The United Parcel Service is a leading American package services company that provides the customers from all over the world with such printed materials as business cards, flyers, envelopes, etc. The products fall into a category of highly usable facilities among the customers of various backgrounds. Still, there are always such factors as price changes, advertising peculiarities, or information technologies development that can lead to the UPS demand alterations. Thus, according to Howard, there is a tendency for the clients to give preference to the progressive digital package deliveries. An example of such a program is Uber.
The mobile innovation draws the attention of the customers, due to its portability and usage convenience (par. 1). There is always a chance of demand increase as well. For instance, successful advertising can become a primary reason for the companys revenue expand. Due to Riley, online advertisement costs overtook television outlay in 2009 (par. 13). Therefore, efficient Internet blasting can turn the UPS Store into a leading on-demand company.
Supply Variations
Changes in the UPS supplies can be imposed by multiple factors. For instance, a supply increase can depend on the improvement of packaging technologies while its decrease can be stipulated by the heightened taxes on paper or other facilities that are used by the company. Nevertheless, it has to be noted that any input changes can produce a positive impact on the stores production. Due to Bertie and Matthew, decreases in supply enhance the level of the managements control activities and extends the companys knowledge base since there appears a need to search for innovative solutions (47).
Interrelation Between Demand and Quantity
In contrast to supply and demand changes, and alteration in quantity relies on a products price. The expansiveness of the UPS products can lead to the company losing a big part of its customers. Consequently, there is a decrease in demand. The quantity change can evoke a demand increase as well if the company lowers the prices for its services (Agbe par. 2). The relation between the prices and selling rates can be demonstrated with the help of graphical demand curves. If the quantity demand curve appears to be negative for the UPS store, one of the possible reasons can be rooted at heightened prices for such supplies like paper, plastic details, etc.
The issue is closely interrelated with the store competitors achievements and progress. For instance, if the quantity demand shows adverse results and the sails of the UPS go down, it can be stipulated by the fact that such packaging corporations as FedEx or Purolator lowered the prices for their production. Consequently, UPSs services can appear too costly for the clients at this stage.
The UPS Demand Elasticity
The concept of elasticity underlines the nature of relationships in supply chains (Zomorrodi and Fayezi 452). Thus, elasticity illustrates the customers perception of the companys product as well as responsiveness to the quality changes. Since the UPS services popularity is gradually decreasing, due to the introduction of such digital substitutions as Uber, an increase in price for the UPS production would rather lead to revenue shortage. Thus, the stores demand flexibility can be described as inelastic. According to Desmet and Parente, an extension of goods variety can result in elasticity rise (319). Therefore, the ultimate challenge for UPS management is to adapt its services to the needs of modern customers and to support its production with high-tech facilities.
Bertie, Greer and Ford Matthew. Managing Change in Supply Chains: A Process Comparison. Journal of Business Logistics. 30.2 (2009): 47-57. Print.
Desmet, Klaus and Stephen Parente. Bigger is Better: Market Size, Demand Elasticity, and Innovation. International Economic Review. 51.2 (2010): 319-333. Print.
Zomorrodi, Maryam and Sajad Fayezi. Understanding the Concept of Elasticity in Supply Chain Relationships: An Agency Theory Perspective. Asian Journal of Management Research. 1.2 (2010): 452-472. Print.
Home buying decisions are perhaps the single most important decisions that individuals have to make in their lifetime. This is so because homeownership is highly valued and, in almost all cases, is a reflection of an individuals worth. A lot of constraints, mostly financial, have to be weighed in and traded off against individuals needs and preferences. This is in a bid to ensure that one doesnt only buy a valuable home but also one that best suits their needs and preferences. For both home developers or investors and home seekers, it is imperatively important to have full market knowledge of the residential houses market to avoid making costly mistakes in homeownership transactions.
This particular study was therefore aimed at finding out and explaining how various home amenities and in particular car garages and swimming pools affect residential choices in homeownership. The specific research question the study aimed to answer was whether houses better sell when they are incorporated with both garage and pool amenities, with pool only, or, with garage only. In order to ascertain this, it was observed important to look into each scenario individually. It was also observed prudent to incorporate the residential area as a variable as this particular variable alone has a significant influence on home pricing.
Firstly, we reviewed recent home sales statistics with a keen interest in the price and distance from the city center of residential houses that had both the garage and pool. From the statistics reviewed here, it was observed that distance or locality from the city center and also to a large extent size of the facility acquired largely explained the difference in pricing or the price tag. As regards to the extent to which the garage and pool facilities influenced the pricing, it could not be established with certainty. Secondly, it was observed that about 30% of the homes purchased had pool facilities.
The main deduction from the literature reviewed was that of the various variables that were being investigated, only two were of direct relevance to the research question. These were; home price and distance. Home price was found to be largely explained by the distance or area from the city center. This confirmed the popular belief among economists who have studied the housing market that location has a huge bearing on housing pricing. It was thus concluded that a deeper understanding of the causal relationship between the two should be explored further.
In conclusion, the main objectives of the study were to ascertain whether pool and garage amenities do have a significant bearing on home pricing. From the research findings, these two facilities yield a very insignificant role in determining home pricing. The first and second hypotheses, therefore, do not hold, and we accept the third hypothesis i.e., the sales can largely depend on the area where the houses are located. The research carried was, therefore, very relevant to the issue being investigated. It would be recommended that the research question be reframed so as to investigate the causal relationship between housing pricing and location. Should there need, however, to find out the tastes and preferences of homeowners on pools and garage facilities or both, a survey questionnaire is most appropriate? This, however, cannot be done in relation to residential housing pricing. Additional research should be done to explore the satisfaction derived by homeowners by having these two amenities incorporated in their homes.
The bank chosen for analysis is Samba, which is located in Saudi Arabia. It has consistently performed well in the countrys economy, with current rankings placing at position 3 in terms of the total number of assets. However, the institution still has a lot to learn from its forerunners like National Commercial Bank and Al Rahji. Some macro environmental and internal forces may be affecting how effectively this institution is carrying out its work.
Critical analysis of the business environment
A PEST analysis of the business environment shows that economically, Saudi has one of the strongest outlooks in the world. As a result, investors need to consider expansion and other investments in business. It is currently ranked 12th in terms of ease of doing business (Credit Agricole, 2012). The countries tremendous oil reserves are likely to sustain it in the near and long term. However, this also exposes Samba Bank to oil price fluctuations. It is necessary for business players to consider diversification into other sectors. If oil prices do not rise substantially, the inflation may be kept under control. Overall, the economy is poised to grow at a promising rate of 5% per annum.
In terms of the political environment, the government plays a considerable role in encouraging foreign investment by opening up its borders. It has private key sectors of the economy like gas, telecommunications and petrochemicals. However, not all areas will be opened to private players since oil production, drilling and exploration are still highly restricted. Investors often enjoy the right not to pay taxes on personal income, and are not obligated to pay import duty concessions. Furthermore, land is relatively easy to purchase. However, exposure to regional instability may play a role in the countrys future competitiveness. Also, succession within the Saudi Kingdom is complicated and may be subject to control by the royal family since it is open to about 20 brothers.
