Saturday, December 28, 2019

Examining the correlations in credit risk through data - Free Essay Example

Sample details Pages: 13 Words: 3850 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Abstract: We examine the correlation in credit risk using credit default swap (CDS) data. We find that the observable risk factors at the firm, industry, and market levels and the macroeconomic variables cannot fully explain the correlation in CDS spread changes, leaving at least 30 percent of the correlation unaccounted for. This finding suggests that contagion is not only statistically but also economically significant in causing correlation in credit risk. Don’t waste time! Our writers will create an original "Examining the correlations in credit risk through data" essay for you Create order Thus, it is important to incorporate an unobservable risk factor into credit risk models in future research. We also find, consistent with some theoretical predictions, that the correlation is countercyclical and is higher among firms with low credit ratings than among firms with high credit ratings. I. Introduction: Correlation in credit risk is a well-known phenomenon. Understanding the causes of correlated credit losses is crucial for many purposes, such as managing a portfolio, setting capital requirements for banks, and pricing structured credit products that are heavily exposed to correlations in credit risk; for example, collateralized debt obligations (CDO). This issue has become particularly important because of the rapid growth of structured credit products in the financial markets in recent years. But despite much research on the subject, we do not understand many aspects of correlation in credit risk; this paper attempts to move the literature forward. First, we explore the economic importance of contagion in credit risk correlation. This is an open empirical question. Many credit models are based on the doubly stochastic assumption that, conditional on observable risk factors, defaults are independent of each other. This assumption is widely accepted and implemented in banking to determine capital requirements.Evidence exists that contagion has a notable impact on the correlation in credit risk of firms subject to significant credit events. On the basis of these findings, some researchers have tried to include contagion in credit models. However, the economic importance of contagion in a firms credit risk correlation is not clear from the literature. If the role of contagion is statistically significant but not economically significant, modeling contagion may not be of first-order importance. But even though some researchers and practitioners reject the doubly stochastic assumption, they find that the proportion of correlation in credit risk that cannot be explained by observable risk factors is small (1 to 5 percent), which suggests that unobservable risk factors may be of minor importance in credit risk models. In this paper, we attempt to clarify this issue. We also explore the credit risk correlation pattern over time and across firms with varying credit quality. The academic literature cannot agree on these patterns either. These questions are important because credit risk has been and still is the biggest risk facing banks. And with securitization and the new products that have been developed in the financial market, credit risk has been spread out beyond the banking sector to various market segments. Ambiguity regarding these issues poses serious challenges for investors, practitioners, and regulators. In this paper, we approach credit risk in two ways. First, unlike earlier studies, we use data from the credit default swap (CDS) market. Most researchers examine the correlation in a firms credit risk using either estimated default intensity based on actual default observations or implied default probability derived from the Merton (1974) model. The former approach may not be reliable, because some default events are strategic decisions and, therefore, may not correspond to economic default.1 Also, some financially distressed companies may be able to negotiate debt restructuring to avoid default or may be acquired with bankruptcy looming on the horizon, and these informal resolutions of financial distress are difficult to identify.2, 3 The problem of reliable numbers is a serious challenge-default is a low-frequency event, and any misclassification may have a major impact on the precision of parameter estimates. Thus, the estimated default intensity might be contaminated, and this w eakness could be behind some rather surprising findings in the literature. On the other hand, default probability estimated from the Merton model could be confounded by the oversimplified assumptions behind the model. In contrast, the CDS market enables the direct measurement of credit risk by many market participants. CDS is insurance against a default by a particular company or sovereign entity (known as the reference entity). The buyer of the CDS contract makes periodic payments to the seller for the right to sell a bond issued by the reference entity for its face value if the issuer defaults. So the price of CDS contracts (or the CDS spread) is a direct measure of the credit risk of the reference entity. Because CDS spreads can be based on a wide array of credit risk models, it is also a comprehensive measure of credit risk. The second way we approach credit risk in this paper is by investigating the observable factors and their contributions to the correlation in risk. Although previous studies have incorporated some macroeconomic factors into modeling credit risk, the impact of these variables is not consistent across studies, and some results are counterintuitive. We study the impact on credit risk of various macroeconomic variables as well as firm- and market-level variables, and we model the industry effect on the credit risk of individual firms. Although many researchers have suggested that the industry effect partially accounts for the correlation in credit risk, the literature has yet to provide conclusive evidence. On the basis of monthly changes in CDS spreads from January 2001 through December 2006, we find that changes in CDS spreads are positively correlated, with an average correlation of 21 percent. Observable variables at the firm level can reduce the correlation by 8 percent, resulting in a correlation of 13 percent among the regression residuals. Market-level and macroeconomic variables are significantly associated with changes in CDS spreads, with the expected signs of the regression coefficients. These variables, together with firm-level variables, can reduce the correlation by two-thirds to 7 percent. We also confirm the existence of the industry effect and find that firms in less cyclical industries have lower correlations in credit risk. Although industry variables are significantly related to CDS spread changes in the right directions, the industry effect can be responsible for less than 1 percent of the correlation in CDS spread changes after we control for firm-level, market-le vel, and macroeconomic variables. When all observable variables are combined, they can account for about 14 percent of the correlations, leaving 7 percent unaccounted for. The main observable variables that contribute to the correlations are firm-level variables and credit spreads, which can be affected by both contagion and systematic risks. Excluding these variables, the mean correlation among the residuals is 12 percent. These findings suggest that contagion could contribute from 33 percent to 57 percent of the correlation in credit risks. We also investigate the potential nonlinearity in the relationship between credit risk and observable variables, and find that accounting for nonlinearity does not qualitatively change our findings. Thus, the evidence suggests that contagion does play an economically important role in the credit risk correlation. In addition, we find that the correlation in credit risk is countercyclical; that is, it is higher during economic downturns and lower during booms. Also, it is higher among firms with low credit ratings than among those with high credit ratings. These findings are consistent with some theoretical predictions but not with the findings based on measures from the Merton model. We believe that the results derived from CDS spreads are more reliable because of the oversimplified assumptions behind Mertons model and the evidence in the literature that the Merton default probability measure does not forecast default probability well. Since the study period was short, it included one full business cycle; thus, the results have general implications. The study period did not include the recent market turmoil; however, if contagion is a major phenomenon during severe economic downturns, failing to include the recent period of turmoil is biased only against the finding that contagion plays an important role. The evidence, therefore, suggests that modeling the unobservable risk factors should be of first-order