Business Strategy in a Global Environment Essay - 1

Business Strategy in a Global Environment - Essay Example The new business scenario opens new vista for growth for all corporates. There are deeper challenges before them. The task before entrepreneurs is to make use of the wider growth potential and face challenges more comprehensively. In this scenario, companies have to devise a new approach for growth and give shape global strategy to face the competition and face challenges ahead. Knowledge management, risk management, strategic management, and resource management are some of the new terms in this global business scenario. Companies need to taken into consideration market information in other parts of the country and purchasing and behaving patterns of people in potential markets before devising strategies and roadmaps for growth. International trade is termed as exchange of products and services across boundaries of countries and continents. From the beginning of human history there had been some kind of trade between individuals and communities. Exchange of service and trade had been a voluntary action among individuals and communities in the beginning. They first communities shared their excess resources and additional services to co habitants without expecting any monitory benefits. At that resources were abundant and majority of people were involved in agriculture. But as the civilizations emerged and people have settled in particular area, some kind of economics introduced to the exchange of good and services. People have traveled around the world searching better prospects. Europeans and Chinese travelers had sailed and find out new routes and destinations. They sourced products from Asia, Northern America and Europe and sell in other markets. This can be considered as the first step of cross continent and national trade. Later trade has emerged as a major area for most of the countries around the world. Most of the wars fought were on the trade interest. Emperors sailed and traveled world over searching of larger trade prospective. It was in the colonial period that globalization in its actual concept was evolved. The Europeans had conquered countries in Asia, Africa and North America with larger trade interest. They find it easy to source products and human power to improve trade prospects. The companies in Europe had entered into these markets and expanded their products and services. Later the colonialists could not carry the huge burden of this undeveloped area and population as the freedom struggle got intensified. So they left these colonies and most of them got independence. Western companies had also left these newly independent countries. The trade policies of these newly formed countries were more inward looking and there were some kind of xenophobia. But in the second half of the 20th century, many of these countries realized the necessity of technology, new products and services. The cold war had seen some kind of polarization even in the trade scenario. The so called socialist countries had grouped with former United States of Socialist Republic or Soviet Union. Europeans countries and United States had formed another alliance of developed countries. The international trade during that time was also highly polarized. It was British, European and Americans, who had started the trend of entering overseas markets seeking better

Why Organizations Should Implement Flexible Work Hours Essay Example for Free

Why Organizations Should Implement Flexible Work Hours Essay In today’s fast-paced competitive world, flexible work arrangements are a key component to ensure employee commitment. Flexible work arrangements ensure that employers have a flexible work force i.e. there is availability of sufficient labor to meet the workload at all times. Transforming practices in the work place so that it suits employee needs better, is extremely crucial in ensuring employee satisfaction and commitment. Flexible work hours, telecommuting, compressed work weeks etc. are examples of flexible work arrangements. We would be concentrating on implementing flexible work hours at our work place. Flexible work hours also known as flextime is a work schedule that allows employees a certain degree of freedom with regard to the time that they want to work in the organization. Under a flexible work arrangement there is a core period of the day during which employees are expected to be in the office (for example 10 a.m. to 2 p.m.), while the rest of the working day is ‘flextime’. During ‘flextime’ employees can choose the time when they want to work with the primary objective of achieving a certain amount of total daily, weekly or monthly work hours expected by the employer. (Flextime) The most common flexible hours arrangement are flextime, compressed work weeks (which is basically something like having four 10-hour days or having 9 working days in a fortnight), part-time work and job sharing (a form of part time work having two people doing the same job but sharing the work, the hours and the salary) (Workplaces that Work) NTUC Income Insurance Cooperative Limited is one of the companies that have successfully implemented flexible work hours in their organization. 20 percent of their workforce is using this arrangement. Another example of a company successfully implementing flexible work hours is Abacus International Private Ltd. (Flexible Work Arrangements) Advantages and disadvantages of implementing flexible work hours Implementing flexible work hour schemes has a lot of benefits: -By choosing a suitable time slot employees can avoid commuting to work during rush hours thus enabling them to save and have a better control over time. -Employees benefit due to better work-life balance and this improves their morale and job satisfaction thereby improving their productivity. -Allows the employer to schedule work out of the conventional 9 to 5 period. -Employee turnover reduces -As the employees are allowed a certain degree of freedom it is less likely for them to leave the job. Such an arrangement allows the employers to keep their valued staff members who may have other commitments in life. -Continuity in work flow is not affected -Employers also may require smaller office spaces and lesser furniture and equipment because all employees are not present in the office at all time, thereby ensuring optimum utilization of resources. -Such a system reduces overload of work and allows people to work during the time when they feel they can accomplish the most (for example: a morning person can work during the day and a night person can work during the late evening). -Improves image of the employer and the organization and increases willingness to work. The employee turnover rate in NTUC Income has reduced by 6% over a period of 7 years from 1992 to 1999 after implementing flexible work hours. Abacus International reported reduction in employee turnover and higher job satisfaction after introducing flexible work hour schemes in 1998. The schemes did not affect deadlines and ensured better work-life balance. (Flexible Work Arrangements) There are few disadvantages of this system also: -The costs of having flexible working hours involve having the cost of administering