Category: Wealth

Introduction

This essay aims to analyze the meanings and interpretations of such words as wealth. Traditionally, this term (along with its derivatives) is understood as a large amount of money or valuable material possessions. Furthermore, this word is often viewed as an abundance of financial resources. To some extent, such an approach may be quite plausible especially in terms of economics but probably it narrows down the meaning of this term. According to the definition proposed in this paper, wealth is a combination of both spiritual and material values that a person has or thinks to have. This abstract idea is subjective at its core and each individual can measure it according to his or her standards. Judging from that, it is quite possible to say that this notion also implies the state of mental health and financial prosperity. Of course, one cannot presume that this definition is conclusive. Others may easily disagree with it arguing that universally accepted interpretation is more accurate and concise, but any abstraction tends to be complex and multi-faceted and it normally has several layers of meaning.

Wealth is as combination of material and spiritual values

In the first part of this definition, we advocate the opinion that this word is closely associated with spirituality. The first reason is purely linguistic because in English as well as in many other languages, there is such an expression as spiritual wealth which means that people focus not only on financial aspects of their well-being. Secondly, many ancient and modern philosophers such as Plato, Aristotle, Nietzsche, or Werner Krieglstein maintain that a human being has both physical and mental needs. Consequently, he or she seeks various resources to meet or saturate these demands. Certainly, it is impermissible for us to argue that wealth does not include money or that money is of no importance. Such a statement is hypocritical or self-deceptive. People, who are deprived of material possessions, may be reduced to an animal state and this involves moral degradation. One cannot deny the significance of financial resources; they help to maintain existence, make it more comfortable and satisfactory. However, people who think only about them eventually become enslaved by this obsession. There are many examples in literature and cinematography that substantiate this point of view. We may remember Honoré de Balzacs Gobseck, in which the author describes the life of a miser for whom money becomes the ultimate goal and this leads him to his destruction. Financial resources should be regarded only as a means to reach some aim or as a way to strengthen one’s position in society. However, they should not be considered as the aim, itself. People, who commit such errors, are brilliantly satirized by Walt Disney especially in his cartoon character Scrooge McDuck, who sets money above everything else and gets into a lot of difficulties mostly because of this passion for material values.

The subjectivity of the term of wealth

Then the question arises what exactly spiritual values include. How can they be identified? And do they exist? The most difficult thing is that they are immaterial, and cannot be shown using numbers, diagrams, graphics, tables, etc; they cannot be described as physical objects. And most importantly, these values are always dynamic because each man defines them in his way. Probably, these are those aspects of our life that give us stimulus and desire to live, for instance, hope, love, friendship, sense of humor, empathy. This list can further continue and it is virtually endless because everyone can easily add some new points which have not been mentioned before.

The state of being wealthy

As it has been previously noted, there are no criteria according to which people can measure wealth, because this term is subjective. In the vast, majority of cases, perception of oneself may vary and every person has one’s standards. Naturally, in terms of economics, some parameters help to assess the level of well-being and prosperity. But there are not always applicable because economics studies only quantitative but not qualitative data. Therefore, a wealthy man believes himself to be wealthy. Perhaps, such a philosophy is the only way to avoid inferiority complex or any other mental disorders that occur when people start thinking about the richest men on the planet.

Conclusion

On the whole, the notion of wealth has always been a subject of heated debate by economists, sociologists, psychologists, and so forth. We cannot presume that this debate will ever come to its end. The major difficulty in defining this is that it can be described only by other abstract notions, and this interpretation is not an exception. It is much easier to speak about concrete objects or living creatures that perform functions or activities in some manner. But the situation is much more complicated with the concept of wealth because it varies from one individual to another. Nevertheless, we can insist that wealth or richness should not be limited only to material values or material resources, because this word also includes spiritual well-being.

The article “Gifts of Mars: Warfare and Europe’s early rise to riches” by Nico Voigtländer and Hans-Joachim Voth illustrate how the political situation in Europe had shaped the economic development of the continent in the fourteenth century. Europe has historically been a fragmented continent, characterized by constant wars and religious conflict, at the cost of human life. Voigtländer and Voth believe that this socio-political scenario largely affected the picture of the economic development of the continent (168).

The first implication of the war-driven continent was a massive human loss. This resulted in a high fatality rate. Malthusian economics dominated developmental parameters prioritized land per person as the prime determinant of per capita output (Voigtländer and Voth 168). Due to the constant state of war, Europe had a significantly high average death rate, reducing population pressure that resulted in higher land-labor ratio and per capita income (Voigtländer and Voth 168).

This simply explains why Europe’s per capita income and urbanization rate was higher than that of China since 1700. However, the shortcoming of the Malthusian theory lies in its assumption of land as the fixed capital. Consequently, with population growth, the land-labor ratio declined. However, advancement in technology diminished the importance of this ratio, as productivity growth no longer depended on the land-labor ratio (Voigtländer and Voth 169).

The difference among modern economists regarding the effectiveness of Malthusian theory in explaining the development pattern in Europe before the industrial revolution creates a puzzle. Voigtländer and Voth point out that the Malthusian theory did not give any weightage to technological advancement, and hence, it played a negligible role in economic development. All importance was given to population growth. However, this logic is not sufficient to explain economic growth (Voigtländer and Voth 149). This becomes more evident when empirical data of the economy is reviewed after the Black Death in 1348-50.

Due to the Black Death, Europe faced a massive population loss, resulting in an increase in per capita income. However, this gain eroded with time, as mortality rate stabilized but in the case of Europe, this did not happen. Even after two generations, there was a large surplus income to tax. This, Voigtländer and Voth believe, was due to the surge in the frequency of wars fought (183). Due to the high degree of fragmentation of Europe, there was greater channeling of war income to the economy (183). Voigtländer and Voth believe that in Europe, war has played a pivotal role in the continent’s prosperity (184).

Voigtländer and Voth used two indicators of economic development – urbanization and per capita GDP – to assess the impact of war on economic development (177). They used cross-section data from early modern Europe to provide an empirical basis for their study (177). Their study indicates that whenever there is a greater frequency of war, there has been an increase in urbanization and per capita income in Europe (Voigtländer and Voth 178).

However, evidence from China did not show a similar trend. Though China had an impressive developmental pattern since the Middle Ages, as the empire was unified and peaceful, it fell behind Europe in per capita income and urbanization rate since the fourteenth century (180). China was politically stable and the country fought fewer wars. Therefore, China faced increasing population pressure, which was absent in Europe due to a high mortality rate. Further, the Chinese fertility rate was higher than that of Europe, causing a higher population growth rate (181). Therefore, this was one reason why Europe outperformed China in the Middle Ages before the industrial revolution.

The second interpretation for Europe’s economic success has been pinned on organizations that fostered commerce (Voigtländer and Voth 181). Some others believe that Europe developed its technological arsenal while that in other places, like China, underwent a decline (181). The main reason for this was the shortage of labor that induced the development of labor-saving devices (181). However, both these interpretations fall short of explaining the significant gain in per capita income during the Malthusian era. Voigtländer and Voth point out that it was due to a high level of mortality in Europe and a continuous state of war.

However, with an increase in income, the mortality rate rose and the cities noted a high rate of urbanization with sustained income. Further, Voigtländer and Voth point out, due to cultural and social constructs, the idea of family planning differed widely in Europe and in other continents (182). Further, the participation of women in economic activities also varied. This had a strong effect in determining the high economic development of Europe compared to others.

The article points out that war has been one of the determining factors that influenced economic development. The policy implications from this study are not as immense as this deals with the economic development in the Malthusian era. The Malthusian explanation of economic development does not hold for modern economies, as the underlying assumptions of the predominance of land-labor ratio as the primary factor affecting economic development has been substituted by innovation. Policy for the modern economy cannot be suggested based on a theory that does not hold a basis on the modern economy. However, it has been used effectively to explain the sudden growth of the European economy even when the continent has been at war most of the time.

