The Impact of National Culture on Workplace Behavior

National Culture
National Culture

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The Impact of National Culture on Workplace Behavior

Culture

Culture is perhaps the most influential factors that impact the success of businesses across the world. Culture can be defined as a set of beliefs, values and assumptions that are held in common by a particular group of people. It is important for any business to understand the culture of its business environment as this is crucial to the success of the business. In this paper, the impact of national culture on workplace behavior is discussed.

Secondly, the paper critically analyzes the impact of national culture on organizational practices. Thirdly, the paper presents some of the factors that often act as change triggers in organizational culture. Finally, the paper presents a discussion on some current cultural issues that impact the operations of contemporary businesses.

National Culture and Its Impact

National culture can be defined as set of assumption, values and beliefs that are held by individuals or organization that have the same national identity. A comparison of the individual behavior people from two cultures in an organizational context can help to illustrate how national culture impacts workplace behavior. In this essay, the behavior of Indians and Americans in a technology firm is compared (Perlow, 2002).

There are significant cultural differences between Americans and Indians. American culture emphasizes on individual liberty while Indians believe in interdependence and mutually helping each other. According to Perlow (2002), these attitudes and beliefs can have a significant impact on behavior in the workplace.

According to Hofstede (1983) as cited in Perlow and Weeks (2002), American ranks highly as an individualistic culture while India scores 48 to America’s 98 on the individualistic dimension. According to Perlow and Weeks (2002), individualistic people are characterized by emphasis on independence and differentiation from others. On the other hand, collectivists’ individuals are interdependent and thrive on relationships. 

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The impact of individualism/collectivism is apparent in US organization contexts. In the US, an individual is supposed to make individual contribution to the organization which will be rewarded by promotion up the societal hierarchy (Perlow and Weeks, 2002). Workers in the US easily link individual effort and ability to rewards. For example, salespersons will work as direct competitors although they are from the same company.

In contrast, India is a collectivist society where group performance is more important than individual performance. In India, a group of salespersons from the same company are likely to work collaboratively as they pursuit market opportunities for their organization. According to Perlow and Weeks (2002), Indian children are taught to subordinate their own personal interests to those of the family and other social institutions.

Later in life, Indians adopt the same attitude where societal or group norms, belief, desires, needs, and values have more priority than those of the individual. People from collectivist cultures have increased pressure to act in an acceptable, effective and legitimate way. According to Perlow and Weeks (2002), the individualism/collectivism dimension has a great effect on the willingness of individuals to engage in collective or cooperative tasks.  

Perlow and Weeks (2002) found that Indian tech workers were more willing to help their colleagues who were faced with difficult task. The authors point out that Indian workers believed that helping fellow workers was an opportunity to enhance their own skills. In addition, assistance in task completion was greatly appreciated by Indian workers who were beneficiaries. In contrast, American workers considered assistance from colleagues an unnecessary interruption in their work. Furthermore, very few American workers were willing to help their colleagues who were experiencing difficulties in completing tasks that were assigned individually.

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The influence of national culture is an indicator of just how profound the impact of culture is in workplaces. Culture is an influential factor that impacts a number of workplace behaviors. According to () , how people work, behave, use language, solve conflicts and problem, negotiate and create relationship is dependent on their culture, and in particular their national culture. This change in behavior is driven by the common values that people from the same national culture posses.

Importance of Values

According to (), individuals learn both conscious and unconscious values from their national culture. People only become aware of their national culture values and beliefs when they are confronted by people with different worldviews, values and beliefs. National cultural differences make interactions and communication between people of different cultures especially difficult. According to (), there are significant variations across national cultures. Unfortunately, many people are biased to judge other using their own cultural norms as reference points or lens.

This biased view holds great potential for conflict, miscommunication and misunderstanding. () points out that diverse cultures lead to diverse behavior which may not be understood by everyone. There is need for contemporary workers to understand, learn and appreciate the culture of their colleagues from other cultural backgrounds and workplaces are becoming increasingly multicultural.

Individual vs Group behaviors and Values

According to Trompenaars and Hampden-Turner (), individuals can either be dividend into community or self-oriented. As seen earlier, Indians are community oriented while American are self-oriented. However, even in community oriented culture there is huge difference in the institution the culture identifies with. The Irish identify the Catholic Church, the French with family and country, while the Japanese identify with Corporations.

It may be assumed that the whole society is moving towards individualism but this is not really true. According to (), it is rare for a person to achieve an extraordinary feat without the assistance of other members of society. He notes that nobody has invented an new product on their own.

According to (), the best approach to survive and flourish in a multicultural environments is to adopt our individual values to the group. Culturally adapt individuals can adapt to fit into groups of different culture. Individuals can also behave in a “culturally intelligent” way by seeking to understand other and adapting behavior so that it can be easily understood.  () advises immigrants or expertriate who move into foreign nation to adapt to local national cultures.

He points out that a person could end up forgetting some aspects of the home culture. However, () argues that people working in foreign countries have no choice that to adapt to host cultures as this is the most practical thing to do. However, people will rarely lose their values even if they work in a foreign culture for years.

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Building Multicultural workplaces

People are likely to work with people from different cultural backgrounds in contemporary organizations. It is therefore important to build work environment where people from different cultures can fit comfortably. Success in building such an environment is dependent on the development of common trust, understanding and commitment.

It is important to genuinely connect with people from different individual culture and realize the potential their hold despite the obvious cultural differences. Some of the important consideration to make include:

  1. Is the person from a different national culture relationship or task oriented? Can I we collaborate in a task without first needing to build a relationship?
  2.  Is the person from a low-trust or high-trust society? With individuals from low trust society it takes little time to earn a person’s trust. In contrast, a lot of time and effort is needed to earn the trust of a person originating from a high-trust country.
  3. Willingness to share information should also be an important consideration when working with people from different national cultures.
  4. Does the person come from a direct communication or an indirect communication country? This is an important consideration when passing instruction to the concerned party.
  5. Research the persons cultural background: its is important for members of staff who will be interacting with a person from a different country to know the cultural expectations of their national culture.

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Building trust with people of diverse national cultures is a difficult undertaking that need skillful employment of cultural intelligence. Trust is achieved when cultural understanding, intercultural engagement, and intercultural communication are employed. Cultural understanding includes being aware of our won cultural bias and those of the other party. On the other hand, intercultural communication involves use of both verbal and non-verbal communication and communication styles that can be easily understood. According to (), emphatic listening and respect helps in earning the trust of people from different national culture backgrounds.

Factors that Lead to Cultural Change in Organizations

Leadership Change

Many authors agree that changes in top-level management can contribute or drive culture change in organizations Morgan (2012); Christopher (2012); Beer (2012).  Organizational culture is initiated by the founder of the organization, but it changes over time due to a number of factors (Beer 2012).  Organizational culture changes significantly once the management of the organization changes and some new ideas start to flow in these organizations. However, Beer (2012) points out that organizational culture remains the same in public sector organization despite changes in the top-management of the organization.

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Beer (2012) and Christopher (2012) argue that changes in organizational leadership can either have insignificant or significant changes on organizational culture.  According to Christopher (2012), the personal traits of the leader, the organization’s new strategy, and objectives influence the extent of changes in organizational culture at the onset of new leadership. In organizations where strategy changes significantly, the organizational culture also changes profoundly.

Technological Developments

Advances in technology have had a huge impact in organizations and in particular organizational culture. Technology has the potential to impact culture in different ways. For example, mobile phone, email and internet technology changed the way organizations communicate. On the other hand, technology such as CCTV enables organizations to closely monitor the conduct of workers at the workplace (Maude 2011).

For example, some organizations use strategically placed CCTV cameras to control lateness and absentia from work. Teleconferencing, email and video relay systems allow employee to work from the comfort of their homes or from remote locations.  For example, Walshe and Smith (2011) points out that technology has enabled clients to make online appointments with health practitioner instead of making physical visits. Overall, technology is changing the way work is done in organizations and therefore changing underlying organizational culture in the concerned organizations.

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Mergers and Acquisitions

Christopher (2012) and Moran et al (2011) have linked changes to organizational culture to the merger or acquisition of organizations. Mergers and acquisition bring together two or more organization with different cultures. Obviously, the cultures of some or all the organizations have to change to enable them to work together successfully. According to Moran (2012), the period immediately following a merger or acquisition is especially difficult as employee have to deal with the inevitable clash in cultures.

However, this clash in culture is temporary and new hybrid cultures soon emerge after the acquisition and merger is completed. Sometimes mergers and acquisition involve organizations from two different cultures. In such a situation, the cultural clash is more serious and need more able leadership to manage it.

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In the views of Christopher (2011), effective leaders assist greatly in enabling the emergence of a new organizational culture blend in the case of a merger or acquisition. He argues that leaders need to support employees at all level of the organization to accept and embrace the new cultural changes. Leaders should also raise awareness about the inevitability of change after a merger or acquisition and try to prepare all stakeholders to receive the impending change positively.

4. Changes in External Environment

Changes in the external environment can act as triggers for changes in organizational culture (Morgan, 2012; Primecz et al. 2011; Velo, 2012). According to, changes in the Political, Social, Technological, environmental and legal environment can influence organizations to change their organizational culture. For example, governments may make changes to official workers requiring workers to report to work at 9:00 am instead of 8: am. Organizations will have no choice than to change their policies to suit the change in official working hours.

Cultural Issues in Business Environments

Successful intercultural negotiations

Businesses are engaged in multiple situations where negotiations between the parties are necessary. According to (), language and cultural etiquette forms a formidable barrier to intercultural negotiations. () argues that it is imperative that businesses operating in multicultural environment use the language of the customer. According to (), foreign trade partners may use a different language, think differently and have different priorities while engaging in business negotiations.

For example, in some culture, business meetings are formal and parties are offended if they are addressed by their first names. In other cultures, business meetings are informal affairs where negotiating parties refer to each other by first name. Obviously, two parties from these two cultures are engaged in negotiations they would have difficulties understanding each other. () argues that successful negotiations depend on the previous knowledge of each other values and assumptions.

Differences in negotiation styles are as diverse as national cultures. For example, negotiations between an South American and a North American businessman will be characterized by considerable differences as the true have distinctly different negotiation styles. 

Differences range from the authority of a negotiator to approve a deal, to the level of relationship needed to start business negotiations. In some culture, it is necessary for organizations to build close and personal relationships with negotiators. These relationships are meant to establish fidelity and trust between the two negotiating teams.

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Religious Limitations

Religion moderates the behavior of communities more than any other cultural factor. Religion varies from nation to nation, within nations, and even within local communities. It is important for businesses to respect the religious norms that relate to their business operations. In particular, the advertising area of business is profoundly impacted by religions. For example, religious reason may prevent businesses from advertising alcoholic products, sanitary pads and other culturally sensitive product in some countries.

For example, the Koran (Islam’s holy book) ban the consumption of alcohol by believers. In some muslim countries, believer who are caught intoxicated are severely punished. The impacts of the alcohol ban on foreign businesses means they cannot market alcohol in countries where it is a banned. In addition, alcohol is a taboo subject in most of the Muslim world where people cannot discuss whether it should be legalized or stay banned.

Dressing and Dress Codes

Dressing is an important cultural consideration in businesses that operate across different national cultures. What is acceptable and decent varies from one culture to another. For example, KFC in the United States may be able to dress their female waiting staff in miniskirts and tight tops as this is acceptable in American culture. In contrast, if KFC operates a store in a conservative Middle Eastern country it would be considered indecent to dress their staff in miniskirts.

The backlash for breaking cultural dressing codes can be significant as some government can even cancel the operation licenses of organization that break local dressing codes. Cultural dressing codes also impact the dressing codes organization can use for their employees. For example, it is agreeable in many western countries for women to go to work in miniskirts as part of suits, but the same would not pass for decent office wear in the Middle East.

Furthermore, some communities require women to wear veils whenever they are outdoors. These points are important considerations for organizations who are developing dressing codes for employee in foreign offices.

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 Women vs. men relationships

Women/Men relationships are becoming an important cultural issue that has the potential to influence business operations. In some cultures, some products are for men while other are for women. Another good example is where buying decisions for some products are the preserve of one sex. In some cultures, women make the buying decisions for food items, household items, and sometimes for holidays as in the case of Britain.

For organization marketing to different cultures, it is important to pre-determine the role of women/men in making the purchases decision for the product that you are offering in the market.

Taboos

Taboos vary from culture to culture. For example, in some culture Dogs are considered pets and thought of consuming their meat would be unacceptable. However, the Chinese consider dog meat a delicacy and there are many butcheries stocking Dog meat in China. One of the taboos which touch on organizational culture has to do with acceptance of tattoos in the workplace.

In the United States, tattoos have gained wide popularity and are quickly being accepted in the workplace. However, some workplaces in the US have rules that prevent employees from having visible tattoos. According to (), the prejudice associated with tattoos has faded greatly in the last twenty years and few people feel tattoos can prevent them from securing a job.

Despite this over 31 per cent of Human resource managers assert that visible tattoos can impact a candidate’s chance of getting a job. In contrast, the stigma associated with tattoos is still high in the UK. Most hiring managers thought that visible tattoos on candidates’ bodies indicated they were “thugs” or “drug addicts”. They also argued that ultimately it is customer’s attitudes towards employees with visible tattoos that influence the hiring decision.

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Conclusion

There is little doubt that culture is a powerful force in business environments. Businesses cannot ignore the potent forces of culture in both their internal and external environment. In particular, businesses must remember that contemporary organizations have to work with employees originating from different national cultures.

It is important for them to consider the role differences in national culture may impact the behavior of employees. For example, organizations receiving employees from foreign cultures may need to use special communication strategies to engage and connect with the employees from different national cultures.

Organizations also have their own internal culture which may need to change from time to time. This paper discusses leadership change, merger and acquisitions, changes in external environment, and technological changes as the main drivers of organizational culture change.

The paper argues that good leadership can enable organization smoothly transition into a new organizational culture. Finally, the paper presents several cultural issues that impact contemporary business including negotiations, religion, dress codes and taboos.

http://hrbdf.org/dilemmas/freedom-speech/#.VuK_ShLfrGU

http://www.dailymail.co.uk/news/article-2410897/Tattoos-taboo-employers-Those-considering-body-art-think-twice-looking-job.html

http://www.economist.com/node/21560543

http://www.usatoday.com/story/news/nation/2014/09/11/tattoo-taboo-workplace/15449719/

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Alzheimer’s disease Research Paper

Alzheimer’s disease
Alzheimer’s disease

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Alzheimer’s disease

Since patient wandering and confusion are common for the patient with moderate-to-severe Alzheimer’s disease, what would the RN teach the family about maintaining a safe environment? Provide three examples.

The RN should teach the family that patients diagnosed with Alzheimer can comfortably live in their homes, provided the safety measures are put in place. The family members must be educated on ways Alzheimer disease causes changes in the patient’s brain and body functions. This affects the patient reasoning, judgement, physical ability, behaviour, cognitive functions and sense of time (Bridenbaugh, Monsch & Kressig, 2012).

The family should be taught on ways to identify the possible dangers.  The hazardous areas should be locked.  Drugs and other chemical substances should be stored out of reach, in lockable cupboards.  The family must be ready for emergencies. This implies that they should keep emergency phone numbers such as fire departments and local police helplines. The family members should ensure that the safety devices are   working.

These include smoke detectors and carbon monoxide detectors and fire extinguishers.  Walkways should be well lit to prevent falls. All weapons such as guns or other types of weapons must be removed. Basically, the home must be well lit, ventilated and free from hazards. The home should not be too restrictive, but one that encourage social interaction and independence (Schneider, 2011).

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To prevent the patient from wandering, the patient’s relatives and care givers should be taught the following strategies. To start with, they should create a daily activity plan. This helps identify the times of the day that wandering occurred. The patient must be reassured whenever they feel lost, disoriented or abandoned.  The care giver must refrain from using correcting the patient using harsh voice.

All patients’ basic need must be met. They should not allow the patient to go places that trigger confusion and disorientation such as grocery stalls, malls or other venues that are busy.  The doors must remain locked, and keys including car keys put out of sight. The patient must never be left alone i.e. they should always be under supervision. If the main issue is night wandering, devices that signal motions should be used (Lacey, Jones, Trigg & Niecko, 2012).


How would the RN adjust the teaching based on the family’s educational level, socioeconomic status or culture? Provide two examples

 Despite the increase emphasis on patient centred care, when it comes to coping strategies for Alzheimer, the healthcare provider should focus on family centred care. In this case, the RN must conduct a family assessment   to understand patient structure as well as style. This helps RN formulate effective teaching plan (Skoog, 2011).

To begin with, the RN should evaluate the barriers that would hinder the family ability to deliver health care.  This includes the ages, sex and health status of the family member. The family socioeconomic status influences the teaching strategy. People from high socioeconomic status are most likely to be educated, thus basic healthcare can be used during the teaching process.

However, those from low income households tend to have low level of education which determines people’s attitudes and perceptions of care. Additionally, some family members lack basic knowledge of the disease. Cultural backgrounds could make some patients to believe in folk medicine. These factors must be addressed when teaching the patient’s family members (Trigg, Jones, Lacey & Niecko, 2012).

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What are common symptoms of caregiver role strain?

 The demands of giving care to Alzheimer patients are very taxing which can lead to care givers strain and burnout. These are manifested through stress, anxiety, exhaustion, and sleep disturbances. Other common symptoms of care giver role strains include changes in appetite, depression, withdrawal and mood swings (Trigg, Jones, Lacey & Niecko, 2012).

Provide one nursing diagnosis statement (statement must include an actual nursing diagnosis, related factor and as evidenced by) that may be appropriate for a patient with moderate-to-severe Alzheimer’s disease.

Anxiety related to stress and situational crisis as evidenced by insomnia, restlessness, memory loss, and cognitive functions deficits.

References

Bridenbaugh, S., Monsch, A., & Kressig, R. (2012). How does gait change as cognitive decline progresses in the elderly?. Alzheimer’s & Dementia, 8(4), P131-P132. http://dx.doi.org/10.1016/j.jalz.2012.05.349

Lacey, L., Jones, R., Trigg, R., & Niecko, T. (2012). Caregiver burden as illness progresses in Alzheimer’s disease (AD): Association with patient dependence on others and other factors—Results from the Dependence in Alzheimer’s Disease in England (DADE) study. Alzheimer’s & Dementia, 8(4), P248-P249. http://dx.doi.org/10.1016/j.jalz.2012.05.660

Schneider, L. (2011). Agitation and Alzheimer’s disease. Alzheimer’s & Dementia, 7(4), S92. http://dx.doi.org/10.1016/j.jalz.2011.05.223

Skoog, I. (2011). Vascular Disease Risk Factors and Alzheimer’s Disease. Alzheimer’s & Dementia, 7(4), S284. http://dx.doi.org/10.1016/j.jalz.2011.05.822

Trigg, R., Jones, R., Lacey, L., & Niecko, T. (2012). Relationship between patient self-assessed and proxy-assessed quality of life (QoL) and patient dependence on others as illness progresses in Alzheimer’s disease: Results from the Dependence in Alzheimer’s Disease in England (DADE) study. Alzheimer’s & Dementia, 8(4), P250-P251. http://dx.doi.org/10.1016/j.jalz.2012.05.667

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FUNCTION-BASED TREATMENTS FOR TODDLERS

FUNCTION-BASED TREATMENTS FOR TODDLERS
FUNCTION-BASED TREATMENTS FOR TODDLERS

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FUNCTION-BASED TREATMENTS FOR TODDLERS

Effectiveness of Function-Based Treatments Versus Non-Function-Based Treatments on Disruptive Behaviors for Toddlers with Developmental Disabilities

Young children with disruptive behaviours are more likely to be removed from early childhood programs (Brauner & Stephens, 2006; Webster-Stratton & Reid, 2003). Disruptive behaviours are a kind of problem behaviours. These behaviours are called disruptive since children with disruptive problem behaviours factually disrupt the individuals and activities around them at different settings, such as at home, at school, and outdoors (Sun & Shek, 2012). Arnold, McWilliams, and Arnold (1998) reported that these disruptive behaviours are one of the most problem behaviours faced by instructors.

