Research Topics: Global Environment

“NESTLE MAKES THE BEST FOR YOU”: A GLOBAL PERSPECTIVE

Nestle Background             In history, the company seemingly saw every challenging environment to develop and strive harder in its operations.  Way back in 1860s, the founder Henri Nestle developed an alternative for breast feeding babies to save a child phasing death.  Since then, the resistance to quit and strategy formulation followed as the demand of several governments to its daily products rose during World War I.  When the war had ended and demand ceased, it institutionalized efficiency and developed new chocolate products.  On to World War II, sales persisted to drop abruptly from to million year-on-year but it again gave Nestle the motivation to excel by introducing Nescafe as US military’s staple drink.  Ever since, it expanded operations through acquisition and joint ventures as it served globally.  (Nestle Homepage). Today, the firm is characterized by 500 companies, workforce of 247,000 employees, Switzerland’s largest industrial company and world’s leading food company.  It has a range of product like beverages (coffee and water), milk products, ice cream, nutrition, culinary products (soups, seasoning, pastas), chocolate, biscuits, food services, professional products, pet products, pharmaceutical and cosmetics company, joint ventures and associate company.  In 2004, it gained highest sales in Europe at 28,000 (in million CHF) and highest profit in America at 4,000 (in million CHF).  Milk products topped its sales at 23,000 (in million CHF) while beverages got the highest profit by product category at 3,000 (in million CHF).  Being global, Nestle adapted business principles such as equal creation of value to stakeholders, emphasizing long-term success, adaptation to culture and legislation of the host countries and employee excellence (Nestle Homepage 2004).    Outsourcing             Through the primary and secondary activities in the value chain, Nestle necessitates the existence of business partners to promote cost-efficiencies as it operates in 86 countries (Kimbrell, 2001). It is rather inconvincible to say that it does not have the capability to do so but three reasons surfaced for this global company to remain fragmented in the value chain; namely: to have greater leverage, to adapt quickly in the local environment and to embody its social responsibility more effectively.  Due to this, it outsources logistics, raw materials and machines to suppliers not to imply its financial incompetence but to realize several outsourcing opportunities and prevent overextension of activities. For example, it outsources the service of small and big logistics companies in its USA plants to distribute its outputs to distribution centers and vendors (Skydel, 2002).  It seemed an ordinary outsourcing strategy but the firm restructured logistics system and established a single Load Control Center (LCC).  As a result, there was improvement in on-time delivery, stable costs are maintained and reduction of needed carriers to a small fraction of the original number.  Before LCC, the firm lost management control over deliveries of logistics companies and the measurement of their performance cannot be calculated causing inefficiencies.  However, with the technological development and installation of RedPrairie software (later upgraded by SAP German technology giving LCC robust and scale compatibility of activities with the size of Nestle), delivery management could now be done at real time and in a centralized manner.             Further, due to perishable nature of Nestle inputs and emphasis in freshness, local outsourcing of raw materials is necessary for time efficiency of harvest-to-manufacture transfer (Nestle Homepage).  In effect, purchasing activities are designed both at strategic and operational level.  Strategic refers to selection and evaluation of suppliers, managing and negotiating contracts and other strategic planning activities in purchasing while operational activities provide inputs for supplier performance, actual ordering, receive goods and services and manage supply signals.  In view of this, the firm acknowledges close cross-functional communication within the organization and with the suppliers themselves including external authorities which is supported by intranet and e-procurement to establish an environment wherein information will be transferred in real-time and with efficiency.  This communication system allows the firm units and divisions to share purchasing networks to maximize category leverage, plan long-term competitive supply and result to fewer and standardized contract specification of suppliers.                     Lastly, although the firm’s manufacturing machines are produced by others, it has the necessary leveraging to customize its design and functionality according to its specific needs (Demetrakakes, 2004).  This outsourcing advantage makes Nestle a “dictator” to suppliers partly because of its huge operations and financial scale.  A high buyer purchasing power, however, did not hold the firm to transfer the research and development activities to machine suppliers.  It has created “application groups” that can address immediate market needs particularly in packaging.  For example, packaging preferences in different regions are motivated by convenience, environmental concerns and economic conditions.  In Germany, glass packaging is preferred because it is deemed more environmental friendly while countries UK and France prefer plastic.  Americans prefer bigger packaging while Europeans see this size inconvenient while both of these regions favor for bulk packaging of maggy bullions unlike Africa which goes for individual ones due to lower purchasing capability.  These country differences, if not addressed efficiently, could lead to looses and can result to outsourcing problems.  Nestle prevents them occurring through internalization of monitoring activities outside the outsourcing contracts.              In this respect, outsourced activities can be evaluated through four skills essential for managers; namely, strategic thinking, deal making, partnership governance and managing change (Hitt, Hoskisson, & Ireland, 2003).  The first, second and third can be best exemplified by Nestlé’s commitment to control the source and prices of suppliers (Nestle Homepage) particularly in agricultural products.  The firm required their partners to produce quality, safe and cost-efficient raw materials including its adherence to minimize ecological hazards.  When the contract has been signed, continuous audits will be performed in the supplier’s site to assure maintenance and improvement of activities with legal and ethical practices in mind (like absence of abuse on child labor).  Finally, traceability is also an on-going commitment of the firm that necessitates suppliers to uncover their processes in order for the firm to assure contract standards and control any deviations that may arise therein.             In managing change brought about by new business partners or old partners that changed their processes, the LCC logistics strategy showed how the firm handled external resistance to introduce new technology.  The firm firstly studied the whole organization and external partners in order to benchmark and initiate possible conflict areas.  This preparation stage became crucial to the actual application of the technology and helped stakeholders to accept the change with mutual interest in it.  The management acknowledges that time is needed to realize the fruits of the change that made them allow some futile moments in its implementation.  This futility, however, did not result for managers to sit down rather encourage suppliers to participate in load planning, thus, ensuring that partnership governance is withheld even though the technology came from Nestle.              In conclusion, outsourcing initiatives of Nestle management is seen in the lens of purchasing power due to local adaptation.  The company could demand specific agreements in its advantage to suppliers because it has the financial back-up and principle of safety and quality across its century-old brand name.  The requirements became more aggressive when efficiency issues and local legislation becomes stiff.  Since cost-effectiveness can be negatively affected by additional pressure to comply with local legal requirements, these rigidities are transferred to suppliers that in turn provide the firm the necessary leverage the latter cannot solely attain because of the demanding environment it is operating.  Thus, without outsourcing, it could only choose between cost and quality (according to local responsiveness) and not be able to exploit the streamlining of both into its operations.            