Financial Stability in Central Bank

 

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Introduction

Discussion

Conclusion

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Financial Stability in Central Bank

 

Introduction

            Following the impact of the recent financial crisis in the world, authorities around the world have had to reconsider the current financial stability frameworks in their respective central banks. It has been suggested that the central bank should take a major role in the concept of financial stability for three major reasons which include: most of the central banks all over the globe play a significant role in providing the economy with the appropriate liquidity an aspect which is very key in financial stability matters. The macroeconomic environment in a given country can be affected by financial instability, which may cause devastating consequences to the process of monetary policy transmission, price stability as well as other economic activities. The central banks also have a better understanding of financial markets through evaluating monetary policy functions performance, and they are in a better position to determine the infrastructures as well as institutions necessary for purpose of putting into effect a macro-prudential function that is viable.

Before going any further in the discussion of this paper, it is pertinent to define the term financial stability as well as what entails the opposite of financial stability for a better appreciation of the concept. The concept of financial stability refers to safeguarding the sound functioning of the economy. This can be achieved through providing for a safe and efficient mechanism for payment as well as directing savings into investments. According to Acharya and Richardson (23), the term financial stability may be defined as a state of affairs in which the system of finance is capable of absorbing shocks and does not succumb to disruption of the payments processing or savings allocation to opportunities of investment.

On the other hand, Nier and Ursel (34) are of the view that the term financial instability is a state where the central banks and indeed other institutions involved  encounter some notion of externalities or market failure that are more likely than not to interrupt the smooth running of economic activity. Study shows that there are a couple of imperfections in the market that are capable of posing significant threats to the proper functioning of any financial system, if such imperfections are widespread and substantial. These imperfections may include: insufficient risk management, panics, asset price bubbles, bank run, and excessive leverage (Peek, et al 818).

For purposes of this study, the term financial instability will be defined according to Diamond, et al (36) who describes this state as a situation which is typified by three basic decisive factors that include: the availability of credit and market function have been significantly distorted locally and perhaps globally; secondly, there seem to be a significant divergence of some significant set of financial asset prices from the ground rules; and finally there is a possibility of aggregate spending to  drastically deviate  from the ability of the economy to produce, as the deviation may either be below or above the normal rate.

Discussion

It goes without saying that the central bank and indeed other concern authorities have a clear policy interest from the definition of financial instability, to take action in a couple of divergent responsibilities for purposes of achieving financial stability. These two roles include: prevention of financial instability as well as the role of managing the aftermaths of financial instability in the market. In order for the central banks to be able to prevent financial instability, they must be able to design viable policies that are able to promote a macroeconomic environment, with sustainable economic growth as well as a stable and low inflation rate. In the absence of such policies however, there is a very high risk of financial instability owing to the inadequacy or absence of the necessary macro brass tacks. Other ways in which central banks may ensure financial stability include: putting into practice efficient bank supervision, overseeing or operating payment systems that are efficient, and designing suitable financial regulations. Even though all these functions have over the years been performed by the central banks, they play a significant role in mitigating the possibility of financial instability occurrence.

In managing the consequences that follows financial instability, central banks may make some changes or modifications in the monetary policy for purposes of mitigating the impacts of financial instability or to foster financial stability of the economy. As such, central banks can be able to bolster the confidence of the public and make use of their basic tools for purposes of reducing liquidity pressures in the event where such financial instability goes down into a crisis. In an effort to address the issue of liquidity pressures, Bernanke and  Gertler, (254) suggest that depository institutions should be given direct lending by the central banks through a discount window function and also through openhanded provision of reserves operations of open market. In addition, central banks may employ other monetary policy tools to ensure financial instability such tools may include: central banks may decide to reduce the requirements of reserves, and in an effort to boost the economy, central banks can lower policy rates of interest.

Central banks across the world have for obvious reasons had a keen interest in the financial stability. This is because in the event of financial instability, the important objectives of macroeconomic for instance price stability and sustainable growth in output may be faced with severe setbacks. It is against this backdrop, that almost all central banks across the world are mandated to provide a viable solution in the event of a financial predicament. In light of the above statement the role of central banks in addressing monetary predicaments dates back to the 18^th and early 19^th century.         Central banks in their historical function were recognized as possible assistance to markets and could often provide emergency liquidity via the operations of open market. Sometimes, they (central banks) gave emergency liquidity via discount window lending to certain institutions. For these reasons, central banks had to be very alert in observing any signs of instability in the markets dynamics, and for purposes of giving emergency liquidity when the need arose. In any case the operations of financial markets greatly influence the implementation of monetary policy. In addition, the real economy largely relies on the smooth running of markets and major financial institutions for purpose of transmitting monetary policy. Financial stability can therefore be attained through stable prices in a sustainable real growth within the economy.

It is worth stressing at this point that the structure and role of central banks may be at variance in light of their particular mandate. Nevertheless, there is consensus among scholars and financial experts to the effect that the concept of macroeconomic stabilization is a key function which is common among all central banks. It therefore, follows that even though the role of financial stability by central banks may not be expressly mentioned under the statutes governing financial institutions, the role is implied by the mandate given to central banks to safeguard macroeconomic stability. Consequently, there are a wide range of instruments as well as policies that central banks may employ for purposes of preserving financial stability notwithstanding the fact that they may not have the authority over other banks in terms of supervision. To this end, Manning, et al (44) suggests that in preserving financial stability, central banks bear at least five key roles.

To begin with, through the surveillance and research function of central banks they are able to get comprehensive information concerning any risks associated with financial stability, and as such, they have the ability to preserve financial stability and maintain it. The central bank is able to detect potential shocks and vulnerabilities in the financial sectors that may bring about undesirable impacts on financial stability. The central bank can achieve this by conducting a macro- prudential surveillance (Bernanke and Gertler 200). The vulnerability of the financial sector can be detected by the central bank through conducting a research and developing useful macro-prudential indicators and tools. Central banks have a wide range of surveillance and research subjects which may include among others; payment system, financial sector, developments in global economy, real economy, as well as the fiscal and monetary policies. From the surveillance and research conducted by central banks, they are able to give viable recommendations to the relevant authorities on means and ways through which stability in the financial system can be preserved.

Secondly, central banks can be able to maintain stability in the financial system through nurturing the reliability of various financial institutions particularly banks. Central banks can achieve this role through exercising their regulatory and supervisory powers. It logically follows that since the leading shares in the financial sector of many economies are held by banks, the function of the economy may be interrupt in the event of any instability in the financial system caused by failures of the banks. Such failures by the banks may be prevented through effective regulation and supervision by central banks thus preventing economic crisis. According to a study conducted by Adrian and Hyun, (33) ineffective regulation and supervision of banking were the major causes of instability in the financial system as well as banking crises.

It is also within the powers of central banks to alleviate market discipline through regulation as well as supervision. It has been argued that the economies with strong and stable financial systems have sound market discipline (Adrian and Hyun 45).  Through protecting the rights of stakeholders as well as creditors, the central bank is able to preserve financial stability in the sense that both the stakeholders and the creditors will have confidence with the system of finance, an aspect which is necessary for the stability of a financial system that is sustainable. In instances where central banks do not have the power to regulate and supervise other banks, all is not lost as they may use monetary policies as well to foster stability in the financial system.

Thirdly, central banks such as that of the United States and Indonesia have tools which are primarily meant to maintain stability in price. These tools include; open market operations and interest rate. The central bank can utilize these tools to influence stability in the financial system through influencing the economy demand and also through intermediary processes. Setting of interest rates by the central banks is used to stabilize inflation; stabilizing inflation can be a viable instrument to ensure stability in the financial system.

As a lender of the last resort, central banks have a net role of monetary safety. Through this role, central banks can be able to manage the crisis and preserve stability in financial system. The lender of the last resort involves the central bank giving liquidity in times of financial predicaments and in normal period. The central bank should nevertheless be cautious in providing liquidity to avoid   behaviors of excessive risk taking by banks and moral hazard (Diamond 412).

To ensure financial stability, the central bank of Indonesia has designed a framework based on four pillars which include: crisis management, research and surveillance, regulation, and cooperation and coordination. The pillar of surveillance and research involves monitoring, assessment, and quantifying developments of stability in the national financial system. A major tool for stabilizing financial system in Indonesia is through micro-prudential and macro -prudential indicators. The second pillar that the central bank of Indonesia has used to stabilize the financial system is cooperation and coordination with other authorities.The role of ensuring financial stability in Indonesia has been shared out with other fiscal authorities and not a sole responsibility of the Indonesian central bank (Nier, Ursel 334). Other authorities involved in the stability of the national financial system include: the Supervisory Authority, Ministry of Finance, other government agencies, and the Deposit Insurance Scheme. The third pillar of used by the central bank of Indonesia to preserve financial stability is crisis management. The bank acts as a lender of last resort both in times of crisis and normal times. The final pillar used by the Indonesian central bank for purposes of ensuring financial stability is effectual prudential regulation. Through imposing such regulations, the bank of Indonesia is able to alleviate market discipline.

It goes without saying that the concept of financial stability has been incorporated in most if not all charters of central banks as this concept is an important objective that cannot be overlooked. In the United States for instance, the concerns of financial stability in the Federal Reserve were included in the statutory law that governs the Federal Reserve. The Federal Reserve Act provides for the roles and functions of the Federal Reserve to include: providing viable ways of commercial paper rediscounting, to ensure that the banking system in the United States is effectively supervised, and to provide a currency that is elastic(Manning et al 54). These functions basically embody stability of the financial system as the primary aim of the Federal Reserve Bank of the United States.

The Federal Reserve is charged with the responsibility of researching as well as supervising other banks for purposes of safeguarding stability in the national financial system. Through research, the Federal Reserve is able to get comprehensive information concerning any risks associated with financial stability, and as such, the Federal Reserve is able to preserve financial stability and maintain it. In addition, through macro- prudential surveillance the Federal Reserve Bank is able to detect potential shocks and vulnerabilities in the financial sectors that may bring about undesirable impacts on financial stability (Adrian and Hyun 16). Further, the Federal Reserve uses tools such as open market operations and interest rate to preserve stability in the financial system. This is achieved through influencing the economy demand and also through intermediary processes. For purposes of maintaining stability in the financial system, the Federal Reserve Bank acts as a lender of the last resort. The lender of the last resort involves the giving liquidity in times of financial predicaments and in normal period. In all, the Federal Reserve has a net role of monetary safety. Through this role, Federal Reserve can be able to manage the crisis and preserve stability in financial system.

 

Conclusion

For reasons that need not be overemphasized,Central banks across the world have had and still have a keen interest in the concept of financial stability. Traditionally, central banks have undertaken a number of roles for purposes of ensuring stability in the financial system which include: putting into practice efficient bank supervision, overseeing or operating payment systems that are efficient, and designing suitable financial regulations. In order for central banks to preserve stability in the financial system, there are a couple of roles that should be carried out by all central banks. These two roles include: prevention of financial instability as well as the role of managing the aftermaths of financial instability in the market (Acharya and Tanju 30).

In order for central banks to be able to prevent financial instability, they must be able to design viable policies that are able to promote a macroeconomic environment, with sustainable economic growth as well as a stable and low inflation rate. In the absence of such policies however, there is a very high risk of financial instability owing to the inadequacy or absence of the necessary macro brass tacks. In managing the consequences that follows financial instability, central banks may make some changes or modifications in the monetary policy for purposes of mitigating the impacts of financial instability or to foster financial stability of the economy. As such, central banks can be able to bolster the confidence of the public and make use of their basic tools for purposes of reducing liquidity pressures in the event where such financial instability goes down into a crisis (Nier, Erlend et al 2034).

            Even though the role of financial stability by central banks may not be expressly mentioned under the statutes governing financial institutions, this role is implied by the mandate given to central banks to safeguard macroeconomic stability. Consequently, there are a wide range of instruments as well as policies that central banks may employ for purposes of preserving financial stability notwithstanding the fact that they may not have the authority over other banks in terms of supervision.

Through surveillance and research, central banks are able to detect potential shocks and vulnerabilities in the financial sectors that may bring about undesirable impacts on financial stability. In addition, through protecting the rights of stakeholders as well as creditors, central banks are able to preserve financial stability in the sense that both the stakeholders and the creditors will have confidence with the system of finance, an aspect which is necessary for the stability of a financial system that is sustainable (Diamond and Raghuram 34). Finally, as a lender of the last resort, central banks have a net role of monetary safety. Through this role, central banks can be able to manage the crisis and preserve stability in financial system.

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Acharya, Viral., and Richardson, Matthew., “Restoring Financial Stability—How

            to Repair a Failed System,” New York: Wiley 2009 print.

Acharya, Viral., and Tanju, Yorulmazer. “Too Many to Fail – An Analysis of            Timeinconsistency in Bank Closure Policies,” Journal of Financial      Intermediation, 16, 2007. pp. 1–31.

Adrian, Tobias and Hyun Song. “Financial Intermediaries, Financial Stability and

            Monetary Policy,” Paper presented at the Federal Reserve Bank of Kansas City

Symposium, Jackson Hole, WY, 2008 print.

Bernanke, Ben., and Gertler, Mark. “Should Central Banks Respond to Movements in

Asset Prices?” American Economic Review, Vol. 91, 2001. pp. 253–257.

Diamond, Douglas. “Financial intermediation and delegated monitoring,” Review of

            Financial Studies, Vol 51, 1984. pp. 393–414.

Diamond, Douglas., and Raghuram Rajan. “Money in a Theory of Banking,”

            American Economic Review, Vol. 96 (1), 2006. pp. 30–53.

Manning, Mark et al. “The Economics of Large-Value Payment and Settlement: Theory   and Policy Issues for Central Banks,” London: Oxford University Press, 2009    print.

Nier, Erlend and Ursel Baumann. “Market Discipline, Disclosure and Moral Hazard in

Banking,” Journal of Financial Intermediation 15 (2006), pp. 333–362.

Nier, Erlend, et al. Network models and Financial Stability, Journal of Economic   Dynamics and Control, 31, 2007. pp. 2033–2060.