Research revealed that the most common disruptive behaviours were crying, screaming, and yelling, followed by turning over materials, pushing materials away, and hiding (Sun & Shek, 2012). The results showed that instructors perceived student disruptive behaviours as those behaviours involving running around the classroom, pushing the task away, and being out-of-seat, disturbing learning and teaching, which mostly needed intervention from instructors (Sun & Shek, 2012).

Failure to address these disruptive behaviours with early and effective interventions may leave these children at risk for later academic and social failure (Campbell, 1995; Dunlap et al., 2006; Webster-Stratton & Taylor, 2001). Additionally, children with disruptive behaviours are three times more vulnerable to suspension from schools than are other children in K-12 (Gilliam, 2005), which cause a substantial reduction in social and academic learning opportunities (Wood, Ferro, Umbreit, & Liaupsin, 2011).

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Function-based treatments identify the reasons why children with developmental disabilities exhibit those disruptive behaviours (Horner, 1994). These treatments are designed and developed based on the findings of a functional behavior assessment (FBA), which determines the antecedents that precede the disruptive behaviours and the consequences that reinforce such behaviours (Sugai, Sprague, Horner, & Walker, 2000).

To decrease these disruptive behaviours, it is necessary to employ functional behaviour assessment (FBA), which identifies the antecedents that trigger and the consequences that maintain such behaviours (Dunlap & Fox, 2011). FBA consists of a variety of assessment approaches, including indirect descriptive assessments (e.g., rating scales, checklists, record reviews, and structured behavioural interviews), direct descriptive assessments (e.g., scatter plots, direct observations and recordings of antecedents and consequences, and conditional probability assessments), and experimental functional analysis, in which antecedent and consequent events are manipulated to identify the functional relationship between these events and the disruptive behaviour (Poole, 2011).

Following FBA, a function-based treatment can be developed and designed to; (a) eliminate the antecedents that lead to the disruptive behaviour, (b) teach replacement behaviours that serve the same function as the disruptive behaviours, and (c) provide consequences that reinforce the replacement behaviours (Sugai, Sprague, Horner, & Walker, 2000).  

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Reviewers of function-based treatments have reported that researchers have adequately described how to implement these treatments, but have failed to provide full details about how to design and develop treatments based on FBA results (Scott et al., 2005). To remedy this, Umbreit, Ferro, Liaupsin, and Lane (2007) developed the Decision Model, which is a systematic process for designing and developing function-based treatments based on FBA data.

The Decision Model has been used to design and develop function-based treatments in general education, special education, and inclusive settings for children with intellectual disabilities (ID) (Blair, Liaupsin, Umbreit, & Kweon, 2006; Wood, Ferro, Umbreit, & Liaupsin, 2011), emotional and behavioural disorder (EBD) (Lane, Smither, Huseman, Guffey, & Fox, 2007; Nahgahgwon, 2008; Turton, Umbreit, Liaupsin, & Bartley, 2007), attention deficit hyperactivity disorder (ADHD) (Stahr, Cushing, Lane, & Fox, 2006; Wood et al., 2011), deafness and hard of hearing (DHH) (Liaupsin, Umbreit, Ferro, Urso, & Upreti, 2006), and autism spectrum disorder (ASD) (Reeves, Umbreit, Ferro, & Liaupsin, 2013; Wood et al., 2011).

For function-based treatments to be used in early childhood programs, comparisons must be made between the effectiveness of treatments that are and are not matched to behavioural function. Very few such evaluations have been carried out, though researchers have compared those interventions in a range of general education, special education, and inclusive settings for children with ID (Ellingson, Miltenberger, Stricker, Galensky, & Garlinghouse, 2000), learning disabilities (LD) (Meyer, 1999), ASD (Taylor & Miller, 1997), mild cerebral palsy (Ellingson et al., 2000), EBD (Meyer, 1999),

Down syndrome (Taylor & Miller, 1997), other health impairments (Newcomer & Lewis, 2004), and those with no disabilities (Bellone, Dufrene, Tingstrom, Olmi, & Barry, 2014; Ingram, Lewis-Palmer, Sugai, 2005).

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Previous studies have investigated the effectiveness of function-based treatments on problem behaviours compared to ‘time out’ (Repp, Felce, & Barton, 1998), standard treatment that may or may not be matched to the function of the problem behaviour (Schill, Kratochwill, & Elliott, 1998), positive behaviour support (BIP) treatment based on alternative hypotheses (Ingram et al., 2005), treatment based on the topography of the problem behaviour (Newcomer & Lewis, 2004), and Mystery Motivator (MM) treatment not matched to the behavioural function of the disruptive behaviour (Bellone et al., 2014).

All these studies demonstrated that the function-based treatment was more successful at reducing problem behaviours; however, inadequate evidence exists to conclude function-based treatments are more effective at decreasing disruptive behaviours than MM treatments that are selected based on their effectiveness at reducing disruptive behaviours with similar topographies (Bellone et al., 2014).

MM treatment uses randomized reward uncertainty to decrease the disruptive behaviour (Musser, Bray, Kehle, & Jenson, 2001; Schanding & Sterling-Turner, 2010; Theodore, Bray, Kehle, & Jenson, 2001) and increase the replacement behaviour (Jenson, Rhode, & Reavis, 1994). MM treatment includes two major elements: (a) a variety of unknown and appealing reinforcers, and (b) a variable schedule of reinforcement (Moore, Waguespack, Wickstrom, Witt, & Gaydos, 1994).

MM treatment has been used to decrease disruptive behaviours in high school, elementary school, and preschool programs for children with selective mutism (Kehle, Madaus, & Baratta, 1998), ADHD (Musser, et al., 2001), serious emotional disturbances (SED) (Musser et al., 2001), ID (LeBlanc, 1998), cerebral palsy (LeBlanc, 1998), oppositional defiant disorder (ODD) (Musser et al., 2001), LD (Valum, 1995), other developmental disabilities (LeBlanc, 1998), and no disabilities (Bellone et al., 2014; Murphy, Theodore, Aloiso, Alric-Edwards, & Hughes, 2007; Schanding & Sterling-Turner, 2010).

Previous studies have empirically demonstrated MM treatments can be effective in decreasing disruptive behaviours and increasing replacement behaviours. Some have argued that function-based treatments are more empirically substantiated than MM treatments (Bellone et al., 2014); however, there has been no research investigating the effectiveness of function-based treatments compared to MM treatments. It will be beneficial for specialists and other researchers to fill this research gap to provide and help special education teachers choose the best treatments for toddlers with disabilities.

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            The intent of the present study was to extend FBA research by comparing the effectiveness of function-based and MM treatments at reducing the disruptive behaviours of toddlers with developmental disabilities. This research was conducted in three parts. In Part 1, an FBA was conducted to identify the function of the disruptive behaviour. In Part 2, both a function-based treatment and an MM treatment were developed and designed for each toddler. In Part 3, both treatments were implemented in the inclusive toddler program during the most problematic activities for each toddler.

Method

Participants and Setting

Each classroom had one early childhood and one special education teacher. Five special education teachers selected one toddler each from five different inclusive toddler classrooms from the same school district. Each classroom had one toddler out of five with an Individualized Family Service Plan (IFSP). All children received speech-language pathology services outside the classroom, so there were no language concerns. The special educators only provided support to the children with IFSPs.

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The special education teachers had between 15 and 20 years of teaching experience. All were experienced with the FBA process and completed at least 20 FBAs per year. Each teacher was involved in special education programs consisting of students diagnosed with developmental disabilities. All teachers had a bachelor’s degree in applied behaviour analysis (ABA) and participated in yearly intensive professional development workshops. Written informed consent was obtained from each participant’s parents and the teachers prior to the study.

The five toddlers were selected based on the following criteria: (a) the presence of consistently occurring disruptive behaviours leading to disrupted learning, (b) having an IFSP, (c) having their teachers contact their parent(s) at least three times (via calls or notes sent home) within the previous four weeks due to disruptive behaviour, (d) the absence of self-injury behaviour (SIB), (e) attending class five days per week for at least four hours each day, and (f) the independent confirmation of DSM-IV criteria by at least two professionals with expertise in the child’s disorder.

The following toddlers were selected for this study. Marcus was a 33-month-old boy who had been diagnosed with ASD. He lives with his both parents and he has two brothers with typically development. He received social skill therapy for two hours three times per week as part of a small group. His vocabulary consisted of 8 words. He displayed a variety of disruptive behaviours that included out-of-seat, crying, and turning over classroom materials (e.g., pushing over a bookshelf in the reading area).

Treatment and baseline sessions were conducted within the classroom during centre activities. Noah was a 34-month-old boy who had been diagnosed with mild ID. He lives with his mother and his oldest sister. His sister has diagnosed with ASD. He goes with his sister to his father home one time in a month. His spontaneous speech consisted of 2–3 word utterances. He displayed a variety of disruptive behaviours that included out-of-seat, pushing the task away, and hiding under his desk.

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Treatment and baseline sessions were conducted within the classroom during centre activities. Aubrey was a 32-month-old girl who had been diagnosed with ASD. She lives with her father and her grandparents. She is only child. Her mother died. She received individualized speech therapy for two hours four times per week.  Her spontaneous language consisted of 10 words and sounds (e.g., ‘no’, ‘bye’, ‘hi’). She displayed a variety of disruptive behaviours that included screaming, crying, and running around the classroom.

Treatment and baseline sessions were conducted within the classroom during circle time. James was a 32-month-old boy who had been diagnosed with Down syndrome. He lives with his both parents and two sisters and one brother. His brother had diagnosed with mild intellectual disability. He received individualized social skills therapy for 1 hour four times per week.

He also received speech therapy for two hours four times per week. He was nonverbal, but had been taught a few signs (e.g., ‘help’, ‘more’, ‘bathroom/toilet’). He displayed a variety of disruptive behaviours that included yelling, crying, and closing his eyes (e.g., closing eyes when asked to look at a picture). Treatment and baseline sessions were conducted within the classroom during circle time. Kali was a 33-month-old girl who had been diagnosed with ID.

She lives with her mother and her stepfather. She has stepbrother with typically development.  She received individualized speech therapy for two hours four times per week.  Her vocabulary consisted of 8 words. She displayed a variety of disruptive behaviours that included yelling, pushing the task away, and hiding under her desk. Treatment and baseline sessions were conducted within the classroom during centre activities.

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Part 1: Functional Behavioural Assessment

Functional Assessment Interview. Each special education teacher interviewed each toddler’s parent using the Functional Assessment Interview Form (FAI; O’Neill, Horner, Albin, Sprague, Storey, & Newton, 1997). The special educators did not receive any additional FAI training. The FAI was used to identify information about the features of the disruptive behaviours (i.e., duration, frequency, topography, and intensity), the immediate antecedent events that triggered the disruptive behaviours, and the consequences that might reinforce the disruptive behaviours.

Certain items provided information about the ecological events that set up the disruptive behaviour, replacement behaviours, communication strategies used by the toddler, previously successful strategies, reinforcers, and the history of disruptive behaviour. Once the FAI was completed, a master’s level behaviour analyst identified the function of the disruptive behaviour and rated their assessment of it using a 6-point Likert scale from 1 (extremely uncertain) to 6 (strongly certain).

The researcher then interviewed each special education teacher using the same FAI forms to collect more details associated with each item. The researcher did not read the FAI form teachers administered to the parents. Again, using the FAI responses, the behaviour analyst identified and rated their certainty of the function of the disruptive behaviour.

For reliability, a second master’s level behaviour analyst examined the teacher and parent FAI responses, independently identified the function of the disruptive behaviour, and rated it using the same certainty scale. Both master’s level behaviour analysts were research assistants with BCBA certification.

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Student Observation. Using the Functional Analysis Observation Form (FAO; O’Neill, Horner, Albin, Storey, & Sprague, 1990), special education teachers observed each toddler’s disruptive behaviours, as indicated by the FAI results, while an early childhood teacher conducted their typical activities. Each observation consisted of five 20-minute sessions. The special educators did not receive additional FAO training. By using these event recording procedures, the special education teachers identified disruptive behaviours, antecedents, consequences, and the function of the disruptive behaviour.

The FAO sessions only occurred during centre activities (Marcus, Noah, and Kali) and circle time (Aubrey and James). Using a video recording, the first behaviour analyst observed the toddlers during the same observation period as the teachers and filled out an identical FAO. When a disruptive behaviour occurred, the behaviour analyst individually recorded the exact time, consequences, antecedents, and disruptive behaviours on the FAO.

The conditional FAO probabilities were examined to look for patterns related to antecedents and consequences related to the disruptive behaviours. The conditional probabilities were determined by following formula: the number of times each consequence and the antecedents occurred divided by the sum of the number of disruptive behaviour occurrences, multiplied by 100. The researcher interpreted these probabilities independently to identify the functions.

Inter-observer agreement. Agreement between the special education teacher and the behaviour analyst regarding the disruptive behaviour was indicated when each independently recorded the occurrence of disruptive behaviours within 5 seconds. Agreement between both observers on consequences and antecedents was indicated when they recorded the same antecedents and consequences associated with a disruptive behaviour. Inter-observer agreement (IOA) was calculated by dividing the number of agreements by the total number of both disagreements and agreements.

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Functional Assessment Results. We discuss the results of the functional assessments for each toddler, in turn.

            Marcus. During the FAI, Marcus’s disruptive behaviour was consistently followed by peer attention with a confidence rating of 6 (indicating strong certainty). The results of the FAO indicated that his disruptive behaviours were consistently followed by peer attention particularly during centre activities. The IOA between the special education teacher and the behaviour analyst was high (range: 99–100%; mean: 99.6%).

            Noah. During Noah’s FAI, his disruptive behaviour was consistently followed by teacher attention with a confidence rating of 5 (indicating moderate certainty). The results of the FAO indicated that his disruptive behaviours were consistently followed by special education teacher attention during centre activities. The IOA between the special education teacher and the behaviour analyst was high (range: 98–100%; mean: 99.4%).

Aubrey. During Aubrey’s FAI, her disruptive behaviour was consistently followed by attention from the special education teacher with a confidence rating of 6 (strong certainty). The results of the FAO indicated that her disruptive behaviours were consistently followed by special education teacher attention during circle time. The IOA between the special education teacher and behaviour analyst was high (range: 98–100%; mean: 99.4%).

James. During James’s FAI, his disruptive behaviour was consistently followed by special education teacher attention with a confidence rating of 6 (strong certainty). The results of the FAO indicated that his disruptive behaviours were consistently followed by special education teacher attention during the circle time. The IOA between the special education teacher and the behaviour analyst was high (range: 99–100%; mean: 99.6%).

Kali. During Kali’s FAI, her disruptive behaviour was consistently followed by peer attention with a confidence rating of 5 (moderate certainty). The results of the FAO indicated that her disruptive behaviours were consistently followed by peer attention during centre activities. The IOA between the special education teacher and first behaviour analyst was high (range: 99–100%; mean: 99.6%).

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Part 2: Treatment Development

Function-based Treatments. The Decision Model was used to design treatments based on the functions of the disruptive behaviour as assessed in the previous section. The Decision Model has three basic components: reinforcement of the replacement behaviour, antecedent modifications, and extinction of the disruptive behaviour. This model uses the two following questions: ‘Do the antecedent incidents indicate an evidence-based best strategy?’ and ‘Can the toddler perform the replacement behaviour?’

The answers to these two questions are used to select one of following four treatment methods. Method One, Teaching the Replacement Behaviour, is selected when the toddler cannot perform the replacement behaviour, even if the antecedent incidents indicate an evidence-based best strategy. Method Two, Improving the Environment, is selected when the toddler can perform the replacement behaviour but the antecedent incidents do not indicate an evidence-based best strategy.

Method Three, Adjusting the Contingencies, is selected when the child can perform the replacement behaviour and the antecedent incidents indicate an evidence-based best strategy. Methods One and Two are combined when the toddler cannotperform the replacement behaviour and the antecedent incidents do not indicate an evidence-based best strategy.

Treatment design and development. The researcher, the behaviour analyst, and the special education teachers were all involved in designing and developing function-based treatments using the Decision Model. The team was familiar with and frequently discussed the Decision Model process. The selected treatment methods addressed the function of the disruptive behaviours and each classroom’s needs. Below, we discuss how the treatment strategy decision was made for each toddler.

Marcus. Marcus was able to perform the replacement behaviours for centre activities with peers, which were sitting for the entire 10-min table activity, looking at storybooks, and playing with toys. The antecedent events indicated an effective intervention strategy for him. In the classrooms, visuals were used to show the order of steps necessary for the different activities, and visual rules were used to remind toddlers of ‘centre activity expectations’ (e.g., a picture demonstrating sitting in a chair).

Samples of the finished products were provided to help orient the toddlers to the task. Teachers provided attention and praise as these replacement behaviours were followed. Most other toddlers responded well to teacher praise. However, for Marcus the schedule of reinforcement did not maintain these replacement behaviours. Therefore, Method Three was selected to develop a function-based treatment. Marcus’s treatment is described in Table 1.

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Noah. Noah was able to perform the replacement behaviours, which were sitting for the entire 10-min table activity, colouring, and cutting. The antecedent incidents indicated an effective intervention strategy. As was the case with Marcus, visuals were used to show the order of the steps necessary to complete the activities (e.g., a photo of scissors for cutting), and visual rules were used to remind the toddlers of ‘centre activity expectations’.

Samples of the finished products were provided to help orient them to the task. Teachers provided attention and praise as these replacement behaviours were followed. Most other toddlers responded well to teacher praise. However, the schedule of reinforcement did not maintain the replacement behaviours for Noah. Therefore, Method Three was selected to develop a function-based treatment. Noah’s treatment is described in Table 2.

Aubrey. Aubrey was able to perform the replacement behaviours, which were looking at the teacher and verbally responding to the teacher’s questions during story time. The antecedent incidents indicated an effective strategy. Visual schedules were used to show the order of the circle-time activities. Visual rules were used to remind the toddlers of ‘circle time expectations’. A song was repeated to signal the beginning and end of circle time. Large, colourful books were used.

Each toddler’s name was placed on the floor around the circle, indicating the beginning of story time and his or her designated seats. Teachers provided attention and praise for Aubrey’s replacement behaviours. Most other toddlers responded well to teacher praise. However, the schedule of reinforcement did not maintain these replacement behaviours. Therefore, Method Three was selected to design a function-based treatment. Aubrey’s treatment is described in Table 3.

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James. James was able to perform the replacement behaviours, which were looking at the teacher and storybook during story time. The antecedent incidents represented an effective strategy. As was the case with Aubrey, visual schedules were used to show the order of the circle-time activities. Visual rules were used to remind the toddlers of ‘circle time expectations’. A song was repeated to signal the beginning and the end of circle time. Large, colourful books were used.

