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HOW DO FOREIGN DIRECT INVESTORS DEAL WITH CORRUPTION IN THE HOST COUNTRY

Introduction The problem of corruption is on-going right at this very minute and seems to be disturbing for everyone in the society. It is perceived to damage the investment environment of a country. However, little research has been commenced to empirically examine corruption’s impacts on foreign direct investments. Corruption on foreign direct investment in most countries has a huge impact on the distance measure of corruption between the host and source countries on cross-border direct investment. Corruption distance deters cross-border investment (1987). Research shows that there are evidences that indicate corruption distance to be not as serious a deterrent of outward direct investment from more-corrupt countries as it is from less-corrupt countries. The Foreign Direct Investment Understanding the connection between corruption and Foreign Direct Investment (FDI) ownership composition is important for several reasons.  First, understanding the determinants of FDI ownership composition is important. For example, many developing and transition economies are eager to attract foreign investors for the advanced technologies that they may bring.  The technological content of a foreign investment varies with the ownership composition of the investment.  Second, host country corruption ought to play a more significant role in theories and empirics of international capital flows than it does so far.  Cross-country variation in corruption levels is as large as the variations in labor cost or corporate tax rate, two commonly emphasized determinants of international direct investment. Third, given that corruption is elusive to measure but important conceptually, it is useful to derive and test more nuanced predictions of the economic consequences of corruption, such as its effect on the composition of FDI.  This could help investors in increasing their confidence that popularly used measures of corruption are indeed meaningful and informative (2001). Plight of Investors in a Foreign Country Foreign investor’s choice of entry mode may be affected by the extent of corruption in a host country. Corruption makes dealing with government officials, for example, to obtain export licenses and production permits less transparent and more costly, particularly for foreign investors.  In this case, having a local partner lowers the transaction cost (e.g., the cost of securing local permits). At the same time sharing ownership may lead to technology leakage. Both costs of local permits and losses from technology leakage are positively related to the extent of corruption in a host country. When corruption level is sufficiently high, no investment will take place. When corruption is low enough so that investment can take place, the foreign investor with more sophisticated technology prefers a wholly owned form, but, holding the technological level constant, the investor is more inclined to have a local partner in a more corrupt host country (2001). In addition, there is an argument that it is impossible to get business done in large parts of the world without paying kickbacks to officials and it is also often argued that companies come under particular pressure to pay up, because they come from rich countries, and because they are outsiders. It is not clear whether further governance controls in the home jurisdictions is a solution. But what can be said is that anti-corruption actions under an existing regime would reinforce the cost side of the equation. Reduction of inward foreign investment only occurs in country with low level of corruption, but the rate of investment is actually higher in countries with a higher level of corruption. Conclusion Corruption is present in almost any country, but has the most devastating effects in developing economies, because it hinders any economic advance in the economic growth and democracy of a country. Normally, a foreign investor will have second doubts in investing to a particular country if the corruption level in there is unregulated and widespread. What the government will do to regulate corruption is clearly the key. The private sector is recognizing that it is in its own best interest to fight corruption to foster sustainable and stable business growth. Global business leaders are more publicly supportive of increased regulation to limit corruption. A careful assessment is needed of the capacity of government and international agencies to enforce, or private sector bodies to self-regulate  these agreements, as well as the capacity of the range of companies to implement procedures to reduce corruption. Multinational businesses typically have the resources to train and monitor internally, but local firms, including down to the level of small and medium enterprises, will often require assistance to develop workable controls.Competent and visible anti-corruption bodies must implement anti-corruption laws. Targeted investigative techniques, statistics and indicators should be developed so that foreign investors would feel safe.     References

HOW DO FOREIGN DIRECT INVESTORS DEAL WITH CORRUPTION IN THE HOST COUNTRY

Introduction The problem of corruption is on-going right at this very minute and seems to be disturbing for everyone in the society. It is perceived to damage the investment environment of a count…