the scheme. The cost of electricity will be higher when flexible working hours are implemented as the office premises. -It may not be suitable for those organizations where continuous cover for work is required. -It changes the way the management supervises employees. It is extremely important that the management supervises staff according to performance that is measurable. As they are not able to monitor employees when they are not at work, managers need to use different methods to judge their performance. -Team work and social interaction in the organization are affected. Telecommuting means working in different locations and this may affect teamwork. As it may affect the coordination of schedules among team mates. -There also may be resentment among those employees who are not chosen for telecommuting. Research model Now we will take a look at NTUC Income insurance implementing flexible work hours. NTUC Income insurance allows employees to choose their starting time and their finishing time. This enables them to choose a time slot so that they can meet their other commitments. Such arrangements help them to cater to their family needs and have better work life balance. NTUC Income has experienced improved employee motivation, lower employee turnover and they have also witnessed a reduction in sick leave, from approximately 4.7 days in 1998 to 4.2 days in 2001. The NTUC case illustrates the following: -Flexible work hours are offered to employees to enable them to manage work and family responsibilities effectively. -Flexible work hours work well when is trust and accountability from both the employers and the employees side. (Guidelines on Best Work Life Practices) NTUC Income conducted surveys to ask employees about their views on these arrangements. The result of these surveys showed that employees were happy with these schemes. And these schemes resulted in better employee morale and improved employee commitment. (Flexible Work Arrangements) Hypothesis for the research was that that implementing flexible working hours in the Key issues that need to be considered in the implementation One of the main issues that need to be considered is the supervision of such employees. Since the employees are allowed to choose the time that they want to work for, there need to be proper practices in place to monitor that the employees are working the required amount of hours. Another issue that needs to be considered is the communication between different employees. As the employees will be working at different times they will therefore meet less frequently thus communication between them is affected. A major issue that needs to be considered is achieving fairness for all staff and employees. Providing these benefits to only a few employees might cause resentment among the others resulting in problems in the organization. Another thing that needs to be looked into is having clear and effective HR policies to help keep track of the number of hours each employee has worked and to ensure that there is work happening in the organization at all times. For example there may be days when no one would be there in the office because people may have worked at some big event in the office the previous day. Also keeping track of the hours that employees have worked enables employers to judge the hourly rate for each employee and also helps to see if some jobs are too big for the employee and some are too small. It also helps to understand and reduce employee stress. Other issues that need to be considered are that is there enough labor at all times in the organization. The time, effort and resources required to implement these schemes also need to be considered. Another issue is maintaining a high level of contact between the employees and the management ensuring that there is proper communication and that the management is updated with what’s happening. Conclusion Flexible work hours have many benefits which outweigh its disadvantages. It improves employee morale and provides numerous benefits to employers also. Many companies have successfully implemented these schemes and have derived benefits from these schemes. In order to implement these schemes effectively the following steps need to be performed. -The scheme should first be implemented for a period of three to four months and then the impact must be assessed. -It should be made voluntary and should be implemented in the whole organization. -Setting up a team or a task force having representatives from all the parties that have a stake in this scheme i.e. people from human resource, management and employees would be helpful this would allow the company to assess individual needs so that difficulties can be anticipated. -After assessing the needs the next step is positioning it in the minds of the employees and to communicate the implementation of these schemes to the employees. -Convincing the employees about the benefits of these schemes addressing all relevant issues is the next step. -Evaluation of the scheme needs to be done and then necessary changes need to be made. -The staff needs to be informed of these changes and continued evaluation of the programme should be done. If these steps are performed then flexible work hours can easily be implemented in the organization. Bibliography Breaugh, J. A., Frye, N. K. (2008). Work–Family Conflict: The Importance of Family-Friendly Employment Practices and Family-Supportive supervisors. Journal of Business and Psychology, 345-353. Collins, M. (n.d.). Problems of Flexible Working Research and Theory in the New Economy. Retrieved from Cheshire Henbury: http://www.cheshirehenbury.com/ebew/virtulahtml/collins.html Flexible Work Arrangements. (n.d.). Retrieved from Ministry of Manpower: http://www.mom.gov.sg/Documents/employment-practices/flexible-work-arrangements-mom-mcds.pdf Flextime. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Flexible_working_hours Guidelines on Best Work Life Practices. (n.d.). Retrieved from Ministry of Manpower: http://www.mom.gov.sg/Documents/employment-practices/Guidelines/2672_GuidelinesonBestWLPractices.pdf Kossek, E., Michel, J. (n.d.). Flexible Work Schedules. In APA Handbook of Industrial and Organizational Psychology. Washington: American Psychological Association. sample memos. (n.d.). Retrieved from .docstoc: http://www.google.com.sg/imgres?imgurl=http://img.docstoccdn.com/thumb/orig/1969158.pngimgrefurl=http://www.docstoc.com/docs/1969158/sample-memosh=1650w=1275sz=135tbnid=wSI-6HhCUCLWqM:tbnh=102tbnw=79prev=/search%3Fq%3Dexamples%2Bof%2Bmemos%26tbm%3 Study Notes: People Manageme nt. (n.d.). Retrieved from tutor2u: http://www.tutor2u.net/business/people/workforce_flexible_hours.asp Successful Flexible Work Arrangements An Employers Guide. (n.d.). Retrieved from Ministry of Manpower Singapore: http://www.mom.gov.sg/Documents/employment-practices/Successful-Flexible-Work-Arrangements.pdf Workplaces that Work. (n.d.). Retrieved from HR Council for the Non-profit Sector: http://hrcouncil.ca/hr-toolkit/workplaces-flexible.cfm

Determinants of the Aggregate Inward FDI Flow to Pakistan

