Financial Crisis Recovery Essay Example for Free

Financial Crisis Recovery Essay 1997-1998 Financial Crisis The weaknesses in Asian financial systems were at the root of the crisis that caused largely by the lack of incentives for effective risk management created by implicit or explicit government guarantees against failure. The weaknesses of the financial sector also were masked by rapid growth and accentuated by large capital inflows, which were partly encouraged by pegged exchange rates. In the mid-1990s, a series of external shocks began to change the economic environment the devaluation of the Chinese Renminbi and the Japanese Yen, rising of U. S. interest rates which led to a strong U.S. dollar, the sharp decline in semiconductor prices; adversely affected their growth. The crisis began in Thailand when the Thai baht collapse of in July 1997 with a series of speculative attacks on the baht extended after quite a few decades of outstanding economic performance in Asia. As the U.S. economy recovered from a recession in the early 1990s, the U.S. Federal Reserve Bank under Alan Greenspan began to raise U.S. interest rates to head off inflation. This made the U.S. a more attractive investment destination relative to Southeast Asia, which had been attracting hot money flows through high short-term interest rates, and raised the value of the U.S. dollar. For the Southeast Asian nations which had currencies pegged to the U.S. dollar, the higher U.S. dollar caused their own exports to become more expensive and less competitive in the global markets. At the same time, Southeast Asias export growth slowed dramatically in the spring of 1996, deteriorating their current account position. Many economists believe that the Asian crisis was created not by market psychology or technology, but by policies that distorted incentives within the lender–borrower relationship. Impacts of the crisis to the South East Asia Most of Southeast Asia and Japan having currency depreciation, devalued stock markets and other asset prices, and a precipitous rise in private debt. It were resulting large quantities of credit became available generated a highly leveraged economic climate, and pushed up asset prices to an unsustainable level. These asset prices eventually began to collapse, causing individuals, financial institutions and corporations in the affected countries were bankrupt. A change in market sentiment could and did lead into a violent of currency depreciation, insolvency, and capital outflows, which was difficult to stop. In the year after collapse of the baht peg, the value of the most affected East Asian currencies fell 35-83% against the U.S. dollar (measured in dollars per unit of the Asian currency), and the most serious stock declines were as great as 40-60%. Lenders led to a large withdrawal of credit from the crisis countries, causing a credit crunch and further bankruptcies. Foreign investors attempted to withdraw their money; the exchange market was flooded with the currencies of the crisis countries, putting depreciative pressure on their exchange rates. As a result, short-term economic activity has slowed or contracted severely in the most affected economies like inflation and rising in unemployment. It impossible that the government doing nothing when the crisis happened to their country. To prevent currency values collapsing, countries governments raised fiscal spending in domestic interest rates to exceedingly high levels (to help diminish flight of capital by making lending more attractive to investors) and to intervene in the exchange market, buying up any excess domestic currency at the fixed exchange rate with foreign reserves. But when interest rates were very high, it can be extremely damaging to an economy that is healthy, wreaked further havoc on economies in an already fragile state, while the central banks were hemorrhaging foreign reserves, of which they had finite amounts. As a strategy to maintain competitiveness, policies to strengthen the country’s balance-of-payments account were pursued. For example, exports were encouraged and imports were discouraged, the latter through an increase in import taxes on certain goods and services. Measures to increase exports for providing handouts directly to people affected included reducing the cost of doing business through such means as tax incentives to boost the manufacturing, agriculture, and services sectors. In the case Malaysia for example, there are policies regarding 1997 crisis: Denial and hesitation, the Malaysian government denied that there was a crisis in the first place; Tight fiscal and monetary policies, and restructuring the banking system; Government proposed to use regional currencies instead of the US dollars in inter-ASEAN bilateral trade; and Financing the recovery programs with the total cost of all measures was RM62 billion. While in the case of Indonesia, the government providing assistance to the poor like efforts to shield poor and vulnerable sections of society from the worst of the crisis, by deepening and widening social safety nets and devoting substantial budgetary resources to increasing subsidies on basic commodities such as rice; measures to increase transparency in the financial, corporate, and government sectors; and steps to improve the efficiency of markets and increase competition. Another example of helping the poor and needy, government must be fair and redistribute the wealth equally to them according their basic necessities of life. In Malaysia, the practicing of zakat system and waqaf contribution to help the poor and needy indirectly will benefit the society. Moreover, Bank Rakyat and ar-rahnu market on Islamic pawn-broking will help the small and medium enterprise to expend their business. Government also must allocate the budget expenditure for subsidizing mainly on education, healthcare and housing for the people. The International Monetary Fund (IMF) is an international organization that provides financial assistance and advice to member countries. It was created out of a need to prevent economic crises like the Great Depression. With its sister organization, the World Bank, the IMF is the largest public lender of funds in the world. It is a specialized agency of the United Nations and is run by its 186 member countries. Membership is open to any country that conducts foreign policy and accepts the organizations statutes. The IMF is responsible for the creation and maintenance of the international monetary system, the system by which international payments among countries take place. A core responsibility of the IMF is to provide loans to member countries experiencing actual or potential balance of payments problems. This financial assistance enables countries to rebuild their international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while undertaking policies to correct underlying problems. Unlike development banks, the IMF does not lend for specific projects. It thus strives to provide a systematic mechanism for foreign exchange transactions in order to foster investment and promote balanced global economic trade. To achieve these goals, the IMF focuses and advises on the macroeconomic policies of a country, which affect its exchange rate and its governments budget, money and credit management. The IMF will also appraise a countrys financial sector and its regulatory policies, as well as structural policies within the macroeconomic that relate to the labor market and employment. In addition, as a fund, it may offer financial assistance to nations in need of correcting balance of payments discrepancies. The IMF is thus entrusted with nurturing economic growth and maintaining high levels of employment within countries. The large financial packages which the IMF has arranged for countries affected by the Asian crisis and its result have stimulated a debate both among policy-makers and academics as to their costs and benefits. The IMF’s role in providing financial assistance to its members in overcoming short-term balance-of-payment difficulties generally has been evident. Advantages and disadvantages of IMF The IMF offers its assistance which it conducts on a yearly basis for individual countries, regions and the global economy as a whole. However, a country may ask for financial assistance if it finds itself in an economic crisis, whether caused by a sudden shock to its economy or poor macroeconomic planning. A financial crisis will result in severe devaluation of the countrys currency or a major depletion of the nations foreign reserves. In return for the IMFs help, a country is usually required to embark on an IMF-monitored economic reform program, otherwise known as Structural Adjustment Policies (SAPs). An IMF loan provides a cushion that eases the adjustment policies and reforms that a country must make to correct its balance of payments problem and restore conditions for strong economic growth. Supporters argue that the IMF can also impose necessary reforms on an economy. Reforms such as privatization, fiscal responsibility, control of Money supply, and attacking corruption. These policies may cause short term pain, but, are essential for preventing future crisis and long term development. Substantial financial advantages are attached to IMF credits because debtor countries benefit from lower debt service costs. Moreover, commercial banks often demand agreement with the IMF before lending is resumed and generally will charge lower interest rates to countries with an IMF program. The benefits attached to the IMF loan can be regarded as a compensation for the policy adjustments which the debtor countries carry through. At the same time, thanks to the unique role the IMF can play, the costs involved for the creditor countries seem to be rather limited, as the opportunity costs of forgoing the proceeds of alternative investments are relatively small. By temporarily providing finance and at the same time fostering adjustment, member countries could overcome external problems without overly detrimental measures either for their own population or for other countries. The interest rates charged by the IMF in normal circumstances can be relatively low, because the special role of the IMF in the international financial system reduces the risks for the IMF itself as well as for the creditor countries which have provided the resources. Because of its special position the IMF can mitigate the risks attached to its loans. Helped by its low funding costs, the IMF can charge debtor countries lower interest rates than private sector participants which have to charge high spreads because of the sovereign risks involved. Over time, the IMF has been subject to a range of criticisms, generally focused on the conditions of its loans. The IMF has also been criticized for its lack of accountability and willingness to lend to countries with bad human rights record. On giving loans to countries, the IMF makes the loan conditional on the implementation of certain economic policies. These policies tend to involve: * Reducing government borrowing Higher taxes and lower spending * Higher interest rates to stabilize the currency. * Allow failing firms to go bankrupt. * Structural adjustment. Privatizations deregulation, reducing corruption and bureaucracy. The problem is that these policies of structural adjustment and macroeconomic intervention make the situation worse. For example, in the Asian crisis of 1997, many countries such as Indonesia, Korea and Thailand were required by IMF to pursue tight monetary policy (higher interest rates) and tight fiscal policy to reduce the budget deficit and strengthen exchange rates. However, these policies caused a minor slowdown to turn into a serious recession with mass unemployment. The IMF have been criticized for imposing policy with little or no consultation with affected countries. Jeffrey Sachs, the head of the Harvard Institute for International Development said: In Korea the IMF insisted that all presidential candidates immediately endorse an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand. It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people. Because the IMF lends its money with strings attached in the form of its SAPs, many people and organizations are vehemently opposed to its activities. Opposition groups claim that structural adjustment is an undemocratic and inhumane means of loaning funds to countries facing economic failure. Debtor countries to the IMF are often faced with having to put financial concerns ahead of social ones. Thus, by being required to open up their economies to foreign investment, to privatize public enterprises, and to cut government spending, these countries suffer an inability to properly fund their education and health programs. Moreover, foreign corporations often exploit the situation by taking advantage of local cheap labor while showing no regard for the environment. The oppositional groups say that locally cultivated programs, with a more grassroots approach towards development, would provide greater relief to these economies. Critics of the IMF say that, as it stands now, the IMF is only deepening the rift between the wealthy and the poor nations of the world. Indeed, it seems that many countries cannot end the spiral of debt and devaluation. The relatively low interest rates charged by the IMF can lead to moral hazard behavior on the part of the debtor countries. This is largely reduced through the tough