Excel Logistics Case Essay

Purpose To introduce participants to the supply chain concept and to the effects decisions along the chain have on inventory levels and costs. Introduction In this game the retailer sells cases of beer to a consumer and orders cases of beer from the wholesaler; the wholesaler sells cases of beer to the retailer and orders cases of beer from the distributor; and the distributor sells cases of beer to the wholesaler and orders beer from the factory (brewery). The factory brews the beer. The beer supply chain is shown below: Players of the game each take on a different role in the supply chain. The roles are the Factory, Distributor, Wholesaler and Retailer. Each position is directly linked, and beer cannot skip the adjacent position. For example, the Wholesaler orders beer from the Distributor, and ships beer to the Retailer. An important consideration in making decisions is the delay in the movement of beer through the supply chain. It takes three periods to move an order of beer between each player in the supply chain. If during period 3 the Wholesaler decides to ship 10 cases of beer to the Retailer, the beer would take periods 4 and 5 to move to the Retailer and then would be available for sale by the Retailer at the beginning of period 6. Similarly, orders are not visible to the upstream player for one period. For example, if the Wholesaler places an order in period 3, the order is received by the Distributor at the beginning of period 4. For each period of play, every participant follows the same cycle: 1. The system is updated by your instructor where new orders and shipments are received, shipments enroute are advanced, and inventory levels and backorder positions are calculated (these tasks are done automatically by the server program. 2. The player updates the status screen and reviews current position. 3. A shipping decision is made according to new orders and backlog, subject to inventory availability, 4. An ordering decision is made for more beer. There are only two costs involved in this simplified version of a logistics  supply chain: inventory holding cost ($1.00/case/period) and back order costs ($2.00/case/period). Each team has the goal of minimizing the sum of these costs by balancing the cost of having inventory (inventory holding cost) with the cost of being out of inventory when a customer orders beer (back order cost). The server program keeps track of the costs incurred by each team. At the end of the game, the total game cost for the distribution system is the sum of the four individual participants’ total costs (retailer cost + wholesaler cost + distributor cost + factory cost). The goal is to minimize team costs. Action The game begins with a fully-loaded â€Å"pipeline† of cases of beer: – 16 cases of inventory in each position’s â€Å"current inventory,† – 4 cases in each of the â€Å"production delay† pipeline, – 4 cases in each of the â€Å"shipping delay† pipeline, – each position has an initial order for 4 cases of beer. Definitions The following terms are used in the status report: Current Demand – This is the demand for the current period at this position. For the Retailer, this demand is determined by an external demand stream. For all other positions, this demand reflects an order placed by the downstream position in the supply chain during the previous period. Backorder – This is the demand that has not been met to date at this position. When a position does not meet demand by shipping cases of beer, the backorder amount is increased. This amount does not include the demand during the current period. Current Shipment – This is the amount that is being shipped to the downstream position during the current period. After the ordering and shipping decisions have been made, the â€Å"status† button can be used to update the status report. The status report will reflect the current order and shipment decisions. Remember that after the instructor has updated the system, the â€Å"statu s† button should be pressed again to receive a report that reflects the execution of the decisions for the previous period. On Hand – This is the current amount in inventory at the position. This is the total amount that can be shipped this period from this position. Due Next Period – This is the number of units that are scheduled to arrive at this position next period. Due In Two Periods – This is the number of units that are scheduled to arrive in two periods. Current Order Release – This is the number of units that are being ordered from the upstream position. The  upstream position will not see this order until after the system has been updated to the next period. Inventory Cost – This is the cumulative inventory cost for this position. This is calculated from the actual inventory balance at the end of each simulated period. During the update process, the system first ships material to the downstream position, updates the cumulative inventory and backorder costs based on the inventory and backorder levels, and then receives new material into the position. Backorder Cost – This is the cumulative backorder cost for the position. Tot al Cost – This is the total cumulative cost for the position.

Synopsis of Killer of Sheep

Stan, the family man as the protagonist of the story/film, is decent, hardworking, and enslaved by poverty.   He works in a sheep slaughterhouse.   His is a story of the 70’s that encapsulates what African-American life is all about in the Los Angeles ghetto of Watts.The whole tapestry of the lives of Stan’s family; his neighbors; his friends; his community was so vividly depicted in the film.   Various episodes transpired in his life in the story.   Some of Stan’s friends tempted him to participate in a murder; a white woman flirts with him; Stan and his friend buying a car engine, the consoling moments Stan spend with his wife and child.   The entire story is about perseverance, patience, desperation, abuse, hope, despair, pride in work, joy in austerity, and integrity even in poverty.Synopsis of Days of GloryFour men of Algerian nationality were the focus of the story about recruitment of North Africans to serve in the French Army to wage its campaig n against the Nazi across Europe during World War II.   Each of the four recruited soldiers has different reasons for joining the army.Amidst the war, their experiences became varied as they witnessed the atrocities of war; the discrimination; the savagery; the despair and the intolerances; the indignities.   The war made them confused and seeking justice for their rightful place for the courage, dedication and commitment they gave in service of France.The Comparative AnalysisKiller of Sheep is an American drama film of human element that was shot in black and white in 1977.   It runs for 81 minutes.   It was first presented as a feature film thesis by its Writer Director, Charles Burnett, for his Masters Degree in Fine Arts.   Inspite of the excellent reviews, the film originally shot in 16 mm was not able to be commercially released due to some music infringements that Burnett could not afford to cover.The film was finally restored and re-issued for full 35 mm screen in 2007, with the appropriate compensations for copyrights of the music used.   The film has got a very poetic treatment of the scenes; the drabness was intended to give realism to the feelings evoked by the story.Burnett was masterful with his shots and camera work, â€Å"He operated the 16-millimeter camera himself, edited the black-and-white images into a visual poem and added the ballads, the jazz and the moody blues that seep into your head like smoke. The result is an American masterpiece, independent to the bone.† (Dargis, 2007)Days of Glory is a French drama film, also of human element, shot in color in 2007.   The film runs for 120 minutes.   â€Å"With strong visuals and even stronger emotions, Rachid Bouchareb's â€Å"Days of Glory† makes a powerful war film about a particularly unique subject scenes of combat are well staged and shot†.   (Honeycutt, 2006).   The film was created as straightforwrd as it should be about the tales of the characte rs.   It exuded honest emotions and vivid narration of what the environment of war was.The portrayals adopted in the filmmaking is classical wherein there was no overplaying of the issues of the story.   Insuch manner, the message of the story stay as relevant in times that will come and go. The camera work on comat sequences are precise.   The scenes truly expressed the dramatic impact that the moral lesson of the film intended to portray.   The film was nominated to the Oscar’s Foreign Language Film Category in 2007.References:Dargis, M.   â€Å"Whereabouts in Watts? Where Poetry Meets Chaos†.20 Mar 2007.   The New York Times.http://www.movies.nytimes.com/2007/03/30/movies/30kill.htmlSchwarzbaum, L.   â€Å"Movie Review:   Killer of Sheep†.   Entertainment Weekly.   28 Mar 2007http://www.ew.com/ew/article/0,,20016243,00.htmlhttp://www.killerofsheep.comHoneycutt, K.   â€Å"BottomLine:   A Strong Film for SpecialtyVenues†.The Holl ywood Reporter.   26 May 2006http://www.hollywoodreporter.com/hr/film/reviews/article_display.jsp?&rid=295Turan, K. â€Å"Movie Review:   Days of Glory†.   Los Angeles Times.   6 Dec 2006http://www.calendarlive.com/movies/reviews/d-et- days6dec06,0,6442085.story?coll=d-mreview)Scott, A.O.   â€Å"Yes, Soldiers of France, In All But Name†.New York Times Review, 6 Dec 2006http://movies.nytimes.com/2006/12/06/movies/06glor.html?ref=movies)   

Event project management Assignment Example | Topics and Well Written Essays - 2000 words

Event project management - Assignment Example Operations going down in an event ought to be executed efficient and effective. According to (â€Å"Events Feasibility and Development†, 2011), event project management has to develop an excellent strategy that will ensure events do meet their objectives as stated. However, some objectives do contradict with the mission of an event this should not be the sole reason for an event failure. Models have been developed to assist event managers in the process of planning. Planning for an event go beyond the literary word and involves a series of activities ranging from been awarded permits by relevant authorities to the closure of an event. A well informed and experienced event manager should always be aware of the possibility of activities planned for an event failing, and therefore, proper fall-back plan should be in place to salvage the moment. It has been argued that all over the years that an event cannot be rated as successful either by a brilliant plan or execution but how th e event ends is what can be used to gauge (Burke, 2011). Adoption of models like events management body of knowledge (EMBOK) and Event Plan and Archive Review System (EPRAS) can assist in event planning. Both are useful tools for event to be successful, however, conflict arises on how one model prefers planning and execution ought to be done. Therefore, it would be wise to incorporate elements that are applicable to a planned event from the two models, so as to achieve objectives of the events. In every organization, it must be guided by values that are deemed to be controlling the flow of operations within the organization. The group is geared towards St. Patrick’s Day parade. It is in it preparation stage, putting all pieces together waiting for the event that will be going down in March. As a team, principles guiding the activities should be in place. For instance, the team should hold a couple of meetings to air and share new