On Outsourcing and Business-Level Strategies             Looking in its outsourcing scheme, the firm’s great demand from its suppliers in terms of control, efficiency and quality sinks well to operate under integrated cost leadership/ differentiation strategy (Hitt et al 2003).  Because of the outsourcing structure, Nestle could adapt quickly to environmental changes as the local supplier has ample knowledge and wide experience base that can provide optimal inputs and enhance legal adherence of the firm in ht locality.  Second, this could prevent the firm to learn new skills and develop new technologies just to meet the local demand because the supplier already developed facilities to blend with local preference and issues.  Lastly, outsourcing can effectively leverage core competencies for the firm while competing against rivals.  This last rationale in outsourcing made the firm focus its capabilities to other activities in order to excel in quality, cost or product line which can be difficult to develop when it has several tasks to perform.             Flexibility is necessary for firms to effectively use this hybrid strategy (Hitt et al 2003).  The introduction of several software devices to Nestle enhances the flexibility of its manufacturing system because of the minimum manual intervention, thus, reducing human error and group decision bias.  With cost leadership/ differentiation strategy, the company could be caught with the low-cost versus product variety trade-off.  But due to its automation in its operations, the firm retained not only cost effectiveness and product variety but also quality.  The development of Gene technology (Nestle Homepage) had benefited the firm to increase food production, quality, nutritive value and support sound agricultural practices.  Also, looking at technology in general, Nestle has 17 research and development sites including nine product technology centers (responsible to transform R and D findings into manufacturable products) that increases its ability to excel both at cost and differentiation strategies.              In addition, communication network (Hitt et al 2003) with suppliers is maintained and improved.  This can address both operational and relational partnerships of the firm and create communication technology, establish mutually-beneficial contract and sustain long-term business with them.  This strengthening of partnership is done to link the organization not only to suppliers but also to distributors and customers for another source of strategic flexibility.  When the firm and distributors are closely operating, delivery and order requisition is done harmoniously, thus, preventing distribution and collection delays that can disrupt cost effectiveness, worse, results to disbandment of contract.  Nestle provides win-win solution to partners which is a characteristic of an internationally known brand competent to grant such environment.                      Acquisitions, Vertical Integration and Diversification The Nestle Waters of North America claimed that in order to be competitive, the company should be vertically integrated and be a low-cost manufacturer (Demetrakakes, 2004).  This could be the particular reason why some activities in the value chain of Nestle would not just be apportioned to outsourcing.  Vertical integration exists when the firm not only produces its own inputs and but also handle the distribution channel (Hitt et al 2003).  It creates market power for Nestle over rivals by saving cost of operations (through sharing of resources and technologies) and protecting valuable company information against imitation.  Because suppliers have several contracts that could be serving one of Nestle competitors, strategies of the firm can be easily translated and adapted by these rivals.  Internalization of activities kept them secret, thus, making the imitation costly and characterized. Nestle started as a mere producer of milk products, however, with several mergers, joint ventures and acquisitions, it diversified its business to include chocolate (merger with Chocolat Suisses SA), cosmetics (L’Oreal equity interest) and pet products (Ralston Purina acquisition).  Among diversification strategies, acquisition seemed the widely used by the company.  To illustrate, in addition to Purina, acquisition, which progressed in 1970s, includes Alcon (pharmaceutical), Buitoni-Perugina (culinary) and Valio (ice cream).  Partly, outsourcing was disregarded because activities are under it largely connotes vertical integration.  Rather, most of these acquisitions are linked to related and horizontal integration because they are within healthcare and nutrition industry.                 With this, it can be said that Nestle used outsourcing in its vertical set-up while acquisitions are prominent when it intends to diversify to different markets and products.  By making these acquired companies into subsidiaries, Nestle could make use of leveraging between outsourcing and internalizing activities.  Processes need not be adapted or restructured to be compatible with the new acquisition because suppliers and partners shoulder such responsibilities.  For its part, Nestle internalize its activities deemed crucial to maintain its reputation in nutrition like research and development wherein they are installed in the world headquarters of the firm in Vevey, Switzerland for close coordination with the corporate managers.  On the other hand, outsourcing is best used to overcome entry barriers (Hitt et al 2003) in the host market where the firm wish to operate.  One entry barrier is government regulation that requires foreign firms to make use of local resources.  By outsourcing the human capital of the host country, Nestle is both satisfying corporate operations and government regulation at the same time.              With acquisitions of differentiated companies, the firm also avoids the cost of new-product development and adheres to the importance of speed to market (Hitt et al 2003).  For example, developing the chocolate product can include significant investments, time and periods of sacrificing profitable returns.  Its success can also be unpredictable and vague especially when the firm is new to developing product, thus, creating huge risks.  However, Nestle acquired Cailler brand (Kimbrell, 2001) which gave the former the speed to market and brand history competitive advantage.  The 200 year-old history of this chocolate brand, wherein one half of which belongs with Nestle, caused chocolate tradition to be pegged to Switzerland and known worldwide.  The chocolate subsidiary also gave Nestle an effortless distinction of its chocolate products against rivals in which it was known to be a passionate brand compared to others like Lindt as intellectual brand.  Procedures in introducing confectionary products like market testing is also adapted by Nestle from the partnership which made it to conduct blindfold taste tests.  As a result, Nestle gained such recognition and profitability without huge marketing campaign and even elevated its corporate brand name and attached it to Switzerland’s history particularly in chocolate business.              In conclusion, advantages of diversification for Nestle can be achieved and protected through acquisition while vertical integration can be leveraged through outsourcing.  As it expands into different product lines, Nestle needs to be flexible in its manufacturing and other value chain activities.  As a result, market power should not be exclusively attributed through internalization of activities especially when diversification connotes adjustment of operations based on the requirements of the subsidiary.  Rather, market power should be a balance between outsourcing and internalization to uphold strategic flexibility of operations.  It means that the firm, even though could not secure all possible leakages of company information that could lead to imitation, has the sole knowledge on how to operate the balance and make competitive advantage over it.  This is concretized by its half century old contracting and in memoriam internal efficiency enhancement operating through its unique company goals and human resources attitudes towards innovation and excellence.  Nestle and International Strategies: Wrapping the Whole Activities             Using the determinants of national advantage (Hitt et al 2003), agricultural products is outsourced to local producers because of the presence of the necessary factors of production particularly in the developing countries wherein agriculture remains a common industry.  This is also true why research facilities are enclosed within the borders of the mother company in Switzerland stimulated by the presence of supporting industries and the demand for extensive product researches.  However, with its environmental concern in the forefront, Nestle could bridge the gap of research exclusivity and raw material decentralization.  