Consequences of High Interest Rates in the Ghanaian Economy…..

Interest rates are among the closely watched variables in the economy. The media on daily bases record their movement because they affect our everyday lives and have crucial consequences for the health of the economy. They affect personal decisions as whether to consume or save, whether to buy a house and whether to purchase bonds or put funds into a savings account. Interest rates also affect the economic decisions of households or businesses such as whether to put their money in the bank or invest in new equipments for factories.Before continuing, we must understand exactly what interest rates mean. By holding financial instruments , such as loans or bonds. Savers and financial institutions extend credits to those individuals or firms that issue the instruments. The amount of credit extended is the principal amount of the loan or the bond. Those who hold financial instruments do so because they receive payments from the issuers in the form of interest. The percentage return earned is the interest rate or rate of return.Rate of return is the price of credit in financial markets and is usually expressed as a percentage (%) of the total amount borrowed that is to be paid each year (over and above the repayment of the principal, or amount borrowed). Thus, it is the price of credit of the rate of exchange between the present and the future. Rate of returns (r) vary given interest rate (i). It is the value of i that just equates the present value (PV) of the benefits of the extra capital when discounted at i to its cost (Pk). That is, r is defined as : r=MRP/Pk, where: MRP=Marginal Revenue Product Pk= CostWe would however, take a look at how interest rate is calculated, various theoretical analyses that seek to explain the determination of interest rates, distinctions between nominal and real interest rates. Finally, we shall relate it to the case of the Ghanaian economy and look at the consequences of the high interest rates in Ghana. CONCEPTS OF INTEREST YIELD/RA TE Interest yields on financial instruments are thought of in different ways. The most important of these are Nominal Yield Current Yield Yield to Maturity NOMINAL YIELD Assuming that a bond is issued in an amount of 100,000 with an agreement to pay 6000 in interest every year.The annual payment of 6000 is the bond’s annual coupon return. This is simply the fixed amount of interest that the bond yields each year. The nominal yield on a bond is equal to rN= C/F, where rN is the nominal yield, C is the coupon return and F is the face amount of the bond. The annual yield of the 100,000bond with the 6000 coupon yield or return is equal to 6000 / 1000,000=0. 06 or 6 percent. Current Yield The current secondary market price of the bond typically is not the face value of the bond. Bonds often sell in the secondary market at prices that are different from their face value.For this reason, those contemplating on bond purchase often are interested in the current yield of a bond. This e quals to r i =C/P Where ri denotes the current market yield, C is the coupon return and P is the current market price of a bond. For instance, the current market price of a bond with a face value of 100,000 might be 90,000. If the coupon return on the bond is 6,000 per year, then annual current yield on this bond is equal to 6,000/90,000=0. 667 or 6. 7 percent. Yield on Maturity A bond’s yield on maturity is the rate of return if the bond is held until maturity.Calculating this yield can be complicated, however, because the bonds normally differ. Typically, bonds are sold at a discount, below its face value. Hence, other things being equal, the bond holder receives an automatic capital gain if the bond is held to maturity. A capital gain occurs when the value of a financial asset at the time it is redeemed or sold is higher than its market value when it was purchased. Consequently, the bond pays a coupon return. The yield to maturity must account for both the capital gain and the coupon returns that a bond yields to its owner. MEASURING INTEREST RATESThe financial credit market instrument can be classified under four types ?Simple Loan This provides the borrower with an amount of funds (principal) which at the maturity date must be repaid to the lender along with an additional amount known as an interest payment. Supposing, a bank made you a simple loan of 100,000 for one year, you would have to pay the principal of 100,000 in one year’s time along with an additional interest payment of say 10,000 given interest rate to be 10%. Most often, commercial bank loans to businesses are often of this type. ?Fixed payment loan:This provides the borrower with an amount of funds that he is to repay by making the same payment every month, which comprises part of the principal and interest for a given number of years. For example, if you borrowed 100,000, a fixed payment loan might require you to pay 12,600 every year for 25 years. ?Coupon Bond A coupon bond pays the owner of the bond a fixed interest payment every year until the maturity date, when a specified final amount is repaid. For example, a coupon bond with 100,000 face values might pay you a coupon payment of 10,000 per year for 10 years and at the maturity date repays you the face value amount of 100,000. Discount Bond A discount bond is bought at a price below its face value (at a discount) and the face value is repaid at the maturity date. However, unlike the coupon bond, the discount bond makes no interest payment. It just pays off the face value. For example, a discount bond with a face value of 100,000 might be bought for ? 90000 and in a year’s time the owner would be repaid a face value of 100,000. These four types of instruments require payments at different times. Simple loan and discount bonds make payment only at their maturity dates, while fixed payment loans and coupon bonds have payments periodically until maturity.The decision as to which of the instrume nts provides you with more income is difficult since they all make payments at different times. To solve this problem, the concept of present value was invented to provide us with a procedure for measuring interest rate on these different types of instruments, Present Value (PV) approach shows the present value Ao of a known amount An, to be received in ‘n’ years assuming compound interest is at the rate ( i) . The present value (PV) formula is Ao=An/(1+i)n NORMINAL VERSUS REAL RATES OF INTEREST So far we have discussed interest rates only in current cedi terms.There is, however, a problem with this. Inflation can erode the value of interest received when a financial instrument matures. Any individual must take this into account when evaluating how much to save. For instance, supposing that a saver can earn a stated current cedi interest rate or nominal interest rate of r=0. 06(6%) on each cedi that he allocates to a one year bond. Supposing also that the saver expects that prices of goods and services would rise by a factor, ? e=0. 03(3%) Where ? e is expected rate of inflation. This is the rate of inflation that he expects to face.Such inflation would reduce the amount of goods and services that his interest would permit him to purchase. Thus, although the saver earns post interest on the bonds he anticipates the inflation will eat away at that interest and the rate ? e. Hence, the real interest rate that this saver anticipated or his expected inflation-adjusted interest rate is approximately equal r = r-? e r = 0. 06-0. 03=0. 03, Where r = real interest and r = nominal interest rate. In terms of what his savings can buy this saver actually anticipates earnings only 3% on his one year bond.A rate of return in current-cedi terms that does not reflect anticipated inflation is known as Nominal Interest Rate. The anticipated rate of return from holding a financial instrument after taking into account the extent to which inflation is expected to redu ce to the amount of goods and services that this return could be used to buy is termed as Real Interest Rate. The real interest rate is crucial for determining how much the individual desires to save. The reason is that savings is foregone consumption. This individual is likely to give up more consumption if the real rate of return on savings is large.This means that the real interest rate is a crucial determinant of the saving in the nation where this saver is a citizen. Countries with high nominal interest rates often experience very low saving rates because expected inflation is so high. THEORIES OF INTEREST RATES Various theories have been propounded by various economists to explain the determination of interest rates. However we would focus on three main theories namely; †¢Classical theory †¢Neo-classical/Loanable funds Theory †¢Keynesian/Liquidity Preference Theory CLASSICAL /REAL THEORY OF INTEREST RATESThis theory by Marshall and Pigou uses savings and investm ent in determining interest rates. The theory equates investment to demand for capital or supply of bonds (i. e. , sales of bonds). and savings to supply of Capital or Demand for bonds (i. e. purchases of bonds). Hence interest rate is determined when investment equals savings as illustrated below Figure 1. INVESTMENTS – SAVINGS COMBINATION IN THE BONDS MARKET Where B (supply of bonds) = I( investment ) B (demand for bonds )= S (savings) r is the equilibrium rate of interest at where S=IAccording to the classicals, there are only two groups of people in the market to provide bonds; investors and government. Firms sell bonds in order to have capital or funds for investments. The sale of bonds however, depends on the expected rate of returns and the cost in selling the bonds. Hence bond price is expressed as PB=Y/r where PB=Bond Price , Y=rate of returns and r= interest rate, implying an inverse relationship between Bond prices and interest rates, Expected rate of returns is as sumed fixed, and when interest rate rises above the rate of returns, it affects the relationship between investment and interest rate.Assumptions: †¢The classicals assume that, †¢Income is constant †¢The saving-investment schedules are independent of one another Criticisms: †¢Keynes asserts that income is variable and not constant and that the equality between savings and investment is brought about by changes in income and not by variations in the rate of interest. †¢Keynes also states that the saving-investment schedules are not independent of one another THE NEO-CLASSICAL/LOANABLE FUNDS THEORY This theory explains the determination of interest in terms of demand and supply of loanable funds or credit.The theory defines rate of interest as the price of credit which is determined by the demand and supply for loanable funds. According to Prof. Lerner, it is the price which equates the supply of credit or saving plus the net increase in the amount of money in a period to the demand for credit or investment plus net hoarding in the period Demand for Loanable Funds. Three main entities of demand for loanable funds; governments, business men and consumers need them for purposes of investment, hoarding and consumption. Government borrows funds for constructing public works.Business men borrow for the purchase of capital goods and for investment projects. Such borrowings are interest elastic and depend mostly on the expected rate of profit. Individual consumers however may demand loanable funds for the purchase of durable consumer goods like houses. These borrowings are also interest elastic. At lower rates of interest, people borrow more than at higher rates of interest in order to enjoy their consumption now. Supply of loanable funds The supply of loanable funds comes from savings, dishoardings and bank credit.The main sources of supply of loanable funds are private, individual and corporate savings. Savings depend on the level of income. For a given level of income savings will depend on interest rate, and the higher the interest rate the greater will be the inducement to save and vice versa. This saving is referred to as Personal Savings. Corporate savings are the undistributed profits of firms and it also depends on current rate of interest to some extent. High interest rate deters borrowing and thus encourages savings. Dishoarding may also occur when interest rate is high or increases.Thus, one dishoards (ie, releasing hoarded money or idle money holdings), if the cost of holding that money increases as a result of high interest rate. Hence, there is a positive relationship between interest rate and dishoarding. Banks also give credit when the borrowing rate is high. That is when interest rate on credit payable by borrowers is high, hence a positive relationship between interest rate and bank credit. Criticisms: †¢Savings not interest elastic. The theory over emphasis the influence of the rate of interest on savings as interest elastic.Thus, people save not only to earn rate of interest but also for other purposes like precautionary motive, hence savings are interest inelastic. †¢The theory is also criticized for combining monetary factors with real factors making it unrealistic. †¢Equilibrium rate reflects unstable equilibrium. The demand and supply schedules for loanable funds determine the equilibrium rate of interest OR which does not equate each component on the supply side with the corresponding components on the demand side. KEYNESIAN/ LIQUIDITY PREFERENCE THEORYKeynes defines interest rate as the price which equilibrates the desire to hold wealth in the form of cash that is the demand and supply of money determines interest rates. The supply of money is considered fixed and exogenously determined (that is inelastic). Demand for money is also called liquidity preference which is the desire to hold money. In this case, interest rate is the premium which has to be offere d to induce people to hold their wealth in some form other than hoarded money. According to Keynes, speculative demand for money is determined by interest rate and bond prices.He considered the current interest (i) as that which determines the speculative demand for money. The higher the rate of interest, the lower the speculative demand for money. At very low rate of interest people will rather prefer to keep their money in cash than investing in bonds because purchasing of bonds will mean a loss. Determination of interest rates The equilibrium interest rate is determined at a point where the supply and demand for money equilibrates. At the point of liquidity trap, there is the belief that interest rate will not fall but will at a point in time rise hence investors hold money against future rise in interest rate.Criticisms: †¢The theory is considered as indeterminate by Prof. Handson. Keynes asserts the liquidity preference determines the interest rates. The problem is that a new liquidity preference curve would have to be drawn at each level of income. This indicates that income levels will have to be known before otherwise, the supply and demand for money curves cannot tell us what the interest rates will be. †¢Hicks and others were of the view that interest rate is determined by the following; i. Investment demand function ii. Savings function iii. Liquidity preference function iv. Quantity of money function.They are present in Keynes theory but not all are the interest rate analysis. Keynes ignores investment and savings, hence his theory is considered as incomplete. TRENDS IN SAVINGS AND LENDING RATES IN THE GHANAIAN ECONOMY (1994-2004). YEAR19941995199619971998199920002001200220032004 LENDING RATE31. 