Monday, September 30, 2019

Business, Government & Society – Notes on Relevant Journals

Berend (2000) From Plan to Market, From Regime Change to Sustained Growth in Central and Eastern Europe * After the state socalism collapsed in Central and Eastern Europe in the early 1990s, the Washington consensus of 1989 (a broadly accepted set of criteria for a reform program) was adopted as a blueprint for the process of transformation. * Central elements: * Macro-economic stabilization (for countries with significant inflation and indebtedness) * New institutions Legislation * Price and trade liberalisation * Radical privatization * Most of the â€Å"transformatologyâ€Å" literature is based on the assumption that the elimination of deformed non-market economies, a restoration of market, and private ownership, paired with a laissez-faire free market system would automatically solve all major economic/social problems of the transforming countries. The economic crisis within the Central and Eastern Europe area started much earlier – in the mid-late 1970s when growth slo wed significantly and the terms of trade for the state socialist countries began to deteriorate (1973 first oil shock 20% decline, for some even 26-32%) Schumpeter’s theory of â€Å"structural crisis†: advancements in technology lead to decline of the old leading sectors and export branches based on old technology, generating wide-ranging slow-down and decline and causing an economic crisis even in rich, advanced countries.However, although rising new technology led to the emergence of new industries, new leading export sectors and an impressive new boom in the US and other advanced countries, the Central and Eastern Europe countries experienced a â€Å"peripheral structural crisis† – they suffered all the negative consequences of a the â€Å"structural crisis† but due to not having sufficient resources for R&D, know-how and financial sources, they were not able to take advantage of the technological development.After 1989, when the countries of th e region lost the protection from Comecon’s isolation and regional self-sufficiency, they were forced to enter the world market and compete with the advanced countries (already adjusted to new technology) and also on their own opened domestic market. Consequence: the peripheral structural which had prolonged since 1973 continued and worsened during the 1990s. Also contributing to the economic crisis: serious macro-economic policy errors e. excessive devaluation of the currency; too abrupt opening to trade with the West; and the failure in government management of the state sector * Foreign trade deficits increased dramatically and nearly all countries in the region dropped into an indebtedness trap – debt service consumed about 40-75% of the countries’ hard income and quite a few started to lose control over inflation * Economic policy during the transition: Change was too fast countries of transformation should not have attempted to jump directly from a central ly planned to a laissez-fair economy and from an entirely state-owned to a 100% privatized economy * State regulations and government policy were needed self-regulating mechanisms were not yet developed, market imperfections and non-market friendly behaviour were present * Suggestion (Kolodko) : A regulated market, instead of a self-regulation market, a mixed economy with a restructured and efficient state-owned sector for at least a period of time, and a â€Å"fine mixture between market and stae† would have been a more natural transition from plan to market * However, this approach was not adopted and led to a collapse of many old companies (lost a bulk of their value and had to be sold for a fraction of their previous value) mass unemployment, sharp decline in living standards (especially for vulnerable layers of society) * Outcome: Industry recovered only in two countries – Poland and Hungary * Some experienced a new crisis – Bulgaria and Romania * Russia an d Ukraine as well as several other successor states of the Soviet nion had experienced constant decline throughout the entire decade * Poland, the Czech Republic, Hungary, Slovakia and Croatia – market economies are functioning, economic decline and rapid inflation are over, the annual economic growth is impressive * Performance differences: * Often explained by the lack of determination to pursue radical reforms author agrees * However, besides pursuing systemic change, the countries in transformation also have to adjust to the â€Å"structural risis†, by restructuring the economy according to the requirements of modern technology to reach a sustained and higher than average growth technological and structural transformation of the economy are central elements of the transition * Window of opportunity slowly opened after 1989 when direct foreign investment became the key factor in technological modernization and restructuring in the area but only played an important r ole in the three frontrunners of transformation – Estonia, Latvia and Slovenia * In addition, not all investments contributed to restructuring, some of them served only to enlarge the investors’ markets. However, key investments were made in the most backward infrastructural sphere, especially telecommunication that serves as the basis for any kind of technological progress to date. * Investments had positive effects on Eastern Europe where they generated growth of domestic business which led to economic growth (especially in Poland).Big transnational businesses were also obliged to reinvest some of its profits and to use domestic products and sub-contractors initiated small local business activities. * Russia, the successor states of the Soviet Union, and most of the Balkan countries exhibited minimal progress in restructuring. FDI was minimal in this area and mostly went into the extracting branches of oil, gas and raw materials; transnationals are present but do not develop processing industries and export branches. Consequently, this area was unable to adjust to the late 20th century technological revolution and declined into a continuous peripheral structural crisis. In those Central European countries, where impressive FDI assisted technological-structural adjustment, transformation is paving the way to sustained growth and catching up with the West. These countries became memers of NATO and are candidates for EU membership. Murrell (1993): What is Shock Therapy? What Did it Do in Poland and Russia? Poland: * Shock therapy failed in Poland * The reform program implemented in January 1990 comprised a number of related measures * Fiscal policy was tightened considerably budget surplus in Q1 1990 * Real value of the money supply was halved * Tight limits were placed on credit * Trade liberalisation removed all restrictions * Anti-inflation wage tax was set at strict levels Government made a commitment to privatisation on a massive scale * Soli darity and the Catholic Church were two of the strongest social institutions in Eastern Europe helping to maintain the shock therapy model * Once it was realised that the shock therapy was not going to produce as many benefits as expected, it came under severe attack gradually, many of the elements of the initial program were withdrawn or weakened monetary policy was loosened * Further movement away from the shock program occurred throughout 1991 in the face of massive and open opposition to the government’s policy * Fiscal and monetary policy were considerably loosened budget deficit began to rise to the levels of 1989 * Reversal of trade policy tariff rates increased and selective protection was endorsed * Although policy was modified during the two years following the big bang, the commitment of the large part of society to change was never in doubt. * Change was inexorable (kohklematu), given the collapse of the communist regime that had blocked reforms that had been dema nded for so long. * Nevertheless, Polish economy started to show first signs of success after policy was rescued from the shock therapists. Russia: Stages of the reform chronology in Russia are similar to those in Poland, but without a successful outcome * Less preparatory reform during the communist period in Russia * Core group of reformers were radical and ambitious, and more removed from its own society than were the Polish reformers * Radical reforms had hardly advanced beyond their explicitly destructive first phases before they were rejected by society * By 1991 economic reform in the Soviet Union had hardly progressed beyond the stage of decentralisation within the old system and it was still very equivocal * Price controls and state orders contributed to about 75% of economic activity * Small private sector did not thrive on its own, it was in a symbiotic relationship with the state sector * Law on contract had not been implemented by the end of USSR * Russia’s econo mic and political leaders still did not fully comprehend the difficult conceptual and institutional issues related to establishing macroeconomic control and they had little experience Russia could not match Poland’s years of contact with the West, the experience and knowledge of its policymakers gained in the worldwide academic community, and the years of learning in interactions with the world financial community. * In 1990 and 1991, the Russian government had been gradually gained power (and this was accelerated by the failed coup). * In late October 1991, Russian President Boris Yeltsin announced his intention to launch a radical attack on the country’s economic problems. He had been given freedom in administrative and policy choices for one year and he decided to assign the policymaking duties to a group of theorists, who had a strong preference for rapid change and who had vague idea about how to bring this change about * Murrell argues that shock therapy was the guiding force of policy as Russia began real economic reform in January 1992. * The reform (1992) was certainly more radical than the Polish big-bang, including: * Freeing of most prices * Removal of the old supply system * The complete liberalisation of imports * A thoroughgoing change in the tax system * Rapid closing of the budget deficit * Stringent tightening of monetary policy * A privatisation program with very ambitious goals Preparation for early convertibility of the ruble together with and immediate relaxation of rules on foreign exchange trading * Renegotiation of the existing trading relationships with the other ex-republics * There was greater determination in Russia to undermine the existing institutions of government; the incoming government viewed its mission as an attack on the old Soviet system. * In several areas, the degree of shock, the amount of policy implementation, and even actual policy were unclear * Uncertainty about the nature of policy was present even among those at the apex of government * As early as February 1992, criticisms about the economic policy started to arise * As 1992 proceeded and the economic crisis became more threatening, some old mechanisms of control began to return * Broad powers to control prices and to use central directives on production * To avoid large scale bankruptcy, the government began to make credit available to nterprises in significant amounts * Due to a threat that better enterprises were being brought down with the bad ones, directors of enterprises formed an alliance along with independent labour unions to put pressure on the government, which was forced into compromise with these interest groups * Direct consequence of the policies introduced in January 1992 was that the political forces representing the dominant economic interests of the old Soviet system were much stronger than they had been before those policies were introduced * The short burst of shock therapy in Russia had considerable s uccess if destruction is counted as a goal. But the destruction of the old was hardly matched by the creation of market-oriented institutions of economic control. Blanchard (1994): Transition in Poland * First two years: * Large decreases in GDP * Even larger decreases in industrial production * Output stabilised in mid-1992 * Employment declined initially more slowly than GDP, but has kept declining despite the turn in output * Hardening of budget constraints * Subsidies to state firms were decreased Tax arrears, interenterprise arrears and bank loans were limited and decreasing * Sources of output decline during the first 2 years: * Stabilisation * Price liberalisation * Collapse of trade between Central and Eastern Europe countries * State firms are controlled by workers with uncertain stakes and horizons, and have limited access to finance; state has remained de jure owner of state firms but is not able to exercise its control rights control has reverted to the workers * Led to slow adjustment of employment to decreasing output, appropriation of profits to workers in the form of wages and low restructuring and investment * Slow privatisationFidrmuc (2003): Economic reform, democracy and growth during post-communist transition Key point: There are merits to simultaneous democratisation and liberalisation – democracy reinforces economic liberalisation, which in turn leads to better growth performance. Democracy is clearly not a necessary condition for high growth (as the examples of Chile and China illustrate), but as the experience of the post-communist transition countries shows, democracy results in policies and institutions that facilitate economic reforms and create an environment that is favourable for growth. However, democratisation alone is not the key to growth; it is through its positive impact on economic liberalisation that it improves growth performance. By 1993, barely 3 years into transition, three frontrunners – the Czech Repub lic, Hungary and Slovenia – attained a level of political freedom and civil liberties comparable to the UK, France or Germany. * Most post-communist countries succeeded in sustaining at least a moderate level of democracy, despite very turbulent economic and political developments, military conflicts or coup attempts. * The high speed of democratisation reflected not only the desire of these countries’ citizens to live in democracy, but also the encouragement or outright pressure from Western governments, international organisations and especially the EU which made democracy and explicit precondition for accession negotiations. Democracy has a positive effect on progress in implementing market-oriented reforms. * Economic liberalisation, in turn, has a positive effect on growth * Therefore, democracy indirectly improves growth performance. * Economic performance during transition and initial conditions affected the progress in democratisation – countries that we re more developed at the outset of transition and those that grew faster during transition in turn implemented greater degree of democracy. Growth performance during transition: * All post-communist countries experienced dramatic contraction of economic activity at the outset of the reforms, but the subsequent transition paths diverged considerably. Some countries reached the bottom of transformational recession after 2-4 years and then recovered * Some, most notably Poland grew at impressive rates subsequently * Others (Bulgaria, the Czech Republic and Romania) experienced a second dip later on * In contrast, most Soviet Union countries experienced deep and protracted depression with little subsequent recovery –> for Moldova and Ukraine, transition resulted in a decade of continuous decline * By 2000 only 4 countries have exceeded the 1989 level of output * Berg et al. (1999) found that the initial output fall is attributable primarily to initial conditions and macroeconomic instability, whereas the effect of liberalisation on growth was