policy measures which the IMF imposes as a condition for its programmers. In practice, most countries do not turn to the IMF if not forced by adverse circumstances. Decisions about which countries may borrow money are made by rich countries. Poor countries have little say about loans and the conditions attached to them. The IMF will only lend money to countries if they agree to certain conditions. These conditions increase poverty. The livelihoods of people in poorer countries are destroyed by unfair competition from foreign goods and services. The IMF does not give good financial advice. Countries have suffered by following it. IMF East Asia Case The IMF was involved in one of the worst East-Asian economic crises thus far. Everything started when Thailand was experiencing difficulties in meeting foreign liability obligations so the IMF intervened by suggested to devalue the Baht. The same suggestion was made to Indonesia, Korea and the Philippine. Soon, South Korea and Taiwan jumped in the trend and Hong Kong and Singapore dollars faced speculative attack. The crisis spread all the way to South America where Brazil and Argentina currency came under attack, but they both stood their grounds and refused to devalue which might have prevented a global financial crisis. Other aspects of the handling of the case that were looked down upon were the issue of the bail-out and the political situation of the borrowing country had once again been ignored. Thailand had already borrowed from the IMF and they were bailed-out very publicly which gave an incentive for surrounding countries to follow very risky projects or decisions, believing that the IMF would be a safety net as opposed to a lender of last resort. This is what happened in South Korea when large, unprofitable investment projects were undertaken, largely due in part to the conglomerates of businesses that are close to the bureaucracy but more importantly, sponsored by the IMF. Likewise, Fund officials protested that many East-Asian countries needed a reform in the banking system and governance, where bad banking, nepotism and corruption do not help create stable and efficient economies. During August December 1997, the International Monetary Fund signed three emergency lending agreements with Thailand (August), Indonesia (November), and Korea (December). These programs established packages of international financial support at an unprecedented cumulative sum of approximately $110 billion, based on the financing commitments. During the period August to December, the IMF programs failed dramatically to meet the objective of restoring market confidence. In all three countries, the exchange rate was expected to stabilize, but in fact quickly depreciated far below the targets set in the program, and this despite a very sharp increase in interest rates. Foreign investors remained unconvinced about the debt servicing capacity of the private debtors despite the announced availability of IMF loans, and continued to demand the repayment of short-term loans as they fell due. The IMF programs failed to achieve their goal of maintaining moderate economic growth in the Asian countries. The programs also failed on several intermediate goals, including the preservation of creditworthiness, the continuation of debt payments, and the stabilization of the exchange rate at levels that prevailed upon the signing of the original lending agreements Indonesia was deeply affected by the 1997–1998 crises, more so than its East Asian neighbors. Its economic contraction was deeper and more prolonged. It was the only one to experience a (temporary) loss of macroeconomic control. Eight years have passed since the collapse of Suharto’s New Order regime on the heels of the economic crisis of 1997–1998. During that time, Indonesia’s economy contracted by over 13% in 1998 alone. This followed three decades of virtually uninterrupted rapid economic growth and led to deep social and political crises. Although countries such as South Korea and Thailand were able to overcome their economic crises in a few years, Indonesia’s crisis resolution has been complicated by political instability, at least until 2004, and by a slower recovery. Indonesia was formally under International Monetary Fund management from 1997 to the end of 2003. But the presence of the IMF actually increased the severity of the Indonesian economy, not more than one year after that; there were capital flight out of the country that led to massive unemployment, compounded by the drastic decline in the exchange rate. At the end of 1998 more than 50% of Indonesias population lives below the poverty line. One of the IMFs policy prescriptions is to close 16 banks and it caused the anger of people and withdraws their money in national banks and some foreign banks. In May 1998, due to an agreement between the IMF and Suharto, the government revoked subsidies for food, and raises the price of oil and electricity. This policy had a strong opposition from the people and not long after that, Suharto regime fell. During Megawati regime, in August 2003 the government finally decided not to continue the IMF program and choose to enter the post-program monitoring. The government option raises the consequences that are not much different. IMF can still continue to dictate economic policy in Indonesia because the government still had to consult every economic policy that will be taken with IMF. The Indonesian government announced that they would pay the remaining debt to the IMF, totaling U.S. $ 7.8 billion, within 2 years. It seems to be the correct political decision to break away from the economic policy interventions that has continued since the crisis in 1997. 2008 Financial Crisis Triggered by events in The US and EU The cause or trigger of the 2008 global financial crisis was the boom of the United States housing bubble which peaked in approximately 2005–2006. Since banks began to give out more loans to potential home owners, housing prices began to increase. The increase in house price and improvement of construction activity started around 1992. At that time the Federal Reserve was holding its policy interest rate at an unusually low level by the standards of the past few decades. The good times lasted until 2005, when monetary policy was tightening after another spell of low interest rates. Over that period, construction activity contributed 1/5 percentage points annually to the growth rate of real GDP, and the share of employment in construction and finance, out of the total workforce, rose from 10 ¼ percent to 11 ¾ percent. That is, over this period, of the 27.4 million people added to work rolls (which ended 2006 with a total of 136 million), 4.8 million were directly related to construction and fifi nance. Finally, the nation was left with an excess stock of housing. A contraction in construction transpired to wind down the inventory overhang, which is often a feature of economic slowdowns and recessions. In addition to that, easy lending standards also contributed to the Real estate bubble. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain. As part of the housing and credit booms, the number of financial agreements called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which derived their value from mortgage payments and housing prices, greatly increased. That kind of financial innovation attracted institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. While the housing and credit bubbles were expanding, US Government was going a process called financialization. US Government policy from the 1970s onward has emphasized deregulation to encourage business, which resulted in less oversight of activities and less disclosure of information about new activities undertaken by banks and other evolving financial institutions. Thus, policymakers did not immediately recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. These institutions, as well as certain regulated banks, had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses. These losses impacted the ability of financial institutions to lend, slowing economic activity. The U.S. Financial Crisis Inquiry Commission reported its findings in January 2011. It concluded that the crisis was avoidable and was caused by: 1. Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages; 2. Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk; 3. An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis; 4. Key policy makers ill prepared for the crisis, 5. Lacking a full understanding of the financial system they oversaw; and systemic breaches in accountability and ethics at all levels.[35][36] Table 1 The Causes and Impacts of Global Financial Crisis Taken from Takatoshi Ito â€Å"Comparison of the Financial Crises: Japan and Asia in 1997-1998 vs. U.S. 2008-09† The Collapse of World Trade Although the crisis is originally from financial sector, trade had great implication that hit countries around the world. Exports collapsed in nearly every major trading country, and total world trade fell faster than it did during the Great Depression. From a peak in July 2008 to the low in February 2009, the nominal value of world goods exports fell 36 percent; the nominal value of U.S. goods exports fell 28 percent (imports fell 38 percent) over the same period. Even a country such as Germany, which did not experience their own housing bubble, experienced substantial trade contractions, which helped spread the crisis. The collapse in net export in Germany contributed to the decline in their GDP which put the country into recession. In the fourth quarter of 2008, Germany’s drop in net exports contributed 8.1 percentage points to a 9.4 percent decline in GDP (at an annual rate); Japan’s net exports contributed 9.0 percentage points to a 10.2 percent GDP decline. Real exports fell even faster in the first quarter of 2009. The Decline in Output Around the Globe The financial crisis was rapidly transmitted to the real economy. The financial disruption was so strong and swift in most countries so that their confidence level in economy fell as well. Confidence levels are measured in different ways across countries, but they were generally falling throughout 2008 and reached recent lows in the fall of 2008 and winter of 2009. As noted, world GDP is estimated to have fallen roughly 1.1 percent in 2009 from the year before. In advanced economies, the crisis was even deeper; the IMF expects GDP to have contracted 3.4 percent in advanced economies for all of 2009. For OECD member countries, GDP fell at an annual rate of 7.2 percent in the fourth quarter of 2008 and 8.4 percent in the first quarter of 2009. Despite the historic nature of its collapse, the U.S. economy actually fared better than about half of OECD economies during those quarters. The decline in industrial production across major economies, each of these economies in January 2009 was more than 10 percent below its January 2008 level, and Japan faring far worse relative to the other major economies. Impact on Developing Countries The impact of the crisis on developing countries will affect different types of international resource flows: private capital flows such as Foreign Direct Investment (FDI), portfolio flows and international lending; official flows such as development finance institutions; and capital and current transfers such as official development assistance and remittances. The World Association of Investment Promotion Agencies foresees a 15% drop in FDI 2009. FDI to Turkey has already fallen 40% over the last year and FDI to India dropped by 40% in the first six months of 2008. FDI to China was $6.6 billion in September 2008, 20% down from the monthly average in year 2008 so far, and mining investments in South Africa and Zambia have been put on hold. The crisis has led to a drop in bond and equity issuances and the sell-off of risky assets in developing countries. The average volume of bond issuances by developing countries was only $6 billion between July 2007 and March 2008, down from $ 15 billion over the same period in 2006. Between January and March 2008, equity issuance by developing countries stood at $5 billion, its lowest level in five years. As a result, World Bank research suggests some 91 International Public Offerings have been withdrawn or postponed in 2008. However, not all developing countries were effected tremendously by 2008 financial crisis. In South East Asia we may take a look Indonesia performance towards the 2008 financial crisis. Indonesia experienced a significant macroeconomic shock at the end of 2008. But, of course, Indonesia was not on its own. Indeed, Indonesia was one of the least affected countries in South East Asia. Although GDP growth slowed markedly to 4.4% in the first quarter of 2009, it did not experience the collapse in growth experienced by countries such a Korea, Thailand and Malaysia. Indonesia’s growth in recent years has been driven predominantly by non-tradeables rather than tradeables, and, although the crisis reduced growth across the board, sectors such as transport and communications, and utilities have continued to grow in double digits. At the same time, the tradeable sector which has performed best is agriculture, which, at 4.8%, has experienced its strongest growth since the East Asian crisis, helping to compensate for the effects of the crisis. Indonesia has learnt from 1997 crisis so that they can manage 2008 financial crisis well. The Role of International Institutions of The G-20 The G-20, which includes 19 nations plus the European Union, is the the main nations of much of the coordination on trade policy, financial policy, and crisis response. Its membership is composed of most of the world’s largest economies and makes up nearly 90 percent of world gross national product. The first G-20 leaders’ summit was held at the peak of the crisis in November 2008. At that point, G-20 countries committed to keep their markets open, adopt policies to support the global economy, and stabilize the financial sector. The second G-20 leaders’ summit took place in April 2009 at the height of concern about rapid falls in GDP and trade. Leaders of the world’s largest economies pledged to â€Å"do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital.† Furthermore, they committed to work together on tax and financial policies. Perhaps the most notable act of world coordination was the decision to provide substantial new funding to the IMF. U.S. leadership helped secure a commitment by the G-20 leaders to provide over $800 billion to fund multilateral banks broadly, with over $500 billion of those funds allocated to the IMF in particular. In September 2009, the G-20 leaders met in Pittsburgh. They noted that international cooperation and national action had been critical in arresting the crisis and putting the world’s economies on the path toward recovery. They also recognized that continued action was necessary, pledged to â€Å"sustain our strong policy response until a durable recovery is secured,† and committed to avoid premature withdrawal of stimulus. They launched a new Framework for Strong, Sustainable, and Balanced Growth that committed the G-20 countries to work together to assess how their policies fit together and evaluate whether they were â€Å"collectively consistent with more sustainable and balanced growth.† Further, the leaders committed to act together to improve the global financial system through financial regulatory reforms and actions to increase capital in the system. It set up emergency lines of credit (called Flexible Credit Lines) with Colombia, Mexico, and Poland, which in total are worth over $80 billion. These lines were intended to provide immediate liquidity in the event of a run by investors, but also to signal to the markets that funds were available, making a run less likely. In each of these countries, markets responded positively to the announcement of the credit lines, with the cost of insuring the countries’ bonds narrowing (International Monetary Fund 2009b). The IMF also negotiated a set of standby agreements with 15 countries, committing a total of $75 billion to help them survive the economic crisis by smoothing current account adjustments and mitigating liquidity pressures. IMF analysis suggests that this program discouraged large exchange-rate f in fluctuate in these countries (International Monetary Fund 2009). These actions as well as the very existence of a better-funded global lender may have helped to keep the contraction short and to prevent sustained currency crises in many emerging nations. The Government Responses The U.S. executed two stimulus packages, totaling nearly $1 trillion during 2008 and 2009. The U.S. Federal Reserves new and expanded liquidity facilities were intended to enable the central bank to fulfill its traditional lender-of-last-resort role during the crisis while mitigating stigma, broadening the set of institutions with access to liquidity, and increasing the flexibility with which institutions could tap such liquidity. United States President Barack Obama and key advisers introduced a series of regulatory proposals in June 2009. The proposals address consumer protection, executive pay, bank financial cushions or capital requirements, expanded regulation of the shadow banking system and derivatives, and enhanced authority for the Federal Reserve to safely wind-down systemically important institutions, among others. The response of the Federal Reserve, the European Central Bank, and other central banks was taken shortly and dramatic. During the last quarter of 2008, these central banks purchased US$2.5 trillion of government debt and troubled private assets from banks. The governments of European nations and the USA also raised the capital of their national banking systems by $1.5 trillion, by purchasing newly issued preferred stock in their major banks. In October 2010, Nobel laureate Joseph Stiglitz explained how the U.S. Federal Reserve was implementing another monetary policy —creating currency— as a method to combat the liquidity trap. By creating $600,000,000,000 and inserting this directly into banks, the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. However, banks instead were spending the money in more profitable areas by investing internationally in emerging markets. The bank bailout, more formally called the Troubled Asset Relief Program, failed to achieve the ultimate goal. The goal of these bailouts from the perspective of the largest financial institution is billions of dollars in taxpayer money allowed institutions that were on the brink of collapse not only to survive but even to flourish. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership. Congress was told that TARP would be used to purchase up to $700 billion of mortgages and to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. However, almost immediately, as permitted by the broad language of the act, Treasury’s plan for TARP shifted from the purchase of mortgages to the infusion of hundreds of billions of dollars into the nation’s largest financial institutions, a shift that came with the express promise that it would restore lending. Treasury, however, provided the money to banks with no effective policy or effort to force the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds. It raised the issues on accountability in providing the bailouts. Lesson Learnt from 2008 Crisis There are several lessons that can be learnt from 2008 financial crisis. Those lessons are stated below : 1. Aggregate volatility is part of market system. There is a need to have more depth study of aggregate volatility. 2. Long lived large firms (such as financial institutions) may not be fully trusted. We should rethink the role of reputation of firms in market transactions. In addition, we need to revisit the key elements of the economy of organization so that reputation should be derived from the behavior not merely from the asset. 3. Economic growth will only take place if there is real increase in the real commodities not financial commodities. 4. People mistakenly equated free markets with unregulated markets. 5. Policy makers should be flexible in their policies and guided by overall national objectives. 6. All trading countries should diversify both their exports composition as well as export destination. 7. World financial system is becoming fragile so that there is a need to reform the current financial system. Islamic based economy system has great opportunity to alter the existing financial system. Islamic perspective From Islamic perspective, the approach that most suitable which is providing handout to the poor and directly to people affected by financial contracts. There were horrible gaps between the rich and the poor all over the world, which remained existent all the time, even after the fall of the planned economy. It goes without saying that the position in developing and under developed countries is even worse. This uneven and unjust system of distribution needs to be reformed on a conceptual basis. The entire world today is crying on the present financial crisis, but few people have realized that this is basically a crisis of rich people who were playing with loads of wealth, and all of a sudden, their income faced a steep fall. So far as poor people are concerned, they have been living in perpetual crisis all the times, but no one care for them, The present crisis should not be examined within the relatively narrow confines of debt; rather, it is fundamentally a question of social justi ce, a concept that is paramount in Islam. Social justice includes three aspects, namely a fair and equitable distribution of wealth; the provision of basic necessities of life to the poor and the needy; and protection of the weak against economic exploitation by the strong. The debt burden, however, is increasing inequality between rich and poor countries and is tantamount to exploitation. It also means that poor countries are often unable to provide the most basic services for their citizens. The huge debt that currently burdens poor countries has arisen from loans that have charged interest and have not shared risk between the lender and the borrower and have, therefore, contravened the two most fundamental principles of Islamic finance. Islamic commands to refrain from charging interest and to share financial risk seek to avoid the concentration of wealth and the economic exploitation of the weak and thereby prevent situations such as the current debt crisis from arising in the first place. The core belief in Islamic finance is that money should not in itself be an earning asset; therefore, Islam prohibits any and all forms of interest. There are also other systems which prevent an economic crisis of pandemic proportions to arise; contractual relationships in business, finance or trade must be based on trust and familiarity of networks of common experiences (takaful) which implies that debts cannot be repackaged and resold as assets globally to faceless investors while profit must be redistributed directly to the poor (zakat) in the Holy month of Ramadan to build and strengthen social safety nets through institutions of charity welfare and education. Over and above zakat, all Muslims pay zakat fitrah to the poor, during the month of Ramadan, either through state collection centers or direct contributions to the poor. There is a trend within rural areas to identify destitute families and the disabled within the underserved rural areas of the State where they reside. Over the last few years, increasing realization of a topic poverty during an economic crisis creating the new poor among the Muslim working classes and a bnormally high repayment rates through unlicensed loan-sharks and licensed money-lenders have made national banking institutions which serve the poorer rural communities shift their services to the Ar-Rahnu market or Islamic pawn-broking market. Currently four Islamic financial institutions, Bank Rakyat (The People’s Bank); the Yayasan Pembangunan Ekonomi Islam Malaysia (Islamic Foundation of Economic Development, Malaysia); Permodalan Kelantan Bhd (Kelantan Investment Co.); and the Agro bank offer such services to the rural and urban working classes. It has established an Ar-Rahnu X’Change Franchise Network, where it plans to provide an Ar-Rahnu franchise throughout the country, managed by reputable cooperatives of the working classes. Given the acute dependency of the working classes on ready cash in times of emergency and the high rates of interest in regular pawn-broking market, there seems to be few alternatives except to expand the Ar-Rahnu market among Muslims and non-Muslims and charge the poor for ‘safekeeping’ services, rather than interest. Despite the fact that loan disbursements of Bank Rakyat alone is among the services which have contributed to Bank Rakyat’s amazing rise as a successful national cooperative bank, giving out higher than normal dividends to its share holders, loan sharks are virtually setting up desks outside flats and apartment buildings of the Muslim poor in towns and cities to offer cash and carry’ facilities to the desperately poor. This lucrative market speaks volumes of the rise of atopic poverty among those on or below the poverty line, the inadequacy of zakat and disbursements of zakat, the high dependency on regular income earners among the middle classes for welfare driven services and products and unclear nature of the rising wealth of the Muslim and non-Muslim upper classes in Malaysia The Islamic finance can bring on significant gains in money released into public capital and infrastructure. The redistributive mechanisms of surplus are instituted into welfare based institutions such as free or subsidized education, health and child care, education, and even publicly directed employment. Its principles may differ from modern welfare economics except the gains at the far end of the redistributive machinery are similarly directed towards the poor. The policies of the New Economic Policy in Malaysia, state welfares in Brunei, or publicly instituted employment as in MENA countries are more Islamic than regul ar, except they are part of the post-colonial ‘reformist’ policies of Muslim states which preceded the modern up-beat drive towards Syaria’ah compliant finance. Islamic finance, however, has not demonstrated a clear connectivity with redistributive justice as in the post-colonial political economy except through instituted deductions of zakat from dividends of shareholders. Profits from credit or financial corporations are not necessarily redistributed through zakat. Furthermore, for borrowers, the appreciated value of assets and services as forecasted and built into systems and rates of repayments which compensate for the lack of interest and, in reality, repayment rates may even out with the regular—rates are generally fixed in advance unlike regular interest