MM416 Essay Example | Topics and Well Written Essays - 500 words

MM416 - Essay Example Strategic management accounting has not been described in a justifiable way in order to eliminate any doubts of reflection in the management accounting textbooks (Hoffjan & WÃ ¶mpener , 2006). Therefore, the lack of use vastly recognized understanding is associated to the reluctance of the textbook authors in the usage of "strategic management accounting." There are different ways through which Chief Financial Officers (CFOs) determine management accounting innovation in an organization. According to David Naranjo-Gil, innovation in management accounting is referred to practices, and ideas that are viewed as new in its adoption in improving organizational efficiency and performance (Naranjo-Gil , Maas , & Hartmann , 2008). Therefore, CFOs determine and ensure the adoption of these practices by assessing and reporting the required financial and non-financial information in making concrete organizational decisions. The individual variances between CFOs and their respective characteristics dictate the use of organizational innovation in management accounting. According to a dissemination study on management accounting, most public sectors adoption of management accounting innovations is significantly affected by the central government. As a result, the determination of management accounting innovation by CFOs is based on various politica l and economic factors. Strategic planning process is a core element in improving organizational efficiency and business operations. According to Gonn K. Weide, there are a vast range characteristic of strategic planning process that can be adopted by the management in accomplishing short-term and long-term organizational goals. For instance, an effective strategic planning must incorporate communication strategy, a task force, vision and mission statement, values, goals and objectives, activities, an implementation strategy, and a

Social Construct According to Locke Term Paper Example | Topics and Well Written Essays - 1000 words

Social Construct According to Locke - Term Paper Example For man to have absolute authority over his fellow human beings, he must enter into a common agreement with them (D'Agostino 56). This paper will elaborate how different philosophers had different ideas on theories of social contract. It is believed that, social contract is a philosophy on its own. An agreement exists between politicians and their constituents. The social contract theory is correctly associated the modern, political and moral theories. Philosophers who have had different theories on the social contract include; Thomas Hobbes, John Locke, Aristotle and Jean-Jacques Rousseau. These philosophers are well known for their influential theories on the social contract. The dominant theories among these philosophers lie within the political and moral theories. These theories regained a kind of philosophical momentum as time elapsed. Recently, more philosophers have added their contributions on the social contract theories. The latest entrants being race-conscious and feminist philosophers, they have contributed significantly to the theories. They argue that the social contract theory is an incomplete picture of the political and moral lives. One of the greatest philosophers was Socrates and he made a very compelling argument. He was supporting the idea of him remaining in prison so that he could face death penalty and not escape the city of Greece as many people would have thought. He embraced the laws of Athens and he even personified them. He felt that he had to obey the entire laws because they had made him whom he was (Mandel 60). He believed that the laws were made to be followed by every individual. Socrates believed that laws were made by their fellow human beings and therefore had to be followed to the latter. In this example, social contract between people is said to be the laws that govern most people. These laws state how people should relate with each other. Plato was also another great philosopher. He is famous for his well-known dialogue R epublic. In this dialogue, the social contract theory is well represented at its best. In his second book, he tries to explore the real meaning of justice. Plato believed that injustices that are meted against fellow human beings were quite unfair. He explains that justice is as a result of conventional laws and agrees that human beings make in order to avoid atrocities against each other. According to Plato, he believes that men submit themselves to the very tenets of convention of justice. They do this simply because they have the feeling of committing injustice and impunity against their fellow human being. The social contract theory is elaborated in this instance because we find that there is a common agreement between the people and the judicial system simply put, the rule of law has to be strictly adhered to. On the other hand, Socrates rejects this view. He says that justice worth having and man is just a happy person. He believes that justice has value and that people should not just take it on its surface value. Thomas Hobbes was another great philosopher who lived in the England. He lived to witness the English civil war that was waged between the years 1642 and 1648. To explain this war, he vividly remembers the war was between the supporters and the monarchy. The king preferred the monarch type of rule. On the other hand, the parliamentarians demanded more power and wanted democratic institutions.

Ethical Decision Making Essay Example for Free

Ethical Decision Making Essay This is to bring to your kind notice that recently we have received a report from the quality assurance department regarding the toy collection which has been recently been made for elementary schools for our South American client. The toys made did not pass the quality check as it includes a metal whistle, which contains high percentage of led which is highly harmful for the children. The shipment needs to be left by the end of the week. There are three different alternatives that I would like to propose: Firstly, we should send the toys neglecting the quality report. This is not an ethical alternative as we are ignoring the quality report of the toys; this decision will highly impact the health of the children. Also, it is disadvantage of company in terms of financial and legal consideration because It is illegal sending unhealthy/uncertified thing as a brand new toy without notifying customer. Advantage is: This alternative would enable us to send the order on time and would save the cost to reproduce the toy. It is going to be advantage of company. Company has to do something in long term process. You can send the product and neglect the quality but if other part realized this issue, you will be lose your credit. Significant thing is realizing that it is going to disadvantage of company. Maybe your advantage will be saving money but it is going to just for this time. 100% make sure that they will realize this issue and give negative feedback about you. I want to give nice example about this situation. Last year Toyota Company called all its customers and informed that there is something wrong with new released cars` breaks. It needs to be fixed as soon as possible. It is fact that Toyota lost millions dollar but he saved his all customer and gain respect from all over the world. People saw that if any product goes wrong with this company they will be informed. This is important example for company that neglecting quality is going to earn you nothing. Your product is your responsibility. Ethics involves the community politics at the level of values–not just what can be achieved or how to achieve it, but more what should be fairness. Ignoring customers and neglecting quality is not the ethical way Secondly, we must reproduce and repack the toy collection with the assured quality and send to the customer. This alternative will lead to extend of the delivery of the toy to the customer and will entail the cost of $100000. This way is the best one. It will have some temporary disadvantages but you will get customers` respect. They will see that you are behind of your product and giving guarantee. It will cost huge money to company and some negative effects of extend deliver time but as I said in previous section best companies choose this way to satisfy their customers. Definition of ethic is: being in accordance with the rules or standards for right conduct or practice, especially the standards of a profession. Breaking the profession is not ethical Way. This method is the ethical way you inform the company about your products and asking for extra time to reproduce. The last option is to cancel the order. This will affect the relationship with the customer. Also, it will affect the company negatively for future orders because since you cancel the order last minutes, your value on customer is going to be negative because time is money and company lose time because of you. Additionally, possible that they can post negative feedback about your company on website and it is going to very negative idea about your company on existed or new customers. Advantage is customers will see that this company does not sell any unhealthy or uncertified products. Also, selling unhealthy product is illegal and possible company may sue you. It will cost you thousands dollar. I mean it can affect you negatively in terms of financial. Customer maybe not going to buy anything from you again but they will see that you are producing brand new quality product. Possible they will refer you to other customers since you are behind of your product. Among the three alternatives, the best option is to choose on reproduce the toys again. Social Responsibility refers to operating a business in a manner that accounts for the social and environmental impact created by the business. It means a commitment to developing policies that integrate responsible practices into daily business operations. Social responsibility is not just about managing, reducing and avoiding risk, it is about creating pportunities, generating improved performance, making money and leaving the risks far behind. High performance workplaces that integrate the views of line employees into decision-making processes It is an ethical ideology that an entity, be it an organization or individual, has an obligation to act to benefit society at large. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advan ce social goals. Businesses can use ethical decision making to secure their businesses by making decisions that allow for government agencies to minimize their involvement with the corporation. (Kaliski, 2001) Company has responsibility to produce quality product and spread it to market area. When company makes decisions, it should be long term decisions. Those steps must be considerate: Improving interpersonal communication. Differentiate the decision conditions of certainty, risk, and uncertainty. Understand why managing is a synonym for decision-making. Though it will entail huge cost but it will help in making the decision ethically and will build a strong relationship with the client and the company will have a stand in the market. The decision needs to taken considering ethical constraint and ethical issues. Report: Codes of ethics are in part designed to protect practitioners against charges of malpractice, for practitioners who practice within these accepted guidelines can use them as some creditable measure of defense in cases of accused malpractice. Generally in legal cases, a practitioners behavior is judged by comparing it to the behavior expected of other practitioners in the same profession and in similar situations in accordance with accepted standards of practice. This reflects the community standard, which is what practitioners actually do, as opposed to the ethical standard of what they should do. Compliance with the code of ethics establishing ethical (not merely actual) standards of practice has some measure of validity in legal proceedings. When faced with an ethical conflict it benefits practitioners to think in terms of formal codes of ethics as providing the first (but not the last) line of assistance in the decision-making process. Responding to Siebers conditions that result in ethical problems, and acknowledging that they may share similarities, several writers have developed models for ethical problem solving and decision making. Tymchuk (1981) developed procedural guidelines that can be used as an ethical decision-making model. The model begins with a thorough description of the situation and involves obtaining information from all relevant sources including the parties involved, sources in the literature, and collegial consultation. From the information that has been obtained the critical issues involved are ferreted out and defined. The codes of ethics or other professional guidelines may be helpful in seeking a possible resolution. These guidelines may include state or federal guidelines or laws, licensing statutes and other educational and resource material such as published case studies that are similar to this situation. This process may not provide the right answer and might expose contradictory information; however, failure to find and acknowledge appropriate policies may have consequences later. With this additional information, evaluation of the rights, responsibilities, and welfare of all affected parties (including the community and the profession) may be assessed. When the issues have been defined and the affected parties identified, alternative decisions regarding each issue may proceed. This should proceed without regard to feasibility; the decision not to make a decision should also be included at this time. This process is analogous to a brainstorming session where ideas are generated and judgment is reserved for a later stage. This allows for the development of an array of options, possibly including the best-fitting one of all. Allowing for the possibility of each decision is followed by critical evaluation of the consequences of each proposed action and the time and resources necessary to effect each decision. The consequences should also be viewed from the standpoint of both short-term and long-term effects and their relevance to all parties identified. Benefits of a code of ethics: A code of ethics is a very important part of an organizations Social Responsibility. A code of ethics is a set of rules or moral guidelines that define and govern principles and actions in an organizational environment. Ethical behavior is beneficial for everyone because it protects the interests of the company or organization and the interests of everyone who comes into contact with the organization. Mutual Respect and Integrity: A code of ethics promotes an environment of respect based on integrity. When people know the code of ethics and follow it, this creates an atmosphere of trust, respect and confidence in the actions of each person involved in the organization or group. In the presence of a written code of ethics, employees at a company, for instance, are expected to behave a certain way toward each other and toward customers Trust and Honesty: Another benefit of a code of ethics is trust. Rules promote trust, especially when they are followed consistently. Management, who take the code of ethics seriously, gains the trust of their fellow employees. Those who work for the organization know that they will be protected in any situation Responsibility: When people take responsibility for their actions, everyone benefits. Responsibility is accountability and honesty, and holding yourself accountable promotes these good character traits in others who see them in you. This helps to create a cohesive and productive work force Code of Ethics Analysis: A code of ethics holds the mutual respect, honest, time, profession accountable to the public. If all employees commit to following a common code of ethics, it will produce mutual respect, honest and coherence among coworkers and organizations. I want to approach the situation with an example below: Presently Nokia is the world’s largest mobile telephone device manufacture. It is the most admired brand, ranking 5th position. Initially Nokia started as pulp industry in 1865 then in next 100 years it emerged as a powerful industrial conglomerate. The purpose of code of ethics for Nokia is to deter wrongdoing as well as promoting the standard of good corporate practices in the industry. The code of Ethics of the company applied to its CEO, President, CFO and Corporate Controller. The code of conduct of the company reveals that it aspires towards becoming the most aspired and loved brand in the world by considering not just what the company does but also how it does. The code of ethics of Nokia sets its approach towards ethical and sustainable business practices which is based mainly on the high ethical standards. The company respects and promotes human rights as well as fair workplace practices, equal employment opportunities, sustainable business in accordance with the environment and lastly zero-tolerance policy towards bribery and corruption. As the company products are technologically driven, so the user requirements are highly volatile. Nokia has to keep the pace and satisfy the consumer . There is always a progressive and continuous increase in customer involvement with technology and communications globally. The corporate practices of the company includes honest and ethical conduct, ethical handling of conflicts of interest, fairly and timely disclosures regarding all necessary information including the effectiveness of company’s control and procedures, compliance with laws and regulations of the state in which it is operating, and reporting of illegal as well as unethical behavior by any official of the company. When we look at the top companies, they always based mainly on the high ethical standards Importing thing is taking most improving companies as an example and implement their nice ideas in our companies. Finally, the probability of the actual occurrence of any of the identified consequences should be carefully weighed. Following the above process to completion results in as full a disclosure as is possible pertaining to the facts and circumstances relevant to the situation. Based on this, a decision is rendered. Ideally, this information (decision) should be shared with all parties involved to the extent possible. The decision that needs to be taken should highly focus on ethical issues and constraints.

Importance Of Brand Leadership For A Fmcg Brand Marketing Essay

Importance Of Brand Leadership For A Fmcg Brand Marketing Essay The main objective of this report is to understand the importance of brand leadership for a FMCG brand. The report develops further by analyzing the previous literature on Branding, Brand leadership, and Brand Loyalty which is implied to a FMCG brand. Finally, it underpins the Brand value which enables Irn Bru to create Brand Loyalty. 1.2 Objectives: To identify the Brand Leadership model used by Irn Bru. This is based on Aaker et al. (2000) brand leadership model; an analysis would be carried out in order to compare the model with Irn Bru operations. To identify consumer motives behind purchasing Irn Bru. By the help of a devised survey questionnaire, consumer behaviour toward purchasing of Irn Bru will be analysed To investigate why loyalty develop from consumer perspective in FMCG market. Academic literature and dimension of brand loyalty will be used to investigate this objective. Focus group will be brought under practice to indentify these factors. 1.3 Background: With an increase in the level of competition, and companies offering more than one similar product into the market, it has become necessary to brand the product in order to differentiate it from others. Brands play an important role in modern society, and allow products to be easily identified within the market. The concept of branding is used in many aspects of human life i.e. it could be a product, religion, sports, culture etc. As companies are expanding globally, the concept of branding has been recognised as an utmost important factor. Not only to attract set target markets, but also to attain brand leadership. The main aspects of branding include: building a successful brand, differentiating amongst its competitors, and maintaining the brand image in the market. Due to the intensity of the modern market, there has been increase in the spending on marketing; branding is a major aspect (Aaker, 1991; Simmons, G. 2007). Generally, a brand is considered as a product, service, a pres ence or personality which rides on the mind of consumers. Branding, according to De Chernatony McDonald (1992), has been characterized as the process of creating value by offering convincing and constant customer experience, which in turn satisfy their needs and wants and keep them coming back. Organisations have started referring to themselves as a branding organisation once customers have realized the value of a brand. With diversity in the market, it has become extremely important for companies to create and maintain high brand awareness and identify how it varies from that of the competition. Internet has proved to be a medium that enables consumers to explore the benefits provided. The increasing number of internet users indicates that global brands can be viewed, and interacted from a single point. Also, the increasing number of online purchases reflects the future of brands. Since more than one company manufactures similar products, the question that arises is: which brand is a market leader? Brand leadership has opened a new gateway for the brands who seek to be on the top of the market. Brands can be an important asset for the company, and in the future they will be an increasingly prominent feature of business dealings. AG Barr was founded in 1830 with the foundation of Robert Barrs cork-cutting business in Falkirk. In 1875, his son diversified the company into aerated water production, and in 1887 operations were extended to Glasgow. The Glasgow-based company was re-named AG Barr in 1904. Its core brands included: Irn-Bru, Tizer and Orangina, the latter of which is produced under licence from Pernod Ricard. The company also distributes Lipton on behalf of Unilever Bestfoods in impulse and cash and carry outlets. In 2001, the company established an agreement with Pepsi Bottling Group to distribute Irn-Bru in Russia. The company will continue to focus on its core brands and markets. High brand loyalty for carbonates brand Irn-Bru has seen it maintain sales in a declining market sector The Companys main