DP blog #3. What should National Accounts Encompass?

Abstract: This is my third blog. This blog is a continuation from my previous blog on the failures of GDP. In this blog, I identify elements of society that must be evaluated in order to assess the well being of a society. The ascendancy of GDP has been criticized in recent years; the rebuke of GDP is the failure to encompass the whole society. I will follow up in my third blog (on this thesis) with a critical analysis of some national indicators and their positive and negative attributes.
Motivation: “The time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being.”
—Stiglitz, Sen, and Fitoussi, 2009

Thesis: As stated in the article: Sustainable Development Indicators: The Tyranny of Methodology Revisited , it is hard work to condense the complexity of society into single values that can be more easily digested and acted upon. However, as the world’s population is exponentially growing and the environment in which we live is deteriorating it is imperative that we find new ways of reporting on national accounts. We must work towards full body indicators to serve as a platform in which action can then be taken.

When I was in third grade my teacher assigned the class to go home and write a paper with the title: What I want to be when I grow up? I went home and took out my notebook and wrote: happy. The next day at school, the teacher said: I didn’t understand the assignment and I told her: she didn’t understand life. Domains of ones life such as health, how we spend our time, our standard of living, education, attitudes and beliefs, political participation, our rights, our income and wealth, our shelter, the environment in which we live all need to be accounted for when access our well being and the well being of a nation. The ultimate goal of national indicators should be to access the overall well-being of the nation’s citizens. As I established before GDP fails to encompass the full picture of a countries well being. We need to adopt a “eudaimonic,” approach (derived from psychology) that infers that providing a rich understanding of human motivations and needs, how there are met by our living conditions, and how they contribute to our overall subjective experience in terms of satisfaction of life. This is different from the hedonic approach, which is, more concerned with pleasure and enjoyment. (Eurostat Feasibility study for Well-being Indicators, pg.4) There needs to be an indicator that gives a comprehensive assessment of the entire state of society. Indicators are used to improve decision-making and implement policy that will direct the nation to a greater state of well being. So therefore, we must access what accounts for the well being of a society and its citizens.
GDP fails because it has one focus and ignores several key domains that create the well being of a society and an individual. The Stiglitz Commision led by Joesph Stiglitz, Amartya Sen and Jean Paul Fitoussi have influenced me greatly in the need to move away from measuring economic production to measuring people’s well being. Various indicators of different latitudinal and functional scales need to come together in order to accurately report on the state of a nation. Performance indicators such as GDP have long been embedded in the government’s procedures, this strong link has led to programmatic and financial planning budgets that has consequently lost sight on the individual’s subjective well being as well as most notably reported on failure to access the environment and sustainability of a nation. These two ideas are separated from the present and the future of well being. The Stiglitz Commision’s focus on subjective outcome indicators has been criticized for the omission of eudaimonic approaches to subjective well being, however it is still is eons ahead of the GDP as a national indicator.
Stiglitz Commision’s recommendation is that quality of life depends on people’s objective conditions and capabilities. Policy makers should be concerned with the inherent value of citizens and assertive in alleviating the failures and shortcomings of a society that directly affect its citizens. Action should be taken to improve measures of people’s health, education, personal activities and environmental conditions. “In particular, substantial effort should be devoted to developing and implementing robust, reliable measures of social connections, political voice, and insecurity that can be shown to predict life satisfaction,”( Eurostat Feasibility study for Well-Being Indicators, pg. 7) Developing an indicator that reports on all aspects of society will enable policy makers to follow up and act upon drivers that potentially enhance the well being of their society.
Dr. Simon Bell goes so far as to compare the GDP as a tyrannic tool “Tyranny defies both law and justice in its impact upon its subject. The key factor here is the idea that methods ….. are often not justified by context (without adaptation). They are imposed in an arbitrary fashion without regard to what would be just or lawful. They are exercised with immense power over a population who have little capacity to either reject or modify them.”(pg.2) He believes that the GDP is a western tool that focuses on one domain of life and in this new globalized world the GDP fails to be just. The State of Society, identifies the main problems with indicators is how they are “ reported and used, who are the users, and how contingencies and institutions affect these indicator systems.” If a full-bodied indicator is developed it will be hard for policy makers to ignore their countries shortcomings.
The State of society has identified 14 categories synthesized from 79 indicators that need to be assessed and woven together as one working model that can measure the well being of the country and the citizens. I have excluded National Stability and sustainability as I have put them into personal well-being and natural environment. I believe that all categories’ need to be assessed to measure the state of a society. I have briefly identified the categories’ and quickly assessed how I feel they fall short. They are as follows:

