Interactive Multimedia

Question 1:

The picture on the left is my chosen piece of graphic design. This design was made as a publication cover. In this graphic design, images had been colorfully arranged to relay a message that is focused on taking care of oneself and staying healthy. This message has been made clear as the pictures used portray various aspects of fit and healthy living. In particular, images that show good diet, weight-watching, muscle-building, exercising, relaxing and cigarette butts on an ashtray had been used to communicate this message. The graphic design is also stressing that there are several ways on how an individual can improve his or her health. This message is apparently directed for young adults and adults who are at-risk to unhealthy lifestyles. Aside from these, the message of the graphic design appears to be directed for workers or professionals as well, particularly those who do not have the time to think of themselves, relax and enjoy the outdoors. Although the message is clear, the picture of cigarette butts seems to be off the general theme of the graphic design. While the majority of the images clearly show what readers should do to obtain good health, cigarette-smoking on the other hand is a vice that readers should not do. Though it is related, this picture does not contribute to the main theme of the design and conflicts the message being stressed by the cover. The message of the design could have been better communicated if a single theme is chosen; this would facilitate better reader or viewer comprehension.

Question 2:

             was an American inventor, designer, visionary and architect. He has been known as an advocator of the ephemeralization principle. This principle was inspired by emphasis on discovering infinite possibilities available to mankind. If  has been famous through his quote “Design is doing more with less”, Fuller has also been made popular with a similar quote but with a different meaning.  used this famous design quotation to stress that designs do not have to be elaborate to be aesthetically pleasing; thus, this line has always been related to the concept that simplicity is still the best design. Fuller on the other hand, related the “doing more with less” quote with his ephemeralization principle. Rather than focus on aesthetics, Fuller noted that sophisticated designs should have less materials and that good designs can be produced even from recycling various resources. By means of recycling, Fuller believed that even small things that appear useless can be developed into high value items.

            This phrase is very much related to contemporary multimedia design as it promotes the value of creativity. Artists and designers of today cannot depend on new items or products all the time considering the cost of goods. However, by means of developing old items, the creativity of a designer in using various materials is optimized. Through Fuller’s quote, designers can be encouraged to think out of the box, consider other better options and make the most of the available items or resources for a good design.

 

Question 3:

            In order to describe a website with a strong visual voice, two websites focused on giving diabetes education to users were selected. One of which is the official website of the American Diabetic Association  and the other is official site of Diabetes UK . Comparing these sites, the website of the ADA appear to have a stronger visual voice that the second site. This is mainly because the ADA website was able to use various means of visual language effectively. In terms of typography, the site made use of sans serif font styles so as to ensure readability and legibility, considering that the contents of the site are factual and medical information. Spacing is also used effectively to separate one subject from another, facilitating better reading. Links are also placed in web pages to encourage user to read more about their selected topics. Aside from these, images and multimedia sources are placed in the site. Among its interactive features include a diabetes risk test, multimedia education, recipes and the virtual grocery store as well as the rate your plate feature where users can place computer-generated food item on a plate and see whether they are following a good diet. The Diabetes UK website is an informative site as well. In terms of visual language, the site used typography principles effectively. However, the site lacks the use of images or graphics that could describe the main content of the site. The lack of interactivity also lessens the capability of the site to appeal and effectively educate users. 

 

Question 4:

            Organizations are often hesitant on allocating budgets for graphic designs. This is mainly because employing graphic design services can be very expensive. In particular, hiring graphic designers can be ineffective considering that they are not familiar with the operations and specific needs of the company. Moreover, entrusting graphic design needs to some professionals also increases the risk of costly errors and mistakes. These are some of the common reasons why most organizations slash graphic design budgets away. Although, these problems actually occur, organizations should consider that developing and funding for good graphic designs are a necessity to present business operations. In particular, marketing efforts are considerably enhanced through the efficient use of graphic designs. The creation of good promotional displays, distinctive logos and other similar media all help the company in communicating with their targets or consumers. Thus, rather than make graphic design less of a priority, organizations should make use of other available option that would still allow them to utilize graphic designing. For instance, instead of using graphic designers from the conceptualization up to the execution of the design, companies should involve themselves and use their own creativity in designing. The professional expertise of the graphic designers can then be used on evaluating, enhancing and approving the design. In this way, organizations can ensure that their ideas and standards are still represented by the final design. Graphic designing is a necessity for business companies; available options should then be used for better and less costly outcomes.

Question 5:

            One of the most popular and influential architects is  During his career, he was able to develop and introduce a number of individual styles that helped in developing American architecture. His works had been popularized at the start of the twentieth century when servants had almost been phased out from American households. With this change of trend, Wright developed a style known as open plans, which made him well-known. In this architectural design, spaces at home where made into workplaces where women can easily do their housework but will still be able to keep track of the children or entertain guests in the dining area. The works and early designs of   have also been integrated into Wright’s concepts. The Usonian style for suburban homes has been popularized by Wright as well and was adapted by several developers. Aside from the open plans, simplified construction methodologies and slab-on-grade footing were among his famous contributions to architecture.

            was an Austrian photographer, architect, painter and graphic designer. In print,  introduced some of the known font styles today such as the sans serif typeface and the custom geometric font called universal. He had also become an art director for Vogue magazine. In architecture, Bayer co-designed the Aspen Institute and participated in the restoration of the Wheeler Opera House. He had also been a famous photographer through his ski poster works where it was effectively promoted as a glamorous and exciting sport. Saul Bass on the other hand was a graphic designer but was more known for his participation and design for motion pictures. During his career, he had worked with some of the best filmmakers in Hollywood, including . Among his famous works was the animated paper cut out used in the Man with the Golden Arm. Aside from his works in the film industry, Bass was also a popular logo designer. The globe logo used today by AT&T was the sixth logo of the company and was designed by Bass. Other company logos made by Bas include the ones used by the Quaker Oats Company, Minolta, United Airlines and Warner Communications.

            A British typographer, art director and graphic designer,  is among the founding member of FontShop in London, which introduced several designs of typefaces. He has also been part of the FUSE project where magazine, graphics and typeface designs had all been integrated. At present,  continues to be a graphic designer in his own design practice known as Research Studios that is found in London, Berlin and Paris. Aside from designing font styles, he has also been involved in various projects including the development of packaging designs for Kenzo Perfumes and branding activities for HomeChoice and Macromedia. Andre Cassandre was an Ukranian-French commercial poster artist, painter and typeface designer. Among his famous early works was the posters made for Dubonnet, a wine company; this work has earned him more clientele as the posters can be seen even by passengers of fast-moving vehicles. Aside from this, his posters were also very memorable as they made use of graphic solutions developed by famous painter like  In typography, Bifur, Acier Noir and Peignot were among  popular typeface designs. he was also employed by companies to do logo designs; among these companies include Yves Saint Laurent.