Apply the Three-Step Writing Process to business communication Essay

Apply the Three-Step Writing Process to business communication. Establish brief and effective business communication routines - Essay Example Persuasive messages have also been used in this trade. They have been used to get different parties interested in the projects and dealings they are in. This paper will review the importance of persuasive messages in attaining the desired results. When projects are about to be started in any organization, it is the manager’s job to persuade others to follow. Without effective communication as to how the project will help them, it is almost impossible to have the task done (Stiff & Mongeau, 2003). This is where the manager or person in charge will employ the three step writing process. It will be used to write a persuasive message to the subordinates or other parties pertinent to the project. With the employment of this method of writing, the person in charge should be knowledgeable on how to reach the audience (Perloff, 2010). Trying to convince the managers at whole foods market about the new program will require a persuasive e-mail. This may be used to have them excited about helping with the expanding of the project. The following is an e-mail that will be addressed to the managers at the Whole Foods Markets trying to get them interested in the program developed to help the market reach to more people and also, be appreciated more. Hello, hope your days are filled with good tidings. The reason for writing this message is to find the best solution to the program we developed earlier. The program was about the donation of food to many more parts than the occasional parts usually reached. As seen earlier, the program has been much appreciated by all the people who have sampled some of your products. It will be of great importance if a far broader outreach was created to get to them on a more occasional basis. The project may help benefit this program more with all the places we may get to take your products. Some of your ideas are welcome to ensure that we come up with the best possible way to go about this project. We appeal to

Cause and effect essay Example | Topics and Well Written Essays - 750 words

Cause and effect - Essay Example As a result, ocean waves travels out from the epicenter of the earthquake which rushes landward to the shorelines where the water was recently lowered. The huge ocean wave that strikes the shorelines causes flooding, destruction and disease. Tsunamis cannot be prevented despite its destructive nature. The first effect of the huge ocean waves caused by the tsunami is excessive flooding. The flooding caused by tsunami will literally submerge everything on its path. Tsunamis cause flooding due to the sheer volume of water carried by its massive ocean waves. The ocean waves that go to the lowered shorelines are so huge that it could tower as tall as 1720 feet just like when it struck at Lituya Bay in Alaska in 1958. This huge amount of water brought by the tsunami immediately floods the nearby inlands where the waters were temporarily lowered and subsequently submerges everything on its path. The flooding could submerge an entire community depending on the size of the ocean waves that st ruck the shoreline. The stronger the ocean floor movement and the nearer the shoreline to the epicenter, the larger the ocean waves are causing excessive flooding. The second effect of a tsunami is the deadly push of the ocean wave that will destroy everything on its path. ... The massive waves that characterize tsunamis can be a â€Å"wave train† or a series of powerful waves that would race toward shorelines making its destructive nature exponential by the multiples of its waves (www. Geology.com). Its strength can literally wipe out a community on the shoreline that will strike. This includes human beings, animals, trees and even structures. A strong tsunami is so destructive that it can even damage structures that are designed to withstand strong waves. The third effect of tsunami is disease. After the water of the tsunami has ebbed, it will leave rotting bodies of living things it drowned and plenty of contaminated water that could potentially precipitate an epidemic in the affected area. The diseases that the tsunami aftermath will range from skin diseases to more lethal diseases such as malaria that could potentially make the entire community sick if the disease is not attended. Tsunamis are indeed very powerful forces of nature that is very destructive and frightening. Its aftermath can leave diseases to the community it affected that could potentially make everyone sick. Also, the amount of energy accumulated in the bottom of the ocean that drive the waves of tsunamis are so powerful it can destroy anything that stands on its path. The power of its waves is terrifying because it can kill people and other living things in multitudes. Not even strong structures can withstand the power of a tsunami because it can destroy such structures like as the case of Fukushima plant that was supposed to be protected by a tsunami wall. The huge waves and massive amount of water wrought by a tsunami could flood the communities near the shoreline of its epicenter that could

Should Trees Have Standing Essay Example | Topics and Well Written Essays - 1500 words

Should Trees Have Standing - Essay Example Taking trees for that matter, as they are living creatures with biological properties, the debate now arises whether or not they have legal or moral rights. In my view, trees do have a legal as well as a moral standing, and their due rights should be protected, however, if humans cut trees for sustenance and not for pleasure, such an act shouldn`t be challenged in any case, as giving the rights is one thing but sacrificing one`s own rights for the sake of nature is another. The presumption can be backed by the works of Stone and Schmitz, both being highly reputable professors of philosophy. Stone here regards that trees, like corporations, should be assigned their due rights. Though trees can`t speak for themselves, so can`t the corporations, thus by virtue of law, trees should be protected from abusive behavior. Similarly, Schmitz talks about social egalitarianism in this regard and argues that it is irrational to presume that all species have equal moral standing as that is to be j udged by the self respect principal, i.e. though killing trees without a reason is highly immoral but killing trees for self-survival is completely understandable and doesn’t challenge the ethics and morality for that matter. To defend the legal status of the trees, the propositions from the Stone`s works can be analyzed and studied. He gives the example of a stream which is often quoted in such instances as it gives the most relevant explanation for the legal rights which ought to be presumed by nature. He proposes three basic requirements for the plaintiffs to sue the violators of the stream. When a company sued the industry for polluting the stream, the legal standing was given for the protection on the stream because, firstly, there was a holder to sue the industry, secondly, there must be a competent someone to bear the standing, and thirdly, there must be someone benefitting from the economic compensations. In this regard, the common law would deny any kinds of rights f or the natural objects, even trees, on the grounds that trees can`t sue anyone themselves, nor can they reap the financial compensations, thus there is no point in giving them any kinds of rights (Stone and Hardin 2002). However, Stone argues that same is the case with corporations, i.e. corporations are also dead entities, not even living beings like trees, and however they do have a legal status. In this sense, similar to the corporations, whenever anyone would sue the violators destroying the trees, the benefits would still be reaped by the trees and not by the plaintiffs. Thus, trees in any case deserve a legal standing whatsoever, similar to that of humans, as if the corporations can have a standing, so can the trees. Speaking of the moral rights of the trees, the concept can be explained by the principal of social egalitarianism, which regards all species as equal to humans, thus being not inferior or superior in any case. The proponents of social egalitarianism argue that his torically when the races were being denied the moral rights, i.e. slaves, blacks etc being considered as inferior, thus once modernization eliminated the discrimination, shouldn’t the same be applied on nature too? The advocates of egalitarianism regard trees as having rights similar to that of humans, thus trees should have a high moral standing in the social spectrum, thus, and it would be

Picasso's Les Demoiselles DAvignon and de Kooning's Woman Essay

Picasso's Les Demoiselles DAvignon and de Kooning's Woman - Essay Example The title refers to the so-called Maisons D`Avignon, â€Å"the houses of pleasure in Avignon Street in Barcelona†. The painting nevertheless faced rejection from his close friends and family, because of its nakedness and carnality. This art was a good example of the African influence on modern European art. Many art historians have noticed the striking resemblance between certain African mask style and the mask-like faces of the five women. African art was used in this context, either as visual evidence for the spread of cultural traits from innovative centers, or as evidence for the social evolution of cultures; from groups which were capable of natural representation, to those which had presumably graduated to the mastery of geometric stylization and abstract forms.Picasso had found a source for a new, non-naturalistic way of representing the world and it blocks the real features of a woman. In this art, a woman is a significant symbol; Picasso represents her as a desecrated icon already torn into bits, and reveals more of rock foundation of sexiest anti-human and celebrates the control of a woman by man.Willem De Kooning was a painter and sculptor of Dutch birth. He was a leading figure in the abstract expression. His work is characterized by an â€Å"inherent stylelessness, resulting from the constant parallel exploration of divergent themes and techniques† (Marter 44). For two years, he worked on his art the woman 1 (1950-52, in New York), â€Å"an image which has become a totem and icon of the times†.