Determinants of the Aggregate Inward FDI Flow to Pakistan CHAPTER 1: INTRODUCTION Overview Globalization which gave birth to the concept of interdependence of countries and their economies has been defined as the process through which regional economies, societies, and cultures have become integrated with the assistance of global network of trade, communication and transportation. This allowed the investors to invest or transfer their capital where ever they wanted which introduced the concept of Foreign Direct Investment. Since the recent financial crisis in Asia and Latin America developing as well as newly industrialized countries have been advised to rely mainly on FDI for economic development and supplement national savings by capital inflows. Developing countries in particular are in need of investment for their development and the investment amount in majority of cases is greater than the capital internally available. Therefore, FDI has emerged as most important source of generating capital required for development of emerging countries. Currently Foreign Direct Inv estment has become one of the major sources of economic development, modernization, employment, income growth, capital generation and a channel for the transfer and access to advance technologies as well as organizational and managerial skills.Recognizing this fact, developing countries try their level best to attract as much as of FDI as they can. But attracting FDI is not that much simple, it requires huge efforts on the part of policy makers and government.Variety of factors is considered by an investor before making investment in a particular foreign country. Those were labeled as determinants of FDI, and may vary from country to country. Pakistan is currently facing a huge shortfall of capital to finance its major development projects and to run the government operations smoothly.The country requires capital to fulfill the growing needs in defense, infrastructure, education and variety of other aspects of serioussignificance to progress. Since 1990s there has been noteworthy increase in flow of capital investments to developing countries, which motivateddiscussions in literature concerning determinants of such investment flows.This trend was result of liberal trade policies, variations in economics related fundamentals of emergent countries, development of capital markets and transformations in economic conditions around the globe.This research paper tries to investigate the role of economic fundamentals in driving investment flows.Past research on the economic fundamentals as determinants of foreign direct investment divided economic fundamentals into two broad categories of pull factors and push factors. Push factors were considered as those economic fundamentals that relateto industrial or developed countries and motivate capital flows,in contrast pull factors consist of economic fundamentals of recipient countries that attract capital flows.One of the major push factors as cited in the past research was hold back of the economies of the developed countries (Calvo, 1992; Fernandez-Arias, 1996; Haque, 1997; Montiel and Reinhart, 1999).Pull factors consist of Supply of money and local productivity of the recipient country (Calvoet al., 1992; Lensink and White, 1998). Calvoet al. (1992)argued that push factors contribute more than pull factors ingrowth of capital transfer.Vita and Kyaw (2008) suggested that variations in domestic yield and productivity of the foreign country were main determinants of portfolio and FDI flows.Dunning (1993) by combining previous research on the determinants of FDI came up with à ¢Ã¢â€š ¬Ã…“OLIà ¢Ã¢â€š ¬? model that stated global manufacturing as function of ownership, localization and internationalization.Variety of theories have been developed regarding the determinants of FDI such as industrial organization theory, the pure trade theory, classical theory relating international investment flows, and locational factor theories.Classical theory relating the in ternational investment flow states that when return on investment crossways countries under autarchy change the investments will shift from lower to higher return providing country. Therefore, this theory assumes foreign direct investment as function of dissimilarity of return on investment.Wilhborg (1978)argued that volatility in the exchange rate would decrease the amount of portfolio investment and that had also been valid for FDI(Black, 1977). According to Kohlhagen (1977) the firms that expect devaluation in the currency of foreign country would defer its investment till the time when exporting becomes profitable. Study also concluded that the higher the exchange rate, the lower the amount of FDI because this phenomena would make exporting relatively less profitable. 1.2 Problem statement To identify the best determinants of the aggregate inward FDI flow to Pakistan. 1.3 Hypothesis This particular research primarily focused on testing the following hypothesis: H1: GDP has positive impact on FDI. H2: Infrastructure expenditure has positive impact on FDI. H3: Taxes has negative impact on FDI. H4: Inflation has negative impact on FDI. H5: GDP per capita growth has positive impact on FDI. H6: Exchange rate has positive impact on FDI. H7: Interest rate has negative impact on FDI. 1.4 Outline of the Study The first chapter of the research focuses on giving basic view of the research and provides information on the overview, issues, purpose and basic theories on the determinants of FDI. In the chapter existing work done by various researchers and past empirical studies have been discussed. The third chapter provides details regarding practical carrying out of the research and describes data collection and analysis procedures. Finally, the last chapter gives details regarding the results of the research. 1.5 Definitions All the chosenfor predicting FDI were variables that had been used in prior researchand theories relatingFDI. 1.5.1 Net Foreign Direct Investment (FDI) The net amount of foreign direct investment received by Pakistan measured in current US dollars. 1.5.2 Inflation (I) The variable represents annual change (%) in the commodities that fall in the category of CPI. 1.5.3 Interest rate (IR) The variable represents the annual rateof interest (%) offered by banks operating in Pakistan on the deposits by customers. 1.5.4 Exchange rate (ER) Measured as the rateof converting 1 US $ into Pakistani rupees (1 US $ = Rs.). 1.5.5 Infrastructure expenditure (IE) Represents the annual amount spent by government on Pakistan on the development of infrastructure in the country. The variable is measured by annual amount of Public Sector Development Program (PSDP) fund and unit of measurement was rupees in million. 1.5.6 Taxes (T) The variable represents the annual rate of tax (%) applicable on the profits of corporate companies operating in Pakistan. 1.5.7 Gross domestic product (GDP) Represents the total value of goods and services (at factor cost) produced in Pakistan measured in Rs. Million. 