The Great Depression

The Great Depression             The Great Depression is considered as one of the darkest times of American history. It is considered as a traumatic experience of those who lived through it and has a profound impact on the generations after. The Great Depression is also considered as one of the dominant forces that molded the United States into what it is today. According to Himmelberg (2001), the depression brought great hardship and suffering to millions of Americans and it was instrumental in the shaping of America’s economic, political, and social spheres. Himmelberg (2001) adds that “the depression made a strong impact on people’s everyday lives because so many suffered from economic hardship and insecurity”.             The Great Depression can be seen as a “peak” of a business cycle. Depressions occur when there is not enough demand for all the goods and services that an economy produces. Inventories of unsold goods build up, and manufacturers cut production by laying off workers and buying less of the raw materials that they use to make their products. Service providers, from doctors to hair stylists, have fewer clients, and their incomes fall. Most economists believe that such falling demand is a normal part of what is commonly called a business cycle. Demand for two kinds of goods--durable goods and capital goods--tends to fluctuate, and these fluctuations drive the cycle. Durable goods are consumer goods that last a long time, such as automobiles, appliances, and home furnishings. Demand for such goods increases when consumers are feeling prosperous; it falls when they are not feeling prosperous. Many economists also believe that durable goods markets can be "saturated"--that there are, in other words, times when most consumers have purchased the durables that they want and have no desire to buy more. At such times, demand obviously will fall. Capital goods are goods such as factory buildings, machinery, and equipment. These are goods that are used to produce other goods. Business firms invest in such goods only when they feel that consumers will buy what is produced by the new capital goods. When that prospect seems doubtful, demand for these goods falls. Events during the mid-1920s illustrate the high point ("peak") of a business cycle. In these years, there was a great increase in the number of Americans who bought houses, home furnishings, appliances, and automobiles. Towns and cities were growing rapidly, and state and local governments spent money to provide roads, sidewalks, and water and sewage services. The homes of town dwellers were connected to electricity and telephone services. Spending by consumers, business firms, and state and local governments created plentiful, high-paying jobs. In the late 1920s, demand was beginning to soften for houses and automobiles. Cities and states had completed most of the efforts they had undertaken to provide services for their citizens. In the summer of 1929, total spending in the American economy was falling, and business firms began to cut production. October's stock market crash--signaling to shareholders that business profits would fall--probably made the recession worse. There was a loss of wealth and, as a result, people spent less, but the crash did not cause the recession. After the crash, the economy seemed to recover and the people were optimistic. However, the recovery of the economy was short-lived. At first, most observers thought that the recession would be temporary. Stock prices began to rise again, and the unemployed, aided by local and private charities, were assured that "Prosperity is just around the corner"--that is, the downward trend of the business cycle would hit bottom and the economy would start to recover. But this did not happen. Total demand stayed low. Business firms continued to lay off employees, and many firms went bankrupt. Then, in 1930, banks began to fail in large numbers, wiping out the savings of potential buyers and further lowering demand. State and local relief funds were soon exhausted, and many laid-off workers and their families, who had only recently led comfortable lives, now faced hunger and even homelessness (Caldwell & O’Driscoll, 2007). The Years before the Great Depression             The Great Depression devastated the whole world in the 1920s up to early 1940s. It is considered as one of the longest and most wide-spread economic depression in the 20th century. The United States, was one of the most severely hit by economic depression that started in late 1920s and ended in the early 1940s.             The onset of the Great Depression came with a shocking suddenness. In the space of a few days in October 1929, values on the New York Stock Exchange abruptly collapsed, wiping out the heady optimism of the “great bull market: of 1928-1929 and the seeming invincibility of Republican prosperity. Several years before the Great Depression, the American economy was doing good, considering that it was recovering from World War I. Stock values had risen steadily and with a nearly unbroken pace since 1922. After the World War I, the United States experienced an economic depression. World War I according to Himmelberg (2001), had placed great demands on the American economy, even before direct American participation began in 1917. Excessive demand led to a steep inflation of prices and set the economy up for an equally sharp deflation when the high rate of government spending rapidly slackened by 1920. By late 1921, the signs of recovery were clear. A long period of prosperity had begun, marred only by brief slowdown in the growth trend and by the failure of certain sectors of the economy, such as agriculture, to keep pace. The economic recovery of the 1920s was seen as a good sign by the people. People from the higher levels of the society as well as the white-collar and blue-collar workers felt the growth of the economy. Production and consumption of the goods that are the stuff of modern industrial economy came into their own in the 1920s.             It was the newer, highly innovative industries that fueled the expansion of the 1920s. During the decade auto registration rose from 9 to 27 million as the automobile industry, led by Henry Ford’s highly affordable Model T, put ownership within the reach of a mass market. Electrical goods too flooded markets from new American factories as refrigerators replaced the “ice-box” in a high proportion of urban homes, brooms gave way to vacuum cleaners, and radios brought entertainment, sporting events, and news into the home. The enormous increase in such products and the rapid expansion of the automobile indicated that higher incomes and more modern consumption patterns were filtering down from the well-to-do through the middle class and the working class. Advertising begun to flourish and adopted newer and more high-powered techniques for manipulating consumers.             Although the people became optimistic for the future, the prosperity of the 1920s was short-lived. National income grew rapidly, but the share of the increase going to those in the upper two-fifths of the income scale was far higher than for those lower down on it. Blue-collar workers enjoyed relatively stable employment, but their wages grew only modestly, and the income of family farmers did not grow commensurately with that of the urban middle class. What Fueled the Great Depression?             In order to understand the cures that ended the Great Depression, it is important that we should first look at the causes of the Great Depression.             Many theories have been developed to explain the occurrence of the Great Depression. One of the most popular among these is the Keynesian model, named after John Maynard Keynes, a very famous economist. The Keynesian explanation of the Great Depression according to Knoop (2004) centered on a major decrease in aggregate demand caused by sharp falls in investment and consumption. The decrease in investment and consumption were the result of a huge decline in expectation. This fall in aggregate demand had real effects on the economy because of wage inflexibility in the labor market (p. 144). According to the Keynesian explanation of the Great Depression, the decline in the total demand was so severe that adequate demand could only be restored only by large increases in government spending (Caldwell & O’Driscoll, 2007).   Another explanation was put forth by the supporters of the Monetarist theory of business cycles. Monetarists argue that the Great Depression was caused by a large decrease in the money supply that occurred because of the Federal Reserve’s ignorance and incompetence. This decline in the money supply reduced the aggregate demand for two reasons – a lower money supply reduced aggregate spending and a decrease in the money supply reduced liquidity in the banking system, leading to banking failures and high real interest rates. The decline in financial intermediation that resulted led to further reductions in spending, investment, and aggregate demand (Knoop, 2004). Caldwell and O’Driscoll (2007) supported this view, arguing that the length and severity of the Great Depression resulted primarily from the unwillingness of the Federal Reserve System to prevent bank failures and to maintain a large enough money supply. According to Gordon and Wilcox (1981) there were different factors that led to the Great Depression. The Great Depression can be traced to a series of domestic spending shocks, both monetary and non-monetary. The initial decline in output during the 1929-1931 period can be traced to a decline in consumption and residential investment expenditures. Friedman and Schwartz (1963) argued that the Great Depression resulted from the perverse actions of the Federal Reserve in letting the money supply decline drastically. Eichengreen (1992) asserted that the Great Depression resulted from a shift of the aggregate demand curve to the left and the impact of the monetary contraction was transmitted worldwide via operation of the “Gold Standard”. The gold standard was believed to provide an equilibrium by means of a simple mechanism which seemed to work as if governed by a law of nature. Two of its supporters such as Hume (1752) recommended the free flow of the precious metals. According to the Gold Standard’s supporters, if precious metals flowed out of a country they would thereby lower the prices and their inflow would increase the prices elsewhere, which would then lead to their flowing back to countries where the prices were lower. This process would work best without any interference. This proved to be an illusion. According to Rothermund (1996) the Golden Standard did nit work automatically at all but depended on the existence of a powerful lender of last resort, an institution which was able to ensure the liquidity and stability of the world market. Another factor that was often cited for the fall of the Great Depression on the United States was the failure of the Federal Reserve System. The Federal Reserve System according to the National Council for the Social Studies (2007) was established in 1913, in part to prevent bank failures by lending reserves to banks that were experiencing unusually high cash withdrawals. On the eve of the Depression, the first concern of the 12 regional Federal Reserve Banks should have been the overall health of the financial system. But the regional presidents of the Federal Reserve Banks were hesitant to lend banks in their districts. In consequence, many banks were allowed to fail, and the failures caused fear