Peek, Joe, et al. “Does the Federal Reserve an Exploitable Informational Advantage?”   Journal of Monetary Economics, 50, 2003. pp. 817–839.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Financial plan for a small business

 

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Introduction

At the heart of every successful enterprise there must be a comprehensive financial plan.  The financial plans of most small businesses are reflected in the overall business plan. Nonetheless, it should be noted that the financial plan of a business is a document that is self supporting which is intended to direct as well as support business actions. A financial plan explains future projections of a business in terms of what the business can be able to afford, ways in which the business can afford to do it, as well as explaining the amount of profits expected in the business. A standard financial plan should consist of a cash flow statement, the balance sheet, personal financial statement, and the income statement[1].

The financial statement of the business shall be completed once every year and shall be revised every mouth for purposes of incorporating results that are accurate and actual. This will enable a person to take better business decisions regarding the moves that are available for the company to make, the financial resources that the company actually needs to succeed. Accordinf to Berger and Udell, the financial plan will also help in the planning for and acquiring the finances that are necessary for purposes of establishing the business, continuing the operations of such a business, and helping the business to grow[2]. It is worth noting that a financial plan that is solid is a clear demonstration to business lenders as well as potential investors that the business is serious, planning to succeed, and very realistic.

Other than impressing lenders and potential investors, financial plan enables potential investors, potential lenders, and the business enterprise itself to easily evaluate the profit potentials of the business, both the short and long term prospects of the enterprise, the weaknesses and strengths of the business, the type as well as the amount of financing the business requires in order to be successful, and finally the future challenges and opportunities of the business.

The financial plan for the business will include: start up costs, cash flow projections, projected income statements and balance sheet, a ratio analysis, and a break even analysis.

Start- up costs

Binks., and Ennew , states that start up costs is a one- time expenditures that are incurred by a business before it commences its business operations. Such expenses includes: the cost of supplies and materials, furniture, licenses, equipments, incorporation fees, and permits[3]. The expenses that will be incurred after the business has stated its operations shall be recorded in the income statement of the business as the operating expenses.

The costs of incorporation of My Western wear are outlined below. A three month inventory will be used to start the business for accessories and apparel since they are the primary generators of revenue. Most of the assets belonging to the business will reside in the inventory. About $384 will be the cash on hand balance in the opening days. The main objective of this financial plan is to acquire an Accion loan of about $16,700. It is worth noting that this supplemental funding is needed for purposes of preparing the site in terms of operational, and inventory expenses.  This amount of loan according to Cavalluzzo, et al, should be indicated in the long-term liability row[4]. Other sources of financing will include a short term credit of about $2,000 for purpose of replenishing the inventory during high reception months, and $ 5, 100 owners investment. Creating a loyal customer base as well as having a successful operation will allow My Western wear to be profitable and self sufficient in two years.

Start-up Funding Start-up Expenses to Fund $9,416 Start-up Assets to Fund $14,384 Total Funding Required $23,800 Assets   Non-cash Assets from Start-up $14,000 Cash Requirements from Start-up $384 Additional Cash Raised $0 Cash Balance on Starting Date $384 Total Assets $14,384 Liabilities and Capital   Liabilities   Current Borrowing $0 Long-term Liabilities $16,700 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $2,000 Total Liabilities $18,700 Capital   Planned Investment   Owners Investment – Cash $5,100 Other $0 Additional Investment Requirement $0 Total Planned Investment $5,100 Loss at Start-up (Start-up Expenses) ($9,416) Total Capital ($4,316) Total Capital and Liabilities $14,384 Total Funding $23,800

Start-up Requirements

Start-up Expenses Rent	$1,606
Grand Opening Event	$400
Telephone & Utilities (3 months)	$1,575
Travel – Dallas Market Buying Trip	$350
Business Insurance	$600
Advertising & Promotion	$1,010
Store Fixtures/Decorations	$1,500
Computer/Cash Register	$950
Signage (Including Permits)	$400
Organizational Dues & Subscriptions	$125
Business/Office Supplies	$400
Other	$500
Start-up Inventory	$14,000
Total Start-up Expenses	$9,416
Start-up Assets Cash Required	$384
Other Current Assets	$0
Long-term Assets	$0
Total Assets	$14,384
Total Requirements	$23,800

 

 

There will be a moderate growth in My Western wear and there will always be a positive cash balance. The business will not be selling its products since it is retail based. The business will accept all major credit cards, checks, as well as cash[5]. In an effort to mitigate the bad checks loss, the business will use Tele-check services as a guaranty system. The rate of advertising as well as marketing will remain at about 5 percent. The residual profits will be reinvested in the business personnel as well as expansion.

 

 

 

General assumptions

	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	30.00%	30.00%	30.00%
Other	0	0	0

 

Break-even Analysis

The importance of break-even analysis is to enable a person to compute the amount of sales that a business needs to make in an effort to avoiding lose of money. Consequently, the break-even point of a business is where the total cost of the business equals the total revenue of such business. In the words of Cooper, et al,  this calculation is vital for purposes of determining the profitability as well as the viability of the company[6]. There are three factors that form the basis of a break-even analysis which include: the selling price, fixed costs, and variable costs. Gaskill, state that selling price is the amount at which a particular good or service is sold; fixed costs are expenses that do not change whether or not there is a decrease or increase in sale[7]. Such costs/ expenses may include; mortgages, loan repayments, rent, core staff, insurance, and equipment leases to mention a few. Variable costs on the other hand, are those expenses that decrease or increase proportionate to sales, that is to say when the sales increases variable costs increases and when sales reduces variable costs decrease. Variable costs may include: materials and supplies, the costs of sold goods, and salaries of additional staff.

A table of a break-even analysis for My Western wear business has been prepared based on average prices/costs. The average sales have fixed costs of 5,800 dollars, (47 average per unit revenue) and average variable costs of 23 dollars. To break even therefore, we require sales of about 11,000 pounds per month.

Break-even Analysis

Break- even units per month	248
Monthly revenue Break- even	$ 11,712
Assumptions:
Average per unit revenue	$ 47.21
Average per unit variable cost	$ 23.60
Estimated monthly fixed cost	$5,856

 

Cash flow projections

Cash flow forecast or projection is a rough estimate of the period within which a business expect to get cash from its sales, and certainly, the time within which such a business anticipate to pay its bills. In a study conducted by Pond, cash flow projection is very crucial to the business plan and certainly a core part of the financial plan of the business because it highlights the amount of cash that will get into and out of the business in every month. Often, cash flow forecasts are carried out monthly and at least in a year’s time[8]. The importance of cash flow projection include: enables the business to calculate the approximate amount of money that is needed to finance business operations every month; it also enables the business to make adequate preparation of how to cover expenses during the period when the revenue is insufficient; in addition cash flow projections gives a clear picture to potential lenders on how the business anticipate to get enough revenue for purposes of paying back the loans without defaulting. Finally, Leach and Ronald, observe that cash flow projections may be used for purposes of comparing actual and projected flow of cash in every month. Thus, it can be easy for a business to constantly adjust is cash flow projections as well as identify areas that are potentially problematic[9].

The following table elaborates the Cash flow projections of My Western wear business.

 

Cash flow projections

	Year1	Year2	Year3
Cash Received
Cash from operations
cash sales	$284,200	$369,460	$480,290
Subtotal cash from operations	$284,200	$369,460	$480,290
Additional cash received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$284,200	$369,460	$480,290
Expenditures	Year1	Year2	Year3
Expenditures from Operations	$44,115	$48,527	$53,379
Bill Payments	$174,454	$244,577	$315,576
Subtotal Spent on Operations	$218,569	$293,103	$368,955
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Long-term Liabilities Principal Repayment	$3,300	$3,300	$3,300
Other Liabilities Principal Repayment	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$221,869	$296,403	$372,255
Net cash flow	$62,331	$73,057	$108,035
Cash Balance	$62,715	$135,771	$243,806

 

Income statements

The actual business expenses and revenues are presented by an income statement. The difference between revenues and expenses is the net profit or net loss accumulated over a particular period of time. Often times, the income statement is also referred to as an operating statement, an income and expenses statement or profit and loss statement. An operating statement according to Wucinich, makes a comparison of revenue estimates and estimate expenses then estimated net loss of profit is calculated[10]. The profits of the business are projected to rise every year from about $70,000 in the first year of operation to about $130,000 in the third year of operation. This is clearly indicated by the graph and explained by the table below:

 

Income statement for My Western wear

	Year1	Year2	Year3
Sales	$284,200	$369,460	$480,290
Direct Cost of Sales	$142,100	$184,730	$240,145
Other Production Expenses	$0	$0	$0
Total Cost of Sales	$142,100	$184,730	$240,145
Gross Margin	$142,100	$184,730	$240,145
Gross Margin %	50.00%	50.00%	50.00%
Expenses
Payroll	$44,115	$48,527	$53,379
Sales and Marketing and Other Expenses	$15,448	$15,523	$15,834
Depreciation	$0	$0	$0
Telephone / Pagers/ Cell	$1,800	$1,800	$1,836
Utilities	$4,500	$4,800	$4,896
Payroll Taxes	$4,412	$4,853	$5,338
Other	$0	$0	$0
Total Operating Expenses	$70,275	$75,502	$81,283
Profit Before Interest and Taxes	$71,826	$109,228	$158,862
EBITDA	$71,826	$109,228	$158,862
Interest Expense	$1,491	$1,175	$845
Taxes Incurred	$21,100	$32,416	$47,405
Net Profit	$49,234	$75,637	$110,612
Net Profit/Sales	17.32%	20.47%	23.03%

 

Projected balance sheet

According to Leach  and Ronald[11] a  pro forma balance sheet or projected balance sheet is a prediction or an estimate of the net worth of a business at a particular time sometimes in the future.

The following table elucidates the pro forma balance sheet of My Western wear

 

	Year1	Year2	Year3
Assets
Current Assets
Cash	$62,715	$135,771	$243,806
Inventory	$13,365	$17,375	$22,586
Other Current Assets	$0	$0	$0
Total Current Assets	$76,080	$153,146	$266,393
Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation Total	$0	$0	$0
Total Assets	$76,080	$153,146	$266,393
Liabilities and Capital	Year 1	Year 2	Year 3
Current Liabilities
Accounts Payable	$15,762	$20,491	$26,426
Current Borrowing	$0	$0	$0
Other Current Liabilities	$2,000	$2,000	$2,000
Subtotal Current Liabilities	$17,762	$22,491	$28,426
Long-term Liabilities	$13,400	$10,100	$6,800
Total Liabilities	$31,162	$32,591	$35,226
Paid-in Capital	$5,100	$5,100	$5,100
Retained Earnings	($9,416)	$39,818	$115,455
Earnings	$49,234	$75,637	$110,612
Total Capital	$44,918	$120,555	$231,167
Total Liabilities and Capital	$76,080	$153,146	$266,393
Net Worth	$44,918	$120,555	$231,167

 

Business ratio analysis

            Business ratio analysis is an important management tool that is used for purposes of identifying negative and positive trends in the performance of a business. Thus, a number of business ratios are used by potential investors as well as lenders for purposes of evaluating the comparative health of the business enterprise. Ratio analysis data is extracted from income statement as well as the balance sheet of the business. The useful ratios in the business include; current ratio, quick ratio (acid test ratio), debt to equity ratio, return on investment ratio, inventory turnover ratio (stock turns), working capital,

The following are the business ratio analysis of My Western wear:

Ratio Analysis

	Year1	Year1	Year3	Industry profile
Sales Growth	0.00%	30.00%	30.00%	0.20%
Percent of Total Assets
Inventory	17.57%	11.35%	8.48%	49.00%
Other Current Assets	0.00%	0.00%	0.00%	23.00%
Total Current Assets	100.00%	100.00%	100.00%	100.00%
Long-term Assets	0.00%	0.00%	0.00%	18.60%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	23.35%	14.69%	10.67%	40.70%
Long-term Liabilities	17.61%	6.60%	2.55%	15.20%
Total Liabilities	40.96%	21.28%	13.22%	55.90%
Net Worth	59.04%	78.72%	86.78%	44.10%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	50.00%	50.00%	50.00%	38.30%
Selling, General & Administrative Expenses	32.72%	29.62%	27.09%	22.10%
Advertising Expenses	0.00%	0.02%	0.02%	2.10%
Profit Before Interest and Taxes	2.22	29.56%	33.08%	0.70%
Main Ratios
Current	4.28	6.81	9.37	2.22
Quick	3.53	6.04	8.58	0.62
Total Debt to Total Assets	40.96%	21.28%	13.22%	55.90%
Pre-tax Return on Net Worth	156.58%	89.63%	68.36%	1.70%
Pre-tax Return on Assets	92.45%	70.56%	59.32%	3.80%
Additional Ratios	Year 1	Year2	Year3
Net Profit Margin	17.32%	20.47%	23.03%	n.a
Return on Equity	109.61%	62.74%	47.85%	n.a
Activity Ratios
Inventory Turnover	10.91	12.02	12.02	n.a
Accounts Payable Turnover	12.07	12.17	12.17	n.a
Payment Days	27	27	27	n.a
Total Asset Turnover	3.74	2.41	2.41	n.a
Debt Ratios
Debt to Net Worth	0.69	0.27	0.15	n.a
Current Liability	0.57	0.69	0.81	n.a
Liquidity Ratios				n.a
Net Working Capital	$58,318	$130,655	$237,967	n.a
Interest Coverage	48.16	92.96	188.00	n.a
Additional Ratios
Assets to Sales	0.27	0.41	0.55	n.a
Current Debt/Total Assets	23%	15%	11%	n.a
Acid Test	3.53	6.04	8.58	n.a
Sales/Net Worth	6.33	3.06	2.08	n.a
Dividend Payout	0.00	0.00	0.00	n.a

 

Current ratio involves comparing business current assets to the business current liabilities and this ratio can enable a person to evaluate the ability of the business to pay up its bills. Investors and lenders are more attracted to businesses that have high current ratios. Acid test ratio sometimes referred to as quick ratio is similar to the current ratio only that in acid test ratio does not include inventory. Because selling some inventory is not easy measuring relative liquidity is better measure through quick ratio. Debt to equity ratio is the ratio that compares what the business owns, that is equity and what the business owes, that is debt. The overall debt divided by equity (liabilities are subtracted from assets). Often, investors and lenders make a comparison of debt and equity of the business with other business enterprises. In return on investment ratio the net profits are compared to equity (investment). The result of this comparison is shown as a percentage. Where there is low investment return the investors might decide to invest somewhere else.