1.5.8 GDP per capita growth rate (GDPG) The variable represents the annual rate of growth (%) in the gross domestic product per capita, of Pakistan. CHAPTER 2: LITERATURE REVIEW A lot of research has already been conducted in the field of identifying the best determinants of Foreign Direct Investment by various researchers. Most of the research work conducted implies that the determinants of Foreign Direct Investment vary from country to country and from location to location. The purpose of this research is to find out the impact of Labor cost (Wage), Inflation (I),Interest rate (IR), Exchange rate (ER), Infrastructure expenditure (IE), Taxes (T), GDP and GDP per capita growth (GDPG) on Foreign Direct Investment (FDI) inflow in Pakistan. The study hypothesizes positive relationship between GDP, GDP per capita growth, Infrastructure expenditure and Exchange rate with FDI whereas Wage, inflation, Taxes and Interest rate relate negatively with FDI. Pursuing the same objectives Kok and Ersoy (2009) conducted study that made attempt to investigatethe best determinants of FDI in developing countries. Study hypothesized and concluded that GDP, inflation, Trade, GDP per capita growth,Gross fixed capital formation and communication (telephone) are positively related with FDI whereas inflation and total debt/ GDP had negative relationship. Barrel and Pain (1996) in their empirical studies found that FDI and both the acceleration and level of GNP were positively related. In addition unit labor cost and relative capital cost also had positive relationship with outward direct investment. Research suggested that in short run funds availability affects investment timing. Research of Barrel and Pain et al.related to this particular thesis because it tried to identify probable impact of factor prices and demand across countries, as well as exchange rate expectations in determining the total level of foreign direct investment (FDI) by United States companies. According to Janeba (2002) investment costs and government credibility has significant impact on the level of inward foreign direct investment, suggesting that MNCs would prefer to invest in politically stable countries. The research also concluded that when any politically unstable country has cost advantage over other countries MNC will invest efficient amount in that particular country and will hold excess capacity elsewhere. According to the conventional wisdom lack of commitment from the government discouraged foreign direct investment in emerging countries.The research work done by Harvey (1990) focused on the macroeconomic determinants of FDI in addition to variables relating to different industry groups and tried to identify the impact of these variables on the inward FDI flow of the recipient country. Research suggested that Exchange rate and Sales had significant impact on the foreign direct investment, whereas taxes did not have any significant role in e xplaining foreign direct investment. Following bit different framework research conducted by Rolfe, Ricks, Pointer and McCarthy (1993) made an attempt to check investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment decision on the basis of various investment incentives provided by countries in the Caribbean region. The study demonstrated that all inducements do not evenly plea to all investors. The investment characteristics would determine which incentives firm manager will prefer. According to the study incentives chosen by firms exporting their productsvary from those firms that sale product in local markets, companiesopening operations in a new state had different inducement preferences than firms involved in growing or purchasingprevailing operations, incentive choicesoccasionally differ by state of investment, incentives varyreliant upon the products made, large financiersselect different motivations than those preferred by smaller companies and incentive inclinations can fluctuate on yearly basis. In short the research concluded that incentive preferences can be represented as a function of the investment type, countries involved, the market positioning of the investing companies, type of products produced by the investing company, amount of the capital invested, and investment time. Terpstra and Yu (1988) tried to examine the impact of firm-specific advantages and locational factors on the foreign investment made by advertising agencies of U.S. Study focused ondetermining role of market size of recipient country, geographic nearness of recipient country, size of the investing firm, experience of investing firm in international operations, oligopolistic response and existence of homemade country clientelesoverseason FDI. The research depicted that U.S. advertising agencies prefer to invest in those foreign countries having large market size, did not discriminated countries on the basis of their geographic location, inclined to enter foreign market with bigger firm size, tended international expansion with increasing understanding of international operations, reacted oligopolistically while making foreign investment and followed client firms belonging to home country while going abroad. Additionally research found that oligopolistic reaction had stronger impact in 1984 compared to 1972, intensity of competition had significant impact on oligopolistic reaction and top agencies witnessed stronger impact of oligopolistic reaction. Another study tried to examine determinants of FDI by using macroeconomic variables but more emphasis was given to various ratios relating to capital and labor, it also used à ¢Ã¢â€š ¬Ã…“The Heckscher-Ohlin Theoryà ¢Ã¢â€š ¬? which stated that a country exports those commodities that intensively use the countrys relatively abundant factors and imports those goods using its scarce factors intensively. Results indicated that countries like U.S. imported goods whose production required higher capital to labor ratio than the goods exported and when the endowment ratio of capital/labor increased the ratio of capital for each worker in import-competing production to capital for each worker in export production declined.Gopinath and Echeverria (2004) studied the association between foreign investment (FDI) and trade in mutualframework, that is, source or investing countrys exports and foreign investment toinvestment recipient country wereexaminedthrough gravity-model methodology. Results suggested that physical distance had negative impact on trade-FDI ratio, this caused nations to switch from export to FDI based manufacturing. Research also found GDP per capita to affect trade-FDI ratio positively and institutional quality strongly encouraged FDI, additionally FDI was also encouraged by regional trading agreements. The empirical study conducted by Goldberg and Kolstad (1995) stated that exchange rate instability contributed to production internationalization without depressing economic activity in the home country. Furthermore, exchange rate instability motivated the portion of investment activity situatedin foreign state. Research also suggested that exchange rate instability did not have statistically dissimilar effects on capital investment shares when distinguished between varieties of periods where real or financialvariations dictated exchange rate movement.Yin (1999) made an attempt to study the impact of tax inducements on the arrangement of a localbusinesswith respect to price, productivity, revenue, and entrance/exit, by taking into consideration technology relocation through FDI. The study concluded that if thehost countryà ¢Ã¢â€š ¬Ã¢â€ž ¢sà ¢Ã¢â€š ¬Ã¢â€ž ¢ government