rates which are more flexible, varying according to market conditions. However, it does allow more capital to be released into projects immediately, allowing a more extensive amount of goods and services to be produced, without the worry of serving loans. One, however, has to be assured of significant productivity even in the early stages of the loan but payments of zakat accruing from successful investment, from the financier or production from the borrower are fixed at a low rate of 2.5%. It is also consensual rather than forced (as in income taxation) and Muslim countries in general pur sue income tax collections as the more important thrust of national revenue. There are generally two disparate systems at work in Muslim countries Islamic finance and post-colonial welfare instituted economics. The welfare inputs in Islamic countries which are operational today proceed whether or not there are institutions of Islamic finance in the country. In Malaysia, Brunei, and the MENA countries discussed in this paper, components of welfare economics in heavily subsidized education, health, housing, farming, and welfare for the poor, are part of a post-colonial legacy of social reform to institute economic parity across groups and classes. In these Muslim nations, the public sector has played an important role in employment for Muslim or indigenous citizens, often acting as a social safety net in times of economic crises. However, these welfare driven policies are subject to much criticism since they favour the poor, encourage low productivity, and a non-competitive public sector. As Islamic institutions of welfare catch on with progressive social educa tion through media and networks and become an alternative system of welfare for poorer Muslims through zakat and other contributions, welfare increasingly becomes a social responsibility of the Muslim middle classes. There is hardly any data on how the profits earned by larger corporations of Islamic finance actually become instituted into a system of welfare economics based in Islam. Private investment trusts of political elites or national trusts controlled by them. In a properly instituted system of redistribution, through wages, salaries, educational, and health subsidies and so on, there should be very little wealth differential between the owners of political Capital and citizens but economic disparities are significant in these Muslim countries and it has been shown how gains among the lowest 20% may be offset by higher or equivalent gains among the top 20% income earners of these nations. The production of stable professional middle classes in these nations has led to an enrichment of social capital and welfare driven redistributive institutions through social networks but Islamic conscientisation had sometimes moved this ‘spiritual gain’ as an objective reality. The belief i n ibadah or ‘to do good’ may outweigh the call for greater transparency in the use of national collections of zakat and so on. Many Muslims in Malaysia pay both income tax and zakat, rather than ask for exemption from income tax. They also maintain Islamic voluntary organizations with personal funds, donate to mosques and charities, and make endless food contributions to orphans and the poor. There is very little data gathered on the actual amounts paid privately or anonymously and state-directed contributions, although increasing, are not reflective of actual payments contributed by the middle classes towards Islamic charitable institutions. On the other hand, Muslim based banking and financial institutions are obscure in their social responsibility towards the poor, including their own clients who may be victims of topic poverty during times of economic crises. In conclusion, Islamic institutions of trusts which are state directed or privately administered by banking and credit agencies contain more humanistic principles of investment and redistribution of profits except that there is a missing component—between the principles of redistribution of surplus or profits in Islam finance and the actual mechanisms to provide welfare to the people who are not share-holders or stake-holders. In Malaysia, Brunei, and the MENA countries of the Middle East and North Africa, state agencies assume trusteeships over compulsory collections like the zakat but do not have any institutional mechanisms to enforce private corporations local or foreign to contribute towards the welfare of the poor. Conclusion The first Financial crisis was began in July 1997 when the Thai baht collapse with a series of speculative attacks on the baht extended after quite a few decades of outstanding economic performance in Asia and most of Southeast Asia and Japan having currency depreciation. There some approach to help financial recovery, It is impossible that the government doing nothing when the crisis happened to their country. To prevent currency values collapsing, governments raised fiscal spending in domestic interest rates to exceedingly high levels. And last approach Government providing handouts directly to people affected and providing assistance to the poor like efforts to shield poor and vulnerable sections of society from the worst of the crisis The International Monetary Fund (IMF) is an international organization that provides financial assistance and advice to member countries. It was created out of a need to prevent economic crises like the Great Depression. The large financial packages which the IMF has arranged for countries affected by the Asian crisis and its result have stimulated a debate both among policy-makers and academics as to their costs and benefits. However, IMF has also been criticized for its lack of accountability and willingness to lend to countries with bad human rights record Debtor countries to the IMF are often faced with having to put financial concerns ahead of social ones The cause or trigger of the 2008 global financial crisis was the boom of the United States housing bubble which peaked in approximately 2005–2006. The impact of the crisis on developing countries will affect different types of international resource flows: private capital flows such as Foreign Direct Investment (FDI). However, not all developing countries were effected tremendously by 2008 financial crisis, Indonesia was one of the least affected countries in South East Asia. The G-20, is the the main nations of much of the coordination on trade policy, financial policy, and crisis responses. The first G-20 leaders’ summit was held at the peak of the crisis in November 2008. The bank bailout, more formally called the Troubled Asset Relief Program, failed to achieve the ultimate goal From Islamic perspective approach that most suitable which is providing handout to the poor and directly to people affected by financial contracts the present crisis should not be examined within the relatively narrow confines of debt, rather it is fundamentally a question of social justice, a concept that is paramount in Islam. The practicing of zakat system and waqf contribution to help the poor and needy indirectly will benefit the society. And this is the best approach that government should do by providing help directly to the poor and people affected by financial contract namely firms and banks. If government reduced the amount tax to be paid, cost of production will decrease level of employment and production will increase. Meanwhile, banks will bail out to save company and people indirectly reduced the worry of public causing the level of borrowing and consumption raises. So, as a result, it can stimulate the capital investment of the economy to increase the economic growth and level of GPD. References Fadillah Putra, â€Å"Economic Development and Crisis Policy Responses in Southeast Asia (Comparative study of Asian Crisis 1997 and Global Financial Crisis 2008 in Malaysia, Thailand and the Philippines)† (2008), Public Administration Department, Brawijaya University Federal Reserved Bank of San Francisco Economic Letter †What Caused East Asia’s Financial Crisis?† 98-24; August 7, (1998) Hussein Alasrag, â€Å"Global Financial crisis and Islamic finance† (2007) http://www.muftitaqiusmani.com/index.php?option=com_contentview=articleid=41:present-financial-crisis-causes-and-remedies-from-islamic-perspective-catid=12:economicsItemid=15,retrieve on 11 November 2012 http://www.academia.edu/1133515/Global_Financial_Crisis_An_Islamic_Perspectiv e, retrieve on 4 November 2012 http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008#cite_note IMF_Loss_Estimates-31, retrieve on 4 November 2012 Mohamed Ariff, Syarisa Yanti Abubakar,†The Malaysian Financial Crisis: Economic Impact and Recovery Prospects† (1999) The Developing Economies, XXXVII-4: 417–38 Reinhart, V. (2011). A year of living dangerously : The Management of the Financial Crisis in 2008. Journal of Economic Perspective.25 (1). Pg 71-90. Ibid Recovery from the Asian Crisis and the Role of the IMF, IMF Staff (2000) http:// www.investopedia.com/articles/economics/09/international- monetary-fund imf.asp#axzz2EQhoHzz9, retrieve on 4 November 2012 http://www.nrcc.org/default/Issues2012/2012_Issues_Book_Chapter_Financial_Crisis_Bailouts_and_Financial_Reforms [ 1 ]. Federal Reserved Bank of San Francisco Economic Letter: What Caused East Asia’s Financial Crisis? 98-24; August 7, 1998 [ 2 ]. Federal Reserved Bank of San Francisco Economic Letter: What Caused East Asia’s Financial Crisis? 98-24; August 7, 1998 [ 3 ]. www.wikipedia.com [ 4 ]. www.wikipedia.com [ 5 ]. www.wikipedia.com [ 6 ]. Federal Reserved Bank of San Francisco Economic Letter: What Caused East Asia’s Financial Crisis? 98-24; August 7, 1998 [ 7 ]. www.wikipedia.com [ 8 ]. Mohamed Ariff, Syarisa Yanti Abubakar, (1999) The Malaysian Financial Crisis: Economic Impact and Recovery Prospects: The Developing Economies, XXXVII-4: 417–38 [ 9 ]. Economic Development and Crisis Policy Responses in Southeast Asia (Comparative study of Asian Crisis 1997 and Global Financial Crisis 2008 in Malaysia, Thailand and the Philippines) Fadillah Putra, Public Administration Department, Brawijaya University [ 10 ]. Recovery from the Asian Crisis and the Role of the IMF, IMF Staff (2000) [ 11 ]. http://www.investopedia.com/articles/economics/09/international-monetary-fund-imf.asp#axzz2EQhoHzz9 [ 12 ]. http://www.twnside.org.sg/title/sick-cn.htm [ 13 ]. Reinhart, V. (2011). A year of living dangerously : The Management of the Financial Crisis in 2008. Journal of Economic Perspective.25 (1). Pg 71-90. [ 14 ]. Ibid [ 15 ]. Ibid [ 16 ]. Ibid [ 17 ]. Wikipedia. Financial Crisis 2007. Taken from http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008#cite_note-ssrn-8 [ 18 ]. Wikipedia. Financial Crisis 2007. Taken from http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008#cite_note-IMF_Loss_Estimates-31 [ 19 ]. Ibid [ 20 ]. Greenspan-We Need a Better Cushion Against Risk. Financial Times. March 26, 2009. Taken from http://www.ft.com/cms/s/0/9c158a92-1a3c-11de-9f91-0000779fd2ac.html. [ 21 ]. FCIC Report-Conclusions Excerpt-January 2011. Taken from http://c0182732.cdn1.cloudfiles.rackspacecloud.com/fcic_final_report_conclusions.pdf [ 22 ]. CRISIS AND RECOVERY IN THE WORLD ECONOMY. Taken from http://www.whitehouse.gov/sites/default/files/microsites/economic-report-president-chapter-3r2.pdf [ 23 ]. Ibid [ 24 ]. Ibid [ 25 ]. Ibid [ 26 ]. Ibid [ 27 ]. Ibid [ 28 ]. Velde, D. W. (2008). Effects of the Global Financial Crisis on Developing Countries and Emerging Markets. Policy responses to the crisis. INWENT/DIE/BMZ conference in Berlin, 11 December 2008. [ 29 ]. Ibid [ 30 ]. Ibid [ 31 ]. Ibid [ 32 ]. Ibid

The Advantages And Disadvantages Of Social Networks