Ecological themes such as 80% of the waste materials in the manufacturing are converted as useful by-products while the 20% are disposed in environmental sound way (Nestle Homepage) and discourage the use of ozone depleting substances in its refrigerants, echoes research activities to the different parts of the world from the square miles of its Swiss facilities.             The idea of the company to use global strategy (Hitt et al 2003), that is standardized research products across country markets, is to integrate the health issues of country divisions and promote lower risks of lost of accountability and prevent high investment costs.  It can be argued that the strategy reduces the capability of the firm to exploit growth opportunities, say, the human capital of Japan and other scientific prowess of other nationality including their state-of-the-art facilities.  But Nestle is protecting a century-old brand name and could not seem to delegate the authority to create safe and nutritious products in other’s hands.  So even though findings are limited, it is within quality standards.  It is to be noted that a commercial drug takes 15 years and approximately 0 million to successfully launch in the market (Hitt et al 2003).  As to Nestle, wherein its products have nutritive values, it could be argued that developing diverse country research centers could mean increased costs and even increased exposure to imitation.              On the other hand, outsourcing agricultural products is largely done through multi-domestic strategy (Hitt et al 2003).  Even though there is a centralized purchasing principle, final decisions to acquire certain perishable raw materials is in the discretion of local management.  Being perishable and vulnerable to human and natural factors like weather, too specific and rigid standard operating procedures could serve as bottleneck in smooth operations of local plants and offices that centralization could alter effectiveness of contingency approach to problems.  Also, consumer needs and desires are aligned to the local distribution schemes of the firm.  Cereal and pasta may not appeal to the Asian markets whereas nutritive values could be undermined by poorer countries in favor of the basic need to eat and quench the thirst.  These regional differences are important to a global firm especially if it wanted to maximize the value of catering to local demand and improve profitability.             In conclusion, the decision to outsource, vertically integrate, business-level strategy and international strategy lies with the firm’s ability to leverage its resources and core competencies to achieve its market superiority.  Its firm structure necessitates it to contribute to the society where it has its local operations while shareholders require it to increase the value of the firm.  Its commitment to serve stakeholders in co-equal basis with the best it can calls continuous improvement of its value chain and competitive position.  In the process of continuous improvement, its human capital and other resources developed their respective leveraging capabilities and flexibility to endure complex environmental results and aggressive competitor movements like that of Unilever.  This complex set of Nestle strategies and adaptation reflects its historic feat to survive stiff competition and near bankruptcy.  Challenges seemed a company tool to excel and discover new ways to solve problems even though it entails not a single but multi-faceted application of global and business strategies.    Recommendation             Its balancing strategy between internalization and outsourcing should be designed as to prevent occurrence of stifled innovation or inefficiencies because a supplier produces a product at a lower cost (Hitt et al 2003).  Due to increased management monitoring, software like RedPrairie should be promoted and installed in different country divisions in order for information to be linked in not only to top management decisions in the Swiss headquarters where research and development is located but also to country offices in order to align their objectives to the trend of other offices or their business partners.  Failure like managerial myopia or lost of flexibility could result to gain the black side of integration and outsourcing instead of exploiting their potentials.  However, technology could be overestimated as the number one option to integrate and enhance communication than face-to-face planning.  In order to avoid this, the management should consider a biannual meeting to country divisions, suppliers and other governmental authorities for strategic planning activities.             Further, maintaining the cost leadership and differentiation strategy at the same time could drown the firm and be “stuck in the middle” (Hitt et al 2003).  To prevent this, it should keep its first mover advantage with that of the close rival, Unilever, and other niche competitors especially in pharmaceutical and pet products.  It should maintain the thread that links its diversified business into one superior veil— health and nutrition.  Intensifying its research, but preventing over-research as too much research can lead to morbidity or can result to exposure to competitors, and being aggressive in innovating environmentally conscious practices can assure its long-term breakthrough: bounded but effective.  Its sustainable development that includes the whole stakeholders intensify its first mover advantage, at least being a diversified food company, that can provide it the conducive environment to improve operations to protect its historic reputation.             Acquisitions and diversification strategies of the firm should also be controlled and monitored to avoid it to resort to greater levels of diversification because of low performance (Hitt et al 2003).  Ineffectiveness or inefficiency should be regarded as a multi-option of divestures, restructuring or internal and external improvements not just simply an option to release a lot of money to buy new firms or subsidiaries in different business.  The trend of Nestle in latest acquisition/ partnership is to team up with pet foods and cosmetics industry apart from being human food company.  Economies of scale and scope might not be realized rather reflect the opportunistic behaviors of managers to retain their positions of increased their salary due to increased responsibility.  As a result, Board of Directors awareness and knowledge of company operations and evaluation of managers are necessary to identify the culprit in the organization.  Transparency should be adhered while directors should convene regularly to have in depth grasps of the logical cause of a proposed diversification.                  Finally, market research should be conducted in regions with varying preferences on packaging or product itself for effective multi-domestic strategy (Hitt et al 2003).  It will assure that Nestle does not only comply with regulations on health issues but also satisfies the customers by conducting surveys to get the pulse of the consumers on ht end-result of research and manufacturing operations on top of health security and quality assurance.  In addition, global strategy in primary research endeavors from the firm’s headquarters should attempt to coordinate with other research companies in other countries to promote universal discoveries of new founded technologies.  This could enhance speed to market of innovative products from nestle by simply buying the patent form these foreign researchers.  The job of the research team is to improve and align patented technology to the firm’s brand image avoiding the rigorous and costly development of such technology.  It should be cautioned that such foreign research firm or institution should be accredited by some international bodies to assure quality for the receiving firm.             Bibliography   Book   Hitt, M, Hoskisson, R & Ireland (2003). Strategic Management: Competitiveness and Globalization. 5th Edition. Singapore: South Western Thomson Learning.     Periodicals   Demetrakakes, P. (2004, October 1). Nestle’s packaging wraps up the world: a truly international food company combines local and global strategies in packaging its huge array of products. Food & Drug Packaging   Kimbrell, W. (2001, January 1). Nestle Suisse Plans Global Masterstroke. Candy Industry.     Skydel, S. (2002, September 1). The very best; Nestle USA: 2002 T3 Information Technology Enterprise of the Year award winner. Transport Technology Today.   . Electronic Source   Internet (2006). Nestle Homepage.  Retrieved on March 28, 2006 from http://www.nestle.com/.    Internet. (2006) High Beam Research. Retrieved February 10, 2006, from www.highbeam.com.   Internet (2006) Questia Online Library. Retrieved February 9, 2006, from www.questia.com.   Internet (2006). Wikipedia: The Free Encyclopedia. Retrieved March 22, 2006, 2006, from www.wikipedia.org.     Credit:ivythesis.typepad.com

