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Economic Proposal
Economic Proposal
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CONTENTS
Introduction—————————————————————————-3
Literature review———————————————————————-4
Research questions and rationale—————————————————14
Model and methodology————————————————————-14
Regression model and source of data———————————————–15
Expected result————————————————————————19
References——————————————————————————21
Introduction
There are abundant literature resources all over the world that give information about the relationship between income inequality and institutional factors. However, there has not been a single theory that has been able to explain the hypothetical factors that do explain the relationship between income inequality and international trade. In most of the concrete resources that I came across when coming up with this article, I was able to realize that most of these do have only one or just a couple of factors. As a matter of fact, some of these studies that have been done have come up with some factors, but they do not to look deeper so as to address all the impact of international trade on income distribution in such a way that can be deemed relevant.
Increasing inequality across many nations over many years poses a challenge to economic policymakers in both developing and developed states. While developments in technology, liberal market reforms, and the integration of nations from earlier Soviet bloc into the world economy have led to high levels of integration of the global economy, the benefits of increasing incomes and aggregate GDP growth percentages associated with globalization share unequally among segments of populations. Income inequality in most countries rose over the past two decades, including developed nations, which had thought of great levels of prosperity. Much debate is on the rising inequality perpetrated by globalization-especially trade, which explains inequality patterns (Nielsen & Alderson, 1997).
From the 1970’s, most countries all over the world experienced sharp increase in income inequalities. It is also from around this time that there has been a significant increase in the number and values of goods and services that are being sold to other countries, more so from the developed countries. To be specific, international trade coupled with increased skills in information technology has been touted to be some of the major factors that have led to increased inequality in income in most countries all over the world (Chusseau et al., 2008).
The Heckscher-Ohlin-Samuelson framework is one of the frameworks that can be used to explain the reason behind the increasing rate of income inequality. According to the model, when a country exports either good or services to another country, the prices of the goods and service will increase in the home country. This will lead to a subsequent increase in the prices of all factors of production including remuneration. In the developed countries that use technology to a big deal in their production, this will lead to an increase in demand for skilled labor which leads to increase in income inequalities. However, in the developing countries, the effect could not be similar to this because production is mostly done using unskilled labor (Crenshaw, 2003).
Literature review
Many economies have faced rise in wage and income imbalances over many years. For instance, in the US, the college premium of the wages of graduates in college relative to that of graduates in high school increased by over a fifth between 1979 and 1995. The general inequality also soared: in 1971, an employee at the 90th percentile earned 266% more than one at 10th percentile. The question that abound is whether new technologies- such as computers and advances in communication led to the above inequality.
Some economists believe that technology is the major driving change, although other aspects including the fall of de-unionization, minimum wage, and globalization play some role, behind the US wage structure. This is brought about by technology skill complementary: technical change is advantageous to more skilled labor, replaces earlier tasks by unskilled workforce, and raises the need for skills. Many people see a direct causal link between technological evolution and radical changes in wage distribution in the US economy (Parke, 1999).
Another technological change of the 19th century is the interchangeable parts. It got designed to the extent of replacing skill. There are no reasons that compel technological change into bringing out skill bias. If replacing educated workers is more beneficial, new technologies should then replace workers, just as other parts did (Social Situation Observatory, 2010).
Research takes these problems into consideration and looks at the start of skilled bias and conditions under for more or less skilled bias. This paper surveys some research on technology that might give an in-sight into inequality. It touches on the links between trade and technology, technology and changes in production, and the link between labor market institutions and technical change.
Data from the database of top income shares
Among the first scholars to use data from France was Piketty (2001) who later conducted the same later on the United States of America in the year 2003 together with SEAZ. It was later that more data and calculations for other 12 countries were released.
They used information from fiscal statistics to come up with a share of revenue that was received by the people in the uppermost portions in the distribution of income. This was the source of the name top income shares. Leigh (2007) shows clearly how this indicator can be used effectively as a very efficient substitute to the formally used inequality indicators of inequalities like the Gini coefficient or even ratios such as the D9/D1 ratio (Rosser & Rosser, 2001).
From the statistical data of 1996 and 1997, one can come up with some tree facts that regard to how inequality emerged in those two years, in the nine countries. These are;
The third fact is that inequality has grown with more or less strength in deferent countries. In the United States of America, Australia, the United Kingdom, Canada and in New Zealand the graph is usually sharper than it is in the other countries like France, Sweden, the Netherlands, and Germany.