• Poverty: percentage of people living at and under the poverty level. Demands from the government, welfare.
• Health: traditionally life expectancy, maternal and infant mortality, death rate, and morbidity. Should be extended to nutrition and availability and cost of health services. Both Mental and physical health. Only physical is reported on.
• Education: usually measures literacy, school enrollment, and drop out and completion rates. Needs to be extended to a full range of academia and its availability and cost.
• Employment: unemployment and employment rates need to be expanded to account for the unpaid work force.
• Income and Wealth: comparative income. It needs to factor in lifetime earning disparities due to women dropping out of the labor force to care for children or to the elderly, and indicators of income disparities among various populations in society are generally missing.
• Shelter: main indicators fall short of homeownership rate and rental cost. Standard of shelter not reported on, definition of shelter?
• Natural Environment: hugely inaccurately accounted. Lack of measurement tools to adequately measure natural resources. Needs to be a measure of capacity and readiness to respond to environmental disasters. Ecological Economics. Value of a tree. I very much align myself with Ecological Economist using National Matrix including Environmental Accounts (NAMEA) which links economic indicators such as GDP, balance of payments and the environment. (Kepa’s class)
• Political participation: rate and range of political participation needs to be reported on. Reports that focus on woman to men shares of parliament is of great interest and widely ignored as irrelevant.
• Civil Society: Indicators of civility or intergroup relations. Church and Worship. Active citizens. Community involvement.
• Economic Participation: Assess the ability of all members of society to be part of all aspects of the economy.
• Human Rights: basic rights and freedoms of individuals: freedom of press, speech, and choice. I believe human rights is hugely ignored with an estimated 30 million modern day slaves worldwide believed to generate 32 billion US dollars annually, where is this accounted for? Countries should put these alarming statistics into their national accounts so that they may work towards alleviating that tragedy of modern day slavery that falls on the shoulders of mostly woman and children. If in the USA, which apparently is seen as the most productive country adorning a high GDP has an estimated 14,500 to 17,500 human beings trafficked into the US annually then clearly the country is not doing as well as the GDP states.
• Family and household well-being: building blocks of society. The demise of the nuclear family and the consequences.
• Personal Well being: Age, gender, ethnicity and disability all affect well-being and so indicators must report on the “happiness,” of a citizen in order to implement policy to alleviate misery.

Traditional GDP has too many shortcomings. There has been much attention, research and reporting looking towards an evolved national indicator that accurately reports on a nation. The Federal Reserve Board has documented gains of America’s wealthiest one percent of more than $2 trillion more than everyone in America’s bottom 90% percent combined. The GDP reports on that one percent. A more well rounded and in depth indicator can establish goals and see where a nation fails to meet these goals. If in the United States that contains less than 5 percent of the world’s population and spends 42% of the world’s health care expenses, and yet Americans are less healthy than the residents of nearly every developed country and some of the poor ones then there is something seriously wrong. The GDP tells us nothing about the state of society and the well being of its citizens. We need to push for an equitable indicator. The GDP turpitude ignores the majority of the population. If we work towards a well-encompassed indicator it will lead to results in management, estimation and justification of resource requirements and reallocation, and development. It will exemplify areas in the society that are lacking and policy makers will be better equipped to initiate policy that works for the whole of society and not just a few elite individuals.

Work Cited
All previous references were of course used, here are some additional sources

Bell, Dr. Simon. Sustainable Development Indicators: The Tyranny of
Methodology Revisited. Consilience: The Journal of Sustainable
Development. Vol. 6, Iss. 1 (2011), Pp. 222–239

Elizabeth T. Boris and Erwin de Leon. 2010.The State of Society and
Measuring Economic Success and Human Well-Being.The Urban
Institute.

Stiglitz, Joesph E., Amartya Sen, and Jean-Paul Fitoussi. 2009. Report by
the Commission on measurement of Economic performance and Social
Progress. Paris: Commission on Measurement of Economic Performance and Social Progress.

Websites:

Society at a Glance 2009—OECD Social Indicators
http://www.oecd.org/document/24/0,3343,en_2649_34637_2671576_1_1_1_1,00. html#data
Measure of Domestic progress: http://www.neweconmics.org/gen/well-being_mdp.aspx.
Organisation for Economic Co-operation and Development Family Database

http://www.oecd.org/document/4/0,3343,en_2649_34819_37836996_1_1_1_1,00.html

CNN.com The Freedom Project. The facts. 2011.
EuroStat Feasibility Study for Well-Being Indicators.pdf. epp.eurostat.ec.europa.eu/…/Feasibility_study_well-being_Indicators.
GDP and beyond Achievements. –Eurostat. epp.eurostat.ec.europa.eu
Human Development Report. 2011. Sustainability and Equity: A Better Future for All. United Nations Development Programme 1 UN Plaza, New York, NY 10017, USA

Comments Off on DP blog #3. What should National Accounts Encompass? / 12 Dec 2011 por Lauren Musiello
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Starting the Project Management subject

Welcome to the Project Management course.