Work Cited

Voigtländer, Nico, and Hans-Joachim Voth. “Gifts of Mars: Warfare and Europe’s early rise to riches.” The Journal of Economic Perspectives 27.4 (2013): 165-186. Print.

Introduction

After three centuries of slavery, almost one hundred years of Jim Crow, and decades of racial segregation, yet America has still a long way to go regarding the economic equality of its White and Black citizens. It is exceptionally for African Americans to climb the wealth and prosperity ladder. Thus, millions of those of African descent are subjected to restrictions and limitations. There is little to no disagreement regarding the fact that financial inequities, particularly those related to an individual’s or a community’s racial identity, are a complex issue. Despite that, there seems to be a rise in the popularity of public debate surrounding the origins and implications of such an imbalance. Economic inequality among Whites and Blacks has become an especially heated topic of current discussions about race, discrimination, and generational wealth. The following essay focuses on the reasons why it is challenging for the Black community in the United States to accumulate wealth and move upwards on the economic ladder. Systemic structural barriers in the form of government policies and discriminatory regulations serve as the cornerstone of the issue of racial wealth disparity in America.

The Myth of Economic Mobility

In the United States, there has been a prevailing misconception about economic mobility shared by millions of people. The very notion of the American Dream posits that everything is possible on the U.S. land as long as one works hard and shares American values. Thus, for decades now, the majority of the U.S. population has regarded economic mobility in America as the norm. However, this is certainly not the case for the Black community. Research demonstrates that it is extremely hard for African Americans to move up the ladder in terms of wealth accumulated over generations (White para. 6)., according to Katz and Krueger, “there has been a large decline in the rate of upward mobility across successive U.S. birth cohorts” (382). This statement reveals that the Black community has not been the only one affected by the challenges associated with economic mobility. Even for White and Asian households, which are considered some of the most prosperous in the nation, building wealth and passing it on to the next generation is increasingly hard. Therefore, economic mobility stopped being the norm in the United States long ago, despite common misconceptions and beliefs.

Current Realities

Before investigating the reasons behind the lack of economic mobility in the Black community, it is crucial to examine its direct outcome. Difficulties in accumulating and passing down wealth generation-to-generation result in low monetary inheritances for African Americans. Such inheritances serve as the foundation of all the current wealth Black people have in their possession nowadays. McIntosh et al. indicate that the most recent statistics demonstrate that “median net worth for white households has far exceeded that of Black households through recessions and booms over the last thirty years” (para. 4). In bringing up this evidence-based claim, the authors highlight that, as of 2020, Black family wealth is a lot lower than that of White family. According to Schermerhorn, the race-based wealth gap continues to expand as, currently, “the typical black family has just 1/10th the wealth of the typical white one” (para. 2). Despite the commonly-held assumption that there has been much progress in regards to the economic prosperity of African Americans since the Civil Rights movement, this is simply not the case.

The Government Is the Issue: The Quest to Uncover Complicit Actions and Regulations in Racial Economic Disparities

Primary Damages

The end of slavery seems to be only the beginning of the Black community’s struggle to overcome the legal barriers on the way to economic mobility. The authorities have simply replaced blatant theft in the form of slavery with institutional discrimination in the form of sharecropping, Jim Crow laws, and social security schemes. Furthermore, despite the progress in social mobility gained by the White population as a result of industrialization in the second half of the 19th century and 1900s, the Black population still faced various disadvantages. For instance, as industrial employment opportunities started to push the population towards cities, rents were disproportionally higher for those of African descent.

The Impact of the GI Bill

Apart from the challenges throughout the industrialization era, it is important to note the sham, which was the promise of GI benefits to Black veterans following World War II. This directive was following Jim Crow, which meant less well-paid employment and high-quality educational opportunities for African Americans (McCardle 122). Schermerhorn equates “the disadvantages of missing out on GI benefits” to “negative interest compounding in each generation” (para. 11). From this passage, it is evident that education and employment were the primary forces behind the mobility of the White population. Lessening the number of such opportunities and limiting the access to them for Black people affected the community’s overall potential to accumulate and transfer wealth.

The Politics of Prejudice

Apart from a variety of aforementioned mistreatments and discriminatory acts at the hands of the U.S. government, there has been a prevailing culture of racial prejudice in American society. Most alarmingly, it has transferred into politics and policing, resulting in mass incarceration. Contrary to popular belief, the trend of higher incarceration rates among Blacks is on the rise (Pettit and Gutierrez 1153). Schermerhorn notes that the likelihood of Black men going to prison has increased almost three times between 1980 and 2020 (para. 16). Thus, it is crucial to acknowledge that mass incarceration is the inescapable reality of the Black community.

On the one hand, this might have nothing to do directly with the economic immobility of African Americans. On the other hand, in the case of wealth accumulation and generational prosperity, incarceration rates do okay a big part. Incarceration often serves as the ultimate barrier for Black families to build wealth and transfer it generation-to-generation. Prison is rarely not synonymous with numerous missed opportunities associated with education, employment, family, and even voting. In summary, the mass incarceration of Black people in America is partially caused by a combination of the aforementioned historic challenges as well as an overall culture of resentment towards the Black community. Moreover, it is yet another example of structural failure to uplift the African American population on the way to economic mobility.

The Root Cause of Economic Immobility among African Americans

All of the government failures and discriminatory policies played a significant part in preventing the Black community from prospering. Most importantly, they served as a limitation to African Americans to transfer all the accumulated wealth over decades to the next generation. None of this can be applied to Whites, both in urban and rural areas who continuously passed down their wealth, creating a net of financial security and opportunity for their offspring. As a result, nowadays, according to the data provided by Schermerhorn, 20 percent of Black families “have a net worth of $0 or below; 75 percent have less than $10,000 for retirement” (para. 19). This demonstrates the severity of the racial economic divide between Black America and White America. Thus, it becomes apparent that the challenges the Black population faces on the way to economic mobility are systemic structural discrimination and racist prejudices, rather than individual factors. Unless the government learns from past mistakes and initiates solutions to alleviate barriers to racial economic equality in the U.S., there is little to no hope that the Black community will prosper and succeed in the long run.

Conclusion

In conclusion, it is crucial to recognize that there are numerous challenges, which limit the ability of Black people throughout the United States to accumulate and transfer wealth generation-to-generation. The main issue lies in the historic background shaping the current reality of the Black community in the United States. Segregation, discrimination, and the overall government support of the narrative of inequality between Whites and Blacks have all contributed to the politics of racial economic disparity. As a result of the U.S. authorities’ complicit actions and initiatives, African Americans are now facing an impending threat of moving even further down the economic ladder. Despite the common misconception that the end of slavery and the Civil Rights movement of the mid-20th century have eliminated the possibility of Blacks and Whites being unequal on an institutional level, the opposite is true. Structural, and not individual, factors are the driving force of the limitations and restrictions, which rob the Black community of any opportunity for building wealth in the long term.

Works Cited

Katz, Lawrence F., and Alan B. Krueger. “Documenting Decline in U.S. Economic Mobility.” Science, vol. 356, no. 6336, 2017, pp. 382–383, Web.

McCardle, Tom. “A Promise Deferred: Black Veterans’ Access to Higher Education through the GI Bill at the University of Florida, 1944–1962.” Educational Studies, vol. 53, no. 2, 2017, pp. 122–134, Web.

McIntosh, Kriston, et al. “Examining the Black-White Wealth Gap.” Brookings Institution, 2020, Web.

Pettit, Becky, and Carmen Guiterrez. “Mass Incarceration and Racial Inequality.” The American Journal of Economics and Sociology, vol. 77, no. 3-4, 2018, pp. 1153–1182, Web.