The CHELEM database
This is the data from the CEPII gives data and information on exports and imports of both goods and services by several countries all over the world.
International trade has evolved two times that are in the 1970s and later in the 1980s. In the early 1920s, the most countries grew their economies by 40 percent. Later on in the 1980s, the same rose significantly for the second time. For these years, the United States of America and Germany were the biggest traders. The same had the biggest rates of income inequality.
Using the rates of openness, one can realize that international trade is on the increase. As seen in the figure below. However, the heterogeneity in the levels of the countries still remains, but the patterns with which it has evolved in all of those countries seems to be well correlated (Lundberg &Squire, 2003).
In the 1990’s foreign trade in information technology as a service was thriving. Before the 90s, most of the exports were goods, but after the 1990s there was a significant increase in the services that were exported by the different countries apart from France. By the year 1995, Germany and France were the major exporters of services followed closely by the United States of America. Over this period of time, most countries experienced an upward trend in the increase of wages and subsequently income inequality increased significantly. For example, in the United States of America wages of those who had collage level education relative to the income by those who had up to high school level of education increased by 25% between the year 1975 and 1995. Generally, in the same period of time the overall inequality in earnings soared. For example, in the year 1971 a worker who was in the 90th percentile in wage distribution was earned up to 266 percent more income than the worker who was in the 10th percentile. By the year 1995, the percentage increased by 100 percent to a high level of 366 percent. Most economics believe that despite the fact that there are some other factors that do have led to changes in income distribution in the United States over this period of time; technology has been the main force that has driven the wage structure. This is because with increase in technology, the non-skilled workers are pushed out of their jobs and replaced by either the skilled ones or machines. Therefore, most economics view the relationship between information technologies with the shifts that have been occurring radically on the distribution of wages in the United States of America economy (Li, Squire, & Zou, 1998).
In the databases by CHELEM, there are three principles that can be distinguished. These are;
The first evolution was corresponding to the increasing rates of international trade. There was an aggregate increase in the number of accommodation services offered, tours and travel services that the countries offered. There was also an increase in tourism which increased the income of most people in those countries.
In the second evolution, there was an increase in transport services. Most countries and people moved from the common railway transport, and air travel and shipping gained more share in the market. The number of people travelling by air increased, the charges for air travel increased the number of goods and passengers being transported via the same means increased tremendously.
In the second evolution, there was an increase in the number of exports of several other commercial services. These were among others, services for communication, insurance, and information technology.
The dynamic model
I will use this model to come up with the coefficient of openness of the different sectors. This model will prove that the second regression period was a result of the increase in the international trade. However, at this time the impact the international trade on services did not have so much impact to inequality as it could have been expected because most of this trade was between countries in the north without involving the others so much (Piketty, 2001).
Assuming that the levels of inequalities are explained by international trade, international trade is usually represented the variable of openness for the sectors in the specific countries during a specific time; that is the GDP of the countries in the different sectors during similar periods of time. In this model, there are several variables that are involved. These are;
Foreign direct investments which at times can be substitutes for the other variables of openness and could possibly have a positive impact but only if there is some impact of Stolper-Samuelson.
Gross Domestic Product Per Capita also some significance impact on income inequality. According to Kuznetts (1955) there is a relationship between income inequality and the development in the economy which yields an inverted U-pattern when applied in those countries that have income inequality having been very high during its initial stages of development but the same decreases later on. So, if there is a relationship between development and income distribution gives us an inverted Kuznets curves, it is expected that the impact on the countries will be increasing (Hederman & Rector, 1999).
The other variable is the ratio between the people who are highly educated and those who have very little to no education at all. Education does have a decreasing effect on the income inequality. When education increases, that is more people do have skills, it is expected that there will be a reduction in the wage differences between the people who are skilled and those who are non-skilled. This means that there will be overall reduction in income inequality.
In my research, I noticed that the coefficient of openness varied with varying sectors in the economy. However, it can be noted that international trade does have a very important and an increasing effect on the distribution of income.