“NESTLE MAKES THE BEST FOR YOU”: A GLOBAL PERSPECTIVE

Nestle Background In history, the company seemingly saw every challenging environment to develop and strive harder in its op...

Sample Essay CUT Telecoms is and continues to be one of the Biggest Producers of Electronic Gadgets and other Industrial Products

Global Businesses CUT Telecoms Introduction             CUT Telecoms is and continues to be one of the biggest producers of electronic gadgets and other industrial products. We shall apply these contemporary theories in order to understand the continuous growth and the possibility of success and failure of this company.             CUT Telecoms is a Hong Kong based company that fully manages telecom, electronic and industrial products. After being in the business for 2 years, it acquired its listed company status in 1991. The company employed over 18, 000 staff and acquired a cash position of about HK billion in 2006. CUT Telecoms cover a wide range of products, from electronic gadgets, to cordless phones to baby-care products (through its subsidiary, Wilted Industries Limited).   Discussion and Analogy             The company continues its stronghold in the electronic production industry. Its turnover has increase throughout the past 12 years and has increased greatly in this period. In the pursuit of CUT to invest in innovation through understanding of where technology, client requirements and global business are headed, the company continually makes strategic decisions to maintain its leadership of this rapidly changing business by focusing on high-value innovation-based solutions and services while consistently generating high returns on invested capital for its shareholders. The company utilizes its entire portfolio — hardware, software, services, technology and research to maintain its leadership. With those broad capabilities to enable enterprise innovation, the expertise and diversity of its global workforce and its large network of suppliers and business partners, it is considered that CUT can well-positioned itself to capitalize on the opportunities represented by the needs of its clients and current trends in economics and society. However, there could be a disadvantage of innovation when the strategy will not be appropriate for the company.             In my opinion, the aspect of the income of the company should be greatly highlighted since it deals much with how the company would look like after a long time. The revenues of the company should be taken into consideration since this will form a part in the development of the company.             In the next five years, this aspect of the company, hopefully, should be on the verge of continuous increase. According to the previous financial statements of the company, the trend of the income should continually increase, except maybe for a few minor, uncontrollable setbacks. The company’s income should continually be monitored and if in any case the rates should go down. If the case is such, the management should look into the matter right away and should identify the key factors that made the trend fluctuate.             In the case of CUT Telecoms, in five years time, the company income should continue to rise. And they should also be able to overcome setbacks. In marketing, there needs to be effective lines of communication between both the company and its customers. CUT Telecoms does this by listening to what customers need and what they think about their products/services, this is done via several different methods, such as postal questionnaires and on line surveys, the information obtained enables CUT Telecoms to knowing what the customers want. It then communicates to the customer through advertising, sales promotions etc, aiming at a specific target market, giving consumers the information on buying their products.             But sometimes there can be a problem with making sure effective communication takes place, for example other consumer’s opinions, and critics and reviewers etc. Companies must also be aware that any impartial advice given to customers by the media or other agencies can support or damage its own marketing communications. Many types of analysis falls into this category, all employ the use of surveys. Since time and the audience is a luxury that we do not have, we shall move on to the next aspect of environmental scanning which are product innovations.                   Attachments: Further notes regarding the review 74.63% Credit:ivythesis.typepad.com

Sample Essay CUT Telecoms is and continues to be one of the Biggest Producers of Electronic Gadgets and other Industrial Products

Global Businesses CUT Telecoms Introduction CUT Telecoms is and continues to be one of the biggest producers of electronic ...