Social factors that relate to the industry include a shortage in housing finance. This puts off potential foreign investors and also diminishes profits that can be derived from such a business. Labor in these nations has been the subject of much debate and criticism. Revenues from oil have pushed the cost of labor thus minimizing growth in non-oil sectors like manufacturing. Natives demand higher pay, which businesses are unable to sustain thus explaining why most laborers are foreign. No trade unions are permitted in the country, so it relatively easy for employers to control labor costs. Additionally, there is no minimum wage in the country; this makes workers welfare susceptible to abuse; notwithstanding, Samba, stands to benefit from this. Women scarcely contribute to the countrys workforce thereby minimizing total output.
Saudi Arabia is currently embracing information technology for business growth. A number of investments have been made in software upgrades and automation systems. This assists in having greater control over Sambas customer base, and fosters growth in the sector. However, challenges around internet censorship have been reported as some websites cannot be accessed in the country. This tends to put off several foreign investors who may be interested in working in the country.
Critical analysis of the Industry structure and attractiveness
The banking industry is one of the most attractive in the region owing to its consistent high performance. These organizations have adequate capital to carry out their activities. Furthermore, the industry has reported strong loan to deposit ratios of about 0.7 (Wesal et. al., 2013). This implies that companies are not as exposed to risk as others who have higher ratios. They tend to stay away from toxic debt and foreign debt as well. All banking institutions are required to maintain high liquidity and reserves, thereby making them financially strong.
Owing to the strong local economy, most banks work with internal players. This implies that they are insulated from financial markets of the world. Even cross-border lending is at a minimum in this sector. Mortgage laws are virtually nonexistent, so the domestic risks that come with provision of property assistance are kept low. Financial prudence is the order of the day in Saudi banks, which explains why they Saudi banks did relatively well despite the global financial downturn. Central banks around the Middle Eastern needed to intervene because of the 2008-2009 credit crunch. However, this was not the case for Saudi banks since they did not need to minimize provision of loans. As a result, their profit level stayed relatively constant (Al-Alwar, 2013).
In the event that an institution becomes insolvent, it always has the government to fall back on for recapitalization. However, if a harsh decline in oil prices occurs for a considerably long time, then the banking sector will bear the brunt. Overall, assets have been growing by approximately 13% in the entire industry between 2007 and 2011. It is postulated that these growth levels will continue to be sustained in the near future. Overall, the industry is attractive as it enjoys a rating of 2, which is only two countries away from being the safest banking system in the world.
Application of porters five forces
The degree of competition in the banking sector is relatively low as there are currently 20 active institutions in the industry. Among these, 12 of the banks control most of the assets with the remaining 8 accessing only 2%. The three largest institutions, including Samba, account for 45% of market share. This implies that the company is at a strong position monetarily.
Threats of new substitutes come in the form of specialized credit institution. The government has created these entities in order to account for gaps in loan provisions. Furthermore, the organizations do not work under capital market authority supervision like Samba. Currently, five of them operate in the Saudi economy, yet they account for 24% of loans lent to the private sector. Therefore, Samba is under considerable threat by these entities and should consider revising its loan portfolios.
Buyer power is relatively minimal in the country because of the ratio of banks to people. Consumers have minimal options from which to chose, so they have to contend with whatever the banks offer them. Additionally, they do not have the freedom to access home loans or other types of loans designed for their businesses. Banks in Saudi are extremely cautious thus putting buyers at a disadvantage in terms of what they can or cannot get from the enterprise. Many institutions have not yet reached the domestic deposit limit of 85% with most of them operating at 82%. Samba has an even lower ratio of 63% (Alawi, 2013).
New entrants have a relatively minimal risk of entry in the institution. Since organizations like Samba control a large share of the banking market, it is difficult for new entrants to complete with these huge institutions. It takes a long time before a bank establishes itself in the market and builds a brand that consumers can recognise. The huge capital investments needed to form a bank of considerable repute are prohibitive. This explains why the banking sector in Saudi is one of the most underpenetrated in the region. The Kingdom only has 46% while the UAE has 89% penetration and Qatar 69%. Furthermore, the countrys laws are rather strict for formation of new financial institutions. As a result, Samba is at a considerable advantage when it comes to this.
Finally, supplier power is relatively moderate in the industry. Only one institution is not listed (The National Commercial Bank), so the rest of them are exposed to the market directly and cannot attribute their success to the central bank or any national entity. Information technology providers who manage banks databases and information are high in number, so financiers have several options from which to choose. Those entities that control the ATM banking system, mobile and internet banking tend to belong to large conglomerates. Therefore, in this regard, banks appear to have diminished prospects.
Application of game theory in Samba and why this would be beneficial
Game theory requires stakeholders to consider the pros and cons of cooperation or individualistic behavior (Aumann, 2008). SME lending is at an all-time low in the Saudi banking sector. This category only accounts for 2% of the loans sector. If Samba decides to act alone, it may be taking on unusually high risk. Conversely, if the company cooperates with other institutions, then it may minimize its returns but be less insulated from shocks. The Saudi government has an industrial development fund designed to offer guarantees to bank lending to SMEs. However, those guarantees are likely to reduce if they are spread across a wide scope of players.
Using game theory, Samba can enjoy greater returns if it started this move towards greater SME lending. Furthermore, since the government offer guarantees, then it will be at a more advantageous position than those who begin late. It is for this reason that the company could gain from selfish behavior in SME financing.
Recommendations that would improve competitiveness
Samba needs to consider increasing its lending activity. In an effort to protect itself from toxic shock, the institution has refrained from taking advantage of this opportunity. Currently, the lowest loan-to-deposit ratios belong to Samba. It thus has a lot of room to expand lending risks without exposing itself to risks and violations of the countrys regulatory body. The bank has had considerable challenges with corporate lending, so it may want to consider SME lending as well as retail lending.
Under penetration may be dealt with by opening new branches in different parts of the country. Therefore, the organization needs to consider expanding in key commercial centers. A lot of profit can be made if the bank commits itself to this strategy. Since loans account for 37% of the penetration levels and deposits account for 46% of these activities, it makes more sense for the institution to focus more on lending rather than deposits when it stretches itself.
Finally, the company needs to consider entering the SME industry as explained in the earlier portion of the sector. The risks that put the company away can be mitigated through government support. Furthermore, SME sector contributions are substantially low in the Kingdom of Saudi Arabia compared to other parts of the region.
References
Alawi, A, 2013, Saudi banking sector. Web.
Al-Alwar, I, 2013, Saudi banking sector rock solid despite global economic crisis. Web.
Aumann, R, 2008, Game theory-The new palgrave dictionary of economics, McMillan, London. Web.
Credit Agricole, 2012, The kingdom of Saudi Arabia: An overview. Web.
Wesal, E., Hanan, A, Gomaa, M, Afafa, A, Taiha, B, 2013, Saudi banking sector current and future trends. Web.
In labour economics, the techniques used to manage pay is of great significance in the conduct of workplace affairs. The payment of labour is fundamental in moulding the relationship between employers and employee (Lipsey & Chrystal, 2007, p. 217).
Indeed, it is the most visible focal point of all concerns related to labour. It is against this back drop that employers have devised various value propositions in fixing pay for their employees. The pay-fixing strategies have undergone notable transformations in the latter years (Lipsey & Chrystal, 2007, p. 576).
Needless to say, this has fairly weakened the influence of labour unions bearing in mind that competitive pressures have become intense and globalised.
Nonetheless, it is imperative to mention that the cost of labour is pay and consequently it would cover wider terrains of market force that than the influence brought about by a unit employer (Lipsey & Chrystal, 2007, p. 9). To be precise, pay can be described as the primary compensation for labour done within a given period of time.