Shermerhorn, Calvin. “Why the Racial Wealth Gap Persists, More than 150 Years after Emancipation.” Washington Post, Web.

White, Gillian B. “Why Black Families Struggle to Build Wealth.” The Atlantic, Web.

Introduction

Part of the millennium development goals focus on poverty eradication, population stabilization, and supplying of all people of the world with adequate food. This aims at ensuring that living standards of the people rise and alleviate deaths related with food shortage and poverty.

Although economic crises limit the efforts of many countries in their quest to eradicate poverty, countries like China have moved a step forward and recorded great success in poverty reduction. In addition, in the pursuit of feeding citizens of many nations of the world, application of diverse measures such as increase in land productivity, proper water utilization schemes, and population stabilization to ensure food security becomes inevitable.

The most Important Points and personal feelings

The millennium development goal on poverty reduction entails the reduction of people going hungry, provision of universal primary education, reducing the number of people who cannot access clean drinking water, combating the spread of infectious diseases, and provision of healthcare services to the needy in the society. All these factors help to narrow the gap between the rich and the poor in the society.

Accessible education for all lowers poverty levels to insignificant levels. I regret the fact that, children with little or no formal education normally start life at a crippled economic state and this would mean they continue in abject poverty for the rest of their lives thus widening the gap between the rich and the poor. The World Bank supports countries with good education plans to achieve their universal primary education for all.

In the developing countries, health sector combats diseases such as diarrhea, respiratory illness, malaria, measles, and HIV AIDS, which affect many people and lead to increase in mortality rate. Prevention of these diseases would mean good health to the people and therefore, high economic productivity.

A nation with high percentage of unhealthy people is prone to suffering from poverty as sick people are less productive than healthy people are. The provision of clean drinking water, adequate food, and good waste disposal helps to alleviate disease outbreaks in the society. Prevention of infectious disease such as HIV AIDs ensures healthy life and high economic productive by all hence poverty reduction.

Falling fertility and increasing mortality rates help to shrink populations and helps to stabilize populations. Family planning methods assist in regulating women fertility whereas HIV and hunger increases mortality rates in many countries. Direct health care intervention helps in raising the literacy level of many women on family planning matters to help in regulating population sizes in many nations. Small sized populations ensure good provision of basic requirements hence reduction in poverty and hunger.

Food insecurity poses a threat to many nations of the world; however, I believe that use of different approaches has alleviated the food insecurity problem in many nations. Increase in land productivity by acquisition of more land for agricultural production and application of new farming techniques improves the land productivity for sustainable food supply.

From the readings, it is clear water, as a major resource in food production, remains a great challenge in many countries. Water shortage reduces food production and this risks food insecurity in the affected countries.

To prevent this problem, I think that adoption of irrigation skills, which help to reduce water usage as drip irrigation and sprinkler irrigations over flooding and furrowing irrigation methods would save the unbecoming problem of water shortage.

From the insights raised in the readings, I feel that the need to sustain food security in the future calls the elevation of responsibility of food production from the ministry of agriculture to the office of the head of state. Effects of other ministries affect food production for instance ministry of energy emit carbon dioxide in the air affecting crop production; therefore, all ministries need regulation to achieve food security.

Conclusion

Although economic crises affecting many nations of the world cause poverty increment and food insecurity, the pursuit to achieve the millennium development goals helps to alleviate the problem of poverty and food insecurity by the application of different approaches such as education for all, population stabilization through birth controls and increment in food production. The achievement of food security and reduced poverty levels remains justified by the appropriate application of these approaches.

Rationale

The news item chosen for analysis is presidential candidate, Mitt Romney’s wealth. This was an ideal theme because the presidential nominations are an important part of the country’s current events. It is insightful to know about how Americans receive information from their media sources concerning various campaign issues.

It may have been reasonable to consider other ‘typical’ themes like healthcare and education, but these do not reveal much about the American psyche. They are also not as controversial and divergent as the topic chosen. Most analysts acknowledge that American voters are some of the most well-informed in the world. Additionally, they pay attention to some of the most unlikely qualities of a particular candidate.

This interest can be seen from the way comments about Romney’s wealth have been linked to his campaign efforts. One’s net worth is an important issue among the electorate in this country, so the analysis will reveal how the information is dispensed in various media sources.

Method

The research started with newspapers, blogs and other articles that covered the election. At this point no clear theme or focal point was evident.

Any issue could prove to be useful in the analysis; some of the topics noted in the media sources include “Obama’s foreign policy apologies”, “Leading candidates in the Republican nominations”, “Candidates’ health care plans”, “Tax increases after the country’s general election.”, “Republican candidates’ economic plans”, “Oil subsidies and their effects on the consumer”, “Gay marriage law in Maryland”, “Tax decisions in congress and many more”. In order to decide on the right topic, it was necessary to settle on those issues that affected all American citizens; therefore, a topic such as the gay marriage law in Maryland was automatically scrapped off since it was geographically confined.

The concerned topic also needed to have momentum, or it needed to represent a matter that would yield immediate results. Issues such as tax decisions in congress and oil subsidies were all interesting, but they had a long-term orientation. Therefore, political news that focused on the campaign were the best bet. Not only did these events receive wide coverage, but they captured the very essence of the country’s political landscape.

Some of the sources that were useful in this investigation were blogposts, newspapers, and articles from non-profit organizations on the internet. Newspaper articles were the largest sources because they dedicate a lot of their media space towards any particular issue. As the research continued, it became evident that many authors thought that Mitt Romney’s wealth was important. However, they all depended on various facts or assertions to make their conclusions. Furthermore, these media sources treated the impact of his wealth differently.

The common perspective that emerged was that Romney did not know how to talk about his wealth (Hunt 2012, A4). Additionally, most sources believed that the issue could hurt his campaign rather than strengthen it. Several articles cited campaign utterances to support their assertions and they attempted to place those assertions in context. None of the articles attempted to present the issue in black and white as the topic had many subtexts around it.

How the different genres approached the topic

Blog posts generally focused on recent events that pushed this issue into the news. It is likely that the writers chose such an approach because they have limited space on their websites. Few of them looked into the history of presidential candidates’ wealth in depth. Large circulation news prints, however, provided greater detail on the history and the context behind the issue.

Commercial media sources such as the Washington Post and Wall Street Journal were different from not for profit sources like NPR because they were more blunt in their statements. When quoting some of the things that Romney said in campaigns, NPR was subtle about these (James 2012). The newspaper articles quoted him directly; they also preferred to start with those controversial elements.

What the media sources revealed about the Romney’s wealth in the campaign

In the analysis, it was clear that Mitt Romney is one of the wealthiest presidential candidates to grace the country’s political scene (Goodman 2012, p12). Nonetheless, he is not the only affluent presidential candidate or politician. Other individuals have used their affluent status to their advantage; however, Romney does not fall in this category. The candidate’s inability to use his wealth tactfully could ruin his campaigns.

The media sources revealed that focus on specific utterances and campaign statements can alter the way a candidate is perceived. They also illustrated that when the historical context of a certain political topic is known, then it may cause readers to prioritize important issues. By relating Romney’s wealth to his campaign strategies and comparing to it to other politicians, it was possible to realize the complexities of political headlines.

Whether it was surprising

The coverage of this topic did not come as a surprise because the American population is a highly sensitized public. This is why authors must provide greater context for every topic. It was also not surprising that commercial sources were blunter than the not-for-profit organizations because they need to grab attention.

What I learnt

American media culture tends to focus on very detailed components of politics. Some issues that are quite personal can take centre stage. Furthermore, the electorate’s opinion about a certain theme can alter their perception towards the candidate. All these emanate from the choices made by media sources.

References

Goodman, R., 2012. How Romney’s wealth can shake up American politics. The Washington post: p 15.

