Evaluate the appropriateness of business information Essay

In this task I will be evaluating the appropriateness of business information used to make a strategic decision. In this part of the task I will be focusing on Tesco business. I will be talking about the importance in strategic decisions within Tesco and how they use the decisions for their business. Also I will be evaluating how the strategic decisions affect the financial performance of Tesco. Tesco Price Promise Website: Tesco uses the price checker to show customers that they are the cheapest supermarket out of the three leading supermarkets, Sainsbury’s, Morrisons and Asda. This is an important strategy for Tesco as they are able to gain customers as well as being competitors this leads to Tesco being able to make more profit compared to Asda, Morrisons and Sainsbury’s. Tesco has given this facility to people so that they are able to see where they have saved money and what they have got cheaper. Tesco has mainly got the price checker facility for themselves and this would be so that they can see what they need to do to be able to gain more customers as they are able to see what there consumers like. Tesco’s provide information which is valid and up to date so that it is easy and fast for the customers to compare the prices of every product they buy. This strategy is used to create marketing plans which then leads on to the strategic decisions made for Tesco. This is done by using the information as part of their marketing plan which will gain customers and maintain their business. Tesco Price Promise Receipt: Tesco doesn’t only provide their customers with the facility to go home and check on the internet how much they are saving but they also give their customer the opportunity to check how much they have saved compared to Asda, Morrisons and Sainsbury’s. This is done when they buy 10 or more items, they would automatically compare your final prices with the other supermarkets and give you two receipt of which one contains your main shopping list and prices and one says you have ‘ £ (something amount) off your next shop’ and this something amount is the amount of money you have saved in your shopping that same day. You are given two options at the bottom of the receipt which is where you can go to the customer service desk and get a voucher for the  amount you have shopped of using the code go onto online. Most importantly Tesco is giving the chance for you to do everything while shopping this is an advantage towards the customers as they would not want to go home and go through a long process whereas they can do it fast and much more easily. This increase profits the profit within the business as Tesco is providing you with products for cheaper and helping you. This also becomes more competitive against a rival as they have a way to increase customers and steal the customers there rivals have. This concludes to a positive financial performance as Tesco are gaining customers and earning a profit compared to other supermarkets. Tesco Club Card: Tesco has a club card facility, and this is a card which can be kept as a key ring as well as a card in your wallet. This allows you to gain points every time you shop at Tesco. This is also beneficial to Tesco as well because they are able to see what you have bought in your shopping basket and according to that they send you vouchers on your most bought items, allowing you to buy more. Also they give you vouchers so that you come back to Tesco as your shopping would be cheaper than it normally is, this attracts customers as they are saving money on their shop and this is what they want. This information Tesco is gaining helps them as they are able to achieve more customers so this increase the rival competitors and they are also gaining an increase in profit and customers due to the fact more people are shopping at Tesco and using the services they provide, this also means Tesco are able to develop even more. Tesco’s financial accounts from 2011-2012 The image above shows the financial highlights of Tesco within the world and the image on the right shows the financial highlights of Tesco in the UK. These figures reflect on the strategic decision as it would help Tesco to make future budgets and it also shows whether the services and facilities they have set up actually help make a profit for the business. Also it helps make long term decision like where they should expand next and how they would meet their aims. Also the price checker would has contributed to this as it has increased the amount of customers that shop at Tesco also it has shown people awareness of the Tesco business itself and this has increased the sales of Tesco which has been able to increase the sales revenue. Conclusion: Overall, I believe that Tesco has many strategies and these strategies help Tesco to make further decisions on what they will be doing as they would be aiming to increase profit, and become the better rivals. Tesco’s financial performance is getting better due to the better strategic decisions made within the company to increase profit and gain customers. Tesco uses the clever tools for them to be an effective company so that financial performances increase, which allows marketing plans to be made. This allows Tesco to create their strategic decisions, proving the information is appropriate.