among account holders in sound banks, prompting them to panic and withdraw their funds. The Federal Reserve System also raised interest rates in late 1931, which discouraged business borrowing and contracted the money supply. Banks keep some of their reserves in the form of bonds. When interest rates rise, the prices of bonds fall; banks then hold assets that have declined in value, yielding less revenue when banks sell them to raise funds to pay depositors (National Council for the Social Studies, 2007). The First Wave of the Great Depression (1929-1931)             The breath-taking growth of the American stock market became the symbol of prosperity and became a gauge of the capacity of the United States to produce endless wealth. Though limited by modern standards, the number of Americans drawn into stock market speculation grew rapidly and was far greater by the late 1920s that ever before. Indeed, the whole United States was caught unaware when the crash came in 1929. Consumers and investors were shocked and they lost their confidence. This aggravated the economic downturn, which became more and more visible in the months after the collapse of the market. The fall of the market signaled the end of the era of prosperity. It wiped out the savings and confidence of many Americans. The United States did not expect that the economic crash in 1929 only marked the beginning of a decade-long economic depression. Politicians, businessmen and journalists believed that like the economic depression prior 1922, the economic depression of 1929 will be short-lived. According to Himmelberg (2001), there was a deeply engrained belief among business circles that the modern economy, with its immense production and consumption of so great a variety and volume of consumer goods, had become virtually depression-proof. These beliefs and hopes proved vain. Unemployment rose steadily throughout 1930; consumer spending and production of goods and services fell relentlessly, even though gradually; the stock market continued its decline; farm prices collapsed; and many banks, squeezed by the inability of borrowers to repay loans, approached the brink of failure. American exports, moreover, declined sharply as depressed conditions appeared in Europe soon after the American crash in late 1929. The Second Wave of the Great Depression (1931-1933)             The second wave of the Great Depression was more severe than the first. During the second wave, there were banking panics and failures that resulted in the crash of financial intermediation and investment. Because of the banking industry’s failure, the economy contracted rapidly. Industrial production according to Knoop (2004) fell by 43% between April 1931 and June 1932, and unemployment rose to 24%. Recovery from the Great Depression (1933-1941)             When Roosevelt came into power in 1933, the gold standard was abandoned which resulted in the devaluation of dollar. France and other European countries, except Germany, also abandoned the gold standard. All countries that dropped the gold standard started to recover after doing so. Once the gold standard was dropped, recovery was strong. According to Bernanke (1995) non-gold standard countries were found to have higher production, prices, money supplies, employment, interest rates, exports, and stock prices than their counterparts that remained on the gold standard. In the United States, the New Deal policies put forward by Roosevelt were found to be beneficial to the economy. Increase in government spending and reductions in taxes stimulated aggregate demand and raised consumer confidence by creating the impression that the government was doing something to improve the economic situation. While these policies were beneficial, it cannot be denied that these were not enough to solve the big problems brought about by the Great depression. The recovery started in 1933, although this was slow. Output had fallen so far below the natural rate that it would necessarily take a long time for it to recover. The recovery was also slowed by the large decline in the capital stock and the lost job skills and training that accompanied lost job opportunities. Output rose very gradually from 1933 to 1937, followed by a short recession from 1937 to 1938. By the 1940, unemployment was still at 14.6% (Knoop, 2004). What Ended the Great Depression? Keynesian Explanation             The Keynesian explanation is based on the theories of John Maynard Keynes. In his 1936 book entitled “The General Theory of Employment, Interest, and Money”, Keynes put emphasis on the relationship between unemployment and the Great Depression. Keynes held that it was possible for total demand in a modern economy to remain low indefinitely, leading to long periods of high unemployment. People who are unemployed are bound to spend less and because of these, businesses are forced not to produced goods which they think will not be purchased. This will further aggravate the problem as businesses will cut production and displace more workers.             The solution to this problem according to Keynes was to create enough demand to employ the work force fully which will be achieved if the government will increase spending to compensate for the decreased spending of consumers and business firms. Keynes also argued that in order to solve the problems of the Great Depression, the Federal Reserve System of the United States should create new money for the national government to borrow and spend. Rather than raising taxes, the government should take steps to create a deficit by cutting taxes, increasing spending, or some combination.  The length of the Great Depression in the United States seemed to confirm Keynesian theory. Unemployment remained high throughout the 1930s; the unemployment rate was 14.6 percent in 1940. Under Roosevelt, government spending did increase, but by far too little to achieve full employment. Only when the American government began to increase spending in preparation for World War II did unemployment begin to fall to normal levels. In light of these developments, the Keynesian explanation of the Great Depression was increasingly accepted by economists, historians, and politicians (Caldwell & O’Driscoll, 2007). Keynes had a great influence on the economic thought in America. Keynes’ great contribution was to argue convincingly that, contrary to traditional economic theory, conditions could arise in which natural economic forces, such as the availability of cheap raw materials and labor, could for long periods fail to persuade businessmen to invest in new plants and equipment. Without large investment spending, only large increases in spending on consumption could raise national income and employment, and on consumption could raise national income and employment, and only government could provide for that increase in spending (Himmelberg, 2001). According to Dadkhah (2009), Roosevelt’s New Deal and Keynes’ General theory have a strong affinity. Many believe that Keynes had a great contribution in the creation of Roosevelt’s New Deal economic policies. According to Harris (2005), when the American Government accepted deficit financing and loan expenditures, they have put into practice the theories of Keynes. The American economy also seemed to have become a testing laboratory of Keynes’ ideas. The National Recovery Administration (NRA), the Agricultural Adjustment Administration (AAA), various relief programs, the Social Security Act were interpreted in part as programs which would transfer purchasing power from non-spenders to spenders (Harris, 2005). Again in accordance with sound Keynesian theories, the government, through the Thomas Amendments and the revaluation of gold, prepared the way for monetary expansion and declining rates of interest.             The traditional views of economist was that economy’s production of goods necessarily entailed the generation of income sufficient to buy all that was produced. Keynes did not agree with this view. According to him, a large amount of a nation’s income went to those who spent on investment in new plants and equipments, not just consumption.  If this class felt opportunities to invest in new means of production were insufficiently profitable, they might prefer to keep their money in a liquid (near to cash) form. A “liquidity trap” could develop, in which too much income was saved rather than invested. This would cause an economic downturn. The solution was for government to make up the shortfall in spending by running deficits, by borrowing and spending well in excess of tax receipts (Himmelberg, 2001). New Deal Policies             Based on the arguments of Keyne’s discussed above, he came up with one solution to the Great Depression. This was for the government to stimulate the economy by increasing government spending or reducing tax collections. These moves according to Keynes would lead to budget deficits that could move the economy back toward a new equilibrium in which all resources would be fully employed. Although, the Roosevelt administration was seemingly heeding the advices of Keynes, this is not true, as Roosevelt was following different path in his economic decisions and policies. Reconstruction Finance Corporation             Due to the failure of the Federal Reserve System to prevent the crash of the banking industry, the Hoover administration created the Reconstruction Finance Corporation (RFC) in 1932. The RFC was primarily responsible for providing loans to four thousand banks, railroads, credit unions, and mortgage loan companies to provide assets that would propel commercial lending. Among the most important programs was the provision of loans to troubled banks in an attempt to provide them with enough liquidity to survive bank runs. In the Roosevelt administration the RFC retained its usage. The RFC also became the banker for many New Deal programs, providing loans or startup working capital to the Public Works Administration (PWA), the Home Owner’s Loan Corporation (HOLC), the Farm Credit Administration (FCA), the Federal Housing Administration (FHA), the Rural Electrification Administration (REA), and the Works Progress Administration (WPA). Emergency Relief and Public Works Programs             Federal spending during the Roosevelt administration was largely aimed at solving the problems that had arisen during the Great Depression. One of the central problems was determining how to aid the huge numbers of unemployed and discouraged workers. Prior to the Depression, the Federal government had assumed virtually no responsibility for the provision of relief payments to low-income people and the unemployed. Because of the dramatic increase in unemployment rates, the Federal government was pushed to take a new role. During the Roosevelt administration, the unemployment rate was more than 20 percent. In this time, the government took the main responsibility in the provision of relief. Thus, the Federal Emergency Relief Administration (FERA) was established. The FERA distributed federal monies to the states, which in turn, distributed the monies to local areas, which administered the payments to households. The FERA program offered either direct relief payments or work relief that required a family member to work for the funds. The Roosevelt administration also created Civil Works Administration (CWA) in 1933 in an attempt to lessen, the still large unemployment rate. CWA was established to immediately put people to work on public jobs. The Farm Programs             The situation of farmers was far worse that that experienced