The coefficient of openness variable is higher and even more significant if the period in which the study was conducted was shorter. Focusing on the period from the year 1980 to 1998, there are more than two folds the coefficient that is realized for the whole period (Cornia, 2001).
The impact that international trade has on income inequality depends a lot on the countries that were studied. In the European nations, there is a very big significance in the coefficient of openness variables but this was so only in the European nations. This difference between the Anglo-Saxon countries and the countries in Europe gives a good explanation as to the non-consensus in the available literature that links international trade to inequalities in international trade.
Retrieved from http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graphResearch questions and rationale
How does international trade relate to income inequality?
What is the relationship between information technology and income inequality?
Rationale
The contribution of the effects of studying international trade on income inequality
The contribution of effects of studying the influence of information technology on income inequality
The above research will help future researchers on income inequality and institutional factors. Students will also benefit from this study as it will bring out the relationship between technology and income, international trade and income. Recommendations from the research will get place a in various nations. Nations might have the chance of implementing practices aimed at fighting income inequalities. The research also will support existing researches on the same topic and shed more light where information is scarce. The paper will answer questions on income, technology, and international trade that have remained mysterious for long.
Model and Methodology
Economic model
An economic model forms a simple description tool for reality used by economists. It is made in a way that gives hypotheses about an economic behavior that one can test. Economic models have subjective designs because there are no objective measures of economic results. Different economists make different views on the needs of explaining interpretations of reality.
There are two main categories of economic models. They are: empirical and theoretical. Theoretical models have verifiable information about an economic behavior under the assumption that agents capitalize on specific goals subject to constraints well defined in the model (like an agent’s budget). The give answers to specific questions-like the effects of asymmetrical data (when a part of a transaction knows more than the other) or how market failures get handled. However, empirical models aim at confirming qualitative predictions of theoretical models and changing these predictions to precise results (Chang & Ram, 2000).
Economic models have a set of mathematical equations that talk about a theory of economic behavior. Model builders include enough equations that provide useful hints about how rational agents behave and how an economy works. The equations get structured in a way that reflects reality. Some economic models are quite simple in nature. Others are rather complex: models that predict the real level of output of an economy use many complex formulations that go by names such as nonlinear, interconnected differential equations (Gustafsson & Johansson, 1997).
Regression model and source of data
A regression is an analysis of the link between two variables. It gets used in finding the relationship between the two variables.
Regression formula:
Regression equation (y) = a + bx
Slope (b) = (NΣXY – (ΣX) (ΣY)) / (NΣX2 – (ΣX)2)
Intercept (a) = (ΣY – b (ΣX)) / Nwhere x and y are the variables. b = the slope of the regression line a = the intercept point of the regression line and the y axis. N = Number of values or elements X = First Score Y = Second Score ΣXY = Sum of the product of first and Second Scores ΣX = Sum of First Scores ΣY = Sum of Second Scores ΣX2 = Sum of square First Scores
The variables are: corruption, technology, government policies, trade, trust, age, time,
Image on Linear regression
Period for the regression model
The period that the above research will take is two months.
The research methodology used is personal interviews, administering questionnaires and use of internet. Open ended questionnaires get the preference. This is because they give informants choices of giving more detailed information questions might not cover. Permission will first be sought from various relevant institutions before questionnaires get disseminated. Another way of collecting data is through personal interviews. A research team will be formed that will go round conducting interviews on the income inequality and institutional factors. The internet forms another means of collecting data. Questions get posted on the net and people all over the world answer according their own will and wishes. Earlier researches will also form part of information source (Scott, 2004).
This proposed research mostly studies the exploratory qualities of primary data collection, in addition to quantitative analysis approach, to data collection. This research will seek to further the already existing knowledge in the effect of institutions on income inequality, and distribution of the same. There are numerous studies that have been conducted in this field.
In addition, from the institutions’ point of view, they have taken numerous steps that would ensure that there is in reduction, in income inequality. There is a need, at times, to recognize the effort that they do to the society. Some of these institutions have done extremely well to ensure that there is a reduction in income inequality, but they find themselves on the receiving end. In other cases, some of these institutions need support from the people so that they can be yield the desired impact.