Hinduism and Christianity

There are many known religions of the world and all of them have their own uniqueness about them. Some people are born into their religious faith and some are converts to their perspective religion. I have chosen Hinduism to compare and contrast with my religion Christianity. I found Hinduism to be an interesting religion to research because of the myths about idol worship and the Hindu place of worship, the temple. Through my research of references, material, an interview, a face to face visit, and common knowledge I will convey the history, provide an overview, and clarify some of the myths of Hinduism and Christianity.Both religions have some differences but they also have some commonalities among them. Hinduism and Christianity are distinctly different religions; however, they do posses some similarities between them such as, God the Holy Trinity, The Holy Book, and different denominations within the religion. [Well developed introduction] Hinduism is one of the oldest religions, originating over six thousand years ago in India, of the world and one of which that does not have no one founder. The root word of Hinduism, Hindu, derived from the name of River Indus.This river flows through the northern region of India and in early times the river was called Sindhu. The Persians that migrated to India called the river the Hindu, the land Hindustan, its inhabitants Hindus. The religion soon followed and came to be known as Hinduism. Hinduism is both monotheistic and henotheistic or having belief in only one God. â€Å"Hindus all believe in one Supreme God who created the universe. He is all-pervasive. He created many Gods, highly advanced spiritual beings, to be His helpers† (Kauai’s Hindu Monastery, 2007).There is a misconception that Hindus are worshipers of idol Gods; this misconception comes from lack of knowledge and understanding. Hindus worship the Supreme Being, God, but through different names. This was done due to the people of earlier In dia having different languages and cultures. They came to understand the one God in their own distinct way. So there came to be three representations of God or Brahman and they are: Brahma-the Creator, Vishnu- the Sustainer, and Siva or Shiva- the Destroyer. These Gods can be referred to as 3-in-1 or the Trinity and they all have a multitude of spiritual beings which are a reflection of the one God.From these Gods arose four denominations or sects of Hinduism and they are Saivism, Vaishnavism, Shaktism, and Smartism. In Saivism the worshipers are called Saivites and God is Siva; in Vaishnavism they are called Vaishnavites and Lord Vishu is God; in Shaktism worshipers are called Shaktas and Goddess Shakti is Supreme; and Smartism they are called Smartas and all deities are seen and worshiped as the one God. In Hinduism it is believed that when God created the universe that he divinely set in place order and laws to preside over His creation. God’s divine law in Hinduism is cal led dharma.Dharma is the inner spirit of man or God within the person. Dharma aides one to discern what is morally right and wrong, disciplines, instills good order, spiritual truth and growth, and salvation. Dharma is not only connected spiritually and religiously but it is also associated with man’s law as well. According to Paul Hacker, â€Å"†¦the entire realm of civil law, criminal law, and state craft-royal law form part of dharma† (Hacker, P. , 2006, p. 483). Now that we have divine law there must be something to support the law, so do Hindus have a Bible? Yes, they do have a Bible. â€Å"Our â€Å"Bible† is called the Veda.The Veda, which means â€Å"wisdom,† is comprised of four ancient and holy scriptures which all Hindus revere as the revealed word of God† (Hacker, P. , 2006, p. 483). The Veda is the Hindu holy book and it is comprised of four books, Rig, Yajur, Sama and Atharva, which include over 100,000 verses (Hacker, P. , 2006, p. 483). Reincarnation is another belief of Hindus and the term carnate means in the flesh and reincarnate means to reenter the flesh. â€Å"Yes, we believe the soul is immortal and takes birth time and time again. Through this process, we have experiences, learn lessons, and evolve spiritually.Finally we graduated from physical birth† (Kauai’s Hindu Monastery, 2007). The graduation from the physical birth is the result of maturing in love, wisdom, and knowledge of God through following dharma. Hindus also believe that everything in nature is reincarnated, nature’s life cycle, not just the human soul. The term Karma is used quite often in the American society and it has come to mean that you are receiving that which you deserve. In most cases the American society equate karma to be negative; meaning that you have done something bad or wrong and you are now receiving its results.However Hindus take the whole spectrum of karma positive and negative; good and bad. The Hindus take the meaning and explanation of karma to be, â€Å"†¦the universal principle of cause and effect. Our actions, both good and bad, come back to us in the future, helping us to learn from life’s lessons and become better people† (Kauai’s Hindu Monastery, 2007). In Hinduism all living creatures are regarded as sacred with a special affection toward the cow. So the question arises, do Hindus worship the cow? â€Å"Hindus don’t worship cows. We respect, honor and adore the cow.By honoring this gentle animal, who gives more than she takes, we honor all creatures† (Kauai’s Hindu Monastery, 2007). Cows are known for yielding milk, its meat and its hide and all of these things are used to produce a multitude of everyday products that we have become to love, need, and enjoy. Hindus believe in non-violence in regards to all forms of life, therefore, most Hindus are vegetarians. There aren’t laws that forbid the consumption o f meat but through wisdom Hindus determine what they will put into their own body.However, â€Å"Hindus teach vegetarianism as a way to live with a minimum of hurt to other beings. But in today’s world not all Hindus are vegetarians† (Kauai’s Hindu Monastery, 2007). It is common to see Hindus wearing a red dot on the middle of their forehead and most people will identify Indians, native of India, with wearing the dot. The meaning of the wearing of the dot, â€Å"†¦is a religious symbol. It represents divine sight and shows that one is a Hindu. For women, it is also a beauty mark† (Kauai’s Hindu Monastery, 2007).This dot is called a bindi and many, many years ago both men and women wore a bindi but today it is most common for women to faithfully wear them. Finally the Hindus have a caste system which consists of different levels within the Indian society. â€Å"Caste is the hereditary divisions of Indian society based on occupation. The lowest class, deemed untouchables, suffer from discrimination and mistreatment. It is illegal in India to discriminate against, abuse or insult anyone on the basis of caste† (Kauai’s Hindu Monastery, 2007). The caste system is broken down into four categories or varnas.The varnas are comprised of the worker, businessman, general, and priest. The beliefs and teachings of Hinduism are the belief in one God with different names; there is only one Supreme God or Brahman but He has many reflections. Hindus believe the divine law or dharma and the holy books of Veda are used to support the law. They also believe the soul is immortal and birth takes place many times otherwise known as reincarnation. Hindus are firm believers in karma and that your past words, deeds, or actions will return to you in the future.They regard all living creatures as sacred but they revere the cow as a symbol for all living creatures. Hindus are taught to be non-harming toward any living being. The teachi ng of vegetarianism is taught to minimize harm toward other beings. Although it is taught vegetarianism is not practiced by all Hindus. There is one distinct religious symbol that is worn on the forehead by some Hindus called a bindi, a red dot, and it is commonly worn by the Hindu women. There are four classes of people which are known as the caste system in the Indian Society.Hinduism is a very unique religion and it is very similar to other religions, however, without a clear understanding of Hinduism one might misinterpret and relay incorrect information about the religion. Knowing the beliefs and teachings with the reasoning behind them provides a clear understanding of Hinduism. The Hindu temple I chose to visit is in Riverdale, Georgia which is located approximately 15 miles south of downtown Atlanta. The temple is sculptured in design with a majestic appearance; it is white in color and it situated atop of a hill. The temple permits entrance to anyone as long as you abide by the rules.One of the rules is to remove your shoes prior to entering the temple. This is not a religious practice but cultural, Indians do this because it is dirty outside and it is clean inside, therefore shoes should be removed before entering a temple or home. Another rule is there are to be no loud noises because this is a time of worship. Inside the temple there are sanctums situated around the temple with the various deities inside them. The priest stands at the entrance of the sanctum of the main God Lord Vishnu and the worshipers walk around to the different deities submitting their prayers.There is no set order for mass worship but it is up to the individual as to what prayers they will submit and to what deity. After touring and witnessing the worship taking place I am glad to say that I was able to experience Hindu worship and to clear up any myths I may have had prior to my visit. While at the temple I was given the opportunity to interview the President of the Temple, Mr. Ravi Sarma. He was very welcoming and pleased that I wanted to know more about his religion. Mr. Sarma grew up as a liberal Hindu not having any strict rules enforced.As an adult he transitioned to the orthodox side of Hinduism, which is very traditional and strict. It was from Mr. Sarma that I received a better understanding of the Gods in Hinduism; after he explained that Hindus belief in one God but with different symbols or expressions. Mr. Sarma went in to detail about the Trinity of Hinduism and how it works as a cycle or reincarnation. The Cycle of Hinduism begins life with Brahma the Creator, life is sustained through Vishnu the Sustainer, and Siva the Destroyer into whom everything goes; the cycle then repeats itself.Even though most of the deities are in the feminine aspect referred to as Durgar; God is neutral being neither male nor female. Mr. Sarma went over the following holidays: Diwali-a festival of lights, Pongal / Sankranti- a harvest festival, Holi- a spring f estival, Ugadi-New Years (comes in spring), and Navratri (Dasara)- a nine day fall festival. Speaking one-on-one with Mr. Sarma I gained a valid knowledge about Hinduism and it also brought a clearer understanding of the course text, references, and materials.My religious faith is that of Christianity, which began some two thousand years ago. The faith of Christianity is predicated upon the life, teachings, death, and resurrection of Jesus Christ (Fisher, 2005, p. 284). In Hinduism the term The Trinity is used but is most commonly used in Christianity. Some Christians refer to the Father, the Son, and the Holy Spirit as the Trinity. All of these names are known as God the one and only. God the Father is the creator of all things. God the Son is Jesus, the son of God and savior to all. The Holy Spirit is the spirit of God and the comforter to all.There are two branches or denominations of Christianity and they are Roman Catholicism and Protestantism. The Roman Catholic Church is the first church of Christianity and the largest Christian denomination. Protestantism is the second major branch of Christianity, which, broke off from The Roman Catholic Church. My denomination Baptist falls within Protestantism. The term Baptist describes individuals belonging to a Baptist church. The name comes from the conviction that followers of Jesus Christ are commanded to be baptized or immersed in water as a public display of their faith.To live eternally is believed that through baptism and according to scripture, â€Å"If you confess with your mouth that Jesus is Lord and believe in your heart that God raised Him from the dead, you will be saved. † (Romans 10:9). It does not stop here; we must also be led by the Holy Spirit to do what is right. Therefore we have the Golden rule as it relates to karma is to treat others as you would want to be treated. The holy book that is used in Christianity is called the Holy Bible. The Holy Bible is comprised of the Old and New T estament.The Old Testament consists of 39 books and the New Testament consists of 27 books. As with most religions there are different levels of leadership within Christianity to provide purpose, direction, and teachings such as a Bishop, Pastor, ministers, and deacons. Christianity is based upon the life, teachings, death, and resurrection of Jesus Christ (Fisher, 2005, p. 284). The belief in the Holy Trinity, eternal life through baptism, treating all beings as you want to be treated, and the Holy Bible are beliefs of Christianity.There are also two major branches of Christianity, Roman Catholicism and Protestantism, with Baptist being one within Protestantism. Within the various denominations there are different levels of leadership. In comparing Hinduism with Christianity I realized that there are some similar terms used but they mean something different for each religion. Both religions are monotheistic and they both have their own representation of the Holy Trinity. As Hindus believe in reincarnation Christians believe in eternal life of the soul. In Hinduism there are only four denominations where as in Christianity there are many.Lastly they both have a sacred book; in Hinduism the Veda is used and in Christianity the Holy Bible is used. I found Hinduism to be a very interesting religion and I was surprised to find out there were some commonalities between Christianity and Hinduism. By Hinduism having some of the same similarities as Christianity and with the reinforcement from my interview helped me to better understand Hinduism. Hinduism and Christianity are distinctly different religions; however, they do posses some similarities between them such as, God the Holy Trinity, The Holy Book, and different denominations within the religion.

Creative ownership, rights, personal ethics Essay

Creative ownership pertains to the right of an individual to possess his creative works such as discoveries, know-how, art works and writings In such, creative works are subjected to intellectual property rights wherein the creators or the owners are granted the rights to reproduce, modify or make an adaptation of his work, display or perform publicly and distribute either by sale or donation. As the right owner, full credit will be given to him for his work allowing the general public to access his work. However, to maintain the balance, time limits are set on the creator’s control over a particular work. Levels of human intellectual activity, innovativeness and effort to produce creative works vary amongst individual and define the quality and depth of the creative works. It is but ethical to commend and attribute the creator of his personal portrayal and output. It will encourage the creators and authors to do more of the creative works and further develop their crafts. Although the copyright owner can sell the rights, he has the moral right to be cited as the original author, the right to object to distortion or defacement and the right to object to be named as the author of mutilated copy. Although the U. S. Intellectual Property Law keep on modifying especially to the number of years the creator have a full control of his creative work and the cost of the patent or right, it generally aims to protect the right of the creator and writer from piracy and false claims. Consequently, the benefits and the rights to own and sell the creative works awarded to him will be on his control and discretion. At that, proper acknowledgement and credit will be given to him coupled with the creator’s prestige and satisfaction which will contribute to his fulfillment. REFERENCES: http://web. mit. edu/tlo/www/community/guide1. html. Guide to the Ownership, Distribution and Commercial Development of M. I. T. Technology. Massachusetts Institute of Technology Five Cambridge Center, Kendall Square Madhavan, Mahesh. Intellectual Property Rights (Primer). JISC Legal. 2006 www. law. duke. edu/journals/dltr/articles/2005dltr0012. html

Aquatic and Terrestrial Ecosystems Essay Example | Topics and Well Written Essays - 1500 words

