Compare and Contrast Great Depression Essay Example for Free

Compare and Contrast Great Depression Essay The 1929 stock market crash and the subsequent ‘great depression’ was the biggest economic crisis that the world has experienced. The depth and length of the crisis and the suffering that it caused is legendary. Therefore when the global financial crisis struck in 2007, many rushed to proclaim that we were about to experience another depression on a similar scale, or at least what some have termed a ‘great recession’. This essay will compare and contrast the two economic crises to analyse the key similarities and differences between the two. To do this, the essay will firstly provide an outline of the conditions that led to the 1929 crash in the economy. Moving on from here the essay will then look at the policy responses that were implemented to tackle the crisis before analysing the conditions that precipitated the 2007 financial crisis and the policy responses, to draw out the similarities and differences of each of the crises, and to ascertain were any lessons learned during the current global crisis from the policies of the great depression era. Finally the essay will conclude with a discussion of the main points raised by the analysis of both crises and a look at the future prospects for recovery. Capitalism is a system of economic development that has crises as an inherent feature. Many crises have occurred both before and after the 1929 stock market crash, however the length and depth of the great depression has made it the point of reference for judging the severity of a financial crisis. Much debate has occurred over the causes of the great depression. While many see the late October 1929 New York stock market crash as the defining feature of the crisis, the reality was much more complex and multifaceted. As (Teichova 1990, p.8) suggests, the great depression was â€Å"the deepest, all embracing (agricultural, industrial, financial, social and political) and longest crisis with catastrophic consequences†. As well as this, although the United States led the way, this crisis was global and the rest of the world also experienced depression. So, any analysis of the great depression must look at the various factors that caused and perpetuated it. The 1920s in America hav e been described as the roaring twenties. After the devastation of the first-world-war, during the 1920 to 1925 period US and international economies were experiencing a boom. During that period, world mining and manufacturing output grew by nearly twenty percent (McNally 2010, p.63). However, in terms of inequality the poor were less poor but the rich were  getting richer at a rate of four to one. As well as this, four fifths of American had no savings compared to twenty-four thousand families at the top who held a third of all savings combined (Canterbery 2011, p.13). During the boom, ninety percent of all Americans saw their incomes fall in relative terms (McNally 2010, p.64). A factor in this was an increase in union-busting and anti-labour laws which increased income inequality. As well as this, agriculture, coal mining and textile industries were suffering from a post-war hangover which saw their profitability decline and in many instances wiped out. This inequality which concentrated wealth in so few hands led to a huge increase in consumer credit which in turn sparked off rising levels of private debt and a massive speculative bubble in the form of a property boom in Florida (Canterbery 2011, pp.13-14). The mania of speculation was not confined to proper ty and between May 1924 and the end of 1925, there was a huge eighty percent rise in stock prices. The trend continued and as Galbraith (2009, p.16) has suggested, â€Å"in early 1928, the nature of the boom changed. The mass escape into make believe, so much a part of the speculative orgy, started in earnest†. During 1928, the Times Industrials (a pre-cursor to the DOW) gained a huge thirty-five percent, from two-hundred and forty-five points to three-hundred and thirty-one points. To maximise their gambling profits, many investors financed their purchase of stocks with borrowed money, with speculators buying one-thousand dollars of stock by putting down one-hundred dollars (Canterbery 2011, p.15). Of course, capitalism’s bubbles must always burst, and this was no exception. The US real economy was showing signs on a slowdown long before the stock market crash. However, on Wednesday October 23rd 1929, a drop in the stock market lost four months of previous gains and the following day panic selling began. This was briefly halted by a meeting of the nation’s biggest bankers who promised to pool their resources to halt the slide. Their efforts however were futile and on ‘Black Tuesday’ October 29th the bottom fell out of the market, giving up all of the gains of the previous year (McNally 2010, p.65). Most economists agree that the great depression that ensued lasted for over ten years. Its economic impact was striking as GNP fell from a peak of $104.4 billion in mid-1929 to $56.6 billion in 1933. Its social impact was even more harrowing as twenty-five percent of the US civilian labour force was unemployed by 1933, the worst point of the  depression (Canterbery 2011, p.18). There are a number of competing explanations as to why the crisis was so severe. Explanations can be grouped into the two categories of monetarist and non-monetarist. For example, in a mixture of the two Ben Bernanke (1983) suggests that there were three interlinked factors that propagated the great depression. The first was the failure of financial institutions, in particular commercial banks. The percentage of failing banks in 1930 was 5.6% jumping to 12.9% in 1933 and this left a situation whereby in 1933 there were half the number of banks that had been operating in 1929 (Ibid, p.259). Bernanke goes on to cite defaults and bankruptcies as key, with the ratio of debt service to national income going from nine percent in 1929 to nearly twenty percent in 1933. This was pervasive across all sectors with home mortgages; farm mortgages, personal debtors and even state governments defaulting on their obligations (Ibid, p.260). However, key to Bernanke’s view was the correlation of the financial crisis with macroeconomic factors. The crux of this view was that the financial crisis affected the macro-economy by reducing the quality of certain financial services, primarily credit intermediation (Ibid, p.263). In line with the monetarist view, it could also be argued that the Federal Reserve did not help matters. Its policy at the time was only to increase the credit base in line with requirements of trade, which essentially meant that as businesses were afraid to borrow, the Federal Reserve did not increase the money supply. Somewhat similar to the monetarist elements of Bernanke’s analysis is that of Friedman and Schwartz (1971,pp. 359-60) who argue that the crisis that originated in the United States was a domestic construct which was prolonged and deepened by a failed policy of failing to cut the discount rate, which meant a failure to provide credit and expand the currency. Kindleberger (1986a) taking a similar monetarist position but focusing more on international factors suggests that the world depression stemmed from reparations and war debt, the overvaluation of the pound, the return to the gold standard in Britain and an undervalued French franc. These factors were aggravated by a fall in commodities and a rise in stocks in New York. From a non-monetarist perspective US government actions were no better, with the introduction of the Smoot-Hawley Tariff in mid-1930, sparking of a wave of protectionist tariffs around the world and a trade war which saw world trade figures nosedive (Canterbe ry 2011, p.19). The  deflationary process was exacerbated by the huge levels of unemployment, which combined with other factors to initiate the ‘multiplier/accelerator’ interaction, reinforced by wage-cut enforced under-consumption as wages fell for manufacturing production workers by at least thirty-one percent between 1929 and 1933, as well as debt deflation and international interactions (Devine 1994, p.166). While this was happening, consumer prices only fell twenty percent during the 1929-33 period. This, as Devine points out helps to explain that falling consumption was a major factor in the decline in GNP during this time, more so than previous or subsequent recessions (Ibid). There are others such as Temin (1976) who suggests that monetarist explanations are wrong, and it was consumption and spending that declined first, therefore leading to a tightening of the money supply. Therefore, it was not monetary factors alone that caused the depression. Taking a different approach to explaining the depth and length of the depression, Kindleberger cites the lack of a lender of last resort as the major factor preventing any form of fast recovery (Kindleberger 1986b, p.4). This he suggests was due to Britain’s inability after the First World War, and the United States’ unwillingness to act in that regard. What each of these arguments above show is there is still no consensus on the policy responses that would have prevented such a deep depression occurring. Such a lack