Childhood Obesity

Physical inactivity, nutrition, genetics and psychological factors are the main causes of prevalence in childhood obesity

Sources: Langwith, J. (2013). Childhood obesity. Detroit: Greenhaven Press

This book by Jacqueline gives an overview of what childhood obesity encompasses. In the book, she talks about childhood obesity being a global health concern and health risk factors associated with childhood obesity. She also talks about the various causes of childhood obesity. They include Type II Diabetes, cardiorespiratory diseases, cancer, and hypertension, stroke, and sleep apnea and liver disease. She argues that children who are obese have a high risk of having a shorter life expectancy and also the controversies surrounding childhood obesity.

In her book, she talks of two main causes of childhood obesity which are genetic factors and stress, the effectiveness of anti-obesity programs, and whether bariatric surgery is appropriate for children the role government should play, focusing on contributing factors, and personal stories of people dealing with childhood obesity. This book is a credible source that will prove useful in the final research paper since it gives detailed information on the issue of childhood obesity. Jacqueline provides general views and clear evidence, and she is not biased in any way. This book will be useful in putting up a strong argument on genetic and psychological factors being causes of childhood obesity. (Langwith, 2013)

Jimerson, M. N. (2009). Childhood Obesity, Farmington Hills, MI: Lucent Books

The author of the book touches on childhood obesity, by talking about what it is its causes and the effects it has on the affected kids, its health risk factors, how it is to live with it as a child and future prevention measures. He says that childhood obesity could be prevented if parents carefully determined the environments they bring up their children. By parents and guardians encouraging their kids on healthy eating habits and an increase in participation in physical activity, cases of childhood obesity will be reduced. He urges parents to maintain their kids body weight, reduce the number of adverts promoting unhealthy food.

To support the suggested preventive measure, he provides information about medical issues of childhood obesity such as diabetes, emotional problem. This book is a credible source in the research as it talks about the main causes of childhood obesity. The book’s details are based on evidence making it of undoubted quality. The book having discussed diet and physical inactivity as the main causes of childhood obesity will help me in arguing out my case (Jimerson, 2009).

Juettner, F. B. (2010). Childhood Obesity. San Diego, CA: Reference Point Press

This book is a reliable and provides unbiased information on the issue of childhood obesity. Source to research on whether physical inactivity, nutrition, genetic factors and psychological factors are the main causes of prevalence in childhood obesity; The books discusses in depth on the origins of childhood obesity, how much of a problem childhood obesity has been all over the world. It also focuses on the causes of obesity which the author discusses in depth. He also tries to answer the question: can obesity in children be prevented and can it be reserve. It also discusses a few controversies that exist on the issue of childhood obesity. The information in the book goes a long way in helping one understand childhood obesity better and what exactly it entails. This source is credible and can be used towards the final projects. The book will provide information to strengthen the argument that the main causes of childhood obesity are physical inactivity, nutrition, genetic factors and psychological factors (Juettner, 2010).

Smith, J. C. (1999). Understanding Childhood Obesity. Jackson: University Press of Mississippi

The author of this book talks of physical inactivity as the main cause of childhood obesity. He urges growing children to exercise daily to help them grow healthy and avoid cases of childhood obesity and the health risk factors associated with it. He outlines the type of physical activities that kids need to undertake, through the help of their parents to remain physically fit. By parents acting as role models to their children in terms of physical activity, obesity in children will be reduced. This will act as a source motivation and could influence the child to do the exercises by themselves at a different time to help reduce some of the weight they have. This book is a reliable source to the research paper as it will because it in figuring out what motivates the child to exercise; is it an incentive by their parents? It will give an understanding on the causes of childhood obesity or is it through only bad eating habits. The information quality of this book is great though it does not focus on all the causes of obesity. This source is supportive to the argument that physical inactivity is associated with childhood obesity (Smith, 1999).

Childhood Obesity
Childhood Obesity

Institute of Medicine (U.S.). Koplan, J., Liverman, C. T., Kraak, V. I., Institute of Medicine (U.S.). & Institute of Medicine (U.S.). (2005). preventing childhood obesity: Health in the balance. Washington, D.C: National Academies Press

The authors of this book talk more on the extent of childhood obesity and the consequences it has on children with it. It also develops an action plan to fight with childhood obesity and make it a national public health priority. The authors also try to create awareness on the existence of childhood obesity through advertising, public education, through the media groups. This information passed to the local communities, homes and schools to help them eradicate the issue of childhood obesity in the society. This book is a credible source in the research paper as it talks about of the preventive measures of childhood obesity. The book mainly looks at childhood obesity in the United States and may seem biased to other areas in the world. The book will only help in arguing out what the consequences of childhood obesity are (Koplan, Liverman and Kraak, 2005).

Dehghan, M. Akhtar, N. and Merchant, A (2005) Nutritional journal: childhood obesity, prevalence and prevention

This article talks more on the causes of childhood obesity such as physical inactivity in that, children prefer playing video to having healthy activities such as swimming or playing in the playgrounds, poor dietary such as high caloric intake, foods with a high level of sugars, genetic factors, how cultural environment influences obesity among children and psychological factors. Impact of advertising junk food and also the preventive measures towards eradicating childhood obesity such as Parents being role models to their children on healthy eating and exercising at an early age. The article has a lot about the health risk factors associated with childhood obesity like type II diabetes, cardio respiratory diseases and stroke. It is a credible source as it has detailed information on the causes and prevention of childhood obesity. The information in the article will strengthen the argument on how poor diet or nutritional habits cause childhood obesity (Dehghan, Akhtar and Merchant, 2005).

Donahue, E. Paxson, C, Haskins and Ron (2006) Future of children: fighting obesity in the public schools

The article acknowledges how childhood obesity has increasingly grown the United States. It recognizes efforts schools are making toward fighting childhood obesity and encourages that more should be done such as including physical activities in the schools’ curriculum and making it mandatory as it will increase the chances of every child being physically active. Also, the article gives detailed information on how and why the government should take part in fighting this pandemic of childhood obesity. Information on the call to take action from congress to put more restrictions on the diet program in the school system; It gives more detail on setting up detailed goals and objectives for change in public school thus making it a credible source (Donahue, Haskins, Paxson and Ron, 2006).

Clinic, M (2006) Child Obesity

In the article, it is clear that childhood obesity is a serious problem globally and especially the industrialized nations. The article continues to give an explanation on the main causes of childhood obesity such as eating fast foods, foods with a high level of sugars and the e health risk factors associated with childhood obesity. It explains the processes of diagnosis and screening, effects it has on children and preventive measures that can be taken. This article is a very credible source in the research paper as it has detailed information on the causes of childhood obesity. Though it has great information, it lacks to provide enough supporting material of their conclusions (Mayo Clinic, 2006).

Centers for Disease Control and Prevention. (2010.) Childhood Obesity

This source states the many facts which have accrued as a result of childhood obesity. It shows how cases of childhood obesity have increased over the past thirty years with a higher percentage of children in the United States of age6- 11years being obese. This source defines obesity as having excess weight for a particular height. The causes of obesity Are also given in this article such as high caloric intake, environmental factors, genetic factors, behavioral factors and physical inactivity. It is clear that kids are the most affected and fall in this unhealthy balances and standards. This is a very credible source as it has information on the causes of childhood obesity as it also gives the preventive measures of this disorder among children. This source is very credible since it provides statistical evidence on issues relating to childhood obesity. The article looks at childhood obesity in the United States and may be questionable in terms of quality when talking about obesity globally. The source will support the argument that childhood obesity is on the rise (Centers for Disease Control and Prevention, 2010).

Centers for Disease Control and Prevention. (2006). Nutrition and the Health of Young People

This is a helpful source as gives more information on healthy eating, associated with the reduction of diseases associated with poor diet such as heart diseases, diabetes, cancer and stroke. Information on healthy eating among kids is given in order for the proper growth of children and prevents cases of child obesity. The article gives detailed guidelines for a recommended diet rich in grains, low fats dairy products, fat free for children. Schools are also are able to promote healthy eating among children by ensuring that only nutritious and the. The school food programs should provide appealing foods. Also, physical activity and nutrition program should be included in the school curriculum. The source will be supportive in the argument that poor diet causes childhood obesity (Centers for Disease Control and Prevention, 2006).

Did you find any useful knowledge relating to childhood obesity in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.

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Pharmaceutical Industry Analysis

Analysis of The Pharmaceutical Industry

Title: Analysis of The Pharmaceutical Industry. The pharmaceutical sector comprises of drug manufacturers, distributors and wholesale companies that handle the production of healthcare products. This industry largely focuses on medical as well as veterinary products, such as vitamins, biological compounds and other chemicals. Moreover, various diagnostic substance and devices are also included in the list of the products produced by these companies. The leading companies on the pharmaceutical sector are called as ‘Big Pharma’ that are responsible to generate almost fifty percent of the total revenue of this industry. The headquarters of these pharmaceutical leaders are mainly located in the west, however with the passage of time, the demand of medications is increasing in the third world countries consequently this drug manufacturing has become fifth most profitable industry in the world that is continuously growing. The following paper will illuminate various spheres of activities in this industry. It will be seen how these companies are surviving in a competitive environment and what it actually takes to become a pharmaceutical manufacturer.

Introduction

The pharmaceutical industry, as the name indicates is associated with the development, production and marketing of products that are intended to be used as medications. This industry comprises of various pharmaceutical companies that are legally allowed by the government of a country to deal in brand or generic medicines. There are various rules and regulations all over the world that are considered useful to ensure efficacy and safety during the marketing of pharmaceutical products as they are directly associated with the human life. This industry also largely relies on research and development activities and is the largest employer of scientists. Many new medicines are being developed in the world and with the discovery and identification of new drugs the future of pharmaceutical industry is becoming brighter (Michael, 2012).

The aim of this paper is to increase understanding about the global pharmaceutical industry and its role in the healthcare system of a country. It will also be seen how this industry contributes to the economy and what major players are there in the global pharmaceutical industry.

Background and History

The origin and development of pharmaceutical industry dates back to the early days when Greeks, Egyptians, Chinese and Indian people tried plant derived medicines. Morphine, codeine and pilocarpine are some primitive drugs. In 1940’s insulin, antibiotics and psychoactive medicines were brought into the market that received remarkable response from the users. The US first   introduced its food and drug administration act in 1906 and the UK drug regulatory rules were developed after World War I, since then these rules have faced various amendments regarding the marketing and distribution of drugs in these countries. Despite various conflicts between retailers, marketers, consumers and drug inspectors, this industry quickly thrived all over the world (Anderson, 2005).

Literature Review

Henske 2009 sheds light on the current situation of the pharmaceutical industry. He demonstrates that this industry is passing through some major structural changes. A lot of mergers, acquisitions (M&A) are underway in order to ascertain stability and success in the long run. Some major pharmaceutical companies are trying to generate higher revenues with these M&As. Although, bigger size of a company is not the sole reasons for its success but even then some important advantages can be achieved with such joint ventures, because bigger drug manufacturing companies invest more in their research and development procedure that finally allow them to diversify their portfolio (Henske, 2009).

For Instance, in 2003 a prominent acquisition took place between Pfizer and Pharmacia soon after which Guidant bought Johnson & Johnson in $25 billion. These acquisitions greatly helped both of the newly developed companies to enhance their market share in the US market. These companies further elaborated their research and development process.

These joint ventures are also not very uncommon in the UK, for example major companies in various states of the UK have developed after mergers and acquisition amongst two or more than two companies. For example:

  • Merger between SmithKline Beecham and GlaxoWellcome results in GlaxoSmithKline
  • Merger between Aventis and Sanoffi Synthelabo creates Sanoffi Aventis

Grieder undergoes the analysis of the major pharmaceutical players and shows that these are not diversified rather major source of revenue generation for these companies is their pharmaceutical products. Although some companies, such as Johnson and Johnson’s is involved in the production of other goods as well but in majority of the cases pharmaceutical industries have their focus on the manufacturing of consumer’s healthcare products and nutritional products (Grieder, 2007).

Statistical Analysis

Grieder 2007 demonstrates that there are some major players in the pharmaceutical manufacturing that actually dominate this industry globally. Following table shows the position of these industries in terms of sale and revenue generation. The financial data has been gathered from the annual reports of these companies to ease accurate comparison between all these companies; moreover, the data related to pharmaceutical manufacturers working outside the US has been converted into dollars using average currency rates in 2004.

Company Name Headquarter Annual Revenue Total Sales
Johnson and Johnson US                           22,190                              47,230
GlaxoSmithKline US                           23,434                              37,897
Pfizer US                           46,133                              52,506
Sanofi Aventis France                           17,861                              18,711
Novartis Switzerland                           18,497                              28,244
AstraZeneca UK                           21,426                              21,426
Abbott U.S.                           13,600                              19,680
Wyeth U.S.                           13,965                              17,684
Bayer Germany                             5,458                              37,013

Table courtesy: (Grieder, 2007).

The above data also reveals that the headquarters of major pharmaceutical companies lie in the US or other Western countries, such as France and Germany. Only a few international drug manufactures are there in Asia (Grieder, 2007). Following chart shows how these companies rely largely on Western markets for maximum profit generation.