Each toddler’s name was placed on the floor around the circle, indicating the beginning of story time his or her designated seats. During circle time, the toddlers were directed to face the teacher. Teachers provided attention and praise for his replacement behaviours. The other toddlers responded well to teacher praise. However, the schedule of reinforcement did not maintain James’s replacement behaviour. Therefore, Method Three was selected to design a function-based treatment. James’s treatment is described in Table 4.

Kali. Kali was able to perform the replacement behaviours with her peers, which were sitting in her chair, playing with Play-Doh™, and drawing. As with the other toddlers in our study, visual rules and instructions were provided to remind them of ‘centre activity expectations’ (e.g., a picture demonstrating sitting in a chair). Samples of the finished products were provided to help orient the toddlers to the task.

Teachers provided attention and praise as these replacement behaviours were followed. Most other toddlers responded well to teacher praise. However, the schedule of teacher praise and attention reinforcement did not maintain the replacement behaviours for Kali. Again, Method Three was selected to design a function-based treatment. Kali’s treatment is described in Table 5.

Mystery Motivator Treatment. The MM was based on the alternative hypothesis that access to tangible rewards could promote replacement behaviours. Since gaining attention was identified as the primary function of disruptive behaviours across toddlers, teachers provided no attention to the toddler contingent on the occurrence of the replacement behaviour. The MM treatment focused instead on a tangible non-function-based reinforcement.

The toddlers and teachers underwent practice sessions to learn the process. The visual rules were posted on the board at the front of the classroom. At the beginning of each session, the special education teachers reminded the toddlers that if they followed the classroom rules, they would receive a check on their chart. If they earned five or more checks, they could choose a card from the MM box containing ten cards with pictures of surprise rewards.

Parents and teachers suggested what to include in the MM box. Children knew they had received all five checks and could pick a prize when the teachers handed them the box with minimal attention. If a child missed a check, they were told at the end of the session. At the end of each session, if a toddler met the criterion, he or she immediately chose a card from the MM box and received the corresponding reward (e.g., small toy car, popcorn, doll).

Toddlers who did not meet the criterion were told by the teachers that they would get another chance in the next session. The activities were the same during baseline, MM, and function-based phases.

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Part 3: Treatment Implementation

Method. A multiple-treatment reversal design was used to compare behavioural disruptions during: (a) baseline sessions, (b) sessions with function-based treatments, and (c) sessions with MM treatments. We observed toddlers during the sessions in which their behavioural disruptions were the most problematic. Baseline, treatment, and maintenance data were collected during centre activities (Marcus, Noah, and Kali) and circle time (Aubrey and James).

All sessions were video recorded. Data were collected using 10-second partial intervalsof 10 minutes in total duration. The teachers used the tone of the timer to signal the beginning of a new interval. By using the VCR timer, the behaviour analyst independently recorded the start and end times of the disruptive behaviours. The design consisted of alternating baseline (‘A’) and treatment phases (either function-based, ‘Treatment B’, or MM treatments, ‘Treatment C’).

Baseline sessions consisted of the early childhood teachers leading activities as usual, with no treatments or planned contingencies being utilized. Following the baseline measures, we counterbalanced and returned to the baseline phase between the treatments for each toddler to minimize internal validity threats and multiple-treatment interference.

The function-based treatment phase (B) was implemented first for Marcus, Aubrey, and James (i.e., ABACAB), while the MM treatment phase (C) was implemented first for Noah and Kali (i.e., ACABAB). The teachers reminded the toddlers of which treatment would be administered that day to ensure the toddlers could discriminate between the two treatments. The maintenance phase was conducted at the end of the final phase. The more effective treatment was implemented for a minimum of two weeks. Data were collected daily from recorded video sessions.

Inter-observer agreement. During IOA, video data were collected using the same methods, and all sessions were recoded. Training occurred to check for reliability before the video coding began. A secondbehaviour analyst independently collected data for 70% of each phase per participant to calculate the IOA. Using an interval-by-interval method, IOA for disruptivebehaviour was calculated by dividing the total agreements by the total number of observed intervals, multiplied by 100.

Treatment integrity.   The behaviour analyst completed a treatment-specific yes/no checklist concerning theintegrity of the treatment and maintenance observations. There were 15 components for function-based and MM sessions. Treatment integrity was calculated by dividing the accurately completed components (i.e., adhering to the treatment) by the total number of treatment components, multiplied by 100. A second behaviour analyst independently completed this checklist for 70% of the treatment and maintenance phases. IOA for treatment integrity was calculated by dividing the total agreements by the total number of treatment components, multiplied by 100.

Social validity. At the end of the study, each teacher independently completed the Treatment Acceptability Rating Form-Revised (TARF-R) (Reimers, Wacker, Cooper, & DeRaad, 1992), which consists of 17 questions assessing each treatment’s disruptiveness/time required, side effects, effectiveness, willingness, cost, and reasonableness for use in the classroom. Responses are indicated on a 7-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree). The total scores range from 17 to 119, with higher scores indicating higher acceptability and social validity.

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Results

Marcus (ABACAB)

During five baseline sessions, Marcus’s disruptive behaviour ranged from 80 to 90%, with a mean of 88%. When Treatment B (the function-based treatment) was implemented for six sessions, his disruptive behaviour decreased substantially to an average of 3.17% (range: 1–5%). His disruptive behaviour later increased back to an average of 83.3% (range: 70–90%) with a three-session return to baseline. When Treatment C (MM treatment) was implemented for six sessions, his disruptive behaviour decreased slightly to 15.2% (range: 14–17%).

With a final return to baseline for three sessions, his disruptive behaviour remained at an average of 90%. During the maintenance phase (Treatment B), his disruptive behaviour continued to decrease, ranging from 0 to 1% with a mean of 0.4%. The IOA for disruptive behaviour was 100% for all phases. Treatment integrity averaged 100% and the IOA for treatment integrity was 100% during the treatment and maintenance phases. Using the TARF-R, his teacher rated Treatment B at 118 and Treatment C at 100.

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Noah (ACABAB)

During five baseline sessions, Noah’s disruptive behaviour ranged from 60 to 65%, with a mean of 63%. When Treatment C (MM) was implemented for seven sessions, his disruptive behaviour slightly decreased to 13% (range: 10–16%). With a three-session return to baseline, his disruptive behaviour increased to levels similar to those of his first baseline sessions, with a mean of 66.7% (range: 65–70%). When Treatment B (function-based) was implemented for six sessions, his disruptive behaviour decreased dramatically to 2% (range: 1–3%).

With an additional three-session return to baseline, his disruptive behaviour remained at an average of 65%. During the maintenance phase (Treatment B), his disruptive behaviour immediately decreased to 0.03% (range: 0–1%). The IOA for disruptive behaviour reached 100% for each phase. Treatment integrity averaged 100% and the IOA for treatment integrity was 100% during the treatment and maintenance phases. Using the TARF-R, his teacher rated Treatment B at 117 and Treatment C at 104.

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Aubrey (ABACAB)

During five baseline sessions, Aubrey’s disruptive behaviour ranged from 85 to 90%, with a mean of 89%. When Treatment B (function-based) was implemented for seven sessions, her disruptive behaviour decreased substantially to an average of 2.5% (range: 1–5%). With a three-session return to baseline, her disruptive behaviour rapidly increased to an average of 90%. When Treatment C (MM) was implemented for seven sessions, her disruptive behaviour gradually decreased to 13.7% (range: 11–17%).

Her disruptive behaviour returned to a frequency similar to the first baseline sessions, 88.3% (range: 85–90%), after an additional three-session return to baseline. During the maintenance phase (Treatment B), her disruptive behaviour decreased again to 0.02% (range: 0–1%). The IOA for disruptive behaviour reached 100% for each phase. Treatment integrity averaged 100% and the IOA for treatment integrity was 100% during the treatment and maintenance phases. Using the TARF-R, her teacher rated Treatment B at 118 and Treatment C at 105.

James (ABACAB)

During five baseline sessions, James’s disruptive behaviour ranged from 65 to 70%, with a mean of 68%. When Treatment B (function-based) was implemented for seven sessions, his disruptive behaviour decreased dramatically to 1.8% (range: 1–3%). With a three-session return to baseline, his disruptive behaviour increased to levels similar to those observed during the first baseline phase, with a mean of 65%. When Treatment C (MM) was implemented for six sessions, his disruptive behaviour gradually decreased to 13.5% (range: 11–16%).

His disruptive behaviour increased dramatically, with a range of 65% to 70% and a mean of 68.3%, following a three-session return to baseline. During the maintenance phase (Treatment B), his disruptive behaviour decreased again to 0.1% (range: 0–1%). The IOA for disruptive behaviour reached 100% for each phase. Treatment integrity averaged 100% and the IOA for treatment integrity was 100% during the treatment and maintenance phases. Using the TARF-R, his teacher rated Treatment B at 117 and Treatment C at 102.

Kali (ACABAB)

During five baseline sessions, Kali’s disruptive behaviour ranged from 85 to 90%, with a mean of 89%. When Treatment C (MM) was implemented for seven sessions, her disruptive behaviour slightly decreased to 15.5% (range: 14–17%). With a three-session return to the baseline phase, her disruptive behaviour increased to levels similar to those observed seen during the first baseline with a mean of 88.3% (range: 85–90%). When Treatment B (function-based) was implemented for six sessions, her disruptive behaviour decreased substantially to an average of 2.2% (range: 1–4%).

Her disruptive behaviour returned to an average of 90% following a three-session return to baseline. During the maintenance phase (Treatment B), her disruptive behaviour immediately decreased to 0.2% (range 0–1%). The IOA for disruptive behaviour reached 100% for each phase. Treatment integrity averaged 100% and the IOA for treatment integrity was 100% during the treatment and maintenance phases. Using the TARF-R, her teacher rated Treatment B at 118 and Treatment C at 105.

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Discussion

The purpose of the current study was to compare the effectiveness of function-based and MM treatments for the disruptive behaviours of toddlers with developmental disabilities. Both types of treatments were implemented in a counterbalanced manner across toddlers to minimize treatment-order effects. Marcus, Aubrey, and James received function-based treatments first, whereas Noah and Kali experienced the MM treatment first. All toddlers’ disruptive behaviours improved during both treatments as measured by direct observations during typical classroom activities. However, disruptive behaviours decreased more following function-based than following MM treatments.

One explanation for the different treatment outcomes on disruptive behaviours may be due to matching the treatment to the function of the behaviour. In function-based treatments, delivering praise and paying attention were more prominent reinforcers for decreasing disruptive behaviours, which was consistent with the attention-seeking function of the behaviours.

The MM treatment was designed to help the toddlers adjust their behaviours to gain tangible items unrelated to the function of the disruptive behaviours. Another explanation for the greater decrease in disruptive behaviour under function-based treatments is the use of an extinction component. In the MM treatment, teachers withheld tangible reinforcers and rewards contingent on disruptive behaviour. In function-based treatment, teachers ignored the occurrences of disruptive behaviour, which may have more significantly weakened the disruptive behaviours than did withholding the rewards.

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A greater decrease in disruptive behaviour under the MM treatment was observed for Noah, Aubrey, and James than for Marcus and Kali. This may have been due to interactions between teachers and toddlers during the MM treatment’s chart-checking process. Chart checking allowed the toddlers to receive attention from an adult at the start and end of the activity, possibly serving the attention-seeking functions of Noah, Aubrey, and James.

The alternating baseline phases were counterbalanced between the treatment B, Function-Based Treatment and the treatment C, Mystery Motivator Treatment (MM) for each toddler to minimize internal validity threats and the likelihood of interference and interaction that might impact the behaviours of each toddler. Responding in each treatment provides baseline phase for subsequent treatment in order to decrease sequence effects on each toddler’s behaviour. In counterbalancing, the treatments are withdrawn in order to reproduce the level of disruptive observed in a previous treatment.

Data collected on treatment integrity for all sessions of the treatment and maintenance phases showed that both treatments were implemented with high levels of fidelity. The measurement of treatment integrity allowed the validation and assessment of the functional relationship between treatments and disruptive behaviours. Our results highlight the significance of consistent data collection for ensuring treatment integrity in evaluating implementation outcomes (Horner et al., 2005). With these data, special education teachers can evaluate the internal and external consistency of the treatments delivered over time (Horner et al, 2005).

Finally, the special education teachers were satisfied with both treatments. Using the TARF-R (Reimers et al., 1992), they rated the feasibility, appropriateness, and design of the function-based treatments developed using the Decision Model as socially valid and more acceptable than MM treatment. Horner et al. (2005), and Newcomer and Lewis (2004) considered social validity an important indicator of the quality and effectiveness of a function-based treatment designed using the Decision Model.

Arelationship existed between the function-based treatments and the reduced occurrence of disruptive behaviours; the reduction in disruptive behaviours was maintained by fulfilling the function of gaining attention from adult and peers. For all toddlers, disruptive behaviour continuedto be reduced for 16 sessions under the function-based treatments. The results of this study are in line with findings of previous studies showing the effectiveness of function-based treatments (i.e., Blair et al., 2006; Lane et al., 2007; Liaupsin et al., 2006; Nahgahgwon, 2008; Reeves et al., 2013; Stahr et al., 2006; Turton et al., 2007; Umbreit, Lane, & Dejud, 2004; Underwood, Umbreit, & Liaupsin, 2009; Wood et al., 2011; Wood, Umbreit, Liaupsin, & Gresham, 2007).

This study also adds to the previous research by examining the effectiveness of function-based treatments using the Decision Model with toddlers with developmental disabilities conducted in inclusive early childhood classrooms. These results support and extend findings showing that function-based treatments that match the behavioural function of the disruptive behaviour decrease that disruptive behaviour.

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Limitations and Future Research

Several limitations should be addressed. First, the data were collected only in toddler classrooms. Disruptive behaviours do not happen in only one setting. Future research should extend the treatments across home and non-classroom settings (Dunlap et al., 2006; Powell, Dunlap, & Fox, 2006), with multiple, setting-specific, function-based treatments for those toddlers. Second, the results of this study have limited generalizability because data were collected only for toddlers with ASD, ID, and Down syndrome who displayed disruptive behaviour.

Additional research is needed to extend findings across different types of problem behaviours and different diagnoses. Third, a descriptive assessment was used to corroborate the function of the five toddlers’ disruptive behaviours. Future studies should replicate this study and utilize functional analysis to confirm that attention seeking is often a primary function that maintains the disruptive behaviours.

Finally, there were special education and early childhood teachers in all the inclusive toddler classrooms in this study. The special education teacher provided extensive attention to the selected toddlers during the FBA and treatment implementations, while the early childhood teacher conducted the typical activities. Future research should be conducted to determine the efficacy of conducting the FBA and implementing treatments in a classroom with only one teacher.

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Acknowledgments

The author would like to thank the behaviour analysts, teachers, and parents of the children for participating in this study.

Conflict of Interest

The author declares no conflicts of interest.

Funding

The authors received no financial support for the research and/or authorship of this article.

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Impacts of FDI on Employment in China

Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI)

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Impacts of FDI on Employment in China

Introduction

Foreign Direct Investment (FDI) has been defined by different scholars, with the common definition referring to an investment where a firm gets acquisition and control over another foreign firm or such a firm set up its subsidiary in another foreign country. Taking many different forms, such investments could include mergers and acquisitions, intercompany loaning facilities, reinvestment of profits in foreign countries and development of new facilities overseas.

A clear distinction is drawn between FDI and portfolio investment, which involves the investments in the security of another country, either equity or debt securities (Sornarajah, 2011).

Due to the rapid changes resulting from globalization, better opportunities arise in the FDI arena. Foreign investments have flowed to different countries and had great impact on these countries’ economy. Developing countries, for instance, have endeavored to set policies that are competent and able to attract foreign investors. China, in its developing stages, managed to conceptualize the Reform and Opening Policy as early as 1978, a move that started revolutionary policy guidance for Foreign Direct Investment in China (Hale & Long, 2011, p. 16).

Since its beginning, FDI in China has undergone rapid developments.  Within 1979 and 1986, a total amount of about $8.304 Billion was transacted as a result of FDI with the main players being Taiwan, Hong Kong and Macao (Chen, 2011, p. 93). This good trend was distorted from 1987 through 1991, when China’s legal system was unsound and incapable of attracting foreign investments

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Mainly referred to as the Rapid Development Stage, happened between 1992 and 1997 after China embarked on their socialist market economic system, hence improving tremendously the opportunities for investments. During this time, China’s FDI hit the highest at $196.7 Billion.

Though the following years witnessed a dwindling trend in FDI, this changed in 2001 to the present, due to China’s involvement in the World Trade Organization and its conducive environment that attracts investments internationally. Mostly, the main sectors which China concentrated on to stabilize their FDI included technology and telecommunications, banking, retail and wholesale growth.

Other than this, China promulgated new government policies that were business friendly. By the year 2011, the country had invested in over 400,000 enterprises that were internationally funded (Deng, 2013, p. 213). Apart from the inflow on FDI, there was massive effect of such investment to the indigenous firms in China. Such effects are referred to as spillover effects, which are usually divided into monetary and demonstration effects.

Due to their technological advancements, multi-national firms are competent compared to the local companies hence giving excessive competition grounds. As a result, local companies seek better managerial skills, technological equipment and production efficiency to meet the standards of the multinational companies (Zhang, et. al., 2016, p. 180). Despite being advantageous, this kind of competition between firms can be detrimental on the local firms, where multinational companies using technological advancements and productivity snatch market shares from local firms.

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There are various forms of FDI in China, including; equity joint ventures, wholly foreign-owned enterprise, joint exploration, FDI shareholding and contractual joint ventures. As its name may suggest, equity joint ventures are owned jointly by foreign and Chinese companies, individuals or other governmental organizations. Both companies manage the company together, hence sharing profits and risks together on determined scales as per capital contributions.

Contractual joint ventures, on the other hand, are somewhat similar to the equity joint venture, only that obligations and duties arising on the parties are laid off in a contract. Wholly foreign owned refer to foreign companies, individual and enterprise investments who establish themselves in China. In this scenario, all capital derives from such foreign firms. FDI shareholding involves the purchase of equity by foreign investors, hence leading to foreign invested enterprise.

Joint explorations, on the other hand, refer to various economic cooperation on the international arena, usually divided into exploration, exploitation then production. In many instances, joint explorations venture into exploitation of natural resources (OECD, 2013, p. 53).

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As earlier mentioned, FDI has a spillover effect. Particularly, FDI ensures creation of jobs, explained through the greenfield and brownfield analogies. Greenfield analogy can be explained as an investment that creates new production lines in host countries, through starting of a new company. Brownfield investment, in contrast, involves overseas mergers and acquisition. Due to its nature, brownfield investments cannot be certainly denoted as job openers, considering no new companies are created.

Another effect of FDI experienced in China is the crowding-effect, considering many multinationals are investing in the country. Local firms are overly pressurized to exhibit good performance, or risk winding up. This leads to severe pressure on employees. The inter-dependency between FDI and employment is usually affected by diverse variables, including population, exports and growth of domestic economy (Michael, 2013, p. 24).

Literature review

In the recent years, China has been trying to support the foreign direct investment to enhance its purchasing power via wages and to create job opportunities. Through understanding factors that impacts on employment, particularly those associated with FDI, China can realize its potential expansion of its productive sector and the required production innovation techniques to improve its economy.

It is because FDI can create jobs through the direct hiring of individuals for the new industries. Moreover, the enhanced aggregate domestic employment via various types of jobs created, income distribution, wages levels, and skills transfer will result in indirect effects. The increased FDI inflow to China has led to the creation of many job opportunities, and as a result, many people have been employed (Hu, 2011).

