Research Korner: Economics

The Structure of Oil Price Market in the World

The Structure of Oil Price Market in the World Introduction             According to US President George W. Bush, being dependence on the oil will create the national security issues and there are many people who got the oil which cannot be like us. Thus, the world oil market is the one that controls the prices everyone is paying for the gas at every gas station neighborhood. The profit of the gas stations, taxes, and the profits of the oil refinery are all taking their toll though when the prices of the gas go up, then, this is the time the oil market is in the action (Steven Stoft, 2008).             Since, the world had the huge and still increasing on the demand for the oil, there are still not sufficient supply of the oil in meeting these demands. The oil world is commonly controlled by the OPEC or the Organizations of the Oil Exporting Countries though not all countries are part of it. This grouped had been formed in order to pressure the major oil companies as well as in refraining the lowering of the prices from the countries that major producers of oil (OPEC, 2008).   Structure of World Oil Market             It had been known that the oil industry is depleting and fast and the majority of the oil producing organizations and countries are have slow eaten up by their production rates. Thus, the world oil market has the structure of being oligopolistic whereas the oil market had been dominated by the fewer suppliers which includes the Opec and the Opec+ as well as the North Sea. In order for the industry to be under the oligopolistic approach, it is only important that it has few large firm that holding the large amount of the output which must be independent and the additions to the barriers are all very high due to the reason that ever participant are aware to other’s actions and the decision’s of every firm will affect the other firms. The prediction can also occur that the industry can be inelastic because of the great changes that rise in the prices of oil and to the people that has the average income that needs the money that signifies changes in preference and test. Therefore, most of the companies that are involved in the distribution and production of oil can be competitive. In reality, the oil had been traded like any other commodity whereas there are future exchanges and institutional spots for the oil products and crude oils. This crude oil had been are traded between the traders and the producers or the consumers that has independence to one another. The supplies move from the cheapest where the consumers are prepared in paying for them and in follows the investment in market. Inside the regions of imports, there are no controls for the prices and the producers of Russia are competing in the oil export. Thus, the oil prices in the domestic market are moving towards in the international levels in China and in Russia as well as other developing countries. This has effect which is connected in setting the commodity markets wherein the competition rules whole the economics is working (Mitchell, J et. al., 2001, p. 179). Therefore, the oil was bought for the cash and being delivered immediately. Then, the current price for the oil had been influenced by the market prices in the future due to the representation of the collective view at the given point in time.   Determining the Oil Prices in World Market             The oil prices can be determined by the aide of the short term relation of the demand and supply wherein part of the producers countries are playing the key roles below the specific price benchmark and the international oil prices that determined by the large state of OPEC and to their political discretion. The other way is the long term perspective for the depletion in the total reserves. This implies that the quality is playing the certain role for the formation of short term prices whereas the market prices can also differ in as greater than 20% (Siedenberg and Hoffmann, 1999, 381).             In other words, the prices of crude oil can be determined in the conditions of global demand and supply to the international market. The OPEC’s production policies can help in determining the global availability supply which can have the important influence to the world prices of oil. This can activity will only depends on the conditions of the prevailing market, it own cohesiveness, and the co-operation degree for the non-OPEC countries of oil producers. Taking the example of Ontario that imports its crude oil in the Canada or from the offshore needs to compete to the other users in the oil and needs therefore needs to pay the world prices. Therefore, the crude oil was in different prices which can vary its quality particularly the value of the products that made to varies from the crude to crude and their relationship was made to be constant which can changes the prices also in the West Texas Intermediate because of the changes in the crude prices (Ontario, 2008).             Factors Influencing Oil Prices in the Future             Many factors are predicted that can influence the prices of oil volatility and other prices of energy commodity in the next 4 years. The factors which can be considered are the high geopolitical risk in the OPEC producers which can continued for the economic growth in Asia and in China that tied to the oil. The other factor is the continuation for the rise of gasoline demand in US as well as the lack of significant investment for the gas and oil production and exploration for the major oil producers. These key factors are all inter-related which can lead to the existing environment of high energy prices (Fusaro and Vasey, 2006, p. 39).             Through the continues development of science and technology in the future, the oil prices can be affected by the production of the natural gases and energy which can be the primary sources of energy in the future. Thus, it can continue to increase the supply of the hydrocarbon fuels in meeting the demand for energy globally.   Low Oil Prices Affects the Global Economy             When there will be a fall in the oil price in the world market, it does affect to the world economy as the growth rate will fell down, there will be a tremendous impact on the worldwide trade as decrees in growth rate. There will falling down in the foreign direct investment while having the inflation as three folds and the rise of the unemployment rate. The worldwide GDP can drop if the fall of the oil prices can determine. The low inflation and the low oil prices can boost the economic growth which can get the contribution of the overheating in US. The dependent on the Middle East can remain high though there will be sources of the political instability for the remaining numerous regions (Maginn, J et. al., 2007, p. 197).   Demand and Supply Diagram for the Price of Oil             There is a significant effect for the price of the oil in the world market when there are changes in the supply and demand for the oil and in different scenario. i. For the world Recession             If there is a world recession, there is also restriction of the supply of oil which can have the huge impact in the increasing of the price. The figure above shows the demand and the supply which shifts to the left. This means that the demand in the oil is inelastic and the decreased in the supply of oil will result to the price and elastic demand though the oil needs to be inelastic and steeper.   ii. Iraq’s Oil Production Reduce the Cost of Producing Oil             The reduction of the production of oil for majority of the oil producing countries as the Iraq can increase the demand for the oil worldwide. The graph below shows the shift of the demand that associated to the supply. Since the demand curve shifts, it causes the excess demand in the oil and can be met by the reduction of stocks but the supply curve shift left which economic impact also. Therefore, the increase in the price also declines the inventories.   iii. UK Adopts the Energy Efficiency Measures             Adopting the energy efficiency practices for UK can significantly affect the market oil price in the world. The table below shows the graph of shift of how price affect the adoption of energy efficiency measures.             With regards to the adoption of UK in the energy conservation program will affect the price of oil whereas the supply will also shift to the left. Thus, the demand will also increase and it is proportional to the increase for the price of oil in the world market.   iv. China and India’s Growth affects Oil price market             For the pats years, China and India made the significant changes in increasing its role for the economies and their leadership had been successful for the reduction of delivering and reducing poverty for their citizens. For China its growth was 9% and the Indian economy grows 5 percent in the same period. Thus, the consequence for this economic growth is the greater demand for the energy and great consumption of oil. In general, the overall demand in energy for India and China can also be projected in the year 2030 while the demands of the prices of oil in the world market also increase.   Conclusion             The shock of oil prices can affect the consumers and can bring wealth to the oil companies which always and true statement as the market way of treating the consumers and producers when encountering shortage. This implies that there are many uncertainties existing in the price of oil in the world. Accordingly, the price can keep updated because of the shortages for the suppliers as well as the increase in the demand without the consideration for the speculators in the short run manner. In the long term issue, the price of oil can go down while price can peaked already which can result to the speculators of unloading the inventories that cause the fall of prices. For the consumers’ purposes, the changes of the gasoline to the alternative one will also affect the shock of the oil price and can also hurt much the consumers.   Bibliography Gasoline Pricing 2008, Ontario, viewed 09 October, 2008, http://www.energy.gov.on.ca/index.cfm?fuseaction=oilandgas.faqs&subtopic=gaspricing Maginn, J et. al., 2007, Managing Investment Portfolios: A Dynamic Process, John Wiley and Sons, United Kingdom. Fusaro, P and Vasey, G 2006, Energy and Environmental Hedge Funds: The New Investment Paradigm, John Wiley and Sons, United Kingdom. Siedenberg, A and Hoffmann, L 1999, Ukraine at the Crossroads: Economic Reforms in International Perspective, Springer, United Kingdom. Mitchell, J. et. al., The New Economy of Oil: Impacts on Business, Geopolitics and Society, Earthscan, United Kingdom. Organizations of the Oil Exporting Countries 2008, OPEC, viewed 09 October, 2008, http://www.opec.org/home/ The world oil market 2008, viewed 09 October, 2008, http://stoft.com/p/40.html.