strength lies in its Irn-Bru brand, which shows no sign of a sales decline and seems unaffected by the general switch to fruit/vegetable juice amongst carbonates consumers. To a certain extent it is po ssible that consumers of Irn-Bru are not much concerned with the health issue; whilst, comparing to other carbonated brands. In order to meet the needs of their potential consumers, Irn-Bru has launched a low-calorie version for the consumers preferring diet carbonated drink. The main strength of Irn-Bru is the inclination of consumers toward Scotlands other national drink. The performance of Irn-Bru in Scotland is astonishing, despite the economic downfall. The catchy advertisements and the tag line Phenomenal has continuously portray the tradition and the uniqueness of the Irn-Bru. AG Barr has also pursued a strategy of diversification through acquisition the company bought Strathmore mineral water in 2006 and acquired both the TAUT sports drink range and the exotic juice drinks manufacturer Group Rubicon in 2008. (GMID, 2009). Rationale for the topic: According to Aaker et al. (2000), the emerging paradigm of strategic brand leadership is replacing the classic, tactically oriented brand management system. Leadership has become an important aspect of the brand, as it leads to innovation. A key element of brand leadership is brand vision. The ability to see the future of the company through the customers eyes is important, as it sets into motion a long-term strategy for the brand. It is vital to discover how consumers perceive the product and what their view points are, as brand value is highly based on it. Measuring loyalty towards a product is equally important as it will enable Irn Bru to reflect on their strategies. Chapter two-Literature Review 2.1 Brand and the concepts: A brand is not a name. A brand is not a positioning statement. It is not a marketing message. It is a promise made by a company to its customers and supported by that company. I may have intelligent agents that can go out and assemble pages of reports on every camcorder on the market, but I dont have time to read them. Ill buy Sony (Sterne, 1999 cited in Rowley, J. 2004). Due to the different characteristics of product, brand enables to distinguish one brand from another ( Riezebos, R. 2003). One of the main concerning areas in the field of marketing is branding. As brands have grown beyond the national boundaries, it has become vital to manage and operate them with a strategic view. This will enable companies to focus on the specific brand, rather than company as a brand. As the level of competition has risen, companies tend to focus on their branding strategies. A well derived strategy will lead a brand to attain high awareness and success in the market niche. As defined by Pickton and Broderick (2001), branding is a strategy that helps the company and their products to leverage in to the market and it also build brand value for the owners of the brand and also the consumers. Whereas, Randall G (2000) has a presented a different approach: Branding comprises of all fundamental strategic process going within the company; it is a part of marketing, but not restricted only to marketing department. Based on the benefits offered by a brand, the consumers form a purchasing decision, and evaluate it depending on their needs and wants. According to Temporal (2001), as the importance of branding is increasing, fast moving consumer goods industry is highly benefited by these strategies. Companies have more than one product in the marketplace, and by viewing the soaring profits in this sector. Companies have tried to differentiate it from their rivals, so that consumers find it easy to purchase. Henceforth, brands provide guarantee package to the consumers in terms of va lue, quality and reliability. Consumers will generate loyalty toward a brand, if the promised quality, value and reliability are full field. As identified by Murphy (1991), Branding adds value to the overall product, and from consumer perspective it provides a self confidence. However, Rowley (2004) has argued by stating that brands not only consist of value, and it also acts an information hub. This enables consumers to eradicate the time spent on searching a specific product offering. 2.2 Brand Equity: The goal of the brand leadership paradigm is to create strong brands. Brand equity is defined as the set of associations and behaviour on the part of a brands customers, channel members and parent corporation that permits the brand to earn greater volume or greater margin than it could without the brand (Wood, 2000). Appendix 1 depicts, according to Aaker (1991) major assets of a company can be brought together into five main types: Brand Loyalty, Brand name awareness, Perceived quality, Brand association, and other proprietary brand assets such as copyrights, patents, trademarks. Appendix 2 shows the brand equity chain, where the description provided on the brand leads to the strengthening the brand and this results in creation or building of brand value. Keller (2003; cited in Atilgan et al. 2005) defined Brand equity from a customer based point of view as Customer based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds som e strong, favourable, and unique brand associations in memory. One of the main reasons for a company to brand their product is to attain organisational goals of attracting and creating amongst their consumers by provision of cost efficient products, as it will aid company to acquire higher margin of profit (De Chernatony McDonald, 1998). Strong brands are the core products of the company and in order to gain a recognition and financial reward, it is important to build a successful brand. Appendix I: Aakers theory on Brand Equity Appendix 2: Brand Equity chain Source: Wood (2000) 2.3 Brand Leadership: Leading brands are perceived to be relevant, unique and compelling. They inspire customer loyalty and enable organizations to charge price premiums. They increase bargaining power with business partners, make it easier to hire and retain talented employees and provide organizations with clear strategic directions and platforms for future growth. Together, these lead to well above average financial performance and a market valuation that far exceeds book value. (Aaker, 2000) Leading brands are organizational assets that must be preserved, enhanced and leveraged for the benefit of their organizations. Aaker Joachimsthaler (2000) developed a Brand Leadership model which will enable companies to build strong brands for the future. It comprises of four challenges which an organisation should consider. 2.3.1 Organisational Challenge: Every organisation should structure and process their functions that will lead them to be a strong brand in the market place. A clear organisational hierarchy should be made so that brands are not at the mercy of ad hoc decisions made by those with no long term interest. When a company increases its portfolio, and extends the production line, every manager from a different production line should provide a common set of inputs, outputs and knowledge that will benefit the organisation. The inter-communication will enable the sharing of insight, experience and brand building initiatives. As companies are going international, there lies a trend which companies struggle to confront with, and organisational challenges are raised. With the increasing competition for talent growing amongst business networks, current economic activities rationalise the challenges which are created within the firm. In order to gain competitive advantage, change in organisational strategy is important as respon se to market need is important. 2.3.1.2 Brand Strategy: Strategies are always used to gain sustainable competitive advantage, which could reflect from any part of the organizations operation. The marketplace is the evaluator of this advantage. Brand strategy is the process whereby the offer is placed to evoke the perception of advantage (Arnold, 1992). Almost all the features of Brand Management are driven by the overall brand strategy; otherwise a company might be leading with a confused perception and image of the brand. Strategy gives focus and direction to brand management and provides the platform that enables brand managers to gain consistency in all their brand related activities (Temporal, 2002). According to Reizebos (2003), a brand strategy is based on two parameters: differentiation and added value. Differentiating refers to the practice of trying to establish the difference between a companys own product and that of the competitor. This signifies that the intention of the brand strategy has a competitive character. By targetin g the differentiation strategy, the firm tends to deliver a brand competitive advantage. The other fundamental trait of a brand strategy is added value, which refers to the fact that a brand has more value for consumers than the bare product. In order to create such an added value, the brand must be meaningful for the consumers (Reizebos, 2003). Appendix 3 shows different branding strategy approaches adapted by brands, and their advantages and disadvantages (Drummond Ensor, 2001). 2.3.2 Brand Architecture: Pertomilli et al. (2002) defines brand architecture from a company perspective as a combination of strategies which include managing, organising and operating in to the market with their brands. 2.3.2.1 Branding in FMCG sector: Branding plays a significant role in FMCG sector, as there are myriad of products in the market. Due to presence of high number of products, it acts a powerful instrument in creation of differentiation and higher store presence. Since the competition is intense in this sector, it is highly important for firms to make their brand identifiable from others. Packaging, graphics and promotional activities such as advertisement is used to attract consumers (Ellwood, 2002). Brands operating in this sector are highly cost efficient and production is carried out in masses. A high capital is required to establish production of FMCG brand, as production cost is high; such firms enjoy the benefits of economies of scale. As identified by Moffett et al. (2002), products are not confined within a region or country. With increase in globalisation, brands can be found in any part of the world. Companies need to consider the global implications of marketing and try to gain brand leadership in the mark etplace. For the FMCG sector, advertising plays a pivotal role and is the best channel to communicate with the targeted audience. Moreover, with the advancement of internet and information provided on it, consumers tend to opt to review product information online before purchasing it. With high competition and many brands offering same product quality, it is very difficult to generate brand loyalty in FMCG sector. 2.3.2.3 Benefits of Branding in FMCG sector: A successful brand is one which evokes the consumers by creating and sustaining a strong, positive and lasting impression. (Fill, 1999). For a FMCG company, it is important to create trust towards its brand in minds of consumers. This trust is being built by providing better quality and satisfaction. Once the trust is created, it subjects to the top most choice of the consumers mind set and leads to re-purchasing actions. The approval of customers signifies that branding, from consumer perspective, is a method which reduces the time taken for decision-making and related perceived risk of the product. This shows that the brand name provides information about the quality, price, and attributes of the product without requiring the consumer to undergo the time consuming process (Fill, 1999). 