providedhigher tax relief to foreign companies, this will result in rise in total yield and decrease price index whi ch will encourage more foreign businesses to move in the industry while certain present host businesses will need to departure. Research also suggested that government should be cautious in decreasing rate of taxes to attract FDI. Vita and Kyaw (2008) used empirically controllable structural VAR model for identifyingdetermining factors of investment flows and variance decomposition and impulse response analyses to examine the time-based dynamic effects of variations in both pull andpushmotivators on FDI and portfolio investments. Study suggested that variation in real variables representing economic activity for example domestic productivity and foreign output possess more power in explaining variability in investment flows to developing nations. This research developed structural VAR model to test relative importance of the determinants of disaggregated investment flows to developing countries. The study investigated the degree to which deviations in FDI and portfolio investmentswere caused by variety of pull andpush factors throughvariousperiod horizons. Studying the impact of FDI on variousfacets of local economies, containingglobal trade, employment, gross fixed capital formation, output, balance of payments(BoP) and overall welfareHejazi and Pauly (2003) found that FDI was encouraged by market access and factor price differences, and on the role of intra-firm trade. According to the research prediction of whether growth in outward FDI will increase or decrease domestic GFCF is not possible. Therefore, comparisons of such growth relative to growth in inward FDI can be a misleading indicator for policy makers. Since the impact of FDI on domestic GFCF depends on the underlying motivation for investment, and not simply on the growth in outward relative to inward FDI, the results are of interest to all countries. The implication of results stated that quickprogress in outward foreign direct investment, comparative to inward progress, should not be taken as a negative growth, butmightbe source of success. Chen (1996) suggested that capacity of the market share to expand affected inward flow ofFDI but labor cost (WAGE) does not affect FDI. Similarly foreign investing companies had utilized the natural and energy resources of Western regiondespite of low allocative efficiency in this area.Interregionalrailwaynetworksweresignificant in location preference of foreign investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢. Besides that, foreign investors were reluctant in locating near state-of-the-artlocal Chinese businesses in the eastern as well as middle provinces. These results were significant because the choice of FDI location appeared to have been motivated by the presence of good transportconnections, high-tech filtering and, to some level by the capacity of the market share to expand. The choice of FDI location did not appear to have been persuaded by taking into accountlabor cost variances. According to the neoclassical model of growth, growth rate of labor as well as technological developmentwere considered as exogenous and inward Foreign Direct Investment (FDI) will lead to increase in the investment rate and which will ultimately lead to increase in the growth of per capita income but the growth effect will not last in the long run (Hsiao and Hsiao, 2006). Papanek (1973) indicatedstatistically significant negative effect of varioussorts of investment on domestic savings. Grounded on a sample of 85emerging countries, researchconcluded that foreign investment displaced national savings. Precisely, the research exhibited all types of foreign investment either in shape of aid or individual investment compressed the domestic savings. As a result the economy of the FDI recipient country went into state ofhigher dependency on foreign investment for development. The empirical studies of Cushman (1985) based U.S. bilateral FDI outflow and inflow data concluded that exchange rate variability had positive relation with set of flows.Connor (1983) conducted research which focused on inward as well as outward flow of FDI. The study divided country specific advantages into three categories FDI Probability, FDI Propensity and FDI Penetration and their impact on FDI.Larudeeand Koechlin (1999) research focused on the wages or labor costs and productivity in terms of production costs as the determinants of FDI. This research usedsweatshop labor argument that relied indirectly on assumption of simplistic trade model that assumed all of the national firms to have access to similar technology. But in contrary MNE and abundant theory acquire higher labor efficiency due to the firm related advantages MNE possess. Thediscrepancy between investing and recipient country in average manufacturing wage should therefore be an independent determinant of FDI flows. CHAPTER 3: PROPOSED METHODOLOGY 3.1 Method of Data Collection The secondary data necessarily required to perform the research was gathered from the official sites of The World Bank and The State Bank of Pakistan. Additionally, some of the required data was abstracted from the book Statistical Supplement and Yearly Book both being published under the supervision of State Bank of Pakistan. 3.2 Sample Size The data used for the purpose of research consisted of 30 years annual data of the variables used in research. Data of all the variables belonged to period starting from fiscal year 1980 to fiscal year 2010. 3.4 Research Model developed In order to test the hypothesis of the research multiple regression model was developed. The model established is similar to the research model used by Kyrkilis and Pantelidis (2003). FDI= ÃŽÂ ± + ÃŽÂ ²0GDP + ÃŽÂ ²1GDPG à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²2Wage- ÃŽÂ ²3I + ÃŽÂ ²4ER + ÃŽÂ ²5IE à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²6T à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²7IR +  µ Where FDI = Net amount of Foreign Direct Investment received by Pakistan Wage = Annual wages paid to a worker (Labor cost) I = Inflation,IR = Interest rate, ER = Exchange rate, IE = Infrastructure expenditure,T = Taxes, GDP = Gross domestic product,GDPG = GDP per capita growth rate. 3.3 Statistical Technique In order to test the hypothesis developed of the research the statistical technique of multiple regressionanalysis was applied. This technique was applied because both the dependent variable and independent variables were scale and under this situation the prediction power of regression analysis is stronger as compared with the other statistical techniques available. CHAPTER 4: RESULTS 4.1 Findings and Interpretation of the results The results drawn by applying Multiple Regression analysis were as follows: Table: 4.1 Model Summary Model R R Square Adjusted R Square Std.Errorof the Estimate Durbin-Watson 1 .998a .996 .995 6.65146E17 2.744 The model summary table explains what amount of variance in the dependent variable is explained by the independent variables. The value of R-square is .996 which means that approximately 99.6 % of the variance of SQFDI is accounted for by the model and only .04 % of the variance remains unexplained. Independent