Aquatic and Terrestrial Ecosystems - Essay Example The level of salinity is different across several marine bodies. Aquatic ecosystem such as the oceans, is a huge reserve for atmospheric CO or carbon monoxide (Aquatic ecosystems: carbon cycle and as atmospheric CO sink). As the aquatic ecosystems are huge reservoirs of flora and fauna, these are often overexploited by the people to satisfy their needs. Industrial fishing that gained preference over the past half-century had alarmingly depleted the highest levels of the aquatic food chain which are the little fishes and organisms (Pauly, et. al.). These small fishes and marine organisms are the preys or food products for the organisms belonging to the higher levels in the aquatic food chain. But multi cultural people and their food habits seems to have taken a toll on this aspect. With the growing love for sea foods in modern times, over fishing of these small creates can harm the larger marine creatures significantly. Terrestrial ecosystem is the one which is found in the land mass and consists of the tundra, the taiga, the temperate deciduous forest, and the grassland (Sheaffer & Moncada, 230).These are the source to different plant and animals. Just like the aquatic form, the terrestrial ecosystem has been over overexploited by man. The trees of the tropical grass lands are cut at a very rapid rate for many activities. The future consequences of thee activities will be that it would harm the global balance and also wipe out many exotic species. One of the exploitation activities seen in the lands is the cutting down of trees for making paper. The cost incurred is high and the revenue generated is also very profitable, similarly, over fishing in the water bodies is a form of exploitation which reduces the number of marine animals. Here too the benefit is in the form of increased revenue for the people. Altering the ecosystems Human activities like cultivation whether on the land or water can change the primary form of the ecosystems. terrestrial ecosystem con sists of agricultural land, rain forests etc. cultivation is carried out in these areas because of the easy availability of soil , manures etc. this can harm the natural balance of the ecosystems as with the increase in cultivation, the land will be modified which would also alter the landscape of the nearby areas. The animals living in those areas would be forced to migrate to other areas which would disrupt the food chain in the long run (Environmental Biology – Ecosystems). Similar disruption can be seen in the aquatic bodies too. Overfishing can lead to the depletion of the smaller, marine creatures which would force the larger creatures like the sharks and whales to survive on other forms of nutrients which might not be suitable for the organisms. Prioritization of the conservation efforts in aquatic and terrestrial ecosystems On the basis of the principles mentioned in paper 1, the terrestrial organisms Pronghorns, desert cottontails and Single-leaf Pinyon can be priori tized over the others as these are exotic creatures that survive on dry arid conditions. For the aquatic creatures, Chasmistes cujus I need to be conserved as the number of their family genus is depleting. This is followed by Cui-uis, Curly-leaf pondweed or Potamogeton crispus and The Lahontan cutthroat trout or Oncorhynchus clarki henshawi as it is an endangered species. Both the ecosystems need to be conser

Lasting Essay Example | Topics and Well Written Essays - 250 words

Lasting - Essay Example â€Å"Lost Your Head Blues† is a blues song popularized by Bessie Smith in 1926. It is composed in an AAB format, characteristic for blues songs. This song is written based on a â€Å"vaudeville† or solo stage performance, which is very common during the 1920s. The songs talks about painful relationships and difficult circumstances. The song reflects the typical musical taste and genre of the African American population and heritage. â€Å"Lost Your Head Blues† uses only three instruments: piano, vocals, and trumpet. Most blues songs are composed or played using these musical instruments because during the vaudeville times or stage style blues period, these instruments are nearly ubiquitous because of the rise of the ragtime music in the 1920s. The song starts with an introduction of a trumpet with an accompanying piano that combines with the singer’s voice. The trumpet makes some bending of tones and melodic layback. On the other hand, â€Å"Erlkonig† is typically sung or played using vocals or piano or both as it was originally adapted, particularly by Franz Schubert. Nevertheless, nowadays, this song is performed in a concerto-style performance with a soloist, usually a soprano, accompanied by a symphony

AI Week 13 Eye moving DB 153 Essay Example | Topics and Well Written Essays - 250 words

AI Week 13 Eye moving DB 153 - Essay Example Various governments have limited fiscal budgets and pressure (Feldstein, 2011). This is because it has to take care for the health of the aging population. Shifting the cost to the public only increases the level of taxes and affects the finances of various households. Such costs could be unsustainable for the lower and average income earners. There are disparities in the level of income for different household individuals. The public consists of a majority of average income earners. If the cost of health care for high-risk employees shifts to the public, then high-income earners should make the biggest contribution. Genetic factors cause most affected employees to inherit some chronic diseases. Such health care plans make the employees feel some form of discrimination from their employers. Employers should treat all the employees with equality regardless of their health background. The employers should instead make health care policies affordable for all the employees. Relevant authorities need to regulate insurance companies in the creation of their health care policies (Feldstein, 2011). The regulations should require the companies to provide insurance covers at normal charges. The employees should seek routine checkups from their healthcare providers to put their condition under control. The employers should avoid any form of discrimination in the determination of the health benefits. Shifting the public health care cost to the public could be unfair for both low and average income

Why do leaders lead in different ways Essay Example | Topics and Well Written Essays - 4000 words

Why do leaders lead in different ways - Essay Example This is what the leader does; instilling a sense of togetherness regardless of the dynamic. However, this is a daunting task for leaders who pick a wrong strategy or leadership style as they will struggle so much to lead them with the unsuitable styles. A question that may ring on one’s mind, therefore, is that why do leaders lead differently? What brings the diversity? Why do some leaders succeed while others do not? In this essay, an exploration of different leadership styles and ways in which they influence the followers will be discussed to help unfold the underlying factors behind leadership while at the same time answering these questions. Leadership is not merely being in charge or in a position of authority. Effective leadership requires special skills in dealing with a range of people and the styles one deploy in this regard will extensively affect the team that is being led. To lead is to be in a control tower from which regulation, coordination, management of the followers is derived. Leadership, therefore, is a state of being in control of and in a position to command actions of a particular team for a specific objective. Leaders are mandated to direct and be in the forefront of any action a group or the team plans to undertake (Nahavandi, 2006, p.58). Behavioural theorist put focus on the conducts and deeds of a leader. They countercheck the behaviour of the leader in leadership duties and see if their (leaders) actions are justified. Some leaders dictate, coerce, command and are rude to the followers yet they expect loyalty and collaboration. Robertson (2011) puts forth a conception that classifies leaders in different categories based on their leadership behaviours. These include: autocratic, democratic and laissez-faire styles of leadership. Autocratic leadership according to Robertson (2011, p.73) is a style in which the leader is the sole decision maker. Decisions in this style are

Supply and Demand of ETFs in the market Research Paper

Supply and Demand of ETFs in the market - Research Paper Example The market value of an individual ETF through out a single trading day depends on demand and supply for each and every ETF. They follow Index all through, but they act like Equity. ETFs can also be used to refer to those investment companies which are classified as Unit Investment Trusts (UITs) or open ended companies. Exchange-Traded Fund usually experience changes all through the day as they get to be bought and to be purchased. Exchange-Traded Fund does not have net asset value like mutual funds since it trades like a stock. The leading country in the development of ETF is Canada. It creation has roots in Toronto Stock Exchange with Toronto 35 Index Participation Units. The creation of ETFs starts when a professional investor like an investment bank places a whole stock portfolio with a fund manager where they exchange the basket of securities underlying the Index with the provider of ETF for new ETF shares. That is, the professional investor then receives a given quantity of ETF shares in return for the deposit. These shares can then be traded in the exchange market where they can be sold or bought by professional investors or retail from all parts of Europe. Creation units refer to large blocks of ETF shares which usually range from 100,000 to 200,000 shares per unit. The designated or professional investor or brokers usually break these creation units into individual ETF shares which then trade in the stock exchange. The creation and the issuance of ETFs consist of two markets which include the prima ry market which creates the ETFs and the secondary market which buys or sells the ETF units. The creation of ETFs therefore takes place in the primary market between the authorized participants and the fund. â€Å"In kind† creation on the other hand takes place in authorized participants and more so large financial institution. The ETF shares are created by the deposit of portfolio of stocks into the applicable fund, and this is done in

Micro Economics Master Essay Example | Topics and Well Written Essays - 1500 words

Micro Economics Master - Essay Example Short term shut down of a business concentrates on cutting the opportunity costs or variable costs. As long as the firm produces something, it will maximize its profits by producing "on the marginal cost curve. "The firm will have to shut down if it cannot cover its variable costs. As fixed costs are anyway going to be incurred, they are not opportunity costs in the short run -- so they are not relevant to the decision to shut down. Even if the company shuts down, it must pay the fixed costs. But the variable costs are avoidable -- they are opportunity costs! So the firm will shut down if it cannot meet the variable (short run opportunity) costs. But as long as it can pay the variable costs and still have something to apply toward the fixed costs, it is better off continuing to produce. When the firm's average total cost curve lies above its marginal revenue curve at the profit maximizing level of output, the firm is experiencing losses and will have to consider whether to shut down its operations. The decisions taken by a firm in such situations is termed as Short-run shut down decisions. Short run equilibrium of a firm can be derived based on the total revenue and total cost and marginal revenue and marginal cost. As firms are price-takers, each firm in an industry tries to maximize its profit by adjusting the output to a level where Marginal Cost (MC) =Marginal Revenue (MR). Profit is the difference between the total revenue obtained from sales and the total cost incurred by the firm. The long run is defined as "a period long enough to make the cost of all inputs variable." This includes, in particular, capital, plant, equipment, and other investments that represent long-term commitments. In the long-run the decisions taken would be only exit decisions. Exit decisions are decisions taken by a firm to leave the market. They are not called as Shut-down decisions. Shut-down is only in the short-run. Long run equilibrium plays a crucial role in deciding the existence of the firm. In the long run there are enough time periods for the firm to cover its losses and earn normal profits. This is because in the long run, all inputs are variable and the firm can have the most profitable level of output i.e. the profit maximization level of output. If firms are perfectly competitive, industry is making short term surplus (profits), more firms will enter the industry. In the long run this will increase the market supply of the product and reduces the market price as well as the profits until all firms in the industry make a normal profit (break even )In the long run equilibrium, the business will be operating at the minimum point on both long - run and short - run average cost curv es obtaining full economy of scale. A Walrasian or competitive equilibrium consists of a vector of prices and an allocation such that given the prices, each trader by