From the background of conventional economic theory, there is a conspicuous denial that employers do not have any defined role in setting up pay standards.
However, it is commonplace for similar firms operating within the same geographical environment and market conditions to offer varying wages to their employees, which can only be explained by the fact there are other factors that determine pay other than the internal mechanics of a firm (Baumol & Blinder, 2007, p.165).
This paper explores the extent at which the labour market determines pay with cross reference to organisational behaviour patterns within a firm as well as the impact of state regulation on wage standards.
Labour remains as one of the most fundamental factors of production (Lipsey & Chrystal, 2007, p.208). In labour economics, it is perceived to be a derived demand in the sense that it is critically required in the process of production, not just an intermediary component.
In any case, revenue generation and profitability of a business organisation is largely dependent on labour input. Moreover, the Marginal Revenue Product will quite often determine the need for surplus labour whenever required by a firm (Lipsey & Chrystal, 2007, p. 638).
In addition, the marginal cost of an employee is yet another determinant whether additional labour will be required by a firm or not (White, 2002). For example, a firm can only retain a certain number of workers above which it will cease to be profitable.
In order to obtain the right computation of the Marginal Revenue Product, the product between the cost price of the either good or service at the end of production and the Marginal Physical product of the employee is calculated (Baumol & Blinder, 2007, p.165).
If the firms Marginal Cost is less than the Marginal Revenue Product, then the business enterprise will be at liberty to hire an additional worker since it will boost profitability. Nevertheless, hiring of additional labour force can be effected by the firm up to a mark when the two margins are congruent to each other (Baumol & Blinder, 2007, p.167).
Hence, according to economic theory, the labour market will be considered saturated when the hiring firms have attained the mark whereby the Marginal Revenue product is equal to the Marginal Cost (Baumol & Blinder, 2007, p.169).
It is sometimes pragmatically cumbersome to equalize pay among employees in a given firm. This has been found to be notably common in labour markets that are partly or fully resilient or mixed altogether (Kessler & Purcel, 1992, pp.23-24).
For instance, if a doctor and a security officer are hired by the National Health Service, their pay will definitely differ by a great deal although working in the same firm (Kessler & Purcel, 1992, pp.18-21). There are myriad of factors that can be used to explain this phenomenon.
A security officer has a far lower Marginal Revenue Product than a doctor. Moreover, becoming a security officer has less barriers compared to the process of becoming a doctor. The training of a doctor is not only time and resource consuming; it also demands the right intellectual capability and tolerance for an individual to succeed in that profession (Crail, 2006).
It is the interdependence of the three forms of capital that the pay as well as Marginal Revenue Product will be affected within and between different geographical locations.
Likewise, the movement of any of the three types of capital among different countries will result into capital mobility which refers to the ease with which money can flow in and out of an economy or across various national borders. (Elmore, 2003).
At this juncture, it is vital to explore the two major pathways through which the labour markets can determine pay. Both the microeconomic and macroeconomic elements of a labour market can determine how much employees are paid on labour offered.
Both the individual employees and the specific firms themselves are believed to play their unique roles in shaping pay standards in the labour market (Ironside & Seifert, 1995, pp. 38-44). The application of microeconomics in a labour market can be used to explain this relationship (Brown, 2009).
A government can play momentous role in regulating the pay rate to workers at different levels. In order to achieve this type of regulation, a state can set up base lines for two types of pay namely the minimum and the living wage (Dennis, 2005, p.35).
In either case, periodic time standards within which certain pay rates should be implemented to workers are stipulate by a government. In United Kingdom, for instance, a National Minimum Wage Act was enforced way back in 1998 (Anker, 2006). Many other countries especially in the developed world have already adopted minimum wage standards for workers (Steifert, 1992).
In some cases, a living wage has been embraced by some firms (Dennis, 2005, pp.29-33). There is need to distinguish between minimum wage and living wage as applied in various work environments.
In most accepted and well documented statutory definitions, the term minimum wage is mainly applicable to labourers who are either skilled or semi-skilled. Different countries across the world have distinct minimum wage stipulations based on the economic performance as well as the cost and standards of living (Locke, Amengual & Mangla, 2009).
First, a living wage is primarily a basic pay awarded to workers so that they can be able to adequately meet their daily needs (Brown, 2009, pp.102-106). A living wage ensures that an individual is in a position to provide for basic needs and wants that are acceptable to the normal standard of living.
For instance, a living age should be able to cater for food, education, healthcare as well as other expenses such as the cost of commuting. Most governments would demand companies and organisations to pay workers some minimum wage so that they can be in a position to foot various expenses even as they deliver their services on a day-to-day basis (Welfare, 2006).
On the other hand, a minimum wage refers to a fixed pay stipulated by a government or other employee welfare agencies that employers are supposed to pay their workers. The authority charged with the duty of fixing a minimum wage must be legally instituted so that it can enforce its mandate through a legal pursuit especially in cases where employers flout regulations.
This least amount of wage that may be awarded to workers can also be put in place by a formal agreement between the employer and other interested parties such as workers themselves or labour unions (Anker, 2006, p. 324). In addition, a minimum wage can affect either the whole state or a specific group of workers.
Although most legal provisions on minimum wage are often binding to employee groups, there are certain occupations which may not be required to abide by these regulations.
For example, employees in the service and agricultural sector in United States are exempted from the minimum wage conditions. Further, minimum wage varies from country to country (Anker, 2006, pp.316-319).
On the same note, a commensurate wage may be paid to employees who have special physical or mental needs. This may still be classified as minimum wage payable to people with disabilities. It is imperative to note that each worker has a unique ability and performance at work regardless of the disability.
Hence, the commensurate wage which acts as the minimum wage for the disabled may not be uniform across the board. Moreover, this wage is also dependent on the geographical setting and the status of the economy from which the workforce is derived (Lipsey & Chrystal, 2007).
The legal framework governing the living wage principally differs from those regulating minimum wage. One outstanding feature of a living wage is that in most cases, the coverage of its legality may affect only a small fraction of the workforce contrary to the minimum wage whose provisions affect a larger population.
The living wage laws mostly affect specific group of workers in given organizations so that they can afford both basic and secondary needs (Ironside & Seifert, 1995). In addition, a living wage is often used in some countries to calculate poverty index while the minimum wage cannot be used for such purposes.
Hence, it goes without saying that the two types of wages are related but completely different from each other. In order to further create a vivid distinction between minimum wage and living wage, it is pertinent to investigate the effects brought about by both types of wages (Industrial Relations Services, 2002).
In real practice, low income workers can practically benefit when the living wage is implemented at their place of work. In line with this, the urban poverty index can be lowered substantially whenever this ordinance is implemented, bearing in mind that it caters for a larger population of workers than the minimum wage (Koshiro, 1992).
Although the typical low income earners are the beneficiaries of this type of wage, it may lead to lack of efficiency in companies during periods of recession In addition; firms which are still at their infancy stage may be unfavoured economically by the seemingly high spending on wages contrary to the revenue generated (Procter et al., 1993).
Worse still, when minimum wage is followed to the letter, it has the potential to trigger inflation, which may usher in tough times for workers since their pay may be maintained to the minimal due to hard economic times (Adam, 2005, p.31).
Therefore, as much as a government may determine workers pay through legal provisions as mentioned above, it may be not be a very strong and independent variable in wage setting compared the labour markets (Income data services, 2001).