overwhelmingly positive. When considering separately the effects of liberalisation on state and private sectors, they conclude that liberalisation contributed to the contraction in the state sector, but this was more than compensated by the expansion in the private sector. The further a country lies from Brussels, the more reluctant it was to implement radical economic reforms – therefore, being father away from Western Europe is associated with lower growth, although the relationship is often not significant. * Engagement in military conflicts, not surprisingly, lowers growth. * On the other hand, once the war is over, the affected countries tend to grow more rapidly as they make up for the loss of output. * Government expenditure does not have a significant impact on growth Democracy and growth: * The post-communist countries implemented, at least initially, economic and political reforms simultaneously. In so me cases, political reforms even preceded the economic ones.Hellmann (1998): Winners Take All: The Politics of Partial Reform in Postcommunist Transition Key point: A conventional approach suggests that in the short-term, economic reforms are believed to generate high transitional costs before long-term gains are realised. Therefore, politicians in democratic systems are reluctant to undertake radical reforms whose benefits will not be realised before the next elections. For an economic reform to be successful, governments need to focus on restraining the net winners of the reform as they are the one’s responsible for setting the highest obstacles for the advancement of the reforms. The partial reform model: Explains why some countries have maintained partial reform over time, even though the short-term costs are higher and the overall gains are lower than those associated with more comprehensive reforms * Explains why post-communist countries in which the net winners of the reform process appear to have significant political power over economic policy-making nevertheless have remained mired in a partially reformed economy * Provides a possible explanation for the strong link between democracy and economic reform among the postcommunist transitions that stresses the advantages of including the very groups that suffer from the transitional costs of reform Conclusion: The costs of transition have been substantial in all transition economies – to varying degrees, each country has faced some combination of high inflation, high unemployment, declining real incomes, decreasing state services, and increasing uncertainty. * However, the losers of the reforms have not constituted the main political obstacle to the progress of reform. * In fact, it is these countries in which governments have been most vulnerable to the losers’ threat of an electoral backlash against reform that have adopted and sustained the most comprehensive reform programs. * In contrast, governments insulated from electoral pressures have made, at best, only partial progress in reforming their economies. * Moreover, economic reforms, once adopted, have rarely been reversed, even when the reform governments that initiated them have been ousted.In addition, there have been cases in which electoral backlashes were followed by intensification of reform in some areas * Partial reforms were predicted to generate rent-seeking opportunities arising from price differentials between the liberalised sectors of the economy and those still coordinated by nonmarket mechanisms * Rapid foreign trade liberalisation without complete price liberalisation managers were able to sell their highly subsidised natural resource inputs (oil/gas) to foreign buyers at world market prices * Privatisation coupled with the creation of an effective corporate government structure reduces asset stripping by enterprise insiders. Actors who enjoyed extraordinary gains from the distortions of a partially reformed economy have fought to preserve those gains by maintaining the imbalances of partial reforms over time – the winners from an earlier stage of reform have incentives to block further advances in reform that would correct the very distortions on which their initial gains were based. In effect, they seek to prolong the period of partial reforms to preserve their initial flow of rents, though at a considerable social cost. * Therefore, the challenge posed by the winners is based on a set of assumptions about the costs and benefits of reform that differs from the assumptions of the conventional J-curve pattern upon which most existing models of the political economy of reform are based. J-curve assumes that economic reforms generate concentrated costs in the short term and dispersed benefits over the long term, whereas Hellman has demonstrated that in the postcommunist transitions, economic reforms have tended to produce highly concentrated gains to particula r groups in the short term, while dispersing the transitional costs of reform throughout the economy. * The partial reform model stresses the need to restrain the winners by increasing competition with other groups or by restricting their ability to veto reform measures unilaterally. * In this view, expanding political participation to include the losers in the policy-making process could place limits on the concentrated political power of the winners and prevent them from sustaining a partial reform equilibrium. * One of the fundamental tenets of the politics of economic reform has always been to create a constituency of winners with a stake in sustaining and advancing the reform process. This has been a common strategy both for making the reforms irreversible and for building up the necessary political support for further reforms. * Yet a comparison of the post-communist transitions suggests that the winners can do far more damage to the progress of economic reform than the losers . * Therefore, the success of economic reform depends both on creating winners and constraining them. * Paradoxically, the most effective means of constraining the winners in the post-communist transitions has been to guarantee the political inclusion of the very constituency that most existing political economy models seek to exclude: the short-term losers of reform. Progress in the implementation of market reforms could reduce the private gains to the initial winners over time, while increasing efficiency gains for the economy as a whole from winners’ perspective, J-curve is reversed * Countries that adopt more comprehensive reforms at the start have a narrower gap between the income curves of winners and losers. More on PARTIAL REFORM and other information: Roland (2002): The Political Economy of Transition Normative political economy – focuses on the decision-making problem of reformers Reformers face 2 types of political constraints: * Ex ante political constraint s – feasibility constraints * Ex post political constraints – related to backlash and policy reversal Relaxing political constraints – 4 options: 1.Building reform packages that give compensating transfers to losers from reforms * Easiest way – ‘Buy their acceptance’ * In the real world and transition economies it is hard to do 2. Making reforms partial to reduce opposition * Partial reform, usually in the framework of a gradualist strategy, has some clear disadvantages. It yields lower efficiency gains than a complete reform. * However, partial reform also has several potential advantages over full reform – it is less costly in terms of compensation payments to losers. * If partial reform is less costly to reverse than full reform, political acceptability can be easier than for full reform because it provides an option of early reversal. If a partial reform is implemented, a continuation toward full reform seems unattractive to a majo rity then it is always possible to come back to the status quo (Russia – turned back too early?! ) * Gradualism thus lowers the cost of experimenting with reform and thus makes a move away from the status quo more easily acceptable to a majority. * Partial reform can also build constituencies for further reform through the use of â€Å"divide and rule† tactics (showing that rejection of a current reform plan can lead to the adoption of a plan that would hurt them even more, they may prefer to accept the first one) and the optimal choice of sequencing of reforms (e. g privatisation of those enterprises with â€Å"good† outcome first) 3.Creating institutions that make a credible commitment to compensating transfers * Can offer benefits * However entails economic costs * E. g extending voting franchise- ensuring poorer segments of population vote 4. Waiting for deterioration of the status quo to make reform more attractive * Sometimes only option is to wait * Howev er, decision-making paralysis may occur if political decision making is characterised by different parties trying to push the burden onto the other parties Understanding the difference in transition paths between central European countries like Poland and Russia and the former Soviet Union on the other hand: * Law and property rights: One argument – the extent of state capture and rent seeking was much more important in former Soviet Union countries than in central Europe and this difference goes a long way in explaining differences in output performance (EBRD, 2000; Hellman and Shankerman, 2000) * Geopolitical factors * Quite important, although they have been underestimated since the beginning of the transition – in geopolitical terms, the transition represents the shift of central Europe and the Baltic states toward western Europe several nations are given the opportunity to have more interaction with western Europe or even join the European Union * Entry to the EU implies adopting the political and economic system of the west. The potential reward of belonging to the club of western nations makes it more worthwhile to undergo the cost of transition.Moreover, the geopolitical factor increases the perceived cost of reversing transition policies, since such reversals would raise the risk of being left out of the western club, an outcome than many in central and eastern Europe would view as disastrious. Geopolitical impact of transition for Russia: * Transition represents the loss of the Soviet empire and also of territories (Ukraine or the Baltic States) – wound to Russian nationalist pride * Trauma of the loss of superpower status could be compensated for by economic gains from transition to a certain extent. Unfortunately, such gains have not materialised so far for the majority of Russians. Entry of Russia into the EU is neither expected nor especially desired. * Thus, resistance to transition proved much harder in the former Soviet Un ion than in central and eastern Europe. Sequencing: The sequence of reforms in transition economies are roughly in line with political economy theory, which suggests that reforms expected to be more popular should be adopted first and the less popular reforms tend to be delayed. For example, in both Central and Eastern Europe, democratic reforms preceded economic reforms because support for democracy was much stronger than support for economic reforms. * Apart from political reforms, certain other institutional changes can be decided at an early stage of reforms. For example, establishment of institutions for competition policy should be among the first reforms to be implemented in transition economies.This reduces the danger of existing monopolies going into private hands, which may have enough power to prevent the government from introducing competition policy or any other measures that are opposed to their interests. * Another important early step in the sequence of transition re forms is encouraging the development of a small private sector prior to more comprehensive reforms (in Hungary, small private sector was already producing 10% of industrial output by 1990) * As the Big Bang Price Liberalization in Vietnam showed, the prior existence of a viable private sector buffered the shocks of economic liberalization and macroeconomic stabilization and facilitated a supply response.In Vietnam, after the implementation of a radical price liberalisation, output initially fell, but an impressive growth in agriculture still led to positive growth in GDP. * In transition economies, the best firms tend to be privatized first as the privatization of more profitable firms creates political support and goodwill to for further privatization and other reforms. * Another set of sequencing issues arises with regard to mass privatization. Mass privatization in countries like Russia created a sudden and strong concentration of economic power among insider managers. This is es pecially dangerous because a sudden shift of economic power to insider managers may make it easier for them to threaten or use bribery against politicians and regulators to take advantage of subsidies or favorable legislation.The insider uses the threat of reducing economic activity and destroying jobs which leads to inequality of wealth which in turn might increase political instability. Trade-off between the speed of reforms and the size of budgetary transfers: * The theory of political economy suggests that faster reforms involve higher compensation costs like unemployment benefits and pensions due to a higher level of restructuring. In addition, there are claims that a faster rate of restructuring in transition economies is associated with a worsening fiscal state. * However, the role of the social safety net in helping overcome political constraints is quite clear.In the case of central European countries like Poland and the Czech Republic, the social safety net has helped to m itigate the negative ffects of transition on income inequality, especially for the most vulnerable proportions of the population. Role of political institutions: * When it comes to the role of political institutions and the progress of reforms, there are contradicting views. * Empirical analysis by Hellman and EBRD has found that stronger executive branch of government tends to be associated with less progress in reform, whereas there tends to be a positive correlation between the broadness of coalition and the progress of reforms. * However, empirical findings by Rubini and Sachs, among others, have shown that weak executive branch and broad coalition goverments are obstacles to reforms. Faster progress in reforms due to broader coalition may be explained by the fact that if reforms are accepted by broader coalitions, perhaps there is less chance they can be reversed. * However, broad coalitions tend to paralyze decision making due to the holdup power of some groups and to differin g views within the coalition. * Another possible interpretation is that the population is eager to get reforms implemented, whereas the politicians and those holding office are opposed to it. In that case, closer checks on the executive branch and frequent elections are a way to force the politicians to move, whereas politicians with more discretion would choose to block reforms. According to Roland, the most likely explanation for the positive correlation between progress of reforms and broadness of coalitions and weakness of the executive branch is that it is likely that the countries where it was the easiest to push for democratic reforms, are also the countries where resistance to economic reforms was relatively smaller. Whereas in countries with less initial support for reforms, it is quite likely that both democratic reform and economic reform are less advanced. Therefore, the differences in initial conditions of reform are what determine the intensity of political constraints , and thus the initial choice of political institutions, and hence the initial choice of policies. Popov (2000) – Shock Therapy vs Gradualism:Primary issue regarding transition