The Structure of Oil Price Market in the World

The Structure of Oil Price Market in the World Introduction According to US President George W. Bush, being dependence o...

Keynesian Economics

Keynesian Economics Introduction According to the New Keynesian Economics, market may fail to clear due to wages and prices. In economics, all of the variables are associated with one another. In terms of governmental actions, the monetary policy and fiscal policy are good indication that somehow, the prices in the market are maintained and monitored. The common concept of letting the regulation over the prices of the products is to avoid the unnecessary inflation which is definitely a hardcore in the issues in the country such as the currency risks, unemployment, oil and wages and many more. Through the help of economics, the government and organizations are agreed to have a control for both price rigidities and wage rigidities. The Early and New Keynesian Economics The Keynesian view of business cycles in 1980 was clouded with too many doubts. The problem was not new empirical evidence against Keynesian theories, but weakness in the theories themselves. According to the Keynesian view, fluctuations in output arise largely from fluctuations in nominal aggregate demand. These changes in demand have real effects because nominal wages and prices are rigid. But in Keynesian models have the crucial nominal rigidities were assumed rather than explained-assumed directly, as in disequilibrium models, or introduced through theoretically arbitrary assumptions about labor contracts. Indeed, it was clearly in the interests of agents to eliminate the rigidities they were assumed to create. If wages, for example, were set above the market-clearing level, firms could increase profits by reducing wages. Therefore, the early introduction of Keynesian Economics and its associated theories led the way for the economists to move toward the new classical models with flexible wages and prices – the New Keynesian Economics. The primary disagreement between new classical and new Keynesian economists is over how quickly wages and prices adjust. New classical economists build their macroeconomic theories on the assumption that wages and prices are flexible. They believe that prices “clear” (e.ge supply and demand) by adjusting quickly. New Keynesian economists, however, believe that market-clearing models cannot explain short-run economic fluctuations, and so they advocate models with “sticky” wages and prices. New Keynesian theories rely on this stickiness of wages and prices to explain why involuntary unemployment exists and why monetary policy has such a strong influence on economic activity. Application of New Keynesian Economics In the price system, the adjustment of prices to changes in market conditions is the primary mechanism by which markets function and by which the three most basic questions get answered: what to produce, how much to produce and for whom to produce. To the behavior of price and price system, therefore, have fundamental implications for many key issues in microeconomics and industrial organization, as well as in macroeconomics and monetary economics. In microeconomics, managerial economics, and industrial organization, economists focus on the price system efficiency. In macroeconomics and monetary economics, economists focus on the extent to which nominal prices fail to adjust to changes in market conditions. Nominal price rigidities play a particularly important role in modern monetary economics and in the conduct of monetary policy because of their ability to explain short-run monetary non-neutrality. The behavior of prices, and in particular the extent of their rigidity and flexibility, therefore, is of central importance in economics. In unemployment issue, normally, economists presume that an excess supply of labor would exert a downward pressure on wages. A reduction in wages would in turn reduce unemployment by raising the quantity of labor demanded. Hence, according to standard economic theory, unemployment is a self-correcting problem. New Keynesian economists often turn to theories of what they call efficiency wages to explain why this market-clearing mechanism may fail. These theories hold that high wages make workers more productive. The influence of wages on worker efficiency may explain the failure of firms to cut wages despite an excess supply of labor and should emphasize the productivity on labor and profit on the organization. Conclusion The unemployment in South Africa is one of the common problems that most of the regions endure. But because of the new Keynesian economics, it suggests that the macroeconomic theory being applied by the government should be matched with the fiscal policy. This might not be the most applicable solution for the unemployment rates but it is good foundation in stabilizing the labor market and coordinate with the efficiency wages. The decision should be made on whether policymakers should intervene in practice, however, is a more difficult question that entails various political as well as economic judgments.   References: Ball, L., Mankiw, N.G., & Romer, D., (2007) The New Keynesian Economics and the Output- Inflation Trade-08 [Online] Available at: http://www.economics.harvard.edu/faculty/mankiw/files/New_Keynesian.pdf [Accessed 13 August 2010] Holzer, H.J., (1996) Employer Demand, AFDC Recipients, and Labor Market Policy, Institute for Research on Poverty [Online] Available at: http://www.irp.wisc.edu/publications/dps/pdfs/dp111596.pdf [Accessed 13 August 2010]. Levy, D., (2007) Price Rigidity and Flexibility: Recent Theoretical Developments, Managerial and Decision Economics, Vol. 28 [Online] Available at: http://www.biu.ac.il/soc/ec/d_levy/wp/mde2.pdf [Accessed 13 August 2010].