2440. 5641. 7143. 5838. 536. 54743. 7536. 3632. 7528. 8 DEPOSITE RATE21. 3726. 7532. 2432. 320. 215. 3925. 817. 4312. 4911. 969. 87 INTEREST SPREAD9. 8713. 819. 4711. 2818. 321. 1121. 226. 3223. 8720. 7918. 9 The interest spread was calculated as a difference in the averages of the lending and the deposit rates covering the said period.Between 1997 and 2001, the interest spread increased and subsequently started falling at a slightly varying decreasing rate. This was the period when the lending rates were high 43. 75% in 2001, down from 47% in 2000 because of the high inflation rate and the general turbulence within the economy. The corresponding deposit rate was 17. 43%. Between the years 2001 and 2004, the average interest spread was 23. 66%. This rate of profits of the commercial banks, heralded the spiral influx of foreign banks especially from neighbour Nigeria. It has been taunted that the banking sector is doing very well.In reality there has not been much competition between the existing banks, hence the high lending rate as well as their profits. They tended to act as collusive oligopolies. Recent developments and trends in the banking sector has been that, competition at long last has set in. For instance the Zenit h Bank has unilaterally decided to reduce it’s lending rate 14. 1% with respect to the general rate. This will result in much more innovation in the sector resulting in better banking services and a general reduction in the interest rate as pertained in competitive markets.From the existing trends, especially as indicated in the graph above, other sectors of the economy will take advantages of the low interest rate to boost up investments and hence output with a resultant increase in the GDP. This is the miracle of interest rates. HIGH VERSUS LOW INTEREST RATES IN THE GHANAIAN ECONOMY. In most economies including Ghana, interest rates are largely influenced by the prime rate which is the rate at which the central bank gives over-night loans to the commercial banks. Thus, when Bank of Ghana (BOG) fixes its prime rate, interest rates are adjusted depending on the direction of the prime rate.There is however a positive relationship between prime rate and interest rates. When pri me rate is set high or low interest rates are also fixed relatively high or low. For instance, interest rates followed a declining pattern in 2003. The monetary policy committee of BOG revised the prime rate downwards from 21. 5% in 2003 to 18. 5% in 2004. In line with this downward revision, the commercial banks’ base rates dropped from an average of 29. 0% to 25. 4%. Interest rates for the 91-day treasury bill dropped from 18. 71% at the beginning of the year to 17. 8% at the close of December 2004. The inter-bank interest rate also dropped from 17. 12% in January to 16. 23% at the end of December. Interest rates, however, low or high have both favourable and adverse effects on the economy of a country. During periods of high interest rates investment falls and savings increase and vice versa in the case of low interest rates. The table and graph below shows interest rates, 1998-2004 and interest rate margins respectively. YEAR1998199920002001200220032004 SAVINGS22262929. 2 525. 232319. 25 TIME DEPOSITS914. 7513. 520. 520. 1418. 515. 5Holders of stocks lose during periods of high interest rates and holders of money (cash) gain though money earns zero interest. In periods of economic boom, high interest rates might be needed to check inflation, while low interest rates will be needed to stimulate investments and create employment in recessions. In between these two extremes, interest rates are adjusted up or down depending on prevailing economic conditions. High interest rates will slow down the economy and cripple the private sector. Investors cannot access funds from financial institutions, thus creating low level of investments.It will also be tempting to invest available funds in high yielding bonds than in infrastructural business investments. This will reduce spending, shrink national output and bring down inflation. Low level of investments will therefore create unemployment. The central bank reacts by lowering interest rates using the sight depo sit rate (inter-bank transaction rate with commercial banks also referred to as the key rate). Low interest rates stimulate the economy. Investors can access low-cost capital for investment. Employment increases, and the national output increases.Low interest rates therefore allow for borrowing and spending, but then, inflation will also pick up. As inflation picks up, companies can increase employment, since real wages decrease. Successive increase in interest rate leads to inflation. Inflation however bad for an economy also leads to reducing unemployment rates since there is a negative relationship between inflation rate and unemployment rate. CONSEQUENCES OF HIGH INTEREST RATES IN THE GHANAIAN ECONOMY. High interest rates have certain repercussions in the Ghanaian economy. Prior to 1987, there was a decline in economic growth and development in Ghana due to high interest rates.Current high interest rates on bank loans (over 25%) and treasury bills (17%) have been a serious imped iment to raising capital in the local market. private sector growth in Ghana has been constrained by limited financing opportunity for private investments. High interest rates lead to crowding out of the private sector in the money market; it makes available loanable funds to the government. Thus, lenders of loanable funds shift lending to only the government with the surety that there is 100% safety in retrieving their money since they believe that governments do not die.Studies done in the past show that the growth process in Ghana has been driven mostly by public investments. As a result, some have attributed the lack of accelerated growth to a combination of weak investment and low productivity from the private sector. Hence the current government in its manifesto promised to make the private sector the engine of growth by providing the right socio-economic framework. For example, the government through the monetary policy committee of the bank of Ghana (BOG) managed to reduce t he Bank’s Prime Rate from 21. % in 2003 to 18. 5% in 2004 and currently down from 15. 5% at the beginning of 2006 to 14. 5%. When the prime rate fell, the BOG was expecting a corresponding decrease in commercial bank lending rates but its evident that the private sector is not responding to such developments; commercial bank lending rates have ranged between 18. 5% and 33. 5% as indicated by the Governor of the BOG. This has been a major concern for small and medium scale enterprises that cannot access loans at these exorbitant rates to expand their activities High interest rate may lead to increase in debt ratio that is, when interest rate is set high, cost of governments borrowing increases, interest payments increases and total debt increases. When government wants to finance its debt, it either prints out or borrows money to finance its debt. However if the government wants to avoid the former which usually leads to inflation, it falls on borrowing to finance its debt. Th ese borrowings also attract interest payment which increases the total debt payment in economy.For instance, profile of interest rates in Ghana reveals the real rates ranging from 10% to 21. 7% in 1996 to 1999. The high rates which are more than 100% between 1996 and 1999 worsen the debt burden. It is clear that since1997, borrowing from domestic sources was not even enough to finance the deficit as a result of high interest payments, thus for the last half of the 1990’sthe country had to borrow externally and/or print money to finance the deficit. For instance, in 1995 change in domestic debt was 200. 9 billion cedis but interest payment was 232. billion cedis which is over and above the change in domestic debt. As in year 2000 change in domestic debt was just 855. 5 billion cedis but interest payment was1446. 2 billion cedis over and above the change in debt. Consequently, as a result of the borrowing (i. e. domestic and external) it contributed to a high rate of growth of our debt that led to a state of bankruptcy in which the government failed to honour its debt obligation. As a result, in 2001 the Ghanaian economy was declared H. I. P. C. ?The need for the government to make interest payments on large debt may contribute to inflation.For example ,inflation may result if the government decides to finance interest payment, not by collecting taxes, instead by borrowing. For instance, prior to year 2000, the government of Ghana depended on borrowing to finance its debt as a result inflation recorded at that period was very high ( i. e. 41%). ?At very high rate of interest people hold bonds or save money rather than investing. Inflation occurs as a result of higher prices of goods and services, cost of living become very high, the poor and low income earners suffer economic hardships.Between 1980 and 1983 in Ghana, inflation was very high not forgetting interest rate as well. This led to economic hardships in 1983. ?High interest rate deprives both loca l and foreign investors from investing in the economy. This disturbs economic growth and development. In Ghana, when interest rates are high foreign investors invest in capital goods rather than in productive ventures. In spite of the consequences of high interest rate, there are also some benefits. The truism that high interest rate contributes to high inflation rate reduces unemployment ratio in the economy.In Ghana for instance, the economy has achieved respectable rate of GDP growth averaging over 4% in the 1990s as compared to the negative average growth rate over the period 1970 -1983. However, the average inflation rate fell to about 19% in 1998 relative to 122% in 1983 due to increase in employment levels or a reduction in unemployment levels as one of the factors responsible for this trend. ?High interest rate serves as a tool for monetary control in the economy. Through the use of the open market operation (OMO), where the economy is operating beyond its full employment le vel.That is when it is considered as being hot; the rate of interest can be increased by the central bank in the purchases of previously issued governments bonds. This mops up excess liquidity thereby reducing the money supply in the economy. The result is that demand for money now exceeds money supply thereby bidding up interest rate. This slows down the growth rate to an acceptable level enabling the economy to operate at full employment level. ?During periods of high interest rate, financial institutions records very high turn-overs. Governments tend to earn high tax revenue through taxes charged on banks’ turnovers.The bank of Ghana’s annual report (1997), recorded a high turn-over as a result of high interest rates as shown in the table below . The Central Bank maintained its rediscount rate at 45. 00per cent throughout the year under review. Money market rates were also fairly stable in the year. The 91-day Treasury Bill discount rate for example remained at 42. 80 per cent through November before declining to 42. 48 per cent at the end of the year. The commercial banks’ borrowing rates were also generally stable throughout the year. Rates for savings deposits moved up slightly from 22. 50-31. 0% to 22. 50-32. 00% and the range for call money from 25. 00-31. 00% to 24. 00-34. 00% per annum. The bank’s lending rates however, showed some upward trends. Rates for the Agricultural sector (usually the lowest) moved up from 30. 00 –47. 00% to 35. 00 – 49. 00% per annum while that for the miscellaneous (usually the highest) rose from 41. 50 – 48. 00% per cent to 41. 50 – 51. 00% per annum. INTEREST RATES (Percent Per Annum) 1994199519961997 DecemberDecemberDecemberDecember 1. CENTRAL BANK a. Rediscount Rate (Bank Rate)33. 0045. 0045. 0045. 00 b. Treasury Bill Discount Rate(91days)29. 040. 5042. 8042. 48 2. DEPOSIT MONEY BANKS A. Borrowing Rates. (%) i. Demand deposits4. 00-13. 445. 00-10. 005. 00-10. 005. 00-15. 00 ii. Savings Deposits13. 75-22. 5021. 50-31. 0022. 50-31. 5022. 50-32. 00 iii. Time Deposits 1 month22. 00-26. 5026. 00-32. 5029. 00-37. 0029. 00-37. 00 3 months14. 50-31. 0025. 00-36. 0025. 00-40. 5025. 00-39. 00 6 months14. 75-31. 0022. 75-37. 0032. 00-39. 2532. 00-39. 50 12 months14. 00-31. 0023. 50-36. 0027. 75-39. 5027. 75-39. 75 24 months22. 00-29. 2524. 00-35. 0027. 50-35. 0024. 00-35. 00 36 months26. 50-29. 0035. 0035. 0030. 00-38. 00 iv.Certificate of Deposits13. 75-24. 5023. 50-37. 0025. 00-37. 0025. 00-37. 00 v. Call Money25. 00-33. 5024. 00-34. 00 vi. Any other20. 00-24. 0022. 50-25. 0022. 50-33. 0022. 50-33. 00 B. Lending Rates. (%) i. Agriculture, Forestry & Fishing22. 50-35. 5028. 00-47. 0030. 00-47. 0035. 00-49. 00 ii. Export Trade20. 38-35. 5034. 25-47. 0030. 00-47. 0035. 00-49. 00 iii. Manufacturing26. 00-35. 5033. 00-47. 0039. 00-47. 0039. 00-49. 00 iv. Mining & Quarrying29. 00-37. 5030. 00-47. 5035. 00-47. 5035. 00-49. 00 v. Construction29. 00-37. 5039. 00-47. 5041. 00-47. 5041. 50-49. 00 vi. Other Sector29. 00-37. 039. 00-47. 5041. 50-48. 0041. 50-51. 00 Source: Bank of Ghana During the year under review, total outstanding credit granted by commercial banks to public institutions and the private sector increased by ? 474. 8 billion or 64. 8 per cent to ? 1,207. 2 billion. This compares with an increase of ? 299. 8 billion or 69. 3 per cent in the previous year. The Commerce and Finance sector recorded the highest increase of ? 84. 5 billion followed by Cocoa Marketing sector which registered an increase of ? 78. 2 billion. Significant increases were also recorded in outstanding credit to Manufacturing (? 1. 5 Billion), Construction (? 53. 2 billion), Services (? 49. 7 billion), Mining and Quarrying (? 36. 7 billion) and Import Trade (? 18. 8 billion). Credit for Cocoa financing showed an unusually large increase as a result of financial accommodation given to COCOBOD in the face of a larger than expected crop size. In conclusion, the various levels of interest rate (that is high or low) affect the economy in diverse ways (i. e. positively and negatively). However the optimum benefits derived from those varying levels of interest rates depends on prudent economic management.The interest rate problem does not rest with Government and the Bank of Ghana only but also the commercial banks. The rising rates of interest are acts perpetuated by the banks for more profit and these rates charged by the commercial banks are just too high and that is what hurt investors. In addition, the banks impose charges and commissions which are completely inexplicable. REFERENCES: ?Business and Financial times issue number 689 ?Bank of Ghana Annual report (1997) ?The state of the Ghanaian economy (2004) ?The internet (Nii K. Sowa, CEPA, Inflation and interest rate fixation in Ghana) ?Article by Ampong Owusu Kwabena -Bsc engineering KNUST, Masters in international business (NORWAY), and Masters in Financial Economics (NORWAY). ?Man aging Ghana’s Dept. – Nii K. Sowa, CEPA, Accra ?Henderson and Poole; Principles of Economics ?David C. Colander: Economics ?Miller, R. L and D. D. Van Hoose; Money, Banking and Financial Market ? Miskkin F. S: The Economics of Money and Banking and Financial Markets ? Dr. Henry D. Jackson: An Introduction to Macroeconomics 1999 ? Dr. Henry D. Jackson- McConnell Brue: Economics, 5th Edition.