Case Studies on the London Stock Exchange

Introduction The study aims to discuss stock markets and its importance. One example of a stock market is the London stock exchange. The study aims to give a background of the London stock exchange and some of the parts of its history.  In the discussion of the London Stock Exchange the reliability and efficiency of the said market will be given focus so that appropriate conclusions and recommendations can be formulated.   Stock Market/ Stock Exchange Stock Market is an organized market for buying and selling financial instruments, including stocks, options, and futures. Most stock exchanges have specific locations where commissioned, or paid, intermediaries called brokers conduct trading or buying and selling stocks. Stocks are not always traded on a stock exchange. Some are traded over the counter, without a specific central trading location.  Major stock exchanges in the United States include the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX), both in New York City. Nine smaller regional stock exchanges also operate in Boston, Massachusetts; Cincinnati, Ohio; Chicago, Illinois; Los Angeles, California; Miami, Florida; Philadelphia, Pennsylvania; Salt Lake City, Utah; San Francisco, California; and Spokane, Washington. In addition, most of the world’s industrialized nations have stock exchanges. Among the larger international exchanges are those in London, England; Paris, France; Milan, Italy; Hong Kong, China; and Tokyo, Japan. Stock exchanges serve important roles in national economies. They encourage investment by providing places for buyers and sellers to trade securities, stocks, bonds, and other financial instruments. Companies issue stocks and bonds to obtain capital to expand their business. Stock exchanges also encourage investment in other ways. They protect investors by upholding rules and regulations that ensure buyers will be treated fairly and receive exactly what they pay for. Stocks are shares of ownership in companies. People who buy a company’s stock are entitled to dividends, or shares of any profits. A company can list its stock on only one major stock exchange, though options on its stock may be traded on another. Each exchange establishes requirements that a company must meet to have its stock listed. The different exchanges tend to attract different kinds of companies. Smaller exchanges typically trade the stock of small, emerging businesses, such as high-tech companies. In the United States, the AMEX lists small to medium-sized businesses, including many oil and gas companies. The NYSE primarily lists large, established companies. Exchanges also support state-of-the-art technology and the business of brokering, which both help traders to buy and sell securities quickly and efficiently. In the 1980s and 1990s stock exchanges have achieved new levels of market efficiency through their increased use of fast and inexpensive computers. Computer networks have also allowed exchanges to connect to each other, both within countries and internationally. Electronic exchanges have fostered the growth of an open, global securities market. Although the overall value of the U.S. stock market has increased substantially since 1946, occasional recessions have occurred during recent decades. In 1987 the stock market experienced a brief, but major crash, marked by a more than a 20 percent decline; over one day’s trading, in the S & P index of stock prices. Markets in other countries have experienced periods of severe decline as well. The market in Tokyo, for instance, plummeted over a period from the end of 1989 to late 1990. The Nikkei index of the TSE declined almost 50 percent during that period. The Japanese government instituted reforms in response to the exchange’s poor performance.  1965).   London Stock Exchange As both a market and an institution the London Stock Exchange occupied a central position within the British financial system. As Britain was such a key component of the world economy from 1700 the result was to make the London Stock Exchange central to the operation of the international financial system, for much of the period.   Throughout its history the prime function of the London Stock Exchange, as an organized market for existing securities, has been downplayed because of its association with speculation. Instead of trying to investigate the causes and consequences of this constant buying and selling, the assumption is made that, because it is rooted in the individual’s desire to sell not produce for a profit, it does not perform a function within the wider economy. Consequently, the existence of the London Stock Exchange can only be justified by attributing to it the activities of others, such as those issuing securities and the use government and business made of the finance so obtain. The motto of the London Stock Exchange which is My Word is My Bond could only be true in an organized and regulated market, where failure to honor a sale or purchase could and did result in a fine, suspension, or expulsion.    The history of the London Stock Exchange, divides into five distinct periods. The first begins in the late seventeenth century and culminates in the mid-1820s. During those years the Stock Exchange emerged as a distinct entity within the securities market, providing an organized forum for the trading of mainly UK government debt rather than corporate stocks and bonds. The second period sees the London Stock Exchange emerge as one of the central institutions of both the British and the world economy.The third period covered an era from the beginning of the First World War in 1914 to the start of another in 1939, with the virtual collapse of the international economy in between. Within the space of those 25 years, the achievements of the past two centuries were largely lost or reversed. The London Stock Exchange was returned to a position where the National Debt dominated trading, and its precise relations to the money and capital markets were uncertain In the fourth period, covering the years from the Second World War until the 1980s the London Stock Exchange retreated almost entirely from its international role. Instead, it found a new role for itself as the semi-official regulator of the domestic securities market.  The final period began in the 1970s and is still continuing today. After appearing to consolidate its control over the domestic securities market, by merging with the provincial stock exchanges in 1973, the London Stock Exchange gradually lost the role it had gained after the Second World War. Attacks by the government on restrictive practices, criticism from the rest of the City for its charges and practices, and growing competition from non-members aided by rapid changes in communications and the ending of exchange controls, left the Stock Exchange without the support it required to resist change (Michie 1999). In the eighteenth century the London securities market had no formal organization and concerned itself with dealing in UK government debt, or proxies for, with most of the activity driven by the short-term considerations of the money market. In the late twentieth century the London Stock Exchange was a highly organized market place for the stocks and shares of British and foreign companies, with most activity driven by the short and long term interests of institutional investors.    Type of market London Stock Exchange is Corporations issue new securities in the primary market as opposed to the secondary market, where securities are bought and sold, usually with the help of investment bankers. In the primary market, corporations receive the proceeds of stock sales. Thereafter, they are not involved in the trading of stocks. Owners of stocks trade them on a stock exchange in the secondary market. In the secondary market, investors, not companies, earn the profits or bear the losses resulting from their trades. Stock exchanges encourage investment by providing this secondary market. By allowing investors to sell securities, exchanges increase the safety of investing. London Stock Exchange has both functions of primary and secondary market. The said stock exchange has already traded over 15,000 securities on the primary and secondary markets it has.  Through the use of the multiple markets more investors and companies will be encouraged to trade since they can make use of the market that will give benefits to them.   How efficient the market is The efficiency of the market is measured through its ability to be competitive and ability to withstand competition.  The London Stock Exchange may switch its clearing business from a British company to a subsidiary of Germany’s Deutsche Boerse, its rival and one-time merger candidate. The London Stock Exchange is trying to cut transaction costs and improve the efficiency of its share clearing operations, and it worries that this merger might hurt its ability to compete. Clearing is the behind-the-scenes process for transferring ownership in the trading of shares and bonds. The London exchange is believed to be talking with at least two other possible alternatives to the London Clearing House: The Depository Trust & Clearing Corp., which provides clearing and settlement services for shares and bonds traded in the United States, and Euroclear, a settlement company based in Brussels and Paris. The London exchange has taken no final decision and is still talking with the London Clearing House about their joint business prospects.   Deutsche Boerse’s Eurex is a candidate to replace its current clearing counterpart, the London Clearing House Ltd. The London Clearing House is in the process of merging with Clearnet, a business owned by Europe’s Euronext stock exchange. Clearnet’s parent, Euronext, beat out the London Stock Exchange in a 2001 takeover battle for the London International Financial Futures and Options Exchange. Euronext is joint operator of stock markets in Paris, Brussels and Amsterdam. Eurex is jointly owned by Deutsche Boerse, for which it provides clearing services, and SWX Swiss Exchange. Consolidation of Europe’s markets suffered a setback in September 2000, when the London Stock Exchange abandoned a planned merger with the Deutsche Boerse to fight off a hostile takeover attempt by Sweden’s OM Gruppen. Backers of the doomed Anglo-German merger had envisioned it as the potential core of a single European exchange and a precursor to an alliance with the NASDAQ Stock Market in the United States.  This move of the London Stock exchange means that the market may have problems that it has difficulty in solving. Through the assistance of other financial institutions the London stock market tried to solve its problems and maintain its operations. This shows that the said stock market is not anymore efficient. This shows how weak the said stock market has become over the years. The stock market having lost some of its efficiency can be given solution by it reconstructing its image and improving its services. Through proper planning, coordination, and assistance of the other financial institution the efficiency of the London stock market can be returned.   How reliable the market is For any institution to be considered reliable by its consumers gives a boost on its image and market value. Reliability is seen in the dependability and honesty of a firm not only among the business community but its clients as well. Reliability can also be seen in the way an institution is being trusted by its environment. Although the London stock exchange has lost some of its efficiency its reliability is still there. One problem any institutions, governments, consumer faces is fraud. Fraud is a way of gaining unfair advantage over people through deception.   This stock market is free from fraud; it has a dedication to maintain an image of honesty and openness. As mentioned in the company’s corporate and social responsibility the company strives for openness and honesty in all of its business dealings and treat their consumers, shareholders, and employees as valued partners in the business. The said stock exchange makes sure that it keeps its corporate and social responsibility. Having the mentioned mandate of responsibility helps the stock market govern itself in maintaining a good relationship and a transparent relationship with their clients. Through the mandate of responsibility the stock market prevents fraud from happening and it gives reasons for fraud not to be committed. For the company being reliable is important for them since it brings recognition from the business community and increase in the number of clients. Another thing that the London stock exchange use to maintain its freedom from fraud is its motto of my word is my bond. Through the motto the company reassures that it will maintain a sense and principle of honesty and transparency in all of the transaction it engages in.    Conclusion Stock Market is an organized market for buying and selling financial instruments, including stocks, options, and futures. One example of a stock market is the London stock exchange. As both a market and an institution the London Stock Exchange occupied a central position within the British financial system. The motto of the London Stock Exchange which is My Word is My Bond. The London stock exchange has already traded over 15,000 securities on the primary and secondary markets it has. The said stock market is not anymore efficient and the said stock market has become weaker over the years. This stock market is free from fraud; it has a dedication to maintain an image of honesty and openness. It uses a mandate of corporate and social responsibility and its motto to prevent itself from engaging in fraudulent transactions and improve the efficiency it possesses.   Recommendations Any member of an organization can be tempted to commit fraud even if there are certain measures to prevent it. To strengthen the measures to prevent fraud the London stock exchange can use methods like conducting honesty tests for its employees, having stricter penalties to those who will be caught committing fraud, and engaging employees in seminars or other activities that can help employees minimize their tendency to commit fraud. The London stock exchange can conduct honesty tests to everyone employed by the institution to see how honest and transparent they are. This will also foresee the level of occurrence fraud can be committed. Through this method the group of employees that can likely commit fraud can be predicted. The London stock exchange can impose stricter penalties on those employees caught committing fraud. Stricter penalties include longer days of suspension, direct termination without any warning and many others. Through this lesser employees might be tempted to commit fraud. The London stock exchange can engage employees in seminars or other activities that can help employees minimize their tendency to commit fraud. These activities can help an employee realize the negative effects to clients and to the image of the company of committing fraud. These methods increase the awareness of the employees and help them conquer the temptation of committing fraud.   The stock exchange can continuously improve its efficiency by improving the processes and techniques it uses. The more advanced and updated their processes are the more it can be efficient and ready for any problems that they encounter. Another way for the stock market to improve its efficiency is through continuously upgrading the technologies it has and adapting it to the modern world. Through this they can give services much better and much quicker. Moreover the stock exchange can improve its efficiency by giving more training to the employees at the same time providing them possible solutions to small problems they might encounter. The improvement of the way the employees perform their duty can be a big boost to improving the efficiency of the stock market.   Credit:ivythesis.typepad.com