Indeeda financial plan explains future projections of a business in terms of what the business can be able to afford, ways in which the business can afford to do it, as well as explaining the amount of profits expected in the business. A standard financial plan should consist of a cash flow statement, the balance sheet, the income statement, the break even analysis, as well as the business ratio analysis. In My Western wear clothing business the cash flow projection statement indicate a rough estimate of the period within which a business expect to get cash from its sales, and certainly, the time within which such a business anticipate to pay its bills. This projection is very crucial to the business plan and certainly a core part of the financial plan of the business because it highlights the amount of cash that will get into and out of the business in every month. The projected balance sheet of My Western wear gives an estimate of the net worth of a business at a particular time sometimes in the future, in this case for a period of three years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bibliography

Ang, James S, On the theory of finance for privately held firms, Journal of Small Business            Finance 1/3 (1992), 185-203.

Berger, Allen N., and Gregory F. Udell, Relationship lending and lines of credit in small firm       finance, Journal of Business 68/3,(2005), 351-381.

Binks, Martin R., and Christine T. Ennew, Growing firms and credit constraint, Small       Business Economics 8/1 (2006), 17-25.

Cavalluzzo, Ken et al, Competition, small business financing, and discrimination: Evidence from a new survey, Journal of Business 75/4, (2002), 641-679.

Chittenden, Francis, et al,  Small firm growth, access to capital markets and financial structure:     Review of issues and an empirical investigation, Small Business Economics 8/1 (2006),         59-67.

Cooper, Arnold et al,  Initial human and financial capital as predictors of new venture       performance, Journal of Business Venturing      9/5, (2004), 371-395.

Gaskill, Rickets, A factor analytic study of the perceived causes of small business failure,             Journal of Small Business Management 31/4 (2003), 18-31.

Pond, Jonathan., financial planning guide for self-employed professionals and small business         owners (Indiana: Dell Pub, 2010).

Leach, Chris., and Ronald Melicher., Entrepreneurial Finance, (Washington: South Western          College Publisher, 2005).

Wucinich, William., How to finance a small business, Management Accounting 61/5 (2000), 16-    18.

 

 

[1] James,  Ang, On the theory of finance for privately held firms, Journal of Small Business Finance 1/3 (1992), 185-203.

[2] Allen Berger., and Udell, Gregory, Relationship lending and lines of credit in small firm finance, Journal of Business 68/3,(2005), 351-381

[3] Martin, Binks., and Ennew, Christine, Growing firms and credit constraint, Small Business Economics 8/1 (2006), 17-25.

 

[4] Ken, Cavalluzzo, et al, Competition, small business financing, and discrimination: Evidence from a new survey, Journal of Business 75/4, (2002), 641-679.

 

[5] Francis, Chittenden, et al,  Small firm growth, access to capital markets and financial structure: Review of issues and an empirical investigation, Small Business Economics 8/1 (2006),   59-67.

 

[6] Arnold, Cooper, et al,  Initial human and financial capital as predictors of new venture       performance, Journal of Business Venturing  9/5, (2004), 371-395.

[7] Rickets, Gaskill, , A factor analytic study of the perceived causes of small business failure, Journal of Small Business Management 31/4 (2003), 18-31.

 

[8] Jonathan, Pond. financial planning guide for self-employed professionals and small business owners         (Indiana: Dell Pub, 2010).

[9] Chris, Leach., and Melicher Ronald, Entrepreneurial Finance, (Washington: South Western College Publisher, 2005).

 

[10] William, Wucinich., How to finance a small business, Management Accounting 61/5 (2000), 16-18.

[11] Chris, Leach., and Melicher, Ronald., Entrepreneurial Finance, (Washington: South Western College Publisher, 2005).

 

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Evidence Based Practice and Nursing

 

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Introduction

Evidence based practice (EBP) was introduced in the early 1800s by Florence Nightingale. According to Fineout et al, ( 2010) is a problem solving approach or method used for purposes of delivering health care that incorporate the best evidence from carefully done research as well as from the patient care data with patient values and preferences and most importantly clinician expertise. It has been argued that better patient’s outcomes as well as clinical decision can be achieved through a health care that is evidence based which is carried out in a caring context. Acquiring skills and knowledge in the Evidence Based Practice process present nurses and clinicians the necessary tools for purposes of transforming the health care system as well help them take control of their practices. The best practice culture is based on the following key elements which include: partnership between clinical settings and academic, Evidence Based Practice mentors, Evidence Based Practice champions, support from the administration, resources and time, and clearly written research.

The main objectives and purpose of the Evidence Based Practice (EBP) is to replace the normal practice in the health care system, with a practice that is informed by research that is rigorous outcome oriented. Evidence Based Practice also seeks to ensure that there is accountability in the health care system as well as transform the practice into an enterprise that is less subjective. As Baumann , (2010) rightly puts it, Evidence Based Practice as it is enables individuals to identify best practices not only in the field of nursing but also in other professions.

In nursing, Evidence Based Practice aims at advancing the quality of care that nurses provide, increase patients satisfaction, to provide a nursing care that is most cost efficient and high quality, and finally to replace the usual or traditional nursing practice with practice that is research and evidence oriented (Barker, 2009).

Indeed, Evidence Based Practice in nursing is the best problem solving method as well as a viable avenue for making critical clinical decisions.  It also enables nurses as well as clinicians to obtain the best clinical evidence, judgment, proficiency skills, and quality clinical care for patients, and deeper clinical knowledge.

 

 

 

 

 

 

 

 

 

 

 

 

References

Barker, J. (2009). Evidence-Based Practice for Nurses. London: SAGE publishers.

Baumann, S. (2010).The limitations of evidenced-based practice. Nurs Sci Q. 23(3) 226-30.

Fineout, E  et al.(2010). Evidence-based practice step by step: Critical appraisal of the evidence: part I. Am J Nurs. 10(7) 47-52.

                                              

 

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Entrepreneurial Leadership

 

 

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Five Guys fast food chain of restaurants was founded by Jerry and Janie Murrell and their four of sons in 1986. The first store of Five Guys Burgers and Fries was situated in Arlington, Virginia. Jerry and Janie Murrell gave their sons an option of joining collage or opening a business. The Murrell brothers decided to open a business rather than joining college and with the assistance of their parent, they opened a burger joint. Costumers from Washington, D.C area voted the burger as the best in that area (Melnick, 2012).  Five Guys Burgers and Fries expanded within one and a half years to a tune of about three hundred units, thus capturing the attention of the whole nation. Currently, Five Guys Burgers and Fries can be found in more than nine hundred locations across the country.

One aspect that sets Five Guys’ philosophy apart from other fast food chains is the fact that their burgers are distinct from those offered in those other fast food restaurant. Five Guys Burgers and Fries prepare and cook burgers according to customers order, thus, there are no two burgers in Five Guys Burgers and Fries that are similar. It should also be noted that the Murrell family carried out the activities of their stores in person for over sixteen years. This enabled them to effectively coordinate and execute all their plans just the way they wanted them done. As a matter of fact, Five Guys insist that there are more than two thousand ways in which they can make a burger at their chain of restaurants (Welch, 2010). To them, hamburger is not just a business but a form of art. Another unique aspect of Five Guys Burgers and Fries is that they prepare burgers with fresh ground beef and that’s why they do not have freezers in their restaurants, they only have coolers. In addition, they serve other menu items apart from burgers, such items include but not limited to sandwiches, bacon cheese dog and Kosher. While cooking and preparing their menu items, Five Guys uses peanut oil only. This makes their menu items free from trans- fats.

The original values of Five Guys Burgers and Fries are enshrined in their mission statement and their service promise. Five Guys Burgers and Fries proclaim that in their premises the customer is the most important visitor and that the customer is not in any way dependant on the business but rather the business is dependent on the customer (Dean, 2000). The Five Guys Burgers and Fries further contend that by serving their customers they are not doing them a favor but rather the customer is doing them a favor by giving them a chance to serve them. These philosophies of the restaurant have made it prosperous and stronger up to date since their customers feel that they are part of the restaurant and that they are the most important asset of the business. Such sentiments coupled with quality products and services from Five Guys Burgers and Fries has enabled the chain of restaurants to remain as strong if not stronger than ever before (Weise, 2011).

Some of the factors that played a significant role in the success of Five Guys Burgers and Fries may be attributed to the fact that the Murrell family carried out the activities of their stores in person for over sixteen years. This enabled them to effectively coordinate and execute all their plans just the way they wanted them done (Melnick, 2012). It therefore follows that the family did whatever they wanted to do and with a lot of precision and passion to the satisfaction of the customers. In addition to that, burger to Five Guys Burgers and Fries is not just a business to make money and cook food bit rather a form of art that needs an extra touch to stand out among others. Another factor that contributed to the quick success of Five Guys Burgers and Fries can be attributed to the fact that their burgers are distinct from those offered in those other fast food restaurant. Five Guys Burgers and Fries prepare and cook burgers according to customers order, thus, there are no two burgers in Five Guys Burgers and Fries that are similar (Dean, 2000). Such unique characteristics enabled Five Guys Burgers and Fries to expand within one and a half years to more than three hundred units, thus capturing the attention of the whole nation.  Another factor that enabled Five Guys to succeed within a short period is the fact that they serve other menu items apart from burgers, such items include but not limited to sandwiches, bacon cheese dog and Kosher. While cooking and preparing their menu items, Five Guys uses peanut oil only.

Ethical and social practices are part of the Five Guys Burgers and Fries in the sense that the franchise give their customers what they have ordered. As a matter of fact, Five Guys Burgers and Fries prepare burgers with fresh ground beef and that’s why they do not have freezers in their restaurants (Pederson, 2009).

 

 

References

Dean, C. (2000). Those Damn Yankees: The Secret Life of America’s Greatest Franchise.   Washington: Verso.

Melnick, J. (2012, October 23). The Runaway Hit. QSR 50(30), 13-23. Retrieved from             http://www.qsrmagazine.com/qsr-50/runaway-hit

Pederson, J.  (2009). International Directory of Company Histories. Washington: Gale.

Welch, L. (2010, April 1). How I Did It: Jerry Murrell, Five Guys Burgers and Fries. INC.            Retrieved from http://www.inc.com/magazine/20100401/jerry-murrell-five-guys-burgers-    and-fries_pagen_2.html

Weise, K. (2011, August 11) Behind Five Guys’ Beloved Burgers. BussinessWeek. Retrieved       from http://www.businessweek.com/magazine/behind-five-guys-beloved-burgers

 

 

 

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Endangered species

Introduction

The world is experiencing the most devastating species extinction crisis than ever before. A good number of different plants and animals have disappeared from the face of the earth, causing an alarming decline in biodiversity. Study shows that by the year 2050, more than 50 percent of different species will be subjected to extinction (Barr 24). It is indeed terrifying but also factual the world is in the midst of the most horrible wave of species extinction since the terrifying extinction of the dinosaurs, centuries ago.

Scholars have even suggested that the world may be in the verge of experiencing its sixth massive species die off (Darling 14).  Extinction may be defined as the death of a particular species and thus, disappearing completely. In the past there have been about five events of historical mass extinction acknowledged by scientist: the Cretaceous, the Ordovician, the Triassic, the Permian, and the Devonian. Scientists are of the opinion that the world is actually experiencing the Holocene, which is the sixth massive species die off.  Even though the past historical mass extinction episodes were induced by natural phenomenon, the current extinction event (the Holocene) is the directly cause by human activities.

Discussion

The current extinction event unlike the past ones is directly cause by human activities the earlier events were caused by events such as  natural climate shifts, volcanic eruptions, and asteroid strikes. It is a proven fact that about 99 % of the currently endangers plants and animals in our planet , are at risk from the activities of human beings particularly those activities that leads to loss of habitat, global warming, as well as introduction of exotic species (Sheehan 33). It is worth mentioning that for every species that faces extinction, there is a very high possibility that other species that are bound to that particular species in the complex web of the ecology may also be at a risk of extinction following the interruption of the complex ecological web. Consequently, a number of species may be directly or indirectly at risk of extinction once a particular species disappears from the face of the earth following its extinction.

One of the many species that are at risk of extinction is the Komodo dragon found in the natural habitats of Indonesian Islands. The Komodo dragons are found in Lesser Sunda islands, Komodo Islands, Rinca Islands, as well as Islands of Montang, Gili, and Padar found in indonasia. It is estimated that the remaining population of the Komodo dragons is approximately 4,000 to 5,000 and as such, they are listed as the endangered species in the Red List of the IUCN. The komodo dragons are commonly reffered by the name of buaja, Ora, and darat which basically means terra firma crocodile. The scientific name of the Komodo dragon is Varanus Komodoensis.  They weigh about 300 pounds and grow to a length of up to 29 inches, making it the largest and heaviest lizard in the world. The creature also has an incredible sense of smell (Sahtouris 32).

The Komodo dragon has a very flexible skull for purposes of enabling it to swallow huge lumps of prey. The dragons’ bit is extremely dangerous as it has very deadly venom that is capable of killing the prey within a very short time.  These fascinating creatures have a life span of about 20 to 40 years. They also have a freckled skin with various colors such as slate black, earthen red, and slate gray in the adult dragons, while on the younger ones they have numerous colors ranging from green, brown, gray, and sometimes yellow (Miller 45).

