Smartphone Market Apple

Apple’s Position in the United States Smartphone Market

The smartphone market in the United States is comprised of all firms that manufacture and sell smartphone’s specifically to U.S. consumers. According to Cromar (2010. p 4.), a smartphone is a mobile phone which is run on an advanced operating system. The operating system makes a smartphone to have advanced computing capabilities such as installing of new applications and can connect to the internet.

There are five major players in the U.S. smartphone market. They include:

  1. Apple Inc. (a U.S. corporation)
  2. Research in Motion Limited (a Canadian corporation)
  3. HTC Corporation (a Taiwanese corporation)
  4. Motorola Inc. (a U.S. corporation)
  5. Samsung Electronics (a subsidiary of a Korean corporation)

This article will mainly focus on Apple’s presence in the smartphone market.

Apple’s Market Share

According to new statistics released by comScore – an analytics firm – on February 2013, Apple and Samsung have continued their two-horse race for the U.S. smartphone subscription over the last quarter of 2012 (Campblell, 2013). For three months ending in December 2012, Apple’s iPhone had maintained its dominance in the U.S. smartphone market which raised its share of the market by 2% up from 36.3% in the previous quarter. However, Samsung, the biggest competitor to Apple had experienced the most positive change over the same period by controlling 21% of the market. These two smartphone giants were trailed by HTC and Motorola, which unfortunately were experiencing declining results with market shares of 10.2% and 9.1% respectively (Campbell, 2013). The following table shows a percentage share of smartphone subscribers for the period between September 2012 and December 2012

Smartphone Market 01
Smartphone Market Apple

Source: comScore (2013)

This was a representation of 125.9 million people in the United States who were owning smartphones during the last quarter of 2012 (Jones 2013). As Apple was dominating in smartphone subscription, Google’s Android Platform operating system was leading with a 53.4 % of the market share in the fourth quarter of 2012 (Paul, 2013). This made Apple’s iPhone 5 and Samsung Galaxy SIII the bestseller in Q4 leaving HTC, LG and RIM struggling to get a share of the lucrative market.  The following table according to Jones (2013) shows a tabulation of Apple’s position in the period between December 2011 and December 2012

Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 +/-
Android 47% 51% 52% 53% 53% 6%
Apple 30% 31% 32% 34% 36% 6%
RIMM 16% 12% 11% 8% 6% -10%
Microsoft 5% 4% 4% 4% 3% -2%
Symbian 1% 1% 1% 1% 1% -0%
Other 1% 1% 1% 1% 0% -1%
Total 100% 100% 100% 100% 100%

Source: comScore (2013)

Threat Analysis

Apple’s dominance in the smartphone market for many years can be attributed to the advantage that the company takes from vital synergies that are available in its electronic ecosystem of electronics, computers and software (Comar 2012 p 31). Before the company released the iPhone, Apple already had an existing broad base of users for its iPods, computers and software like iTunes. The iPhone is a smartphone that can be easily integrated with other Apple products such as the Apple TV. It is the success of Apple’s other products that were carried over and integrated into the iPhone making it an unmatched smartphone with highly differentiated and integrated user experience.

As of 2010, most of Apple’s competitors were facing significant challenges in market share control due to Apple’s availability of a highly integrated electronic ecosystem.  However, Samsung has in the past two years revolutionized its smartphone presence in the United States making it Apple’s main competitor.  This has led to patent counter suits between Apple and Samsung being experienced in especially the last one year. Samsung has fully utilized its wide range of consumer products such as the manufacture of computer chips, PCs, TVs and printer to influence its smartphone innovation in recent years, a technique that Apple largely relied on in the earlier days.

Apple’s Weaknesses

The biggest challenge that Apple as a smartphone manufacture is facing today is the growing competition in smartphone operating system application platform. Apple smartphones use iOS which is a mobile operating system created exclusively by Apple. Over the last couple of years, Apple has been experiencing a significant long term risk in gradual loss of smartphone market share specifically to the Android platform. This trend has reduced Apple, a one-time smartphone giant, to a mere niche player in the U.S. smartphone market. The following image show’s Apple’s iOS market share as compared to other mobile operating systems for the period between January 2009 and June 2012 (Blodget 2012)

Smartphone Market Dissertation
Smartphone Market Dissertation

The Android platform that is giving Apple’s iOS a run for its money is a software stack of mobile devices which includes an operating system that is designed mainly for touch screen devices such as smartphones. Android, which is owned by Google, has played a key role in challenging the success of Apple’s smartphone by handing companies like Samsung an easy to use mobile operating system.

The reason why Apple’s smartphone market share is under siege is essentially because the smartphone market is a ‘platform’ market. Apple’s weakness here is that in a platform market, third company markets like Google build products and services on top of other companies’ platforms (Blodget 2012). In this case, Google continues to build the Android application for use by companies such as Samsung on their smartphones. Currently, Android and Apple are continuing to dominate the smartphone market with Apple’s share declining in a rapid manner in the last two years.

Another area of Apple’s weakness is its spending on research. According to Chen (2013), smartphone manufacturer, Samsung, outspent Apple by 2012 on research and development with Samsung spending 5.7% of its revenues on research as compared to Apple which has spent only 2.2% of its revenues. Research is essential, especially in a mobile based platform, since a company will always be abreast with not only emerging trends, but also reading the current trends of consumers.

Samsung’s Competition on Apple

Even though Samsung came in second in the U.S. smartphone market share, Samsung was the only company that recorded significant growth especially in the last quarter of 2012.  Paul (2013) points out that with increase in competition in innovativeness in smartphone design, Samsung’s growth rate was slightly more than Apple’s which consequently heightens the prediction of its market share results in the first quarter of 2013.  Samsung has not only been experiencing growth as a mobile phone manufacturer in the United States alone. Globally, for the first time in 13 years, Samsung toppled Nokia in the global mobile phone business on an annual basis at the end of 2012. Samsung accounted a growth of 29% in mobile phone business in 2012 which was up from 24% in 2011 (Wayne 2012).

Chen (2013) also concurs that for many years Apple has not face a challenger like Samsung, who can make very popular and profitable smartphones and tablets.   Whereas Apple is staking its success on creating new markets and then dominating them, Samsung is investing heavily on studying existing markets and coming up with new innovations inside them. Samsung’s strategy has seen the Samsung Galaxy SIII smartphone to be the first smartphone to engage on a neck-to-neck competition with Apple’s iPhone in sales (Chen 2013).

Samsung’s success over competitors like Apple and Nokia is being mainly forged by the company’s competitive edge in the smartphone sector. According to information and analytics provider HIS, on a global perspective, Apple and Samsung ended 2011 in an absolute two-horse race over smartphone market share, with only 1% separating the two (Wayne 2012) .

Business Analysis tools and techniques

There are many business analysis techniques and tools that can be used to analyze different business problems. This paper shall focus on four of the majorly used tools. They include:

  1. SWOT Analysis
  2. The PESTLE Technique
  3. The 5 Whys Technique
  4. CATWOE Analysis

SWOT Analysis

SWOT analysis is one of the most commonly used tools for analyzing and auditing the overall strategic position of a business and its environment.  SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats.  For purposes of understanding the business environment of a company through SWOT analysis, strengths and weaknesses mainly focus on the internal factors while opportunities and threats focuses on the external factors.

Whereas a business cannot change the external factors affecting it, it can change the internal factors affecting its business environment. SWOT analysis do help companies for instance to understand the external environment of a business and how they can strategize on sustainability and performance.  SWOT also helps a company to identify a strategy that creates a concrete business model that best matches a company’s capabilities and resources to the environmental requirements. It is basically a foundation in which a business evaluates its internal potential and probable limitations in comparison to opportunities and threats posed by its external environment. Arguably, a consistent SWOT analysis of the environment that a business is operating enables a company to adequately predict changes in trend and also helps in factoring them in the decision making processes of the company.

Strengths

The strengths of a business are the unique qualities that enable a company, for instance, to accomplish its mission and vision. They form the basis on which the continued successes of a business are established and sustained.  The strengths of a business are what the business is well specialized in or the expertise it has, the traits and the exceptional qualities that its employees poses and the distinctive features as compared to others in the industry that gives the business its consistency.  They are simply the attributes within a company, which can either be tangible or intangible that give the business a competitive edge over others. Some of these beneficial aspects of a business may include: customer goodwill to the brand loyalty, human competencies, financial resources, products and services, etc.

Weaknesses

Weaknesses are the attributes and qualities that prevent a business from accomplishing its mission and consequently achieving its desired full potential. In SWOT analysis, these are factors that prevent a business from achieving successful results since they simply deteriorate a business’ growth. They are internal factors in a business that make the business not to meet the required standards that the business opts to be meeting. They may range from insufficient research and development capabilities as in the case of Apple Inc. when compared to Samsung Electronics, to narrow product range and depreciating machinery. Analyzing weakness assists the management in a business to know the areas in the business that need to be improved. Weaknesses precisely impact on the profitability of a business and if not well controlled, they may make a company to go out of the business.