I will also seek to know the opinion of several peers in the field of economics so as to know what their opinion is, and to get more information about their opinion on the same. This will give me more information on the relationship between international trade and income inequality. Some peers could have adequate information that can be advantageous to my research, or even go to the extent of shaping the path I will use. This is because some peers have done a lot of research in several fields; therefore, if they are quite philanthropic in giving me the information they have I could get to know new models thus facilitating my own research for better results.
Data Analysis
The research will incorporate both qualitative and quantitative data analysis approaches. Focus group data will be summarized into charts, maps and other familiarization thematic frameworks.
When analyzing the data, descriptive statistical methods will prevail since data and information from several different sources will get converted into useful information that makes scientific sense. Data will get analyzed from different sources with the aim of coming up with models that will give statistical analysis of research.
Measures of central tendency will get be calculated from the data collected; the mean, mode, range, and median. Moreover, measures of dispersion such as standard deviations, variances, co-variance will also receive a precise calculation. I will also come up with graphs, polygons, histograms, percentiles; inter quartile ranges, and examples to bring forth all my points in the proposed research. Finally, proves, results and worked out problems will form integral and part of my research in an attempt to expound more on my points and ideas (Gilson & Perot, 2011).
Expected results
This research will seek to provide answers to the research questions mentioned above. By the end of the research, I expect to come out with the following results;
1. That there is adequate evidence proving that information technology does have significant impact on income inequality.
2. That information technology has significant impact on only some specific sectors in the economy and the same is very different across several countries.
3. And finally that at times when information technology is significant, the relationship between information technology and income inequality it is in most cases the same for all the sectors in the economy in the same country but different in different countries, more o, there is a very considerably big difference between the developed and developing countries.
References
Cornia, G. A., Kiiski, S. (2001) Trends in Income Distribution in the Post-World War II Period. UNU/WIDER Discussion Paper No. 2001/89.
Chang, J. Y. & Ram, R. (2000) Level of Development, Rate of Economic Growth and Income Inequality. Economic Developmentand Cultural Change, 48 (4): 787–799.
Crenshaw, E. M. (1993). Polity, Economy and Technoecology: Alternative Explanations for Income Inequality. Social Forces, 71 (3): 807–816.
Gilson, D. & Perot, C. (2011). It’s the Inequality, Stupid. Retrieved fromhttp://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
Gustafsson, B. &Johansson, M. (1997). In Search for a Smoking Gun: What Makes Income Inequality Vary Over Time in Different Countries?LIS Working Paper No. 172.
Hederman, R. & Rector, R. (1999). Income Inequality: How Census Data Misrepresent Income Distribution. Retrieved from http://www.heritage.org/research/reports/1999/09/income-inequality.
Li, H., Squire, L. & Zou, H. (1998) Explaining International and Intertemporal Variations in Income Inequality. The EconomicJournal, 108 (446): 26–43.
Lundberg, M. &Squire, L. (2003). The Simultaneous Evolution of Growth and Inequality. – The Economic Journal, 113 (487): 326–344.
Nielsen, F. & Alderson, A. S. (1997). The Kuznets Curve and the Great U-Turn: Income Inequality in U.S. Counties, 1970 to1990. American Sociological Review, 2: 12–33.
Social Situation Observatory (2010). Distribution of market income. Retrieved fromhttp://www.socialsituation.eu/monitoring-report/income-distribution/distribution-of-market-income-in-the-european-union
Parker, S. C. (1999). Income Inequality and the Business Cycle: a Survey of the Evidence and Some New Results. Journal of PostKeynesian Economics 21 (2): 201–225.
Piketty T. (2001). Les hauts revenus en France au 20ème siècle. Paris:Grasset.
Rosser, J. B. & Rosser, M. V. (2001). Another Failure of the Washington Consensus on Transition Countries: Inequality and Underground Economics. Challenge 44(2): 39–50.
Scott, W. R. (2004). “Institutional theory” P408-14 in Encyclopedia of Social Theory, George Ritzer, ed. Thousand Oaks, CA: Sage.
Final Art
Student’s Name
Professor
Course
Date
Final Art
The colors on the wood art represented in this art analysis is a picture of Jesus Christ when he was crucified. There is no specific date indicated when the art was done however, it is indicated that the art originated from Philippines and it was acquired by San Francisco-Manila Sisters City Committee. Considering the rarity of Christ’s images and the Christian religion in Asia, the art must have been made to spread the gospel of Christianity among the Asians in the region. The art is currently located in Asian Art Museum in San Francisco, Osher Gallery. A viewer walking into the museum can be able to look up at the art and can easily interpret the original intention of the artist which was meant to evoke emotions in the challenges that the Christ went through in the hands of his tormentors before he lost his life on the cross.