Electromechanical Energy Conversion

Introduction Chapter 3 Electromechanical Energy Conversion Topics to cover: 1. Introduction 3. Force and Torque 5. Friction 2. Electro-Motive Force (EMF) 4. Doubly-Excited Actuators 6. Mechanical Components Introduction (Cont. ) For energy conversion between electrical and mechanical forms, electromechanical devices are developed. In general, electromechanical energy conversion devices can be divided into three categories: – Transducers (for measurement and control), which transform signals of different forms. Examples are microphones, pickups, and speakers Force producing devices (linear motion devices), which produce forces mostly for linear motion drives, such as relays, solenoids (linear actuators), and electromagnets. – Continuous energy conversion equipment, which operate in rotating mode. A device would be known as a generator if it convert mechanical energy into electrical energy, or as a motor if it does the other way around (from electrical to mechanical). Lor entz Force & EMF Lorentz force is the force on a point charge due to electromagnetic fields. It is given by the following equation in terms of the electric and magnetic fieldsF ? q(E? v? B) The induced emf in a conductor of length l moving with a speed v in a uniform magnetic field of flux density B can be determined by a e ? ?v? B? ? dl ? b In a coil of N turns, the induced emf can be calculated by e ? ? Concept map of electromechanical system modeling d? dt where ? is the flux linkage of the coil and the minus sign indicates that the induced current opposes the variation of the field. It makes no difference whether the variation of the flux linkage is a result of the field variation or coil movement. EMF EMF – Example: EMF in a Linear Actuator – Example SolutionSketch L(x) and calculate the induced emf in the excitation coil for a linear actuator shown below. Assuming infinite permeability for the magnetic core and ignore the fringing effect, we can express the self inductance of the coil as L? x ? ? where Rg ? x? ? N2 ?o N 2 l ?d ? x? ? Rg ? x ? 2g L(x) L(0) 2g ?o ? d ? x? l O is the air gap reluctance. ? e? ? N 2l d? d ? Li ? di dL dx di ? ? L ? i =L? x ? ? i o v 2g dt dt dt dx dt dt EMF – A Single Conductor in a Uniform Field e ? ? I dc If i=Imsin? t , e? Force and Torque – Example Solution (Cont. ) If i=Idc , ?o N 2 l 2g ? Im ? Im ?o N 2l 2gFor a single conductor in a uniform magnetic field, we have v ? d ? x I m cos ? t ? vI m sin ? t ?o N l 2 2g ?o N 2 l 2g d Fm ? Il ? B ?o N 2 l In a rotating system, the torque about an axis can be calculated by 2g d ? x cos? t ? v sin ? t ? ? T? r ? Fm v ? ? ? ? d ? x ? ? ? ? d ? x ? 2 ? 2 ? v 2 cos t ? arctan? ? where r is the radius vector from the axis towards the conductor. B Fm l I X Force and Torque – A Singly Excited Actuator Consider a singly excited linear actuator. After a time interval dt, we notice that the plunger has moved for a distance dx under the action of the force F.The mechanical work done by the force acting on the plunger during this time interval is thus dWm ? Fdx Force and Torque – A Singly Excited Actuator The amount of electrical energy that has been transferred into the magnetic field and converted into the mechanical work during dt is dWe ? dWf ? dWm ; dWe ? eidt ? vidt? Ri2dt e ? d? dt ? v ? Ri Because dWf ? dW ? dW ? eidt ? Fdx ? id? ? Fdx e m we obtain From the total differential dW f ? ? , x ? ? ? W f , x ? i? Therefore, ? W f , x ? d? ? and ? W f , x ? ?x F dx ?W f ? ? , x ? ?x Force and Torque Force and Torque – A Singly Excited Actuator (Cont. ) A Singly Excited Actuator (Cont. ) From the knowledge of electromagnetics, the energy stored in a magnetic field can be expressed as ? Wf ? ? , x? ? ? i? ? , x? d? In the diagram below, it is shown that the magnetic energy is equivalent to the area above the magnetization or ? -i curve. Mathematically, if we define the area underneath the magnetization curve a s the coenergy (which does not exist physically), i. e. 0 For a magnetically linear (with a constant permeability or a straight line magnetization curve such that the inductance of the coil is independent of the excitation current) system, the above expression becomes 1 ? Wf ? ?, x? ? 2 L? x? and the force acting on the plunger is then F ?Wf ? ?, x? ?x 1 ? ? ? dL? x? 1 2 dL? x? ?i 2 ? L? x? ? dx 2 dx ? 2 we can obtain Wf ‘ ? i, x? ? i? ?Wf , x? ? Wf (? , x ) dW f ‘ ? i , x ? ? ? di ? id? ? dW f ? ? , x ? ? ? di ? Fdx Therefore, ? ?W f ‘ ? i , x ? ?i ? W f ‘ ? i , x ? ?i di ? and ?W f ‘ ? i , x ? ?x F? dx ? W f ‘ ? i , x ? ?x (? , i ) Wf ‘ ( i, x ) O i Force and Torque Force and Torque – A Singly Excited Actuator (Cont. ) – Example 1 Calculate the force acting on the plunger of a linear actuator as shown below. From the definition, the coenergy can be calculated by iWf ‘ ? i , x? ? ? ? ? i , x? di ? 0 Wf ‘ ? i, x? ? ? (? , i ) Wf (? , x ) For a magnetically linear system, the above expression becomes Rg 1 L? x? i 2 2 Ni Wf ‘ ( i, x ) Rg and the force acting on the plunger is then F? ?Wf ‘ ? i , x ? ?x 1 dL? x ? ? i2 dx 2 O i (c) Force and Torque Force and Torque – Singly Excited Rotating Actuator – Solution to Example 1 Assume infinite permeability for the actuator core. The self inductance of the excitation winding can be readily obtained as L? x? ? N 2 ? o N 2l? d ? x? ? 2Rg 2g Therefore, the force acting on the plunger is F? ? Rg Ni ?l 1 2 dL ? x ? 2 i ? ? o ? Ni ? 2 dx 4gThe minus sign of the force indicates that the direction of the force is to reduce the displacement so as to reduce the reluctance of the air gaps. Since this force is caused by the variation of magnetic reluctance of the magnetic circuit, it is known as the reluctance force. Rg The singly excited linear actuator becomes a singly excited rotating actuator if the linearly movable plunger is repla ced by a rotor. Through a derivation similar to that for a singly excited linear actuator, one can readily obtain that the torque acting on the rotor can be expressed as the negative partial derivative of the energy stored in the agnetic field against the angular displacement or as the positive partial derivative of the coenergy against the angular displacement. Force and Torque Solution b) Voltage induced – Example †¢ The magnetically-linear electro-mechanical circuit breaker as shown is singly-excited via a N-turn coil. Its magnetic reluctance varies with the angle ? as R ? Rm? ? R0 , where Rm and R0 are constant. †¢ Derive the torque developed by the field from the system co-energy. †¢ When the device is excited with a direct current i=I, the angular displacement increases quadratically as ? ?t ? ? 1 ? t 2 ? ?t ? ? 0 , 2 where ? ? and ? 0 are constant. Find the voltage induced in the coil . Singly Excited Rotating Actuator Total turns, N = N1 + N2 Frame relu ctance Rf ? rf 2 Gap reluctance Rg ? 2rg ? ? lf 2? 0 ? r wd 2lg ?0rd (2? ? ? ) , 2? ? 760 ? 1. 33 rad Rg(? ) Rcore ?g Rarmature Fm=Ni e(t ) ? ? N 2 IRm (? t ? ? ) [ R0 ? Rm 1 ? t 2 ? ?t ? ? 0 ]2 2 ? Singly Excited Rotating Actuator ? Singly Excited Rotating Actuator airgap length, lg = 0. 001 m airgap radius, r = 0. 0745 m airgap depth, d = 0. 0255 m frame length lf = 0. 496 m limb width w = 0. 024 m Singly Excited Rotating Actuator ? (? ) ? T? ? NI R f ? Rg (? ) lf Rf ? 2 ? ? r wd Magnetic flux at equilibrium : ? NI ?0 ? ? ? R (? ) ? R f ?g ? ? ?0 NI lf 2 ? 0 ? r wd ? lg ?0rd? ? , Rg ? 2l g ?W f? ? ? ? N2 ? ?, ? R (? ) ? R ? f? ?g dRg dRg 2l g sign(? ) , where ? d? d? ?0 rd (2? ? ? )2 1 2 ? L(? ) 1 2 ? I ?I 2 2 122 ?1 IN 2 ?Rg (? ) ? R f ? 2 2l Rr sign(? ) 1 ? ? I 2N 2 , where Rr ? g 2 2 ?0 rd 4 ?Rg (? ) ? R f ? (2? ? ? ) ?0 rd (2? ? ? ) Restoring Torque ?1, x ? 0 sign ( x ) ? ? 1, x ? 0 NI? 0d lf l ?g 2 ? r w r? Force and Torque Singly Excited Rotating Actuator – Sing ly Excited Rotating Actuator (Cont. ) Torque Nm Flux mWb Flux, Torque for 2-pole motorEnergy In g eneral, 1. 5 Coenergy dW f ? id? ? Td ? dW f ‘ ? ? di ? Td ? ? i W f ? ? , ? ? ? ? i ? ? , ? ?d ? W f ‘ ? i , ? ? ? ? ? ?i , ? ?di ?W f ? ? , ? ? i? ?W f ? ? , ? ? T ?W f ‘ ? i , ? ? ?i ?W f ‘ ? i , ? ? T? 0 1. 0 mWb, Nm 0. 5 0 If the permeability is a constant, W f , ? ? ? 0. 0 0 5 10 15 20 25 30 35 40 45 rotor angle 50 55 60 65 70 75 80 1 ? 2 2 L ? 1 ? ? ? dL ? 1 2 dL ? ?i 2 ? L ? ? d ? 2 d? ? ? W f ‘ ? i , ? ? ? 2 T? T? 12 i L ? 2 1 2 dL ? i 2 d? Force and Torque Force and Torque – Doubly Excited Rotating Actuator – Doubly Excited Rotating Actuator (Cont. If a second winding is placed on the rotor, the singly excited actuator becomes a doubly excited actuator. The general principle for force and torque calculation discussed here is equally applicable to multi-excited systems. The differential energy and coenergy functions can be derived as dW f ? dWe ? dWm where dWe ? e1i1dt ? e2 i2 dt , e1 ? d? 1 dt , e2 ? d ? 2 dt , and dWm ? Td ? Hence, dW f 1 , ? 2 , ? ? ? i1d ? 1 ? i2 d ? 2 ? Td ? ? and ? W f 1 , ? 2 , ? ? ? W f 1 , ? 2 , ? ? ? W f 1 , ? 2 , ? ? d ? 1 ? d ? 2 ? d? 1 2 ? ? dW f ‘ ? i1 , i 2 , ? ? ? d i1 ? 1 ? i 2 ? 2 ? W f ? 1 , ? 2 , ? ? ? ?1 di1 ? ?2 di 2 ? T d ? ? ? W f ‘ ? i1 , i 2 , ? ? Therefore, T ? i1 di1 ? ? W f ‘ ? i1 , i 2 , ? ? ?Wf 1 , ? 2 , ? ? ? i2 or di 2 ? T? ? W f ‘ ? i1 , i 2 , ? ? Force and Torque – Doubly Excited Rotating Actuator (Cont. ) – Example 3 ? ? L? 1 For magnetically linear systems, ? ? 1 ? ? L11 ? ? ? L ? 2? ? 21 L 1 2 ? ? i1 ? L 22 ? ?i2 ? ? ? i1 ? ? ? 11 ?i ? ? ? ? ? 2? ? 21 or ? 1 2 ? ? ? 1 ? ? 22 ? ? ? 2 ? ? The magnetic energy and coenergy can then be expressed as W f ? ?1 , ? 2 , ? ? ? Therefore, d? ? W f ‘ ? i1 , i2 , ? ? Force and Torque and 1 1 2 ? 1 1 ? 12 ? 2 2 ? 2 ? ? 1 2 ? 1 ? 2 2 2 W f ‘ ? i 1 , i 2 , ? 