The major factors that poses a great risk of possible extinction of the komodo dragons is decrease in the prey base of the creature, volcanic activities, as well as forest fire. In addition, it is pertinent to mention that the loss of the creature prey based is largely as a result of human activities such as poaching these prey species, and forest fires caused by human activities such as honey collection. These activities have greatly altered the natural habitat of the komodo dragons thus exposing them to the risk of extinction (Kalman 53). The illegal trade of the skins and specimens from komodo dragons is another factor that has committed this species to the risk of extinction.  The limited distribution of the komodo dragons poses another risk of possible extinction of the this species in the sense that they become vulnerable to both human and natural cause incidences for instance diseases, fire or even storms.

The illegal hunting of the komodo dragons poses a major threat to the very existence of these creatures, not to mention the encroachment of human settlement into the natural habitat of the dragons. Like in the past where some species were highly sought all over the world as trophies, komodo dragons experience the same fate. Over the years, these dragons have been hunted down for their fascinating feet and beautiful skin. Others were trapped and sold to private collectors as well as zoos (Martin 42).

The existence of diverse species in the ecosystem ensures that the complex ecological web is maintained. Thus, the ecological communities in a given ecosystem are able to survive and multiply in their natural habitat, and they are able to withstand any form of challenge that comes on their way. It therefore, follows that conservationist should not only focus their efforts  on saving areas endowed with numerous species  such as coral reefs or even rainforest. They should also design a viable strategy to conserve and protect the few species found in areas such as isolated Islands, tundra, polar seas, and grasslands (Foreman 34).  It goes without saying that the loss of these few species such as the komodo dragons could be irreversible. Concern on extinction of species should therefore be focused on the local level rather than on globally lost species since more benefits of biodiversity take place at the grassroots, and as such protection of the endangered species from the grassroots level is the only viable means of ensuring that these species are not at any risk of extinction due to human alteration of their habitats.

It is argued that the current trend of species extinction is faster than the background rate in   hundreds or even thousands times. It is worth noting that from time to time, major changes in the global environment cause the living systems of different species to collapse leading to extinction of numerous species. The extinction of these species means that they disappear completely from the face of the earth a loss that may never be recovered. The extinction crisis that the earth planet is currently experiencing is quite unique in that it is directly induced by the human activities and also taking place at a very terrifying rate. It is believed by some scientists that this kind of extinction began with the explosive growth of human population in the 1600 which saw human settlements and their domesticated animals encroaching on the habitats of different species (Lunis 36). One of the species that is on the verge of extinction is the Komodo dragon found on the Islands of Indonesia.

Conclusion

Hunting of the komodo dragons poses a major threat to the very existence of these creatures, not to mention the encroachment of human settlement into the natural habitat of the dragons. Poaching of these dragons is simplified by the fact that they are found in limited areas with little human settlement. Conservationist should not only focus their efforts on protecting areas endowed with numerous species such as coral reefs or even rainforest, they should also design  viable strategies  to conserve and protect the few species found in areas such as isolated Islands, tundra, polar seas, and grasslands. This will ultimately ensure the survival of the endangered species such as the Komodo dragons which are estimated to be about 4000 to 5000 in number. This is a terrifying but factual statistics of the fascinating creatures of a kind loss of which could be irreplaceable.  Interestingly, in every species that disappear from the earth due to extinction, there is a very high possibility that other species that are bound to that particular species in the complex web of the ecology may also be at a risk of extinction following the interruption of the complex ecological web. Consequently, a number of species may be directly or indirectly at risk of extinction following the extinction of a particular species.

 

 

 

 

 

 

 

 

 

 

Works Cited

Barr, Nevada . Endangered Species. Berkley Pub Group, 2008 print.

Darling, Kathy. Komodo Dragon .Lothrop, Lee & Shepard Books, 1997 print.

Foreman, Paul . Endangered Species: Issues and Analyses. Nova Publishers, 2002 print.

Kalman, Bobbie. Endangered Komodo Dragons: Earth’s Endangered Animals Series. Crabtree     Publishing Company, 2004print.

Lunis, Natalie. Komodo Dragon: The World’s Biggest Lizard. Bear port Pub 2007 print.

Martin, James. Komodo Dragons: Giant Lizards of Indonesia. Capstone Press, 1995 print.

Miller, Jake .The Komodo Dragon: Lizard Library.The Rosen Publishing Group, 2003 print.

Sahtouris, Elisabet. EARTHDANCE: Living Systems in Evolution. June 1999. Web. 4 April          2012. < http://www.ratical.org/LifeWeb/Erthdnce/chapter18.html>.

Sheehan, Sean . Endangered Species :What If We Do Nothing? Gareth Stevens critical issues.        Gareth Stevens Pub, 2009 print.

 

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Running Head: Higher Education

 

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Outline

 

I. Introduction
II. Comparative Analysis of the Branches of Government engagement in the Higher       Education policy
III. Consideration of Impacts on the policy.
IV. Summary Considerations.

V. Conclusion

VI. References

 

 

 

 

 

 

 

 

 

• Introduction

In the United States, higher education during the nineteenth and twentieth Century did not have any customary, statutory or even constitutional provisions that established a federal organizing board of education or even a state department of education for purposes of taking charge of polices regarding higher education.  Following the absences of a particular authority to oversee higher education in the United States during the last two centuries, a number of initiatives were undertaken by the federal, state, and local government to establish universities and colleges through providing the necessary incentives as well as resources for that purpose (Meier, 2000). One of the defining traits of higher education in the United States is the fact that the states have authority to grant charters to both universities and colleges in that state.  Until recently, in the twenty first century, a symmetrical empirical attention to the relationship between the structure of government and performance in regard to higher education had not been given the deserved priority.

After independence, there was a fundamental change in the political oversight of higher education in the United States. Under the colonial power, the education system in America adhered to the English custom which was very stringent particularly in award royal charter to institutions of higher education.  The petitioners were subjected to comprehensive scrutiny in an effort to prevent an increase in the grant of academic degrees. Nonetheless, the petitioners who successfully underwent through the detailed scrutiny were given a charter by the crown and they were also assured of continuous financial support by the crown.  The public policy regarding higher education in the United States has continued to reflect the historical aspects even in the twenty first century. There are countless and diverse institutions in the country, a clear indication of the commitment of government to ensure that higher education in the United States are anniversary accessible.

II. Comparative Analysis of the Branches of Government engagement in the Higher Education Policy

Higher education structural governance in the United States differs from one state to another. Generally, there are three types of board that constitute the structure of higher education in the United States (Knott and Payne, 2002).  The key responsibility and objective of these boards is to govern or oversee institutions higher education in their respective jurisdiction. Most of the authority to coordinate higher education in the United States is assigned to the consolidated governing boards. The governance of single corporate entity is one of the responsibilities of consolidated governing boards in the United States. The system of consolidated governing board in North Carolina State is charged with the responsibility of taking all the decisions regarding higher education in the State, and therefore it does not come as a surprise that there are no separate governing bodies for individual institutions of higher learning. Important to note is the fact that the state law gives the consolidated governing boards all the corporation rights and responsibilities. Consequently, all the institutions of higher learning that are under the consolidated governing board system of the State do not have separate corporate standing. Other responsibilities of this board include: analysis of policy, setting a public agenda, resolving problems, as well as planning.

 

It should also be noted that the governing boards play a vital role in the review and approval of academic program, maintaining accountability, providing relevant information, and developing a budget. Further the boards take part in designing and executing policies as well as promoting to the governor and legislature the needs of different institutions of higher learning within their jurisdiction. The boards serve as the ultimate appeal point in relation to grievances emanating from the faculty and awarding tenure all of which are under the board responsibility of setting up faculty personnel policies.  According to Lowry, (2001,) the boards institute policies regarding fees and tuition, as well as assign and move resources among institutions that fall under their jurisdiction.

 

Coordinating boards, on the other hand, are merely a link between the State’s governing boards and the State government. Important to note is the fact that these coordinating boards are more likely to be politically influenced, as they do not have the necessary autonomy as well as power to resist such influence. The responsibilities of some of the coordinating boards include approving academic programs. The responsibility of reviewing and giving recommendations regarding academic programs to institutional governing board is undertaken by the advisory coordinating board. Other responsibilities of coordinating boards are limited to the administration of financial aid to the students.

 

It is worth noting that coordinating boards do not have a separate corporate status, and the agency executive is usually appointed by the governor based on the coordinating board recommendation. Rather than advocating for interests, coordinating boards center their attention towards the system needs, state, and the main concerns (Bond and Fleisher 2000). These board have very little power and hence their limited extent of authority. The budget implementation policy by coordinating boards is limited to the funds allocated to that board.

 

Within different State, there are other political institutions apart from governing boards that are involved in higher education governance. What’s more, both the governor of the state and the lieutenant governor do have some power over the higher education in their respective jurisdictions. One of the ways through which they exercise their influence on higher education is through appointing, board executives, or members of educational boards, as well as using their authority to influence the legislature. The legislature also influences the governance of higher education in that the constitution allows some positions within the legislature to appoint board members. The powers given to boards through a statute may be increased or reduced depending on the legislature of a particular state. It should also be noted that the state legislatures do have committees that are empowered to oversee the formulation of policies regarding higher education in their respective states and therefore such committees have a lot of influence on the governance of higher education in the United States.

 

III. Consideration of Impacts on the policy.

It has been argued that within the arena of political parties, the Democratic Party as opposes to Republican Party is more likely to reduce the cost of student’s education in the higher learning institutions. The party may reduce this cost by either bringing down tuition fees or through increasing aid for the students (McClendon et al, 2002). Even though one can rightly contend that the Republican Party is not as liberal as the Democratic Party in a particular state, one should not forget that a political party is just an ideological stand-in. the ideology of the government or political party in power evaluate the officials’ political ideology for purposes of addressing the lacuna in the party preferences. The preferences of the mass are, on the other hand, the citizen ideology. The general public can therefore, influence the governance of higher education through influencing official in the government to act as their delegates on a particular issue (Bond and Fleisher 2000).

 

Since the federal government role in higher education legislation has been limited by the constitution, the federal government through the president and the congress passed legislations such as The 1862 Morrill Act which enabled institutions of higher education to get financial support from their respective states after selling land allotments from the western territories.  The involvement of the federal government in higher education was also evident in congressional approval of financing development as well as research projects undertaken by institutions of higher learning. Even though this federal funding of research projects to higher institutions was meant to facilitate the institutions in resolving a problem that the federal government deemed vital. The secondary effect of federal involvement was that universities and colleges were able to build more programs.

 

Following the reduction in revenue collected by the state during the twentieth century, and increase in the demand for subsidies in other services offered by the state such as tax exemptions in industries, health care, the need for accountability arose. Consequently, the legislature and the judiciary were tasked with the responsibility of renegotiating and reviewing the privileges given to the executives and board members of state universities and colleges. Such executives and board members were now subjected to external scrutiny. This led to increased accountability of the executives in the academic affairs (McLendon et al, 2002). All the institutional affairs that were initially outside the scope of public inspection were no longer a secret.

 

The role of the state in regard to higher education and public policy cannot be underestimated. Individual states are responsible for financing public colleges and universities within their respective jurisdictions. In addition, the state grant tax exemptions to universities and colleges located within its boundaries. Without such exemptions by individual states, universities and colleges with huge chunks of land would bear a major tax burden. Different states also fund development and research projects of colleges and universities within their territory.

 

It is important to note that in the year 2007, the United States had over three thousand institutions of higher learning granting degrees. The total enrollment capacity of all these institutions exceeds fifteen million students per annum. It goes without saying that there has been a tremendous development in terms of higher education in most states of the United States.

 

IV. Summary Considerations. 

 

In the higher education system of the United States, there is a notable tension between self-sufficiency and political control. According to Meier, (2000) autonomy of a certain level must exist for effective implementation of policy by a bureaucracy. The importance of such autonomy is to provide an insulation of such policies from political influence. The existence of a consolidated governing board in United State is a clear demonstration of an autonomous body charged with the responsibility of taking all the decisions regarding higher education in different states, and therefore it does not come as a surprise that there are no separate governing bodies for individual institutions of higher learning. Important to note, is the fact that the United States has over three thousand institutions of higher learning granting degrees. The total enrollment capacity of all these institutions exceeds fifteen million students per annum. In regard to efficiency, judiciary is tasked with the responsibility of renegotiating and reviewing the privileges given to the executives and board members of state universities and colleges. This has led to increased accountability of the executives in the academic affairs and the institutions of higher learning in general.

 

Even though the federal government and the congress are limited by the constitution in terms of their level of involvement in making legislations regarding higher education, the federal government has indirectly found viable means of alleviating higher education. One of the ways through which the federal government and congress have boosted institutions of higher learning is through approving financing support for purpose of development as well as research projects undertaken by institutions of higher learning in different states (Bond and Fleisher 2000).

 

V. Conclusion

One of the defining traits of higher education in the United States is the fact that each state has the authority to grant charters to both universities and colleges within its jurisdiction. There are three types of board that constitute the structure of higher education in the United States which include, the planning agencies the Coordinating boards, as well as the consolidated governing boards. Most of the authority to coordinate higher education in the United States is assigned to the consolidated governing boards. The governor of the state and the lieutenant governor do have some power over the higher education in their respective jurisdictions. Even though one can rightly contend that the Republican Party is not as liberal as the Democratic Party in a particular state, one should not forget that a political party is just an ideological stand-in.

 

 

 

 

VI. References

 

Bond, J.R. and R. Fleisher. (2000). Polarized politics: Congress and the president in a

            Partisan era. Washington, D.C.: CQ Press.

 

Knott, J.H. and Payne, A.A. (2002). The impact of state governance structures on            higher education resources and research activities. American Journal of Political        Science, 43, 974-977.

 

Lowry, R.C. (2001). Governmental structure, trustee selection, and public university

Prices and spending: Multiple means to similar ends. American Journal of             Political Science, 45, 845-61.

 

McLendon, M.K., et al. (2002). State postsecondary policy innovation: Politics,      competition, and the interstate migration of policy ideas. Paper presented at the     Midwest Political Science   Association meetings, Chicago.