Keynesian Economics

Keynesian Economics Introduction According to the New Keynesian Economics, market may fail to clear due to wages and prices. In econo...

Development of the Hotel Industry in Taiwan

Chapter 2 Review of Related Literature 2.1 Development of the Hotel Industry in Taiwan             The service industry has greatly contributed to the economic growth of Taiwan. Basically, Clark, H. (2001) stated that the hospitality and tourism industry is expected to continue growing within the succeeding years. Actually, the success of the industry is partly attributed to the external factors providing an environment suitable for business such as the political and economic stability of the market and tourism efforts of the government to encourage and draw visitors from other countries and partly from the management and business practices developed and maintained by the individual businesses conducive to customer satisfaction and customer loyalty.             The vibrant hospitality industry developed after passing through an industry cycle due to both external and internal factors affecting the number of tourists whose needs the industry meets. The hotel industry in Taiwan is delineated into international and domestic hotels based on business ownership and domestic hotels are also subdivided into domestic company owned hotels and family owned hotels depending on the scale of operation and ownership of the hotel (Dennis et. al, 2003). These hotels differ in a variety of ways according to the manner that they utilize their available and created resources and business strategies to actualize their business goals.             Despite the differences in the scale of operation, organizational structure and business strategies of international and domestic hotels, the common objective is to utilize and maximize their resources to achieve a high brand equity founded upon efficient and excellent quality of service that results to customer satisfaction and eventually to customer loyalty.  According to Nguyen and Leblanc, (2001), international and domestic hotels build a strong industry through their ability to cater to the diverse needs of customers in terms of price, customer relationship, accommodation arrangements, and other diverse hospitality needs of customers. Although there is competition among international hotels, international and domestic hotels, and among domestic hotels it cannot be denied that these hotels provide distinct hospitality services giving customers options for their service preferences.             As discussed, the Taiwan hospitality industry developed after experiencing a business cycle with its initial high during the implementation of the Six-Year National Development Plan applicable for the years 1991 to 1996, but becomes low with the outbreak of severe acute respiratory syndrome in 2003, and a rise again in the performance of the hospitality industry at present (Global Hospitality News Archive, 2003).             During the initial high of the hospitality industry in the mid 90s, the Tourism Bureau of Taiwan reported that building the hospitality industry requires leadership on the part of the government and the leading hotels within the industry to provide both administration and guidance to direct the industry towards growth; comprehensive and holistic facilities planning for the industry; and sufficient goal-oriented training for the employees of the hospitality industry (Chen, 1996).  The result of the Six-Year National Development Plan is the increase in the gross domestic product of the country by 1.1 percent for the period 1990 to 1994 (Bailey, 1996) and .7 percent in 1997 (Hsieh, 1998). The economic growth spurred the development of the hospitality and tourism industry in Taiwan. The 1997 Annual Report on Tourism showed that the composition of the visitors to Taiwan were mostly from other Asian countries who were also experiencing growth. Close to 76 percent of the tourists in Taiwan were Asians with the remaining percentage from North America, Europe and other regions. Apart from international tourism, the economic growth that Taiwan experienced also proved helpful to the hospitality industry by encouraging domestic tourism (Wise, 1993). In 1996, the average number of trips within Taiwan was 2.99 increasing to 3.2 in 1997 as a result of economic growth and the policy of declaring public holidays (Hsieh, 1998). Economic growth translates to income for households and the empowerment to spend not only on their needs but also for leisure activities such as travel. The five-day workweek implemented in 1998 limited the time available for international travels resulting to the consumption of domestic hospitality and tourism industry services. The Tourism Bureau is strengthening international tourism through innovative leisure resorts and tourism packages. The visitor expenditure of foreign tourists amounted to 3.4 billion in 1997 with a US $193.56 average daily spending for every visitor. The cost of hotel accommodations amounted to around 50 percent of the daily spending. (Lu, 1999) The bureau also sought to create an environment conducive to the hospitality business by releasing a promotional brochure in different languages, using the internet as a marketing strategy, and participating in organizations for international tourism cooperation such as the East Asia Travel Association, American Society of Travel Agents and the Asia Pacific Economic Cooperation. The industry expects to gain external support through government efforts to help the industry grow. In 2003, the industry experienced a rapid decrease in the occupancy rates because of the outbreak of the severe acute respiratory syndrome or SARS in the region.  In the May 2003 new report of the China Post, around 84 percent of hotels in Taiwan had a lower than 30 percent occupancy rate and 96 percent of the hotels in Taiwan incurred losses. In the survey made by Pan Asia Human Resource Corporation, 79 percent of the 2,452 hotels questioned viewed the effect of the SARS outbreak as very severe. The quarantine measure implemented in the Ho Ping Hospital resulted to the deterioration of 79.01 percent of hotels represented by 50 to 60 percent drop in occupancy rates resulting to losses. In an effort to prevent further losses, many of the hotels requested some of their employees to take unpaid leaves or take their annual leave, implemented salary cuts, and suspended the payment of salaries until business performance improves. The owners of firms have asked the government for a bailout plan. (Global Hospitality News Archive, 2003)             In just a few months, the industry development that the government and business owners sought to achieve was brought down by the SARS epidemic. Between April and May, all hotels tried to alleviate their losses by offering large discounts up to 70 percent of the original price in an effort to maintain the operations of the industry. Inter-industry collaborations were also in place such as the offer of a package that includes hotel accommodations as well as air fare for a discounted price. (Dennis et. al, 2003)             The government held an emergency meeting to develop a plan to help the hospitality and tourism industry. A plan to rescue the ailing airline transportation sector was implemented through the reduction of the fees for local airlines at the expense of government revenue. Tax cuts and exemptions were also planned for the other sub-sectors of the tourism industry. The legislature also approved the proposal preventing the local banks from not approving loans needed by the businesses within the tourism industry for short-term financing. (Dennis et. al, 2003)             In 2004, the SARS outbreak has been controlled leaving behind bankruptcies for the hotels and other businesses unable to cope up with the economic cost of the epidemic. By the end of 2004, the hospitality industry in Taiwan is still in the verge of development but fairing well because of the growth in economy with the vibrancy in the different industries after the arrest of the SARS epidemic.             At the end of 2005, the November 12 issues of Asia Times reported that the tourism industry in mainland China, Taiwan and Hong Kong continue to grow as observed through the rampancy of hotel construction in the different business and tourism centers of the country. The rate of arrival of international visitors increased by 16 percent as a result of the increase in occupancy in the hotel industry. The growing hotel industry in Vietnam is expected to grow with China hosting several international events such as the 2005 Miss World and the upcoming 2008 Olympics. With a favorable business environment, the competition is expected to heat up requiring the management of the different hotels to develop and establish management and operations strategies to draw customers and achieve customer satisfaction and loyalty.               2.2 Building Brand Image             International and domestic hotels will be able to keep up with the demands of a growing market for the industry by making the industry service-based instead of price-based. International and domestic hotels set their respective prices based on service and not on price alone. The key component to brand management is the implementation of an integrated approach where companies are able to say what they can offer relative to their competition, do what they offer and promise to customers and confirm it through consistent practice. The value of saying, doing and confirming should be internalized in the company culture. (Cai and Hobson, 2004)             Building brand image to achieve competitive advantage in the hotel industry requires management to treat the service as experience goods (Nguyen and Leblanc, 2001).  In treating hospitality service as experience goods, establishments focus on providing a pleasant experience for customers to create the image that the hotel wants to portray to the market. However, the image is only established once the hotel is able to consistently do what it says to the satisfaction of the different needs of customers. Management will then direct all efforts of the company towards the creation of a company culture that provides a satisfactory service that meets the experience requirements of customers and eventually to achieve customer loyalty. It is after the achievement of a good brand image that the hotel can justify its price. The brand image justifies price and not the other way around.             