importance for future research in credit modeling. This paper is organized as follows. In section II, there is a review of the current literature. In section III, description of the sample is given. Discussion of observable risk factors and their contributions to the correlation in credit risk is given in section IV. Section V presents results on the correlation in credit risk over time and by rating groups. In the last section, a brief conclusion is given. II. Literature Review Modelling Correlation in Credit Risk The two branches of credit risk measurement are (1) the structural approach and (2) the reduced-form approach. Structural models originate from the Merton (1974) model and assume that a company will default if the value of its assets is below a certain level; for example, the amount of its outstanding debt. The key to structural modelling is to capture the stochastic asset diffusion process, and default correlation between two companies is introduced by assuming that the stochastic processes followed by the assets of the two companies are correlated. Correlation in the stochastic asset diffusion processes of two firms can be caused by both observable risk factors and unobservable risk factors, such as contagion. The advantage of structural models is the flexibility in modeling correlation in credit risk; the disadvantage is the difficulty in implementing them empirically. The general theoretical predictions from this school are that credit risk correlation is higher for firms with a low credit rating than for those with a high credit rating, and that the correlation increases during economic downturns The reduced-form models assume that a firms default time is driven by a default intensity that varies according to changes in macroeconomic conditions In other words, when the default intensity for company A is high, the default intensity for company B tends to be high as well, which induces a default correlation between the two companies. The reduced-form models usually assume that observable risk factors are the main drivers of firm credit risk and that, after controlling for observable factors and default intensity, defaults should be independent. This is the doubly stochastic assumption. Because of its mathematical tractability, most researchers and practitioners gravitate toward this approach; thus, the doubly stochastic assumption is behind many commonly used reduced-form models to predict default, such as the duration models and the survival time copula models. The doubly stochastic assumption is also the key assumption behind the proprietary models. For instance, Moodys KMV Risk Advisor considers systematic factors using a three-level approach: (1) a composite market risk factor, (2) an industry and country risk factor, and (3) regional factors and sector indicators. The factor loading for an individual firm for each of the factors is estimated using asset variances obtained from the option theoretical model, and the factor loadings are then used to calculate co-variances for each pair of firms. In Credit Metrics, the credit transition matrix is conditioned on a credit cycle index, which shifts down when economic conditions deteriorate. The credit cycle index is obtained by regressing default rates for speculative grade bonds on the credit spread, 10-year Treasury yield, inflation rate, and growth in gross domestic product (GDP). In contrast, Credit Risk Plus incorporates cyclical factors by allowing the mean default rate to vary over the business cycle. Credit Risk Plus models find that correlation in credit risk is higher among firms with low credit ratings. In summary, the doubly stochastic assumption plays a critical role in the vast majority of credit models used in research and practice. The findings say that variations in the observable factors cannot fully explain the correlation in credit risk and that the doubly stochastic assumption is violated; however, the proportion of the correlation that cannot be explained by observable factors is rather small. The conclusion may be contaminated in two ways. First, the evidence could result from the misspecification associated with the model to predict default intensity. A different model could lead to two possibilities: (1) observable factors may be sufficient to account for the correlated default risk, or (2) the proportion not explained by observable factors could be much larger. It is not clear from the literature how the correlation in credit risk varies over business cycles and across firms with different credit quality, as studies on these subjects have yielded conflicting results. This lack of clarity poses a major challenge for investors, portfolio managers, bankers, and bank regulators. Macroeconomic Impact in Credit Risk Modelling Some studies incorporate macroeconomic conditions into credit risk models; however, researchers have used different macroeconomic variables, and some variables that are important in one paper are found to be unimportant in another. Also, some empirical results are quite counterintuitive. Some researchers find intuitive relations between credit risk and macroeconomic variables. For example, Collin-Dufresne, Goldstein, and Martin (2001) examine determinants of changes in credit spreads using changes in 10-year Treasury rates, changes in the slope of the yield curve, changes in market volatility, and monthly SP 500 returns. They find that all these variables are significantly related to changes in credit spreads, with the direction implied by structural models. Carling and colleagues (2007) investigate how macroeconomic conditions affect business defaults using a corporate portfolio from a leading Swiss retail bank. They find that the output gap, the yield curve, and consumers expectations of future economic development can help explain a firms default risk. In summary, the impact of macroeconomic variables is not consistently documented in the literature, and some results are counterintuitive. These findings add to the puzzle of whether observable risk factors can explain the correlation in credit risk. We believe that the inconsistent and sometimes counterintuitive findings may be contaminated by the noise in the default data, as default events are rare and can contain misclassifications that lead to estimation errors. CDS data are more suitable for this purpose. III. Data Description and Sample Statistics The Sample The primary data in this study are the monthly CDS data from January 2001 through December 2006. We use the five-year CDS, as this instrument is the most liquid in the CDS market. We use monthly data to match the monthly macroeconomic variables because price movements in monthly data are less contaminated than daily or weekly data by temporary imbalances between supply and demand. The CDS spread measures total credit risk, which includes both default probability (DP) and losses given default (LGD). It is widely documented that DP and LGD are positively correlated thus, the CDS spread is a comprehensive measure of total credit risk. The sample includes 523 firms (25,113 firm-month observations)-376 investment-grade firms and 147 speculative-grade firms, based on the average rating for each firm during the sample period. Our sample period (2001-2006) includes one full business cycle consisting of varying economic conditions: an economic downturn in the early period, a recovery in 2003, and a normal period afterward. Variables at the Firm, Industry, and Market Levels We use three firm-level variables to explain the changes in CDS spreads: monthly stock returns, monthly stock volatility change, and firm leverage change.According to the structural model, a firms default risk is higher when either volatility or leverage is high. Also, stock returns indicate the markets assessment of a firms future performance. Lower returns imply a dimmer outlook, which should correlate with a higher credit risk, so stock returns should be negatively associated with changes in CDS spreads. We use the following market-level variables: changes in implied market volatility (VIX), changes in market leverage, and changes in market returns (measured by NYSE-AMEX-NASDAQ value-weighted returns). An increase in either market volatility or market leverage, or a decrease in market returns, suggests a worsening economic outlook, which should be associated with an increase in credit risk. We define industry variables similarly-changes in industry volatility, changes in industry leverage, and changes in industry aggregate returns-and the same logic should hold at the industry level if there is an industry effect. Macroeconomic Variables We use real GDP growth rate and changes in capacity utilization rate to describe the business cycle. If credit risks are higher during an economic recession, we would see changes in CDS spreads negatively related to both real GDP growth rate and changes in capacity utilization rate. We also include inflation among our list of macroeconomic variables. Since previous studies have shown a negative relationship between real