The roles of strategic planning and implementation

The roles of strategic planning and implementation Strategic planning refers to defining an organizations strategies, direction of guidelines, and making decisions on how the organization allocates its resources to pursue those strategies. The key resources of an organization include capital, land, properties and people (workforce). Allocation of such resources is a major function of strategic planning process. A company may use different techniques to implement its strategic planning such as SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, PEST (Political, Economical, Social and Technological) analysis, STEER (Socio-cultural, Technological, Economic, Ecological and Regulatory) analysis, and EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal) analysis. Whatever the analysis technique is, the main purpose of making strategic planning for business is to set out the future courses of actions for an organization. Strategic planning process deals with the following questions: What do we do? For whom do we do it? and How do we excel it? or How can we beat or avoid competition? (Bradford Duncan, page 1). Strategic planning is typically being made for 3 to 5 calendar years for most of the business organizations. However, some companies set their vision for up to 20 years. STRATEGIC PLANNING PROCESS The preparatory phase of starting any new business both for profit making and not for profit organization relies greatly on setting strategies and making appropriate strategic planning. In order to do so, an organization analyses its current situation, objectives and marketing plans. Analysis of current situation mostly deals with the previous years Business Trend analysis, Market analysis, Competitive analysis, Market segmentation, Marketing mix, SWOT analysis, Positioning-analyzing perceptions and analyzing Sources of information. A companys Objectives and Marketing plans deal with the future Marketing strategies, Desired market segmentation, Desired marketing-mix, TOWS-based objectives as a result of the SWOT, Positions and perceptual gaps and Yearly sales forecasts. APPROACHES TO STRATEGIC PLANNING Among numerous approaches of making strategic planning, most organizations typically follow a three step process called Situation-Target-Path technique, where an organization evaluates the current situation of the business and how it came about, defines its goals and objectives, and maps a possible route to implement those goals and objectives. There is an alternative to this approach called Draw-See-Think approach, where the company draws the ideal image or the desired end-states, sees todays situation and persisting gaps from the ideal and its possible reason, thinks what specific actions must be taken to close the gap between todays situation and ideal state. FOR PROFIT AND NON-PROFIT STRATEGIC PLANNING Different organization carries out the strategic planning process differently. This variation in strategic planning process depends more on the size and nature of the organization rather the profit/non-profit status of the entities. Small size organizations whether profit or not for profit carry out their strategic planning almost similarly that differs from large organizations. On the other hand, large for profit or large non-profit organizations tend to conduct similar planning activities that are different from those conducted in small organizations. However, there are some differences in strategic planning process in terms of profit or non-profit status of the organization by the following criteria: Non profit organizations give more emphasize on board development, fundraising and volunteer management, where in profit making organizations, emphasize is placed on activities to maximize profits more. ROLES OF STRATEGIC PLANNING Strategic planning plays an important role in the business area and also in the public areas such as education, healthcare or government. It is practiced and implemented widely everywhere both informally and formally. In any business organization the roles of strategic planning depend on the nature of the organizations leadership, culture of the organization, complexity of the organizations environment, size of the organization, expertise of the planners etc. According to the diverse goals or objectives of different business entity, various technique of strategic planning is used, for example, goal-based strategic planning, issue-based, organic or scenario-based strategic planning, etc. But in general, strategic planning serves the following purposes in almost every organization: à ¢- º Clearly defines the purpose of the organizations and set the objectives or goals à ¢- º Communicate those goals and objectives to the organizations constituents à ¢- º Develop a sense of ownership of the plan à ¢- º Use the organizations resources most effectively by focusing on key priorities à ¢- º Provide a base from which progress can be measured à ¢- º Listen to everyones opinion to build consensus about where the organization is going à ¢- º Focus more on production most effectively and efficiently in order to grow the production à ¢- º Works as a bridge between staffs/employees and board of directors à ¢- º Helps in team work with employees/staff and board members à ¢- º Works as a glue that keeps board members together à ¢- º Produce a sense of satisfaction among planners, especially around a common vision à ¢- º Solves major problems in the organization It was thought in the old days that only the big enterprises need formulate strategies and adopt a strategic planning process. But with the span of time, the business environment has changed to a great extent. Todays business environment has become more competitive and challenging. To survive in this competition, any organization whether big or small should come forward with the best quality products or services that will satisfy the changing requirements of the customers. Customers have become choosier as they are getting more alternative products and services. They will take the products that will best serve their requirements, in terms of quality or price. Satisfying these customers is not so easy job. For that, an organization must come forward with the best products/services to remain in the leading position. For that reason, every business organization, small or big needs to formulate and implement its business strategies. Only the good strategies can make an organization succe ssful in todays competition and helps them to survive. Bigger companies will always be ahead in this race, as they have got rigorous strategies that are being planned and implemented throughout each of their levels. Smaller companies always thrive for survival and try to grow bigger. Strategic planning provides an organization direction. With the help of this, organizations can know their position in the industry and take appropriate measures for future growth and expansion. Strategic planning also help them to process day to day business functions, which are very important to run the business successfully. A companys mission/vision can never be attained without a proper strategic planning and the objectives of the company can not be achieved without it. A strategic planning process helps an organization in meeting the following perspectives: Focused purpose: Strategic planning helps the organizations to define their short term business purposes clearly, i.e. where they want to see themselves in a year or two years of time, making the profit targets, segmenting their market, and making different marketing mix. Strategic planning ensures that mission is realistic and achievable and being taken with due considerations of current business trend and analysis. Good planning serves the best interests of the stakeholders. Moreover, it defines a point of differentiation. Future Perspectives: In considering the future perspectives of an organization, the strategic planning clearly defines the long term objectives, i.e. the vision of the organization, identifies the long-term interests of the stakeholders, and provides a foundation for decision-making to the management of the organization. Strategic advantage: Strategic planning helps an organization achieving the competitive advantage over others and makes it clearly understood to all the