1 1 L 1 1 i 12 ? L i 2 ? L 1 2 i1i 2 2 2 22 2 ? W f ‘ ? i 1 , i 2 , ? ? 1 2 d L 1 1 ? 1 2 d L 2 2 ? d L 1 2 ? ? i1 ? i2 ? i1i 2 2 2 T ?W f 1 , ? 2 , ? ? ? A magnetically-linear doubly-fed electromechanical actuator has two windings and a mechanical output with spatial rotary displacement ?. The self and mutual inductances of the windings are respectively L11 ? ? 5 ? cos(2? ) mH, L22 ? ? 50 ? 10 cos(2? ) mH, and L12 ? ? L21 ? ? 100 cos? mH. Brushless doubly-fed machine The first winding is supplied with i1 = 1. A while the second winding draws i2 = 20 mA. Determine: a) The general electromagnetic torque of the actuator as a function of ? . b) The maximum torque that the actuator can develop. Solution to Example 3 (a) Solution to Example 3 (cont. ) The  energy  stored  at  the  doubly? fed  actuator  is, 1 1 2 2 W f ? L11i1 ? L12 i1i2 ? L22 i2 2 2 1 1 ?3 2 ?3 2 ? (5 ? cos 2? ) ? 10 i1 ? (0. 1cos? )i1i2 ? (50 ? 10 cos 2? ) ? 10 i2 2 2 The  ex pression  of  electromagnetic  torque  is  obtained  as  follows:   ? ?W f (i1 , i2 ,? ) T ? i1 ? 1. 5, i2 ? 0. 02 ? 2 2 1 ? (i1 L11 ) ? (i1i2 L12 ) 1 ? (i2 L22 ) ? ? ? 2 2 1 1 (1. 5) 2 ( ? 2 sin 2? ) ? 10 ? 3 ? (1. 5)(0. 02)(? 0. 1sin ? ) ? (0. 02) 2 ( ? 20 sin 2? ) ? 10 ? 3 2 2 ?3 ? ? ( 2. 25 sin 2? ? 3 sin ? ) ? 10 Why Magnetic Field? Ratio of Electric and Magnetic Energy Densities in the air gap we ? 0 ? 0 E 2 1 ? ? wm B2 3. 6 ? 10 5 †¢ Saturation Flux Density Bs = 2T in commonlyused magnetic materials †¢ Air breakdown voltage Ebd=1,000,000 V/m b) At  maximum  torque, dT ?0 d? Differentiating  T  from  part  (a), 4. 5 cos 2? ? 3 cos ? ? 0 ? 1. 5 cos 2? ? cos ? ? 0 or               1. 5( 2 cos 2 ? ? 1) ? cos? ? 0 Solving  for  ? by  the  quadratic  formula, ?  =  55. 94 °Ã‚  and  153. 25 °Ã‚  (extraneous)Substituting  the  value  of  ? into  the  torque  expression  yields, T(max) ? ?(2. 25 s in 2(55. 94) ? 3 sin(55. 94)) ? 10 ? 3 ? ?4. 57 ? 10 ? 3 Nm Electric Machines †¢ Electric motor converts electrical energy into mechanical motion. †¢ The reverse task, that of converting mechanical motion into electrical energy, is accomplished by a generator or dynamo. †¢ In many cases the two devices differ only in their application and minor construction details, and some applications use a single device to fill both roles. For example, traction motors used on locomotive often perform both tasks if the locomotive is equipped with ynamic brakes. Introduction Electric Motors Electric Machine Insulation Class DC Motors Universal (DC/AC) AC Motors †¢ Induction †¢ Synchronous Stepping Motors Brushless DC Motors Coreless DC Motors Linear Motors MEMS Nano Motors †¢ A critical factor in the reduced life of electrical equipment is heat. The type of insulation used in a motor depends on the operating temperature that the motor will experience. †¢ Average insulation life decreases rapidly with increases in motor internal operating temperatures. †¢ Electric motor converts electrical energy into mechanical motion: Lorentz force on any wire when it is onducting electricity while contained within a magnetic field †¢ Rotor: rotating part †¢ Stator: stationary part †¢ Armature: part of the motor across which the voltage is supplied MaglevMagnetic Levitation Three phase AC induction motors rated 1 Hp (750 W) and 25 W with small motors from CD player, toy and CD/DVD drive reader head traverse DC Generators / Dynamos AC Generators / Alternators As the first electrical generator capable of delivering power for industry, the dynamo uses electromagnetic principles to convert mechanical rotation into a pulsing direct electric current through the use of a commutator.Without a commutator, the dynamo is an example of an alternator, which is a synchronous singly-fed generator. With an electromechanical commutator, the dynamo is a classical direct current (DC) generator. The DC generator can operate at any speed within mechanical limits but always outputs a direct current waveform. Mechanical energy is used to rotate the coil (N turns, area A) at uniform angular velocity ? in the magnetic field B, it will produce a sinusoidal emf in the coil: Permanent Magnet DC Generators d? d ? ? ( NBA cos ? ) dt dt ? NBA? sin ? t e(t ) ? ? http://micro. magnet. fsu. edu/electromag/java/generator/dc. tml Automotive alternator Rotor emf and current are induced by rotating magnetic field http://micro. magnet. fsu. edu/electromag/java/generator/ac. html Mechanical Components Mechanical Components – Mass and Inertia The mechanical component which stores kinetic energy is a mass in a translational system, and a moment of inertia in a rotational system. – Mass and Inertia (Cont. ) The kinetic energy stored by a mass moving at a velocity v, or a moment of inertia rotating at an angular speed ?. can be calculated by ? x M T F J Wk ? 1 Mv2 2 d? d 2? T? J 2 ? J dt dt dv d 2x F? M ?M dt 2 dt 1 J? 2 2 (translational system) rotational system) Comparing with the relationships of voltage, current, and magnetic energy in an inductor: V? L By the Newton’s second law, we have Wk ? or di dt and WL ? 1 Li2 2 we may regard a mass or a moment of inertia as an inductor which stores magnetic energy, if we let J? L M? L or Mechanical Components Mechanical Components – Springs An ideal spring is a device with negligible mass and mechanical losses, whose deformation is a single-valued function of the applied force or torque. A linear ideal spring has deformation proportional to force or ? 1 torque. – Springs (Cont. ) For a given distortion of x and ? the potential energy stored in a spring is 1 1 W p ? ? Td ? ? K ? 2 W p ? ? Fdx ? Kx 2 T x1 F ? K ? x 1 ? x o ? ? Kx (linear spring) (torsional spring) Comparing with the relationships of electric charge, voltage and electric energy in a capacito r: Q V? C F 2 2 WC ? and 1 1 Q2 VQ ? 2 2C we may regard a spring as an electric capacitor which stores electric potential energy, if we let T ? K 1 ? ?o ? ? K ? K? 1 C Friction Friction Modelling Friction: force that opposes the relative motion or tendency of such motion of two surfaces in contact. Friction between the two objects converts kinetic energy into heat.Coefficient of friction (Frictional coefficient): dimensionless scalar value which describes the ratio of the force of friction between two bodies and the force pressing them together, needs not be less than 1 – under good conditions, a tire on concrete may have a coefficient of friction of 1. 7. Static friction (stiction) occurs when the two objects are not moving relative to each other: Rolling friction occuring when one object â€Å"rolls† on another (like a car's wheels on the ground), is stiction as the patch of the tire in contact with the ground, at any point while the tire spins, is stationary relati ve to the ground.Kinetic (or dynamic) friction occurs when two objects are moving relative to each other and rub together: – Sliding friction is when two objects are rubbing against each other. – Fluid friction is the friction between a solid object as it moves through a liquid or a gas. The drag of air on an airplane or of water on a swimmer are two examples of fluid friction. Lu-Gre Model (1995): ? 0 , ? 1 bristles’ stiffness and damping coefficient ?2 viscous friction FC , F S Coulomb and Stribeck friction ? F f ? ? 0 z ? ? 1z ? ? 2v ? z? v? v z g (v ) 2 1 g (v ) ? [ FC ? ( F S ? FC ) e ? v / v S ) ] ?0 Mechanical Components Mechanical Components – Damper The mechanical damper is analogous to electrical resistor in that it dissipates energy as heat. An ideal damper is a device that exhibits no mass or spring effect and exerts a force that is a function of the relative velocity between its two parts. A linear ideal damper has a force proportional to the relative velocity. In all cases a damper produces a force that opposes the relative motion of the two parts. Mechanical friction occurs in a variety of situations under many different physical conditions.Sometimes friction is unwanted but must be tolerated and accounted for analytically, as, for example, in bearings, sliding electrical contacts, and the aerodynamic drag on a moving body. In other cases friction is desired and is designed into equipment. Examples are vibration dampers and shock absorbers. d ? x2 ? x1 ? dt dx ?B dt F? B ? B? R d 2 ? ?1 ? dt d? ?B dt T? B – Damper (Cont. ) Mechanical Components Mechanical Components – Damper (Cont. ) The damping due to Coulomb friction, as shown by the characteristic, can be regarded as a nonlinear resistor, which can keep the voltage across it to be constant.The Coulomb friction force can be expressed as – Damper (Cont. ) There is another kind of damping caused by the drag of a viscous fluid in turbulent flow. 2 F ? ? Bs d x2 ? x1 dt F ? ?d Fn ? ? d Fn d ? x2 ? x1 ? dt ? ? ? Bs dx dt d ? x2 ? x1 ? dt ? 2 ? R ? B s dx dt dx dt ? dx dt or T ? ? Bs d 2 ? ?1 ? dt Comparing with V=RI, we may conclude that ?F R? d n dx dt ? ? ? Bs d? dt ? ? 2 2 ? R ? B s d ? dt MR Dampers as a semi-active device MR Damper New Models Non-symmetrical Model (2007) ? F ( x) ? c0 x ? ko ( x ? x0 ) ? ?z ? ? ? z ? (? ? ( ? ? ? sign( zx) z ) x n : hysteresis variable, ? , ? , ? , ? , n, c0 , k0 : model parameters Bouc-Wen Model: ? F ( x ) ? c0 x ? k o ( x ? x0 ) ? ? z ? ? ? ? z ? ? ? z | x || z | n ? 1 ? ? x | z | n ? ? x z: hysteresis variable , ? , ? , ? , ? , n , c 0 , k 0 : model parameters Static Hysteresis Model (2006) ? F ( x) ? cx ? kx ? ?z ? f 0 ? z ? tanh( ? x ? sign( x)) z : hysteresis variable, ? , ? , f 0 , c, k : model parameters Minimally-Parameterised Model (2007) ? F : G ( x ) ? D ( x ), F ( x) ? ? 1 ? F2 : G ( x ) ? D ( x ), b G ( x) ? a ? ? 1 ? exp ( cx ) ? D ( x ) ? rexp{? ( x / 2? ) 2 } ? 0 x ? 0, x