Case Studies on the London Stock Exchange

Introduction The study aims to discuss stock markets and its importance. One example of a stock market is the London stock exchange. The ...

The global war on terror

This paper will discuss the subject with regards to the global war on terror and its relation to ongoing civil wars around the world. Specifically, it will try to answer and provide argument that the global war on terror provides a valid framework that can be used to understand and explain civil wars. It will also try to provide the adequate international response to civil wars and terrorism.                  Before necessary discussing about the relationship and issues that surrounds these two concepts we must first give a brief and short definition on the term global war on terror and civil wars. The global war on terror refers to the effort and campaign being initiated by the United States lead by U.S. President George W. Bush and other countries to combat and eradicate terrorist and terrorist groups namely the al Qaeda lead by Osama bin Laden (Davis 2004). The goal of fighting terrorism stem from events such as the World Trade Center bombing in February 26, 1993 masterminded by the Islamic terrorists that killed six people. Other notable incidents that pushed the United States to fully combat the threat posed by terrorism are the attacks and bombing made by terrorist against U.S. embassies in the capital cities of Tanzania and Kenya. The U.S. military has also been attacked in 1985 when a truck loaded with bombs crashed into a camp manned by U.S. Marines in Beirut, Lebanon and when a suicide fast craft exploded on the side of the U.S.S. Cole (Davis 2004).             The most serious attack on U.S. soil came on September 11, 2001 when two hijacked airplanes loaded with passengers and aviation fuel crashed into the World Trade Center collapsing and literally bringing it down. This attack was part of a plan that intended to hijack airplanes and use them as flying bombs against high priority and strategic targets (Galgan 2004). Another hijacked airplane meanwhile crashed and partly destroyed the Pentagon. Other terrorist attacks that are worth mentioning are the Madrid bombing in March of 2004 and the series of bombings aimed at the transportation system that rocked London on July 7, 2005.             In the September 11 attack on the World Trade Center, the Al Qaeda, a extremist Islamic group headed by Osama Bin Laden claimed responsibility for the attack as part of an ongoing war against American influence and ideas. The U.S. government then demanded that the Taliban government turn over Osama and his top aides and lieutenants to the United States to stand trial but the Taliban government of Afghanistan refused. The U.S. military and other coalition forces like Britain were forced to attack and invade Afghanistan in a military operation dubbed Operation Enduring Freedom. The United States military easily defeated the Taliban forces but failed to find the top leaders of the Taliban government and the members and leaders of the Al-Qaeda (Galgan 2004). Osama bin Laden and his group were forced into hiding while evading U.S. operatives that are searching the Tora Bora mountain region of Afghanistan.             The United States also believed in the notion that Saddam Hussein, the leader of Iraq helped and harbored al-Qaeda and that Iraq is manufacturing and storing weapons of mass destructions (WMD). The coalition forces lead by the United States supported by Britain invaded and eventually conquered Iraq in a bloody but swift military operations capturing Saddam and his supporters and trying them for their crimes. As of today, the U.S. military and the Coalition forces are still staying in Iraq while looking for WMD and restructuring the political, economic and social framework of that country.             Civil war meanwhile refers to a conflict that involves two or more parties within the same party or country in a struggle for state, military, economic and political power. In a civil war the reasons may have different and varied means. Some civil war aims for the restructuring the political system, giving equal rights and privileges to all people, respecting and fighting for one’s freedom, ethnicity and religion (Tucker 1997). Examples of civil war initiated by ethnic diversity are the war waged by certain tribes in Angola and Rwanda while civil wars that are rooted on nationalistic ides are waged by the ETA (Euskadi Ta Auskatasuna or Basque Country and Freedom) in Spain and the LTTE (Liberation of Tamil Tigers Ealam) in Sri Lanka against the predominately Sinhalese government. Civil wars can be fought using conventional armies and regular troops that met in set piece battles such as in the American Civil war or the Spanish Civil War or it can be conducted using guerilla tactics that consist of raiding, bombing, kidnapping and other atrocities that are used to sow fear, terror and panic to the society.             In a global war on terror, terrorism is an effective method that can be used as a practical and useful tool to achieve a specific objective. Terrorism refers to the strategy of using coordinated attacks that are classified as methods  unconventional warfare. Terrorist attacks are usually characterized by indiscriminate actions that targets civilians with total disregard for human life (Bensahel 2003). Terrorism can also signify attacks which are random, immoral, wanton and unjustified. Terrorists are sometimes called separatist, freedom fighters, liberators, guerilla, mujaheddin and fedayeen depending on perspective and thought of the viewer (Burke 2003).             In reading and understanding the global war on terror, terrorism and civil wars we, can see a direct relationship between global war against terrorism and the civil wars that is happening in many countries of the world. In short we can see that the global war on terror provides a valid and applicable framework that encompasses civil wars in different parts of the globe. This framework is evident because the idea of global war on terror tends to simplistically brand military actions and offensives as events that are perpetrated by terrorists. The global war on terror provides capacity and the rationalization to governments that deals with civil wars. The global war on terror therefore is a situation and a framework where all events and actions made by a group fighting in a civil war are grouped and labeled together. The global war on terror provides easy classification and categorization of acts that are labeled as terrorism just because the group is labeled as a terrorist. To clearly illustrate these significant points, let us provide valid and complete examples that would clearly emphasis this hypothesis.             The first example that will be discussed with regards to this topic is the case of Afghanistan. During the Soviet invasion of Afghanistan, mujaheddin and resistance fighters were recruited to deal and to fight against the Soviet forces stationed throughout Kabul and Afghanistan. After the withdrawal of the Soviet forces a movement called Taliban came to power and seized control of the capital. The Taliban movement is dominated by Pashtun and other tribes throughout Afghanistan and the North West provinces of Pakistan. In September 26, 1996, through the support of the Pakistani government, they surrounded the capital of Kabul eventually capturing it and establishing the Islamic Emirate of Afghanistan. This government was recognized by Pakistan, Saudi Arabia and the United Arab Emirates and the government controlled all of Afghanistan except for some areas and mountains in the north which was held by the Northern Alliance.  The Taliban and the Islamic Emirate of Afghanistan received logistics and material support from the United Arab Emirates and the Pakistani Inter-Services Intelligence while the royal family of Saudi Arabia annually sends 2 million dollars as funds for two major universities and six health centers that supports 4,000 orphans.             The second group that had waged a civil war against the Taliban backed government in the 1990’s is a loose and diverse group called Northern Alliance. This group is a military coalition that consists of various Afghan tribes that are united in their fight against the Taliban. The precise name for the Northern Alliance is the United Islamic Front for the Salvation of Afghanistan based in the northern area around Panishir. The Northern Alliance is specifically composed of five groups of mujaheddin fighters that were opposed to Taliban. These groups are the Islamic Party of Afghanistan, Islamic Party of Afghanistan, National Islamic Movement of Afghanistan, Islamic Movement of Afghanistan and the Islamic Union for the Liberation of Afghanistan (Buckley 2003).             From the year 1992 up to the invasion of the United States the two factions namely the Taliban and the Northern Alliance battled in out in a bloody and prolonged civil war. The Northern Alliance controlled 10% of the whole area of the country encompassing 30% of the whole population while the Taliban controlled the capital and almost all Afghanistan except the mountainous areas in the north. Atrocities like rape, murder, indiscriminate bombing and executions of prisoners were rampant. In 2001, the U.S. military invaded Afghanistan to capture Osama and to eradicate the Taliban government using the global war on terror as precept while armed with the rationale that the Taliban government harbors terrorists and willfully aiding terrorist groups.  Northern alliance forces received material and logistic supports in terms of ammunitions, weapons and food supply. The United States also used Special Ops operatives to train and to conduct attacks accompanied by Northern Alliance soldiers (Burke 2003). The U.S. military helped the Northern Alliance in their push towards the capital city of Kabul eventually ending the Taliban regime in Afghanistan.             The second example that can be presented is the civil war that rages in the island of Sri Lanka where the Liberation Tigers of Tamil Ealam (LTTE) composed of Tamils are fighting the Sri Lankan government dominated by the Sinhalese ethnic groups. The primary aim of this group is the establishment of a independent and free state for Tamils that will be called Tamil Ealam located in the north east portion of the country. Despite its noble goals and aims, the organization has been branded as a terrorist organization because of its wanton disregard for human life when it conducts military operations against the Sri Lankan Army using car bombs, suicide bombers and sneak attacks on civilian and highly populated targets (Hogood 2005).             It is labeled as a terrorist organization by the United States, Britain, India, Australia and Malaysia while LTTE delegates were barred from attending international meetings such as the European Union. Other countries also criticized its use of suicide bombers, targeting of non military and political figures and structures. Between 1991 and 1994, the organization was responsible for the assassination of prominent political leaders such as RAjiy Gandhi, Ranasinghe Premadasa and Gamini Dissanayake (Hogood 2005). The LTTE has also actively eliminated other Tamil militant groups killing its leaders and assimilating the members of the group. The LTTE has also been criticized in its frequent attacks against civilians in incidents such as the attack on the Temple of the Tooth in Kandy, train explosion in Dehiwala and the bombing of the Central Bank in Colombo (Hogood 2005).             