stakeholders of the company. It also increases the employee productivity by clearly presenting the roles and duties they need to serve for the organization. External assessment: A good strategic planning helps an organization in assessing the external factors outside the business entity, which is very important to be successful and to remain ahead of the competition. An external assessment reflects an organizations approaches to gather and analyze essential market data, e.g. studying macro and micro economic information, identifying industry opportunities and threats, and understanding what it takes to be successful in a given market. Customer profiles: Customer profiling is an external business assessment by the organization that define reasons why the customers should buy its products or services and the benefits persisting with such products. It also defines the reason why the customers should not buy some products or services, assess the customers bargaining power. Moreover, strategic planning helps the organization know the customers preferences of different choices of distribution channels. Industry and competitive analysis: This is an important component of business strategy that helps the organization in identifying the primary competitors in the industry, determines potential and indirect competitors, also identifies their strengths, weaknesses, opportunities and threats, helps the organization in assessing the threats of substitute products or services or new entrants into the market place. A good planning helps the organization in comparing growth rate with industry standard, and evaluates ongoing market process. Environmental assessment: Strategic planning does the following to assess the business environment for the organization; identifying the regulatory requirements; Assessing vulnerability to adverse business cycle, summarizing opportunities and threats due to economic condition, new technology, demographic structure, legal or political events, socio-cultural norms, and the natural environment. Assessing key success factors: Strategic planning helps the organization in assessing the key success factors in doing business. Key success factors are identified with a critical thinking process that includes implementation of critical thinking process; measuring competitive intensity; setting the demand of products or services within the market; defining key drivers to success within the industry; and consistently monitoring key influences within the industry. Internal assessment: By making strategic plans, an organization can assess its internal factors which help the organization to evaluate its own strengths and weaknesses. Self assessment is very vital to sustain as a successful business entity. An organizations internal assessment process refers to the evaluation of its management process which includes: Finance: Strategic planning determines whether an organization has enough fund available for investment or for ongoing business functions; sets up a comprehensive pricing model; keep the consistency of performance within a range of financial goal; makes a targeted long ranged financial plan; employs a cost benefit approach to resource allocation; makes a financial plan that allow flexibility and economic or environmental disruption. Research development: Having a strategic planning process empowers an organization to integrate all appropriate departments with RD, maintain a creative and innovative process; and ensures that RD department has all required resources to fulfill its functions. Production: Strategic planning program helps an organization to integrate all of its departments to support the production process; maintains that the production process is cost-effective, flexible, fast and responsive. Marketing: Strategies helps an organization in making coordination among all the departments to support marketing, defining marketing plans, branding the products or services, usage of database to track all the customers and market information, promotion of the products or services, and monitoring the ROI of all marketing campaigns. Sales Distribution: By planning its strategies, an organization consistently achieves sales goals, ensures that its sales personnel have got the required skills to achieve plan are being provided with necessary information to achieve their goals, employs a well defined sales management process, and coordinates all other departments to support sales process. Customer servicing: If the organization takes the appropriate strategic planning, then it can define the standard of its customer service, meet the customers expectations, measure the satisfaction level of the customers, achieve the customer loyalty by building a high commitment between employees and managers, and maintain a customer relationship management system that provides critical service information to make the best decision IMPLEMENTATION OF PLANNING PROCESS After formulating the strategies, a firms main concern is how to implement those selected strategies. This is done by means programs, budgets and procedures that involve the firms resources and motivation of the staffs to achieve such objectives. In order to ensure that the planning process is not a document that ends up collecting dust on the shelf, an organization should follow some guidelines that will ensure that the planning is being implemented. An organization can do that by involving people who will be responsible for implementing the plan, can make a cross functional team combining representatives from each department who will be liable to ensure that the plan is realistic and collaborative. In order to that, the organization must continue asking them whether the plans are realistic or not, or can they really achieve all their goals or not. The organization can organize the overall strategic plan into small action plans. In the overall planning document, the organization should specify who is doing what and by when it is going to be implemented. Some organizations may elect to include the action plans in a separate document from the strategic plan, which would include only the mission, vision, values, key issues and goals, and strategies. The organization should also specify and clarify the plans implementation roles and responsibilities in the implementation section of the plan and make a regular review on the progress of the implementation plan. Translating the strategic plans actions into job descriptions can stimulate the implementation process quicker. When people involved in any process know that the action plans will be regularly reviewed, then the implementers tend to do their jobs before they are being checked. So organization needs to review the plan time to time and communicate with the personnel involved in the process. Moreover, the organization can integrate the plans goals and objectives into chief executives performance review, this will get the implementation process more importance as the chief executives involvement and support in the plan is a major driver to the plans implementation. Regular feedback on the implementation plan from the planning participants to the executive committee is also very important in strategy implementation. Make sure that the organization has designated rotating checkers to verify if each implementer completes his/her assigned tasks. The organization should also grow an attitude of helping each other among the implementers in the strategy implantation program. The way by which the strategies are being implemented can have a significant impact on whether it will be successful or not. For this reason, care must be taken to communicate the strategies among implementers. For a sustained and successful strategies carried out by an organization, the implemented strategies must be regularly viewed and monitored, and necessary adjustments should be made time to time. Bradford and Duncan (2000). Simplified Strategic Planning. Chandler House. Patrick L. Burkhart and Suzanne Reuss (1993). Successful Strategic Planning: A Guide for Nonprofit Agencies and Organizations. Newbury Park: Sage Publications. http://en.wikipedia.org/wiki/Strategic_planning http://managementhelp.org/plan_dec/str_plan/str_plan.htm Mintzberg, Henry, Lampel, J., Ahlstrand, B., Strategy Safari: A Guided Tour through the Wilds of Strategic Management