Research and Development

Research and development activities are essential for the success of pharmaceutical companies and major players in this area put great focus on the development of new products. This phenomenon is not very simple because it needs a lot of hard work and investment from Big Pharma companies. Sometimes research process involving one or two drugs needs many years, moreover the investment of resources remains unclear until the end of the process that also involves the approval of newly synthesized drug for marketing, therefore, it can be said that rate of success is highly unpredictable in the pharmaceutical industry (Noack, 2007).

According to a report, it takes almost fifteen to twenty years for a company to develop a new pharmaceutical product and only one out of thousands of pharmaceutical products discovered by research teams become medically useful. Moreover, the introduction of these products into the market involves many legal issues (National Science Foundation, 2001).

Growth Perspectives

The drug manufacturing industry promises appropriate healthcare for the citizens of a country and in turn, these people directly or indirectly aid in the growth and development of pharmaceutical industry. The life expectancy is increasing in some developed countries of the world after which the population of these countries is becoming older and grayer. All these elderly people are buyers of life maintaining drugs and continuously demand the healthcare products sold by these Big Phrama companies.

Along with that, some countries of the world including various states of the US are going to introduce their new drug sale act (Drug improvement and modernization act) after which elderly people of these states will be able to have their access to some medicines that were previously unavailable for them. As a result their drug coverage will increase and the sale of relevant pharmaceutical products will also enhance (Aronovitz, 2005).

Situation in developing countries

The above literature review suggests that major pharmaceutical companies have their headquarters in developed countries of the world, but recently some pharmaceutical companies in developing countries have also shown prominent improvements in their research and development activities, after which it can be said that these companies have significant potential for future growth. Increasing solvency of population in Asian, South American and East European economies is making these countries very attractive for investment. However, further reformations in the rules and regulations regarding drug sale and patent protection are required in order to ensure safe and trial free business (Blumberg, 1999).

Pharmaceutical Industry
Pharmaceutical Industry

Despite being an attractive business, the pharmaceutical sector needs a lot of efforts from individuals who are involved in it. Opportunities are limitless but issues are also there that should be taken into account by the management before planning final strategies of their companies. In this regard the management needs to consider some key challenges that are there for them before taking the plunge into this sector, these challenges will be discussed one by one the following paragraphs:

Price Control Issue

The pharmaceutical sector needs to work in a highly regulated culture, although details are different but this culture is almost same all over the world. One important aspect of these rules is price control issue. For example in the U.S. Medication Protection and Modernization Act has resulted in severe price reduction pressure over this industry after which it becomes difficult for companies to support their research and development activities. This downwards pressure on prices is also very prominent in other countries such as Japan, France and Germany. Drug prices are subjected to strict review and they are solely controlled by the government (Lott, 2007).

Competition

The pharmaceutical industry currently operates in a very competitive environment. New rivals are merging for Big Pharma companies and this competition covers almost all segments of pharmaceutical marketing. Moreover, research oriented pharmaceutical companies also face severe competition from generic manufacturing companies. The price of generic manufacturers is much lower than that of their research oriented counterparts; finally they successfully achieve greater market shares (Roth, 2009).

Patent Protection

Research oriented companies can only be saved in a highly competitive environment by the introduction of patent protection rules and regulations because generic drug manufacturers start production of a patent protected analogue before a patent expires, consequently R&D companies face enormous financial loss.

Conclusion

The pharmaceutical industry has been an attractive business place for entrepreneurs and also for people involved in research and development activities, however, now the situation is changing fast. Immense competition is there for Maga Pharmas from generic manufactures and other healthcare companies that are involved in the production of pharmaceuticals. Therefore it must be stated that this industry sounds easy and attractive but must be difficult involving great risks. Companies that want to survive should keep a strong eye on the current market scenario in order to avoid loss and ensure maximum growth, moreover, mergers and acquisitions also turn out to be helpful for some companies because they augment their growth opportunities in the global pharmaceutical industry.

References

Anderson S., 2005, Making Medicines, Pharmaceutical Press.

Aronovitz G. L., 2005, Medicare Contracting Reform, DIANE Publishing.

Blumberg, 1999, Pharmaceutical Industry in developing countries, Conference Summary.

CPPR, Pharmaceutical Research centre, National science foundation.

Grieder K., 2007, Big Fix, Public Affairs.

Harper, 2002, Patent protection in pharmaceutical Industry, Forbes.com

Henske P., 2009, Mega Mergers cannot cure pharmaceutical industry, Business Week.

Lott R. J., 2007, Freedomnomics, Regnery Publications.

Michael J., 2012, The pharmaceutical industry, Michigan State University.

Noack A., 2007, Research and Development in pharmaceutical Industry, GRIN.

Roth T., 2009, Drug makers paying off to competitors, TPM Links.

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Innovation and Technology Usage on Business

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Online Education

Growth and Acceptance of Technology in Online Education

Online education has become a common phenomenon in education since the advent of the internet and globalization. However, even though online education has a great potential to result in effective educational experiences, it will often be received with apprehension in order to ensure that the students receive it better. Unless there is a clear comprehension of online education from the perspective of the student, students will be more inclined to drop out of the learning platform as soon as they learn that they do not need to keep on with online education. This problem results in a general problem of not persisting with online education, which in turn leads to attrition (McMahon, 2013). This problem has been identified in most nations that have established online education, such as the United States.

The main component of online education is technology without which the idea would be nonexistent. Hence, understanding online education also means understanding how people interact with technology in an educational setting (Tirrel & Quick, 2012). The information society that has become the norm today requires that individuals go an extra mile to gain expertise on the technological front. In addition, the educational system has had to catch up with this recent trend by integrating services with technology. Since, as An and Reigeluth, (2011) suggest, traditional factory models of education are incompatible with the modified demands of the society and education.

One of the most unique qualities of technology is that it is an end in itself and it is also a means to an end. Hence, it is not just a change in the educational platform, but it also inspires changes in other sections of education. For instance, online learning has enabled distance learning which has in turn led to the enrollment of more adult learners. Because of socioeconomic qualities that are unique to this group, they face a unique set of challenges and therefore interact uniquely with technology in online learning.

Theoretical and Conceptual Framework

In this new age of information, there have been great changes in the way things work around the world. Technology has become synonymous with almost every aspect of life, including work, education, and social life. The way people relate to each other has changed, and so has the thought processes used by people in decision making. These aspects of human life in turn affect the academic outcome and execution of academics. This is because it is the same individuals who are affected by technology who are charged with the task of developing education policies (McCarthy, 2010). In essence, it affects how people learn things. Learning is not just affected by policies, but also by the culture around which the individual who is learning grows within. Older generations that grew up at a different time have a slightly different way of looking at the world, and so does the younger generation. This will in turn affect the possible strategies that can be used to inspire their participation in online education. Online education has led to the development of a new learning method whose success is contingent on the features of the learner. Constructivism calls for the development of learner centered teaching it these features are to be used to the student’s advantage (Taber, 2011). The theories developed to explain these changing perceptions are critical in helping people understand more about teaching methods and student perceptions.

The online learning platform has brought about a new concept of learning and information sharing. This is even more profound owing to the advancement and proliferation of the internet as a source of information. It is likely that those engaging in online education also have access to the internet (McCarthy, 2010). Even though the internet is a source of valuable information, its access should be managed effectively, as well. Rather than doing the managing for the students, the teacher should teach the students how to do the managing then let them do their own management. Constructivism calls for students to be taught how to deal with the problem, and others like it on their own (Tirrel & Quick, 2012). This section will explore constructivism, adult learning theories and the theory of diffusion, as they are applicable to online education. The theory of diffusion helps in understanding the adoption of technology in classrooms and in teaching.

Adult learning and online education

Hanover research (2012) examined research related to the different trends in online education within institutions of higher learning as well as undergraduate programs for adults and the pedagogical strategies used in adult online education. Online education offers adult learners an opportunity to fast track their courses and this is important for them. Hannover research (2012) found that adult learners preferred accelerated and fast tracked courses that they could complete in a timely basis. Parker et al (2011) therefore concluded that blended or online courses therefore attract adult learners because they conveniently allow them to attend to family obligations and work while at the same time completing their education. According to Andragogy, this helps them fulfill their need for self-concept in that they can direct their own learning experiences (Chou, 2012). The need to feel self directed is a result of the adult being in a different place mentally owing to their experiences and their constructed reality. Therefore, as Chou (2012) concludes, they have a need to be in charge of their own experiences. This is in tandem with the assumption of andragogy that the adult is an individual who has accumulated numerous life experiences that offer a rich resource for learning (Chou, 2012). Through their experiences, adults built their own realities and mental processes that they use in their educational processes.

Within the United States economy, training and education are critical to economic survival. There is a great variance in the results of the number of additional educational services to secure descent jobs (Parker et al, 2011). However, it is claimed that the present classroom programs cater only for between 3 to 5 % of the adult population in need (Seaman, 2011). Even though classroom capacity to handle these students has increased over the years, this does not meet the needs of adult learners as needed. Distance education is one of the ways that this need has been met. Online education has become popular among adult learner with more of them enrolling in this type of education. Based on the andragogy theory, the adult is motivated by internal rather than external factors (Chou, 2012)

The profile of today’s learners has revealed a trend that cannot be ignored by academic institutions. Half of the population in the world is aged below 20 years and about two billion teenagers live in developing nations (Parker et al, 2011). Most of the learners entering the higher education system are familiar with technology more so than previous generations. These learners will likely also demand that the pedagogies they are offered are e based and based on digital technologies (Seaman, 2011). These changes will in turn affect adult learners who have chosen to come back to the classroom and gain more skills and knowledge as demanded by the new technologically savvy era. Traditional learners in higher education institutions are now increasingly being joined by adult learners, especially on the online platform (Hanover Research, 2012). Hence, adult learners are pursuing adult learning as a transformative processes which is meant to make them better at what they do at work so that they can be a greater societal contribution. Transformative learning stipulates that adults have accumulated a number of experiences, perceptions and expectations that they therefore use in pursuing education.

Despite the potential that online education has, it also has its challenges and especially to adults. When the requirements for online learning are considered, including a computer connected to the internet, minimal competence in computer operation and knowledge on how to access information on the internet (Sitzmann et al, 2010). When the ratio of those who may use online education is weighed against those with the ability to meet the requirements, few adults can access online education. Some adult learners still use outdated computers that are yet to be connected to the internet (Sitzmann et al, 2010). These individuals may have refrained from updating their computers since they did not have a need to. Hence, adult learners are bound to incur additional costs of updating their computers.

According to Lee and Choi (2011), online courses are more attractive to adult students because they do not have additional restrictions, such as place and time. Chou (2012), concluded that self directed learning attracted more adult learners because it allows them to make their own rules. However, this is not always associated with success in online learning courses (Chou, 2012). With the rapid development of educational technology, online learning has grown significantly, and word of the possibilities of distance learning has become more appealing (Beck & Milligan, 2014). Adult learning has been adopted as part of online education, especially for individuals who may have opted for other choices rather than going to college immediately after high school. It should be noted that Lee and Choi (2011) found that high school students engaging in online education had the highest rates of online education. In order to reduce the rates at which adults drop out of online education, it is important to classify and codify the reasons why adult students drop out of online learning (Allen & Vince, 2011). Self directed learning gives the student a greater perception of control over their learning environment and their education which in turn appeals to their learning requirements (Chou, 2012).

However, this will not be enough to help in decreasing dropout rates, especially since attrition is a complex phenomenon that involves varying human behaviours (Grau-Valldosera & Minguillon, 2014). Attrition in adult learning has not yet been explored extensively, which leaves little evidence on which to base the practice of student retention (Hart, 2012). Online learning is especially beneficial to adult learners living in rural areas. Adult learners are a special group in online learning because they make up a majority of the students taking online courses. Keradima (2012) estimates that over 82 percent of students taking online courses are adults. In addition, they are mostly raking undergraduate courses. Other than that, about 33 percent of college students in the United States have taken at least one online course.

Theory of Diffusion

The theory of diffusion by Rodgers is applicable in this context, in that it explores the diffusion of innovation. The theory was employed as a framework for a study carried out by Jwaifell and Gasaymeh (2013) to explain the degree that English teachers adopt technology within modern schools in Jordan. Like with most other researchers, like Zhao (2011), Jwaifell and Gasaymeh (2013) also found that training workshops were necessary for the successful integration of technology into a teaching environment; hence, online education is only as successful as its implementation. According to Kervin, Varenikina, Wrona and Jones (2010), technology as an end in itself is not a remedy to an educational system, but it is perceived as useful relative to the needs it is meeting on academic. The success of the learning outcome is what will determine the success of technology in academia. Online education can, therefore, only be considered successful if it results in a successful outcome for students. Attrition and other negative perceptions of students indicate that there is a problem with the adoption of the new technology.