Brand image is one of the factors that hotels should consider if they plan to achieve consumer-based brand equity. Brand image affects the development of a customer base of the hotel and the consequent improvement in financial performance (Kim, Kim & An, 2003). The development of a brand image should be based on the customer’s viewpoint. This means that a hotel should initially have updated information on the current trends in market demand before the company can formulate a plan to develop its brand image through customer satisfaction. The practice of providing total customer satisfaction was developed within the industry from knowing that customers require a hotel service that integrates accessibility and delivery of material needs with service.             Brand image is dependent upon the feelings that consumers and other establishments have about the organization in relation to the evaluation of other competing brands. Marketing activities, such as advertising and promotions, falls under the general image of the organization. Once the organization has built its brand image, it should maintain this image because a negative change in the way that the brand name is regarded reflects on a decrease in customers and consequently of revenue. It takes twice as hard to rebuild a good brand image rather than initially building it. There are different management areas that the business should focus on in developing a good brand image. The people tasked to build brand image should think of two things in planning a strategy. These things are first is to sell the service of the organization as a short-term goal and second is to build image in the long run. During the process of promoting the brand name, the company should apply integrated marketing communications to ensure the efficient introduction of the quality of service that the organization stands for. Image is related to the strengths and weaknesses of the organization. The company should integrate all available resources and recognize opportunities such as combining a strong image with an external opportunity to create a strategic advantage. A comprehensive analysis of the image of the organization and its strengths and weaknesses should be integrated to solidify the connection with customers. The brand image should consider the different consumer behavior to be able to introduce a consistent message with the target market. To be able to effectively communicate the brand image to the public, it is important that within the organization the message and the brand image are clearly defined. The image should identify the values or principles of the organization and the extent that the organization has established its position. The purpose of communicating brand image is to instill a consistent and stable impression among customers. The general impression that hotels should develop is quality of service in terms of amenities, personnel and meeting the particular needs of customers for the market to develop an impression of the organization. The significant perception is that of the consumers rather than the view of the managers about the organization. Brand image is consumer-based because their perception about the organization determines their propensity to make decisions in choosing a particular hotel and in enlisting again the services of the hotel in the future. Brand image in the hotel industry has different components, which are tangible and intangible. The tangible components include the services offered by the organization; the different hotel branches in terms of location and accessibility; the marketing communications strategy of the organization; the name and logo of the organization representing the brand image; and the employees of the organization who are the forerunners of brand image. The intangible components include the operational and human resource policies of the organization; the organizational culture determining the beliefs and practices of company personnel; the external environment and location of the company such as the accepted personal and business practices of the particular country where the organization operates; and the publicity that the organization gets especially from the media. Brand image plays an important role in the perspective of the consumer. The brand image gives an assurance to the customer that the decision to obtain the services of the chosen organization in unfamiliar settings is worth it. Brand image also assures the customer of quality service when the latter has no previous experience of the organization. The image perceived of the organization also lessens the time spent looking for accommodations when the image meets the experience needs of the customer. The brand image also determines the nature and extent of connection that the customer develops with the organization based on the perceived openness of the organization.                          Brand image also plays an important role from the point of view of the organization. A good brand image ushers the acceptability of change and developments within the organization such as the introduction of new services and the putting up of new branches in different locations. The brand image determines the ability of the organization to determine the price of its services. A consistent brand image and consistently meeting the needs of customers results to the return of customers and positive endorsements through word-of-mouth. The brand image not only attracts customers but also qualified employees willing to work to maintain the brand image. A good brand image attracts favorable reviews from industry experts. 2.3 Delivering Quality Service             Competitive advantage is achieved by many organizations through their offer of superior service quality (Schmenner, 1995), which is a harder thing to do than offering product quality because there are a lot of service factors that are intangible and cannot be completely controlled such as the decisions and actions of employees and the result of the interaction between employees and different customers. Moreover, the customer judgment on the quality of service is based on the perceptions of the service recipient’s perceptions and expectations causing a difficulty in identifying and correcting service failures. (Hays and Hill, 2000).             Achieving service quality requires the organization to focus on building and transmitting the importance of service quality to the members of the organization. The efforts and contributions of management and personnel should be directed towards a clear vision of delivery of superior service quality. Employees should be motivated to provide quality service in all aspects of the operations of a service organization such as hotels. Outstanding service organizations have strong vision, initially market their offered service internally, evaluate service and publish results. (Albrecht and Zemke, 1985) There are two factors that affect perceived service quality, which are employee motivation and vision and organizational learning (Hays and Hill, 2000).             Quality is a significant predictor not only of profitability but also of the respective market share of organizations in the market (Buzzell and Gale, 1987).  The primary actors involved in ensuring quality are the personnel of the organization. The attributes of the personnel of the organization directed towards the achievement of quality plays an important role in consequently achieving customer satisfaction. The attributes emphasized in the field of service are commitment (Farber and Wycoff, 1991), organizational culture (Collier, 1994), and service delivery environment (Schneider, 1980). Employee attributes in the achievement of quality service is significant because service quality starts with people (Hostage, 1975).             The qualities of empathy, courtesy and responsiveness of employees in service delivery when combined in the interaction of personnel and customer influence the perceptions of customers on quality. Service personnel plays a significant role in service delivery that they are perceived to be an integral part of the service. Service employees not only create service but they also form part of service delivery (Czepiel et. al, 1985). This highlights the importance of motivating employees to become conscious of improving their performance and maintaining a standard quality of service based on organizational goals.           Developing a standard quality of service of the organization requires the determination of the goals of the company and the process of learning and improvement until such that the organization is able to establish a service quality that substantiates its brand image. Learning can be done in two ways, which are learning from employees and learning from customers. The organization should implement both an internal and external approach to learning (Marquardt and Reynolds, 1994). The rate that organizations learn constitutes a competitive advantage for the organization (Senge, 1990).              The organization should consider feedback from the employees in evaluating the effectiveness of a service because it is the personnel who directly observe the reaction and hear the complaints and praises of customers. Organization should also consider the views of customers by integrating a feedback system in service delivery. On the part of employees, the regular meetings and evaluations may be considered as the venue for collating employee experiences and comments on the service delivered and the system of delivery. On the part of customers, quality control is a system of getting the feedback of customers (Argyris and Schon, 1978). The hotel can establish a customer service booth or provide a form or a telephone number where their complaints can be voiced and addressed. The organization should use the records of complaints to assess and investigate the validity of claims, determine areas requiring change and device the most effective manner of making the change within a reasonable span of time.             In the delivery of quality service requires both internal and external consideration.  Internal consideration involves the creation of an organizational vision, the motivation of employees towards the realization of the visions and the establishment of a system for evaluating performance to facilitate learning. External consideration refers to information on the service expectations of customers, the integration of these expectations in the goals of the organization, and the establishment of a feedback system to solicit the participation of customers in evaluating the quality of service of the organization and enhancing organizational learning. Offering quality service to substantiate the brand image of the organization is primarily used to achieve customer satisfaction and eventually customer loyalty. 