James, F., 2012, Romney’s wealth ‘gaffes’ seem less about money and more about him, weblog. Web.

Hunt, K., 2012. Romney’s wealth proves rich vein for rivals’ Wall street journal, 21 Januray, A4.

Introduction: Digging for Diamonds

Whenever there are diamonds on display, there are always the gasps of awe and delight; however, there is hardly a single person who ever thinks of the history of these diamonds. Meanwhile, even the gems of a size of a toenail can reveal a back story worth of at least a novel adaptation.

Despite their huge price, diamonds are produced in the poorest countries, which makes the latter even poorer and, therefore, contributes to the conflicts within these countries, as well as strikes with the hypocrisy of the promotion campaigns of major diamond-producing companies, e.g., De Beers.

De Beers’ Advertising Campaign: The Pinnacle of Promotional Hypocrisy

It must be admitted that the video offered by Schmuddelfinger (2012) is truly astonishing – watching the history of diamonds production and of the world’s greatest jewelry companies is really exciting. Moreover, it is extremely gripping to track the history of the African countries where the raw materials being produced.

However, when it comes to the most striking element of the movie, it goes without saying that the contrast between the poverty of the African countries and the riches which are located there is the most astonishing thing.

Even though it is clear that it is practically impossible to process diamonds and produce jewelry in Africa, the contrast between the images of the poor African diamond miners and the jewelry advertisement campaigns developed by De Beers raises the shock values rather high.

Concerning the Conflict Trap: When Rebels Rise

Another peculiar aspect of the African diamond trade concerns the conflict trap. It seems that at certain point, digging for diamonds developed into a peculiar cycle of increasing conflict within the country.

As Schmuddelfinger (2012) explains, the money obtained from digging for diamonds was used in the least appropriate way possible: “In Sierra Leone, in the 1990s, our UF rebels used revenue from diamonds to fund a brutal civil war” (Schmuddelfinger, 2012).

Hence, the case of African diamonds is a clear-cut instance of a typical conflict trap described by Collier. “Once the war has begun, the economic damage undoes the growth achieved during peace” (Collier, 2007, 33). Repeated in a cycle, the phenomenon leads to the ultimate decay, which can be the case of the African countries supplying diamonds for the rest of the world.

Natural Resources Trap: Exploring the Paradox

It is also striking that the African countries exporting diamonds suffer from what Collier defined as the “natural resources trap” (Collier, 2007, 38).

According to Schmuddelfinger (2012), “What created the value in diamonds is withholding the supply, making sure that the supply is regulated ad there’s never a flood of diamonds on the market, that’s one thing that De Bees did” (Schmuddelfinger, 2012). Hence, the conflict for the resources was created, which also contributed to the African countries’ poverty.

Conclusion: The Treasure Trove Has Been Discovered

Therefore, these are not the resources that a certain country has, but its position in the chart of the world’s most influential states. Even with its truly incredible amount of resources and the richest mines of diamonds, the above-mentioned African countries remain among some of the world’s poorest states.

Moreover, it seems that, without their resources, these countries would have never taken such low positions. Since other countries managed to take the control of one of Africa’s key riches, the countries are permanently in the conflict trap and natural resources trap, which can be solved only with the help of reconsidering the national strategies.

Reference List

Collier, P. (2007). The bottom billion: Why the poorest countries are failing and what can be done about it. Oxford, UK: Oxford University Press.

Schmuddelfinger (2012). Blood diamonds – the true story. Web.

Adam Smith believed that the wealth of nations was derived from their division of labor and accumulation of capital goods for the production of necessities. However, his arguments may not be congruent with the conditions and circumstances, which are in the twenty first century.

Division of labor is the sub division of work into smaller portions so that the task being done can become easier. Smith gave an example of nail manufacturing industries where the work done involved cutting a long wire of iron and sharpening it.

When one individual did this work, the artisan could only make a hundred nails a day. However, if this work was subdivided into different portions such that one person cut the wires, another person sharpening, and packaging by another person the number of pins produced would have been four thousand. This showed that division of labor led to increased output (Smith 24).

The subdivided labor called for specialization where an individual had to become a master of particular skills. Before division of labor was invented, an individual could manage to do a set of activities alone. The people in the economy were therefore jacks of trades but they were masters of none. Division of labor called for being a jack of no trade but a master of one trade (Smith 108). One had to be a specialist in one area and in the case of nail industry; one had to be a specialist in cutting nails and be unskilled in sharpening them.

The division of labor also brought about efficiency, which is the percentage of the amount of effort applied compared to the amount of goods or services produced. In the division of labor, more output was produced compared to where there were no divisions of labor. The efficiency also came because of improvement in quality.

The work done by the solo artisan of sharpening the nails after cutting them would be probably of lesser quality. The nail-sharpening specialist whose only work is to sharpen the nails would do the work because; tired people produce low quality work.

More inventions came up during this period of division of labor more than any other time previously. This is because; the individual who is assigned a particular task had to find ways of doing the work faster. If it was the nail cutter, he had to look for ways to cut the nails faster. This involved devising equipment and tools, which were meant to make the work easier. Nail cutters were invented during this period as well as wheat threshing machines and the locomotives (Smith 238).

There was low costs of production because of division of labor. This is because the number of laborers employed to do the work was significantly reduced when there was division of labor. Four individuals would produce four thousand nails compared to the one hundred nails produced by one artisan.

Therefore, it could have taken forty artisans to produce four thousand nails in a day. This low cost of production also implied that those who engaged in division of labor had an added competitive advantage because their goods and services were cheaper compared to goods, which were locally produced. This meant that an economy or a country with industries that engaged in division of labor could export their goods to other countries thus increasing their nation’s foreign exchange as well as the gross domestic product (Smith 388).

Before the concept of division of labor was invented people engaged in a number of activities, they only produced enough goods for their subsistence consumption, and there was no surplus. The increased output that came with the division of labor changed the concept of wealth accumulation as people and industries could produce goods in surplus, which they could sell to individuals in different countries.

This surplus was the major source of wealth because; apart from the domestic consumption, it resulted to capital accumulation. The surplus goods could be sold elsewhere and they represented the worth of the industry, the individuals as well as the nation (Smith 450).

The capital accumulation was indeed the way to go in regard to the accumulation of wealth because; other factors of production that led to great wealth such as land were out of reach for most people. Capital refers to the machineries, buildings and other assets that are involved in the process of production. For a company to increase its production it had to increase its capital or its equipment.

For this to be done companies or individuals who owned these companies had to forfeit their ownership and allow other people to own part of the company through the initial public offering, which allowed a private owned company to be held by the public. This was a major source of wealth, as the public had to buy the portion offered in terms of stock (Smith 457). The origin of the term shares means the amount of capital one owns in an industry.

Critical Evaluation. The ideas expressed by Adam Smith in relation to division of labor are still applicable today although not all of them. Division of labor enables workers to acquire a high level of skill in one trade as opposed to many different trades. Skills acquired through specialization enable workers to produce commodities that are of high quality and thus are able to compete effectively with others in foreign commerce.

Smith argues that foreign commerce is an agent for accumulation of wealth for nations. Thus, countries without access to international trade cannot fully exploit the benefits of specialized production and end up being relatively poor (Smith 29).

These arguments are solid and coherent because; the situation in the world market requires economies to invest in productive activities in order to acquire wealth. The accumulation of capital is a significant factor in the ability of economies to respond to changes in the market. Capital accumulation is required in order for economies to enable production and specialization in their productive efforts.

However, in the twenty first century when there have been many cases of down sizing and retrenching in major corporations leaving thousands of people jobless, the idea of specialization has to be reconsidered.