Well-known graphic designer  is famous for his poster designs including the Bob Dylan poster as well as his logo designs such as the DC Comics and the I Love New York logos. Along with  is also a co-founder of New York Magazine. The works of this designer has been characterized by originality, directness and simplicity. He is also very versatile when it comes to selecting the style or medium for designing. The establishment of Milton Glaser Inc. enabled him to participate in various major projects like the 600-foot mural creation for the Federal Office Building. He had received several awards for his contribution to contemporary design and illustration.is a known animator as well as the assigned chief creative executive for Pixar Animation Studios. As a founding member and part of  has been involved in several Pixar projects where he either played as the executive producer or director. Animated films like A Bug’s Life, Toy Story, Toy Story 2 as well as the upcoming movie Cars were among his popular works. Due to his contributions to films, most critics dubbed him as the present Walt Disney. His works did not only gain support from viewers worldwide but also won some important awards.

 on the other hand is Apple Computer’s Senior Vice President of Industrial Design. One of the greatest contributions of Ive to computer manufacturing was the integration of fashionable designs and styles for Apple’s iMac product line. Compared to the iMacs developed during the 1990s, Macs today are not only more functional but stylish as well. The radical developments of these computers pave the way for the “new Apple” symbol. Colors are the main component of  works. His early designs features milky white surfaces with see-through candy color surface and bulging shapes; the translucent colors were actually based from gumdrop candies. The color code of the products was even patterned after candy flavors (e.g. Blueberry, Grape, Tangerine, Lime and Strawberry). This design even began a trend with other goods like clock radios and chairs that are made from translucent bright plastic. Another design introduced by Ive was the Graphite color scheme, a calmer smokey gray color. At present, Ive’s designs were based from latest consumer preferences characterized by professional and sophisticated designs; here, multi-color styles were replaced by glossy white coloring, opaque finishes, brushed aluminum with streamlined shapes.

 was Austrian automotive engineers and is best known for his contribution to car designing. In particular, he was the one who designed the original Volkswagen Beetle. In addition, he was also the one who designed some of the advanced tanks in Germany including the Elefant, Tiger I and Tiger II. Jakob Nielsen is a speaker, writer as well as a consultant for web and software usability. During the initial introduction of the Web, Nielsen correctly foresaw the role of hypertext in user interface design; thus, he made a comprehensive book about it. He developed his own website where he regularly writes articles on usability research. His expertise on web usability has gone through controversies and critics as he stresses the graphics, flash animation and other similar features are only use for gimmicky purposes. Currently, Nielsen still writes newsletter on web design and published books about the same subject.

 

Question 6:

Background: The aim of this design brief is to help out a designer in need of a promotional portfolio for a website. The client have recently put up a day care center in a mall, the client would like to promote the services of the business by using the website design.

Task: The task of the tem is to design a website that would promote the services of the client’s business and appeal to the target market. The design should clearly communicate the services offered by the business, contact details, mall location and other important details.

Service Description: For this project, the client will be serviced through the use of web design programs and templates. Sample web designs will be shown to the client. A design will be selected by the client along with the modifications that will be done. The development, testing, evaluation and installment of the site will be done by the design team.

Target Market: The target market for the web promotional design will be parents, particularly mothers who need to do some hassle-free shopping. Professional or career moms who do not wish to leave their children at home and has to shop are also the main target of this project. Parents can also make use of the business services to clean up their kids, let them sleep or play with other children.

Tone and Manner: For best project results, the design team will ensure a continuous information exchange with the client. Moreover, if the client has other designs in mind, this will be integrated openly by the team. The design team will encourage the client to be involve in the promotional project to ensure that the final design truly suit the needs of the client.

Budget: For this project the client is willing to spend ,500.

Mandatories: For legal formalities, the project would require an official business registration. The logo of the business must also be provided.

 

Question 7:

            There are several online resources that could help me in my professional development. One of which is the website of the     (ACUADS). This site features downloadable research articles and online newsletters that could be of use in enhancing my knowledge on graphic design and visual arts. Aside from these, the website also displays updated list of conferences, seminars and workshops available for graphic designers and artists. Attending these conferences can provide me with updated developments on graphic designs, which could promote my professional development. The organization itself serves an important role in helping artists, designers and craftsmen obtain high quality knowledge; thus, using the site will help me become an efficient professional artist. The Design for Australia is yet another useful online resource. Similar to ACUADS, the site also offers useful resources that could update my knowledge on designing and arts. The site also promotes a program known as Continuing Professional Development (CPD). This program is developed in order to promote the role of design in the business and work sector. This program also stresses the importance of continues learning among artists; by taking part in this site’s program, I would be able to develop professionally through various education forms like workshops, mentoring, conferences, teaching and the like.

 

 

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ICU Psychosis

ICU Psychosis

            Some patients in the intensive care unit (ICU) experience a distorted state of consciousness. With the development of intensive care units in the early sixties came frequent reports of psychiatric symptoms (confusion, agitation, and hallucinations) in patients (Welker 2008; Ruffo et al 2002; Divitia 2006). According to Polderman and Smit (2005), ICU psychosis is frequently occurring yet it is often under-diagnosed and under-treated. Within ICUs, the term ‘ICU psychosis’ has been used to describe hallucinations, delusions and  fluctuating level of consciousness, poor orientation, passivity or aggression (Pierce et al 2004)Among the common symptoms of psychosis are hallucinations and delusions. Hallucination happens when a person hear, feel, see or smell something that is not real. Delusion on the other hand, happens when a person have unusual beliefs that are not shared by other people (NHS Direct 2008). These psychiatric symptoms are often called syndromes. These syndromes have been given different names – post-surgery psychiatric syndrome, ICU confusion or psychosis, post-operative delirium, post-operative encephalopathy, and delirium. The estimates prevalence of acute confusion in hospitalized patients has ranged from 5 to 70 percent, depending on the population studied and criteria used for diagnosis. The occurrence of acute confusion is highest in elderly patients hospitalized for any reason and in patients following cardiac surgery (Neelon 1990 cited in Lawrence 1997).

            It has been shown that acute confusion or delirium, especially in elderly patients increases length of hospital stay as well as mortality (Axell et al 2002). According to Immers et al (2005), ICU psychosis is a serious, high-frequency complication in intensive care unit patients. The consequences of this complication range from high morbidity to mortality to greater need for nursing care.

 

            In 1988, Easton and MacKenzie conducted an investigation of ICU psychosis. According to them, ICU psychosis is a reversible, confusional state that usually occurs between the third and seventh day on an ICU and generally disappears within 48 hours after discharge. They report that 12.5 to 38 percent of conscious patients experience this phenomenon. In their own sample of patients, 50 percent or 5 patients, recalled that they thought they were going crazy. They responded hesitantly for fear of being labeled mentally ill and they thought they were the only ones to experience this problem. The patients reported 27 delirious experiences, of which only one was pleasant – most were scary, terrifying, or very frightening (cited in Olevitch 2002).

 

            The highest incidence of ICU psychosis has been reported in the surgical intensive care unit (SICU), followed by the medical intensive care unit (MICU), and the coronary care unit (CCU) and general medical and surgical wards respectively” (Easton and MacKenzie 1988).