Opportunities

Opportunities are essentially the possibilities that a business has in increasing their profit margins or improving on performance.  They are presented by the environment within which a business is operating. Opportunities arise when a business takes an advantage of the conditions posed in its operating environment to plan and execute strategies that could drive it to more profit making. Businesses have to be very keen in identifying opportunities and grasping them immediately they rise. It could be something as simple as releasing a new product line to targeting a new customer niche. Conducting a SWOT analysis on opportunities involves examining external factors to a business such as technological advancements and the state of the overall economy.

Threats

Threats to a business rise when external factors in a business environment compromise the profitability and reliability of the business. They create a vulnerability that is faced by a business when compounded to its weaknesses. They are peculiar external factors which cannot be controlled. For instance, the economic downturn of 2008 was factor that most businesses could not control. Political and social trends can also be possible threats to a business. A good example is the current social and political push for products that are more environment friendly as compared to those that are not.  An essential part in analyzing the threats of a company has to involve a look at the strengths of its competitors.

SWOT analysis is advantageous in that it presents valuable information since a business can evaluate the four elements either independently or as in combination (Nordmeyer, 2010). It also involves the integration of qualitative and quantitative data which is an essential part in formulating a business strategy. SWOT analysis is preferred by many since one is not required either have technical skills or training to conduct the analysis. This in turn makes SWOT analysis one of the most affordable business analysis tools that also requires a fairly short time to conduct.

The PESTLE Technique

The PESTLE technique is a business analysis technique that is mainly concerned with the external aspects of a business such as the environment. PESTLE is an acronym that stands for Political, Economic, Social, Technological and Legal Environment (Financez 2012).  This method is mostly used in analyzing a business environment and making market evaluations at the initial stages of the business. According to Marx (2010), the PESTLE technique primarily consists of four main phases.  These phases are:

  1. Formulating the external factors list
  2. Identifying the implications of these external factors
  3. Determining the relative importance of the impacts of the external factors
  4. Formulating alternative scenarios

Political – When generating a political-factor list, one is expected to concentrate on the key political factors that will affect a business. The taxation policy, for instance, especially during elections is one of the main political factors that a business needs to internalize and factor in its strategy analysis. How foreign policy will affect exports and imports especially to a business in such a field can also be a cognizant factor.

Economic – In this analysis, one is considered to factor the overall economic situation, the strength of consumer spending in business’ main product and service segment, both current and future government expenditure and how it may affect the economy among many other factors.

Social – When considering the sociological aspects in business analysis, it is important to concentrate on the cultural aspects that are likely to impact on the business (Marx 2010). Cultural and social trends have great influences on a consumer of any product or service. Therefore, it is important to consider factors on demography, lifestyle patterns, fashion, and work attitudes as well as religious and ethnic differences when analyzing a business environment.

Technological – This is one area that has greatly changed the lives of many people today. For a business to easily sustain itself in today’s world, it has to adequately factor technological advancements available to improve its overall performance. Having a big eye on technology is a major factor that creates a competitive edge of a business over its rivals (Financez, 2012).

Legal – Legal and political factors are closely related but for good business analysis, they are distinguishable. Current and pending legislation ultimately do have implications on a business which makes them a compulsory business analysis consideration as this technique provides. Legislation may affect employment, taxation, health and safety requirement, as much as many other aspects of a business.

Environmental – These are factors in business analysis that may have a connection with the environment. Aspects on pollution capabilities and recycling possibilities in the product and services of a company are important factors in business analysis.

The 5 Whys Technique

The 5 Whys technique is a problem-solving technique that assists one in getting to the root cause of a problem quickly (Manktelo & Carlson 2011). This method simply helps in determining the cause-effect relationship in a problem or failure event (Sondalini 2008). This technique was made popular by Toyota especially in the 1970s when they were developing their manufacturing methodology. The 5 Why’s technique simply involves looking at a business problem and asking ‘why’ and ‘what caused the problem’. In using this strategy to solve a problem, one simply starts with the end results and works backward in asking ‘why’ in a repeated manner until the root cause of a problem is apparent.

Five is a rule of the thumb and that is why this technique is called the 5 Whys technique. It is not a must for one to ask 5 ‘whys’ since one may ask more or less before finding the root cause of the problem. When one, for instance, in business is facing a certain problem, you start with a statement of the situation and ask why it is occurring. Then turn the answer to this questions into a second ‘Why’ question. The answer to the second ‘Why’ questions becomes the third ‘Why’ questions and so forth. Repeatedly asking why peels away ‘layers’ in an issue which then leads one to the root cause of a problem. When one refuses to be satisfied with an answer, this increases the odds of coming up with the underlying root cause of the problem (Sondalini 2008).  Some of the benefits attributed to this technique are:

  1. Simple – it does not require the use of advanced mathematical tools.
  2. Effective – it quickly helps to separate symptoms from causes
  3. Flexible – It can be used alone or in combination with other techniques

CATWOE Analysis

CATWOE analysis is a business analysis technique where an analyst prepares a report, that is analytical, to solve a particular problem. CATWOE is an acronym that stands for Clients, Actors, and Transformation, Worldview, Owner and Environmental constraints.  In business, it is a technique that is very useful in checking the features existing in a defined problem. The CATWOE technique is mostly preferred when identifying a business problem that requires prompting critical thinking on why it is really necessary to be solved.

Clients – The clients of a business have to be analyzed on so as to understand who are on the receiving end of the business’s products and services.

Actors – This comprises the employees who form part of implementing the business strategy or changes to achieve a desired mission.

Transformation – It comprises of an analysis of probable changes that have been introduced in a business. It also factors on the analysis of the processes involved in transforming inputs into outputs.

Worldview – In other words, this is the world view. This describes an analysis on the bigger picture that a certain situation or a problem in business fits.

Owner – Having a look on the stakeholders and identifying needs of the owners or shareholders of a business is crucial.

Environmental constraints – It includes an analysis on the external environmental factors in which a business is operating.

References

Blodget H. (2012). This Trend is very worrisome for Apple. Business Insider

Campbell M. (Wednesday, 6th February 2013). Apple and Samsung pull further ahead in U.S. smartphone market, iOS gains on Android.  Apple Insider

Chen B. (February 10th, 2013).  Samsung Emerges as a Potent Rival to Apple’s Cool. New York Times

Comar S. (November 29th, 2010).  Smartphone in the U.S. Market Analysis

ComScore (February 6th 2013). ComScore Reports December 2012 U.S. Smartphone Subscriber Market Share

Financez (2012). What is Business Analysis: 2 – PESTLE Technique

Jones C. (February 2013). Apple’s and Android’s U.S. Smartphone Market Share Continues to Increase.

Manktelow J. & Carlson A. (2011). 5 Whys – Quickly getting to the root of a problem. Mind Tools

Marx C. (July 20th, 2010). The PESTLE Strategic Marketing Analysis Technique: Compiling the list of External Factors. Yahoo! Voices

Nordmeyer B. (2010). Advantages and Disadvantages of SWOT Analysis. Houston Chronicle.

Paul C (2013). Apple top US smartphone market with Samsung second. TechBeat.

Sondalini M. (2008). Understanding how to use the 5 Whys for Root Cause Analysis. Lifetime Readability Solutions

Wayne (December 18th, 2012). Samsung displaces Nokia as Top Cellphone Brand in 2012 and takes decisive Smartphone lead over Apple.  HIS Supplier

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Feminist Movement

Feminist Movement

Introduction

In the beginning of the sixties, feminist movement emerged as a social movement which concentrates on dealing with issues related to women. It sought to tackle issues such as abortion, domestic violence, sexual assault, voting issues, violence against women, sexism, etc. it influenced all spheres of life and concentrated on removing sexism and male chauvinism from society. Similarly, it has influenced the field of arts, which was also dominated by males. According to researchers, dealers and curators mostly consisted of males and they preferred male artists. This trend had negatively influenced women artists and they were excluded from major art events and exhibitions. Consequently, they did not get the chance to get acknowledged for their work and skills. During the time of discrimination against women and in the such an environment, where women were not acknowledged for their work and skills along with male chauvinism, female artists expressed their views through art in order to deal with patriarchal society. According to scholars, feminist art is defined as the art which concentrates on tackling patriarchy and to define and pave way for social creation of feminism. Several feminist artists came into view to deal with male chauvinism. The aim and objective of this research article is to explore true feminism.

This article will concentrate on discussing feminism and feminism movement. It will provide an overview on what feminism is all about and how it influenced art. At the same time, it will concentrate on feminism art of the sixties. It will also explore feminism and feminism art in today’s time. The main aim of this research article is to explore the topic of true feminism art of the sixties and feminism art of the twenty first century in the lights of broad and diverse academic resources. This article will employ the use of various journals, books, encyclopedias, magazines and electronic resources to discuss the topic of feminism art of sixties and twentieth first centuries. It will concentrate on discussing the works of prominent feminist artists and the events, which gave rise to feminism movement.