Marketing 100 Essay Example | Topics and Well Written Essays - 2000 words

Marketing 100 - Essay Example The Organic care products are consumable products and majority of its products are for young customers. The main differentiation of Organic Care products is its contents which distinguishes it from other products. Organic Care is a hair care product of ‘Natures Organics’. Organic Care is made from natural elements, instead of commonly used synthetic ingredients. This product helps to cleanse the hair and provide much nourishment. General perspective says that other shampoo brands contain chemicals which can damage the hair of the user. But Organic Care from Natures Organics provides best alternatives to chemical based shampoos. The regular chemical based shampoo is harm for hair and can cause damage to the shine. Organic Care provides good substitutes for other chemical shampoo. Organic Care provides wide range of products which provide customer the freedom to choose. The herbs and natural hair oil in organic products made them special and it can lock the soft smell and shine. Moreover, to provide more efficient customer service, the organisation uses the formula titled ‘natural miracle’ which balances the moisturizer and nourishes the health of the users’ hairs. The consumer can feel their hair soft and manageable, by using these products everyday (Buzzle 2011). 1.2 Current Pricing Price is a vital issue in marketing. The pricing of product affects the product sales and distribution. Many factors have to be considered before deciding the pricing strategy of products. At first the cost of making the product is to be identified. The price must be set in a way that it covers the cost of production and the service cost. The cost of operating the business such as variable cost also needs to be considered for example the salaries of employees, financing cost, inventory cost and others. The market research must be conducted before setting the price of product. The price of the competitors must be observed and then the optimum price ha s to be decided. The cost of Organic Care Normal Balance Conditioner 400 ml pack is 3.45 Dollar in Australia. The other hair care products of Organic Care are Normal Conditioner, Nourish Shampoo, Nourish Conditioner, Heat Protect Conditioner, Colour Shampoo, and Colour Conditioner which costs 3.45 AUD on an average (Natures Organics n.d.). Compared to other similar products, Organic Care is much cheaper. For example, the cost of Nature’s Gate Organics Shampoo is 4.8 AUD for 12 fl oz (340 ml) bottles (Organic Shampoo and Conditioner 2011); Chamomile Lemon Shampoo costs 8.07 AUD for 12 Ounce (355 ml) bottles (Vegan Essentials n.d). Avalon Organics Refreshing Shampoo costs 9.59 AUD for 11 Ounce bottles (325 ml) (Avalon Organics 2011). Desert Essence Organics Thickening Shampoo costs 9.12 AUD of 8 fl oz (237 ml). So it can be seen that Organic Care products are very cheap

Learing Secondary Languages should be supported Research Paper

Learing Secondary Languages should be supported - Research Paper Example Linguistic barriers prove to be the biggest barriers in the way of building up of rapport between employees because they are not able to understand one another. This paper explores some of the potential advantages of the knowledge of second language. Learning second language provides an individual with an opportunity to immigrate to the country / countries whose languages are known by him/her. Learning second language is particularly beneficial for people who are nationals of the poor countries because they do not have as many opportunities as available to people who are nationals of such advanced countries as America, Australia, Canada, and Britain. A lot of people belonging to such underdeveloped countries as India, Pakistan, and Bangladesh tend to migrate to the richer economies in order to have a better standard of living, and many of them become successful in their endeavors. Once migrated, even if they drive a cab or deliver a pizza, they earn much more than what they did in th eir homeland. They do not need very high paying jobs in order to be convinced to migrate. They become satisfied as long as they are earning more than they did in their own country. Luckily, in a vast majority of cases, they do earn more abroad. However, this opportunity can not be availed by an individual unless he/she has sufficient knowledge of the language spoken in the foreign country. In order to move to UK, an individual is supposed to have attained at least the minimum established score of the International English Language Testing System (IELTS), which in a vast majority of cases is 5, though it becomes 6 if the purpose of travel is educational. The minimum score varies from criterion to criterion, though it can not be attained unless the individual has tried to learn the second language in the past. These exams are really tough and one is checked on various linguistic abilities. For example, the four modules of IELTS check an individual’s ability in speaking, reading , writing, and listening English. Thus, an individual is considered eligible for travel only if he/she is sufficiently competent in each of the four areas of language. Once an individual manages to cross this barrier through learning second language, the world is open to him/her and he/she can totally change and improve his/her future abroad. Knowledge of second language boosts the brain power of an individual. â€Å"Children in foreign language programs have tended to demonstrate greater cognitive development, creativity, and divergent thinking than monolingual children† (Peckham). According to Moran and Hakuta (cited in Ukrainian Bilingual Programs), students with knowledge of multiple languages are able to achieve more in such academic tests as the cognitive flexibility, creativity and the Provincial Achievement Exams than students who do not have knowledge of the same. Knowledge of second language is fundamental to the attainment of higher education in foreign countries. Schools and colleges in the underdeveloped countries are not as advanced as the ones in developed countries. There is lack of research, and the paraphernalia of laboratory are not sufficient to inculcate sound knowledge of the concepts in the students. As a result of this, many students opt to study abroad, though knowledge of second

Article Analysis Essay Example for Free

Article Analysis Essay The article entitled â€Å"The Last Frontier† is a discussion of China in the past decades that had been known as a Communist country wherein all the people must follow the rule of the government so that wealth is equally divided to all, which the Capitalists have no voice to the economic stand of the government. That is why people had no right to criticize the rule which freedom of expression is limited only to those who are in authority. Only those who are in position are the ones who have the access on government transactions. If you were caught opposing an issue about a transaction in the government, they will be caught and put into jail without a fair trial. That is how they perceive justice during those days. However, Chinese people today can do what ever they want from choosing what they wish for themselves like finding the right job, to even do marry-making on wherever they wanted and even having an organization to which they can look after their environment. There was also an instance that where in a group of people decides to take its ground against the ruling power but failed because their stand does not have a favor for the government. Even though thousands of protesters flocked the streets of China, the government still did not let anyone use this as a tool to overthrow their government. The very example on the futile rule happened during the massacre in Tiananmen Square wherein thousand of protesters where they call for democracy and stop to corruption had made paid for their lives. Thus, the government made a deal with its people â€Å"we will give you freedom to make money, but politics is off limits (67),† giving them a little access to whatever transaction that the government is into. Reference Author. Date. The Last Frontier. Publisher