2.4 Achieving Customer Satisfaction             Customer satisfaction is what sustains the operations of the organization because an unsatisfied customer will not do business with the organization again and dissatisfaction may also dampen potential referrals to the friends and business associates of the unsatisfied customer. Even if the organization implement the newest technology in building the hotel and designing individual  rooms, offer the most expensive items for the use of customers, and train their personnel but if these do not meet the particular needs of customers, then satisfaction is not attained. The measurement of customer satisfaction is through the perception of customers and their propensity to engage the service again.             There is a direct connection between service, satisfaction, sales and profit (Gerson, 1993). However, these cannot be achieved without the imposition of measurements for performance. Measuring the customer satisfaction is important because everything that the organization measures are completed, improved and mastered. Having a measure of customer satisfaction also provides a detailed learning of the factors considered by customers as crucial to their satisfaction that will form the basis for identifying areas for improvement and the efficient change management. Every aspect of customer satisfaction should be centered on the customer.             The definition of customer satisfaction is based on the service that the customer expects to receive to become satisfied. A customer is satisfied whenever an expectation, whether real or perceived, is met or superseded (Gerson, 1993).  It is important for the organization to know the expectations of the customer and to know this the organization should ask the customer. This is the reason why in all service organizations, the personnel always ask for the preference of the customer. Starting from the reservation of hotel accommodations, the customer is asked about his or her preferences from the type of rooms, the amenities that comes with the room and other special arrangements. During the receiving and stay of the customer, there may be particular requests that the service personnel have to meet. An organization is able to provide satisfactory service by knowing the preferences of customer and anticipating the possible requests that customers may make.             For the organization to measure the value of customer satisfaction, the company must first measure the cost of delivering a poor service. There are several measures for determining the cost to the organization of poor service. First is lost customer revenue, which refers to the money that the organization will loose because of the loss of customer to a competitor because of poor service. Second is lost opportunity revenue that is the loss of money because of the decrease in the revenue that could have been achieved when the customer engages the services of the organization again and when the satisfied customer refers the service organization to friends and business associates. Third is customer replacement cost, which refers to the expenses that the organization will incur in looking for new customers. If the organization full comprehends the implications of these losses, then the company will start to recognize the role of customer satisfaction and profit.  (Gerson, 1993)             In the hospitality industry, customer satisfaction is based on the expected ultimate hotel experience of the customer (Sigala and Leslie, 2005). People no longer engage the services of hotels for board and lodging but customers seek a hotel experience that includes the amenities of the hotel, the services offered, the attitude of personnel, the completeness of service, and the manner that the organization values its customers. Although price still remains to be the consideration of customers, there are customers who are willing to pay a higher price for hotels with an excellent brand image but they also expect top service in return.              A hotel experience becomes measurable in terms of revenue when it is deemed a memorable. The organization increases the value of its services by including memorable experiences to service delivery. This is because the decisions of customers to consume and choosing a particular hotel are determined by hedonistic and psychological aspects (Gretzel and Fesenmaier, 2003). The ultimate hotel experience is that which satisfies the hedonistic expectations of customers. The experience creates a connection between the organization and its brand image and the lifestyle of the customer in the context of the intentions of both parties. There are physical and psychological considerations in achieving the ultimate hotel experience, which are the physical components of the service such as amenities and comforts and the psychological components such as the ambiance of the hotel, attitude of personnel and the drive to fulfill the emotions that people want to feel in a hotel. 2.5 Achieving Customer Loyalty             A loyal customer is a client that engages the hospitality services of a hotel every time an opportunity arises. Customer loyalty refers to the fidelity that a customer has for a particular organization as a result of a consistent experience of satisfaction from the services of the particular hotel. (Bowen and Shoemaker, 1998). Mutual trust develops based on the expectation on the part of the customer that the hotel will consistently meet the needs of the customer and on the part of the organization that the customer will patronize its services.              Achieving customer loyalty and retention involves the implementation of plans that prevent customers from changing their hotel preference. There are three considerations in preventing customers from changing their preference. First is the context of the engagement of the services of the organization. The needs and requirements of customers change depending upon the change in their circumstances and it is important that a hotel can accommodate the expectations of customers despite the changes in the context of the service engagement. The quality of service should still be consistent despite the fact that the customer previously visited the hotel on business and returns for leisure. Second is the control that the organization has on the marketing mix to efficiently maximize resources to provide a pleasurable experience to the satisfaction of customers. Price, location, promotions and services are the different aspects of hotel operations that the organization can control. Management should ensure that the operation of the hotel is synchronized in the direction of achieving customer loyalty.  Third is the consideration of the customer in terms of the background and the demographics of the customer. The background of the customer determines the service expectations of the customer, the fulfillment of which determines the propensity of the customer to return to the hotel in the future. Hotels should customize their services to accommodate cultural differences. There are cultures that require separate accommodations for men and women or the particular preparation of food. These aspects should be known and considered by the organization in providing service to international customers. (Morgan and Dev, 1994)                Service considerations include the physical and psychological aspects. The physical aspects include the accessible lay out of the rooms, elevators and stairs, bathrooms, foyers, restaurants and bars, and other significant aspects that contribute to the achievement of loyalty. The technical aspects of functionality also includes cleanliness and orderly placement of furniture in the room, the size and comfort of the bed, wall paper and decorations, quality of bathroom, facilities of the room. The functional aspects of the service include the style of service delivery, the presence of a customer service area, cleaning service and food delivery service. The psychological aspects of service delivery are the friendliness of the service personnel, speed of service, the attitude of employees towards customers, the ambiance of the hotel and the overall service reputation of the establishment. (Lewis and Pizam, 1981)             Price is a factor that contributes to customer loyalty. Pricing a hotel service is difficult because of the intangibility of the thing being valued (Dearden, 1978) Price that the organizations impose for their services primarily depends upon their official rating. A five star hotel has a higher price than a two star hotel. Generally price setting is cost-based. However, there are instances where price can be used as a competitive advantage for some sectors of the market. Whether the pricing system is cost or competition based or both, the organization should consider their target customers and decide based on the pricing that would effectively draw customers and maintain their loyalty. Price is also based on a good brand image that contributes to the motivation for customer loyalty.                          The location of the hotel is another factor that contributes to customer loyalty. Hotel location is a significant consideration depending on whether the customer is traveling for business or leisure purposes. A customer engaging the services of a hotel because of a business engagement in the area looks for a hotel that provides all his or her services especially the proximity to the venue of the business engagement. Businessmen travel with considerations for time and they would not ordinarily engage then services of a hotel that is far from the business areas. Leisure customers on the other hand consider the proximity of the hotel to the tourist locations and leisure activities that they want to experience. Location also matters to customers who are passing by the place and merely looking for transient accommodations. The smaller, more homely hotels located near major routes are usually the choice of accommodation for travelers and the small budget groups. (Hall, 1999)              Promotion is the other factor that contributes to customer satisfaction. Promotions in the hotel industry are classified into loyalty strategies, branding and relationship marketing. The common loyalty strategy is the issuance of loyalty cards that represents perks for frequent customers. This may work for some and not for others but if it works then the company expects to gain profit. Retaining 5 percent of customers will increase profit by 100 percent (Reichheld and Sasser, 1990). This is an excellent incentive for organizations to find a promotional program that efficiently retains at least 5 percent of customers for it to gain profit.