of a consensus has also been a feature of the current global crisis. Since the global financial crisis broke out, many have rushed to make comparisons between it and the great depression. However, before one makes these comparisons, an analysis of the fundamental differences in the nature of the capitalist system between now and then must be undertaken. After the World War boom in output and the post-war move to Keynesian economics, which essentially saved capitalism from self-implosion, the emergence of neoliberal capitalism in the latter 1970s in the form of Reaganism in the US and Thatcherism in Britain ushered in a new era of capitalist development that was distinctly different from its previous incarnations. This period of capitalist modification saw the creation of the era of what Canterbury has termed ‘casino capitalism’ (Canterbery 2011, pp.83-121). He suggests that this era began with three powerful forces converging. These were; monetarism, which Milton Friedman advised Regan would bring down inflation with minimal effect on employment or production, the influence of the  Ã¢â‚¬Ëœneo-Austrians’ who sought to reduce state influence over entrepreneurs through deregulation and finally, the pervasive idea that less taxes on the rich produced the trickle-down effect (Ibid, p.83). Regan’s policies during this era, continued under the Clinton administration gave huge power over to Wall St through deregulation, and contributed to a huge shift from production to financial services. As the financial sector grew its asset base, it became a much bigger part of the national economy. This can be seen in the fact that between 1978 and 2005, the financial sector grew from 3.5 percent to 5.9 percent of the US economy in GDP terms. To put this in perspective, from the 1930s to around 1980 the rate of growth for the financial sector was roughly the same as that of the non-financial sector. However, from 1980 to 2005 financial sector profits grew by eight-hundred percent, compared with two-hundred and fifty percent for the non-financial sector (Ibid, pp.116-117). This form of capitalism, where value and profit are not ‘produced’ but the result of speculation is a form that gives huge power to unelected rating agencies and bankers to set the agenda, which even governments and international institutions find difficult to alter. It was under this system of capitalism that the global financial crisis emerged. Many different arguments for the causes of the global crisis exist and whilst it can be difficult to pin down the exact causality because of its global nature, there is agreement on a number of factors. Just like its sister crisis the great depression, before the global crisis struck, the global economy went through a boom period with the world economy growing at a faster rate between 2001 and 2007 than in any other period in the past thirty years (Wade 2008, p.23). Most agree that the crisis was sparked by the subprime mortgage bubble collapse in the United States. However this spark was not the sole cause of the crisis. Just l ike the great depression, the factors that caused the crisis were numerous. Although signs of an emerging crisis first appeared in 2006-7, it was not until 2008 when banks such as Lehman Brothers were going to the wall and financial assets were crashing that the full extent of the crisis was realised. As a result, flows of credit dried up and economies the world over started to suffer. However, this crisis was not solely a monetary crisis and had deeper dynamics at play. In particular, the financialisation of capitalism being built upon debts as a means of making profit (McNally 2010, p.86). The subprime  mortgage crisis is illustrative of this. For example, in the year 2000 there was $130 billion of subprime lending in the US, backed up with $55 billion of mortgage bonds. Yet by 2005, those figures had jumped to $625 billion in subprime loans backed by $500 billion in securitised bonds (Ibid, p.103). The ‘speculative orgy’, as Galbraith termed it speaking on the 1929 crash, was back with a bang. What exacerbated the orgy more was the creating of innovative financial instruments in the form of credit default swaps (CDS) and other debt securities. For example, by 2006 the CDS on mortgage bonds was eight times the value of the bonds themselves, so when the crisis hit, that wealth was wiped out (Ibid, p.103). The European context experienced similar problems as contagion spread throughout the world economy. Trade imbalances within the Eurozone created by the power of the German economy, in particular its exports produced vast wealth within Germany, generating credit that was more than was required for domestic demand. The result was an outflow of cheap and easy credit to peripheral European states. This in turn with low interest rates created the basis for a speculative property bubble in places such as Ireland and Spain, and a rise in consumer debt across Europe (Avellaneda and Hardiman 2010, pp.4-5). This, coupled with the ECB having light regulatory practices and liquidity responsibilities, and the fact that the Euro project created an quasi-federal state with a centralised monetary and exchange rate policy, but had no fiscal control over individual states led to a disaster of structural design in the Euro which prevented adequate policy responses from individual states, who instead we re burdened with a one size fits all, centralised Franco / German led response. It is clear that the immediate causes of the crisis were centred on â€Å"excessive debt leverage or imprudent lending† (Wade 2008, p.27). Much of this debt leveraging was in the form of the complexly structured credit securities, like the CDS, and when market panic set in following the collapse of Lehman, and this huge default risk pushed investors towards the tipping point. However, as Bernanke (2010) has pointed out, many factors were at play. Although the most prominent was the prospect of losses on the subprime market when the housing bubble burst, the system vulnerabilities as well as shortfalls in government responses explain the severity of the crisis. For example, the â€Å"sudden stop† in June 2007 of syndicated lending of asset backed securities to large borrowers. Other factors included the  overreliance of banks on short-term wholesale funding, deficiencies in private sector risk management, an over-reliance on ratings agencies, excessive leverage on the part of households, businesses and financial firms, statutory gaps in regulation on special purpose vehicles and a failure of existing regulatory procedures worldwide (Bernanke 2010). Although causality had similarities between the United States and Europe, the policy responses to deal with the crisis have been markedly different. Quite early into the crisis, perhaps learning from pa st mistakes from the great depression, the US government approved various Keynesian inspired fiscal stimuli and financial and auto sector bailouts. In particular, the Troubled Asset Relief Program (TARP), a $700 billion rescue fund for the banking sector which bought toxic loans at reduced rates (Nguyen and Enomoto 2011). This policy has been seen to be a relative success with an estimated final cost of $32 billion to the United States taxpayer (Congressional Budget Office 2012). In contrast to this, the European solution has been overwhelmingly austerity based, and the cost of the crisis being mainly burdened by the taxpayers of Europe. In particular, the Irish taxpayer’s bill for the bailout of one bank, Anglo Irish will cost the taxpayer more than the total final cost of the TARP program in the United States. In this regard, it does not seem that lessons from the great depression have been learned in a European context. When we look to the rates of unemployment over the past number of years, it seems like the American policy of stimulus may be working slightly better than the European austerity agenda. For example, in the US unemployment rose sharply after the onset of the financial crisis going from 4.6 percent in 2007, to 7.2 percent in 2008, 9.3 percent in 2009 and 9.7 percent in 2010. However, in 2011 there has been a decline in unemployment to 9 percent (Index Mundi 2012). The European Union (twenty seven members) on the other hand has seen its unemployment rate grow from 8.3 percent in 2006, to 9 percent in 2009 and 9.7 percent in 2011(United Nations Economic Commission for Europe 2012) to a current figure of 11.7 percent (Eurostat 2012). So, how does the global crisis match up to the great depression? It is obvious that there are a number of similarities between the two crises. For example, with both crises there was an extended period of economic growth preceding the crashes. Each of the crisis periods also saw speculative bubbles based on the flow of easy credit  which fuelled both property based and stock market excess. Both crises also saw staggering drops in Industrial production and increases in unemployment. However, there are also key differences between the great depression and the global crisis. Primarily, the nature of the capitalist system has cha nged fundamentally from productive industrialisation to financial capitalisation. The policy responses of governments have also showed that lessons have been learned, especially