Analyzing Enterprises Service Quality Survey

Analyzing Enterprises Service Quality Survey Enterprises Service Quality Survey is attempting to gather very precise information on the value and quality of its service throughout the whole process. The first few questions are very generic and are aiming to source information on the overall experience of dealing with the Enterprise Rent-A-Car. This includes information on customer satisfaction. Enterprise Rent-A-Car is trying to attain valuable information on how customers feel the service could improve and how customers would rate the telephone reservation process. These sorts of questions are unspecific and are the beginning to service quality surveys for any enterprise. As the survey progresses, customers are urged to articulate how long the process of picking up and returning the rental car took. Surely, by doing this, Enterprise Rent-A-Car are trying to attain approximate times so they can average the results out and seek to improve on the results in the coming months and years. Customers are asked to rate sundry questions based on five options: Excellent, Good, Fair, Poor and Non Applicable (N/A). Utilising this rating method the firm can obtain a definite level of customer fulfilment and find out where their strengths and weaknesses lie concerning each aspect of the service they provide. One interesting aspect to note about the information Enterprise Rent-A-Car are trying to source is that only one question requires the customer to write out an answer whereas every other option simply requires a ticking of the box in an option such as Good, Fair, Poor etc.. In my opinion, this means that Enterprise Rent-A-Car as a firm simply want polarised answers so to speak. By having to tick options such as Good, Fair and Poor, it becomes apparent straight away if the customer was satisfied with the service or not. If several questions required answers with full sentences, this could lead to numerous problems for Enterprise Rent-A-Car employees who are analysing the su rveys after. One problem is that customers could write out a half-hearted misleading answer with little or no meaning making it extremely difficult for Enterprise Rent-A-Car to attain valuable customer opinions and outlooks on the service. The Service Quality Surveys research objectives are quite simple. The objective of the research is to assess how well they are providing their service to customers. The most important aspect of the survey is that it is being answered by those who have used the service and whose opinion on the service is of huge strategic importance to the company. Question 3: In addition to or instead of the mail survey, what other means could Enterprise use to gather customer satisfaction information? There are numerous other means that Enterprise Rent-A-Car could utilise to gather customer satisfaction information. Observational research involves gathering primary data by observing appropriate people, actions, and situations to gather how satisfied the customer is. Ethnographic research involves sending trained observers to monitor and interact with consumers in their natural environment. Experimental research is best for gathering causal information, through the use of cause-and-effect relationships. Enterprise Rent-A-Car could change the contact method from the currently used mail survey to the other available contact methods: Telephone, Personal (Face to Face) or online (through the use of the Internet). Each one of these contact methods has both benefits and disadvantages with regard to gathering customer satisfaction. Concerning response rate which is of utmost importance, Online and Personal can be classified as good while telephone lags behind and is poor for response rate. If one was to look at cost as a means of differentiating the other contact methods, telephone is obviously the most expensive with also personal contact cost being very poor indeed. Online methods of gathering information seems to be a brilliant way of gathering customer satisfaction information. Firstly it is very cheap once the consumer has an Internet connection. The simplicity of this process is the best alternative to the means being used by Enterprise Rent-A-Car to gather customer satisfaction info rmation. Question 4: What Specific recommendations would you make to Enterprise to improve the response rate and timeliness of feedback from the process? The specific recommendations I would make to Enterprise Rent-A-Car to improve the response rate and timeliness of feedback from the process is to conduct the survey online on their website http://www.enterprise.ie/car_rental/home.do The response rate would be increased ten fold in comparison with the use of the mail survey. Once the survey is completed, the information will be available to Enterprise Rent-A-Car in their database instantaneously. This means busniess decisions can be made quicker, faster and more efficiently. In comparison, while the mail survey has a free postage stamp so it costs the customer nothing to complete, the Internet is such an easier process. There is no need to head down to the post office and send back the survey, once users click the submit button their part of the customer satisfaction process is complete and their feedback is available to Enterprise Rent-A-Car straight away. Enterprise Rent-A-Car could offer customers a discount on their next transaction if they complete the survey in a specific period of time online. They would then have up to date valuable information on the levels of customer satisfaction the users have had with their service. Thus they can use this information and feedback to adapt their business to suit customers. Therefore the timeliness of feedback is improved which improves Enterprise Rent-A-Cars performance and will keep their customers loyal to their service. Marketing Principles Assignment 2 Choose a recent purchase that involved not only yourself but other people in making the decision. What role(s) did you play in the process? What roles did other people play and how did they influence your choice? Recently, the home computer in the family house broke and so a new desktop computer was needed for everyone in the family to use. My father asked the whole family to do a bit of research into the best available computers and that we would agree between us on the best available option to suit everyone. We were given that we had a budget of 800 to spend replacing a home computer that had finally worn down after five years of constant use. Each one of the family scoured various magazines, catalogues as well as visiting stores such as Currys and PC World to check the computer market for the best suitable fit for us. I played a key role in the choosing of a computer for the family as I was viewed among the family as the most technically aware person with regards to the latest products being unveiled in the business market. My two sisters were quite proficient users of computers but my parents were looking more at the cost and simplicity side of purchasing and utilising the computer. I researched reviews online for each type of computer and noted the opinions of others in my college class who were adept computer users and had a broad knowledge of the market. My sisters played the role of reading over the reviews I had picked out to give a second opinion to me on what they thought of products I had earmarked as being a potential purchase for the family. This role influenced me as it gave me the confidence to follow on from the primary research I had carried out. My father played the role of making sure I was keeping within the budget allotted for the computer. His role influenced me as it was a constant reminder to keep within the money designated to purchase the computer. My mother kept an eye on me to make sure that I was looking out for the best needs of the family and not just my personal needs. Her role influenced me as it re-emphasised to me that the computer was for the whole family and not just my preferences. What type of buying decision behaviour process did you go through? At each stage (need recognition, information search, etc.), outline what activities took place Need Recognition: Directly after the breaking down of the home computer, a close family friend purchased a new desktop computer with all the state of the art specifications. I was aware of the quality of the product but my parents who were oblivious to the latest technologies were thoroughly impressed by the newest technologies such as Bluetooth, Built in Microphone and Webcam, huge Hard Drive space and the simplicity of the User Interface. My father decided that instead of paying to fix the worn down computer, a new computer with all these latest cutting edge technologies would be more suitable. Thus a need for the new computer was triggered in my father by external stimuli, in this case the family friends positive feedback. Information Search: Thus my father urged the family and primarily myself to scout the market for a computer with all the latest technologies. Other than the personal source (family friend) who had been the external stimuli in the first place, I consulted an extremely knowledgeable I.T whizzkid in my course to offer his opinions. As mentioned previously the mass media was used to provide us with information on the products i.e. technology websites, blogs etc. I paid a trip to the local Galway computer superstore PC World and I was given a test run on a few of the latest computers released by the leaders in the personal computer market such as Sony, Toshiba and Samsung. Evaluation of Alternatives: In the computer market there are so many alternatives so each alternative was scrutinised thoroughly. The first choice was to choose between either an Apple Mac or a Personal Computer (PC). I would regard myself as a huge fan of the Apple and very susceptible to their compelling marketing of their products. If I was to choose PC there are so many leading companies with high quality computers to choose from. I decided to categorise the PCs in terms of warranty, look, price and performance. I weighed up which company offered the best post sale support to consumers if problems were to arise. Look was based on the easiness on the eye of the product as well as weight, size etc. Performance was based on user reviews from reputable sources. Purchase Decision: The family had a brief meeting and we decided to all divulge what each of us wanted from the computer (software, applications etc.) My father asked me to inform him of my opinion bearing everything in mind. I informed him that I believed the Apple products were the market leaders in terms of computer performance but that their products would not be suitable for the family and the price budget wasnt enough to purchase one. We decide on a PC with a Microsoft Windows OS platform as it would contain all the MS Office tools which would be of utmost importance to the family. My sister and I concurred that Dell Desktop PCs were receiving outstanding feedback and each computer could be tailored to suit the needs of the family. A Dell Inspiron One 23 with the specifications my father liked was agreed on by the family and purchased over the Internet that day. Post Purchase Decision: The family was incredibly satisfied with the product and has lived up to our expectations. Dell delivered within 3 days and a warranty of a year was given to us to cover us in case of unintentional damage to the computer. What choice criteria did you use? Did they change between drawing up a shortlist and making the final choice? The choice criteria as outlined up above were that we divide the computer into three categories: Warranty: We wanted to review which companies were renowned for having an excellent post-sale service given the problematic nature of technology and in specific computers. Look: My mother wanted the computer to have a pleasant appearance so it would blend into the corner of the living rooms environment. We also wanted it to be very lightweight so it could be transported if it had to be moved. Price: The computer had to stick within the budget allotted of 800 euro; there was no flexibility on this rule. Performance: We wanted the computer to run quickly and efficiently and have plenty of storage for the familys photo albums and software applications. The choice criteria did not alter between originally drawing up a shortlist and when we made our final choice. Marketing Principles Assignment 3 Discuss three alternative price-increase strategies that address these concerns. Increasing prices can be a very sensitive issue and can easily upsets loyal customers so companies must carefully approach how they increase prices. When increasing prices, the company must avoid being alleged as being a price gouger( Kotler Armstrong ,2010). Customers have long and clear memories and they will desert companies that they believe are excessively pricing their products. Competitors will prey on the companys necessity to increase their prices and so can advertise a cheaper price in their persuasive marketing campaigns, simply informing the market that they charge lower. There are three price-increase strategies that can address the concerns of customers fleeing from the company due to excess pricing: Honest Approach: The first method of increasing prices that can address the concerns of customer loss is the honest approach. By maintaining a sense of fairness surrounding the price increases, customers will realise that there are legitimate reasons for the rise in prices and that these increases are because of a necessity not a profit hungry exercise from the upper echelons of the organisation. Company communications should tell the customers exactly why the prices are being raised and thus the customers are not left in the dark as to the reason behind the price increase. Honest is always the best policy is an overused phrase but this may just apply in a competitive business market if the firm wants to keep faithful to their loyal consumers. Low Visibility Price Moves: A good technique of increasing prices is by making low-visibility price moves first. Examples include reducing discounts, ever-increasing minimum order sizes and slowing down the production of low margin products. The company sales force should help business customers find ways to economize. By getting rid of offers such as 33% off etc. the firm will steadily increase the amount of revenue they are earning for each product without displeasing their loyal customers. If the