 

            These patients’ experiences tend to be frightening for the subjects and have a general paranoid quality to them. Very common is a feeling of being held captive and being part of an experiment. One study described the illusions of a 56-year-old housewife admitted because of aortic stenosis, secondary to rheumatic heart disease (Abram 1965). Six days after surgery to replace her aortic valve she experienced a psychotic episode. The following are the words of a nurse describing her behavior. “Patient is evidently experiencing auditory hallucinations – says she hears her daughter’s husband paged over the p.a. system, has been smelling strange gas all day.” When the patient was seen by a psychiatrist, she told him she was convinced she would be taken back to the operating room for more surgery. In addition, she thought the “new machines” had been brought to her room to do her harm (Abram 1965, pp. 662-663). Another study of open-heart surgery patients found that eight out of twelve subjects had a major psychotic episode (Blacher, 1972). Five had delusions or hallucinations and three loss of memory and confusion.

 

Predisposing Psychological Factors

            Most of the psychiatrists who have conducted investigations in this area have advocated explanations that include the severe anxiety experienced by the subjects. All their subjects came close to dying or at least had some risk of dying. If the threat of death was overwhelming, the psychiatrists believed it could contribute to hallucinations and illusionary experiences.

            Psychiatric history and personality type are also believed to be contributing factors. Individuals with preoperative psychiatric illnesses have been found to be more prone to development of delirium when hospitalized with a serious illness (Dubin and Field 1979). Individuals with dominant, aggressive, and self-assured personalities were found to be the most likely to be affected by delirium (Kornfeld 1978 cited in Lawrence 1997). The predisposing psychological factors for ICU psychosis are:

 

1. Deprivation

            Several studies have been done on the hallucinations that occur when subjects experience either sleep or sensory deprivation (Helton 1980; Comer 1967). Since sleep and sensory deprivation are common in ICUs many believe they can be contributing causal factors.

2. Biophysiological Factors

            Individuals who have been addicted to drugs or alcohol have a predisposition to hallucinations, illusions, and delusions when seriously ill. Since many admisions to ICUs are occasioned by accidents where drugs and/or alcohol have been involved, it is not unusual for drug and alcohol users to go through withdrawal while in the ICU. Patients with chronic cardiovascular, metabolic, or respiratory illness are at a higher risk for developing delirium while in the ICU. Physiologic aberrations caused by hemorrhage, septic shock, anoxia, acid-base imbalance, and other serious physiological changes have been documented in persons with ICU psychosis (Lawrence 1997).

3. Pharmacological Agents

            Fifteen common pharmacologic agents used in ICUs include acute delirium, hallucinations, agitation, paranoia, confusion, or nightmares as potential side effects (Easton and MacKenzie 1988). With so many potential causes, it is difficult to establish the necessary and sufficient conditions for a psychotic episode to occur in a serious illness. Since these episodes are transitory, emphasis has been on identifying patients at risk and supporting the patient after the experience.

 

Pathophysiological Causes

            ICU psychosis of post-operative delirium affects about 20 percent of the patients undergoing cardiac surgery, the estimates ranging from 3 percent to 47 percent. It has been associated with several pre-operative risk factors.

 

Among the most common factors in developing ICU psychosis are:

• Metabolic disturbances


• Electrolyte imbalances


• Withdrawal syndromes


• Acute infections


• Seizures


• Head trauma


• Vascular disorders


• Intracranial space-occupying lesions (McGuire et al 2000)

 

            The exact pathophysiological causes of ICU psychosis are unknown. However, it is believed that one of the pathophysiological causes is the imbalances in the neurotransmitters that modulate the control of cognitive function, behavior, and mood (Truman and Ely 2003).

 

            Abnormalities of various neurotransmitter systems as a consequence of decreased oxidative metabolism in the brain have been implicated in the pathophysiology of delirium. According to this neurotransmitter hypothesis, delirium may be the result of reduced cholinergic function, excess release of dopamine, norepinephrine, and glutamate, and both decreased and increased serotonergic and gamma-aminobutyric acid activity (Van der Mast et al 2000).

 

            Changes in the levels of various amino acids that are precursors of cerebral neurotransmitters may affect their function and thus lead to delirium. For example, the production rate of brain serotonin (5-hydroxytryptamine or 5-HT) is dependent on the plasma availability of its precursor tryptophan (Trp). Trp competes with the other large neutral amino acids (oLNAA), such as tyrosine (Tyr), phenylalanine (Phe), valine (Val), leucine (Leu), and isoleucine (Ile), for transport across the blood-brain barrier (BBB). The ratio of Trp to the oLNAA eventually determines the amount of Trp that reaches the brain and consequently the synthesis of cerebral 5-HT. Thus, delirium after cardiac surgery has been associated with reduced plasma tryptophan and, consequently, decreased cerebral 5-HT function. Furthermore, phenylalanine is a precursor of dopamine and norepinephrine through a Tyr connection. The ratios of Tyr and Phe to the oLNAA determine the amount of Tyr and Phe that enter the brain. An increase in the cerebral uptake of Tyr and Phe may be a risk factor for the development of delirium if excess release of dopamine and norepinephrine is implicated in its Pathophysiology (Van der Mast et al 2000).

 

            Surgical trauma induces physical stress, increased activity of the limbic-hypothalamic-pituitary-adrenal axis, and a low triiodothyronine (T3) syndrome. The latter is characterized by a decreased level of active T3 as well as an increased level of inactive reverse T3, in the absence of thyroid illness. The degree of thyroid hormone alterations is dependent on the severity of disease or trauma, and it is both a measure of physical condition and a predictor of prognosis.  A low-T3 syndrome very likely causes a generally decreased metabolism through reduced synthesis of adenosine triphosphate (ATP). This is another mechanism by which the production of 5-HT in the brain may be endangered, since Trp hydroxylase needs tetrahydrobiopterin as a cofactor, and the latter may be reduced in the presence of decreased ATP. Thus, surgery itself may contribute to an imbalance of neurotransmitters. Surgery also causes an increase in corticosteroid levels. Cortisol is an important stress hormone that has modulating effects on both the limbic system and the immune system and that inhibits the release of thyroidstimulating hormone (TSH). Thus, changes in cortisol may influence brain function, immune function, and thyroid function and, through interacting mechanisms, may provoke delirium. Surgery may endanger the transport of Trp across the BBB, because the plasma concentrations of the oLNAA may be increased via degradation of muscle proteins, and second because elevation of corticosteroid levels induces Trp pyrrolase in the liver, reducing plasma Trp availability for the brain (Van der Mast et al 2000).