Women in the Workplace Essay -- Female Workforce Job Essays

In many cultures throughout the world women are patronized and viewed as the weaker sex. Women are commonly perceived as being unfit for any forms of higher education and because of societal pressure and expectations retreat to a life of raising children and cooking meals for their husbands. Our society’s stereotypical views about women’s suffrage, educational expectations and athletic abilities have all advanced over the years. In many aspects of our society, women are now expected to compete with their male counterparts. Currently, it is not uncommon to hear of a women CEO or Vice President in businesses or even a women politician. Women have now emerged from laundry rooms and kitchens across the country and changed the demographics of the American workforce. However women are yet to take the medical workplace by storm and redefine the preconceived notions society upholds about leaders in medical professions. To illustrate this idea I conducted an ethnographic study of a local dental office that I am employed at. I believe that the medical field has hardly been affected by the advances in women’s rights and is a common ground for the influences of gender stereotypes that have been outdated for many years in American culture. Going to the doctor can be a frightening experience for many people. Choosing a doctor is a difficult process that can result in a poor experience at the appointment or worse in some cases. First impressions play a large role in a patients response to the practice overall. â€Å"Great Smiles† focuses on this concept and shapes their office procedures to make all first visits a positive experience. This office is located on a busy main road in an upper class suburban area of Michigan. The buildin... ...orld and are no longer seen as the â€Å"weaker sex†. The inclining percent of women becoming doctors could be a large movement to a completely blended population of doctors to chose from. Women are learning that to avoid the control men can enforce on women in the medical workplace they need to strive for success in their profession. Many women may be happy assisting a male doctor but the growing number of female doctors illustrates the point that women want the power and control that their male counterparts currently maintain. Works Cited Jennifer. â€Å"Gender Relations and Alcohol: An Examination of The Cocktail Waitress: Women’s work in a Man’s World.†. December 9th, 2001. www.geocities.com/wellesley/6265/papers/gender/cocktailwaitress.html