The wooden sculpture of crucifixion of Jesus portrait in this art seems to represent a stage in his life when he was getting tortured by the people who crucified him. The sculpture portrays the image of Christ with his eyes closed and his head leaning towards his right shoulder. Part of his long hair are portrayed crossing over his right shoulder to his armpit and he looks like he is not in pain. Most of the images that that portrays the sequences of Christ’s crucifixion normally indicate different stages of the suffering he endured on the cross. In some instances, most images portray Jesus having his head lifted up with his eyes gazing up to the sky and this normally indicate that he is in pain. In some other instances, the images of Jesus is portrayed when his eyes are gazing on the ground with a sense of a lifeless body and this normally indicate that it could be the last time he was alive. However, in this art, Jesus is neither gazing up into the sky nor gazing down. The art portrays the image of Christ in between two stages of his suffering.
The art of crucifixion of Jesus Christ uses different line elements to give the sculpture the emphasis of the suffering that the Christ endured. One of the notable lines used by the artist is the contour lines. When one looks at the art, the image of Christ has been shaped in a flawless manner and this has been made possible by the continuous contour lines that shapes the body in a manner that fits on the cross. Another notable lines used in the art is the parallel lines. When one looks at the part in between the lower abdomen and the chest, the ribs of Christ are visible which are parallel against each other. The parallel lines have used by the artist to great patterns that a viewer can easily notice by looking at the art. There is also the implied lines which have been used by the artist in the sculpture. When one looks at the face of Christ, his closed eyes seems to suggest that he was gazing on the right side over his shoulders in his last stages of life. Another important element that is clearly depicted in the art is the shape of Christ. The shape of the art portrays that of a person who is suffering on the cross. Equally, the there is an element of angular shape as portrayed by the art. There is a sharp angle of the face looking on the right side over the shoulders of the art.
The tonal value created by the artist is low. There is a high contrasting light that has been made possible by use of different colors. The art depicts a brown color which is in contrast with the rest of the background. The contrast is place more emphasis on art. A viewer can easily get attracted to the image of the Christ due to the appealing brown color used on the art. Another element that is notable in the art is the pattern used by the artist. There is a repetition of parallel lines on either side of the thorax of the art where rips are clearly visible and are indicated by parallel lines. There is also the repetition of curvy shapes throughout the art. The pattern depicted in the art enhances the emphasis that the artist intended to bring to the viewers’ attention on the challenges and the suffering that Christ endured on the cross. Another compelling element that is witnessed in the art of Christ’s crucifixion is the space that has been employed by the artist. The distance between the rest of the body and the hang hands depicts a struggle that Christ endured on the cross. The space between his legs is another factor that shows the challenges he went through. The hallmark of the art is the color that has been used by the artist, the pain and suffering that Christ went through is depicted using the stains of red blood visible on his hands and feet. The artist has placed more emphasis on this color to draw the attention of the viewer on the pain and agony that Jesus went through. Went one looks at the art, they can easily get emotional but creating an imaginary challenges that Christ went which is reinforced by the presence of blood stains on his arms and feet. The body of Christ is depicted in the art as motionless which shows that he was in the last moments of his life.
The principles of design employed by the artist to enhance the visual aspect of the art is a unified visual element. All parts of the art fit in together. The art is equally symmetrically balanced. There is the application of weight in both sides of the art and it is well balanced. The emphasis that the artist intended to pass is enhanced by the use of different shapes, color and different lines. The art creates a flawless rhythm using the curvy shapes on the body of the art. The setting is also done in a manner that evokes emotions when a viewer looks at the art. The angular shape of the face of the art suggest a body that is lifeless and the curvy shape indicate the challenges and suffering endured by Christ.