removal of discounts is done subtly, then customers will not notice that the price has increased officially and firms can benefit from this method. Unbundling of Market Offering: By removing features, packaging, or services and separately pricing elements that were formerly part of the offer, firms can increase profits. By unbundling their product offering, they can gain more revenue for each sale of a product. By doing this firms are making consumers pay extra for the excess parts of a product such as packaging. This will not easily upset customers as much as say just increasing their product. Airlines such as Ryanair are using this method of increasing prices. For example, to keep flight fares down, Ryanair are charging separately for services that were once part of the price paid in the flight. Examples include a restriction on the weight of handheld luggage and food served on flights. Thus when you are paying for a flight, it is simply the transport you are paying for with no built in perks. Principles of Marketing Assignment 4 Q.1 ZARA SUPPLY CHAIN Q.3 Zara employs a corporate vertical marketing system. A corporate vertical marketing system can be defined as when a single owner runs organizations at each stage of the marketing channel(Kurtz, McKenzie Snow, 2010) Zara has such an efficient and effective supply chain that it has almost total control of every aspect from raw materials to the consumer purchasing the product at the end. This is directly mentioned in the case study his experience led him to design a system in which he could control every aspect of the supply chain (Kotler Armstrong, 2010). Zara benefits greatly from adopting this system. Firstly, the 300 creative staff that carry out the design, benefit from information sent to them by the shop assistants who can report on the latest fads that are trending as they are directly dealing with the customers on the frontline. With regards to sourcing, as mentioned in the case study by using this type of a VMS that while Zaras rivals outsource nearly all their product to che ap production facilities in Asia, Zara makes 40 percent of its own fabrics and produces more than half its own clothes. Therefore Zara which is located in Northern Spain needs not to rely on slow moving suppliers. This is of huge benefit and speeds up the process from raw materials to retailing meaning Zara can produce two or three times as many items as its competitors. Zara carries such business clout that it uses local co-operatives to complete some tasks such as sewing meaning that these materials are sent back quickly to the factory where they are moved onto the next stage in the supply chain. It has huge control of its packaging and distribution service by adopting this system. The huge warehouse which uses high quality machinery is so efficient that the packaging process which can be of concern to other firms in this sector of the market is completed seamlessly by Zara. Therefore Zara, by using a corporate vertical marketing system enjoys many benefits and is the dominant fig ure in its market. Q.4 In my opinion, Zara experiences very few disadvantages from employing its fast-fashion distribution system and the advantages of this distribution system easily outweigh and offset by its advantages. The advantages of fast fashion distribution system seem to be endless and this system generally pleases the end user as the variety of products available changes regularly while maintaining high quality. Firstly, personally I would imagine that through my study of microeconomics if because of the short production runs due to the amount of products being made from different raw materials each time with the change in the fashion trends is their cost of production very high. They certainly arent benefitting from economies of scale at the rate they change the type of products they are producing. While it is a huge advantage that they seem to have a change in product every few weeks in comparison with competitors who have shipments arriving at stores only 4-5 times a year, surely the distribu tion costs are exceedingly high. The cost of transporting new finished goods to the retailers every fortnight or so must put huge pressure on the sale of the stock because of the products short life cycle. However all that said, undoubtedly the advantage of this distribution offsets the disadvantages. For example, the figures mentioned in the case study paint a true portrayal of the massive success of this system. In some cases, Zara are launching as many as four times as many products as their competitors. Because, of the rapid nature of their products life cycle, obsolescence of inventory is never a problem. Thus the cost of storing inventories are never a problem nor is the loss of revenue due to having to cut down prices in end of season sales. Therefore, the advantages of fast fashion easily offset the disadvantages. Q.5 Zara adds value for the customer through major logistics functions in many ways. Major logistic functions include warehousing, inventory management, transportation and logistics information management. By barely having the need for warehousing due to the high turnover of stock quickly, customers are receiving the freshest new products without any chance of obsolescence. Also as a result of the efficient transportation system of Zara, it means that the overall price of the product should invariably cheaper for the customer to purchase. Zaras high quality packaging system done by efficient automate machinery means that the chances of products being damaged on arrival is very slim in comparison with some of the logistic functions of its rivals like Gap. Logistics Information Management which keeps tabs on the flow of information with regards to customer data adds value for the customer as there is documentation with the product and a manner of tracing back the product if there is ever a problem. Reference: Kurtz, McKenzie Snow, 2010 http://books.google.ie/books?id=lf7VKtZcJlgCpg=PA403dq=corporate+vertical+marketing+systemhl=enei=HWnlTOKxIsGwhQfYqoX0DAsa=Xoi=book_resultct=resultresnum=1ved=0CCwQ6AEwAA#v=onepageq=corporate%20vertical%20marketing%20systemf=false Principles of Marketing Assignment 5 There are three types of appeals used by marketing professionals when promoting a product or service: Rational Appeals, Emotional Appeals Moral Appeals. I intend to critically evaluate an advertisement that fits into each of these types of appeals using the A.I.D.A model. Rational Appeal: This type of appeal is concerned directly with the self interests of the audiences that are targeted by advertisers. This type of appeal tries to utilise a persons common sense to draw in their viewers. Rational Appeals use logic/reason to convince audiences (Chaudhari Gokhale, 2009). This type of appeal can also be used to try and elevate itself above its competitors by using its quality, performance or dominance over its main rivals. Through these appeals, the audience are made to think and believe that the advertisers product is the best in the market (Trehan Trehan, 2009). I believe an advertisement that expertly uses rational appeal to capture the audiences interest is that of Rolexs Commercial for Wimbledon 2010. http://www.youtube.com/watch?v=o1ECS3k9od0NR=1 Evaluation using A.I.D.A Model: Get Attention: From the offset my attention was fixated on the screen with the opening images presented in the advertisement. The nobility of the opening pictures showing the hallowed lawns of the Wimbledon tennis tournament and the image of the arrival of a sporting titan like Roger Federer instantly command the attention of the audience. Rolex cleverly have inserted their product within the first three seconds of the ad along with an up close illustration of Federer who is easily one of the sporting worlds most recognisable figures. Hold Interest: The audiences interest is held because of the slow build up of the advertisement with slow eerie music and the slow paced moving shots of Federer and their product. Suddenly, the advertisement burst into life and a plethora of fast paced action occurs which corresponds with a crescendo in powerful music. Arouse Desire: After a certain point in the advertisement, I became aware of the relationship between the number on the watch and how it directly communicates with the number of Wimbledon titles Federer is seen winning. I think they are trying to associate Federers unbelievable success with their product. I also noticed the Rolex advertisement on the scoreboard as Federer leaps in ecstasy having secured another victory. This almost subliminal style of interest showed me the power of the organisation and its lofty high class status in its market having such a strong connection with such a prestigious tournament. Obtain Action: The ending to the advertisement would certainly would certainly give me the impetus to purchase a Rolex watch. The closing image of Federer standing as a messiah like figure in front of the jubilant masses and the Rolex punch line A crown for every achievement made me assume that this successful relationship is going to continue and made me want to be part of this esteemed partnership. There is certain majesty to the connection between Rolex and Federer as both are viewed in the public eye to have an air of superiority to them. This is a great example of an advertisement that uses Rational Appeal. Emotional Appeal The Emotional Appeal theme of advertising is an advertising approach where the message seeks to evoke a positive or negative reaction in the consumer (Clemente, 2002). Thus this appeal has a direct connection with the heart and how the person is feeling or will feel after seeing the advertisement. An advertisement that uses Emotional Appeal to gain the audiences approval and loyalty to their product is used by Nokia (http://www.youtube.com/watch?v=l4Ek8i0ddSQ) Get Attention: The start of this advertisement shows a man and a woman in seemingly distant contrasting environments which captures the audiences concentration straight away. The woman seems to be entrapped within a desolate apartment alone with seemingly no way out due to the dark and persistent nature of the weather. In startling contrast, the man seems to be enjoying the freedom of life exploring a town with his trusty Nokia phone. Hold Interest: The music playing throughout the advertisement seems to have a quite emotional downtrodden tone to it and this is illustrated perfectly as the woman stares out the window of her apartment with sorrowfulness. The advertisement holds our interest as we are wondering what is the connection or relationship between the downtrodden woman and the joyful man. The man is getting his photos taken beside random billboards/signs and suspicion is aroused as to the meaning of this. Of course each of the photos is being taken by a clearly vivid Nokia phone and the random words being taken hold our interest as to whether the sundry words will have an outcome or a destination. Arouse desire: Desire is aroused to purchase the product when it is revealed the outcome of the various photos. The woman receives a multimedia message which maps out to reveal Will you mary me? tugs at the heart strings as the womans previous apparent depression like nature is suddenly cured as she views each of the pictures of the man and the sequence of words. The Nokia phone is of course used as the medium of communication between these distant lovers. Obtain Action: The final scene of this fifty four second commercial sees the man sitting on a park bench impatiently awaiting the outcome of his proposal. As we see him receiving the answer to his proposal and his sudden explosion of unadulterated joy, a bus in the background trundles off screen to reveal the monstrous Nokia logo. This is a brilliant advertisement as Nokia manages to involve itself within the heart warming relationship that has consumed the audience. This advertisement will particularly appeal to amorous women and might just sway them as they purchase their next mobile phone. Moral Appeal This type of appeal as one would imagine is based on morality. These appeals draw attention on what is right (Trehan Trehan, 2009(2). I think a perfect definition on what moral appeal is and what it aims to do is contained in the following quote Use of moral appeal includes attempts to gain compliance by convincing the target audience that it is morally wrong if it doesnt comply (Heath, 1994). Thus the organisations who use this type of appeal are aiming at a large target market considering that if the message is presented correctly in the advertisement itll have a profound effect on the audience. Environmental Defense uses moral appeal in its advertisement quite ably in its attempt to warn of the looming threat of Global Warming. http://www.youtube.com/watch?v=s-_LBXWMCAM Get Attention: This advertisement automatically draws the attention of its audience as we see a dark, bleak looking environment beside a set of train tracks with the eerie sound on the environment to be heard in the background. Suddenly, the audience sees a close up shot of a worried looking man who simply utters the phrase Global Warming. Hold Interest: Directly after the utterance of the words Global Warming impending doom and tragedy in the form of a moving train hurtling towards the man who is now seen to be standing in the middle of the train tracks. This instantly worries and alerts the audience and is a perfect example of an advertisement using moral appeal as the audience is suddenly fraught with anxiety as to the mans imminent death. Arouse Desire: As the train trundles along at what seems like increasingly greater speed, the man informs us that the irreversible consequences of this global disaster are 30 years away. The fact that the middle aged man of the age bracket [40-50] enlightens us that he wont be affected as he will be on the cusp of death by the time the real effects are felt throughout the planet is an example of the ignorant view expressed by many throughout the world. This blatantly ignorant statement questions the audiences morals. Obtain Action: After his immoral statement, the man walks of the train tracks and a small child is seen to be split seconds away from taking the brunt force of the train. This a hard hitting advertisement as it calls on our morals in relation to what is going to be done to stop this imminent global disaster. I certainly was forced to think twice about the disastrous outcomes of this global problem being caused by the citizens of humanity.