2005 State of the Union Address Essay -- essays research papers

After watching the 2005 State of the Union address. I think that the President, Mr. George W. Bush, has made it clear to the Speaker of the House, Vice President, Membe4rs of Congress, and the citizens of the United States that he has a clear plan to improve the welfare of the United States in present days and days to come. The President put forth that he has now a plan for a budget that holds discretionary spending below inflation, makes tax relief permanent, and to cut the deficit in half by the year 2009. The principle to his budget is, â€Å" Taxpayer money must be spent wisely, or not at all.† It was also stated that education is a very important part of this nation and that the standards of the schools need to be raised, â€Å"†¦so every high school diploma is a ticket to success.† Later on he speaks of keeping young children and adolescents out of gangs and dangerous violence and encourages that more people be involved in a child’s life by increasing the number of programs to improve literacy and sports. He told of the nation wide effort to do this that would be lead by the First Lady, Laura Bush. Also so the healthcare and costs of health care for lower income families was brought to attention. The President stated that the costs of healthcare should be made affordable to all families that need it. Stating that it should be available to people of every financial status and that there be a community health care center for every needy community. And that information technology should be improved so that fewer errors are made as well as needless costs. He believes that there should be association health care plans for small business owners and their employees and many measures to decrease healthcare costs. The President talked to the Social Security system and how if it is unreformed that it will only lead to its own bankruptcy. He assured those that are now receiving or will be receiving Social Security in the near future that their Social Security would not be affected in any way. The President would like to prevent the deterioration of the Social Security system. According to the facts provided by the President, as of now there are a diminishing number of workers paying an increasing amount of benefits to an increasing number of retirees. If it continues to be like this in the year 2018 the system would be paying out more than it takes in and in the year 2027... ...S. needs to be kept safe and they recognized the men and women who serve in the unformed services of the United States. The Democrats are shocked though that the President did not and has not thus far put forth a clear plan to end our presence in Iraq. They believe that one the responsibility of Iraqi security should be put in the hands of the Iraqis, two that Iraq’s economy needs to be increasingly developed and lastly that regional diplomacy needs to be intensified. They also announced that although the President acknowledges that there is a threat to national security that he has taken no action to correct it. Also they tell of how the President has failed to present a plan to protect America from terrorism. In summary the Democrats believe that the President has backed up his words with action and that they promise to correct this problem as best they can. In conclusion I agree with the President on many views because it seems to me that he has plans to improve the U.S. for the best. But I believe that even though there are conflicts in the views of the President and the Democrats that there will be a compromise that will result in the improved wellbeing of the United States.