by workers cities and industries. An expansion of farms during the World War I had followed a golden era of farm prices in the early 1900s. As the Europeans recovered from the war in the early 1920s, demand for American farm products declined, and the farm sector went through a difficult shakeout in the early 1920s. After a decade of troubles farmers were hit still harder by the Great Depression. The Roosevelt administration responded to farmers’ pleas during the “First Hundred Days” by establishing a series of measures that became the basis for the nation’s modern farm programs. The goal was to limit supply and thus raise the ratio of farm prices to nonfarm prices to levels seen during the golden era just prior to World War I. The New Deal program gave rise to the rental and benefit program administered by the Agricultural Adjustment Administration (AAA). For a wide variety of farm products the AAA offered agreements to farmers that paid them to take land out of production. The funds for the program came from a tax on farm output at the location where it was first processed. Many farmer also benefited from a wide range of loan programs. The Commodity Credit Corporation (CCC) lent funds to farmers for crops in storage with terms that contributed to keeping prices high. When repayment time came, if crop prices exceeded the target level, the farmer would sell the crop on the market and repay the government loan. If crop prices were below the target, the farmer gave the crop to the government as payment of the loan. In the 1930s the CCC set the target prices above market prices, so the program operated as a price support program. National Industrial Recovery Act (NIRA)             The NIRA was the center of the early New Deal. The policy aimed to enhance economic recovery by increasing the public’s purchasing power and by imposing some measured control over the conditions of production and commerce. This act seemed to follow, Keynes’ advice, but Keynes was not pleased with what the Roosevelt administration has done. Indeed, NIRA was declared unconstitutional in 1935, two years after its enactment. The underlying economic philosophy of the NIRA was that the depression was a result of the intense competition in industry and commerce. In order to correct the evil, the act provided for the creation of business codes of fair competition to be promulgated by trade associations and industrial groups and brokered by the administration (Shamir, 1995). The workers, under NIRA were to be protected by minimum wages, limits on hours, and rules related to working conditions. The End of the Great Depression According to Keynesian Views             John Maynard Keynes put forward a new and radical theory (during his lifetime) that will explain the emergence of the Great Depression and will provide a solution to it. According to Keynes the remedies to the Great Depression center on the government’s act to spend a great deal of money in excess of tax revenues. Keynes’s analysis overturned the engrained conclusion of traditional economic theory that the competitive forces of the market economy would inevitably create sufficient demand to buy all that was produced and provide for full employment of resources. Keynes argued that the volume of investment in new plant and equipment was the key variable for maintaining full employment. Circumstances could arise, he held, in which savings would not be translated into investment over a long period and that the result could be a situation, like the depression, of protracted underemployment of resources. Keynes’s analysis provided the theoretical underpinning for the policy that most conventional economic opinion had continued to reject, that the continued state of depression mandated heavy government spending through borrowing.             American Keynesians, accepted this view and warned that the American economy was undergoing a secular stagnation. According to a famous American Keynesian, America was in the grip of secular stagnation because investment had failed and could not recover. The volume of investment would never again be sufficient to create full employment because the major stimuli that promoted investment historically – the need to develop the frontier and a booming birthrate – had now disappeared. Large-scale government deficit spending could provide for employment, but economic controls to prevent interest groups from taking advantage of rising prosperity and causing inflation would be necessary. Deficit spending might cure unemployment, but the cost would be the abandonment of a considerable degree of the freewheeling entrepreneurial capitalism America had always known and relied on.             Although the Keynesian views were rejected by many policy makers and economists, the events in early 1940s seemed to point at the correctness of Keynes’ arguments. Defense spending grew rapidly during 1940 and 1941 but vaulted to previously unimaginable levels after the Japanese attack on Pearl Harbor on December 7, 1941, drew a united America into World War II. Federal spending on war production now soared. Unemployment vanished, and the standard of living rose, despite wartime scarcity of some consumer goods. By 1944 the total production of goods and services had nearly doubled relative to 1937. The surging economy of the war years served to emphasize the tragic extent of the losses economic stagnation had inflicted on the nation during the Great Depression. To many observers, it demonstrated that America could have escaped those losses. Clearly it was massive government expenditures that brought the economy to life after 1939 and ended the years of economic doldrums. For those who had called for large increases in government borrowing and spending as the way out of depression, the economic expansion and prosperity of the war years was a vindication. The economic revival, moreover, continued after World War II. After a brief postwar recession, the American economy set off on a long period of steady growth, which, with some lapses, as during the highly inflationary and intermittently depressed 1970s, has extended to the present day. High-volume governmental spending continued throughout this period. But most economists attribute postwar growth to a revived capitalism, the processes of economic innovation, and private investment in new industries and new products. American experience during and after World War II seemed to indicate that, first, deficit spending could effectively stimulate employment and, second, that American capitalism was still capable of steadily producing economic growth and a high level of employment of resources. The length of the Great Depression in the United States seemed to confirm Keynesian theory. Unemployment remained high throughout the 1930s; the unemployment rate was 14.6 percent in 1940. Under Roosevelt, government spending did increase, but by far too little to achieve full employment. Only when the American government began to increase spending in preparation for World War II did unemployment begin to fall to normal levels. In light of these developments, the Keynesian explanation of the Great Depression was increasingly accepted by economists, historians, and politicians.             The hesitation of businessmen to invest was also seen as a contributing factor to the emergence of the Great Depression. Although, Keynes pointed out that in order for the economy to regain its strength, the government must increase its spending in order to compensate for the failure of investment, both depression-era Presidents (Hoover and Roosevelt) did not pay attention. Hoover’s fiscal policy was restrained, except for 1931, when Congress enacted over the president’s veto a bill providing for the immediate payment of part of the bonus veterans were scheduled to receive under earlier legislation, in 1945. Roosevelt also practiced a restrained fiscal policy, although he acquiesced in modest deficit spending during 1933–1936 to fund unemployment relief and other programs of recovery. The modest deficits of those years stemmed not from a deliberately expansionary fiscal policy but were incidental to the creation of programs intended to alleviate the depression’s impact. The magnitude of this deficit spending was sufficient to exert some positive force on the economy but fell far short of sparking full recovery. By 1937–1938, however, when the recovery halted and reversed, Keynes’s ideas had taken root and the spending policies of the late New Deal years were influenced by them.             Another view as to the ending of the Great Depression was presented by Peter Tamin. Tamin attributes the downturn of 1929, and the ensuing Great Depression to bad governmental monetary policy. In 1928 and 1929, the Federal Reserve banks, concerned about the soaring stock market speculation, adopted interest rate policies that exerted deflationary pressures on the economy. America’s banking authorities, in other words, set interest rates at a level that slowed the pace of healthy borrowing for business purposes and limited growth of the supply of money below the real needs of the economy. None of this deterred the stock market boom, which during the first half of 1929 became more dangerously speculative than before, but it did succeed in slowing down the economy. This in turn led, in October 1929, to the Great Crash. The downward trend of the economy, once set in motion, had a momentum of its own and was aggravated by a number of circumstances, such as those mentioned earlier in this paper. The Federal Reserve System raised interest rates in early 1928, which discouraged business borrowing and spending and brought about the decline in production that began that summer. Interest rates were raised again in 1930 and 1931. Furthermore, when banks began to fail in large numbers at the end of 1930, the Federal Reserve System did little to assist them. The Federal Reserve System had been established by Congress in 1913 for the express purpose of preventing bank failure caused by a "run" on the bank. A run occurred when many customers withdrew all their deposits in the form of cash, forcing the bank to close when all its cash was depleted. In such cases, Federal Reserve Banks were to supply banks with enough cash to meet the demands of their customers, thus preventing bank failure. But, according to Friedman and Schwartz, the Federal Reserve Banks in the 1930s refused to support banks that they thought were unlikely to repay them, forcing many basically sound banks into bankruptcy. When a bank fails, its deposits can no longer be spent; as a result, the amount of money circulating in society goes down, depressing demand for goods and services. The Great Depression lasted for a long time, according to the monetarists (Friedman and his followers), because bankers were reluctant to make new loans after 1933. Bankers made only the safest and most conservative loans in these years because they believed that the Federal Reserve would not support them if they got into trouble. Furthermore, as the economy began to improve in 1936, the Federal Reserve System actually raised interest rates on loans, fearing inflation. Conclusion             In conclusion, I would like to take the Keynesian and Temin views on how the Great Depression ended. By consulting different works on the subject, I conclude that the Great Depression ended indirectly because of the New Deal programs and policies enacted by Roosevelt which resulted in the abandonment of gold standard, increase in government spending and restructuring governmental monetary policy.