performance – strength of institutions Secondary – speed of reforms * By now most economists would probably agree that because liberalisation was carried out without strong market institutions it led to the extraordinary output collapse in CIS states * The worse initial conditions for transformation, the greater the probability of the deep transformational recession, and hence the more likely delays in liberalisation * Gradualists objected to the elimination of old regulations and institutions before the new ones are created, warning that the institutional vacuum may have a devastating impact on output Transformational recession Supply-side phenomenon – reallocation of resources (restructuring) due to market imperfections is associated with the temporary loss of output Argument: Di fferences in economic performance in post-communist countries during transition appear to be associated predominantly not with chosen reform paths, but with the magnitude of initial distortions in industrial structure and external trade patterns, and with the initial level of economic development. The higher the distortions (militarisation, over-industrialisation, â€Å"under-openness† of the economy and the share of perverted trade flows), the worse is the performance as measured by the GDP change. And the higher was GDP per capita before transition, the greater were distortions embodied in fixed capital stock, the more difficult it was to overcome these distortions to achieve growth. The impact of speed of liberalisation appears to be limited, if any. Reasons (distortions): * High defence expenditure and the need for conversion * Overcoming the effects of the Cold War Defence expenditure was abnormally high – declines in defence output were not offset by increases in non-defence output * Reallocation of resources from industry to services * External trade distortions – the degree of openness of socialist economies (the share of external trade in GDP) * In most countries, including the majority of the former Soviet republics, trade was relatively underdeveloped * A bit better in Azerbaijan, Hungary and Vietnam * Shift to world market prices in interrepublican trade led to reduced trade – prices used were completely different (resource commodities underpriced, finished goods overpriced) Policy factors: institutions, rule of law and democracy The decline of the institutional capabilities contributed a great deal to Russia’s and CIS poor economic performance * Regardless of the criticism against â€Å"big governments† and too high taxes in former socialist countries, the downsizing in the government that occurred in most CIS states during transition went too far – drastic reduction of government spending (50% and more in real terms in the course of just several years) cannot lead to anything else but institutional collapse * In addition, in most CIS states the reduction occurred in the way that instead of shutting some programs down completely and concentrating limited resources on others, governments kept all programs half-alive, half-financed and barely working Three major patterns of change in the share of government expenditure: 1) Under strong authoritarian regime – China Cuts in government expenditure occurred at the expense of defence, subsidies and budgetary financed investment, while expenditure for â€Å"ordinary government† remained largely unchanged 2) Under strong democratic regimes – Poland * Budgetary expenditure, including â€Å"ordinary government† expenditure declined only in the pre-transition period, but increased during transition itself – social safety nets? 3) Under weak democratic regimes – Russia * Reduction of the general le vel of government expenditure led not only to the decline in the financing of defence, investment and subsidies, but to the downsizing of â€Å"ordinary government† which undermined and in many nstances even led to the collapse of the institutional capabilities of the state * Russian pattern of institutional decay proved to be extremely detrimental for investment, and for general economic performance To sum up, Gorbachev reforms of 1985-91 failed not because they were gradual, but due to the weakening of the state institutional capacity leading to the inability of the government to control the flow of events. Similarly, Yeltsin reforms in Russia, as well as economic reforms in most other FSU states, were so costly not because of the shock therapy, but due to the collapse of the institutions needed to enforce law and order and carry out manageable transition. Therefore, there is enough evidence that differing performance during transition, after factoring in initial conditions and external environment, depends mostly on the strength of institutions and not so much on the progress in liberalisation per se. Democratisation without strong rule of law usually leads to the collapse of output.After allowing for differing initial conditions, it turns out that the fall of output in transition economies was associated mostly with poor business environment, resulting from institutional collapse. Liberalisation alone, when it is not complemented with strong institutions, cannot ensure good performance. Ericson (1991): The Classical Soviet-Type Economy: Nature of the System and Implications for Reform Characteristics of the Soviet-type economic system: * A hierarchical structure of authority * Rigid, highly centralised planning of production and distribution * A commitment to maximal resource utilisation * Formal rationing * Exhaustive price control * The lack of any liquidity or flexible response capability * The lack of legal alternatives to assigned economic rela tionships * Absolute and arbitrary control by superiors Incentives that are geared to meeting the plans and desires of evaluating superiors Any economic reform must struggle against these characteristics and their natural consequences. One important consequence is that while the administrative superstructure has been subject to rather frequent â€Å"reform†, the physical structure of production and interaction has changed only very slowly. Strengths and weaknesses of the traditional Soviet-style system: Strenghts: * Very good at mobilising scarce resources and concentrating on a few clear, well-defined objectives (that can be expressed in measurable, quantitative and communicable terms and that yield large observable outcomes) * Building of major heavy industrial capacities * Collectivisation of agriculture * Post-war reconstruction of industry Development of an unprecedented military-industrial complex * Maintenance of the world’s last true empire Weaknesses: * Centra l authorities lack the information and physical capability to monitor all important costs * Decisions made in ignorance of opportunity costs lead to a vast range of negative externalities: * Damage to the capability of users to produce (especially with needed quality) * Unusable output forced on others in the system * Destruction of the resource base due to improper exploitation * Collateral damage to agriculture etc * Incentives used lead agents to: * Avoid any change or risks * Shun innovation * Ignore information important to others * Work to rules regardless of the impact on othersThus, while the traditional Soviet economic system has been effective in achieving a few centrally definable and achievable objectives, it is also inherently wasteful and inefficient in the pursuit of those objectives. Implications for reform: 2 monumental obstacles: * Vast resource commitment – however, lack of resources currently available in Soviet-style economies is probably not the most ser ious obstacle, for it might be dealt with through aid from abroad * Primary obstacle: characteristics of the Soviet-style system are interconnected and mutually supporting, altering one or a few is merely disruptive of the stable functioning of the system and its effectiveness.Thus, a meaningful reform must eliminate all characteristics more or less simultaneously. THEREFORE Partial reforms will not suffice The analysis implies that radical reformers are correct to seek the total replacement of the traditional system. Radical marketization and privatisation undercut of destroy each of the nine defining characteristics of the traditional system. Fischer & Gelb (1991): The Process of Socialist Economic Transformation Enterprise reform: * Enterprise reform, which requires the imposition of bottom-line discipline, definition and change of ownership, and reform of management, is the heart of the transformation process. Two phases (opinions differ which should come first) * Restructuring * PrivatisationSlow privatisers argue that firms should be sold off gradually after restructuring. They emphasise the danger of severe economic dislocation if too much change is attempted quickly. Fast privatisers argue that the benefits of a rapid and irreversible shift to private production outweigh the costs of reduced state revenue. They believe that comprehensive and rapid ownership reform is necessary to increase efficiency. * Broad distribution of shares, or vouchers with which shares can be bought, across the population The Role of the State: * Redefining the previously all-encompassing role of the state is one of the greatest challenges for reform.Institutions and professions taken for granted in market economies have to be re-created and reformed to support markets: * Secure legal environment to protect property rights and regulate commercial relations * Accounting and audit systems are needed to organise and monitor information * Investments in human capital to complement the system reforms in areas such as: accounting, credit and market analysis and bank inspection. * Management skills need to be upgraded and modernised (especially in finance and marketing) * In some areas, such as financial markets, reform may require a greater state role than before. * Reforming governments need urgently to: * Introduce broad-based taxes and to develop the capacity for tax administration, rather than continue to depend on profit remittances from state enterprises. * Institute a social safety net, especially for those affected by the new phenomenon of open unemployment * Liberalisation of labour and capital markets is also important.Labour market reform measures to make it easier to hire/fire labour, relaxation of wage regulation, introduction of unemployment insurance, establishment of institutions (inc. employment agencies) to encourage labour mobility. Capital market reform development of financial markets and private sector institutions (inc. banks). However, freeing input markets should not be an early priority. * Enterprise reform is the heart of the transformation process. 2 phases: restructuring and privatisation. Slow privatizers vs fast privatizers. Reforming governments will have to introduce broad-based taxes and develop the capacity for tax administration, rather than continue to depend on profit remittances from state enterprises. The reforming goverments will also have to develop a social safety net. Sequencing of reforms: Reforms need to include macroeconomic stabilisation, price reform, trade reform, small-scale privatisation, new regulations for private investment, the creation of emergency unemployment insurance and the start of work on new tax, legal and regulatory institutions. * For countries with severe internal/external imbalances, priority no. 1 has to be macroeconomic stabilisation (e. g sharp cuts in firm-specific subsidies, tight credit limits, trade liberalisation at a heavily depreciated exchange rate, fixing th e nominal exchange rate (in countries with high inflation)). Stabilisation can be assured only by following consistent macroeconomic policies over periods of years. Shleifer (1997) : Government in Transition Key point: Russian government is less effective in serving the market economy – as well as its people – than the Polish government. But why? Arguments to the effect hat Russia is historically and culturally incapable of good government (such as low trust and anti-market culture) lack support. More convincing argument: Russia has not had as radical a change in its government, in terms of both structure and personnel, as Poland or the Czech Republic. Comparison of Poland and Russia: * Both were industrial economies at the time reforms began * Both economies faced substantial disruption from the collapse of COMECON and other trade following the demise of the Soviet Union * Both economies were in poor condition when the reforms began, suffering from inflation, goods sh ortages and declining production. * Both experienced a near-collapse of the state prior to transition. In Poland – total demise of the communist party and its military regime * In Russia – the Gorbachev government faced a similar crisis, which led to the dissolution of the Soviet Union and the creation of independent Russia * After communism collapsed, both countries moved to fragmented, rapidly changing party systems and â€Å"semi-presidential† regimes, in which a conflict between president and legislature was present from the start. * Both were led in their transition by charismatic, populist presidents committed first and foremost to the destruction of communism. However, despite these similarities as of 1990, the two countries appeared in 1996 to have very different results of their reforms. I argue that an essential part of transition to capitalism is the transition of government.Despite similar economic reforms, government in Russia continues to retain su bstantial political control over economic life, and moreover uses this control to pursue predatory policies toward business. The political transition in Russia has not gone nearly as far as it has in Poland, and this slowness of political transition disturbs economic growth. Government in transition: * Even when the communist power collapsed, some remnants of a large government often remained, ready to continue political control. The principal goal of the political transition was to replace these remnants with institutions supportive of capitalism. This entailed two steps: * Depoliticisation – government control replaced with control by market orces * Price liberalisation – eliminates price controls that were used by planners to either stimulate or discourage production of particular goods, or to create shortages that allow planners to maintain their power over resource allocation. * Stabilisation – imposes a harder budget constraint on the government, and thus prevents politicians from using subsidies to encourage firms (and regions) to pursue political ends * Privatisation – removes direct control over firms from the government * New functions taken on by government: provision of laws and regulations that support a market economy. * The state had to be weakened overall, but strengthened in a few areas. * However, even with the three radical measures taken, the government retains much regulatory power which it can use to either support market economy or hurt it. Shock therapy does not guarantee depoliticization (as politicians can still exercise control in other ways) or a transformation of government institution which includes: * creation of laws and legal institutions that protect private property, enforce contracts between private parties, but also limit the ability of officials to prey on private property * creation of regulatory institutions that deal with competition, securities markets, banking, trade and so on * Despite sho ck therapy, politicians in Russia, particularly at local level, retain enormous control over economic life, which they use to pursue political ends and to enrich themselver. * This makes them rather different from politicians in Poland * Russia is also behind in creating the institutions of a new market economy. ALSO Transition of government into one that supports markets from the one that preys on them has gone further in Poland than in Russia – regulators of small business exert more power over business in Moscow than in Warsaw and use this power to enrich themselves. In addition, the Russian government has not yet successfully taken on the basic market supporting functions, including police protection. * Russia is much more of a laggard in the transition of its government than it is in shock therapy. Human capital of politicians: Key point: Lack of turnover of human capital in Russian politics may well be a serious reason for the poor performance of its government * Many R ussian politicians are communist leftovers experiencing significant hardships understanding what is expected from them. Few of these leftover politicians have transformed themselves into capitalist politicians. In Poland, 75% of local leaders elected in Poland in 1990 had no record of government service and 45% of newly elected mayors were under the age of 40 – in Poland the people have largely changed and been replaced by a younger crowd, with some experience in both democratic politics and market economy, whereas in Russia, the local leaders are largely the very same people who were there before the reform began. In this respect Solidarity changed Poland – Russia would be a very different place politically if it had a similar revolution from below. Incentives of local politicians to support private business * Campaign support * If politicians need to collect campaign contributions to run their elections, they might favour new business as a source of potential campaig n donations * Local tax base * If politicians need to provide public goods to attract votes, and must collect taxes to pay for these goods, they would support the growth of new business to broaden the tax base * Personal share holdings Local politicians may support private business if they effectively become shareholders in it and profit personally when it does well Poland vs Russia: Elections: * Poland had held elections more consistently than Russia and officials at very local level – where small business would actually have a political say – are all elected. * Because of elections, Polish politicians appear to be much more supportive towards private business than Russian politicians. Tax base * In Poland, the principal source of funds for local governments are local taxes and fees, especially property taxes incentive to the local politicians to broaden the tax base to increase revenue through new business formation and employment * In Russia, over 2/3 of local gover nment evenues comes from their share in taxes collected by central government through negotiation governors have little incentive to broaden their tax bases and instead focus on negotiations with Moscow Personal financial incentives: * In Russia, many of the local officials see a rather short and insecure future for themselves in politics. If the private economy grows, they are likely to lose power because they will not be acceptable to the new business elites or will be replaced by younger politicians during new elections. Absence of political security may prevent the politicians from accessing the future profits of the firms, therefore many local government officials simply destroy local business through excessive corruption and regulation – they take what they can while they can. Initial conditions Poland had been pursuing economic reforms at least since the 1980s (much longer than Russia) Polish private sector was well established by 1990 when reforms began (by 1986 1/3 o f the Polish labour sector was employed in the private sector) * Poland had a much more substantial legal history and tradition to rely on – many of its commercial laws were adopted as soon as reforms began because they were based on Poland’s own pre World War II laws * National tradition made the implementation of at least some institutional reforms much easier. * Russia had been building capitalism for a much shorter time – Gorbachev’s reforms allowed some quasi-private firms in Russia, but few compared to Poland. Russia’s history of market institutions is sparse too – pre-revolutionary laws were an instrument of autocratic control, not protection against it; regulatory agencies have been created from scratch, employees often view their jobs as mandates for personal enrichment rather than efficient regulation. * However, author believes that importance of initial conditions can be overrated – many countries in Eastern Europe, such a s Slovakia and the Czech Republic, are growing rapidly even though they had as little private business before the reforms as Russia did. Some countries of FSU are also growing despite having a limited history of legal traditions and public institutions. With proper political incentives, initial conditions are often overcome. Suggestions: Acceleration of elections at the sub-regional or local level * Fiscal federalism – more generally the tax system – needs to be reformed as well. * Institutional reforms need to continue – legal reforms are most important among those, but creating functional bureaucracies, one at a time, is also crucial. * Russia made the mistake of beginning with economic reforms and delaying the political and institutional reforms (however, author believes that business pressures are likely to play a critical role in the political transition of Russia and of course they did not exist before economic reforms) Estrin (1991) – Privatisation in Central and Eastern Europe Key points: Appropriate mode of privatisation depends on the development of capital market institutions and the availability of foreign or domestic private capital * Transition must be rapid to be effective, so reforming governments have been faced with the tasks of selling assets whose value is far in excess of domestic resources. Privatisation: * Objective: to improve enterprise performance and national economic efficiency and to help public finances (Vickers and Yarrow, 1988) * Definition (Milanovic) – transfer from the public to the private sector of ownership in such a way that private individuals become the identifiable ultimate owners Seven central areas in which property rights and the mechanism of resource allocation must be altered in order to build a functioning market sytem: 1) Ownership and control 2) Means of allocation 3) Aims of the System 4) The Allocation of Labour 5) The Allocation of Capital 6) International Trade 7) Role of StateReformers in Central and Eastern Europe strongly believe that their recent history proves that when the state is owner, it will always interfere in the operation of firms in such a way as to hinder the beneficial impact of competition Hinds (1990) – absence of effective private property rights is at the heart of the failure of actual socialist systems, and must be immediately eradicated by widespread privatisation. Privatisation: * Important way of raising government revenues, but it will not affect the state’s long-term financial position if enterprise efficiency is not changed; may still be sensible from a revenue point of view is short-term conditions call for additional expenditures with limited availability of taxation or other income sources * Important element in building markets Significant role in the formation of labour market institutions and the process of wage bargaining * Privatisation prevents a reversion to the old systems How to Privatise and to W hom? One of the main problems – mass privatisation in countries where domestic savings are small and capital market institutions weak Arguments FOR selling state’s assets: * Considerable revenues * If monetary overhang threatens to destabilise the macroeconomy, privatisation could absorb some of the excess liquidity. * Owners established through a process of financial exchange will have the strongest demand effective corporate governance Arguments AGAINST selling state’s assets: * Unequal distribution of income and wealth Traditional modes of privatisation are very slow and most analysts agree that for transition to be effective the changes must be fast * Valuation problem – nothing upon which to base valuation (no relevant record of profitability), a significant proportion of companies are loss-making, thus it is likely that sales price will be negative * No domestic actors with the resources to buy Most of these problems are resolved by a free distribut ion of the state’s holdings: * No need to value the assets initially * No need to find domestic purchasers * Privatisation could be extremely rapid * Provided an operational scheme can be devised, privatisation can be constructed in a highly egalitarian way, preventing the early concentration of wealth in the hands of the nomenklatura or black marketeers who otherwise would be the people most likely to gain from privatisation Disadvantages of free distribution: * Losing the revenues from sales Possibility of weak governance if capital ownership is dispersed – central issue is whether population at large are the appropriate owners to dramatically improve company performance Potential buyers or recipients: * Public at large – external privatisation or privatisation from above * Transfer of ownership to shareholders * Foreigners – access to hard currency, superior management skills and technical know-how * Insiders – internal privatisation or privatis ation from below * Involves the sale of shares to workers and managers in the firm * Attractive: * Could be administered quickly and relatively easily, yet could still provide some revenue to the government * Participative organisations may be more productive * Negative: Yugoslav experience: employee control may conflict with effective corporate governance * No establishment of credible procedure for wage determination and for reducing inflationary pressures * Clearly not suitable for companies that require a significant degree of restructuring (probably the vast majority) * Unjust – workers and managers in profitable firms stand to gain considerably from the privatisation process, while those employed in loss-making firms would obtain nothing * Potential for bribery and corruption as workers and managers can use insider information to undervalue the assets or to transfer them illicitly into their own hands Roland (1994) – On the Speed and Sequencing of Privatisation a nd Restructuring Big bang approach – fast privatisation through mass privatisation plans with no definite sequencing, leaving the task of restructuring to the owners of the privatised firm Key point:Political constraints necessitate a gradual approach to restructuring and gradualism has implications for the speed and sequencing of privatisation. In particular, we ward on the danger of privatising too fast firms where restructuring should best be delayed for political reasons. Conclusion: A condition for successful gradual restructuring is a screening mechanism to separate good firms from bad ones. It is crucial to separate thee firms and their channels of finance, so that good firms would become independent of government through government and face hard budget constraints while bad firms would remain under government control with strengthened control. Arguments for the big bang view of mass privatisation: * Speed Price liberalisation in a state-owned enterprise economy will n ot give the correct incentives, thus it is necessary to achieve very quickly a critical mass of private ownership in order to get firms to respond to market signals. * If not done: * Danger of inertia – due to firms not taking new profit opportunities * Danger of continued soft budget constraints – loss-making firms expect to be bailed out * Importance of getting the State out of the economy * Committing the State to avoid continuous intervention in enterprise activity * Absence of clarified property rights * Danger of large scale decapitalisation by managers who have de facto control without assigned property rights Experience: * Poland Plan: combining fast privatisation through giveaways together with strong control rights given to mutual funds to avoid dispersed ownership of firms * Political constraints have played a major role in blocking Polish mass privatisation – in 1994, four years after the beginning of â€Å"big bang† in Poland, it is still not implemented * Russia * Speed of privatisation – obvious success (about 1/3 of workers were in privatised firms by end of 1993) * Problems with restructuring * Former managers are still in control (workers did not sell their shares to outsiders to assure outsider control; managers preventing them) Political constraints: There are 2 main sources of political constraints to privatisation: * Ex-ante political constraints – feasibility constraints * Proposals may be blocked – e. in Poland where coalition in power preferred distribution to workers whereas the Polish mass privatisation programme involved distribution to the population at large * In Russia, policy-makers took into account ex-ante political constraints by designing a giveaway plan favouring managers and workers (Boycko, Shleifer and Vishny (1993) justify that this was the only way to get privatisation adopted) * Sometimes coalitions push forms of privatisation that are economically not sensible but poli tically difficult to avoid * Ex-post political constraints – concern the danger of backlash and reversal of given politics * This may be the case when a programme advertised as very egalitarian induces a high concentration of wealth in the hands of a small number of people * However, political constraints related to redistribution of wealth and income may not be the most serious * More serious political constraints are related to serious income risks related to restructuring – general knowledge that there will be a massive shift from heavy industry to services, from big to small enterprises, but in most cases, nobody knows in advance which enterprises will survive and which will die Experience: * Big bang restructuring is not ex ante feasible * Gradual restructuring may be more acceptable ex ante because: * Gradualism allows for â€Å"divide and rule† tactics * Gradual resolution of uncertainty may enhance ex ante feasibility * Aggregate uncertainty related to u ncertainty: restructuring may be positive but it can go wrong, too advantage to moving gradually by starting to restructure only a subset of enterprises or sectors * Gradual eform packages tend to start earlier – Hungary and China * Optimal sequencing: * Better to start with reforms having the highest expected outcome for a majority and to delay the reforms that are expected to hurt the most Gradual restructuring and privatisation policies: * No political constraints – restructuring may be left to the new private owners * Political constraints – very fast and non-differentiated approach to privatisation danger of partial renationalisations (subsidising a great number of firms) and general delays in restructuring (due to soft budget constraints/no incentives) * Gradual privatisation policy allows for: Establishment of a screening mechanism separating good from bad firms * Best firms tend to get privatised first as they are more likely to find a buyer less large r edundancies and better performance * Privatisation may be slow, but it is possible to speed it up: * Managers incentives to restructure before privatisation especially when given shares * In Poland, although mass privatisation has been blocked, successful privatisation has continued at a fast speed especially in smaller and medium enterprises through a â€Å"liquidation programme† – management buyout * Emergence of a sound private financial system If good firms get privatised first, bad firms remain under state control private savings are allocated to good firms with high yieldings sound financial system may emerge * A credible pol