Applying Theory Essay

Healthy aging is positively correlated with continued psychological and social participation of senior citizens with activities that may not be very similar to those that they have been used to, but substitutes them to accommodate their age and limited capabilities. Building a senior citizen’s center would allow them to participate in modified activities that they have pursued in middle age. The community would be creating a venue by which the elderly could get educational training, physical and leisure activities suited to their age to reduce boredom. The center would encourage them to stay active, less depressed about aging. In the long-term, the center would promote a positive well-being among the elderly. Exchange Theory Building a senior citizen’s center would benefit the senior citizens in many ways but on the part of the community, the project would have benefits as well as incur costs. A center would provide senior citizens a productive means by which to spend their retirement years. It would make them more active and social than they would if they simply spend most of their time at home or a retirement home. On the part of the community, the monetary cost of the project might make it impractical if the amount could be better spent in a much more needed community project. Then again, the elderly is as much a part of the community as much as the younger members and constructing a center would provide a psychological benefit for both age groups. To the elderly, a center is a reassurance that the community values them in spite their old age. To the younger generation, the center equally reassures them that they are doing something right for the elderly. Functionalism Every age group needs to belong to an institution which would foster a sense of their membership in the larger community. Furthermore, to survive as a whole, all members should work together and slip into roles aimed towards fulfilling the needs of society. A senior citizen’s center would make the retirees a sense of belonging in the community as it would serve as their institution now that they have lost membership in their former workplaces. They would form into a social group which could organize activities to benefit the entire community. It would make the cohesion of the community stronger as an organized group of senior citizens means that even the elderly are contributing towards the stability and constant activity of the community, factors which characterize a healthy, working community. Continuity Theory Senior citizens would continue to seek for the same activities, relationships and lifestyles they had in younger years. A senior citizen’s center would be a good way by which the elderly members of society can organize, assemble and socialize—just like when they were younger. Since they all belong to the same age group, members would develop a distinct culture and this would give everyone a sense of stability and support system. A center with activities and programs geared for the elderly would help ease the difficulties of adjusting to old age. The community, in turn, would have less of the stereotyped bitter and bad-tempered elderly members because it has a place which helps the elderly experience aging as a positive, supportive and gently-sloping experience. Theories that would argue against the senior citizen’s center. Conflict Theory Building a senior citizen’s center would benefit the elderly, however it would acknowledge their continued worth in society and their influence in terms of policy-making. The senior citizens have passed their prime, and the younger generation controls public administration including the budget and planning. The latter would disapprove the spending of $3M for a center that would not be profitable to the community. The community could maximize its spending by allocating the budget for other projects and simply put the care of the elderly under their respective families or elderly homes. This way the family or home would be spending only for the necessary expenses to support the survival needs of the elderly without funneling the community’s financial resources. Political economy of aging The corporate interest precedes personal interest of the market. A senior citizen’s center would surely not justify the $3M that the community would be spending towards constructing and running it. A center for the elderly would simply be a place for them to engage in pursuits like physical activities, entertainment, seminars conducted by volunteers and other non-profitable, self-serving endeavors. If the aim is to spend the money in a project that would benefit the aging population, a wiser idea would be to revert the funds towards the construction of a managed care institution. To be profitable in the long run, this institution could give the elderly the same services and activities as the proposed center, but at certain prices. Recreation for the elderly should be a privilege instead of a charitable act. Disengagement theory The elderly and society engage in mutual separation. A senior citizen’s center is impractical because it would mean integrating the elderly into the community when they should realize that they have to withdraw from social activities they have been used to prior to retirement. A center would give the elderly a false sense of importance regarding their role in the community. It would pose a burden to the community which has to constantly bear with the expenses incurred by the center and its useless programs. The elderly cannot anymore contribute to society and compete with its standards of excellence; therefore, for the benefit of society, they should interact with the community and with each other less. Social Competence/Breakdown Theory Building a senior citizen’s center would create greater dependency on the part of the already vulnerable senior citizens. If the center is realized the elderly would feel self-important, ask for extra services and special privileges. If the demands are refused, it would cause emotional distress. To show sensitivity to the elderly, they should be allowed to face the challenges in life, without spending $3M to build a center especially for them. They should not be doled out with charity. They should be left to find the means to be happy and productive in their late years. The community would be doing them well if they are made to feel like they have worked hard to accomplish something.

Management innovation in the South African dairy industry Essay

The case focuses on management innovation in the South African dairy industry, describing how an innovative new yoghurt product, Danimal, was created specifically for the market at the base of the pyramid. It explains how management of the product line embodied the various innovation opportunities and challenges presented. The concept was initially introduced in order to assess the feasibility of profitably servicing this market. However, the project was not simply about introducing a cheap brand to poor people but was more about creating brand awareness in the market at the base of the pyramid. It was an investment for the future. The new product took into consideration the nutritional shortcomings in the diet of children in this market and also allowed for the lack of available infrastructure – electricity and refrigeration. The case illustrates the importance of a product being affordable, relevant and available for this market. Innovation went further than product design and also took into account the necessity of a lean distribution channel. This took the form of micro-distributers, referred to as Danimamas, who comprised township residents, unemployed or part-time employed individuals. The case offers insights into the complexity of doing business in developing countries. The company admits that it has not been a sustainable business model in terms of current profitability but the value that has been gained from social marketing and long-term brand development has been great. The case concludes with the challenge of how to ensure that the project continues on its upward trajectory. The objectives of the case are to encourage students to have a better understanding of the strategies required to successfully impact on low-income markets in developing countries, the different metrics that one could consider when assessing the impact of interventions on the base of the pyramid market, and the importance of harnessing opportunities and overcoming the challenges of management innovation. Questions to answer: How does the Danimal project shed light on and challenge the principals suggested to manage the base of the pyramid? How would you measure the success of the Danimal project? How does the approach taken by Maria Pretorius in managing the Danimal product line factor in management innovation opportunities and challenges?