Notwithstanding state regulation on pay rates for employees, collective bargaining and agreements between workers and labour unions can curtail pay within the comfort of both the firm and workers.
A firm is primarily defined as a business enterprise formulated to specifically supply goods and/or services to end users. It may be publicly or privately owned and its main purpose is revenue generation. There are myriad of labour theories that are integral to firms.
For example, the concept that pay rates will differ across firms is expounded in classical view theory (Dennis, 2005). It elaborates that marginal productivity and pay rates will reflect each other since different firms have access to various amenities that results into variation in the amount paid to workers.
According to the efficiency wage view, workers who are not duly supervised at workplace are more likely to be offered higher pay than those who are continually monitored. Moreover, pay variations across different firms is also occasioned by inequality in unionization rates according to the labour market theory.
Modern policy debate on role of a firm in setting pay standards is largely dominated by the neo-classical theory of the firm. Wage equalization is a possible occurrence in any firm when this theory is applied in labour market. However, the theory can only work in an ideal market situation where several factors have been held constant.
For instance, the theory requires a free or liberalized market (Egan, 2004). There should be no state regulation whatsoever. Market response by consumers should be self-driven and void of any statutory interference.
The 1916-1918 Whitley Committee proposed quite a number of recommendations that would seek to not only recognize labour unions but also strengthen their roles as part of building viable industrial relations. The principles adopted thereafter came to be known as Whitleyism (Steifert, 1992, pp.212-216).
The fundamentals of extensive industrial bargaining were thereafter adopted. Since then, collective bargaining on workers pay has been done through trade unions. Indeed, Whitleyism has been very instrumental in setting up pay standards in various industries.
The Annual Survey of Hours and Earnings (ASHE) is an important parameter that can be used in the determination of pay standards (Brown, 2009, p.12). This survey provides data on earnings make up as well as the hourly distribution relative to the pay levels of workers spread across various regions and job categories. Hence, the government can make use of ASHE in setting up the minimum wage in various industries.
Events within a firm can, in practice, lead to marked differences in wages. One cause for such differences is the organizational behavior of policy and decision makers running a firm. On the same note, a firm can adjust its worker wages due to market failures occasioned by external factors such as inflation and decline in demand.
On the other hand, a worker may stand out in the labour market irrespective of the internal actions of decision makers within a firm (ACAS, 2011). Through human capital theory, an employee who has advanced education and training will likely receive higher wages than the colleagues who are not.
Besides, an employee with a unique talent will be part of a non-competing group since it is impossible to train individuals to acquire the very talent. As a result, the employee will most likely stand a higher chance of receiving higher pay than others.
When employees tend to defend the territory of their jobs, it is referred to as balkanization. They can achieve this by acquiring higher qualifications or using gender, legal, race or cultural barriers. Over and above the aforementioned pay determinants in a firm, differences in wages may also result from working skills and experience gained by an employee.
Workers with higher skills and better working experience are competitive in the labour market. Moreover, the nature of the responsibility or job description assigned to an employee by a firm will determine the pay rate. Lighter and more direct responsibilities will more likely attract meager pay from the labour market (Kessler & Purcel, 1992).
Furthermore, the effort needed to discharge a given responsibility is yet another consideration when setting wage standards within a firm. The aggregate pay will also be affected by the rate of unemployment. Realistically, the initial phase of most wage setting is bargaining.
Thos may take place between the employer and employee or between a labour union and employer. In whichever case, the bargaining power of workers is adversely affected and further weakened by higher unemployment index. Workers are compelled to accept lower pay since the labour market is saturated with job seekers.
As a consequence, firms will pay remunerate their workers poorly by taking advantage of the situation (Adam, 2005, pp.32-33). Worse still, the contracted workers will be willing and ready to work in spite of the lower pay since they do not have any alternative.
According to ACAS definition, job evaluation refers to how much a particular job is worth within workplace (Egan, 2004, pp.9-10). It is a consistent approach whereby a ranking process is used to categorise various jobs based on the relative demand placed on a particular job by an employee.
Hence, job evaluation assists in setting up a benchmark for a grading structure that is not only orderly but also fair enough. Moreover, the job evaluation procedure permits the selection of benchmarks whereby individual jobs are ranked in terms of their relative value.
In order to carry out an effective job evaluation, a factor plan is necessary. These are components that are necessary when evaluating jobs. When job evaluation is implemented to the letter, it is possible to set up benchmarks that can be used to determine pay (Egan, 2004, pp.12-13).
For instance, the relative value attached to a given job can be used to set up pay standards since it is both a system and structure used to determine pay.
In summing up, it is imperative to reiterate that the extent to which labour market determines pay can only be evaluated when other market forces such as state regulation and internal firm mechanics are analysed. The labour market is in itself a derived demand since the process of production cannot take off without its inclusion. Besides, profitability of a firm is a direct function of labour.
Hence, whenever a firm requires additional labour, the Marginal Revenue Product and the Marginal Cost ought to be compared. When the two components are balanced, then a firm can no longer hire additional employees. These are strong labour market imperatives that can explain why the labour market is a major pay determinant.
On the other hand, a government can set up the minimum wage for workers within different categories. Hiring firms are then supposed to comply with the pay standards according to the set laws. A case example is the United Kingdom which enacted the National Minimum Wage for its citizens. In some cases, governments and individual firms may set a living wage for a certain segment of workers.
Finally, determination of pay can be effected by a firm. For example, the decision making organ of a firm may opt to set pay standard that is consistent with the goals and objectives of the firm. Besides, the level of experience, skills and competences can elevate the wage level of a worker.
Moreover, the application of the human capital theory whereby a worker has undergone further education and training may also determine the pay standard for that employee. Meanwhile, out of the three elements, the labour market remains to be the one single most determining factor when setting up wage standards.
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Managing a common pool resource is often a complicated task. Its complexity has interested conservationists, environmentalists and scholars alike. Particularly, the need for societies to adopt sustainable natural resource exploitation practices has emphasized this issue in social and economic studies. Before delving further into the details of this issue, it is crucial to understand that common properties encompass natural resources that are only useful when communities, or groups of people, protect and derive benefits from it. These resources are unique because, unlike public goods, they are often susceptible to misuse and overexploitation.
Moreover, since they have a limited supply, they are extremely vulnerable to human activities. Therefore, it is important to adopt a common property use regime that addresses the unique challenges of managing common property resources.
This paper explores the above issue by discussing the use of common property philosophies in natural resource management. This discussion mainly focuses on marine resource management, as a common resource. Using the arguments from renowned theorists in this field, including Wade (95) and Hardin (1243), this paper shows that common resource management has a limited viability in modern societies. Similarly, using the findings of Cinner (36), through his investigations into the socioeconomic factors that influence customary marine tenure in the Indo-Pacific region, this paper shows that only a few socioeconomic changes (that happen today) support the common resource management regime. As a practical example of this fact, this paper explores how different societies have used the customary marine tenure, as a common resource management framework.
Customary Marine Tenure
Cinner (36) says that, for many generations, governments and community organizations in the western pacific region have used many resource management techniques that involve private restrictions on resource use to manage common pool resources. Most governments have adopted these measures through the customary marine tenure (CMT) localized control over natural resources. This system outlines the legal and cultural foundations for exploiting marine resources. Many communities, governments, and non-governmental organizations prefer to use this system, as opposed to other methods, because it addresses their conservation and community goals (Cinner 36).