 

Clinical Practices that Increases the Risk of ICU Psychosis

Drug Therapy

            Drug therapy is seen as a contributing factor to the development of delirium. If a medication is not stopped promptly, it can contribute to the occurrence of delirium. Drugs that exhibit antimuscarinic or domaninergic activity are particularly associated with the development of delirium. Increased plasma concentrations and/or increase blood brain barrier permeability may make patients particularly prone to the deliriogenic effects of some drugs. Certain drugs can contribute to the development of delirium. These drugs are:

• Analgesics


• Anti-depressants


• Anti-convulsants


• Anti-histamines


• Anti-emitics


• Anti-psychotics


• Anti-muscarinics


• Cardiovascular Agents


• Corticosteroids


• Hypnotic Agents

 

 

The Role of the Nurse in Preventing ICU Psychosis

            Nurses are responsible for providing early detection and coordinating with other health professionals in initiating a plan of care for the patient. The nurses need to promptly treat delirium to reduce the signs and symptoms, duration and potential adverse sequel of the disorder (Justic 2000). Nurses, who spend more time at the bedside than physicians, play a crucial role in the recognition of delirium. Because nurses have frequent and continuous contact with patients, they can better observe fluctuations in attention, level of consciousness, and cognitive functioning. As a result, the observations made by nurses are critical for the early detection of delirium symptoms and for the continuous monitoring of these symptoms that is essential to follow the patient’s clinical course.12 With training and supervision, delirium symptoms can be monitored effectively by nurses (Inouye et al 2001).

 

I. Non-Pharmacological Interventions (Borthwick et al 2006)

1. The nurse must provide support and orientation to the patient. The nurse must:

• Communicate clearly and concisely; give repeated verbal reminders of the day, time, location, and identify key individuals, such as members of the multidisciplinary team and relatives.


• Provide clear signposts to patient’s location including a clock, calendar, and chart with the day’s schedule.


• Have familiar objects from the patient’s home in the room preferably by the bed.


• Attempt consistency in nursing staff.


• Use television or radio for relaxation and to help the patient maintain contact with the outside world. Some discretion is required as patients may build events from television programs or radio into delusions.


• Involve family and caregivers to encourage feelings of security and orientation.

2. The nurse must make sure to provide an unambiguous environment

• Attempt to create a day/night cycle with lights off at night but on all day with appropriate day time stimulation.


• Control sources of excess noise.


• Keep room temperature between 21.1 °C to 23.8 °C

3. The nurse must maintain the competence of the patient

• Identify and correct sensory impairments.


• Encourage self-care and participation in treatment.


• Arrange treatments to allow maximum periods of uninterrupted sleep.


• Maintain activity level.

 

 

 

References

 

Abram H. S. (1965). Adaptation to Open-Heart Surgery. American Journal of  Psychiatry, 122, 659-667.

 

Blacher R. (1972). The Hidden Psychosis of Open-Heart Surgery. JAMA, 222(3), 305-308

 

Borthwick, M., Bourne, R., Craig, M., Egan, A. and Oxley, J. (2006). Detection, Prevention and Treatment of Delirium in Critically III Patients. United Kingdom Clinical Pharmacy Association.

 

Comer N., Madow, L. and Dixon, J. (1967). Observations of Sensory Deprivation in a Life-Threatening Situation. American Journal of Psychiatry, 124( 2), 164-169.

 

Divatia, J. V. (2006). Delirium in the ICU. Indian Journal Of Critical Care Medicine, 10(4):215-218.

 

Dubin W. R., Field, H. L. and Gasfriend, B. S. (1979). Postcardiotomy Delirium: A Critical Review. Journal of Thoracic and Cardiovascular  Surgery, 77, 586-594.

 

Easton, C. and MacKenzie, F. (1988). Sensory-Perceptual Alterations: Delirium in the Intensive Care Unit. Heart and Lung, 17, 229-235.

 

Helton M. C., Gordon, S. H. and Nunnery, S. L. (1980). The Correlation Between Sleep Deprivation and the Intensive Care Unit Psychosis. Heart and Lung, 13, 59-65.

 

ICU Psychosis (2008). Medicine Net. Retrieved September 17, 2008, from http://www.medicinenet.com/icu_psychosis/article.htm

 

Immers, H., Schuurmans, M. J. and Van de Bijl, J. (2005). Recognition of delirium in ICU patients: a diagnostic study of the NEECHAM confusion scale in ICU patients. BMC Nursing, 4(7).

 

Inouye, S. K., Foreman, M. D., Mion, L. C., Katz, K. H., Cooney, Jr, L. M. (2001). Nurses’ Recognition of Delirium and Its Symptoms – Comparison of Nurse and Researcher Ratings. Archives of Internal Medicine , 161:2467-2473.

 

 

Justic M. (2000). Does “ICU psychosis” really exist? Crit Care Nurse. 20:28-37

 

Kornfeld D. S., et al. (1978). Delirium After Coronary Artery Bypass Surgery. Journal of Thoracic and Cardiovascular Surgery, 76, 93-96.

 

Lawrence, M. (1997). In a World of Their Own: Experiencing Unconsciousness. Westport CT: Bergin and Garvey.

 

McGuire, B., Basten, J., Ryan, C., and Gallagher, J. (2000). Intensive Care Unit Syndrome: A Dangerous Misnomer. Arch Intern Med. 160, 1-4.

 

Olevitch, B. A. (2002). Protecting Psychiatric Patients and Others from the Assisted-Suicide Movement: Insights and Strategies. Westport CT: Praeger.

 

Pierce, J. M. T., Allenby-Smith, O. and Goddard, J. (2004). Delusional memories following cardiac surgery and prolonged intensive care: a retrospective survey and case note review. The British Journal of Cardiology, 17(11): 262-266.

 

Polderman, K. H. and Smit, E. (2005). Dealing with the delirium dilemma. Crit Care, 9(4):335-336.

 

Psychosis (2008). NHS Direct. Retrieved September 17, 2008, from http://www.nhsdirect.nhs.uk/articles/article.aspx?articleId=303

 

Ruffo, D., Osbourne, J., Peters, M., Johnston, J. Stuart, M., Christopher, J. M., Chan, G. and Wen, E. (2002). Post-Operative Delirium: A Predictive Tool. Geriatrics Today, 5:21-24.

 

Truman, B. and Ely, W. E. (2003). ‘Monitoring Delirium in Critically Ill Patients: Using the Confusion Assessment Method for the Intensive Care Unit’ Critical Care Nurse, 23(2), 25-35.

 

van der Mast, R., et al. (2000). Is Delirium After Cardiac Surgery Related to Plasma Amino Acids and Physical Condition. Neuropychiatry Clin Nuerosci Journal. 12(1), 57-63.

 

 

 

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Use international trade theory or the work of Michael Porter to explain the advantages and disadvantages of locating manufacturing production in the Pacific Rim

Advantages and Disadvantages of locating manufacturing production in the Pacific Rim: Michael Porter’s Diamond

 

            The Pacific Rim plays a major role in the world economy, ever since the Asia Pacific Economic Cooperation was formed in the 1980s. The Pacific Rim is composed of countries from China, Singapore, Hong Kong, South Korea, Japan, Philippines, United States of America, Australia, New Zealand, Chile, Colombia, Mexico, Indonesia, Taiwan and Canada (,  and , 1994).

            These nations house the most important financial centres in the world, therefore the participation of these nations in every aspect and sector of the world economy is very significant. And one of those aspects in the business is manufacturing. According to  (2003) manufacturing is the process wherein the companies apply and use processing mediums and other tools in changing raw materials into finished products that will be sold to the market. According to  (2002) some economists and scholars view manufacturing as an aspect in the economy that produces wealth.