In conclusion, the picture of the art below suggest that the artist achieved the intended purpose of passing an information to the Christian community on the challenges that Jesus Christ went through in the hands of his tormentors. Someone who may have read about the story of Jesus can easily relate with his experience when they look at the art. The artist also employed excellent artistic colors that enhances the intended purposes of the art. The choice of red color to depict the blood and the visible nails on the hands and feet of Christ was meant to evoke emotions that would trigger empathy. Overall, the art is one of the most interesting collection in the Asian Museum.
http://searchcollection.asianart.org/view/objects/asitem/60718/1/dateAdded-desc?t:state:flow=d8886d7d-1f8c-46c7-91c5-66cf6354250f
Implementation-week-5
Implementation, Strategic Controls, and Contingency PlanSTR 581University of PhoenixImplementation, Strategic Controls, and Contingency PlanAbstract
The fast space level at which changes take place in the global marketplace has made the need for strategic control key in managing a business. Most organizations established strategic controls to track their strategies as it is being implemented, this will help them detect various problems or changes in its underlying premises, and make necessary adjustments (Pearce and Robinson, 2011). If a business designs an implementation control, it can use it to evaluate whether the overall strategy should be changed in light of any unwanted results (Barney, 2007). Managers implement strategy by converting broad plans into the concrete, incremental actions and results of specific units and individuals
Introduction
For the organization to gain competitive edge over its competitors, this paper will describe a strategic plan generated to give the business that edge, the plan will also include an implementation plan. The paper will elaborate on any change management strategies that would enhance successful implementation. The paper will also provide a Key success factors, budget, and forecasted financials. I will also implement a Risk management plan that will include a contingency plans for identified risks (UOPM, 2012).
Implementation Plan
The Implementation Plan for IKEA in New Zealand will outline the short-term objectives, functional tactics, action items, milestones and deadlines, tasks and task ownership, and resource allocation for the business (UOPM, 2012). The three most important short-term objectives for Omega Inc. are listed below:
Launch a new organization that manufactures ice in various sizes for bars and restaurants, homes and local fish mongers to preserve their food and other perishable items.
Establish a social responsibility within 6 months where the company helps in women development programs in communities we will be doing business with.
Developed a marketing program that will create a brand for the company in 4 months.
Functional tactics
The company first concern when implementing a business strategy is how to transform that strategy into positive actions all over the business. Functional tactics will be derived from the company’s business strategy. They will identify specific, immediate actions that IKEA must take in key functional areas to implement the business strategy (Pearce and Robinson, 2011). These immediate actions are as follow:
Accounting: prepare a budget estimate, estimate the target cost of capital and finding ways the company can best account for the costs of creating and providing our business’s products to customers
R&D: create and launch a company website, Omega Inc. will maintain an offensive posture, seeking to lead innovation in the ice industry in Sierra Leone
Marketing: establish key promotion priorities and approaches, the company will be competing primarily on price and establish a level of market coverage that is necessary. Omega Inc. will also find a media that would be most consistent with the total marketing strategy of the company.
Human resource management: the company will evaluate key human resources that are needed to support the chosen strategy and developed levels of pay that will be suitable for the tasks we require.
Action items
IKEA action plans will translate the company’s generic and grand strategies into “action”. The company will identify specific actions to be undertaken, establish a clear time frame for completion of these actions, create accountability by recognizing who is responsible for each “action” in the plan, and each action must have one or more detailed objectives that the action should achieve (Pearce and Robinson, 2011).
Registration requirements for a startup business is New Zealand
Initiate market research, conduct surveys on services provided
Evaluate internal and external environment and prepare a SWOT Analysis
Create a targeted sales goal
Acquired office supplies, equipment and leasing agreement for rented buildings
Prepare a contract that outlined all terms and conditions.