Although this system has protected natural resources, in some communities, some critics have questioned its long-term viability, based on social and economic changes. For example, as shown below, Cinner (36) has investigated how changing socioeconomic factors affect CMTs reliability to protect marine resources.
Socioeconomic Changes
Wade (96) says the CMT system thrives when groups of people live in a situation where they could mutually benefit if they restrained their use of common-pool resources (Wade 96). Comparatively, the CMT system mainly thrives on a specific notion that exists within a society, at a specific time. If the socioeconomic framework changes, the CMT system becomes irrelevant (Cinner 36). This is the main problem associated with the CMT system. Some researchers have affirmed this criticism by doubting CMTs viability in places where external influences dominate common pool resource management (Cinner 36).
For example, Cinner (46) says the Asia Pacific region is undergoing several socioeconomic changes that affect marine tenure regimes. He argues that the tenure system is unable to cope with some of these changes (Cinner 46). For example, increased immigration and the adoption of free-market policies undermine common property management foundations. Similarly, a decreased dependence on marine resources has the same effect on the tenure system.
Comparatively, Cinnar (46) argues that the tenure system is immune from some socioeconomic changes, such as a high population growth. For example, he says the tenure system can work in communities that have up to 1,700 people (Cinner 46). However, strong marine tenure systems exist in communities that have a small immigrant population. Overall, the changing socioeconomic factors of different communities limit common property management regimes, such as the CMT. To support this view, many collective action theorists have often argued that, without an external force, many communities would not protect common property resources, even if they could benefit from doing so (Wade 95). Similarly, many property right theorists have argued that many communities are bound to misuse common property resources by increasing their demand for such resources (Wade 95).
Wade (96) also believes that the social cost of lacking exclusivity in natural resource exploitation often undermines the benefits that come from protecting a common resource. Therefore, if people feel they lack the exclusive ownership rights of a marine resource, they are bound to increase its use, thereby leading to its overexploitation. Based on this analogy, Wade (96) supports the limited application of the CMT system.
Tragedy of the Commons
The tragedy of the commons is a philosophy introduced by Hardin (1243), which explains the problems associated with common property management. It explains the difficulty of preventing natural resource mismanagement because of peoples selfish interests. Stated differently, Hardin (1243) believes that the interests of a minority group of people, acting independently, would lead to the misuse and overexploitation of natural resources. Using the same argument, Hardin (1243) argues that welfare states often support natural resource mismanagement because they give room for free-riders to benefit from other peoples hard work. Therefore, Hardin (1243) argues that relying on human conscience to guide common resource pool management is impractical because not all people are altruistic.
Although the arguments of Hardin (1243) have prevailed for many decades, independent analyses show that the tragedy of commons philosophy has some shortcomings. For example, this philosophy is not prevalent in all human societies, as claimed by Hardin (1243). Moreover, selfish persons do not only serve their interests because they often collaborate with other people when undertaking their economic activities. Therefore, communities can realize collective interests in common pool resource management (selfish and collective interests can co-exist in common pool resource management). Nonetheless, Wade (233) says the validity of these criticisms mainly depends on several factors, including the characteristics of the protected natural resources, the characteristics of the communities that protect the resources, and the nature of the state-community relations that prevail in the country.
Conclusion
The common property management system depends on a few socioeconomic factors to make sense. However, some changes in these factors undermine the foundations of the tenure system. For example, this paper shows that high immigration rates and free-market policies undermine common property management. However, high population numbers have little effect on such systems. The tragedy of commons philosophy supports the limited viability of common property management because it shows how selfish interests could easily lead to natural resource mismanagement. The lack of exclusivity in the common property management system also undermines its viability because it causes increased natural resource use. Comprehensively, it is difficult to support the long-term viability of common property management because many socioeconomic changes undermine it. Comparatively, few of these changes support its practicability in many modern societies.
Works Cited
Cinner, Joshua. Socioeconomic Factors Influencing Customary Marine Tenure In The Indo-Pacific. Ecology and Society 10.1 (2005): 36 -50. Print.
Hardin, Garrett. The Tragedy of the Commons . Science 162.3859 (1968): 1243 1248. Print.
Wade, Robert. The Management of Common Property Resources: Collective Action as an Alternative to Privatisation or State Regulation. Cambridge Journal of Economics 11.1 (1987): 95-106. Print.
Price Index, Money Supply, Interest Rate and Unemployment Rate
The multiple linear regression model of Ancot is a relation equation that shows the relationship between two or more variables by placing a fixing linear equation in each of the variable with regards to the set of data (Ancot et al. 143). In this model every value of the independent variables x is associated with a value of the dependent variable y as in the standard multiple linear regression model given below n observation:
This model has a wide range of application and could actually be used to analyse the relationship between the real effective exchange rates and the macroeconomic variables like the consumer price index, the money supply, interest rate and the unemployment rates in various countries.
These variables help in the analysis of the economic growth and development of a countrys efficient economic modules (Ancot et al. 144). In this study we will focus on how the above variables relate to the model in the United State and the United Kingdom.
Consumer price index using Ancot multiple regression model is usually an effective way of calculating the changes in prices of goods and services with respect to exchange rates in stock exchange where their relationship is inverse. (Ancot et al. 144).
Money supply is also a variable used in the analysis of economic growth and development of a particular country and therefore Money supply and liquidity rate are variables that are directly proportional (Barrows & Naka 119). This has an adverse effect in the sense that there will be a realisation of an upward trend in the nominal rates and nominal equity prices (Barrows & Naka 120).
The final result is that there will be an optimistic relation between the supply and the returns of stock. In fitting money supply in the model, money is usually treated like a commodity which is bought and sold in the stock exchange market.
In the market interest, nominal rates study shows that with respect to the use of the multiple regression model an increase in the market interest leads to falling of the stock prices (Ancot et al. 140). This is because when the interest rates increase more money is held hence the value of interest bearing securities decreases causing a fall in the stock levels. This has a negative effect on the nominal rates of a particular economy.
The aspect of un-employment rates is widely studied and analysed using the model and the results reveals that the exchange rate has a significant impact on the unemployment rate (Frenkel & Ros 640). This is because unemployment affects capital accumulation which has a tendency to real currency appreciation.
Therefore unemployment is negatively affected by the exchange rate thus reducing the product wage in the traded goods sector. This also implies that a higher exchange rate leads to more devaluation of domestic currency (Paterson 253).
A study conducted in the US proves that as a variable of analysis industrial production greatly determines the rate of economic growth of a particular country. The measure used is the industrial production index whereby if there is increased production in a particular commodity then the industrial production index is high and thus leading to a high level of stock returns and hence interest rates (Duffie et al. 337).
In conclusion, other variables that can be used to analyse stock returns with application of the multiple linear regression model are; the gold price, the oil price, and the foreign exchange rate. However, the variables discussed above have an adverse effect on the economic growth, development and planning of a particular country.
This is clearly depicted by the fact that the countries with high development, high economic rates have high industrial production index making the stock levels to be high. The foreign exchange rates of such countries are also high thus leading to realisation of a stable economy.
Works Cited
Ancot, John, et al. Five principles of spatial econometrics illustrated. In Chatterji, M. and Kuenne, R. E., editors, Dynam-ics and Conict in Regional Structural Change: Essays in Honour of Walter Isard. Vol. 2. Macmillan, Basingstoke, United Kingdom, 1990. 144-155. Print.
Barrows, Clayton, and Atsuyuki Naka. Use of Macroeconomic Variables to Evaluate Selected Hospitality Stock Returns in the U.S. International Journal of Hospitality Management 13.2(1994):119-128. Print.
Duffie, Darrel, et al. Securities Leading, Shorting and Pricing. Journal of Financial Economics 66.1 (2002):307-339.
Frenkel, Roberto, and Jaime Ros. Unemployment and the Real Exchange Rate in Latin America. World Development, 34.4 (2006): 631646.
Paterson, Martin. Macroeconomics of Stock Price Fluctuations. Quarterly Journal of Business and Economics 26.2 (2000): 253-270. Print.
The budget for the City of Philadelphia was prepared by the Philadelphia city council department managers and other stakeholders. This budget can be used to evaluate performance when the budgeted level of activity is the same as the actual results. This analytical treatise will present a budget line for funding the renovation of the Franklin Delano Roosevelt Park, which is of interest to the local environmental groups and the area residents of the city of Philadelphia. The stakeholders are families around Philadelphia and beyond since the park is one of the most common recreational sites in this region. The findings of the analysis are based on the interview with the Philadelphia City clerk, Mr. John Claude.
Expenditure request and funding level
The Philadelphia budget council approved a budget of $100,000 to renovate the Franklin Delano Roosevelt Park. The request for the budget allocation was made by the local environmental lobby group called the Philadelphia Green Movement. In the last five years, the funding for renovation of the park has been to the tune of $56, 780 with the highest allocation being in the year 2011 at $32,000. In the year 2013, the annual budgetary allocation for general maintenance of the park was $8,000. The current renovation project is aimed at providing public goods such as better pathways, environmental conservation, and drainage within the Franklin Delano Roosevelt Park.
Political interests and intension
Being a public institution budget, it is apparent that it has a political language especially in addressing the core social pillars of the City such as environmental conservation, provision of public good (pathways expansion), and macro management of the Franklin Delano Roosevelt Parks sewage and water systems. Besides, the voters fall in the first pyramid in the hierarchy of command chain. Reflectively, the macro social issues are given the first priority in the allocation of resources and funding.
The renovation project at the Franklin Delano Roosevelt Park was championed by the local Philadelphia Green Movement alongside the council representative for the Philadelphia region. The non governmental agency and the council representative office managed to convince the budgeting team through collecting ten thousand signatures from the local residents. Since the Philadelphia region is predominantly associated with conservative society, the support was immense from the older generations.
Expenditure benefits
The budget message captures the three main elements of a complete budget. As a matter of fact, there are long-term, short-term, and midterm goals that are allocated resources according to their agency and costs of implementation. Besides, the budget statement has a clear policy for reviewing performance and raising revenues to fund its development goals. In addition, the budget factors in the demands of the city in terms of infrastructure and possible means of financing their expansion.
The main programs that are prioritized in the budget are completion of the public works relocation facility, completion of the widening project, environmental project completion, and upgrading water/sewage management system within the Franklin Delano Roosevelt Park. Through this expenditure, the municipalitys collective profile will be improved as the municipality interested in conservation efforts.
Besides, the municipality will benefit from increased park entry fee collection since the demand will improve upon completion of the renovation exercise. As a result, the municipality will have higher comparative advantage as the government agency interested in serving the interests of the local community through sustainable development and preservation of symbolic facilities such as the Franklin Delano Roosevelt Park. All the residents of the Philadelphia City are beneficiaries of the project. In addition, the local lobby and environmental groups are assured of the sustainability of the park through the renovation exercise.
Obstacles
Basically, an externality in the field of environmental conservation and sustainability refers to any benefit or cost which happens due to an action or activity. It directly affects a third party who may not be involved and has not made the choice to accept the benefit or cost. Reflectively, an externality is a secondary result of a primary action and may bring with it a benefits or a cost. There are two types of externalities, that is, positive and negative externality. Negative externalities are accompanied by costs incurred while positive externalities are characterized by strings of benefits. An ideal example of a negative externality in the park project is the continuous uncontrolled pollution activities that directly causes air from the sewage wastes. As a result of the pollution, the whole community has to incur the cost of poor health and clean up to restore the clean environment.
Conclusion
Conclusively, the main issues identified in this budget are the focus on the difference between the actual and budgeted amounts. It analyzes the total variance between standard and actual result in apportioning funds for different priorities in the renovation of the Franklin Delano Roosevelt Park. Being a public institution, the budget is characterized by a strong political language. Besides, the Philadelphia municipality is likely to benefit from a comparative advantage as a government agency with a sustainable environmental management policy.
According to W.K. Kellogh Foundation (1998), program evaluation is the efficiency, effectiveness, and accountability of a department, program or agency. It applies systematic measures and comparisons so as to provide the outcome of the program to executives who in turn use the results in making decisions for the program (W.K. Kellogh Foundation 1998).
An outcome is usually a description of short or long term effects, including those that were not planned for but occurred as a result of the programs outputs (United Way of America, 1998).The basic process of program evaluation involves outcome evaluation as discussed below.
Outcome Evaluation (W.K. Kellogh Foundation,1998)
According to W.K. Kellogh Foundation (1998), there is no specific method or approach can suit all programs in outcome evaluation. However, W.K. Kellogh Foundation (1998) recommends that it is important to start with the overall goals and outcomes of the program and then come up with a way of measuring these outcomes.
The initial step is to identify outcomes (W.K. Kellogh Foundation, 1998).This can be achieved by creating a team which may comprise of internal and external stakeholders to help you have a wider view of the outcomes of your organization (Herman & Associates, 2005).
The next step is to think about areas whereby change is eminent in the program. It could be change in clients, in the society or even in the larger systems (W.K. Kellogh Foundation, 1998).The outcomes can be classified into three groups: initial outcomes, intermediate outcomes and longer-term outcomes (Herman & Associates, 2005).
One way in which these outcomes can be measured is by is by identifying indicators. According to Lanzerotti & Lanzerotti (2004), an indicator should be something that is visible, audible, tangible or something that can be verified and every outcome should have at least one indicator .
Their main purpose is usually to determine the extent to which an outcome has been realized. The indicators can also be compared with targets and benchmarks. In this case, targets are your expected achievements in form of numbers while benchmarks are data from a past program that one can use to compare with a current program.
Logic models can also be used to measure outcomes in program evaluation. According to W.K. Kellogh Foundation (1998) a logic diagram is a diagram that helps clarify the links between the components of your program design.
The logic diagram is usually composed of inputs, activities, outputs, initial outcomes, intermediate outcomes and long term outcomes (W.K. Kellogh Foundation, 1998). This diagram can them be compared with the programs outcomes.
Quantitative and qualitative approaches can also be used in evaluating the program outcomes (United Way of America, 1998). According to Lanzerotti & Lanzerotti (2004), quantitative method involves experimentation and testing, a reflection of changes introduced by a program in numeric form, interviewing a large group of people, and analyzing relationships between hypothesized variables and the outcomes.
On the other hand, United Way of America (1998) notes that qualitative evaluation seeks to explain how a program functions, the views of the program implementers and the clients as well as the extent to which the objectives are met.
Some of the qualitative measures that can be applied include collection of non- numeric, in depth descriptions of the program, sorting through large amounts of data and allowing for in-depth study of selected issues (United Way of America, 1998).
The other evaluation method of outcomes is effectiveness and efficiency (Lanzerotti & Lanzerotti, 2004).Effectiveness seeks to examine how well the program performed. According to Lanzerotti & Lanzerotti (2004), this can be achieved by identifying standards, benchmarks or criteria against which progress or performance can be assessed.
On the other hand, efficiency seeks to find out whether the cost was worthy the outcome by determining the output to input ratio (United Way of America, 1998).
If the output ratio is greater than the input ratio, then there was efficiency but in case the input ratio is greater than the output ratio, then there was lack of efficiency in the program (W.K. Kellogh Foundation, 1998).The problem of inefficiency can be solved by looking for ways to minimize costs.
The final evaluation method of outcomes is by use of cost benefit analysis (W.K. Kellogh Foundation, 1998).although this method is commonly applied in the profit sector, it can also be applied in the non-profit sector. One is supposed to determine the relationship between the costs and the benefits.
According to W.K. Kellogh Foundation (1998) the cost benefit relationship is the relationship of the cost of the program to the cost of achieving them.
Politics of Goal Definition (Hellriegell & Slocum, 2007)
Political behavior often occurs in organizations due to different opinions over goals, different views about the organization and its limitations, different knowledge about dealing with situations as well as how to make use of resources that are scarce (Hellriegell & Slocum, 2007).These are the basic forces that result in politics of how goals are defined.
However, doing away with these forces is not possible because there is no point in life when all people will have similar views. Similarly, organizations are always striving to make use of the scarce resources so as to obtain the required goals. As a result, political behavior must be exhibited as every individual in the organization strives to acquire their preferred results (Hellriegell & Slocum, 2007).
In cases whereby such situations arise, a manager should not use force to stop such behavior but instead should work to see that such behavior does not impact the organization in a negative way (Herman & Associates, 2005).
According to Hellriegell & Slocum (2007) the political behavior among employees can be stimulated by the actions of a manager. For instance, as Hellriegell & Slocum (2007) notes in departments like accounting, human resources, and quality control, legal and information systems among others employees performance is hard to measure.
Thus, leaders processes give yield to inadequate resources in terms of pay, bonuses, and benefits (Hellriegell & Slocum, 2007).Other leaders tend to give the political behavior in the process of appraisal a blind eye and assume that it does not exist. However, politics in appraisal is a fact that can not be done away with and which can have several impacts.
Some of these impacts as noted by Hellriegell & Slocum (2007) include organizational goals and performance are undermined; increase political behavior in other decision making processes and expose the organization to litigation if employees are terminated.
In conclusion, program evaluation involves several steps. The first step should be to identify the outcomes. After that, other processes follow. These other processes include: identifying indicators, use of logic model, use of quantitative and qualitative methods, determining effectiveness and efficiency as well as determining the cost-benefit analysis.
On the other hand, political behavior is often displayed in organizations when it comes to formulation of goals. It is important for managers to know that this can not be avoided but can be minimized. One of the ways in which a manager can minimize political behavior is by ensuring that the goals are clear and specific.
References
Hellriegel, D. & Slocum, J.W. (2007). Organizational behavior. New York: Thomson Learning.
Herman, R. D. & Associates. (2005). The Jossey-Bass handbook of nonprofit leadership & management. 2nd ed. San Francisco: John Wiley & Sons.
Lanzerotti, R. & Lanzerott, L. (2004). Measuring Change to Make Change: The Fundraising Case for Program Evaluation. Grassroots Fundraising Journal, 23, 4-8.
United Way of America. (1996). Measuring Program Outcomes: A Practical Approach. Alexandria: United Way of America.
W. K. Kellogg Foundation. (1998).Outcomes Logic Model. Mexico: Kellogg Foundation
To understand the role of the correlation of surpluses and deficits in the economy of the United States, it is necessary to analyze the researchers findings in this field while paying much attention to the economists conclusions and possible economic predictions. In their article Speculative Growth: Hints from the U.S. Economy , Caballero, Farhi, and Hammour discuss the phenomenon of the extreme economic expansion in the United States in the 1990s while referring to the idea of speculative growth and analyzing the situation with references to the concept of fiscal surpluses ( AEA Journals ; American Economic Association ; Caballero, Farhi, and Hammour 1159). Caballero, Farhi, and Hammour state that the development of this economic phenomenon is possible when the procyclical fiscal surpluses can be observed in the United States economy.
The researchers article provides the important background for the analysis of the role of fiscal surpluses for the idea of speculative growth. It is necessary to note that the concept of the speculative growth is rather debatable, and this notion is actively discussed by the economists today. Thus, one of the main strengths of Caballero, Farhi, and Hammours investigation is in the fact that the researchers propose the discussion of the episodes of speculative growth in the economy of the United States referring to the examples of the 1990s, analyzing the associated environments and context, and paying much attention to the role of fiscal surpluses in the process (Caballero, Farhi, and Hammour 1159).
The authors of the article discuss the generation of procyclical fiscal surpluses as the key element to cause the unexpected economic growth. According to the researchers, the positive effect of the fiscal surpluses on developing the processes known as the speculative equilibrium and speculative growth depends on observed increases in the countrys investment (Caballero, Farhi, and Hammour 1162). As a result, fiscal surpluses guarantee the funding for this process and promote the situations in the economy discussed as the speculative growth. Thus, the researchers use the effective example of the situation in the United States during the 1990s in order to discuss the question, and the overall conclusions supported with the credible evidence are appropriate to develop the further discussion of this controversial issue (Caballero, Farhi, and Hammour 1164).
While focusing on the role of the fiscal surpluses and additional capital flows, the authors of the article propose to discuss the episodes of the speculative growth in the economy of the United States from the most appropriate perspective. Much attention should be paid to the fact that Caballero, Farhi, and Hammour analyze all the sources of the fiscal surpluses in detail, and they also demonstrate the connections between the procyclical fiscal surpluses and the national debt to discuss the ideas of speculative equilibrium and speculative growth (Caballero, Farhi, and Hammour 1172).
Thus, Caballero, Farhi, and Hammours research developed to analyze the sources of the speculative growth in the United States economy is important to be referred to while emphasizing the role of fiscal surpluses in the development of the economic phenomenon because procyclical fiscal surpluses are considered as the critical factors to influence the discussed economic situation. In this case, the article by Caballero, Farhi, and Hammour is the significant source to focus on the detailed discussion of the problem of speculative equilibrium and speculative growth.
Analysis of Valerie Rameys Can Government Purchases Stimulate the Economy?
While the understanding of the correlation of surpluses and deficits is based on the proper discussion and examination of both concepts, it is necessary to focus on analyzing the role of the deficit-financed increases which affect the government purchases in the United States. In the article Can Government Purchases Stimulate the Economy? , Valerie Ramey discusses the government purchases as the stimulus for the countrys economic development and growth while concentrating on the idea of the multiplier related to the government spending. In this case, the concept of deficit plays the most important role because of affecting the economic progress with references to the deficit-financed increase. That is why, Ramey states that the discussion of the government purchases seems to be irrelevant without accentuating the deficit-financed increase (Ramey 673).
The researchers purpose is to estimate the multiplier associated with the government spending, and the observed result is between 0.8 and 1.5 (Ramey 673-675). Thus, Rameys article provides the important discussion of the issue and interesting findings related to the role of the governments purchases and spending for the economic progress of the United States.