The Great Depression

The Great Depression The Great Depression is considered as one of the darkest times of American history. It is considered as a traumatic experience of those who lived through it and h…

Essay Instructions on Final Assignment

LAW OF BUSINESS ASSOCIATIONS   TAKE HOME EXAM   2007       PLEASE READ THESE INSTRUCTIONS VERY CAREFULLY:     <li class="MsoNormal"> This open-book take home examination is worth 75 marks and counts for 75% of your assessment in the unit.  </li>   <li class="MsoNormal"> You should answer any 3 questions.  All questions are worth equal marks.</li>   <li class="MsoNormal"> You must hand in your exam by 1.00 pm on Monday 29 October 2007.  </li>   <li class="MsoNormal"> Exams handed in late will be subject to a 1 mark per day penalty per lateness, as per the unit outline.  For this purpose a “day” begins at 1.00 pm each day, starting on the due day of 30 October 2006.  Any exam handed in more than 7 days late will not be accepted.</li>   <li class="MsoNormal"> Extensions will be granted on the basis of a medical certificate.  A student who is unable to hand in their exam on the due date must contact me on or before the due date to notify me of this fact and to ask for an extension.  The extension that will be granted will depend on what is stated on the medical certificate, but the maximum that will be granted is 7 days, after which the rule in paragraph 11 below will apply.</li>   <li class="MsoNormal"> There is a word limit of 3000 words across all three answers (in other words, you should aim for an average of 1000 words per answer).  This word limit will be strictly enforced and you must put a word-count on your cover sheet.</li>   <li class="MsoNormal"> Please be aware of the University’s rules relating to plagiarism, contained in the University’s Academic Integrity Policy.</li>   <li class="MsoNormal"> As this is an exam, you do NOT need to use footnotes or any other form of referencing.  Case names should be in italics but you do not have to put a citation after the case name.</li>   <li class="MsoNormal"> You must fill in the cover sheet (below) and have it as the first page of your answers.  On the cover sheet you must fill in:</li>   Your student ID number   The number of words you have used and   The numbers of the questions you have answered – eg           1 3 4     <li class="MsoNormal"> Put your exam paper into the mailbox of (mailbox No. 18 near Law School reception), Building 6, Level C.  Do NOT put your exam into the general Law School mailbox at Building 6 Level B.  You do NOT need to have your assignment stamped by reception staff.</li>   <li class="MsoNormal"> In accordance with BLIS Divisional policy, any student who has a medical certificate and has been given an extension but who does not hand in the exam by the expiry of the extension granted in accordance with paragraph 5 above, may then submit a further medical certificate and apply (by completing the required application form, available at the BLIS student affairs office, Bldg 6, Level B) to sit a deferred exam, which will take place at the start of Semester 1, 2008 – in other words, such a student would not be able to graduate in December 2007.  A deferred exam will take the form of a formal 2 ¼ - hour open-book paper answered under exam conditions.</li>   <li class="MsoNormal"> Any student who fails the unit having passed all other units for his or her course may apply to the lecturer for a supplementary exam, which will take place at the start of Semester 1, 2008 – in other words, such a student would not be able to graduate in December 2007.  A supplementary exam will take the form of a formal 2 ¼ - hour open-book paper answered under exam conditions.  A student applying for a supplementary exam must provide the lecturer with a letter from their course convenor confirming that they have passed all other units.</li>   <li class="MsoNormal"> As this is an exam, you will be notified of your result for the unit in the usual way – that is via OSIS when all other exam results are released.  You may see your paper on the nominated exam feedback day, but you may not take your paper away.</li>       EXAMINER:                                       It is strongly advised that you do not sit this exam if you are ill or hold a current medical certificate. No consideration will be given for illness when the examination is marked.       LAW OF BUSINESS ASSOCIATIONS   TAKE HOME ASSESSMENT     COVER SHEET       STUDENT NUMBER:                                   _________         QUESTIONS ANSWERED:              ________                                                                   ________                                                                   ________       WORD COUNT:                                ________                    QUESTION ONE   Tony is Managing Director of Anglo-American Corporation (AAC) Ltd, a major engineering and mining company.  AAC’s share capital consists of 100,000 shares.  Its total assets are valued at approximately $ 100 million, and its cash reserves form $ 20 million of that.    The Board of AAC is aware that United Steel Ltd, which is also engaged in engineering is purchasing AAC shares on the open market, and has already secured a 40% holding in AAC. AAC is currently engaged in negotiations with General Electric Ltd (GE) over a proposed joint venture to construct a new jail for the ACT government.  The ACT government has announced that the company which succeeds in constructing a jail meeting the government’s specifications will receive a substantial bonus.  The Boards of AAC and GE are confident of success, and are therefore eager to undertake the project.  The project would however cost $ 25 million.  The Board of AAC enters into an agreement with GE in terms of which AAC will issue GE with 20,000 shares in AAC in return for $ 20 million in capital.  In due course the Board of AAC issues the shares.  As a result of this, AAC and GE are able to commence work on the project, while United Steel’s holding in AAC is reduced to 33% and it fails in its attempt to obtain a majority holding in AAC.  AAC has received a letter from Aching Clutz, a firm of solicitors who act for United Steel, threatening legal action against AAC.    Tony has been negotiating a multi-million dollar deal on behalf of the company to sell a consignment of iron ore to Consolidated Mining industries Ltd (CMI), who has been represented during negotiations by its Managing Director, Gordon.  At 9 am on Monday 1 October Tony telephones Gordon and says “I’ll come over to your office to sign the deal at 3 pm”.  Later that day there is an acrimonious Board Meeting at AAC, at which Tony is removed from his position as Managing Director (as is permitted by the constitution of AAC, which is the sole basis for his holding the position).  At 12 noon Gordon is having lunch at the City Club.  At his table is Susan, Chief Accountant of AAC Ltd, who says “I heard that our MD was fired at this morning’s Board Meeting – though it’s just a rumour, no-one has told me officially”.  At 3 pm Tony comes to Gordon’s office and signs the contract.  The Board of AAC believes that the contract will not be a profitable one, but has received a letter from CMI demanding delivery of the iron ore.   