The objective of this course is to take you through the basics of Project Management, covering Project Planning, Project Scope Management, Time Management, Resources Management, Risk Management and Project Monitoring and Control.

The course will follow the Project Management Body of Knowledge (PMBOK)© contents and methodology, developed by the Project Management Institute (PMI) and recognised by the American National Standard Institute (ANSI) and by the Institute of Electrical and Electronics Engineers (IEEE).

My personal objective for the course is that students learn by discussing practical and real life examples in class and having fun!. Project Management is the discipline that brings all the other disciplines together to create something that did not exist before. In consequence, I will be supporting the course with real practices in companies that I have worked for, mainly in the Aerospace and Engineering sectors. I hope that, besides the know-how you can get in Project Management, you also get a good flavour of the “real life” inside any business these days.

In line with this latter objective, we have designed a case that you will need to solve in your groups. The goal of this case is to launch a new product to the market: the ePad 3D – does it sound familiar?. We hope it will be fun to solve it and work with your colleagues simulating a real company environment.

I am looking forward to starting the course with you. Just in case you still wonder why we need Project Management, here you have a first taste: A380 Assembly.

Francisco Javier Sánchez-Segura. EOI PM teacher.

5 comentarios / 12 Dec 2011 por evacurto
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DP: Food Self-Sufficiency & Hydroponics

Garden Produce

There are different methods and levels of self-sufficient agriculture being done. By self-sufficient agriculture I mean people that grow their own food supplies partially or completely. It is important to say that complete food self-sufficiency on a house hold level is difficult and a very demanding lifestyle although it is not impossible it means more commitment. I will be talking mostly on the technologies that are actually available and will focus mainly on community level self sufficiency.

Extensive Agriculture

Why is food self-sufficiency important? Well the answer is simple if a community or country is not able to satisfy their food necessity this means they rely on food markets and as we know food markets are not particularly stable. This means relaying on food markets threatens a country’s food security. Another factor is that the extensive agrarian industry cares nothing for the good use of land and doesn’t discriminate on the use of chemicals. Leading to all kinds of contraproducent agrarian practices for which society pays the last toll; such as bad water usage, heavy fertilization, pesticide use, monocultures, ecosystem destruction, and the use of genetically modified crops.

Small Permaculture Garden

Actually apart from traditional methods of agriculture we have a few new technologies and methods of producing vegetable food. We have organic farming which eliminates the use of chemical fertilizers and pesticides that flood our foods with all sorts of chemicals and cancerigenus agents. This type of agriculture can take a step further and turn into permaculture farming in which you diversify crops in order to create a perfectly balanced ecosystems while producing food (a lot of the know-how of this method is based on ancient wisdom from natives). The main technology currently available would be hydroponics which consists in cultivating in a soilless medium with the use of mainly synthesized salts and minerals that are used as nutrients mixed with water (water with organic waste can be used as well).

School Kids Learning Hydroponics

I believe hydroponics can play a major role around the world in gaining food independence from food markets in developing countries. This type of system needs less space than common agrarian practices to produce a much higher yield, it doesn’t erode, deplete or transform the soil’s characteristics, can be applied virtually in any part of the world (Israel is a main user of this technology they figured out how to use salty water for hydroponic irrigation/it also can be used in major cities on rooftops or windows), there is a wide variety of mediums depending on what is available in the region (clay pellets, rock wool, coco peat, sand, wood fiber, among others), water usage is the most efficient in agriculture since it is collected after irrigation and re-used (this is important in water scarce regions/deserts). It is also an opportunity for small entrepreneurs to emerge (people empowerment), it doesn’t demand as much work as traditional agriculture, it is a process of constant learning to improve yields, pest control and diseases are easier to control (crops are not in contact with soil), and no pesticides are used.

Window Farming

Hydroponic agriculture can be applied anywhere this means creating local agriculture in any part of the world. This gives a chance for local entrepreneurs to emerge in developed or developing countries there for creating job opportunities. In developing countries it will give them food independence and in developed countries it will give them the opportunity to bring agriculture back to big cities this is important because as Schumacher said one of the goals of agriculture apart from food production is “to keep man in touch with living nature, of which he is and remains a highly vulnerable part”; I cannot stop thinking we have long forgotten this in big cities.

If you want too see a prototype urban farm take a look at this video: Urban Farming

References:

E.F.Schumacher, Small is Beautiful (1973)

http://www.umass.edu/umext/jgerber/agric.htm

http://www.triplepundit.com/2011/10/feeding-seven-billion-people-farm-tech-revolution/

http://ag.arizona.edu/hydroponictomatoes/timeline.htm

Comments Off on DP: Food Self-Sufficiency & Hydroponics / 12 Dec 2011 por Javier Solano Palacios
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DP1: Introduction to Corporate Social Responsability

I am going to do my report related to development perspectives about the issue that has change my life and I hope that my professional career too. It is Corporate Social Responsibility. I have been studying marketing for the last four years and I am one of those that believe that the marketing of the big companies has been creating instead of effectively satisfying human needs.

According to Klein (2001) the big American companies discovered during the 80´s a new way to promote their products and services. They started to associate the feelings with the material world. When we decide to get a product we are not choosing most of the times the best price value or the more ecological awareness, we normally look for a specifically brand which one we could feel directly and unconsciously identified. Honestly two years ago I felt confident developing the role of a pure marketer in the society.

Pinche aquí para ver el vídeo

However this last year of studying in Wales and specifically the subject of strategic management has changed my mind. I discovered the Corporate Social Responsibility. I realized how the powerful of the big companies could be use to promote social and environmental policies around their business.

First of all lets check some of the definitions of CSR. As The World Business Council for Sustainable Development states in its publicationMaking Good Business Sense by Lord Holme and Richard Watts “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.

Well in the other hand with statements like this: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition, without deception or fraud”. (Friedman in Turner 2006, p. 7). It is hard to believe that something is going to change in the business path.

However as I am going to show you in the following posts this issue is not near to disappear or to be just a fad. We as consumers and future labour force have more power that we think.

Comments Off on DP1: Introduction to Corporate Social Responsability / 11 Dec 2011 por Antonio Calixto Moreno Zarco
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(DP) A philosophical approach to sustainability part 2

In the other hand –unfortunately- it won’t be important just our choices, even the government ones it will be the key for our future. If with our choices we can be advocates for our future, to induce any changes in the government’s choices is not easy and it seems even harder because the governments of developed countries (and other international organizations) were (and are still) leaving behind a worrying situation: they seem to understand just the “profit” word, and to reach as much as possible of it, they deal the third world’s countries and the developing ones just as resources areas and not more, and moreover they trying to perpetuate this vicious circle to ensure for their the prosperity and the continuous growth with no limit. Without any changes on policy and approach from those countries/organizations it will be impossible any real change or any dream of equity in the world’s population. I’m going to analize better the inequities of these establishments (IMF, WTO, UN, and so on…) later, because I’d to go deeply on that topic. This is just the my “painting of nowadays”, I would to analize in the next steps the current theories that could be applied and that might change (in better) the situation about social inequity and environment sustainability.

This is the last part of my first post, “A philosophical approach to sustainability”, that was even an introduction to the next posts, and from that I would to start the second post on our possible (future) choices.

Part 2: what can WE do?

I think that we have great power in hour hands, we can change a lot with our convinctions, but even more with our ACTIONS.

Pinche aquí para ver el vídeo

I think that the people should come back to a “more shared” sociability, that could flows in a final act of PARTECIPATION.

One of the weaknesses that afflict our generation is the lack of sociality, and then of participation; the networks had broken down many walls, the distance, the cultures, the differences…nowadays if you want, you can “be” in every part of the world and every part of the world could be in your home.

We have the communication, we have the network, we could spread with these anything we want to say, anything we’ve seen, just staying at home with our little device, it doesn’t matter if it’s our blog, our facebook, linkedin or whatever account.

This is a big tool, and we should do leverage and pick it up, to being more influent.

Yes influent…but how? I think we can be really influent with our choices, and become CRITICAL MASS, and not just buyer mass.

We should understand our power, not just the power of each of us, but the power of society; with our choices we can achieve significant results.

For instance we should start to influence the choices of our government, in Italy we have an example of this: many people has start to be tired and critic against the behaviour of the politicians and they’ve decided to join their forces in one movement to change these behaviour and to have an influence in the political issues “from the bottom”; they are called “Movimento 5 stelle”[1], and they’ve started their activities from network, it’s a “sharing movement” and everyone could join it and give its contribution and push his/her ideas; it’s young people that tries to install a new mentality and try to give some answers to the most important and current topics through new media and network and they basically wants to protect the common goods of the common people, that is, quoting their program: “Stato e cittadini Energia Informazione Economia Trasporti Salute Istruzione” (translation: “State and Citizens Energy Health Information Economy Transportation Education”[2]). Their activities was starts since two years, and they are already been elected in some little and major municipalities, provinces and regions establishment, as people’s representatives.