Therefore, FDI has positively impacted on employment in the long-term since individuals who could have been unemployed, now can have jobs. However, since FDI bring new business culture and technology, its influence relies on the interaction between the growth of the productivity, labor specialization, and output growth.

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FDI has led to the improvement of technology, skills, and trade in the long-term in China. Moreover, it has facilitated adverse effects on jobs and wages as realized in China in the short-term. The findings in China in both secondary and tertiary firms for the period 1985-2008 indicated that FDI growth led to the creation of employment, enhanced skills and technology, and trade for the period.

FDI needed high-skilled personnel to work in their organizations that had sophisticated technologies, hence, necessitated an individual to acquire skills that matched FDI requirements, making one to have improved skills in the end. However, in situations where there was a bidirectional linkage between employment and FDI, in the short-term, FDI led to the loss of jobs because of displacements of workers, according to Liu (2012).

Furthermore, on one hand, new technology made industries more competitive that allowed them to employ more employees and to grow. On the other hand, new technology led to decrease in demand because of substitution of many low-skilled workers by fewer high skilled employees. Therefore, new technology had both merits and demerits attributed to job creation and employment.

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Recent empirical evidence studies show that China should not expect to have any job opportunities despite the benefits she gets from FDI (Zia & Rizvi,2011). It is because elasticity growth associated with employment in China is extremely low, which makes employment enhancing policies be priorities. Initially, when foreign investors and their companies came, many people were employed, but over time the rate of absorption became low. T

he new companies were able to attain the required number of employees in their organizations with time, meaning new people could not be employed leading to low elasticity growth associated jobs.

When China is studied using the two-sector dual economy model to show the influence of foreign investment on domestic capital accumulation and underemployment, it shows that foreign investment lower manufacturing sectors in the long-term. The manufacturing sector decline because some of the local companies were not able to compete adequately with foreign organizations associated with FDI as they had a lower level of technology and skills.

FDI also had a large effect in the high-wage manufacturing firms than on a one-for-one basis and crowds out domestic capital. The study of FDI effect using analysis of panel information to find labor demands roles for white and blue collar employees showed that FDI had significantly positive outcomes. However, the positive effect, especially with the blue-collar jobs, declined with the rise of the skilled intensity of manufacturing companies (Liu, 2012).

According to Duan (2011), labor market, market size and market potential, clustering and cluster, macroeconomic policies, openness, and scientific research level account for the reason of determining the FDI location. Labor productivity and labor costs also influence FDI location, which indicates that improved workforce skills level attracts FDI. Thus, FDI favors high-skill workers because they are the ones mostly likely to get employed in the new job markets, and makes low-skill workers liable to lose their employments due to replacement.

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Ownership that is so crucial in the creation of the jobs affects employment in China. Research indicates that the major reason for inadequate employment creation is because the state own enterprises absorb employees quickly than the private sector. The low absorption rate is attributed to the fact that both joint ventures and foreign-owned multinationals that are supposed to employ many people belong to the private sector.

Thus, it means that the private sector has a higher capacity of creating more employment opportunities when compared to the state-owned enterprises (Sjoholm, 2011). In a similar analysis of employment, Hale & Long (2012) found out that FDI indirectly and directly impacts jobs. According to them, FDI can directly increase jobs and indirectly lower jobs by improving productivity levels indirectly and supplanting domestic investment. However, when the effects of the two are combined, FDI has significant positive influence in China.

Liu (2012) analyzed the effect FDI has on employment creation in China as far as manufacturing companies are concerned. Liu relied on the industry-level data in the Chinese manufacturing industry for the period 2000-2009. Also, Liu presented an analysis of direct and indirect job impacts. The findings indicated that both the private domestic industries and FDI have higher employment growth than the non-private domestic companies in China.

Furthermore, firms with other types of ownerships had less advantageous features than the FDI, in particular, their access to the export market, when the cross-ownership comparison is done. The conclusion was that FDI had led to employment creation in the Chinese manufacturing sector.

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The impact of FDI on employment may not be beneficial to China. Hu (2011) illustrates that when crowding-out is taken into consideration, the crowding-out only becomes significant when foreign multinational enterprises focus on the recipient nation’ market. It is because the FDI influx may bring in more pressure on domestic firms. Moreover, the external investment requires higher efficiency and better technology, which implies that it will only need fewer employees than before, making the crowding-out effect of FDI lead to more workers being laid off as a result of more of the domestic companies going bankrupt.

Zia & Rizvi (2011) indicate that FDI has more favorable when China faces economic crises. It is because FDI has an advantage over other investments programs such as loans or portfolio as it often prove to be more resilient in times of economic crisis. The other types of investment are subject to large reversal when there is a financial crisis. Thus, economic crisis presents a major challenge to employees and employment.

Workers who are employed in other types of investment are more likely to be laid off because their organizations may go bankrupt, which is unlikely of FDI that is more resilient and stable in an economic crisis. In this scenario, FDI positively impacts on employment in China because workers are not likely to lose their jobs due to the economic crisis.

FDI has also led to the loss of employment among people in China, according to Zia & Rizvi (2011). The increased competition associated with FDI’s international corporations has pushed out some of the more productive local business enterprises as they are not able to compete. It is because the local business enterprises have lower technology and skills in most cases than the FDI’s companies making them less favorable to compete in the market.

Therefore, the increased competition brought in FDI has led to the loss of jobs, rather than creating. Moreover, it illustrates that FDI does not contribute to local economy development because the increased competition associated with FDI leads to people being laid off in local business ventures.

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The amount of FDI in China increased by 225.20 USD HML between December and February 2016. This is according to data the ministry of commerce of the people’s republic of china. The country averaged 416.01 USD HML between 1997 and 2016 hitting an ultimate high of 1262.7 HML in December 2015.

Labor is affected by a variety of factor in an economy both from either side of the border of the economic space of a country or an economy.  Empirical research has given much more attention to the effects of trade on labor markets than to the impacts of FDI on employments. Analysis on the effect of FDI on employment is thus more complicated.

A large number of studies have been conducted that try to establish whether OFDI substitutes or complements domestic jobs and this is split into two. In the home employment effect of foreign direct investment: from empirical results, China’s OFDI contribution to the employment of the country is a noticeable difference in the studies conducted over time. It was found that FDI  can stimulate exports thus, in turn, achieving more employment.

These multinationals,  in the process of processing trade of foreign investments, source most of their materials from the domestic markets. This are raw materials, spare parts and other half finished products.  This increases the demand for these goods in the domestic market hence raising the employment in the different industries producing them and those related to them.

However, with the surplus of china’s labor being serious and FDI still being at a start stage, many investments belong to the defensive industry. These investments cause an increase in the demand of domestic capital and goods thus edging out domestic investments from the market.

Research also shows that china’s FDI  does not influence employment in the primary industries but gives a significant effect in secondary and tertiary industries. With the composition of capital in the tertiary industries being comparatively small,  labor is higher compared to other industries at similar investment levels thus FDI  achieving more influence in tertiary sectors.

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Research done on the effect of FDI on the home country have elicited mixed results. Research dealing in detail with the employment effect of FDI found a substitution effect between a foreign subsidiary’s activity and its parent’s employment. These studies have majorly concluded that change mainly occurs between countries with comparable endowments. This thus implies that low-wage countries make better substitute among themselves than.

Studies indicate that American multinationals are employing vertical FDI seem to be reducing employment back home compared to production by transferring labor intensive stages of their production processes to their affiliates in developing countries. Other studies have concluded that labor substitution is more likely to take place when factor proportions are different in various locations and vertical FDI prevails. The second group of research has found that the complementary effect prevails, this noted a positive effect on employment due to an affiliate activity in the host country.

The main reason behind this is that the opportunity to invest in a low-cost host country could increase the firm’s competitiveness, promote its use of economies of scale, and reduce its costs, which may lead to an increase in home-country employment.

This brings the picture of a scale effect dominating over a substitution effect for the parent country’s firms and the parent country’s employment. In the North American car industry, studies have found that jobs in Japan were growing as a consequence of investing abroad. This is explained as the result of allocating labor intensive production to developing countries thus increasing supervisory and ancillary employment to mainly service foreign operations.

According to Hu (2011), the two factors affecting employment are economic development and capital stock, with capital stock encompassing both domestic and foreign FDI.

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The third group of studies shows that outward investments can increase the demand and wages for skilled labor in both the parent and host countries. This is attributed to the differences in labor demand in both countries

Nunnenkamp, Bremont and Waldrich (2011) posed the question on whether foreign direct Investment contributed to employment creation in Mexico. An analysis of FDI and employment data covering manufacturing firms in Mexico were used. From this, they estimated the dynamic labor demand functions for blue and white collar workers, including both FDI and its interaction with major industry characteristics.

Using the GMM estimator proposed by Nunnenkamp, Bremont and Waldrich (2011) they accounted for the relatively short time dimension of the panel data (1994-2006). It showed that FDI had a positive though the quantitatively modest impact on manufacturing employment in Mexico. This was in contrast to a widely held view applying to both white collar and blue collar jobs.

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Hu (2011) found that it is very difficult to assess the outcome of FDI on employment in European nations mainly due to the different stages of economic development in the countries. According to him, the first stage of FDI  is characterized by elimination unproductive jobs giving way to new productive jobs.

This is mainly due to the restructuring of jobs by extensive mechanization and automation leading to loss employment while the organisations became better and more profitable. From these, the multinationals create a better and more productive labor force.  This process of creatively destroying labor ends up creating a more positive effect on employment. Finally, it is found that the research shows that FDI is not a golden wand to the creation of jobs.

 Liu (2012) using data collected between 1986-2010, concludes that that the effect of FDI on employment was positive before 1996, but the effect was not noticeable after 1996.

According to established theory, the activities of affiliates can be related to the motives of FDI, namely efficiency seeking, market seeking and strategic-asset-seeking flows. The impact of these types of FDI on trade patterns are explained by distinguishing four kinds of trade linkages between the parent firm and her affiliates:

  • The substitution of former exports through FDI
  • Growing (re-)imports of goods and services produced abroad
  • FDI associated exports of goods and services
  • FDI induced exports of other product lines neither generated by the foreign affiliates nor exported earlier by the parent 

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The overall impact of FDI on domestic employment is the sum of negative (export substitution, re-imports) and positive effects (associated and induced exports) and can be tested only empirically. Any distinction between direct and indirect FDI is justified only if their trade linkages differ. In a broad view, the literature reviewed shows that MNE (Multinational Enterprises) employment can promote growth and poverty reduction in host countries in four ways.

(i) Multinational Enterprises job has a direct and indirect impact on domestic employment: this is through direct employment and indirect employment through forward and backward linkages in the local firms.

(ii) Multinational Enterprises employment boosts wages in host countries:

A number of studies have shown that Multinational Enterprises pay higher wages than local firms even after controlling for firm and worker characteristics. The presence of multinationals will also at times cause wages to be higher in industries and in provinces that have a higher foreign direct investment

(iii) Multinational Enterprises employment fosters technological transfers:

Through labor turnover, technology gets diffuse into the host countries as domestic employees move from foreign firms to local companies.

(iv) Multinational enterprises employment enhances labor force productivity in host country:

Several studies have shown that workers in foreign-owned enterprises are more productive than workers in domestically owned enterprises.

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Methods

Time series and AUTOREG process in SAS were used to access historical association between the inflows of FDI and employment in China. Since, dependent and independent variables are time series data, model error has a significant probability of not being independent based on time   The AUTOREG procedure measures and predicts linear regression for time series in the event that errors are Autocorrelated.

Dependent and independent Variables

As indicated early, FDI has led to crowding-out influence on employment, as such an essential indicator of job opportunities. Besides FDI, various variables may impact employment including GDP, interest rates and wages. Some of the components of GDP include government expenditure, consumption, value of net exports and investment (Mankiw, 2012). The thesis uses China’s Statistical Yearbook that has FDI as an investment element.

For that reason, the assessment was performed using GDP values from this Statistical yearbook and provided values of GDP subtracted with FDI.  The results were then utilized in testing the association between GDP and employment. For easier understanding, model outcomes of GDP are obtained from Statistical Yearbook of China. The estimates of the model are similar, with same independent variables under the requirements of alternative model. The model outcome of GDP with no adjusted FDI is demonstrated in analysis section.       

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Moreover, since China’s FDI information from World Bank beginning in 2005 demonstrate considerably amounts in comparison to Statistical Yearbook, however, employment and GDP are similar in these sources, models were evaluated using FDI and other variables from World Bank and Statistical Yearbook respectively. The results are demonstrated in table 1.

Table 1: Chinese National Economy Data

    YearEmplo yment (100mi llion)    FDI  FDI ˄World Bank˅    GDP  GDP- FDI  total wageintere st rate for depos itsintere st rate for loans  Exchan ge rate
19854.987319.5616.592943.0 72923.5 1430.9 18.287.923.2095
19865.128222.4418.752816.2 32793.7 9444.7 99.367.923.7314
19875.278323.1423.143290.2 93267.1 5504.1 39.367.923.7314
19885.433431.9431.944124.0 94092.1 5620.7 310.8013.323.7314
19895.532933.9233.934113.1 14079.1 9622.1 514.9419.264.2088
19906.474934.8734.873695.7 13660.8 4563.7 011.5211.165.2352
19916.549143.6643.664162.9 64119.3612.8 89.009.725.4234
19926.6152110.0 8111.564739.0 54628.9 7677.2 39.009.725.8166
19936.6808275.1 5275.156345.6 66070.5 1844.5 612.0612.245.8210
19946.7455337.6 7337.875906.2 75568.6782.8 813.8614.048.5024
19956.8065375.2 1358.4927584.4 27209.2 1966.4 913.8614.048.3351
19966.8950417.2 6401.88904.2 78487.0 11076. 2912.0615.128.3290
19976.9820452.5 7442.379874.0 69421.4 91161. 116.6610.538.2700
19987.0637454.6 3437.5110463. 3210008. 691228. 046.668.018.2700
19997.1394403.1 9387.5311018. 7410615. 551324. 662.886.218.2700
20007.2085407.1 5383.99311940. 6311533. 481324. 632.886.218.2700
20017.3025468.7 8442.4113183. 5612714. 781475. 862.886.218.2700
20027.3740527.4 3493.079 76614567. 7914040. 361649. 112.795.768.2700
20037.4432535.0 5494.568 47116519. 1615984. 111853. 642.795.768.2700
20047.5220606.3 0621.080 4319462. 718856. 42129. 993.606.128.2700
20057.5825603.2 51041.08 69423208. 3322605. 082554. 223.606.128.0757
20067.4978630.2 11240.82 03628471. 1327840. 923101. 644.146.397.8224
20077.5321747.6 81562.49 33536166. 735419. 023998. 094.416.397.3714
20087.5564923.9 51715.34 6546083. 95451605147. 095.587.476.8565
20097.5828900.3 31310.57 05351082. 3850182. 055900. 705.587.476.8227
20107.61051057. 352437.03 43560602. 1559544. 87111. 574.206.146.6469
20117.64201160. 112800.72 21973453. 3972293. 289455. 835.006.606.3405

Table 2 Chinese National Economy GDP Disaggregated Data

Unit (100 million US$)

  YearGross Domestic Product
household expendituregovernment expenditureGross capital formationNet export
19851460.48404.701077.270.62
19861420.94407.271056.41-68.39
19871641.77449.831195.802.89
19882108.62528.331527.63-40.49
19892093.85558.731504.63-44.10
19901805.26504.201288.7897.47
19911978.57619.781450.75113.86
19922235.00722.621734.0547.38
19932819.46942.762700.17-116.73
19942569.18870.112392.4074.58
19953403.641005.213055.76119.81
19964076.831196.253455.99175.20
19974464.511356.603623.70429.25
19984743.571494.433786.48438.84
19995068.971658.593984.46306.72
20005544.691893.764213.16289.02
20015977.742115.844808.88281.10
20026415.552268.435509.67374.14
20036970.962422.706766.99358.51
20047886.152700.628363.77512.16
20059034.353268.929640.881264.18
200610556.293902.6911883.062129.09
200713068.414870.2315050.503177.56
200816286.796089.4220174.333533.41
200918100.476691.8924087.652202.37
201021176.588027.2529126.952271.37
201126014.5410033.2935487.211918.35

Data Source: China statistical yearbook.

Table 3 Chinese Economy Primary Sector Source Data

Unit (100 million US$)

YearEmployment (100 million)FDIGDPGDP-FDITotal Wage
19973.4846.27631746.31740.0231.78
19983.51776.23751791.731785.4930.22
19993.57687.101517861778.930.58
20003.60436.75941807.11800.3431.45
20013.65138.98731908.261899.2732.43
20023.68710.27641999.641989.3633.63
20033.654610.00842101.782091.7740.6
20043.526911.14342589.212578.0742.46
20053.3977.18262776.232769.0545.65
20063.19415.99453073.233067.2451.56
20073.07319.24073883.523874.2863.03
20082.992311.91024915.344903.4375.32
20092.88914.28735159.285144.9978.71
20102.793119.11956098.12607994.34
20112.659420.08887489.357469.26110.03

Data Source: China statistical yearbook.

Table 4 Chinese Economy Secondary Sector Data

Unit (100

millio n US$)

YearEmployment (100 million)FDIGDPGDP-FDITotal Wage
19971.6547325.69894539.664213.96556.41
19981.66313.27494716.354403.08514.97
19991.6421277.84324961.744683.9521.02
20001.6219295.7985508.575212.77546.18
20011.6284348.08445986.985638.9575.7
20021.578394.71856517.146122.42627.26
20031.6077391.96967549.947157.97719.88
20041.692454.63068936.438481.8831.48
20051.8084446.924310847.1210400.21009.74
20061.8894425.06613259.312834.21248.39
20072.0186428.610517070.2116641.61587.29
20082.0553532.562421731.7121199.12018.55
20092.108500.758223088.1222587.42272.02
20102.1842538.603728191.0727652.52789.19
20112.2544557.48734762.6934205.24030.86

Data Source: China statistical yearbook.

Table 5 Chinese Economy Tertiary Industry  Data

YearEmployment (100 million)FDIGDPGDP-FDITotal Wage
19971.8432120.59523263.383142.78549.09
19981.886135.11513697.763562.64578.94
19991.9205118.24244095.943977.7642.53
20001.9823104.59074681.254576.66710.91
20012.0228111.70425361.165249.46822.43
20022.109122.43376033.725911.29930.53
20032.1809133.06876772.036638.961093.16
20042.3011140.52587806.697666.161256.05
20052.3771149.149277.129127.981498.82
20062.4143199.081911320.6811121.61801.7
20072.4404309.827715105.9414796.12347.77
20082.5087379.481219155.5418776.13053
20092.5857385.281721681.9821296.73549.97
20102.6332499.629226116.8325617.24228.04
20112.7282582.534232329.0831746.55314.93
Data Source: China statistical yearbook.    

Unit (100 million US$)

Model outcome of industry with respect to GDP without FDI are indicated in table 6

Table 6: Chinese National Economy Normal Least Squares Results

The AUTOREG Procedure

SSE2.74028586DFE18
MSE0.15224Root MSE0.39018
SBC44.5152978AIC32.852766
MAE0.22047964AICC43.4410013
MAPE3.56510991HQC36.3206481
Durbin-Watson0.7275Regress R-Square0.8492
  Total R-Square0.8492
VariableDFEstimateStandard Errort ValueApprox Pr > |t|
Intercept15.48390.88426.20<.0001
FDI10.0031700.0013552.340.0310
household1-0.0001390.000722-0.190.8497
government10.0014270.0013501.060.3044
GCF1-0.0001820.000230-0.790.4394
export1-0.0001460.000220-0.670.5144
wage1-0.0005880.000951-0.620.5443
deposit10.0066440.12140.050.9569
loan10.01370.08930.150.8795

Additionally, wages influence employment. A number of studies have assessed the connection between wages and employment. Wages cannot affect employment, in other words, reducing real wages in not useful to increase job opportunities. On the contrary increased job opportunities do not affect wages. When job opportunities increase, it implies that increased demand while reducing real wages. Interest rates also affect employment.