activity and inflation, we expected a positive relationship between inflation and credit risk. We use the following interest rate variables: changes in three-month T-bill rates, changes in term spreads (difference between the yields of 10-year T-bonds and three-month T-bills), and changes in credit spreads between BBB and AAA bonds and between AAA bonds and 10-year T-bonds. The relationship between the three-month T-bill rate and credit risk should be negative for two reasons. First, the Feds monetary policy is pro-cyclical. Second, a higher interest rate can increase the risk-neutral drift of the process of firm value, thus reducing credit risks Collin-Dufresne and colleagues (2001) and Duffee (1998) both documented a negative relationship between interest rate and credit risk. Credit risk should also be negatively related to the term spread (Estrella and Hardouvelis 1991, Estrella and Mishkin 1996, and Fama and French 1989) and positively related to both measures of credit spread (Chen 1991, Fama and French 1989, Friedman and Kuttner 1992, and Stock and Watson 1989). Data Description Table 1 provides summary statistics of the sample. For all firms, the mean CDS spread is 126.27 basis points (bps). The median and standard deviation suggest that the distribution of CDS spreads is quite skewed and volatile. The mean change in CDS spreads is small (-0.07 percent), but the range is wide (-17.78 to 23.43 percent). Both the high and low in CDS spread changes are found among the speculative-grade firms; these firms also have higher mean changes in CDS spreads. As expected, all three measures (CDS spreads, equity volatility, and firm leverage) are lower among investment-grade firms and higher among speculative-grade firms. Panel B of table 1 shows that the average CDS spread was highest in 2002; it declined sharply in 2003 and 2004, then leveled off.11 The average monthly return on the NYSE-AMEX-NASDAQ index was 0.47 percent during the sample period, and the average annualized volatility was 19.08 percent. Over the entire sample period, the mean market leverage was 0.23. The average return across the industry portfolios was 0.57 percent, and the mean annualized industry volatility was 25.27 percent. Table 1. Descriptive Statistics Table 1 shows the summary statistics of the variables used in the study. Panel A presents the descriptive statistics for the firm-level variables: five-year CDS spreads (in basis points), CDS spread percentage changes, equity returns, equity volatility, and leverage. The monthly equity volatility is computed as the annualized standard deviation based on daily returns. The firm leverage is computed as the ratio of book debt value to the sum of market capitalization and book debt value. The data are from January 2001 through December 2006. Investment-grade refers to firms with ratings at BAA or above; speculative-grade refers to firms with ratings below BAA. Panel B presents the descriptive statistics of CDS spreads by year. Panel C presents the summary statistics of the market and industry variables. VIX is the implied volatility of the SP 500 index options obtained from the Chicago Board Options Exchange. The market return is the NYSE-AMEX-NASDAQ value-weighted index returns. Other m arket (industry) variables are the value-weighted average from all firms in the market (industry). We use the Fama-French 12-industry classification. Panel A. Firm Characteristics Variables Mean Median Minimum Maximum All firms CDS (bps) 126.27 63.10 8.65 1,632.36 CDS change (%) -0.07 -0.46 -17.78 23.43 Equity return (%) 1.23 1.13 -4.26 4.86 Equity volatility 0.31 0.28 0.13 0.78 Leverage 0.32 0.29 0.00 0.94 Investment-grade CDS (bps) 60.22 47.10 8.65 444.89 CDS change (%) -0.42 -0.60 -5.06 7.93 Equity return (%) 1.18 1.13 -0.80 4.39 Equity volatility 0.27 0.25 0.16 0.64 Leverage 0.28 0.24 0.00 0.94 Speculative-grade CDS (bps) 295.23 223.24 53.81 1,632.36 CDS change (%) 8.26 5.78 -17.78 23.43 Equity return (%) 1.34 1.34 -4.26 4.86 Equity volatility 0.41 0.39 0.13 0.78 Leverage 0.44 0.43 0.06 0.92 Table 1. Descriptive Statistics (contd.) Panel B. Summary Statistics of CDS Spreads (bps) Year Mean Median Minimum Maximum 2001 151.67 83.33 17.83 3,249.57 2002 212.29 99.70 15.22 3,232.04 2003 150.72 69.62 9.84 2,508.39 2004 109.33 49.27 8.72 1,843.10 2005 107.17 44.90 5.21 2,181.16 2006 94.39 41.40 3.98 2,396.08 Panel C. Market- and Industry-Level Variables Variables Mean Median Minimum Maximum Market aggregate return (%) 0.47 1.11 -10.01 8.41 VIX (%) 19.08 16.69 10.91 39.69 Market leverage 0.23 0.23 0.19 0.27 Industry return (%) 0.57 1.57 -12.64 10.23 Industry volatility (%) 25.27 20.21 11.91 80.57 Industry leverage 0.23 0.17 0.07 0.48 IV. Observable Risk Factors and Correlation in Credit Risk Because most of our analyses involve panel data, our estimates are based on robust standard errors. We estimated these errors by assuming independence across firms, but we accounted for possible autocorrelation within the same firm. We use the contemporaneous variables on the right-hand-side variables . Market and Macroeconomic Effect Table 2 shows the effect of firm-level variables on changes in CDS spreads. We calculate the pairwise correlations (of the raw CDS spread changes or residuals from the regressions) and report the means in the last row of the table. The first column of table 2 shows that, without controlling for any observable covariates, the average correlation in changes in CDS spreads in the entire sample is 21 percent. The correlation ranges from a minimum of -30 percent to a maximum of 72 percent, and the interquartile spans a range of 30 percent. Table 2. Effect of Firm Characteristics on the Correlation in Changes in CDS Spreads Independent Variables Model 1 Model 2 Model 3 Model 4 Model 5 Equity returns -0.567*** -0.473*** [0.023] [0.025] Change in firm leverage 1.662*** 0.318*** [0.114] [0.084] Chance in equity volatility 0.199*** 0.148*** [0.015] [0.012] Constant 0.003*** -0.002*** -0.003*** 0.003*** [0.001] [0.001] [0.001] [0.001] Observations 25,113 25,113 25,113 25,113 25,113 R2 9% 5% 3% 11% Correlation/residual correlation 0.21 0.17 0.14 0.16 0.13 Industry Effect Table 5 shows the average pairwise correlation in CDS spread changes among firms in each of the 11 Fama-French industries.12 The table shows much variation in correlation in credit risk among firms in the same industry. Over the study period, the energy sector has the highest correlation among all industries, whereas the health care sector has the lowest correlation. Only four of the 11 industries have a higher average correlation than the overall average of 21 percent. The ranking of correlation by industry changed over the six-year study period. The financial industry had the highest correlation in 2001 and 2002, suggesting that an economic downturn affects financial firms more than others. The energy industry had the highest correlation from 2004 to 2006, likely driven by volatile price movements in oil. The health care, medical equipment, and drug industries had the lowest correlations in three of the six years, and consumer nondurable goods had the lowest correlation in two years. These findings suggest that less cyclical industries have lower correlations in credit risk. Table 5. Correlation in CDS Spread Changes Across Industries Year Ind1 Ind2 Ind3 Ind4 Ind5 Ind6 Ind7 Ind8 Ind9 Ind10 Ind11 2001 0.12 0.44 0.44 0.63 0.24 0.36 0.51 0.28 0.41 0.65 2002 0.13 0.43 0.26 0.26 0.14 0.41 0.43 0.38 0.24 0.17 0.45 2003 0.20 0.33 0.15 0.24 0.05 0.13 0.25 0.36 0.17 0.03 0.29 2004 0.24 0.26 0.21 0.35 0.17 0.21 0.26 0.32 0.23 0.14 0.30 2005 0.22 0.28 0.23 0.55 0.18 0.22 0.22 0.35 0.20 0.23 0.31 2006 0.06 0.07 0.09 0.33 0.17 0.11 0.12 0.26 0.22 0.06 0.13 2001-2006 0.16 0.28 0.18 0.35 0.18 0.17 0.16 0.29 0.19 0.11 0.22 V. Conclusions In this paper, we examine the correlation in credit risk using CDS data. We find that observable variables at the firm, industry, and market levels, as well as macroeconomic variables, cannot fully explain the correlation in credit risk, leaving at least one-third of the correlation in credit risk unaccounted for during the study period (2001-2006). These findings suggest that contagion may be a common phenomenon in an economy and that the doubly stochastic assumption may not hold in general. Because of the large proportion of correlation that cannot be explained by observable risk factors, future research in credit modeling should focus on incorporating unobservable risk factors into models. We also find that credit risk correlation is higher during economic downturns and higher among firms with low credit ratings than among those with high credit ratings. These findings are consistent with the theoretical predictions but inconsistent with some empirical findings based on the Merton default probability measure. We contend that our results are more reliable because of the oversimplified assumptions behind Mertons model and the evidence in the literature that the Merton default probability measure cannot accurately forecast default probabilities.