2.3.2.4 Branding in the soft drink sector: With the fierce competition in the soft drink industry, firms are fighting for market share. Companies should reflect upon their branding strategies, as they are of paramount importance. Companies should extend their brands to various market niches in order to meet the needs of the consumers. The scope and opportunity in this market is high, as products can be differentiated by infusing different flavours. It would be appropriate to emphasize that the value which the brand adds to the product is intangible, however, its presence is undeniable and with immense significance. Considering the characteristics of soft drinks, branding is an ideal marketing tool which allows companies to position and differentiate between the offered product and its incremental value. International product portfolio analysis The Boston Consulting Group (BCG) originated an early version of product portfolio analysis. The BCG version classifies a companys products into four categories: stars, cash cows, problem children, and dogs. The classification is based on market share and market growth rate. The optimum product portfolio for one market is different from that of another. Product A, for example, may be a star in country X, and a dog in country Z. Individualizing the use of portfolio techniques for each country will help define different product portfolios for each foreign market. Although portfolio analysis of products for international sale is relatively new, it can assist the company in determining how to allocate resources among different markets. Positioning a new product/brand depends upon the firms ability to describe product attributes that will generate a flow of benefits to buyers and users. The international marketer planner must put these attributes into bundles so that the benefits created match the special needs of each targeted market segment or subculture. Product positioning then is viewed in a multidimensional space, commonly referred to as theperceptual space or product space (Johanson, 1985). In terms of perceptual space, a particular version of a product is graphically represented as a point specified by its attributes. Competitors (local and international) and other products are similarly located. If points representing other products are close to the point representing the new product, then these are products similar to the new prototype. If the prototype is positioned away from its closest competitors in the world markets and its positioning implies positive features, then it is likely to have a significant competitive advantage. This mapping process is appropriate for each foreign country/market segment contemplated. 2.3.3 Brand identity 2.3.3.1 Competitive Analysis: According to Cohen (1988), competitive analysis permits the understanding of differential competitive advantage, as well as the comparative advantages in relation to competitors. Intense competition requires operations to be carried out with maximum efficiency. The key to this is large-scale production to reduce the value of fixed costs per bottle. With increasingly sophisticated vehicles and rising investment costs, the optimum economic scale increases (Rees, 1999). Industry Analysis Using Porters Five Forces According to Besanko (2007), in order to devise and execute successful strategies, a firm must understand the nature of the markets in which they operate and compete. In 1980, Micheal Porter developed five forces to analyse the extent of competition. Understanding the nature and strength of each of the five forces within an industry assists managers in developing the competitive strategy of their organization. (Campbell D., 2002, p.134) The Five Competitive Forces for Irn Bru: A structural analysis of the UK carbonated soft drinks industry examines the impact the various forces have on this industry. Firms operating in the carbonated soft drink market in the UK, face tough competition from the rivals. Every soft drink organization should review its rivals products, analyse any potential new entrants in the market, understand the demand of substitute products, review the consumption pattern and demand amongst the buyers, and identify appropriate suppliers. Porters five force model is used to analyse the magnitude of competition. The intensity of competition within the industry is quite high, with regular advertising wars taking place; on the other hand, sales are increasing and the products are differentiated. There are high barriers to limit entry such as: the high capital required for production and distribution, increasingly advanced and specialised technology, lack of access to distribution, and strong consumer loyalty to recognised brands. A final, but very critical, point to bear in mind is that the forces themselves change over time. Sometimes in a predictable way, other times not. However, it is usually possible for the firms to have some influence over these changes. If no action is taken to counter the forces, it is extremely likely that the forces will grow stronger over time. Each firm needs to consider the actions that it could take to counter the forces, or position itself in such a way as not to face their full impact. For example, merging with a rival not only eliminates a competitor but also reduces the number of competitors in the market as a whole, something that can benefit all rivals by reducing competitive intensity. Threat of Rivalry: In the UKs soft drink industry, Irn Bru faces the greatest competition from its arch rival Coca-Cola and Britvic soft drinks (Appendix, X). Their presence all round the globe shows their potential strength, and demand in the consumer market. As can be seen from the table, Irn Bru has made constant strides in an upward direction by gaining market share. Manufacturers retail value brand shares in carbonates, 2006-08 2006 2007 2008 (est.) % change  £m %  £m %  £m % 2006-08 Coca-Cola GB, of which: 1,296 65 1,302 65 1,334 66 2.9 Coca-Cola 934 47 942 47 968 48 +3.6 Fanta 127 6 124 6 115 6 -9.4 Schweppes 96 5 102 5 111 6 +15.6 Dr Pepper 61 3 61 3 65 3 +6.6 Sprite 57 3 56 3 60 3 +5.3 Lilt 21 1 17 1 15 1 -28.6 Britvic Soft Drinks, of which: 277 14 280 14 305 15 +10.1 Pepsi 215 11 224 11 252 12 +17.2 7-Up 24 1 28 1 30 1 +25.0 Tango 38 2 28 1 23 1 -39.5 AG Barr Irn-Bru 82 4 86 4 91 5 +11.0 Other 96 5 94 5 88 4 -8.3 Own-label 239 12 235 12 200 10 -16.3 Total 1,990 100 1,997 100 2,018 100 +1.4 Source: Mintel, 2009 Loyalty towards brand names is another factor to measure brands performance. Brand loyalty in the soft drink market is another component which Irn Bru has to deal with from its rivals. Coca Cola and Pepsi are well established brand names all around the globe. Due to high brand awareness and product availability, they attain high market share. The presence of Irn Bru in the international market is very limited. Perhaps, due to its authenticity, it is famous in Scotland, and has struggled in other international markets (e.g. Russia, South Africa, Australia, America and Canada). The soft drink industry is mature, with nominal current growth and limited ability of firms to increase revenues at the pace they may have become accustomed to in the past. Of course, new markets, such as in Middle East or Southern Asia, may result in major new growth opportunities. The current makeup of the industry line-up leads to higher levels of competition. On one hand, key rivals offer different products, but similar in size, which increases competition. Differences in companies philosophies, cultures, and histories result in varied strengths and weaknesses, and lead to different strategies in pursuit of competitive advantage; the overall predictability of the industry development decreases and industry volatility increases. Irn Bru has a strong presence in the Scotland, due to the fact that it is the country of origin and a strong culture is associated with it. Threat of new entrant: Entry to the market, on a large scale, is difficult. The risk of new entrant in the soft drink industry is low. The presence of renowned brands like Coca-Cola and Pepsi, and their strong distribution channels in major grocers, public houses, and fast food outlets dominate the industry. Moreover, as the market is saturated, growth tends to be minimised. Such situations prevent new entrants from entering the market, and competing against strong brands. With high fixed cost attached i.e. labour, warehouse, logistics and economies of scale, it is difficult for new entrants to compete with established brands. Market saturation and high fixed costs, the levels of barriers are increased, and henceforth, entering into the UK soft drink market is difficult. Furthermore, because the products are have already acquired the impression of good experience, and reputation matters, very heavy advertising would be a necessity to gain a foothold as a brand producer. Entry as an own label producer might be possible, but it would demand a large scale operation to keep costs down and be as competitive as the existing large own-label producers. Even with the removal of trade barriers and generally greater harmonization within the European Union, major continental firms have appeared to be reluctant to plan a takeover on the UK market. There are at least several strong brands for every consumer segment currently in the carbonated soft drink industry. Consumers do have a choice, and many have developed brand loyalty. It would be difficult for new entrants to sufficiently differentiate their products and to build brand identity and loyalty. Threat of Substitute: There are number of substitute for carbonated soft drinks e.g. mineral water, fruit juice, energy drinks, tea, coffee etc. Water and sport drinks provide more variety that appeals to the consumers who seek the healthier options. However, carbonated soft drinks have gradually been gaining market share at their expense and this trend does not appear set to reverse. In addition, carbonated soft drinks have a particularly strong appeal to the youth market (10-25years), which is where most of the sales can be traced to. Overall, the threat appears relatively weak, especially to the core youth market. Power of suppliers: Soft drink industry suppliers do not hold a strong competitive pressure. There are usually several suppliers to choose from for any of the soft drink components; therefore, the rivalry between suppliers is high, and companies have many options, including manufacturing components themselves, which some of them still do. Again, relatively weak pressure exists, with the exception of sugar producers and plastic suppliers. The work force is not highly organised, nor is it militant. Power of Buyers: The large numbers of consumers willing to purchase a bottle of carbonated soft drink mean that the actions of a single consumer will not have a notable effect on a companys performance. At the same time, however, these consumers face low switching costs and have varied degrees of brand loyalty, which requires companies to spend significant resources on capturing