ADHD Essay Example | Topics and Well Written Essays - 1000 words

ADHD - Essay Example Conservative estimates indicate that AD/HD affects between three to seven percent of school age children, and between two to five percent of adults† (Freer, 2004). This is how one author defines the disorder and its prevalence; although there has been a more recent interest in adult ADD and AD/HD, the disorder is primarily associated in the media and in most existing articles with children and adolescents. This means that the disorder is also aligned with the educational system in this country. At the same time, there has been a federal concentration on outlining programs that are relatively sensitive and malleable and do not reflect federalization in dealing with the problems brought up by special situations of AD/HD. In terms of the symptoms that they show, generally the individual with AD/HD, â€Å"Fails to pay close attention to details or makes careless mistakes in schoolwork†¦ has difficulty sustaining attention, does not seem to listen when spoken to, does not follow through on instructions and fails to finish, has difficulty organizing tasks†¦ avoids or is reluctant to engage in tasks that require sustained mental effort, loses things†¦ easily distracted†¦ forgetful† (Dreher, 1998). These symptoms could be seen as simply shortcomings in attention span or irresponsibility, so in many cases the student or child is blamed for their condition, when it is really the brain chemistry that deserves the blame, not the individual. This is why teachers and parents need to give children with AD/HD more tools to overcome the symptoms: they often have trouble writing neatly, so teachers could advocate early use of word processors. â€Å"Children with ADHD are sometimes poor s pellers, so let them use a spell checker to edit their stories. Wherever possible, let kids use checklists - to assess key elements of their stories during the revision process, to determine whether theyve followed important steps† (Weaver, 1998). Symptoms of

Positive Relationships With Children Essay Example for Free

Positive Relationships With Children Essay Positive relationships with children and young people are important for the following reasons: When a child/young person feels comfortable and settled within their care setting they are more likely to engage and participate more with staff and other children within the group which creates a more relaxed atmosphere, it also makes the separation process easier for the parents/carers as well as the child /young person as it shows that the child/young person is emotionally secure, Building and maintaining positive relationships is also important as it contributes to the developmental needs of each individual child/young person personally, socially and emotionally which then enhances their language skills as they gain confidence talking to each other and staff. Positive relationships also enables us as practitioners to understand and respond to children/young people more effectively as we are able to recognise their emotions and expressions and also enables practitioners to plan more accurately as we know more of the interests and understand the developmental needs of the children/young people in our care. Making sure as a practitioner I keep to my word i.e. if a child/group have done a particular activity today, and I have told another group/child they may have a turn next session I must make sure that is what takes place as theses situations will affect the trust between myself and the children within the setting. Positive relationships are maintained by us practitioners, parents /carers being good role models, by showing courtesy and respect to each other at all times, remembering that we must show respect and courtesy to our younger as well as our elders, Always being fair and consistent, listening to what is being said without making judgement and making sure that any rules and boundaries set out are kept to and understanding when information is to be kept confidential, being able to identify and resolve disagreements /conflicts, help children and young people to understand the difference. Effective communication- the way in which we speak to an individual, according to age and developmental stage of the child/young person, being  aware of body language/hand gestures and facial expressions. Ensuring that children and young people are aware and understand their views and opinions are valued and considered. It is important that people involved in the care of children and young people build and maintain positive relationships with each other, as this can also have an enormous impact the development and wellbeing of the children and young people within their care spectrum, having a positive relationship with the child/young persons parent/carer can have positive effect on the child/young person, as this is the first step in getting to know and understand the initial needs and preferences, likes and dislikes and fears or concerns of each individual, also by including parent/carers in various sessions giving them the opportunity to contribute and get involved in planning and implementing of various activities it encourages people to engage in conversation where different views, ideas, and skills are learned. Also shared whilst showing the children/young people how to live in diverse community where we are all individuals who are able to work together regardless of background or upbringing. positive relationships between the various professionals working with children/young people whether it be colleagues, external agency/organisation or service, is important as it has a direct impact on the child/young person ongoing development, being able to share information between adults involving children/young people in different situations engaging in various activities, means that planning for the children/young people can be done more effectively as each professional involved may see a different way of contributing towards the development /wellbeing of the child/young person, they may also have the opportunity to identify any needs and interests different to those already established, the welfare of children/young people can be properly monitored while being assured that each child/young person is being given consistent care, any concerns or issues can be shared accurately and promptly when required following correct procedures and guidelines.

College Computerized Billing System Essay Example for Free

College Computerized Billing System Essay With the power of technology nowadays, people get interested with computers. They tried to indulge themselves on it to have a productive result in a more efficient and time saving process. It is highly valued in institutions like business enterprises, schools, hospitals, government and non government services. However, some of them are still using manual system. In this regard, we acknowledge the value of computerized system. As of today’s generation, there are already many college schools existing. One of which is IJMS College Department that serves tutorial type. It is located at Malvar, Santiago City and is owned by Dr. Imelda B. Brilliantes. IJMS started the operation of their college department on June 2004. Since the said industry is new, they still don’t have computerized system for reservation and billing which is very useful for business purposes. For thesis project, the researchers would like to propose a reservation and billing system to D’ Budgetel to help the management and have a synchronize flow in their transactions system. 1. 2 Statement of the Problem Hotel customers choose important considerations in choosing a place to stay like location, price/value and service. These are very important because these are the primary basis of a customer to be attracted in that business. Since the researchers found out that manual procedure are still used in processing their billing and reservation transactions, it greatly affects their customer’s need. This study aims to look for the following problems: 1. The School billing statement doesn’t provide specific or detailed information regarding on student’s payment or charges.