            Manufacturing is an important sector in the business and without manufacturing there are no products that could be used by the consumers to make lives easier. Big companies from industrialised nations are the ones responsible for the massive scale of manufacturing in their own countries; an example is the Ford Motors in the United States. However, with the rapid embracement of huge companies in the concept of globalisation, more and more companies are looking for possible locations for manufacturing. In addition, with the new technologies in the market boundaries is no longer an issue in the business. An organisation may have its headquarters in the West but can open a factory in the East.

            This paper discusses the advantages and disadvantages of locating and establishing manufacturing production in the Pacific Rim, particularly in China. The advantages and disadvantages will be tackled in the context of Michael Porter’s Diamond Model.

 

One of the emerging markets in the East is the People’s Republic of China.  According to  (2007) the country is now the fourth largest economy in the world and has the GDP growth of 10.7% in the year 2006. China is now considered one of the most important nations in the world today in terms of business opportunities. Aside from the fast GDP growth in China, the country has the biggest population in the world, and because of the booming economy of the country, investors are flocking in China.  (2005) wrote that China has one of the largest and highest labour forces in the world having a population of 1.3 billion. Different organisations are setting-up factories in China when it opened its door to capitalists, and most of these companies are in the sector of manufacturing.

            In order to determine the advantages and disadvantages of locating an appropriate manufacturing production in the People’s Republic of China, the Porter’s Diamond will be utilised. Michael Porter developed the Porter’s Model in order to give analysis on the reasons why some nations or locations are more competitive than other. In addition, according to  (1998) the Porter’s diamond proposes that the location of an organisation is significant in developing the extent to which the company will probably attain advantage on a wider scale. The location of the manufacturing production delivers the basic factors that could support or obstruct the organisation from gaining the advantage in the global market. Traditional theories on economics often utilised five factors in comparing the advantages and disadvantages of locations and countries and these are Land, Location, Natural Resources, Labour and Local Population size. However, Michael Porter viewed these factors as passive and could weaken the competitive advantage of an organisation. Porter introduced the concept of clusters which is a group of interwoven firms, related industries and suppliers in a specific field. In addition Porter discussed that clusters could have an impact on the competition in the following ways:

·         The productivity and efficiency of the companies within the cluster could be increased.

·         Innovation and creativity will be enhanced in the field.

·         Clusters could stimulate new businesses.

The Porter’s Diamond distinguishes four determinants of the competitive advantage and disadvantage of the location and these are:

Firm Strategy, Structure and Rivalry- it is the status in the country that determines how organisations are established, organised and managed, it also identifies the attributes of competition in the domestic market. In this determinant the cultural aspects plays a significant role. For a company that plans to locate some parts of the business in another nation, determining and understanding factors such as the structure of management, working morale of the employees, and interactions between the company and the local industries interconnected with the organisation in the particular country is also important because it shapes the structure of the organisation and it can either give advantages and disadvantages in some industries. The corporate strategy of an organisation is also important because the strategy has a huge impact on the structure and control of the organisation. In the Porter’s Diamond rivalry in the domestic scale could be a big help in organisations in achieving the competitive advantage in a global scale.

            In the case of China, the economic condition of the country is very favourable for organisations that want to locate their manufacturing process and set-up firms or factories because of the cheap labour and robust economy. However, there is also a disadvantage since China is not a capitalist nation but a socialist therefore there are more restrictions when establishing a manufacturing production compare to capitalist countries.  The corporate and management strategy and structures of the organisation could be an advantage if the company was able to have a deep understanding on the working commitment of the employees, however it could also be a disadvantage if the management of the company did not understand the culture and work ethics of the people wherein they plan to set-up the manufacturing process. China is the nation that produces huge quantities of counterfeit products, it would definitely be an advantage for some of the companies particularly the clothing companies because there is a possibility that the designs may be copied, and therefore the company must ensure that their designs will not be victims of counterfeiting.   

Home Demand Conditions- it is the condition of the demand of products and services that is produced in the country wherein the organisation is planning to establish a manufacturing production process. The demand conditions for the product of the nation aids in shaping the direction of the development of the products. Moreover, Porter discussed that the home demand is driven by three characteristics which are the mixture of the needs and wants of the consumers, the scope and the rate of growth in the domestic market, and the mechanisms that convey the preference of the domestic markets to foreign markets. The manufacturing process of an organisation established in another nation could utilise the changing tastes and trends of the domestic consumers as an advantage, specifically in innovating the products and services due to the fact that the domestic market have bigger influence in the identification of the needs and wants of the consumers than its foreign market.

            China poses advantages in the aspect of the home demand conditions because of the huge population of the country and the growing number of middle class families, the demand for the products that an international firm will be higher. Since the organisation will establish manufacturing production in China there is the advantage of obtaining the trends and demands of the consumers. However, there is also an advantage, particularly if the trends are picked up in China and sold it to other countries such as the United States because the trends and needs of people from China might differ from that of another country.

 

Related and Supporting Industries- it is the existence or non-existence of industries that supply the needs of the organisation in order to compete internationally, as well as, the supporting industries of the organisation. If the organisation was able to obtain a competitive supplier for the international market it can also lead to the advantages with supporting industries. Having a good and competitive supplier and related industries will aid in the innovation and internationalization in the organisation in the future years. As mentioned earlier, aside from the suppliers related industries also plays an important role in the producing products that are have great quality, related industries could be activities that are needed such as design of the products.

            Since a number of raw materials could be found in China and nearby countries the cost of the production and manufacturing will be relatively cheaper, therefore the location for possible suppliers that offer cheap raw materials is easier to find thus it is an advantage for a company. On the other hand, there is also a disadvantage because there is a possibility that the products and designs could be copied during the production process by some people working in the related industries.

Factor Conditions- it is the condition in the country regarding the factors of production such as labour, infrastructure and many more which is important in some industries. The factors are assembled into human resources which includes the cost of labour, commitment and many more, the material resources such as the space and natural resources, capital resources, knowledge resources and the infrastructure. Some organisations even include the stock market, policies on labour and employment and educational backgrounds. These factors could be an advantage for an organisation if the management was able to identify and determine the factors that could be exploited and developed in another country. That is the reason why the idea of transferring to low-cost countries came about. The factor condition according to Porter could be modified and change in order to suit the needs of the organisation. The political and technological changes in the society could also trigger changes the conditions of the national factors.

            In the case of China the human resources is an advantage due to the fact that the cost of labour in China is very cheap. However, cheap labour does not necessarily equate to skilled workers, although China has cheap labour there are still only few workers that have the sufficient knowledge to perform in some activities. Furthermore, , , and  (2000) discussed the challenges a firm faces in Human Resources when establishing a business in China. First, is on the selection, in China connections is important in facilitating a business without connections the business will be in a slow process, another challenge in the selection process is the belief of the government in which private firms should be absorbing excess employees from state-owned companies, in which leads to overstaffing in private firms, and empire-building is also a challenge in the selection process. Next is Training and Development, the Chinese Employees are risk averse and seldom takes initiative. The third is on Appraisal and Reward, the appraisal on the performance for non-production revealed to be a problem and loyalty of employees is hard to get. And finally Control and Socialization, the top managers use the firm’s money to use for their own personal needs without paying interests, the iron rice bowl mentality of Chinese workers does not fit well in the private sectors in which most of the companies are owned by foreign investors.  