For instance, a decrease in interest rate on deposit means that individuals will deposit less hence promote consumption in households while promoting production and recruitment as the market will require additional employees. In contrast, when there is a reduction of interest rate on loans, producers will borrow from banks at reduced costs thus assist in expanding production and a nation will need extra employees.

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Sources of data

In this study, to assess the connection between FDI and employment in China, eight independent variables were used including wages, FDI, government expenditure, consumption, net exports, investment, interest rates for loans and deposit from 1985 to 2011.

In china, the Reform and Opening Policy was introduced in 1978, a period when FDI started to flow. Nonetheless, as a result of inadequate information on FDI, interest rate for deposit and loans, wages while ensuring that independent variable , data was collected from similar source as well as period- 1985to 2011.When it comes to statistical analysis, three major industries in the economy of China, information on four elements of GDP and interest rates for loans and deposit was not available.   

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Additionally, in the analysis of three major sectors; GDP, FDI and wages were used as independent variables. Information on industry analysis was available for 1997 to 201. And for national economy and industry analysis dependent variable was similar – number of employed individuals, which was represented as 100 million employment opportunities.

Consequently, original Chinese information source FDI units, household spending, net exports, wages, government spending and gross capital are represented by 100 million US dollars. On the other hand, household spending, net exports, wages, government spending and gross capital are represented based on Chinese currency RMB. To ensure that there is uniformity in the information, exchange rate for RMB to USD from 1985 to 2011 was employed to convert RMB to 100 million USD. The interest rates units are expressed as a percentage.                           

Owing to the fact that each industry has various units/sectors, the primary, secondary and tertiary data values are the totals of every sector in each industry. The primary sector comprises of forestry, agriculture, fishing and animal husbandry while the secondary industry involves manufacturing, mining, supply of water, gas, and waters. Addition, tertiary industry represents other sectors not in the primary and secondary industries.

Some of these sectors are storage, transport, information dissemination, hotels and catering; realtor, scientific research and so forth (China Statistical Yearbook).For that reason, the useful data for primary, secondary and tertiary sectors, and FDI information and wages were estimated.  GDP information is collected from China’s yearbook. Information for the China’s economy is illustrated in Table 1 and Table 2. Table 3 presents primary sector data and Table 4 and Table 5 represents secondary and tertiary sectors for the economy of china respectively.

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Results

Data analysis was performed using AUTOREG procedure to demonstrate the connection between independent and dependent variables of employment. The modeling approach changes due to inadequate interdependence of data values as well as estimation error through modeling errors as  lag-one autoregressive, or AR(1), framework. According to the model errors in the analysis, it demonstrates cases of moderate level of skewedness for particular model while approximating normality in certain cases.

Much as heteroskedasticity of errors is not directly tackled, AUTOREG process id developed to deal with such issues; based on the fact that there is insufficient volatility in the information to assess the models.

Findings for the national economy of China

Based on the findings from the overall economy of China, it is evident that independent variables including household spending, FDI, gross capital, government spending wages, net capital and interest rates of loans and deposits have a significant relationship with employment- the dependent variable. According to estimations from Ordinary Least Squares, 84.95 percent of changes in employment can be forecasted by independent variables (table 6).

In addition, from Maximum Likelihood that involves adjusted Autocorrelated errors, there were about 95.89 percent changes in employment, which can be estimated by eight predictor variables (Table 7). The association between every independent as well as dependent variable is illustrated in Tables 6 and 7. Since the information is focused on 27 year while standard errors are huge compared to large datasets, estimations demonstrate that particular p-values are more than 5%.

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Using, Ordinary Least Squares, it is clear that there is a strong correlation between FDI and employment- with a p-value of 0.031. There is no evident association between dependent variable and household spending, FDI, gross capital, government spending wages, net capital and interest rates of loans and deposits (Table 6 With respect to Maximum Likelihood that comprises of the impacts of autoregressive lag-1 framework there is a negative correlation between employment and interest rates loans, because the p-value is more than 5% at 0.0616.            

While this is not a strong relationship, it indicates and provides areas fro further studies in future. Again, there is no correlation between employment and other independent variables (Table 7). First-order autoregressive or AR (1) model is utilized to address trends of high serial reliance within data. It is estimated at -0.9779 with a Pearson value of less than 0.0001. This suggests that independent errors associated with data for one time though closely associated. in other words, every year  independent error is closer to the previous year’s error.

Based on Maximum Likelihood and Ordinary Least Squares, the association between independent and dependent variables are not similar. In the Ordinary Least Squares, there is a strong correlation between dependent and independent variables (Table 6), this is because the p-value is at 0.031 while estimate for parameter at 0.00317. On the other hand, for Maximum Likelihood, there is no significant correlation between employment and FDI; however, there is a negative association between employment and interest rates for loans (Table 7), since the Pearson value and parameter estimates at 0.0653 and -0.0653 respectively.                                                                    

This variation is due to Maximum Likelihood put into account First-order autoregressive procedure and also the impact of independent variables that significantly affects parameter estimations of every predictor variable. This result indicates that putting into account autoregressive framework, the impact of FDI weakens while interest rates for loan demonstrate a significant influence on employment. Residual analysis is shown in Figure 6.

Residual analysis is important when it comes to measuring the variation between estimated and observed values for every year employment level. For employment- the individuals employed in China, every year’s residual is at -1 and 1 apart from 1988 to 1990. In other words, the observed and estimated values are closely, other than in 1988 t0 1990.                                                                       

According to lag framework, the probability of white noise reduces as the lag time increases, when the lag period increase, it becomes challenging to forecast employment level. The autocorrelation function is a trend of autocorrelation in a given time series at several lags while the partial autocorrelation function is the trend of incomplete autocorrelation in any given time series at different lags

Findings for primary, secondary and tertiary sectors of the economy of China

In the primary sector it is evident that 3 independent variables including FDI, wages and GDP have a significant correlation with employment. With Ordinary Least Squares estimation, 97.36% of difference in the employment is described by these variables as demonstrated in Table 8while Maximum Likelihood represents 97.39 percent of difference in employment (Table 9).

Since the data used is fifteen year data, it is intricate to achieve a small Pearson value, which demonstrates a positive statistical association. With regards to Ordinary Least Squares, there is a strong connection between employment and FDI as the p-value is at 0.001. In addition, the Maximum Likelihood, there is a strong relationship between employment and FDI because the Pearson value is at 0.005.

When it comes to secondary industry, 3 independent variable such as GDP, FDI and wages have a strong correlation with employment. The Ordinary Least Squares, 96.63 percent and Maximum Likelihood estimations indicate that 97.91percent changes in employment level can be forecasted by wages, FDI and GDP (Table 4.5 and 4.6). Much as the Ordinary Least Squares value indicate that there is a strong connection between employment and FDI since the Pearson value is 0.0007, there is a strong negative association between employment and wages with a p-value of 00187 and -0.000276 parameter estimates.

Again, Maximum Likelihood demonstrates a strong positive association between FDI and employment since the p-value is less than 0.05 at 0.027 and parameter estimates at 0.0000461. While the there is no statistical significance between employment and wages, Maximum Likelihood is similar to Ordinary Least Squares Figure 8).

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In the tertiary industry, there is a strong correlation between 3 independent variables- wages, FDI and GDP. Ordinary Least Squares results shows 95.16 percent of difference in the employment level, which is due to these variables while Maximum Likelihood demonstrates a 98.27 percent of change in employment level, which can be described by wages, FDI and GDP.

In Ordinary Least Squares values, there is a negative association between FDI and employment, because the Pearson value is greater than 0.05 at 0.0251 and parameter value at -0.002095. There is a strong negative connection between wages and employment with Pvalue and parameter estimation at 0.0264 and -0.001326 respectively. However, there is a significant correlation between employment and GDP since Pearson value is at 0.0046 and parameter estimate at 0.00312.

Based on Maximum Likelihood outcome, the parameter estimations demonstrates a negative correlation between employment and FDI because the p value is more than 0.05 at 0.0251 and strong association between GDP and employment with a p value at 0.0604.  The strong negative association between employment and wages in the Ordinary Least Squares results is not significant in Maximum Likelihood results (Figure 9).

To guarantee that these correlations are precise, further estimations were performed by subtracting FDI from GDP, rather than using GDP information from Chinese Statistical Yearbook to establish the reported association between employment and independent variables of primary, secondary and tertiary industries of China’s economy.

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These results are similar to the above results. Nonetheless, the new outcomes will assist in verifying the validity of previous relationships. Furthermore, FDI information collected from Chinese Statistical Yearbook were evaluated against those from World Bank to guarantee that past outcomes are in line with other sources of information. The results of primary industry demonstrate that with careful consideration of autoregressive system, the strong correlation between employment and FDI is still strong.

This confirms that without doubt FDI has a positive influence on employment in the primary industry. In the secondary industry, Ordinary Least Squares and Maximum Likelihood estimates demonstrate a similar correlation between independent and dependent variables, therefore, GDP as well as wages affect level of employment, where GDP has a strong relationship while wages has a negative correlation.

In the tertiary industry, the negative association between wages and level of employment is not statistically significant in Maximum Likelihood; GDP has a strong correlation on the employment in Ordinary Least squares; and GDP is closely a strong independent variable of employment in Maximum Likelihood. Apparently, FDI has a negative impact on employment in the tertiary industry. For the general economy of China, there is no strong correlation between FDI and employment; and there exists a strong negative association between interest rates on loan and employment.

Bibliography

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Zia, S., and Rizvi, A. 2011. The Impact of Foreign Direct Investment on Employment Opportunities: Panel Data Analysis. Institute of Business Management.

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Cultural Change Concept Paper

Cultural Change
Cultural Change

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Cultural Change Concept

Introduction

The society today has turned out to become in full awareness of its status as a multi-cultural unit that is slowly transformed by the cultural change proponents of globalization that has turned the world into a small village. This has seen several cultural change within the society that include the awareness of the community of their rights and freedoms.

This aspect has been considered as a functional dilemma since it has thwarted the ethnic and cultural change appetites of most of the communities that still embrace the element of traditional customs (Delanty, 2011). Habits have been changed and behaviors transformed as a result of the new wave of transformation that has brought with it the aspect of development.

In a small village, South East of Timbuktu, a society is struggling to embrace the element of change. To this society, the aspect of change being a good element likened to rest does not make any sense. This society in other words has chosen to fight the arsenals of globalization that has wrought change in the community. However, their approaches to fighting these changes are as harmless as a toothless woman.

This paper therefore seeks to develop a fictional story that describes a fictitious persona living within a modern community that is inhibited by several challenges. The paper additionally seeks to inclusively incorporate the proponents of sociological concepts that include social construction of gender, the use of social imagination and the theoretical perspectives included within the fictional story.

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The Natives of Kumbaya

Kumbaya is one of the smallest sections of communities in the South Eastern parts of Timbuktu. This village upholds some of its traditional cultures and believes in the fact that the proponents of globalization are just but the Western approach of colonization. This determines the rationale behind their resistance to accept that changes that globalization is bringing within the towns around them.

This community consequently believes in their inherited traditions and cultures that are tied on by different elements such as language, values and beliefs (Delanty, 2011). The only language known to the natives of this community is Kumbayana that is widely spoken by the inhabitants of this community.

One of the village elders known as Kundida is considered as the right man of their god. Kundida is aged 85 years old and believes that before the community interacts in any activity, prior consultation should be done with their god to approve and consent to their activities. This has seen Kundida consulted to make incantations to their god during planting seasons and in allowing the community to even seek health care and education. Any individual within this community who goes against the directives of Kundida is considered a disgrace and in most instances punished for their actions.

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The village of Kumbaya also has a series of developed norms and values that are developed by the elders within the society before approval by Kundida who is considered as the final say in determining what is right for the people of Kumbaya. These values define the manner in which the population needs to act within the society (Delanty, 2011). In consideration of the norms and values in accordance to the views of this community, women are considered as junior to the male individuals within the society.

The manner in which the society views the women in this case is biased. Kundida has over time refuted the claims of the outside world on the development of their community’s norms and values that are against the freedoms and rights of the women. Women in this community are discriminated and treated as tools of trade that can be exchanged for the furtherance of a family’s objective.

Kundida also believes that education is one of the weapons that is developed by the Western World to negatively influence the minds of the communities younger generation, a factor that would lead to the wrought of their cultural values and norms. In an instance, one of the elites who went through the odds of the society to achieve his goal in pursuing education is considered as an outcast and burnished from the society (Ferreira, 2014).

Tumbali has been in the fore front to transform the manner in which the society views women and other social problems, a factor that has bore no fruits since the community has been trained to believe in their own systems and frown upon cultural change.

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It is also essential to consider the fact that Kundida does not believe in the aspect of his community’s prosperity and cultural change, a factor that determines the manner in which the Kumbayan community is socially stratified (Ferreira, 2014). The inhabitant of this population believe that no wealth belongs to a single individual and when there is a need, the community or the individuals have the authority to get whatever they require to meet these needs.

Poverty has in this case evaded the community of Kumbaya while the other communities that boarder this village prosper. According to Kundida, the accumulation of individual wealth is one of the sources and the root of evils within the society.

However, Kundida has ensured that there are traditions and cultural change that need to be adhered to by the community members. The community is required to daily bring food into his store house and ensure that there is enough for him to feed each and every day (Gangas, 2016). The communities even in abject poverty are forced to adhere to these traditions since there is a belief that individuals who fail to adhere to these traditions are likely to be stricken by thunders.

This has therefore developed a social unrest within the community of Kumbaya who are not allowed to even seek for medical help from intuitions of health within Timbuktu. The sick individuals within the society are required to use herbal medicines and if the situation worsens, they are required to seek prayers and meditations from Kundida who is believed to have access to god.

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Over time, Kundida has been sported as vocal about the changes that are developing within the society around him. In his view, he believes that development is evil, and the society is getting into the Western trap of colonization (Gangas, 2016). As a matter of this fact, the children within this society are only allowed to learn their traditional activities that include firming, fishing and hunting. Education in this community is therefore considered as one of the social evils that washes away the brains of the children and the youth and develops vices and immoral actions that consume the community values and morals.

Several organizations have held talks with Kundida to enlighten him of the important issues that would see the prosperity of his people with focus on education, health care and the well being of the community members. However, the people of Kumbaya believe that the final say rests with Kundida who has access to god and knows what is best for the people of Kumbaya.

Women are used to the manner in which they are viewed and discriminated and consider this as a normal act. On the other hand, the girls within this community are also subjected to such harsh treatments and are trained to take up their responsibilities as women as early as they can walk. The village of Kumbaya is still flowing under the annals of darkness even when there seems to be no hope at the end of a tunnel.

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Conclusion

It is essential to consider that the development of this fictional paper inclusively incorporated the elements of sociological concepts in developing the actions of the fictional character within a fictitious community. Some of the sociological concepts used in depicting the nature of this society include the proponents of values, beliefs, cultures and the language of the community.

On the other hand, the element of social construction of gender in this fictional story can be seen in the manner in which the community of Kumbaya views women, a factor that has resulted in discrimination of this gender. Women are in this case treated as junior to any male individual within the society be it their husbands or their male children, thus pointing out to the element of social construction of gender.

In this fictional story, the element of social imagination is employed in the manner in which this community is trained to believe. Kundida in this case has ensured that there are traditions that need to be adhered to by the community members. The community is required to daily bring food into his store house and ensure that there is enough for him to feed each and every day.

The communities even in abject poverty are forced to adhere to these traditions since there is a belief that individuals who fail to adhere to these traditions are likely to be stricken by thunders. This has therefore developed a social unrest within the community of Kumbaya who are not allowed to even seek for medical help from intuitions of health within Timbuktu. The theory of social stratification is additionally included in the paper.

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References

Delanty, G. (2011). Varieties of critique in sociological theory and their methodological implications for social research. Irish Journal Of Sociology, 19(1), 68-92.

Ferreira, S. (2014). Sociological Observations of the Third Sector through Systems Theory: An Analytical Proposal. Voluntas: International Journal of Voluntary & Nonprofit Organizations, 25(6), 1671-1693. doi:10.1007/s11266-014-9469-7

Gangas, S. (2016). From agency to capabilities: Sen and sociological theory. Current Sociology, 64(1), 22-40. doi:10.1177/0011392115602521

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Data set Research Paper

Data set
Data set

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Data set

Quantitative Section

Introduction to Data set

Data sets represent collected data from a single database or data matrix. Every column present in data sets represents a particular variable while every row represents a certain member of the data set in question. All values present in data sets are recorded as variables. Each value is referred to as datum. Data sets contain more than one form of data. The term data set was coined to mean a method of data collection from tables which are related and correspond to certain events or experiments (Bryman, 2012). Data sets have been utilised to identify and analyse both qualitative and quantitative data.

Data Management Analysis Technique

Quantitative data analysis bases on different statistical methods. The commonly used methods are measures of central tendency and measures of dispersion. Measures of central tendency include the mean, mode and median. Mean represents an average value while median refers to the centre value (Bryman, 2006). Mode refers to the value with the highest frequency.

The mean is the commonly used method that is used to analyse results since it monitors and determines the exact value that can be used to measure different variables. It can be used to compare different values. Measures of dispersion include variance and standard deviation and inter-quartile ranges (Mugenda, 2009). Measures of dispersion and central tendency are used together to analyse data. Standard deviation and variance are two forms used together with the mean. Variance and standard deviation show how much values differ from the mean.

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Presentation of Data

In this case an example of the disease affecting different parts of the world will be utilised. The data will be based on several continents. All the information that has been provided has been divided into data sets. The sets include the Africa region, western pacific region, South East Asia, Europe, Eastern Mediterranean, and the American region. The data provided included the different diseases that affected different areas in different years.  The quantitative method that was used to analyse the data was the mean. It encompassed calculating all the different death values per disease. The following results were obtained

Mean valueRegion
134.39Western pacific region
132.23South east Asia
194.65Europe
117.50Eastern mediterrean 
117.92 Region of Americas
208.13Africa

Table 1.  Mean values showing the deaths of different diseases per 100,000 people per population

Description and Interpretation of Data

The above data compares different rates of morbidities across different continents. The average value when all values are incorporated equal 150.22. When this value is compared to mean values, the deviation and variances becomes easily established. The results reveal that Africa has the highest rates of mortality followed closely by Europe (Malterud, 2011). Eastern Mediterranean has the lowest value. All results reveal that the values lie within the accepted deviation standards.

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References to Research Methods

Mean values have been used to compare results from different samples. The mean as is used as a comparison method since it eliminates all outliers present in a set of data. Median and mode are two methods not utilised since they include outliers in their analysis. Additionally, the median shows the number that is in the middle while the mode shows the number appearing in most cases (Creswell & Clark, 2007). Such values cannot be utilised to compare different samples since they show bias in their analysis. Inclusion of standard deviation and variance in the mean provide a better method of analysis.

Relevance of Data to Policy

The above information can be utilised to implement new laws and heath standards that can be utilised to decrease morbidities rates. The above information provides a comparison of different health standards across the world. It can be used by non-governmental organisations health standards across the world (Neuman, 2005). The above information can be used to investigate the underlying the causes of high levels witnessed in some parts of the world.