Why Investors Invest In Hedge Funds

Why Investors Invest In Hedge Funds Abstract Hedge funds have gained a lot of popularity in the last decade and are one of the fastest growing industries. The main aim of most hedge funds is to reduce volatility and risk. It also attempts to preserve capital and deliver positive returns under all market conditions. Not all hedge funds are same therefore it is important to know the difference between them. It differs in terms of its risks,  investment returns and volatility among the different hedge fund strategies. The strategies which are correlated to equity markets deliver consistent returns and have low risk while the ones that are not will be more volatile. Main objective of hedge funds is to provide consistency in its returns for investor, lower portfolio volatility and preserve their capital investments, which is the reason why investors such as pension funds, insurance companies, institutional investors and high net worth individuals and families invest in hedge funds. This thesis reviews various issues relating to the investment in hedge funds, which have become popular with high net-worth individuals and institutional investors, as well as discuss their empirical risk and return profiles. The concerns regarding the empirical measurements are highlighted, and meaningful analytical methods are proposed to provide greater risk transparency in performance reporting. It also discusses the development of the hedge fund industry in Asia. Asian hedge funds have grown vastly in past few years. It is said to have grown nearly six times as many funds while managing ten times are much in assets since 2000 according to Eurekahedge. The industry is estimated to consist over 1100 funds, and managing roughly $175 billion in assets. International managers are starting up their own Asia-focused funds too. Allocators are increasingly eyeing investment opportunities in Asia. Funds with a global mandate are increasing their allocation to Asia. The paper presents an overview of hedge funds, describing their development and characteristics. It also discussed the various issues related to the measurement of hedge fund performance, as well as examined alternative performance measures. This thesis ends with some remarks on the development of the hedge fund industry in Asia. 1. Introduction There has several definition of hedge funds throughout the history. There isnt one particular sentence that defines what hedge funds really means. However, according to Chicago Board Options Exchange (No Date), hedge funds can be defined as: A conservative strategy used to limit investment loss by effecting a transaction that offsets an existing position. Alfred Winslow Jones was the first person to create hedge fund structure more than 50 years ago. The fund established had following feature: He created hedges by investing in securities that was said to be undervalued and funded these positions by taking short positions in overvalued securities hence creating market-neutral position. He designed an incentive fee compensation arrangement for fund mangers. They were paid a percentage of profit from the clients capital assets; and He so invested his own investment capital in the fund, to make sure that his capital and that of his investors were coordinated and in line so that it is not just an individual investment but a partnership Almost all modern hedge funds have above listed features in them, and are set up as limited partnerships with a lucrative incentive-fee structure. In most hedge funds, managers also have a significant portion of their own capital invested in the partnerships. The term hedge fund has been generalized to describe investment strategies that range from the original market-neutral style of Jones to many other strategies and opportunistic situations, including global/macro investing. There is a large variety of hedge fund investing strategies present today and therefore no standard way to classify hedge funds separately. Many data vendors and fund advisors set up their own major hedge fund styles according to their popularity. Under the classification by Credit Suisse, the categories of hedge funds with 9 differentiated styles and a fund-of-funds category: (a) Event driven funds are the funds that take positions on corporate events when companies are undergoing re-structuring or mergers. For example, fund managers would purchase bank debt or high yield corporate bonds of companies undergoing the re-organization which is often referred to as distressed securities. Another event-driven strategy is merger arbitrage where the funds seize the opportunity to invest just after a takeover has been announced. They purchase the shares of the target companies and then short these shares of the acquiring companies. (b) Global funds are categories of funds that invest in non-US stocks and bonds with no specific strategy reference. This fund has the largest number of hedge funds and it includes funds that specialize on the emerging markets. (c) Global/Macro funds are the funds that rely on macroeconomic analysis and invest in long and short position in order to capitalise on major risk factors and unforeseen markets such as currencies, interest rates, stock indices and commodities. (d) Market neutral funds refer to hedge fund strategy that involves utilizing strategies such as long-short equity, stock index arbitrage, convertible bond arbitrage and fixed income arbitrage. Long-short equity funds use the strategy of Jones by taking long positions in selective stocks and going short on other stocks to limit their exposure to the stock market. Stock index arbitrage funds trade on the spread between index futures contracts and the underlying basket of equities. (e) Dedicated Short Bias  funds are strategies that take more short positions than long positions and earn returns by maintaining net short exposure in long and short equities. Detailed individual company research typically forms the core alpha generation driver of dedicated short bias managers, and a focus on companies with weak cash flow generation is common. To affect the short sale, the manager borrows the stock from a counter-party and sells it in the market. Short positions are sometimes implemented by selling forward. Risk management consists of offsetting long positions and stop-loss strategies. (f) Convertible bond arbitrage funds typically capitalize on the embedded option in these bonds by purchasing them and shorting the equities. (g) Fixed income arbitrage is a strategy that bets on the convergence of prices of bonds from the same issuer but with different maturities over time. This is the second largest grouping of hedge funds after the Global category. (h) Short/long fund-, shorts focus on engineering short positions in stocks with or without matching long positions. They play on markets that have raised too fast and on mean reversion strategies. Long funds take long equity positions with leverage. Emerging market funds that do not have short-selling opportunities also fall under this category. (i) Emerging Markets  funds invest in currencies, debt instruments, equities and other instruments of countries with emerging or developing markets (typically measured by GDP per capita). Such countries are considered to be in a transitional phase between developing and developed status. Examples of emerging markets include China, India, Latin America, much of Southeast Asia, parts of Eastern Europe, and parts of Africa. There are a number of sub-sectors, including arbitrage, credit and event driven, fixed income bias, and equity bias. (j) Fund of funds refer to funds that invests in a pool of hedge funds. They specialize in identifying fund managers with good performance and rely on their good industry relationships to gain entry into hedge funds with good track records. Table 1 gives statistics about the various categories of hedge funds and past performance. The global/macro hedge funds provided the best mean return over the period studied, while the event-driven funds had the lowest standard deviation of returns. On a risk adjusted basis which is obtained by dividing the mean return by the standard deviation, the category of fund that ranks highest is the global/macro funds followed closely by event-driven funds. Hedge funds are not required to publicly disclose performance and holdings information unlike the registered insurance companies, which might be construed as solicitation materials. This is the reason why which makes it more difficult for investors to evaluate hedge fund managers. TABLE 1 Jan 2000   Nov 2009 Categories Mean Return (%) Standard Deviation (%) Risk-Adjusted Return Event driven 8.66 5.44 1.60 Global 6.60 6.23 1.06 Global / Macro 12.28 6.07 2.02 Market neutral 2.09 13.48 0.16 Short/Long 5.50 8.88 0.62 Emerging Market 9.23 11.05 0.84 Convertible Arbitrage 6.98 8.34 0.84 Dedicated Short Bias (1.95) 16.40 (0.12) Fixed Income Arbitrage 3.66 6.81 0.54 Source: Credit Suisse/ Tremont hedge index Notes: The mean returns are annually compounded returns over the period 2000 to November 2009, The annualized standard deviations were computed from of the standard deviation of monthly returns for each investment style. Risk-adjusted returns are obtained by dividing the mean return by the standard deviation. In 1990 the entire hedge fund industry was estimated at $20 billion. At the end of 2008, global hedge fund industry was estimated to be worth $1 trillion with 8350 active funds. It has gained a lot of popularity in the last decade and is one of the fastest growing industries. While hedge funds are well established in US and Europe, they have also been growing rapidly in Asia. Hedge funds have posted attractive returns. A seven year annualised return of 2.47% posted by Hedge Fund Research (HFR) from 2003 to 2009, higher than the SP 1200 of 1.18%. Hedge funds are seen as natural hedge to control downside risk because they employ investment strategies believed to generate returns that are uncorrelated to traditional asset classes. Hedge funds differ in strategies- a macro fund such as quantum fund generally take a directional view by betting in particular bond market or a currency movement. Other funds specialise in corporate events such as mergers or bankruptcies. They also vary widely in investment strategies and the amount of financial leverage. In the recent financial crisis, hedge funds have been heavily criticised in terms of their strategies and also for the fact that in 2008, they have had hard time fulfilling their absolute return targets. There have been other criticisms towards hedge fund regarding this particular crisis. Stromqvist (2009) writes that ever since the growth of hedge fund industry there has always been discussions regarding the role of hedge funds in a financial crisis. The main focus of the criticism was on highly leveraged hedge funds and that they may have a large impact on price stability on both currencies and equities. In an article written in The Times, Dillow (2008) observes that even though average return of hedge funds in 2008 has been poor, they have not been a serious source of instability in the wider financial system. Regardless of the recent financial crisis, hedge funds still generate a growing number of interests all around the world. Due to their private nature, it is difficult to obtain information about the operations of individual hedge funds and reliable summary statistics about the industry as a whole. It is a common belief that investing in hedge funds can have superior returns. Many success stories have emerged in the past and the most popular of which is the George Soros story. In September of 1992, he risked $10 billion on a single  currency  speculation when he shorted the British pound, which gave him an international fame. He was right, and in a single day he successfully generated a profit of $1 billion â‚ ¬Ã¢â‚¬Å" ultimately, it was reported that his profit on the transaction almost reached $2 billion. Therefore, he is famously known as the the man who broke the  Bank of England. The greates investor: George Soros, http://www.investopedia.com/university/greatest/georgesoros.asp 16-12-09 As seen in Table 1, the hedge funds as a group can generate positive returns. For example, over the period 1990-1997, all the hedge funds had positive absolute returns. Global/Macro funds obtained mean returns of 28.1% p.a. with a standard deviation that is comparable to equity funds. Traditional asset allocation makes the most of the use of equities, bonds, real estate and private equity to invest in a portfolio that maximizes returns and minimizes the portfolio risk. Therefore, in an investment portfolio hedge funds can play a vital role in maximising returns. Moreover, in a bear market, many investment and fund mangers find it dull to just beat the market index, which may have negative returns. They generally prefer to go short or avoid long positions to have positive returns. Choosing an appropriate hedge fund to invest increases the possibility of obtaining positive absolute returns. It is also generally believed that hedge funds have returns that are generally uncorrelated with the traditional asset classes. In fact, hedge funds may even have a lower risk profile. For example, Morgan Stanley Dean Witter (2000) reported that hedge funds exhibit a low correlation with traditional asset classes, suggesting that hedge funds should play an important role in strategic asset allocation. The answer to the question Why invest in Hedge funds? simply is to make money. The common analogy in all hedge funds strategies and the underlying rationale for investing in hedge funds is the search for absolute returns. This is sometimes called alpha. Alpha is the extra return a skilled manager can produce over and above the market return (or beta). Whereas many conventional fund managers aim simply to outperform their chosen benchmark index, hedge fund managers seek to produce positive gains in all market conditions. http://www.fleetstreetinvest.co.uk/shares/trend-investing/hedge-fund-investing-00128.html Research Question By using quantitative study, I will try to answer the following questions: Why investors invest in hedge funds? To answer this question I will be looking at the return, risk and performance associated with investing in hedge fund and how the fund mangers. By looking at the annualised return, standard deviation and risk adjusted returns of different styles of hedge funds their performance can be measured. What are the issues relating the investment in terms of risk, return and performance measurement? Although hedge funds are popular in terms of an investment vehicle, there are various issues. The issues related are its cost/ management fee structures, collection of data, survivorship bias and selection bias. Various performance measure techniques are available for hedge funds too. I will be looking at some of the performance measurement approaches. Purpose There are several purpose for this paper. First is to give an overview of hedge fund as an investment vehicle with a short description of different characteristics and styles of hedge funds. Second is to describe why hedge funds are attractive for investors and fund managers by presenting different theories where risk and returns of hedge funds are investigated in order to evaluate the performance measures. Third purpose is to investigate the issues related to the investment in hedge funds where several sets of issues are evaluated and various performance measures are identified. LITERATURE REVIEW There is no one particular definition of hedge fund as mentioned earlier. According to the Investment Company Act 1940 of the US, hedge funds were defined by their low degree of regulatory controls. In comparison to mutual funds, hedge funds were seen to have higher level of risk. This led to a 100-investor limit as well as wealth requirement of the investors. Fung and Hsieh (1999) claim that another reason for 100-investor limit is the use of leverage and short selling in hedge funds. The limit restrictions were later abandoned and wealth requirement lowered. Many definitions of hedge funds have been cited-most of them mainly based on its characteristics. Some of them are: Investment companies that by their charter can buy on margin, sell short, hold warrants, convertible securities and commodities and otherwise engage in aggressive trading tactics in order to profit from forcasting market swings.- Polhman, Ang and Hollinger (1978) A mutual fund that employs leverage and uses various techniques of hedging- Soros (1987) hedge funds are vehicles that allow private investors to pool assets to be invested by a fund manager. Unlike mutual funds, hedge funds are commonly structured as private partnerships and thus subject to only minimal SEC regulation. Moreover, because hedge funds are only lightly regulated their managers can pursue investment strategies involving, for example, heavy use if derivatives, short sales and leverage.- Bodie, Kane and Marcus (2008). Murguia and Umemoto (2004) claims that the reason why there is no proper definition of hegdge funds is because they are not classified by the different asset classes but by the type of strategies employed by the fund mangers is what classifies them. Such strategies range from very aggressive to conservative, which is the reason why there is no clear definition. Several studies have been carried out about hedge funds performance and risk issues. Fung and Hsieh (1997a) extend Sharpe (1992) style analysis and conclude that there are more diversified hedge fund strategies and suggested that hedge fund strategies are more dynamic. The literatures also conclude that option-based factors can enhance the power of explaining hedge fund returns. Brown, Goetzmann and Ibbotson (1999) examine the performance of offshore hedge funds and attribute fund performance to style effects rather than managerial skills. Brown, Goetzmann and Liang (2003) found, in a study using the TASS database, that fund of hedge funds reduce by a third the standard deviation of monthly hedge fund returns, as well as significantly reduce the value at risk of hedge fund investment. Hence, fund of hedge funds can also provide significant diversification potential. A well-diversified fund of hedge fund manager can therefore take advantage of market-specific risks while maintaining low correlations to stock, bond, and currency markets. As a result of which the fund of hedge fund manager can provide superior returns and generate alpha which reflects managerial skills. More generally, since fund of hedge funds deliver more consistent returns with lower volatility than individual hedge funds, they are considered to be ideal for diversifying traditional portfolios. During 1993â‚ ¬Ã¢â‚¬Å"2001, fund of hedge funds outperformed the SP 500 index on a risk-adjusted basis (Gregoriou, 2003a). Koh, Koh, Lee and Phoon(2004) state that traditional asset allocation optimizes the use of equities, bonds, real estate and private equity to invest in a portfolio that maximizes returns and minimizes the portfolio risk. Thus, hedge funds become vital in enhancing returns in an investment portfolio. Following the growth in hedge fund industry, fund-of-hedge funds (FOF) have become more and more popular. Liang (2003) states that FOF mixes various strategies and asset classes together and creates more stable long-term investment returns than any of the individual funds. It invests in underlying hedge funds and diversifies the fund specific risks and relieves burdens on investor to select and monitor managers, and providing asset allocation in dynamic market environments. Fund-of-funds require less initial investment as compare to hedge funds and therefore are more affordable for small investors. To participate in the investment, small investors may be willing to pay extra fees as it might be the only way for them. Previous studies in this area by Brown, Goetzmann and Liang (2002) conclude that combining hedge funds with fund-of-funds not only causes the double counting but also hides the difference in fee structures between hedge funds and fund-of-funds. Liang (2003) state that a hedge funds charges a management fee and incentive fee while a fund-of-funds not only charges these fees at a fund-of-fund level but also passes hedge fund level fees in the form of after fee returns to the fund-of-fund investors whether or not the fund-of-funds make a profit. Brown, Goetzmann and Liang (2002) examine this issue and propose an alternative fee which provide a better incentive for fund-of-fund managers and reduce the cost for investors under the current fee structure, which is that the fund-of-fund managers absorb the underlying hedge fund fees and establish their own incentive fees at the fund-of-fund level. Liang (2003) conclude that because of the above issues fund-of-funds need to be separated from hedge funds in academic studies and address the difference in performance, risk and fee structures. However, the FOF mangers can add value to the portfolio through selection, construction and continuous monitoring of the portfolio. They provide professional services and have access to the information that are expensive and difficult to obtain otherwise. The FOF mangers quite often use different investment strategies and styles through a diversified portfolio of individual fund managers. Considering these advantages for an investor, investing in fund of hedge funds is not cheap. The cost can be as high as the cost of buying a building, according to Koh, Koh, Lee and Phoon (2004). This structure allows for more diversified portfolio and much reduced risk at the fund level which comes at a price. More diversified the portfolio is it is more likely that it will incur more incentive fees. Therefore, there are many persuasive reasons why investing in hedge funds are considered as alternative investments. Some uninformed investors may be misled about the risks and returns on hedge funds as it relies heavily on statistical compilation from the database vendors which is filled with data bias such as survivorship bias and selection bias. Fung and Hsieh (2001a) found that estimates of survivorship biases differed across two commonly used databases, HFR and TASS. The survivorship bias was much higher in TASS than that in HFR. They estimated that survivorship bias would over-report hedge fund mean returns by about 1.5% to 3% per annum. Brooks and Kat (2001) stated that around 30% of newly established funds do not survive the first three years, primarily due to poor performance. Thus, not including defunct funds is likely to lead to over-estimation of the returns and profile of hedge fund industry.