Development of the Hotel Industry in Taiwan

Chapter 2 Review of Related Literature 2.1 Development of the Hotel Industry in Taiwan The service ind...

Present pro or against arguments pertaining to globalization and cultural imperialism

Globalization and cultural imperialism This paper will discuss and present pro or against arguments pertaining to globalization and cultural imperialism and for conclusion, the need to take specific position of one and not both sides of the debate. Truly, the presence of globalization is rapidly affecting today’s society, lifestyles, business and trade operations that bring in assumptions regarding such healthy or ill culture environment and that the process of imperialism does emerge into the globally inclined context. There moves towards an impeding change of the activities that are culture centered and implies to the essence and adoptable grounds of globalization and that, certain debates and arguments were happening over the years and that people and authorities are giving feedbacks and comments about globalization and culture imperialism such as the ideas of protectionism and free trade as asserted by proponents McConnell and Brue (1999, 2005), and that several critics have made argumentations on the situation and some are on the positive side while others on the negative matter.   Pro arguments on Globalization and cultural imperialism Globalization is effective in business markets and economy and if it functions well cultural imperialism will assume power over the market that implies constructivism of perspectives relating to trade processes and operations, as useful interaction may took place and growth in business investment and capital flows are evident factors of a healthy globalization ways and culture imperialism. Furthermore, globalized culture assumes innovative reality of economic as well as cultural phenomenon, having successful impact into the business functions and that Tomlinson (1997, p. 177), have indicated certain argument linking the basis of globalization into cultural imperialism as he adheres that, “globalization is either just a term for process with history, being extensive with Western imperialism, as he added, it is simply the global working through process of domination in which the West draw cultures into its realm”. Aside, Schiller (1976), have noted the “concept of cultural imperialism as of today, it best describes the sum of process through which society is brought in modern system and how it is attracts reality such as the shaping of social institution in order to promote better value and structure of trading systems”, realizing that, globalization is the vital step toward stable world and better life of the people.   Against arguments on Globalization and cultural imperialism The argument against globalization and culture imperialism is placed at the obvious discourse as there focuses on production and distribution as opposed to the reception truth, there is too much emphasis of the two that neglect importance of culture ways. Thus, it can be that, cultural imperialism extrapolates from such theories and models of economic relationships, the compelling of evidence of domination such as the EU colonialism. Also, Schiller (1976) believed that, “globalization is process whereby all global cultures are inexorably drawn into the sphere of influence of one single culture capitalism”. Furthermore, globalization does produce homogeneity (Kwame, 2006) and it can be that, globalization is possibly a major threat of the latter. Thus, globalization have the economic line and political cost and there bring in the focus of culture power like in binding and dividing in time when certain tensions of integration and separation imposes issues relevant to global as well as culture relations (Kwame, 2006). Moreover, there can be situations that some workers are losing jobs into domestic as well as foreign markets as an outcome of globalization and culture imperialism for example, due to increase in prices by in selling such product in a country (McConnell and Brue, 2005, p.85), the installing of monopolies allowing detriment to society as a whole (McConnell and Brue, 2005, p. 85). Globalization serves to increase competition, granting the most efficient operation of business, trimming excess fat from supply chains, provide low price such as companies as Wal-Mart, upon getting demands by its consumers and without global trade, no need for spending dollars such as for export purposes.     Conclusion Therefore, the position is pro with the argument realizing that, globalization have useful effects on countries around the world by promoting freedom and democracy in nations allowing business trading and communication to emerge that inevitably boosts the idealism of culture foundation and positive ground and believing that, globalization helps the poor people to have means of living in certain nations for example, Bangladesh are into stable textile industry and India has effective information technology zones, the people of the two countries does have  a life to live for and exercise ample liberty of entering income opportunities as an indication of globalization linking imperialism truth (McConnell and Brue, 1999, p. 90), as there might be presence of lower prices and that people are happy of the result.       References Kwame, A. (2006). The Case for Contamination. The New York Times. January 1, 2006 www.nytimes.com McConnell, C. and Brue, S. (1999), Economics. 14th edition. Boston: McGraw-Hill McConnell, C. and Brue, S. (2005), Microeconomics: Principles, Problems and Policies, 16th ed. New York: McGraw-Hill Schiller, H. (1976), Communication and Cultural Domination, Armonk, NY: M.E. Sharpe, 98-103. Tomlinson, J. (1997), Cultural Globalization and Cultural Imperialism, pp. 170-190 in Ali Mohammadi (ed.) International Communication and Globalization. London: Sage.

Present pro or against arguments pertaining to globalization and cultural imperialism

Globalization and cultural imperialism This paper will discuss and present pro or against arguments pertaining to globalization and cu...