 

Meier, K.J. (2000). Politics and the bureaucracy: Policymaking in the fourth branch of

            government. Fort Worth: Harcourt College Publishers.

 

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Cutaneous sensation

 

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Organisms interpret their surroundings through differential processing of signals that are both externally and self generated. This state of fact has been observed and proven across a variety of sensory systems as well as in different species.  In human beings, tactile sensations that are self are self generated are usually perceived as weaker compared to a similar stimuli imposed externally. It has generally been thought that the sensory attenuation result from a mechanism that is predictive.

There is strong evidence to suggest that predictive mechanism causes attenuations that are self generated tactile sensation. The sensation was only attenuated on the passive finger when a tapping movement was made by one finger above another finger of the other hand, and when the two fingers were expected to make contact. The same attenuation levels were observed when there was an anticipation of contact regardless of whether there was actual contact or not. The results are indeed consistent with the predictive mechanism action where self generated sensory events are predicted on the basis  of planned activity of the motor and the incoming sensory stream are attenuated for purposes of mitigating the events sensory salience (Bays et al, 2006).

There is a distinction between the attenuation observed for the study from the increase in the threshold of cutaneous stimuli   in a moving effector in the sense that it is synchronized to the time that is expected as well as present in a passive digit of self contact. In addition, there is an observation made in advance of increased threshold of the passive movement that takes place at a time that is unpredictable. This could only suggest that it involves a mechanism that is masking or predictive rather than predictive mechanism that this study demonstrated.

The study further indicates that for predictive cancellation to occur in a human being, a set of events that are highly specific must take place in the somatosensory system. Self-generated tactile sensation attenuation does not culminate from postdictive reconstruction or predictable stimuli that are arbitrary but rather from a mechanism that relies on anticipation of an event that is specific (Kenneth, 2001). The nervous system ability to predict sensory results of the activity of a motor may be used to examine the ability of a human being to rehearse movements mentally before executing them.

In study conducted by Bays et al, (2006) human psychophysical data are equally consistent with a postdictive or reconstructive mechanism the same way they are, with a predictive mechanism. The percept of a sensory event in a postdictive mechanism is constructed from the information of the sensory received just about the time of the episode. If the responsible mechanism for tactile sensory attenuation is postdictive, a particular sensation will be easily identified as externally or self generated sensation based on all the activities that have taken place at about the same period.

When there is contact between the fingers, the tactile sensation that follows is perceived as weaker compared to the same externally imposed stimulus. An outcome such as this could emanate from a predictive process that is capable altering the sensory perception that is evaluated subsequent to the activity.  Attenuation is observed in the study even when there is no contact of the fingers and this is a clear indication of a predictive process.

According to Iggo,  (1958) Cutaneous thermal pain and sensations can also be caused by cooling of even heating the skin. These sensations may be carried by some fibers known as unmyelinated afferent. The leg, lower thigh, and the foot were used in the observation of the receptor behavior. In the afferent fibres conduction velocities 10 out of 17 fibers that were measured ranged from about 0,5- 17m./sec. All the condition velocities were a little less than 1.2m./sec except for fibre number 5. This led to the assumption that other than fibre number 5, all other fibres were unmyelinated. The size of the receptive fields was assessed through mechanical and thermal stimuli were used. The part of the skin from which impulses discharge could be aroused by the stimulus that was weakest though effective. Receptor fields were 5 by 5 mm, and the mechanical as well as thermal stimuli fields were coincident. It should also be noted that mechanical stimulation could excite all the receptors nonetheless; the required intensity of stimulation was always high. A pressure of 3g was required by units that were more sensitive before an impulse could be discharged (Iggo, 1958).

A number of other receptors could be exited only by pulling hairs, by pressing the skin using the forceps, or by pressing in to the skin a sharp metal pin. It should be noted that when mechanical stimuli were used, it was not easy to find the receptors. The receptors sensitivity to mechanical stimulation increased after frequent cooling and heating even though sensitivity was not constant.

References

 

Bays, P., et al. (2006). Attenuation of Self-Generated Tactile Sensations is Predictive, not             Postdictive. Attenuation of Self-Generated Sensations.4(2), 1-4

 

Iggo, A. (1958). Cutaneous heat and cold receptors with slowly conducting (c) afferent    fibres. Thermal Receptors with C Fibres 1(1), 362- 370

 

Kenneth, O. (2001) The roles and functions of cutaneous mechanoreceptors. Sensory         systems 1(1), 455- 460

 

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Running Head: Role of Communication in A Cross Cultural Project Team

 

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Abstract

In today’s global economy, the ability of an individual in a team project to effectively communicate across cultures as well as being culturally aware is more than just a nice skill to posses. As such, in this twenty first century, the aforementioned skills are vital competency parameters for employees in any project particularly in a cross cultural project team. One of the factors that have led to the growing diversity in the workforce is the aspect of globalization whose impact has been felt in almost every industry. This situation has raised concerns as to the ways in which individuals from strikingly different cultures may be coordinated to promote or alleviate personal and organizational goals in a cross cultural project.  It is a well known fact that most if not all individual behaviors and attitudes are habituated by cultural values, perceptions as well as assumptions of such an individual that are many at times instilled early in one’s life, and are often articulated  in the way we interact and behave. Actually, the influences of culture are so intuitive and  deep to the extent that individuals act upon them unconsciously in our day to day activities such as the way an individual employee deal with his or her superiors, the way a person talk and stand, as well as the way a person make a  decision or handle a conflict. Communication in a cross cultural project team is not restricted to studying other languages and cultures but also includes understanding the way in which other cultural core values as well as patterns influences the process of communication.  Consequently, attaining the necessary communication skills and ability to effectively work with local and multicultural teams is a necessity and not an option as it was some decades ago. Owing to the fact that the differences in various cultural influences are indeed intuitive and certainly deep, they can without a doubt lead to miscommunication as well as misunderstanding in a cross cultural project team. This condition can be very detrimental to any project in the sense that such misunderstandings based on cultural conflicts may break cross cultural project such as international mergers or even business deals that are very lucrative. The objective of the study is to highlight the importance of communication in promoting an effective cross cultural project team.

Introduction

In the recent years, it is not a secret any more that workplaces are swiftly becoming diverse, as the business environment spread out to different geographical locations where there are various and different  cultural values. The difficult part however, is the ability of employees in a cross cultural project team to be able to communicate effectively with various individuals within the team who speak a different language or uses different means to achieve a common goal due to cultural differences (Triandis and Rosita, 2000). In such instances the role of effective communication cannot be overemphasized. Consequently, the success of any cross cultural project team calls for more than just the ability of such a team to put forward the right services or products to meet the prevailing market demands (Belbin, 2000).  Such a project requires the right individuals having the right capacity and skills to adapt accordingly and to be culturally intelligent in an effort to work effectively in a cross cultural project team. To this end, effective cross cultural communication in this new world is a must. Communication in a cross cultural project team is not restricted to studying other languages and cultures but also includes understanding the way in which other cultural core values as well as patterns influences the process of communication (Imhof, 2003)..  Consequently, attaining the necessary communication skills and ability to effectively work with local and multicultural teams is a necessity and not an option as it was some decades ago (Gudykunst et al, 2005).There are a number of benefits that accrues with effective communication in cross cultural project team which include among others understanding cultural diversity, developing awareness of individual cultures, the team is able to develop tolerance towards each other. Study shows that about seventy five percent of cross cultural projects are disastrous (Hall, 2003). Experts are of the opinion that one of the key reasons that contribute to such failure is insufficient or poor communication. Strategic communication set up is extremely important as this tend to result to the right expectations of the team in the project (Trompenaars, 2005). In all, effective communication in a cross cultural project team is vital in the development of a strong cultural competence and good relationship among the team players that go beyond the business project in issue. Nonetheless, there is a very big possibility that Failure to observe effective communication in a cross cultural project team tends to result in missed opportunities, productivity losses, as well as conflicts that are unnecessary (Higgs & Ploch, 2005).

Literature review

According to Varner & Beamer, (2005) an effective communication in a  cross cultural project team assist individuals from various cultures to learn about each other’s customs, traditions, protocols, and culture for conducting business, and as such, the team players in the cross culture project mitigate the possibilities of inadvertently offending  an individual in the team. Communication therefore, ensures that the team in the cross cultural project is adequately equipped with the ability to effectively execute the project with minimal difficulties (Hall & Hall, 2004). Communication act as a bridge that link different cultural values and ensure that the team in the project work s together for purposes of achieving the goals of the project within the desired timeframe. Failure to observe effective communication in a cross cultural project team tends to result in missed opportunities, productivity losses, as well as conflicts that are unnecessary.  Effective communication in a cross cultural project team is vital in the development of a strong cultural competence and good relationship among the team players that go beyond the business project in issue (Earley, & Gardner, 2005).

Oftentimes, the term culture has been used to denote people life style in a particular community. Nonetheless, there is much more to the term culture which covers numerous behavioral as well as attitudinal aspects such as norms, beliefs, values and expectations. Due to the complexity involved in the understanding of culture particularly in right of cross culture project team, a number of studies have been undertaken to investigate the role of communication in the success or failure of a project that encompasses a cross cultural team (Connerley & Pedersen, 2005). Behavioral scientists in their studies have demonstrated that individuals who belong to the same culture have similarities in their behavior as well as thinking. In the same vein, different individuals from different cultures think differently and exhibit different behaviors.  These differences in culture can have an effect on the level of openness and trust in communication that an individual can realize with people from different cultures. It therefore goes without saying that in an effort to attain an effective cross culture project team, the role of communication cannot be underestimated (Govindarajan, & Gupta, 2001).

According to Adler and Graham, (2003) one of the factors that have led to the growing diversity in the workforce is the aspect of globalization whose impact has been felt in almost every industry. This situation has raised concerns as to the ways in which individuals from strikingly different cultures may be coordinated to promote or alleviate personal and organizational goals in a cross cultural project (Maddox, 1993).  To achieve productivity in across cultural project, a communication strategy must be developed which is able to foster the necessary working relationship. In his work Andersen, (2003) noted that the communication modes that alleviates the status of virtual groups are the same modes that may cause a lot of difficulty for such a group to interact effectively. The relevance of communication in cross cultural projects is increasingly gaining recognition in the global marketplace as it is today, where people from different countries and cultures for that matter are moving from one nation to another for business. Needless to say, in order to have a successful cross cultural project team, there is a need to understand other cultures by focusing on how other cultures communicate and understand one other (Brennan, & Braswell, 2005).

Understanding cultural diversity

One of the major roles of communication in a cross cultural project team is to enhance a deeper understanding of cultural diversity among the team players in the project. It is natural that due to the difference in the cultural context experienced in a cross cultural project team there are new challenges pertaining to communication that crop up in the workplace(Griffin, 2003).  An effective communication strategy in this case begins with understanding the fact that both the sender and the receiver of the message come from dissimilar backgrounds and cultures.  This understanding cultivates among the project team a level of skill and caution while communication in a cross cultural project team thus optimizing productivity.  Understanding cultural diversity does not therefore require the project team to learn individual languages and cultures of every team member but rather how best one can communicate with people from different cultures (Elron, 1997).

Communication in a cross cultural project team enables individuals from the team to develop awareness of individual cultures of different players in the project making it easy to achieve the goals and objective of the project. Study shows that effective communication in a cross cultural project team encourages people to learn and exchange basics about different cultures as well as effective ways in which to communicate effectively with a teammate from a different culture Barlett & Ghoshal, (2001) Communication in a cross cultural project team can therefore go a long way in developing the basic level of understanding among the team players. These basics are very important and at the same time very tricky areas in different cultures. Understanding the appropriate physical contact and greetings required by different cultures is one of the basic understandings that can be achieved through communication (Hofstede, 2001). Taking an example of greetings from United States and France, it is appropriate in the US business arena to kiss business associates, in France; it is an appropriate greeting to peck a business associate on each cheek. Other cultures may not as well recognize a handshake as an appropriate business greeting as it is widely accepted in the United States (Smith & Bond, 1999). Communication in a cross cultural project enhances the ability of the team to understand that individual reactions and behaviors are oftentimes driven by their culture and as such they may not be in agreement with another cultural behavior that may be considered appropriate or in appropriate (Dainton, & Zelley, 2005).

One on one communication in a cross cultural project team can go a long way in helping individuals the multicultural team to discuss their differences and personal needs without being embarrassed or perhaps feel that they are being put on the spot (Shockley, 2006). In such a setting therefore, there is a great need for members of such a team to exercise courtesy and patience and in the event there is uncertainty on how to handle a particular difference that may arise, it would be advisable to seek clarification  from other team members through communication(DeSanctis & Jiang, 2005).

Maintaining a simple and understandable level of communication can prove to be an effective means of handling cross cultural project team. Even though English language is widely accepted as an intercontinental language of business, one would be wrong to make an assumption that every individual in a cross cultural project team is capable of speaking good English (Samovar, & Porter, 2003). As a matter of fact, among the eight million people who speak English, only about half of them learned this language as their first dialect. For this reason those individuals who speak English as their second language are oftentimes more restricted unlike their native counterparts (Bennett, 2004).  Communication in a cross cultural project team can achieve optimum productivity if communication is kept simple, unambiguous and clear. Understanding what may be humorous in one culture and not the other may go a long way in achieving a successful cross cultural project team (Schneider & Jean, 1997).  Individuals in the team should avoid humor especially in instances where they are not sure whether or not the targeted person will understand it and may not take it offensively. Due to the fact that humor is disreputably cultural specific, one ought to be very careful while trading in humorous statements as many things or statement that may pass for humor in a given culture may be perceived as offensive in another culture (Gannon, 2004).

Effective communication in cross cultural project team ensures that professionals in business arena or members of the team are able to build formidable relationships and as such avoid insulting or offending fellow teammate. Communication in a cross cultural project team prevents members from making wild assumptions (Gesteland, 2005). Through the use of active listening practices such as paraphrasing, repeating, as well as asking for clarification, helps the team members to understand each other. The art of listening silently also encourages the communicator to pass across his point and this may enhance productivity in a cross culture project team (Conrad, & Poole, 2005).