Actually in Italy they are doing to understand to the people that is possible to act and do something if we join our resources and our forces, it’s a huge message that we have to catch.

In the same way, we can act and influence the multinationals strategies: if we start to choose energy saving goods, if we start to choose fair trade goods, instead luxury goods and non-necessary goods, we will influence their input, and inevitably their outcome.

If we want a better world, and if they would to go on to sells, they should give us the goods that we prefer…a “better goods”; we don’t forget that we are the final consumers, and we have the power to choose, so if we start to choose in a CRITICAL way, they have to follow us, and our behaviour.

So far this is what can we do to influence other subjects, but in the last, but not the least, we can apply our positive behaviours to another level: the relationship and domestic life.

What should be done?

Now our consumption is really too high, because our behaviour and our waste, and it seems that we don’t understand it, and we go on and on to “grow” it.

There’s an alarming (and interesting) index that should let us reflect on which way we have been taking: the

ECOLOGICAL FOOTPRINT.

This index measures -taking in account the natural resources available on our planet, and the earth’s capacity to regenerate it- how’s our demand of nature. Basically if our footprint exceed the bio-capacity of our planet [see the map below], we would need to find resources elsewhere (in another planet?), and this is really clear that it is not sustainable.

Here you can CALCULATE YOUR OWN FOOTPRINT: http://myfootprint.org/en/visitor_information/

What is shows this index? That we’re not sustainable for our earth, we aren’t in equilibrium with our ecosystem, we’re exploiting that and we are just taking and we don’t give it back, in the end this is a vicious circle. We should change it, in a VIRTUOUS CIRCLE!

The reduction of our footprint should become our new global law, there are many simple ways to reduce the footprint you leave on the planet. “learn how to reduce your footprint in each consumption category-carbon, food, housing, and goods and services-but don’t stop there. Amplify your impact by encouraging others to follow your lead. Engage your friends and community with local and global movements for social change, or start your own movement!”[3]

Please, check it out here http://myfootprint.org/en/take_action/reduce_your_footprint/ the behaviours that you can follow, and you can do it right now.

To achieve this goal we should “DEGROWTH”, and come back to some behaviours and practices that nowadays are almost been lost, as we can find in E. F. Schumacher’s 1973 book “Small is beautiful”[5] where he wrote “since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption….The less toil there is, the more time and strength is left for artistic creativity. Modern economics, on the other hand, considers consumption to be the sole end and purpose of all economic activity.”

Following this thought we could undertake a path which could be defined “back to the sociality and simple life”, which is done of auto-production (of food, of renewable energy), of responsible use of energy, to give more importance to the values of life, and return to live and enjoy our environment and give greater importance to the interchange of products rather than giving importance to the money, and finally to life as a ”social activity” of the human beings.

Sources:

[1] http://www.beppegrillo.it/movimento/

[2] http://www.beppegrillo.it/iniziative/movimentocinquestelle/Programma-Movimento-5-Stelle.pdf

[3] http://myfootprint.org/en/take_action/reduce_your_footprint/

[4] http://en.wikipedia.org/wiki/Degrowth#cite_note-0

[5] http://en.wikipedia.org/wiki/Small_is_Beautiful

2 comentarios / 11 Dec 2011 por Luca Palma
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Blog Strategy: Mars Ice Cream

How would you resume the strategies adopted by Mars to launch its ice cream products?

As a well-known brand in the world of chocolate the strategy that this company used were according to the status that they have in the chocolate bar market. The main vision of mars ice cream was high-quality ingredients, such as real cream and real chocolate, the use of significant advertising support across Europe and the establishment of a new premium-price category in the market place.

The problem is that the chocolate bar and ice cream markets are totally different even thought you are selling the same vision and a similar product. They did a poor research in this kind of market thinking that it would have the same success than the bars implementing the same kind of strategy. The biggest mistake was not taking in account the distr

ibution process (distribution frozen chain) and the instruments required to sell it such as the high competition to place their products in small outlets freezers.

They had to face companies such as Unilever and Nestle with a higher purchase power and a

huge range of products in the ice cream market. Theses companies did a good strategy to place and differentiate their products giving for free special freezer cabinets just for them. In most of the markets Mars did not have access to these freezers so they found a huge problem to place their product. Even the small retailers were aware of the interest of the costumers in the products offered by this c

ompany. They were required to be followers in terms of strategy so the competitors are always one step forward preventing any kind of benefit in this market for Mars. That is the why they do not have profits since 2000.

Do you think that Mars will ever make significant profits from its ice cream operations? Why? How?

From my point of view it is obvious that if they still having the strategy of being a follower of the big brands of this market they will never achieved profits in this sector. I would recommend them to change radically their strategy in terms of distribution and placement. It would be great if they reduce costs of frozen supply chain needed to transport their products, building a new factory nearest to the more profitable markets however this action would mean a huge invest that would have to face the main problem of this market, the competition.

Brands such as Nestle and Unilever have a purchasing power higher than Mars Ice Cream. So Mars cannot compete with this brands in this market. They offer a wide range of product with so many facilities that make almost impossible the successful implementation of any direct competitor. The best example is the way that these companies are buying the brands that could affect their premium position such as Lion Maid and Miko leaving Mars alone in the distribution market. This fact will increase the distribution and placement cost becoming increasingly difficult to be profitable.

Comments Off on Blog Strategy: Mars Ice Cream / 05 Dec 2011 por Antonio Calixto Moreno Zarco
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Environmental Economics: Case study

Imagine a factory located upstream that pollutes a river. It produces steel for the automotive industry. Downstream, local fishermen find they catch less fishes due to the pollution. Both are flourishing businesses that produce wealth and prosperity for the community. But there is a problem environmental economists must deal with:
1. Can you suggest any criteria that could be used to decide on who has the right to use the river? The factory, the fishermen, both?
2. Can you propose any instrument or agreement to solve the problem?

In environmental economics there are different ways to evaluate. For this case study I would prefer to consider the Multicriteria Analysis. All 3 scenarios should be analyzed:

a, The factory has the right to use the river:

This way we acknowledge the factory’s effort to offer jobs and participate on the economical growth of the community. Nevertheless, we also accept that it pollutes the river, so we sacrifize the river, its wildlife (and other possible negative effects on humans) for the economical growth and for producing steel for cars, which again pollute the environment. This should not be an optimal solution, even if the factory could pay a fine for the pollution (or in form of a tax) and with that money the river could be cleaned. This way we open the possibility for everyone to pollute and then pay, and two problems would arise: pollution upto a nivel where the cleaning process is not effective anymore (cap&trade possibility?) and what if the money (=price) is less than the value of the river, not enough to clean the river. I would only support the continue of the business of the factory if it stopped the pollution. The regional government/community management could offer tax reduction or other incentives in case the factory invests in a water recycling technology.

b, The fishermen have the right to use the river:

In this case we support the local agriculture and the self-sufficiency of the community. SOmeone has to come up for the damage the fishermen already suffered. It has to be analysed if the management of the community gave permission for polluting the river, in which case they are responsible for compensating the fishermen. If not, and the factory brakes a law, then the factory should pay 100% of the loss of profit for the fishermen. To avoid overfishing, a limit (cap&trade) needs to be set for the quantities of the fishing goods. In case the factory has to close, many community members would lose their job and income though. To solve this problem, the community management could come up with alternative ideas, how to use the area of the river, since they have now this resource, ie. building a recreational site, natural park and provide jobs in these areas. Most probably it would go with decrease of financial recources for the community members, but if we internalize the externalities it would show the real value and this would be positive.

c, Both have the right to use the river:

If the parties could come to an agreement ( i.e. the factory compensates the fishermen for the damage done until now and promises to decrease its pollution, in medium term towards zero), both businesses could stay at the river and flourish. But for that it is necessary that both explicit this wish. The independent community management could oversee both businesses and their relation.

As a conclusion, after describing the three scenarios, we could survey the community about which situation they would support. This is the direct approach, which is built on the fact that people know the best what is good for them and the value of it.

Comments Off on Environmental Economics: Case study / 05 Dec 2011 por Ildiko Heim
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Managerial Skills: ensuring our company´s success and our own success.

During Managerial skills course we did a fast but interesting trajectory, gaining practical and theoretical knowledge while paying attention to three main points related to Management :

Effective presentations
Effective negotiations
Effective leadership

All three of them are about being “effective”. But is what is “effectiveveness”? “Adequate to accomplish a purpose; producing the intended or expected result”.

When developing effective communication in order to be heard, we are trying to provoke change in our environment according to our own thoughts. We are trying to provoke actions, to see results.

About the first point: Effective presentations. I especially liked this quote: “Bussiness people operate efficiently as opposed to creatively”. The fact that these people are result oriented and multitask in their work, does this lead us directly to lack of creativity, la ack of imagination when presenting? Definitely not!

There are basic principles when presenting and we should all them know in advance, such as having a clear point, a clear audience benefit and a clear structure and flow. Besides the first three points the presentation should be appropiate in length, one should use visual aid, one should stand up and talk, move around, make eye contact and communicate clearly, loudly and one should vary his voice.

If these points mentioned before are not taken into account, we are forgetting probably our audience. We forget how to motivate them through the benefits of our presentation, we are forgetting our aim: provoking changes in their actions/thinking. So if we do not take into account the audience, what reason do we have to give a speech to them?

In relation to the second point: Effective negotiations, it is particularly interesting to learn about two basic characteristics in the nature of every negotiation and interdepedance between entities. These are the Win-Win- and the Win-Lose situation.

In the professional world whenever we are looking for maintainance of relationships with other parties in time, I consider the Win-Win tecnique as the basis.

In a tecnique where the solution is workable and there is mutual benefit for both parties, the most important is that the outcome is better than if they had never entered into negotations with the other party.

In this Win-Win approach the dominant strategies include cooperation, sharing information and mutual problems solving. Despite it won´t always work like this in reality, as soon as we can reach one of these strategies, the negotiation will be favourable for all parties.

Leadership was the last point, however not the leart important. I particularly remember in the leadership class, “The pickle Jar theory” . A theory about time Management. No time Management theory should be without balance and the Pickle Jar Theory is all about balance. For me that is one of the things I like the most about this theory, I think it is one of the most important things in life, for everybody, to find a balance in your activities and always prioritize from the most important to the less important for YOUR life.

Additionally, to my interest to the contents of this subject, I have enjoyed very much an “effective teaching method”, Chris methods. I must thank our teacher for the environment he created in class, for the motivation he constantly transmitted, for the very constructive feedbacks he gave us and for teaching us effective skills which will always be present in our professional spheres.

Comments Off on Managerial Skills: ensuring our company´s success and our own success. / 05 Dec 2011 por Tatiana Casquero Rodriguez
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Managerial Skills: ensuring our company´s success and our own success.

During Managerial skills course we did a fast but interesting trajectory, gaining practical and theoretical knowledge while paying attention to three main points related to Management :

Effective presentations
Effective negotiations
Effective leadership

All three of them are about being “effective”. But is what is “effectiveveness”? “Adequate to accomplish a purpose; producing the intended or expected result”.

When developing effective communication in order to be heard, we are trying to provoke change in our environment according to our own thoughts. We are trying to provoke actions, to see results.

In the professional world whenever we are looking for maintainance of relationships with other parties in time, I consider the Win-Win tecnique as the basis.

Comments Off on Managerial Skills: ensuring our company´s success and our own success. / 05 Dec 2011 por Tatiana Casquero Rodriguez
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Strategy- MARS ICE CREAM

Situation being analysed: Relaunch Mars Ice Cream Products

This SWOT example is for a new business opportunity, to reinvent the Mars Ice Cream. Mars a chocolate food product is one of the confectionery industry’s greatest success stories. Mars slogan is work rest and play. It is important to establish a strong brand to build a solid customer franchise. In reality Mars company operates in over 230 locations in over 1980 countries with 135 factories in more than 68 countries. In this exercise Mars has one factory. This one factory will severly effects Mars success. Mars has a low unit cost of the items carried to cover transport cost you need to sell a lot of inventory and fast. There is related difficulty of making up economic loads within a sufficiently compact geographic area. Mars primary goal should be to establish more factories to cut transportation cost. Mars also needs to provide freezers to local retailers as its competitors have done in order to ensure they do not loose out on the small market opportunities.

Below is an extended look in question 1. How would you resume the strategies adopted by Mars to launch its ice cream products? Again, the primary goal is to establish more factories to cut transportation cost. The one factory in France will not be able to compete against competitors fast and readily available deliveries. Mars has to adapt the mulipack the bulk pack which it has and it as also created the 5 pack to double its brand pressence.

criteria examples

Advantages of proposition?

Capabilities?

Competitive advantages?

USP’s (unique selling points)?

Resources, Assets, People?

Experience, knowledge, data?

Financial reserves, likely returns?

Marketing – reach, distribution, awareness?

Innovative aspects?

Location and geographical?

Price, value, quality?

Accreditations, qualifications, certifications?

Processes, systems, IT, communications?

Cultural, attitudinal, behavioural?

Management cover, succession?

Philosophy and values?

Strengths

Reinvent product to compete with competitors that are monopolizing the market.

Resume advantage in European Ice Cream Market

First product of its kind, high quality ingredient and delicious chocolate. Great taste and packaging

1 distributing factory, France

( France consumes the most chocolate per a capita after the USA)

High Brand loyalty

Cultural- sponsors global football teams

Philosophy: work , rest and play.

“The Mars Ice Cream business has over 20 years of hertiage where we have aimed to combine the best of what Mars stands for: Great brands, delivering great tasting products, fit for all occassions.”