Role of Population Size and Growth in Economic Performance

Role of Population Size and Growth in Economic Performance     Introduction The discipline of economics as we understand it today is a relatively recent development (Varian HR 1989). Economic theory provides an outlet for research in all areas of economics based on rigorous theoretical reasoning and on topics in mathematics that are supported by the analysis of economic problems (Varian HR 1989). Economic theory surveys for particular areas of research that clearly set forth the basic underlying concepts and ideas, the essential technical apparatuses, and the central open questions. The help of economic theory the economist have already a guide on how to manage and boost the economy. Modern economic thought emerged in the 17th and 18th centuries as the western world began its transformation from an agrarian to an industrial society (Varian HR 1989). In accordance to these theories, issues concerning economic growth and development become a hotly debated topic. Actually, the economic development and progress of most countries in world is most likely related to their agriculture but only few recognizes that modernization and population growth are part of it. From the statement of economy presented by Macfarlane, I (2002), it was shown that the 1930s depression, accompanied by social chaos in rural and mining areas that effectively forced the country into the import-replacing industrialization that became the basis for a post-war economic boom.  Different nations around the world experienced decline and success in the course of their history. Their success and decline in terms of their economic, political, and societal conditions have led many historians and economist to come up with theories and assumptions that would determine the chain of events. With this, we may say the population size and growth as well as technological development as part of modernization changes plays significant role in economic performance. This role could have both positive and negative impact to the economy.  Basically, the increase in population size could also mean increase of workforce that would help the economy to grow inevitably.  However, this increase in population in negative side would also hinder the nation or a certain economy to distribute its already scarce wealth.     Discussions             According to Krautkraemer JA (2005), the decline in population means less pressure on resource and it also means less labor for production in the economy but a developed economy will react differently from a developing country. Basically, most developed countries are on that stage of having more death than birth meaning their population is declining.  For example, Japan its economy is not at all declining despite the population decrease. In other words labor is being substituted because there is now intensive mechanization, modernization, automation and computerization of every production sector and this nullifies the fact that a decline in population will affect an economy in developed world. One of the benefits of modernization is it describes the ongoing global trend toward the freer flow of trade and investment across borders and the resulting integration of the international economy. Because it expands economic freedom and spurs competition, modernization raises the productivity and living standards of people in countries that open themselves to the global marketplace.  For less developed countries, the benefits of modernization are obvious. Modernization offers access to foreign capital, global export markets, and advanced technology while breaking the monopoly of inefficient and protected domestic producers. Faster growth, in turn, promotes poverty reduction, democratization, and higher labor and environmental standards.  Modernization has produced enormous benefits for very large numbers of people (Inglehart, 2005). One of the most important benefits of modernization is the major progress and growth of global trade. Through this, goods, services, labor, capital and technology are able to move freely across national borders. International trade expansion led to higher international capital flows, labor and technology. Universality in cultural, political, legal and institutional practices among neighboring countries was also made possible through this benefit. With international trade, countries are able to distribute their goods to a larger market. Aside from economic development, the ties shared by participating countries can also be a useful resource for less developed nations. This benefit was even more pronounced from 1980 to 1997 where volume of international trade had tripled. At the same rate, imports and exports have also grown. From 1990 to 1997, the volume of foreign direct investment has also doubled in volume (RAWOO, 2000). Changes in technology and communication have also supported this modernization effect as labor and business opportunities become more accessible. The economic benefit of modernization then resulted to higher standards of living among participating nations. As modernization enables open trade among foreign countries, media had also been enhanced through this concept; this in turn, resulted to the people’s increased accessibility to several forms of media including the radio, newspaper, telephones, televisions, computers via the internet. This access on the other hand was beneficial not only in making communication easier but also in increasing public awareness over several important issues like gender inequality, discrimination, democracy and human rights.  As business monopoly is gradually taken out by modernization, media monopoly is no longer observed as well. RAWOO (2000) stated that the increased access of people to communication, markets and information is among the important benefits of modernization as nations are able to optimize various resources and share the outcomes with others. Ultimately, this important benefit resulted to efficient allocations for the purposes of progress, poverty reduction and human development. National governments then improved though modernization as awareness led to active development.             However, we may say that economic growth is the expansion of productive capacity of an economy and it requires labor but quality labor (skilled and educated). It is very possible for a region to have a shrinking population but a growing economy so long the few are skilled. The other fact which is also very important to consider as far as economic growth is concerned is both capital widening and capital deepening in production.             