The Advantages And Disadvantages Of Social Networks Table of Contents Introduction Advantages of Social Networks Disadvantages of Social Networks Influence on people in the future Data Collection and Analysis Recommendation Bibliography Appendices This research report has answered the questions i.e. what is social network? What are the advantages and disadvantages of social networks? How social networks will influence on people in the future? The research report will specify in the fields of education and business, which are two of the most important fields in the modern world, as parts of advantages of social networks. On the other hand, the report will highlight the major problems of today world such as online crime and addiction to social networks as primary disadvantages. Besides, there are analyses and predictions concerning with the dominance of social networks and how they will influence on people in the future. Justification The main reason for choosing this research topic is because my interest lies in that field. Besides, I am intended to specify my study in telecommunication engineering, which is a branch of my major study, electrical engineering, at the University. Internet can be said as the base of telecommunication systems and social networks are extensions of the internet. For all these connections and reasons I chose the topic in the question. 1.Introduction 1.1 What is social network? A social network is a social structure made up of a set of actors (such as individuals or organizations) and complex set of the dyadic ties between these actors (Wikipedia.org) Social media is any form of online publication or presence that allows end users to engage in multi-directional conversations in or around the content on the website (OnlineMatters.com) Social media and social networking focus on two-way interactions, between the site (or the person running the site) and the people reading or using it (Salpeter,2011,p.6) Two-way interactions means that comments are allowed in that blog and there could be interactions between the writer and anyone who give comments. 1.2 History of social networks 1.2.1 Evolution of internet The internet technology was introduced in the 1960s. The forerunner of the modern Internet was called ARPANET and it was created in 1969 by a worked for the Advance Research Projects Agency (ARPA) in the U.S Department of Defence. Basically, they just wanted to build an electronic communication system that could carry military data without disturbance. In 1971, an engineer Ray Tomlinson, invented the first electronic mail (e-mail) program. Twenty years later, in 1991, British scientist, Tim Berners-Lee, invented World Wide Web and created Hypertext Markup Language (HTML) that establish links. 1.2.2 Development of social networks Social networks evolved since the internet technology was first developed in the 1960s. One of the first online communities was Usenet, which was created by Duke University graduate students, Tom Truscott and Jim Ellis. Usenet was similar to a discussion forum where students can share their opinions and suggestions. In 1984, similar method of online interaction called Bulletin Board System (BBS) was introduced. Later, the emergence of social networks rocketed with the invention of World Wide Web by a British scientist, Tim Berners-Lee, in 1991. One of the most dominant social networks in the history, Friendster, was founded by Jonathan Abrams and launched in 2003. Along with Friendster, LinkedIn and MySpace also become popular in their respective fields. After 2003, the social networks become so popular that, by the time Facebook was launched in 2006, the Internet users had more than two hundred social networks to choose from. Nowadays, Facebook is regarded as the most successful social network with over 1.06 billion monthly active users, 680 million mobile users, more than 50 million pages and 10 million apps. (April, 2013 data) 2. Advantages of social networks 2.1 Education Field In the survey conducted by Pew Internet Projects research, it showed that 67% of online adults use social networks. This data describes the fact that social networks can be used to improve the education of adults and students since they already have certain influence on the learners. The main advantage is that students can further explore topics that they are interested in by using online social networking since they may have limited resources and time in school. Apart from that, for adults with unique interests, it is not easy to find friends with same interest to chat or discuss with. However, social networks link these people with the ones with same passion, where they can interact with people from different parts of the world. On the other hand, teachers can take the advantage of studentsà ¢Ã¢â‚¬Å¾Ã‚ ¢ social networking abilities to create discussion forums, class blogs and online teaching. Such collaboration between students and teachers, acting social networks as a medium, can help the students gain opportunities to cover knowledge in a wider area and pursue interest. Schools also use social networks as an intermediate to keep in touch with students. Certain networks such as Facebook, Moodle, Secondlife, Digg and other networks are often used by teachers to connect with students and to hold out-of-classroom discussions. So, it is quite obvious that several advantages are observed for the impact of social networks on the education field. 2.2 Business Field Social networking takes place online where people meet and share ideas, recommendations and experiences. So, it is similar to a non-stopping communication with a broad audience through a variety of platform or sites. This is one of the factor that the organizations are interested in social media since they can get different kinds of suggestions and feedbacks from people. Many companies use social networks such as Twitter and Facebook to connect with customers and prospective clients. This leads to a golden opportunity for job seekers to learn more about the organization and easily connect with people who work there. Job seekers can become acquainted with the ones working, through these social media, and once they achieve strong presence on these networks, it becomes feasible to reach the people with the authority to hire an employee. Different kinds of social networks convey effective ways to find jobs. One can search about the company in Google by simply typing the name of that company. Facebook, Twitter and FourSquare are excellent social networks to be able to interact with the people who work in the organization. If lucky, one can meet with a recruiting agent and have some conversation and discussions which could increase the chance to get the job. Moreover, ones profile can be distributed on the social networks, which will increase the probability of getting the job. Mariam Salpeter, the founder of Keppie Careers suggests that, Creating an online presence allows hiring managers, recruiters, colleagues and friends to know more about you, what you offer and what you want. Its a way to draw jobs to you instead of you spending your time searching the jobs (Salpeter,2011,p.75) One of the most important thing to point out the impact of social networks on business field is, social media marketing. By acting social networks as stepping stones, social media marketing can gain a lot of benefits including relationship building, brand building, publicity, promotions and so on. So, it can be concluded that social media marketing proposes several opportunities for entrepreneurs, small businesses, midsize companies and large corporations to build their brands and business. (Gunelius,2011) 3. Disadvantages of social networks 3.1 Crime Highlighting the benefits of social networks, it doesnÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢t necessarily means that there are no drawbacks in them. Recently, online crime which is also known as Cybercrime, proposes an increasing threat to all the internet users. This includes online sexual exploitation and cyber bullying. One of the main problems to eradicate cybercrime is that it is hard to identify the offender and it is almost impossible to keep full-time surveillance in such a wide network. 3.1.1 Online sexual exploitation One of the most aggressive forms of cybercrime is the online sexual exploitation. This includes sharing pornography, persuading for sex and sex chat. There are over 665000 registered convicted sex offenders in the United States of America, according to a study commissioned by the National Center for Missing and Exploited Children. This means that one in every seven kids has been approached by a sexual predator online. That is 13% of children who use the internet. Moreover, the Center for Sex Offender Management (CSOM) mentioned that the average sex offender offends for 16 years before he is finally caught. In that life span, he has committed and average of 318 offenses and violated 110 victims. Regarding these data, it can be clearly seen that online sexual exploitation has been destroying the lives of children who use social networks. (Hoffman,2012) 3.1.2 Cyber bullyingCyber bullying is different from face to face bullying as the bullies cannot be identified easily and they have sense of security that convinces them they wont get caught. Not knowing the harm that they caused to victim, the bullies do not feel any guilt or empathy. Cyber bullying is also a form of cybercrime which include different branches. The most common type is called harassment, where the abusive and insulting messages are repeatedly sent to the victim. Other kinds of cyber bullying such as flaming, denigration, impersonation, outing, trickery, and exclusion are also found in the world of social networks. The most crucial way is called cyberstalking which fuel up harassment with significant threats and creates fear. Please refer to Appendix 4 (p- ) for different forms of cyber bullying. 3.2 Addiction to social networks Social networks, being used as a form of assistant in the field of education, also show negative impacts on students. One of these impacts is addiction to the networks. A survey done by the University of Marylands International Center for Media the Public Affairs (ICMPA) showed that people under the age of 25 have more chance to addict social networks and two-third of the students who use social media have already shown some addiction. Fifty percent of people between the age of 25 and 35, admitted that they are so attached to social networks that they even use them during office hours. Besides, children can also become attached to social media, if there is no parental guidance. 4. Influence on people in the future 4.1 Positive Influence Apart from the negative aspects of social networks, there are some occasions that they can influence peoples lives positively in the future. One of these influences is that people will obtain more convenient ways of living. Holding meetings and discussion forums using social networks will make time for the busy business-men to spend more time with their family. Online shopping will reduce the time consuming of housewives, when they can do other house chores. Moreover, students can have online learning days where they can interact with people from different parts of the world and share their ideas and debate issues. The next fact is that social networks will help people to be able to keep in touch with the developing world. This includes sharing latest news, stock share prices and gold prices. Since social networks become available on mobile phones during these days, people will always be informed with the current news of the world. Last but not least, some experts of social networking want to advance it to the stage of communication where it can replace telephone. So far, social networking sites such as Google, Facebook and Skype became major media for oversea communication. Scientists of social networks believe that they can create new communication technology that could possibly replace mobile phones in the future. 4.2 Negative Influence Although the social networks can conduct many positive influences, they impose negative ones at the same time. The major drawback is that people may start to lose physical communication and interaction in the real world. For example, two people become best friends online but they do not talk to each other in the real world. Besides, there will be no conversation between partners in the job as the systems are computer control and they can communicate by simply typing some words in chat box. The second influence is the case of students and children. While students can gain knowledge when they use social networks, they can also face with threats and online hazards. Most people believe that cyber crime rate will increase in the future as the criminals can manipulate different ways and methods of crimes in such a world with over 300 social networking sites. On the other hand, there is possibility that people, especially between the age of 15 and 25, will become more addicted to social networks in the future. Moreover, since social networks start to focus their websites on entertainment and business commercials rather than on education, people may spend more of their time on the networks instead of reading or doing physical exercises. Spending over time on social networks is not favourable to health also because when one is using the networks, he or she is doing nothing but sitting in front of a screen or lying on a sofa. 5. Data collection and analysis 5.1 User statistics According to a survey conducted in 2013, Facebook is the most successful social network, obtaining 67% of internet users. Twitter and Pineterst, which stand at second and third positions, have 16% and 15% of users respectively. The researches and surveys describe that women are more attached to the networks than man do. Besides, the researches point out that people between the age of 35 to 44 are most likely to use social networks. This is followed by the age group of 25-34 and 0-17. People over 65 have the least potential to use the networks. 5.2 Mini-survey results To be able to observe accurate and latest data, I conducted a mini-survey which included 100 people, varying age between 15 and 35, from different parts of the world. This survey contained telephone interviewing, emailing and paper distribution. (Please refer to Appendix 3 (p ) Survey on Social Network After analysing all the answers and data, the result came out that 75% of people use at least one kind of social networks and 25% of them use two or more. Among those who use social networks, 20% of people use less than one hour and the remaining use more than two hours per day. They do not usually use two hours straight away. Instead, they check their profiles on networks while going to school or job, having lunch and going back home. Integrating these times with the actual time they use the networks, probably during their leisure hours, the result came out to be two hours per day or more. Most people assumed that being in touch with friends and receiving information as a benefit while they regard low security in privacy and online bullying as major drawbacks. In weighing the advantages and disadvantages, 65% said using social networks is advantageous while the remaining percentage believed that there are more disadvantages to encounter with. However, most people, about 80%, said that they enjoy with their current usage of social networks since they are like tools to refresh their mind after working for a long time or to browse around when they feel bored. 