            In the material resources, China has a number of advantages due to the fact that it has a massive land area and is also near to countries that have abundant natural resources therefore obtaining raw materials is easier if the manufacturing production is established in China. Furthermore, with the massive land area of China, manufacturing companies could tap out possible substitutes from this country. An example is in the case of drinks, tea is one of the drinks used by East Asians for hundreds of years, and because people nowadays are more health conscious and have started to discover the benefits of tea, therefore soda companies are threatened by the entry of these substitutes that originated from the Eastern part of the world, various food companies from different parts of the world have seen the potential of these food products and have set-up production in the country since the information and resources could be found there.

            Knowledge resources could be both an advantage and disadvantage in China. It is an advantage because there are a number of potential individuals from reputable universities that could be trained by the management. However there are also disadvantages in the knowledge resources in China, in the study conducted by  (1997) Taiwanese managers told the problems with local workers in China such as poor job commitment and work discipline, high turnover rates, not interested in learning new skills, intergroup hostilities and poor training and education. In addition,  and  (1996) made a comparative study on women managers in China and Hong Kong the study revealed that managers from China were not as mature as in Hong Kong. Women managers in Hong Kong regarded their job as a path to career development while managers in China regarded the monetary reward as their motivation for the job. Moreover, Hong Kong managers concentrate on planning whereas managers in China concentrate on directing.

            The advantages of manufacturing in China are due to the fact that the raw materials and people is very abundant in China the organisation could switch easily from one supplier to another, therefore the richness of resources and population of China is an advantage to organisations. However, there are also disadvantages in manufacturing in China include the rampant piracy of products, although raw materials and labour is cheap in China the possibility of copying the products and technology of an organisation is inevitable. It is a clear fact that organisations flock to China and establish factories because of cheap labour; however there is a shortage of skilled labour despite the fact that the population of the country is 1.3 billion therefore it becomes a disadvantage to the organisation (, 2006).

  The Role of the Government

            According to  (2007) the government of the nation wherein an organisation is planning to establish a manufacturing process plays an important role, although the government does not have a direct impact to the organisation, the institution serves as a medium that incites activity and challenges the organisations. The government is the one that encourages and push organisation to be more competitive, in order to produce high quality products and even stimulate healthy rivalry among other firms.

China is one of the fastest emerging nations in the world in terms of economy and even politics. Many companies are clamouring to set-up factories in firms in China due to cheap labour and resources. Manufacturing is one of the industries that have been establishing firms and factories and have taking advantage on the cheap labour and costs of production. However, just like in any places there are advantages and disadvantages that must be determine to in order to create risk measures. In this case, Michael Porter’s Diamond Model could be a useful tool in determining useful information for decision-makers of an organization when identifying possible locations to set-up their manufacturing process.  By having an analysis of the industry, entrepreneurs could identify the optimal industry in which to enter.  Overall Porter’s Diamond Model gives people the basic understanding of the competitive structure. Different organisations could use the model to determine the magnitude and scope in which they can turn the advantages in order to develop a competitive advantage to other organisations in a global context.

Every country has its own advantages and disadvantages. China is not an exemption to that, even though it is one of the business hotspots in the world. Companies, regardless of the nature of the industry must have a full understanding of the location in order to maximize the resources and prevent risks that may hinder the progress of the company.

 

References:

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General Motors and Ford Company

General Motors and Ford Company

 

The Company’s Current Performance

            General Motors or GM and Ford are considered as the biggest car manufacturing in the United States. However, due to the current financial and economic condition in the US, as well as in the global market, the two companies are facing a long, hard battle for survival due to the lost of confidence of the Wall Street in their financial stability in the face of plummeting vehicle sales (Clark, 2008).

            GM reported that it had lost a total of .5 billion during the third quarter and stated that the company could run out of cash in coming 2009. Thus, the biggest automaker in the country that it had suspended talks in order to acquire the Chyrsler, its smaller rival. On the other hand, Ford declared that it had lost 9 million in the same quarter. Thus, the company is planning to eliminate another 2,260 white-collar jobs as it battles the downturn of the economy, crisis regarding credit as well as the weak environment for the sales of car. The company burned through .7 billion in cash during the quarter (msnbc.com, 2008).

            In October 2008, GM’s shares crashed by 31% to close at .76, considered as the lowest in the entire history of the company since 1950. On the other hand, the stock of Ford plunged by 21% to a 20-year low of .08 on mounting concern that the both companies are at risk of bankruptcy (Clark, 2008).

            Both of the company have already rated as offering junk debt, it means that they are high-risk prospects for lenders as well as further reduction that will make it even harder for them to borrow the money. Even before the current financial and economic slowdown in the USA and in the world, US based car makers were already losing headway to their Japanese rivals due to the shifts in tastes and lifestyle of the American motorists from pickup trucks and sports utility vehicles to smaller one and more fuel-efficient cars (Clark, 2008).

            According to the report of Citigroup experts, if the said conditions of the two companies, deteriorate further, Ford and GM could be pushed into a severe spending cuts, including activities that are related in slashing jobs as well as making new pay deals with the union and even debt-for-equity exchanges, where in the banks would take some of the ownership of the two companies. Thus, the already weak balance-sheet positions will find it somewhat hard to cater a prolonged global downturn, thus the risk-reward balance has tilted decidedly negative (Clark, 2008).

            At today’s share prices, GM was worth just .6billion, considered as less than its capitalization during the start of the Great Depression during 1929, while Ford was valued at less than billion. The said numbers or amounts are considered as worthless and small for the two companies that are considered as great earners and profitable in the industry, selling 3 billion worth of vehicles (Clark, 2008).

 

The Strategic Vision For The Company

            The current economic and financial condition of the world can greatly affect the demand of people for vehicles, thus it can affect the entire performance of GM and Ford, being as the two largest automobile companies in the world. As the economic condition slows down, the demands for and sales of light vehicles in the US will fall to 13.6 from 16.1 this year, and then will continue to fall to 13.4 in the coming 2009 (msnbc.com, 2008).

            Because of the growing problem, the two companies must think of strategies that could help them to prevent total bankruptcy that will result to closure. The US government promised a total f billion of loan that will help the different motor manufacturers to stay on firm financial footing (msnbc.com, 2008). The said amount can be used by the companies in order to support their financial problems. However, it is important to consider that experts are saying that the said amount may not be sufficient enough in order to avert the upcoming bankruptcy (msnbc.com, 2008).

            According to Wall Street, one of the primary problems of the companies is that their market shares do not support its current size. Thus, both of the companies have too many plants, too many staffs and workers, too many models, too many dealers, thus the benefits and incentives of their employees are high (Gallagher, 2005). In order to save the company in future worse problem, it will be important for them to lay off employees, because it can help them to save money in terms of maintaining their human resource.