Policy makers will be keen to address the underlying causes of the diseases. Policy makers may also opt to utilise information provided by the results to address the high levels witnessed in some areas. More specifically, it can utilise some of the policies implemented in areas that have shown low incidences. Policy makers are able to understand the number of people that affected.

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Qualitative Section

Introduction to Qualitative Data Sets

The qualitative section involves analysis of data sets that are not expressed numerically. These data sets will also be expressed in rows and columns. Data sets included in qualitative data sets will not be limited to descriptive and inferential statistics (Creswell, 2013). In this case values that are utilised to analyse the data are in nominal form or ordinal scales. This means that the data to be utilised will not base on number but in certain wordings which either shows the level or degree of sickness in this case or the number of people suffering from a given disease.

Data Management Analysis Techniques.

            Two methods have commonly been used to analyse qualitative data. These methods are coding and theming processes (Mays & Pope, 2006). Coding refers to the arrangement of data by combing different aspects such as themes, categories and ideas. Coding as a method has been utilised to bring out certain themes that are dominate in qualitative data (Patton, 2005). 

The theming process involves the identification of particular theme that is largely shown in qualitative analysis. It identifies the major themes that are easily brought out in different aspects. It normally focuses on outlining all major themes present in any form of qualitative study.

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Presentation of Data

            The information provided below seeks to address the question on the most prevalent disease that affected individuals in the year 2000. The data was selected using the theming process where the disease status of the world was going to be compared. The disease states that are available are the 2000 and 2012. Therefore, one had to be chosen and investigated.

Thus in this case the disease that was investigated was the one shown in 2000. All relevant information containing the different disease that occurred in the year 2000 as well as their levels were analysed. Their means were then identified and formulated into a pie chart to show the levels.

Description and Interpretation of Data

From the above results it can be deduced  that all causes of disease were the major contribution to the diseases rates witnessed . it was closely follwoed with cardiovascualr disease, mailgnant diseases, neoplam conditions, HIV/AIDS, malaria and tuberculosis. A pie chart is used to bring out this form of information because it represent one of the best methods that brings out qualititive data. A comparison can thus be carried to identify the disease thataffacted more people in the year 2000. From this information different piechrts can be made depending on the individual gender of individuals.

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References to Research Methods

            Pie charts have been used in numerous occassions to bring out a qualititive method of analysis. Unlike other methods, a pie chart can be readily used to identify the disease that affected more people. it can also be further utilised to ideintify other small areas withi basing on other vraibales such as sex and region. From the above pie chart small pieces of infromation regarding the other variables can be easily collcted and utilised.

Qulitative data involves the idenfication of which disease was shon to affect  more populations across the world. from the above values, one ca easily identify the differen values belonging to different data sets. For example , one can make a conclusion that cardiovascular diseases make up the huge percentage of diseases affecting people across the world as compoared to any other form of disease. This statement can be made in regard of the disease in the year 2000.

Relevance of Data to Policy

            The above information becomes quite important to all policy makers. The identificatoon of the disease that casing more diseases across the world becomes a major concern for all policy makers. Once the disease has been identified, all necesaary measures required to decrease the disease are taken into consideration (Patton, 2005).Some of this measures include health promotion exercises, public awareness on the causes and prevention of some of this diseases.

Policy makers can also come up with laws aimed at decreasing the incidences of all the above diseases. Polyc makers can also manage their budgets so that more cash is allocated n fighting such diseases in the society (Smith, 2013). The piechart provides policy makers with an opportunity to identify disease that require immediate attention. At the same time it tells the polcy makers of the disease status of their society. 

The information that has been provided an be used to as a standard measurement against the disease status of different individuals in the society. this is because the values represent the pricture of the world. It can also be used to compare results with the coming years for example the year 2012. Lastly, the pie chart can be dissected to adress all concerns of all parties in the society.  It can be dissected basing on regions and gender.

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References

Bryman, A. (2012). Quantitative and qualitative research: further reflections on their integrationMixing methods: Qualitative and quantitative research, 57-78.

Bryman, A. (2006). Integrating quantitative and qualitative research: how is it done?. Qualitative research, 6(1), 97-113.

Creswell, J. W. (2013). Research design: Qualitative, quantitative, and mixed methods approaches. Sage publications.

Mugenda, O. M. (2009). Research methods: Quantitative and qualitative approaches. African Centre for Technology Studies.

Neuman, W. L. (2005). Social research methods: Quantitative and qualitative approaches (Vol. 13, pp. 26-28). Boston, MA: Allyn and bacon.

Patton, M. Q. (2005). Qualitative research. John Wiley & Sons, Ltd.

Smith, J. K. (2013). Quantitative versus qualitative research: An attempt to clarify the issue. Educational researcher, 12(3), 6-13.

Mays, N., & Pope, C. (Eds.). (2006). Qualitative research in health care (pp. 10-19).London: BMJ.

Creswell, J. W., & Clark, V. L. P. (2007). Designing and conducting mixed methods research.

Malterud, K. (2011). Qualitative research: standards, challenges, and guidelines. The lancet358(9280), 483-488.

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Retirement Plans Research Study

Retirement Plans
Retirement Plans

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Retirement Plans

Introduction

During the past three decades the retirement plans have shifted from Direct Benefit (DB) to Defined Contribution (DC).The trend is seen in both public and private sectors. The DC plans transfer much of the decisions like the investment and savings from the employer to the employee. The DC plans have attracted the employees in terms of their flexibility and portability.

The mentioned benefits come with the responsibility to choose in a wise manner. The plans have also provided the economists to study the saving behaviors of the individuals. In developed countries like US the plans have expanded themselves to several other factors like health care and time-off arrangements. Due to their wide adoption they have been implemented in different countries including Latin American Nations, Germany, Sweden and Russia.

As the power of decision is given to the individual it is assumed that the employee will behave as an active economic agent acting to maximize its self-interest.  According to this implicit assumption it is assumed that the individual can interpret and judge the information presented as options from employees and governments. The individual is able to evaluate and balance the choices offered to him and can reach an informed decision.

In the recent years it is seemed that the people when trying to maximize the profitability make decisions which have less outcomes as expected. According to the studies the individuals have the right intention but they lack in the abilities to make necessary changes in the behavior. The philosophy of the people making such decisions has developed the rapidly increasing fields of behavioral economics and finance (Utkus et.al, 2003).

b) Purpose

This research will focus on the question of behavior adopted by the individuals while making economic decisions and the reaction of the market towards these decisions. In the research it will be analyzed that how the workers make decisions to save, manage the retirement investments and how they address their assets in retirement. The choices of making decisions have some consequences which are planned to be evaluated in this research. The research questions are as follows:

  1. Are the employees well placed and informed about the plans offered by the employers or the governments?
  2. How the DC plans are implemented in the various countries?
  3. How the employees made decisions regarding their retirement plans?

Literature Review

Defined Contribution (DC) Plans in Various Countries

Stakeholders in the employment sector have an obligation of ensuring that retired employees attain the capacity of enjoying lifelong financial security. However, the approach of how and when this can be achieved remains a wide subject of discussion. Different nations across the globe adopt different mechanisms of implementing their policies regarding saving for the future. Defined contribution (DC) is one of the most adopted approaches of enhancing the employee saving concept for future financial security.

Edwards and Webb (2015)defines Defined Contribution as a retirement plan sponsored by the employer, which puts into account several factors like employee salary history and period of services. Under this scheme, the company exercises entire control of the investment risk and management of portfolio. According to Edwards and Webb (2015), the success retirement scheme is dependent on the input of the plan, levels of saving, and performance level of investments provisions relative to particular benchmarks.

However, these metrics do not sufficiently address the plans potential in providing employees with adequate retirement income. Similarly, there are several challenges, which the responsible institutions of implementing retirement schemes face in the line of deciding the most suitable retirement plan to employ (Beshears 2012). As a result, different countries employee employ different schemes suitable for the needs of its employees.

The objective of this paper is a literature review addressing how different countries implement defined contribution policy. This study also presents a discussion on the relevance of the said retirement plans and contribution schemes and some of the areas, which needs to be addressed to meet the needs of the participants.

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 Implementation of Defined Contribution plan

Defined contribution plan is a retirement benefit policy adopted by most countries across the globe. For instance, the most adopted employer-sponsored retirement plan in the US pension system is the use of DC plans with 401(k), 403(b) plans, 457 plans among others (Brown 2016; Weisbenne; 2016). According to the 2010 annual report by then US Department of Labor, approximately 73.4 million citizens are members of the defined contribution plan of which 401(k) plan cohabits 60.5 million participants.

The 401(k) plans consists of various attractive characteristics for long-term participants, which includes deferral of tax, flexibility and portfolio control (Miller2015). The scheme provides for the delay of taxes on income and interests until the contributors start getting distributions from the scheme. Rollovers such as the transfer of 401(k) funds into an alternative competent scheme or a self-employed retirement plan can be done easily under this scheme.

This scheme caters for large participant expenses such as emergency loans and medical expenses. Furthermore, employees can be given a lump sum amount of their contributions when the saving period comes to an end.  In case an employee decides to withdraw from the scheme, the employer is provided for by the law to retain 20 % of the distribution. However, in case of rollover to another scheme, the employer is required to transfer 1005 of the contribution.

Despite having attractive features, 401(k) the idea of increasing the rate of tax when deferring tax using a 401(k) may be considered unfavorable by the employees (Adkins 2016). Besides, participants may be frustrated by restriction to utilize their shares before the end of retirement period. Similarly, the 401(k) scheme limits participants to a particular amount of annual contribution, which stops automatically, in case they are forced out of work as a result of becoming disabled.

Adkins (2014) observes that, while there have been many structural improvements on the features of 401(k) scheme, there are several problems, which needs to be addressed. Adkins argues that the problems concerning structural flaws, horizons of long investment period, high administrative costs, lackluster keeping of records should be addressed. In addition, the providers of the plan should also look into the issue of sub-Par investment plan model and options of Marginal Quality Investment as well as implications of complex tax.

According to the overview of the Canadian Pension Plan (CPP), a person or the family is entitled to partial earnings replacement after retirement, disability, or death. Regardless of place of residence, one qualifies for a pension from the country of residence. Almost every working citizen in Canada contributes to the Canada Pension Plan. However, Brown (2016) observes that, most of the employees in current generation are not saving enough towards secure retirement benefits.

Besides, in a define benefit plan, employees are only entitled to income when they die, therefore their claim for further pension assets stops when the contributor dies. Nevertheless, under some provisions, the surviving dependents like a spouse can claim the asset. Therefore, Brown recommends that the scheme be upgraded to a defined contribution plan to address this problem.

Under a defined contribution plan, participants are not promised of any retirement benefit stream. Instead, an employee contributes a certain defined amount towards building a personal fund, which develops a financial asset portfolio for generation of retirement income. The participant decides on the investment approach from a wide range of options. However, according to Kolivakis (2015), the defined contribution approach is associated with various problems.

Among the limitations of this scheme is that, in some cases, the funds offered to  workers is relatively high leading to insufficient returns. Secondly, the employees have picked unsatisfactory weightings of the portfolio particularly regarding the employer’s shares, which may turn disastrous incase the firm fails. Besides, the employees are not well vast with how large their contribution should be.

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Nonetheless, Kolivakis (2015) states that the above problems can be addressed through a well define retirement plan. He suggests that the scheme provider should ensure a reasonable allocation of expenses and portfolio. In addition, the sponsor should also ensure that the amount of contribution is adequate to realize the promised benefits (Jefferson 2011)

However, there has been a massive move-out by the private sector on the basis that there are extremely difficult to sustain in the present employment environment. The government is reluctant to chip in its support citing hidden political risks as the main reason. Compulsory pension benefits provisions

On the other hand, defined contribution is mandatory government requirement for all the citizens. For instance, the Malawian legislature enacted a pension act in 2011 and the 2010 employment amendment act to call for citizens to subscribe to retirement benefit schemes. According to Mhango (2012), the driving force behind these legislations was to ensure every employer provides a retirement plan for its employees by facilitating their membership to the national pension scheme.

In addition, the pension act also provides the minimum subscription amount that each employee should contribute. However, Coleman (2011) argues that the mandatory pension scheme is inconvenient for some people, who are forced to save at the time when it is not within their priority. Besides, participants are limited to invest in some assets, which are not of their preference.

The U.S for instance, is one of the nations that has adopted employer-sponsored retirement plan pension system with the use of DC plans with 401(k). However, some scholars argue that while there have been many structural improvements on the features of 401(k) scheme, there is still a lot to be done to make the scheme a completely inclusive. Adkins argues that the problems concerning structural flaws, horizons of long investment period, high administrative costs, lackluster keeping of records should be addressed.

An overview of the Canadian Pension Plan (CPP), states that a person or the family is entitled to partial earnings replacement after retirement, disability, or death. However, it is argued that in a define benefit plan, employees are only entitled to income when they die, therefore their claim for further pension assets stops when the contributor dies.

Besides, the limitation of this schemeis that, in some cases, the funds offered to workers are relatively high leading to insufficient returns. In some nations, the working citizens are by law required to subscribe to national pension plan. However, the disadvantage with this initiative is that, it may be inconvenient for some people, who are forced to save at the time when it is not within their priority.

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Employees understanding plans offered by the employers or the government

Employees benefits are the primary tool by which employers use to attract and retain qualified and experienced employees in an organization. Other reasons include; promotion of higher levels of morale among employees, aligning employees’ benefits with competitive offers in the market, providing promotional opportunities as employees move to other positions within the organization or when they retire and so on.

All over the world, employees’ benefits are categorized into two.  The first category is about those that are required by law which aims at providing the most essential and important needs of employees and /or their families. They include; workers compensation, social security, unemployment insurance and others.

The second category is those that the employer offers voluntarily to compensate employees. They include a wide array of programs like; Life Insurance, defined benefit Retirement plan, Health care insurance, paid jury, paid funeral leave, Unpaid family leave, Vocational pay, Holiday pay, Employee assistance programs, Dental care, Flexible compensation, Health care insurance, Paid military leave, Subsidized commuting, Flexible work place, payroll deduction IRA, Wellness programs, dependent Care Reimbursement care account, Long term Disability, Short Disability, Paid family leave, Paid personal leave, Childcare, Stock options and many others. The reasons to why most employers voluntarily offer such benefits range from a desire to be more competitive in the labor market to a genuine concern for their employee’s wellbeing.

Employees benefit plans plays an important role in the lives of employees. As such, the benefits offered by employers can be a deciding factor for a potential employee’s decision to work for a given employer. Most employees seek to know what they will get before they decide whether to accept an offer or not.

Most employees are aware of the plans offered to them by either the employer or the government. For example, most employees prefer medical insurance, paid leave and retirement plan. If you deny them, they will easily head for the door when another opportunity that promises to offer them knocks.

Most of the employees are aware of the government benefits plans. For example, every employee is aware of social security of which every employer pays at the same rate paid by their employees.

Other benefits plans provided by the government. For example, workers compensation, and unemployment insurance are a must and therefore, employers and maybe the government will ensure that all employees are aware of such benefits. The employer will take the first step by not only ensuring that employees are aware but also complying by availing them to employees. A fail to do so may impact their business negatively.

During interviews for a new job, most employers inquire more on the kind of benefits a prospective employee would prefer. Such a question would not be asked by an employer when they know that a prospective employee is not aware of such kind of benefits. 

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Although the law does not require the employer to offer a retirement program to his/her employees, if offered, it must be fully and well disclosed to employees. As such, the employees are made aware since the terms and condition of a retirement program are enforceable in some countries. More specifically, in California courts.

Most employers disclose all kind of benefits they will be offering to a new employee on the contractual letter. At this point in time, the new employee is made to know what kind of benefits her or she will be enjoying and vice versa.

All human beings fall sick at some point in their life time. Although it’s an unfortunate situation, a reasonable employee knows whether he or she like it or not, he or she will once fall sick. As such, an employee will definitely inquire from an employer if they provide a sick leave or not. Some employers will disclose such details during appointment.

Although most of the employees are made aware of the benefits plans they will or are entitled to by their respective employers, some employees who are not keen enough may to some extend not be aware of some benefits they will or are entitled to due to their ignorance.

Other employees simply do not mind some of other benefits their employers may or are offering apart from their normal salary or wages but majority of employees are aware.

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Employee choice of retirement plans

Making decision on when to retire may be one of the greatest decisions an employee makes during his lifetime. The decisions on retirement can significantly affect an individual well-being for many years. Many researches about retirement decision have explored the impact of health NIA (2007) and economic status, Gustman and Steinmeir (2002) on person decision to retire. Research shows that individuals with poor health, or whose family member or loved ones are experiencing negative health conditions, retire earlier than those in better health (McGarry 2002).

The role of the state, local government and private sectors as employers is simply to hire the right kind of employees to provide the best value services to the public or customers. It is not the responsibility of the employers to plan and prepare the employees for retirement. The truth that some individuals will make poor decisions in their retirements planning does not change this.

People still make bad decisions in their marriage and how they raise their children, but no one is suggesting that employers should intervene and make decisions for the employees.  The financial services industry has invested a lot in innovating to provide the services that their clients’ needs. There are reputable financial advisors throughout the country in case an employee requires a financial advisor. If employees require an estimate amount they want to save, there is a calculator tools on internet.

In case they want low cost, diversified investments, there various company that provide this. In case of guaranteed life time income, there multiple insurance firms that offer annuity income. If employees do not use all these services, then they really do not need them. If people want to spend the money today and forget tomorrow, who then is the employer to say their decisions are wrong.

Many employees have a low level on financial knowledge, especially when it comes to retirement planning. Sometimes the employer can provide a valuable guidance and education to its employees on the matter regarding finances and retirement. These services will not only be valuable to employees but also the employers because financial problems are major distraction from work and absenteeism. Through helping employees prepare for retirements, employers enhance smooth transition from order employees to young employees.

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Through education, employees learn financial skills that will help them plan throughout their lives. Through working with an advisor, employees are able to alter the benefits to the certain needs of themselves and their families. Education and guidance have been proven to work and increase the employee’s saving rate. When individual decide to retire, they must have a method to support themselves financially, as their previous income from work will no longer be available.

Hence the question of how to support oneself should be a great consideration in retirement decision. Commonly, income during retirement is thought to come from personal saving, pension and social security benefits. Many employees fail to consider the matter of financial well-being in retirements until retiring become imminent (EBRI 2008).

Creating decision environments that enables people to make the best choices possible is the objective of careful choice architecture which can be used to “nudge” (Thaler and Sustein 2008) retirees toward retirement decisions that are beneficial to them. In such a case, behavioral decision making research can guide the ways policymaker and retirement advisors communicate with potential retirees.

The findings from behavioral decision making research also innovate new ways to approach matters surrounding the retirement’s decision. For instance Featherstonehaugh and Ross (1999) argued that providing retirees with the option to receive a one time, lump sum benefit could encourage delayed retirement. After the survey research, majority of respondent claimed that one-time, lump-sum payment provided a greater incentive to delay the retirement, this compared to Standard Social Security annuity increase.

When deciding when to retire, employees compare what their lives would be like under different scenarios. There also some trade-offs that employees may make when thinking about retirement; more comfortable life now, less money later, working longer now, a good retirements benefits later. An important prerequisite of the retirement decision is the accuracy prediction of one’s future emotions.

There are ways individuals use to help them make accurate predictions of their future well-beings, but sometimes cognitive biases lead to erroneous predictions (Hsee and Hastie 2006). Often errors can be caused by the impact bias (Wilson and Gilbert 2003), it describe people tendency to overestimate the duration and intensity of their emotions in reaction to negative and positive future events.