6. Recommendation After analysing all the advantages and disadvantages of social networks, the organizations which specify their interest in social media, came up with several recommendation concerning with the usage of social networks. Firstly, parents must check their childrenÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢s profile regularly and explain about cybercrimes. This will make children to be familiar with the ways of approaching of cyber predators and parents can take precautions for their children. Secondly, one should not accept friend requests if the person is not an acquaintance in the real world. Besides, one should not share personal information such as address, telephone number and email address in social networking sites. Lastly, if someone is bullied or harassed, he or she should report to the authorities of respective social networking sites and contact police when serious threats are made. 7. Bibliography Friedman ,L. (Ed.). (2011). Social Networking. Greenhaven Press, Gale/Cengage Learning. Gerdes, L. (Ed.). (2009). Cyber Crime.Greenhave Press(CA). Guneliu, S. (2011). 30-Minute Social Media Marketing: Step-by-step Techniques to Spread the Word About Your Business: Social Media Marketing in 30 Minutes a Day. McGraw Hill Professional. Hillstrom, L. (2010). Online Social Networks. Farmington Hills, MI. The United States of America Kiesbye, S. (Ed.). (2012). Cyber predators. Gale Group. Rogers, V. (Ed.). (2010). Cyber Bullying. London, UK and Philadelphia. Jessica Kingsley. Salpeter, M. (2011). Social Networking for Carer Success (1st ed.). LearningExpress, LLC. Social network. Wikipedia, the free encyclopedia. Retrieved April 18, 2013, from http://en.wikipedia.org/wiki/Social_network 8. Appendices Appendix 1. Social networking site use by age group This is a survey done by Pew Research Center, showing the usage of Social Networking Site by age group from 2005 to 2012. Appendix 2 This is a survey conducted by Pew Research Center in the late 2012. The expectations are for the year 2013. Referring to the survey, 3% of Facebook users say they plan to spend more time on the site in the year 2013. 27% of Facebook users say they plan to spend less time on the site in the year 2013. 69% of Facebook users say they plan to spend the same amount of time on the site in the year 2013. Appendix.3 Mini-survey evaluated from 100 random students. Survey on Social Network Name- Date- Do you use social networks? Yes/No (2) How many social networks do you use? 1 2 3 More than 3 (3) How many hours do you spend on social networks per day? Less than 1 1 2 3 More than 3 (4) What benefits do you gain from social networks? (5) What, do you think, are the disadvantages of social networks? (6) Do advantages outweigh disadvantages? Yes/No (7) Do you enjoy using social networks? Yes/No

Management and Leadership of Different Cultures

Management and Leadership of Different Cultures Introduction A well recognized definition of leadership by Warren Bennis is Leadership is the function of knowing yourself , having a vision that is well communicated, building trust among colleagues and taking effective action to realize your own leadership potential. Globalization is defined as the absence of borders and barriers to trade, the crystallization of the world as a single place, or the overlapping of the interests of business and society. Globalization is a process whereby world-wide interconnections in virtually very sphere of activity are growing. This rise of these interconnections is the result of shifts that have taken place in technological, political, and economic spheres. The process of globalization means flow of people, flow of technology, flow of capital, growing economic interconnectedness. This process impacts upon regional tourism and hospitality market in many ways. The tourism and hospitality industry brings together hosts and guests from different cultures with different characteristics, expectation and values. To improve competitive position in the global market, the industry needs to satisfy the expectations and needs of their guest. Therefore, it remains an important issue as to how well prepared the tourism and hospitality industry is to handle this flow of peoples and fusion of cultures. Globalisation has also impacted on the composition of the domestic tourism market as this now include multi-ethnic as well as multicultural migrant groups. Yet another impact of globalisation has been the multicultural workforce in the industry itself. Globalisation changed todays hospitality industry. Due to globalisation the managers of the hospitality industry are capable to learn about various cultures as they get to mix with people from various aspect of life and therefore, develop knowledge of them. Due to globalisation the guest base has growth strongly. Tourists travel not for holidays, business, health and different other intentions too. Therefore, this has developed the market for the hospitality industry, which acquired its great income from international tourists. Tourists always spend money when they come in because of that foreign exchange increases. Therefore it is of major value to the economy as globalisation helps to bring in money into the country. Moreover, due to globalisation the industry requires to operate advance technology. Since one wants to fascinate as many visitors as possible, hospitality organisation frequently need to advance and improve their services. For example: Singapore flyer, using faster and advance technology in hotels, so that the guest is gratified. Companies are frequently thinking of advance and innovative ideas to fascinate more visitors. Due to globalisation, more tourists come into our country and more people are required to serve and cater to their needs. So, with the advent of globalisation, there are plenty of more jobs available for people within the hospitality industry. Due to globalisation, more people move around, to facilitate this, the travel industry requires to develop as well. People who come into our country by air, or ship, or land use the transport services provided as well. Due to globalisation, there are different types of international services/cuisines. Since there are plenty o f different tourists with various cultures, custom, cuisines and languages, the hospitality industry includes recipes and various other services to cater to them. These services are available to the locals too, which makes even better. Nevertheless, globalisation has negative impacts on the hospitality industry and also, there are some challenges and difficulties for todays leader in hospitality firms. Due to globalisation, the hospitality industry can hire people from various countries as it is usually cheaper they may sometimes have difficulties in communicating with the guests. Many guests get quite irate as a consequence of this. As there are from various cultures, one needs to be attentive not hurt them. As example, a Hindu will not eat beef so that serving person should be aware of food which contains beef . (unless specifically asked). What is acceptable by one culture may be frowned upon by another. For the communication, technology has been increased because of international barriers, (through the internet, voice recordings.) This has not keept the human touch. A leader from the hospitality industry has a multicultural challenge, managing a diverse workforce and trying to keep up with rapidly shifting trends. Cultural intelligence provides a better approach to this leadership challenge. Cultural intelligence (CQ) is the capability to function effectively across national, ethnic and organizational cultures. Leader has to have knowledge of different cultures. CQ is needed to understand diverse guests, manage diverse teams, recruit and develop cross cultural talent, demonstrate respect and adapt leadership style; without these knowledge hotel can faces many problem. If a manager does not understand different culture, how will he understand different guest from different culture, how will he manage his employees from different culture. It can be affect financially on the hotel. Hotels can have financial losses caused by managers not understanding different cultures. Looking at these challenges and difficulties, it shows that, cross cultural management plays an important role to compete in a global marketplace. The mistakes mention above may results into some consequences. As example- where a strong and forceful personality overcomes the lack of formal delegation or where an inadequate leader is supported by his subordinate who effectively acts as the leader. Failure to delegate successfully to a more knowledgeable subordinate may mean that the subordinate emerges as an informal leader and this could have possible adverse consequences for the manager and organization. Serious mistakes can be made while dealing with people from different cultures. For example- eye contact in western countries is normally associated with confidence, politeness and attentiveness but in some African countries can be seen as rude and disrespectful. Bulgarians nod when they mean no and shake their heads when they mean yes while the Greek nod upwards or raise their eyeb rows for no and shake the head side to side or tilt it to say yes. A lack of cultural literacy can lead to incorrect assumptions, poor relationships and a failure to make useful business connections. So to avoid these mistakes a proper training should be given to the staff by his manager because in any company you will find many people from different culture and different cities so as every person have their own different culture, everyone have their own body language and facial expressions which can results into some mistakes so to combine all these people from different culture together to work as a team a proper training should be given by the manager. STARBUCKS COFFEE COMPANY Starbucks is a well-known coffee company, started in 1971 in Seattles pike place market, Washington. It was opened by Jerry Bolvin, Zev Siegi and Gordon Bowker, they started selling coffee, tea and spices. Now it has largely developed in such a way that it is functioning in 40 countries along with 16000 coffee outlets. Howard Schultz joins Starbucks in 1982. Once he went Italy, he visits Milans popular espresso bars and he was impressed with their popularity and culture and he sees their potency in Seattle. So after having lattes and mochas Seattle immediately becomes crazy for coffee. The thirst for good coffee allows Starbucks to develop their business out of Seattle too, first in the United States, and then further all countries. After becoming the first company to provide stock options to its part-time staff members, Starbucks become in public traded company. Starbucks opened their first shop in 1997, in UK. Starbucks form various products like hot made to order beverages, readym ade brewed coffee packets, tazo tea, bottled beverages, frappucino beverages, smoothies and baked goods like sandwiches, pastries cookies. There are so many organizations which still follow their mission, vision, value or culture like Starbucks use. Starbucks mission line says; to build Starbucks as the premier supplier of the best coffee in the world while managing their uncompromising precept as they develop and in other angle to pep up and nourish the human spirit-one person, one cup and one neighbourhood at a time. Starbucks vision is to make sky-high gratified guests by giving good service expenses that creates changes in guests day-to-day life. If the guest is unhappy, second time he might come with two more extra guests so that how it works for Starbucks. The anchor value in the feat of Starbucks is to make a company with a soul was that the organization would never give up searching the perfect cup of coffee. Hospitality management functions must be aware of the changing curves as the industry is confronting an ever increasing number of foreign employees are being used to fill these gaps which shows in increasing the diversity in the work place. The company working towards globalization of plenty food and beverage functions must also be cognizant of the diversity of various countries in which they operate. Diversity management must become aspect of organization policy in order to be effectual and it must be embedded within the culture of the organization from superior management through front line employees. Good diversity management can have many positive effects on performance of business such as good understanding of guest needs, higher staff keeping rate and increased sales. Ineffective diversity management can get added problems to the work place such as demoralization of staff, hostility and high employee turnover. To adopt diversity as an essential element in the way Starbucks work s. Starbucks conceive that to work successfully in the global market place diversity needs to be adopted within every facet of the business which includes, The workplace Training Suppliers Communities in which they operate The workplace- Starbucks loyalty to diversity starts with fascinating and holding a diverse work team. They try to mirror the