in the American case, where Keynesianism and central bank intervention has been preferred to the Laissez-faire attitude during the great depression. In a European context, the decision to make taxpayers foot the bill for the losses of financial speculators marks a departure from the policies of the great depression where speculators suffered heavy losses. There are of course other key differences between the two crises in-so-far as although initially the global crisis seemed every bit as bad, if not worse than the great depression, there are now signs that this may not be the case. For example, by measuring from the peaks in industrial production the decline in industrial production in the nine month period from April 2008 was at least as severe as in the nine months following the June 1929 peak (Eichengreen and O’Rourke 2009). Similarly, in that initial nine month period, global st ock markets were falling even faster than in the Great Depression and World trade was also falling much faster than in 1929-30 (Ibid). However the authors of this study have revised their analysis for 2012 and it paints an altogether different picture. The levels of industrial production had shown shoots of recovery over the past couple of years but growth of global industrial output now appears to be slowing. The upturn had been promising, but this follows months when production was essentially stagnant. Notably in the Eurozone, industrial production declined (Eichengreen and ORourke 2012). Since initial early forecasts, global trade had showed signs of recovery â€Å"But trade is now also fluctuating without direction, at levels barely higher than those of April 2008† (Ibid). As the authors also point out, while equity markets have recovered to a large degree compared with their initial drop, â€Å"it is worth observing that world equity markets remain considerably below pre-crisis levels† (Ibid). The somewhat gloomy outlook is confirmed by the latest United Nations ‘World Economic Situation and Prospects’ pre-release document which states; Four years after the eruption of the global financial crisis, the world economy  is still struggling to recover. During 2012, global economic growth has weakened further. A growing number of developed economies have fallen into a double-dip recession. Those in severe sovereign debt distress moved even deeper into recession, caught in the downward spiralling dynamics from high unemployment, weak aggregate demand compounded by fiscal austerity, high public debt burdens, and financial sector fragility (United Nations 2012, p.1). So, although there are signs that the global crisis may not be as severe as the great depression, recent economic forecasts do not suggest that there will be a clear path to recovery in the near future. Capitalism has been proven to be susceptible to crises and cycles of boom and bust. The two cases here have been the most high profile of those crises. It does seem that some of the lessons of the great depression have been learned to reduce the severity of the global crisis. However, only time will tell if these lessons will ultimately stop a double dip global recession and if lessons can be learned from the global crisis for the inevitable next financial crisis that will come down the line.

Is Globalisation A Good Thing For Development Politics Essay

Is Globalisation A Good Thing For Development Politics Essay Globalization: Developmental Boon or Bane? Years ago, globalization was the curious buzzword which was viewed with much optimism by much of the world, including the poor and underdeveloped nations. The merging of the worlds economies promised great opportunities for growth and development especially for Third World economies. Today, there are two prevailing sentiments on globalization: either that globalization has resulted to prosperity for the poor nations or that it has resulted to the prosperity of the rich at expense of the worlds poor (Irogbe, 2005). This paper posits that while globalization have provided a range of benefits for underdeveloped nations, the wheels of globalization has led to the deterioration of national economies, marginalization of the South, cultural homogenization, and intensified international migration. Main Features of Globalization Globalization is a complex process which has many facets: economic, political and cultural. To understand this more concretely, discussed are the main features of globalization from the perspective of the developing world and how it is concretely manifested. Looking at globalization from a Third World lens is crucial to our understanding of it (Yotopoulous Romano, 2007). This is because, when viewed from the perspective of the First World, it is easy to appreciate the obvious benefits of globalization. For instance, globalization has enabled Americans to get hold of a wide range of products and services from all over the world. The margining of the worlds economies have allowed us to enjoy goods previously inaccessible to us because of high cost: for instance, fruits such as pineapples, bananas, and mangoes that is not homegrown in the United States. We can listen to world music, Africa, Jamaican, Latin American, and Arabic rhythms through our iPod all day long. What is not clearly visible to us is how the wheels of globalization impact the farmer in Southeast Asia, the coffee growers in Latin America, and the agricultural workers in Africa. Economic integration While faster interconnected through advanced technology and transportation is the most popular idea about globalization, globalization is a fundamentally economic phenomenon. The economic promise of free trade and free competition was supposedly designed to help Third World economies to gain market access previously impossible to penetrate (Lechner Boli, 2004). This has been true. Underdeveloped countries have been able to export their local products to developed markets unlike in the past (Sen, 2000). However, the bigger picture suggests because of the inherent asymmetries of the worlds economies, globalization also leads to asymmetrical development benefitting the rich countries more than the poor (Yotopoulous Romano, 2007). Economic integration through the merging of the global economies takes on three primary forms: liberalization, privatization, and deregulation (Benyon Dunkerley, 2000). Liberalization is the downgrading of the social goals of national development, combined with the upgrading of participation in the world market (McMichael, 2004, p. 158). This is achieved by reducing and eventually removing the barriers to flow of goods, capital, and services among countries, e.g. the removal of tariffs on agricultural products such as corn, rice, or beef. Deregulation means the reduction of the reduction of the role of governments in regulating trade and production and in providing services (Yotopoulos Romano, 2007). It adheres to the belief that the market is the most efficient and effective determinant of what should be produced and what would be consumed. Privatization in its purest sense means divestiture of state-owned enterprises or SOEs (McMichael, 2004). What used to be an ideological battl e between big government/welfare states and more marketless state has moved into the mainstream economic development debate under the guise of sound economic management and good governance (Benyon Dunkerley, 2000, p. 45). A deregulated market freed from the visible hand of government is the most efficient, less burdensome system that will result in economic progress through foreign investments, so goes the argument. Economic pragmatism and expediency are the main motives for privatizing today, driven mainly by balance-of-payment imperatives and the need to shift the burden of development from the public to the private sector (Leeds, 1990). To drive these three key strategies of economic globalization, two main institutions are responsible: the worlds transnational corporations (TNCs) and the triumvirate of public international financial institutions (Buckman, 2004). The global TNCs hold tremendous influence in global trade because it has control over investment, employment, and trading decisions which surpass the decision-making power of most developing countries. The triumvirate of the the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) act as a global overseer of the processes of economic globalization (Benyon Dunkerley, 2000). In theory, the triumvirate could be held accountable by the worlds governments but in practice, it has become a major global bureaucracy wielding enormous, largely unaccountable influence (Buckman, 2004, p. 87). The global privatization network includes multilateral and bilateral lenders, large MNCs, merchant banks, stockbrokers, accounts and manageme nt consultants, legal firms, marketing, specialist consultants, and think tanks (Leeds, 1990). The TNCs control the lions share of the world trade. The strongest among them, act more cohesively, in close cooperation with their respective governments, to assault or defend markets (Bello, 1997, p. 5). Hence, globalization also means the most intense competition even among industrialized economies. For instance, the United Sates and the business interests it represents stands to gain the most from globalization, which