            It will also be important to lessen the operating plants that will help the companies to save money in terms of maintaining and other operating cost in managing the operating plants. In addition to that, it will also be inappropriate because if it will continue, the number of the supply will be extremely greater than the number of the demands. This is somewhat the same with the varieties of models that they are releasing and the number of their dealers.

            More over, it will also be important for the companies to implement an extreme cuts in the healthcare and retirement insurance of the companies that will result in pushing the employee to pay 25/30% of the costs, excluding many drugs from the entire coverage (Gallagher, 2005). The said action will help the company to save cost in terms of the benefits of the employee. This is due to the fact that, although the companies have already implemented massive lay off, the cost is still high due to the high amounts that are allocated for each and every employee. The said action can be done by explaining to the employees the current condition of the companies and telling them that it is the best solution in order to protect the interests of the entire organization.

            Above all, Wall Street strategy demands and insists that GM must sell off the residential mortgage unit of the GMAC, considered as the biggest profit source of the company, together with the Kerkorian’s apparent prey. The said actions leave the remainder of the company certain to go bankrupt that much quicker (Gallagher, 2005).

 

 

References

 

Clark, A. (2008, October 9). American Automakers GM and Ford Fight for Survival. Guardian.co.uk. Retrieved November 20, 2008, from http://www.guardian.co.uk/business/2008/oct/09/ford-generalmotors

 

Gallagher, P. (2005, May 13). LaRouche: Move Fast to Save Auto; GM Sliding to Bankruptcy. Executive Intelligence Review. Retrieved November 20, 2008, from http://www.larouchepub.com/other/2005/3219gm_junkbond.html

 

GM, Ford Post Huge Losses as Crisis Deepens (2008, November 7). Msnbc.com. Retrieved November 20, 2008, from http://www.msnbc.ms n.com/id/27593678/

 

 

 

 

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Erikson’s theory of Psychosocial Development

Your group has been hired by an advertising firm that is developing a series of commercials for family-oriented products geared toward the entire family. They want to develop a series of commercials that will target family members at various life stages. Your group needs to thoroughly describe Erikson’s theory of Psychosocial development. In your description of each stage, identify and analyze a television, movie, or literary character for each stage of the theory. The marketing firm will use this information as they develop commercials targeting each developmental stage. Finally, provide a review of three recent studies utilizing a theory of development.

The advertising firm has requested that you submit a 4 to 5 page report summarizing your research in this area. Therefore, your group should submit one combined Word document that conforms to the following directions:

·                          Give a description of Erikson’s theory, including the stages of development using the criteria listed above.

·                          Identify a character at each stage.

·                          Choose three of the following studies found in the cybrary article search engine Psychology and Behavioral Sciences Collection.

·                          For each one you choose, describe the study and discuss how it supports or does not support the information you have written in your report about Erikson.  Specifically:

o                                         Which particular aspects of the theory does the study examine?

Do the experimental or discussion results strengthen or weaken the theory and you ideas? 

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The impact of Fiscal Policy on the Real Property Sector of Nigerian Economy from 1980-2005 a Case Study of the Industrial Sector

The Impact of Fiscal Policy on the Real Property Sector in Nigeria: 1980-2005

The vulnerable economic situation in Nigeria in the conduct of illicit activities due to precedent lingering and insurmountable poverty effectuated by precedent fiscal policy deregulation and fragile economic and financial regimes determine the need to maintain a sturdy fiscal policy infrastructure in Nigeria. The past three decades earmarking degenerating political and economic history in the region combined the remnant effects of armed conflict in the western African states that result to nonstate actors to regress illicit activity in the region and to undermine reconstruction efforts in the long term heighten the vulnerability levels to overcome peace and security in the area plagued by current and weak political and economic structural controls resulting to proliferate international money laundering despite cooperation efforts in the country (FinCen Advisory, 2002,p. 1).  A research gap exists by which no link establishes the relevance between the historical aspect of fiscal and economic deficiencies in Nigeria back to the 1980s, then three decades henceforth, to the concurrent destabilization situation engaged in trenches where transnational money laundering activity proliferates. In the end a need arises that cater to implementing an invincible and sound economic and fiscal policy to overcome this insurmountable task due to the complexities associated to disposal of mechanisms under legitimate facilitation by international financial institutions, the wide scale deregulation of the financial industry in Nigeria that enabled excessive liquidity in financial instruments attribute to precautionary steps manifest in Basel II and III by imposing regulations to controlling liquidity and a stringent regulatory system that assess data quality, outsourcing and enhancement mechanisms to reflect information enlisting data sources from multiparty and third party feeds to ensure a compliance regime with utmost integrity for compliance. For example, to trace money laundering activities can associate with portfolios incorporating extensive amounts and exceptions (Accenture, n.d.,p2) This paper highlights the analysis that fill the relevance gap.

Historical facts attribute to the innate economic and political destabilization factors that determine the need to regress integrative governance of fiscal policy in Nigeria:

The economy relied heavily on the oil industry deriving revenue to the economic influx that account 80 percent of the gross domestic product. Attribute to this is the oil industry boom in the early 1970s by which derived a majority of oil resources within land area and the remaining from oil drilling in continental shelves resulting to at least 32 billion barrels. The exploitation level and the extent of volume of oil extraction could last for at least 38 years that generated unexpected wealth and reserves in the economy. Resulting investment in local urbanization in cities and leaving rural areas to develop curried unemployment and crime. Nigeria’s local currency, the Naira, before 1985 was stronger than the US dollar attribute to the trade influx greater than the outflow as well with foreign exchange and other capital reserves. Due to the saturation of this trade imbalance and persistent deficit not only in the oil sector resulted to full scale dependency of the nation on imports comprising to the extent basic commodities and food combined with the neglect to develop other economic based sectors in local settings, like agriculture, incited the Nigerian economy to decline with escalating debt, decreasing reserves and the decrease in oil prices in the international markets. This resulted to declining economic indicator indices. The repercussive effects of the boom attribute to culturally driven subversive immobility regime among citizens opposite to democratic practice and preference for economic development through a free enterprise and capitalism practice could function with overall priority through the effortless acquisition of wealth by availing riches in illicit ways and impose corruption practices within government levels among state and nonstate actors. The instant lure ingrained in the Nigerian culture to corruptive practices among engenders destabilizing mechanisms to suppress legalization in the country despite to a limited extent current post conflict reconstruction efforts have reached. This practice infers a fiscal policy formulation to resort to instinctive characteristics among the common population that revert back to the problem of parasitic interdependency with oil price movements relative to upstream or downstream performance regardless the effects these movements signify (Adedipe, 2004, p.3). Due to this mentality ingrained in the culture the oil industry dictated at large national economic policy structures. The key to policy reforms focuses on developing other commercial sectors other than oil and agriculture which the country is rich in that respect (Obi, 2007, p.33).