Feminist Movement: Overview

The feminist movement is also called the Women’s liberation movement which sought to deal and tackle with issues such as abortion, maternity leave, harassment and violence against women, domestic violence, genital mutilation of females, honour killings, etc. Scholars and academic have divided feminist movements into three waves, which have dealt with several aspects of feminism but in a different way. The first wave feminist had initiated between the nineteen and twentieth centuries and it was mainly concerned with Suffrage movement. The second wave of feminism was the period between sixties and eighties in which feminists sought to deal with discrimination against women in society and law. It had the basic ideas of first wave feminism. The basic idea behind these movements was to struggle and to improve the conditions of women. According to researchers, feminism is defined as the continuous battle against the oppression and suppression of females. It was essential to initiate the feminist movement because women were subjugated at all levels in the Western society. The feminist movement aimed at removing this bias and concentrated on removing sexism from society so that women would also get a chance to develop their careers. It is one of the most influential and long lasting social movements which have influenced women in all spheres of life.

Feminism and Art

The feminist art is considered to be the hard work and achievements of feminists, who worked hard to use art as a medium to represent the lives and experiences of women so that they can bring change in society as well as in contemporary art. Feminism art main aim was to ensure that women become more visible in the history and practice of art.  The feminist movement started somewhere in the sixties and continued to develop in the seventies. Consequently, it gave rise to the notion “second wave of feminism”, which is persistent in today’s time. It was in the California State University of Fresno, where the first feminism art education program was started. The number of students was not more than fifteen and their instructor was Judy Chicago. She helped in the influencing the early feminism art and employed the use of costumer, video, performance in order to express feminism. In Los Angeles, Judy Chicago founded the art program. Together with Miriam Schapiro, they created Woman House in the early seventies. With the popularity of feminism movement, women emerged as separate and distinct individuals of society and started working with men. Artists such as Judy Chicago and Miriam Schapiro, Suzanne Lacy, Faith Wilding, June Wayne, Mary Kelly, Dara Birnbaum, etc emerged in the world of art and brought piece of art to represent feminism. In the seventies and eighties, the Women’s Building was considered to be the essential hub for feminist artist to gather and exchange views. In the same arena, conferences, conventions, workshops and exhibitions were held to discuss and promote feminist art. At the same time, Women’s Video Festival was introduced in order to promote feminist art.

Feminist Movement
Feminist Movement

Feminism History

According to researchers, feminism is considered to be theory which concentrates on political, economic and social equality of genders. As a social movement, it is considered to be the organized movement, which strives to work for women rights and interests. The history of feminism has been divided and classified by academics and researchers in three waves, first wave, second wave and third wave. The third wave feminism starts from nineteenth century to early twenty first century. The second wave starts from late sixties and late eighties. The third wave starts from nineties till recent times. The first wave feminism had started in the United Kingdom and United States. It concentrated on removing the inequalities which were officially mandated. Feminists of this time included Mary Wollstonecraft, Lucy Stone, Helen Pitts, Olympia Brown, etc.  According to researchers, the first wave ended when the U.S Constitution allowed the women to vote. It was considered to be big step for women. Other significant victories of this first wave included new reforms in education, healthcare and other professions. However, the second wave of feminism concentrates on the unofficial inequalities and it was important to tackle them. It created a link with issues, which had to be addressed in order to change the present situation of women. This wave allowed women to understand their lives personally and politically.

History of First Wave Feminism

In the 1800, women did not have any control in their life. During this time, an average married female was the mother of seven children. They could not get higher education. In wealthy families, women interfered in domestic issues but did not have any property rights. At the same time, religious restrictions also hindered with the growth and development of women. In the 1790, the Second Great Awakening had started which allowed women to show their leadership skills outside the domestic sphere. Several movements were started. Angelina and Sarah Grimke are considered to be famous and prominent abolitionists who had criticized and defied social customs. They publicly addressed the American Anti-Slavery Society and were severely criticized. In order to respond to criticism, Sarah Grimke wrote “Letters of Equality of the Sexes.”

First wave feminism is considered to be the era in which the feminism activities were started during the nineteenth and twentieth centuries. It started in United States and United Kingdom and aimed at removing gender discrimination. It concentrated on women’s suffrage because women were not allowed to vote during those times. From Miriam Schneir perspective, the first wave of feminism was the time when woman had taken her pen to protect herself from male chauvinism and gender discrimination. According to historians, Mary Wollstonecraft was the first female who had published the very first feminist treatises. The name of her treatises was, A Vindication of the Rights of Woman. In it, she expressed her views of current situation of women and supported the fact that there should be gender equality. In her uncompleted work, by the name of Maria or Wrongs of Woman, she had extensively discussed and explored the topic of sexual desires of women. It was criticized severely because it sought to talk on female sexuality. British feminists consider Wollstonecraft as the founder of British feminism. It was because of her ideas; feminists in Britain strived and campaigned for the right to vote. After continuous efforts, some women were given the privilege to vote in the year 1918. During the same time, Maria Stopes emerged and wrote a sex manual by the name of Married Love. The basic aim of this manual was to concentrate on the issue of equality in marriage. It also talked about female sexuality and its importance.

In the United States, Margaret Fuller was considered to be the pioneer of feminist work. She had written Woman in the Nineteenth Century. In United States, several prominent and well known feminist activists emerged. Active feminist movement members included women such as Lucy Stone, Susan B. Anthony, Elizabeth Cady Stanton, etc. these women were also the same individuals who made continuous efforts to remove slavery from the American society. Other prominent activist includes Victoria Woodhull and Matilda Gage, who worked hard to ensure that women get the right to vote. Several of these women had to face charges because of the fact that they had raised their voices. Carrie Chapman, Alice Paul, Sarah Grimke, etc are the name of some of the woman who violated the laws so that their voices could be heard. The first wave feminism consisted of women who belong from orthodox Christian groups. According to researchers, first-wave feminists are considered to be sensible and moderate and were ready to work within the system of politics.

According to researchers, the first wave of feminism was very different from second wave of feminism because of several issues. Firstly, it did not deal with social issues such as abortion, etc. They did not talk about the reproductive rights, which women have. According to researchers, feminists of that time did give views on marriage and asserted that woman has the right to refuse sex. However, marital rape had no legal recourse. During that time, feminists also talked on unwanted pregnancies and birth control pills. In the year 1860, Married Women’s Property Act was passed. It allowed women the authority and power to voice their opinions in the wills of their children. It also gave them inheritance laws. It was in the year 1920, when women were given the permission to vote. This was a major event and a big victory for feminists because it influenced the lives of women and gave the place for second wave feminist movement.

History of Second Wave Feminism

The second wave feminism movement is considered to be the feminist movement which took place from early sixties and continued to develop in the seventies. The first wave feminist movement concentrated mainly on the legal equality. However, second wave feminism concentrated on several social issues such as abortion, domestic violence, work discrimination against women, violence against women, reproductive rights of women, marital rape, etc.  This second wave of feminism emerged in the late forties in which patriarchal concepts emerged. Television shows such as Father knows Best, etc are the male chauvinist programs which concentrated on the fact that woman are best to be housewives and mothers.

The Second Sex has been written by Simone de Beauvoir. In her work, she explained that women were considered to be ‘other’ in the male dominated society. She came to the conclusion that male dominance has taken roots in the entire world and it is accepted as a norm. Women are viewed as objects and their work is to become pregnant, look after their children and menstruate and there is no valid justification to categorize them as the ‘second sex’.

According to Cynthia Fuchs Epstein, Betty Friedan had openly criticized and protested against the image of women, which was depicted in the media. Women were placed at homes, to do house-chores and take care of children. This image was publicized and hindered in the development and growth of women. It showed that women did not have talent. The concept of perfect family consisted of husband, who was the bread earner and the wife, as the home maker and caregiver of children. This concept did not show happiness but rather degraded women.

During this movement, President Kennedy had appointed Esther Peterson to occupy one a high post in his administration. He also founded the Presidential Commission on the Status of Women. Eleanor Roosevelt was the chairperson of the Commission. Betty Friedan released, Feminine Mystique in the year 1963. In the same year, President John F Kennedy administration released a report which demonstrated that women were subjected to severe and harsh discrimination in United States. With Friedan book and report, several housewives criticized and show discontent and dissatisfaction on the present condition of women. This led to the development and formation of several local and government feminist organizations, which concentrated on liberating women from male oppression and subjugation. This was the starting point of the movement.