is why it has tried to dominate both the GATT-WTO and the APEC (Benyon Dunkerley, 2000). While imposing unilateral measures to protect its own market, the US is trying to prevent other countries from acting in the same way by invoking the principles of free trade. On another plane, many Northern governments, despite the neoliberal ideology of reducing the role of the state in economic matters, still heavily subsidize their agricultural products. These then become very ch eap and when dumped into the markets of developing countries, local products cannot compete. This explains why farmers in Chile, Latin America, South Asia, and Southeast Asia have experienced destruction of their local economies such as in textile, transport, and even agriculture (Bello, 1997; McMichael, 2004). Political marginalization Globalization has also resulted to the political asymmetries leading to the marginalization of the South. Globalization has proceeded under the premise that modernization is the key towards the genuine development of the Third World. However, the dependency theory of development suggests that modernization will only lead to increasing domination of the major world economic players to the detriment of the poor nations. The basic decisions in global trade are still influenced by the dominant countries, leaving dependent nations with few choices because the parameters have already been set by the former (Willis, 2005). It is in the South where globalization as a political process really reduces the role of the nation state in terms of deciding the direction of development through macro-economic policies. Parallel to this is the qualitative strengthening of the institutions of global economic governance (Bello, 1997, p. 8). The main mechanism for this has been the debt trap, whereby highly indebted countries are compelled to undergo structural adjustment programs (SAPs) in exchange for more loans. The SAPs comes in the benign form of development loans from the World Bank but with them come harsh conditions or impositions on the developing nations to abandon crucial social services and domestic programs that benefit their local population. SAPs include having governments abandon health services, education, and environmental programs which are not profitable and hence, cannot be used to replay World Bank and IMF loans and interest. Eventually, this leaves countries solely dependent on the market as we ll as pricing systems well beyond their control. Essentially, the political process of globalization renders countries powerless over the fate of their national economies (Bello, 1997). Cultural homogenization Globalization leads to a borderless world, one which erases political and geographical borders, essentially making countries operate and act similarly. As a consequence, culture is also gradually being erased as the development of a global culture emerges (Norberg, 2003). Because of globalization, local products, cultures, and services disappear into this global culture one that is shaped and defined by the worlds economic and political powers. Critics have referred to this phenomenon as the McDonaldization of the world (Buckman, 2004). Globalization has also penetrated the sphere of culture and ideology. Cultural influences from the North are transmitted through the media whose impact is intensified by the spread of television, the use of the World Wide Web, computer products, and other technologies (Cohen Kennedy, 2007). The process of cultural homogenization or the fashioning of one global culture is presently ongoing. Aside from creating an insipid culture, it has also forced people to redefine their lives to promote this global culture. In order to make Nike shoes, designer clothing, and computers, poor Filipino and Indonesia farmers are forced to abandon their way of life to provide these consumer goods (Irogbe, 2005). Moreover, the environment is being degraded in order to provide room for giant farms for TNCs and ancestral lands of the indigenous peoples of the world are being plundered by mining TNCs (Bello, 1997). While the Internet has provided wider democratic space and a venue for greater cultural exc hange, the increasing homogenization of culture through the Internet has also created greater insecurity (Cohen Kennedy, 2007). International migration Globalization also means the waves of migration in search of better earning opportunities. With the relative ease in transportation and communication, the number of international migrants has approached staggering levels (Lechner Boli, 2004). Aside from the migration of people, jobs have also been shipped off to Third World economies a contentious issue for First World nations because industries are slowly dying in the latter because business processes are outsources to countries like India, the Philippines, and China. This has created tensions among the workers of the First World countries (Bello, 1997). Moreover, an increasing concern of globalization is the globalization of the sex trade. Women and girls are being trafficked across national borders for the purpose of prostitution (Irogbe, 2005). Conclusion Globalization has several implications on the world and not all of them are negative. It has been an important engine of growth for many poor countries (Norberg, 2003; Sen, 2000). Access to trade and foreign markets, more democratic structures of communication through technology, are some of its benefits. Nonetheless, as a result of intense competition of the economies and the inherently asymmetrical political and economic conditions of countries, the economic development now rest on the decision-making powers of a few nations, leaving poor countries dependent.

Selling Your Used Car Essay -- essays research papers fc

Process Essay Thesis: The majority of the American population has very little, or no understanding of the used car trade. A simple understanding on when and where to sell, how to get your car ready, writing a classified ad, negotiating, and making a contract.   Ã‚  Ã‚  Ã‚  Ã‚  With consumer demand rising and supply constrained by several factors, including the tendency of new-car owners to hang on to them longer, prices for used vehicles have been climbing steadily. According to one recent study, nearly three times as many shoppers now want to buy a used, rather than a new, vehicle. (Dalglish)   Ã‚  Ã‚  Ã‚  Ã‚  In trying to find the perfect buyer, your options include: new-car dealers, used-car dealers, and friends and strangers. New-car dealers are generally eager and ready to buy. They are incredibly picky about every aspect of a car’s condition. New-car dealers will be choosy about the make and model, preferring newer models in relatively good condition.(Makower) They will pay a relatively low price for the car. Used-car dealers are also eager to buy and incredibly picky about every aspect of a car’s condition. But they aren’t very choosy about the cars they buy. However, they will pay a rock-bottom price for the car. Friends and strangers are usually eager and ready to buy. They will be much less picky, and rely more on your word for information. They will be choosy about the car, but will already be interested in the car through your ad. You will get the best price, through negotiations, but you have to work harder. The best time to sell is in t he springtime when the weather turns nice. Other good times are in September when kids are going off to college; and in the dead of winter, when there is no competition.   Ã‚  Ã‚  Ã‚  Ã‚  It is possible to turn the average used-car into a saleable commodity in just a few hours. You should dress up your car, regardless of the condition you normally keep it in. You want to make it clean, neat, and even smelling nice. You must do this to the entire car, inside and out, from one end to the other. Most car buyers understand that appearance is a good indicator of how well someone treated the car overall. Nine important steps to take are: washing and waxing, painting and touching up, cleaning your tires, a thorough cleaning of the interior, gather all the important documents, steam... ...importantly, make copies of everything you sign. The bill of sale is the basic car-buying document that records the transaction. The following should be included: the date of the sale, year and make and model of the car, state registration, VIN number, odometer reading, amount sale is for, extra conditions, and the buyer’s and seller’s names and addresses and phone numbers. Make sure that each party gets a copy of the bill of sale.   Ã‚  Ã‚  Ã‚  Ã‚  A large percentage of the population uses the automobile regularly. The majority of the population, over 90%, has little or no understanding of the car buying art. (Robertson) Many people feel that selling their car themselves can be a real hassle. But, if you can realize that you will get several hundred dollars more than what a dealer might offer you, it just may be worth a little effort and time on your part. Works Cited Dalglish, Brenda. â€Å"Better Than New: used-car prices jump as consumer demand grows.†   Ã‚  Ã‚  Ã‚  Ã‚  Maclean’s 10 Jul. 1995: 22-24 Makower, Joel. How to Sell a Used Car. New York: Perigee Books, 1988. Robertson, C.B. How to Deal on an Automobile. Lyons: Blue Mountain Publisher, 1988.