Advice AAC on its legal position arising out of the above issues.        QUESTION TWO   United Agricultural Technologies Ltd (UAT) is a company which owns large agricultural holdings, 90% of which are cattle stations, all over Australia.  It has a board of 20 directors, of which Tom Lam is a member.  In January 2004 a horticulturist, Peter O’Malley, contacted UAT with an offer to sell it a patented genetically-modified corn seed (called THX 1138) which, he said, had the potential to increase crop yield 50% over what is currently obtained in this country.  UAT’s board decided to reject the offer by a 16-4 majority, stating that exploiting it would mean converting grazing land into arable fields, which would require expensive irrigation and ploughing.  Lam however remains convinced that the corn-seed option is a potential money-spinner and, without further reference to the board of UAT, contacts O’Malley.  They commission a report by an expert botanist, who says that the estimate of a 50% increase in yield is far too conservative, and that the yield increase is in fact likely to be 100% better than is currently obtainable.   Lam resigns from UAT, but retains his 10% shareholding in that company.  He and O’Malley form a company called L & O Ltd, which buys a farm in southern Queensland.  Cultivation of  THX 1138 commences.  However it transpires that development costs are significant, and more capital is needed.  Lam, who is very wealthy, consults his stockbroker with a view to deciding which of his substantial share portfolio to sell.  He is about to instruct his stockbroker to sell his holding in BHP Ltd when he receives a copy of the monthly in-house veterinary report from UAT Ltd, which he has continued to receive because, due to an oversight by UAT’s company secretary, Lam was not removed from the UAT mailing list when he resigned.  The report contains a pessimistic statement as to the likely effect of an outbreak of bovine encephalitis (BCE) on UAT’s herds.  Lam sells his UAT shares for $ 3.30 each to Jeff Slaughter, and counts himself lucky to escape the crash to $ 1.05 each which occurs once the company revises its profit predictions downwards in its annual report published a month later, in which it explains the likely effect on the company of the outbreak of BCE.   Lam is also pleased at his decision to exploit TXH 1138 – crop yields exceed all expectations, and he and O’Malley make profits of $ 1 million in the first year of operation.    Advise Lam as to any liability arising out of the above facts, citing full authority for your answer.    QUESTION THREE   De Beers Ltd is a mining company which owns several claims in Western Australia.  It needs capital in order to exploit the claims.  On 1 July 2004 Sam Kruger, Managing Director of De Beers circulates the following notice to shareholders at the company’s annual general meeting:   STOCK ISSUE   The board is proud to announce an upcoming offer of shares to the public.  The offer will be of 10 000 000 ordinary shares at $ 5.00 each.  Your company expects that this infusion of capital will permit it to exploit hitherto dormant resources.   On 3 July 2004 Sam has lunch at his club in downtown Perth, the West Australian Club.  He sees Mary Rothschild having lunch, goes up to her and says “Can I interest you in our new share issue – how about $ 1 million’s worth?”.  Mary accepts the offer and agrees to buy $ 1 million worth of shares.  Sam then goes over to Paul Hunt’s table, and offers him $ 10 000 worth of shares, which Paul agrees to take.    On 10 July 2004 De Beers lodges a prospectus with ASIC, signed by all the directors.  In the prospectus the following is stated:   FUTURE EARNINGS – GEOLOGICAL REPORT Mining claims are likely to yield 25 carats per metric tonne of ore which, at present costs, gives a production price of $ 500 per tonne.    Signed:  Peter Grunt, Qualified Geologist   Elsewhere the prospectus states   OUR MARKET FORECAST Assuming a production price of $ 500 per tonne, and in view of our expectation that world diamond prices can only go up in coming months,  De Beers Ltd expects earnings of $ 0.50 per share in the first year of operations – that is, a return of 10%.   Henry purchases 1 000 shares at $ 5.00 each.  A few months later he is sitting in a dentist’s waiting room in Kalgoorlie and reads an article in a magazine called The Diamond Miner, issue No 6 of June 2004.  The article contains the following statement “unfortunately, most experts predict a crash in world diamond prices in the short to medium term”.  It also transpires that the mine had yielded only 15 carats per tonne.  Henry sells his shares immediately, but is able to get only $ 1.00 for them.  Needless to say, he has never received any earnings.   Advise De Beers Ltd on the legal issues arising out of these facts, citing full authority for your answer.    QUESTION FOUR   Blue Star Hotels Ltd operates a chain of hotels in NSW and Victoria.  Its directors are Tom Sharp, Charles Dickens and Mary Wollstonecraft. On 1 April Taylor’s Linen Hire Ltd presented a demand to Blue Star in respect of a $ 2 500 laundry bill owed by the hotel group.  Blue Star was unable to meet this debt.  On the basis of this insolvency, Taylor’s Linen Hire then filed an application for winding up on 23 April.  The application was successful, and Ivan Trump was appointed as liquidator under a winding up order granted on 1 May.  Ivan has requested that the directors meet with him on 5 May and provide him with a report on the company’s affairs.  Advise him as to what impact the following facts have on the liquidation, giving full authority for your answer:   On 12 April  Blue Star executed a floating charge in favour of Wholesale Liquors Ltd, securing a debt of $ 100 000 owed to Wholesale for wine supplied by it in February and March.   On 2 April the Board of Blue Star, in an attempt to deal with its cash-flow problems, borrowed $ 200 000 from Grasping Bank, paying the bank an application fee of $ 50 000 and agreeing to a 25% per annum interest rate.    Leonard Royce, who is in charge of the fleet of limousines run by the hotel tells Ivan that the contract with Ultra Lube Ltd, which services the vehicles, is up for renewal.  Ultra-Lube requires that its clients sign a maintenance contract that is of a minimum of 4 months’ duration.    Ivan has found the following in Blue Star’s files: a contract dated 1 February for the purchase of 25 ivory chess sets from Dunhill Ornaments Ltd (which Blue Star would sell in gift shops in its hotels) on terms of payment after 6 months, and a letter dated 21 April varying the terms of the contract by adding to it a new clause in terms of which Blue Star agreed to transfer ownership in the goods back to Dunhill, and to sell them on consignment from Dunhill at 20% commission.    Ivan has also discovered a receipt for a one-way ticket for a flight which leaves for Argentina on 3 May, booked by Mary Wollstonecraft.   Tom, Charles and Mary are owed $ 20 000 each in respect of salary and $ 5 000 each in respect of leave entitlements.  The hotel chain’s 500 employees are owed $ 1 000 000 in respect of salaries, $ 35 000 in respect of superannuation entitlements and $ 40 000 in respect of leave entitlements.