The movement grew and prospered and won several legal cases. These achievements include Equal Pay Act of 1963, Amendments in the Civil Rights Act of 1964, etc. Friedan joined forces with several women and men to lay down the foundations for NOW: National Organization for Women. Other significant victories of the movement are as follows:

  • Formation of Executive Order
  • Women’s Educational Equity Act
  • Equal Credit Opportunity Act
  • Pregnancy Discrimination Act
  • Illegalization of marital rape
  • No-fault divorce legalization
  • Allowing women to enter the military

The above are some of the major achievements of the second wave feminism. The second wave of feminism assisted women to become aware of them and gave them the opportunity to look at their personal lives. According to researchers, the goal of the second wave feminism was to remove the negative images of the women and to create their positive images in order to respond to these negative images. At the same time, it concentrated on removing oppression.

Abortion Act of 1967

The Abortion Act of 1967 was introduced in the year 1967 by the Parliament of United Kingdom. It made abortion legal if practiced by registered and authorized practitioners. David Steel was responsible for introducing this Act. It was subjected to heavy criticism and became one of the most debatable and controversial subject of all times. However, it was passed on twenty seventh of October in the year 1967. David Steel supported this Act because there were several women who had died because of illegal abortion practices. At the same time, such unwanted children were sent to orphanages or were looked after by relatives. They were also sent abroad. The act ensured that abortion remained legal in the United   Kingdom. It ensured that abortion was legal up to twenty eight weeks of pregnancy.

Sisters of 77

Sisters of 77” is considered to be an important documentary which concentrated on giving insight on the history of women. It was shown on the first National Women’s Conference and sought to end the discrimination and oppression of women. It concentrated on removing gender inequality. This was the first conference which was funded by the federal government and it was brought by more than twenty thousand men and women.

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MBA Project Globalization

MBA Project Globalization

Summary

Over the past few decades, the global scenario has changed considerably with increased interdependence amongst nations and economies. This intertwining amongst nations and sharing of ideas and technology has been termed as “Globalization”. Globalization has been a buzzword of late, with heated discussions about its pros and cons. Some consider it to be a blessing for mankind while others take it as a curse. For some it has brought about material prosperity while others have become unemployed due to it. This paper tries to analyse the effect of Increased International Trade and Globalisation on the US economy. The first section discusses the pros and cons of Globalization while the second section discusses how globalization has lead to increased foreign trade. Thereafter, it discusses the effect of globalisation and increased foreign trade on the American economy.

Introduction

Trade is believed to have taken place throughout much of recorded human history, whether as barter or in exchange of currency. Till the 1800’s, trade was limited due to difficulties in transportation, communication and restrictive trade policies. However, in the mid 19th century, with advent of free trade and nation advantage concepts, trade started to pick up (Daniels & Sullivan, International Business and Operation).  Although international trade has been present throughout much of history, for example Silk Route, its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing. Worldwide, countries are doing away with trade restrictions and lowering trade tariffs, thereby supporting free trade and making the world a global village (Daniels & Sullivan, International Business and Operation).

Globalization – Boon or Bane

The global economy is no longer an individual event and USA no longer plays the dominating role. This is apparent from the fact that ten years ago the World Trade Organization had only 80 members whereas now it has 153 members (WTO Data, 2010). Also countries like China and India are getting more bargaining power day by day. Globalization is the deepening relationship and broadening interdependence amongst the different countries of the world. The World Bank defines globalization as “the growing integration of economies and societies around the world.” This integration of regional economies into a global village has lead to increased international trade, investment, capital flows and technological advancements. Technological advancements such as the internet and cell phones have literally reduced the world to a Global village. Globalization has both its critics and it supporters. Some interpret it as a way of countries losing their cultural identities and becoming “Americanized.” Others see it as a way to reduce costs and to increase profits and efficiency. The debate over globalization is perceptible in demonstrations against the WTO in Seattle in the fall of 1999, against the Summit meetings in Quebec and Genoa and against several annual meetings of the IMF and World Bank. While on the other hand, supporters of globalisation look forward to a global village, linked together by the Internet, and enjoy the ever-increasing material well being (Daniels & Sullivan, International Business and Operation). The United States is seen by much of the world as the strongest supporter of globalization – in fact, as pushing it on everyone else. Over the years, globalization has resulted in increased foreign trade and capital flows, thereby contributing immensely to the domestic economy. In the 1990s, globalization and free trade, resulted in integration of China and the former Soviet bloc into the trading system thereby lowering inflation and opening new markets. However, as the emerging markets got stronger, the prices of commodities started rising immensely and competition from foreign workers lowered the average US wage rates. Jeffrey Garten, professor of international trade and finance at the Yale School of Management, points out that in 2000, the world’s wealthiest countries accounted for about 70 percent of the global economy, compared with 30 percent for developing economies. These rates are slowly but surely reversing. Thus, USA has seen both the positives and the negatives of globalization.

International Trade

One important effect of globalization is the increased interdependence among nations which has demanded increased liberalization of markets, the dismantling of almost all trade barriers (Lee, 2005; Czinkota and Ronkainen, 2007). As a result, the forces of globalization have necessitated trade liberalization (Martin, 1993), leading to increased international trade, not only in good and services but also currency and capital. Ever since independence, America has been a supporter of Free Trade. In 1988, USA signed a Free Trade Agreement with Canada that progressively eliminated tariffs over a ten‐year period, thereby making Canada USA’s premier trading partner. Further, in 1994 the Mexican Government, in pursuit of market reforms, signed the North American Free Trade Agreement (NAFTA). The passage of the NAFTA agreement signalled the continuing support of U.S. policy‐makers for the worldwide march toward free markets and further economic globalization (Paul. S Boyer, 2001). The above agreements lead to immense increase in trade and greater market efficiency. However, by 1999 USA had a huge trade deficit of around USD 200 billion (Paul. S Boyer, 2001). The trade boom of the 1990’s had ended in a recession marked by serious job losses and the nations policy of “free trade” was being questioned. President George W. Bush insisted that America’s economic future lay with the global economy, but early in 2002 political pressures led him to slap import duties on cheap foreign steel. However, he was forced to withdraw it in 2003 due to retaliation against US exports and WTO sanctions (Paul. S Boyer, 2001)

Globalization MBA
Globalization MBA

Competition and Business Restructuring

International competition goes hand-in-hand with globalization. A company that has been very successful in the domestic market may suddenly find itself facing competition from a yet unheard of company from the other end of the globe. Survival in this new business environment calls for improved productivity, reduction in costs, up gradation in technology and advancements in supply chain management (O’Reilly, E., & Alfred, Diane., 1998). For example, In the 1980s American automobile manufacturers began losing market share to Japanese competitors who offered American consumers higher quality cars at lower prices (Brewer, G., Managerial Accounting). However, from the consumer’s point of view, increased competition promises greater quality, reduced prices and a greater variety of goods and services. China’s entrance into the global marketplace has proved that globalisation leads to competition and changes the business environment. For example, from 2000 to 2003, China’s wooden bedroom furniture exports to the United States increased by more than 233% to a total of $1.2 billion. During this same time, the number of workers employed by U.S. furniture manufacturers dropped by about a third, or a total of 35,000 workers (Fishman, T., 2005).

In a 2002 speech, the Economic counsellor to the US Embassy, Mr Lee Brudvig, said, “We have not resisted the free flow of money, goods, services, and ideas. Rather, we have subjected our companies to market competition and limited the role of government on the whole to that of facilitator, regulator and, when necessary, safety net provider. As a result, we have seen a massive reorganization of business structures. Whereas in 1960 manufacturing accounted for 27 percent of GNP, by 2001 it had dropped to below 15 percent.” The changes brought about by technology and productivity is causing both markets as well as organisations to undergo restructuring.

Labour Market Developments

An important trend in labour markets in the advanced economies has been a steady shift in demand away from the less skilled toward the more skilled (Slaughter, M., & Swagel, Philip., 1997). Studies have shown, for the advanced economies as a whole, that trade with developing countries has led to about a 20 percent decline in the demand for labour in manufacturing, with the decline concentrated among unskilled workers (Swagel, Philip., 1997). This trend has produced dramatic rises in wage and income inequality between the more and the less skilled. In the United   states, wages of less-skilled workers have fallen steeply since the late 1970s relative to those of the more skilled (Slaughter, M., & Swagel, Philip., 1997). According to a study conducted in 2007, the impact of trade flows in 2006 increased the inequality of earnings by roughly 7% (Bivens,J., 2007). The study goes on to prove that although “liberalized trade” is a win-win proposition for nations, it reduces the income of most workers. Workers employed in industries directly in competition with low-cost imports from abroad can expect to see immediate job dislocation and/or downward wage pressures.