Willy Russells Educating Rita :: Educating Rita Autobiography Social Class Essays

Willy Russell's Educating Rita Educating Rita was a play, which was written by Willy Russell. The book is a semi autobiographical story about a woman who has achieved nothing in her life and wants to get an education before it is too late. She is being forced to have a baby by her husband Denny and regrets not getting any qualifications. With a lack of learning she had only hairdressing to turn to. She started to feel like she was just another person in a crowd, nobody special at home so she starts a literature course at the Open University. Where she is given Frank as a tutor. Frank teaches her literature. She is an outcast to begin but it doesn’t take long before she becomes a stereotypical student sitting on the lawn. Frank is a middle-aged man, divorced but not single. His girlfriend Julia who we find cheating on him. As an English Lecturer and former poet, he understands the deeper meaning behind literature, but he can’t remember it half the time because of his little drinking problem. The character of Rita was based on the writer’s own life and experiences. They both grew up outside Liverpool with a poor education and a lack of qualifications. They both set off to change their lives. Rita became a student while Willy Russell lived his dream of being a writer. In act 1 Rita is introduced. She is shown to be loud and outwardly confident. An example is her use of inappropriate, crude language. When she sees a piece of artwork hanging on Frank’s office wall she says â€Å"look at those tits†. This quote expresses her attitude and gives you the impression she is loud and always speaks her mind. Her approach to Frank’s sophisticated reality is crude and shocking. â€Å"That’s ‘S’ for Susan. Its not me real name. I’ve changed it to Rita though† This is the funny side of Rita. She is made out to be entertaining and funny to make the audience laugh. When misunderstanding Frank’s comments her words are twisted into an inappropriate language. This shows her lack of education and her completely different approach to literature, her experiences are only reading pulp fiction books.. This lack in education causes her social status around school to be very low. She wants to be like the other students and knows it will take a lot of work to get there. The audience sees that she is aware of her academic limitations and knows the change will have to come from within â€Å"†¦ they come to the hairdressers cos they wanna be changed, but if you want to change y’

Best Snacks Problem Solution

Running head: PROBLEM SOLUTION: BEST SNACKS INC. Problem Solution: Best Snacks Inc. Taleish M. Daniels University of Phoenix Problem Solution: Best Snacks Inc. â€Å"Best Snacks, Inc. , a 150-year-old company which has been held publicly for more than 100 years, has traditionally held the number one or two positions in the snack market, providing an excellent and stable investment for stockholders. But in the past several years, Best Snacks sales have been slipping, market share has decreased and, particularly in the past two years, stock prices have taken a dive. This year, the company will finish a very weak second, and with several smaller competitors emerging as major players in the snack industry, Best Snacks is in danger of losing its long-held premier standing in the snack market,† (University of Phoenix, 2010,  ¶ 2). In addition to these issues, the employees at Best Snacks are unsettled and feeling as if management does not value their opinions and has not done a good job of promoting innovation. In order to succeed, Best Snacks must tackle the challenges of its failing product line as well as find a way to bring the internal climate with employees back to a state of resolution. Describe the Situation Issue and Opportunity Identification Best Snacks is facing a number of issues. Declining sales, complacency, and a lack of motivation within the employees due to the absence of manager support have all contributed to the current state. By taking a close look at its competitors and studying other successful organizations the leadership at Best Snacks can retain some of its previous success. Capitalizing on the new changes in leadership, Best Snacks has the opportunity to restructure their organization in a way that will foster an environment of creativity and innovation. As stated, both sales and market share at Best Snacks has seen a decline. The opportunity presented is for the leadership at Best Snacks to evaluate the organization’s current process to determine how they can keep up with the competition. A radical innovation is a significant change that simultaneously affects both the business model and the technology of a company. Radical innovations usually bring fundamental changes to the competitive environment in an industry, (Davila, Epstien, & Shelton, 2006, p. 51). Contributing to the declining sales is the fact that there have been no product or service innovations in the past five years; instead, previously successful marketing methods have been improved or extended. Successful organizations tend to become complacent and conservative in order to preserve their core competencies—those things that lead to their success. This is logical and largely advantageous in the short-term. Paradoxically, the things that led to their success could be the very things in the long-term that pull them into failure, (Davila, Epstien, & Shelton, 2006, p. 239). By designing new marketing methods that are completely different from anything that has been done before, Best snacks can return to their customer base with a fresh approach that will draw people to their products. A learning organization is an organization that purposefully designs and constructs its structure, culture, and strategy so as to enhance and maximize the potential for organizational learning (explorative and exploitative) to take place, (Jones, 2004, p. 377). Currently many employees at Best Snacks do not understand the importance of innovation and have forgotten how to develop and implement creative ideas. Most of this stems from the fact that managers do not support creativity and innovation, another issues facing Best Snacks. Employees believe that they are not supported in their ideas and independent thinking. One of the key roles of the CEO is to make innovation part of the culture of the company. The CEO needs to make certain that collaboration occurs and becomes part of the culture. Steve Jobs works this critical cultural angle at Apple by being the clear leader of innovation and pushing hard to ensure that there is effective collaboration between the technology and business folks, (Davila, Epstien, & Shelton, 2006, p. 58 & 259). The leadership at Best Snacks should use this opportunity to support and encourage organization learning, developing culture that is ripe for innovation through leading by example and pushing for employees to come up with new ideas. Stakeholder Perspectives/Ethical Dilemmas Though Best Snacks is facing a number of issues, three main stakeholder perspecti ves and ethical dilemmas have been identified. The first is between Best Snacks and the competition. Both Best Snacks and its competing businesses have a vested interest in their individual corporations. Each would like to be the number one holder of sales and market share in their industry. In their quest to be number one, it is the responsibility of each organization to utilize fair business practices, and conduct themselves with honesty and integrity. Another stakeholder perspective is the leadership of Best Snacks versus their employees. The employees at Best Snacks feel that leadership does not value their opinions and has not created an environment open for innovation and creativity. Though management sees the need for employees to develop a creative mindset, they are unsure about the best ways to utilize those skills. Both management and the employees need to be honest about what they’re needs and expectations are. Opening the door to communication will allow them to work together as a unit. Management has the responsibility to treat employees with fairness and respect, understanding that although their titles may be lower in rank, their opinions and desire to grow the organization is what will ultimately lead Best Snacks into their next phase of success. The last ethical dilemma that was identified is Best Snacks versus itself. As a corporation, Best Snacks is rightfully concerned that they are seeing a significant decrease in sales. In their quest to retain success, Best Snacks must be careful to not violate any copyright infringement laws while studying their competition and creating their own new products. Frame the â€Å"Right† Problem Best Snacks will become a leader in the snack industry once again by promoting creative and innovative learning within the organization that will inspire a new product lines and allow them to compete with the competition. Describe the â€Å"End-State† Vision Best Snacks held on to its top position in the snack industry by promoting innovation within their organization. Though the industries may vary, the characteristics of innovative organizations are often similar. Studies have shown that innovative workplaces share six cultural characteristics: context rich, customer close, confidence building, curious, challenging, and collaborative, (Daniels, 2010). Innovative organizations have leaders that cultivate creativity by allowing employees