Analyse the Purchasing Power Parity Theory and Discuss Its Applicability

Question: â€Å"Analyse the purchasing power parity theory and discuss its applicability† In this essay I will analyze the theory of Purchasing Power Parity and discuss its applicability. I will begin by explaining the basic concepts of PPP. In order to get a deeper understanding of the theory I will also briefly touch on topics such as the Law of One Price, the Big Mac index and similar subjects related to the Purchasing Power Parity theory. Furthermore the PPP theory will be put in to practice and its applicability will be discussed and evaluated using real life examples. It is necessary to understand the functions of the PPP theory before giving a definition to it. The purchasing power parity theory is a measurement that is being used within the economy to compare the currencies of different countries and to see if their currencies are under or over valuated. It is also commonly used as a measurement to compare the living standard between two countries. The Purchasing Power Parity theory is developed on the basis of the law of one price (LOP). The law states that once converted to a common currency, the same good should sell for the same price in different countries. (Kalinda Mkenda, 2001) To give an example of this lets neglect all the factors such as taxes, tariffs and transportations costs. The law of one price can then be explained with the following formula: e = PSWE/PUK where e equals the nominal exchange rate and P price. If I buy a bike in Sweden for 1000:- this means the same bike should, in theory cost ?100 to buy in UK which gives us a nominal exchange rate of 10. If a bike would sell for any price higher in UK, there would be a clear advantage for consumers to go to Sweden to buy bikes (remember that factors such as travelling costs are neglected in this example). Also, it would be beneficial for traders to go to Sweden and buy bikes and sell them in UK for a profit, also called arbitrage. However, this kind of activity would slowly drive prices higher in Sweden and lower in UK and in the end resulting in market equilibrium based on the theory of supply and demand (Mankiw & Taylor, 2006). This leads us to the Purchasing Power Parity theory which states that price differences between countries in the long run is not sustainable because the market will drive the prices to equilibrium and that â€Å"a currency must have the same purchasing power in all countries† (Mankiw & Taylor, 2006 p. 650). â€Å"Purchasing Power Parities (PPPs) are currency conversion rates that both convert to a common currency and equalise the purchasing power of different currencies. In other words, they eliminate the differences in price levels between countries in the process of conversion. (OECD, 2010) The PPP can be expressed in either absolute or relative terms. The absolute theory on measuring exchange rates is the one mentioned above and is the theory this paper will mainly focus on. The other version, relative, is based on price movements. (Ong, 2003) It states that the inflation rate between two countries must be the same if the exchange rate is going to stay the same. That is, if the inflation in one country X is higher than the country Y, its exchange rate will depreciate against country Y exchange rate based on the following formula: % e = % Inflationx -% Inflationy here e is the change in exchange rate. As stated above, the absolute PPP theory is mainly used as a tool of measuring how a currency is valuated and whether it’s under or over valuated. One very popular way to do this is using the Big Mac index (See appendix A) put together by The Economist. The Big Mac index is an index of how much a Big Mac costs in different countries. With this index we can compare the predicted exchange rate with the actual exchange rate to how a country’s currency is valued. When we compare the PPP we use a basket of goods which is identical in the comparing countries, in this case our basket is a Big Mac. When doing this we can predict an exchange rate based on the Law of one Price and PPP. When comparing the predicted exchange rate with the nominal exchange rate and this illustrates whether a currency is over or under valuated. Looking at the Big Mac index (See appendix B) we can see that Norway’s currency is over valuated by almost 90% against the American dollar. This implies that in the long run the Norwegian Krone is expected to depreciate against the US dollar using the PPP theory. PPP is also being used for comparing different living standards in different countries. If you for example use the GDP per capita you don’t quite get an accurate overview of the standards as factors such as living costs and pricing varies between the countries. By eliminating the price differences in two countries and compare the raw price differences we get a clear overview of a country’s living standard. Looking at the data in table 1 (See appendix C), we can see that the difference of GDP per capita between Sweden and UK is about ~8500 units, however, by comparing the GDP per capita based on PPP per capita we discover a much smaller difference (~1000 units. This suggest that the actual living standard of these two countries are quite similar, something that does not show when comparing GDP per capita which is why using PPP is a better method than using GDP per capita when measuring welfare as it takes into account differences in prices and purchasing power. (International Monetary Fund, 2009) By developing root unit tests that account for both structura l change and maintaining a long-run mean or trends Papell and Prodan (2006) argues that there is additional evidence that PPP is valid in the long run. However data shows that there can be substantial and long periods of time with deviation from PPP exchange rate for either the relative or the absolute versions. (Pakko and Pollard, 2003) We can describe these variations with a few main explanations, starting off with the assumptions we had to make while explaining the law of one price: taxes, tariffs and transportations costs, but also adding a few points such as differentiated goods, pricing to market and non-traded goods. Marrewijk et al , 2006), (Pakko and Pollard, 2003), (Moffat, 2010) One simple reason why the law of one price and PPP fails is that exchange rates are influenced by many other different factors than just pricing. The existence of trade barriers and costs is one. Any variable that will increase the price in another country such as shipping costs or taxes will neglect the arbitrage opportunity and affect the exchange rates related to the PPP theory. Other important factors to consider are that when explaining the law of one price we use a basket of identical goods, in real life however, very few goods are the same and people in different countries consume different goods. Also, some goods cannot be traded across borders; real estate, haircuts and carwashes are examples of these, also called non-tradable goods. While a piece of property can be traded, its location cannot be changed, thus, prices of property can vary widely between different locations and we can expect this to account for deviations from PPP. When calculating the PPP we also require the markets to be perfectly competitive. If a market is not perfectly competitive some firms may have more control than others and may use this as an opportunity for price discrimination and regulate the price for an identical good differently depending on the customer (Economist, 2010b) which will also cause the PPP to deviate from its expected value. As we can see by this, the purchasing power parity is a useful theory to use for measuring a country’s expected currency and living standard in the long run as it consider factors that are left out when using data such as GDP per capita or CPI, this way you get a much better perspective of the actual values. The theory has been excessively tested in empirical studies with mixed results ( Mac Donald, 1993), (Abuaf, N and Jorion, P, 1990), (Papell and Prodan, 2006), (Patel, 1990). Studies show that in the short-term there can be substantial deviations from the expected PPP and exchange rates related to the previously discussed factors, which makes it limited for predicting exchange rates in the near future. However, this argument illustrates that this theory holds true in the long run when calculating currencies and long term equilibrium.