Sunday, September 29, 2019

E commerce online food ordering system

The BARS also provides the business understanding that should e incorporated into message implementation guides and other user documentation as well as supporting re-use of artifacts within the standards development process. 3 Audience The main audiences for this document are the potential authors of individual Bars. These are primarily the ANNUNCIATE business and IT experts who are responsible for specifying the business requirements for e-business or e-government solutions in a specific domain and for progressing the development of solutions as relevant standards.Authors may include other standards bodies or users and developers in developed or developing economies. Reference Documents Knowledge and application of the following standards is crucial to the development of quality business requirements specifications. Other key references are shown in the appropriate part of the document. UN/CAVEAT. Techniques and Methodologies Group (TM). ASPECT'S Modeling Methodology (MUM): MUM Meta Model – Core Module. (Candidate for 2. 0). 2009-01-30. Methodology (MUM): MUM Meta Model – Foundation Module. Candidate for 2. 0). Formal definitions of many of the technical terms used in this BARS specification may be found in the above references but for convenience some key definitions are included in Appendix loft this document. 5 purpose of BARS 2. 0 A BARS is designed to capture the requirements that a business, government or sector has for an e-commerce solution in a particular area of business (I. E. Domain) and to achieve it in such a way that it provides a basis for a subsequent standards development process within ANNUNCIATE.Version 2 of the BARS documentation template requires that the business requirements are first specified in business terms and that these requirements are then expressed formally as ML diagrams or worksheets that aid standardization and provide IT practitioners with the required retracts from which to develop formal specifications. By facilitating consistent documentation of business collaborations between participants, the BARS 2. 0 template supports the standardization and harmonistic of business processes and encourages re-use of the resulting artifacts in part or as a whole.This consistency, achieved through the systematic specification of requirements in the BARS, is vital if resulting e-business systems are to be interoperable. A clear specification of business requirements enables traceability between requirements and supporting the quality assurance process. As the BARS provides the description of the equines processes and identifies the business data needed to support those processes, it can provide the necessary business understanding to enable successful data harmonistic.It also provides the business understanding that must be incorporated when developing message implementation guides and other user documentation. The use of a modeling tool that is designed or configured to support Version 2. 0 of the MUM will enable the majority of the content of a BARS to be generated automatically. This document may also be considered as a resource to support capacity building in developed or developing economies. 1 Overview of BARS Development Process A BARS MUST start with a clear specification of the scope of the project and where this project fits into a global context of business operations and MAY refer to a MUM model of the business domain. The Scope MUST be specified in terms of the Business Processes that are involved and the Business Entities about which information is to be exchanged by the participants who are involved directly in the Information Exchanges that support the related business process.It MUST also indicate stakeholders who have an interest in the processes, or may participate in elated processes, and whenever appropriate, what is out of scope of this particular project. The process and information flows that constitute the business process, the business rules that gove rn the exchanges and the details of the information that is to be exchanged during these processes, SHOULD then be elaborated.The requirements MUST first be specified in business terms and then expressed in formalized terms. The business requirements MUST be presented as a numbered list so as to facilitate a check to be made that all requirements have been met in the eventual e-commerce solutions proposed. As the process of completing a BARS progresses, new requirements may be recognized and added to the list. The resulting BARS will include text, templates (worksheets) and diagrams, and may refer to a MUM model of the domain.To help with future re-usability, interoperability and to provide a degree of standardization in the developing a BARS, an initial set of preferred terms is provided in Annex 2. To minimize the work in creating a new BARS, improve harmonistic and encourage risibility, where ever possible, any relevant existing Bars artifacts or MUM models SHOULD be used as a ba sis for producing the ewe requirements. A high level BARS MAY be used to define the context and scope of a domain that is refined by a cascade of more specific Bars. . 2 BARS Business Requirements 5. 2. 1 Scope of Project The Scope of the project MUST be identified in terms of the Business Processes to be covered – the key types of information that are to be exchanged in the processes and the types of participants that are involved directly or indirectly in providing or using the information exchanged. The place of this project within the wider business domain SHOULD be identified. For example projects in the International SupplyChain, this SHOULD be positioned with respect to the international supply chain be made to industry or sector models and to the Business Area/Process Area classification specified in the Common Business Process catalogue. The Context categories , as specified in ACTS, SHOULD be used to help specify or limit the scope of the project. 5. 2. 2 Requiremen ts List As they are discovered, the business requirements MUST be added to a numbered list .This list will cover: The business transactions between participants, the participant who initiates the activity, the participant who responds and the business conditions that govern the initiation and responses. Other business rules governing the Information Exchanges. The key classes of information (Business Entities), the detailed data (attributes) about these Entities that are to be exchanged, and the relation between the Entities. 5. 2. 3 Definitions The names and definitions of each of the business terms and data items used MUST be listed and SHOULD be added as they are discovered in the process of completing the BARS. . 2. 4 MUM representation of Business Requirements The business requirements MUST be formalized as appropriate ML artifacts, (Use Case Diagrams, Activity Diagrams, Class Diagrams and Business Entity Life Cycle Diagrams) or worksheets, by following the Insufficient Modelin g Methodology (MUM). 5. 2. 5 The UN/CAVEAT Modeling Methodology MUM An outline description of the MUM process is given below and examples of artifacts that should form part of the BARS are shown in section 7.The MUM consists of three main views: The Business Requirements View enables the Business Information and Business Processes described in the first part of the BARS to be more formally described. The Business Choreography View shows how the Business Processes may e created from a choreographed set of Business Transactions and the information exchanged in each transaction identified as Information Envelopes. The Business Information View identifies the content of these information envelopes based on the specific data and syntax standards and is the substance of the related RSI.Figure 1 – MUM Outline MUM Business Requirements View This presents the view of the domain, the business processes, the participants and the Business Entities involved. They are detailed in the Busin ess Domain View, Business Partner View and Business Entity View. The Business Domain View This view identifies the scope of the domain in terms of the processes it covers. The Business Area [Process area classification may be used to classify the business processes that make up the domain. Each business process is represented by an Activity diagram, Use Case Diagram and Business Process Worksheet .These document the Business Partner Types that are engaged in the information governing the initiation of each Information Exchange. The state of the Business Entity resulting from each information exchange is shown in the activity diagram. Business Partner View The business partner view captures a list of business partners and stakeholders in the domain under consideration as well as the relationships between them. Business Entity View The range of states that a Business Entity may assume and the order in which they may occur as a result of the various information exchanges are documented in a Business Entity Life Cycle diagram.This View MAY also contain Conceptual models that present a business view of the Information and the relationships between the Classes identified. The Conceptual Model is assembled from the list of business requirements and expressed through the use of â€Å"class† diagrams. These describe the necessary classes of information, the relationship between the different classes and the required attributes that are to be found within each class.Each of these pieces of information should be fully described in the business definition section. It is important to stress that the class diagram for a Business Entity should reflect the information requirements expressed in business terms. Business Choreography View This shows how the Business Processes identified in the Business Requirements View may be represented as one or more Business Transactions and the necessary hieroglyph to enable the full functionality of each Business Process to be achie ved.It consists of the Business Transaction View, Business Collaboration View and Business Realization View Business Transaction View The business transactions between each pair of data exchange participants that are part of the full Business Process are identified and described in a Transaction Worksheet and illustrated as Use Case diagrams . Six standard transaction patterns are identified within the JIM. Two of these represent participants sending and receiving information (Information distribution, Notification) and four represent artisans sending and responding (Query Response, Request Response, Request Confirm, Commercial Transaction).Each transaction is further detailed in terms of: the name of the Information Envelopes sent or received the Authorized roles exercised by the sender and receiver the Activities that action the sending or receiving of the Information Envelope the conditions that cause the transaction to start or that exist as a result of the exchanges . Business Collaboration View The sequence or order in which the set of business transactions that make up the lull business process is specified using a Use Case Diagram and an Activity diagram in the MUM Business Collaboration View.

Saturday, September 28, 2019

Causes Of World War II And Holocaust Essay Example | Topics and Well Written Essays - 1000 words

Causes Of World War II And Holocaust - Essay Example The paper talks about how the quote mentioned in the thesis statement relates to the events of WW II. There were many causes of WW II which fall under the broad categories of the Treaty of Versailles, the after-effects of WW I, the Great Depression, Europe’s deep resentment after WW I, failure of the League of Nations and numerous other political and nationalistic forces. Two particular events that acted as catalysts were the invasion of Poland by Germany and Russia and the invasion of China by Japan. The drivers behind these decisions were Hitler and the Nazis from the German side and Kwantung Army in Japan. The Treaty of Versailles was putting extreme pressure on Germany to accept blame for WW I and to pay the damages caused by the war. German land was taken away and many restrictions were put on it. Around this time Hitler was coming to power. Once in power, he built a secret army for Germany and provided it weapons. Hitler also created alliances with Japan and Italy who we re aggressors in WW II. Hitler’s approach was also aggressive and kept breaking pacts made with other leaders and taking violent actions by invading countries he had expressly stated he wouldn’t and thus was a source of constant instigation. In the 1920s, the Great Depression hit and the conditions of the people worsened. Trade levels plunged, along with prices and business incomes while unemployment and despair shot up almost simultaneously. In the face of the Great Depression, the only thing that was holding these different countries together-The League of Nations-failed. It had no army and thus negligible power and the worst part was the aggressor countries like Germany and Russia were not even part of it.

Friday, September 27, 2019

Letter to parliament Essay Example | Topics and Well Written Essays - 1250 words

Letter to parliament - Essay Example This however does mean its policies are perfect in regard to meeting social needs. This discussion focuses on the various ways by, which United States’ social and Health policy has been ineffective the Comparing it with Canadian Social and Health Policy. It suggests ways through which its standards can be raised to favour the entire society. Recommendation are thereby given and conclusion as to introduction of new policies into the industry to facilitative it efficient and smooth running while reducing costs are highlighted. Background Understanding Canada's Medicare Debate Medicare including social care in Canada is a success story. Not to the perfection, but good enough to be admired by better part of the world. Canadians therefore receive high standard healthcare whenever they need it as there are no financial constrains or any other obstacles, therefore they take the care for granted. In comparison with everything that happens in USA, they get surprised yet pleased to real ize they have a well-designed health program that delivers better results and care, to a huge population, and a considerably lower cost than in the USA. Faced with these realities, media and policy makers have come up with a predictable conclusion: Canadian healthcare is in a deep crisis, probably in deathbed. Collapse of health sector has been predicted and urgent overhaul is needed to bring it back to track. High care debate has become a philosophical battle ground, in which predetermined economic and political assumptions are more evidential and where tale is received as a fact. Considerations Out of Control Costs Reality: Health care expenses are under very tight control, to a point where spending in a pubic funded health facility isn’t keen on keeping track with the population growth rate. Being a percentage of Gross National Product, spending on health care has leveled at approximately 9%.Healthcare became national program in 1971, when the proportion of GNP rose to 9 % from 7.5%.This rising share going to health care in 1980’s was not as a result of spiraling costs but due to shrinking economy and started at the introduction of free trade agreements .If the GNP did not slump then, the spending on healthcare would still be at 7% just like they did in 1971. While discussing costs on healthcare, it’s crucial to put on mind that spending on health in public sector accounts for 72%.The costs are rapidly growing in private sector unlike the public sector e.g. dental services and drugs. Instituting user fees and abolishing free system Reality: It’s illogical to say that if costs are too high, the solution is to further raise them. To the contrary user fees do not reducing rather it increases costs. Premium insurance, taxes or user fees the money is dug from the same pocket. The actual advantage to the advocates of user fees is that they discourage the poor from seeking the medical care. Ones the poor is denied care, the rich can the n avoid assisting to cater for their care. In 1970’s under the Liberals, Saskatchewan introduced the fee which saw the poor shy ff from seeking the care, physician visits by the poor decreased by 18%.Inspite of this, the overall costs rose, due to changes in mix services and utilization patterns. Actually the doctors maintained their salaries by encouraging the high income patients to make more visits and take more tests. At the end of it, more was being spent while providing care to fewer people. Health care Cost

Thursday, September 26, 2019

Orion Shield Project Analysis Essay Example | Topics and Well Written Essays - 2000 words

Orion Shield Project Analysis - Essay Example Due to his good work the company promoted him as the project manager for Orion Shield Project. However this appointment was the biggest error on the part of company. Lack of administrative knowledge and experience of Gary was the principal reason for the failure of the project. Apart from that lack of effective communication and truthfulness with the stakeholders of the project was also another rationale towards the failure. If Gary would have maintained honesty and open communication from the beginning of the project, it would have never failed. The poor decision making, unprofessional approach and unethical behavior also affected the stakeholders as well as the clients. Moreover it also affected the career of Gary Allison. Table of Contents Introduction 4 Case Analysis 5 References 9 Introduction Project management is an important and specialized task which requires a set of specific knowledge and expertise. Project management is the area which includes initiating, planning, system atizing, organizing, guiding and monitoring of the associated resources (Pmi, n.d.). Project management is mainly undertaken to meet the objectives of a particular project in a structured way and within the stipulated time frame. A project manager thus needs to have in-depth knowledge and proficiency in some specified area (Himss, n.d.). Some of those essential skills include preparation, financial management and planning, forecasting and also the most important task of assessing the risk associated with the project. Eminent scholars such as Schwalbe stated that the duty of a project manager is not only confined to meet the specified time, budget, scope, quality and requirements of the project, but also hold the liability to smoothen the progress of the entire process (Schwalbe, 2010, p.8). Apart from that project managers are also liable to satisfy the demands and other functional requirements of the people associated with the project. They should also counterbalance the challenges of a project (Heerkens, 2007, p.1). The activities of project may also impact or affect some of the communities, therefore the project manager also have the duty to look after such issues. In the context of the project of Orion shield do not falls in special category and required the same skills and expertise to accomplish the project successfully. The Orion shield project mainly failed due to poor handling and management. The project was mishandled from the beginning to the end of the project. Also as the project initiated, the program manager Gary Allison also did not approach the requirements of the stakeholders of the project. The project will now analyze whether Gary was the fittest person to carry out the task or it was a wrong selection. It will also emphasize whether the director of engineering, Henry Larson Selected the wrong person to be the program manager of the Orion Shield project. Lack of experience on the part of the project manager has mainly caused the problems in the project. The inexpertness of Gary Allison to handle such tasks has been also one of the reasons for creating this issue. Case Analysis Gary Alison was actually Ph. D in mechanical engineering. He was a talented project engineer in Scientific Engineering Corporation (SEC). However the good work has allowed the company to promote him as the program manager for the Orion Shield project. The Orion Shield project was valued more than $ 2 million. Initially Gary was in two minds but finally accepted the role the project manager of the as Project Manager of Orion Shield Project. Within the first 6 months of the job he stated that he was spending sleepless nights and was far more better when he was doing the engineering jobs. Therefore this clearly portrays that Gary was not at all comfortable

Wednesday, September 25, 2019

Secure Computer Systems Essay Example | Topics and Well Written Essays - 500 words

Secure Computer Systems - Essay Example Through a depth of experience and breadth of technologies spanning from servers to desktops and laptop PCs to mobile devices, Microsoft offers the most comprehensive technological solution to address this ongoing need". By Kimberly Nelson, Microsoft executive director for e-government, and William Billings, chief security advisor for the Microsoft U.S. Public Sector division. 'Protecting personally identifiable information (PII) (http://www.microsoft.com/industry/government/federal/protectinginformation.mspx) Crippling penalties and fines on errant institutions that have had a lax approach to PII data security will make other private and public institutions vary of storing un-necessary PII data and putting up air-tight security procedures for their existing PII data banks. Frequent changes in PII data security laws will keep private and public institutions on their toes and they will take measures in advance, in order to reduce the cost of updating their security measures. I would like to cite -** A Nevada law that took effect this month which requires all businesses there to encrypt personally-identifiable customer data, including names and credit-card nu

Tuesday, September 24, 2019

The Implication of Cultural Diversity in American schools Essay

The Implication of Cultural Diversity in American schools - Essay Example majority of the population diversity was white alone that was represented 72% while the minority was American Indian and Alaska Native represented 0.9%. However, the African American census made up about 13% and the Hispanics numbering totaled 16%. The Asian population increased faster than other groups. Despite the changes in the education sector within the last decade, we still needed to concentrate the ethnic diversity in classrooms. That means we cannot eradicate the immigration’s issues by segregated the students, on the contrary; it is most significant to integrate different cultural ethnic. Actually, the educator must have various styles of teaching that he/she will have to educate children from different backgrounds and beliefs. So that, the teachers and the education programs with each other can work to create modify which is helpful for the different groups of learner in the schools. No doubt, educators will face some challenges to educate different students from dif ferent cultures (De 88). In retrospect, cultural diversity in American schools is the surest way of eliminating cultural discrimination since learners grow up into holistic individuals who appreciate cultural diversity in the society. As the students interact among themselves, they overcome some of the existing stereotypes thereby create social circles that are culturally diverse. This way, they share values and learn to respect each other despite the diversities in their respective cultures. Every cultural group always uses its cultural values to judge other cultures a feature that may often lead to discrimination (Phelan 76). With cultural diversity on the other hand, the students experience other cultures thus creating a cohesive system especially given the fact that schools just as any other organization often create systematic organizational

Monday, September 23, 2019

Mao Zedong Essay Example | Topics and Well Written Essays - 750 words

Mao Zedong - Essay Example Mao Zedong was one of several children growing up in a rural part of China. His father was a peasant farmer. As far as one can be successful as a peasant farmer, Mao’s father was a success. He consolidated parcels of land, building them up slowly until he owned twenty acres of ground, the largest land holding in the village. Farming in China was backbreaking work. There were no machines to help in the filed labor, so crops were cultivated by hand using rudimentary tools. Mao Zedong was sent to school by his father because he wanted his sons to be prominent among the village boys. After five years of education, Mao’s father wanted him to return to the farm. Mao obeyed, but he was restless. He became a voracious reader and a substandard peasant farmer. During this period of his life, Mao’s glorification of strong political leaders such as George Washington and Napoleon Bonaparte began to develop (Chang & Halliday, 1980). Mao Zedong eventually left his fatherâ€℠¢s farm and moved to the provincial capital of Changsha. He completed his education and eventually landed a position in Beijing. This is where Mao met the individuals that would introduce him to the teaching and philosophy of Karl Marx. Mao was above all else a Marxist. He believed strongly in the idea that eliminating the differences between classes in a society would lead to the best form of government. He strongly believed that the only way this could occur in China was to organize the masses of peasants that held little or no political power under the rule of the emperor. The exciting thing about Mao’s life was the last emperor of China was dying before his eyes. He could feel that it was time for something new for China, and Mao believed that the best development would be a broad-based peasant revolt that would usher in a Marxist state. He was determined to be the leader of that state. Mao was a forceful personality and he did not shy away from doing brave and audacious things. One of his early rivals in China for power was the leader of the nationalist Chinese, Chang Kai-shek. A civil war broke out between these two groups but was interrupted by the Japanese invasion of Manchuria, a part of northeastern China. This was a difficult time for China because there was no central government to stand up to the Japanese. Mao and Chang Kai-shek decided to join forces to withstand the Japanese. For a while, there was cooperation, but soon it was clear that the truce would not hold. Mao took his army and followers far into the north of china to escape the Nationalists. This was known as the Long March. Most of the army died, but Mao lived to lead the Communists over the nationalists, who fled to Taiwan when they were defeated on mainland China. Once Mao established himself ruler of China through his authority as President of the Chinese Communist Party, his penchant for strong leaders started to show. He conducted a series of political purges that eliminated his political rivals through mass executions and starvation. Mao undertook a program of transforming China in every way, not just through politics. He wanted to change the very nature of China. He outlawed traditional arts and crafts, discouraged Buddhist and Confucian teachings and branded anyone that got in his way as â€Å"counter-revolutionary.†