Jang and Tsai (2012) advocate that, effective technology is one that facilitates the teaching process, explicates complex concepts, increases operational interaction between teachers and students, and retains student’s attention. Technology will be successful if the technology’s diffusion is directed and efficacious. In this context, diffusion refers to the process that result in the communication of an innovation through particular channels and among individuals within a specific social system (Henson &  Kamal, 2010). The adoption of these new innovations begins with a small group of individuals, then spreads. Online education is itself an innovation, and it is also a source of other innovations. Once new methods are developed in online education, it spreads to other practitioners of online education, as well. Adoption as a decision process requires that the potential adopter collect adequate information about the technology and consider whether it gives one the upper hand in education. As a result, people explore new technologies and experience their effectiveness before they decide on whether or not to accept it (Jwaifell & Gasaymeh, 2013). The acceptance of online education contains some aspects of social change, and the theory of diffusion offers valuable insights into the processes of social change. Qualities such as relative advantage, compatibility, ease of use and simplicity, triability and observable results determine the level of attrition toward a technology.

Constructivism in Online Education

The constructivist approach to understand the nature of learning has been a part of traditional educational perspectives for a long time. However, the modern form (Taber, 2011) is based on how students make sense of their learning experiences. As a result, it’s not about the subject of what they learn, but about their entire learning experiences, including the process of gaining, retaining, revising, and assessing knowledge. According to Taber (2011), this shift in the comprehension of constructivism may be attributed to the changes in the location and meaning of the learning environment. Online education changes both the meaning and experiences of the learning environment, which in turn prompts a different understanding of the constructivist perception of learning. Jean Piaget was a proponent of constructivist ideas and suggested that learning should be a search for meanings (Ültanır, 2012)

The learning process is constrained and channeled by the nature of one’s cognitive processes and apparatus that already has built in biases; hence, if an individual already has a negative attitude toward technology, their use of online education will show attrition toward the learning method. As an individual develops, so does his ability and capability to understand and comprehend particular information. Piaget argues that the mind understands different things at different stages of development (Ültanır, 2012). According to Weegar and Pacis (2012), Piaget proposes that learning results in cognitive development which is a product of the mind; it is achieved through experimentation and observation. The online learning context gives an individual more elements to experiment and observe virtually which helps them learn. The learning process depends on the cognitive resources that are available for one to use in interpreting the information (Henson & Kamal, 2010). The major point from this is that learning is rarely about helping learners get knowledge from scratch. Instead, it is about building up to the conceptual and cognitive resources available to the student. As Piaget suggests students create their own mental processes and knowledge by interacting with different things in their environment which in turn modify their cognitive processes (Weegar & Pacis, 2012).

Online Education
Online Education

Teaching, therefore, involves activating the relevant ideas that are already available to students, which in turn helps them generate new knowledge. These students, therefore, need to be guided, or they will build their knowledge on incorrect, irrelevant, or particle existing knowledge. Online education is filled with a wealth of knowledge, which makes it important for students to be guided. However, it should be noted that the teachers will play a limited role, as argued by Piaget, with the student playing a bigger one (Ültanır, 2012). On the same breath, Tirrell and Quick (2012) found that constructivist learning theories are effective in developing instructional practices for online student engagement; it promotes increased engagement of students in online education. In their study Tirrell and Quick (2012) found that, higher scores in classes undertaking online education were adhering to principles that are common in traditional classrooms. On the other hand, lower scores were associated with strategies affiliated with non-traditional and more innovative principles, such as encouraging students to work together and encouraging them to participate in active learning within an online education environment. These results indicate that instructors and faculty within higher learning, academic institutions remain largely uncomfortable and unfamiliar with constructivist principles of learning that are meant to encourage the engagement and participation of students (Barrera, 2013). If effective learning is to be ensured, teachers should be made aware of these new and more effective teaching methods. In addition, online education should also include different learning styles and assessment methods to address the needs of varying learners. Students cannot understand information unless it is customized to what they know. Piaget suggests that people cannot understand raw information but transform the knowledge using what they already know (Ültanır, 2012). A computer is only a computer if the student already knows something about computers.

Creating a learner-centered classroom

An and Reigeluth (2012) suggest that technology integration in learning can be sued as a tool for creating learner centered classrooms. Online education should focus on creating problem based learning environment, which in turn promote the use of technology within learner centered contexts. In their findings, An and Reigeluth (2012) imply there is a need to support teachers – by extension, academic institutions – as they endeavor to create learner centered classrooms. This support is not just through the provision of resources, but also be availing and providing additional training (Barrera, 2013). Currently, most institutions focus their attention on training in technological knowledge and skills while overlooking the important relationship between content, technology, and pedagogy. Consequently, teachers gain new interesting knowledge, but fail in the application of the knowledge to practical learning situations.

As noted by McMahon (2013), open and effective communication is critical to the development of a learner centered approach of teaching, which is based on constructivism. There is a need for the tutor to get to know her students and be able to judge their technological competence (McMahon, 2013). The integration of technology into education requires that the individual be engaged in much more than getting technical skills. Teachers must be supported so that they have TPACK (technological, pedagogical and content knowledge) through providing them with technology integration ideas that are unique to specific subjects and content. In addition, they should be provided with the opportunities to explore the use of technology in authentic online teaching environments. In consequence, instructors should be capable of building technological skills within the context of developing and learner centered online learning activities.

Evidences have also indicated that teachers are mostly constructivist in philosophy rather than in practice (Jaggers, 2011). This underlines the need for further training in learner-centered instruction. There is incongruence between instructor’s beliefs and their actual practices. In essence, just because they are aware that they have an obligation to do something, it does not necessarily mean that they do; hence, the training programs that teachers got through need to be experiential. Rather than just telling teachers what they are supposed to do to develop and sustain a learner centered classroom, they should show how it happens (An & Reigeluth, 2012). Time for hands on practice should be allowed, and the training should be subject specific. In a traditional classroom, the needs of different subjects vary and this is similar in online education. Interaction, graphic user interfaces, software and hardware, may need to be customized for different subjects.

Enhancing a social environment

The creation and enhancement of an online social environment in online learning is a complex process that involves numerous mechanisms that can both be helpful to the student or harmful to them. Effort should be made to control some of the social-environmental features within the classroom (An & Reigeluth, 2012). On one hand, it is easier for people to make friends online because it takes away the added tension that comes with face to face communication. It is also impersonal in that the individual loses the connection just as first. In an online learning and teaching context, students will be able to communicate at their own pace without the pressure of being put on the spot; hence, even when asked questions by the instructor, they are likely to answer more truthfully. For instance, a learner in a face to face environment may be nervous about pointing out possible problem areas while an online environment may make students more comfortable.

Social sites have been used alongside online education to foster a social environment. Facebook is the most used site for this function because of its relatively higher popularity compared to other sites like MySpace, Flickr, and Friendster. In addition, the site has immense popularity, and it is likely that most of the students have already interacted with it and are familiar with how it works (Hart, 2012). It is likely that students will participate in online discussions if they are hosted by a website whose working they are already aware of. The millennial generation are the biggest users of ICT, while ICT is now synonymous with education and communicative abilities of teachers and students in the United States (McCarthy, 2010). The potential merits of online social networking in an academic framework have been noted in numerous studies, with the conclusion that the greatest levels of satisfaction with academic progress are witnessed amongst those with access to the widest range of academic and social context. Online education widens or broadens one academic context while social networking helps them meet students online with similar interests and problems.

Among the most rewarding consequences of online education is the interaction between local and international students. International students are especially keen about engaging with their colleagues to get their critiques, as opposed to being out on the spot in the classroom (An & Reigeluth, 2012). This is common with L2 learners as they are in an environment that they do not understand comprehensively. Language barriers and social awkwardness that are often the focus of attention when international students interact with others takes a back seat as they socialize in an online environment. Good communication is allowed between students and teachers and amongst students.

Promoting critical thinking

Teachers are not just expected to help students get the facts about particular issues in the curriculum, but also to inspire them to engage in critical thinking on their own. This is in line with constructivism, which calls for teaching students the skills they will need to find solutions in an ever changing world (McCarthy, 2010). Using the knowledge, they are expected to create their own reality, and from this reality, comes the solution. This is similar as the idea by Piaget that students construct knowledge from prior personal experiences thus creating their own realities (Weeger & Pacis, 2012). In addition, Hussein (2011) suggests that critical thinking is also an element of constructivism since teachers too are expected to use their cognitive skills to interpret the environment around them. Critical thinking refers to thought processes that are inclusive of reflective judgment or purposeful thinking (Vijayakumar, 2011). However, the definitions are too general to be effectively applicable in describing an academic context. The definition that has been adopted in education is that it is the type of thinking that seeks to explore issues about existing knowledge for problems that do not have clear cut answers or clear explanations.

Before a teacher can promote critical thinking in their students, they need to understand the skills that are needed for a student to be considered a critical thinker. One of the skills is interpreting, in that the student should be able to understand what data signifies so as to clarify its meaning (Dang, 2011). In addition, the student should be able to analyze information, which entails breaking down the information and reconstructing it in different ways. This is a major component is applicability of online education and is instrumental in paraphrasing ideas to avoid plagiarism. Reasoning is also a component of critical thinking, and it entails creating defending legal arguments using logical thought processes or steps (McCarthy, 2010). The final skill is evaluation, in that the student should be able to defend the credibility and judge the worth of pieces of information.

Students who develop critical thinking skills have several advantages over their counterparts, such as being able to achieve higher scores, being less dependent on the teacher to provide content and teachers in general, as well as text books, being able to generate knowledge and be able to change, challenge and evaluate the structure within the society. Critical thinking should be promoted in the online environment in reading and writing (Tirrell & Quick, 2012). This is the only possible way that a teacher of an online classroom can ensure that they can work independently even when the teacher is unavailable. Critical thinking will also help students make sense of the vast amount of information that they will see on the internet (Vijayakumar, 2011). Like with other effective teaching and learning strategies, teachers play a key role in fostering the development of critical thinking amongst students making use of online education.

With the availability of online presentation and discussion tools, teachers have the added advantage of engaging their students in additional activities, which results in intellectual growth. Online communication offers students the opportunity to collaborate, which yields better results of critical thinking (Dang, 2011). Just like discussion and online curriculum is monitored, so too should online discussions in order to develop a ‘classroom’ culture that supports students in their processes of online thinking (Vijayakumar, 2011). When going online, the student must understand the goal of their online interaction and the social skills necessary to achieve them. The teacher should, therefore, coach the student on asking the right questions, listening, taking turns, sharing work, understanding different points of view, empathizing, building on ideas, and asking for help.

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Technology Challenges in Online Education

With the internet becoming a major component in education, educational institutions in the United States are increasingly turning to technologies in online education to deliver the curriculum at varying levels. This established trend has forced higher education institutions to pay closer attention to the most effective and efficient strategies of delivering online education. However, this is not without its challenges (Vijayakumar, 2011). Depending on the technological format used, online education will often create challenges that impact the quality of the service within the entire system. Technological challenges do not only affect institutions but individuals, as well (Hart, 2012). The increasing number of online courses changes the learning experiences of students and instructors within the United States. These two groups must evolve as the support processes in institutions evolve, as well. The instructors and the student may have to learn how a new software works, which in turn generates new challenges for instructors and students to overcome (Vijayakumar, 2011). Other challenges emerge owing to accessibility, such as lacking the resources required for comprehensive school reform and functionality through online education. This part of the paper will review the literature discussing these technological challenges under the broad categories of computer literacy, challenges faced in institutions, and accessibility issues.

Computer Literacy

Various studies have found computer literacy to be a significant challenge in online education. Barrera (2013) found that education has taken a technological turn since the modern workforce relies on standardized literacy levels and significant computer literacy skills for students enrolled in online education. The differences in computer skills amongst adult business students are attributed to differences in interactions with computers and the intended use by the learner (Barrera, 2013). An individual’s interaction with computers is determined by computer literacy levels. Students from industrialized nations have better interaction with online education while those from less industrialized nations face greater challenges with computer literacy. This is because students from industrialized nations have access to the latest technological innovation, and according to Barrera (2013), this increases their exposure from technology, subsequently increasing their computer literacy.

In a similar breath, Zhao (2011) concluded that the online education platform is a completely new experience that brings a new learning model that does not only entail transferring knowledge, but also the know-how of transferring traditional forms of knowledge into databases that are then used as the new forms of storage. There is a significant lack of knowledge as regards to the division of learning content, as well as a re-alignment of research and learning methods. Computer literacy is, therefore, not only required for students, but also for teachers. According to the computer literacy survey of 2010, this has a special relevance because testing and assessment methods have evolved to include computer technology. Much as the internet and technology have been around for more than three decades, online education is still in its development stages, which implies that the application models have yet to be adopted in different platforms (Vijayakumar, 2011). This poses the additional challenge of synchronizing and standardizing expected levels of computer literacy, which Henson and Kamal (2010) vie to be a significant challenge to online education because of the globalization and the impact of information systems on curriculum. Different universities in the United States use different methods of online education; as such, there are differing forms of online education. Teachers who transfer will have to learn new instruction methods.

Challenges Institutions face

There are numerous institutional challenges that in turn affect the technology, such as space allocations, infrastructure, student preparedness, faculty training, academic honesty, and faculty workload. Developing and sustaining the necessary infrastructure for use in online teaching requires commitment of resources that may pose a great challenge to institutions. This involves the necessary hardware and software for academics, as well as computer bandwidth necessary to keep online education consistent (Hart, 2012). These infrastructures will need to be operated by faculty, which in turn highlights the need for faculty support and the provision of multiple training opportunities. This task is neither simple nor inexpensive, making it a challenge for all those involved. Being that the resources are expensive, online education too is expensive for the students. Universities have to be able to get a significant amount of support from external donors, as well as the government, if they are to be able to afford the infrastructure for online education.