Essay Instructions on Final Assignment

LAW OF BUSINESS ASSOCIATIONS TAKE HOME EXAM 2007 PLEASE READ THESE INSTRUCTIONS VERY CAREFULLY: This open-book take home examination is worth 75 marks and counts for…

Research Essays Assignment Instructions

For info, The university is very strict on plagiarism and they are utilising the turnitin.co.uk plagiarism tool to check all essays. (websites like www.wikipedia.com are a big no-no in the academia world) I have another essay due in 2 days, info below, section (a). Section A - Assignment 1 Assessment Type: Research Essays Individual Assignment Word Length: 4000-5000 words (excluding referencing and bibliography) Report Due Date: Weight: 40% (Total) Research Essays (15 marks each) Write two essays (each 1500-2000 words) on any two of the following three topics: 1. "Behavior at the workplace is predictable and further research in this field is just a waste of time and money." Evaluate this and construct an argument that either supports or refutes the statement. 2. Evaluate and appraise the issues around productivity and quality of the products and services in an organization that you are familiar with. Support your evaluation through additional research. 3. What are the questions you would ask, and the specific criteria you would apply, in attempting to evaluate the performance and effectiveness of your own organization, or some other organization of your choice. Kindly email to confirm you are able to complete the assignment urgently

Research Essays Assignment Instructions

For info, The university is very strict on plagiarism and they are utilising the turnitin.co.uk plagiarism tool to check all essays. (websites like www.wikipedia.com are a big no-no in the academia…

Retail Management: A Strategic Approach (International Edition)