What is Sociology?

We as human beings have always been curious about the sources of our own behaviour. Attempts to understand this relied on ways of thinking that were passed down from generation to generation. These ideas were often expressed in religious terms or drew from well-known myths, superstition and traditional beliefs. The objective and systematic study of human behaviour and society is a recent development dating from the 1700’s. A key development was the use of science to understand the world and this approach brought about a radical change in outlook and understanding.Just like physics, biology, chemistry and other disciplines, sociology emerged as part of this important intellectual process. The origins of sociology were the series of sweeping changes ushered in by the ‘two great revolutions’ of the 18th and 19th century Europe. These events transformed the way of life humans had maintained for thousands of years. The French Revolution, 1789 marked the ideas and value s, such as liberty and equality, over traditional social order.This was the Industrial Revolution, the broad spectrum of social and economic transformation that surrounded the development of new technical innovation. This caused an influx of migrants causing a rapid expansion of urban areas, forming new social relationships dramatically changing the face of the social world. There were a few individuals who contributed to early sociological thinking; one in particular was a French author, Auguste Comte (1798-1857) who actually coined the word ‘sociology’.He argued that sociology can and should study society and social phenomena following the patterns and procedures of natural sciences. Another contributor was Emile Durkheim (1858-1917) and he had a more lasting impact on modern sociology than that of Comte. Some regard Durkheim as the first sociologist to apply statistical methods to the study of social phenomena. Throughout his career, Durkheim was primarily concerned with how society would maintain integrity and coherence in the modern era, when things like religion could no longer be assumed.His book Suicide (1897) is a very well-known piece of literature. These sociologist developed ideas into how we could study humans and the world in which we live. Sociology is seen as being the study of human social behaviour and its origins, development, organizations and institutions. It is a social science which uses various methods of investigation and is to develop a body of knowledge about human social actions, social structures and functions. The traditional focuses of sociology include social stratification, social class, social mobility, religion, law and deviance.With all aspects of human activity it is affected by interplay between social structure and individual agency, which means sociology, has gradually expanded its focus to further subjects such as health, internet and political economy. There are two non-sociological explanations of human b ehaviour, naturalistic and individual explanations. The naturalistic approach suggest that humans behave as a product of inherited disposition; programmed by nature, e. g. / race, motherhood, gender (etc.)We take for granted that all women are maternal and want to become mothers and be just like their own mothers but this is not always the case. The individual approach is on that sees human behaviour as a result of psychological make-up of the individual person, eg/ people who commit suicide have their own personal reason for doing so. This persons suicide may not solely be a personal choice but may have other social factors associated like religion. This is what sociology is all about, challenging the unknown and looking at things from a different perspective, â€Å"Sociology defamiliarises the familiar† (Z.Baumen 1990 Thinking Sociologically p15)Sociologist look at these behaviours from all different perspectives and challenges what we believe to common sense theories. To m ake sense of human reality sociology attempts to make sense of the human condition through analysing the manifold webs of human interdependency as opposed to the naturalistic or individualistic approach. It disturbs the comforting quiet way of life by questioning what we usually take for granted. â€Å"It can be said that the first wisdom of sociology is this: things are not what they seem† (P Berger 1963 Invitation to Sociology p34)To gather information we use sociological methods called quantative and qualitative data. Quantative data is presented in the form of numbers and statistics; macro-sociological perspective. This helps to go beyond personal impressions and opinions and is done in the form of social surveys, questionnaires and structured interviews, e. g. / The Kinsey report on the sexuality of Americans (1948-1953) Qualitative data however is to tell us why and methods used are usually interviewing people to build up an understanding of a respondents point of view rather than a generalized opinion on their behaviour.There is also participant observation and this is observing someone in their own environment and learning what life is like for them, e. g. / The Paulo Case. â€Å"Sociology deals with a factually observable subject matter, depends upon empirical research, and involves attempts to formulate theories and generalizations that will make sense of facts† (Giddens Scope of Sociology p6) The use of concepts are needed to describe things accurately and precisely and to describe and address abstract and immaterial social phenomena such as individualism, social class and globalization, etc.As you can see from this essay sociology is a very important study and without it we wouldn’t question human behaviours or the society surrounding us. It helps us to gain a better insight into who we are and why we are the way we are and how others can have an effect on each and every one of us.

Skate America Essay Example | Topics and Well Written Essays - 500 words

Skate America - Essay Example Two of the most prevalent online competitors are A1 Skateboards and Element Skateboards. A1 Skateboards uses person marketing, taking it a bit farther with customization options. Skateboards and accessories are also offered by product line or brand, just as with Skate America. Element Skateboards takes a different approach, using event marketing. Information about X-Games dates and locations takes up most of the home page with its severe black and red color scheme. Though this online retailer is listed as a skateboard supplier, the product list and links are difficult to see. Skate America does an excellent job in design, theme and presentation of its web site. Attractive, yet not too busy, the site provides links to brand or professional line products, as well as others. Graphics are pleasant and eye-catching, without distracting viewers. Its red, white and blue scheme works well with the design and fits its short and easily recongnized name. Strengths for this online seller are des ign and appropriate selection of products. Weaknesses are lack of personalization such as the customizable skateboards that A1 Skateboards offers and failure to promote skateboarding and skating, by providing topics or information of interest. Skate America attempts to direct its efforts toward all skateboarders and skaters. While the product and brand offerings are more than adequate, its difficult to determine who the intended audience with its generic feel.