Conclusion

Arguably, communication in a cross culture project team has gain more importance in the recent years than in any other interlude of human history. This can be supported by the fact that in the current global marketplace and indeed the future most if not all successful projects will be highly dependent on the ability of an individual to appropriately and effectively communicate across cultural boundaries (Gudykunst, & Lee, 2002). It is worth noting that communication in a cross cultural project team is not restricted to studying other languages and cultures but also includes understanding the way in which other cultural core values as well as patterns influences the process of communication.  Consequently, attaining the necessary communication skills and ability to effectively work with local and multicultural teams is a necessity and not an option as it was some decades ago. Therefore Bacon & Ghoshal, (1998) Believe that for purposes of creating the necessary environment for cross cultural working teams, sensitively responding to markets, clients, and customers demands it is crucial to learn how to communicate across cultural boundaries as this can alleviate those processes. The first step in cross cultural communication is the realization that different people from different cultures communicate their opinion in different ways (Mary, 2003).

Notably, the influences of culture are so intuitive and deep to the extent that individuals act upon them unconsciously in our day to day activities such as the way an individual employee deal with his or her superiors, the way a person talk and stand, as well as the way a person make a decision or handle a conflict (Ting, & Oetzel, 2001). As a matter of fact, individual behaviors and attitudes are greatly influenced  by cultural values, perceptions as well as assumptions of such an individual that are many at times instilled early in one’s life, and are often articulated  in the way we interact and behave. Communication in a cross cultural project team is to enhance a deeper understanding of cultural diversity among the team players in the project (Lewis, 2006). Communication in a cross cultural project team also encourages people to learn and exchange basics about different cultures as well as effective ways in which to communicate effectively with a teammate from a different culture. Such basic information may include understanding the appropriate physical contact and greetings approved or disapproved by different cultures is one of the basic understandings that can be achieved through communication (Phatak et al, 2005). To this end, Communication enhances the ability of the team to understand that individual reactions and behaviors are oftentimes driven by their culture and as such they may not be in agreement with another cultural behavior that may be considered appropriate or in appropriate (Katzenbach & Smith, 2003).

Communication act as a bridge that link different cultural values and ensure that the team in the project work s together for purposes of achieving the goals and objectives of the project within the desired timeframe. Optimum productivity may be achieved in any cross cultural project team if communication is kept simple, unambiguous and clear (Munter, 1995). This ensures that any cross culture project team or professionals in business are able to build formidable relationships and as such prevent members from making wild assumptions and avoid insulting or offending fellow teammate.  Communication assist individuals from various cultures to learn about each other’s customs, traditions, protocols, and culture for conducting business, and as such, the team players in the cross culture project mitigate the possibilities of inadvertently offending an individual in the team (Siira et al. 2004). Effective communication in a cross cultural project team is vital in the development of a strong cultural competence and good relationship among the team players that go beyond the business project in issue.  However, failure to observe effective communication in a cross cultural project team tends to result in missed opportunities, productivity losses, as well as conflicts that are unnecessary.

 

 

 

References

Adler, N. J. and Graham, J. G. (2003). “Cross-Cultural Interaction: The International

Comparison Fallacy?”Journal of International Business Studies, 20 (3), pp. 515-   537.

Andersen, P. A. (2003). In different dimensions: Nonverbal communication and culture. Belmont, CA: Wadsworth/Thomson Learning.

Bacon, B., & Ghoshal, S. (1998). Intercultural communication and Managing across         borders: The transnational solution. Boston, MA: Harvard Business School.

Barlett, C. A., & Ghoshal, S. (2001). Managing across borders: The transnational solution. Boston, MA: Harvard Business School.

Barker, L., et al. (2001). Groups in process: An introduction to small group   communication. Boston: Allyn and

Belbin, R. (2000). Beyond the team. Oxford: Butterworth-Heinemann.

Bennett, M. J. (2004). Intercultural communication: Basic concepts of intercultural             communication: Selected readings. Yarmouth, ME: Intercultural Press.

Brennan, M., & Braswell, P. (2005). Developing and leading effective global teams.        Chief   Learning Officer, 4 (3), 44-48. Retrieved June 29, 2012, from Business

Source Premier database.

Connerley, M. L., & Pedersen, P. (2005). Leadership in a diverse and multicultural           environment: Developing awareness, knowledge, and skills. Thousand Oaks,        CA: Sage.

Conrad, C., & Poole, M. S. (2005). Strategic organizational communication: In a global    economy. (6th ed.). Belmont, CA: Thomson/Wadworth.

Dainton, M., & Zelley, E. D. (2005). Applying communication theory for professional life: A practical introduction. Thousand Oaks, CA: Sage.

DeSanctis, G., & Jiang, L. (2005). Communication and the learning effectiveness of       multinational teams. In D. L. Shapiro, M. A. Y. Von Glinow, & J. L. C. Cheng

(Eds.), Managing multinational teams: Global perspectives (Vol. 18, pp. 97-

123). Oxford: Elsevier.

Elron, E. (1997). Top management teams within multinational corporations: Effects of    cultural heterogeneity. Leadership Quarterly, 8 (4), 393. Retrieved June 29,             2012, from Business Source Premier database.

Earley, P. C., & Gardner, H. K. (2005). Internal dynamics and cultural intelligence in         multinational teams: Managing multinational teams: Global perspectives. Oxford:             Elsevier.

Gannon, M. J. (2004). Understanding global cultures: Metaphorical journeys through 28 nations, clusters of nations, and continents. (3rd ed.). Thousand Oaks, CA:Sage.

Gesteland, R. R. (2005). Cross-cultural business behavior: Negotiating, selling, sourcing            and managing across cultures. (4th ed.). Copenhagen, Denmark: Copenhagen           Business School Press.

Griffin, E. A. (2003). A first look at communication theory. (5th ed.). Boston: McGraw-       Hill.

Govindarajan, V., & Gupta, A. K. (2001). Building an effective global business team.

            MIT Sloan Management Review, 42 (4), 63-71. Retrieved June29, 2012, from        Business Source Premier database.

Gudykunst, W. B., & Lee, C. M. (2002). Cross-cultural communication theories.    Thousand Oaks, CA: Sage.

Gudykunst, W. B., et al. (2005). Theorizing about intercultural communication.       Thousand Oaks, CA: Sage.

Hall, E. T. (2003). Beyond culture. New York: Anchor Press/Doubleday.

Hall, E. T., & Hall, M. R. (2004). Understanding cultural differences. Yarmouth, ME:           Intercultural Press.

Higgs, M., & Ploch, J. (2005). Influence of team composition and task complexity on       team             performance. Team Performance Management, 11 (7/8), 227-250.   Retrieved June 29, 2012, from             http://www.emeraldinsight.com/10.1108/13527590510635134

Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors,         institutions, and organizations across nations. (2nd ed.). Thousand Oaks, CA:            Sage.

Imhof, M. (2003). The social construction of the listener: Listening behavior across          situations, perceived listener status, and cultures. Communication Research   Reports, 20 (4), 357-366. Retrieved June, 29 2012, from Communication &Mass     Media Complete database.

Lewis, R. D. (2006). When cultures collide: Leading across cultures. (3rd ed.). Boston:     Nicholas Brealey.

Katzenbach, J. R., & Smith, D. K. (2003). The wisdom of teams: Creating the         highperformance organization. New York, NY: McGraw-Hill.

Mary, M. (2003). “Cross-cultural communication for managers”. Business Horizons,         36(3), pp 69.

Maddox, R.C. (1993). Multicultural Problems in International Business. Westport, CT,       USA:   Quorum Books.

Munter, M. (1995). “Cross-cultural communication for managers”. Business Horizons,     36(3), pp. 69-80.

Phatak, A. V., et al. (2005). International management: Managing in a diverse and            dynamic global environment. Boston: McGraw-Hill Irwin.

Samovar, L. A., & Porter, R. E. (2003). Understanding intercultural communication: An     introduction and overview. Belmont, CA: Wadsworth/Thomson Learning.

Schneider, S., and Jean, L. (1997). Managing Across Cultures. London: Prentice Hall.

Shockley, P. (2006). Fundamentals of organizational communication:         Knowledge,   sensitivity, skills, values. (6th ed.). Boston: Pearson/Allyn &Bacon.

Siira, K., et al. (2004). “A spoken word is an arrow shot”: A comparison of Finnish and    U.S.    Conflict management and face maintenance. Journal of Intercultural Communication Research, 33 (1/2), 89-107. Retrieved June 29, 2012, from      Communication & Mass     Media Complete database.

Smith, P., & Bond, M. (1999). Social psychology across cultures. Boston: Allyn & Bacon.

Ting, S., & Oetzel, J. (2001). Managing intercultural conflict effectively. Thousand Oaks, CA: Sage.

Triandis, H., and Rosita, D. (2000). “Cross-cultural Perspectives.” Handbook of      Organizational Communications. Newbury Park, CA: Sage Publications.

Trompenaars, F. (2005). Riding the Waves of Culture: Understanding Cultural Diversity   in Business. Chichester: Capstone.

Varner, I., & Beamer, L. (2005). Intercultural communication in the global workplace.        (3rd ed.). Boston, Mass: McGraw-Hill.

 

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Critical Success Factors for Successful Entrepreneurs

 

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Table of content

1.0. Abstract…………………………………………………………………………….. 3

1.1. Design/Methodology/Approach…………………………………………………….3

1.2. Findings……………………………………………………………………………….3

1.3. Research Limitations/Implications…………………………………………………..4

1.4. Practical Implications………………………………………………………………..4

1.5. Originality/Value…………………………………………………………………….4

1.6. Introduction………………………………………………………………………….4

1.7. Overview………………………………………………………………………………5

1.8. Discussion of the model ……………………………………………………………..12

1.9. Goal………………………………………………………………………………………………………………14

2.0. Importance of the model………………………………………………………………………………….15

2.1. Recommendations…………………………………………………………………………………………..15

2.2. Limitation……………………………………………………………………………..15

2.3. Conclusion…………………………………………………………………………….16

2.4. References…………………………………………………………………………….18

 

 

 

 

 

 

 

Abstract

            The study aims at exploring the critical success factors that influence the success of entrepreneurs. In an effort to achieve this purpose, the objective of the study is to assess several factors that are common among successful entrepreneurs as well as their significance and implication. For purposes of creating a better understanding of successful entrepreneurship the study will examining empirical results as well as theoretical information from a body of literature related to the aspects of successful entrepreneurship.

1.1.Design/Methodology/Approach –

The study involved a comprehensive literature review particularly on the subject of critical factors for successful entrepreneur. Five critical factors were developed and the importance of each factor was discussed. These factors formed the list of the most common critical factors that were applied by the successful entrepreneurs.  Qualitative method was used in the research for purposes of investigating the research topic.

1.2. Findings –          

All the factors that were examined had an important aspect in regard to the success of an entrepreneur.  Each one of the five critical factors for successful entrepreneur played a critical role in the success of an entrepreneur and not one particular factor can be treated in isolation of the other.

1.3.Research Limitations/Implications –

During the study the respondents were unwilling to answer particular questions regarding their business financial matters. There was partiality on the methods used to determine business success.

1.4. Practical Implications–

The model is very vital for companies that seek ways in which they can operate a successful and productive business enterprise. These factors seek to give a comprehensive way in which a business enterprise should be carried out to ensure profitability, efficiency and most importantly success.

1.5.Originality/Value –

The study highlights the factors that are more common among most successful companies and their implication on the success of a business enterprise. The five critical factors contribute equally in the realization of success .the implication of each of these factors determines the success or failure of company. There were a number of different variables that were used in the study and they were categorized into three. These variables included; financing of the business, personal factors, and management in general.

1.6. Introduction

            Arguably, there is not a particular success recipe that can be identified as the only way to successful entrepreneurship (Batra et al, 2012).  Nonetheless, there are a number of common factors that a good number of successful entrepreneurs have used which have contributed a great deal to the success stories of their respective companies. According to Henderson, (2002) entrepreneurs a group of unique individuals who manage the operations of the business, assume risks, bear the blunt of their failure, as well as enjoy the rewards of their success. Entrepreneurs are divided in to two categories namely; growth and lifestyle entrepreneur. High- growth entrepreneurs according to Henderson, (2002) are those that are focused on developing a more valuable company that is highly visible. These kinds of entrepreneurs are capable of doing almost anything to ensure that the aims and objectives of their firms are achieved (Thomas & Mueller, 2000). Lifestyle entrepreneurs on the other hand, are those entrepreneurs who incorporate a firm for the sole purpose of satisfying his lifestyle desires or for purposes of supporting his family (Golder et al, 2012). It has been argued that setting realistic goals in a company is a key factor to the success that firm (Homburg et al, 2012)). It therefore follows that setting goals that are overly vague and optimistic may work against the company’s efforts of growth and success. Certainly, there is a need for every firm to have a clear mission statement as well as a clear vision. Jack, Dodd, & Anderson, (2008) confirms that this will enable the staff of the company to have a clear business goal with the required specifications and information on how to execute their duties and responsibilities effectively.

Some of the critical success factors for successful entrepreneurs can be categorized into five factors which will be examined hereafter in the discussion. These factors include; identification of stretch goals with specific timelines as well as rational highlight (Kreiser& Davis, 2010).  These goals according to McGrath, MacMillan, &Scheinberg, (1992) should match with the set spending and investment plans of the company. The second critical factor for successful entrepreneurs entails identifying the company’s target customers and understanding the needs of that particular group (Sridhar &Srinivasan, 2012). This can give the firm an opportunity to evaluate what they can offer to their target customers better than any other firm (Walker & Brown, 2004). Another factor that is critical for successful entrepreneurs is doing research on the field of competition (Lee & Peterson, 2000).  The firm needs to carry out a research and classify its competitors outlining their weaknesses and strong points. Troye&Supphellen, (2012) argue that out of the research, a company can be at a better position to make a comparison with the competitors and assist the company strengthens its weak points.   Investing in marketing is another key factor that determines the success of an entrepreneur. Hills & La Forge, (1992) points out that marketing creates points of products differentiation and also clarifies the value of the company’s products. It has been suggested that for an entrepreneurship to be successful, he must create a marketing and sales team that has common measures, objectives as well as common milestones (Lumpkin et al, 2009).  For an entrepreneur to be successful, he must exhibit fiscal prudence, yet prepared to mull over targeted investment for purposes of developing a strong infrastructure of his business (Pena, 2002). Execution of business plans in a swift and effective way is also a key factor in achieving success in any kind of entrepreneurship. This can only happen where the company has identified its objectives as well as business plans, and effectively communicated them throughout the organization while encouraging involvement and adoption of such plans at all levels (Chen et al, 2012).