to be themselves and encouraging the development of new ideas. Brainstorming and team building activities play a large part in how these companies create, (Daniels, Watts-Holley, Mobley, & Rauschenbach, 2010). Capitalizing on these traits, Best Snacks was able to energize their employees and push for organizational learning, and team building that enabled them to create new product lines, modernize the previous products therefore maintaining their previous customer bases as well as capturing a new audience. Identify the Alternatives and Benchmarking Validatio Based on the opportunities given, three main alternatives have been identified. First, instead of promoting organizational learning, management can select a few employees for individual learning. Managers would select employees to serve on special teams. There’s team members would then go through a series of individual and group learning to implement programs within the organization. Another alternative is for previous marketing methods to be revisited in an effort to appeal to the standard customer base. Leadership at Best Snacks can attempt to capture their previous success by reconnecting with their audience through an analysis of what has worked in the past. The third alternative identified is to make no radical changes, choosing to stick with incremental or semi-radical innovation. By utilizing incremental innovation, Best Snacks can wring out as much value as possible from existing products or services without making significant changes or major investments. Semi-Radical Innovation on the other hand involves substantial change to either the business model or technology of an organization—but not to both, (Davila, Epstien, & Shelton, 2006). Evaluate the Alternatives In Table three there were two goals that were ranked at a number five. The first goal, design new marketing methods that are completely different from those of the past was chosen to stimulate creativity within the organization. Best Snacks has already spent and ample amount of time redeveloping ideas of the past and needs a fresh approach to capturing their audience. The second goal that was ranked at a number five is for the management to promote organizational wide learning. One of the reasons Best Snacks is in the position they’re in is because at some point the organization stopped learning. Management began to discourage the innovation and creativity that once the key to the company’s success. As a result, the entire team at Best Snacks; employees as well as management need to go back to square one in learning the organization, its customers and products. Narrowed List of Alternatives The best alternative chosen are to revisit the previous marketing methods to capture some of the past product success, and to implement semi-radical change. Although it is clear based on the goals that it would be best for Best Snacks to make a complete 360 degree turn around with their business structure and approach to marketing, the cost of doing so could defeat take a toll on the company’s finances due to its declining sales. As a result, it may be better for the organization to take things slow implementing only a semi-radical change program and revamping some of the previous marketing methods. Due to the fact that the organization was highly successful not too long ago, it may be worth taking a look at some of the processes that were in place during that time, examining whether or not success can be generated by reinventing the wheel as opposed to starting over completely. Identify and Assess Risks The remaining alternatives; select a few employees for individual learning and implement incremental change have been identified as having too many risks to utilize in the future plans of Best Snacks. In selecting just a few employees, the leadership does not tackle the real issue of ensuring that innovation is stimulated on an organizational wide scale. It seems that an incremental change approach is what put Best Snacks in the position that they are in now. In only considering the bottom line while ignoring the significant changes that needed to be made in the product lines and processes has cost the organization in sales. With both alternative, Best Snacks runs the likely chance that no changes will be made, leaving the organization to continue its decline. Make the Decision Best Snacks will utilize radical innovation to develop customized, strategic marketing plans for their current product lines and formulate teams within the organization to design new products. Management and employees will work together to energize not only each other but the customer with anticipation of what’s to come. Creative advertising campaigns, team building exercises, and consistent attention to employee needs by management will position Best Snacks in the upper echelon of the snack industry. Founded in 1998, Google has obtained success by being one of the most innovative internet search engines in the world. The company name, Google is in fact a play on the word â€Å"googol,† the mathematical term for a 1 followed by 100 zeros. The name reflects the immense volume of information that exists, and the scope of Google's mission: to organize the world's information and make it universally accessible and useful, (Google, 2010). With over 150 domains in different names and languages, advertising applications, and a phone, and its own internet browser, Google Chrome, the leadership and employees at Google are constantly coming up with new ideas on how to make their existing products better and challenging themselves to create new products that will speak to their consumer needs. Google’s philosophy is embedded with a number of approaches to the principles of their organization and how they will conduct business. Specifically when it comes to design the company believes: 1. Focus on people – their lives, their work, and their dreams. . Every millisecond counts. 3. Simplicity is powerful. 4. Engage beginners and attract experts. 5. Dare to innovate. 6. Design for the world. 7. Plan for today's and tomorrow's business. 8. Delight the eye without distracting the mind. 9. Be worthy of people's trust. 10. Add a human touch, (Daniels, Watts-Holley, Mobley, & Rauschenbach, 2010). In capitalizing on the success of organizations such as Google and the competing snack corporations, as well as returning their focus back to the people, Best Snack will move into the future retaining their top slot as an industry leader. Develop and Implement the Solution In order to develop and implement the solution, Best Snacks must be strategic in their next steps. To take place immediately, Elizabeth Fairchild must devise a conflict management plan for employees and managers to have better communication. In order for innovation to thrive employees must first iron out the issues they have amongst each other as well as management. Getting the problems out on the table will be the first step to opening the door to communication needed for innovation and creativity. Within the next ninety days, Sabrina McKay will develop a plan for team brainstorming. Working with Elizabeth Fairchild, a plan for organizational learning will be put into place to stimulate the employees and get them thinking about what’s next for the organization. Within six months, new product lines should be developed. These lines will be a culmination of the ideas of each person from the management team as well as the employees. Evaluate the Results External success for Best Snacks will be measure by evaluation of the next quarter sales and earnings. Because the ultimate goal of the organization is to increase sales and market share in an effort to remain competitive in the industry, short term review goals are deemed best for a clear understanding of whether newly implemented marketing ideas and approaches are working. There are certain marketing elements every (startup) entrepreneur should track to grow and become more profitable. The key indicators are leads generated, leads converted, average dollar per transaction and average number of transactions per customer. Though the notion of tracking may feel like overkill, focus and improvement spring from the habit of constant measurement. In creating a baseline, it will be much easier to focus the strategies and actions on the right areas of the business, (Jantsch,  2009). Internal measurements for determining success will be to administer another company-wide survey and small focus groups. Leadership must remain in constant communication with the Best Snack employees to ensure that most, if not all needs are being met and that satisfactions with encouraging innovation and creativity amongst employees is felt. Conclusion Best Snacks has the potential to maintain its position in the snack industry. Though the situation looks bleak, it is not as bad as it seems. The main issue for Best Snacks is that they’ve never been in this space before. As long as management uses this opportunity to grow and learn the ills of complacency the organization should be able to avoid being placed in this position again. References Daniels, T. , Watts-Holley, J. , Mobley, A. , Rauschenbach, L.. (2010). Best Snacks Benchmarking Worksheet. Retrieved from MMPBL550 – Creativity, Innovation, and Organizational Design website. Davila, T. , Estien, T. J. , & Shelton, R. (2006). Making Innovation Work: How To Manage It, Measure It, and Profit From It. Upper Saddle River, NJ: Wharton School Publishing. Jantsch, J. (2009). 