Moreover, some of us may also state that economic growth depends on whether the economy makes a profit or not, and what proportion of the decline are revenue generating people. For example, when the birth rate goes down, less resources are used (schools, hospitals etc) as children, but then the problem of fewer tax payers when that generation starts working causes a decline. This is happening now as the baby-boomers of the 1950s reach retirement, we will have an ageing population, so fewer tax payers and more people drawing pensions will cause the certain economy big problems in a decade or so. With respect to the population issues, employment and unemployment concepts will come up in order to relate measures of economic growth and economic actions of the government of a certain country. For example, Australia initiated a bipartisan protection strategy till the early 1980s which allowed reasonably high wages, low unemployment and a diverse manufacturing sector while achieving reasonable import replacement. However, this strategy was abandoned in 1983-85 as the Labor government worked to bring Australia out of the era of protectionism and into a new era of open competition and manufacturing for global markets.  Basically, the development of the Australian economy over the past years has been excellent. Regardless of the crisis in Asia, Australia’s GDP has sustained to grow sturdily, with per capita income growth averaging just under 3 per cent a year since late 1991. There has also been stable growth in full-time service and even faster growth in the number of part-time jobs. The unemployment rate, while still higher than popular given this period of growth, had fallen to a near 10 year low of 6.4 per cent in August 2000 (Macfarlane, I 2002). As seen in this report, the theory of Keynesian seems to be true in which the emphasis is on the activist government policies to promote high employment, dominated economic policymaking. With regards to this theory, it clearly describes the participation of the government in which it plays a major role in managing the economy (Varian HR 1989). Government is important because they are the on who will control and finance the expenses in order to make the economy become progressive. For some business companies, the theory of monetarism seems to be apparent. In Monetarism theory it deals about the updates the Quantity Theory. In monetarism theory really concerned the numbers of products being produce for the reason that can immediately supply if ever the demand is high (Varian HR 1989). It emphasizes the critical role of monetary growth in determining inflation. From the evaluation presented by Macfarlane, I (2002), Rational Expectations Theory is not apparent since this theory provides a contemporary rationale for the pre-Keynesian tradition in which there is restrictions or limitations of government involvement in economy. It argues that the market’s ability to anticipate government policy actions limits their effectiveness (Varian HR 1989). Basically, these theories play an important role in order to make the economy become progressive because it provides concepts and ideas in analyzing the complicated situation and problems that deals with economic problems. The concepts and ideas being provided by the theories, it will serve as the guidance for the government on how to manage the economy with fewer expenses. With regards to population growth, it certainly creates significant impact to economic growth and progress. Most notably may be Japan as well as many developed Western countries. The U.S. however, has experienced population growth due primarily to immigration rather than births. In the case of Japan, population growth by births is rather stagnant, and there seems to be a high barrier for immigration. The fear is that the elderly population will overtake the working (which may already be the case), and Japan's version of social security will inevitably fail. Thus, the Japanese government is promoting the birth rate through incentives and the media. There are a few factors that actually allow the economy of a country to grow while the population decreases. People who did not previously contribute to the economy may do so, e.g. retirees, students, women. For example, during World War II, females entered into the workforce in the U.S. (which was unprecedented at the time), while the men were sent overseas to fight. The simple facts is that generally half the population (male v. female), were only subjected to the home life, now were contributing to the creation of goods and services. Obviously, this was to continue after the war and to the present. Since it is no longer the case that such a large part of the population is not working, we may assume that there are other methods to increase productivity. Technology will play a key role in countries that are unable to grow, or even sustain its population. Hence, we would imagine computers and machines to take the place of humans in the future.   Conclusion   Typically, there is a whole 'growth' component of the economy - housing construction and so forth, so that if there is no growth, then we have unemployment, and through the multiplier process, stagnation. Historically, part of growth has been the increase use of inputs such as labor, land, oil, forests and the selling off stocks. So, in this sense, population growth is necessary and play significant role to the economy. Thus, it is also necessary to pay for the old people to have young people around, so that you need to at least replace your population. In the US, there is a huge swell of baby boomers that did not save enough for, so there need lots of immigrants to help pay for them when they retire. But this is rather an exceptional case. If there is no population increase, then the ever increasing demand for construction and so on must be dealt with technological growth and modernization. As evidently discussed in this paper, Japan survived and continues to receive economic growth even though their population growth is too low and that is because they manage to have excellent modernization growth. But for most economies, they must have either population or technological growth with respect to the current composition of economic factors and outputs.   References:   Inglehart, R (2005), Modernization, Cultural Change, and Democracy: The Human Development Sequence. Cambridge University Press.   Krautkraemer JA (2005), Economics of Natural Resource Scarcity: The State of the Debate, Resources for the Future, Accessed: 14 January 2009, Available at: <http://www.rff.org/rff/Documents/RFF-DP-05-14.pdf>   Macfarlane, I (2002),The Australian Economy:Past, Present and Future, Reserve Bank of Australia Bulletin. Accessed: 14 January 2009, Available at: <http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_apr02/bu_0402_2.pdf>   RAWOO (2000), Coping with globalisation: the need for research concerning the local response to globalisation in developing countries, Rawoo, The Hague.   Varian HR (1989), What Use is Economic Theory? School of Information Management and Systems, University of California, Berkeley. Accessed: 14 January 2009 Available at: <http://people.ischool.berkeley.edu/~hal/Papers/theory.pdf>

Role of Population Size and Growth in Economic Performance

Role of Population Size and Growth in Economic Performance Introduction The discipline of economics as we understand it toda...