Friday, December 20, 2019

Essay about Revenge and Downfall - 723 Words

Yasmin Nunez nbsp;nbsp;nbsp;nbsp;nbsp;In Shakespeare’s Hamlet, it is the desire for revenge that lies behind the motives of young Hamlet. His moral struggle towards revenge becomes an obsession leading to a change in character. His actions strongly imply that madness has overcome him. However, there are hints present in the text that implies his madness was feigned in order to achieve his revenge. nbsp;nbsp;nbsp;nbsp;nbsp;Immediately following the appearance of old King Hamlet’s ghost, Hamlet warns Horatio that he may act mad, which foreshadows a change in Hamlet’s character. The reader is prepared that any abnormal acts may be a result from Hamlet’s acting. As the play continues, more questions are raised that involve his†¦show more content†¦His constant reminder of the evil in King Claudius and his vow to seek revenge also added to his burden. His struggles against these emotions weakened him, and ultimately led him to actual madness. As it become more evident that Hamlet’s acting could have become a reality, his desire for revenge becomes stronger. He becomes more focus on achieving his revenge, but does not rush for the opportunity. When Hamlet approached King Claudius praying in act 3 scene 3, he does not react immediately. He thinks about his actions and decides not to harm the King. This thought out decision would lead one to believe that Hamlet is not crazy due to his ability to rationalize, but Hamlet’s decision not to kill the King was because he did not want to kill him after he had confessed his sins to God. Thus, the fact that Hamlet thinks to the extent of whether or not the King’s soul will go to heaven or hell shows that his intentions were rooted from his madness. Before Hamlet’s madness became an issue, he would often try to rationalize his actions. When Hamlet first saw the ghost of his father, he questioned the intentions of the ghost and the validity of the ghost’s story of murder. However, later in the play, as Hamlet is looked upon by others as mad, he confronts his mother in a way the reader has not seen before. He is brutally honest with her, yelling at her for being with King Claudius and admits toShow MoreRelatedHamlet essay on emotion, fate and reason1241 Words   |  5 PagesHamlet, the death of Hamlets father caused many problems, all of which eventually lead up to the tragic death of Hamlet. Each event that happens in the play is impacted by reason, fate and emotion. The events throughout the play that lead to hamlets downfall are determined by the roles of reason, fate and emotion. These three roles are key factors of the play. Reason plays the role of advancing the plot, especially when hamlet devises a plan to reassure the predication of his father’s ghost. 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Thursday, December 12, 2019