Auteur Theory and Directorial Burlesque Essay Example | Topics and Well Written Essays - 3000 words

Auteur Theory and Directorial Burlesque - Essay Example In the domain of cinematic extravaganza directorial role evolves as â€Å"consequential volume of discourse on a ?lm’s director and on consecration itself† (Hicks & Petrova, 2006, p. 180). The emergence of the auteur theory circumscribes around the role of the director in a movie. The auteur theory is actually a way of reading or the appraisal of the films through the indentation of an auteur (author) especially the director. The underlying mechanism of the theory states that quality of a film centers around the director as author. The paper will deal with the crux of the auteur theory with reference to a reputed director of Hollywood, M. Night Syamalan and his great works in the field of cinema. Auteur theory Developments and the proponents Historically, the notion of the authorship developed the essence of a secluded individual working fervently for the creation of the bodies of art. As for example the characters in Baz Luhrmann’s Moulin Rouge, there have been a perfect permeation of the romantic stereotype of the tortured Bohemian artist. The term auteur is basically a French word and the word prefixed with it i.e, ‘auoto’ means one. ... In one of the two comparative popular history texts of the recent origin, Nowell-Smith, Sarris and Bogdanovitchare are mentioned. In 2004, the ISI Web of Science Citation Indexes for the arts and the social sciences figured out that Sarris, The American Cinema was cited around 100 times while on the other hand, Truffaut’s phenomenal ‘Politiques des auteurs’ was only cited 12 times (Hicks & Petrova, 2006, p.184). . The notion of the theory The theme of the theory conjectures upon the fact that the director of a film with his or her personal influences and artistic control over their films are so immense and charismatic that the director may be regarded as the their author and their films are recognized collectively as cluster of work sharing common notion or the ambience spread expresses the rigid predominance of the an individual’s style or vision (Auteur Theory, n.d., p. 3). The theory finds its roots of development of the influential essay written by Fran cois Truffaut in Cahiers du Cinema in 1954. The auteur theory differs from the straightforward theory of directors which could be found from Ian Cameron’s article â€Å"Films, Directors, and Critics†, in Movie of September, 1962 where the comment he made goes as follows: â€Å"The assumptions that underlies all the writing in the Movie is that the director is the author of the film, the person who gives it any distinctive quality. The significant premise on which the theory stands is the distinguishable personality of the director as a criterion of the value. Over through a wide array of films, the director wills exposit certain characteristics of style which will be represented as the signature of the director. The way in which the storyline of the movie flows largely depends on the thinking and

Risk Assessment in Leroy Merlin hypermarket in Swidnica Essay

Risk Assessment in Leroy Merlin hypermarket in Swidnica - Essay Example The paper tells that the goal of safety management in organizations and the development of Safety Management Systems (SMSs) is the achievement of peak safety performance. This means no operational incidents, no personal injuries, and no harm to the environment. This therefore enhances the safety of the employees in any organization. This study location; Leroy Merlin hypermarket in Swidnica is still some way from achieving this goal. Tools such as the SMSs undoubtedly help compliance with rules but they do not necessarily improve safety environment. There is an ordinary recognition in this company that encouraging safe working performance does not require more rules, regulations, and procedures. Instead, the company needs a better comprehension of the social and organizational aspects that foster professionalism and emergency situations. Original attempts to improve workplace safety and or reduce risks, focused on the mechanical and engineering aspects of the company’s systems. The focus widened as the role of human error became more evident. Human mistakes were blamed for the safety culture in workplace areas. The absence of a safety culture in any organization is the significant contributor to the disaster, and potential hazards. Thus, safety culture can be defined as â€Å"That assembly of facets and attitudes in companies and individuals which establishes that, as an overriding priority, safety issues receive the attention warranted by their significance†.

The Soloist Essay Example | Topics and Well Written Essays - 1000 words

The Soloist - Essay Example has long escaped from it, being more disposed to unconventional living where he is caught between schizophrenia and the will which Lopez desperately helps him with for the revival of his exceptional talent and passion for music. The story identifies the premise in the musician’s yielding to profess virtuosity at the time the effect, unconsciously leads him beyond norm. Accordingly thus, his schizophrenic behavior necessarily reflects significant disturbance in the manner he wanders about with his instrument and in an odious external, deed and talking which no real person with common logic seeks to afford. A mentally disordered individual in Nathaniel’s case, may be found to exhibit symptoms such as delusions, hallucinations, disorganized speech, and grossly disorganized behavior (DSM Criteria). The film gives evidence to the fourth sign showing Ayers to have a rather crudely embellished outfit, that strikes an abiding impression as both bizarre and beaten up like his wagon of improvised percussions awkwardly set up. Characterized by unwieldy facial gestures, some repressed desire manifests through his overall countenance. Visual hallucinations have had recurrences in his childhood, the varying instances of which have one element in common. At the early stage of his deepening struggle, Nathaniel sees a rolling cart of fire by the window when he was by himself playing cello one evening. Likewise, when Steve sends him over to watch a classical concerto, he perceives flashes of colorful lights in the middle of raptures, having transported the symphonies to his full attention, earn ing remembrance of his fondness for Beethoven. The time he gets the chance to perform with a live audience however, just when he’s about to hit the bow on string, a brilliant light passing the slits of the upper deck collides his eyes. It comes too bright to blind a sight away from the rest that subsequently makes him recollect an act of rudeness toward his sister, a scene at daybreak

Disaffirmance of contract Essay Example | Topics and Well Written Essays - 750 words

Disaffirmance of contract - Essay Example Disaffirmance is the act whereby a person is allowed to renounce a contract that he or she entered in void of legal requirements coming from the contract. It is meant to guard the minors from unfair contracts, although it has its drawbacks. Therefore, to void a contract, an individual must show that he or she will not be ready or willing to be bound by the signed contract. For instance, in this case, Mathew Green was a minor therefore liable to disaffirmance of the contract he made with Caruana Chevrolet. The conduct of Mathew Green clearly indicated the he was about to disaffirm the contract since he knew a contract can be disaffirmed at any time as long as he is a minor or until he reaches eighteen. The Caruana Chevrolet had the right to deny repayment of the money that Mathew Green had paid them because when a person below the age of eighteen disaffirms a contract, the property that he or she has transferred can be retained or recovered to the third party, which is the Green famil y. It is significant to note that the law gives the minor the choice of disaffirming the obligations of the contract while the adult parties involved in the contract remain bound by it until the minor decides to disaffirm the contract, they cannot do it. ... The Caruana Chevrolet did not consider these issues while entering into the contract with Mathew Green because they believed that the relationship that existed between Caruana Chevrolet and the Green family could make Mathew Green not disaffirm the contract. There are some important exceptions in the disaffirmance contract in that a person under the age of eighteen is liable for the rational value of provisions of the contract. For instance, When Matthew did not have the car; he used a car pool to get to school and to work. Matthew’s father occasionally drove the car in a carpool with other parents and students. Several months later, the used car, which Matthew purchased, became inoperable due to a blown head gasket and Matthew Green gave notice of his disaffirmance of the contact to Caruana Chevrolet. Therefore, if Mathew Green is given $7,000 as the sale price of the camaro, the court may be required to amend the amount if the reasonable amount for the car is less. In this c ase, the Caruana Chevrolet should refund Mathew Green because the law allows a minor who disaffirms a contract to have his or her demands considered even if the content of the contract is destroyed by the minor. On the other hand, Mathew Green will have to pay some amount to Caruana Chevrolet for the use of their property. In this case, Matthew Green lived about six miles from his school and about one mile from his job and used the Camaro to go back and forth to school and to work. Therefore, he has to pay some money for reasonable value use of the camaro. The law demands that when a minor wants to disaffirm the contract, it should not be done abruptly but on time and in its entirety. In this case, Mathew Green gave notice of his disaffirmance of

Women Of Color Essay Example | Topics and Well Written Essays - 2500 words

Women Of Color - Essay Example No sacrifice was complete without women participating in it. They enjoyed rights equal to men, with full liberty to receive education and prepare themselves in their own manner, to face the arduous battle of life. They had full voice in the settlement of matrimonial relations. Many nations affirm the principle of gender equality. As women continue to advance in most walks of life, the impression that equality has been reached and that gender issues no longer pose real problems has naturally gained ground. Yet, many cultural, economic and social barriers remain. Although as many women as men possess the skills necessary to shape social and economic development, women are still prevented from fully participating in decision-making processes. Today the role of men and women in our society is both collaborative and supplementary. During the last five decades women have entered in increasing numbers into salaried and remunerative occupations as well as professions, which were previously the exclusive preserve of men. Today the difference that while women in former days worked along with men in the fields, now they work in factories or offices. The myth of male superiority is only a distortion that came in the wake of growing male domination. It is a paradox th at there should be an increase in crimes against women, especially in the face of spectacular strides being made by them in various walks of life. Emancipation of women has occupied an important place in the scheme for social reforms undertaken in developing countries of Asia and Africa, in the later half on the 19th century. Violence against women remains pervasive worldwide a major health and human rights concern. Women can experience physical or mental abuse throughout their lifecycle, in infancy, childhood and/or adolescence, or during adulthood or older age. It is the most atrocious manifestation of the systemic discrimination and inequality women continue to face, in law and in their everyday lives, around the world. It occurs in every region, country, and culture, regardless of income, class, race or ethnicity. Violence against women in developing countries have becoming mere frequent and is alarmingly on the increase. Today in almost every stratum of our social life, women are treated as inferior creatures. Almost all countries go about shouting about constitutional equality between man and women, but have yet to go long way before women find an equally safe and honorable place in society. The newspaper daily read and hears about ladies living in busy localities being murdered in broad daylight. It is so because they have some yellow metal on them. Rape is not the only motive force behind the crimes against women. A woman, by her very constitution, is vulnerable. In poor countries Young girls are deceived on promises of a decent job or marriage. Once a girl has fallen, she is blackmailed into a life of vice. To get a feel of the widespread evil of crime against women, only requirement is to know the experiences of working girls from the moment they leave their home up to the time of their return. At all times they are

Alignment of IT Strategy CP Essay Example | Topics and Well Written Essays - 1000 words

Alignment of IT Strategy CP - Essay Example This paper will candidly and comprehensively explicate why an IT strategy focused on maintaining a cutting-edge technology position is the most effective way to support any kind of overall business strategy. Firstly, from a vaguest and broadest perspective, cutting-edge technology can be described as technological techniques and/or devices that are at the frontier of knowledge, but have been used for a relatively long time jettisoning the unreliability threats to users. Apparently, with cutting-edge technology, a business stays informed on the feasibility of their objects and the possibility of its strategy succeeding. Hence, an IT strategy focused on maintain cutting-edge technology enables the business to triumph by guaranteeing that decisions will be made based on latest available information (Keyes, 2005). Any incongruity of information or rather information asymmetry that would have torpedoed the business’s plan can be thwarted through implementation of IT strategies pinpointed on cutting-edge technology. Additionally, in the past, organizations were unable to bridge the fissure between business and IT professionals due to the perceived dissimilarities in culture, objectives, mutual ignorance and incentives. Consequently, the IT systems proved to be expensive and unable to deliver sufficient returns on investment. However, an IT strategy centered on cutting-edge technology position helps the present organizations to maximize value on investments by openly defining who is responsible for the attainment of certain goals and objectives and unequivocally specifies the indispensable resources (Keyes, 2005). Moreover, the misunderstanding often associated with incorporation of technology into the management of a business is eliminated and replaced with a mutual understanding of how the business’s strategies or objectives will be attained. For