Understanding the role that affective forecasting can contribute in the retirement decision may be important for recognizing why individuals retire when they do. The same way patients mentally simulate the experience of receiving a mammogram before deciding to make an appointment, just the same employees mentally simulate how retirement would be like before even deciding to retire.

Gilbert and Wilson (2007) discuss four characteristic of affective forecasts and explained why those characteristic mismatch between mental simulations and actual experiences. They argued that the mental simulations are unrepresentative, essentialized, abbreviated, and decontextualized. Unrepresentative, means they are formed from memories of past events that does not display how future events will unfold.

People tend to remember the best and worst of an event, as well as the final part of it, neglecting the instances that were simply average (Kahneman 1997). Therefore when thinking about retirement individuals may form mental simulations of future work experiences using their best and worst work related memories.

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Mental simulations are also essentialized, which means that they only hold the main features of the events but not minor details. This may involve thinking about aspects of one’s job, such as feeling undervalued by a boss, while forgetting details such as interacting with coworkers. Mental simulations are also abbreviated, meaning they are shorter than the actual event being simulated. When thinking how retirement would be, an employee is likely to consider only the early stages of retirement.

Decontextualized, means that the contextual factors present during mental simulation of the future may not be present at the time the event actually occurs. For example when an employee decides to retire, they are earning an income that will not exist once theyretire. At this moment the individuals are not feeling the strain of limited income, and the situation in which they are simulating retirement will not include negative feelings associated with inadequate funds. All of the mentioned features of mental simulations may lead to inaccurate affective forecasts of retirements.

Workers may prefer to retire early both because they think working longer will be worse than it is and life after retirement would be better. Everyday throughout the world employees are preparing or finishing planning their retirement plan. There much to look into when organizing a plan so that you can meets your retirement goals. Most employees focus on what stock and bonds they would wish to invest in and also about 401k. 

Employees find it difficult to determine which kind of stocks they would want to invest in. There are many different stocks in the stock market, therefore making it difficult for people to choose the best. Another problem would be kind of bonds they would also like to invest in. Investing in both stock and bonds does not make the individuals rich but use their money wisely as they near their retirement age.

Old age most of the time brings medical problems and health expenses. Without your own saving, living your younger years in comfort while also minding to cover your medical expenses may be a large burden to bear. To prevent any unforeseen sickness from eating on your retirement savings, you may consider obtaining insurance, such as medical and long term care insurance.

This will finance any health care that may arise. Employees considering retirement could be asked to write down the events that go down in a normal working day. This activity will help the employee paint accurate and complete picture of how it would be to worker much longer and without missing the minor details that somehow make their work more enjoyable.

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Methods

This study aims at assessing behavior adopted by the individuals while making economic decisions and the reaction of the market towards these decisions. Quantitative analysis was used to assess the correlation between dependent as well as independent variables. Understanding behavior adopted by the individuals while making economic decisions is vital when it comes to addressing the research questions of this study.

The study used quantitative technique to assess the gathered information. Different behavior adopted by the individuals while making economic decisions can be estimated by data. Information associated with behavior adopted by the individuals while making economic decisions can provide a detailed understanding regarding how DC plans implemented by various nations; decisions workers make about their retirement plans; and if employees are well placed and informed about the plans offered by the employers or the governments.

Data collection techniques

The purpose of this study is tobehavior adopted by the individuals while making economic decisions and the reaction of the market towards these decisions. The study also highlights on the how workers make decisions to save, manage the retirement investments and how they address their assets in retirement.

Data description

Much as plan-level information is an effective technique to assess the behavior adopted by the individuals while making economic decisions, a number of them are ineffective when it comes to analyzing the effect of how the workers make decisions to save, manage the retirement investments and how they address their assets in retirement. As such, survey data can address these challenges, such that it involves defined contribution plans with or without investment decisions.

This study embraces first wave from HRS, which is a household survey that was initiated in 1992. Moreover, detailed demographic information of the participants, supplementary issues, the spouse’s pension eligibility and benefits from present or previous employer or other sources of pension integrated in the questionnaire. Owing to the fact that survey technique is of elderly population, the sample does not represent pen-age group, particularly, the sample of elderly group and hence assessing this data cannot adequately depict behavior adopted by the individuals while making economic decisions.

Some characteristics of contribution degree must be highlighted. For instance, various employers offering plans require a default level of contribution rate for workers, in other words, individuals who choose to use DC plans must automaticallycontribute the default rate of their wages. However, without such data, it becomes challenging to evaluate the actual rate of contribution for individuals desiring to make contribution between 0 and default rate.

Again, employer-funded DC plans impose a maximum level of worker’s contribution. For that reason, if the individual contributes maximum rate, the desired contribution is likely to increase in comparison to the reported rate of contribution. The employer also offers certain percentage to workers’ contribution, however, to a certain proportion of salary.

This is widely known as match threshold. A number of people save in the retirement plans in terms of the amount of match threshold, which is the regarded as initial rate of rate. Nonetheless, HRS does integrate these questions, which can address the default level of contribution, match threshold and maximum amount

Regardless of these limitations imposed on individuals, they have the right to save, manage the retirement investments and how they address their assets in retirement. Firstly, individuals can chose to contribute positive rates or any amount between default or maximum rate. Moreover, individuals can contribute a higher figure that what employer or government match threshold.

This research concentrates on the aspect of workers position in terms of making informed choices regarding plans offered by the employers or the governments; implementation of DC plans in different nations; and the way in which employees make decisions regarding their retirement plans.

The decision to save, manage the retirement investments and how they address their assets in retirement used in this study is reported data by individuals in HRS. This is the aspect that differentiates limited and unlimited regulation over retirement investments. The study also integrates dummy variable showing that individuals are limited in terms of using their contributions of contribution from governments or employers. In many instance, this is common in profit-sharing and firm stock acquirement plans, whereby contributions from employers or governments are limited in firm stock and workers’ contribution in some circumstances.

When HRS was introduced it has a total of 2277 non-retired people with at least one retirement plan, of these 20.9% individuals indicated that they used DC plans.

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Analysis

The researcher used individuals with DC plans as well as those who provided their views to investment issues, which decreases the sample size to 476 individuals.  Table 1 demonstrates a summary of individuals with DC plans, sub-sample of individuals with positive contributions to personal counts and people with zero contributions accordingly.

On average, these individuals contribute approximately 5.99% of their pay o DC plans, therefore, they contribute roughly 1.84 thousand and how they address their assets in retirement, it is accessible to 60% of individuals and about 16% of them have stock acquirement alternative or profit-sharing, implicitly workers have do  not have power over employers’ contribution to retirement plan. There were about 47% women while 80% of the sample sizes were married. Furthermore, approximately 27% of the individuals have direct benefit plans and also DC plans.

In comparison to the subsample of individuals in this study who had 0 contribution, subsample with a positive demonstrated the capacity to control their savings, manage the retirement investments and how they address their assets in retirement decision, in other words roughly 71% of the subsample have the ability to make decisions about the retirement plans while 28% have such ability in the sub-sample with 0 contribution.

All individual who had access to positive contributions were less limited in the firm stocks, thus, they had additional income with less contribution from employers that is described based on the ratio contribution from employer  to the worker’s pay.

Figure 1 demonstrates the distribution of levels of contribution in defined contribution plans and decision to invest and with no decision individually. In fact, individuals with the capacity to direct investment make more savings, manage the retirement investments and how they address their assets in retirement in DC plans, than those with no decisions to save or manage their retirement investment. However, there is a significant reduction among individuals that contribute 0 amounts and a considerable rise in those that save more than 15 % of their wages. The graph below shows that investment decision encourages the amount to save in defined contribution plans.

Results

This part provides results about how workers make decisions to save, manage the retirement investments and how they address their assets in retirement influence their level of contribution in defined contribution plans. There were about 476 individuals in the DC with roughly 22 different plans with 498 observations. Average contribution is 5.99% of their pay and standard deviation of 7.82. The mean of individual’s contribution is 8.9 while 123 individuals indicated 0 contributions.

According to the basic regression, there is asset decisions financial information, and demographic characteristics of participants. The contribution of employer in the defined contribution plans is demonstrated in Column 2, and column 3 shows other plans. Investment coefficient is not only positive but also significant, demonstrating that individuals with ability to select an investment and not limited by the design of retirement plan contribute about 3.25% more of their pay in DC plan compared to other respondents.

On the other hand, the coefficient is limited decisions is negative as well as significant, providing 3.53% less of workers contribution limited by firm stock of workers as well as employer’s contribution, indicating that individuals would not invest in the retirement plans  if they do not completely  self-direct their retirement plans.

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For instance, if contribution from employer is made in firm stock in defined contribution plans, such a system encourages workers to maintain risky portfolios. For that reason, workers with complete authority over their contributions, have to alternatives to balance such risks. On one hand is investing in less risky assets in the defined contribution plans and on the other hand is going for other risky retirement plans like direct benefit. Nevertheless, for workers with partial or no power over their contribution, the effective strategy is reducing DC plan contribution while selecting risk free retirement plans.

Interestingly, to speculate the technique of an individual decision convinces respondents to pay more to their retirement plans. People have conflicting expectations. Variation in retirement plans can tip internal balance while increasing the amount of saving. Such estimates demonstrate that with an investment decision increase salary percentage as such, the effect of employer rate- the initial rate of contribution.

It can be assumed that selecting some or even all investment decisions makes individuals to maximize the contribution level, because asset decisions partially determine the return. This contrasts passive behaviors in retirement plans, particularly, where employers are in charge of managing investment. This formulation suggests that influence of asset similar across genders. With a gender variation, significant impact of asset decision for men is about 4.01 and 0.76 as the standard error while the impact for female is 1.89 and 1.11 standard error, though not correlated to 95% confidence interval.

This shows that women investment decision is determined by investment choices to save in defined contribution plans and they are careful in risky ventures. This is guided by two reasons, for instance women have higher expectations to save maybe they have a longer life expectancy compared to men. Additionally, decision unit is household and in most scenarios women secondary income earners and their revenue supplement their spouses. In such conditions, women reported revenues are considerably lower compared to household revenue and their behavior demonstrates their level of household earnings.

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Conclusion

The paper has discussed behavior adopted by the individuals while making economic decisions and the reaction of the market towards these decisions. there are different extension that emerge. Firstly, individuals with DC plans cannot adequately control the exact amount of contribution from their salaries. Second the study offers econometric impact of investment decision , however, it does not examine the  decision variable will be a constraint on the budget of the individuals.

Bibliography

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Strategic Planning Research Paper

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Strategic Planning

Task 1

1.1. Factors informing the process of strategic planning  

According to Bain (2014), the success of any strategy is determined by the strategic plans put in place. Effective strategy implementation requires a clear understanding of the process of strategic planning (Favoro, 2015). The set strategies should be in line with the firm’s goals and objectives since they represent the financial strength and sustainability of an organization. It is impeccable for strategic managers to show a clear strategic path for resource allocation and decision making to get the best strategies out of the available alternatives.

The vision of a business is the representative of what the organization wants to look like in future. Additionally, a vision statement tends to provide a picture of what the organization wants to achieve in the long run. On the other hand, the mission statement is short-term and aims to provide the purpose of the organization. The mission statement shows the stakeholders the position of the organization and its capability in the near future.

The goals of an organization provide the means with which it aims to achieve its mission statement, while the objectives are the desired returns that an organization would want to achieve (Iowa, 2011). Finally, the core competencies are the main differentiating factors of an organization from its competitors. Resources, skills, and activities that competitors cannot imitate provide for an organization’s core competencies.

All the laid strategic plans must be consistent with the goals, objectives, mission, core competencies, and vision of an organization since they are the determinants of the expectations of an organization’s stakeholders. Since strategic planning involves laying the foundation for achievement of strategies with the available resources, when all the stakeholders are satisfied as per the mission and vision statement, it becomes possible to implement the strategies for realization of positive results.

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There are a number of issues that affect the process of strategic planning. Strategic planning is referred to as a phase-by-phase procedure with the purpose of advancing the an organization. Of the issues that affect the process of strategic planning, there are five major factors that influence the procedure. Confusion of the strategy with the plan, disconnection from the reality, ineffective strategic analysis, lack of consistent ownership, and complicating the innovative process are some of the issues relating to strategic planning.

During the strategic planning process, some plans seem to liaise with already existing policies, making the current approaches seem void and managers may do away with the strategies. In the course of the process, some employees are not involved and still, the process is intellectual and involving making the strategic managers to be detached from the real world and come up with unreal plans (Bain, 2016). When there is great involvement and use of comprehensive analysis, the process ends up with so many details that make it unattainable.

Also, since it’s only a part of employees that are involved in strategizing and planning, it can be said that the process is now owned by all the employees hence making it difficult for them to be accountable and responsible for mistakes resulting from strategy implementation (Long, 2012). New strategies bring about new control measures which eventually reduces flexibility and innovative nature of an organization. All these issues dampen the process of strategic planning and it’s up to the strategic managers to deal with them before commencing the process to avoid loopholes for successful implementation.

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1.3. An evaluation of strategic plans systems

The techniques used for formulation of strategic plans differ in accordance to the strategy. There is a variety of techniques used for strategic planning but the chosen technique should provide the best possible strategic outcome. The main methods used for strategic planning include; directive, command, coordination, emergent and directive strategic techniques (Iowa, 2011).

A directive technique is used in large organizations that have a simple way of doing things. The technique involves a comprehensive study of the internal and external environment for the top management to carry out strategic plans. However, if the organization is large and complex, the suitable technique is coordination where all the departments and resources are integrated together to find the most suitable strategy.

A command technique is used in small and medium enterprises where the owner or owners get involved in the strategic planning process.  The owner is responsible for strategy formulation, planning, assessment, and implementation since there are few stakeholders involved in the process. A combination of internal and external team of experts is used for strategic planning in the case of emergent technique.

 Therefore, the effectiveness of a strategic technique is highly dependent on the type and nature of an organization. It is crucial for strategic managers to be familiar with their organizations in order to apply the best technique. Combining the different techniques provides for application of the internal and external environment, available expertise skills, as well as associating all the stakeholders in the strategic planning for effective results.  

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Task 2

Successful organizations understand the need to update the existing strategies as well as develop new ones to have a sustained growth. Apart from understanding the objectives, mission, core competencies, goals, and mission of an organization; it is important to understand the micro and macro environment before formulating new strategies. SWOT analysis, PESTEL analysis, and Michael Porter’s analysis are some of the main tools that can be used in assessing the environmental factors affecting an organization for the formulation of new strategies (Sun, 2015).

2.1. McDonalds

McDonalds operates as a food chain and has a presence in 200 nations. Founded in 1955, it has continuously grown in market share and revenue through diversification of products and engagement in online selling to increase customer value for maximum satisfaction.

2.2.     McDonald’s organizational audit

To carry out McDonald’s organizational audit, SWOT analysis is necessary.  SWOT analysis is carried out to determine the strengths and weaknesses of an organization, as well as identify the opportunities and threats that an organization faces for the formulation of a sustainable strategy for an increase in market share.

Strengths

  1. Ever since it was founded in 1955, the company prides itself in a great market share where it has established itself in 119 countries with more than 40 million customers.
  2. Offers a variety of products and menus for customers. The diversity of products makes the company have a sustained growth and increase in revenues over time.
  3. Utilizes up-to-date knowhow such as online marketing to increase customer value and market share.

Weaknesses

Although the company has a sustained organization environment, its main weakness is in the product delivery after the emergence of E-commerce. It is difficult to deliver products to all its consumers due to infrastructural problems and bad weather.

Threats

Just like other food chains, the company’s main threats are:

  1. Intense market competition since there is free market entry.
  2. Rapid changes in consumer tastes and preferences.
  3. Penetration of the web

Opportunities

  1. Globalization that has created numerous avenues for expansion of the company.
  2. Technology advancement leading to diversification of trade through e-commerce.

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2.3. McDonald’s environmental audit

The intention of carrying out an organization audit is to understand the market that a firm operates in. Since McDonald has an international manifestation, its environmentally friendly inventory is influenced by technological, political, legal, economic, environmental, and legal factors.  The environmental audit is a global one. Through the of PESTEL model, it is possible to carry out an environmental audit on McDonald’s.

2.4.      PESTEL Analysis

Some governments may encourage the company’s presence in their countries by giving out incentives while some may restrict operations hence influencing the strategies set up by McDonald’s strategic managers. Economic factors that affect the strategies set by the company include inflation, recessions, demand, and the supply of the products. Also, the company’s operations are socially affected in terms of the culture of the different market segments such that McDonald has to formulate strategies are consistent with certain cultural orientation.

There are some governments that impose high tariffs and taxes on foreign companies or reduce the rates to encourage the companies and McDonald is not left out. In addition, the strategy of the company is affected by innovations like information technology as well as electronic-commerce, which have an impact on the manner in which company operations are carried out. All these PESTEL factors influence the company and the way it formulates its strategies.

2.5. Significance of stakeholder analysis in strategy formulation

Stakeholders are the persons who are directly or indirectly affected by the operations of an organization. Like other businesses, McDonald’s stakeholders include: employees, customers, lenders, investors and the government. To effectively formulate a new strategy, it is important for a company to analyze all the stakeholders’ needs and expectations of the company (Duggan, 2014). A stakeholder analysis is a procedure used to assess and determine the effect of the key persons in an organization as well as their influence in the organization.

A company`s appraisal is considered to: decide the individuals that will undesirably or definitely have an influence on organizations operations, comprehend the influence of the shareholders on the business, and come up with approaches that are reinforced by all shareholders as well as reduce the difficulties the institute might go through  when implementing the strategies.

2.6.      Advantages of stakeholder analysis in formulating a new strategy

  1. It is possible to get expertise opinions that assist in shaping of a strategy as well as gaining support for effective strategy implementation.
  2. When stakeholders are involved in strategy formulation, an organization increases its chances of getting extra resources.
  3. It gives a clear understanding of the opinions people have for the company hence providing room for improvement through the new strategies.
    1. New strategy for McDonald’s

With the rapid changes that are taking place in the market, the best strategy that McDonald should adopt is e-commerce so as to increase its market share and increase consumer’s value.

Task 3

It is important that various alternative strategies are looked into before implementation. Each strategy has its advantages and disadvantages and it’s the strategy with the best outcome that should be taken (Duggan, 2013). In line with the vision and mission of Marks and Spencer, substantive growth, market entry, limited growth, and retrenchment are some of the available alternative strategies. This section outlines the four alternative strategies and recommends a strategy for Marks and Spencer

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3.1. Background

Mark and Spencer is a multinational retailer offers a variety of products in clothing and accessories (Mark & Spencer 2016). The company was founded in 1884 and is one of the leading retailers in the world.

3.2. Evaluation of the alternative strategies by Marks and Spencer

Substantive growth strategy is formulated through mergers and acquisition. Suppose a business if sturdy in terms of finances, then this implies that it is able to consider a strategy. Marks and Spencer has a big market share but it can merge with another firm to increase the share for sustained growth. Also, an expansion strategy exists by acquiring another business as it will be at a reduced cost and procedures.

An inadequate development approach is integrated using a joint venture thus leading to a diminished competitive edge, thus Marks and Spencer do not consider it. Reduction of cost and assets as well as revenue generation is some of the retrenchment strategies available for Marks and Spencer. The company can reduce its operation cost in Middle East. Moreover, the company should strategize on taking up extra market segments in the world to increase its market share.