foolear A Fool for a King in William Shakespeares King Lear Essay

A Fool for a King in King Lear     Ã‚   In Shakespeare's play King Lear, the main character, King Lear, is presented as a respected and powerful king. As the story progresses the king loses his power because of his own stupidity and blindness. The tragedy of this play is shown chiefly through the actions of Lear’s daughters, which lead to Lear’s bout with insanity, and through the words of the Fool. At the beginning of the play, King Lear appears as a powerful and well-loved ruler. He explains his intention to abdicate and divide his kingdom among his three daughters, giving the largest segment to the daughter who convinces him that she loves him most (Boyce 343).   Goneril is the first to lie,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Sir, I love you more than word can wield the matter; / Dearer than eyesight, space, and liberty;   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Beyond what can be valued, rich or rare; / No less than life, with grace, health, beauty, honor;   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   As much as child e’er loved, or father found; A love that makes breath poor, and speech unable.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Beyond all manner of so much I love you. (I.i.56-63) Regan is the next to exaggerate her love,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   I am made / Of that same metal as my sister   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   And prize me at her worth. In my true heart / I find she names my very deed of love,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Only she comes too short, that I profess / Myself an enemy to all other joys   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Which the most precious square of sense possesses, / And find I am alone felicitate   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In your dear Highness’ love. (I.i.72-80) Finally, Cordelia speaks only the truth when she says, â€Å" Unhappy that I am, I cannot heave / My heart into my mouth. I l... ...cted and powerful king to that of a regular man who, at times, seems to have no family. This takes him to the brink of despair and, at least, temporary insanity until he is rescued by his friend whom he had banished and his daughter whom he had disinherited.   Not only is it a tragedy that Lear and Cordelia die at the end of the play, but also that so much pain and suffering was endured before a Fool enabled Lear to see that he had tragically misjudged the most important people in his life. The people he had rejected were the ones who truly loved him and tried to protect him; the people he treated so well were the ones from whom he needed to be protected.   This error in judgment cost him everything.   Works Cited Boyce, Charles.   Shakespeare A to Z.   New York: Roundtable Press, 1990. Shakespeare, William.   King Lear.   New York: Washington Square Press, 1957.

Ballad of Birmingham :: Ballad of Birmingham Essays

Ballad of Birmingham In the poem Ballad of Birmingham, by Dudley Randall, written in 1969, Mr. Randall uses of irony to describes the events of the mothers decision, and also her concern for the welfare of her darling little child. It seems odd that this child would even know what a freedom march is, but this would be considered normal back in the early 1960's, when Mr. Martin Luther King Jr. had rallies and freedom marches to free the African American people from discrimination and segregation (Hunter 6). It also seems very ironic that the young child is acting like an adult in this particular situation (Hunter 12). I think the mother would be the one who would want to got to the march to free her people, not the child. In the poem "Ballad of Birmingham", by Dudley Randall, written in 1969, Mr. Randall uses tone and irony to describe the events of the mothers decisions, and as well as her concern for her child's well being. In the first stanza irony is used in order to make reading the poem more interesting. The situation in this first stanza is also very important. The little child is in a desperate situation and wants to help better the lives of the African Americans. Randall also focuses on specific culture here. The speaker is allowing the reader to make a mental picture of one specific march in Birmingham (Hunter 17). But, you know as well as I, that with peace marches and rallies comes violence and hostility. This is exactly what the little girls mother is afraid of, this is why she will not let her go to the march. It also seems weird that her mother is so sure that going to church, instead of going to the march, will be the best thing for her. (Hunter 19-20). Typically, a church is to be a very safe and sacred place where no-one would imagine a bombing or any other type of violence to happen. What is ironic about this is that going to church turns out to be the worst place for her to be (Hunter 21). Something else that strikes me funny is that her mother dresses her in her daughter in her best clothes to go to church with her. What is ironic here is that she ended up wearing them to her funeral instead (Hunter 26). There is also a shift in dialogue here in the fifth stanza(Hunter 27). Here the narrator starts to take over. The narrator's tone shows the reader the pride and

Analysis of Motives and Prospects within the OLI Framework: A Case Study of German FDI in China