Another major problem centralizes around the immobility and sterility of economic indicator systems unsuccessful through the SAP system approach in 1986 that brought forth the need to establish a centralized and impartial macroeconomic policy structure to evade the concurrent incentive oriented cause.  Economic indicators designed to follow proportionally to the reactions in social indicators did not respond appropriately to reform measures as others do in other economies. Research found the discrepancies in reform measures dominate over fiscal behavior that stagnate other requisite elements in the mobility of fiscal policy through income redistribution by establishing uniform economic concentration equality with new and existing businesses spurring throughout Nigeria audited under stringent compliance with the Central Bank of Nigeria imposing Basel II and III regulations to monitor anti-money laundering activities.  Salient activation and participation among nongovernmental and community based organizations with government, national and local policymakers to educate with these initiatives are critical. The precedent uncontrolled levels of liquidity caused by the oil sector boom and the financial and banking deregulation on interest rates in 1991 by the Central Bank of Nigeria at extent attracting random sources and niches for investments regardless of location that spawn a new dawn to initiatives to illicit financial activities call for restrictive fiscal policy to monitor the likely recurrence which destabilizes amid current reconstruction efforts. Restoration of a restrictive regime in foreign currency reserves to amounts subject to a maximum limit should be imposed to revert to the needed excessive liquidity to strengthen local currencies impacted by oil prices which is the central revenue generator of revenues to the Nigerian economy. To restore an IMF policy model is critical to balance currency reserves and promote competition in a free market and capitalist enterprise through settlement of balance of payments in the midterm and achieving fiscal balance in debt financing, to revolutionize noninflationary growth in the medium and looming terms, and restructuring the economic base to diverse export markets, should prevail (The Nigerian economy, p.7).

 

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Sample Essay Investment Appraisal Techniques and their Associated Risks

III. Investment Appraisal Techniques and their Associated Risks

Return on Equity (ROE) is a business ratio that measures the return the firm is earning on equity funds invested by its shareholders (Macmenamin, 1999, p. 304).  It is calculated by dividing the net profit with average common equity of the firm or in symbol: Net Profit/ Average Common Equity (as cited in Investopedia, 2003).  According to the preceding literature, ROE guides investors to build an equity portfolio whose components are able to derive profits efficiently.  Therefore, they can obtain optimal returns in the form of dividends though minimum investments.  An annual rising of ROE shows that the firm is valuing as well rewarding investments because it is sacrificing to avoid waste-saving in every organizational function but still maintain effectiveness to generate income.  In effect, shareholders have more financial residual to manage its portfolio with flexibility without damaging its individual investments.

 

            Internal Rate of Return (IR) is a discount rate equivalent to investment project’s expected rate of return (Macmenamin 1999 p. 371).  Its calculation is far more complicated than ROE as it attempts to bring to zero the net present value of the cost of capital coming from the investors (cited in ACCAD Global, 2000).  As a result, shareholders can have understanding on whether to invest or otherwise to a certain project because they can compare the expected rate of return to what they viewed as required rate of return.  As observed, unlike ROE, IR merely measures projects cash flows not the whole business especially those who are under going-concern stance.  This is due to the ever-changing discount rates in which IR will be based and used to arrive at a decision.  However, IR is still effective when evaluating the profitability of two projects with single discount rate, predictable cash flows, equal risk and shorter time horizons (Investopedia, 2006).

 

            One advantage of ROE is that it can evaluate a number of firms within an industry (as cited in Investopedia, 2003).  For example, between 1998 and 2003, Dell, HP and gateway have ROE of 46%, 12% and 2.5% respectively.  In terms of profit efficiency, investors can easily discern that Dell is an ideal investment and ROE mimics the cost-effectiveness and value of its direct marketing.  It is also a good indicator of growth potential.  However, ROE can be easily manipulated by a firm who wanted to make their reports attractive to prospective investors.  Through write-downs and/ or buyback programs, the net income in the numerator and equity on the denominator is distorted to result in a high Roes.  Further, even if manipulation is not applied, an ethically-prepared report can have unintended impression by providing high Roes that is caused by excessive debts (as cited in Investopedia, 2003).  

 

            Ire’s capability to analyze cash flows stems one of its strength which is to compare cost streams between two projects (Martin, 1998).  It is a tool to screen individual projects and their profitability in which ROE lacks as the latter is holistic in its financial analysis.  However, aside from its historic position being an underdog to NP, IR is ineffective in calculating a project with a mixture of multiple positive and negative cash flows because there can be at least two solutions due to the effects of market factors (Investopedia, 2006).  Another bottleneck is the determination of well-developed and well-analyzed discount rate in which IR is to be compared.  Without discount rate, IR cannot be a stand alone measurement.  In the contrary, even with these blemishes, IR is a simple decision tool requiring less assumptions and research from the firm unlike ROE or NP (Investopedia, 2006).

 

            Placing their varying advantages and disadvantages in the realm of foreign investment, ROE is suited for investors who wanted to establish assets abroad or foreign direct investment (FID).  This type of stake is relatively more costly, long-term and requires internal structure and strategy for maximum returns.  In effect, this places prospective investors to evaluate their investments within the lens of the whole corporate value and operations.  On the other hand, IR can be compatible with non-equity investments as its measurement can give investors simple approach to risk and abrupt market changes.  In addition, IR is effective in project-based activities of a firm which gives investors the opportunity to earn and receive back their profit share in a short span of time.  The motivation to use IR is derived from the ease of pulling out investments abroad unlike fixed assets in which expatriation or war can diminish investor’s income generating stake.  Since ROE uses evaluation inputs from the elements of the firm while IR from the elements of a specific project, investors can choose appropriate tool in relation to their risk level, withdrawal preferences and self-proclaimed goals.

The key in determining Net Present Value (NP) is the discount rate.  Used in capital budgeting, NP is the most dynamic and widely used method in evaluating long-term projects.  Its major criteria state that “projects that have positive Naves are worthwhile while those with negative are not”.  But Naves are not perfect.  Although analytical tools like net present value (NP) are helpful, the greatest obstacle to minimize the need for working/ physical capital to be able to enhance free cash flows is not guaranteed.  There is some work to do even after computing for Naves.  By locating inefficiencies and value-adding activities, deferral or elimination of projects that can be a deceptive action (due to savings) can be re-analyzed to locate possible opportunities that are kept untapped (1993).  Naves are simply the summation of discounted annual cash flows of a project.  It is derived after the net income of the project is illustrated (e.g. expenses like marketing costs are deducted or non-cash transactions like depreciation expense are brought back to the net income).

 

Ire’s capability to analyze cash flows stems one of its strength which is to compare cost streams between two projects (Martin, 1998).  It is a tool to screen individual projects and their profitability in which ROE lacks as the latter is holistic in its financial analysis.  However, aside from its historic position being an underdog to NP, IR is ineffective in calculating a project with a mixture of multiple positive and negative cash flows because there can be at least two solutions due to the effects of market factors (Investopedia, 2006).  Another bottleneck is the determination of well-developed and well-analyzed discount rate in which IR is to be compared.  Without discount rate, IR cannot be a stand alone measurement.  In the contrary, even with these blemishes, IR is a simple decision tool requiring less assumptions and research from the firm unlike ROE or NP (Investopedia, 2006).

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