This is especially because with the advent of integrated technology or the merger of technologies where machines are becoming more incorporated such that one machine can do more than one task; individuals who specialize in one area will lack employment. The division of labor is therefore more applicable in corporations and nations more than to the individual laborer.

Labor has also undergone major changes in the sense that the modern world has more skilled labor than it had in the nineteenth century. Labor has become more competitive than it were before. This implies that economies, which will thrive, are those whose labor is specialized in various tasks or else the changes in technology might edge them out.

Concerning capital accumulation, there are other significant changes, which have occurred and may lead to a redefinition of capital. This is because capital is not only quantified in terms of tangible items or equipment but also non-tangible items, which give a nation or company advantage.

These explain why a company like Google is valued at several billion dollars though it has no tangible assets such as buildings or land; it only deals with information technology. We nowadays have more companies, which do not have any tangible item, yet they are valued at billions of dollars.

Conclusion

Adam Smith in the “Wealth of Nations” shows the importance of division of labor in enhancing productive capacity of labor. Labor is one of the most influential factors of production.

Many countries have realized the need to specialize and divide their work into units that can be handled by different workers. Division of labor has enabled people to become efficient in their work because of increased skills acquisition. The workers are able to increase efficiency by reducing the time spent in moving from one station to another.

The use of machines has enabled people to improve their efficiency and increase the skills required in production of commodities. Capital accumulation is a source of wealth for nations because; it enables production of machinery for manufacturing purposes. Capital accumulation helps imparting of skills and knowledge, which increases the productivity of workers and thus the wealth of the countries.

Works Cited

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. London: The University of Chicago Press, 1976. Print.

Teleology is a philosophical term that asserts that nature is the underlying and final cause of existence. Teleology plays a role in Adam Smith’s ideas about the wealth of nations. The nature of the ideas can be argued from a teleological point of view. With regards to division of labor, Adam Smith argues that human beings have a propensity to truck and exchange.

This explains how trade occurs and why nations and individuals become wealthy. From his arguments, it can be drawn that nature dictates the existence of trade. It is in the human mind that we are able to truck goods. In order for trade to be in existence, there is need to first persuade the natural inclination of the human mind. A trader becomes restless when someone tends to differ with them. Therefore, they make every effort to ensure that they be on the same mind.

Tautology is also a philosophical proposition that assumes that if something has a logical implication, then it is actually accurate. However, nothing much is said about the real world. On one hand, the theories and economic ideologies of the Adam smith can be termed to be tautological in nature.

This implies that the theories do not expose anything new about the real world. The things that happen in the world of economics have been in existence, arguably since the beginning of time. They also bound to continue existing because nature is their final cause of existence. Debates on tautology focus on symbols that describe existence of phenomenon. This renders the discussions to varying interpretations. Similarly, the debates about symbols of existence are not comparable to the actual observation of existence.

On the other hand, Adam’s Smith’s ideas on economics can be argued not to be tautological in nature. The underlying reason is the fact that the theories focus on the action of human beings as their finality. These actions contribute to the existence of the world and can be used to develop a better understanding of the world. At the same time, human actions change with time implying that some activities that dictated economic systems in the past may not be relevant in today’s economic systems.

A good example from Adam smith’s ideas is the notion of productive and unproductive labor. At the time when he developed the idea, the service industry was not fully developed to support the economy of a country. It is for this reason that Adam Smith had to classify so many professions as unproductive labor.

The service industry is today known to make significant contribution to the GDP of a country. Ruling out Adam Smith’s theories to be tautological, implies that the theories help to create a better understanding of the world. They basically bring something new to the world.

A disfigured approach that rules out Adam Smith’s ideas from being tautological is the notion that symbols and observations of existence are only tentative at the present. It only takes a matter of time that the observations and the implications of the symbols change.

However, this argument can be countered by the notion that changes in meaning do not imply changes in existence or truth. The issue that the symbols tend to describe remains the same despite the changes in implication. Changes in meaning only occur when people or observers develop different perceptions over time.

Many popular American myths hold it that the society in the U.S. is one that provides equal opportunities for its members and that all a person needs to become successful is hard work and enough talent. The common ideology also asserts that everyone should strive towards leadership. Not only this goal is questionable, but the premises are supporting it (e.g., the belief in equal opportunities) are easily disprovable by facts about the income and wealth distribution among the American population.

The American society is highly stratified; the distribution of income and wealth in it is unequal, and very few people have an abundance of resources, whereas many struggles to make their living (Dolbeare 36). It is stated that the top 5% of the American families received 14.4% and 14.2% of the total income in 1972 and 1976, respectively. The breakdown of the income of American families in 1972 and 1976 is shown in Table 1. Despite the fact that the data is rather old, it is stated that the proportion tends not to change over the course of years, had been stable throughout the 20^th century, and that other developed countries also have a similar pattern of breakdown (Dolbeare 36-37)

Table 1. The Breakdown of Income among Families in the U.S. in 1972 and 1976 (Dolbeare 36).

Moreover, the patterns of distribution of wealth are even more unequal. Approximately 61% of American households owned less than 7% of the wealth of the nation, whereas the top 2% of households held approximately 43% of this wealth in 1962. Table 2 shows the distribution of wealth among American households in 1962. Again, as in the case of the income, this pattern remains stable throughout the course of decades (Dolbeare 37).

Table 2. Distribution of Wealth among American Households, 1962 (Dolbeare 37).

It is important to point out that such characteristics as the level of education are closely related to financial status. It is stated that only approximately a quarter of the American population was able to obtain education better than high school as of the 1970s, and most of these people came from those categories of families/households that had the highest levels of income and/or wealth (Dolbeare 37-38). It is also essential that the occupational characteristics of the population also significantly depend on wealth/income status. A lion’s share of the most highly-paid jobs are filled by the people coming from the upper class, as well as the upper-middle-class; a tiny part of them are held by people coming from the other categories of the society (Dolbeare 38-39). It is also implied that most of these top positions were filled by white men (Dolbeare 39).

As it can be seen, despite the numerous popular myths, the society in the U.S. is highly stratified, with a tiny fraction of people enjoying all the benefits of the powerful economy, and a large part of the population struggling financially and having no real access to such resources like higher education and highly paid jobs, most likely despite the talents and hard work of many of them. Even though the data provided is a few decades old, the same patterns (and similar myths) are easily observable today, and not only in the US but in rather many countries and societies.

Works Cited

Dolbeare, Kenneth M. “The American Political Economy.” American Politics: Policies, Power, and Change. Kenneth M. Dolbeare and Murray J. Edelman. Fairfax, VA: D. C. Heath and Company, 1981. 23-45. Print.

Introduction

Strategic business plan¹ Proposals are created to stimulate efficiency, responsiveness, and cost-effectiveness in the business world and to also act as channels of creating wealth and potential resources for business organizations. A strategic business plan covers a period of two to five years to establish a potential investment for a given organization (Aaker & McLoughlin, 2010). Many business organizations are inspired by the need to create wealth, jobs, and improve the living standards of their targeted clients. A given business organization must make a strategic plan for resource allocation and the creation of reliable alternatives for its sustainability. Allocation of resources, especially financial ones for the creation of wealth, is a crucial subject for any commercial entity. It is usually the responsibility of the stakeholders in a business organization to devise the best way of managing the organization’s wealth. Better funding and investment creates a productive channel and a prospective market for business organizations. The strategic plan for the Zurich Cantonal bank will evaluate the various opportunities that the institution will create and the number of investments that will be made in a given period.

The international financial market will be analyzed, and credible results will be evaluated. The proposal will aim at creating not only a good strategic business plan but also an effective one. It will aim to develop a realistic, credible, and relevant plan. To maintain competitive economic standards for the bank, the proposal will recognize opportunities and create effective ways of nurturing them. The plan will be mandated to develop the best and most effective idea that will be viable in the contemporary market. The Zurich Cantonal bank will need to draft a plan that will secure it from its major competitors in the financial market like Barclays and Standard Chartered banks. The strategic business plan will address the different ways of handling the financial challenges of the Zurich Cantonal bank. Various techniques and theories of management will be exploited, and the structure of the organization will be accorded priority.