Abstract This study deals with an analysis of German FDI in China using the OLI framework, an eclectic framework for analysing FDI. Other theories that aid in explaining German FDI’s motives and prospects in China are the internalisation theory and the product cycle theory. This study is mainly qualitative, using secondary data from existing literature. It suggests that German FDI is guided by internalisation advantages, location-specific advantages, and ownership advantages in its motives and prospects in the Chinese market. The internalisation advantages for German FDI in China include incentives derived from conducting such FDI in the country over other locations or through exporting. Location-specific advantages are identified as cheap, trained labour, export-oriented nature of existing FDI, quality of local infrastructure, access to natural resources, and cooperation agreements with local suppliers and the Chinese government. Ownership advantages, on the other hand, are identified as technology-based infrastructure and management know-how. Introduction This report deals with the analysis of motives and prospects within the OLI framework, focusing on a case study of German foreign direct investment (FDI) in China. To begin with, it is important to define and describe what the OLI Framework is. The OLI framework was developed by Dunning (2010) and is considered an eclectic approach to the study of FDI. It has been a guaranteed viable means to think about MNEs, which likewise paved the way for a range of applied works in economics and international business. Albeit it does not constitute a formal theory in itself, the OLI framework is nevertheless helpful in classifying many recent empirical and analytical studies concerning FDI (Reinert et al., 2009). Foreign direct investment (FDI) has been an important characteristic of globalisation. It is different from portfolio investment since it involves a package of assets and intermediate products and is generally carried out by MNEs (Blanco and Razzaque, 2011). Germany is China’s mo st important trade partner from Europe. In 2003, German companies were placed as the top European investors in China and were ranked as the seventh largest investors in the country. Albeit the ˆ7.9 billion investment of German companies in China comprised a tenfold increase from 1995, this only constituted 1.2 per cent of total German FDI. Most of these investors were manufacturing companies (around 2/3 of all German investors). Some of the pioneer German companies in China are Bayer, Siemens, and Volkswagen, which have been doing business with China for more than a hundred years (Reinert et al., 2009). China has large market potential as proved by about 76 million abundant consumers in the country, which is even larger than Germany’s total population. China is also characterised by low-cost assembly line, which serves as a major driver for investing in the country. Apart from it, its WTO membership has been an important driving factor behind German FDI, as WTO enabled ea sier access to China’s market (Bao, Lin, and Zhao, 2012; Reinert et al., 2009). The issues besetting German FDI in China are the unrelenting legal uncertainties in the country, as shown by the lack of intellectual property rights protection; limited market transparency; the rapidly changing regulatory framework conditions and obstacles; inadequate potential supplier networks; and difficulty in searching for relevant market information due to the problem involving the identification of individual market segments (Reinert et al., 2009). Potential German investments also face high input prices in China, such as high prices for raw materials and electricity, thereby making it all the more difficult to attain profit margins. There is also a rising competition in China in the midst of the growing attractiveness of its market. Given this context, this research intends to look into the intentions and outlook of German FDI in China, using the OLI framework to evaluate them.1.1 Objecti ves of the ResearchThe objectives of the research are described as follows: To analyse the German FDI in China in terms of its motives and prospects within the OLI framework; To describe the theoretical underpinnings surrounding German FDI activities in China; and To analyse how the OLI framework functions as a relevant model for the dynamic development of MNEs and German FDI within the increasingly growing Chinese market. Literature Review This part of the research report presents an array of published works relating to the topic of investigation to give light to the important concepts and to serve as evidence to the claim that may be posited. It also involves a description of methodology and data used.2.1 Methodology and Data UsedThis research is characteristically qualitative, which means that it is value-bound and relies on interpretations. It is predominantly inductive and is carried out in natural settings, discounting the use of quantities and measurements, which are confined within the domain of quantitative research (Klenke, 2008). This research also uses a case study method, which is described as â€Å"the study of the particularity and complexity of a single case† (Simons, 2009: 19), which in this report is the German FDI in China. Case study as this report’s research approach acknowledges the tradition in which it is drawn upon, specifically qualitative research (Simons, 2009). Secondary data a re solely used for this report. These are data that have been collected by a person (e.g. an author) and are being used by another (e.g. a researcher) for his/her own purpose (Oleckno, 2008). These data are therefore non-original. In this research report, they are mainly taken from books, academic journals, and relevant online resources relative to the topic being investigated. The search engines used to locate the needed materials are Google, Scholar Google, and Books Google, from which a number of sources have been uncovered. The journal articles utilised from these search engines are published by Wiley and Elsevier.2.2 Literature Review on the Motives and Prospects of German FDI in ChinaAccording to Zhang (2005), China’s location characteristics would help to understand and appreciate massive FDI in the country. The four determinants of China’s location-specific factors for the influx of FDI are its export-promotion strategy for FDI, its dominant availability of che ap labour, and export-orientation of FDI injected by the countries entering China. In the case of Hong Kong and Taiwan, unique links with China (the Chinese connections) are important determinants. The study uses a qualitative method and a case study design in dealing with the subject matter. Its applicability to the topic under investigation is seen in its direct focus on FDI in China and how China has flourished as a location for countries to engage in FDI. The limitation posed by the study is its emphasis in Hong Kong and Taiwan and does not include German FDI, which does not however mean that the study is already totally irrelevant. In the work of Chen and Reger (2006), German FDI in China has been described as one that has grown larger in size and of higher quality (alongside related technological activities), with long-term motives and broad market orientation. German FDI also seeks new markets and expands market shares within China. The authors second Zhang’s (2005) ea rlier claim for FDI determinants in China, such as cheap, abundant labour, and export orientation; and added some more, including China’s huge domestic market, access to natural resources, and enforced tax incentives. The research approaches used by the authors include a mail survey and a database analysis. The work is applicable to the present study because of its emphasis on the nature of German FDI in China. In a separate study by Pikos (2013), the author presents an investigation of the consequences of FDI for German companies in China. The author highlights the differences amongst the following: FDI in China, FDI elsewhere, and exporting. When size and sector activity are controlled, attributes to FDI in China include turnover, employment, net income, profit margins, and total assets, to name some. Albeit performance is boosted through FDI elsewhere, this is however on smaller scale. It is noted that investing in China results in better outcomes than doing FDI in another country, and this is due to China’s large and rapidly growing market. The methods used by Pikos (2013) are descriptive and econometric analysis in order to address the research topic. The applicability of the work to this research is its description of German FDI in China, thereby aiding the research to give light to the topic. A limitation of the study is its focus on location-specific factors for FDI. On the other hand, Zhang and van den Bulcke (1999) state that the expansion of FDI and its embodied technology are two of the key forces that molded the development of the Chinese automotive industry. Germany is an important source of inward FDI in China’s automotive industry, third to Hong Kong and the United States respectively. FDI in the automotive industry during the 80s was highly focused on the assembly of whole vehicles. In the 1990s, FDI became highly concentrated on the manufacturing of parts and components. Since the Chinese government in the 1990s had stric t control of the Greenfield investment projects for whole vehicle manufacturing, the latecomers encountered quite high entry barriers since dominant positions were already occupied by early movers. European automotive multinationals strongly influenced the restructuring of China’s automotive industry since the 80s. Moreover, China’s European car manufacturers have engaged in cooperation agreements with the Chinese government and local suppliers and often extend technical and financial assistance to local suppliers. An example of this is a 5-billion Chinese Yuan contribution of Shanghai Volkswagen for localisation funds (Zhang and van den Bulcke, 1999). The approach of Zhang and van den Bulcke’s (1999) study is chronological, mainly basing from existing secondary literature. The study is relevant and applicable to the topic under investigation as it provides useful and sufficient insights on the nature of the Chinese automotive industry and the chronological deve lopment of European FDI in the country, which can aid in analysing the current motives and outlook of German FDI in China. The research limitation is bounded within the study’s concentration on the Chinese automotive manufacturing industry. Analysis and Discussion The analysis and discussion provided for this research report is anchored on the literature review being carried out for German FDI in China.3.1 Analysis of German FDI in China Using the OLI FrameworkThe OLI Framework pertains to the three potential sources of advantage; namely Ownership, Location, and Internalisation, that lie beneath an organisation’s decision to enter into a multinational level of operation. Ownership advantages explain the reason/s why firms operate abroad whilst others do not, and indicate that successful multinational enterprises (MNEs) possess firm-specific benefits that enable them to overcome the costs entailed in operating in a foreign country. Location advantages, on the other hand, concentrate on the location aimed by an MNE (Reinert et al., 2009). Access to natural resources serves as a location advantage for choosing China for which to invest, as in the case of German FDI. Additional determinants of location selection for FDI are availability of cheap trained labour (e.g. Chen and Reger, 2006; Pikos, 2013; Zhang, 2005) and quality of local infrastructure (Tang, et al., 2012). Other critical factors are a smooth relationship with Chinese authorities, both central and local; and experience to cope with Chinese bureaucracy (Tang, et al., 2012). Such relationship is the bottom line for German FDI to engage in cooperation agreements with the Chinese government and local suppliers, as earlier highlighted by Zhang and van den Bulcke (1999). Zhang (2005) also highlighted in his work that China’s location characteristics would help to understand and appreciate massive FDI in the country. Internalisation advantages – another embodiment of the OLI framework – provide the influence on how a firm decides to operate abroad, making a trade-off between transaction savings and monitoring costs of a completely-owned subsidiary, on one hand; and the advantages of other forms of entry, such as joint venture and exports, on the other. A main characteristic of this approach is that it provides emphasis on the incentives for the individual firm. Mainstream international trade theory has considered this a current standard, which was not the case in the 1970s when FDI was classically regarded as an international movement of physical capital in pursuit of higher returns (Reinert et al., 2009; Taliman, 2007). The internalisation advantages embodied in the OLI framework are also found in the study of Pikos (2013) in the literature review, which magnifies the differences amongst conducting FDI in China, elsewhere, or through exporting, apparently aiming to ascertain the incentives that can be gained from choosing the most suitable out of the three options. The OLI framework is in fact an eclectic paradigm that provides a general theoretical framework for ascertaining firms’ FDI activities beyond their national borders. The eclectic paradigm is an analytical theory that accommodates other FDI theories a nd views most of the theories as having complementariness with each other (rather than having substitutability) of which their application can be fully enhanced (Tang et al., 2012). Internationalisation theory is one of the general theories of FDI, which views a MNE as an organisation that engages in utilising its internal market to produce products and distribute them efficiently in situations where a regular market encounters failure of operation. In effect, the internationalisation theory regards MNES taking on FDI activities abroad as a way to respond to goods and factor market imperfections, which have in fact prevented international trade and investment to operate efficiently (Tang et al., 2012). Through FDI, MNEs are able to produce and distribute their products via internal markets, thereby enabling them to optimise efficient production and improve the total profits. This notion must also constitute the motives and prospects for German FDI to conduct business in China. It mu st be noted that a MNE only employs FDI if the cost is outweighed by the benefits (Suneja, 2006; Tang et al., 2012). Worthy of note is the idea that in the lens of the internationalisation theory, knowledge, information, and research are intermediate products to be readily and directly traded to other countries due to the risk of loss of knowledge advantage (Rugman, 2002). However, MNEs possess vertical and horizontal integration, enabling the creation of their own internal markets, whereby intermediate products such as technology know-how are converted as a firm’s valuable property. This reflects the ownership advantage embodied in the OLI framework, as discussed by Reinert et al. (2009) and Taliman (2007). Hence, as the MNE sustains its competitive advantage, its ownership such as management know-how can be utilised and bolstered (Tang et al., 2012). The Uppsala Model looks at the internationalisation process as cyclic, experiential, and resource-based learning-by-doing, wh ich seems to foresee later research flows regarding dynamic capabilities and temporary competitive advantages with the internalisation framework (Sanchez and Heene, 2010). Based on the analysis, the internationalisation theory cannot in fact be seen as a separate body of thought from the OLI framework because it has a similar trail with such framework in relation to understanding the motives of a MNE (e.g. German firm) and its outlook to engage its FDI in a country like China. Meanwhile, the product cycle theory describes the so-called ‘wild geese flying’ patterns of foreign trade to explain the different economic development phases of countries. This theory cites three phases of industrial development with which each country attempts to elevate itself o the top phase of industrialisation. The theory says that the mature phase takes place once industrialisation development has been extensively laid down over the entire region or country with robust dynamic growth (Tang et al., 2012). It is interesting to consider that the OLI framework may be fastened over the product cycle theory in analysing German FDI in China, and that the relevance of the framework cannot be set aside when the chronological developments involved in the industrialisation process are taken into account. The applicability of the twin analysis of OLI framework and the product cycle theory is seen in Zhang and van den Bulcke’s (1999) study, which uses chronological discussions to describe the growth of European FDI in China, and cites the ownership-specific, location-specific, and internalisation-specific factors of European firms (e.g. German firms) to invest in the Chinese automotive sector.4. ConclusionThis research report deals with analysing the motives and prospects of German FDI in China within the OLI framework. The OLI framework is an eclectic framework that accommodates other theories of FDI and explains the intentions and outlook of MNEs to engage in FDI in China . The motives and prospects of German FDI to continuously seek to invest in Chinese market is propelled by internalisation advantages (e.g. incentives through conducting FDI in China rather than elsewhere or through exporting); location-specific advantages (e.g. cheap trained labour, export-orientation of FDI; access to natural resources; quality of local infrastructure; cooperation agreements with the central and local governments and local suppliers); and ownership-specific advantages (e.g. management know-how; technology-based infrastructure). The rapidly growing globalised market ushers the German FDI to continuously seek newer FDI prospects within China, beset by the growing competition and search for competitive advantages. References Bao, S., Lin, S., and Zhao, C. (2012) The Chinese Economy After WTO Accession. England, Ashgate Publishing Limited. Blanco, E. and Razzaque, J. (2011) Globalisation and Natural Resources Law: Challenges, Key Issues and Perspectives. Glos: Edward Elgar Publishing Limited. Chen, X. and Reger, G. (2006) The Role of technology in the Investment of German Firms in China. Technovation, 26 (3), 407-415. Dunning, J. H. (2010) New Challenges for International Business Research: Back to the Future. Glos: Edward Elgar Publishing Limited. Klenke, K. (2008) Qualitative Research in the Study of Leadership. Bingley, IWA: Emerald Group Publishing Limited. Oleckno, W. A. (2008) Epidemiology: Concepts and Methods. IL: Waveland Press, Inc. Pikos, A. K. (2013) German FDI in China: Consequences for Firms’ Performance (Published Thesis]. Denmark: Aarhus School of Business, Aarhus University. Reinert, K. A. and Rajan, R., Glass, A. J., and Davis, L. S. (2009) The Princeton Encyclopedia of the World Economy. Oxfordshire: Princeton University Press. Rugman, A. M. (2002) International Business: Theory of the Multinational Enterprise. New York: Routledge. Sanchez, R. and Heene, A. (2010) Enhancing Competences for Competitive Advantage. First Edition. Bingley, IWA: Emerald Group Publishing Limited. Simons, H. (2009) Case Study Research in Practice. First Edition. London: SAGE Publications Ltd. Suneja, V. (2006) Understanding Business: A Multidimensional Approach to the Market Economy. New York: Routledge. Taliman, S. B. (2007) A New generation in International Strategic Management. Glos: Edward Elgar Publishing Limited. Tang, S., Selvanathan, E. A., and Selvanathan, S. (2012) China’s Economic Miracle: Does FDI MatterGlos: Edward Elgar Publishing Limited. Zhang, K. H. (2005) Why Does So Much FDI From Hong Kong and Taiwan Go to Mainland ChinaChina Economic Review, 16 (3), 293-307. Zhang, H. and van den Bulcke, D. (1999) The restructuring of the Chinese Automotive Industry: The Role of Foreign Direct Investment and Impact of European Multinational Enterprises. Belgium: University of Antwerp. Analysis Of Motives And Prospects Within The Oli Framework: A Case Study Of German Fdi In China Introduction There are a number of theories that explain motives and prospects of FDI. OLI framework is the one that is most widely used by economists. According to OLI, there have to be advantages that can offset costs of making direct investment abroad. In this paper we apply the OLI framework to understand the motives behind German FDI in China. A case study of Volkswagen China is conducted to show the application of OLI in practice, and to demonstrate why FDI abroad can be a success story despite all the difficulties a company faces in a foreign environment. Literature Review One of the earliest theories explained FDI in terms of market imperfections. Kindleberger (1969) argued that for companies to gain advantage by investing abroad market has to be imperfect . If we assume that markets are perfect there is nothing foreign companies can exploit to make enough profits that will offset costs and risks associated with investing abroad (Kindleberger 1969).. The concept of firm-specific advantages was introduced to explain how market imperfections lead to foreign investment. Among these advantages are superior technology and marketing (Caves 1971), cheap labour (Grubel 1968), management skills (Wolf 1977), and exclusive access to natural resources (Lall and Streeten 1977). . Only when a foreign company possesses these firm-specific advantages can it successfully invest and become a major player in a foreign market and compensate for the disadvantages of being foreign in the country of its operation (Hymer 1976). Vernon’s product life cycle is another major FDI theory that tries to explain motives and the rationale behind FDI. Vernon (1966) dissected product life cycle into three distinct phases – innovation, maturity and standardisation Established companies in developed economies invest in new projects to design innovative products that will sell in future and guarantee a new profit channel for them. When a new product is designed, it is sold in the domestic market. Consumers gradually get used to it and demand new products. This leaves the company with two not mutually exclusive choices – get back to the innovation phase and design something new, or go abroad and produce the same products there. Going abroad is sometimes a better choice because foreign producers (such as China) start to imitate the existing product and become so good at it that the differences with the original become marginal (Vernon 1966). A later theory developed by Dunning (1977) has become widely used in attempts to understand the motives behind FDI. The theory became known as OLI: Ownership, Location and Internalisation. All three elements should be present in order for FDI to occur. This theory will be explained in greater detail in a separate chapter of this paper. Theoretical FrameworkDefinition of FDIAccording to the Organisation for Economic Co-operation and Development (OECD) (2008) 4th Edition of Benchmark Definition of FDI, FDI is â€Å"a category of cross-border investment made by a resident entity in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor† . Companies carry out FDI because they want to have direct control over their enterprise. This is what makes FDI different from portfolio investments which usually result in an ownership of less than 10 per cent of a foreign company’s capital. Hence the investor does not have real control over the foreign company (OECD 2008). Mergers and Acquisitions (M&A) and Greenfield investments are the two different types of FDI. The choice between them has different implications for the parties concerned. M&A happen when an existing company is bought out by a foreign firm. In contrast Greenfield investments are investments into new assets. For developing economies, including China, M&A are more common, for developed economies like Germany Greenfield investments are a popular choice (Shatz and Venables 2000). FDI are divided into horizontal and vertical; only in a few cases do the two occur simultaneously. Horizontal FDI occurs when a company invests in a firm built to serve the foreign market (Shatz and Venables 2000). . This foreign