and retaining that individual consumer. Over 65% of sales are sold through multiple grocers. The top five grocery chains account for nearly 70% of all grocery sales and are thus in a strong bargaining position. Some 8% of sales are through fast food restaurants, and 6% sales are through public houses. (Mintel, 2009) The remainder of sales are relatively weak buyers, including off-licences, confectionaries, newsagents and restaurants. Soft drink manufacturing companies distribute the products to these stores so that they can be sold to the consumers. The top grocers buy soft drinks in bulk, as it allows them to purchase goods at a cheaper price. The strongest pressures come from the power of buyers and the fairly intense non-price competition within the industry. Nevertheless, overall the industry seems to be in a fairly healthy position: the leading firms are very profitable and industry growth is expected to be steady around 8% over the period 2007-9. Cola, as a product, appears to be reaching maturity, but other segments offer prospects of development and growth. This plays to an advantage in the hand of Irn Bru, as the product offered is completely contrary to the Colas. At the same time, the firms are actively competing on quality and bringing new products to market, as well as being innovative in terms of reducing costs by investing in new technology and machinery, developing new forms of packaging and offering better distribution services. The danger is that the firms may not be able to sustain the route to growth and instead may seek growth through techniques such as undercutting rivals prices in a market share game. In this situation, profits are likely to deteriorate rapidly if destructive head-to-head price competition becomes the main competitive instrument. 2.3.3.2 The Brand Positioning Concept: According to Kotler (1997), Positioning is the act of designing the companys offering and image so that they occupy a meaningful and distinct competitive position in the target customers minds. The positioning of a brand is not about the quality which products provide, but it is what consumer thinks about the brand. For positioning, it is important how a consumer perceives the product rather than its physical nature. According to King (1991; cited in Fill 1999), advancements in technological fields have allowed products to offer similar functional and physical appearance, where consumers choices and decision will be based on the brand name. Henceforth, positioning origination as a brand will evoke actual and potential customers. According to McCormack (1984, cited in Olsson 2004), positioning is a factor which determines what consumers are actually purchasing while buying any product or service; and subsequently communicating related imitations and inspirations to the buyer. An organ ization should primarily evaluate and identify where they stand in the market spectrum and then position it accordingly. 2.3.3.3 Branding from Consumers Perspective: A brand provides not only a source of information, but also performs certain other functions which justify its attractiveness and its monetary return, when they are valued by buyers. According to (Kapferer, 2008), there are eight main functions (Appendix 4), Identification and practicality are mechanical and concern the essence of the brand i.e. to function as a rec

Scarlet Letter Essay -- Literary Analysis, Hawthorne

After the death of Nathaniel Hawthorne’s character Dimmesdale from the book the Scarlet Letter, there have been many theories about the cause of his death. Some literary analyzers claim that his guilt was the cause of his death. Others say that Roger Chillingworth, a physician, poisoned him with Atropine and Scopolamine. In Nathaniel Hawthorne’s book The Scarlet Letter, Dimmesdale’s guilt appears to be the cause of his death, but his symptoms point towards Atropine and Scopolamine poisoning. In The Scarlet Letter, all the symptoms Dimmesdale experiences provide evidence that he is poisoned with Atropine and Scopolamine. The action of gripping hard at the breast leads readers to believe that Dimmesdale is poisoned with Scopolamine and Atropine. Gripping hard at his breast is a cardio vascular symptom which is associated to Scopolamine and Atropine poisoning. Shafer points out that â€Å"he was often observed, on any slight alarm, to put his hand over his heart, with first a flush and then a paleness, indicative of pain† (qtd. in Hawthorne 88). Scopolamine and Atropine poisoning causes pain in the chest therefore Dimmesdale’s symptom is one of chronic intoxication. Shafer quotes Hawthorne saying how the gripping of the chest â€Å"had now become a constant habit, rather than a casual gesture, to press his hand over his heart† (qtd. in Hawthorne 88). Because Dimmesdale forms the constant habit of putting his hand over his heart, it shows that he constantly has pain in his chest and is being gradually poisoned. Other symptoms of Scopolamine and Atropine poisoning that Dimmesdale experiences are gait disturbances, tremors, and convulsions. Shafer mentions that Dimmesdale has a nervous â€Å"despondency in his [Dimmesdale’s] air†¦Ã¢â‚¬  (qtd... ...n occur. If overdosed, Atropine can cause very serious consequences but fatalities from Atropine poisoning are very rare but can occur in adults and children. Atropine is the safest alkaloid of all the potential alkaloids. Since death caused by Atropine alone is very rare, the fatal dose has not medically been discovered. If ever overdosed, the side effects of dry mouth, blurred vision, photophobia, anhidrosis, and constipation are unavoidable. Although The Scarlet Letter makes readers believe that Dimmesdale died of guilt, there is enough medical evidence to prove that he was poisoned by Scopolamine and Atropine. Not only is there enough evidence of the poison, there is also evidence on how Chillingworth caused his death. All in all, Dimmesdale’s death in The Scarlet Letter was caused because of Scopolamine and Atropine poisoning by Roger Chillingworth.

Minority Movements Essay -- Politics, Civil Rights Movement

During the 1900’s many minority and ethnic groups including African Americans, Mexican Americans, and Women wanted to prove that they deserved equal rights, freedom of speech, the right to sexuality preference, and equal treatment for women. They formed several organizations under great leaderships during these movements in order to civil rights and equality. Along with great leaders, powerful organizations, and dedicated supporters, African Americans, Mexican Americans, and women were able to successfully obtain many rights despite constant opposition. [This looks like a strong thesis, but I am a bit puzzled how great leaders, powerful organizations, and dedicated supporters also obtained rights. The sentence is rather confusing as it stands now. You may want to revise to indicate that these were instrumental in helping the cause. Then, if you are going to talk about them, that topic should come first in your discussion.] African Americans were in constant pursuit of equality through the civil rights movement that began in the 1940’s (Roark 843). They fought against racial discrimination, segregation laws, and for the right to vote without prejudice. Discrimination led to exclusion from belonging to professional sports teams (Roark 843). During the post war era in 1947, a man by the name of Jackie Robinson became the first African American to play major league baseball within an integrated team called the Brooklyn Dodgers (Roark 843). Known as a sports pioneer of the civil rights movement, he led the Dodgers to six national league titles and one outstanding World Series despite constant harassment from white players and fans (Roark 843). Several civil rights leaders emerged during this movement (Roark 680). Dr. Ralph David... ...is president?] If you sincerely desire to forward the interest s of all people, why do you oppose the national enfranchisement of women (Scott 24)? The president could not respond. The president made a Pro –suffrage speech for the women who protested and the next year Congress passed the Nineteenth Amendment giving women the right to vote in the year of 1918(Scott 24). All three minority groups used activities such as demonstrations to voice their opinions and stances to gain equal rights in America. Along with African Americans, Mexican Americans /Chicanos continued to be represented among the poor, and gradually won more political offices, effective enforcement of anti discrimination legislation, and greater respect for their culture (Roark 915). Mexican American like African Americans rejected traditional politics in favor of direct action (Roark 914). Minority Movements Essay -- Politics, Civil Rights Movement During the 1900’s many minority and ethnic groups including African Americans, Mexican Americans, and Women wanted to prove that they deserved equal rights, freedom of speech, the right to sexuality preference, and equal treatment for women. They formed several organizations under great leaderships during these movements in order to civil rights and equality. Along with great leaders, powerful organizations, and dedicated supporters, African Americans, Mexican Americans, and women were able to successfully obtain many rights despite constant opposition. [This looks like a strong thesis, but I am a bit puzzled how great leaders, powerful organizations, and dedicated supporters also obtained rights. The sentence is rather confusing as it stands now. You may want to revise to indicate that these were instrumental in helping the cause. Then, if you are going to talk about them, that topic should come first in your discussion.] African Americans were in constant pursuit of equality through the civil rights movement that began in the 1940’s (Roark 843). They fought against racial discrimination, segregation laws, and for the right to vote without prejudice. Discrimination led to exclusion from belonging to professional sports teams (Roark 843). During the post war era in 1947, a man by the name of Jackie Robinson became the first African American to play major league baseball within an integrated team called the Brooklyn Dodgers (Roark 843). Known as a sports pioneer of the civil rights movement, he led the Dodgers to six national league titles and one outstanding World Series despite constant harassment from white players and fans (Roark 843). Several civil rights leaders emerged during this movement (Roark 680). Dr. Ralph David... ...is president?] If you sincerely desire to forward the interest s of all people, why do you oppose the national enfranchisement of women (Scott 24)? The president could not respond. The president made a Pro –suffrage speech for the women who protested and the next year Congress passed the Nineteenth Amendment giving women the right to vote in the year of 1918(Scott 24). All three minority groups used activities such as demonstrations to voice their opinions and stances to gain equal rights in America. Along with African Americans, Mexican Americans /Chicanos continued to be represented among the poor, and gradually won more political offices, effective enforcement of anti discrimination legislation, and greater respect for their culture (Roark 915). Mexican American like African Americans rejected traditional politics in favor of direct action (Roark 914).