Unemployment as an Indicator of Macroeconomic Performance

Unemployment as an Indicator of Macroeconomic Performance The rate of unemployment is one of the most important indicators of macroeconomic performance. Unemployment arises due to the distortions in the supply of labor cause by the non-competitive wage differential. During the period from 1945 until at least 1968, unemployment rates in the major European economies were extremely low by todays standards. For instance in the United Kingdom, the average rate of unemployment for the entire period was about 1.8% of the labor force and in worst years it did not even exceed 2.5%. The main driving force was autonomous rather than policy related. These forces include waves of new products and processes, spread of trade and development around the world. However the cause of unemployment problem in Europe in comparison to the United States was their labor market institutions while the United States is far more superior due to the flexibility of their labor market. In this paper, determinants of unemployment in US are the concerns with economic growth as the main concern. Economic growth of a nation is the increase in a nations real output that occurs over time. In general, growth and unemployment are closely related as unemployment affects the growth rate through the scale of operation of an economy. Besides that, FDI inflow and inflation are taken into account altogether to identify the relationship towards the unemployment rate. 1.1 Background As unemployment is one of the most important economic indicators, the unemployment rate provides useful information such as how the labor market works as well as the percentage of human capital that is not used in the production process, which is especially crucial towards policy makers. Consequently, it is important to analyze the factors that impact the unemployment rate regardless short or long term perspective. The United States of America is a developed country which has one of the largest population and production in the world (Encyclopedia, 2010). As unemployment are explained by structural factors mainly by inflexible labor market. One may wonder the about the impact which economic growth, inflation and FDI have on the unemployment rate of the United States of America as the clutches of unemployment are hard to escape even for a develop country, especially for US which possesses by far the most flexible labor market. As a case study, the United States of America has been chosen as the research country. United States of America is reckoned to be particularly appropriate as United States of America labor market has proven by all accounts to be more dynamic in the sense of a higher level of job turnover, resulting in high vacancy levels at any point in time. Recently, unemployment rate in the United States of America has been found to be as high as 9.6% as of August 2010 compared to the 4. 1% ten years ago (Bureau of Labor Statistics, 2010). In the mean time the real GDP growth in 2000 was at 4.14% when the unemployment rate was 4.1% while the real GDP growth in 2003 was at 2.49% when the unemployment rate was 5.8% (Bureau of Labor Statistics, 2010). From here, it can be seen that unemployment rate moves in the opposite direction of economic growth, yet there were different versions of results concluded by different previous researchers. 1.2 Problem Statement Unemployment has been a famous macroeconomic variable that researchers tend to use to study on but even with so many researches carried out, some of the results obtained are not consistent with one and another. For instance, the debates among Monetarist and Keynesian views of unemployment as well as the new contributions of Lucass approach and new Keynesian Economics shows that there was no reason to account for growth in the unemployment model. However, a significant innovation occurred with Pissarides'(1990) formulation of an unemployment theory in equilibrium. In many previous attempts, he formalize a unique framework to study the labor market dynamic perspective, providing useful tools to analyze both long and short run unemployment. Pissarides also introduced a first link between long run unemployment and growth which matches the neoclassical framework of economic growth. ( Pissarides, 1990 Ch. II) In the case of US, its economy began its current economic recovery in December 2001. However, rather than experiencing employment growth, not only did the unemployment rate increase but the number of new jobs created in the economy actually declined significantly during the first year of the recovery (Seyfried). Thus this paper is conducted so as to affirm the relationship of economic growth has on the unemployment rate of the country. As some results obtained by past researchers showed that economic growth impacts unemployment whereas the others came to a conclusion that unemployment causes economic growth whereby the existence of Granger Causality relationship is quite possible. In this study, economic growth, inflation and FDI serves as explanatory variable to determine the relationship towards unemployment rate in the United States of America. 1.3 Objectives This study aims to investigate the determinants of unemployment rate in the United States of America with economic growth as the main concern in addition with inflation and FDI (foreign direct investment) to further assure that it is coherent with the results obtained from previous studies. 1.3.1 Specific objectives This paper aims to examine the relationship between economic growth, inflation and FDI towards the unemployment rate. On the other hand, this paper serves to probe further into the relationship between economic growth, FDI, and inflation towards unemployment to sustain the existence of granger causality relationship. 1.4 Significance of study The contribution of carrying out this study is to allow policy makers to have an insight of unemployment so as to allow them to decide on suitable policy that will help bring down the unemployment rate while sustaining appropriate inflation level and attract sufficient FDI inflow. The results generated will help provide insight to the nature of the relationship between economic growth, inflation, and FDI towards unemployment. It would be useful to policy makers to know the rate and relationship of economic growth as it is necessary to reduce the unemployment rate, or at least keeping it from rising. Moreover, in previous studies, FDI is found to have impacted the unemployment rate indirectly through spillover effects from economic growth. In this study, however, FDI is incorporated directly to affect unemployment growth; therefore the effectiveness of the implemented policy will be taken into account more effectively. CHAPTER 2: Literature Review 2.1 Conceptual Model According to Alexopolous (2003), in the case where there is technological growth in the economy, families will increase their investment in capital, which in turn increase the amount of family purchased consumption workers receive over time. As a result, firms optimally increase the wage rate proportionately in order to prevent workers from shirking on the job. Therefore, the rate of unemployment along the balanced growth path will not change over time, since the marginal product of labour and the marginal cost of labour grow at the same rate. Based on De Groot, in general, growth and unemployment are intimately related for two reasons. Unemployment affects the scale of operation of the economy and thereby the growth rate. Growth affects inter-temporal decisions of workers about where to allocate on the labor market once they are laid off, and thereby it affects equilibrium unemployment. According to Brecher (2007), rapid economic growth and FDI, accompanied by higher per capita income, usually increase output growth. Thus, domestic firms and foreign multinational corporations will demand more labour force with skills to create products. Hence, economic growth can promote future employment growth for labour force based on new Keynesian theory of the output-inflation tradeoff. Some studies found that overseas investment replaced domestic employment in developing countries; however, the same result did not happen in developed countries. Tremblay (2007) pointed out that based on classical economic theory, the Phillips Curve illustrated long-run tradeoff between unemployment and inflation. There is an inverse relationship between inflation and unemployment, that is saying inflation will rise when unemployment decrease and vice-versa. Futhermore, Luciano Fanti and Piero Manfredi (2003) mention that the neoclassical Solow model, which still provides excellent econometric fits and shows a globally stable positive growth equilibrium, but also shows two restrictive features as regards the scope of this paper: (1) it does not take into account the stylized fact of the existence of unemployment, which is generally not only positive but also strongly fluctuating; (2) in such a model fluctuations have never been endogenously determined Meanwhile, Martin Zagler (2006) noticed that the cost associated with economic growth is structural unemployment, as structural change destroys jobs in one firm and creates jobs in another. The source of unemployment is the rate of intra-sector structural change associated with faster economic growth. Besides, Bonatti (2007) says that an increase of the workers influence on the political process may raise the fraction of GDP allocated to finance the welfare state, thus leading to a higher unemployment rate and to a lower growth rate. The research work done by Chang (2007) noticed that when the degree of trade openness of Taiwan is larger, the unemployment rate of Taiwan will increase, this is because the young men and young women in Taiwan desire to extend their education in working age. According to Phillips (1998), the negative relationship between inflation and unemployment can be explained through governments expansionary policy to increase the consumption level of the citizens. As labor market tightens, unemployment rate will fall as money wages tended to rise more rapidly. Unemployment will then increase as government tries to control the inflation rate. This is because the increment in wages is closely related with the increase in price. Therefore, the trade-off between these two variables can be seen. 2.2 Methodology Effects panel regression methods were used by Zagler (2006) on the relationship between economic growth and unemployment. Moreover, Zagler (2006) checked his estimated model with the unit-root test to test the stationary of the model. In order to obtain information about the relationship between inflation and unemployment, the procedure of den Hann was employed by Bae (2006), which has the advantage as no assumptions about the order of integration in the variables of interest is required. The procedure estimates a vector regressions (VAR) model and analyzes the correlations of VAR forecast errors of inflation and unemployment at long horizons. Chang (2007) used vector autoregression method of variance decomposition and impulse response function analysis are applied to analyze various relationships among foreign direct investment (FDI), economic growth, unemployment and degree of openness in Taiwan. Besides that, he also uses the unit root test of augmented Dickey-Fuller (ADF and KPSS) test to examine the stationary properties of the economic time series. The appropriate lag-length in the ADF regression is selected by minimizing the Akaikes information criterion (AIC). He also uses co-integration test to determine whether there exists a long-run equilibrium relationship among variables and weak exogeneity, and multivariate Granger-causality test to determine their causal direction in the short-run between all variables. Besides, he also has applied the VAR technique of variance decomposition and impulse response function analysis to analyze various inter-relationships between FDI, unemployment rate and GDP variables in the case of Taiwan from the period of 1981 to 2003. Meanwhile, Eric Heyer, FrÃÆ' ©dÃÆ' ©ric ReynÃÆ' ¨s, Henri Sterdyniak (2006) present the results of the DF-GLS unit root test to test the growth rate of consumer price and also unemployment rate. 2.3 Empirical Result Zagler (2006) has carried out a research which empirically investigated the link between economic growth and unemployment, using micro econometric evidence for the United Kingdom. The results generated showed a significant and negative relationship between unemployment and economic