guest and communities they serve which creates an environment where all the guest and partners feel prosperous and welcome. To attract a diverse representation of certified candidates, Starbucks connect with many local and national community based companies. As instance in U.S. they make connections with the National Black MBA and the Hispanic MBA and the women in food service firm. Starbucks supervise the demographics of their workforce on quarterly basis to identify whether they reflect the communities in which they work. They also focus on representation within particular positions and judge whether there are tract to higher-level positions. Based on available data, Starbucks US workforce is contained of 53% women and 14% people of colour and in Starbucks executive team vice presidents and above 42% are women and 8% people are of colour. Training diversity object is made through Starbucks general training and development module also management training courses. Diversity courses are also provided at Starbucks to address partners related to business requirements which include diversity learning journey and bias free interviewing workshops which train managers and recruiters for the hiring procedure. Starbucks take the hiring and recruiting process very gravely. They are very deliberate while employing people as it costs 2,300-3,000 pounds to recruit and prepare each staff member. By the period of two weeks of commencing employment all the staff member members will have undergone training and learning about the diversity amongst the employees and also amongst the guest base. Suppliers- Starbucks have developed a provider diversity first step which assures that each selected provider shares the companys core values to meet main requirements which include quality, service, value, stability and sound business practices. A diverse provider must meet certain criteria. As instance the company must be 62% owned, operated and managed by women, minorities or socially disadvantaged individuals. Diversity in communities in which Starbucks operate- Starbucks built a combine venture with Johnson Development Corporation which is owned by Earvin Johnson. They produced urban coffee opportunities, LLC bringing Starbucks shops to diverse communities. By 2003, there were 62 UCO places in the United States. Starbucks UCO shops provide communities an inviting and prosperous place for neighbours to gather. While guests are ensured a coherent Starbucks experience at all the shops they may find the music is tailored to local tastes, elusive differences in the food offerings and wall paintings that is unique to the shops. A UCO shop can be an accelerator for producing jobs and encouraging business development in the communities where the shops are situated. By the end of 2004 the locations employed 961 Starbucks partners. The Starbucks foundation and community and giving programmers provide support to non-profit organization that serves diverse communities. They are also partner with diff erent community organizations to provide employment opportunities to their elements. Cultural encounter happens when people from various cultures come into contact. Sometimes the encounter begins before anyone has a chance to properly introduce you before you even open your mouth. Cultural encounter can lead to world class fatigue or even depression. Many of the adjustments to life in the cultural fast lane must be made early on preventing a successful overseas experience. If we ask who suffers from cultural encounter the answer must be one who spends much time with people from another culture. People eat different foods, celebrate different holidays and dress differently in countries all around the world but these differences affect the ways in which people work together because people organize, manage and work differently from culture to culture. The behaviour of people in organizations varies across cultures in many ways. Researchers have observed systematic and culturally based differences in managers values, attitudes and behaviour. Each of us has a set of attit udes and beliefs through which we see management situations the managers value, attitudes and beliefs can affect cycles of behaviour. Some managers do not trust their subordinates and believe that employees will not do a good job unless closely supervised. These managers establish tight control systems such as time clocks and frequent employee observation to reassure them that employees are working. The employees can be started realizing that management does not trust them so they might start behaving irresponsibly. They arrive on time only when the time clock is in working condition and only work when the manager is around. So it is easy to see how misunderstanding and mistrust can grow between managers from one culture to employees from different culture. In hospitality business you can find many examples of cultural clash as you deal with guests all over the world and you work with different people from different countries with different culture as well. So I just want give to gi ve an example as per my experience in hospitality. Example- I used to work for a hospitality company, park Starbucks Goa resort and spa in India. Once I was in the bar in the afternoon and a Russian guest came to me. Russians hardly speak English. So he came to me and as he didnt know English he was indicating his finger outside towards tree and said kakushka, kakushka he was speaking in Russian and was trying to make me understand his language but as I didnt know Russian language I couldnt make out what he wants exactly so it took a long time to know me what he wants exactly but finally after 10 minutes I finally came to know that he was asking for coconut water and he was indicating his finger towards coconut trees. Then I gave him coconut water and he was very happy. So here we can see a culture clash between an Indian and Russian culture because the Russian hardly speak English so they couldnt communicate properly. So as a suggestion to this problem I would like to suggest that there must be a co-coordinator person in the hospitality company so that if this kind of communication problems due to different culture occurs he or she can handle it. Few managers are more effectual at leading diverse groups than other managers. The traits and behaviour should equip a person to lead diverse groups. Additionally, cultural sensitivity, cultural intelligence and certain specific global leadership skills are essential for inspiring people from cultures other than the ones own. Although they reinforce each other we can describe cultural sensitivity and cultural intelligence separately. Global leadership encompasses so many behaviours that they receive of their own section. Leaders as well as others who are attempting to influence a person from a foreign country must be alert to possible cultural differences. Thus the leader must be willing to acquire knowledge about local customs and learn to speak the native language at least passably. A cross- cultural leader must be patient, adaptable, flexible and willing to listen and learn. All of these characteristics are part of cultural sensitivity an awareness of and a willingness to investig ate the reasons why people belong to other culture act as they do. A person with cultural sensitivity will recognize the certain differences in customs that will help to build better relationships with people in his or her adopted cultures. Another aspect of cultural sensitivity is being tolerant of the subtle differences between cultures. Following is the leadership self assessment quiz which gives an opportunity to reflect our own tolerance for cross-cultural issues. LEADERSHIP SELF ASSESSMENT QUIZ Tolerance for cultural differences Instructions- indicate how comfortable you would feel in the following circumstances: VU- very uncomfortable U- Uncomfortable N- Neutral C- Comfortable VC- very comfortable VU U N C VC Working on a team with both men and women 1 2 3 4 5 Coaching a team or club when all the members are 1 2 3 4 5 Sex than yours Having a transsexual person as a boss. 1 2 3 4 5 Having a person of a different race as a boss. 1 2 3 4 5 Having an opposite sex person as a boss. 1 2 3 4 5 answers if a if you are heterosexual or b if you are homosexual Having a gay or lesbian boss Having a straight boss Having dinner with someone who eats what you consider to be a pet.1 2 3 4 5 Having dinner with someone who eats what you consider to be a repulsive animal or insect.1 2 3 4 5 Working alongside a teammate who you know is HIV positive. 1 2 3 4 5 Working alongside a teammate who has served prison time for 1 2 3 4 5 Vehicular homicide. Total score: Scoring and interpretation: 40-50: you are highly tolerant and flexible in terms of working with a broad spectrum of people. These attitudes can help you to be an effective multicultural leader. 21-39: your tolerance for working with people different from yourself is within the average range. It you learn to become a more tolerant of differences, you are more likely to become an effective multicultural leader. 10-20: you may be experiencing difficulties in working with people quite different from yourself. As a consequence your effectiveness as a multicultural leader might be hampered. If you seek out more diverse cross-cultural experiences you are likely to become more tolerant of differences. Cultural sensitivity helps a person to become a multicultural worker that why cultural sensitivity is very important. Such an individual is convinced that all cultures are equally good and enjoys learning about other cultures. Multicultural workers and leaders are the people who usually have been exposed to more than one culture in childhood. Being multicultural helps one to be accepted by a person from another culture. It has been said that a multilingual salesperson can explain the advantages of a product in other languages but it takes a multicultural person to motivate foreigners to buy. Cultural intelligence is a four dimensional framework rooted in many years of research on intelligence and cross cultural interaction. After going through the above practices implemented in order to improve leaders cross culture intelligence I suggest the effective approaches in improving CQ are as follows. CQ drive CQ knowledge CQ strategy CQ action All these four dimensions are usually refer to develop CQ. CQ drive- the motivational dimension of CQ is the leaders level of interest, drive and energy to adapt cross culturally. You should have the confidence and drive to work through the challenges and conflicts that inevitably accompany cross cultural work. The ability to be personally engaged and preserve through cross cultural challenges is one of the most novel and important aspects of cultural intelligence. We cannot simply assume people who are interested and motivated to adjust to cultural differences. Employees often approach diversity training apathetically and do it just because it is required. Personnel headed to international assignments are often more concerned about moving and adjusting their families overseas than they are about developing cultural understanding. Without ample motivation, there is little point in spending time and money on cross cultural training. CQ drive includes three sub dimensions: Intrinsic motivation- the degree to which you derive enjoyment from culturally diverse situations Extrinsic motivation- the tangible benefits you gain from culturally diverse experiences and Self efficacy- the confidence that you will be effective in a cross cultural encounter. All three of these motivational dynamics play an important role in hoe leaders approach cross cultural situations. CQ knowledge- the cognitive dimension of the CQ research refers to the leaders knowledge about culture and its role in following how business is done. You should understand the way culture shapes thinking and behaviour. It also includes your overall understanding of how cultures vary from one another. CQ knowledge includes two sub dimensions i.e. cultural systems and cultural norms and values. Cultural systems are the way societies organize themselves to meet the basic needs of their members. For example, every nation has cultural systems for how its members distribute products and services or for how they raise their children. Understanding how a family system works might seem unnecessary but it become critically relevant when you are trying to develop human resource policies for employees who are expected to care for the senior members of their extended family. The other sub dimension of CQ knowledge i.e. cultural norms and values refers to the varying ways cultures approach issues such as time, authority and relationships. The value a culture places on time and relationship becomes highly closely connected when an American is trying to get a signed contract from a potential affiliate in china or Saudi Arabia where different norms shape leaders expectations. CQ knowledge is the dimension most often emphasized in many approaches to intercultural competency. For example, a large and growing training and consulting industry focuses on teaching leaders this kind of cultural knowledge. Although valuable however the knowledge coming from CQ knowledge has to be combined with the other three dimensions of CQ or its relevance to the real demands of leadership is questionable and potentially harmful. CQ strategy- is the metacognitive dimension of the CQ. It