Millions With Chronic Disease Get Little to No Treatment Essay Example for Free

Millions With Chronic Disease Get Little to No Treatment Essay Relation to Management: The management team of every organization is expected to handle employee issues to be able to increase their competencies at work, which includes their health status at work. Helping employees avoid developing chronic illness through giving them better access to healthcare assistance availabilities as well as giving them fine environment for work is a huge step up in solving this issue on the part of the organizations’ management team. The rate of employees having the need to deal with suffering from chronic disease increases every year, especially in the American region. It could not be denied that the stress and the pressures that most employees deal with at work costs their lost of health stability. The article of Reed Abelson aims to show how many employees today are already affected by the illness. As the years of economic downfall over the world enters the scene, the problem becomes even more serious thus demanding a more serious attention on the matter from the management teams of the different business organizations all over the world. (Abelson, 2008, Intenet) The most disturbing issue that has been noted by the author is that most of the people having this particular illness actually receive lesser attention from the administration of the business organizations that they are working for. This is the reason why Jeffrey Harris and his colleagues decided to search for evidences that prove that chronic disease among employees in America today and thus be able to find a solution to the said issue. The group of Harris conducted a pilot test of the American Cancer Society Workplace Solutions, which they applied as intervention system in the work operations of eight major employers in the Pacific Northwest.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The said intervention proposed at least 15 major focus-activities that are further subdivided into five categories that are listed as follows: health insurance benefits policies workplace programs health promoting communication tracking of employees health behaviors to measure progress Along the said process of intervention, the researchers even added a 4-meeting session to be held with the employers of the companies involved for two months which are to begin with handed questionnaires that are designed to asses their involvement in the program and how well their employees are faring due to the effects of the program.(Harris, et al, 2008, 16)   TO be able to test the effectiveness of the program, the researchers decided to present the data in a before-after pattern which gave a clear depiction on how the program affected the existing systems of the organization and the health awareness culture that the said business organizations adapt to. Why have the research been concentrating on the employers as source of motivation on the staff personnel of the business organizations tested and not direct the study on the employees at once? There are three main reasons why this process had been considered effective by the researchers: Employers have power over the workplace environments that directly affect the health of the old-aged employees of the organizations. Employers face rapidly mounting healthcare and productivity costs that could affect the process by which they aim to safeguard the health of their people at work. Employers are the once who are in charged of controlling health insurances of employees. These reasons actually showed how much the employers could do to imply a health-conscious environment at work and thus increase health assured number of employees, in the aim of trying to help them avoid the causes of Chronic Disease that could result to long time illness. As a result of the study, the data gathered by the researchers showed that most employers who to involved in the study chose to impose non-smoking policies. Since it appeared to be the least expensive and actually the easiest way to encourage employees to be health conscious, it has been the â€Å"favorite† of the employers. Least applied on the organization on the other hand is the sun-protection program which aims to protect the employees, especially the ones working in the field, from being affected by the heat rays of the sun at work. (Harris, et al, 2008, 13) It is also through this study that it was found out that employers are less able to apply policies, especially when they are not at first handed through a written proposal that would outline the significance of the process to their business and their employees as well. More over, the study revealed that employers are more than willing to learn how to deal with the health needs of their people. Primarily, this is because aside from increasing the employees’ loyalty to them, it also serves as a protection to their gains in the future time as it would help them avoid paying for unnecessary or emergency health cases that their employees have to face. From the study analyzed, it could be noted that employers are indeed expected to take serious consideration of their employees’ health as they are considered to be the organization’s foundation now and in the future. Hence, the application of health-conscious programs on their part for the benefits of their people is an essential part of employee loyalty enhancement proceedings. Being able to establish such particular program in an organization makes the process of dealing with health issues in the organization be met with better ease and understanding on the part of the parties involved in the situation.   Ã‚  Ã‚  Ã‚   True, as Abelson notes in his article, understanding the health needs of the employees working for the success of the business actually ensures the progress of the entire business in the industry that they are involved with. This is the reason why the management team of the organizations today should actually give focus in answering these issues to ease the employees of the health problems that they need to deal with and thus give them better chances of performing better for the business organization’s sake. Reference: Harris JR, Cross J, Hannon PA, Mahoney E, Ross-Viles S, Kuniyuki A. Employer adoption of evidence-based chronic disease prevention practices: a pilot study. Prev Chronic Dis. 2008;5(3). Reed Abelson. (August 2008). Millions With Chronic Disease Get Little to No Treatment. http://www.nytimes.com/2008/08/05/business/05health.html?_r=1ref=businessoref=slogin. (August 5, 2008).

Consumer Advertising Ethical Essay Example for Free

Consumer Advertising Ethical Essay She then pulls out a magazine and begins to turn through the pages when she find an advertisement for a prescription drug to treat migraines. This drug could ease her pain and let her resume her normal activities. Is it wrong for her to see this ad? Absolutely not. ?Sharing information with the public about possible cures is morally right. Withholding information that can save someones life is morally wrong. Direct advertising to consumers of pharmaceutical drugs is ethical based on a deontological perspective. Kant considered what is right over what is good to be   superior (wikipedia). In the case of direct-to-consumer drug advertising, the right of sharing information about cures and possible ailments outweighs any possible good that can be made on behalf of the advertisers. It does not matter that the advertising companies and the pharmaceutical companies will make money off of the patients purchasing the drugs. What is most important is sharing the knowledge with those patients. When the general public is presented with information about pharmaceutical drugs not only are they given information about something that can provide treatments for symptoms they may be having, but it also informs them about what certain groupings of symptoms may be. For example, a person having strange pains in his/her legs and doesnt know what it is and might not seek medical attention. However, if he/she sees an advertisement on television that describes those exact symptoms he/she is experiencing, the advertisement would give the ailment a possible name. This information could help that person when he/she goes to see his/her doctor. The patient can describe what he/she is experiencing and tell the doctor about the ad that made him/her think there was a reason to visit the doctor for treatment. Some cases will be serious and others will be minor, this is not important. What is important is that the public was granted this information in an easily accessible format the advertisement. ?The United States and New Zealand are the only two developed countries that allow direct-to-consumer advertising of pharmaceutical drugs (DeGeorge 320). Health care works differently in the U. S. than in other parts of the world like Europe and Canada. Because of the major differences in health care, DTC is more welcomed in these countries than in others. Here in the U. S. many people are paying for their own health care out of pocket unlike other places where it is provided at no cost. In other countries you dont have to worry about whether or not you can afford to go to the doctor and/or pay for the visit and prescriptions. DTC advertising is more welcomed in the U. S. because people want to feel empowered and be given choices. Here there are a lot of options because people pay for what they think they need even if it is not the best option for them. ?People make decisions based on what they are convinced they need. In the U. S. you, or your insurance that you most likely pay for, have to pay for every lab and every doctor visit. So in the U. S. many people would rather treat symptoms than fix a problem. DTC advertising knows this and uses it to their advantage. Canadian Medical Association president  Henry Haddad, M. D. stated, The message U. S. consumers are getting is that pharmaceuticals are simply consumer commodities rather than complex therapeutics. We think that interferes with the physician–patient relationship by raising the expectations of patients and pressuring physicians to prescribe drugs. † (Fintor) This is a prime example of why other developed nations are not proponents of DTC advertising. ?When you look at direct-to-consumer advertising based on a utilitarian perspective it would be considered morally wrong. In utilitarianism you can only judge somethings moral value once you know all of the consequences (wikipedia). This means that every consequence needs to be examined and weighed. As a result of DTC advertising of pharmaceutical drugs, not only is the pubic informed about illnesses and a variety of ways to treat said illnesses, but also a plethora of other consequences that add negatively to the moral value of the action. ?One negative consequence to seriously consider is the money that is gained by pharmaceutical companies, advertisers, and doctors. Money will drive people to do almost anything regardless if it is morally right or wrong. When consumers see an advertisement for a drug they might try to identify with the ad and feel it necessary to visit their doctor. Once they visit the doctor they will claim to have symptoms that were described in the advertisement and then ask for a prescription to the drugs that were shown. Once the doctor prescribes these drugs the money is gained by all the involved parties and is lost by the patients. ?Many of the drugs prescribed have harmful side-effects that are downplayed by the advertisements. Its all about the money and not the well-being of the patients. This is clearly displayed in a study that showed that a pharmaceutical company saw a return of $4. 0 for every dollar spent on advertising (DeGeorge 319). Thats an incredible 420% percent profit margin. With profits like that its easy to understand why the moral consequences have been ignored. It would be morally wrong for people to take advantage of consumers and capitalize on their illnesses. If the pharmaceutical companies were really all about informing the public about illnesses and treatments they would do it without receiving any money. Taking away the profit aspect of the pharmaceutical world would change the advertising and probably the drugs themselves. With no profits involved there would not be the push that there is to find something that could work to treat an illness regardless of the consequences. Scientists would strive to find treatments that would help people and not harm them; this is the basis of utilitarianism, weighing all of the good and the bad. In conclusion, direct-to-consumer advertising of pharmaceutical drugs has both positive and negative consequences. Do I believe people making money off of the misfortune of others is right? No. However, I do believe is our duty to inform and educate people about illnesses and possible treatments.The health and well-being of the population of the world is much more important than someone making a dollar.