Sunday, September 22, 2019

Crunch Assignment Example | Topics and Well Written Essays - 750 words

Crunch - Assignment Example Crunch’s demographic market was that of young adults. Their core demographic market rested in American sub-urbans. These were people who would be in their twenty somethings. Thus the demographic market of Crunch is young and peppy. Crunch stood out as a brand for its innovative offerings. They always tried to project a big image of their company. The Crunch logo symbolized fitness apparel manufacturers and they had that logo licensed. A point came during its tenure, when aerobics was no longer central to the company’s programs. Crunch continued to gain popularity and attention by coming up with group exercise concepts that were not available. Levine’s motivation and strengths: Levine drew his motivation from the positive results that he was getting for the work that he was doing. His investments into new and innovative products were being welcomed in the market. His biggest strength was his urge to take risk and try new things. This had helped him project an ecle ctic image of his company as it helped ensure that the company was always on the road to development and innovation, the key traits needed for a successful stint in entrepreneurship. What are their main operational concerns? How have they financed their growth? Crunch as a brand was larger than life. They had gone for above the line promotion and had ensured that no stones were left turned in promoting it properly. They had a TV show running in its name and they had people licensing the product and selling as if it would not be available. However there was no corporate organization and everything rested at the club level. Crunch’s staff was at the club level only and most of its employees stayed in Manhattan club. There was heavy dependence on external accounting firms, PR agencies, consultants and advertising agencies. However now that crunch was considering to expand foray into bigger ventures, Levine was considering preparing a systematic mode of corporate organization. Is the Sports Life acquisition a good fit for Crunch? Yes, it’s a good fit for Crunch because it is in sync with the overall branding of Crunch. It will not just add another big name to their pool but will also be monumental in promoting the image of Crunch as a brand. It will attract more customers and is also likely to take Crunch to newer and bigger heights. SportsLife will mean Crunch will have a whole new market base added to his customer base. Those gyms are Olympic sizes, they are huge and widely revered by the people of Atlanta. There were membership installment plans that were being offered to the customers of Sports Life. While acquiring SportsLife would mean drifting away a bit from the Crunch’s typical business model what could be done could be to acquire it and then customize it according to Crunch’s branding itself and the needs and perception of people of Atlanta. Q. How should Crunch prioritize their growth opportunities? I believe that Crunch shou ld go for a carefully thought out growth expansion program. They should go for an online portal, first. It is important for faster and acquiring access of their customers to them. It will also give them a access and make them able to capitalize on the market on web. Secondly, it should opt for acquiring Sports Life and once it has big large enough at home then it should look out for international expansion and spreading into