is the leaders ability to strategize when crossing cultures. Can we slow down the RPMs long enough to carefully observe what is going on inside the mind of others and ourselves? It is the ability to draw upon our cultural understanding to solve culturally complex problems. CQ strategy helps a leader to use cultural knowledge to plan an appropriate strategy accurately interpret what is going on and check to see if expectations are accurate or need revision. The three sub dimensions of CQ strategy are awareness, planning and checking. Awareness means being informed of what is going on in ourselves and others. Planning is taking time to prepare for a cross cultural encounter in anticipating how to approach the people, topic and situation. Checking is monitoring our interaction to see if our plans and expectations were appropriate. It is also comparing what we expected with our actual experience. CQ strategy emphasizes strategy an d is the keystone between understanding cultural issues and actually being able to use our understanding to be more effective. CQ action- the behavioural dimension of CQ is the leaders ability to act appropriately in the range of cross cultural situations. We can effectively accomplish our performance goals in different cultural situations. One of the most important aspects of CQ action is knowing when to adapt to another culture and when not to do so. A person with high CQ learns which actions will and will not enhance effectiveness and acts on that understanding. Thus CQ action involves flexible actions tailored to specific cultural contexts. The sub dimensions of CQ action are verbal actions, nonverbal actions and speech acts. The exact words and phrases we use when we communicate specific types of messages. These are the three kinds of behaviours where there is the greatest need to adapt to cultural norms. Although the demands of today are intercultural settings make it impossible to master all the dos and donts of various cultures. There are certain behaviours that should be modified when we interact wi th different cultures. For example, westerners need to learn the importance of carefully studying business cards presented by those from most Asian contexts. Also some basic verbal and nonverbal behaviour enhance the extent to which we are seen as being effective by others. As an example, the verbal tone(e.g. loud versus soft) in which words are spoken can convey different meaning across cultures. Almost every approach to cross cultural work has insisted on the importance of flexibility. With CQ action we now have a way of exploring how to enhance our flexibility. Research, examples and best practices will be offered to move toward gaining the capabilities represented by these four dimensions. The CQS (cultural intelligence scale) measures competency in each of the four dimensions. Through a series of questions you receive four scores one for each dimension of cultural intelligence. By averaging these four scores together, you can estimate your overall CQ. Two different CQ assessments are available both of which have relevance for improving leadership effectiveness. One is a self report assessment and the other is a peer report assessment. The self assessment provides a profile of how you view yourself in the four dimensions of cultural intelligence. The peer assessment asks you to identify three to five peers who can answer a few questions on your behalf. In return you receive a composite of how your peers view you in the four dimensions of cultural intelligence the two kinds of assessment are most valuable when used together so you can compa re your self assessment with how others perceive your cultural intelligence. There is variety of ways to apply the four dimensions of cultural intelligence to leadership. They can be used as four areas to assess individuals you are considering for a cross cultural assignment. They can also serve as four categories for diversity training or for a leaders personal development plan and the four dimensions can be used as a four step cycle for developing cultural intelligence in the case by case situations. This four step cycle is the primary application used. CQ is more strongly related to an individuals overall performance cross culturally than things like academic achievement or an exceptional IQ. In particular CQ drive, CQ strategy and CQ action are found to have a positive relationship on an individuals success in accomplishing a task. CONCLUSION In the above research it shows that the management is confronting number of challenges problems as an increasing number of foreign employees are being used which results in the diversity in the work place. So the Company must be cognizant of the diversity of various countries in which they work. In order to keep up this diversity management must become a part of organization policy because an effectual diversity management can have many positive consequences on performance of business. So in order to defeat this Starbucks consider that to work successfully in the global market place diversity requires to be adopted within every angle of the business which includes the work place, training , suppliers and the communities in which they operate. Starbucks loyalty to diversity starts with fascinating and holding a diverse work team. They try to mirror the guest and communities they serve which make an environment where all the guests and partners feel prosperous and welcome. Diversity c ontent is constructs through Starbucks general training development modules also management training courses. Starbucks have developed a provider diversity first step which assures that each selected provider shares the companys anchor values to meet main requirements which include quality, service, value, stability and sound business practices. Starbucks has also built a combined venture with Johnson Development Corporation and they have produced urban coffee opportunities, LLC bringing Starbucks shops to diverse communities. Although Starbucks try to control diversity problem at workplace, cultural encounter still happens when people from various cultures come into contact. A person who spends much time with people from different culture suffers the most. The behaviour of people in company varies across cultures in many ways. Some managers are good at leading diverse groups than other. The traits and behaviour should fit a person to lead diverse groups. Cultural sensitivity, cultu ral intelligence and certain specific global leadership skills are essential for motivating people from various cultures. The leadership self assessment quiz can be very helpful in avoiding cross cultural issues in an organization. Cultural sensitivity is also important as it helps a person to become a multicultural worker and cultural intelligence is a four dimensional framework rooted on intelligence and cross cultural interaction. So in order to improve leaders cross culture intelligence, the effective approaches in improving CQ should be CQ drive, CQ knowledge, CQ strategy and CQ action. From the above research it is been clear that CQ drive, CQ knowledge, CQ strategy and CQ action are found to have a positive relationship on an individuals success in accomplishing a task. The CQ is a set of individual capabilities that allows leaders to learn from their experiences. Thus CQ facilitates the transformation of experience into experimental training. A mere exposure to cultural diversity and international assignments does not necessarily enhance learning. Instead leaders must balance the creative tension of all four stages in the experimental process which are concrete experiences, reflective observation, abstract conceptualization and active experimentation. I would like to recommend that organizations should shift their focus from providing experience to ensuring that effective experimental learning occurs for leaders. Part of this shift requires the recognition that individuals have different capabilities to learn from their experiences. Those who are culturally intelligent indi

Malaria and DDT Essay -- Health Biology Essays

Malaria and DDT Malaria has been a huge problem among many developing nations over the past century. The amount of people in the entire world that die from malaria each year is between 700,000 and 2.7 million. 75% of these deaths are African children (Med. Letter on CDC & FDA, 2001). 90% of the malaria cases in the world are located in Sub-Saharan Africa. Once again, the majority of these deaths are of children (Randerson, 2002). The numbers speak for themselves. Malaria is a huge problem and needs to be dealt with immediately. There have been many attempts at preventing malaria, none of which have been very successful. These have usually involved protecting human beings from mosquitoes, the dreaded carriers of the disease, by eliminating their breeding places. Attempts have been made at destroying larvae as they grow in the water, but none have managed to stop the onslaught of malaria. Recently (before 1999), in some locations, certain drug-resistant strains of malaria such as P. falciparum have arisen. The P. falciparum strain is considered the most lethal form of malaria and can cause neurological damage (Poser, 1999). This presence of strains of malaria that do not respond to conventional drug-treatment poses a new problem for malaria control. The hope is that a malaria vaccine can be developed. However, development of such a vaccine is far off. One possible developer of such a vaccine, Henri Vial of the Montpellier University II in France, has developed a drug that kills the malaria parasite by preventing it from replicating in the red blood cells. However, this drug, called G25, has only been tested on laboratory monkeys and still needs to undergo further testing. It is estimate... ...s way into the water where it is absorbed by fish and marine animals. The substance is stored in the fatty tissues of the animal where it stays until it is needed, like during a sickness or when one is deprived of food. This can cause the immune system of an animal to respond to disease with less efficiency. Fish such as carp have shown significant immune-system suppression and high levels of pesticide-induced toxicity (Repetto, Baliga, 1996). If birds feed upon these aquatic animals, then they too will pick up the chemical. The thinning of egg-shells and therefore a decrease in successful births has been linked with exposure to pesticides such as DDT. However, these studies have been done in the field and therefore the results are uncertain and inaccurate. It is difficult to tell the extent of the chemical’s effect on the biological system (Repetto, Baliga, 1996).

Standing Alone Against the World in Ayn Rands The Fountainhead Essay

Standing Alone Against the World in Ayn Rand's The Fountainhead Conformity is a basic human characteristic that man spends a life time either fighting or accepting, but few can escape.   Parents, churches, schools, and communities teach that the path Peter Keating follows is the assured road to security and happiness.   Humans crave companionship and are willing to sacrifice their values, beliefs, and very souls for the satisfaction of superficial love.   Howard Roark demonstrates that true happiness comes from within, at the end of a wearisome road.   He confirms this ideal through exhaustible determination struggling from burdensome beginnings to almost unattainable goals without relenting to pressures from society.   This concept of non-conformity is exemplified throughout the novel.   It is most clearly defined in Howard's resolution to work for Henry Cameron, his rejection of the A.G.A., and the Cortlandt Housing project.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Howard Roark elucidates from the very beginning that he is going to work for Henry Cameron, a revolution considering Cameron's present state, or lack thereof.   Roark is laughed at for having such a fatuous goal but hardly notices the acrimonious criticism that follows him. Even Henry Cameron himself rebukes Howard Roarks efforts to study under him, and only relents to Howard's wishes after he feels that he can no longer bear to reject such talent.   The demonstration of drive and determination as well as defiance of basic rules of social structure make it difficult to not admire this aspiring architect.   It is clear at this point that Howard Roark is going to get what he wants, and he has no concern for what anyone else thinks of it. Roark establishes his own practice and has a conversatio... ...y and non-conformity is highlighted in the exchange between Peter Keating and Howard Roark on the A.G.A, as Howard has no intent of entertaining any such invitation and Peter can think of nothing sweeter.   Finally, Howard Roark reaches a pinnacle of non-conformity as he destroys the only hold society ever had on him, the Cortlandt Housing Project.   Howard Roark is a standard that one can strive towards, realistically, however, it would be almost impossible to follow in his footsteps.   Even in striving to reach his level one conforms to a set of idea, in a sense one conforms to non-conformity.   This novel illustrates in an effective manner that happiness must be reached through holding fast to one's own values.   Perhaps defying society is not the path many would choose, but Ayn Rand certainly presents a challenge to all in her message of   misery and happiness.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