Analyse The Current Strategy Of Ryanair Tourism Essay

Analyse The Current Strategy Of Ryanair Tourism Essay You are to critically analysis the current strategy of Ryanair which comprises the following tasks. Undertake an environmental analysis of the European airline industry with implications for the budget sector and Ryanair in particular. Analyse how Ryanair has been successful in the European budget airline industry. From the above analysis, critically assess the sustainability of Ryanairs strategy. Executive Summary In this recession period to sustain a business and make it different and unique id definitely a big task and to make it growing need to implement different Strategies. Strategy is the direction and purview of a business organization in long run to achieve an advantage over other rivals by adapting with available resources and build competency. today we are discussing the Environment Analysis, strength and weaknesses and its strategy to sustainability of Ryanair a low cost Airline. This assignment will analyse the business environment of the airline industry in Europe, then it considers the competitive strategy and sustainability of Ryanair. Introduction Ryanair start its business by Mr. Cathal and her wife with the financial help of their father Tony Ryan with the total capital of  £1 in 1985. The company Head office is in Dublin, Ireland. Initially Ryanair provide flights between Ireland and UK by using secondary airport due to national airlines monopoly. In 1990 Ryanair loss was IR £20 Million and at the end of 1990 the new management team under the supervision of Michael OLeary adapted the model of Southwest USA base airline introduced the low budget cost concept in Europe and became market cost leader with no frills carrier. Gulf War 1 broke out in 1991 and airline traffic all over the world distorted. Although the down turn in overall airline traffic, Ryanair made a profit of  £ 0.3 million for the year and carry 651,000 passengers with a total work force of 477 people. In 1997 Ryanair first time ranked in Dublin Stock exchange and London stock exchange and in 2002 on NASDAQ. Ryanair added number of aircraft and number of European destinations in 1999. And in 2000 Ryanair introduced Europe largest travel website, www.ryanair.com within three months, the site was record 50,000 bookings per week. In 2005 May 26th Ryanair Holdings, PLC celebrated its 20th birthday. At the celebration party Ryanair CEO Michael OLeary said that Ryanair will be overtake British Airways by carrying 3.5 million passengers a month in 2005 In June 2009 Ryanair is offering 1200 scheduled short haul flights per day along with 145 locations throughout Europe and Morocco with an operating fleet of 196 aircraft flying approximately 845 routes. Environment Analysis The external business environment of Ryanair means the other European airlines and other influencing factors which affect the decision making, making of business strategy and the performance of Ryanair. There are number of external environmental factors which affect the Ryanair like PEST (Political, Economic, social and technological factors) Strategic management in any airline industry plays very important role to make them successful airline. The strategy of Ryanair is depends on the vision and mission its vision and mission which is based on the environment factors which are internal and external factors. These environmental factors normally called environmental analysis. In Strategic planning techniques environmental analysis plays very important role to evaluate or scan that business environment is suitable for business or not. In Ryanair these strategic policies clarify its resource strengths and deficiency, its market opportunities, the outside threats to its future success an d its competitive status relative to rivals. Environmental analysis in airline industry helps them to develop and change their strategy to meet the upcoming external changes and its help the company to lead. D. Stoffels 1994). Concept of Environmental Analysis Environmental analysis means the environmental scanning or appraisal (L M Prasad). There are two types of for Strength, Weaknesses, opportunities and threats. In Ryanair Strength and weaknesses are internal factors whereas opportunities and threats are external factors. Ryanair environment is analysis based on following structure. Figure No 1: Ryanair Environment Analysis External Analysis The external analysis is based on the opportunities and threats. Threats Volcano crises 9/11 terrorist attacks War in Iraq Oil prices Economic downturns Government Regulation The airline industry in Europe has always been under pressure from domestic and European Union. At the end of 1980 E.U deregulate the airline industry and an array of liberalisation measures followed that were to be applied throughout its territories. In 1997 E.U any airline can operate its business from anywhere within Europe. Competition At the start of 21st century competition in airline industry exploded and this competition will continue to grow up new entrants to take this advantage. Due to price competition and economic downturn and financial crises there is no entrants who want to enter in the market. Porters Five Forces Analysis of the low cost Airline According to Porter 1985 Five force analysis is a means of identifying the forces which affect the level of competition in an industry. Porters five forces model is based on the opportunities and threats of Ryanair from the external environment. Here porter analysis is applied on Ryanair external business environment. Porter five forces analysis are as under. Porter Five Forces Analysis Bargaining Power of Suppliers Boeing is the main supplier of Ryanair Airline Regional airports are mostly dependant on one airline Bargaining Power of Customers Customers are price conscious Lack of loyalty Switching airline is comparatively easy without any cost Threat from New Entrants High capital investment Some barriers to entry Threat from Substitutes Lack of brand loyalty for customers No extra cost for customer to switching Other methods of transport like Euro train, cars, Ferries and Euro lines Competitive Rivalry The low cost airline industry is highly competitive PESTEL Analysis PESTLE analysis is the most appropriate model to discuss the Political, Economic, Social, Technological factors, Environmental factors and legal factors. Political Factors Political factors means government regulations like taxation policies, environmental law, employment law, trade restriction by government and political instability. Change of Government taxation policies An international organization like Ryanair may effect by regulate the Government and taxation policies and some time these policies are in favourable and sometime in opposibe favour. Political changes in countries where Ryanair have routes Like in United Kingdom election are coming and may be new party change their business policies. Political instability Political stability plays very important role in an international company like Ryanair. Now a day in United Kingdom if government will be labour party then the policies will be in favour of the business community. Terrorist attacks on airline business Starting of 21st century the mode of terrorism is totally changed and now terrorist attacks through aeroplanes and target airline industry. Considering the events of 9/11 in USA, Manchester Airport chemical attack in UK its totally change the strategy of industry. Local government office may object to noise and new runway projects Currently Ryanair is facing Legal issues and disputes with Government. Economical Factors These factors are purchasing power of consumer and Ryanair, capital cost, economic growth, inflation rate, bank interest rate and currency exchange rate. Economic condition may affect positive or negative in the airline industry according to the country economic situation. If consumers standard of living will be high automatically they will use airline for holidays and other purpose. Fuel prices are rising day by day In these days fuel prices are going up and up and it may affect the consumer purchasing power. Social Factors In Social circumstances Ryanair will affect by peoples attitude towards luxury class, population growth and health matters. Ryanair do not offer luxury class so business trips are frequently possible to reduce company cost. Rapidly increase in travelling life style Lack of consumer loyalty Ryanair low budget airline means to attract more consumers around the globe. Technological Every business organize one unique system to operate its business Ryanair main supplier is Boeing and Boeing have less carbon emission and les noise pollution Good relationship with customers by maintaining online service Online sales/service Environmental Factors Environmental factors plays very important role in external environmental of airline industry. The important factors are as under. Natural disasters In Iceland Volcano ash disturb the whole Europe flights and airline and still writing these word almost 70,000 flights are cancelled. It will affect the airline industry around the globe. Health problems During flight some people feel really bad depression and its can decrease the profitability of the airline industry. Legal Factors Immigration law Immigration law is very major barrier in legal factors. There are some restrictions on the peoples to travel to other some certain countries. Aviation safety rules Every country has its own aviation and safety rules which affect the airline of other country. Swot Analysis of Ryanair SWOT analysis shows the organization existing strategy and position. SWOT analysis based on strength, weakness, opportunity and threats in any organization. In Ryanair this tool is used to analyse the internal strengths and weaknesses and external opportunities and threats. The current scenario of Ryanair on the basis of SWOT analysis is as under. Strengths Brand Name: Ryanair spent 15 years in the LCC market to develop its brand name Low airport charges will automatically reduce the cost of fare. All Boeing aircraft: Uniform fleet save training cost and technical cost High service performance: low baggage loss, in time, high rate of flight completion it gave the good image of the Ryanair performance High Aircraft Utilization Point to point service Small Headquarters: Ryanair try to reduce its administration cost due to small offices Weaknesses Bad press image Restricted expansion possibility due to budget cost Lack of skill staff Opportunities New routes and new destination Provide best and updated customer services may affect the number of customers Threats Threats from competitors like BMI, Easy jet, Air Asia, Atlantic and fly be. Economic downturn may affect disposable income. European Union may put some type of restriction if Ryanair do not accept the rules and policies. Mostly hotels are four stars due to low cost package is risky Change the choice of consumer Change the status of economy may change the situation of business policies. Question No 2. Ryanair European low cost airline Competitive Strategy of Ryanair Competitive strategy is key factor for the success of Ryanair. Ryanair followed different types of strategy which kept itself one step up from its competitor. Ryanair aim was establish itself Europes low fares leading airline through improvements and expanding day by day of its low fares services. The Ryanair strategy was simple to focus on low fares and catch more and more passenger traffic. At the end of 20th century the European aviation industry changes its cost strategy and focused on low budget model and now whole industry became low cost airlines. Ryanair based on low fares airlines and growing rapidly due to its environment friendly policies. Ryanair strategy is to provide their customers latest aircraft and advance technologies facility in their aircraft that reduce fuel burn and emissions of CO2 as much as possible. Figure No 2: Ryanair Business Model Ryanair plan to invest 17bn Euro on expansion programme of fleet replacement and now all Ryanair old Boeing 737-200 aircraft have replaced with the new Boeing 737-800. Here are the key elements of Ryanair Strategy who make itself European leading low cost airline. Low fares: Low fares are the main focus of Ryanair strategy. Ryanair sets its fares on the basis of demand of that flight. Frequent point to point Flights on short haul Routes Commitment to Safety and quality maintenance Ancillary services Choice of route Low operating costs Maximizing the use of the internet Question No 3. Sustainability of Ryanair Ryanair business model is adapted from the Southwest airline of USA. Ryanair focused on the secondary airports because majority of the national airlines concentrated on hub airports. At hubs airport acquired a scarcity value and were typically allocated to incumbent airlines in order of seniority at the airport by a scheduling committee presided over by the home country national airline. First time Ryanair used London-Luton route to promote its strategy in 1986 because slots were not available due to rush at Heathrow airport. Ryanair played a vital role to use these secondary airports and make itself a successful low cost airline. On secondary airports the deregulated market brought the opportunity to progress business with the new market entrants rather than remain underutilised. due unused airports substantial reductions was given to new airlines which they used form the expansion of passenger numbers by low cost would be financially worth it. The Ryanair product At the starting of Ryanair airline business in Europe its strategy was very simple to reduce its cost and sustain itself in the long term in airline industry was to use secondary airport. All major airports was under monopolistic condition of national airlines so Ryanair target secondary airports and its affect on Ryanair the low congestion charges, low landing charges and low rate of missing bags per passenger. Due to this situation Ryanair fully focused on its customer services. The Ryanair airport product The strategy of Ryanair was using secondary airports affect very positive result on consumer. Ryanair offers point to point flights and secondary airports become the hub airports. In secondary airports the consumption of time, cost reduce like less walking time within terminals, less waiting time for baggage retrieve and very cheap car parking. The Ryanair cost base Ryanair becomes the cost leader with very small labour force and fully focused on costs and productivity. Ryanair Europe No 1 in customer service In February 2010 Ryanair ranked No 1 around the Europe airlines. Only Ryanair is guarantee about the low cost and best customer services. These figures are published in customer service statistics in very month. CUSTOMER SERVICE STATS FEB 2009 2010 On-time flights 87% 83% Complaints per 1,000 pax 1.39 0.86 Baggage complaints per 1,000 pax 0.35 0.23 Complaints answered within 7 days 99% 99% External factors Ryanair is world fastest growing airline company According to Ryanair statistics in 2006 42.5 millions peoples travel in Ryanair airline and in 2007 it was 51 million and in 2008 the passengers was 59 millions. Ryanair Passenger Growth in Millions in 2006, 2007 Pax Chart Conclusion The above report examines the environmental analysis of European airline industry and discussed the strategy and sustainability of Ryanair in that environment. Ryanair is using very simple and good strategy according to economic condition at this time which is simple product, strict cost control over airports like aircraft suppliers and distribution costs. Ryanair focused on secondary airports that reduce its operating cost. BIBLIOGRAPHY L M Prasad, Business Policy: Strategic Management, New Delhi: Sultan Chand Sons, Educational Publishers, 2005 An Analysis of European low-cost airlines and their networks accessed on April 10, 2010. From www.sciencedirect.com Nigel Evants and David Campbell, Strategic Management for Travel and Tourism, 2003, Pages375-378 www.ryanair.com R. Casadesus-Masanell, Joan Enric Ricart, From Strategy to Business Models and on to tactics Long Range Planning (2010) Jay b. Barney William S. Hesterly Strategic Management and Competitive Advantage(concepts and cases) 3rd Edition, Pearson