The rise of labour abundant nations, like China and India, has increased the global labour pool. The price of labour-intensive commodities falls as a result of this increase in the global labour pool, and these falling prices harms the labour in professional-abundant nations like the United States. DVD Players, clothing and call centre operations, all provide examples of reduction in prices due to expansion in the global labour pool (Slaughter, M., & Swagel, Philip., 1997). Outsourcing and offshoring, has further increased unemployment and decreased national earnings. 22-29% of the U.S. workforce has been rated as potentially offshorable over the next one or two decades (Blinder, 2006). The implied loss due to offshoring would push these wages well below the 1979 levels, completely undoing the entire increase in these wages over the past three decades. The trade adjustment assistance (TAA) program has been formed as a way to compensate globalization’s victims in the United States. In 2006 TAA allocated $655 million in income supports for workers harmed by globalization, and, another $200 million for training. As quoted by Bradford, Grieco, and Hufbauer in their study, “While the gains from increased trade generate a permanent rise in income, the associated losses are temporary. Nevertheless, they are very real, and are concentrated on a small fraction of Americans”.

Financial Market Globalisation

Financial globalization has been one of the most important trends in the world economy in recent decades. Financial globalization has been one of the most important trends in the world economy in recent decades (Lane and Milesi-Ferretti 2003). International financial liberalization was also accompanied, in a

somewhat chicken-and-egg causal relationship, by the abandonment of the Bretton Woods system of adjustable exchange rate pegs and the shift to floating exchange rates among the major currencies or regional currency blocs (Eatwell 1996). When currency fluctuations are considered, it is the exchange rate between the US dollar and the euro that gets the most attention. This not only reflects the size of the respective economies using these two currencies, but also the fact that the US dollar is the most widely traded currency today. That’s because it effectively serves multiple roles: as an investment currency; as a reserve currency for many central banks. According to an IFSL research conducted in April 2007, the US dollar was involved in 86% of foreign exchange transactions, followed by the euro (37%), which proves its importance (Safar, L., 2008). The report further states that foreign currency trading increased by 70% in 2008 compared to 2004. This increase in currency trading makes it imperative for companies to learn to deal with exchange fluctuations and how to benefit from all situations. The US dollar has fallen since January 2004 against the euro as well as against most major European and Asian currencies. This has caused many companies to introduce a “fluctuation clause” in their contracts to protect themselves from losses due to exchange rate fluctuations and has also lead to the development of many financial instruments to help companies hedge their currency risks. However, times such as these when the dollar becomes weaker often works well for US producers with a larger proportion of their costs being in dollars but selling worldwide. International revenues not only translate to higher US-denominated revenues, but they also contribute to higher margins which can be achieved globally (Safar, L., 2008). For example, Q1 2008 for instance marked a milestone for Google, whose international revenues exceeded US revenues for the first time. Revenues from outside of the United States represented 51% of total revenues in the period, compared to 47% in the first quarter of 2007 and 48% in the fourth quarter of 2007. In Q2 2008, this had increased further to 52%. According to Google, “Had foreign exchange rates remained constant from the second quarter of 2007 through the second quarter of 2008, our revenues in the second quarter of 2008 would have been $249 million lower.” (Safar, L., 2008). Nothing can be predicted with 100% accuracy when it comes to exchange rates, and the only thing that can be safely said is that there will be no “business as usual” when it comes to currencies.

Political and Institutional Changes

According to CIA Global Trends 2015, 2000,” The rising tide of the global economy will create many economic winners, but it will not lift all boat. It will spawn conflicts at home and abroad, ensuring an even wider gap between regional winners and losers than exists today. Regions, countries and groups left behind will face deepening economic stagnation, political instability and cultural alienation. They will foster political, ethnic, ideological, and religious extremism, along with the violence that often accompanies it.” One of the most important and necessary features of the current process of globalization is the proliferation of international organizations. Scholars point to the emergence of expanding web of international treaties and institutions, which regulate and adjudicate on matters of interstate behaviour. The number of international organizations rose from 61 in 1940 to 260 by 1996 (Barnett 2002:110). Since 1995, when the World Trade Organization (WTO) was formed, transnational corporations have increasingly influenced political leaders to push international trade laws in the same direction of liberalization and deregulation. In addition, existing international organizations like the IMF, the World Bank and the GATT/WTO have transformed their roles substantively, gaining further powers and responsibilities (Camillery and Falk 1992:94-7; O’Brien et al. 2000). The United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. Due to this reason, the United States enjoys considerable bargaining powers in the WTO and World Bank. With the influence of globalization and with the help of The United States’ own economy, the People’s Republic of China has experienced some tremendous growth within the past decade, and now enjoys as much bargaining power, if not more, as USA. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United   States for the position of leading world power (Fishman, T., 2005).

Crime and Terrorism

At the end of the 20th century, a new phenomenon appeared—the simultaneous globalization of crime, terror, and corruption, an “unholy trinity” that manifests itself all over the world. This unholy trinity is more complex, however, than terrorists simply turning to crime to support their activities or merely the increased flow of illicit goods internationally. Rather, it is a distinct phenomenon in which globalized crime networks work with terrorists and both are able to carry out their activities successfully, aided by endemic corruption. Crime groups and terrorists have exploited the enormous decline in regulations, the lessened border controls, and the resultant greater freedom, to expand their activities across borders and to new regions of the world. The United States has been one of the worst sufferers of this new “global” terrorism. Since September 11, 2001, numerous resources have been shifted in the United States and elsewhere from addressing trans-national crime to fighting terrorism. It has increasingly become clear, that for a nation to advance, it has to keep its crime and terror activities in check.

Cultural and Other Issues

The growth of cross-cultural contacts has helped the United States participate in a new World Culture. It has helped Hollywood reach remote corners of the world while at the same time Bollywood has reached out to the Americans. Globalization has also lead to greater international travel and tourism thus greatly benefiting the tourism industry. WHO estimates that up to 500,000 people are on planes at any one time. (WHO Data, 2009). In 2008, there were over 922 million international tourist arrivals, with a growth of 1.9% as compared to 2007 (UNTWO Data, 2009). Globalization has also increased the number of illegal immigrants entering USA. The Rockridge Institute argues that globalization and trade agreements affected international migration, as laborers moved to where they could find jobs. The Mexican government failed to make promised investments of billions of dollars in roads, schooling, sanitation, housing, and other infrastructure to accommodate the new maquiladoras (border factories) envisioned under NAFTA. The 1994 economic crisis in Mexico, which occurred the year NAFTA came into effect, resulted in a devaluation of the Mexican peso, decreasing the wages of Mexican workers relative to those in the United States. Unemployment, corruption, low wages and few opportunities cause Mexican laborers to look for greener pastures and migrate illegally to the United States.

Conclusion

Globalization leads to increased international trade and reduction in trade barriers, which is beneficial for all the trading nations. Increased globalizartion has increased competition in the global economy, making it tougher for organisations to survive, and leading to greater productivity, efficiency and quality. This has in turn lead to the rise of countries like China and India, which are rich in labour. Due to the rise of labour abundant nations, the US labour market has suffered with fewer jobs being available for unskilled workers and lowering of wages. Further, outsourcing and offshoring have lead to loss of jobs and unemployment. In order to establish a set of trade rules and monitor the trading nations, institutions like WTO, IMF and World Bank have gained in importance. The United States hold a very important place in all these institutes, due to its strong economy and political power. Thus, it has a huge bargaining power when it comes to trade regulations. Overall, globalisation has affected America both positively as well as negatively but it is primarily due to globalisation and increased trade that America has a strong economy today.

References

Bivens, J., 2007, Globalisation and American Wages: Today and Tomorrow,

The author examines the effect of globalisation on wages and predicts what the future is going to be, based on mathematical models.

Blinder, Alan. 2006. Off-shoring: The next Industrial Revolution. Foreign Affairs magazine.

Boyer, P., Foreign Trade, U.S., The Oxford Companion to United States History.2001.Encyclopedia.com.

Boyer, P., Global Economy, America and the., The Oxford Companion to United States History. 2001. Encyclopedia.com. Accessed on 22 Apr. 2010 at

Daniels & Sullivan, International Business and Operation, 11th Ed, Pearson Education

Eatwell, John. 1996, International Financial Liberalization: The Impact on World

Development, Office of Development Studies, Discussion Paper Series (September). New   York: United Nations Development Programme.

Fishman, T., 2005, How China Will Change Your Business, Inc. magazine,

O’Reilly, E., & Alfred, Diane., 1998, Innovations in Technology and Globalization,

Slaughter, M., & Swagel, Philip., 1997, Does Globalization lower wages and export jobs?, IMF Report,

UNWTO World Tourism Barometer (World Tourism Organization) 7 (2)

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Theory of Motivation

Analysis of Motivation in Today’s Workforce and Recommendations for the First Bank of Kamloops

The blog post will discuss the theory of motivation as a concept, as a behavior and as a management tool and important concepts that are associated with motivation, given its prime role in life. Also, I have taken a case study related to a bank, and examined how the HRD has identified, and evolved a plan to increase motivational assets. This HRM Essay will discuss the theory of motivation.