Economic Development and Social Change Essay

Section 1 1) What is the primary goal of modernization theory in contrast to theories of capital formation? Compare and contrast Hoselitz’ formulation of modernization theory with Lewis’ theory of capital formation In the 18th century, during the Age of Enlightenment, an idea named the Idea of Progress emerged whereby its believers were thought of being capable of developing and changing their societies. This philosophy initially appeared through Marquis de Condorcet, who was involved in the origins of the theoretical approach whereby he claimed that technological advancements and economical changes can enable changes in moral and cultural values. He encouraged technological processes to help give people further control over their environments, arguing that technological progress would eventually spur social progress. In addition, Émile Durkheim developed the concept of functionalism in the sociological field, which emphasizes on the importance of interdependence between the different institutions of a society and their interaction in maintaining cultural and social unity. His most well known work, The Division of Labour in Society, which outlines how order in society could be controlled an d managed and how primitive societies could make the transition to more economically advanced industrial societies. Another reason for the emergence of the modernization theory derived from Adam Smith’s Wealth of Nations, which represented the widespread practical interest on economic development during a time when there was a constant relation between economic theory and economic policy that was considered necessary and obvious. It was by analysing, critiquing, and hence moving away from these assumptions and theories that the modernization theory began to establish itself. At the time the United States entered its era of globalism and a ‘can do’ attitude characterized its approach, as in the functionalist modernization advanced by B. Hoselitz: â€Å"You subtract the ideal typical features or indices of underdevelopment from those of development, and the remainder is your development program†. As he also presents in Social Structure and Economic Growth , this body of economic theory â€Å"abstracted from the immediate policy implications to which it was subject†Ã ‚  and also â€Å"assumed human motivations and the social and cultural environment of economic activity as relatively rigid and unchanging givens†(23-24). He claims that the difference lies in the extra examination of what is beyond simply economics terms and adjustments, by â€Å"restructuring a social relations in general, or at least those social relations which are relevant to the performance of the productive and distributive tasks of the society†(26). Most forms of evolutionism conceived of development as being natural and endogenous, whereas modernization theory makes room for exogenous influences. Its main aim is to attain some understanding of the functional interrelationship of economic and general social variables describing the transition from an economically â€Å"underdeveloped† to an â€Å"advanced† society. Modernization theory is usually referred to as a paradigm, but upon closer consideration turns out to be host to a wide variety of projects, some presumably along the lines of ‘endogenous change’ namely social differentiation, rationalization, the spread of universalism, achievement and specificity; while it has also been associated with projects of ‘exogenous change’: the spread of capitalism, industrialization through technological diffusion, westernization, nation building, state formation (as in postcolonial inheritor states). If occasionally this diversity within modernization is recognized, still the importance of exogenous influences is considered minor and secondary. I do not view ‘modernization’ as a sing le, unified, integrated theory in any strict sense of ‘theory’. It was an overarching perspective concerned with comparative issues of national development, which treated development as multidimensional and multicausal along various axes (economic, political, cultural), and which gave primacy to endogenous rather than exogenous factors. (Tiryakian, 1992: 78) In the context of Cold War modernization theory operated as a highly interventionalist tool enabling the ‘free world’ to impose its rules and engage in ‘structural imperialism’. Typically this occurred in the name of the forces of endogenous change such as national building, the entrepreneurial spirit and achievement orientation. In effect modernization theory was a form of globalization that was presented as endogenous change. Modernization theory, therefore, emerged from these ideas in order to explain the process of modernization within societies. The theory examines  not only the internal factors of a country but also how with the aid of technology and the reformation of certain cultural structures, â€Å"traditional† countries can develop in the same manner that more developed countries have. In this way, the theory attempts to identify the social variables, which contribute to social progress and the development of societies, and seeks to expl ain the process of social evolution. The question of the functional relations between all or most culture traits is left open, and special attention is â€Å"given only to those aspects of social behaviour that have significance for economic action, particularly as this action relates to conditions affecting changes in the output of goods and services achieved by a society†(30). They conceptualize the process of development in a similar linear, evolutionary form as older evolutionary theories of progress, but seek to identify the critical factors that initiate and sustain the development process. These factors, they argue, are both intrinsic and extrinsic: the former involves the diffusion of modern technologies and ideas to the developing world, while the latter requires the creation of local conditions, such as the mobilization of capital, which will foster progress. Modernization theorists believe that primitive production, an anachronistic culture, and apathetic personal dispositions combine to maintain an ar chaic socioeconomic system that perpetuates low levels of living. Modernization theorists hold that policies designed to deal with these traditional impediments to progress primarily through economic intervention, provide the key to prosperity. Overall, Hoselitz’s modernization theory is a sociological theory of economic growth that determines the mechanisms by which thesocial structure of an underdeveloped economy was modernized – that is, altered to take on the features of an economically advanced country. Hoselitz’s answer was based on the â€Å"theory of social deviance† – that is, that new things were started by people who were different from the norm. Unlike Lewis’ theories that we will revise later, Hoselitz thought that small-scale private economic development was the best way of achieving development in Third World economies. This particularly involved revaluing what he called â€Å"entrepreneurial performance†, something that Lewis also agrees with, but in a way that provided not only wealth but also social status and political  influence. In Chapter 8 of Sociological Aspects of Economic Growth, Hoselitz focuses on the creation of â€Å"generative cities† ( that is, cities producing innovations) rather than traditional rural areas were the focal points for the introduction of new ideas and social and economic practices. Many of the early colonial settlements in the New World and South Africa, Hoselitz claimed, were parasitic, enjoying a certain degree of economic growth â€Å" within the city itself and its surrounding environs† only at the expense of the rest of the region, which was ruthlessly exploited for its natural and agricultural resources (p.280). Although prescriptions for inducing social change and removing cultural obstacles to economic modernization in developing countries may be described as social policies, they do not seek to deal directly with mass poverty and its attendant problems of malnutrition, ill-health, inadequate housing, illiteracy, and destitution. These critical welfare concerns are seldom referred to by modernization theorists, namely by Hoselitz. Instead, the implicit assumption in his writings is that the process of economic development and social change will raise levels of living and remedy these problems automatically. Since economic growth, engendered by capital investments in modern industry, will expand employment, the proportion of the population in subsistent poverty will steadily decline. The increasing numbers of workers in the modern economy will experience a steady rise in real income that will be sufficient not only to satisfy their basic needs for food, clothing, and shelter but permit them to purchase consumer commodities as well as social goods such as medical care, education, and social security. Arthur Lewis was one of the first economists to create a theory about how industrialized and economically stable countries are capable of helping undeveloped countries progress. He presented this theory in his work Economic Development with the Unlimited Supplies of Labor† where he brings about the concept of capital formation. He defines it as the transfer of savings from households and governments to business sectors, resulting in increased output and economic expansion. He claims that his â€Å"model says, in effect, that if unlimited supplies of labor are available at a constant real  wage, and if any part of profits is reinvested in productive capacity, profits will grow continuously relatively to the national income, and capital formation will also grow relatively to the national income†(158). From here bridged off his development of the two-sector model of the economy and the theory of dualism. Both posit the existence of a substantial pool of underutilized labo r in a backward, subsistent agricultural sector of an economy that perpetuates low levels of production and mass poverty. This model comprises two distinct sectors, the capitalist and the subsistence sectors. The former, which may be private or state-owned, includes principally manufacturing industry and estate agriculture; the latter, mainly small-scale family agriculture and various other types of unorganized economic activity. Here the capital, income and wages per head, the proportion of income saved, and the rate of technological progress are all much higher in the capitalist sector. The subsistence sector is both at a very low level, and also stagnant, with negligible investment and technical progress and no new wants emerging. Institutional arrangements are the ones maintaining this chronic disequilibrium between the sectors, implicit in these differences in real income and productivity. In the extended family the members receive approximately the average product of the group even if the marginal product is much less. The process of development, initiated by an increase in the share of capitalist s in the national income, I essentially the growth of the capitalist sector at the expense of the subsistence sector, with the goal of the ultimate absorption of the latter by the former. To some extent, this is similar to Hoselitz’s development of the modernization theory, whereby the claims that the formation of his generative cities (a) creates a new demand for industrial raw materials from the surrounding region, and (b) attracts new population to the cities, thereby increasing the demand for food from the countryside. The net effect of these forces is a â€Å"widening of economic development over an increasing area affecting a growing proportion of the population outside the city†(Hoselitz, 282). However, Lewis’ theory has several limitations and conditions, most importantly that his theory can be applied only in countries with unlimited supplies of labor. Unlimited supplies of labor arise from the employment of  more workers