Importance of Arts Essay Paper Example For Students

Importance of Arts Essay Paper Children first learn to respond aesthetically to their environment through touch, taste, sound and smell, and their natural curiosity suggests a need for sensory experience. Visual arts education helps to develop sensory awareness. Each child possesses a range of intelligences and he/she needs a variety of learning experiences in order to develop them fully. Visual arts activities enable children to make sense of and to express their world in visual, tangible form. The development of the child cannot be complete without exposing her/him to art and music especially, which are the basic forms of aesthetic appreciation. Learning through the arts Fosters integration of a students sensory, cognitive, emotional, and motor capacities. For example, hands-on materials and activities can challenge students to move from the concrete to the abstract, and students can develop ideas. Is enjoyable, fulfilling and also intellectually rigorous disciplines, Stimulates and develops the imagination and critical thinking, and refines cognitive and creative skills. Develops fine motor skills of children. Repeating stories, poems, and songs strengthens memory. Help to level the learning field across socio-economic boundaries. Strengthens problem-solving and critical-thinking skills, increasing academic achievement. Provides a natural source Of learning. Child development specialists note that play is the business of young children; play is the way children promote and enhance their development. The arts are a most natural vehicle for play. Develops a sense of craftsmanship, quality task performance, and goal-setting skills needed to succeed in the classroom. Teaches children life skills such as developing an informed perception; articulating a vision; learning to solve problems and make decisions; building elf-confidence and self-discipline; developing the ability to imagine what might be; and accepting responsibility to complete tasks trot start to finish. Nurtures important values, including team-building skills; respecting alternative viewpoints; and appreciating and being aware of different cultures and traditions. Provide a natural vehicle through which students can explore and express themselves and discover and interpret the world around them. Reduces childrens negative attitudes toward school and develop confidence and enjoyment as motivation. Dance helps build motor control, body relationships, and a sense of direction. Drawing, sculpting, and other visual arts develop spatial acuity. Group activities, such as learning dance steps or singing songs, build social skills. As children describe people and things in their world using pictures, body moments, and mime, they enhance their descriptive, nonverbal, cognitive capabilities. Expand and deepen the attention span and powers of concentration of pupils, their ability to listen, observe closely, interpret what they see and enables them to become more self-aware and self-confident. Enhances intellectual and emotional development tot children. Encourages innovative and yeoman ways of thinking, spontaneity, intuition and improvisation. Develop students ability to think creatively and critically. Nourish and stimulate the imagination of students and help them gain insights into the overloud around them and to represent their understandings in various ways. Encourages them to take risks, to solve problems in creative ways, and to draw on their resourcefulness to build on new ideas. Provides opportunities for differentiation of instruction and learning environments. Identify common values, both aesthetic and human, in various works Of art, and increase their understanding of others. Encourage students to be responsible and critically literate members of society and citizens of the world. Learn to approach issues, create and present ideas, thoughts, feelings and points view in new ways. Use of current and emerging technologies (e. G. , video, multimedia) is integrated in the four disciplines as means of recording enhancing, communicating, and reinterpreting ideas. Deepen their awareness and appreciation of the nature of the arts and understand what artists, musicians, actors, and dancers do as individuals and as a community Help to reflect record, celebrate, and pass on to future generations the arsenal and collective stories, values, innovations, and traditions that make us unique. Meet John Doe: Fighting for Social Integrity EssayAssessment Areas for assessment would include: the childs ability to choose and use materials, tools and media for a particular task or project, effectively and with originality the childs expressive use of visual media in compositions and in developing form the quality of the childs responses to art works, and his/her ability to make connections between his/her own work and the work of others the childs approach to and level of involvement with a task the childs contribution to group activity, Reflection pupils were able to use scissors and glue properly without spilling. They cut UT shapes fairly well. Newspapers were put on the tables to facilitate cleaning. However, for a composition, pupils need lots of practice and exposure. It was an enjoyable experience both for the teacher and the pupils. I knew the lesson would be assessed, so I thought more about my teaching and prepared more. My presentation attracted the students and f ired their imagination. They paid attention and gave active response. I felt good. Believe that preparation is the key to a successful lesson. Conclusion Creative Education forms part of the primary curriculum but it has been totally selected, particularly after Standard Ill, because Of the COPE examination. A regular and adequate supply Of materials and tools is essential for building on staff interest and enthusiasm. It is also important to plan for ancillary resources, such as cleaning materials, drying facilities and display and storage space. The knowledge and skills developed in the study of the arts can therefore be applied in many other endeavors. Appendix (Quotes on importance of Arts) The arts can play a crucial role in improving students abilities to learn, because they draw on a range of intelligences and learning styles, not just the linguistic ND logical-mathematical intelligences upon which most schools are based. (Eloquent Evidence: Arts at the Core Of Learning, Presidents Committee on the Arts and Humanities, talking about Howard Gardeners Theory of Multiple Intelligences, 1995) The Physical and Sensory Impact Of Arts Education A student making music experiences the simultaneous engagement of senses, muscles, and intellect. Brain scans taken during ironical performances show that virtually the entire cerebral cortex is active while musicians are playing. (Learning and the Arts: Crossing Boundaries, 2000, p. 14) Dramatic play, hymning games, and songs are some of the language-rich activities that build pre-reading skills. (Young Children and the Arts: Making Creative Connection, 1 BIB, p. ) Preschoolers who were given music keyboard lessons improved their spatial-temporal reasoning Used for understanding relationships between objects such as calculating a proportion or playing chess, (Education Leadership, November, 1998, p. 38) Creative activity is also a source tot joy and wonder, while it bids its students to touch, taste, hear, and see the world, Children are powerfully affected by storytelling, music, dance, and the visual arts.