Motivation

Motivation is a practice of extracting, controlling and sustaining certain behavior.  There are many approaches to motivation – physiological, behavioral, cognitive, and social. Motivation is usually a group effect, but not limited to it; it affects the behavior of individuals on different levels, and as a result, the product in any workplace can directly be correlated to the motivational levels or on practical terms, the spirit of the work force. Motivation plays a vital role in setting and attaining goals, and the factor of motivation is intertwined with certain philosophical and psychological concepts – altruism, selfishness, morality, or avoiding mortality. Work place motivation can either intrinsic or extrinsic; intrinsic motivation refers to the drive or thirst due to the interest in the work, and this kind of motivation exists within the individual, not forced by any external pressure. Psychologists see intrinsic motivation as more effective than extrinsic because it helps in engaging on a task on one’s own will. Intrinsic Motivation is based on taking pleasure in an activity rather than working towards an external reward

Intrinsic motivation usually empowers in the following ways;

  1. Autonomy  – helps in grooming leaders
  2. Effective agent in reaching desired goals in technical perspective
  3. Creates specialist in professional world
  4. Enriches the skill set

Extrinsic motivation is the opposite of intrinsic motivation, and the engagement in a task is inspired by an external reward. This sort of motivation is a function of two variables – activation based on motivation and target behavior. Extrinsic motivation is very common in any work place; usually the rewards are monetary benefits and promotions. Self-determination theory proposes that extrinsic motivation can be converted to internal motivation if the task assigned fits with the values and beliefs of the individual, and therefore helps to fulfill their basic psychological needs.

Incentive Theory

Employees in a company are usually motivated to do things due to external rewards such us monetary benefits and promotions. Also, people are motivated to go to work each day for the monetary reward of being paid. Association and reinforcement play a major role in this theory of motivation.

Drive Theory

According to this theory, certain actions are taken to reduce the internal tension that is caused by unmet needs. For example, you might be motivated to work on night shifts in order gain more bonuses. This theory is usually associated to strong biological components. The problem with the drive theory of motivation is that these behaviors are not always motivated purely by physiological needs.

Arousal Theory of Motivation

Arousal theory depends on certain actions taken either to decrease or increase levels of arousal. As per this theory, we are motivated to maintain an optimal level of arousal, although this level can vary based on the individual or the situation. Thus, employee often maintains the work life in a balanced manner, rather than operating in volatile moods.

Humanistic Theory

Humanistic theory is based on the idea that there is strong cognitive reason for every action performed by a human. This theory was strongly proposed by Abraham Maslow; people are initially motivated to seek basic needs such as food, home and health, as well as emotional values such as love and respect. Once, the basic needs are met, people get motivated to perform fullest to their potential.

Cognitive (Attribution) Theory

The cognitive approach is attribution theory by Heider and Weiner. It proposes that every individual tries to explain the factors of success and failure by offering some explanations and attributions. These attributions are either internal or external and are either under control or not under control. The following chart shows the four different attributions, which result from a combination of internal or external locus of control and whether or not control is possible.

Internal

External

No Control

Ability

Luck

Control

Effort

Task Difficulty

The second cognitive approach is expectancy theory. (Vroom, 1964) According to this theory, Motivation = Perceived Probability of Success (Expectancy) * Connection of Success and Reward (Instrumentality) * Value of Obtaining Goal (Valance, Value) All the values should be existent for motivation to exist. From the perspective of this theory, all three variables must be high in order for motivation and the resulting behavior to be high.

Psychoanalytic Theories

In this theory, we are focused on variety of fundamental influences. Freud (1990) said that all actions of humans come as an effect of internal, biological instincts that are classified into two categories: life and death. Many disagreed on Freud’s approach, his student like Erikson (1993) and Sullivan (1968) proposed that interpersonal and social relationships are fundamental, Adler (1989) proposed power, while Jung (1953, 1997) proposed temperament and search for soul or personal meaningfulness.

Adam’s Equity Theory

According to John Stacey Adams, behavioral psychologist presented his equity theory on job motivation in 1963. Until then, work place psychology was limited to variable factors such as individual’s assessment and perception of their relationship with their work, and thereby their employer. The Adams’ Equity Theory for the first time extended beyond the individual analysis, and incorporated the influence and comparison of other people’s situations.

Adams represented personal efforts, give, take and rewards as only two variable namely, ‘inputs’ and ‘outputs’.  Inputs are what we give to work, and outputs are what work gives us. It includes all the factors such as working hours, and that what people receive from their work includes many things aside from money. Also, the pivotal part is Adam used several references and reference point with whom we compare our situation.

In practice, equity model proposed by Adam helps us resolve why people are strongly affected by situations. People are continuously expecting sense of fairness or equity in their work situations. When we feel the inputs go well with the reward that we reap as outputs, then we are happy about it and continuously inputting at the same level for benefits. Also, we stay happier and contented in the work place. On the contrary, if the input is not benefited by output than the ratio enjoyed by referent others, then we become demotivated in relation to our job and employer. Thus we have adequately discussed all the approaches pertaining to motivation in the psychological perspective.

Purpose of the Report

The purposes of this report is identify the problems of the employees, identify the consequences a company endured with unmotivated employees, identifying techniques, the  organizations can use to motivate their employees, and lastly, show the positive consequences a company enjoys with motivated employees. Nine professional and scholarly journals were used for the report, while preparing this report.  As part of the study, the bank deployed several sources, and identified the problems associated with de-motivated employees. Before going on to them, lets study the practical factors associated with motivation.

Nelson (1996) said it is not wise to rely on money to motivate the employees because money can act the otherwise too. This is the basic reason why people are not motivated in the work force. Employers are still not aware that money alone is not enough to motivate workers in today’s work environment (pp. 65-66).

Motivation Theory
Motivation Theory

Often, employees are not aware of what is happening in a company. According to scholars, it is one of the cheapest ways to motivate an employee, and show them how they form the core part of the profit company earns. Employee feels like a business partner, he or she will feel a sense of belonging to that particular company. Usually, managers withhold key information from reaching their employees to maintain power in their company. This will seriously undermine employee morale, and ultimately motivation suffers.

Also, Nelson reported those employees are not motivated when they are not acknowledged for their performance. When employees are not given full or even limited recognition and praise, they will not put in the extra effort to do their jobs well. Praise and recognition can increase workers’ performance and self-esteem significantly.

Nelson (1996) also reported that employees will not be motivated to do their jobs if managers or supervisors do not acknowledge workers’ performance. When employees are not given full or even limited recognition and praise, employees are not ready to increase their effort.  As a result, there is a chance Workers’ performance and self-esteem to go down significantly.

Other factors that cause employees de-motivation are environment where employees are bored or mismanaged furthermore, when employees are not given a chance to learn new skills or grow within the organization, low morale will be the likely result.

Consequences – de-motivation

Martinez (1997) reported that de-motivated workforce can create negativity throughout the workplace in very short span of time; this can even be considered like an epidemic that spreads diseases.

Beavers (1996) seriously warn that one de-motivator can offend the whole spirit of the organization; the de-motivated persons can be held on displays of violent or aggressive behavior on the job. Also, the important consequence of possessing unmotivated employees directly reflects in the production scale. When production drops, it’s natural that profit goes down within.

Nelson (1996) pointed out that when firms are not willing to motivate their employees, turnover rates increase. Thus, no companies like to see a rention drop of employees. The process of human resource development is expensive. Moreover, new employees are not immediately productive, which again drains a company’s resources.

Ten techniques to motivate

  1. Thank employee when they perform well, and make it timely. When thanks offered in writing, employee morale is boosted.
  2. Take the time to talk with employees. The best means of communication is face-to-face conversation.
  3. Give specific feedback about work performance directly to employees.
  4. Create an environment where employees can work creatively, and share their thoughts on the process.
  5. Show employees how the organization loses and makes money.
  6. Taking employee into decision-making processes, especially when a decision will affect that particular employee.
  7. Allow employees to feel a sense of ownership or secure in their jobs and in the work that they do.
  8. Make rewards, promotions, and recognition based solely on employee performance.
  9. Encourage employees to grow and learn new skills to be used in the company.
  10. Celebrate an employee’s performance when he or she is successful. Let employees know that their hard work is valued and appreciated.

Issues with Bank’s motivational factor

After the interviews with banks’ Lonny Cooper, Jon Wenzel, and Reza Rich, the following conclusions were drawn,

  1. Money does not motivate employees in today’s workforce.
  2. Employees become unmotivated when there is a communication gap between management and subordinates and when performance is not recognized or praised.
  3. Unmotivated employees cause negativity throughout the workplace. Carelessness, absenteeism, resource waste, and turnover rates increase when employees become unmotivated.
  4. Employees are motivated in different ways as each individual possesses different values.
  5. Specialized system on effective communication, incentive programs, and praise in the workplace has proven to be successful strategies or techniques a company can use to motivate its employees.
  6. When a company has motivated employees, production and sales rates increase, customer relations improve, the work environment becomes safer, morale increases, and turnover rates decrease.