1.7. Overview

The role of entrepreneurship is very vital in the development of any country.  The role of entrepreneurs in any economy includes employment creation, producing innovation, commercialize innovations, and contribute to growth in productivity. Entrepreneurs a group of unique individuals, who manage the operations of the business, assume risks, bear the blunt of their failure, as well as enjoy the rewards of their success. Entrepreneurs are divided in to two categories namely; growth and lifestyle entrepreneur. There are a number of common factors that a good number of successful entrepreneurs have used which have contributed a great deal to the success stories of their respective companies.

Some of these critical factors include; the ability to highlight the stretch goals of a company with specific timelines as well as rational highlight. These goals must match with the set spending and investment plans of the company. Certainly, there is a need for every firm to have a clear mission statement as well as a clear vision; identifying the company’s target customers and understanding the needs of that particular group. This can give the firm an opportunity to evaluate what they can offer to their target customers better than any other firm; an entrepreneur should undertake research on the field of competition. The entrepreneur needs to carry out a research and classify its competitors outlining their weaknesses and strong points. From the research a company can be at a better position to make a comparison with the competitors and assist the company strengthens its weak points; an entrepreneur must also creating a marketing foundation; an entrepreneur  must be able to build a marketing and sales team that has common measures, objectives as well as common milestones.

Most successful companies have registered better results by encouraging the sales and marketing team to work together; he must also exhibit fiscal prudence, yet prepared to mull over targeted investment for purposes of developing a strong infrastructure of his business; success of an entrepreneur can also be determined by the ability of such an individual to Execution of business plans in a swift and effective way is also a key factor in achieving success in any kind of entrepreneurship. It should be noted that none of these critical factors can be singled out as being superior to the other as they all contribute equally to a successful entrepreneurship.

 

1.8. Discussion of the Model

            For an entrepreneur to be successful, there are a number of critical success factors that he or she must consider implementing in their business enterprise. this success factors include ability to highlight the stretch goals of a company with specific timelines as well as rational highlight, identifying the company’s target customers and understanding the needs of that particular group, undertaking research in the competition landscape, Creating a marketing foundation, and finally the entrepreneur should exhibit financial prudence, yet prepared to mull over targeted investment for purposes of developing a strong infrastructure of his business. Lee and Peterson, (2000) suggest that for any entrepreneur to be successful, the decision making of such an entrepreneur must apply the approach of Entrepreneurial Orientation. This approach enhances the capabilities and skills of an entrepreneur. Such skills enable the entrepreneur to be aware of new technologies in the market, current trends in the market as well as assess new potentials (Avery et al, 2012).

According to Lumpkin, Cogliser& Schneider, (2009) there are five dimensions of Entrepreneurial Orientation which can go a long way in boosting the success of a company. These dimensions include; taking risks, autonomy, competitive aggressiveness, innovativeness, and proactiveness.

 

F1: Creating a marketing foundation and creating a marketing and sales team with common objectives.

According to Rubera & Kirca, (2012) creating a marketing foundation is another critical success factor for successful entrepreneurs. Most entrepreneurs have a misconception that marketing during initial the stages of a company’s growth is not important and therefore a waste of resources. Others believe that once a company is ready to develop a brand, then it can start marketing (Rubera&Kirca, 2012).  Nevertheless, companies that have done very well over the years spent resources as well as quality time to cautiously develop value propositions that are very unique, and also build a sale tool foundation before they launch their products.

The issue of branding has sparked confusion among many entrepreneurs.  Golder et al, (2012) states that an extravagant launch does not in any way represent branding. Branding entails message as well as mission. Entrepreneurs who have been successful create a message that is clear, then reiterate and emphasize the message. With a strong and effective marketing team makes it possible for all employees to sell the value proposition of the product with ease.

 

A good number of successful entrepreneurs agree that to be a successful entrepreneur, one must be able to build a marketing and sales team that has common measures, objectives as well as common milestones (Burns, 2001). Most successful companies have registered better results by encouraging sales and marketing team to work together. Study shows that there is a very close relationship between sales and marketing particularly in large and successful businesses (Schumpeter, 1934). For this strategy to work in a given company, a link of common objectives between marketing and sales must be established. The cooperation between marketing and sales may be likened to a military campaign in which one squad defines the line of attack while the other troop implements that strategy. For a better performance in a company a similar working relation must be adopted where the strategy is set by marketing while best approach and tactics of the field are determined by sales.

According to Schumpeter, (1934) an entrepreneur is an individual who take advantage of the opportunity in the market through organizational and technical advancement. The fundamental role of an entrepreneur is creation of value in a market system that is free. In a more recent study conducted by George and Zahra, (2002) entrepreneurship was described as a deliberate act by an individual, region, organization, or even a community to identify and trail available investment opportunities for purposes of generating capital (Cui & O’Connor, 2012). Other research findings that are more contemporary believes that entrepreneurship involves finding opportunities, market making, as well as utilization of such opportunities (Kreiser& Davis, 2010).

 

F2:      Identifying the company’s target customers. Zablah et al, (2012) state that anither critical factor for successful entrepreneurs’ entails identifying the company’s target customers and understanding the needs of that particular group. This can give the firm an opportunity to evaluate what they can offer to their target customers better than any other firm. In their research, Wieseke et al, (2012) noted that many successful companies can attest to the fact that it takes a little more than just technical leadership to build a successful and appropriate enterprise. It therefore follows that the customers’ value must supersede the value of other solutions presently being offered. An entrepreneur must therefore understand his unique proposition value.  Value proposition may be achieved by focusing carefully on a particular target. It has been observed that an attempt to do everything at the same time may lead to poor execution of the company’s plans and overextension of resources (Troye&Supphellen, 2012). Additionally, the specific problem that must to be solved should be clarified by value proposition and the compelling reason for the choice of a particular solution must be elaborated. Through value propositions successful entrepreneurs engage their prospective cliental in the initial phase of product creation (Oksanen&Rilla, 2009)). They also gather feedback about the sales process, the product itself, market reaction, and the problems associated with their product. Such information has proven to be very vital in terms of streamlining business plans and increasing investments in sales and marketing.

F3:      undertaking research in the area of competition.

As Lussier & Pfeifer, (2001) suggest, doing research in the field of competition is a critical factor for successful entrepreneurs.  The firm needs to carry out a research and classify its competitors outlining their weaknesses and strong points. From the research a company can be at a better position to make a comparison with the competitors and assist the company strengthens its weak points (Lussier& Pfeifer, 2001).  The process of identifying the competitors of the company may start by highlighting the company’s target customers and understanding the needs of that particular group. This can give the firm an opportunity to evaluate what they can offer to their target customers better than any other firm. one area where entrepreneurs go wrong is concentrating so much on their products and failing to put into consideration the market trend that are evolving . Often times, entrepreneurs fail to foresee the likelihood of competitive innovations in the market that may outdo their products (Homburg et al, 2012). It is therefore important for entrepreneurs to carefully examine the market trends if they have to remain relevant and successful in today’s market where the lifecycle of product is reducing by the day.

In an effort to understand and identify the competitors of the company, an entrepreneur should consider a couple of things. The first one according to Osoba, (2009) is to understand how the today’s needs are addressed by the users without the company’s services or products. It is common knowledge that users of a particular product may come up with a service or even a solution that addresses the problem that an entrepreneur solves. Having done such an investigation, an entrepreneur will have a better understanding of the alternative available in the public domain before their products are launched. Secondly, an entrepreneur must also identify other technologies as well as products that are currently being used. With this kind of information a prudent entrepreneur will be able to identify his different competitors and as such, they can clarify their differentiation points (Torelli et al, 2012).

F4:      Ability to highlight the stretch goals of a company with specific timelines as well as rational highlight.

One of the critical success factors for successful entrepreneurs has been cited as the ability to highlight the stretch goals of a company with specific timelines as well as rational highlight (Swierczek& Ha, 2003). These goals must match with the set spending and investment plans of the company. Certainly, there is a need for every firm to have a clear mission statement as well as a clear vision. This will enable the staff of the company to have a clear business goal with the required specifications and information on how to execute their duties and responsibilities effectively (Bygrave, 1994). One of the factors that are essential for initiating and running a business enterprise is through careful planning right from the initial stages of the business. Planning entails several other aspects such as setting goals and making arrangements on how to attain such goals (Minniti& Levesque, 2010).

In a study conducted by Olawale&Garwe, (2010) risk taking was a very common factor among successful entrepreneurs. Most entrepreneurs who are willing to venture in investments that were uncertain have recorded unimaginable success. Such entrepreneurs follow the philosophy that there is no investment that does not involve risks. As aforementioned, proactiveness is another crucial element necessary for the success of any company (Rust & Huang, 2012).  This element is related to the implementation of objectives and goals of company. Entrepreneurs who are proactive participate actively in plans of the business and do everything in their power to ensure that their concepts bring about positive results (Currim et al, 2012).

F5: Exhibit fiscal prudence and execution of business plans swiftly and effectively.

For an entrepreneur to be successful according to Stahl et al, (2012) he must exhibit fiscal prudence, yet prepared to mull over targeted investment for purposes of developing a strong infrastructure of his business.  For an entrepreneur to be successful he must carefully design plans for the future of the company. Study shows that successful entrepreneurs had designed future plans of their firms that encouraged a culture of creative hiring and managing the rate of their cash burn. With respect to managing the rate of cash burn a good number of successful entrepreneurs were willing and able to make investments that were well thought about and strategic, that is, such investments were appropriate in terms of executing the company’s programs of marketing and sales (Bhide, 2000). There is also a lot of creativity among successful companies when it comes to hiring and firing their employees. The successful companies request retired executive to be part of their advisory staff. Sometimes, they use consultants for expertise and as such they get unique expertise in their projects and they are able to achieve the objectives of the company. It is not surprising that some of the most successful companies “poach” for the best employees from other companies and hire them.

Execution of business plans in a swift and effective way is also a key factor in achieving success in any kind of entrepreneurship. This can only happen where the company has identified its objectives as well as business plans, and effectively communicated them throughout the organization while encouraging involvement and adoption of such plans at all levels. The execution of a company’s plans should be not only aggressive but also executed in line with the set targets otherwise such execution may be a waste of the company’s resources. The ability to strike equilibrium on executing business plans aggressively and at the same time effectively is a challenge that many companies have not been able to deal with. Nonetheless, effective and swift execution of sales as well as marketing programs is achievable especially where there is a set plan. It should be noted that even where there is a well designed plan, some programs may not be successful.  The secret to achieving efficiency is through learning from the failures as well as borrowing some aspects of the successful programs and incorporating them.

Batra et al, (2012) content that aautonomy is a key element in the success of any business entrepreneur. This element acts as a catalyst for effective execution of entrepreneurial activity. Such an environment will bring about freedom and liberty necessary to generate ventures that are novel and profitable. In an effort to maintain autonomy a culture that upholds independent acts of entrepreneurs, seek opportunities, as well as maintain individual control without constraints from the society. Successful entrepreneurs should also be creative in their investment plans which are referred to as innovativeness (Sridhar &Srinivasan, 2012).

            Walker and Brown, (2004) agree that for any entrepreneur to be successful, there must be competitive Aggressiveness in the company. The only way to survive in today’s competitive and dynamic market is by designing aggressive plans that will give an entrepreneur an advantage over his competitors.

1.9. Goal:

The model of critical factors for successful entrepreneur can be adopted by any entrepreneur whose aim is to achieve maximum productivity and success in his business.  This success factors will encourage entrepreneurs to take risks which is very common factor among successful entrepreneurs (Storey, 1994). The success factors outline the absolute necessary issues that are capable of bringing positive results to an organization. Thus, an organization can be able to meet all its objectives as well as remain competitive in the market and succeed in the industry.

2.0. Importance of the Model:

Critical success factors for successful entrepreneurs are those issues or factors that are deemed important for purposes of the organization present and future performance. These issues are also very important to the stakeholders of the business (Strydon et al, 2009 ). The outlined factors are very critical for purposes of achieving the vision of the business mostly because they are specific to a particular kind of enterprise. The other importance of these critical factors is that they define particular areas of performance that are crucial for the achievement of the business goals and objectives (Malhotra, 2002).

The other importance of the critical factors for successful entrepreneur model is to enable entrepreneurs to adopt strategies that can improve the productivity of the business and enhance its growth. This model outlines the do and don’ts in a business world for purposes of remaining relevant and competitive (Hair, 2003).

Appreciation of the five critical success factors is paramount since these factors are the key drivers of an organizations strategy. These factors are considered vital for purposes of an organization strategic planning as well as a platform for an organization to validate and focus on key projects, initiatives, as well as activities. The critical success factors enable entrepreneurs to direct their efforts towards realization of the company’s vision and the ability of the organization to remain relevant.

Critical success factors provide strategic planners a basis on which they can be able to collect as well as validate the data. In instances where there is an overload of date, critical success factors provide a better avenue through which the relevant information can be filtered and the irrelevant discarded.

2.1. Recommendations

In the process of strategic planning several aspects should be put into consideration:

Factors that are critical to a particular organization should be assessed carefully

The critical factors for a particular industry should be identified with regard to a set timeframe.

There should be a consideration of what can be traded off in other areas of an organization while at the same time maintain the company’s profitability in the long run.

The goals that can assist the company to accomplish the general critical success factors should be identified.