than is productively effective. Lewis went through all of the areas of Caribbean society where he thought there were pools of labour in which the marginal productivity was negative, negligible or zero. His plan now was to make this a potential, industrial labour force. He could take all of the labour away from agriculture, away from casual labour, without lowering the profit margins of the places where they are currently employed. This was not a radical, disruptive assault on the existing economic order, which resulted in one of the main reasons that his theory was so successful. Ineffective production, occurring when an additional worker prevented the previous one from producing another product (hence equaling a negative marginal productivity) was common in the Caribbean, Southeast Asia and other undeveloped regions of the world. Several sectors of the economy employ too many people with negligible, zero or negative marginal productivity. According to Lewis these productively unnecessary individuals are employed in agriculture, or are casual workers, petty traders, or women of the household. He claims that the transfer of these people’s work from these areas towards commercial employment is one of the most notable features of economic development. The second source of labor for expanding industries is the increase in the population resulting from the excess of births over deaths. After his analysis of the effect of development on death rate, whereby he concludes that â€Å"[death rates] come down with development from around 40 to around 12 per thousand†(144), he claims therefore that â€Å"in any society where the death rate is around 40 per thousand, the effect of economic development will be to generate an increase in the supply of labor†(144). From this point of view, he states, †Å"there can be in an over-populated economy an enormous expansion of new industries or new employment opportunities without any shortage of unskilled labor†(145), though too many people could again cause ineffective production. He clarifies this by saying, â€Å"Only so much labor should be used with capital as will reduce the marginal productivity of labor to zero†(145). This can be achieved by offering and maintaining decently high wages. The wages offered should be only slightly higher than the wages available in the subsistence sector, since wages that are too high may attract more workers than needed. But firstly, and perhaps most importantly, entrepreneurial-minded capitalists are required in order to invest in the nation. Tax holidays attract the foreign capitalists. It is not a very difficult task, because they have very good incentives to come. The planter class in the Caribbean seemed just like the planter class in the American South – it had no desire to go industrial and no desire to go competitive. It was still trapped in a situation between an old monopoly system and a market situation since they were able to negotiate for a protected market for sugar, not a competitive market. Lewis then looked around realized the only way he could keep this program of industrialization launched would be by visiting England and America where capitalists and entrepreneurs were flourishing and foster their entrance into the Caribbean. Again, he employed the concept of a dual economy where a subsistence sector existed, but also from where he created from scratch this modern industria l sector to establish on modern capitalism. Capitalists in North America and Europe found these labouring conditions and costs in the Caribbean quite attractive. Getting this labour to the imported capitalists would not be resisted locally because he was taking those labourers with marginal productivity of zero. Once they began working, he would then re-invest more capital into the factory, so that it could expand, employ more workers, export more products, and increase profits, hence developing a self-feeding system that would eventually lead the national income to grow. Although Hoselitz also is of the belief that the formation of a dual economy is beneficial, rather than necessarily attract foreign capitalists through such incentives, Hoselitz believes that the creation of westernized cities led the way forward. He claims that cities modelled after the Western cities exhibited a spirit difference from the traditionalism of the countryside. In this way, he differs slightly from Le wis in that he favored a shift in political power away from traditional leaders and toward total control by economic and urban modernizers in underdeveloped countries, not necessarily foreign entrepreneurial capitalist as Lewis asserts. Lewis knew that some products would work better than others, so he developed an Industrial Programming Market – a number of basic calculations about those particular commodities, if produced in the Caribbean, would be  particularly competitive internationally. And so as a result of this study Lewis found that the production of airbrushes, gloves, furniture, needles, shirts, and leather goods would be particularly good to produce, given the skills of the labour force available at the time. For the self-feeding system to be a continuous process, costs of labour had to remain fairly constant. If the cost of labour rose too rapidly, they would not be sustained since the goods would no longer be internationally competitive. The key to this model is indeed international competitiveness. Capitalists can create more capital when the supply of money is higher, and hence if governments create credit, inflation arises yet does not have the same effect as the inflation that arises durin g depression periods. This inflation only has an effect on the prices in the short-run so that in the long run the final effect equal to what it would be if capital was formed by the reinvestment of profit. Lewis discusses at some length the methods by which governments of underdeveloped countries can raise revenue, especially the substantial funds required for government capital formation. For familiar political and administrative reasons much of this revenue has to be raised from indirect taxes, notably import and excise duties and export taxes. He argues that indirect taxation is more likely to increase than to decrease the supply of effort: The taxpayer usually does not know how much tax is included in the prices of the articles he buys, so in so far as the disincentive effect of taxation is psychological it can be avoided by using indirect rather than direct taxes†¦ If it is an increase in indirect taxation, the effect is probably to increase effort rather than to reduce it (414). Because of the multiple restrictions in this model, it is designed for countries with unlimited supplies of labor and hence this growth has a limit: â€Å"The process must stop when capital accumulation has caught up with population, so there is no longer surplus labor†(172). Furthermore, if wages are too high, they may consume the entirety of the profit leading to no re-investment. Several other reasons for the end of capital formation vary; the occurrence of natural disasters, war or a change of political system can also prevent further economic expansion in a closed economy. Lewis’ model is powerful but also highly restricted and specific to only a handful of nations. Some critics also claim that the distinction between the two sectors is too sharp; that small-scale agriculture is often far from stagnant and the emergence of the production of cash crops by individual producers has in fact been a key instrument in economic development since capital formation is actually created in this type of agriculture. Also, this model requires low wages for the labor force, yet very low wages result in a wide gap between the lower and upper class in a society, an issue that many have questioned thoroughly. Lewis says openly that exploitation can easily occur in this model, but that it is part of capital accumulation. He believes that one has to sacrifice a generation to grow the economy, because he assumed that if all goes well and more consumers are attracted to Caribbean, they will generate more business, and the economy will grow to the point where the weal th can be redistributed to the people. He reckoned that it would take, given the rate of growth that he observed in the Caribbean, one generation, thus a period between 40 and 50 years, to grow the economy and claim that poverty could be eradicated in this region. And yet the cost of this would be exploiting this generation, so that their children could benefit from it later. Hoselitz, as stated earlier, applied the ideas of Parsons and other sociologists to an analysis of the development process under the assumption, drawn from Adam Smith, that increasing productivity was associated with more detailed social divisions of labor: A society on a low level of economic development is, therefore, one in which productivity is low because division of labor is little developed, in which the objectives of economic activity are more commonly the maintenance or strengthening of status relations, which social and geographical mobility is low, and in which the hard cake of custom determines the manner, and often the effects, of economic performance. An economically highly developed society, in contrast, is characterized by a complex division of social labor, a relatively open social structure from which caste barriers are absent and class barriers are surmountable, in which social roles and gains from economic activity are distributed essentially on the basis of achie vement, and in which, therefore, innovation, the search for and exploitation of profitable market situations,  and the ruthless pursuit of self-interest without regard to the welfare of others is fully sanctioned. (Hoselitz, 1960: 60). These preceding theories both provide us with some preliminary indications and developments of views of modern social orders broader than that envisaged in the initial models provided. They stress the historical dimensions of the process of development, emphasizing that this process is not universal, something in the very nature of humanity or in the natural development of human societies. Instead, the modernization process is fully bound to a certain period in human history, even though in itself it is continuously developing and changing throughout this period. Development and the challenges it brings forward constitute a basic given for most contemporary societies. Though it certainly is pervasive in the contemporary setting, it is not necessarily irreversible in the future, and it would be wrong to assume that once these forces have impinged on any â€Å"society†, they naturally push toward a given, relatively fixed â€Å"end-plateau.