Thursday, December 5, 2019

Performance Measurement and Decentralization †MyAssignmenthelp.com

Question: Discuss about the Performance Measurement and Decentralization. Answer: Introduction Decentralization essentially refers to the process of delegating the authority mostly related to decision making processes that are not possible by a single individual to execute. This means that in a large scale organization the complexity of the operations performed and the diversity of the projects undertaken demand effective decision making in the processes associated with them. These decisions can be categorized into certain domains like strategic decisions, decisions related to management and decisions regarding control. Now it is not possible for a single individual to take accurate decision in regards to such a vast area of operations, therefore the senior level management delegates the decision making process to his subordinates, this is known as decentralization. A particular official who is positioned at the higher level of the hierarchy of authority may not be always available to take decisions therefore the task may be delegated to the employees at the middle or lower le vel. However in order to ensure that the employees do take decisions that are in the interests of the company and not in accordance to their own personal interests, suitable and apt performance measures should be established in the organization (https://www.accaglobal.com, 2017). Literature review:Measuring performance in managerial accounting level Decentralization is carried out in all organizations irrespective of the size of the organization. But in order to measure the effectiveness of the decentralization carried out in the organization, performance measures have been introduced. Performance measures can be of two types namely financial measures and non financial measures. Financial measures are those which produce results that can be measured quantifiably like financial performance. Non financial measures are the measures that deal with the qualitative results of the firm like innovation and resource utilization of the firm. In this particular study the discussion focuses upon the techniques of measuring performance inmanagerial accounting level that is financial performance measures ("Measure your financial performance", 2017). The financial performance measures are utilized for gauging the performance of the organization. Specific measures for evaluating the performance in managerialaccounting are: Quality Cost the extent to which the cost of quality to be utilized in the organization, is measured by comparing the actual cost with the budgeted cost. Variances variances are another effective measure of performance that is calculated by comparing the standard absorbed cost with the actual expenses incurred by the organization. Cashflow cashflows are the perfect performance measurement tool in respect to managerial accounting. A particular cashflow aims to measure the cash flowing in and out of the business. Cashflows are a mandatory component of the financial statements prepared by an entity and tend to provide accurate forecasts regarding the business. Working Capital the amount of working capital that is undertaken by the company also acts as an efficient performance measurement tool. There are several other tools that aim to measure the performance at the managerialaccounting level but individually these tools do not prove to be effective therefore certain systems have been developed in order to simplify the task of performance measurement (Franco-Santos, Lucianetti, Bourne, 2012). The first performance management tool is the balanced scorecard system. The balanced scorecard system that constitute of certain methods of design and automation tools, which are essentially used the senior level management in order to keep track of the activities or decisions executed by employees and the subsequent results from such actions (Wu, 2012). Another popular performance measurement system is the Action-profit Linkage Model that aims to cover the four main components of performance that are the actions or operations undertaken by the company, delivered services or products, action by the customers and the economic impacts. Managers with the help of such a system are able to measure the performance and profitability of each and every action that is undertaken by the company (Mirela-Oana, 2012). Lastly the performance measurement system in managerial accounting is the performance prism. Performance prism essentially measures the performance of the firm based on the perspective of its stakeholders. The primary five facets of the performance prism are satisfaction obtained by the stakeholders; strategies to increase the stakeholder satisfaction; processes to be incorporated; capabilities required in order to establish the processes; contribution by the stakeholders ("The Performance Prism", 2017). Decentralization and its impact in managerial accounting activities Decentralization is adopted by each and every organization. This is because the increasing complexity of business and the involvement of the organization in a vast number of operations make the process of decentralization effective and necessary. Decentralized decision making impacts the performance of the organization in a positive way. The quality of the decisions that is taken by the employees in a decentralized unit is always higher than the quality of decision making that is taken in a centralized unit. This is because in a decentralized unit the decision is taken by an employee who is directly connected with the issue regarding which the decision has to be taken therefore the decision taken by him is often accurate and effective. In an organization that has incorporated effective decentralization the chances of occurrence of errors in the financial statements are low. This is because the lower level employees who are delegated with the responsibility of preparation of the finan cial statements are directly related with decision making processes and do their work with increased motivation and focus. Thus decentralization positively impacts the managerial accounting activities Managerial accounting activities essentially refer to the preparation of the financial statements and other activities that depict the financial performance of an organization along with the preparation of the accounting statements revealing the liquidity position of business and other indicators of the financial condition of the organization. Decentralization if implemented in an organization will ease the entire process of managerial accounting. This is because the preparation of the financial statements require recording of data or information from different stakeholders of business. Now these activities are carried out at the lower levels of management and often executed by employees at the base level of the hierarchy of authority. Decentralization enables such an employee to take effective decision in the preparation of the financial statements as he is in direct connection to the area of action. Thus effective decentralization results in an accurate managerial accounting proces s of an organization (Ecker, van Triest Williams, 2013). Advantages of decentralization on measuring performance Decentralization saves the chief executives from being burdened by the responsibility of taking routine decisions. The time that decentralization saves for these executives can be spent on more important topics such as diversification of products or developing a cheaper production process, product innovation and initiating investment in new projects. Decentralization facilitates effective supervision and control. This is because the senior level management having released from the rigorous task of decision making, have enough time to monitor and assess the activities and operations carried out by his subordinates. Decentralization enables an organization to take accurate and contextual decisions due to the fact that the individual or employee delegated with the particular authority is nearest to the place of action. This allows him to be well aware of the real situation and thus take a decision that is perfectly suitable (Alonso, Clifton Daz-Fuentes, 2015). Disadvantages of decentralization on measuring performance The process of decentralization also comes with certain demerits. For instance decentralization often hampers the process of cooperation and coordination among the various units of the organization. This is because different units react differently to a particular situation thus hampering effective coordination. Decentralization for small scale firms are not recommended as it involves greater amounts of operating costs. Decentralization may also lead to decision making by employees in regards to satisfy their own personal interests rather than the interest of the organization (Alonso, Clifton Daz-Fuentes, 2015). Discussion Decentralization though has certain demerits but with the implementation of effective performance measures can prove to be a major contributing factor in increasing the profitability of the organization. Decentralization without performance measurement system is incomplete and also ineffective. Moreover the process of delegation of authority can only be a success when the effect of such an action can be measured. For instance an individual working in a bank with decentralized process in loans approval, accounts opening, budgeting, managing cost and all operations activities if shifted to a centralized process will surely affect the entire structure of business in the bank. The process of decision making may deteriorate the quality of the decision taken along with delay in the entire process of decision making. This is because a centralized decision making process does not involve direct connection with the place of action, thus disallowing the executive to make realistic and quick decision. The cost of operation may also increase as individuals with specific skill and experience may be appointed for the purpose of decision making. The managerial accounting function may also be affected negatively due to a centralized decision making system. This is because the senior