The LTTE has also o been accused of kidnapping and “ethnically cleansing” Sinhalese and Muslim inhabitants in areas within their control. In one instance, the entire Muslim population of Jaffna on a 48 hour notice in 1990 (Hogood 2005). The organization also recruits children to serve as soldiers. As of today a ceasefire exist between the Sri Lankan government and the LTTE.             In this examples we can see that the global war on terror and other plans and scheme that is aimed against terrorist provides a framework for understanding and explaining civil wars in countries such as Afghanistan and Sri Lanka. The war on terror provides for the reasoning why a particular group of people initiates a civil war. Since the war on terror highlights unique religious ethnic, ideological and nationalistic identities as causes of civil wars and internal conflict. In the case of Afghanistan, civil war was eminent when there was massive divisiveness brought about by religions differences and ethnical diversity while in the case of Sri Lanka , the problem and the main cause of the civil war was ethnic differences between the Sinhalese and Tamil segment of the population.             The global war on terror also provides for the immediate curtailment and restriction and eventually the demise of civil wars due to the elimination of one camp. Since the war on terror is fought not only in the fields, funds and financial assets that are own by a particular terrorist and participant in a civil war are frozen and sequestered by governments. Other governments can also deny entry and use of national facilities to a group if it is labeled as a terrorist group. The global war on terror greatly benefited the Northern Alliance in their fight against the superiorly armed Taliban forces. The Northern Alliance gained grounds on its offensive through the help of the U.S. military who are pursuing Osama bin Laden and his terrorist group. The global war on terror therefore ended a potential and dangerous civil war between the Taliban and the Northern Alliance.              With regards to the situation in Sri Lanka, the global war on terror persuaded the LTTE to discontinue and to cease from doing terroristic activities in exchange for limited political autonomy in the regions that it occupy. The global war on terror is also effective in making known to the global community the actions by a particular group that are labeled as terroristic activities thus shaping the world opinion and forcing other governments to take actions and measures that would ensure that these acts will be prohibited and punished.             In order to combat and fully eradicate the menace of global terrorism, a valid and workable international response must be agreed and must be implemented by all countries and nations of the world. In this point the paper will discuss the different and myriad responses that can be initiated by foreign governments and the international community in minimizing the effect of terrorism. To effectively combat terrorism, there must be a total coordination and foucs with regards to government resources, manpower and materials. Pure counterterrorism is not enough and a weak deterrent in stopping terrorism since this method is just reactionary. This method puts government at a disadvantage and people and civilians at risk because terrorist must make the first move in order to be detected by the police, counter intelligence agencies and other local and international counterterrorism groups (Cordesman 2002). To combat terrorism, counterterrorism must be incorporated in a larger strategy that would create a response against the terrorist groups. Economic sanctions, legal efforts, financial and economic aids and diplomatic pressure must be incorporated in a unifying strategy that would compel or pressure countries that support terrorism or would grievously hurt organizations and companies that help terrorist groups (Cordesman 2002).             Another effective way to effectively respond against terrorism is by providing foreign aids and financial support to countries who are suffering from chronic economic instability (Duffield and Wardell 2005). This step is necessary to improve the quality of living, create enough jobs and to channel the human resources of the country thereby eliminating social problems, blurring the lines between ethnic groups thus preventing the start of a civil war. Infrastructure, basic social services and the economic state of the country must be rehabilitated so that hotbeds of terrorism and radical ideologies will never grown and flourish. Aids and financial support that tackles education that promotes peace, dignity of human life and stability can greatly benefit the society (Duffield and Wardell 2005). Terrorism and terrorist groups cannot thrive in an environment where there is no suffering, discrimination and repression. In giving foreign aid and financial support, there must be a set of guidelines and course of action that must be followed (Kepel 2004). First nations and international lending institutions must never support a “rogue” regime and government. This condition stem from the lessons of the Cold War where the United States supported authoritarian, undemocratic and repressive regimes and governments in order to woe them in not joining and cooperating with the Soviet Union. In the end however, the regimes and governments committed actions that violated the basic rights of the citizens pushing the people into taking arms and starting civil wars and internal rebellions (Maley 2003).             Another guideline that must be viewed with regards to giving financial aid and foreign support is that proper liquidation and documentation of the fund must be monitored and asses in order to curtail graft and corruption inside the government that receives the loan or financial aid. Prolonged aid to countries that do not properly allocate the funds would just result in massive government dissatisfactions and unrest making the people cling to beliefs and ideologies that would seemingly advocate freedom, economic prosperity and justice (OECD 2005). If foreign aid does not have a trickle down effect to the grassroot levels of a society, this condition would ferment discontent, frustration and eventually rebellion and ultimately civil wars. Care and policies must also be implemented so that these countries will no longer be dependent on foreign loans and aid in the future,             There are also other ways to effectively frame a response against terrorism. Countries must bolster long term stability that would require the respect for human rights, rule of law, political development and economic and social programs (OECD 2005). Donors and countries should concentrate more in developing cooperation and communication between nations to facilitate faster exchange of data and information that can prevent the spread of terrorism. Stability can also be viewed as the process wherein disputes, conflicts with regards to religion, ethnic and racial grounds can be solved using non violent means like peace talks, conventions and other forms of peace building processes.              To eliminate friction and fighting between two warring camps and parties and to avert a civil war or the formation of a terrorist group, countries must take the initiative of developing systematic agencies that would hear grievances, abuses and other human rights violations and to provide a strict penalty system like economic sanctions or trade embargoes on the offending state (Duffield and Wardell 2005). This facet of responding to terrorism is vital since it provide the people or individuals who are abused with outlets and systems that can hear their plight and eventually grant them justice.  If there are no international justice systems that would hear these kinds of cases, a group of people would have no course of action but to take up arms to defend the rights of his group. With regards to punishment and sentencing, there must be strict and definite punishment as well as the rigid implementation of the law or order. In the past, trade embargoes and economic sanctions levied against countries such as Iraq, Iran and Cuba were not successful because the offending countries used loopholes, dummy companies and other allied states as tools to circumvent these embargoes and sanctions. Aside from these, these must also be a united force that would enforce and monitor the implementation of the order of this international justice body. There must be a unilateral consensus on the proper monitoring and enforcement of these policies because statements and orders without any form of force backing it up would not be seriously taken by a nation state. Another measure that is aimed against stopping terrorism can be started by talking and speaking to a group of people or a society about the evils and immorality of joining or supporting a terrorist organization (OECD 2005). Dialogues, information dissemination and the mass media are the primary tools that can help this kind of approach. Information, discussions must highlight the mentality that violence and radicalism in terms of religion and ideological beliefs can only lead to tension and larger conflict that can result in a civil war or a massive loss of life and property. TVs, radios, newspapers, pamphlets and the internet are tools that can reach a wide audience and viewers can be used in emphasizing the point that terrorism is counter productive and against the laws of mankind and God (OECD 2005). To be able to combat terrorism and other factors that lead to the creation of a society that advocates civil war, a bridge must be made to reconnect fragmented portions of society torn by ethnic differences, religious affiliations and ideological variations. Bridges like shared political power and influence, respect for all views and beliefs and the freedom with regards to religion can be built that would enable two or more sectors of the society to reach out to one another and to see not their differences but to highlight and emphasis the commonality that is in them. The global war on terror and the generic war on terror being started at the start of the 21st century do provide a framework in understanding civil wars happening in different parts of the globe.  The war on terror provides the generic labeling of all acts being done in the course of a civil war as terroristic thus attracting the attention of the world and eventually the resources and manpower of these countries that  would help quell and solve the root cause of a civil war. Since the mere mention of the word global war on terror invokes wanton disregards for civilian lives and indiscriminate destruction of property, civil wars associated with terrorism would make the world instantly focus its attention on these events. Although the global war on terror is against terrorist groups, not all civil wars can be classified as war against terror since each and every armed group has a main aim or objectives such as political independence, autonomy or etc.. the only distinct classification is that terrorist groups and other armed group fighting in a civil war uses means and methods that tends not to discriminate between combatants and noncombatants, between military personnel and civilian targets. To curb terrorism and civil wars, a proper response must put into practice. Bridging the gap between people and group of individuals, reeducation and emphasis on the futility of using terrorism to advocate a specific viewpoint are some of the measures that can be used by all governments of the world as a reply to the growing threat of these problems. Partial autonomy, unrestricted freedom of expression and other basic human rights must be respected by all governments to stamp out the seed of internal fragmentation.     Credit:ivythesis.typepad.com