The strategic business plan will tackle the various mechanisms and methodologies of increasing competitiveness while maintaining standardization, efficiency, and productivity in the bank. The strategic business plan will equip the bank with potential resources to maintain a realistic growth plan. The proposal will also analyze the various books of accounts and asses the financial ability of the Zurich Cantonal bank concerning wealth creation (Fry, 1989). The overall target of the strategic business plan will be wealth creation for the bank. The proposal will consider the various challenges that derail wealth stimulation and, at the same time, evaluate the possibility of the Zurich Cantonal bank overlooking these challenges and improve its wealth management practices. It is the mandate of every strategic business plan to provide a better plan than the existing one. The plan of the Zurich Cantonal bank will oversee the transformation of the financial institution, which will, in turn, serve many clients, starting from Zurich to its various branches globally.

Description of the business

The business description will include the mission statement, the objectives, vision, goal, and target of the bank.

Mission and objectives

The mission of the bank will be to facilitate a self-sufficient financial unit and evaluate banking services concerning the change in the global economy. The objective of the plan will be to target at least one in every ten individuals in Zurich to accept the use of Swiss bank’s products and convince them to open accounts in the bank. It will be the goal of the business plan to ensure the creation of wealth and opportunity for the people of Switzerland by managing profits, reducing liabilities, national debt, and deficits in the national budget. The Zurich Cantonal bank will be expected to grow and conform to global standards by offering diverse bank products.

Business description

The Swiss Zurich Cantonal bank will be a leading financial institution in Zurich, Geneva, Basel, and Lugarno aimed at providing financial and other related services. Founded in 1870, the Zurich Cantonal bank is considered as the largest Cantonal bank in the world and the 4^th largest in Switzerland. The plan will stipulate how the bank will have 103 outlets with offices in Beijing, Sao Paolo, Mumbai, Singapore, and Panama. Consultation and project mentorship programs will also be started with links in France, England, and Holland. The services of the bank will be found in most countries of the world, especially in the European continent. The Swiss bank has been in existence since the 18^th Century to date. Its headquarters are found in Switzerland. The Swiss Financial Market Supervisory Authority will regulate the bank. The bank will be dealing with three types of currencies, which are the dollar, the pound, and the CHF (Confoederatio Helvetica Franc), which is the Swiss currency. The shares will be sold in 1-ounce gold units. The bank will focus on Swiss society as a link to the outside world and will target merchants, investors, tourists, and other credible clients in the financial world. Its duty will be to provide better services and sufficient banking resources to all local and international clients. It is believed that a third of the world’s total money is found in Switzerland. This fact will be a major opportunity for the Swiss economy, and it will give the Swiss people pride to know that they own a 1/3 of the world’s wealth.

Products and services

The need to provide quality and quantifiable supply of goods and services will be a crucial aspect of the bank’s strategic plan. The Swiss bank is charged with the responsibility of providing safer, better, and faster financial products and services. The bank will facilitate the provision of services that are competitive regarding interest rates with 1.0% to 1.5% margin and provide competitive dividends and returns. The bank will address challenges linked to its use of all major currencies in the market. The emerging technology will be important in facilitating the bank’s modern financial services like the use of mobile banking, visa cards, electronic transfers, and the Swiss Interbank Clearing (SIC) services. This idea will ensure better services and transactions for the bank’s clients. Close contact and communication between the bank’s staff and its clients will be integrated into the strategic plan of the bank. In all its branches, the bank will assure its clients of maintenance of the same discipline and proximity. To enhance the concept of competitiveness, the bank will exploit technological facilities whose use will also be linked to Six Sis AG, Wir Bank, and Hinduja², all major competitors of the Zurich Cantonal bank. The Zurich Cantonal bank will engage the use of competitive technology to facilitate safer and faster transfer of money across all the bank’s networks in the world. The Swiss bank will have to satisfy the changing needs of its clients by conducting structured market surveys which have, in the past, helped the bank introduce new products for its clients like telephone banking.

Major benefits and performance

The bank will provide relatively low-interest rates to its clients on loan facilities. The Cantonal Swiss bank will enhance the satisfaction of its clients by the provision of credit facilities with a reasonable period of payment depending on the individual ability of the clients to repay and the amount of money borrowed from it (Lewis & Roehrich, 2009). All the plans for the provision of credit facilities will be achieved through an understanding and collective bargaining between the clients and the bank. The bank will be targeting to increase its operations beyond Europe and open office branches in Asia, Africa, and the Caribbean regions. The existence of networks across the world will ensure that the Swiss fraternity will be able to exercise its mandate, goal, and mission efficiently and effectively.

Sourcing

The sourcing concept³ as it pertains to management refers to the process of acquiring a legitimate business permit from a relevant authority or office. It is the obligation of the federal government of Switzerland to issue an operating permit to the Zurich branch. Any sources obtained will be aimed at ensuring that the bank meets the set standards of banking and reach its potential customers and investors. With the right source, the bank will be assured of greater and safer services, which will be satisfactory to its clients.

Bank’s landline communication services

The landline communication service is an ancient communication network which uses a fixed telephone line with a switched wire system. It offers alternative bank communication to the text message service. The bank’s clients will be able to enjoy all the benefits attached to the bank’s physical and financial resources. Communication is vital, and if enhanced by technology, it will become efficient, effective, and faster (Dumville, 2001). The people of Zurich and entire Switzerland have embraced modern technology and information systems. Even though the landline system is outdated, some people still prefer it, and its availability will suit their operations. In Switzerland, hospitality is accepted and practiced as a way of serving, supporting, and distributing new technological products.

ISDN

The ISDN digital service⁴ Offered by telecommunication companies like Liechtenstein is an important tool for effective banking. The Cantonal Swiss bank, in connection with the telecommunication companies, will adopt the ISDN system as an alternative to the analog landline system. This option will facilitate variety in terms of communication, and the clients will prefer what is convenient for them and not for the bank. In most telecommunication companies, the ISDN facility operates at a speed of 26 to 64 kilobits per second; thus, the system will enhance the speedy transfer of financial data.

Services 900 and 600

The Cantonal Swiss bank will employ the services 900 and 600 in telephone banking and electronic transactions. This fact will ensure cost-effectiveness and efficiency in the provision of its services. The service system provides the provision of visas, streaming of revenues, and analysis of account information. It has, however, been reported that services 900 and 600 have been challenging to use, especially when it comes to the integration of other information systems (Plunkett, 2008). The subscribers of these services will be required to pay a subscription fee of 100 US dollars or an alternative rental charge of 50 US dollars. Time is a crucial factor in the two services as the charges will depend on the speed of the services. It has also been noted that the services have been slow, but the Zurich Cantonal bank will integrate measures to improve their speed and urgency.

Market share

The marketing research will employ both primary and secondary research methods to analyze market-related probabilities that the bank can exploit. For the primary market research, I have gathered my data concerning the market trends that will be reflected in the pie chart as an illustration of the possibility of a good marketing scheme for the Zurich Cantonal bank.

Future projection

The secondary market research strategy will involve the use of publication journals, bank statements, magazines, newspapers, census data, and demographic profiles. The information will be found in industrial associations, commerce chambers, public libraries, government agencies, and online services. The local libraries in Zurich will be of invaluable help in the provision of secondary data.