Zhao (2011) found that most instructors perceive online education as a positive contribution to education. However, they also acknowledge the fact that they are not equipped to deal with online education as it presents itself. The Millennial generation is mostly taught by generation x, most of whom have not been trained to deliver education on an online platform. For that reason, teachers need extra training if they are to successfully deliver this form of education. With the technological difficulties facing students and instructors, the reception of online education dwindles.

As explicated by Zhao (2010) and Henson and Kamal (2010), computer literacy is also affected by institutional challenges. Academic institutions have a challenge of meeting the needs of the online education. There is a general lack of software standards and course prototypes within a course development platform. Studies have also identified additional technical challenges in course management software. This is, in addition to the fact that, distance education creates an extra workload for the faculty. Several authors such as Henson and Kamal (2010), Zhao (2010), Cook-Wallace (2012), Hart (2012) and McMahon (2013) have concluded that web based courses need more effort and time on the part of the faculty compared to classroom courses of a similar credit, size, and content. Regardless of the mode of teaching, a larger classroom calls for the use of more resources. An increase in a classroom from 18 to 49 will increase the workload form 47 hours to 116 hours (Hart, 2012). Faculty employing online teaching will have a larger workload since it requires more one on one interaction.

Lack of preparedness has been reported as a great concern for teachers who found that certain groups of students, especially traditional undergraduates, were ill prepared to deal with the responsibility and autonomy of online education (Gidley et al, 2010). There is very little in education that as prepared for older Millennials to deal with the challenges of online education. Consequently, instructors have an additional responsibility of ensuring that their students are accessible. Another major problem that has faced online education since its inception is the difficulty of establishing academic honesty. The internet has a wealth of information, which students are ready to copy and paste. Universities have had to establish software that can be used to identify plagiarized work (Hart, 2012). The instructor, therefore, has an additional role of developing a syllabus to help students avoid academic dishonesty. This challenge is similar to that of using copyrighted material from the internet.

Accessibility (Internet access)

In a study carried out by Cook-Wallace (2012), the policies of online education were examined in terms of the challenges that arise from their not being implemented effectively in academic institutions. These issues include copyright, accessibility, technologies and quality assurance. Cook-Wallace (2012) found that technical support was one of the most essential components of online education and that about 20% of educators lack access to technical support. Studies have also found accessibility is affected by different parameters, including the ability or disability of the learner. Software used for online learning is not always configured for people with disability, which in turn excludes them from online education. The internet can be accessed by a greater percentage of students in the United States, but the user interface is yet to be customized effectively for special education students; consequently, there are problems with internet access for this group of students. Cited in Barrera (2013), Brock and Thompsen in their 1992 study suggested that access to a computer, which in turn gives one access to the internet, influences one’s familiarity computer technology, and by extension, their computer literacy skills.

Student role in online education

The introduction of extensive technologies for use in education has resulted in the phenomena of online education, this has in turn affected the perceptions of teachers and students as to what their roles in ‘classrooms’ are. Results from research such as that carried out by Hussein (2011) reports that different student cohorts have differing perceptions about their roles in an online classroom. Similarly, they also have different expectations of the roles that their fellow students and their teachers will have. These different perceptions and expectations are resultant of their interaction with instructors online as well as their mode of learning.

Advanced technology use in online education has made syllabi – that required students to gain knowledge of, understand and apply what they have learnt – an out of date learning method (Gidley et al, 2010). Consequently, students have additional roles to play in that they have to concentrate on learning higher levels of skills that involve more activity of the cognitive domain. Accordingly, students need to develop sets of sophisticated abilities in making judgments, collaboration with others, problem solving, critical thinking and analysis (Dang, 2011). It is important to note that these roles do not come automatically, but that they need coaching from their teachers to learn these new roles.

If students are to be successful in online learning, they have to take an active role in learning. This means that their roles should include being actively involved in discussions, working effectively with minimal guidelines and supervision and speaking out (Dang, 2011). Students in an online environment also need to be self-directed learners in order to understand the content of their subjects which in turn helps them develop a positive attitude to their studies (Gidley et al, 2010). By a great percentage, online students are their own motivators.

Students have an additional role of motivating their instructors. Instructors get numerous motivations from students to teach online courses. They respond to the need that students have to study online. This teaching also helps instructors get additional income and gives them pedagogical advantages stemming from experiential advantages (Kinuthia et al, 2010). This will in turn help in their personal and professional growth. Students dictate the agenda of online learning, as well as the agenda for the future of technology (Beck & Milligan, 2014). Based on the usability of technologies, service providers modify their technologies to meet the needs of students and instructors within an online environment.

The online environment is inclusive of a multifaceted set of roles, each of which needs to be fulfilled at different levels by the actors involved in different contexts.  The student needs to have operational competence in that they should be able to efficiently use ICT tools for communicating, self-direction, learning, and collaborating (Allen & Vince, 2011). However, just because students have a higher proficiency in tools, it does not necessarily mean that they will have higher scores in online education courses (Yuan & Kim, 2014). Students also have an additional role of having cognitive competence, such that they are efficient in the application of curse content, application of knowledge, and asking for help if need be.

Online environments are facilitated by collaboration and cooperation, and the student needs to have collaborative competence, as well (Beck & Milligan, 2014). They should be efficient in their collaboration and communication with teachers and classmates within an online learning environment (Yuan & Kim, 2014). Rather than just concentrating on what they are doing within the online learning context, students are also in charge of their own learning, and as such, they need to have self-directing competence, which involves efficient self-monitoring and self-appraisal. Another role that should be present in both an online and traditional classroom is course specific competency that the students should possess, as it will help them assimilate appropriate use of content and terminologies that are instrumental in their coursework (Kinuthia et al, 2010).

Attrition trends for First Time Online Learners

McMahon (2013) studied the cause of attrition amongst a sample of adults who were taking a full time online training course. Research has shown that dyslexia occurs in about 10% of the adult population in the US (Jaggers, 2011). Being that it is a learning disability that is yet to be understood, most individuals with dyslexia often find themselves having to take additional classes and training in order to catch up with others in the work force. The United States has one of the most advanced educational systems in terms of acknowledging and developing curriculum for individuals with dyslexia. However, this is a recent trend and most adults with dyslexia have not benefited from these efforts. Results from different studies show that attrition levels vary, indicating that other factors, such as subject area, mode of delivery and age of students, may contribute to the rates of attrition witnessed. Hart (2012) found that no academic causes of attrition could be deterred by the presence of strong social connections and a strong support system. Cited in McMahon (2013), Frankola (2001) supported this view and expressed that lack of motivation is likely to cause attrition. The source of motivation includes both the instructor and the student’s support system. Frankola adds that attrition can also be caused by inexperienced and substandard instructor, poorly designed courses, problems with technology, lack of student support, and lack of time (McMahon, 2013).

First time learners are particularly vulnerable to experiencing attrition owing external issues, such as problems with resources and infrastructure, as well as internal issues, such as lack of social support. Instructors should, therefore, be aware of the fact that their students will include first time learners who are vulnerable and others who are not (Gidley et al, 2010). The method of instruction should consider both groups and work toward helping them sustain their studies. This may pose a challenge since it is an online classroom. If possible, teachers should install software logs that allow them to track the progress of the student throughout the lesson. This will tell them whether the individual was participating in the lesson or not, and possibly point out the problem areas (Hart, 2012).

Student attrition should not be perceived as a function of online courses, but as a paradigm of education (Tirrell & Quick, 2012). Online course, consequently, requires a different approach in design, learning, and instruction that will engage students actively. For that reason, there is a call for greater collaboration and communication, significantly more than is required in classroom delivered course. In an online environment, the instructor has to meet the challenge of sustaining the attention of the students all the time since they are not physically present.

First time users of online learning face additional distractions, which may result in attrition. One of the major causes of attrition is when an interruption occurs in the learner’s external environment, as it takes their attention away from what they need to be doing within an online environment (Sitzman & Ely, 2010). This impedes their progress with their primary tasks. In addition, technical difficulties have been cited as among the most popular difficulties facing online learners. Technical difficulties are a source of attrition for online learners (Allen & Vince, 2011). This can occur repeatedly because technology evolves almost every day. A learner could have used online learning before and opted to use it later, only to find that it has changed or has been modified.

Allen and Vince (2011) concluded that the pre – training motivation is a predictor of attrition as it relates to other causes of difficulty, such as technical issues and access (Allen & Vince, 2011). As such, students will not likely drop out if they encounter technical difficulties, only if they also have higher motivation rates (Grau-Valldosera & Minguillon, 2014). When the motivation to learn the course content is present, it will likely deter other causes of attrition form taking route (Ellis, 2013).

Factors related to drop out in first time online learners

According to Milheim (2012), research continues to support the idea that students taking online courses experience consistent dissatisfaction for a number of reasons. Research on distance education continues to be among the major sources of guidance on how instructors operate with their students within this context (Grau-Valldosera & Minguillon, 2014). The more knowledge people get that pertains to distance learning, the better equipped instructors will be (DeWitt et al, 2014). This is because research yields information on the most effective assessment methods, student preferences and instructional strategies, which are essential in improving the online experience for students (Allen & Vince, 2011). Despite all these efforts that have been made to improve the effectiveness and growth of online education, there is still skepticism about the effectiveness of the learning method.

One of the major issues that has been associated with drop outs of learners in online learning is that educators have, thus far, failed to reproduce the numerous elements of live classrooms within the online environment (Beck & Milligan, 2014). Human nature dictates that people will be more open to technologies and strategies that they have been familiar with before. Being that people are used to live classrooms, they transfer these expectations to online classrooms, and these expectations are often not met (Kinuthia et al, 2010). There is little understanding about how live classroom qualities can be replicated in online environments.

Another major concern that has been cited in literature is that there is reduced interaction among students and instructors within an online environment, or the interaction is unlike what students re regularly used to (Milheim, 2012). Other than this, instructors are sometimes left with the burden of ensuring that their students retain interest despite the inappropriateness of content for delivery in an online environment (Grau-Valldosera & Minguillon, 2014). The content is not just faulted over delivery, but also because students do not have additional tools that are essential in helping them understand course content (DeWitt et al, 2014). The online environment has a high level absence of strong, supportive and collaborative learning environment (Yuan & Kim, 2014). The courses have been developed in such a way that the transmission of information is by the dumping or distribution, which is an additional reason for dissatisfaction.

In addition, there is low students’ familiarity with technology or the course they are taking, which adds to their uncertainty about taking the online course. All these result in lower motivation for the student. Using Maslow’s hierarchy of needs to investigate student satisfaction and motivation, Milheim (2012) found that if the needs are not fulfilled, then the student would experience dissatisfaction. In order for students to get to level 5 of Maslow’s model, which is self-actualization, the previous levels must be reached first. For that reason, without access to basic materials, such as access to the computer, the students will be ill equipped to continue with the course.

Yet another cause of students dropping out of their courses is that they do not get appropriate preliminary training sessions on course format and content, as well as failing to clarify the nature of expectations and assignments to them (Kinuthia et al, 2010). Students also need to be supported by the instructors in establishing collaborative forums (Hachey et al., 2012). In an environment where face to face interaction is absent, there is a need for the instructor to help students collaborate in establishing learning communities (Hall, 2010). Instructors within this context also have an additional motivational role to play of anticipating students’ needs and having appropriate and timely responses for them. This will boost their confidence (Kinuthia et al, 2010). When this lacks, students lose faith in themselves and deteriorate in the efforts toward education.

Without feeling valued and respected, students will also fail to stay committed to online learning, especially if it is their first time (Kinuthia et al, 2010). Within a traditional classroom setting, students tend to feel greater appreciation because they can interact with their instructors and colleagues face to face (Lindquist & Long, 2011). Teachers can give reassuring comments and students can clap, which in turn helps the student in feeling appreciated (Grau-Valldosera & Minguillon, 2014). This is a greater challenge within an online environment since the instructor and the students do not meet. In addition, the student does not meet his colleagues (Hachey et al., 2012). It is important to note that students in classes are different and so are their needs (Seiver & Troja, 2014). Seiver and Troja (2014) demonstrate that students with the highest need for affiliation are likely to drop out as first time online learners.

Tools for online education

According to He et al (2012), online resources play a critical role in helping undergraduate students accomplish academic tasks. However, the authors also acknowledge that there is a contrast in that some of the most popular online resources do not play a role in academic tasks of undergraduates (He et al, 2012). Social networking is popular in the daily lives of undergraduates, but they are not ranked high in accomplishing academic tasks. Musawi and Sharaf (2011) suggest that technology has three major roles in online education, which are hinged on its ICT (information, communication and technology) capabilities. There are three main roles that technology plays in online education, including being a resource/medium, being a delivery form, as well as being a tool that can be used for the management of information within the online context (Hachey et al, 2012). The authors stress that these three roles – when combined – provide the best possible chance for a technology to be successful in the online environment.

Musawi and Sharaf (2011) reiterate other researchers’ ideas, which is that technology not only changes how teachers teach, but also how students learn. The technologies are there to complement the human learning experience; they present more opportunities for students and campuses (DeWitt et al, 2014). If technology is to be perceived as having an essential role in education, research documenting its effectiveness should be carried out clearly. Musawi and Sharaf (2011) claim that technology helps in learning, in that it is computational, it is influential, and it is experiential.

Owing to lower retention rates, students taking online classes should be exposed to more positive experiences with online learning tools as it increases retention rates in online learning (Mbuva, 2011). When the instructor gives students a positive experience with technology, barriers to their learning are decreased. This information is important because it allows teachers to focus their attention on students who reveal that they have failed previous courses they have taken online.

Blackboard

According to Steenkamp and Rudman (2013) educational technologies have brought about new learning methods, which have in turn highlighted the significance of audio-visual learning methods. Research has found that blackboards are mostly used by students as management systems for essay-type assignments including short answers, essays and computer programs. The characteristic program of Blackboard, WebCT and Moodle are examples of learning management systems (LMS) that provide basic support pertaining to the management of academic assignments. Among the most appealing qualities of the blackboard for institutions is that it is cheaper to maintain and set up compared to other online learning tools.

Not only does the Blackboard offer a forum for setting up assignments, it also allows students to submit their completed assignments and for the instructor to access and post the marked assignments. Without the opportunity to have a face to face interaction with the student, the instructor can let them know about what is needed for their assignments as well as the due dates. Hence, it is a platform for sharing content as well; which is one of the most critical functions in online learning. According to Hachey, Wlaids and Conway (2012) it is likely that students who have had prior success with online learning will be likely support online learning tool. The blackboard offers the student a chance to customize their information. It consolidates the most frequented information sources and functions across sites relevant to the course. This increases the usage of online tools and student satisfaction as it offers a vital component of ease of use form a home base. This in turn increases retention rates (Mbuva, 2011).

Desire2learn

The educational technologies that are supported by the Desire2learn platform allow for an increase in mobility, so that students can communicate, collaborate and access learning materials at any time and in any place, as long as they have the tools they need to access the internet (Steenkamp & Rudman, 2013). Students are naturally drawn to image rich environments, which makes online learning appealing to them. In order for these sites to sustain their effectiveness, the activities and designs in each course need to be redesigned in order to prevent them from being added on to available content without having relevant educational benefits.

Despite these sites being available for use by students, it is still challenging for educational institutions to motivate students to engage in online learning (Hachey et al., 2012). Only about 30 percent of students use social networking sites for academic purposes (Lindquist & Long, 2011). Even less students make use of e-books and look for podcasts that have been captured on videos (Smith & Caruso, 2010). Students are yet to see the online environments as a great contribution to their academic purposes. Students also participate more in courses that include online teaching and learning.

Some of the sites that are under the desire2learn umbrella also include simulations and games, which are important as they let people participate in their new online worlds (Lindquist & Long, 2011). These simulations allow the students to think, act and talk as they engage in academic tasks and activities in a manner that interests them and remains relevant to their social contexts. These tools are essential in incorporating functionalities that faculty and students themselves have identified as valuable and essential in facilitating the goals of teaching and accommodating preferences in learning (DeWitt et al, 2014).

The tools used in desire2learn are instrumental in helping individuals customize their learning environments. Online learning is likely a greater challenge for adult learners because it comes at a time when most have or will soon have other obligations in their lives (Beck & Milligan, 2014). Undergraduate students have numerous other interests and obligations, including financial and family obligations (Ellis, 2013). Consequently, they need a greater variety of learning options (DeWitt et al, 2014). There is more than one site using the desire2learn platform to inform their online learning strategies, and this in turn gives them an even wider variety of choices on the sites they will use to facilitate their education.

Web 2.0

In their study of the interaction of students with online resources, He et al (2012) found that undergraduate students reviewed the importance of online resources based on differences in their academic tasks. This is consistent with the available literature. Morris and Teevan (2010) concluded that students used different communication technologies and tools shared and exchanged information on an online platform depending on their academic goals, which in turn affects their desire to collaborate (Yuan & Kim, 2014). When looking for definitions, undergraduate students made most use of Wikipedia, even more than they used other online encyclopedias (He et al, 2012). Consequently, He et al (2012) concluded that this trend demonstrates a wide acceptance of Web 2.0 tools, such as Wikipedia, by students, even though there is high level uncertainty about this resource within the academic community. Students perceive that Web 2.0 tools, such as Wikipedia, as good enough to help them accomplish academic tasks.

While this points to a positive attitude toward the use of Web 2.0 tools as academic resources, it also indicates that there is a need to educate undergraduate students on the limitations that accompany these tools (Ellis, 2013). He et al (2012) stress that, this uncertainty exists because the accuracy of this information is difficult to guarantee. Students utilize search engines and they regard them as among the most essential resources in performing academic tasks since they are gateways to other resources on the internet. They use these not only for assignments, but also for revising for exams and tests

In another study, Steenkamp and Rudman (2013) found that more than half of their respondents perform most of their activities on web 2.0 tools for viewing other users. Following this, they would amend and submit the information respectively. Social networking is one of the most popular web 2.0 tools that is used by students (DeWitt et al, 2014).

Asynchronous technology tools

Hu et al (2012) observes that most of the asynchronous technology tools are used by undergraduate students when collaborating in accomplishing academic tasks. Undergraduate students taking online courses are likely to use asynchronous technology tools when carrying out collaborative tasks (Ellis, 2013). Collaboration may involve co-authoring research papers and group projects, both of which have different goals involving efficiently and effectively exchanging ideas and information (Yuan & Kim, 2014). However, the importance that each task elicits of the resources is the same. The use of asynchronous technology tools in online education is affected by the choice made by the student which may be affected by the communication tools they use regularly. This, Hu et al (2012) speculate could be the reason why instant messaging and e-mail are among the most relevant tools. Asynchronous technology tools used in online education are expected to meet the demand of the exchange of documents, as well as ease of sharing.

Most of these tools are Web 1.0 resources, including emails, online book search engines, and instant messaging. Most students engaging in collaborative academic tasks only use Web 1.0 resources (Yuan & Kim, 2014). Email is an important technology in learning experiences as they are one of the few channels that students can use to communicate with their instructors when turning in assignments, getting additional instructions, or getting feedback from their instructors (Ellis, 2013). Students can also use web sites to upload video assignments that their colleagues can comment on. This will in turn increase their interaction and allow students to assess the work done from their peers (Lindquist & Long, 2011).

File and information sharing on the internet is among the most essential components of online learning. The internet is a web of connections and web 1.0 resources are essential in ensuring that this part of online learning remains relevant (Carr, 2014). Asynchronous technology tools used in online education have both advantages and disadvantages (Ellis, 2013). Because they are used outside real time correspondence, they impact immediate feedback that the student may need in order to gain confidence in their work. On the other hand, they have a positive impact since they allow the instructor enough time to go over material that they have been presented with before they give the students feedback.

Asynchronous learning tools are among the most common tools used in online learning. Research has shown that asynchronous technology tools are most effective when they are used along with synchronous tools (DeWitt et al, 2014). Within an online environment, the learning activities and the expectations on the instructors and students are similar to those that are found within traditional classrooms. However, asynchronous learning environments are characteristic of the online environment because it is impossible for the instructor to meet the students. This environment gives students an opportunity to participate in their own learning and create their own realities, as proposed by the constructivist approach to teaching (Carr, 2014). In addition, they also get opportunities to interact with their peers and reflect on the status of their personal learning (Lindquist & Long, 2011). There are numerous learning activities and tasks that require their students to generate, synthesize, explicate and apply the content they have acquired from numerous sources.

Future of technology in online education

According to Milheim (2012), it is important to ensure that the future of technology in online learning is informed by gaps that have been pointed out in literature and other studies. He suggests that technologies used in online learning should be geared toward ensuring that the students’ achieve satisfaction in their course (Milheim, 2012). Technologies should be customized for different course content to ensure that students are able to achieve all that they need to within an online environment. Technologies in the future should also be dedicated to establishing and generating innovative ways that students can engage in online learning.

Hu et al (2012) suggests that technology in the future should seek to incorporate academic tasks and provisions in social networking tools. The potential they have to reach such a wide audience also means that they have the potential to inspire more involvement, participation and retention in online learning. In addition, Seiver and Troja (2014) suggest that the technology tools used in online learning should permit the instructor to develop different tests and assessments for the students online. Although these assignments should be alternative, they should also be equal (Seiver & Troja, 2014).

Future technologies will focus on ensuring that there is a cost effective effort toward online education. According to Keramidas (2012), online courses can be offered at more flexible times, which make them more appealing. In addition, the technology does not necessitate the presence of a traditional live classroom space. It is likely that future technology used in online education will be geared toward meeting the challenges that current online learning students are facing; hence, future technology should be geared toward reducing the rates of attrition in online students (DeWitt et al, 2014). Online education has also been instrumental in helping institutions of higher learning to offer more courses at a given time (Carr, 2014). The timetable of lessons in most universities is created in terms of the space available for classrooms. However, with technology and online education, lessons can be offered to more students, even if no classroom is available for use at that particular time (Ellis, 2013).

Educational technology will also be consistently modified toward ensuring that it is more time conscious and user friendly, graphic user interfaces will likely be modified so that they are more appealing to clients and so that they give the client ease of use, along with greater interest (Ellis, 2013). This should allow users to customize their own pages and interfaces depending on the course they are pursuing and their interests (Keramidas, 2012). For instance, rather than starting from scratch every time they go online, the students will have a page that shows them their most frequented sites, and includes suggestions for other sites where they could get academic information (Carr, 2014) . This will increase the use of the technologies and improve the retention rates (Mbuva, 2011). For instance, podcasts are rarely used, but if they are a default on the homepage of the student, they will likely look at them even for a little time.

Studies have estimated that online courses take at least twice to thrice as much time to prepare to teach compared to traditional face to face courses. Some of this time is attributed to the time and resources needed to develop and upload materials (Keramidas, 2012). This indicates that future educational technology will also be aimed at ensuring that there is better user interface and ease of use for instructors who have to prepare students for these courses. In addition, these instructors will have to be trained on technological prowess so that they learn how to work faster and more efficiently (Carr, 2014).

Summary and implications

Online education has slowly developed into a common learning strategy in higher learning institutions to meet the new societal demands of education since traditional education models have become incompatible (An & Reigeluth, (2011). Despite the vast use of technology in education and daily life, students are still susceptible to dropping out for numerous reasons, including technical, personal, psychological, and transferred problems (McMahon, 2013). Adult learners are, by a large percentage, the most users of online learning as it offers them an opportunity to fast track their education and get educated from locations that may have otherwise been impossible to get to. Battling attrition in online learning requires understanding the adult students demographic and incorporating their needs in technology (Tirrel & Quick, 2012). Adults are found to prefer accelerated courses, indicating that they will likely choose to take such curses, as opposed to taking more gradual ones that take longer to complete (Hanover research, 2012). Online education is also appealing because it allows learners to attend to most of their other obligations, as well.

Understanding online learners means subscribing to particular theoretical frameworks such as diffusion of innovation and constructivism. Before innovations, such as technology, are adopted in other contexts, they are transmitted to different users through diffusion (Jwaifell & Gasaymeh, 2013). Diffusion happens amongst both the students, as well as among teachers. Technology will diffuse as fast as it is successful to those who use it. Education technology will only be adopted in more contexts if it is successful in previous contexts. The diffusion of educational technology is experiential (Zhao, 2011). Diffusion is the process where innovations are communicated through specific channels amongst individuals in a particular social system. The system will only respond if the innovation proves successful to them (Kervin et al, 2010). Despite the fact that online learning has faced numerous challenges, including attrition on the part of the students, its potential within academic institutions is too vast to be ignored.

This means that the theories adopted to teach students in this context should be informed by evidence based practice. Constructivism calls for students to make sense of their own learning experiences and get the most positive results that they can get from this context (Henson & Kamal, 2010). Online education has instructors who help students, but a major part of this method of acquiring knowledge is that the students manage themselves (Taber, 2011). The learning experience is not just about the facts they acquire, but about all their experiences within the online environment. The location and meaning of education have been changed by online learning experiences (McCarthy, 2010). Constructivism is critical in the development of instructional strategies that are focused on training the students to help themselves.

The online classroom should, therefore, be learner centered. Technologies in online learning should be used to create problem based learning contexts, which in turn create learner centred classrooms (An & Reigeluth, 2012). Gaining knowledge on the use of technology is not enough; instructors also need to know how to effectively apply this knowledge in practical situations (Barrera, 2013). Communication is essential in developing a learner centred environment. This should also include providing teachers with opportunities to practically test their online communication strategies so that they are not only constructivist in philosophy, but in practice, as well (McMahon, 2013).

Hands on activities should inform the teacher so that they are aware of what their students feel and learn in an online environment. This will help the instructor in enhancing a social environment, which should monitored and controlled by the instructor. This will allow students to communicate effectively without feeling the pressure of communicating at a faster pace. Learner centered online classes are more effective in that the student will be more truthful in their answers, and this allows the instructor to learn more about the student and establish tools for creating a learner centred environment, as well as an appropriate social environment (Jaggers, 2011). Creating a social environment involves the instructor working together with students within the online community. These environments help students develop critical thinking skills (An & Reigeluth, 2012). Learning institutions also face additional challenges, such as not having enough financial backing to support the purchase of technological innovations.

Online learning does not only require institutional support but also skills from the students such as critical thinking, which will help them discern the most appropriate sources of information (Hussein, 2011). This will prevent distraction from irrelevant and inaccurate sources. Online discussion groups and presentations are instrumental in critical thinking (Vijayakumar, 2011). Despite the many potential benefits that online instruction has, there are numerous drawbacks that are also linked to online learning. These drawbacks result in attrition among online education students, with most of them failing to finish their online courses. Computer literacy is a major problem since if students are unaware of how to operate within an online environment (Hart, 2012). A nation that has access to more technological innovations will have a greater population that is computer literate, and this increases the exposure that online students have to new technology, which in turn increases computer literacy (Dang, 2011).

Institutions also have additional commitments, such as offering additional and continuous training to teachers (Barrera, 2013). This is more complicated because it requires the cooperation of the governments, academic institutions, and other relevant parties. Technological updates also have to be made to ensure that the technologies being used change with the changing time. (Grau-Valldosera & Minguillon, 2014) Even with these present, access is also harder for most users of online learning since not every person who wishes to be an online student is able to do so. Accessibility also influences one’s computer literacy skills.

The role of technology in education cannot be ignored in the academic arena. Traditional education can now be stretched to reach more individuals (Zhao, 2011). Technology has become a part of people’s daily life and is used for different activities each day. It is not enough that technology used in education is only described as a medium; it has evolved to be more than a medium to be a teaching/delivery mode, a resource, and a management tool (DeWitt et al, 2014). Traditional technological services that are used in education need to transform into digital and be available to more students online to ensure that students have access to some of the live classroom features that they are used to (Henson & Kamal, 2010). One of the greatest challenges that are facing educational technology is transforming online classrooms into environments that are as close to live classrooms as possible (Gidley et al, 2010).

Students have various roles in these online classrooms, including having a complex set of cognitive abilities that involve problem solving, collaboration with others, making judgments, and critical analysis which help in transforming the online learning environment (Hussein, 2011). Despite having these abilities, it is still important to ensure that students are motivated from an outside source, as well (Kinuthia et al, 2010). Additional issues, such as the subject area, the nature of the content being learnt, the mode of delivery for the online courses, students’ age and disabilities, may result in higher rates of attrition. Attrition is a paradigm if education and solutions should also be explored from this perspective.

Even though technology has become a major part of life in this era, it is yet to be used in education, in a way that enhances online learning. Most undergraduate students will not choose to take online courses (Milheim, 2012). Students are not accustomed to online learning and expected live classroom instruction. The future of technology will also be directed toward ensuring that there is more cooperation between students, which would include incorporating social networking and other social sites, which will help in creating and cooperative online learning environment (Beck & Milligan., 2014).

Implications

The various issues discussed in this paper have a number of the major implications about how technology should be used to successfully facilitate learning and teaching using digital resources. Based on the constructivist theory, the instructor has a duty to help learners develop the capacity they require to manage their learning within the online environment (Hachey et al, 2014). For that reason, teaching strategies and curriculum should be developed in a way that helps students build their cognitive and conceptual resources to create their own realities using available resources to generate knowledge that is relevant to their educational standards (Hall, 2010). Guidance is essential in educating students or they may come to inaccurate conclusions.

In order to develop learner centered classrooms, instructors need not only focus on the training of technological skills, but also in explicating and teaching the nexus between pedagogy, content, and technology. This will allow for the development of customized content that is augmented by the technology used to deliver it, which in turn helps in increasing retention of students (Mbuva, 2011).

Discussion forums can be utilized as part of learning, especially since they are instrumental in the development of superior cognitive processes. The different interactions that occur in online environments during online communication are instrumental not only in the generation of new knowledge, but also in encouraging learners to be self-expressive to a greater extent (Hall, 2010). Hence, instructors can use it as a strategy for motivating shy students and turning them into experienced users of online learning platforms (Ogude, Kilfoil & du Plessis, 2012). Discussion forums are among the most essential learning tools within an online learning environment as it brings the students as close to having classmates and people to share information with as they can get.

These strategies used should allow for and encourage sharing of ideas and the tasks developed should also authentic and meaningful as demanded by the subject of discussion (DeWitt et al, 2014). The instructional materials used, including the interactions, materials and activities, should be designed within an online environment in order to optimize learning processes (Hachey et al., 2014). Not surprisingly, among the most important features that these technologies should have is ease of use for both the instructor and the student. The second most important is that the technology should save them time, or it is likely that they will opt for using traditional sources of information, such as going to libraries. Educational technology should also provide students with opportunities to contextualize their sources with the aim of enhancing learning and facilitating pedagogical goals.

Success in the retention of students in online education cannot be accomplished without the involvement of different stakeholders (Mbuva, 2011). There is a need for cooperation between universities, community colleges, the government, stakeholders and other academic institutions offering online education to help support the availability of infrastructure that supports educational technology (Hall, 2010). These partnerships will increase the rates of retention by increasing cost effectiveness to save money and time, developing retention programs, and effective pedagogies (Ogude et al, 2012). Future research should focus on studying the differences between the successes of a single course being taken online and when a student pursues an entire degree course online.

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Oil and Gas Sector Qatar

The Impact of the Oil and Gas Sector on the Qatar Economy

Oil and Gas Sector Qatar

Qatar has become a dominant player on a global front, and its economy continues to grow at an alarmingly fast rate; it has seen a large influx of expatriates to the country because of the attractive remuneration packages on offer and the tax free environment that is available to the labor market. In addition the acceleration of growth seen in the Qatari economy is not solely due to the attractive remuneration and tax environment, but a number of other factors exist, such as the presence of large organizations, flexible trade policies, government supported initiatives and influences as well as cross border collaboration with other nations and companies that has intensified the growth of Qatar’s economy.

The production, distribution and sale of oil and gas are one of the fundamental factors that have seen Qatar and its economy develop from a frontier market status to an emerging market status. Petroleum is the cornerstone of Qatar’s economy and accounts for more than 70% of total government revenue. Paramount to this is the volume of gas which places Qatar as the third largest provider of Gas in the world today, and the richest Muslim country globally.

It is commonly becoming a place to build and implement businesses and successful partnerships and furthermore, the wealth Qatar has is in abundance which has enabled the economy of Qatar to flourish under the stewardship and vision of the Qatar emir and its government. Its economic freedom in the 2012 index was rated at 71.3 which places Qatar at 25 in terms of the freest economy of the world, and this shows the strides made by the country as a whole, however this can largely be attributed to the wealth generated from oil and gas productions, which is the largest contributor to the Qatari economy.

While Qatar has made significant progress in laying the institutional groundwork for sustained and diversified economic growth, the volatility of commodity prices, particularly during recent economic woes seen across the world which continues to undermine macroeconomic stability. Restrictions on foreign investment still exist and considerable state involvement in the economy is serious drags on generating more vibrant economic drive.

Justification of the Study

There is a lot of literature on the impacts of oil and gas on the economy of Qatar. However, most of this literature has not taken an all-round examination of the role and impact of oil and gas on the economy of Qatar. An examination of this literature shows a high inclination to the attractive economic effects of oil and gas revenue but they have paid little attention to the negative impacts of over reliance on oil and gas and its role in the current economic climate in the country.

These literature have also paid minimal attention to other factors that have contributed to the economy and the impact of globalisation. Because of this, they have been less reliable on making policy recommendations on economic diversification as a way of responding to volatility of oil prices and the global shift towards green energy supply in order to ensure a continuously high economic growth. The country also has to begin setting up economic projects that will sustain its economy, especially after the exhaustion of its oil and gas reserves. This literature gap provides the rationale for this research. Although it pays a special attention to the oil and gas industry, this research makes a whole round examination of the Qatar economy and out of this, it will make an evaluation of the role of oil and gas companies in improving the economy of Qatar.

Objectives and Nature of the Study

This study will critically evaluate and assess the role and impact of the oil and gas industries within Qatar on its economy. In doing so, the study will focus on current economic climate and analyse the key factors which contribute to the economic growth which has been evident over the last several years. The study will make a strategic evaluation of the Qatari economy examining the benefits and drawbacks of reliance upon oil and gas companies and more importantly looking at the influence of globalization on Qatar’s economy.

Main Aim

To assess the impact of oil and gas sector on the Qatari economy

Literature Review

This section of the paper contains brief summaries of the existing literature surrounding the role and impact of the oil and gas industries within Qatar on its economy and other factors that have facilitated or contributed to this the economic growth of the country.

Economic Landscape of Qatar

Qatar has flourished under the strong stewardship of the Al -Thani family and the support of the government has enabled Qatar to build and strengthen the economy of Qatar. During the recent financial crisis where many countries and governments struggled to maintain control and control spiraling debt Qatar seemed protected from such adversity, and in 2011 Qatar had the highest growth rate. Qatar’s economic policy has been focused on developing its vast oil and natural gas reserves with considerable success. The economy has seen unprecedented growth but this has largely been due to the focus and revenue generated from the oil and gas sector Qatar.

Globalization in Qatar

Globalization has encouraged and seen flexible trade among nations and also allowed emerging economies such as Qatar to prosper as it has enabled various distribution channels to be accessed. Without sufficient access to global channels or investment from foreign investors, the economy of Qatar would remain stagnant with low growth rate and a sufficiently weak economy. According to Mankiw et al (2011), international trade allows economies to achieve economies of scale, build strong relationships and more importantly, develop trade policies and practices which assist the economy.

Qatar, having reduced restrictions to some degree with respect to the investment of foreign investors, has increased its position as a leading oil and gas provider. More importantly, it has allowed Qatar to develop other aspects of its infrastructure away from the production and distribution of oil and gas. Globalization in Qatar can also be seen through the expatriate workforce, who account for almost 75% of the Qatari population, and the skills and knowledge of these individuals has allowed Qatar and its economy to benefit from sharing of best practices and gained knowledge.

Oil and Gas Companies

As mentioned in earlier parts of this chapter, the oil and gas industry in Qatar is by far the largest contributor of revenue, with almost 70% generated through this industry. The money is reinvested within the Qatari economy, with a number of objectives the government has set such as development of the infrastructure in Qatar and the knowledge base. Money is also reinvested to develop and improve other business sectors particularly the reinsurance and asset management sectors. As discussed oil and gas is a large contributor of revenue and is one of the key drivers for the Qatari economy, (Miller et al, 2011) however the volatility of oil prices, and the global focus of shifting towards more greener energy supply is likely to impact the economical standing and strength of Qatar.

Impact of Oil and Gas Industry on Qatari Economy

The exploitation of oil and gas fields in Qatar begun in 1940 and since then, the oil and gas industry has had a huge impact on the economy of Qatar. Generally, the oil and gas industry has led to the attainment of a stable economic prosperity in the country. First, it has removed Qatar out of the ranks of the poorest countries in the world. Before this, it was a poor pearl fishing nation. In relation to this, the industry has also helped to speed the economic development in the country and in 2010, Qatar was experiencing the highest growth rate in the world. This economic boost has mainly been experienced since the dramatic increase in oil and gas revenues in 1973 and the completion of first phase of the North Field gas development. This phase alone cost $1.5-billion.

This positive and accelerated economic growth in Qatar has been recorded even in the times of global financial crisis. During such times, the country experiences a rebounding of its economy due to the increased oil prices as opposed to non-oil producing countries that have to spend extra money to avail oil and gas for driving their economies. The oil and gas industry can therefore be said to provide a shield on the Qatar economy against the effects of global financial crisis. It is undeniable that the oil and gas industry is the backbone of Qatar’s economic development. This industry accounts for over 50% of the country’s GDP, about 85% of export earnings, and 70% total government revenues (Miller et al 2011).

The oil and gas industry has provided Qatar with one of the leading per capita incomes globally. Currently, Qatar has the second largest per-capita income in the world. The per capita income for 2009 was $80,000. This rose to $90,000 in 2010 and to $102,700 in 2011. The GDP for these years were $131.2 billion, $153 billion and $181.7 billion in for years 2009, 2010 and 2011 respectively. Their GDP growth rates were 12%, 16.6% and 18.7 % respectively (CIA world fact book   2012).

The oil and gas industry has also helped to reduce the unemployment rates in Qatar and currently, Qatar is one of the countries with the low unemployment rates. Unemployment rates in 2009 stood at 0.5% and remained constant through 2010. However, this figure dropped to 0.4% in 2011. Inflation rates in Qatar have been reduced mainly because of the increased government revenues from the oil and gas industry and in 2011, this figure was 2.8%. this has led to a decrease in the number of people living below poverty line. The Industries Qatar (IQ) is the second largest producer of chemicals in Middle East. The largest is Saudi Arabia’s Basic Industries Organisations.

The huge revenues from the oil and gas industry have provided sufficient capital for the establishment of heavy industrial projects in Qatar. These include refinery, fertilizer plant for ammonia and urea, petrochemical plant and a steel plant. These projects are based in Umm Said and they benefit directly from gas fuel extracted in the country. The development of industries has provided a means of diversifying the economy. Revenues from oil and gas have been critical in enhancing the development of other economic sectors like tourism, transport, education among others. Through these revenues, the government of Qatar has been able to boost its educational sector and this has reduced the reliance on foreign expatriates who are expensive to maintain.

oil and gas sector Qatar
oil and gas sector Qatar

Overall, the improved government and household income has led to a significant increase in the number of Qataris who attain higher education and those that are foreign-educated. These individuals have occupied the key positions that used to be occupied by the highly paid expatriates. This has had a positive impact in reducing national expenditure. Because of the stable income from oil and gas export, there have been sufficient funds for facilitating the growth of the tourism industry through the funding of the various activities and plans of the Qatar Tourism and Exhibitions Authority (QTEA). This has led to an increase in the number of tourists received in the country and thus revenue from tourism.

The government has also been able to expand the New Doha international airport and this is important in increasing the country’s economic growth by accommodating a larger number of passengers, especially tourists, as well as some economic commodities. Still on transport, revenues from oil and gas have helped to improve regional connectivity between Qatar and, Bahrain and Saudi Arabia through the multibillion-dollar Qatar Bahrain Causeway and the Doha Expressway. This has resulted to increased regional trade between Qatar and these countries. Others include extensive bus and rail transport that are important for facilitating a smooth running of the various economic activities like transport of human resources, raw materials or finished products to the target markets or export points.

Key Factors Driving Economies

An economy comprises of the economic systems of an area; its land resources, capital, manufacturing, production, trade, distribution, consumption patterns and labor. A country’s economy results from the activities and mechanisms that result from its technological know-how, demographic factors, geography, utilization of natural resources and history (Stretton 1999). These factors contribute to the environment, content and principles upon which the given economy operates. A market based economy may be looked at as a limited social network where exchange of goods and services takes place based on the demands and supply between the economic agents i.e. a medium of exchange where credit and debit values are accepted in a given network.  Labor and capital are the only free economic systems that can move free in search of higher profits, interests, dividends, interests, benefits and compensations. Land resource is fixed.

For an economy to be sustainable, the key drivers of its growth include, per-capita income, opens to trade, channelization of investment and deregulation (Stretton 1999). Per capita income or income per person refers to the measure of a population’s resources within a given nation or country in comparison to other nations. It involves taking the sources of income such as gross national income and then dividing it by the total population. Commonly, an international currency is used for calculation of GDP which produces accurate statistics for comparison. It’s not aimed at determining wealth or resource distribution of a nation but a measurement of success (Stretton 1999). Per capita income does not result to monetary income because income over time needs to account for change in prices. Another weakness is that there can be discrepancies on international comparisons caused by differences in living standards between nations that are not reflected on exchange rates.

Demographics refers to information that shows he populations composition on a given area. This information comprises of age, gender, income, race, population growth and migration patterns. These factors determine the price of commodities, demand and supply phases. Changes in demographics can have significant impact on the market trends of a nation. Investors need to analyze the demand and supply effects. Changes in interest rates can influence a person’s ability of purchasing an item since, if the interest rates fall, the mortgages of buying a house for example decreases and increases the demand for the house. When the interest rates rise, the mortgage increases, lowering the demand for the house.

Investment channelization affects the economy in that, if people have invested in buildings, there is sensitivity to economic activities due to the type of lease structure inherent in the business (Stretton 1999). Structures are bound to be demolished any time especially if they are located on public land. On the same note, buildings located on non-strategic business ventures are likely to yield less profits in terms of rent compared to those that are strategically located. People should be advised to invest on appreciating resources such as land as opposed to depreciating resources.

Employment is another key economic determining factor. Employed persons contribute to the economy through tax payment (Stretton 1999). Employment also improves the living standards of people in a given population. Openness to trade is determined by factors such as communication patterns between nations, political stability and history of a nation in terms of trading patterns. Communication strengthens business relations between nations. Political stability ensures freedom of movement and security in conducting trade activities.

The Key Factors Driving the Qatari Economy

EconomyWatch (2010) reports that Qatar is one of the fastest growing economies across the globe and has surpassed countries like Turkmenistan and Singapore according to 2010 economic survey 2010. The survey revealed that by 2010, Qatar’s real domestic product (GDP) growth rate stood at 19.4 percent. Its economic growth has been consistent since 2008 in which it I ranked among the top three world’s fastest growing economies. In fact, economists believe foresee the growth to continue by double-digits in the coming years. The growth is attributed to by many factors among them being producer of oil and natural gasses.

EconomyWatch (2010) argues that the growth in Qatar’s economy has mainly been spurred by the fact that it has abundant oil and natural gas. For instance, it is estimated that natural gas and oil industries contributes 50 percent of the gross domestic product, with 85% of the export earnings and the other 70% being revenue. 2010 statistics show that 76.98 billion cubic meters of natural gas was produced in Qatar which accounts for an average of 1.213 million barrels of oil production daily. Qatar also ranks among the world’s top exporters of oil. This has helped in increasing economic growth based on the fact that there is high demand for oil and constant increase in prices globally.

The other factor that has spurred economic growth in Qatar is the country’s economic diversification efforts (Oxford Business Group 2009 p.42). EconomyWatch (2010) argues that since the economic down turn experienced in Qatar in 1980s and 90s, the government has ensured that the country reduces over-reliance on natural gas and oil for economic growth ensuring that it expands the country’s service sectors such as tourism and finance industries. For instance, Qatar’s financial centre built in 2005 is a state-of-the art business and financial centre that serves major multi-national companies and international financial service organizations. This has contributed a lot to Qatar’s economic growth. With regard to tourism sectors, the country has good infrastructural facilities, ranging from good roads, hotels, and natural sceneries developed to attract tourism has contributes largely to its economic growth. The fact that it has good infrastructural facilities is what led to its successful bid to host 2022 world cup. This has also increased its global profile thus increasing tourist’s influx (Oxford Business Group 2009 p.42-88).

Qatar’s industry sectors are also another factor that has contributed considerably to its economic growth. Apart from gas and oil industries, Qatar also has other industries such as steel, fertilizer and petrochemical industries. The government in partnership with private sectors has maintained a positive growth in all this industries. For instance, Industries Qatar (IQ) ranks second largest chemical producer in the Middle East just behind Basic industry organizations in Saudi Arabia. EconomyWatch 2010 survey reports that Qatar ranked among the world’s fastest growing in terms of industries in 2010, rising by 27.1% in from the preceding year. The trend has continued to grow. Thus it is one of the major factors that contribute a lot to the economic growth in Qatar.

The growth in Qatar’s economy is also attributed to the fact that the country has invested a lot in foreign countries (Oxford Business Group 2009 p.42-88. The money recouped back from such investments is used in the development of the country’s economic stimulus such as education sectors, health and other social facilities. The country also trade a lot with other countries like Japan. This has spurred a lot its economic growth. For instance, EconomyWatch (2010) Japan was the largest export partner of Qatar which accounted for 34.68 percent of all exports from Qatar. This was followed by South Korea, Singapore and India.

The other factor considered to contribute to the growth is the modest population in Qatar. The modest population has ensured that there is no strain in economic resources of the country. This is therefore a factor that has spurred its growth in GDP per capita.

Benefits and Drawbacks on Placing Reliance on Oil and Gas Revenues

Oil and gas are the main sources of revenue to the citizens. National wealth and revenues are mainly derived from oil and gas. As a major contributor to the national economy, oil and gas le ads to growth, development and good governance.  However, oil and gas have brought several challenges to the national government. These challenges do not only include the problems of management of oil and gas resources and the taxation issues. The challenges also include the government’s ability to control resources, governance and accountability in the usage and distribution of the national revenues to all members of the country (Cordesan, 1997).

Another major challenge of relying on oil and gas is the ability to manage the environment.  Unchecked oil and gas exploration and production leads to environmental de gradation. Crucial habitats for both plants and animals can be affected while producing oil. In addition, harmful gas emissions to the environment have led to global warming thus le adding to climate change. Current efforts have been channeled toward the production of energy through renewable sources of energy. Over reliability on gas and oil also reduces the chance of the coming generation in using the resource. With the increasing demand on oil and gas and the mass production, the coming generations  are likely not to benefit from oil and gas  in the coming few years. Investing in the renewable sources of energy is the best alternative to the usage of fossil fuels.  Placing reliance on oil has also led to the decreased food production. Large tracts of land have been used in the exploration and production of oil and gas (Amuzegar, 2001).

Over-reliance in oil revenues leads to increased economic tax reliability. Other contributors to the economic sector have witnesses a decrease in the amount of taxes they can contribute to the national economy. The agricultural sector has not been such effective in contributing to the national economy. However, reliance on oil and gas revenues has led to faster economic growth in Qatar (Cordesan, 1997).

Due to the increasing rate of petroleum rents. The government has been able to decrease the amount of taxes levied on its citizens. Reduced levels of taxes ensure that the citizens enjoy larger part of their income without being highly taxed by the government. However, corruption among government officials has led to the loss of huge amount of national resources. Corruption ensures that citizens do not en joy the potential benefits of the revenues generated from oil (Amuzegar, 2001).

On the contrary, reliance on oil and gas may pose challenges to the government especially when the oil and gas are not in large amounts. Fossil fuels sources can be depleted due to its constant usage and over reliability. The government therefore needs to invest t in other contributors to the economy such as industries. This will ensure that oil and gas shortage commonly witnessed or the eminent depletion of sources lead to a crisis.  Further, there has been lack of public accountability and the rampant corruption cases. This has led to fierce competition in the elective posts with competitors using violent means to deter their opponents from taking office. Politicians have continued to use state resources and facilities; there has also been the increased violation of human rights and harassments (Cordesan, 1997).

Trade barriers and the Impact on the Economy – oil and gas sector Qatar

Internally, Qatar maintains a number of trade barriers, which directly affect foreign investors willing to invest in the country. These barriers are mainly in form of import restrictions. First, the country is extra keen on the import of politically or religiously sensitive items and the Government of Qatar (GOQ) is expected to ban the import of such products.  Just before the 1995 closure of the Arab Boycott of Israel Office which was located in Doha, the government of Qatar unilaterally deleted some giant foreign firms from the blacklist. This included some US corporations. Qatar has lifted the tertiary and secondary aspects of the boycott and the as a result, the Israeli Trade Representation Office was set up in Doha. However, in a brief statement, the government of Qatar announced that this office was officially closed. This was just before the opening of the Organization of Islamic Conference in November, 2000.

Qatar does not have import quotas. However, a number of non-tariff barriers which discourage investment and trade arise occasionally. For example, Qatar maintained a banned the importation of beef from the US from 2005 until mid-2008. International trade in Qatar is also restricted by cultural barriers. For example, the imports of pork products is totally prohibited in Qatar because of cultural reasons. The country is s strong Islamic state and the consumption of pork is totally prohibited by their religious values (Arnous 2011).

International Trade Within Qatar

Imports over the one past decade, Qatar has depended more on imports. These imports range from basic food commodities to consumer goods. Specific import goods include machinery, chemicals, and transport equipment. The Imports of goods is mainly dominated by Organization for Economic Development and Cooperation (OECD) members namely US, UK, Japan, Italy, and Germany. Others include South Korea, Saudi Arabia, France, People’s Republic of China, and the United Arab Emirates. In 2010, the total import value for Qatar was $25.33 billion (CIA World Fact Book). Although Japan overtook the UK as Qatar’s chief machinery supplier, imports from the UK still account for an important percentage of Qatar’s imports. Overall, European Union (EU) is Qatar’s leading import trade partner. The value of Qatar imports doubled since 1990 as a result of improved purchasing power resulting from increased oil and gas sales and this peaked in 1999. Since the early 1990s, the capital gas and oil purchases have accounted for approximately 40% of the total import spending in Qatar (CIA World Fact Book). Unlike the export value, Qatar’s import value is consistent or predicable due to the large difference between its import and export values. Any one time, the country has sufficient money to fund its import trade. Oil and gas has therefore played an important role in maintaining a good import trade in Qatar.

The main export product in Qatar is crude oil. However, its dominance has begun declining over the recent years as a result of the increase in the export of Liquefied natural gas (LNGs). Crude oil accounts for about 56% of Qatar’s total exports and this reliance on crude oil has resulted to inconsistency in Qatar’s export bill (Miller, Agnes, & McBrewster 2010). This value has always fluctuated, to the positive and negative, as dictated by the global oil prices. Evidently, Qatar’s export revenues begun to surge beginning from 1999. in 1998 for example, export revenues were US$4.36 billion but this increased to US$6 billion in 1999 (CIA World Fact Book). Beginning this time, Japan has been the largest export partner, of Qatar. In 1998, exports to Japan alone accounted 58.1% of Qatar’s total export bill. 2010 estimates still places Japan as Qatar’s leading export partner and its trade value accounted for 30.3% of Qatar’s exports. Other important export partners for Qatar include South Korea (13.1%), India (8%), Singapore (7.7%), UK (4.2). Thailand and the US import from Qatar but on minimal levels compared to other export trade partners. Apart from exporting oil and LNG, Qatar also exports petroleum products, steel and fertilizers. In 2010, Qatar’s total export value was $104.3 billion (CIA World Fact Book).  The substantial revenues from oil and gas have allowed Qatar to maintain a significant trade surplus. This has been efficient in shielding the country from trade imbalances.

Research Methodology

Research Approach

Saunders et al. (2007) classify research approach into two main categories; deductive or inductive approaches. This research will use both approaches, as this study will analyse existing study and theories in relation to the subject. The study will rely on secondary data with sources including books, journals, government records, newspapers and reputable websites.  Primary data will also be relied on with questionnaires being issued directly to respondents. Structured interviews will also be conducted with the aim of establishing certain facts in relation to the subject from an authority’s point of view.

Data Collection

In relation to the study, a sample of 20 respondents will be used for the study. A random sample will be drawn from a population of nationals living in the capital city of Qatar. The sample will be drawn randomly at different parts of the city as they go about their businesses. Two respondents will be draw from 10 of the main and busiest streets of the city, one from each end of the street.  The 10th person to pass by the researcher’s standing or sitting position moving toward the other end of the street will be taken as a sample.

Questionnaires will be constructed using pre-defined statements where the respondents will be asked to respond based on their level of agreement with the statement. The questionnaire will be based on the Likert style questionnaire. Specifically, a five-point Likert scale will be used to indicate the degree to which an individual respondent agrees or disagrees with statements. These will range from “strongly disagree’ at one end and at the extreme end, “strongly agree”.

Each participant will be required to complete the questionnaire presented in two languages: Arabic and English. This will help to reduce the effects of language variations and thus increase the reliability of the results. In addition interviews will also be used as an additional method of gathering data. With respect to supporting this study, the people selected for the interviews will be carefully chosen and will be selected based on their position and knowledge of the area of study. For this study, two interviewees will be considered. One interviewee will be a government official working in a ministry or department directly concerned with the harvesting and processing of oil and gas. The second interviewee will be a top official in a privately owned organization that deals with oil and gas. These personalities are chosen owing to the presumed rich knowledge of the gas and oil sector and its impact on the economy.

Data Analysis

Once the data has been collected, it will be coded on SPSS software for analysis. In order to analyze the findings and results of the study, cross tabulation and descriptive statistics will be used to determine the absence or presence, and degree of association of a relationship between any combination/pair of variables that have been selected for analysis. This method will also allow an examination of the frequencies of responses or observations that fall into specific categories. A correlation coefficient will be calculated for the purpose of expressing the relationship that exists between any two variables.

Ethical Considerations

The research does not deal with a subject that is personal and so it is unlikely to attract serious ethical issues. All the same, the research will take into consideration a number of ethical issues in its procedures. Among them is the protection of the private and statutory rights of the participants and the community being surveyed. One of the things that will be done in line with this is obtaining informed consent from the participants to avoid undue intrusion. No personal data of the respondents will be collected, and minors will not be engaged in the survey.

The research questions will be framed in a way that they will help to maintain public confidence in the entire research process. Qatar is a society that highly regards its cultural values such as human relations. Because of this, the participants, especially female participants, will be approached in a more sensitive manner to avoid suspicion, misunderstanding, or undue concerns. Any conflicting interest will also be identified and taken note of.

References

Amuzegar, J (2001) Managing the Oil Wealth: Opec’s Windfalls and pitfalls, New York, I.B Tauris.

CIA world fact book (2010) Qatar Economy 2012

Cordesan, A. (1997) Bahrain, Oman, Qatar, and the UAE: Challenges of security. New York Westview press

Crystal, J. 1995. Oil and politics in the gulf: the merchants of Kuwait and Qatar, (1st Ed), Cambridge University Press. Cambridge.

Economist Intelligence Unit (2006) Qatar. Country Report, June 2006. Economist Intelligence Unit, London, UK.

EconomyWatch (2010) Qatar Economy

Government of Qatar, Planning Council (2006) Qatar 2025 Vision, Qatar, Government of Qatar

Mankiw, G. & Taylor, P. (2011) Economics, (2nd Ed), Nelson Education.

Miller, P., Agnes. F. & McBrewster, J (2010) Qatar: History of Qatar, Politics of Qatar, Municipalities of Qatar, Economy of Qatar, Geography of Qatar, (1st Ed), Alphascript Publishing.

Oxford Business Group (2009) The Report: Qatar 2009, Oxford, Oxford University Press.

Qatar Knowledge Economy Project (2007) Qatar Knowledge Economy Project

Saunders, M., Lewis, P and Thornhill, A. (2007) Research Methods for Business Students, (4th Ed). Prentice Hall, London.

Stretton H. (1999) Economics: A New Introduction, Pluto Press.

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Market Analysis Nike

Market Analysis Nike

Nike Inc. is a globally leading organisation involve in the development, design and global marketing and selling of apparel, athletic footwear, equipment and accessories. Nike is one of the largest sellers of athletic apparel and footwear worldwide with more than 200 subsidiaries all around the world. Nike is famous for its cutting edge technology.

Nike was founded in year 1964 by Phil Knight and Bill Bowerman as an importer and distributor of Japanese shoes and was named as Blue Ribbon Sports. It officially became Nike, Inc. in 1971. The company is one of the largest manufacturers of sports equipment and suppliers of apparel and athletic shoes.

PESTEL Analysis

Political

The company has favourable relationship with other countries and has its subsidiaries in around 200 countries. Every country has its own laws and regulations and therefore the company faces the risk of different tarrifs and non-tarrifs, regulations and laws in diverse countries. The adverse trade protection by Nike in global businesses affects its services and selling.

Economic

The economic downturn worldwide that reduces consumers’ confidence to spend money and hence affects the consumer purchases. Moreover, being a global brand the companies dealing in diverse countries create diversity in currency and exchanges which is sometimes unprofitable for Nike. Nike can take advantage to outsource the low cost manufactures as it does not have its own manufacturing unit and it globally outsource the manufacturing services from where it get from cheaper rates.

Socio-cultural factors

Nowadays, consumers are becoming more brand conscious and the buying habits of youth have changed a lot within two years. Moreover, the market share of female customers is increasing and Nike does not concentrate on them. Furthermore, there is diversity in the living habit of every individual. Therefore, all such things create issue for the company.

On the other hand, Nike get benefits because people are becoming more of brand conscious.

Technological factors

Nike is considered as a technologically innovative company that manufacture technically superior quality products. But the company is required to follow the concept if lean manufacturing and to use the up to date technology.

Environmental factors

 The company needs to follow certain policies regarding the safety of environment and every country has its own policy. The environmental sustainability is important issue and is relevant for the companies. Reduction in the consumption of energy comes under the corporate social responsibility. Nike has introduced the “green” products.

Legal factors

The legal factors that affect the working of the company are the variation in laws and regulations in diverse countries. Like the law related to the company’s social responsibility.

Unique Value Proposition

The company has unique value proposition on the design, durability and quality of its products. Nike’s primary strategy that is the reason for its unique value proposition is its innovativeness.  A value proposition is something a company provide its target customers that help in giving them a better result of choosing the company. Nike Inc. practice the form follows value. For creating such value it uses the following resources –

  • Design or R&D for new products;
  • Marketing of the new products that means to drive and create demand for it; and
  • Distribution of the new products that means to make sure they reach fast to the end user.

Nike has been among the greatest value creators because of its organisational form that entail concentration of people, processes and resources. Generally, the company has achieved maximum profitable growth giving higher level of productivity and low cost of production and it’s positive and flexible responses to the changing taste of customers.

Market Analysis Nike
Market Analysis Nike

Nike’s Global Strategy

The primary strategy of Nike is to build its presence in almost every major world posting event like Olympics, World cups, skating, etc.

Nike’s global marketing strategy includes 4 P’s of marketing – Product, Promotion, Price, and Place. The company has almost every range of products that include sports apparel, footwear, equipments and accessories. In starting, Nike was only targeting consumers related to sports but later they realized to expand and started emphasizing on casuals as well in countries like India where people wear sport shoes as casuals.

Nike uses Value based pricing and Price Leadership strategy. Value based pricing strategy is the one in which company decides the price of the product on the basis of value placed by the consumers. Nike has spent so much to maintain its brand value and this is the reason people customers like to buy Nike’s products for its symbol and are willing to pay even higher amount for the same.

The company also uses psychological pricing strategy where people think .99 is cheaper than .00. Nike also uses Higher Pricing strategy in which people feel that they are purchasing products of higher quality and higher prestige.

Global Sourcing

The company has relocated the manufacturing of its clothing and footwear in around 40 countries and employ around 8, 00, 000 people to do so. Nike manages a global virtual company from its headquarter through the combination of R&D functions and low cost of production.

Brand Portfolio

The company has followed the strategy to extend its brand and product line form only sports footwear to sports apparel, equipments and accessories. For that it has owned some affiliated businesses that include – Converse, Inc., Cole Haan, Nike Golf, LLC, Umbro, Ltd. These businesses play an essential role in the growth of the company.

Nike’s focus on long term financial objectives

The long term financial strategy of Nike include the following:

  • High single-digit revenue growth (average annual rate)
  • Mid-teens Earnings Per Share growth (average annual rate)
  • 25 % Return on Invested Capital
  • Increasing dividends within a target calendar year payout range of 25-35% of trailing four quarter earnings per share

Porter’s Five Forces

Barriers to Entry – Low

The barriers of entering to the industry of athletic footwear are very low. Though the companies have a great potential to enter into the industry because of the high level of competitiveness into the industry but the huge companies like Nike and Adidas maintain their competitive advantage and control their costs in such a way that it is really difficult for the new entrants to compete with them. Moreover, the company has a strong brand power that helps it in competing with the new entrants and to beat them. So, the entry of new entrants is quite low.

Bargaining Power of buyers – High

The number of buyers is quite high in comparison to the number of companies present in the market. Therefore, the companies are required to manufacture differentiated products and make use of most innovative strategies to market and sell their products in the market. Because of such reasons it is necessary for Nike to attract and retain the consumers and it is also necessary for the company to build strong brand. The strong brand value of Nike provides its customers loyalty and trust. The brand image is also necessary because most of the buyers are cost sensitive. This shows that the bargaining power of buyers is quite high.

Bargaining power of Suppliers – Low

The material that is primarily required for the industry entail cotton, rubber, and leather and there are so many suppliers of these materials in the market and therefore, the bargaining power of suppliers is very low or does not exist. The companies need to depend on a single supplier for these materials and they can switch over to the substitutes and this is the primary reason that suppliers have less bargaining power.

Threat of substitutes – Low

When we talk about fashion items than so many substitutes are there but for professional athlete no substitute for shoes is present. An athlete does not have any substitute to switch and therefore the threat of substitute is low.

Rivalry among existing competitors – High

The company has strong competition with companies like Adidas, Puma, and Reebok. The rivals are extremely fierce and the company is considered hyper competitive. Therefore, there is a requirement of differentiated strategy that Nike is following. Still the rivalry among existing competitors is quite high.

SWOT Analysis

Strength

Nike is a highly competitive company that sponsor top athletes and gain valuable coverage.

The company has a strong brand image. Nike is a global brand and is considered as number one brand in sports items.

Nike is a very lean organization with no factories. It does not tie up cash in manufacturing workers. Rather it focuses on innovative products through its strong R&D. Nike start production of products when it is required and that too at lowest possible cost. Therefore, if the prices of product increases and the company is able to produce it at low prices in some other area then it move its production or manufacturing to that part.

Weaknesses

The first and foremost weakness of the company is that it is highly dependent on footwear market and does not have diversified range of sports products that erodes market shares of the company.

Nike does not have its own retailers and retail is the most sensitive sector. This is decreasing the prices of Nike’s products because retailers try to emphasize on Nike for low prices.

Opportunities

Nike considers it as a sports brand and not meant for fashion purpose. But development of the company’s product can offer it many opportunities because consumers do not buy its products for the purpose of sports.

Nike has a very strong image and high income group like to purchase its product for the sake of prestige and therefore Nike has opportunity to make development in the existing products like sports wears as well as to enter into the new market like that of  jewellery and sunglasses.

Nike should focus more on global expansion because even some emerging markets like China have a richer consumer to spend lavishly on sports products.

Threats

The costs and profit margins of the company are unstable over long run because of the company’s exposure to international trade. This is a global issue that Nike being a multinational brand is facing and because of which the company may be manufacturing and selling products in loss.

There is no sustainable competitive advantage in the industry because the market for the sports apparel and shoes is highly competitive and competitors in any way want to take away Nike’s market shares.

The retail sector as we discussed above is highly competitive and people really want to go for a best deal. Therefore, consumers make comparison between prices before purchasing a product and this is another threat for Nike.

Recommendation

Nike should concentrate on the impacts of its global expansion on its brand integrity and loyalty of the customers. Moreover, the company should push itself in digital sports. The company should also concentrate on the Women Athletics. Nike has a very strong image and therefore it can also concentrate on fashion products with the sports products. Nike should also concentrate on application of lean in manufacturing its products.

Being a global brand the company is required to deal with consumers in diverse locations and countries and therefore Nike needs to monitor the movement of foreign exchange. For that it is necessary for the company to engage itself in substantial forward hedging of the currency that provides it with the moderate shift in the value of currency and save Nike from loss incurred because of dealing in diverse currencies.

References

Katz, D., 2004. NIKE Kingdom. Triumphpublish Co., Ltd.

I hope you liked this post written on the market analysis of Nike. What other marketing strategies do you think will help Nike maintain its position as the number one sports clothing manufacturer in the world? Let us know in the comments.

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