Recommendations

  1. Reward bank tellers for effectively balancing the cash drawers for one month, and continue to reward tellers for every perfect month thereafter.
  2. Have meetings once a month with each branch to recognize, praise, and congratulate employees for successful performance. Specific names and achievements should be discussed during these meetings.
  3. Encourage main office executives to visit the five branches on a weekly basis to ensure that the main office has not forgotten about them.
  4. Give employees a choice as to whether they want extra pay or time off when extra hours are put in each week.
  5. Let each employee know who he or she can talk to when there is a problem or when help is needed.
  6. Designate someone to ask employees how they wish to be rewarded so that when rewards are given, employees value and appreciate the rewards.
  7. Allow current employees of First Bank of Kamloops first choice when an opening occurs rather than posting the job opening in the newspaper.
  8. Send memos to every employee showing how each branch is making profits. Specifically, list how much profit each branch makes on a monthly basis. In the memos also recognize successful performance and outstanding employees. Let employees know what areas need improvements and how they can help management meet its goals.

Conclusion

To sum up, I have borrowed Thomas Jefferson words – “do you want to know who you are? Don’t ask. Act! Action will delineate and define you”.  It is important for companies to motivate not just to grow, but to have a happier world. Every man needs to be motivated, and groomed as efficient as possible. This will certainly remove all the ills of modern management, and make the organizations grow more as a unit, or like that of a sports team.

References

Braverman, R. (n.d.). Motivating employees at First Bank of Kamloops

Cherry, K. (2012). Theories of Motivation

Leonard, N., Beauvais, L., & Scholl, R. (1999). Work motivation: The incorporation of self-concept-based processes. Human Relations, 52(8), 969-997

Maslow, A. (1943). A theory of human motivation. Psychological Review, 50, 370-396.

Mathes, E. (1981, Fall). Maslow’s hierarchy of needs as a guide for living. Journal of Humanistic Psychology, 21, 69-72.

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Economics Essay Monetary Union

Balance of Advantages of the UK Joining the EMU and/or Using the Euro as a Functional Currency

Introduction

The Economic and Monetary Union is an agreement between participating European nations to share a single currency, the Euro and a single economic policy with set conditions of fiscal responsibility. There are currently 27 member-states of varying degrees of integration with the EMU.

Currently there are 16 member states who adopted the Euro: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, Spain, Cyprus, Malta and Slovakia. Further 3 countries including United Kingdom, Denmark and Sweden did not join the EMU even though they had an option to do so. Main reason for the UK not to join the Euro was the strength of the Pound and the British economy against the countries in the Euro zone. Joining EMU was predicted to cause economic problems in the country as European Central Bank would seize full power over the monetary policy in the UK including for instance setting benchmark interest rates. Economists are therefore divided into two groups: pro and cons the EMU. Aim of this report is to show on the example of invented for the purpose of the report Multinational Corporation (Insomnia plc) the influence of UK joining the EMU and/or using Euro as a functional currency.

History of Insomnia PLC

Insomnia plc is a UK based Multinational Corporation with their headquarters in Aberdeen, Scotland. The company was founded in 1987 by Mira Stavika. Insomnia designs, produces and sells luxurious clothing, shoes and accessories for adults and kids. The company has internationalized through subsidiary undertakings in Italy, Spain, Germany and France as well as international trade with India, where the clothing is manufactured and exported to UK. The special packaging for cloths is produced in Slovakia. Since 2001, the company is listed on the London Stock Exchange and the largest German stock exchange in Frankfurt (FWB Frankfurter Wertpapierborse). The corporation owns approximately 60% of each subsidiary.

Scope of Business

After importing clothing to the UK, Insomnia stores it and resells majority part of it to their subsidiaries at the 20% mark-up. The remaining part is being sold in the UK. Subsidiaries and parent trade the clothing in the Insomnia branded shops. Apart from the payments for the import of clothing, foreign entity has to pay to its UK parent the management fee for the administrative and managerial services it provides. Out of the profit the foreign entities obtain, 70% is re-invested in their business; the remainder is paid to shareholders in form of dividends. Almost 40% of Company’s debt is denominated in Pound Sterling where the remaining part (60%) is in Euro. Revenue of the company comes in 70% from Euro and 30% from UK braches in Pound Sterling.

Parent company uses Pound Sterling as a functional and reporting currency, whereas all of the subsidiaries occupying in the Euro zone, use Euro as a functional and reporting currency.

Monetary Union
Monetary Union

Current Exposures in  a Monetary Union

Insomnia plc trades mainly in the foreign markets. This exposes the company into a series of uncertainties mainly regarding the exchange rate of the currencies. Exchange rates cannot be predicted with the ideal accuracy, but companies can at least forecast their exposure to exchange rates fluctuations which comes in three types.

Transaction Exposure

Transaction exposure is the degree to which the short–to–medium term cash flows denominated in foreign currencies are affected by the exchange rate fluctuations. This type of exposure has direct and large effect on the value of the company’s earnings.

Insomnia is highly affected by this type of exposure due to majority of its operations denominated in foreign currency. Buying clothing from the manufacturers in India and selling these to their foreign subsidiaries highly exposes company. Depending on the economic conditions, value of Indian Rupee and Euro can change rapidly within short period of time (Even as much as 10% within a year; Madura, 2007). Invoicing of clothing imported from India is denominated in Rupee, so if the value of this currency appreciates against the Pound, payables of UK company will increase and adverse. Similarly sales of the clothing to subsidiaries are invoiced in foreign currency, the Euro, which can affect cash flow in the adverse way to Rupees. Transaction exposure affects debt as well. Due to the Euro/Sterling exchange rate increase by 16.3% in 2009, debt of the company increased significantly last year as 60% of debt is denominated in Euro.

Economic Exposure

Extent to which present value of company’s future cash flows are affected by the exchange rate fluctuations is referred as economic exposure. ‘All types of anticipated future transactions that cause transaction exposure also cause economic exposure because these transactions represent cash flows that can be influenced by exchange rate fluctuations. Economic exposure includes transaction exposure and indirect effects on revenue and cost. ’ (Madura, 2007)

Insomnia is exposed as well to the economic exposure. If the Indian Rupee appreciates against the Pound as in previous example, the company may need to increase the price of clothing sold in the UK and price of goods sold to subsidiaries as will have to pay more for the supplies. In this case, customers might shift their purchases to the cheaper clothes’ retailers both in the UK and Euro zone which will decrease export of cloths to subsidiaries and result in the reduction of the future revenues of the corporation. If Pound appreciates, home sales are expected to decrease due to the foreign competition as well. Basically, increase in value of Pound will result in a decrease in both cash inflows and outflows, and adverse. (Madura, 2007)

Translation Exposure

How does this affect a wider monetary union? Subsidiaries have their own accounting records, but in reality parent fully controls the entities. Parent company has to show its own and subsidiaries’ accounts in a consolidated manner through consolidated financial statement. To do so, there is a need to translate financial statements of all subsidiaries of different currencies into reporting currency of the parent, which is Pound Sterling.

As exchange rates vary over time, the translation of the foreign entity’s accounts is exposed to exchange rate movements called translation exposure.

Insomnia plc has to translate the Euro denominated financial statements of its subsidiaries to the Pound Sterling, which is governed by the Financial Reporting Standards (FRS 23) and the International Accounting Standards (IAS 21). Assets and liabilities should be translated at the closing date; whereas income and expenses at the exchange rates at the transaction dates (average rate for the period is allowed, if reasonable).

Translation exposure does not affect the cash flow directly, but investors base their decisions on the consolidated financial statements. When in 2005 Insomnia announced that its consolidated earnings will be negatively affected by the translation exposure to Euro, investors responded very fast by selling their shares of the company, which led to decline in value of the stock by 5%.

Hedging

What is the impact of hedging on a wider monetary union? Exchange rate fluctuation exposures affect the cash flows of the entity in a direct or indirect way. The main aim of hedging is to minimize the effects and the uncertainty of the exchange rates fluctuations. Hedging may as well reduce agency costs, expected tax liability, and the cost of financial distress. Insomnia uses forward contracts to secure the exchange rate of their transactions and thus minimize the transaction exposure. For payables it negotiates the forward contract to buy foreign currency, for receivables – contract to sell foreign currency. The company, being risk averse, uses forward contracts to minimize the economic and translation exposure as well. To minimize the cost of hedging, company first calculates the net transactions exposure in each currency for each of the subsidiaries, then hedge against this balance. Additionally, company invoices the exports to its subsidiaries in the same currency in which they will pay management fees and dividends to a UK parent. It cannot be done for the transactions with the suppliers in India and Slovakia.

Effects of the UK Joining EMU on Insomnia Plc

Creating single market forming free flow of goods, capital, services and people within the European Union was the main objective of creating the EMU. To adopt Euro, countries need to fulfill “Convergence Criteria” set out by the Maastricht Treaty, but benefits outweigh the hard to accomplish objectives of price, exchange rate and fiscal stability as well as interest rate convergence and an impact on a wider monetary union.