On the one hand, the scope of Rameys research can be discussed as rather limited because the investigator focuses only on stating the multiplier related to the government spending and government purchases in the United States during the 2000s. As a result, the reference to the idea of deficit depends on the limited purposes of the conducted research. On the other hand, Rameys research can be discussed as important because the investigator chooses to analyze the changes in the United States economy as a result of the economic crisis of 2008 with the focus on the ideas of government spending (Ramey 673-675). Thus, the researchers focus on the particular features of the fiscal policy and correlation of surpluses and deficits in the United States economy is significant for the further detailed examination of the controversial question.
The credibility of the authors research depends on the choice of empirical evidence associated with the problem. Ramey chooses to estimate and discuss the multiplier typical for the economy of the United States while referring to the numbers and financial reports characteristic for the post-crisis period. In the article, Ramey refers to the examined multiplier, and she also discusses the aspects causing the balanced budget in order to receive the opportunity to conclude about the role of deficits in affecting the United States economy. The strength of Rameys work is in the fact that the researcher states clearly the connection between the increases in government spending, deficits, and changed taxes (Ramey 675). Furthermore, Ramey proposes the statistical and effective numerical analysis of the role of deficit-financed increases in relation to the observed government spending while providing the real-life examples associated with the economy of the United States in the 2000s.
That is why, Rameys approach to discussing the question of the deficit in relation to the government purchases and spending can be considered as effective to propose the sound conclusions about the correlation of surpluses and deficits in the economy of the United States while referring to the early part of the 2000s, the post-crisis period, and the current situation in the country. Rameys article is important to provide economists with more evidence to discuss the role of the deficit-financed increase regarding the observed government purchases as the methods of stimulation for the economy of the United States.
Caballero, Ricardo, Emmanuel Farhi, and Mohamad Hammour. Speculative Growth: Hints from the U.S. Economy . American Economic Review 96.4 (2006): 1159-1192. Print.
Ramey, Valerie. Can Government Purchases Stimulate the Economy? Journal of Economic Literature 49.3 (2011): 673-685. Print.
This report will review my internship at the Saudi Hollandi Bank. The report will examine the performance of the bank in terms of strengths, weakness, opportunities, and threats. The report concentrates on individual observation and how this experience has impacted on my future direction.
Company background
Founded in 1926, the Saudi Hollandi Bank has grown from the initial retail financial to the current project financing product. The establishment of the branches such as the Al Khobah and Damman was implemented by the bank in 1954 to expand the scope of operation. The bank is currently renowned for offering customized financial services such as personal banking, business banking, and corporate banking. In the recent past, the company introduced ATM services, internet banking, insurance, and property financing (Saudi Hollandi Bank 2014).
The vision of the bank is to enhance service delivery through a proactive, friendly, and sustainable service delivery. The vision has internalized the aspects of quality services, affordable financial products, and long culture of reliability. The mission of the bank is to attract and maintain customers through provision of convenient and competitive financial services that surpass the anticipation of the clients (Saudi Hollandi Bank 2014).
The management team consists of the general manager, operations director, marketing director, and administration director. Under the directors, there are departmental heads leading the information technology, accounting, audit, human resource, and administration department. Under the departmental heads are the workers who are professional in the fields such as accounting, banking, labor management, and auditing. Basically, the bank has adopted the inverted triangle management model, whereby the employees have to take most of the responsibilities with the directors limited to leadership and goal setting (Saudi Hollandi Bank 2014).
SWOT analysis
Strengths
The stable and management team comprising of five directors and several managers are instrumental towards providing necessary support and guidance in provision of financial services to customers and reviewing current operational strategies, in line with the demands of their clients. For instance, the management team introduced the electronic banking service in response to the demands of the clients. The bank also enjoys consistency in profits and high asset quality as well as strong capitalization. In the last financial year, the banks profitability increased by 23% as compared to the previous year. This has enabled the bank to fund different business project initiatives at affordable loan repayment interest rates (Saudi Hollandi Bank 2014).
Weaknesses
The bank has more presence in the Al Khobah area than other parts of Saudi Arabia. Thus, the bank does not enjoy the substantive demand in the wider market, as its customer catchments area is restricted to the boundaries of the Al Khobah region. Besides, the focus of the bank is more on corporate and investment banking. This is counterproductive in terms of revenue generation since majority of its customers are small businesses and private individuals, who cannot operate in the corporate and investment platform. As a result of these weaknesses, the bank has not been able to efficiently penetrate the small business segment in the Saudi Arabia (Saudi Hollandi Bank 2014).
Opportunities
The bank has an opportunity to expand its opportunity to cater for leasing of finances since its asset base is strong enough to sustain this market. This opportunity will help in boosting the banks revenues and leadership position in the Saudi Arabian banking industry. Moreover, financing SSI sector could also be used as a very important venture avenue since the industry is still growing. As a result, the bank will be in a position to double its current revenues and increase the customer base (Saudi Hollandi Bank 2014).
Threats
The main threat to survival of the Saudi Hollandi Bank in Al Khobah region is the competition from other local banks as the Al Rajhi Bank and the NCB Bank. These banks have very strong customer base. Thus, the expansion and market penetration strategies that the Saudi Hollandi Bank proposes are likely to face opposition from these banks. The other threat for the bank comes as a result unrest in many parts of the Khobar region. These unrests may destabilize the free market and interfere with the financial products interest rates. However, this threat is minimal since the government has managed to maintain political stability in this region (Saudi Hollandi Bank 2014).
Organizational marketing strategy
The Saudi Hollandi Bank, located in Khobah region, uses business to customer strategy to design its marketing promotional service. The bank relies heavily on the local television channels, local business magazines, and social media to advertise the financial services. Besides, the bank relies on word of mouth from satisfied customers who have improved the banks referral network (Takahara & Liu 2007).
Organizational competitive strategy
The company has several products that are tailored to meet the demands of each client. The bank has a brighter and sustainable future based on statistical growth of market, market expansion, efficiency, and very competitive prices for its financial services, which cannot be offered by competitors. The companys market price offer on its high quality products will continue to lure the middle class consumers, who make up almost 40% of market (Bidgoli 2011).
Conceptual framework
The internship opportunity at the bank was significant understanding the operational framework in the banking industry. The operational framework comprises of policy and litigation to satisfy the demands of customers through creative and high quality services (McQuilten 2011).
Projects undertaken
I was given an opportunity to design and develop the banks customer service information system. Through collaboration with the banks information systems director, I was in a position to develop the system that could track the customer feedback. However, the system was limited customer connectivity. Since the system is yet to be implemented, it is difficult to establish challenges that may require solutions (Bidgoli 2011).
Evaluation of the internship experience
The internship experience was life changing since I had the opportunity to apply the class concepts in the bank. Besides, I had the opportunity to participate in the development of a communication system.
Summary of findings and recommendations
It is apparent that the Saudi Hollandi Bank, located in Al Khobah region, is well positioned to survive competition due to its interesting community management systems. Besides, the bank has a very dynamic team who are always in the forefront of designing creative products. However, the bank should expand on its customer feedback system to guarantee client loyalty.
References
Bidgoli, H. (2011). MIS2. New York, NY: Cengage Learning. Web.
McQuilten, G. (2011). Art in Consumer Culture: MIS-design. New York, NY: Ashgate Publishing. Web.
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