firm then performs the same activities as the host firm does in its own domestic market. With vertical FDI, the production cycle is fragmented so that each phase can be completed in a country where it can be done cheapest of all (Shatz and Venables 2000). OLI Framework The OLI framework is a theory that explains motives and the rationale behind multinational corporations’ (MNCs) decision to choose FDI instead of licensing use of their name or product to foreign producers or sellers (Lynn 2008). . FDI is a foreign investment so, for it to occur, the investing firm has to acquire assets in a foreign country. FDI is called direct investment because it results in a direct and real control over the acquired capital. MNC acquires a right to produce what it wants in a foreign country and decide where it wants to sell the product. As explained above, the whole product (horizontal FDI), or parts of it (vertical FDI), can be produced in a foreign country based on the considerations of cost-effectiveness (Shatz and Venables 2000).. FDI occurs because there are advantages to it. The first one is ownership advantage which stands for â€Å"O† in the OLI abbreviation. There has to be some advantage to owning the foreign asset. These can be lower costs, greater reputation, or swifter transition to a foreign market. Take for example Apple. The company has a reputation for high quality products so by owning a production facility in a foreign developing country it can still make profits that will offset costs of FDI (Lynn 2000). . Ownership advantage alone is not enough for FDI to occur. Here is when the â€Å"L† comes into play. â€Å"L† denotes the location advantage. A less costly labour force, access to the natural resources needed in manufacturing and a better geographic position (which leads to more efficient logistics), are some of the location advantages that can make companies seriously consider investing abroad (Lynn 2000). . Again this is not enough for FDI because everything described above can be achieved by brand licensing or through establishing joint ventures. FDI needs a third element – internalization, or control, advantage. This is the â€Å"I† in OLI. When it is believed that MNC can lose market share in case another company gets access to the same asset, FDI becomes the only choice available (Lynn 2000). . It is known that at some stage, foreign producers start copying products produced in the developed world and when they do it they are able to offer cheaper prices thus outperforming foreign producers in sales. To prevent this scenario many companies prefer to go with FDI and gain exclusive control over their assets. Methods and Data In this research, we conduct a critical review of the main theories of FDI, paying special attention to the OLI framework. While we acknowledge the importance of OLI in understanding international business and FDI in particular, we provide a short overview of criticisms of the paradigm so that readers have an understanding of the potential limitations of this research. A case study of German car manufacturer Volkswagen is used as a method of understanding FDI under the OLI framework as applied to the German investor interest in China and the two country’s bilateral economic relations. Additionally, we use statistical information to put some numbers into perspective and cite a research by Deutsche Bank which includes some forecasts as to the future of German FDI in China. Volkswagen (VW) Case Study Volkswagen was founded in 1937 (Datamonitor 2011). The name of the brand translates as â€Å"the car of the people† (Datamonitor 2011).. Volkswagen is represented in China through two ventures – with Shanghai Automotive International Company founded in 1985 and with First Automotive Works started in 1990 in Changchun (VW Annual Report 2010). VW has always regarded China as an important market. Today, there are 9 production facilities in China and 2 more are planned. VW’s target is to sell 3 million cars per year. Through 2015 VW is set to invest a total of 10.6 million euro to expand its production in China. VW is actively involved in producing electric vehicles in China. Both E-Golf and E-Lavida were presented in China and the first electric test was made here in 2011. VW is also set to produce a new brand specifically for the Chinese fast-paced economy (VW Annual Report 2010). Volkswagen Analysis Based on the OLI ParadigmOwnership advantageVW is one of the world’s most successful car manufacturing companies and, as such, it has a lot of advantages. VW is known in Europe for its technological advances and efficient production system. VW brand is strong all over the world. Many consumers associate vehicle design innovation, cost-effectiveness, and high safety standards with VW and consider it as their first choice when making decisions on buying a vehicle (VW official website 2011). Not surprisingly, VW had a competitive advantage over all Chinese manufacturers at the time of the entry into the market (VW official website 2011). In fact, VW is still superior to any of the Chinese car producers. VW exploited its technological dominance and increased its brand recognition. Chinese consumers were happy with the product offered and enjoyed VW’s presence in their country. Currently, VW strives to adjust its technology to meet changing customer need s and develop sustainable models for future (Yu 2010). .Location advantageVW’s joint venture in Shanghai was the most successful car enterprise in China at the time it was established in 1985 and it retains the top position today (Li 2000). . Locating in China, and Shanghai in particular, was the best possible decision for VW in terms of location because the region is rapidly developing and the people’s life standards are improving. Shanghai is the most densely populated and prosperous city in China and it has close ties with the central part of the country (Li 2000). Products from Shanghai are considered to have high quality across China and do not face any obstacles due to local protectionism. It should be also noted that at the time VW entered China it received many incentives and support from the government. The government still stimulates the automobile industry to increase domestic sales and contributes to the development of the sector. Thanks to these location a dvantages, VW China became a success and continues to be a source of decent income for the parent company (Li 2000)..Internalization advantageVW had the first mover’s advantage which helped it to become a major player in the new market. The company managed to take control over the major share of the Chinese market and realise all its ownership advantages. This first mover advantage till today helps VW to be very competitive with regards to Japanese and American rivals. To retain its market share, VW continues to innovate according to the changing tastes of the Chinese consumers and requirements to reduce the strain on the environment resulting from manufacturing and exploitation of automotive vehicles (VW official website 2011).Future of German Interest in ChinaChina has attracted German interest more than any other emerging country since 1997 (Deutsche Bank Research 2004). German companies explain their excessive interest in China by citing the country’s huge market p otential. In 2001 there were about 76 million prosperous consumers in China – a population that is worth FDI in any country despite possible barriers and foreign culture-related challenges (Deutsche Bank Research 2004). This number of prosperous consumers in China is greater than the total population of Germany and it is set to increase tenfold by 2015. The second most important argument for German FDI in China is the â€Å"extended low-cost assembly line† (Deutsche Bank Research 2004). Cost has always been one of the most important considerations in business decision-making.. Heated global competition for competitive advantage and market shares across virtually all industries means that companies need to find cheaper options for manufacture. China is often the best solution because of the low-cost labour force it offers. Not surprisingly, Germany, alongside other strong economic powerhouses, chooses China as a low-cost manufacturing site and actively invests there (D eutsche Bank Research 2004). Another reason for German FDI is the growing economy of China and its potential to become a dominant power. Germany has to defend its interest in a country which is set to become a global leader with an over 1 billion of potential buyers of products and services. Of course, China is a completely whole new world for German businesses that has to be explored until there is sufficient understanding required for making informed decisions. Usually, most foreign companies entering China lack information vital for their success and have to be quick to adapt or risk becoming a failure. China cannot be considered â€Å"one country – one market†. It is bigger than both Eastern and Western Europe put together (Deutsche Bank Research 2004) and it is naive to think that one product design or pricing strategy will work across the whole country (Deutsche Bank Research 2004). Hence a lot of prior planning is required (Deutsche Bank Research 2004). Among other obstacles that can potentially deter German interest in China are high input prices. There are a lot of protectionism locally, and also many logistic and bureaucratic inefficiencies that are not easy or cheap to overcome. Moreover, the global prices for raw materials and energy resources a re growing which adds to the cost of production even in China (Deutsche Bank Research, 2004). The final commonly-cited obstacle to German interest in China is the heated competition amongst different foreign companies coming from such developed nations as USA, Canada, and Australia. Everyone knows about advantages of investing in China and hence there is a lot of competition for assets and control over the market.Criticism of OLI frameworkThe OLI framework offers a very useful insight into the motives and the rationale behind FDI. The paradigm has evolved over the time to adapt to changes in the way international business is conducted (Narula 2010). Critics of the theory argue that because of expansion of OLI’s application to all MNE-related phenomena, it now risksbecoming tautologous (Narula, R. 2010). Narula proposes a return to the classic OLI framework and using alternative theories to understand the more complex new developments rather than internalising everything so th at it fits OLI. Narula acknowledges the importance of OLI in early research on the international business and FDI, but argues that it is not suited for explaining everything that happens in business (Eden 2003). In fact, it is becoming cumbersome to apply OLI to understanding international business, as the latter has became complex (Eden 2003).There is a need for new frameworks. OLI can still be a valuable tool in understanding some aspects of international business and FDI, but should lose its dominance in the academic community (Narula, R. 2010). Conclusion German interest has been present in China for almost half a century. Because Chinese market is huge and has a big growth potential, German companies are likely to look for more opportunities there. Before a decision to invest is made, companies always asses its prospects. OLI framework is often used to see whether FDI is justified. OLI’s critics now say that there should be some additional analysis involved in decision-making, because, as good as the paradigm is, it still cannot explain every complex aspect of international business. References Caves, R. (1971). International Corporations: The Industrial Economics of Foreign Investment. Economica, Vol. 38, pp. 1-27 Datamonitor (2011). Automotive Manufacturing in China http://360.datamonitor.com.www.baser.dk/Product?pid=10C672D5-7559-4A0A-90B3-5EFBDF97D73C [accessed 31 March 2014] Dunning, J. (1977). Trade, location of economic activity and the multinational enterprise: A search for an eclectic approach. University of Reading diuscussion papers in international investments and business studies, no. 37 Eden, L. (2003). A Critical Reflection and Some Conclusions on OLI. 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