Cost Savings on Cross-Border Transactions

Increase in trade within the European Union is one of the main objectives of the EMU. It is supposed to increase the consumption possibilities. According to Rose (2000) trade within domestic economy is far higher than international. Joining EMU and having single market with other EU countries will significantly increase the trade by making it domestic. It could be a great advantage for the Insomnia. It is thought to be achieved through cost savings on the cross-border transactions. Trading across Euro zone is much cheaper due to no need for exchanging money to foreign currency, hedging or keeping high reserves of foreign exchange. This will speed up the transactions and decrease its cost. Insomnia will benefit from this as company already trades with the subsidiaries from the Euro zone. Joining EMU will decrease costs of trading with them, whereas leaving problem of high costs of trade with India unsolved. Staying outside the EMU could be a big disadvantage in case of Pound appreciation. Shall this happen, export and sales in foreign countries will decrease as price of company’s goods will be higher. If joining EMU, Euro fluctuations would not have an effect on the exports to subsidiaries.

So far, strength of Sterling against Euro has already resulted in the reduced UK exports, which in turn forced foreign investors to pull out of the UK (Gillette, Siemens) and many more threat to pull out if UK will not adopt Euro. For the economy it is a disadvantage, but it is in favour of Insomnia plc, as it will reduce the competition. However, today’s situation is not positive for the company as “investors come here [to UK] because we have lower taxes and less regulation than the Euro-zone.” (Dominic Cummings, F/T; 12/06/01)

Stability of Prices

Stability influences monetary union, one of the advantages of joining EMU according to the European Commission is having more stable prices due to anti-inflationary regulations by European Central Bank. It is to be done by setting benchmark interest rates (according to the Fisher Effect) and exchange rate. It will affect Insomnia indirectly. In the event of the crisis in one of the EMU countries it is very possible that ECB will adjust interest rates in all other countries regardless the domestic conditions of single states. UK economy then may become unstable and collapse unfavourably affecting cash flows of the company. The risk of this happening is large due to high Euro volatility comparing to Dollar and Pound since it was introduced.

However, price stability can bring more advantages than the disadvantages to the Insomnia. Creditors being sure that prices will remain stable in the future are more willing to lend at lower interest rate which encourages domestic investments. Historically, UK interest rates have been higher than in the Euro-zone. In case of higher interest rates in the country, it may attract foreign investors in putting funds into Insomnia, but customers are more willing to save money rather than spend on clothing. Controlled inflation, stabilized prices and elimination of exchange rate fluctuations result in the ease of making long term investment decisions, planning and borrowing for Insomnia. (“Stability: Why is it important for you?”; ECB, 2009)

Price Transparency in a Monetary Union

Price transparency of a monetary union is driven by the price stability. When joining EMU, costs of the same goods across the whole Euro-zone will be much easier to compare. Prices of the Insomnia plc are relatively more expensive than the competitors, revealing it will lead customers to shift their purchases to different retailers. This might effect in the downwards pressure on prices and make it harder to keep different pricing policies on similar quality and use products. It is a big advantage for customers, but not for the Insomnia businesses. On the other hand, price transparency might help the company to find and work with the new, cheaper suppliers of clothing’s packaging. In addition, if Insomnia wants to set up a new subsidiary in the Euro-zone country, can easily compare costs of doing so among various locations. Stock prices of EMU countries are more comparable and prices are more stable as well, so it is easier and safer for the foreign investors to chose and invest in stock of Insomnia. Although, highly correlated markets decrease the diversification of the European investor.

Other Effects

Joining Euro will effect in long-term savings on the book-keeping. The Company has to hire people and keep tracks of costs, expenditures, margins etc. in various currencies. These costs will be reduced due to single currency used by the parent and subsidiaries. On the other hand, the disadvantage of one currency would be the cost of change over. This will require staff training, new tills software as well as labelling. Using Euro by UK might make company’s products more attractive to Euro zone customers due to easier purchases of goods online with no exchange rate uncertainty.

However, contrasting to the UK, in the Euro zone there is a VAT fee on children clothing, which will increase the price of such company’s items. It is a disadvantage for the clothing company. (Stephen Castle, the Independent, 15/07/03)

The level of hedging in Insomnia will be significantly decreased. Due to having Euro as a functional currency, company’s transaction exposure will be minimized drastically, due to having majority of transactions denominated in Euro. Insomnia will have to hedge only against the Indian Rupee. Economic exposure to exchange rate fluctuations will be decreased as well due to majority of the company’s operations based in the single, highly integrated market. Appreciation or depreciation of the Euro will not have an effect on the price of goods relatively to the competitors, trade or competition itself within the EMU. It will influence only trade with India and only Rupee will have to be hedged against. Translation exposure will be eliminated. As company needs to translate only the financial statements of its subsidiaries within the EMU, there is no need for this, therefore any need for hedging.

Using Euro as a Functional Currency of Insomnia Plc

“Functional currency is the currency of the primary economic environment in which the entity operates. The primary economic environment in which an entity operates is normally the one in which it primarily generates and expends cash.”(IAS 21) Insomnia considers the choice of the functional currency based on the factors stated by the IAS 21:

  1. The currency: That mainly influences sales prices for goods and services (this will often be the currency in which sales prices for its goods and services are denominated and settled); and of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services.
  2. The currency: That mainly influences labour, material and other costs of providing goods or services (this will often be the currency in which such costs are denominated and settled).

According to the factors stated above, Insomnia should change its functional currency into Euro. The effect of this action will be similar to joining the EMU. Insomnia having Euro as a functional currency will benefit from the fixed exchange rate and reductions in cost of managing currency risk, speed of Euro transactions as well as price transparency. UK market will not be highly integrated with the Euro zone, as it would be in case of joining EMU. Insomnia would not be able to gain from the lower interest rates and stable prices. Obtaining cross-border funds will be easier when having Euro as functional currency, but due to prices being less stable, the cost of financing will be slightly higher than in the EMU. VAT on children clothing will not be introduced giving an advantage to Insomnia. Hedging will be decreased as well. Transaction exposure will be minimized, but by less than when joining EMU. There will be a need to hedge small amounts against receivables in Pounds and payables in Rupees as the majority of transactions are denominated in Euro. The company could easily reduce the exposure even more by invoicing in Euro, shifting this way the exposure down the supply chain. Economic exposure will be slightly decreased. In opinion of the report’s author, appreciation or depreciation of Euro throughout the EMU will not have an effect on the company or its competition. Although, UK will not be consistent with the single market, interest rates and inflation of the EMU zone, which may cause the differentiation in prices of the same goods (no price stability). Translation exposure will be shifted from translating from Euro to Pounds, to translation of Pounds to Euro. Exposure will be however decreased due to only 30% of revenue coming in Pounds.

On the other hand, it is argued (E. Christie; A. Marshall) that there is no connection in reduction in hedging with the decrease in risk. According to the article, the majority of UK MNCs using Euro as functional currency stated that there is no reduction in hedging. Author of the report argues with this opinion. It is probable that questioned companies had different levels of trade with the Euro zone states. Insomnia plc has its majority of operations focused within the EMU zone, therefore the advantages of reduced risk will benefit in lower incentives for hedging. Moreover, hedging policies could stay unchanged due to the different types of risk (non currency) faced by the companies. According to the article, using Euro did not encourage companies to expand internationally, which illustrates currency exchange risk as only one of the factors influencing investment decisions.

Conclusion

UK joining the EMU will bring Insomnia Plc lots of advantages. Stable prices, elimination of the exchange rate uncertainty leading to cost savings on the cross-border transactions, price transparency, possible growth, easier accessible borrowing, higher stock liquidity and decrease in hedging are just the major benefits to the company. However, there are factors which can influence the corporation in a negative way including not always favorable price transparency or additional costs of change over. Similarly, using the Euro as a functional currency involves its advantages and disadvantages, but the last have greater power than in the case of joining the EMU. It is decided that main exposures of the company involve the exchange risk; therefore reducing this uncertainty will be significantly beneficial to the Insomnia plc in the short and long term.

References

Anon, An Analysis on Whether UK Should Join the Euro

Artis, M., The call of a common currency, Europe without Currency Barriers, paper no. 3

Buckley, A., 2004. Multinational Finance. 5th ed. Edinburgh: Pearson Education ltd.

Castle, S., 2003. Britain fights EU plan for children’s clothing tax.

Christie, E., Marshall, A., 2001. The Impact of the Introduction of the Euro on Foreign Exchange Risk Management in UK Multinational Companies. European Financial Management, Vol. 7, No. 3.

Currie, D., 1997. The pros and cons of EMU

HM Treasury (1997), UK membership of the single currency: An assessment of the Five Economic Test

Rose, A.K., 1999. Does a Currency Union Boost International Trade?

International Accounting Standards. ,2009,IAS 21, The Effects of Changes in Foreign Exchange Rates

Madura, J., Fox, R., 2007. International Financial Management. London: Thomson Learning.

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