Milestones and a deadline
Identifying competitors is a milestone in the development of strategy. But it is a process laden with uncertainty and risk, a process in which IKEA will make costly mistakes if certain precautionary measures are not implemented (Pearce & Robinson, 2011). The company has identified important milestones that will be targeted during the strategy implementation process. The milestone reviews that then take place usually involve a full-scale reassessment of the strategy and of the advisability of continuing or refocusing the firm’s direction. The table below illustrates the major steps in the company’s strategy’s implementation plan being taken
Tasks Start Date Duration Finish Date
Wrap up Legal paper work and determine setup time frame 10/01/2012 30 days 10/30/2012
Cross check and verified Market Analysis 10/10/2012 12 days 10/22/2012
Complete Marketing Strategy 10/12/2012 15 days 10/27/2012
Equipment Purchase and Setup phase 11/01/2012 15 days 11/16/2012
Finish QuickBooks training and finalize accounting needs 11/01/2012 20 days 11/21/2012
Create a Sales Plan 11/01/2012 30 days 12/01/2012
Complete and unveil new Website 11/25/2012 25 days 12/18/2012
New Business launches 10/01/2012 90 days 01/01/2013
Tasks and task ownership
In any organization, tasks need to be define clearly and required tools needed to be available for the successfully completion of the said task. IKEA strategic task in this new market is to formulate and implement a strategy that will reignite interest in its image. Since the company is in its start-up phase so most of the required tasks will be completed by the owner. As the company grows task ownership will be reevaluated and tasks will be delegated to employees. The table below describes the immediate task and owner of those various tasks the company will be undertaking.
Tasks Ownership
Registration and legal documents Outsource to a law firm
Purchasing of equipment’s owner
Budget estimating owner
Equipment installation and setup Recruit and hired qualified personnel
Develop a market strategy owner
Develop market analysis owner
Draft leasing contract for rented building Outsource to a law firm
Resource Allocation
To avoid the problems of zero-based budgeting, some firms manage capital allocation as a cross-divisional process. Allocation is based on a product’s gross margin. IKEA will prioritize it Resource allocation, since it’s a new business, the company will be investing more on advertisement and market strategies to increase sales and create a strong public image in geographical areas it will be operating.
Organizational change management strategies
With the unstable market environment, organizations are finding it difficult to predict their future. It is a top priority of the company to make sure that the employees are well informed about the organization policies and regulations, what are the obligations of each employee, and a detailed structure of the changes which are to be implemented. IKEA will implement a five step strategies to avoid resistance to the changes the company will have to make in the future:
A clear outline: the company will clearly outline its policies and guidelines, so that employees will understand the goals and objectives of the company.
Commitment: Full Corporation from top-bottom and bottom-top for any change to be fully effective
Advocacy: each employee will have the chance to voice out their views
Responsibility: employees will be held accountable for their actions
Flexibility: Management of IKEA will implement a flexible methodology to the various methods of change strategies that will be implemented so that unanticipated emergencies can be executed, if it’s required.
Budget and forecasted financials
IKEA strategic management process will focus on the flow of historical and current information which the company will use to create a forecast data on the operations and environment of the business. To gain a completive edge, IKEA must evaluate these data in other to attract stakeholders that are vitally interested in the actions of the business. The following tables will illustrate the budget and forecasted financial information about the company.
Risk management plan
The objective of conducting a risk management plan for IKEA is to increase the probability and impact of positive events, and decrease the probability and impact of negative events that would happen throughout the life span of the company (Pearce & Robinson, 2011). A decision-making setting is said to be risky when its future state cannot be characterized by a single point but rather must be characterized by a probability distribution of possible outcomes. Controlling risk is adopting measures to eliminate or at least reduce the possible negative effects of the recognized risk factors. These measure are embodied in contingency plans sent in place (Hyden, 2012)
A risk breakdown structure will be implemented to help break down the risks associated with the Omega Inc. The company will be creating a decision tree diagram to help the business make decision between alternative capital strategies. Sensitivity analysis will also be used to help determine which risks have the most potential impact on the business. As a contingency plan, the company will have in place a special alert control a thorough, and often rapid, reconsideration of the firm’s strategy because of a sudden, unexpected event (Pearce & Robinson, 2011).
Conclusion
The central goal of IKEA strategy is how to survive, increase growth, and improved our competitive position in the face of ever-accelerating rates of change in New Zealand. Omega Inc. implementation strategy clearly identified the short term objectives, functional tactics, action items, milestones and deadlines that will be put in place once the business is in full operation. As owner of the business, I will seek to control the execution of the various strategies that will be implemented and in the process, increase my awareness for the need for innovative and entrepreneurial thinking. Creating a budget and forecasted data, has allowed the company to develop a break-even point. The risk management plan that will be implemented will help the company identify risks (positive and negative), determine when and how to perform quantitative risk analysis.
References
Hyden T. (2011). Risk Management: Planning to Avoid Losses
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Barney, J. B. (2007). Gaining and sustaining competitive advantage (3rd Ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Pearce, J. A., II, & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin.