The Context of Social, Cultural and Consumer Behaviour – Article Review

Gordon A. Haaland Summary People regularly carry on in an unexpected way. Furthermore, since these practices are not indistinguishable, they are translated to resemble develops, for example, learning, perspectives, impact and reference gatherings. The creator has introduced certain degrees of examination that accommodate the hotspot for deciphering and perceiving the hypothesis of social, social and buyer conduct. Social conduct can be fittingly conceptualized through these changing degrees of investigation, which at various purposes of time, have been proposed by a few social scholars. The issues experienced at different degrees of investigation, has been delineated by taking the case of the author’s experience of living in Norway for a year. Furthermore, the experience of being viewed as a ‘cultural stereotype’ has likewise been delineated through a similar model. To explore the reasons for such multifaceted social patters existing in a general public that is moving towards fast industralisation, for example, Norway and to direct an exploration on the adjustments in the examples of the relational conduct, the creator has offered 11 recommendations so as to address these issues. These recommendations are fixated on the changing degrees of examination that was advanced to contemplate the various develops of social, social and shopper conduct. Also, the recommendations do introduce a setting for the investigation with an exceptional worry for the kind of culture that is being mulled over. Survey The article proposes the setting for considering the hypothesis and the justification of social and buyer conduct. In doing as such, the creator has distinguished certain develops that are seen to oversee social and shopper conduct. He further proposes levels of examination that would accommodate a comprehension into the between disciplinary variables of cross-culture and culture-explicit conduct. At the point when the creator refers to the reference made by Kuhn (1962) with respect to ‘paradigm’, I. e. sociologies needs a worldview like that of characteristic science, it remains constant when all of social conduct is abbreviated to a lot of related marvel. In that specific circumstance, the author’s conflict that when social conduct is expected a unitary marvel, at that point any of the given orders (teaches regularly followed by social and social researchers) can be paradigmatic additionally holds great. Different ideas proposed by different scholars, for the degrees of investigation have been given significance for the implications accommodated understanding social conduct. Triandis, Malpass and Davidson (1973) contention that conduct is an element of a person’s capacities, emotional culture, individual miens, physical condition, social structure, etc, a large portion of the factors as brought up by the creator are predominant in a contemporary set up. Hansen (1972)* says that an individual is additionally determined by ‘perceived distinction and worth importance’ which likewise help influence dynamic. As a general rule, the impact relies upon the level of positive and negative prize that was recently connected with the worth. It can in this way, be expected that these two factors can likewise be considered as conduct develops. The issue of ‘culture stereotyping’ has been splendidly clarified by the creator, by taking the case of no other that his own. The culturally diverse references had been drawn from his own encounters of his stay in Norway for about one year. Be that as it may, thinking about the social, financial, social and segment game plan in Norway, the case of being treated as a culture generalization confines the investigation of relational conduct and crossculture between the Norwegians and the Americans. Comparative builds for investigation in various geographic areas may not hold centrality, as the personal conduct standards and culture-explicit generalizations might be unique. The suggestions set out by the creator have been shown up at after the examination that was completed by him during his stay in Norway. Despite the fact that theoretical, these recommendations are intended to chop down the degrees of examination into ‘singular set of statements’ that would introduce a view on the idea from a more extensive point of view. The vast majority of the recommendations referenced by the creator, focus on the possibility of social and purchaser conduct inside the limits of a set up. A set up, for example, a working environment, a gathering of individuals having comparative qualities (by interlocking regularizing conduct of individuals inside an association) or individuals who have a place with a culture that has developed for a considerable length of time with nearly nothing or less change. The creator additionally discusses the presence of ‘meaningful boundaries’, wherein he accept cohesiveness in a gathering as a framework. Gathering cohesiveness, all things considered, is dictated by the characteristics of people framing that gathering and the interests they share among each other. Limits as the creator has brought up alludes to the units estimated being normally related and not the spot or structure. Considering Berrien’s (1968) surmisings about limits, it ought to be viewed as that limits rise above past common levels. Certain different recommendations that relate to ‘time and place’ characterize the need of considering society across different generational just as geographic contrasts. Studies which are restricted to just one time and spot would likewise bring about a solitary time and spot investigation. The plan to examine various degrees of examination across societies by staying inside the builds of a specific degree of investigation is able. Culturally diverse marvel that clarify likenesses in societies as ‘etic’ and dissimilarities as ‘emic’ demonstrates the significance of diverging from different degrees of time and spot and study social conduct by depicting states of connection with time and spot. Different recommendations that manage choice of technique and configuration inquiries for the degree of investigation and the utilization of multivariate examination and arrangement of hypothetical proclamations for a specific level go with the same pattern. Suggestions seven, eight, nine and ten furnish with the subtleties at each level, consequently giving a significant understanding into the degrees of examination. The creator discusses there being no ‘apriori’ reason for choosing a level for social examination fixated on shopper conduct. This can be viewed as a legitimate articulation since customer issues are various and expect extents of complexities when experienced in various situations and culture set ups. The suggestions as set forth by the creator do give a knowledge into the shifting degrees of complexities in social, social and buyer conduct, yet these recommendations could fall helpless against more profound examination concerning the setting of social conduct. All the perspectives and assessments communicated by the creator may relate to a specific age, however the pertinence of these suggestions stay to be the equivalent. It is each of the a short time, so to state, when diverse intimations and investigation of social standards of conduct across various societies could for sure present uncovering examination of shopper conduct.

The Concept of Otherness

Presentation Otherness is the quality or state of being unique. In this world, individuals consistently think of sets of contrasts that depend on the shade of the skin, nationality, and even sexuality. These are the components that we as people use to classify ourselves as ‘us’ isolating ourselves from ‘them’ or basically ‘the other’.Advertising We will compose a custom paper test on The Concept of Otherness explicitly for you for just $16.05 $11/page Learn More On most events, we give a ton of benefit to the gathering that we relate to in the general public. We see the ‘other’ bunches as unreasonable, youthful, passionate, substandard and of a lower economic wellbeing. People ordered as the other are comprehended as without a sense having a place and by and large extraordinary in some significant territories. The other is generally observed as one who does not have some significant qualities that a gathering has. In a general publi c, the other typically has not many or no rights by any means, all things considered, he might be marked as idiotic or less smart or as one ailing in ethics. He may consequently be treated as less human. For the most part, the other might be of an alternate, race, nationality, religion, or sex, and the gathering which orders the other might be a specific social class, a family, a network inside a general public, or the whole society (Melani, 2009). Wherever you go, you see him, in the commercial center in the financial corridor and in the city. Everybody appears to keep away from him and disregard his reality. Indeed, even the individuals who realize him are reluctant to move toward him since they know the outcomes of doing as such. The way that he isn't a piece of the group implies that anybody recognizing him will likewise be stayed away from or snickered at. This is the manner by which Sherman (2011) has introduced the idea of otherness. She investigates the life of the Indians i n the reservationists and the contentions that happen in their day by day life. We see that there are the individuals who don't care for partner with the old Indian way of life. They accordingly respect the individuals who are as yet rehearsing it to be behind, socially second rate, to need something major; they essentially consider them to be the ‘other’ (Sherman, 2011). Author’s points of view Sherman relates emphatically to this story. First he was conceived of an Indian mother; in this way, he was not a full Indian simply like Thomas in the story. He was brought into the world with a mind entanglement and in this way, he was not expected to grow up typically. Much the same as Thomas in the story, Sherman likewise experienced childhood with an Indian reservation. With an end goal to locate superior instruction, Sherman selected at Reardon secondary school in Washington where he was the main Indian. This shows Sherman has at one second felt and treated as the à ¢â‚¬Å"other† in his life as it happened to Thomas in this story. In light of his accomplishment throughout everyday life, Sherman utilized this story to show that sorting individuals as other isn't right on the grounds that these others can once in a while be more useful than those we see as one of us (â€Å"Biography†, 2010, P. 1).Advertising Looking for article on sociologies? How about we check whether we can support you! Get your first paper with 15% OFF Learn More Sherman (2011) recounts to the narrative of Thomas who has been arranged as the other. In the first place, he is classified as the ‘other’ by Victor while in line at the exchanging post. He says that he saw Thomas conversing with himself as he generally did. That he was a narrator that nobody needed to tune in to. He was even astounded that Thomas knew about his father’s passing. Truth be told, Victor was humiliated to converse with him. The individuals at the exchanging post were like wise astonished to see Victor conversing with Thomas. This implies Thomas was at that point put in a class that we will call the other. He would not like to approach Thomas for help. We are likewise informed that Victor used to beat Thomas for reasons unknown at all as different young men gived a shout out to. The young lady who acted the hero likewise asks why it was simply him that they singled out and not different young men. Victor is likewise humiliated when Thomas begins chatting with a wonderful woman in the plane. He called him ‘that insane Indian narrator with ratty old meshes and broken teeth’ (Sherman, 2011, p. 1). Sherman (2011) is very basic about the way that the general public treats the others particularly when it is on unjustifiable grounds. Through the tale of Thomas he shows that regarding others as the other is terrible to the point that it makes individuals selfish to other people. A demonstration of dissatisfaction is seen when Thomas gave a loanin g hand to Victor. Much after Thomas had assisted Victor, he says toward the finish of the story that he realized that he couldn’t be companions with him. He recognizes that it is remorseless, yet genuine. The entire society has ordered Thomas as the other (Sherman, 2011). References â€Å"Biography†. (2010). Sherman Biography. Self-destructs. Web. Melani, B. (2009). The other. Scholastic Brooklyn. Recovered from: http://academic.brooklyn.cuny.edu/english/melani/cs6/other.htmlAdvertising We will compose a custom article test on The Concept of Otherness explicitly for you for just $16.05 $11/page Learn More Sherman, A. (2011). This Is What It Means To Say Phoenix, Arizona. E Notes. Recovered from: https://www.enotes.com/themes/this-what-implies state phoenix-arizona This article on The Concept of Otherness was composed and put together by client Camilo F. to help you with your own investigations. You are allowed to utilize it for research and reference purposes so as to compose your own paper; be that as it may, you should refer to it in like manner. You can give your paper here.

10 Shocking Stats About Employee Engagement

10 Shocking Stats About Employee Engagement Here’s a fun fact: The song Working for the Weekend by Canadian rock band Loverboy still appears on VH1’s 100 Greatest Songs of the 80s. What’s this got to do with employee engagement?The fact that the song is still ranked in this list shows that there’s still a lot of people who feel a connection to the lyrics of the song and who are always waiting for the weekend.In other words, majority of employees are disengaged at work and are always looking for the next opportunity to spend some time away from work.Employee engagement is a very important factor to the success of any company, and unfortunately, it has become a huge problem in today’s workplace, impacting everything from productivity to customer satisfaction.According to the Deloitte Review, American companies spend over $100 billion every year in a bid to improve employee engagement.Sadly, all this expenditure does not seem to making much of an impact, considering that a separate poll by Gallup shows that only slightl y more than one third of employees (34%) are engaged at work.While this is an improvement from previous years, the number is still quite low.To help employers gain a better understanding of employee engagement and its impact on companies, we are going to take a look at 10 shocking statistics on employee engagement.Before we get to that, however, let’s take a moment to understand what employee engagement means.WHAT IS EMPLOYEE ENGAGEMENT? Employee engagement refers to how connected an employee is to their job and the level of emotional commitment they have to the organization and its goals.Engaged employees care about their work, rather than simply working for the paycheck at the end of the month.Disengaged employees, on the other hand, do not care about their job or how it contributes to the organizational goals.They only care about the benefits they get from their job, such as a paycheck, a promotion, and so on. They are not enthusiastic about their job and will never go above an d beyond in their duty for the sake of the company.To make it easier to distinguish between engaged and disengaged employees, I’ll use an illustration.Assume there are two guys, Pete and Mike, who work in the IT department.One day, a couple minutes just before the end of the work day, they both notice that there is glitch that would make the company network vulnerable to external attacks.After checking the magnitude of the problem, Pete realizes that it will take at least one and a half hours to solve the problem.Since he was almost getting done for the day, he decides to pretend that he hasn’t noticed the glitch to avoid working overtime.Mike, on the other hand, understands that there is a huge risk in leaving the glitch unresolved overnight.Instead of leaving the problem until the following day, he spends an extra hour and a half at the office resolving the problem.Mike does not gain anything by spending the extra time at the office, but he still does it because he cares about his job and its impact on the entire organization. In other words, he is an engaged employee.Pete, on the other hand, is disengaged and is not willing to sacrifice his personal time for the organization.He does not care much about the organization, he only cares about the money in his account at the end of the month.It’s good to note that there is a difference between employee engagement and employee satisfaction. Very often, many managers confuse between the two.Employee satisfaction simply focuses on how contented or happy employees are with their job.It does not address how motivated, committed or involved they are. Just because an employee is happy with their job doesn’t mean that they are engaged at work.Actually, to some employees, being happy with their job might mean doing as little as possible.Now that you understand what employee engagement means, let’s at 10 shocking statistics on employee engagement.ONLY 25% OF EMPLOYERS HAVE AN EMPLOYEE ENGAGEMENT STRATEGYMost em ployers agree that employee engagement is very important for business success.At the same time, it is surprising that majority of employers do not have an employee engagement strategy in place.A survey carried out recently found out that out of every 10 employers, only less than two (25%) have an established employee engagement strategy.Like most other business processes, the only way to improve engagement is to have a comprehensive strategy that outlines what the company intends to achieve in terms of employee engagement, as well as how this will be achieved.In addition, the company also needs to have metrics that will be used to monitor and track the progress and success of the employee engagement strategy.INCREASED ENGAGEMENT CAN INCREASE PROFITS BY 21%You might be aware that employee engagement affects things like productivity and customer satisfaction, but what exactly does this mean for the company’s bottom line?Well, according to a Gallup poll, an increase in employee engag ement can drive up profits by 21% or more.In addition, the companies that rank among the top 20% in terms of engagement have 59% less turnover and a 41% reduction in employee absenteeism.This shows just how important employee engagement is at the workplace.This means that any company that wants to be successful needs to make employee engagement one of the pillars of their business strategy.Highly engaged employees will do their work with passion, energy, and enthusiasm, which will translate to better products and services.LACK OF EMPLOYEE ENGAGEMENT IS COSTING COMPANIES OVER $450 BILLION PER YEARIf a 21% increase in profits is not enough to convince you how important employee engagement is, what if I told you that your company might be losing money because of lack of employee engagement?Well, a report by Harvard Business Review states that companies are losing between $450 and $550 billion per year as a result of employee disengagement.Unfortunately, this money is lost in expenses t hat are not directly linked to employee engagement, which means businesses are wasting money without realizing that they could cut these losses by improving employee engagement.One of the major ways through which lack of employee engagement leads to losses is through loss of talent. High levels of employee disengagement leads to an increase in turnover rate.This means that companies have to constantly spend money on hiring and onboarding, which can be quite expensive.In addition, lack of engagement leads to reduced productivity, lower quality products and services, absenteeism, and so on â€" all of which lead to loss of money.70% OF EMPLOYEES DON’T FEEL ENCOURAGED TO GROW WITH THE COMPANYFor majority of today’s workforce, and especially Gen Y and Gen Y workers, career growth and development is very important.Actually, the pursuit of career growth is one of the major reasons why most employees look for new job opportunities.In spite of this, it is surprising that many employers d o not do much to encourage the growth and advancement of their employees.According to Gallup’s State of the American Workforce report, 7 out of every 10 employees feel that their employers do not care much about the employee’s growth and advancement within their companies.When employees feel that their employer does not care much about their growth and development, not only will they become disengaged at work, they will also start looking for opportunities for growth elsewhere.This means that companies are losing both productivity and some of their best talent by not encouraging the growth of employees within the company.75% OF EMPLOYEES QUIT BOSSES, NOT JOBS Source: ChartCourse.comWhen employees start becoming disengaged, people automatically assume that there is something about the company or the job that led to the disengagement.More often than not, however, the disengagement is not triggered by the company itself, but rather by the employee’s manager.A poll by Gallup found that 75% of employees who leave their jobs do it because of their boss.This shows that the key to dealing with employee disengagement is to start at the top.Without the right managers, all attempts at improving employee engagement will ultimately fail.ALMOST 70% OF EMPLOYEES RECEIVE NO RECOGNITION IN A MONTHLack of recognition is one of the causes of employee disengagement.Everyone wants to know that what they are doing counts, and the most effective way of letting someone know that their work counts is by recognizing their efforts.Without consistent recognition, employees start feeling like small cogs in a very huge machine, like all the effort they are putting i nto their work is not being appreciated.This can quickly lead to high levels of disengagement. If it remains unaddressed, some of your best talents will start looking for new opportunities where their efforts will be recognized.Despite this knowledge, it is shocking that majority of employers and managers do not give consistent recognition to their employees.According to a report by Achievers, almost 70% of employees do not receive any recognition from their employers in a month.Even worse, 89% do not receive any recognition in a week.If employers want to increase employee engagement levels within their companies, they have to commit to giving more consistent recognition to their employees.21% OF EMPLOYEE FEEL THAT THEIR VOICES ARE NOT GETTING HEARDIn addition to receiving recognition for their efforts, employees also want to feel that their voices are getting heard.How would it make you feel if your opinion gets ignored every time you share it?Not very good, I presume.However, that is exactly what employers are doing to employees.According to the Achievers report, 21% of employees surveyed reported that their employer was poor at asking for feedback from employees. Some employees even reported that their employers do not request for employee feedback at all.If you are wondering why asking for feedback from employees is such an important thing, you should keep in mind the fact that 13% of employees are willing to look for a new job if they feel that their current employer does not listen to them.To avoid losing some of your best talent, as well as the costs that come with hiring and onboarding new employees, you should ensure that your company has a well laid out process for collecting employee feedback.However, you should not stop at that.For employees to feel heard, you must also take appropriate action based on their feedback.ALMOST HALF OF EMPLOYEES DO NOT KNOW THEIR JOB EXPECTATIONS Source: ChartCourse.comWithout a clear understanding of what is expected of you at the workplace, as well as how your job ties in to the organization’s mission and goals, being engaged in your work can be quite a challenge.On the face of it, this looks like something very obvious.Unfortunately, employers do not seem to be paying much attention to this “obvious” piece of information, if Gallup’s State of the American Workplace report is anything to go by.According to the report, only 6 out of every 10 employees are aware of what is expected of them at the workplace.This means that almost half of employees do not know what their employers expect of them, and could therefore be doing something that does not even move the company closer to its mission and goals.SAFETY ISSUES AT THE WORKPLACE CAN BE REDUCED BY INCREASING EMPLOYEE ENGAGEMENTThis might sound surprising, but there is actually a correlation between safety issues at work and employee engagement.The more engaged your wo rkers are, the less likely there are to be safety issues at work.The same Gallup report conducted a study in the healthcare industry and found out that workplaces where employee engagement was high were 70% less likely to experience employee safety incidents.They also noticed that patient safety issues were 58% lower in these workplaces.This makes sense. When employees are passionate and enthusiastic about their jobs, they are more likely to pay greater attention to what they are doing, to avoid unnecessary shortcuts, and so on.This decreases the likelihood of safety mishaps happening.EMPLOYEES WANT GREATER INCLUSIVITYA report by Deloitte found out that diversity and inclusivity was a top priority for 69% of polled executives.The report also shows that 39% of employees are willing to leave their current jobs for a new job in companies whose culture is more inclusive.This is even more significant if majority of your workforce is comprised of millennial workers.According to the report , more than half of millennial employees (53%) will leave their current job to move to a company that embraces diversity and inclusivity.WHY DO EMPLOYEES BECOME DISENGAGED AT WORK?The above statistics show that employee engagement is a huge problem in the modern workplace.Question is, why are so many employees disengaged at work?What are some things that make employees disengaged?Some of the causes of employee disengagement include:Under/Over QualificationWhen there is a disconnect between an employee’s skills and the responsibilities of their position, this can easily lead to employee disengagement.When an employee is underqualified for their position, they will feel overwhelmed by the expectations that come with the position.This can lead to a lot of stress. If the situation is not addressed (usually by way of training and guidance), the employee will start lagging behind, and in most cases, they will end up losing motivation for the job.When an employee is overqualified, on the other hand, they will feel that their skills and expertise are not being fully utilized. They will have nothing to challenge them in their job.If they are not given more responsibilities that are at par with their qualifications, they are likely to get bored with their jobs.Such employees have the highest likelihood of searching for a better, more challenging job.Lack of Career Advancement OpportunitiesLike I mentioned earlier, career growth and development is very important to today’s workers.Employees want to be given opportunities to improve their skills, take on greater responsibilities, and earn more money.If it becomes apparent to an employee that there are no opportunities for them to grow within the company, they will stop giving their all because there will be nothing to be gained from it.They become bored with their job and start doing just the bare minimum required of them at work.Lack of RecognitionEmployees want to know that their work is valued by the organization.W henever they go above and beyond in their duty, they want their efforts to be noticed.When they perform exceptionally well, they want their hard work to be rewarded with bonuses, pay raises, and promotions.If an employee notices that all their hard work is not getting noticed, they will lose their enthusiasm and commitment and stop trying too hard.Excessive WorkloadIf an employee is constantly overburdened with work, they are likely to get burnt out and get resentful. They lose their motivation for their work.This is especially common if all their hard work goes unrecognized. Sometimes, being overworked can even lead to stress, depression, and substance abuse.Poor Work-Life BalanceHaving a proper work-life balance is very important.When employees start feeling like they have to sacrifice their personal time to work for the company, they will become resentful and demotivated.Most will actually start looking for new job opportunities.Lack of Tools and ResourcesSometimes, despite an em ployee’s willingness to do their jobs the right way, the company might not be providing them with the tools and resources they need to get their work done.Having to constantly come up with unorthodox ways of getting their work done reduces the employee’s satisfaction with their job.HOW TO PREVENT YOUR EMPLOYEES FROM BECOMING DISENGAGED AT WORKHaving seen how employee disengagement can take a toll on your company’s bottom line, it is important to put in place measures to prevent your employees from becoming disengaged.Some of the steps you can take to prevent disengagement include:Spot Disengagement EarlyEmployees don’t wake up one day, flip a switch and become disengaged. It starts slowly and snowballs to the point where the employee loses all commitment to their job.The key therefore, is to spot the early signs of disengagement and do something before it becomes a real problem.Some of the early signs of employee disengagement include employees taking frequent sick leaves, r educed communication from employees, the office looking emptier on Fridays and Mondays, subpar performance at work, indifference to team wins, and so on.Come Up With Well-Defined Career Paths for Your EmployeesWe’ve already seen that the feeling that there are no opportunities for growth is one of the major contributors of employee disengagement.To prevent this from afflicting your workers, you should ensure that your employees have a good idea of how their career will progress in the next two, three, or five years.Together with the employee, come up with a personalized and well-defined plan on how the employee will move up the company, acquire new skills, achieve certifications, receive pay raises and bonuses, and so on.This will enhance your employees’ morale and keep them motivated and satisfied.Give RecognitionSince lack of recognition is another major cause of employee disengagement, managers should get in the habit of giving recognition to their staff.When it comes to givi ng recognition, managers should do it immediately following whatever achievement or action warranted the recognition.Don’t wait for the next performance review to give recognition.The more you wait, the less effective the recognition becomes.In addition, you should point out the specific action that you are appreciating, rather than generalizing the recognition. Avoid something like “You have done a great job this month.”It’s also good to note that you don’t have to give elaborate rewards for the recognition to be effective.Even something as simple as giving the employee a card appreciating their good work, inviting them to lunch one day, or recognizing their effort in front of the whole company is enough to make an employee feel appreciated.However, keep in mind that giving recognition is a two edged sword.When giving recognition, managers should make sure that the given recognition matches the effort and achievement of the employee.In other words, the recognition should only be given when it is warranted.In addition, the recognition should come off as sincere.If the employee feels that the recognition is undeserved or insincere, it might even trigger disengagement where there was none initially.Let Them in on the Big PictureEmployees will also become disengaged when they don’t know what’s going above them and don’t understand how their work contributes to the greater goal.To prevent this, it is important to make it clear to the employees what the top end goals of the organization are, and how what they are doing contributes to these goals.This can be done through regular staff meetings where the management lets employees know about the strategic decisions that are being made at the top level.Employees should also be given a chance to share their contributions as regards the company’s direction.WRAPPING UPThe 10 statistics shared in this article show that lack of employee engagement is a huge problem in the workplace today, and one that migh t be costing your company money in multiple ways.Fortunately, I have also detailed some steps that you can take to prevent your employees from becoming disengaged at work.While these measures will reduce the likelihood of widespread employee disengagement, it is also good to note that in as much as you try, it is not possible to entirely stop all workers from becoming disengaged.The trick, therefore, is to create an environment where majority of employees remain engaged and committed to their work.

The Most Adorable Birds in the World

Is the Social Service Broken Essay - 1825 Words

Over the years the population in California has increased and we are seeing more people enrolled in the social services. We are fortunate to have human services to help the less fortunate. As social workers noted; it is not an easy job to help one’s clients, but are committed to help and make a difference in their life (Merrill-Payne). Social services are comprised of general assistance, food stamps, Medi-Cal, children services, older adult-services, mental health, and drug abuse. There are many non-profit organizations that are there to help the community, but the counties offer many programs that are Medi-Cal based to help the community. Regardless of all the programs offered by the County or any non-profit organizations is the social†¦show more content†¦The county will let the people know when they need to be fingerprinted and photo imaged in order to get the benefits. Before the interview the food stamp worker will need to see certain documents such as the social security number, personal identification, proof on income, proof of assets, and proof of expenses. During the interview, the county food stamp office asks several questions to determine if a person qualifies for benefits. It is required by state federal law to ask questions about immigration, felonies, Fraud, and income. It is important to know the person’s background information because the government does not accept any falsification. To use the food stamp benefit people are give a plastic Electronic Benefit Transfer card Electronic Benefit Transfer (EBT) is an electronic system that automates the delivery, redemption, and reconciliation of issued public assistance benefits (Electronic Benefit Transfer Project Home Page). People can only purchase nutritious foods as well as seeds and plants to grow food, and are not allowed to buy tobacco, alcohol, pet food, or anything that has been cooked (California Electronic Benefit Transfer (EBT) Card). The Electronic Benefit Transf er card can trace everything that has been purchased or stolen. It is easier for people to keep their ETB card in a safe place for when they need is to purchase food. Nearly a half million children in California come to their need of childShow MoreRelatedOutcome Based Practice774 Words   |  4 Pagesfor adult health and social care. Within this framework, they stated â€Å"set of outcomes measures which have been agreed to be of value, both nationally and locally for demonstrating the achievements of adult social care†. 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The research questions are: (1) Do abandoned properties actually attract criminals and contribute to social disorder? (2) Can spruce-up efforts result in an overall reductions in crime incidents? (3) can efforts of prevention, enforcement, and reuse effectively reduce crime rates and costs associated with abandoned buildings and vacant lots in communities

Political and Administrative Theories Free Essays

John Stuart Mill in his book â€Å"On Liberty† argues that civil liberty is not something that is widely spread out much in human history. He acknowledges that despotism is the government’s legitimate mode in dealing with barbarians towards creating prospects in the future life of the people. He continues to say that once mankind is capable of being controlled by his own improvement through persuasion or conviction, it therefore implies the passive possession of mankind in the modalities of governance. We will write a custom essay sample on Political and Administrative Theories or any similar topic only for you Order Now The compulsive style of ruling is no longer a means of rule that may be accepted (John, 1863). Mill argues that an individual’s decision over his own mind and body implies personal sovereignty. It sounds sensible and convincing though there is no simplicity in the issue of liberty. Mill believes that, the only freedom that requires conviction is the one in which we are able to pursue our own good in a way that is of our own desire. This aspect will only be possible when we do not happen to impede or deprive the efforts of others in pursuing their own good. He constantly indicates that there is no deal that is of great to worry or say about liberty prior to the final hurdle that one gets. In many areas and aspects of humanity, liberty is spelt as having various difficulties (John, 1863). In his book, Mill talks about the liberty of discussion and thought. He believes that it is important that every person can give whatever they belief on regardless of how it crushes the majority. Consequently, every person’s voice should be given the opportunity of evaluation since it reflects the conceptions held by an individual. Thomas Huxley `Evolution and Ethics’. Thomas Huxley in his book of evolution and ethics uses the two approaches of serious misapplication and morally repugnant Darwinian Theory to the subject of ethics. He states that a society progresses best through those people who prove themselves ethically and fit physically. In his book, Huxley says that there is a war between the psyches of human within themselves. He further states that humans are alienated in the societies’ moral precepts and in cosmos. They are perceived as important in conflict with the existence of the natural conditions. Huxley however saw the dictates of morality as the key in human future for his success and happiness (Thomas, 1958). He however states that natural selection needs not to be deemed as a mixture of blessing, but as a mixture that is damnable. Additionally, natural selection is not a natural evil. He gives the examples of floods, hurricanes and earthquakes killing people as natural evils. These are evils that are unequivocal, but distinct from a point that is capable of leading us into a condemnatory and a retributive mind frame. Elsewhere, he states that natural selection is neither culpably nor intentionally evil. It is only people’s ways and action that are evil. The natural selection evils are quite sinister than those which are derived from competition in death or life for necessities that are scarce (Thomas, 1958). It is the perversity that is heightened of evil due to the good of natural selection as found in one organism when compared to the evil of another organism evil. He continues to say that the good of one organism in one respect is its own evil in the respect of another organism. Consequently, anything that has good also posses evil. Reference John Stuart Mill (1863) On Liberty. London, Longmans, Green Reader and Dyer Thomas Haxley (1958) Evolution and Ethics. London, Routledge How to cite Political and Administrative Theories, Papers

Light and the Nature of Seeing free essay sample

Light is a form of energy that enables us to see things around us. Without light, the world would be completely dark and we wouldn’t be able to see. A luminous source is an object that emits light, such as the sun or a human-made incandescent lamp. There are three types of media. Transparent media allows all light to pass through it, like glass for example. Translucent media allows some light to pass through it, like tinted glass. Opaque media allows absolutely no light to pass through it, such as a brick wall.Light moves at the fastest known speed in the universe. It takes about eight minutes for light to get from the sun to earth and about 1.3 seconds to get from the moon to earth. Light travels in a straight path. Scientists have been trying to determine the speed of light for a long period of time. Galileo was the first scientist to attempt an experiment to determine the speed of light. We will write a custom essay sample on Light and the Nature of Seeing or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In 1638, he and his partner, standing a far distance away from each other, were holding lamps covered with a piece of cloth. Galileo will uncover his lamp and as soon as his partner saw the light he would uncover his. After the experiment, he reasoned that it was instantaneous and that light traveled ten times faster than sound, but he couldn’t determine a specific speed because the human reaction is slower.In 1675, the Danish astronomer Ole Roemer noticed, while observing Jupiter’s moons, that the times of the eclipses of the moons of Jupiter seemed to depend on the relative positions of Jupiter and earth. After doing deeper research, he concluded that light must have traveled at 200,000 km/s. In 1728, an English physicist named James Bradley estimated the speed of light in a vacuum to be around 301,000 km/s. He used stellar aberration to calculate the speed of light. Stellar aberration causes the apparent position of stars to change due to the motion of the earth around the sun. In 1862, a French physicist named Leon Foucault used a similar method to another French physicist named Louis Fizeau, but Leon’s data was more accurate. He shone a light to a rotating mirror, and then it bounced back to a remote fixed mirror and then back to the first rotating mirror. But because the first mirror was rotating, the light bounced back at an angle slightly different from the angle it initially hit the mirror with.

Code. Secret of computer language Review Essay Example

Code. Secret of computer language Review Paper Essay on Code. Secret of computer language It just so happened that in recent programming has been more and more people who received education in very different fields. And in the universities are increasingly moving away from low-level languages. And it turns out that many programmers have no idea how to actually operate the computers and whats going on outside of their IDE. And sometimes we just do not pay attention to these subjects in college, considering that all of these assemblers already outlived its and Java all win. This book is designed to fill the gaps in education or simply to remind of years of youth of it really is. Together with the author we go the way of the different ways of encoding information (Braille, Morse code) to a modern operating system with a graphical interface. In the process, we will learn how to build a simple, but quite a computer from 5 million relays kollichestva and small light bulbs, as they are then replaced on the lamp, and then on the transistors. What is the language of machine code for 8080 and why coprocessors used. We learn how presented fractions and pixels in computer memory and write simple programs in assembly language. It is this low-level part is devoted to the main part of the book. We will write a custom essay sample on Code. Secret of computer language Review specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Code. Secret of computer language Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Code. Secret of computer language Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Well, in the last chapter, the author is very fast pass for every peripheral device such as a scanner, MIDI-sequencer and printers. Recommended reading everyone who in one way or another involved in the programming and wants to get to know what is going on inside this clever piece of iron.

N.B. Meaning

N.B. Meaning Now, pay attention! Thats the basic meaning of N.B.  -   the abbreviated form of the Latin phrase nota bene (literally, note well). N.B. still appears in some forms of academic writing as a way of steering readers attention toward something particularly important. Two or three centuries ago, when classical Latin was widely taught in British and American schools, it wasnt unusual for Latin expressions to appear in English prose. For proof, pick up an American dollar bill and look at the Great Seal of the United States on the reverse (or greenback) side. There on the left, just above the floating eye and the unfinished pyramid, is the Latin phrase Annuit Coeptis, loosely translated as Providence has approved our undertaking. At the base of the pyramid is MDCCLXXVI (1776 in Roman numerals) and below that the motto Novus Ordo Seclorum (a new order of the ages). To the right, on the ribbon in the eagles beak, is the countrys first motto, E Pluribus Unum, or one out of many. Now thats a lot of Latin for a buck! But keep in mind that the Great Seal was approved by Congress way back in 1782. Since 1956 the official motto of the U.S. has been In God We Trust -   in English. As the Romans used to say, Tempora mutantur, nos et mutamur in illis (Times change, and we change with them). Nowadays, with a few exceptions (such as A.D., a.m., and p.m.), abbreviations for Latin words and phrases have become rare in ordinary writing. And so our advice regarding most Latin abbreviations (including e.g., etc., et al., and i.e.) is generally to avoid using them when an English word or phrase would do just as well. If you must use them (say in footnotes, bibliographies, and technical lists), consider these guidelines on how to tell them apart and use them correctly.

Case Study 2 Example | Topics and Well Written Essays - 500 words - 3

2 - Case Study Example In case of an acute hemolytic transfusion reaction due to ABO incompatibility is specifically identified â€Å"a reviewable sentinel event for which a comprehensive analysis of cause, corrective action, preventive action† (2013) an reporting are required. Successful performances of these require the involvement of medical staffs and practice guidelines for ordering blood transfusion. Late 1970’s showed an increasing demand for blood and it’s products with rising cost and transfusion associated morbidity, thereby reviewing blood ordering and transfusion practices and these studies showed gross over-ordering of blood much in excess of anticipated needs. Surplus units of blood ordered by surgeons are not properly utilized resulting in the loss of shelf-life and wastage of blood. Eg: â€Å"In South Africa 7-10% of blood is wasted annually because of over ordering of blood† (Cable et al. 2002). â€Å"Blood ordering is a common practice in surgical field† (Pediatric Preoperative Blood Ordering: When is a Type and Screen or Crossmatch Really Needed?, 2014) where the average requirement for a particular procedure is usually based on subjective blood loss rather than on evidence based estimates. Over ordering with minimal utilization squanders technical time and impose extra expenses on patients.† Excessive cross-matching with minimal transfusion practice was observed in elective surgical patients†. Blood ordering pattern for elective procedures needs to be revised and over ordering should be avoided. The hospitals with blood transfusion committee should forcefully formulate maximum surgical blood ordering policies for elective surgical procedures and also follow up regular auditing. Blood management has also helped those refusing blood products for religious or other reasons. This has revolutionized and broadened the scope of clinical applications which inv olves â€Å"the functions of blood utilization,

Editi a paper Essay Example | Topics and Well Written Essays - 250 words

Editi a paper - Essay Example there are many jobs that require a bilingual employee. Hence there is a huge demand as well as market for bilingual or multilingual people who can easily be employed in such organizations. A person who speaks two languages or more has more opportunities to find a job easily. There are also many other benefits of being a bilingual. As for my experience as a bilingual, I would say I am so luck for being so. As a bilingual, I have come across various incidences which point towards the significance of knowing more than one language. I have learnt many things from reading and interacting in my second language â€Å"English†. My knowledge in English, as a second language has helped me in my career as well as various other aspects of my life. Before learning a second language, my reading and interacting were limited to my first language â€Å"Arabic". The various interactions I had through reading and writing far exceeded the experience I gained through interaction in my first language – â€Å"Arabic†. When I decided to join the foreign language program, I have not imagined that I would benefit so much  from learning a second language. Prior to enrolling in a foreign language program, my experiences were limited in nature; however my scope was widened post learning the second language. After graduating as an English major, I was presented with endless opportunities to explore however I decided to be an English teacher whereas I can choose another job but I prefer to be a teacher. After enrolling in this Master program, I realized how very important to be the true significance of being a bilingual is and used this opportunity to teach educate bilingual or even multilingual students. The issue of â€Å"Bilingualism† is very important of utmost significance not only for bilinguals but it is also in other equally relevant fields such as important since it is related to

Life Cycle Analysis To Assess District Energy

Life Cycle Analysis To Assess District Energy Introduction Life Cycle Analysis is the method used by individuals working in procurement to assess District Energy. This is done so as to understand the amount needed to create cooling on the site; though this analysis is carried out for the duration of 20 40 years and then it is equated with district cooling proposal. The concept of Life Costing is being widely used because of the productivity associated with it. Practically, mechanical / electrical equipment live short lives, but energy consumption, maintenance and renewal programmes are expenses. Both present and future costs are genuine, Example, in a rolling maintenance programme for major installations capital comes from the same fund. If these situations can be met then whole-life costing is vital. (Ferry 1964) Use of Whole life costing methods within the mechanical and electrical installations s most profitable since the amount of money spent on these is always growing. Variances between expenditure and running cost are constant in evaluation of energy-consuming systems. Drawbacks affecting calculations for whole-life costing is unaccountable in building fabric, because, Firstly, running costs of energy-consuming systems equate to considerable sum of the total whole-life costs. Secondly, restrictions on life span of mechanical / electrical installations and since they become obsolete quickly imply these installations should be considered for shorter periods as compared to building fabric. Thirdly, assumptions are held over short period time frames, any hypothesis on cost, interest rates and taxation are possibly more legitimate. (Ferry 1964) Fig 4.1 displays the proportional values of the various life cycle costs that a building owner would need to consider in order to produce cooling on site. (Damecour 2008) As can be seen in the above diagram, there are 3 clear parts to manufacture cooling on site; Natural gas or electricity, Operation and maintenance and Capital. Capital costs Capital for equipment is a fraction of the total installation cost. It is critical to consider this when deciding on what amount can be reduced by using district cooling system. For example in chiller plants, the chiller and cooling towers make up 25% of total cost. [See fig4.2] (Damecour 2008) Operation and maintenance: To operate chillers and cooling towers there is a need for well trained staff and budget for wear and tear of machines. Chillers need water and chemicals to work accurately. It is mandatory for the owner to insure all heavy machinery such as boilers, chillers and cooling towers. Besides, heavy machinery is sold with warranty contracts. Details of Case Study This case study evaluates the capital connected with a district cooling plant and Air cooled chiller package, but over a time frame of 30 years. The particulars of both are below. District Cooling Plant Employer: Emirates Central Cooling Systems Corporation (EMPOWER), Dubai Engineer for the Works: Ellerbe Becket Inc and Tebodin Middle East Ltd. Scope of work: The capacity of the job involved supply, installation, testing and commissioning of a central cooling plant. The plant will have a capacity of 56,000 tonnes of refrigeration. The specification of the building is 135 metres long x 40 metres wide and 37 metres high from basement floor level to the top of the parapet wall. Transgulf Electomechanical LLC, are the contractor on this project and will perform all functions relating to mechanical, electrical, process, civil and architectural components, including supply and installation of machinery. The capacity of work extends towards supply and installation of the instrumentation and controls in two phases for up to 40 ETSs (Energy transfer stations) located in developers buildings around DHCC area and wiring them back to the central plant. It includes engineering as required, procurement and provision of manpower, materials, equipment and two years defect liability period. Project Time Schedule: In March 2008, the first 18000 tons of refrigeration has been connected to the pipeline network. The balance load will happen during part II of the work. The details of the equipment installed are indicated in the Annexure 4.1. District cooling system model Firstly, chilled water is scattered between DCS and buildings through a three-level chilled water piping system, which comprises of production loop with constant speed pump. Each chiller has a dedicated production loop pump, and the two are controlled together. Secondly, distribution loop pumps defeat pressure loss, as acquired by chilled water flowing between DCS and the buildings. Distribution is hydraulically separated from production loop by existence of separate bypass pipes between the loops. All distribution loop pumps have changeable speed. Thirdly, secondary loop in each building includes a number of changeable speeds, with variable flow chilled pumps, for distributing chilled water through the airside apparatus in the building. Heat exchangers are built-in to segregate distribution loop of DCS from secondary loop in each building, which keeps system pressure in the distribution loop at a low. Lastly, there are total 4 zones T1, T2, T3 and T4 as indicated in the drawing (Fig 4.3) which shows the location of the ETS stations and the load detail. The load details of Phase I are in Annexure 4.2. Air Cooled Chiller Package Transgulf Electromechanical has provided information on air cooled chiller package for comparison. Employer : Dubai World Trade Centre Engineer : RMJM consultants. Capacity of chiller : 275 TR Type : Air cooled chiller Information on machinery, model number and power consumption are in annexure 4.3. Factors considered for costing 1. The real cooling capacity that a building needs is a much lower number than the chiller capacity. On the basis of the design cooling loads predicted for the twenty one buildings in four building zone the connected load is 18000 TR and the actual load is 15738 TR. Accordingly the district cooling plant is designed for 8 chillers working (8 x 2000 TR = 16000 TR) and 1 standby (2000 TR). The connected load (17796 TR) correlates to sum of fixed capacity of the chiller plants needed by each building if each had a plant, but 16000 TR relates to the cooling capacity required of a DCS to serve 21 ETS stations. Outcome of diversity in cooling load among buildings can be taken advantage of by using district cooling plant to serve groups of buildings. Air cooled chiller packages are in multiples of 275 TR (66 chiller packages) as total load of 18150 TR to be fixed in 21 buildings. 2. Study is based on NPV (present worth value) and EAC (equivalent annual cost); across initial and operating costs. Choice depends on which requires least LCC (life-cycle cost) and can execute the duty for its life span. (Al Daini et al 2002). Comparisons are made only between co-terminated proposals, to guarantee comparable results. Co-termination means, lives of systems involved end at the same time, which is not the case in this work. When alternatives have unequal lives, time span for analysis can be set by common multiples of system lives or a study period ending with disposal of all systems. Common-multiple method is used to accommodate NPV for unequal-life systems. Like in this case study, least common multiple is 30 years for the district cooling plant. This means the air cooled chilled package has a lifetime of 15 years; and would be substituted once during the analysis period. The total NPV for analysis is derived by adding the NPV of single entity considered, both future single payment (i.e. replacement cost) items and series of equal future payment (i.e. annual operating cost). The value of money is the job of available interest rates and inflation rate. In equivalent annual method, all costs incurred over time are changed to an equal yearly amount. The EAC comparison method is most fitting, especially for systems that comprise of many subsystems with unequal life spans. In this case, there is no need to assume the replacement of a system. 3. Owning Costs: Economic analysis demands derivation of first cost and operational costs for every projected selection. It is significant in correctly assessing to reach a final decision, for overall approach and system choices. Life cycle cost evaluation comprises of first costs, utility costs, maintenance costs, operational costs, utility escalation rates and owners cost of money. (Richards et al 2000). There are four rudiments to calculate annual owning costs: Initial cost, Analysis or study period, Cost of capital and other periodic costs like replacement, refurbishment or disposal fees. These combined with operating costs, equates to economic analysis. (ASHRAE 2003) Initial costs A fair ballpark of capital cost of parts has resulted from cost records of installations of similar le design or quotations from manufacturers and contractors or referring market available cost- estimations. Analysis period Time span during which an economic analysis is carried out affects the outcome. This is decided by clear objectives, like length of planned ownership or loan repayment period. As the length of time in analysis period grows, the net present value decreases. The time period is not affected by equipment depreciation or service life, though it may be valuable for the study. In this study a single design life of 15 years was used to show a midway point between small and medium capacity equipment range for air cooled chiller package. Smaller equipment has a life span of 10 to 15 years while medium size equipment has 15 to 20 years. (Archibald et al 2002) In district cooling plants, machinery is all large scale and has a life span of 30 to 40 years as declared by district solution providers (Tabreed 2007). Though, in this analysis 30 years is considered to minimize the intricacy and work. Interest or discount rate Borrowed capital has high interest rates, albeit this rate is not apt enough to use in the study. Discount rate instead is used to give the actual value of money. This rate is affected by individual investment and profit, while interest rates are fixed. (ASHRAE 2003) Most establishments use WACC to calculate costs of capital as organizations can produce capital through debt or equity. Although return required for equity and debt is varied, debt holders have high risk as they access the organizations profits. Hence cost of the capital is calculated by taking a weighted average of both, and the weightings are introduced by level of debt and equity in the companys asset base, or the companys gearing. (EMA 2002) This estimation is from the hypothesis of cost of capital as 10% (as per break up in Annexure 4.4) to DCS by private sector. Operating costs Operating costs comprises of; cost of electricity, wages of employees, supplies, water, materials, chemicals and annual frequent costs associated with functioning of the system. For the vapor compression system, operating costs are subject to electricity needed to work the compressor. Extra electricity is needed to work the condenser water pump and cooling tower fans. This has been regarded in the calculation. DEWA tariff has also been considered. Wages are as per current UAE market rate. Maintenance Costs Maintenance cost is equal to final cost estimated for air-conditioning systems. Most frequently used maintenance towards building HVAC services are run-to-failure (unsuitable for the hospital), preventive, and predictive maintenance. Run to failure, capital is not spent until the machinery gives way. Preventive maintenance is planned by run time or calendar. Predictive maintenance is done by supervising machinery and using condition and performance indices to increase repair intervals. HVACR maintenance and utility costs form a high percentage of operating cost, hence it is critical to reduce cost on maintenance by managing the process well. Maintenance cost is hard to measure as it is liable on many variables like local labor rates, experience, age of the system, length of time of operation, etc. Although a fair prediction is derived from quotations for repairs and Annual maintenance contracts. Sensitivity analysis Most whole-life cost calculation includes a lot of suppositions and it is not probable to get the effect of change in these practically. One method of testing results attained from whole life cost calculation is to repeat the calculations in a methodical way, changing the value of a single variable (i.e. assumption) each time, and then one can see how sensitive results are to changes in the variable under consideration. Results if seen on a graph can show when; example, one component becomes more attractive than another. (Ferry 1964) Consequently, sensitivity analysis was done to learn the effect of change in DEWA tariff rate on life costs by keeping all parameters same and results are reflected in Figure I and Figure IV. Also the same was done by changing hours of operation; results are seen in Figure III and Figure VI. Explanatory notes to the costing Capital costs Air cooled chiller package 275 TR chiller package is used for contrast study as data of cost and power usage are accessible for a recent project completed in 2007 (Dubai World trade centre) Design fees are taken @ 4 % as per market trend in contracting business in Dubai. Total load requirement as per ETS integrator data is 18,000 TR which needs 66 number of 275 TR air cooled chiller packages. Hence cost as per 66 chiller packages was noted. District cooling plant The capital cost figures shown are for a recently executed project (Phase I completed in March 2008) at Dubai Health care city. Architect/Consultant fees are taken @ 8% as per market trend in contracting business in Dubai. Plant is constructed for 56,000 TR capacity. Civil cost should be allocated to 56,000 TR . Though this difference was not made in capital cost. Chiller cost is 18,000 TR (2000 TR x 9nos) in line with phase I ETS load. Land cost is taken from Dubai rent prices in 2006 in the Dubai Health care city. (UAE property trends 2006) Economic calculation requires consideration towards the space for the cooling machine which will be vacated for other purposes since the consumer is connected to the DC network (Soderman 2007). Although this was not considered in the calculation. Operating costs District cooling plant Power consumption for the plant is from SCADA reports as per annexure 4.5. The power consumption charges are assumed at 20 fils/kwh as per DEWA tariff rates from May2008. Sensitivity analysis by changing the rate to 33 fils/kwh is also done to learn the influence of revised rates from DEWA since June2008. Dubai health care city has residential, hospital buildings and office buildings and so has different running hours. Running hours are assumed as 4800 hrs per year (16 hours /day x 300 days working) and all calculations are based on 4800 hrs of operation. Results for operating at 3200 hrs and 6000 hrs are evaluated. Water costs are assumed as 4 fils/gallon as per DEWA tariff and run hours are 4800 hrs as per above. Air cooled package Power consumption is assumed as 20 fils/kwh as per DEWA tariff rate from May 2008. Since the start of slab tariff, consumption charges for each chiller package will be 20 fils/kwh as total consumption would not exceed the slab. Water and chemical requirements are not applicable for air cooled chiller package, since cooling tower is removed and chilled water system being a closed system the makeup water requirements are irrelevant to consider in costing. Life cycle costs are from budget costing figures formulated from basic equipment sizes, not detailed design solutions. This is supposed to be precise for comparison. 4.5 Inferences from cost comparison Figure I Figure IV District cooling plant has huge initial capital cost, though in the long term it is more advantageous. According to present worth method, district cooling is advantageous from 13th year when present worth becomes lower than air cooled chiller package, which is even before replacement of the chiller package. As operating and maintenance costs are sizably less with the same tariff for electricity as per before May 2008. Since the start of slab tariff rates for electricity from May 2008, air cooled chiller package NPV is lower than district cooling. As increase in operating costs of district cooling because of higher tariff (33 fils/kwh) when compared to air-cooled chiller package (20 fils/kwh) neutralises the advantage of less power consumption per unit of cooling produced by district cooling as compared to air cooled chiller package. Thus the massive disparity in capital costs of district cooling makes it not worth. Figure II In district cooling, capital cost is 56% while operation and maintenance is 44% of the cost. Compared to air cooled chiller package, initial capital investment is 30% while operation and maintenance is 70%. Hence throughout a life cycle of 30 years, OM costs for air cooled chiller package are much higher than the benefit of low capital investment. With equivalent annual cost method, district cooling plant is beneficial when weighed against air-cooled chiller package. Figure III and Figure VI 1. Operating hours of a cooling plant differ widely with use, example the chiller plant in typically HVAC equipment in commercial buildings run for a portion of 2,500 to 3,500 hours that the building is occupied. But in the industrial sector, commercial cooling systems are expanded to comprise of process cooling and function on two shifts or around the clock. Here it is possible to note that the plant runs for 8,000 hours per year. (Archibald et al 2002) Cost differentiation shows as operating hours lessen, differences in present worth between the DCP and ACC reduces. As hours of operation lessen, OM costs lessen and DCP loses the advantage to ACC. Although with more operating hours DCP becomes much more attractive than ACC. 2. As per the present worth method, DCP becomes productive from 15th year, the present worth becomes less than ACC because of substituting of the chiller package with 3600 hours of operation, in the 13th year with 4800 hours of operation and in 9th year of operation with 6000 hours of operation. Here it is visible how costs; except initial capital costs; can influence decisions. Figure V Comparison of DCP and ACC considering inflation is shown. Rates supposed for inflation the difference in costs of ACC and DCP over 30 years increases as compared to the cost comparison without inflation. District cooling system considerations and benefits. High cooling load demand and density are predominant reasons to select District Cooling. It is most commonly seen in universities, government facilities and hospitals, or in office and industrial complexes and high- rise urban districts. A high load density means a less extensive distribution system, which is very expensive. Shorter runs also minimize thermal and pressure losses and maintenance costs. A desirable companion to high load density is a favorable load factor. Means that the aggregate load over time tends to approach the peak block load condition. This analysis considers both factors, thus making DCP a better option. Infrastructure Requirements District Cooling Scheme needs a central plant and a central pipeline network to function. Consideration of these site necessities for district cooling facilities in planning and programming process for Strategic New Development areas in the beginning stage is priority to hold the master plans and certain easy execution of District Cooling Scheme. (Parsons 2003) Due to fast paced construction process any changes to the master plans and infrastructure corridors, can severely impact the completion of the district cooling project. Traffic Impact Review Since some of the pipelines laying works need to be on busy roads it is important to have an extensive Traffic Impact Assessment. For Dubai health care city careful notification was provided to the stakeholders to guarantee no inconvenience was caused due to pipeline installation. Under Ground Congestion These are higher than anticipated costs since there may be unexpected costs relating to congestion in underground services. These need to be overcome primarily in the planning process. (IDEA 2007) Chilled Water Temperature Differential Low chilled water temperature differential (Ά T) is a major district cooling weakness. Poor Ά T performance at cooling coils means lost cooling capacity, wasted energy, extra cost and added complexity for a thermal utility, its chilled water customers, or both. Health care city district cooling plant has power consumption of 1.12 kw/tr which is more than the desired consumption of less than 1 kw/tr due to low chilled water temperature difference. This increases operating costs. To encourage customers to invest in technology to improve Ά T performance in their buildings, an increasing number of utilities have established chilled water rates that vary inversely with Ά T . Figure 4.4 is an example of rates charged to customers from one prominent university in the United States. As can be seen, the lower the Ά T, the greater the rate. Conversely, customers that minimize their flow rate per ton cooling are rewarded. (Moe 2005) Risks and Uncertainties Faced By District Cooling Customers There is no bargaining power with the District Cooling Services Provider once a building is connected to District Cooling Scheme and Uncertainties over future tariffs. Risks and Uncertainties Faced By District Cooling Investors Demand is unpredictable, Uncertainty in dealing with building owners on District Cooling Supply Agreement (negotiations can be time consuming), Unpredictability relating to land costs for District Cooling plant room and distribution pipelines and High initial capital investments with long payback periods. (Parsons 2003) Strategic Environmental Assessment Noise The central chiller plant and pumps of the district cooling scheme are housed in underground plant rooms, this reduces the noise. As buildings connecting to District Cooling Scheme do not need to have their own chiller plant, the district cooling user building will have no noise. Appropriate techniques can be implemented to reduce the noise during construction stage of district cooling scheme. (Parsons 2003) Air Quality District cooling reduces electricity energy thus minimising carbon dioxide emission and will help improve air quality. Based on the case study for 4800 hours of operation the energy saving by using district cooling would be (1.91 -1.12)kw/ton x 4800 hrs x 18000 tons i.e. 68,256,000 KWh , which is equivalent to 104,772,960 lbs of CO2 (Electricity carbon emission factor 1.535 lbs CO2/KWh).(EPA 2006) Benefits of district cooling for project owners: A highly efficient solution: Given that this region has extreme heat, air conditioning can account for as much as 70% of the energy consumption in a typical building. Moving this load from individual houses to a central plant, the housing electric load is reduced considerably and along with it the number of electric substations and length and sizes of electric cables. District cooling requires far less electric power than multiple plant rooms or ducted splits. Also the plant room can house the electric substation, enormously reducing the electric works. Significant capital and O M cost reduction: Removing in-building or on-premise chiller plants by using district cooling schemes; means that availability of free land for other use. Also project owners do not need to buy more land to operate and maintain complex central air conditioning plants. They also need not have to replace expensive equipment. The industry has a two part tariff structure which is complex to understand. It is based on an Annual Capacity or Connection Charge for every ton committed to a property and also a Consumption Charge for the energy used measured through an energy meter installed for every end user. Palm district cooling has developed a new form of tariff structure that maintains the consumption charge but replaces the annual capacity charge or connection charge with a One Time Service Connection Charge (AED/sq ft) of the property. (Prashant 2007) Benefits of this tariff structure: Developer need not pay advance cost for DC, Developer does not need to pay for any air-conditioning chiller units during construction stage. The tenant or property owner contributes to the cost of the DC system at the time of purchasing his property [as he would do with conventional AC equipment]. When district cooling is an option, the building owner can invest capital towards amenities for tenants. Reduced project complexity means faster project completion: Dedicated experienced professionals take over the complex task of providing the cooling needs of the project, simplifying and expediting the project development cycle and expediting move-in dates and income generation Improved ROI numbers: Reduced initial up-front capital outlays for developers, faster move-in dates, reduced OM costs and the elimination of costs related to technical staff all translate into less financial risk for project owners, with improved return on investment and better project economies overall for developers and owners. No idle expensive capacity: District Cooling Solutions allow project owners to buy the capacity they need when they need it. Improved reliability and ease of operation: Economies of scale allow for sophisticated redundant systems resulting in superior 100% up-time performance and ease of operation for project owners. Units used are high-tech and industrial which dramatically decreases the failure frequency compared to commercial equipment. District cooling reliability is in excess of 99.94%. (Source: IDEA). (Papadopoulos et al 2006) The central chiller plant concept, almost by definition, is more flexible and more reliable and possesses a greater degree of redundancy than the concept involving individual cooling packages. Greater flexibility in design: Architects have more creative leeway due to the elimination of heavy machinery. Ecologically friendly: It provides for a noise free, clean environment for the tenants. The absence of tall towers allows for a clean environment.

Currency Risk Management Essay

Currency or Exchange rate risk management is an integral part in every firm’s decisions about foreign currency exposure. Currency risk hedging strategies entail eliminating or reducing this risk, and require understanding of both the ways that the exchange rate risk could affect the operations of economic agents and techniques to deal with the consequent risk implications. Selecting the appropriate hedging strategy is often a daunting task due to the complexities involved in measuring accurately current risk exposure and deciding on the appropriate degree of risk exposure that ought to be covered. The need for currency risk management started to arise after the break down of the Bretton Woods system and the end of the U.S. dollar peg to gold in 1973. The issue of currency risk management for non-financial firms is independent from their core Business and is usually dealt by their corporate treasuries. Most multinational firms have also risk committees to oversee the treasury’s strategy in managing the exchange rate (and interest Rate) risk. This shows the importance that firms put on risk management issues and techniques. Conversely, international investors usually, but not always, manage their exchange rate risk independently from the underlying assets and/or liabilities. Since their currency exposure is related to translation risks on assets and liabilities denominated in foreign currencies, they tend to consider currencies as a separate asset class requiring a Currency overlay mandate. It can be argued that prudent management of multinational firms requires currency risk hedging for their foreign transaction, translation and economic operations to avoid potentially adverse currency effects on their profitability and market valuation. DEFINITION AND TYPES OF CURRENCY RISK A common definition of currency risk relates to the effect of unexpected exchange rate changes on the value of the firm. In particular, it is defined as the possible direct loss (as a result of an unhedged exposure) or indirect loss in the firm’s cash flows, assets and liabilities, net profit and, in turn, its stock market value from an exchange rate move. To manage the exchange rate risk inherent in multinational firms’ operations, a firm needs to determine the specific type of current risk exposure, the hedging strategy and the available instruments to deal with these currency risks. Multinational firms are participants in currency markets by virtue of their international operations. To measure the impact of exchange rate movements on a firm that is engaged in foreign-currency denominated transactions, i.e., the implied value-at-risk (VAR) from exchange rate moves, we need to identify the type of risks that the firm is exposed to and the amount of risk encountered. The four main types of currency / exchange rate risk that exist: 1. Translation risk: A firm’s translation exposure is the extent to which its financial reporting is affected by exchange rate movements. As all firms generally must prepare consolidated financial statements for reporting purposes, the consolidation process for multinationals entails translating foreign assets and liabilities or the financial statements of foreign subsidiaries from foreign to domestic currency. While translation exposure may not affect a firm’s cash flows, it could have a significant impact on a firm’s reported earnings and therefore its stock price. Translation exposure is distinguished from transaction risk as a result of income and losses from various types of risk having different accounting treatments. Translation gives special consideration to assets and liabilities with regards to foreign exchange risk, whereas exposures to revenues and expenses can often be managed ex ante by managing transactional exposures when cash flows take place; 2. Transaction risk: A firm has transaction exposure whenever it has contractual cash flows (receivables and payables) whose values are subject to unanticipated changes in exchange rates due to a contract being denominated in a foreign currency. To realize the domestic value of its foreign-denominated cash flows, the firm must exchange foreign currency for domestic currency. As firms negotiate contracts with set prices and delivery dates in the face of a volatile foreign exchange market with exchange rates constantly fluctuating, the firms face a risk of changes in the exchange rate between the foreign and domestic currency. Firms generally become exposed as a direct result of activities such as importing and exporting or borrowing and investing. Exchange rates may move by up to 10% within any single year, which can significantly affect a firm’s cash flows, meaning a 10% decline in the value of a receivable or a 10% rise in the value of a payable. Such outcomes could be troubl esome as export profits could be negated entirely or import costs could rise substantially; 3. Economic Risk: A firm has economic exposure (also known as operating exposure) to the degree that its market value is influenced by unexpected exchange rate fluctuations. Such exchange rate adjustments can severely affect the firm’s position with regards to its competitors, the firm’s future cash flows, and ultimately the firm’s value. Economic exposure can affect the present value of future cash flows. Any transaction that exposes the firm to foreign exchange risk also exposes the firm economically, but economic exposure can be caused by other business activities and investments which may not be mere international transactions, such as future cash flows from fixed assets. A shift in exchange rates that influences the demand for a good in some country would also be an economic exposure for a firm that sells that good; and 4. Contingent Risk: A firm has contingent exposure when bidding for foreign projects or negotiating other contracts or foreign direct investments. Such an exposure arises from the potential for a firm to suddenly face a transactional or economic foreign exchange risk, contingent on the outcome of some contract or negotiation. For example, a firm could be waiting for a project bid to be accepted by a foreign business or government that if accepted would result in an immediate receivable. While waiting, the firm faces a contingent exposure from the uncertainty as to whether or not that receivable will happen. If the bid is accepted and a receivable is paid the firm then faces a transaction exposure, so a firm may prefer to manage contingent exposures. MEASUREMENT OF EXCHANGE RATE RISK After defining the types of exchange rate risk that a firm is exposed to, a crucial aspect in a firm’s exchange rate risk management decisions is the measurement of these risks.   Measuring currency risk may prove difficult, at least with regards to translation and economic risk. At present, a widely used method is the value-at-risk (VAR) model. Broadly, value at risk is defined as the maximum loss for a given exposure over a given time horizon with z% confidence. The VAR methodology can be used to measure a variety of types of risk, helping firms in their risk management. However, the VAR does not define what happens to the exposure for the (100 – z) % point of confidence, i.e., the worst case scenario. Since the VAR model does not define the maximum loss with 100 percent confidence, firms often set operational limits, such as nominal amounts or stop loss orders, in addition to VAR limits, to reach the highest possible coverage. VALUE-AT-RISK CALCULATION The VAR measure of exchange rate risk is used by firms to estimate the riskiness of a foreign exchange position resulting from a firm’s activities, including the foreign exchange position of its treasury, over a certain time period under normal conditions. The VAR calculation depends on 3 parameters: †¢ The holding period, i.e., the length of time over which the foreign exchange position is planned to be held. The typical holding period is 1 day. †¢ The confidence level at which the estimate is planned to be made. The usual confidence levels are 99 percent and 95 percent. †¢ The unit of currency to be used for the denomination of the VAR. Assuming a holding period of x days and a confidence level of y%, the VAR measures what will be the maximum loss (i.e., the decrease in the market value of a foreign exchange position) over x days, if the x-days period is not one of the (100-y)% x-days periods that are the worst under normal conditions. Thus, if the foreign exchange position has a 1-day VAR of $10 million at the 99 percent confidence level, the firm should expect that, with a probability of 99 percent, the value of this position will decrease by no more than $10 million during 1 day, provided that usual conditions will prevail over that 1 day. In other words, the firm should expect that the value of its foreign exchange rate position will decrease by no more than $10 million on 99 out of 100 usual trading days or by more than $10 million on 1 out of every 100 usual trading days. To calculate the VAR, there exists a variety of models. Among them, the more widely-used are: (1) the historical simulation, which assumes that currency returns on a firm’s foreign exchange position will have the same distribution as they had in the past; (2) the variance- covariance model, which assumes that currency returns on a firm’s total foreign exchange position are always (jointly) normally distributed and that the change in the value of the foreign exchange position is linearly dependent on all currency returns; and (3) Monte Carlo simulation which assumes that future currency returns will be randomly distributed. The historical simulation is the simplest method of calculation. This involves running the firm’s current foreign exchange position across a set of historical exchange rate changes to yield a distribution of losses in the value of the foreign exchange position, say 1,000, and then computing a percentile (the VAR). Thus, assuming a 99 percent confidence level and a 1-day holding period, the VAR could be computed by sorting in ascending order the 1,000 daily losses and taking the 11th largest loss out of the 1,000 (since the confidence level implies that 1 percent of losses – 10 losses –should exceed the VAR). The main benefit of this method is that it does not assume a normal distribution of currency returns, as it is well documented that these returns are not normal but rather leptokurtic. Its shortcomings, however, are that this calculation requires a large database and is computationally intensive. The variance – covariance model assumes that: (1) the change in the value of a firm’s total foreign exchange position is a linear combination of all the changes in the values of individual foreign exchange positions, so that also the total currency return is linearly dependent on all individual currency returns; and (2) the currency returns are jointly normally distributed. Thus, for a 99 percent confidence level, the VAR can be calculated as: VAR= -Vp (Mp + 2.33 Sp) Where, Vp is the initial value (in currency units) of the foreign exchange position Mp is the mean of the currency return on the firm’s total foreign exchange position, which is a weighted average of individual foreign exchange positions Sp is the standard deviation of the currency return on the firm’s total foreign exchange position, which is the standard deviation of the weighted transformation of the variance-covariance matrix of individual foreign exchange positions While the variance-covariance model allows for a quick calculation, its drawback includes the restrictive assumptions of a normal distribution of currency returns and a linear combination of the total foreign exchange position. Note, however, that the normality assumption could be relaxed. When a non-normal distribution is used instead, the computational cost would be higher due to the additional estimation of the confidence interval for the loss exceeding the VAR. Monte Carlo simulation usually involves principal components analysis of the variance-covariance model, followed by random simulation of the components. While it’s main advantages include its ability to handle any underlying distribution and to more accurately assess the VAR when non-linear currency factors are present in the foreign exchange position (e.g., options), its serious drawback is the computationally intensive process. MANAGEMENT OF CURRENCY RISK After identifying the types of exchange rate risk and measuring the associated risk exposure, a firm needs to decide whether to hedge or not these risks. In international finance, the issue of the appropriate strategy to manage (hedge) the different types of exchange rate risk has yet to be settled. In practice, however, corporate treasurers have used various currency risk management strategies depending, ceteris paribus, on the prevalence of a certain type of risk and the size of the firm. A. Hedging Strategies Indicatively, transaction risk is often hedged tactically (selectively) or strategically to preserve cash flows and earnings, depending on the firm’s treasury view on the future movements of the currencies involved. Tactical hedging is used by most firms to hedge their transaction currency risk relating to short-term receivable and payable transactions, while strategic hedging is used for longer-period transactions. However, some firms decide to use passive hedging, which involves the maintenance of the same hedging structure and execution over regular hedging periods, irrespective of currency expectations—that is, it does not require that a firm takes a currency view. Translation, or balance sheet, risk is hedged very infrequently and non-systematically, often to avoid the impact of possible abrupt currency shocks on net assets. This risk involves mainly long-term foreign exposures, such as the firm’s valuation of subsidiaries, its debt structure and international investments. However, the long-term nature of these items and the fact that currency translation affects the balance sheet rather than the income statement of a firm, make hedging of the translation risk less of a priority for management. For the translation of currency risk of a subsidiary’s value, it is standard practice to hedge the net balance sheet exposures, i.e., the net assets (gross assets less liabilities) of the subsidiary that might be affected by an adverse exchange rate move. Within the framework of hedging the exchange rate risk in a consolidated balance sheet, the issue of hedging a firm’s debt profile is also of paramount importance. The currency and maturity composition of a firm’s debt determines the susceptibility of its net equity and earnings to exchange rate changes. To reduce the impact of exchange rates on the volatility of earnings, the firm may use an optimization model to devise an optimal set of hedging strategies to manage its currency risk. Hedging the remaining currency exposure after the optimization of the debt composition is a difficult task. A firm may use tactical hedging, in addition to optimization, to reduce the residual currency risk. Moreover, if exchange rates do not move in the anticipated direction, translation risk hedging may cause either cash flow or earnings volatility. Therefore, hedging translation risk often involves careful weighing the costs of hedging against the potential cost of not hedging. Economic risk is often hedged as a residual risk. Economic risk is difficult to quantify, as it reflects the potential impact of exchange rate moves on the present value of future cash flows. This may require measuring the potential impact of an exchange rate deviation from the benchmark rate used to forecast a firm’s revenue and cost streams over a given period. In this case, the impact on each flow may be netted out over product lines and across markets, with the net economic risk becoming small for firms that invest in many foreign markets because of offsetting effects. Also, if exchange rate changes follow inflation differentials (through PPP) and a firm has a subsidiary that faces cost inflation above the general inflation rate, the firm could find its competitiveness eroding and its original value deteriorating as a result of exchange rate adjustments that are not in line with PPP. Under these circumstances, the firm could best hedge its economic exposure by creating payables (e.g., financing operations) in the currency that the firm’s subsidiary experiences the higher cost inflation (i.e., in the currency that the firm’s value is vulnerable). Sophisticated corporate treasuries, however, are developing efficient frontiers of hedging strategies as a more integrated approach to hedge currency risk than buying a plain vanilla hedge to cover certain foreign exchange exposure. In effect, an efficient frontier measures the cost of the hedge against the degree of risk hedged. Thus, an efficient frontier determines the most efficient hedging strategy as that which is the cheapest for the most risk hedged. Given a currency view and exposure, hedging optimization models usually compare 100 percent unhedged strategies with 100 percent hedged using vanilla forwards and option strategies in order to find the optimal one. Although this approach to managing risk provides the least-cost hedging structure for a given risk profile, it critically depends on the corporate treasurer’s view of the exchange rate. Note that such optimization can be used for transaction, translation or economic currency risk, provided that the firm has a specific currency view (i.e., a possible exchange rate forecast over a specified time period). B. Hedging Benchmarks and Performance Hedging performance can be measured as a distance to a given benchmark rate. The risk embedded in the hedge is usually expressed as a VAR number that will be consistent with the performance measure. Hedging optimization models, as methods for optimizing hedging strategies for currency-denominated cash flows, help find the most efficient hedge for individual currency exposures, while most of them do not provide a hedging process for multiple currency hedging. Thus, both performance and VAR are measured as effective hedge rates, calculated for each hedging instrument used and the risk in terms of a confidence level. A single optimal hedging strategy is then selected by defining the risk that a firm is willing to take. This strategy is the lowest possible effective hedge rate for an acceptable level of uncertainty. In this way, when the firm’s currency view entails a perception of volatility, options generate a better or similar effective hedge rate at lower uncertainty than the unhedged position. Furthermore, when local currency has a relatively high yield and low volatility, options will almost always generate a better effective hedging rate than forward hedging. As part of the currency risk management policy, firms use a variety of hedging benchmarks to manage their hedging strategies effectively. Such benchmarks could be the hedging level (i.e., a certain percent), the reporting period especially for firms that use forward hedging to limit the volatility of their net equity (e.g., quarterly or 12-month benchmarks) and budget exchange rates, depending on the prevailing accounting rules. Moreover, benchmarks enable the performance of individual hedges to be measured against that of the firm. C. Hedging and Budget Rates Budget exchange rates provide firms with a reference exchange rate level. Setting budget exchange rates is often linked to the firm’s sensitivities and benchmarking priorities. After deciding on the budget rate, the corporate treasury will have to secure an appropriate hedge rate and ensure that there is minimal deviation from that hedge rate. This process will determine the frequency and instruments to be used in hedging. It should be further pointed out that persistent moves relative to the numeracies (functional) currency should be reflected in the budget rates, or strategic positioning and hedging should be considered. Firms have different practices in setting budget exchange rates. Many corporate treasurers of multinational firms prefer to use PPP rates as budget exchange rates, often with the understanding that tactical hedging may be needed over the short-term where the forecasting performance of the PPP model is usually poor.2 However, other multinational firms prefer to set the budget rate in accordance with their sales calendar and, in turn, with their hedging strategy. For example, if a firm has a quarterly sales calendar, it may decide to hedge its next year’s quarterly foreign currency cash flow in such a way that they do not differ by more than a certain percentage from the cash flow in the same quarter of last year. Accordingly, this will necessitate four hedges per year, each of one-year tenor, with hedging being done at the end of the period, using the end-of-period exchange rate as its budget rate. Alternatively, a firm may decide to set its budget exchange rate at the daily average exchange rate over the previous fiscal year. In such case, the firm would need to use one hedge through, perhaps, an average-based instrument like an option or a synthetic forward. This hedging operation will usually be executed on the last day of the previous fiscal year, with starting day the first day of the new fiscal year. Furthermore, a firm may also use passive currency hedging, such as hedging the average value of a foreign currency cash flow over a specified time period, relative to a previous period, through option structures available in the market. This type of hedging strategy is fairly simple and easier to monitor. The relative version of the PPP theory states that bilateral exchange rates would adju st to the relative price differentials of the same good traded in the two countries. Setting budget exchange rates is also crucial for a firm’s pricing strategy, in addition to their importance for defining the benchmark hedging performance and tenor of a hedge (as the latter generally match cash flow hedging requirements). However, the budget exchange rate used to forecast cash flows needs to be close to the spot exchange rate in order to avoid possible major changes in the firm’s pricing strategy or to reconsider its hedging strategy. In this connection, it should be noted that forecasting future exchange rates is a key aspect of a firm’s pricing strategy. Since it has been well-documented that forward rates are poor predictors of future spot rates, structural or time-series exchange rate models need to be employed for such an endeavour. This becomes evident if we compare a firm’s net cash flows estimated by using the forecast rate and the future spot exchange rate. For an investment in a foreign subsidiary, moreover, the budget exchange rate is often the accounting rate, i.e., the exchange rate at the end of the previous fiscal year. D. Best Practices for Exchange Rate Risk Management For their currency risk management decisions, firms with significant exchange rate exposure often need to establish an operational framework of best practices. These practices or principles may include: 1. Identification of the types of exchange rate risk that a firm is exposed to and measurement of the associated risk exposure. As mentioned before, this involves determination of the transaction, translation and economic risks, along with specific reference to the currencies that are related to each type of currency risk. In addition, measuring these currency risks—using various models (e.g. VAR)—is another critical element in identifying hedging positions. 2. Development of an exchange rate risk management strategy. After identifying the types of currency risk and measuring the firm’s risk exposure, a currency strategy needs to be established on how to deal with these risks. In particular, this strategy should specify the firm’s currency hedging objectives—whether and why the firm should fully or partially hedge its currency exposures. Furthermore, a detailed currency hedging approach should be established. It is imperative that a firm details the overall currency risk management strategy on the operational level, including the execution process of currency hedging, the hedging instruments to be used, and the monitoring procedures of currency hedges. 3. Creation of a centralized entity in the firm’s treasury to deal with the practical aspects of the execution of exchange rate hedging. This entity will be responsible for exchange rate forecasting, the hedging approach mechanisms, the accounting procedures regarding currency risk, costs of currency hedging, and the establishment of benchmarks for measuring the performance of currency hedging. (These operations may be undertaken by a specialized team headed by the treasurer or, for large multinational firms, by a chief dealer.) 4. Development of a set of controls to monitor a firm’s exchange rate risk and ensure appropriate position taking. This includes setting position limits for each hedging instrument, position monitoring through mark-to-market valuations of all currency positions on a daily basis (or intraday), and the establishment of currency hedging benchmarks for periodic monitoring of hedging performance (usually monthly). 5. Establishment of a risk oversight committee. This committee would in particular approve limits on position taking, examine the appropriateness of hedging instruments and associated VAR positions, and review the risk management policy on a regular basis. Managing exchange rate risk exposure has gained prominence in the last decade, as a result of the unusual occurrence of a large number of currency crises. From the corporate managers’ perspective, currency risk management is increasingly viewed as a prudent approach to reducing a firm’s vulnerabilities from major exchange rate movements. This attitude has also been reinforced by recent international attention on both accounting and balance sheet risks. HEDGING INSTRUMENTS FOR MANAGING EXCHANGE RATE RISK Within the framework of a currency risk management strategy, the hedging instruments allowed to manage currency risk should be specified. The available hedging instruments are enormous, both in variety and complexity, and have followed the dramatic increase in the specific hedging needs of the modern firm. These instruments include both OTC and exchange-traded products. Among the most common OTC currency hedging instruments are currency forwards and cross-currency swaps. Currency forwards are defined as buying a currency contract for future delivery at a price set today. Two types of forwards contracts are often used: outright forwards (involving the physical delivery of currencies) and non-deliverable forwards (which are settled on a net cash basis). With forwards, the firm is fully hedged. However, the high cost of forward contracts and the risk of the exchange rate moving in the opposite direction are serious disadvantages. The two most commonly used cross-currency swaps are the cross-currency coupon swap and the cross-currency basis swaps. The cross-currency coupon swap is defined as buying a currency swap and at the same time pay fixed and receives floating interest payments. Its advantage is that it allows firms to manage their foreign exchange rate and interest rate risks, as they wish, but it leaves the firm that buys this instrument vulnerable to both currency and interest rate risk. Cross-currency basis swap is defined as buying a currency swap and at the same time pay floating interest in a currency and receive floating in another currency. This instrument, while assuming the same currency risk as the standard currency swap, has the advantage that it allows a firm to capture prevailing interest rate differentials. However, the major disadvantage is that the primary risk for the firm is interest rate risk rather that currency risk. For exchange-traded currency hedging instruments, the main types are currency options and currency futures. The development of various structures of currency options has been very rapid, and is attributed to their flexible nature. The most common type of option structure is the plain vanilla call, which is defined as buying an upside strike in an exchange rate with no obligation to exercise. Its advantages include its simplicity, lower cost than the forward, and the predicted maximum loss—which is the premium. However, its cost is higher than other sophisticated options structures such as call spreads (buy an at-the-money call and sell a low delta call). Currency futures are exchange-traded contracts specifying a standard volume of a particular currency to be exchanged on a specific settlement date. They are similar to forward contracts in that they allow a firm to fix the price to be paid for a given currency at a future point in time. Yet, their characteristics differ from forward rates, both in terms of the available traded currencies and the typical (quarterly) settlement dates. However, the price of currency futures will normally be similar to the forward rates for a given currency and settlement date. Comparing currency forward and currency futures markets, the size of the contract and the delivery date are tailored to individual needs in the forward market (i.e., determined between a firm and a bank), as opposed to currency futures contracts that are standardized and guaranteed by some organized exchange. While there is no separate clearing-house function for forward markets, all clearing operations for futures markets are handled by an exchange clearing house, with daily mark-to-market settlements. In terms of liquidation, while most forward contracts are settled by actual delivery and only some by offset—at a cost, in contrast, most futures contracts are settled by offset and only very few by delivery. Furthermore, the price of a futures contract changes over time to reflect the market’s anticipation of the future spot rate. If a firm holding a currency futures contract decides before the settlement date that it no longer wants to maintain such a position, it can close out its position by selling an identical futures contract. This, however, cannot be done with forward contracts. Finally, since currency hedging is often costly, a firm may first consider â€Å"natural† hedging, such as (1) matching, which involves pairing suitably a multinational firm’s foreign currency inflows and outflows with respect to amount and timing; (2) netting, which involves the consolidated settlement of receivables, payables and debt among the subsidiaries of a firm; and (3) invoicing in a foreign currency, which reduces transaction risk related primarily to exports and imports. HEDGING PRACTICES BY U.S. FIRMS According to the BIS (see Tables 1-4) and the International Swap and Derivatives Association, the OTC derivatives market has experienced an exponential growth. Even with the recent slowdown due to the special disclosure requirements of FAS 133, derivatives continue to be the main hedging instrument for most firms. However, the increased availability of derivative instruments, coupled with the advent of mark-to-market hedge accounting (FAS 133 and IAS 39), implies a difficult to follow impact of derivatives on firms’ financial statements. Several surveys have shown certain characteristics and practices of U.S. non-financial firms using derivatives. Thus, the larger the size of sales of U.S. non-financial firms, the more likely is to use derivatives in their risk management. Foreign currency derivatives usage is most common, with almost three-fourths of the reporting firms taking positions. The primary goal of exchange risk hedging is the minimization of the variability in cash flow and in accounting earnings, arising from the firms’ operational activities and characteristics. Preoccupation with accounting earnings may be related to their role in analysts’ perceptions and predictions of future earnings and in management compensation. Furthermore, it is interesting to note that U.S. firms do not place high importance in minimizing the variation in the market value of the firm (the present discounted value of the stream of future cash flows) when they use derivatives in risk management. The choice of derivative instruments for foreign exchange management by U.S. firms is concentrated in simple instruments, with OTC currency forwards being by far the most popular instrument (over 50 percent of all foreign exchange derivatives instruments), OTC currency options being the second most preferred hedging instrument (around 20 percent of all foreign exchange derivative instruments) and OTC swaps being the third (around 10percent). Forward-type (volatility elimination) instruments are used to hedge foreign exchange exposures arising from U.S. firms’ contractual commitments (accounts receivable/payable, and repatriations), as recommended by the international financial literature. Option-type instruments, on the other hand, are used to hedge uncertain foreign currency-denominated future cash flows (usually, related to anticipated transactions beyond one year and to cover economic exposures). The tendency of US firms to use OTC currency forwards rather than OTC options or swaps should mainly be attributed to the relatively higher liquidity and depth of forward markets. The use of OTC instruments (forwards/swaps and options) dominates that of exchange traded hedging instruments, with currency futures being preferred by less than 10 percent of U.S. firms and currency options being preferred by a very small percentage of firms. The prevalence of OTC instruments should be attributed to firms’ very specific hedging needs that can primarily be accommodated in the more-flexible OTC market. The majority of U.S. firms with a set frequency for revaluing derivatives do so on a monthly basis, with a quarter of the total firms valuing their derivatives at least weekly and a very small percentage doing so only on an annual basis. Finally, the most common methods to evaluate the riskiness of their foreign exchange positions are stress testing of derivatives and VAR techniques. CONCLUSION Measuring and managing currency risk exposure are important functions in reducing a firm’s vulnerabilities from major exchange rate movements. These vulnerabilities mainly arise from a firm’s involvement in international operations and investments, where exchange rate changes could affect profit margins, through their effect on sources for inputs, markets for outputs and debt, and the value of assets. Prudent management of currency risk has been increasingly mandated by corporate boards, especially after the currency-crisis episodes of the last decade and the consequent heightened international attention on accounting and balance sheet risks. In managing currency risk, multinational firms utilize different hedging strategies depending on the specific type of currency risk. These strategies have become increasingly complicated as they try to address simultaneously transaction, translation and economic risks. As these risks could be detrimental to the profitability and the market valuation of a firm, corporate treasurers, even of smaller-size firms have become increasingly proactive in controlling these risks. Thereby, a greater demand for hedging protection against these risks has emerged and, in response, a greater variety of instruments has been generated by the ingenuity of the financial engineering industry. This paper presents some of the main issues in the measurement and management of exchange rate risks faced by firms, with special attention to the traditional types of exchange rate risk (transaction, translation, and economic), the currently predominant methodology in measuring exchange rate risk (VAR), and the advantages and disadvantages of various exchange rate risk management approaches (tactical vs. strategical, and passive vs. active). It also outlines a set of widely-accepted best practices in currency risk management, and reviews the use of some of the widely-used hedging instruments in the OTC and exchange traded markets. It also reports on the use of various derivatives instruments and hedging practices of U.S. multinationals. Based on the reported U.S. data, it is interesting to note that the larger the size of a firm the more likely it is to use derivative instruments in hedging its exchange rate risk exposure; the primary goal of U.S. firms’ exchange rate risk hedging operations is to minimize the variability in their cash flow and earning accounts (mainly related to payables, receivables and repatriations); and the choice of foreign exchange derivatives instruments is concentrated in OTC currency forwards (over 50 percent of all foreign exchange derivatives used), OTC currency options (around 20 percent) and OTC currency swaps (around 10 percent). From the available exchange-traded foreign exchange hedging instruments, currency futures is preferred by less than 10 percent of U.S. firms and currency options by around 2 percent. Overall, it should be noted that the data on U.S. firms are only representative of the reporting period that they refer to and are indicative of the level of sophistication of U.S. corporate treasurers and the level of development of local derivatives markets. By no means can these stylized facts be generalized for other time periods and countries, especially those with different corporate structures and capital market development. To form a better understanding of global firms’ practices in this area, more empirical studies would need to be undertaken to explore their exchange rate risk measurement and hedging behaviours.