3.3. Recommended strategy for Marks and Spencer

The company best alternative strategy is sustained growth through mergers and acquisition. The firm is already financially stable and strong hence is in a position to acquire or merge with other businesses in the same line. The strategy is the best of the other alternatives since it will lead to cost reduction with increased market share and sales.

Also, the microeconomic challenges faced in some of the countries can be phased out through mergers with firms that are already stable in those economies. The competitive nature of the clothing industry requires uniqueness of strategies which can only be achieved by liaising with firms that already understand the culture of the people in the various market segments.

Task 4

A strategy is void unless it is implemented. After successful strategic planning it is crucial to identify proper methods for implementation. Implementation is the final stage and the way it’s carried out determines if the strategy will be successful (Sage, 2014).

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4.1. Honda’s Background information

The company is multinational and operates in the automobile industry. It is the second largest automobile and was founded since 1959. The company operates globally and has sells a variety of products.

4.2. Responsibilities and roles of personnel in strategy implementation

The formulated strategy has to be communicated to the different stakeholders either formally or informally. The functions of each organization are influenced by the novel approach and needs the application of an informed communication to reach out regardless if it is horizontal or vertical.

The personnel equipped with the implementation process are responsible for mapping the strategy, integrating the organization for delivering the strategy, and carrying out the change process as impacted by the new strategy.

The personnel have the role of mapping the new strategy to the internal and external users to make them have an idea of the prospects of the new strategy to the operations and image of the organization. By mapping the strategy, the personnel will also be involved in positioning the strategy to the existing culture of the organization so that it fits with the firm’s expectations. Finally, the personnel are tasked with the change process that results from the new strategy.

The middle management and outside parties are the ones that take the responsibility of strategy implementation. The middle managers implement the strategic plan that has been set up by top managers through making sense of the strategy to other stakeholders, interpretation and re-adjustment of the stakeholders view on the strategies, and advising the senior management on the implications of the new strategy (Lewis & McKone, 2015). Shareholders are convoluted in the modification procedure and compelled to make the policy flexible as envisioned by the organization.

 4.3. Resource requirements for implementing a new strategy for Honda

Resource allocation is a strategic process aimed at aligning all of organizations resources to its goals and objectives. Resources are in form of finance, human labor, and infrastructure. All these resources must be used in such a way that they lead to the achievement of the strategies.

Honda required resources are finance and human resources since it is already in possession of the materials and tools required for strategy implementation. To achieve its innovative process of generating unique products, the company needs expertise skills as well as finance to undertake the process of research and development as well as start-up capital for the new venture.

4.4. SMART targets

For achievement of strategy implementation in Honda, SMART goals must be set. SMART stands for specific, measurable, attainable, realistic, and time-oriented. A strategy should be specific and clear to avoid complications during its implementation. A realistic target is achievable and falls within a specific time frame that is also measurable and is agreeable by all stakeholders. When a target is SMART it is easily implemented and is successful in the long run (Haughey, 2014).

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Conclusion

Strategic management is one of the crucial functions of a business. If all stakeholders are involved in the strategy formulation process, it becomes easier to implement and the required resources are made available. A strategy is said to be successful if it’s SMART has been analyzed using SWOT and PESTEL tools. After formulation, it requires different parties to take up the process of communicating the strategy in order to integrate all the functions of the organization for successful implementation of the strategies.

References

Bain, 2015. Strategic planning. [Online] available at: http://www.bain.com/publications/articles/management-tools-strategic-planning.aspx

Balanced Scorecard Institute 2016. Strategic planning [online] Available at: http://balancedscorecard.org/Resources/Strategic-Planning-Basics

Duggan, T 2013. Strategic management and how to allocate resources [online] available at: http://smallbusiness.chron.com/strategic-management-allocate-resources-11682.html

Duggan, T 2014. What are the roles and responsibilities of strategic project manager? [online] available at: http://smallbusiness.chron.com/roles-responsibilities-strategic-project-manager-10260.html

Favoro, K 2015. Defining strategy, implementation and execution [online] available at: https://hbr.org/2015/03/defining-strategy-implementation-and-execution

Haughey, D 2014. SMART goals: [online] available at: https://www.projectsmart.co.uk/smart-goals.php

Honda 2016. Honda[online] available at: http://corporate.honda.com/innovation/

Iowa 2011. Basics of strategic planning. Retrieved from: https://www.fpm.iastate.edu/worldclass/strategic_planning.asp

Lewis A & McKone D., 2016.  Strategic planning[online] available at: https://hbr.org/topic/strategic-planning

Long, N 2012. What is the role of an employee in the implementation process? [online]  available at: http://smallbusiness.chron.com/roles-employee-implementation-process-36334.html

Mark & Spencer 2016. Mark and Spencer Online. [online] available at: http://www.marksandspencer.com/?extid=ps_ggl_ROW_Brand_InternationalBrand&kwid=29649850_Google+Adwords&s_kwcid=AL!2750!3!76493220287!e!!g!!mark%20and%20spencer&device=c&ef_id=VqCuxgAAAWf@2QeZ:20160323111459:s

McDonalds 2016. Strategies. [online] available at : http://www.mcdonalds.co.uk/ukhome.html

Sun, L 2011. Environmental factors in strategic planning. Retrieved from: http://www.leoisaac.com/planning/strat016.htm

Sage, S 2015. Strategic implementation[online] available at.: http://onstrategyhq.com/resources/strategic-implementation/

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Transocean Strategic Management

Strategic Management
Strategic Management

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Transocean Strategic Management

1.0 Introduction

The paper will evaluate the strategic position of Transocean, a major player in global offshore drilling services in the oil and gas industry. Strategic management is a process that entails formulating and implementing main objectives as well as initiatives a company takes based on the available resources. It also takes into consideration the evaluation of external and internal environment in which the firm operates.

Founded in 1953, the company is headquartered in Houston Texas. Transocean administrative division has since shifted to Vernier, Switzerland for tax and client servicing reasons. Various models such as STEEPLE, Ansoff and Porter’s Five Forces will be used to paint the company’s strategic position when it comes to, macro-environmental review, competition, diversification strategy, market development, product development and market penetration. To wrap up, the paper will make recommendations regarding the direction the company has to take to remain sustainable.

1.1 Analysis of Transocean Limited

Transocean is a prominent global provider when it comes to offshore drilling services for energy establishments. The company owns and operates the world’s most multipurpose flotillas that concentrate on deep-sea and extremely harsh environment drilling (Deepwater.com, 2016). With a fleet of sixty-one portable offshore drilling components, the company offers powerful rigs for deepsea drilling. Transocean helps clients to establish and develop oil as well as natural gas stockpiles.

The company offers an exceptional drilling performance that is anchored in a solid experience that spans more than a half a century. Transocean shares are listed on the New York Stock Exchange under the acronym RIG and Swiss Stock Market under the acronym RIGN.Transocean operates more than 140 offshore rigs in almost all mainmarine markets. Apart from offering drilling services offshore, the company offersdrill management services globally.  Transocean operates not just the largest extreme-deepsea flotilla of drill ships global, but it is also the largest offshore fleet worldwide.

The company hires more than 20,000 employees with the technical expertise that is the envy of their business rivals(Deepwater.com, 2016). Moreover, Transocean provides management and accomplishment services for assessment and production firms regarding offshore drilling schedules. The company’s mission is to become a leading offshore drilling organisation that provides rig-based services with a global reach, by incorporating a highly dedicated workforce,state of the art machinery and ultra-modern technology, while concentrating on technically demanding environments (Transocean, 2007b)..

The company is dedicated to values that represent its focus, innovativeness, safety, trust and reliability. The company promises to surpass not just the anticipations of theclient, but employees and shareholders as well (Deepwater.com, 2016). Transocean’s strategic goals include getting aligned with its customers when it comes to supporting and ensuring delivery of clients’ business objectives. 

The company conducts its operations with distinction which is characterized by safety and efficientoffshore solutions (Deepwater.com, 2016). In addition,Transocean keeps on enhancing its corporate culture and processes to optimize returns. Lastly, the company not only attracts but also nurtures and retains the industry’s best employees.

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2.0 Industry Trends

Drilling oil and gas was previously dependent on backlogs. Contract bores alter their rates based on their rig charges relative to retailing oil and gas prices. Usually, contract bores tend to wait on the day down, and speedily adjust their prices upwards depending on how the markets are performing (Redall, 2012). There has been a widespread pattern of extreme deepsea rig business with strong daily charges.

However, there has been a downward trend in mid-water rig markets. The most lucrative market lies of the Gulf of Mexico and West African coastal line, down to the south of Africa. The demand for deep-sea rigs is anticipated to remain jerky in the short-term(Helman, 2015).As of now, approximately 206 floaters are operating under contract across the industry (Deepwater.com, 2016).A large percentage of the total number is idle for completing major contracts.

3.0 Analysis the different types of strategic options

3.1Ansoff Matrix:

    Existing Markets    Market Penetration      Product Development  
    New Markets  Market Development      Diversification    

Existing Products

New Products

Transocean is a dominant player in a market that is not highly saturated. However, to remain at an edge over its closest business rivals, the company has adopted different approaches. Based on the Ansoff matrix, Transocean has been using a low pricing model to penetrate the market. When it comes to market development, Transocean has been offering ultra-deepsea drilling and management services in various parts of the world. What makes the company the envy of its business rivals is the fact that Transocean’s product development strategy works magic. Apart from ultra-deepsea boring services, the company offers rig and deepsea drilling consultancy services which is certainly some form of diversification hence competitive edge.

In short, Transocean operates in the same market by adopting a horizontal strategy in terms of expanding the product line. Lastly, Transocean has a predominantly diversified portfolio. To diversify risks, the company has necessitated mergers and acquisitions when it comes to financial management and technical expertise. The company operates in various regions such as the United States, the Gulf of Mexico, the North Sea, West Africa, and Southeast Asia, Middle East and the Arctic.

3.2Porter’s Five Forces

3.2.1Competition

Transocean threat of competition is moderate to high. For example, following a merge in mid-2007 between Rig and Transocean’s chief rival Global Sante Fe, this attempt reduced competition particularly, in ultra deep-water segments. While Transocean has almost a monopoly in ultra deep-water drilling, It is likely to enjoy less competition in ultra deep-water, especially in harsh climates that require technical personnel.

In fact, this contributed to the need for anti-trust lawsuit following the merger between RIG and GSF. Nonetheless, the firm has exposure to different offshore markets such as jackupsegment that is associated with intense competition in various regions globally as well as pricing (Porter, 2008). By and large, the organisation has less competition in ultra deep-water segments, with a somewhat intense competition in mid-water floater and also jackup segments.

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3.2.2 New entrants

Transocean enjoys a low threat of new entrants. With respect to offshore contract drilling sector, it requires huge investment in fleet and rigs before getting inflows from gas and oil organisations (Porter, 2008). This makes nearly impossible for new firms to enter this sector.

3.2.3 Substitute

The main threat of substitute is the changing the energy source from hydrocarbon to renewable sources across the world, which is not likely in the short-run (Turner, 2007). Therefore, the threat of substitute is low.

3.2.4Purchasing power

Transocean’s purchasing power is moderate. Much as exploration and production firms have power when it comes to negotiating, especially in mid-water floaters and jackupsegments, they have sufficient ability and provision of idle rigs. In essence, the buyers are in aposition to negotiate low daily rates in the contracts while ultra deep water segments maintain stringent rates (Schlumberger, 2008).

3.2.5Suppliers’ power

The supplier power is moderate. Transocean providers have some degree of power. For instance, suppliers like National Oilwell Varco take part in the decision making in constructing Transocean’srigs andother essential parts. Luckily, this is crucial for Transocean since National Oilwell Varco has a few plans of increasing the fleet of drillships. In general, benefits from pricing since they are the main clients to themajority of their specialised providers (Porter, 2008).

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3.3 STEEPLE

3.3.1 Social

The organisation takes part in various social activities, including charitable contributions to developing environmental initiatives to increase its reputation.

3.3.2 Technological

Technology is necessaryfor drilling sector as such Transocean gets its strength in technological development. While oil drilling and the ecology are related, so is technology and demand. Drilling in deepwater is more and more vital from drilling organisations since they are considered to be more profitable. The firm is positioning itself to capitalize in this segment. For instance, in 2007, Transocean acquired a drillship worth USD 470m to take advantage of deep-water drilling, which allows the firm to drill up to ten thousand feet.

Due to advanced underwater drilling, there has been a decrease in jackup rigs demand (Associated Press, 2007). This presentsTransoceanwith the opportunity to beat their rivals like Noble Corporation in the struggle for innovation. Currently, the firm is leading in deep-water exploration (Katsaros & Christy, 2005).

3.3.3 Economic

Cost is a major challenge for drilling organisations. As oil price rises, the cash flow increases too, which makes organisationsinvest considerably in drilling activities? Furthermore, the new techniques of recovering oil though they are essential in the growth of petroleum production, are leading to an increase in the gasoline price. Implicitly, thehigh price of oilis required to make drilling firms profitable. High global investment drives drilling.

With great interest to drill in foreign regions, global investors are significantly investing, hence leading to expansionof oil and gas sector (Maksoud, 2007).Even though raising oil cost will adversely influence Transocean, in reality, will be beneficial in the long run. Oil cost is inelastic. In other words, afluctuation will insignificantly affect demand. Therefore, increasing oil prices willboost cash flow for Transocean, which means additional business like funding new drilling projects.

3.4.4 Environmental

On environmental protection, Transocean is committed to enhancing its stringent police on Environmentalmanagement system (EMS). Transocean’s EMS visitation is conducting its operations in a standardised manner that fulfills the high levels of stipulated laws to drive continuous enhancements while instilling ownership across its facilities (Transocean, 2007a). The organisation is environmentally sustainable by way of using green products and assessment is utilized as part of routine operations.

The firm also focuses on recycling. Additionally, Transocean has set up a recycling plan, where recyclables are sorted and compressed in rigs. After compression, they are transported to Tech Oil Products and donated to a recycling hub in the ARC of Iberia.

Transocean has collaborated with different oil and gas firms such as Subsea 7, and BP in the SERPENT project. Thisentails necessitating access to the installations, in partnership with their customers to present scientific knowledge to experts in the SERPENT project (Dictionary.Cambridge 2012). In turn, the analysts conduct various projects including assessing biodiversity and effects of drilling on the environment.

The analysts also work on the company’s rigs to study marine species (Transocean, 2007a). By and large, Transocean protects the environment in which it operates to demonstrate that the company recognises the consequences of natural demand shifters.

3.4.5 Political/Legal

Oil presents this organisation with a strong political force. Because oil is the primary source of energy internationally, thus, the supply of oil is related to power regardingpolitics; oil firms leverage authority over regimes (Dictionary.Cambridge 2012).   With no oil organisations, United States is likely to lose its dominance in developing nations remarkably. Though oil drilling firms are fundamental in giving regimes the authority, they are still regulated and work as per government laws, such as prohibiting drilling in particular regions like the Gulf of Mexico to protect the environment.

In 2007, the Congress was promoting the closure of a quarter-century ban on the production of offshore energy. This decree banned 85 percent of all drilling in United States’ continental shelf, greatly affecting oil drilling firms including Transocean (Kamalick, 2007). Furthermore, the Congress were supporting the opening of additional shorelines, which was associated with renewable sources of energy, as such they sought for support from environmentalists. While regimes exercise their authority on oil and gas providers, these providers, in turn, have authority over the very regimes.

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3.4.6Ethical Standards

Transocean aspires to ensure financial discipline in their disclosure, honesty and candor in all their engagements with clients, ahigh esteem for employees, customers and suppliers, the safety of employees, property and the ecosystem and technical leadership. Loyalty to these core values demands the company to execute its operations in tandem with thelaw and the utmost standards of business ethics.

In advancing that objective, the company embraces the Code of Business Conduct and Morality, the firm’s environment is also a corrupt free zone and an Anti-Corruption and Business Conduct Policy takes care of that. Again, directors and employees are not allowed to enhance the culture of inside trading. Nonetheless, all employees should adhere to the privacy policy.

4.0 Recommendations

Since oil is directly associated with international authority, oil drilling organisations have authority over regimes, nevertheless, with another alternative, Transocean should continuously go this direction to maintain the lead if the primary source changes

Much as the company has advanced drillship tools, it should take a notch higher by researching new products in comparison to its rivals.When it comes to maintaining competitiveness in oil and gas industry, Transocean should use differentiation strategy that will be vital in developing clients’feedback and service delivery. The differentiation strategy should focus on quality rigs, particularlydeep-water drilling and ability to survive environmental disasters such as hurricanes.

While this threat of substitute islow, in future it may reduce the demand for oil. For that reason, Transocean should create awareness among clients about the benefits of oil in comparison to other energy sources. This can be carried out through advertisements. For instance, the organisation should use ads that demonstrate even with the use of alternative sources such as ethanol, which is considered environmentally sustainable compared to oil. Ethanol requires aconsiderable quantity of biomass. In the even that US, ethanol from corn is employed on a large scale, then it will contribute to increased costs of corn.

The prices of beef will also skyrocket remarkably as cows feed on corn products. On the other hand, if Brazilian corn is used thatis produced from sugar; rainforests in the region will be cut to provide land to grow sugar. Creating awareness through ads will help Transocean increase the demand for oil while increasing the demand for petroleum products from the company.

The company should embrace Ansoff model to diversify its portfolio. Instead of concentrating on drilling and consultancy, the company can take a leap of faith and venture in other business like marine transport, finance, healthcare, real-estate, heavy metal processing among others. Diversification is critical because it will help the company spread risks, when oil business is at its low. 

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5.0 Conclusion

The study set out to evaluate Transocean position in the offshore drilling services. The company’s background, values and strategic goals were highlighted at the outset. To understand the company’s product and market development; market penetration and diversification, the Ansoff Matrix was used. The Porter’s Five Forces were employed to establish the intensity of the competition. However, STEEPLE model was used to evaluating the company macro-environment. In the end, the paper touched on the best practices as assured by ethics codes. Recommendations were made regarding the corporation’s future. 

6.0 Bibliography

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Berman, A. 2007. Drilling advances. World Oil, 19. Retrieved March 17, 2016 from Business Source Premier Database

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Helman, C, 2015. Forbes.com, Retrieved March 17, 2016  from http://www.forbes.com/sites/christopherhelman/2015/03/16/oil-layoffs-itemized-75000-andcounting/

Deepwater.com, 2016. Deepwater.com accessed on 18th March. 2016 at <http://www.deepwater.com/>

Katsaros, J.&Christy, P. 2005. Getting It Right the First Time: How Innovative Companies Anticipate Demand. Westport, CT: Praeger

Kamalick, J. 2007. Untitled. Chemical Business Americas, p. 26. Retrieved March 17, 2016

Maksoud, J. 2007. International investment pours into Africa. Pipeline and Gas Journal,pp. 42-44.

Porter, M. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 15 January 2011.

Redall, B, 2012. Reuters.com, Retrieved March 17, 2016 from http://www.reuters.com/article/us-fieldservices-powerstruggleidUSBRE8AC05S20121113#y2LttEqUfwzf4Kja.97

Schlumberger 2008. Day rate. Oilfield Glossary. Retrieved March 17, 2016 from http://www.glossary.oilfield.slb.com/Display.cfm?Term=day%20rate

Transocean, Inc. 2007a. Responsibility. Retrieved March 17, 2016 from www.deepwater.com

Transocean, Inc. 2007b. Our company. Retrieved March 17, 2016 from www.deepwater.com.

Turner, H. (2007). Conversation about Transocean and alternative fuels. 

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