Finally, in an effort to achieve the set goals of a company, all the critical success factors should be identified, implemented, monitored, and reviewed.

2.2.Limitations of the study

The study was limited to giving a comprehensive discussion of the success factors and their characteristics.

During the study the respondents were unwilling to answer particular questions regarding their business financial matters. This is because most business owners were reluctant to give information regarding their business enterprise.   There was partiality on the methods used to determine business success

The use of questionnaires with close ended questions may have limited the responses of the respondents since they were not able to express their views in a detailed way.

 

2.3.Conclusion

Entrepreneurship involves finding opportunities, market making, as well as utilization of such opportunities. In an effort to attain the status of a successful entrepreneur there are a number of success factors that such an entrepreneur must consider. Some of these success factors for a successful entrepreneur include; Execution of business plans in a swift and effective way is also a key factor in achieving success in any kind of entrepreneurship (Porter, 2000). This can only happen where the company has identified its objectives as well as business plans, and effectively communicated them throughout the organization while encouraging involvement and adoption of such plans at all levels (Lazear, 2002).

Another success factor involves creating a strong marketing foundation. There are indications that companies that have done very well over the years spent resources as well as quality time to cautiously develop value propositions that are very unique, and also build a sale tool foundation before they launch their products (Shane, 2003). In addition, companies that seek to be successful should exhibit fiscal prudence, yet be prepared to mull over targeted investment for purposes of developing a strong infrastructure of their business. In addition to that, the entrepreneurs who seek success must undertake research in the area of competition.  The firm needs to carry out a research and classify its competitors outlining their weaknesses and strong points. From the research a company can be at a better position to make a comparison with the competitors and assist the company strengthens its weak points.

Further, a number of successful entrepreneurs agree that to be a successful entrepreneur, one must be able to build a marketing and sales team that has common measures, objectives as well as common milestones. Most successful companies have registered better results by encouraging sales and marketing team to work together. The last but not in any way the list of success factor for successful entrepreneur is the ability of an entrepreneur  to highlight the stretch goals of a company with specific timelines as well as rational highlight. These goals must match with the set spending and investment plans of the company. Certainly, there is a need for every firm to have a clear mission statement as well as a clear vision. It should be noted that there is not a particular success recipe that can be identified as the only way to successful entrepreneurship.  Nonetheless, there are a number of common factors that a good number of successful entrepreneurs have used which have contributed a great deal to the success stories of their respective companies.

 

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Running Head: The Special Court for Sierra Leone

 

 

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Introduction

            Sierra Leone a West African country was entangled in conflict for about eleven years. This conflict was characterized by acts of violence against the citizens of the country from various fronts. There were three major factions involved in the mayhem which included the civilians, suspected collaborators, and enemy combatants. During the long period of the conflict, there were so many atrocities committed ranging from acts of sexual violence, amputation, use of child combatants, mass killing, mutilation, forced recruitment into the armed gangs, exploitation of the diamond reserves in the country for purposes of financing  the conflict, as well as abduction. After the end of the conflict, the citizens of Sierra Leone wanted the individual responsible for the conflict and the atrocities that followed to be held accountable for their actions and face justice. Nevertheless, the country at the time did not have an established judicial system and the necessary infrastructure to bring these perpetrators into book (Nzongola-Ntalaja 2000). Furthermore, the existence of Lomé Peace Agreement of 1999 was a big hindrance to the courts in the country to indict the alleged perpetrators as they were given a blanket amnesty by the aforementioned agreement. For this reason, there was an urgent need to form a court that would be capable of addressing the situation in the country, thus, the formation of The Special Court for Sierra Leone (SCSL).

The United Nations Security Council and the government of Sierra Leone agreed to form The Special Court for Sierra Leone (SCSL) which was established in the year 2002 on a request from Ahmad Tejan Kabbah, the then president of Sierra Leone. Unlike the courts established by the United Nations Security Council to deal with the perpetrators of the conflict in the former Yugoslavia and the Rwandan genocide, the Special Court for Sierra Leone (SCSL) was able to dispense a diverse judicial model hence characterized as a hybrid tribunal so to speak. The main aim of the special court for Sierra Leone was to deal with the post conflict justice expeditiously, and in a more economical way unlike the local courts and tribunals in the country which were slow and more expensive, not to mention their inability to respond to the plight of the citizens in the country (Murphy 2003).  This court was characterized by new ways of handling judicial processes in the post conflict situations. Such characteristics include the pressure to accomplish its mandate expeditiously, use of a very tight budget, and its location.

Discussion

The composition of the court includes both international and local judges, counsel, and employees. This composition allows the court to administer justice without undue influence from the domestic or international pressure. The mandate of the Special Court for Sierra Leone (SCSL) is to try the persons suspected of having the greatest responsibility in perpetrating the violence that ensued in Sierra Leone during the 11 years conflict. It is worth noting that this special court is independent in its operation from the domestic legal system of Sierra Leone and as such, the court uses limited statutory guidelines from the country’s criminal law and heavily depend on international humanitarian law in its proceedings (Stover 2005).

The Special Court for Sierra Leone (SCSL) statute empowers the court to prosecute violations of Article 3 under the Geneva Convention, international humanitarian law violations, and crimes against humanity.

One of the major strengths witnessed in the operation of the Special Court for Sierra Leone (SCSL) is the responsiveness of the court in the witness protection and management, since most of them are victims of the atrocities that ensued in Sierra Leone. The court has continued to ensure that the witness feel protected and safe during and after their testimony. This has been done by involving a variety of security resources as well as new psychosocial support program. The court in its proceedings has employed a primarily prudent as well as concerned method in the treatment of witnesses particularly during the proceedings. It should however be noted that the  care for these witnesses can be enhanced further  if the court ensures that key witnesses in the course of the trial proceedings do not feel uncomfortable due to any form of digress cased by commentaries within the courtroom (Gurd 2005). The court should therefore, design principles that outline what amount to witness intimidation or even harassment during the trial proceedings, as this may facilitate equal treatment of all witnesses in the special court, and also boost the cooperation of the witnesses in giving their testimony.

It is pertinent to mention that, the Special Court for Sierra Leone (SCSL) has also worked extensively in its effort to involve different sectors of the society in Sierra Leone to work with it. The court is able to achieve this by dissemination information to the citizens of Sierra Leone about the court, principles of human rights as well as the trial proceedings. In addition, the court uses the views and opinion of the citizens to inform its programs and the purposes of such programs (Perriello & Wierda 2006). Both the international and domestic activists in the civil society hold with high regard this outreach section of the Special Court for Sierra Leone (SCSL). In an effort to alleviate its legacy, the court has held conferences aimed at commemorating victims of the violence and to encourage other players in Sierra Leone to engage in promoting the rule of law. The court has further adopted measures to ensure that more staffs are hired from Sierra Leone in the available international posts of the special court.

The Special Court for Sierra Leone (SCSL) has been termed as a hybrid court due to its effort to employ an approach that strikes a balance between the application of the localized interpretation of the international legal norms, precedents as well as conventions in a way that would ensure justice is dispensed fairly and expeditiously in light of the circumstances in the country. The use of the term hybrid justice in reference The Special Court for Sierra Leone (SCSL) should therefore be perceived as drawing attention to the importance of the opposing concern that the operations of the special court seek to deal with in the best way possible (Wald 2002). The appropriateness of the term hybrid justice in the case of The Special Court for Sierra Leone (SCSL) cannot be over emphasized, as the term clearly highlights double impact of the court’s operation and emphasizes composition of the special court. The court attempts to develop a viable model of a mixed composition for tribunals and courts which may employ such approach in future. It is also the aim of the special court to positively influence Sierra Leone’s judicial and social circumstances.

In the standards for prosecuting individuals who perpetrated atrocities in Sierra Leone the Special Court for Sierra Leone (SCSL) was the first court to employ greatest responsibility standards unlike the Arusha and Hague based United Nations tribunals with the mandate to try individuals responsible for the commission of felonies. The critics of the approach by the prosecutor (greatest responsibility standard), argue that such an approach is likely to be ineffective in the fight against impunity in Sierra Leone (Stedman et al 2002).  In their argument, the indictment of a few individuals who are alleged to bear the greatest responsibility, would exempt other persons who were responsible in the commission of heinous acts during the conflict in Sierra Leone.

The interpretation of the prosecution mandate coupled with the financial, political and temporal constraints pose a big challenge to the prosecution in the Special Court for Sierra Leone (SCSL). It follows that the due to the aforementioned constrains, the prosecution is unable to prosecute a good number of high ranked persons responsible for the commission of crimes under the international criminal law and hold them legally accountable for their actions.

It has been argued that the new structure of the (SCSL) was informed by the failures and successes encountered by tribunals formed in the past, such as the International Criminal Tribunal of Rwanda (“I.C.T.R.”) and the International Criminal Tribunal of Yugoslavia (“I.C.T.Y.”)  (Basoglu et al 2007). It therefore follows that the formation of the Special Court for Sierra Leone (SCSL) was a consulted effort by the United Nations Security Council to create an international criminal tribunal that is more effective and efficient. Unlike the two previous tribunals (“I.C.T.Y.”) and (“I.C.T.R.”) which were situated outside of Yugoslavia and Rwanda respectively and sparked a sharp criticism on that decision by the United Nations, the Special Court for Sierra Leone (SCSL) was located in the capital city of Sierra Leone Freetown.

The location of the special court within Sierra Leone is likely to achieve the purpose of its set up which is assist the country to reconstruct a judicial system that is credible, effective and strong. Thus, the decision by the United Nations to establish the special court within the country’s territory is very critical as the people of Sierra Leone will have an opportunity to access and follow the judicial process (Bangura 2005).

There are however a number of procedural and structural shortfalls associated with the Special Court for Sierra Leone (SCSL) and which may present a number of challenges in the operations of the court. These inadequacies include:  the Lomé peace Agreement which contains amnesty provisions to alleged perpetrators, the inability of the special court to invoke powers under chapter VII, the financial restraints of the court, and the limited jurisdiction given to the Special. The aforementioned shortfall of the court may present surmountable impediments in the efforts of the special court to bring to justice the perpetrators of crimes in Sierra Leone during the conflict.  The limited jurisdiction of the special court may prove to be quite prohibitive in the efforts of the court to bring to justice the responsible perpetrators. Notwithstanding the fact that the conflict in Sierra Leone began way back in the year 1991, the United Nations granted the special court temporally jurisdiction to investigate and determine concerns which dates back from the year 1996 and nothing more. Even though the decision by the United Nations was aimed at reducing the burden of prosecution in the context of the duration in the 11 years conflict, the decision has been termed as unfair and arbitrary particularly the limited temporal jurisdiction of the court (Abdullah 1997).  Due to lack of chapter VII powers under the United Nations, the special court could not oblige other states to comply with it request to provide evidence regarding the conflict in the country. In addition, other nations bear no responsibility of arresting a person who is alleged to have perpetrated crimes in Sierra Leone and has sought an asylum in that other country.

Conclusion

The establishment of the Special Court for Sierra Leone was aimed at providing a novel approach by the government of Sierra Leone and the United Nations Security Council to international justice adjudicated in the country where such crimes took place. The aim of establishing this special court within Sierra Leone was to assist the country in the reconstruction of a judicial system that is credible, effective and strong. Thus, the decision by the United Nations and the collaboration of the Sierra Leone government to establish the special court within the country’s territory was very critical as the people of Sierra Leone will have an opportunity to access and follow the judicial process. Structure of the (SCSL) was informed by the failures and successes encountered by tribunals formed in the past, such as the International Criminal Tribunal of Rwanda (“I.C.T.R.”) and the International Criminal Tribunal of Yugoslavia (“I.C.T.Y.”). The court was characterized by new ways of handling judicial processes in the post conflict situations. Such characteristics include the pressure to accomplish its mandate expeditiously, use of a very tight budget, and its location. The special court was therefore created to deal with the post conflict justice expeditiously, and in a more economical way unlike the local courts and tribunals.

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Abdullah, I (1997), Lumpen Youth Culture and Political Violence: Sierra Leoneans Debate the    RUF and the Civil War, African Development, Vol. 22 no 6, pp 171-215

Bangura, Z. (2005), Sierra Leone: Ordinary Courts and the Special Court, Justice Initiative, Feb   2005, 54-58. Accessed 12/4/2010 from:                                                                 http://www.sc-sl.org/LinkClick.aspx?fileticket=0LBKqqzcrMc%3D&tabid=176

Basoglu, M et al (2007), Psychiatric and Cognitive Effects of War in Former Yugoslavia: Association of lack of             redress for trauma and posttraumatic stress reactions, JAMA            Vol.294 no 5, pp 580-590.

Gurd, T. (2005), Individualizing International Justice in Africa: Focusing on the victims, Justice   Initiative, Feb 2005: 48-53 Accessed 12/4/2010 from:                                                                      http://www.sc-sl.org/LinkClick.aspx?fileticket=0LBKqqzcrMc%3D&tabid=176

Murphy, W. (2003), Military Patrimonialism and Child Soldier Clientelism in Liberian and            Sierra   Leone Civil Wars, African Studies Review, Vol. 46 no 2, pp 61-87.

Nzongola-Ntalaja, G (2000), Unpacking the Lome Peace Agreement in Abdel Fatau Musah           (ed), Sierra Leone: One Year after Lomé, London: CDD

Perriello, T., & Wierda, M (2006), the Special Court for Sierra Leone under Scrutiny, New            York: International Center for Transitional Justice.

The Lomé Peace Agreement (1999).

Statute of the Special Court for Sierra Leone, Article (2002).

Stedman, S et al (2002), Ending Civil Wars: the Success and Failure of Negotiated Settlements      in Civil War, Lanham, MD: Lynne Rienner

Stover, E (2005), The Witnesses, Philadelphia: University of Pennsylvania Press

Wald, PM (2002), Dealing with witnesses in war crime trials: Lessons from the Yugoslav   tribunal, Yale Human Rights and Development Law Journal, Vol. 5 no1, pp 217-239.

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