level management would not have much time to monitor their subordinates thus increasing the chances of errors and fraud in the accounting statements of the bank. A single individual delegated with the task of decision making regarding loan approval, account opening, budgeting and managing cost also aggravate the chances of error on the part of the individual as he cannot be in touch with all these sectors at the same time thus he has to take decision n the basis of assumption and experience (Beretta Prete, 2012). However a centralized decision making system may establish the lost coordination among the different units of the bank and increase the dependence of the employees over the management of the bank. Best method to do research methodology The research methods will enable us to gather the data needed to answer as response in the research questions in target group. Survey method is the best quantitative method that includes asking people to fill up responses about budgeting, costs and managerial accounting. First, we have to consider a focus group in which interview process is to be conducted. This is the best method to work out a research methodology. We mainly ask two types of questions: open-ended questions and closed-ended questions. The responses of interviewee are tabulated in the excel sheet. Target participants The target participants are the intended audience or sample of whole population of predetermined market. The target participants are commonly formed according to the similarity or variability as required. Target population in research process indicates the entire group of individuals or objects to which researchers are interested in generalizing the interpretations. Interviews or focus groups include conversation to people to find out their views and experiences. Generally, focus groups have 6 to 10 people. The target population is restricted to exclude population members and questions should be relevant to the interview process. Here, the representatives from employees, managers, educated customers and senior officials are able to make a proper target group. Analytical Process of Data Data analysis is the method of systematically applied statistical and logical techniques to describe and illustrate, summarize and interpret. Finally, after evaluating the data, researchers generally analyze for patterns in observations through the entire data collection phase. The data could be majorly of two types. These are quantitative (numeric) and qualitative (categorical such as ordinal, cardinal). We should put the data in nominal, ordinal, interval or ratio scale. (Yin, Yang Karimi, 2012). The first step is to impose a research question.The second step is to consider the measuring process. Reliability and validity of the measures are to be tested. The accounting and costing data have mainly two types of measures such as achievement measures and improvement measures. The third step is collect data according to the responses of questionnaire required for our study. We have to set up the survey system and survey design software according to the sample size formula and calculator. We then measured the descriptive statistics and central tendency of the subject matter. Measures of variance indicate the data around the center. Besides, correlation and regression of different variables were undertaken into consideration. We could use different software packages such as Minitab, SAS, SPSS, MS Excel and R. After analyzing the data, we tested the hypotheses to determine the probability that that a given hypothesis is true or false. From pre assigned consideration, we assume null or alternative hypotheses and decide whether accept or reject the null hypothesis at certain confidence interval. Collection of Data The collection of data depends on four degrees such as degree of structure, degree of quantifiability, degree of obtrusiveness and degrees of objectivity. We can collect primary data or secondary data. The communication between respondents and interviewer helps to generate true responses. Collection of secondary data is easy to process but sometimes may bay unsuitable. We must keep the data collection process under control. The interview method is proper for getting information. The interview could be conducted in two ways such as personal interview (face-to-face) and structured interview (non-flexibility of face-to-face). We are eager to tale personal interview because of getting the information of greater strength, flexibility of restructuring, low amount of non-response, more control and more personal information. Interviewer could gather supplementary information about respondents personal characteristics and environment that has value in interpreting outcomes. We can take it group wise too. Their thought processes in terms of responses are necessary for the welfare of bank in terms of decentralization of accounting management (Weigold, Weigold Russell, 2013). Recommendations Decentralization essentially refers to the process of handling over the responsibility of the decision making processes to the concerned group or individual who is directly related or connected with the action regarding which the particular decision has to be taken. Decentralization in managerial accounting can be very effective if implemented accurately. The best practice to implement decentralization or to develop a decentralized organization is that the particular responsibility of delegating the authority of decision making should be done by a senior level officer after proper scrutiny of the workings inside an organization. To be more precise the decentralization without proper research and analysis may prove to be a wastage of resources. Therefore it is best recommended to assign a particular team that may deal with the entire process of decentralization and result in effective execution of the operations of the entity. Secondly the structure of the decentralized system should be such that it involves performance measurement tools in order to measure the effectiveness of the implemented decentralization process. Conclusion Therefore as it can be concluded from the above study a decentralized organization is much more effective than a centralized organization. This means that decentralization does lead to accurate decision making and thus initiate proper functioning of an organization. The managers of a particular entity implementing decentralization in the organization should be vigilant of the decisions that is taken by the employees and should also implement performance measures in order to measure the effectiveness of the implemented processes. Decentralization as can be understood from the above study, also is effective in facilitating managerial accounting. Thus as a matter of fact decentralization should be adopted by more and more organizations. Summary The findings of the particular study have provided a clear understanding of the concept of decentralization in an organization especially in banks. Decentralization fundamentally refers to the process of delegation of authority to employees or units that are in direct connection with the operations undertaken by a particular organization and therefore will be able to take effective and wise decisions regarding the operations. Decentralization in banks with regard to handling operations such as cost management, account opening and approval of loans is an essential requirement for ensuring effective degree of operation by the bank. However, decentralization without the implementation of effective performance measurement tools is meaningless. As mentioned in the study multiple systems have been developed in order to measure performance in managerial accounting level. These are namely the balanced scorecard system, action profit linkage model and the performance prism. Therefore, it is c lear that decentralization and performance measurement are the two facets of the same coin. Though decentralization has certain demerits, as it is not suitable for small-scale firms and hamper the process of coordination among different units of the organization, the merits of the decision making process overcast these disadvantages. Therefore, decentralization should be adopted by each organization. References Alonso, J. M., Clifton, J., Daz-Fuentes, D. (2015). Did new public management matter? An empirical analysis of the outsourcing and decentralization effects on public sector size. Public Management Review, 17(5), 643-660. Beretta, E., Prete, S. D. (2012). Bank acquisitions and decentralization choices. Economic Notes, 41(1?2), 27-57. Ecker, B., van Triest, S., Williams, C. (2013). Management control and the decentralization of RD. Journal of Management, 39(4), 906-927. Franco-Santos, M., Lucianetti, L., Bourne, M. (2012). Contemporary performance measurement systems: A review of their consequences and a framework for research. Management accounting research, 23(2), 79-119. https://www.accaglobal.com, A. (2017). Decentralisation and the need for performance measurement | ACCA Qualification | Students | ACCA Global. Accaglobal.com. Retrieved 6 November 2017, from https://www.accaglobal.com/in/en/student/exam-support-resources/fundamentals-exams-study-resources/f5/technical-articles/performance-measurement.html Measure your financial performance. (2017). nibusinessinfo.co.uk. Retrieved 6 November 2017, from https://www.nibusinessinfo.co.uk/content/measure-your-financial-performance Mirela-Oana, P. (2012). PERFORMANCE EVALUATION: LITERATURE REVIEW AND TIME EVOLUTION. THE ANNALS OF THE UNIVERSITY OF ORADEA, 753. The Performance Prism. (2017). CGMA. Retrieved 6 November 2017, from https://www.cgma.org/resources/tools/essential-tools/performance-prism.html Weigold, A., Weigold, I. K., Russell, E. J. (2013). Examination of the equivalence of self-report survey-based paper-and-pencil and internet data collection methods. Psychological methods, 18(1), 53. Wu, H. Y. (2012). Constructing a strategy map for banking institutions with key performance indicators of the balanced scorecard. Evaluation and Program Planning, 35(3), 303-320. Yin, S., Yang, X., Karimi, H. R. (2012). Data-driven adaptive observer for fault diagnosis. Mathematical Problems in Engineering, 2012.