As of 2012 there is anew team and new sturcture, increase in marketing.

Recognized worldwide

Weaknesses

Does not sell dessert ice creams

Does not sell bulk pack

Does not sell children’s novelty ice cream

Expensive chocolate that has high transport cost

Short shelf life, need quick inventory overturn

Not easily available due to competitors (UNilver and Nestle) buying up the freezer cabinets in small local shops. ( Must compete, so must provide same freezer initiative.

New staff , new management dedicated to the quality and promotion of Mars

High Price

There is a very strong global market with lots of competitors.

criteria examples

Disadvantages of proposition?

Gaps in capabilities?

Lack of competitive strength?

Reputation, presence and reach?

Financials?

Own known vulnerabilities?

Timescales, deadlines and pressures?

Cashflow, start-up cash-drain?

Continuity, supply chain robustness?

Effects on core activities, distraction?

Reliability of data, plan predictability?

Morale, commitment, leadership?

Accreditations, etc?

Processes and systems, etc?

Management cover, succession?

criteria examples

Market developments?

Competitors’ vulnerabilities?

Industry or lifestyle trends?

Technology development and innovation?

Global influences?

New markets, vertical, horizontal?

Niche target markets?

Geographical, export, import?

New USP’s?

Tactics: eg, surprise, major contracts?

Business and product development?

Information and research?

Partnerships, agencies, distribution?

Volumes, production, economies?

Seasonal, weather, fashion influences?

Opportunities

2012 we aim to go back to the basics devlier a real focus against our consumers and customers needs to deliver long term sustainable growth for all

New Promise to market brands with a marketing code that promtes our products for people age 13 and over as this is the age when you can make sensible snack choices.

New freezer lid stickers, use stickers on external facing windows to attract customers

Tap new cities and new retail chains

Have more variety and smaller gift packages

2012 introduce 4 pack and 5 pack variety to double brands presence

41% of all Ice Cream sales are made in winter so keep freezers stocked

Bulk packages, children’s novelty ice cream and dessert ice creams

Mars partners with Swiss chocolate maker to increase availability

Threats

Make sure freezer is clean and tidy. 50% of sales are lost due to scruffy freezer displays

Need to have retailers use freezer stickers and menu boards to show what is available.

Have freezer in an easy to access place

Must compete with bulk packs

Mars is 8 in the top 20 single ranking list of 2011. Mars had 4 varieties compared to 2 each of the competitors Cadbury and Nestle. Threat to stay ahead.

Calorie conscious people, obesity on the rise

Chocolate interest is decreasing and health awareness is increasing

criteria examples

Political effects?

Legislative effects?

Environmental effects?

IT developments?

Competitor intentions – various?

Market demand?

New technologies, services, ideas?

Vital contracts and partners?

Sustaining internal capabilities?

Obstacles faced?

Insurmountable weaknesses?

Loss of key staff?

Sustainable financial backing?

Economy – home, abroad?

Seasonality, weather effects?

2.) Do you think that Mars will ever make significant profits from its ice cream operations? Why and How?

To follow Michael Porter’s Value Chain we can evaluate Mars potential and immediately see Mars’ weaknesses. Mars needs to first and foremost expand it’s hypothetical infrastructure. It cannot compete with only one factory that causes transport cost to sky rocket. It needs improve operations in order to compete. The new team is dedicating more money to marketing which is always good. Mars is placing themselves in the limelight by sponsoring sporting events which will help in advertising. In order to ensure success they need to place their product in not only large retail chains but small vendors as well and in order to do this they need to provide freezers for small retailers the way their competitors have. Mars should (as they have in reality) team up with competitors to drive business. Mars needs to be able to deliver a product and service for which the customer is willing to pay more than the sum of the costs of all the activities in the value chain. As of right now, Mars is failing to do so unless they extend their operations and employ new products and packaging to compete. There is a link between not only the quality of the goods but also the systems and processes that enable the company’s performance. Only is marketing and sales delivers steady demand then procurement will be able to order the necessary amounts of chocolate by the correct date. It is a domino effect and every chain is as strong as it’s weakest link. The difference of the final price the customer pays and the sum of all the cost incurred with the production and the devliery is the companies profit so in order to maxmise profit margins a solid foundation and value chain needs to be established in order to successfully sell Mars Ice Cream. Mars needs to continue to expand globally and expand investment in infrastructure and freezers to compete. Mars will have to combat the health conscious trend but new opportunities will present themselves with trend changes. Mars will be able to compete if certain aspects of their organization are improved to better the whole.

Comments Off on Strategy- MARS ICE CREAM / 05 Dec 2011 por Lauren Musiello
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