A past future city vision, explaning what the main ideas were and Essay

A past future city vision, explaning what the main ideas were and commenting on the possible sucess it may or may not have had as a sustainable - Essay Example d and therefore it is not surprising that a common theme in the visions of future is addressing the challenges of growth and development of cities, without endangering the surrounding environment and employing sustainable natural resources. Built into these visions were attempts to address the issues of production of resources, its consumptions, and the threat of rising sea levels due to global warming (Ng, 2008). The vision for Washington D.C. includes the use of the military forts surrounding the city that defended it in the past to bring life to the city in the future. Sinuous towers are envisaged on these forts to enable harvesting of wind, solar energy and rainwater and the production of food through the use of hydrophonic farms. Food supply will be further augmented through communal farming on the greenway that will be created in the present avenues of the city (Ng, 2008). Addressing transportation requirements in a unique way is seen in the vision for San Francisco, based on the use of Hydro-net consisting of walls made of carbon nanotubes. The underground Hydro-net is a network that transports individuals, vehicles, water and energy in the city. The Hydro-net also acts as a resource production system with hydrogen-producing algae farms, fog catchers to collect air moisture, and water extractors to collect fresh water from an aquifer below the city (Ng, 2008). For Atlanta the vision includes the reintroduction of treated water from the old sewage system around the ground to produce a natural waterway that flows through city. The surrounding forests would be allowed to creep into the city reducing the city grid and creating new hybrid environments. The idea here is to restore the natural systems to offset the burden of the man-made infrastructure of the city (Ng, 2008). While such a competition may result in what may appear as far fetched solutions for the development, they do provide ideas and solutions for the man made problems in the cities. An example