4 Metrics For Measuring Success: 4 key metrics can help you determine if your brand-building is working. Retrieved from http://www. entrepreneur. com/magazine/entrepreneur/2009/february/199732. html Jones , G. (2004). Organizational Theory, Design, and Change (4th ed. ). Upper Saddle River, NJ: Prentice-Hall, Inc. University of Phoenix. (2010). Best Snacks Scenario. Retrieved from University of Phoenix, MMPBL550 – CREATIVITY, INNOVATION, AND ORGANIZATIONAL DESIGN website. Table 1 Issues and Opportunities Identification | | | |Issues |Opportunities |Reference to Specific | | | |Course Concept | |Best Snacks sales have been slipping, market|Evaluate the organization’s current |A radical innovation is a significant change that | |share has decreased |process to determine how they can keep up |simultaneously affects both the business model and the | | |with the competition. |technology of a company. Rad ical innovations usually | | | |bring fundamental changes to the competitive | | | |environment in an industry, (Davila, Epstien, & | | | |Shelton, 2006, p. 51). |There have been no product or service |Design new marketing methods that are |Successful organizations tend to become complacent and | |innovations in the past five years; instead,|completely different from anything that |conservative in order to preserve their core | |previously successful marketing methods have|has been done before. |competencies—those things that lead to their success. | |been improved or extended | |This is logical and largely advantageous in the | | | |short-term. Paradoxically, the things that led to their| | | |success could be the very things in the long-term that | | | |pull them into failure, (Davila, Epstien, & Shelton, | | | |2006, p. 239). | |Not many people seem to understand the |Management can promote learning within the|A learning organization is an organization that | |importance of innovation. Worse, they seem |organization. |purposefully designs and constructs its structure, | |to have forgotten how to develop and | |culture, and strategy so as to enhance and maximize the| |implement creative ideas. |potential for organizational learning (explorative and | | | |exploitative) to take place, (Jones, 2004, p. 377). | |Employees feel that creativity/innovation is|Management can develop a culture that is |One of the key roles of the CEO is to make innovation | |not encouraged and that their ideas are not |ripe for innovation through leading by |part of the culture of the company. The CEO needs to | |supported by management. |example and pushing for employees to come |make certain that collaboration occurs and becomes part| | |up with new ideas. |of the culture. Steve Jobs works this critical cultural| | | |angle at Apple by being the clear leader of innovation | | | |and pushing hard to ensure that there is effective | | | |collaboration between the technology and business | | | |folks, (Davila, Epstien, & Shelton, 2006, p. 258 & | | | |259). | Table 2 Stakeholder Perspectives and Ethical Dilemmas | |Stakeholder Perspectives and Ethical Dilemmas | | | | | |Stakeholder Groups with Competing | | | |Values |The Interests, Rights, and |The Ethical Dilemma Based on the Competing | | |Values of Each Group |Values | |List: Group X | | | |versus Group Y | | | |Best Snacks vs. the competition |Both Best Snacks and the competition have a vested |It is the responsibility of each organization | | |interest in their individual corporations. Each would |in their quest to be number one to do utilize | | |like to be the number one holder of sales and market |fair business practices, and conduct themselves| | |share in their industry. |with honesty and i ntegrity. | |Best Snacks Leadership vs. he |The employees at Best Snacks feel that leadership does |Both management and the employees need to be | |employees |not value their opinions and has not created an |honest about what they’re needs and | | |environment for open innovation and integrity. Though |expectations are. Opening the door to | | |management sees the need for employees to develop a |communication will allow them to work together | | |creative mindset, they are unsure about the best ways |as a unit. Management has the responsibility to| | |to utilize those skills. treat employees with fairness and respect, | | | |understanding that although their titles may be| | | |lower in rank, their opinions and desire to | | | |grow the organization is what will ultimately | | | |lead Best Snacks into their next phase of | | | |success. | |Best Snacks vs. tself |As a corporation, Best Snacks is rightfully concerned |In their quest to retain success, Best Snacks | | |that the y are seeing a significant decrease in sales. |must be careful to not violate any copyright | | | |infringement laws while studying their | | | |competition and creating their own new | | | |products. | Table 3 Analysis of Alternative Solutions [pic] Table 4 Risk Assessment and Mitigation Risk Assessment and Mitigation | |Alternative |Risks and Probability |Consequence and Severity |Mitigation Techniques and Strategies | |Select a few employees for |By selecting only a few employees |The organization may find itself | Instead of managers randomly selecting| |individual learning |for individual learning, Best Snacks|in the same position as right now,|employees, they could ask for | | |leadership will have only barely |it is clear that not enough |volunteers, or use a mixture of | | |touched the issue of many not |employees understand the process |experience and tenure to make the | | |understanding creativity and |of innovation to a point where |selection | | |innovation. |they can move the company forward. | | | |Also, in selecting only a few | | | | |employees issues of favoritism and| | | | |feeling left out could occur | | | | |amongst workers. | | |Implement Incremental change |Though incremental innovation would |Utilizing incremental change could|Instead of incremental innovation, Best| | |save the company money it would not |put Best Snacks back in the same |Snacks should utilize another approach | | |address the most important issue of |position. that would allow them to tackle the | | |stimulating creativity and | |core of the issues. | | |innovation within the employees. | | | | |This would cost the company in the | | | | |long run as they run the risk of | | | | |continuing the sales decline. | | | Table 5 Pros and Cons of Alternative Solutions Alternative |Pros |Cons | |Revisit previous marketing methods to capture |Methods used during the company’s most |These methods are old and no longer appeal to | |past success |successful times have a lready been tested |the target audience – the reason Best Snacks is| | | |in their current state | |Implement semi-radical change |Extreme change will be made to certain portions|Best Snacks is no longer in a position where | | |of the organization. |small changes are acceptable. They need fast, | | | |extreme change to catch up to the competition | Table 6 Optimal Solution Implementation Plan |Action Item Deliverable |Timeline |Who is Responsible | |Develop a plan for team brainstorming and innovation|90 days Sabrina McKay | |Create new product lines |6 months |Sabrina McKay, Bill Santoro, Jennifer | | | |Heartwell, Martin Hernandez, Dale Chin | |Devise conflict management plan for employees and |Immediately |Elizabeth Fairchild | |managers to have better communication | | | Table 7 Evaluation of Results |End-State Goals |Metrics |Target | |Management and employees will develop and |Employee survey |85-90% satisfaction | |maintain open communication. | | |Best Snacks increa se sale and market share. |Industry reports |70% increase | | | | | | | | | | | | |

Auerbach Enterprises Manufacturers Essay

In today’s very competitive business environment, it is imperative that organizations choose the most appropriate and effective overhead rate, particularly, because it guides management in its tasks of product pricing, job costing, and budgeting. Businesses can use the single company-wide method or can opt for the departmental method. Auerbach Enterprises manufactures air conditioners for many makes of both automobiles and trucks. The two main products are MaxiFlow and Alaska. Currently, the company uses a company-wide predetermined overhead (OH) rate but is considering using departmental OH rates in the upcoming year. Company-wide OH rates allocate expenses across the entire enterprise. This rate is figured by dividing the total cost of overhead by cost drivers common throughout each department. According to Schneider (2012), â€Å"Department OH rates are calculated for each separate department by dividing the total department overhead budgeted by the budgeted amount of comm on cost drivers within the department† (p. 3.3). Moreover, Auerbach Enterprises is trying to make a determination as to whether it would be more appropriate to use the company-wide predetermined overhead rates, or whether it would be more appropriate to switch to using departmental overhead rates. As such, this paper will be making calculations to determine the most appropriate overhead costing rate method; according to Brunton (1998): The easiest method is to apply the plant-wide, or blanket rate. Parts are valued at a proportionate share of indirect costs according to some predetermined base. One disadvantage of this method rises when production processes differ significantly for different parts.  