Saturday, September 21, 2019

Conflict Resolution Essay Example for Free

Conflict Resolution Essay Merriam-Webster (n.d) defines conflict as, â€Å"the opposition of persons or forces that gives rise to the dramatic action in a drama or fiction†. Interpersonal conflicts, whether they are between family members, students and teachers, employees and supervisors, or groups, have certain elements in common. Coser (1967) asserts that conflict is a struggle over values and claims to scarce status, power, and resources, in which the aims of the opponents are to neutralize, injure, or eliminate the rivals. (p. 8) Coser’s definition grew out of the cold war, when conflict between the United States and the former U. S.S.R. dominated Western method to conflict. Conflict was viewed as a win-lose solution. According to Dana (2001) there are only three ways to resolve any conflict; power contests, rights contests, and interest’s reconciliation. Power contest is based on Coser’s (1967) win-lose situation. Each party views their point as right each wanting power over the other. Rights contest is an orderly system which has rules, regulations, policies, precedents and a hierarchy of authority which is used in order to â€Å"win† again this model is a win-lose resolution. The solution to conflict resolution is interest reconciliation. This approach enlists support from both parties to find the best solution. All parties win with interest reconciliation model as their solution. Conflict in the workplace is a condition between or among two or more workers whose jobs are independent, who feel angry, who perceive the other(s) as being at fault, and act in a way that causes a business problem. Conflict has three elements feelings (emotions), perceptions (thoughts) and actions (behaviors). â€Å"Psychologists consider these three the only dimensions of human experience. So, conflict is rooted in all parts of the human nature† (Dana, 2001, p. 5) some confuse conflict with indecisi on, disagreement, stress, or some other common experience that may cause or be caused by a conflict. However, those elements are not best handled by conflict resolution. The question many ask, is conflict normal? Conflict is a fact of any organizational life. On the job, conflict is a stubborn fact of organizational life (Kolb and Putnam, 1992, p. 311). Rather than seeing conflict as abnormal, Pondy (1992) suggests we view organizations as arenas for staging conflicts, and managers as both fight promoters who organize bouts and as referees who regulate them (p. 259). In addition, Pondy states that in the company, agency, or small business, conflict may be the very essence of what the organization is about, and if conflict isnt happening then the organization has no reason for being (p. 259). One study surveyed workers and found that almost 85 percent reported conflicts at work (Volkema and Bergmann 1989). With an increasing awareness of cultural diversity and gender equity issues, it is essential that employees become familiar with issues surrounding promotions and harassment. In fact, one can see training in organizations as a form of preventive con flict management (Hathaway, 1995). The recognition of the frequency of conflict at work has led to books on mediating conflict in the workplace (Yarbrough and Wilmot 1995), showing how managers can learn conflict management skills to intervene in disputes in their organization. As employees, daily work with clients, customers, co-workers, or bosses can be a struggle. Conflict is as Wilmot (1995) wrote, What determines the course of a relationship . . . is in a large measure determined by how successfully the participants move through conflict episodes (p. 95). Conflict resolution has five styles, giving in, avoiding, fight it out, comprise, and work together style. No style is right or wrong; however some do work better than others. Accommodation, giving in to the others wishes or smoothing waves sacrifices ones own goals for the sake of the other person. Accommodators often use phrases like: Whatever you want is fine with me. When one party in a conflict genuinely does not care about the outcome of the conflict, accommodation may be the right choice for that situation. However, if accommodation is the only style a person utilizes, he or she is advised to learn more skills. Avoidance is characterized by behaviors that either ignore or refuse to engage in the conflict. While avoidance is by some consider a negative style that shows low concern for both ones own and the other partys interests, there are sometimes strategic reasons to avoid conflict. For example, when the relationship is short-term and the issue is not important or when the situation has a potential to escalate to violence, avoidance may be the prudent choice. Fight it out, competition, or win/lose, style maximizes reaching ones own goals or getting the problem solved at the cost of the others goals or feelings. While always choosing competition has negative repercussion s for relationships, businesses and cultures, it can occasionally be the right style to choose if the other party is firmly fixed in a competitive style or there are limited resources. While competitive strategy is not necessarily dysfunctional, competition can easily slip into a destructive situation. Understanding the methods and strategies of others who use competitive styles can assist conflict managers in neutralizing the negative consequences of competition and work toward a mutual gain approach. Compromise is a give and take of resources. The classic compromise in negotiating is to split the difference between two positions. While there is no victor from compromise, each person also fails to achieve her or his original goal. Finally, working together to collaborate is when parties cooperatively team up until a mutually agreeable solution is found. Compromise and collaboration are win-win solution where as the other styles are win-lose. Why do people avoid dealing with conflict? People have a natural instinct of fear and some let that fear overpower them. The fear of harm causes people to fight-or-flight. Individuals will choose the flight option when in a dangerous part of a city that they have never been in before in order to avoid danger, it shows wisdom or strength to get out a of physically abusive relationship, commendable to stay out emotionally abusive relationships. In spite of this, in some cases people have the response to flight to a false perception of harm. People overstress in their minds the emotional harm that someone can cause harm. The same is said for conflict in the workplace, people will avoid conflict for fear of being harmed by others. Some avoid conflict because of a fear of rejection from others. These individuals feel others will withdraw their friendship or push them away causing more hurt. People have the perception if they do not risk rejection they can suppress their needs and feelings. Loss of relationship is the fear of rejection taken up a level they fear totally losing a relationship. Others avoid conflict to mask their true desires because preserving a relationship is more important than getting what they want. These individuals are trapped into believing their worth is dependant on another accepting them. People avoid conflict for fear of anger. These people do not like listening to someone who is angry. They believe another will hurt them, reject them, or leave them, and they just cannot stand to witness anger. However, anger is just anger and it is not necessarily directed toward them. Individuals do not want to be seen as selfish. In some situations people are not afraid of others reactions, but rather their interpretation of the situation. They fear that they will appear selfish. However, is it wrong to have a need, feeling, or want and to express it? Society has sometimes had it seem that way. Although, there is nothing wrong with asking for what individuals want versus feeling they are entitled to always getting what they want. The truth is if one never asks, then they are depriving people around them from being able give to them effectively. Still, people who feel their wants should not be fulfilled, regardless of what others want, fall into the selfishness category. Sometimes people avoid conflict for fear of saying the wrong thing or something they will regret. Individuals will avoid conflict rather than risk putting â€Å"their foot in their mouth† they contain their anger and frustration which often leads to that which they fear. When people have conflicts in the past that have failed so they avoid future conflict for the fear of failing those too and begin to believe the confrontation is not worth the emotional energy it takes to deal with others. The fear of failing can impact other aspects of ones life. The fear of hurting another is more than just saying the wrong thing. These individuals are extremely sensitive and caring. They would rather hurt themselves than risk hurting another. The fear of success is a fear that most over look. However, it is much like the fear of failure. Some people are afraid to get what they want; they believe they will never get it. These people feel they do not deserve what they want, the consequences of getting of what they want is regret, or the responsibility is more than they need or desire. The fear of intimacy is the most subconscious of the fears. People do not want to share their dreams, desires, and wants with others. They feel they are private and do not want to be exposed. People do not want to appear weak. If resolution involves giving in, avoiding, or compromise they may feel they appear as though they do not have confidence. People do not want the stress of confrontation. They feel it is better to avoid conflict rather than deal with the stress it will cause them in the workplace between co-workers. Our society tends to reward alternative responses to conflict, rather than negotiation. People, who aggressively pursue their needs, competing rather than collaborating, are often satisfied by others who prefer to accommodate. Managers and leaders are often rewarded for their aggressive, controlling approaches to problems, rather than taking a more compassionate approach to issues that may seem less decisive to the public or their staffs. Conflict resolution requires profound courage on the part of all parties: It takes courage to honestly and clearly express one’s needs, and it takes coura ge to sit down and listen to one’s adversaries. It takes courage to look at one’s own role in the dispute, and it takes courage to approach others with a sense of empathy, openness and respect for their perspective. Collaborative approaches to conflict management require individuals to engage in the moment of dialogue in thoughtful and meaningful ways, so it is understandable if people tend to avoid such situations until the balance of wisdom tips in favor of negotiation. People have certain perceptions in conflict when dealing with different situations. Culture shapes and frames each individuals interpretation of appropriate behaviors during conflicts. Conflict across cultures, whether across nations or across the diverse cultures within a country, exacerbates the routine difficulties of conflict management (Fry and Bjorkqvist, 1997). There is no clear conclusion about whether men and women actually behave in different ways while conducting conflicts. However, gender stereotypes do affect conflict behaviors when individual s act and react based on stereotypes of how men and women will/should act rather than selecting behaviors appropriate for the individual one is communicating with (Borisoff and Victor, 1997). Parties respond to conflicts on the basis of the knowledge they have about the issue at hand. This includes situation-specific knowledge and general knowledge. The understanding of the knowledge they have can influence the persons willingness to engage in efforts to manage the conflict, either reinforcing confidence to deal with the dilemma or undermining ones willingness to flexibly consider alternatives. The person sharing the message is considered to be the messenger. If the messenger is perceived to be a threat (powerful, scary, unknown, etc.) the message can influence others responses to the overall situation being experienced. For example, if a big scary-looking guy is yelling at people they may respond differently than if a diminutive, calm person would express the same message. Additionally, if the people knew the messenger previously, they might respond differently based upon that prior sense of the person’s credibility. People are more inclined to listen with respect to someone they view more credible than if the message comes from someone who lacks credibility and integrity. Some people have had significant life experiences that continue to influence their perceptions of current situations. These experiences may have left them fearful, lacking trust, and reluctant to take risks. On the other hand, previous experiences may have left them confident, willing to take chances and experience the unknown. Either way, one must acknowledge the role of previous experiences as elements of their perceptual filter in the current dilemma. These factors, along with others, work together to form the perceptual filters through which people experience conflict. As a result, their reactions to the threat and dilemma posed by conflict should be anticipated to include varying understandings of the situation. This also means that they can anticipate that in many conflicts there will be significant misunderstanding of each others perceptions, needs and feelings. These challenges contribute to our emerging sense, during conflict, that the situation is overwhelming and unsolvable. As such, they become critical sources of potential understanding, insight and possibility. How do people respond to conflict? There are three responses to conflict emotional, cognitive and physical responses that are important windows into our experience during conflict, for they frequently tell people more about what is the true source of threat that is perceived; by understanding the thoughts, feelings and behavior to conflict, a better insight into the best potential solution to the situation. Emotional (feelings) are the feelings we experience in conflict, ranging from anger and fear to despair and confusion. Emotional responses are often misunderstood, as people tend to believe that others feel the same as they do. Thus, differing emotional responses are confusing and, at times, threatening. Cognitive (thinking) are our ideas and thoughts about a conflict, often present as inner voices or internal observers in the midst of a situation. Through sub-vocalization (self-talk), people understand these cognitive responses. Physical (behavior) can play an important role in our ability to meet our needs in the conflict. They include heightened stress, bodily tension, increased perspiration, tunnel vision, shallow or accelerated breathing, nausea, and rapid heartbeat. These responses are similar to those we experience in high-anxiety situations, and they may be managed through stress management techniques. Establishing a calmer environment in which emotions can be managed is more likely if the physical response is addressed effectively. Dealing with someone unwilling to negotiate can be difficult for the person who is trying to resolve the conflict. However, the 8 Step Model can be very beneficial, by focusing first on listening to the other person, and seeking to understand the sources of their resistance, the stage can be set for clarifying the conditions he or she requires in order to talk things out. This is not about being right or wrong in the situation, but a practical strategy for getting the other person engaged as a partner in the negotiation process. Another alternative is to focus on things we can do to influence conflicts in the future, rather than putting initial energy into understanding (or solving) problems we have had in the past. By remaining relatively flexible about the agenda taking on topics individuals care about, but not necessarily the most pressing issues – thus, creating an opportunity to reduce the fears associated with resistance. While the conflict may not be able to be truly resolved, some key issues that exist will be managed and will help to prevent the issues from getting worse. Power is an important and complex issue facing anyone seeking a negotiated solution to a conflict. Before negotiating clarify the true sources of power in the room: The boss has position power, associated with the carrots and sticks that come with the role. She or he may also have coercive power, supported by contracts or statute that compels employees to behave in certain ways and do certain tasks associated with the job. Some may have a great deal of expertise power, accumulated from doing your job over a period of time. Either conflict participants may possess normative power, through which they know the lay of the land in their department and, therefore, how to get things done. And either may possess referent power, through which others show respect for the manner in which the employee conducts themselves. Generally, referent power accrues to those who demonstrate a mature willingness to seek collaborative solutions. An impasse is the sense of being stuck. Impasse is the point within a dispute in which the parties are unable to perceive effective solutions. People feel stuck, frustrated, angry, and disillusioned. Therefore, they might either dig their heels in deeper, anchoring themselves in extreme and rigid poitions, or they might decide to withdraw from negotiation. Either way, impasse represents a turning point in our efforts to negotiate a solution to the conflict. As such, rather than avoiding or dreading it, impasse should be viewed with calmness, patience, and respect. Multi-party disputes are complex situations, and they require careful attention and persistence. However, the same 8 Step Model can be applied to the disputes. In spite of using the same process expect everything to take a bit longer than if there where only two or three people. Patiently make sure that all points of view are heard, that issues are clarified for all to see, and that all members in the group accept the agreements being negotiated. If there are limits to the groups decision-making power, then it is important to acknowledge those limits and understand how they are perceived by all members of the group. There are many different ideas of the steps for resolution, some claim five steps while others claim six or seven for the purpose of this paper Weeks (1992) eight step resolution style is identified. Step one – Create an Effective Atmosphere Creating the right atmosphere in which the conflict resolution process will take place is very important, yet most overlook its importance. The atmosphere is the frame around the canvas which will be painted the negotiations and building of better relationships (Weeks, 1992). Step two – Clarify Perceptions Perceptions are lenses through which a person sees themselves, others, their relationships, and the situations they encounter. Perceptions have a great influence on behavior of people. Once people perceive something in certain way, even if the perception is wrong, in the mind it is that way, and often base behaviors on that perception (Weeks, 1992). Step three – Focus on the Individual and Shared Needs This step builds on the previous step as needs as the conditions people perceive they cannot do without, those conditions critical to each persons wellbeing and relationships. However, step three focuses more on skills involved in the conflict partnership approach. There are several key points to keep in mind in this step. 1) Needs are the foundation of relationship and are an essential part of that foundation. 2) People sometimes confuse needs with desires. 3) Personal needs in relationships perceived by individuals must allow for respect of the needs or the relationship (Weeks, 1992). Step four – Build Shared Power Power is a part of every relationship. However, the way people perceive and use power is seen frequently as a dirty word. Such as when people use power as means to control or to manipulate some else to get what they want. Although, power is and of itself not corrupt, it is the way in which people use their power and whether they allow such power to corrupt. Developing positive self power through a clear self-image means that we base our perceptions of ourselves not on what others expect of us or want us to be but what we believe to be our own needs, capabilities, priorities and goals (Weeks, 1992, p. 152). Step five – Look to the Future, Then Learn from the Past. All relationships and conflicts have a past, present and future. Resolving conflicts requires dealing with all three. The conflict partnership process encourages the use of positive power to focus on the present-future to learn from the past. The past experiences people face set the landscape for present and future decision making and how relate to others (Weeks, 1992). Step six – Generate Options People have the ability to discover new possibilities in their relationships as well as conflict resolution. However, both are often impaired by the packaged truths and limited vision people hold onto in times of stress, insecurity, and conflict. Generating options breaks through the predetermined restrictions brought into the conflict resolution process. Generating options imparts choices which specific steps to resolve conflicts and enhanced relationship can be agreed upon (Weeks, 1992). Step seven – Develop â€Å"Doables†: the Stepping-stones to Action Doables are the necessary stepping-stones taken along the way to resolve conflict. Doables are explicit acts that stand a good possibility of success, meet some individual and shared need, and depend on positive power, usually shared power to be carried out. Working on and accomplishing some doables can help the conflict partners see more clearly where they need to go. Many conflict partners have changed their preconceived definitions of both the conflict itself and the expected outcome due to the lessons learned and clarified perceptions through working with doables (Weeks, 1992) Step eight – Make Mutual-Benefit Agreements Mutual-benefit agreements are the next step on the pathway to conflict resolution. Conflict resolution agreements must be realistic and effective enough to survive and the potential to develop further as challenges arise in the future. Mutual-benefit agreements replace the need or want for demands, see the others needs, shared goals, and establish a standard wherein power is identified as positive mutual action through which differences can be dealt with constructively (Weeks, 1992). Conclusion Conflict is an unavoidable aspect of everyday life whether it is with family, teachers, students, friends, or an organization. The best approach to resolving conflict is interest reconciliation. It joins both parties of the dispute to find the best solution. In so doing, all parties win. People respond to conflict in three ways emotional (feelings), cognitive (thinking), and physical (behavior). All are important to the conflict experience. They allow a better awareness to best furnish a solution to the situation. An important tactic to conflict resolution is to develop persuasion skills with the ability to clearly explain one’s point of view and to argue for their conclusions and convictions. Week’s Eight-Step Process is a valuable tool in helping people to become more strategic about resolving conflict. References Borisoff, D., and D. A. Victor., (1997). Conflict management: A communication skills approach, 2nd ed. Boston: Allyn and Bacon. Conflict, (n.d.). In Merriam-Webster’s online dictionary Retrieved from http://www.merriam-webster.com/dictionary/conflict Coser, L. A. 1967. Continuities in the study of social conflict. New York: Free Press. Dana, D. (2001). Conflict resolution. New York: Mcgraw-Hill. Fry, D. P., and Bjorkqvist K., (1997). Cultural variation in conflict resolution. Mahwah, N. J.: Lawrence Erlbaum Associates. Hathaway, W., (1995). A new way of viewing dispute resolution training. Mediation Quarterly, 13(1), 37-45. doi:10.1002/crq.3900130105 Kolb, D. M., Putnam, L. L. (1992). The Multiple Faces of Conflict in Organizations. Journal of Organizational Behavior, (3), 311. doi:10.2307/2488478 Pondy, L. R. (1992). Reflections on organizational conflict. Journal of Organizational Behavior, 13(3), 257-261. Volkema, R. J., and Bergmann T. J., (1989). Interpersonal conflict at work: an analysis of behavioral responses. Human Relations 42: 757-770. Weeks, D. (1992). The eight essential steps to conflict resolution: preserving relationships at work, at home, and in the community. Los Angeles, J.P. Tarcher; New York: Distributed by St. Martins Press Wilmot, W. W. (1995). Relational communication. New York: McGraw-Hill. Yarbrough, E., and Wilmot W., (1995). Artful mediation: Constructive conflict at work. Boulder, Colo.: Cairns Publishing.