Economics

The market size will target 1 in every 10 of Zurich’s citizens and visitors, and this idea will eventually capture about 3% of the total population. The current market demand for banking services is on the rise, and the Zurich Cantonal bank will envisage harnessing the big market opportunity by providing efficient and cost-effective products and services. The bank will have the potential for growth and development if it will expand its markets and improve its products through innovative ways. Reliable resources, technological integration, and relevant marketing strategies will be key aspects that the bank will exploit to penetrate European, Asian, and African markets. The bank will be projected to grow immensely and increase its market share index. It is, however, recognized that the banking sector faces a lot of challenges, and business risks will be likely to be experienced due to the competitiveness of the banking sector and the uncertainty of the market. The Zurich Cantonal bank will need to create alternative methods of meeting the challenges of an unreceptive market and a competitive environment.

The challenges that the bank is likely to be faced with will include increased costs in the market, capital, transport, insurance, operations, and problems related to consumer recognition and acceptance of its products. The bank will also be likely to encounter reduced levels of cooperation and relations with the various economic and legal bodies in various countries concerning matters of compliance with market standards and regulations. Insurance costs alone will be expected to take about 1% of the total share approximated to be 0.9 billion US dollars. Effective mapping of alternative dimensions in its marketing strategy will be important in deciding whether the bank will be able to overcome its wealth management challenges. The following chart will give an expression that will amount to a challenge if not properly effected.

Personnel

The Swiss bank will employ approximately 100 employees, including main and support staff, to deal with its different operations. After the bank’s opening of new office branches in various strategic locations, the need for additional personnel will be expected to rise steadily depending on the market trend and demand. The initial cost of employee recruitment will take a share of about 3 million US dollars annually. An enthusiastic and adequately trained workforce will be crucial to the delivery of the bank’s strategic plan, which includes expansion of its branches to reach new global markets and integration of new approaches of service delivery. The bank will allocate monetary, physical, and human resources towards the training of its staff and enhancing its capacity to embrace a dynamic market and clients’ needs. The growth of the bank will ensure reduced levels of unemployment, and its expansion will lead to the absorption of jobless people. Consequently, this will also lead to the growth of the economies of the various states in which the bank will be operating.

Customer’s policy

Slow and delayed payment from clients, especially on credit facilities given to them by the bank, will have adverse effects on the wellbeing of the bank. The Zurich Cantonal bank will explore legal mechanisms to enhance prompt payments of its products like overdue standing orders, debts, loans, and overdrafts. Letters, emails, and phone calls will be sent to the clients to alert them of the need to make prompt payments before the agreed dates are due, and the bank will employ a mechanism of helping the clients to pay the money through third-party agencies and alternative sourcing. The bank will assert its authority regarding payments of its money by clients through a legislative contract signed between the bank and the clients. The bank will also conduct a technological upgrade of its bookkeeping system to enhance the efficiency and accuracy of all transacted business. The idea will reduce the risk of deficits or data loss due to clients’ failure to pay or their breach of contract. Reports indicate that the Swiss National Bank (SNB) has been depending on the labor target range of 3 months, and its charges on deferred payments by the banks’ clients have been 0.0% to 0.25%. The SNB is also reported to leave the minimum state of exchange at 1 euro = 1.20 CHF⁵. The appreciation of the dollar has been a disadvantage to the Swiss franc, which may compromise the stability of the market price resulting in dire consequences on the economy of Switzerland with a minimum rate of exchange.

It is thus possible to avoid the undesirable plummeting of the value of certain currencies at the disadvantage of certain economies in Europe as it happened to Greece in the year 2011. Regional exchange regulatory controls should be set up to deal with the economic uncertainties in banks’ exchange rates. The Swiss Cantonal bank will employ a strategy to determinate exchange rates and will also try to purchase the foreign exchange currencies at an unlimited scope. The Swiss bank’s inflation forecast will be adjusted downwards to alter the forecast from the previous status. In 2012, the inflation rate in Switzerland was reported to have been lower than projected due to the perpetual fall in import duties. The economic forecasts appear uncertain in Europe with the adoption of the use of the euro as a currency within the European region. This inflation forecast is due to the unchanged three month, suggesting 0.0% up to 2015. The SBN has set the projection for inflation at 0.3% (2013), 0.4% (2014) and 0.9% (2015). The international economic growth rate has taken a negative progression though there has been an improvement in the global financial market. Economic activities have slowed down than predicted in Europe in the last three years.

The rate of unemployment has risen in various states in Europe, especially in Greece. The SNB⁶ is still optimistic and anticipates a 1.0% to 1.5% growth of Switzerland’s economy in the year 2013. The subject of development uncertainty is creating tension by deterring investments and posing as a risk to the Swiss fraternity. The world economy and the landscape of financial markets remain vulnerable to recession, and the Swiss bank must correct the said anomalies. The Swiss Franc (CHF) has shown stability in the last three years compared to the dollar and pound. It is recorded that due to the power of the CHF, the financial sector in the year 2009 contributed to11.5% of the Swiss GDP (Gross Domestic Product).

The sector employed 196,000 individuals, with 137,000 of them working in banks. The workers represented 5.4% of the total workforce in Switzerland. In abroad, the Swiss bank employs about 102,000 people. Switzerland has managed to assert itself as a neutral state after World War 1 and 2. It is not a member of the European Union and joined the UN in 2012. In 2001, the Swiss banks collected a total of 2.9% trillion US dollars and 400 trillion US dollars in 2003. In 2007, the value had risen to 6.5 billion US dollars. The major banks in Switzerland are UBS (Union Bank of Switzerland), Credit Suisse, Central Bank, and Raiffeisen.

The issue of bank accounts, according to the Swiss bank, is a private matter with major banks’ accounts limited to the access of only Swiss bank officers. The financial accounts and statements of major banks are not usually accessible to members of the public.

Future products and services

Future products of the Zurich Cantonal bank will depend on the current performance of the existing ones. Still, the bank will continue to improve service communication networks across its branches, enhance timely money transfers, and ICT⁷ channels. This idea will facilitate safer and convenient banking with the profit margin and interest rates expected to rise by a reasonable margin.

Technology

Innovative technological inventions have not only changed the way banks market their products but also enhanced banks’ service delivery to their clients. Banks’ clients enjoy services and products that are delivered to them using recent technology, as has been reported by various market trend studies (Saylor, 2012). According to the strategic plan, the people of Zurich and its environs will have the opportunity to bank their money in an institution that embraces technology and dynamism (John, 2010). They will experience faster and safer services like electronic money transfers, mobile banking, and online accounting. The Zurich Cantonal bank will employ qualified information telecommunication experts, computer technologists, competent accounting officers, and analysts to link the bank’s products to technology. The existence of quick network services like the 3G system will facilitate the fast and effective transfer of both ideas and funds. The internet service will transform the world into a global village, with the bank’s clients being linked to the bank through the internet options developed by the bank for their use. The Zurich Cantonal bank will keep close contact with its clients, investors, and other corporate entities by using technological alternatives in the market and will provide necessary information about itself to the clients through various technological channels. The use of modern technology will assure the Swiss bank community of Swiss interbank clearing (SIC)⁸ as a faster way of inter-bank transfers.

Market analysis

Economic reports in Switzerland show that by the year 2008, the Swiss bank had collected an average leverage ratio of 28:1 (asset: net worth). The short term liabilities were equal to 263% of the GDP, which is the same as 1,274% of the national debt of Switzerland. The interest rates in Switzerland are handled by the Swiss National Bank (SNB), and they range from 1.3% to 3.5%.

The Central Bank’s interest rate acts as a prototype, one by which it controls rates for other banks under its jurisdiction. The Central Bank is mandated by law to determine interest rates for banks and exchange rates for different currencies. The bank is also allowed by law to control inflation rates in Switzerland. The reduction in interest rates will lead to an improved economy and business environment in Switzerland because many people will be able to borrow money from banks to invest in various sectors of the economy which will, in turn, lead to the rise in employment levels and increase in need for a big labor force. If better measures are put to control inflation and the cost of living, the people residing and working in Switzerland will be assured of a better quality of life with better pay and service provision.