The global war on terror

This paper will discuss the subject with regards to the global war on terror and its relation to ongoing civil wars around the...

The Global Logistics Model for the Choice of Distribution Centers and the Combination of Transportation Tools

Introduction             Logistics is the process of strategically managing the procurement, movement and storage of materials, parts, and finished inventory (and the related information flows) through an organisation and its marketing channels in such a way that current and future profitability are maximised through the cost-effective fulfillment of orders. The term logistics has evolved from the military’s need of spare-parts supply, but is now widely accepted to include activities like purchasing, transport, warehousing, organizing and planning of these activities. Logistics managers need general knowledge of each of these functions, and specific knowledge of the industry, commodity, or business protocols governing the product types being managed. In business, logistics may have either internal focus, or external focus covering the flow from originating supplier to end-user, see supply chain management (http://en.wikipedia.org).  Global Logistics Logistic systems are providing solutions into today’s fierce global market competition; the introduction of products with short life cycles and the heightened expectation of customers that forced manufacturing enterprises to invest in and focus their attention on the system.  This, together with changes in communications and transportation technologies, for example, mobile communication and overnight delivery, has motivated continuous evolution of the management of logistics systems.             In these systems, items are produced at one or more factories, shipped to warehouses for intermediate storage and then shipped to retailers or customers.  Accordingly, to reduce cost and improve service levels, logistics strategies must take into account the interactions of these various levels in this logistics network.  This network consists of suppliers, manufacturing centers, warehouses, distribution centers and retailer outlets, as well as raw materials, work-in-process inventory and finished products that flow between the facilities.              According to the Council of Logistics Management, it is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.             When we use the term “Global” with logistics, we talk about imports from Asia to the U.S.; we talk about exports to Europe; we talk about movements within North America – and we talk about more; products, components and finished goods, which never touch the U.S. They move from a vendor in Singapore to a manufacturing plant in the Philippines. Or they move from Hong Kong to Germany. They move within Europe. Global supply chain. Worldwide logistics. Exciting and dynamic (Craig, T. 1996). With such a complex scope of locations, plants, warehouses, vendors and customers, the five key issues of logistics are especially critical with global logistics – movement of product, movement of information, time / service, cost, integration (within your company between you and your customers and between you and your vendors).   Just How Important Logistics Is?             Companies wanting a slice of the ballooning electronic commerce market cannot ignore logistics, according to industry giant United Parcel Service.  Ross McCullogh, UPS e-commerce vice-president, told the Internet World Asia at Hong Kong ’99 conference recently that many new companies failed to take into account how to move goods to customers.  “Every single day we move 12.4 million packages, and inside those packages are the commerce transactions, many of which occurred across the web … Every day we link 1.6 million people selling something to seven million people buying something,” McCullogh said.  Over the past four years, he had read around 1000 business plans from companies planning to launch new businesses, of which more than 95 per cent failed to consider logistics.  Many businesses also failed to take into account issues such as taking and processing customer orders.  “The bottom line is you cannot separate e-commerce from the logistics/supply chain. They are two sides of the same coin,” McCullough added.  Companies hoping to cash in on the e-commerce boom had to understand how to minimize their inventories and how to track orders to ensure they had complete control of their supply chain (Business Asia, 1999).   Influences and Factors             Within the five critical issues of global logistics are additional influences and factors.  For example, time zones.  People in the Far East, Europe and North America are all networking at the same time.  There is too great a difference in the time zones.  This means there must be firm understanding of plans and strategies by each element.  Or, there are cultural factors.  Different cultures view and understand business topics differently.  These understandings and their complexities can compound if the strategies and plans for doing business are not the result of collaborative effort with input by all groups.  Plus the company is much decentralized.  Different global areas have to meet their own needs, yet must work together to share product and information to make it happen. All this comes into play, for example, with air freight forwarder and ocean carrier selection.  Given the needs of all parties as to cost, availability of space/equipment, responsiveness and delivery/cargo release, a pool of forwarders and carriers can be selected.  Primary and secondary designations are assigned for the respective origin-destination lane.  But if special situation arise, the origin plant should be given the flexibility to use other than the primary forwarder.  He must stay within the list of approved forwarders.  Yet if special price, space or other matters develop, he has the explicit approval to make changes.  He does not have to wait to contact someone in the U.S. or other location. Or, conversely, instead of price, he must understand when service is required. Service does not mean getting it on the plane.  Service means getting it delivered within the time demanded.  A great rate is not good if the shipment does not arrive in time.  Or delivering the shipment via a destination airport which delays actual door delivery is not acceptable either.  Everyone must understand the responsiveness and adjust as circum-stances dictate. This is just discussing shipping in the global company.  Doing it requires integration, information, transfer of product, service and cost – in other words, logistics.  Change, and responding to them, as to service or cost should be recognized in the information, data and communication used among the regions. It takes more than late night phone calls and faxes. Vanilla Strategy From the teamwork, they develop the Vanilla Strategy.  (You have to give these things names. Not sure why, but you do).  The key aspect is shipping partially made units -vanilla models- to the plants for final assembly.  Shipping the basic models this way creates cost and time savings and postponement manufacturing to reduce inventories and create value-added.  If a country has clearly demonstrated a strong ability to accurately forecast its sales requirements, a certain portion, say 75%, of their finished product will be sent to them from the Philippines and will arrive per the work week sales they planned.  It will not go to the plant in Germany or the U.S.  This will save cost and time.  But if a country is not very good at forecasting, it will get a lesser portion, say 25%, of its quarterly requirements direct from Asia.  A country which is good at forecasting may get 50% of its requirements directly. Then for the remaining units, Vanilla kicks in.  This means units will be finished at the higher labor cost plants in Germany and the U.S.  However, there will be freight savings by shipping the partially-completed units in the special, reusable pack.  This offsets the labor. In addition, there is less need for air freight.  As part of the program, the plant in Germany will print keyboards.  Rather than buy finished keyboards from the supplier’s facility in Malaysia and then having problems if the various country requirements change, they will buy mostly blank units.  This improves their responsiveness to sales changes.  In addition, they are able to reduce inventory by 20%.  In addition, the German plant will supply the country’s weekly requirements within 48 hours of its request. Not bad.  Logistics cost savings, less rework, lower inventories, less hassle within the company and with the suppliers.  Better sales responsiveness and more sales.  This did not cover every aspect with global logistics, but hopefully it gave you some understanding, especially as to the five key issues of logistics.  There is movement of product, movement of information, time/service is important, as is cost, and there is integration. Global logistics is dynamic, not only in what is done but the way it is done. No where can this be better illustrated is with the technology and the movement of information.  Text and spreadsheets can be moved between different departments and companies via E-mail.  Even freight booking and management is going hi-tech.  There is a new web site recently developed by Net Logistics in alliance with Microsoft.  Its address is http://www.wwship.com.  This is a new, pioneering and exciting way for logistics users and providers to find, gather, and exchange information.  A database; book shipments; obtain rates; global E-mail and more:  Electronic global commerce.  The potential is unlimited.  Timely, cost effective and global.  It will significantly aid global logistics.   Third-Party Logistics Provider A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or “third party” logistics services to companies for part or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials. Examples of 3PL providers include: Freight Hauling Logistics (FRHL), C.H. Robinson Worldwide, Exel, Total Logistic Control, Federal Express, DHL, UPS, TNT N.V., Trinity Transport, Inc., BAX Global Inc., ECS warehouse, TVS Logistics services, Transfreight and Nexus Distribution. A 3PL provides integrated logistics services (i.e. the complete set of logistics activities from the buyer to the seller). A 3PL is assets based unlike a 4PL (fourth-party logistics provider) Retail Logistics             All manner of retailers are waking up to the power of logistics, realizing that they entail more than trucking and distributing goods. For without good information about sales and insight into customer needs, the finest distribution center and transport capabilities are likely to send the wrong thing to the wrong place at the wrong time. Effective logistics therefore require an efficient information system as well as good transport, distribution center, and store-handling capabilities. And that’s just the start. Those who excel at logistics in today’s environment use logistical expertise not only to survive, but to sustain real competitive advantage. They have discovered that just as one strategy does not work for all retailers; neither does one logistics system suit everyone. No longer a generic capability, logistics can be tailored to support each company’s distinct strategy. Fashion leaders, for example, need to make speed their priority, and typically incur higher transport costs, whereas discounters focus more on cost and would not consider flying in goods from the Far East for speedy delivery. Senior executives thinking about how to compete should therefore consider how to tailor their own logistics. To do so they’ll need a sound understanding of the fundamentals of good logistics, as well as logistics’ new capabilities. Only then will they be able to make the choices and trade-offs required to deliver their specific strategy (Dvorak, R. E. & Paasschen, F. V. 1996). Logistics alliances – formal or informal relationships between companies and logistics providers – are rapidly emerging in Europe, North America, and, increasingly, the Far East. While no precise information is available, we estimate that annual value in Europe and North America is over billion, with a number of leading providers enjoying almost billion in revenues. The success of these alliances means that they are poised to become a building-block in the coming “network economy”: a system in which companies focus on their core competencies and outsource other activities to external providers that can perform them more quickly, more cheaply, and more effectively.             A survey of alliances in the automobile, electronics, and packaged consumer goods industries discovered that logistics alliances often bring in large service and cost benefits which come from more efficient operations, tailored logistics solutions, an expansion in services, and the capture of synergies and scale effects (Lal, S. et al. 1995). Logistics alliances are proving to be powerful tools for enhancing supply chain performance. The best are based on close working arrangements, a shipper lead in design and evaluation, a tendency to outsource almost everything, ambitious targets, and a strong performance ethic. Most concerns about losing control, insufficient provider knowledge or capability, and “putting all the eggs in one basket” seem quickly to fade. Supply chain management Supply chain management is very important in controlling the operations of the supply chain to satisfy customer requirements as efficiently as possible.  Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.  Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned. Some experts distinguish supply chain management and logistics management, while others consider the terms to be interchangeable. From the point of view of an enterprise, the scope of supply chain management is usually bounded on the supply side by your supplier’s suppliers and on the customer side by your customer’s customers. Supply chain management must address the following problems: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="text-align: justify; line-height: 200%; background: #F8FCFF"> Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%; background: #F8FCFF"> Distribution Strategy: Centralized versus decentralized, direct shipment, cross docking, pull or push strategies, third party logistics. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%; background: #F8FCFF"> Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%; background: #F8FCFF"> Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods. </li> </ul> Trade Routes             Which route was considered preferable (or not) for use by groups of merchants and their armed and logistical escort, depended on a number of background factors, including an overall political and economic situation in areas to be crossed, travellers’ mode of transport, their navigation skills and knowledge of geography (and weather patterns), as well as on the actual ease, speed, safety and profitability of such journeys.   Credit:ivythesis.typepad.com

The Global Logistics Model for the Choice of Distribution Centers and the Combination of Transportation Tools

Introduction Logistics is the process of strategically managing the procurement, movement and storage of materials, parts, ...