variables were square of Infrastructure Expenditure (PSDP Fund), Interest Rate (IR), Inflation (I) and Exchange Rate (ER) and the dependent variablewas Square of Net Foreign Direct Investment (SQFDI). Table: 4.2 ANOVA Model Sum of Squares df Mean Square F Sig. 1 Regression 2.524E39 4 6.310E38 1426.142 .000a Residual 1.106E37 25 4.424E35 Total 2.535E39 29 The Anova table explains the model fit, sig. value of .000 suggests F-test to be significant, and therefore the model is statistically significant. When the sig. value in the Anova table is less than .05 the model fit is good and regression can be applied on the data. Table: 4.3 Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics B Std. Error Beta Tolerance VIF 1 (Constant) -9.595E17 7.703E17 -1.246 .224 Inflation -8.806E16 3.960E16 -.037 -2.224 .035 .640 1.562 Interest Rate 2.047E17 6.261E16 .045 3.270 .003 .920 1.086 Exchange rate -5.646E16 9.021E15 -.125 -6.259 .000 .440 2.273 IE 1.654E8 3349513.619 1.094 49.392 .000 .356 2.809 The co-efficients table shows the significance of individual independent variable in explaining the dependent variable. In the final model square of Infrastructure Expenditure (PSDP Fund), Interest Rate (IR), Inflation (I) and Exchange Rate (ER) were the statistically significant variables.The effect of Inflation (Standardized B= -.037, P =.035) is statistically significant havingnegative coefficientdemonstrating that largerthe value of inflation rate, the lower the Foreign Direct Investment. The value of beta indicates that 1 unit increase in inflation will decrease FDI by .037units. Similarly, the effect of Interest Rate (Standardized B= .045, P =.003) is significant and its coefficient is positive indicating that the greater the value of interest rate, the higher the amount of FDI received. The value of beta indicates that 1 unit increase in interest rate will increase FDI by .045units. Next, the effect of Exchange Rate (Standardized B= -.125, P =.000) is statistically significant havingnegative coefficientdemonstrating that larger the value of exchange rate, the lower the amount of FDI. The value of beta indicates that 1 unit increase in exchange rate will decrease FDI by .125units. Finally, the effect of Infrastructure Expenditure (Standardized B= 1.094, P =.000) is also statisticallysignificant having positive coefficient indicating that the greater the amount spent by government as infrastructure expenditure, the higher the amount of FDIreceived. The value of beta indicates that 1 unit increase in amount of infrastructure expenditure will lead to an increase of 1.094 units in FDI. Empirical Model Developed FDI = 1.094 InfrastructureExpenditure + .045 Interest Rate .125 Exchange Rate .037 Inflation 4.2 Hypothesis Assessment Summary Hypothesis ÃŽÂ ² Sig. E.C H1: GDP has positive impact on FDI .089 .560 Reject H2: Infrastructure expenditure has positive impact on FDI 1.094 .000 Accept H3: Taxes has negative impact on FDI Reject H4: Inflation has negative impact on FDI -.037 .035 Accept H5:GDP per capita growth has positive impact on FDI .001 .962 Reject H6: Exchange rate has positive impact on FDI -.125 .000 Reject H7: Interest rate has negative impact on FDI .045 .003 Reject CHAPTER 5: DISCUSSION, CONCLUSION, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion Foreign direct invest being the most important factor in the development of developing countries likewise Pakistan. From recent years there has been great fight going on among LDCà ¢Ã¢â€š ¬Ã¢â€ž ¢s from all over the world to attract higher amount of FDI to fuel their economic growth. This research was intended to find out the impact of macroeconomic variables including GDP, GDP per capita growth rate, Interest rate, Inflation rate, Wage rate, Exchange rate, Tax rate and Infrastructure expenditure (PSDP fund) on the inflow of Foreign Direct Investment in Pakistan.The relationship between labor cost (Wage) and FDI could not be established because insufficient data was available on the annual wage rate in the country. GDP, GDP per capita growth rate and Tax rate were statistically insignificant in contributing in the final model.The most significant variables in the model were Inflation rate and Exchange rate; both had negative relation with FDI inflow having beta of -8.806 and-5.646 r espectively.Interest rate and Infrastructure expenditure (PSDP fund) were positively related with FDI inflow having beta of 2.047 and 1.654 respectively. 5.2 Discussion Accordingto results derived from the research inflation had negative impact on FDI as found by (Kok and Erosy, 2003). Contradictory to the studies of Kok and Erosyet al. andAsiedu (2002) that found positive impact of GDP per capita growth rate on inward flow of FDI but in case of Pakistan GDP per capita growth rate proved insignificant.Results regarding the impact ofinfrastructure on FDI were similar to those established by Asiedu (2002)but the impact of tax rate was conflicting. The results regarding the impact of exchange rate on FDI were consistent with those found by (Cushman,1985).Terpstra and Yu (1988) and Weinstein (1977) found positiveimpact of GDP on FDI but according to the results of this study GDP was statistically insignificant in explaining variation in FDI.Finally, the results regarding the impact of interest rate on FDI were consistent with those found by (Fernandez-Arias, 1996). 5.3 Implications and Recommendations Pakistan belongs to category of countries those currently face huge deficit of resources to finance its major growth projects and to manage the government operations smoothly.This research paper made attempt to explore those factors that in particular have direct impact on the inward FDI flow of the country.Results of the research show that exchange rate and inflation were negatively related with FDI and had statistically significant impact on the FDI received by the country. Therefore, the government of Pakistan should try to control the rate of inflation and fluctuations in the exchange rate and keep it at minimum possible level inorder to assist the increase in inflow flow of FDI.Similarly, infrastructure expenditure and interest rate were found to be positively related with inflow of FDI, keeping this in mind government should increase its spending on the development of infrastructure within the country. Following these strategies the government would be able to attract higher am ount of FDI. 5.4 Future Research Generally speaking determinants of foreign direct investment could consist of variety of factors other than some macroeconomic variables discussed in this particular research paper. The most common of those that previously have been studied were political factors including political stability, level of corruption, structure of the industry, market openness and variety of other factors impact the foreign direct investment received by any specific country. But talking in the Asian scenario cheap labor has been one of the major determinants of the inward FDI flow but unfortunately data regarding labor cost (wage) could not be collected and the impact of labor cost on FDI in case of Pakistan remained unidentified. Therefore, great deal of research could be done in order to identify those variables that have an impact on FDI.