† Rather, as we have seen, they evoke within different societies, in different situations, a variety of responses which depend on the broad sets of internal conditions of these societies, on the structure of the situation of change in which they are caught, and the very nature of the international system and relations, whether those of â€Å"dependency† or of international competition. Section 2 5) Briefly outline David Ricardo’s theory of comparative advantage; then outline in greater detail Samir Amin’s theory of periphery capitalism and why he thinks that trade between the central and peripheral capitalist economies does not meet the conditions of Ricardo’s theory In 1817, David Ricardo, an English political economist, contributed theory of comparative advantage in his book ‘Principles of Political Economy and Taxation’. This theory of comparative advantage, also called comparative cost theory, is regarded as the classical theory of international trade. According to the classical theory of international trade, every country will produce their commodities for the production of which it is most suited in terms of its natural endowments climate quality of soil, means of transport, capital, etc. It will produce these commodities in excess of its own requirement and will exchange the surplus with the imports of goods from other countries for the production of which it is not well suited or which it cannot produce at all. Thus all countries produce and export these commodities in which they have cost advantages and import those commodities in which they have cost disadvantages. Ricardo states that even if a nation had an absolute disadvantage in the production of both commodities with respect to the other nation, mutually advantageous trade could still take place. The less efficient nation should specialize in the production and export of the commodity in which its absolute disadvantage is less. This is the commodity in which the nation has a comparative advantage. Ricardo takes into account the following assumptions: there are two countries and two commodities; there is a perfect competition both in commodity and factor market; cost of production is expressed in terms of labor; labor is the only factor of production other than natural resources; labor is homogeneous i.e. identical in efficiency, in a particular country; labor is perfectly mobile within a country but perfectly immobile between countries; there is free trade; production is subject to constant returns to scale; there is no technological change; trade between two countries takes place on barter system; full employment exists in both countries; there are no transport costs. In 1973, Samir Amin, an Egyptian political economist, begins his dialogue in Unequal Development by referring to Marx’s writing on non-European societies, namely India and China, and creates a work in which he reevaluates Peter Evans’ theory of Dependent Development and simultaneously presents his theory of peripheral capitalism in developing societies. He shows how these early ideas established the notion of the centre and the periphery, and how â€Å"the development of capitalism in the periphery was to remain extraverted, based on the external market, and could therefore not lead to a full flowering of the capitalist mode of production in the periphery†(199). He then begins to develop his own theory of the transition to peripheral capitalist economy by questioning David Ricardo’s assumptions in his theory of comparative advantage, and later outlines nine theses to support his views. Peripheral capitalism is based on, but not identical to, the imperialistic relationships developed between colonizing nations and their colonies. In this economic relationship, the players are the same – the colonizing nation becomes the â€Å"center†, while the colony becomes the â€Å"periphery† – but the role that each society plays is different from the classic imperialist relationship. The peripheral economy is marked by extreme dependence on external demand, or extroversion, as well as stunted and unequal rates of development within the society. Amin maintains that in order for these societies to break free of extroversion and develop, they must be actively removed from the peripheral capitalist relationship. He proposes nationalization and socialization as an alternative, a system which-when contrasted with peripheral capitalism-could not be a more different approach to economic development. Unfortunately for the developing nation s, socialism was largely unsuccessful as an economic experiment, consistently causing stagnation and underdevelopment in societies that attempted it. Peripheral capitalism evolves from colonial imperialism, an economic system in which the colonizing nation penetrates deep into the heart of the colonial economy in an effort to manipulate it towards the benefit of the mother country. Every aspect of the colonial economy is geared not towards the expansion of the colonial economy itself, but rather towards the production of something that the colonizing nation cannot produce itself. As a result, the success and the existence of a particular sector of the colonial economy is dependent upon whether or not the mother country has a need for that sector; colonial economies are rooted heavily in external demand. This extroversion leaves the colonial economy without an indigenous set of linkages, as economic sectors that will benefit from colonial activity function mostly within the economy of the colonizing nation. When autocentric, or internally-driven, economic growth is blocked in such a way that a peripheral economy emerges with the sa me sort of external dependence on the central economy that was suffered by the colonial economy. The peripheral economy is typically plagued by an unequal division of labor, or specialization, between itself and the central economy. While the latter enjoys the benefits and progress associated with industrialization, the periphery tends to remain predominantly agricultural. What little industry may exist in the peripheral economy is most often â€Å"light† industrial production of small, simple goods, as opposed to the â€Å"heavy† industrial production of machinery and complex products that characterizes the central economy. Additionally, Amin argues that there is often a â€Å"hypertrophy of the tertiary sector†(200) of the peripheral economy; too much of the economy is devoted to providing services, â€Å"expressed especially in the excessive growth of administrative expenditure†(201) effectively anchoring the society’s development due to a lack of productive advancement. Yet another malady of the peripheral economy is the reduced value of the local ‘multiplier effect’, another result of the remnants of economic infrastructure modification from the colonial period. If an economy is replete with linkage sectors, then any money put into the leading sector will generate a multiplied effect in all of the forward and backward linkages of that industry. Peripheral economies, however, are effectively stripped of linkages during their colonial phase of development hence spending in the peripheral economy ultimately benefits the central economy, where most of the peripheral industries’ linkages are realized. Not only is the local multiplier effect reduced in the peripheral economy, but Amin claims that it also leads to â€Å"the marked propensity to import†(201), and thus is in effect transferred to the central economy, where revenue is collected every time money is spent in the periphery. Because peripheral input ultimately goes abr oad, local businesses are not stimulated, as they would be if linkages were realized within the periphery, worsening the already-detrimental conditions of the peripheral economy. Adding to the lack of stimulation of local business is the fact that peripheral industries tend to be dominated by monopolies established from foreign capital. After the majority of revenue goes to the central economy through linkage industries, what little money remains in the local economy is often put into businesses controlled by central capitalists. In other words, almost every dollar put into the periphery ultimately finds its way to the central economy. In Unequal Development, Amin maintains that no economy can be expected to develop without successfully making the transition from extrovert to introvert so that it can â€Å"assert the dominance of the exporting sector over the economic structure as a whole†(203), and that no peripheral capitalist economy can independently heal the economic wounds inflicted by colonialism. Therefore, the only way to promote development in peripheral capitalist economies is to actively remove them from their disadvantageous relationship with the central economy, which, according to Amin, should be replaced by internal nationalization and socialization of the once-peripheral economy. The establishment of a nationalist socialist state would serve both to eliminate external dependence, as well as to reconcile the disarticulated nature of the local economy. The first critique of Ricardo’s theory made by Amin is its lack of specificity – claiming that his examples of trade between Portugal and England were very exclusive to intra-European trade and could not exactly be applied to relations between several different country relations around the World. If there is a large difference in GDP between two countries, then what statistics demonstrate is that the country with the smaller GDP would benefit more from this transaction, and this was â€Å"the source of special problems that dictate[d] development policies in the periphery that [were] different from those on which development of the West was based†(201); a factor that Ricardo hadn’t considered it in his theory. Another vital yet neglected consideration was the importance of the commodity in terms of a nations’ GDP: wine was a big section of the Portuguese GDP, greater than it was for England, so the trade benefited the Portuguese to a greater extent than it did to the British. He elaborates upon this idea by explaining how the relation between central and periphery assumes the mobility of capital, since the centre is investing greatly in the periphery. What the periphery chooses to specialize in is to a large extent determined by the centre, since very often the selection comes after it has been forced to serve the imperial country. As he clearly states, this type of trade â€Å"compels the periphery to confine itself to the role of complementary supplier of products for the production of which it possesses a natural advantage: exotic agricultural produce and  minerals†(200). The result is a decrease in the level of wages in the periphery for the same level of productivity than at the centre, hence limiting the development of industries focused on the home market of the periphery. The disarticulation due to the adjustment of the orientation of production in the periphery to the needs of the centre prevents the transmission of the benefits of econo mic progress from the poles of development to the economy as a whole. Overall, this is what Amin defines by ‘unequal specialization’, which in turn violates the conditions of Ricardo’s theory. Another argument that Amin makes involved the Keynesian multiplier effect. He claims that this effect does not take place to the situation at the centre because of its advantaged stage of monopoly, characterized by difficulties in producing surplus. Due to this unequal specialization as well as the significant propensity to import that follows, the effect is a transferring of multiplier effect mechanisms and the accelerator theorem from the periphery to the centre. Furthermore, Amin includes the social aspect of this process, which is a result of the individual history of each nation and the power imbalance created. Amin finds that the nature of the pre-capitalist formations that took place previously and the epoch in which they became integrated in the capitalist system are both very important factors in determining the presence or lack of development to come. He also draws a line between two different terms, ‘peripheral formations’ and ‘young central formations’, whereby the latter, based on the predominance of a simple commodity mode of production, are capable of independently evolving towards a fully developed capitalist mode of production. Amin terminates by asserting â€Å"the domination by central capital over the system as a whole, and the vital mechanisms of primitive accumulation for its benefit which express this domination, subject the development of peripheral national capitalism to strict limitationsâ₠¬ (202). These countries would hence not gain equal benefits under this trade, only if the patterns of specialization were undertaken in more ideal conditions, conditions that approximated Ricardo’s theory more closely. Rather than being a positive force for development, this type of trade becomes a force created under development. It will contribute to development in the centre, and underdevelopment in the periphery. He concludes that this inevitably hinders the development of peripheral nations: â€Å"the impossibility, whatever the level of production per head that may be obtained, of going over to auto centric and auto dynamic growth†(202).