Legal environment

The licensing procedures to be undertaken by the Zurich Cantonal bank will be adhered to by all the bank’s expansion plans as the permits will be obtained from the Switzerland Licensing Board or FINMA and other environmental licensing bodies to ensure that new structures adopted for the bank’s use will comply with environmental laws. Health concerns of the bank’s staff will also be addressed through relevant bodies. The bank will verify compliance with community health standards and policies through coordination with WHO (World Health Organization)¹⁰ and affiliated health organizations. Medical covers and insurance policies will be obtained by the bank for its clients and staff with the starting deposit amounting to 300 million US dollars. The bank will also address legal brand requirements and certification by administering copyrights, trademarks, and patents tagged by the bank’s logo and recognizable symbols. The strategic business plan will put up measures to improve the interest trends for the concern of its clients, as shown below in the next one year.

Business trends

Major competitors of the bank will be expected to be Six Sis AG, Wir bank, and Hinduja. The Zurich Cantonal bank will maintain an upward trend in interest rates and marginal profits of 30% annually.

Sales and revenues

The Zurich Cantonal bank’s revenue generation will be important for the nation and especially for the Swiss government as it will promote economic development through employment creation for the citizens of the country. Support from the government towards the bank’s goal, mission, and objectives will ensure a constant flow of revenue for the government.

Financial projections

In financing the strategies of the Zurich Cantonal bank and the requirements needed to expand the market realms; the bank will engage in consultations with investors, well-wishers and other branches under the Swiss Accord in generating funds amounting to 10 billion dollars. The collected funds will be used by the bank for future expansion in ¹¹terms of commerce, marketing strategies, and communal ventures in a competitive banking sector. As reflected in the marketing strategy and business trends of the bank, adequate finances will be a major priority for the Swiss bank, and any programs that will raise the financial and market indices of the bank will be highly integrated into the strategic plan as its monitoring and evaluation process continues. It will be important for the bank to facilitate its mobility through diversification of its revenue programs and thus safeguard itself from competition from other banks in the financial market.

Project financing

In Switzerland, the Swiss bank maintains its leading role as a financial institution with a global outlook. The financing of a new or existing project involves several considerations. First, for better financing of a new project, the bank will have to evaluate its state, and this fact will be achieved by examining various books of accounts like balance sheets and profit and loss accounts. Secondly, the existing project will require adjustments in terms of marketing and advertisement procedures. The Swiss Cantonal bank will lay down workable approaches to address the subject of project financing.

Startup expenses

The startup expenses¹² that will involve an accumulated amount of 10 billion US dollars that will include initial capital, insurance, medical cover, transport and training of personnel, registration, and acquisition of permits. This stage will be given the necessary attention to avert any inconveniences that may arise.

Organization

The organization plan for the Zurich Cantonal bank will be built based on cost-effectiveness, efficiency, and equity of resources. The organization will be constituted of the shareholders, clients, the structured bank committee, and the credited investors. The structure of the bank will take the form of a chart. The vertical patterns will be more pronounced as the unity of command; objective, directives, and the span of control of the bank are aligned to organizational principles of management. For the cost-effectiveness and efficiency of its operations, the bank will adopt the lean organizational structure. The structure will also ensure that there is the optimal use of human resources. The allocation of resources will be done upon consideration of the management’s priorities, duties, and responsibilities (Brown, 2001). The bank will facilitate programs that encourage teamwork, collective participation of all stakeholders, and motivation of its employees and clients. Cases of fraud and financial insecurities will be addressed through the creation of specific departments to curb the said crimes, and the bank will ensure the credibility of its services for prospective investors and financiers to harness.

Exit plan

The exit plan of the Zurich Cantonal bank will be associated with the prospect of effective management of its global assets. The plan will rely on how the bank will manage its future failures and improve the low volumes of its sales, especially due to consistent failure of its key market strategies (Jeong & Nor, 2007). The failure to address risky investments will lead to the failure of the strategic plan because the plan will have lost its ability to provide alternative dimensions in case certain programs fail. The bank will, therefore, need to evaluate areas in which it is likely to succeed by analyzing logistical prospects. Alternatively, the logistical challenges will also provide prospects of failure of certain ventures featured in the bank’s strategic plan. Withdrawal of financial advisory services, reduction of advertisement, and retrenchment of its staff will be a good exit plan because it will act as a warning before the final closure of the enterprise, and its clients will, therefore, need to move to other banks like Six Sis AG and Hinduja. The exit will plan to provide opportunities for the assessment of outcomes like an evaluation of the performance of interest rates and marketing strategies. The payment procedure for wages, bonuses, salaries, and interests will be determined by the bank’s performance and productivity (Barrow, 2005).

Loans will be repaid with a proper understanding of the criteria involved in spending. The failure to understand various challenges related to the bank will lead to a dismal reduction of the bank’s operations. The exit strategy will not be an efficient one based on its liquidity aspect. This fact will be due to its negligence of the possible results when the strategic plan fails. The acquisition of wealth is the best approach for the bank because it is safe and checks the stakeholder’s needs by making sure that the losses are minimized while carrying out the exit plan.

Executive summary

The strategic plan of the Zurich Cantonal bank will aim at targeting clients and investors from Switzerland and beyond. Swiss banks are internationally recognized for their contribution to the global economy. The banks have made a significant contribution by revolutionizing key areas of operations, interest rates, credit and loan services, and financial securities. The strategic plan will enhance unique and efficient customer services in the financial sector. The creation of jobs and maintenance of better bank and client relationships will be part of the priority of the business plan of the Zurich Cantonal bank. The plan will evaluate the different interest rates offered by different banks and provide the Zurich Cantonal bank with the opportunity to offer the best interest rates in the market.

By the year 2008, there were 327 major and authorized banks in Switzerland, with the UBS and Credit Suisse being the major banks. The proposal will provide ways for the Zurich Cantonal bank to compete with the major banks in Switzerland and contribute towards 6% of Switzerland’s financial deposits. The bank will work towards increasing its level of savings and financial investments by 5% from the usual 3% annually through collective bargaining, innovative, and informative programs. The loan facility will provide an opportunity for the Swiss bank to obtain an amount of 1 billion dollars from other Swiss banks within Switzerland. The money will be used in opening investments and foreign exchange. It will also be used in adopting new and fast technology in the banking and running of business transactions.

References

Aaker, D & McLoughlin, D 2010,Strategic Market Management – Global Perspectives, John Wiley & Sons Ltd,West Sussex.

Barrow, W 2005, Robert Bruce & the Community of the Realm of Scotland (4th ed.), Edinburgh University Press, Edinburgh.

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Footnotes

1. A strategic plan is a document that outlines the economic agenda for a given organization for some time. It stipulates resources to be used and the expected challenges and their remedies.
2. Six Sis AG, Wir Bank, and Hinduja are major commercial banks in Switzerland.
3. Refers to the aspect of acquiring legal authorization for all initiatives by a business organization.
4. Is an alternative to the landline system as it is cost-effective and enhances the speedy transfer of money.
5. 1 euro=1.20 CHF means that a single euro equals 1.20 Swiss francs.
6. SNB refers to the Swiss National Bank.
7. ICT is a term that refers to information communication technology.
8. SIC(Swiss Interbank Clearing) refers to an internal mechanism used by Swiss banks to transfer money internally.
9. Market analysis involves an assessment of the ability of a given market to sustain economic programs.
10. WHO refers to the branch of the UN that deals with health matters in the world.
11. Project financing involves the establishment of communal support mechanisms by commercial, government, and social organizations.
12. Startup expense refers to the initial capital used by an organization to start a given project.