Retail Management: A Strategic Approach (International Edition)   1. What are the pros and cons of starting a new bakery versus buying an existing one? Starting up a bakery business had advantages of non-restrictive decision-making hence the direction and the control of the business all depends on the owner. It also advents owners by operating the way s/he likes by means of creating own working environment. Aside from the flexibility of working hours, the owner could further gain business knowledge and experience and the financial gain will be limited to him/her. There are also no limitations of how successful the business will be and on the amount of income earned. Disadvantages of start-ups, however, are risks owned and mitigated solely, increased responsibility and increased liabilities. Not getting paid of extra long hours and uneven period and substantial investment of time and money are other disadvantages. When buying, this provides opportunity to own business minus all the paper works and also reducing the risk. It can take less time since there is no need to build up the resources. Customer list and physical location of the business could be readily available as well as legal approvals necessary. Drawbacks of buying an existing bakery business are investing large amount of money aside from the requirement of working capital and honoring or renegotiating contracts. 2. How would you supervise and motivate a 19-year-old supermarket cashier? A 65-year-old cashier? When motivating the young cashier, it is important to recognize both small and big accomplishments within the workplace. Appreciation is one of the requirements of the young workers particularly in the retail industry that does not always compensate achievements with monetary values. Praise or positive feedbacks given in a fairly public place also seems to boost esteem of employees aged 16 to 25. Humiliating young employees, however, only builds resentment toward the company. Communicating with the young cashier is also imperative because this is seen as a way to build relationships especially on lower level employees like the cashiers. In supervising this cashier, internal promotion should be considered particularly when performance is above excellent. Dialoguing is another way to supervise him/her effectively to learn about work-related concerns. On the other hand, supervising the older cashier requires that the management provides ongoing challengers for him/her for it is important that s/he will feel functional and important. Apart from seniority, performance should always be an indicator and not the age.  Communicating openly with him/her about individual strengths and weaknesses is the next important thing. Promoting involvement, providing regular feedback, offering training opportunities, offering flexibility, cultivating an atmosphere of respect are just some of the motivational tools for the older cashier. 3. Present a checklist of two factors for a chain retailer to review in determining how to allocate merchandise among its stores. In allocating merchandise, one basic checklist is a checklist to reduce inventory shortages. There are six categories for this checklist: buying, marking, handling, selling, inventory planning and accounting. This 20-item checklist determines the quantity of merchandised purchase including noting special purchase terms and returned goods. Retail prices are also determined if clear and proper. Markdowns and additional markups are recorded. Removing all price tags if necessary is covered. Purchase quantities against orders are checked and also the measured quantities of the merchandise. Whether sales personnel are aware of the correct selling prices is also checked and recorded. Lastly whether physical inventory is conducted and permanent records are kept and monitored for accuracy are also checked. Space planning is another important aspect of merchandise allocation. A checklist that ensures merchandise reach the retail store at the least possible time is location/site evaluation checklist. There are eight categories such as pedestrian and vehicular traffics, parking facilities, transportation, store composition, specific site and terms of occupancy and overall rating. This checklist identifies the potential consumer traffic that could eventually purchase merchandises. How accessible is the merchandise store for people is determined through this checklist aside from the visibility and possible rivals of the stores.                 4. What are the pros and cons of a retailer’s relying too much on a want book? The retail outlook is shaped by needs and wants of the retailers themselves. Retailers are always after making sales and making stores more appealing to boost sales. Nevertheless, they also do not want being out of stock and having excess stock. Performing better is an ongoing goal of retailers. As such, they keep a want book. These want books reflect what are needed and how it should such need be accomplished. One benefit of having a want book is its very nature which is direction and performance-driven. Retailers want the best for the business which in effect is the best for employees, shareholders, stockholders and the community in general. Another advantage of having a want book is that its task specificity. Retailers would know if their wants are realistic and attainable aside from being objective. In this way, tasks to accomplish could be effectively delegated. However, when wants books are inexistence the tendency is to zealously implement things by the book which jeopardizes flexibility and creativity of the employees, teams and the workforce generally. Retailers could put pressure on the people to accomplish tasks that are either too simplistic or impractical.     5. Present a seven-item checklist for a retailer to use with its reverse logistics. A reverse logistics checklist will cover freight issues, control issues, customer service issues, product recovery, inventory of returned goods, financial asset recovery, and shipping right merchandise. Decisions will be based on this. To illustrate: 6. What are the pros and cons everyday low pricing to a retailer? To a manufacturer? One of the main advantages of everyday low pricing to a retailer is making profits or returns which could be in excess of cost capital basically because of the other advantages as low-cost capital, with low fixed costs and specific knowledge of operation was realistically obtainable. Another advantage for the retailer is the capability to carry diverse lines of merchandise in great depth. However, the disadvantage is bulk buying which is common among retailers selling at discounted prices. The prices of merchandise move along with the changes in the industry like inflation and deflation and shift in demand and supply, for instance. For the manufacturer, an advantage is the continuity of production specially that there is an expectant place, people or establishment to supply. Another advantage of the manufacturer is, although products are sold at low prices, retailers carry the name of the manufacturer as a trusted brand. However, the power over the retailer is low. Retailers could put pressure on manufacturers to sell merchandise at much cheaper prices. In other times, retailers could demand the manufacturers to increase quality of items which will impact materials and production costs. 7. What, how, why and give a explain - Retail institutions by ownership in retail business There are six ownership forms in the retail business. Independent is the first type generally referring to private-owned companies. These are mostly sole proprietorships, requiring own entrepreneurial skills, control over investment, cost and personnel and decision-making. Next is chain or retail outlet where brand is shared and the management is centralized. Chains typically have standardized business procedures and practices. Because there is common ownership, coordinated decision-making is possible. Franchising is the third where franchisors lend franchisees the use of the latter’s business philosophy, expertise and know-how. Franchising has benefits for both like expansion and legal and operational considerations. Leased department is conferring a right in one person to utilize a space belonging to the other within a retail store. Department leasing could be in fixed term, periodic, at will and at sufferance. For as long as the lessee pays rents and abides by the terms and conditions, s/he could occupy that department. Vertical marketing system is where producer, wholesaler and retailers work together as a unified group for the purpose of meeting customer needs while a consumer cooperative is a business owned by its members. Consumer cooperatives are also known as retail co-ops where merchandise sold are no different from a usual retail store.   8. What, how, why and give a explain - Identifying and understanding consumers in retail business Retailers, in order to be profitable, should tap on what drives and influences consumers toward making a purchase decision. Six among these influencers are demographics, lifestyles, needs and desires, shopping attitude and behavior, retailer actions and environmental factors. Consumer demographic profile shapes and determines preferences of the people that they develop through interaction with family, friends, relatives, workers and even acquaintances. Further, consumer decisions also depend on social status for instance. Another determinant is levels of income which directly relates with levels of disposable incomes. Culture an affinity also affects the decisions especially those traits that are long-held in the families. To wit, it is important to consider attitudes and personality when making a purchase. Behaviors that are evident in perceptions of risk and outcomes of the purchase are other things to consider. Although functionality is always important, purchase decisions also depends on price, alternatives, convenience, brand name and reputation of retailers.  The shopping experience itself inside a retail store is also important. Sales and quality finds are two among the motivators of purchasing. Environmental factors that shape purchase decisions are ethical stance or reputation of retailers and conformance to environmental policies applied when producing goods. 9. What, how, why and give a explain – retail organization and human resource management in retail business Customer service is critical in the retailing business as it enhances level of consumer satisfaction. As a process to meet customer expectations, it is vital that retail stores are strategically manned. Strategically means employees are capable of dealing with the customers in respectful manner before, during and after the purchase. Employee empowerment is then a requirement. This can be carried out by means of integrating learning and development initiatives for the people while also creating an engaging culture in the process. Developing internal talent would be costly for retailers but if they realize the benefits of such in the long run they will invest in it. Retailers must remember that turnover rates incur significant costs and it ruins spontaneity.  Training is just one aspect of human resource management others are recruiting, selecting, compensating and supervising. During recruitment and selection, aiming at diversity must be considered because a diverse workforce serves as a resource rather than a threat. This is a capacity-building strategy evident in range of talents, experience and knowledge insight. Nonetheless, a retail organization should compensate on the basis of performance. Understanding employee attitudes and behaviors would ease supervising. 10. What, how, why and give a explain - pricing strategy in retail business Pricing strategies are demand-oriented, psychological, cost-oriented or competition-oriented. Demand-oriented pricing is a method of pricing where price is established for a product or service on the basis of level of demand. In setting prices, the manufacturing cost of the product and the required gross profit margin are of secondary importance. This is because prices could be raised when demand is high and lowered when demand is low. Profitability then is based on demand. Psychological pricing is a marketing practice where the belief is that specific prices have a psychological impact. This strategy of pricing depends greatly on the quality associations and prestige of the product. Cost-oriented pricing is a method of pricing where a fixed sum or a percentage of the total cost is added into the cost of the product to arrive at its selling price. Hence, the price is considered reasonable considering the cost incurred and perhaps efficiency of the operation. Finally, competition-oriented pricing is a strategy wherein prices are set based on what a firm’s competitors are charging competitive advantage. As such, prices are based on a unique or special feature of a firm that its rivals do not possess.   11. What, how, why and give a explain - developing merchandising plans in retail business Merchandising plans should adhere into merchandising philosophies such as target market needs and wants, positioning, value chain, supplier capabilities, cost, competitors and product trends. Merchandising plans are important due to the fact that it implicates effective forecasting, innovating, assorting, branding, timing and allocating. Forecasts are the foundations of the plans while assortment implicates alternative for proper selection. Even so, retailers must bear in mind the ever-changing preferences of consumers which may define assortment and forecasting. Inventory and stock forecasting on the basis on demands on consumer staples of basics and special categories must be carefully planned. Merchandise planning should be founded on realistic marketplace variables including target market, trends, responsiveness, competition, profitability, risks and product life cycles. Salability is the main indicator here whereas the quality of merchandise is the determinant. Thereby, brands that retailers carry should be wide and must be of high quality. Merchandise flow directly relates with how effective the planning will be. Inventory levels and rates though it depends on demand will also tell if the merchandising planning is effective or not perhaps after a year. 12. What, how, why and give a explain - Implementing merchandising plans in retail business Implementing the plans encompasses several stages that start from gathering information, selecting and interacting with merchandise sources, evaluating, negotiating, concluding purchases, receiving and stocking merchandise, reordering and reevaluation. Sources are manufacturers, full-service merchant wholesaler, limited-service merchant wholesaler and agents and brokers. Looking from this, informations are sourced through an interdisciplinary approach. Merchandisers should consider factors such as pricing, reliability, order processing time, information, guarantee, reorders, markup and risk among others. To negotiate properly, opportunistic buying and slotting allowances must be also considered. Ownership is transferred to the retailer after successful negotiation although there are other ways to conclude purchase like when shipment is received and when the supplier is paid already. Receiving and stocking depends on the stocking plans and arrangements. Space planning is also critical at this point to provide optimum visibility for each product category. There are four factors that affect reordering process which include order and delivery time, inventory turnover, financial outlays and ordering costs. These are the outcomes of reevaluation wherein the consumable space in retail stores, levels of demand and costs are just some of the pointers to determine the need for reordering.

Retail Management: A Strategic Approach (International Edition)

Retail Management: A Strategic Approach (International Edition) 1. What are the pros and cons of starting a new bakery versus buying an existing one? Starting up a bakery business had advanta…

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