Thursday, November 28, 2019

10 Definition Essay Topics on the Climate Change Based on the Biocultural Approach

10 Definition Essay Topics on the Climate Change Based on the Biocultural Approach A definition essay is a creative piece of writing, which asks each student to come up with a single word and define it through the lens of the content in whatever piece of writing was assigned. In this case, with a focus on biocultural approaches, a student would need to pick a single word that might relate directly or tangentially to the topic and from there, define it based on content derived from the book. This requires students to look at a single topic within a larger topic, and from there find a single word that can be defined based on the context of the piece. That being said, finding facts to support your definition can be challenging, and above all else you want to find facts which help you best to make the definition you have selected a viable one. Below you will find a list of facts that can be used to support your definition essay, assuming the word which you are defining is one which can use the information provided. Review these with care and with your specific definition in mind: Philosophical viewpoints toward humanity and nature have historically viewed human impact as detrimental to the world of nature and something which has wrought dysfunction on the otherwise pristine and virgin natural environment which existed without human interference. This idea has made it challenging to define the relationship between nature and humans, as the only viable solutions presented were those which looked toward a non-human solution, a way of improving nature without humans. Historically studies have explored linguistic diversity as a single element as well as biological diversity as a single element. However, in each case the focus is on the single element and/or its impact on other cultural or natural elements, and not on one another. The field of biocultural diversity has taken from ethnoecological, ethnobiological, and anthropological insights in order to form a more comprehensive insight into the relationships between human knowledge, language, practice, and the environment. This has been a fundamental change as it alters the once widely accepted assumption of being an inextricable link between cultural diversity and biological diversity. The paradigm of sustainability is one which uses three distinct pillars to form its foundation, that of economy, society, and environment. Understanding traditional biodiversity plays a key role in this. As such, future development and application of improved biodiversity solutions are only made possible with sustainability and biodiversity working together. It was the International Society of Ethnobiology which declared in 1988 that there was a link between local and indigenous knowledge about plants, animals, habitats, ecological relations, functions, and low environmental impact that translated to sustainability of traditional forms for the use of natural resources. Humans have successfully maintained, as well as enhanced and in some cases even created biodiversity by way of the diverse cultural practices of managing otherwise â€Å"wild† resources and by the varied ways of raising domesticated animal species such as through animal husbandry, agroforestry, fire, and horticulture. This study was particularly important as a counter measure to the idea of bringing nature back to its â€Å"original† and â€Å"pristine† condition wherein it is no longer affected by humans. The findings actually suggested that there was a great link between the environment and humans, one which was interdependent and at a global level. That means that both humans and nature must be preserved together. Linguistic diversity functions as a web of intellectual life, something that envelops the Earth and is really essential to the survival of mankind in the same way that biology is paramount to the function of Earth. In fact, the role played by language and culture has been recognized as a potential fourth pillar to the previous three pillars which formed the notion of sustainable biodiversity. UNESCO as well as the IUCN, CBD, and UNEP have worked together to improve the synergies between cultural and biological diversities. The biocultural world is currently at a negative turning point which can be mitigated by practitioners, researchers, and activists who change their perspective toward biocultural knowledge and improve conservation of human culture in tandem with the conservation of nature. Humans have a responsibility to grow their economy and their future by cultural milestones and by preservation. One should not have to exist without the other, and in fact, cannot. Maintaining local cultures and revitalizing local languages is a form of conservation which should go hand in hand with the conservation of biodiversity, something which celebrates the past and its connection toward the future. People who are in the thick of the issue are those within the biocultural trenches and these are the people who can provide conceptual and political knowledge and tools to younger generations regarding the diversity within nature and within human culture which makes people, people. This knowledge is what will give people the opportunity to chart a new and sustainable path of culture and ecology. Diversity has been found to exist among plant and animal species, habitats, ecosystems, as well as human language and culture. Perhaps more surprising is that these ranges of diversities are not necessarily existent in separate realms which are parallel but rather, they exist in complex ways and interact among one another in a co-evolutionary fashion. The diversity of life is made up of interacting diversities which have developed with time to adapt toward mutual adaptation between the environment and humans in the form of a coevolutionary relationship. This is seen down to the local level, something which indicates that there is a deep connection between the two. Remember that these are only meant as a guide and you can choose to define whatever topic or word you select using whichever pieces of data you find best represent your overall purpose. If you find it difficult to select the right topic, look through our list that will help you with that. In other case, if there is a problem with an essay structure, use our guide on definition writing. Do not limit yourself to the facts above, but rather, take time to explore concepts and terms similar to your word and look for creative inspiration. Our writing service can be helpful if you experience troubles in academic paper writing. References Heckenberger, Michael. Biocultural Diversity In The Southern Amazon.  Diversity  2.1 (2009): 1-16. Web. Kerr, R. A. CLIMATE CHANGE: Humans And Nature Duel Over The Next Decades Climate.Science  317.5839 (2007): 746-747. Web. Kerr, R. A. CLIMATE CHANGE: Its Official: Humans Are Behind Most Of Global Warming.Science  291.5504 (2001): 566a-566. Web. Maffi, Luisa, and Ellen Woodley.  Biocultural Diversity Conservation. London: Earthscan, 2010. Print. Stepp, John R, Felice S Wyndham, and Rebecca K Zarger.  Ethnobiology And Biocultural Diversity. Athens, GA: International Society of Ethnobiology, 2002. Print. Vignieri, S. Humans Mitigate Climate Change Effects.  Science  337.6100 (2012): 1274-1274. Web. Weston, Burns H., and Tracy Bach. Recalibrating The Law Of Humans With The Laws Of Nature: Climate Change, Human Rights, And Intergenerational Justice.  SSRN Electronic Journal  n. pag. Web.

Sunday, November 24, 2019

How computing has changed us essays

How computing has changed us essays Computing has changed the workplace dramatically over the last few years. Information technologies have taken over our infrastructure. It is now necessary to consider your organizational needs before you make any drastic changes. Managers must consider how these changes will affect different aspects such as human behavior. We need to see how the advent of telecommunications will affect peoples behavior. Will Email, database services, and teleconferencing affect our users? These are the questions we need to ask as managers of businesses considering organizational change. We need to assess any and all consequences of implementation of all the aspects mentioned before. Factors such as employee resistance are a big concern. For instance if an employee that hass a busy work load is expected to learn a lot of new procedures may become overwhelmed. This may result in less productivity and more job dissention, which is not good for anyone involved. Learning new ways of doing things can be an extra burden that some people may not have the time or the patience to deal with. As managers we need to find ways of easing organizational changes in to the work place. Another option is to provide training for the employees in need of it. Sometimes it is better to train everyone in the procedure rather than just training them on the equipment. They may be able to become efficient earlier with out knowing exactly how everything works but rather knowing how to accomplish the tasks they need to get done on a regular basis. We must discuss human behavior success factors. If technology is to be compatible with human, social, political, and economics patterns we need to recognize these factors. Not only recognize these factors but address them in a way that is conducive to the business. Human compatibility is obvious we already alluded to that. Social compatibility is another issue all together. Political compatibility is another factor that cannot be over...

Thursday, November 21, 2019

New Technology at Wallace Case Study Example | Topics and Well Written Essays - 2250 words

New Technology at Wallace - Case Study Example Wallace must embark on the new technology of computer-aided designing and manufacture.   A huge and important industry like the plastic industry stands to gain from the tremendous potential and opportunities in store, by upgrading to the new digital technology.  There are normal risks such as teething problems as it will take time for the staff to comfortably operate the new system. The operation in the initial stages will have to be put under high alert with round-the-clock supervision by skilled personnel to undertake to troubleshoot and rectify errors. Wallace has not been manufacturing molds, so the project of manufacturing molds will present new challenges and risks. The software must be guarded against hackers and virus attacks.  Reactions to the changeover to the new technology could be expected from customers and competitors. Most customers are already aware of the great strides the new technology is making into every stratum of the economy the world over. The competito rs to have no alternative except to follow suit.  Innovation will be costly. Not only the hardware and software but training and recruitment of trainers and engineers, training of staff on the new technology will call for proper planning and budgeting. The company has to work out the best source and mode of funding the transition.  The company has not been able to secure higher profits from its equipment for several years. Obviously, the equipment currently in use is either outdated or on the verge of obsolescence. Hence, the company has been correct in working on a development in the area of production automation that it believes would provide considerable value to its customers. Customers currently buy complete molds, which are handmade, from specialized suppliers. They are expensive and late delivery and teething troubles often lead to major delays for the plastics producers.  Under the new innovation, Wallace would produce the molds for use on its machines. Its customers w ould be provided with software that would enable them to specify the mold and transmit the specification to Wallace. Wallace would then produce the mold to the customer's design and deliver it by courier. This innovation is geared to reduce costs and increase the speed with which the company could respond to each order from its customers. Moreover, it would enable them to increase the variety and sophistication of product shapes that they manufacture. Every industry has turned over or is on the verge of turning over, to the new technology of computer-aided designing and manufacture. The plastic industry is an important industry of mass production. With its colossal usage the world over, and its tremendous resource in terms of finance as well as raw material, it has the wherewithal to garner the needed resource to find ways and means to incorporate cutting edge technology to boost its efficiency and output. Wallace is no exception.