The Spanish Inquistition Essay -- essays research papers fc

Ferdinand and Isabella used the Inquisition to eliminate opposition in Spain. Their thoughts were that by eliminating the Jews, Muslims, and New Christians in Spain they would gain unity, wealth, and power. They wanted to make a Christian and only a Christian Spain.   Ã‚  Ã‚  Ã‚  Ã‚  Since Ferdinand and Isabella were married they strived to make Spain a whole. With Ferdinand ruling Aragon and Isabella ruling Castile they united Spain as one. Soon Ferdinand and Isabella had the regions of Granada and Portugal as part of Spain. But Ferdinand and Isabella wanted to increase their authority over their kingdom through religion as well. Ferdinand new that the church controlled large amounts of land and also served significant roles in the political system, he took these very important things into major consideration. Isabella on the other hand, â€Å"†¦had a genuine concern for religious reform and believed in their responsibility for the spiritual life of their subjects and people.†(Ovid 3). Ferdinand and Isabella didn’t think of using the Inquisition to purify Spain until a priest named Tomas de Torquemada brought it to their attention. Torquemada was Isabella’s confessor or spiritual leader. Torquemada convinced Ferdinan d and Isabella that once the Inquisition was in place they could eliminate all non-Catholic believers. He bribed them with the thought that they,â€Å"†¦could use it to solidify the supremacy of Catholicism in Spanish life†¦the inquisition would promise them con...

Case Study of Jetblue Ipo

Initial Public Offering is the first sale of stock by a private company to the public. The private company as an issuer entrusts an underwriter firm or a group of firms who help the issuer going public. IPOs are such a big deal because any investors who hold stock at initial offering price would make a significant capital gain when the company goes public. Numerous cases of new issues have proved that investors rise in value. Mr. Schwartz (1999) listed some advantages of going public in his article.For instance, going public could be easy for the company to access to capital market to raise capital via equity, debt or convertible securities. This also increases the liquidity of the company. Moreover, employees could be more motivated if company made some employee benefit policy based on stocks. At last, going public could increase company’s goodwill. Thus it would bring more business. In the case of â€Å"Jetblue airways IPO valuation†, the motivations of JetBlueâ€℠¢s management board also prove the advantages listed.Based on some analysis of the case, three clear disadvantages reflect going public does not seem such fine. Firstly, the initial and ongoing expenses of going public are costly and multifarious. For example, before going public, some prerequisites should be fulfilled, and those prerequisites are complicated and costly. After going public, the company is not a private company and has obligations to disclosure annually or seasonally audited reports to public. Secondly, the management would over focus on their share price, not operations.To avoid declining share price is their primary objective, so they may forgo some business plan that can bring long term benefits but cause share price decreasing in a short time. Thirdly, going public via IPO is unreasonably difficult, so it may experience a long time. During this period, the company may lose some other opportunities. To conclude, going public is a crucial decision for a company. So Jetblue also is concerned with it because there are some negative influences on its industry.Jetblue faced challenges after the terrorist attacks of September 2011. So it was not a good time to go public, but Jetblue still could make profits and grow aggressively. Going public could be considered. Meanwhile, there were fewer competitors in the IPO market. This factor could contribute to success of JetBlue’s issues. The valuation is very important for issuing securities. Too much overpricing may reduce investors’ enthusiasm. Too much underpricing may leave more ‘free money’ and damage the interests of the company. There are three main methods o price the stock price—free cash flow to equity method, free cash flow to firm method and relative valuation techniques. 1. FCFE FCFE method is not suitable for start-up companies or companies with an unstable capital structure. So in this case, FCFE method will be forgone. 2. FCFF FCFF is preferable for a com pany with a history of leverage changes, as its growth rate will be more stable than FCFE growth rate, which means FCFF is useful for startup companies without a stable capital structure. While valuating IPO, there are some key assumptions: terminal growth rate is 4. %; after 2010, the FCFF will constantly grow at a speed of 4. 5%. So the terminal value is 4,819. 24million. Here we can set the WACC (9. 21%) as the discount rate to calculate NPV. Share price is estimated around $30. To conclude, all the calculations are based on the Exhibit 13. The forecast in the exhibit 13 is reasonable because all assumptions are based on reality. The aircraft has limited seats, so the output per aircraft is unchangeable. The only way to increase revenue is to increase the ticket price. So the growth rate is the inflation rate is reasonable.Moreover, the length of forecast period is also reasonable. From 2009, the value of FCFF turns to be positive. 3. Relative valuation techniques. Relative valua tion is used to complement DCF analysis. The key steps are to identify similar or comparable investments and recent market prices for each and to estimate the initial value of asset. The method of comparable involves using a price multiple to evaluate whether an asset is relatively fairly valued, relatively undervalued, or relatively overvalued in relation to a benchmark value of the multiple.For this case of JetBlue, P/E multiple and EBIT multiple can be used as benchmarks to estimate the share price of JetBlue. P/E Multiple: In the Exhibit 3, net income in 2001 equaled to $38,537,000. So share price is $38,537,000*29. 12/40,600,000=$27. 6 EBIT Multiple: Business valuation= profits * EBIT multiple=38,537,000*20. 71=798,101,270 So share price= business valuation/ shares=$20 In summary, after those two valuations of the JetBlue’s IPO, we can recommend that the current price level ($26) is in a reasonable range.