Parts processed in departments that have low overhead expenses are valued and priced proportionately the same as parts produced in departments with high overhead expenses. A second disadvantage is that all parts do not necessarily carry a portion of indirect cost as part of their value because one base is used in the allocation process (p. 22). Further, a determination should be made concerning whether one product is affected more than the other by using departmental rates rather than a company-wide rate. Computation of departmental OH rates using machine hours as the cost driver. Department OH Costs / Machine Hours = Department OH Rate Radiator parts fabrication $80,000 /10,000 = 800% Radiator assembly, weld, and test 100,000 /20,000 = 500% Compressor parts fabrication 120,000 /5,000 = 2400% Compressor assembly and test 180,000 /45,000 = 400% Total 480,000 80,000 4100% Computation of company-wide overhead rate using machine hours as the cost driver. Company-wide OH cost = 480,000 Total machine hours =80,000 Company-wide OH rate 480,000/80,000 = 6.00 AUERBACH ENTERPRISES 4 Computation of the overhead costs per batch of MaxiFlow and Alaska assuming: (a) The company-wide rate (b) The departmental rates. Maxiflow 6.00 x 116 = 696Alaska 6 x 164 = 984 a) MaxiFlow 696/20 = 34.8Alaska 984/20 = 49.2 b) MaxiFlow 1246/20 = 62.3Alaska 954/20 = 47.7 Departmen MaxiFlow hours Department OH rate Department cost Radiator parts fabrication 28 x 8.00 = $ 224.00 Radiator assembly weld and test 30 x 5.00 = 150.00 Compressor parts fabrication 32 x 24.00 = 768.00 Compressor assembly and test 26 x 4.00 = 104.00 Total 116 41.00 1,246.00 Department Alaska hours Department OH rate Department cost Radiator parts fabrication 16 x 8.00 = $ 128.00 Radiator assembly weld and test 74 x 5.00 = 370.00 Compressor parts fabrication 8 x 24.00 = 192.00 Compressor assembly and test 6 x 4.00 = 264.00 Total 164 41.00 954.00 Computation of the OH costs per unit of MaxiFlow and Alaska assuming: (a) The company-wide rate & b) departmental rate. MaxiFlow Departmental Rate Company-wide Rate Direct materials $ 135.00 $ 135.00 Direct labor $ 75.00 $ 75.00 Overhead 62.30 34.80 Total unit costs 272.30 244.80 Alaska Departmental Rate Company-wide rate Direct materials $ 110.00 $ 110.00 Direct labor 95.00 95.00 Overhead 47.70 49.20 Total unit costs 252.70 254.20 Is one product affected more than the other by use of departmental rates rather than a company-wide rate? Why or why not? Indeed, the ability to remain competitive lies in how well a company implements cost-cutting solutions within its organization. Accordingly, based on the total unit cost, MaxiFlow appears to be affected more than Alaska by using the departmental rate. Using a company-wide OH rate is better suited for an enterprise that manufactures a single product. Since Auerbach has multiple departments and manufacturing sections, a more accurate overhead rate can be calculated using the departmental OH rate method. Additionally, it is very interesting, and no less compelling that company such as this uses machine hours instead of direct labor as the cost driver to assign overhead cost; this, in and of itself strongly suggest that it is a company which the majority of its manufacturing is done by machine and not by physical labor. This is expressed by Novin (1992) in the following excerpt; he states: Direct labor no longer may be the most effective base for applying factory overhead costs to various jobs and products. With today’s highly automated systems, labor-related costs constitute only a small portion of total manufacturing costs, and overhead costs now correlate more with factors such as machine hours and material quantities. Accordingly, many companies are beginning to identity application bases that better reflect the causes of overhead costs in their unique manufacturing environments (p. 40). Indeed, regardless of whether a company opts to use the company-wide overhead rate, or the departmental overhead rates, the effectiveness of those various systems, to a large extent, depends on the type of organization that utilizes them. This is expressed by Boer & Jeter (1993), wherein they state, â€Å"†¦manufacturing cost structures have been changing slowly over time, but sufficient variation across industries exists in the extent and nature of the changes to suggest that no single approach to structuring cost accounting systems is likely to be optimal for all industrial organizations or sectors† (pp. 5, 61). In  conclusion, Auerbach compiled planning information in an attempt to determine if it would be beneficial to change from a company-wide predetermined overhead rate to a departmental overhead rate. This is important because choosing the most appropriate rate helps management in the budgeting, job costing, and product pricing process. Essentially, it all amounts to the bottom line of a company choosing the method that provides the most accurate results for its business success. References Boer, G., & Jeter, D. (1993). What’s new about modern manufacturing? empirical evidence on manufacturing cost changes. Journal of Management Accounting Research, 5, 61. Retrieved from http://search.proquest.com/docview/210171196?accountid=32521 Brunton, N. M. (1988). Evaluation of overhead allocations. Management Accounting, 70(1), 22. Retrieved from http://search.proquest.com/docview/229737200?accountid=32521 Novin, A. M. (1992). Applying overhead: How to find the right bases and rates. Management Accounting, 73(9), 40. Retrieved from http://search.proquest.com/docview/229742735?accountid=32521 Schneider, A. (2012). Managerial Accounting: Decision Making for the Service and Manufacturing Sectors. Bridgepoint Education: San Diego, CA.

One Shot Society Essay

As the great Colin Powell said, â€Å"There are no secrets to success. It is the result of preparation, hard work learning from failure. † People’s success in life is determined by their sacrifice and hard work while young. We can go back in time and arrange every error we commit, meaning that we only have one opportunity in life. My essay will talk about the differences between Hondurans and South Koreans in terms of effort, opportunities, demands and expectations. Countries such as South Korea take very seriously the academic part of life in order to succeed in every aspect of it. Since early people grow with this way of life in which giving every inch of effort counts. Parents lead their children with strict habits of studying instead of doing other activities. Society demands youth to get well prepared for life and they have to respond by demonstrating it in their academic life. The results of studying and being dedicated shows when preparing for college. For example, admissions test for college is a day where society paralyzes, because this is crucial, this is the only shot they got to start with the right foot and have a decent life for probably the next 60 years. If people are not enough dedicated, they will have more difficulties in life. Koreans are usually hard working by nature; they don’t need to be told what to do, they work for it and at the end everything pays. On the other hand we have Honduras, a poor country where society has low demands on individuals; A country where goods are not fairly distributed. Not everyone in the country has opportunities to succeed, if people do not have money, even if they have the desire of giving everything in academics, opportunities do not present. Public education is very poor. Only the social class that can pay has a fair higher education. Academics is not something primary and society’s demand are not so harsh on young people. Even if youth doesn’t have a fine education after high school they can probably find a way out and earn money and because of this reasons not every student gives all their effort. Opportunities present to the ones who know wealthy people and government figures. The majority of Hondurans are not hard working people and society doesn’t give that much opportunities. These two countries are very different in almost every aspect but have similarities on a few. South Korea is a rich powerful country where every kid has to be very dedicated to their studies in order to succeed, young people usually study until 4 and then go with tutors, and meanwhile few Honduran kids are dedicated because of the poor society demands. Schools end about 2 or 3, then do a couple of homework and that’s it. 00% of South Korean parents want their children to get to college, while not every Honduran parent sees college as a mandatory thing to do. The level of work in South Korea surpasses Honduran one and the results show in the evolution as a society and as a country. The little similarity between these two countries is that not so much work opportunities are presented for people who study, making it hard for some people to succeed. In conclusion people should take advantage of that one shot life gives us even if we are in different countries.  To make a difference and overcome difficulties people have to be hard workers to demonstrate society our capacities and accomplish our life goal, which I think for the most is having a wealthy life. Rich countries such as South Korea evolve because of their work, even if this means doing sacrifices and passing through lots of stress. At the end results will show and society will grow. â€Å"Those who have everything given to them become lazy, selfish, and insensitive to the real values of life. The very striving and hard work that we so constantly try to avoid is the major building block in the person we are today†.