Definition and Examples of Semantic Satiation

Definition and Examples of Semantic Satiation Definition Semantic satiation is a phenomenon whereby the uninterrupted repetition of a word eventually leads to a sense that the word has lost its meaning. This effect is also known as  semantic saturation or verbal satiation. The concept of semantic satiation was described by E. Severance and M.F. Washburn in The American Journal of Psychology in 1907. The term was introduced by psychologists Leon James and Wallace E. Lambert in the article Semantic Satiation Among Bilinguals in the Journal of Experimental Psychology (1961). For most people, the way theyve experience semantic satiation is in a playful context: deliberately repeating a single word over and over again just to get to that sensation when  it stops feeling like an actual word. However, this phenomenon can appear in more subtle ways. For instance, writing teachers will often insist that students use repeated words with care, not just because it demonstrates a better vocabulary  and a more eloquent style,  but to avoid the loss of significance. Overuse of strong words, such as words with intense connotations or profanity, can also fall victim to semantic satiation and lose their intensity.   See Examples and Observations below. For related concepts, also see: BleachingEpimoneGrammatical Oddities That You Probably Never Heard About in SchoolPronunciationSemantics Examples and Observations I began to indulge in the wildest fancies as I lay there in the dark, such as that there was no such town, and even that there was no such state as New Jersey. I fell to repeating the word Jersey over and over again, until it became idiotic and meaningless. If you have ever lain awake at night and repeated one word over and over, thousands and millions and hundreds of thousands of millions of times, you know the disturbing mental state you can get into.(James Thurber, My Life and Hard Times, 1933)Have you ever tried the experiment of saying some plain word, such as dog, thirty times? By the thirtieth time it has become a word like snark or pobble. It does not become tame, it becomes wild, by repetition.(G.K. Chesterton, The Telegraph Poles. Alarms and Discursions, 1910)A Closed LoopIf we pronounce a word over and over again, rapidly and without pause, then the word is felt to lose meaning. Take any word, say, CHIMNEY. Say it repeatedly and in rapid succession. Within some seconds, th e word loses meaning. This loss is referred to as semantic satiation. What seems to happen is that the word forms a kind of closed loop with itself. One utterance leads into a second utterance of the same word, this leads into a third, and so on. . . . [A]fter repeated pronunciation, this meaningful continuation of the word is blocked since, now, the word leads only to its own recurrence.(I.M.L. Hunter, Memory, rev. ed. Penguin, 1964) The MetaphorSemantic satiation is a metaphor of sorts, of course, as if neurons are little creatures to be filled up with the word until their little bellies are full, they are sated and want no more. Even single neurons habituate; that is, they stop firing to a repetitive pattern of stimulation. But semantic satiation affects our conscious experience, not just individual neurons.(Bernard J. Baars, In the Theater of Consciousness: The Workspace of the Mind. Oxford University Press, 1997)Disconnection of Signifier and Signified- If you stare continuously at a word (alternatively, listen to it over and over), the signifier and signified eventually appear to fall apart. The aim of the exercise is not to alter vision or hearing but to disrupt the internal organization of the sign. . . . You continue to see the letters but they no longer make the word; it, as such, has vanished. The phenomenon is called semantic satiation (first identified by Severance Washburn 1907), or loss of the sign ified concept from the signifier (visual or acoustic).(David McNeill, Gesture and Thought. University of Chicago Press, 2005)- [B]y saying a word, even a significant one, over and over again . . . you will find that the word has been transformed into a meaningless sound, as repetition drains it of its symbolic value. Any male who has served in, let us say, the United States Army or spent time in a college dormitory has had this experience with what are called obscene words . . .. Words that you have been taught not to use and that normally evoke an embarrassed or disconcerted response, when used too often, are stripped of their power to shock, to embarrass, to call attention to a special frame of mind. They become only sounds, not symbols.(Neil Postman, Technopoly: The Surrender of Culture to Technology. Alfred A. Knopf, 1992) OrphanWhy has my fathers death left me feeling so alone, when he hasnt been a part of my life in seventeen years? Im an orphan. I repeat the word out loud, over and over again, listening to it bounce off the walls of my childhood bedroom until it makes no sense.Loneliness is the theme, and I play it like a symphony, in endless variations.(Jonathan Tropper, The Book of Joe. Random House, 2004)Boswell on the Effects of Intense Inquiry (1782)Words, the representations, or rather signs of ideas and notions in the human race, though habitual to all of us, are, when abstractly considered, exceedingly wonderful; in so much, that by endeavouring to think of them with a spirit of intense inquiry, I have been affected even with giddiness and a kind of stupor, the consequence of having ones faculties stretched in vain. I suppose this has been experienced by many of my readers, who in a fit of musing, have tried to trace the connection between a word of ordinary use and its meaning, repeating th e word over and over again, and still starting in a kind of foolish amazement, as if listening for information from some secret power in the mind itself.(James Boswell [The Hypochondriack], On Words. The London Magazine, or, Gentlemans Monthly Intelligencer, Volume 51, February 1782)