growth. According to the result generated by Muscatelli and Tirelli (2001), it is proven that there is a negative relationship between economic growth and unemployment as Japan, Germany, Italy, France and Canada. This result is generally in favour of those theories which predict a negative linkage between unemployment on economioc growth Besides, Pehkonen (2000) stated that a fall in GDP has significant relationship with unemployment as a drop in the GDP in Finland leads to an increase in the unemployment since demand for labor have shrunk. Therefore, Pehkonen (2000) concluded that unemployment would increase as a result of a decrease in economic growth. Meanwhile, Mitra and Sato (2007) found that the major links between external scale economies and growth are perceived in terms of technical efficiency, and higher growth is taken to reduce the unemployment rate. Futhermore, Scahaik and Groot (1998) found that the unemployment and economic growth relationship in imperfect competition economy and different periods, where structural changes occur, has a negative correlation and effect of different degrees through testing the structural stability. Chang (2007) proved that economic growth as well as FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. In addition, according to Solows growth theory, employment for labour force with skill can further promote economic growth and this can be verified by Taiwans economy model. Okuns law stating that reducing unemployment for labour force can promote further economic growth is then verified. Furthermore, unemployment is very sensitive to changes in GDP and vice versa, which does lend support that rising economic growth can obviously affect unemployment for labour force. shock of unemployment rate has negative effect on economic growth . He also mentions that the shocks in economic growth and FDI inflow decrease the unemployment rate. This means that rapid economic growth and FDI inflow, accompanied by higher per capita income can promote future employment growth for labour force. In the research study of Meckl (2001), correlation between growth and unemployment is shown to be positive if the research sector is of the high-wage sector in the economy, and negative if the research sector is the low-wage sector. Arico (2003) has already observed that the rate of growth is negatively related with the rate of unemployment. If the growth rate increases, it will decrease the net rate at which the stream of profits is discounted. For each firm the entry will result less costly. More vacancies will be created, reducing the unemployment rate. (Capitalization effect).On the other hands, It will reduce the life-time of each firm, by increasing the price for human capital. Each innovation will generate fewer vacancies than before. That will be reflected in an increase of the rate of unemployment. (Indirect creative destruction effect). Besides, Fanti and Manfredi (2003) has shown a negative relation between unemployment and growth , though we should also mention the positive relation between unemployment and growth obtained in the particular creative disruption context according to Schumpeters idea. Fanti and Manfredi alsomshows a surprising relation between unemployment and growth (via effects on population which is an endogenous engine of growth): this relation can be either positive or negative depending on the relative levels of cost of childrearing of workers and unemployed persons and the level of unemployment benefits. Meanwhile, Bonatti (2007) noticed that reduction of government transfers in favor of the workers allows decreasing the ratio of total tax revenues to GDP, thus monotonically increasing the growth rate and leading to a lower unemployment rate. CHAPTER 3: RESEARCH METHOD 3.1 Data Analysis 3.1.1 Unemployment Rate In this study, unemployment rate is the main study which was examine by using some explanatory variables. According to BLS, Bureau of Labor Statistics, (2009) those people who are with jobs can be considered as employed. On the other hand, a person will be classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Dixon Shepherd (2002) stated that the unemployment rate can be considered as one of the most important indicators of macroeconomic performance in a country. The data of unemployment rate is obtained from the Bureau of Labor Statistics (BLS) which if measured in percentage from those people who are 16 years old and above from year 1970 to 2007. The method which BLS used to calculate the unemployment rate in United States is: X 100% 3.1.2 Real Gross Domestic Product Real gross domestic product (Real GDP) in a country can be measured by the total output value of goods and services which produced from the domestic labor in the country in a given year, expressed in base-year prices. In this study, it is expected that there is a negative relationship between the Real GDP and unemployment rate in United States. The source of the United States Real GDP data is from the World Bank World Development Indicators and International Financial Statistics of the IMF. On the other hand, the data obtained was converted to a 2005 base year. The formula to calculate the data of United States Real GDP is as below: 3.1.3 Foreign Direct Investment Foreign direct investment (FDI) is a kind of investment which is made to serve the business interest of the investor in a company which is in a different nation distinct from the investors country of origin. An example of FDI is a foreign company comes into a country to build or buy a factory and run a business there. Many economists believe that FDI is good for an economy, because it provides domestic job opportunities and increase domestic capital. In this study, net inflows of foreign direct investment in the measurement of current US Dollar are used. A net inflow of foreign direct investment is the total amount or value of the investment flow into United States from foreign investors to operate their business in United States and negative relationship between foreign direct investment and unemployment rate is expected in United States. 3.1.4 Consumer Price Index Consumer price index (CPI) is measured that examines the weighted average of prices of a basket of consumer goods and services in a country, such as transportation, food, rental fees and utilities fees. CPI is one of the measurements of inflation rate. According to Bureau of Labor Statistics (BLS), the prices for the goods and services used to calculate the CPI are collected in 87 urban areas in United States from about 23,000 retail and services establishments. The CPI data used in this study included all consumer items in United States from year 1970 to 2007. 3.2 Research Framework 3.2.1 Unemployment rate and Real Gross Domestic Product Based on the study, unemployment and real gross domestic product is expected to be negatively related. Edward (2007) stated there is a negative relationship between real gross domestic product and unemployment because of the theory of Okuns law. According to Okuns law, 1% increase in the unemployment rate will decrease GDP by 3%. However, Christopher (2010) said that, Okun coefficients can change over time because the relationship of unemployment to output growth depends on laws, technology, preferences, social customs, and demographics. 3.2.2 Unemployment and Consumer Price Index Consumer price index is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation. Therefore, we expect that there is an inverse relationship between the rate of unemployment and rate of inflation. According to the Phillips Curve theory, if the unemployment is high, inflation tends to be low. The diagram below shows the Phillips curve. Inflation Phillips curve Unemployment However, the result shows a positive relationship in our regression model. This problem will occur because of the multicolinearity problem in our regression model. But when one independent variable by one independent variable with the unemployment is tested, negative sign for consumer price index and unemployment are obtained. Bae (2006) stated that there is a positive long run relationship between unemployment and inflation. 3.2.3 Unemployment and Foreign Direct Investment In this study, inflow of foreign direct investment were expected to affect the unemployment rate significantly and expected that foreign direct investment has a negative long run relationship with unemployment. Foreign direct investment will increase job opportunities so, unemployment rate will decrease. Shu (2007) stated that FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. 3.3 Econometric Methodology 3.3.1 Introduction This chapter consist the used of the method to examining the relationship between the unemployment and economic condition in United State by using the time series data ranging from the year 1970 to 2007. First, the result testing will start with the test of stationary by using Augmented Dickey-Fuller unit root test and proceed with the cointegration test. Secondly, the Multiple Regression Analysis and several ways to detect the assumption of the Classical Linear Regression Model (CLRM). The multicollinearity is used to test the correlation analysis. Breusch-Godfrey Serial Correlation LM Test is used to test the existence of serial autocorrelation, Autoregression Conditional Heteroscedasticity Test is used for testing the heteroscedasticity variance of error of the model and Ramsey RESET Test is used to detect the linearity regression and misspecification error. Unemployment = f (RGDP, FDI, CPI) RGDP = Real Gross Domestic Product FDI = Foreign Direct Investment CPI = Consumer Price Index The change in unemployment is our main study that we want to examine with using a few of variables which are RGDP (Real Gross Domestic Product), FDI (Foreign Direct Investment) and CPI (Consumer Price Index). y = ÃŽÂ ²0 + ÃŽÂ ²1Ln (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3 (FDI) + Econometric Model with Expected Sign: = ÃŽÂ ²0 + ÃŽÂ ²1L (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3(FDI) (-ve) (-ve) (-ve) Where +ve indicates that there is a postive relationship between the explanatory variable and dependent variable. On the other hand, -ve indicates that there is a negative relationship between the explanatory variable and dependent variable 3.3.2 Unit root A unit root test is used to examine whether a time series variable is stationary. In the model, T-statistic, F-statistic and R-squared are used to determine to ensure the validity of the test statistics is stationary. The result will become spurious regression problem if the non-stationary series in the ordinary least square (OLS) regression is used. Spurious regression result in high significant T-statistic and highly value for the coefficient of determination R-squared, and the R-square is larger than Durbin Watson. Therefore, if the stationary does not hold, estimate is not consistent and result will be misleading. To avoid the spurious regression problem, the Augmented Dickey-Fuller test (ADF) is used to examine the stationary of the variable. An Augmented Dickey-Fuller test (ADF) is used to test for a unit root in a time series sample. The Augmented Dickey-Fuller (ADF) statistic used in the test is a negative number. Therefore, the more negative value is, more power the rejection of the hypothesis that there is a unit root at some level of confidence. The equation for Augmented Dickey-Fuller (ADF) test Where ÃŽÂ ± is a constant, ÃŽÂ ² is the coefficient on a time trend and p is the lag order of the autoregressive process. ÃŽÂ ± = 0 and ÃŽÂ ² = 0 corresponds to modeling a random walk and ÃŽÂ ² = 0 corresponds to modeling a random walk drift. By including lags of the order p, the ADF formulation allows for higher-order autoregressive processes. This means that the lag length p needs to be determined when applying in the test. One possible approach is to test from high orders and examine the t-value on coefficients. The criterion such as the Akaike information criterion (AIC), Schwarz-Bayesian information criterion (SBIC) or the Hannan-Quinn information criterion (HQIC) test is used to examine the lag length. 3.3.3 Granger Causality The Granger Causality test indicates that a time series Y is said to be Granger caused by X if X helps the prediction of Y or equivalently if the coefficients on the lagged X are statistically significant. Granger Causality shows two-way causation in the case. X Granger causes Y and Y Granger causes X. It usually through a series of t-tests and F-tests on lagged values of X and lagged values of Y. 3.3.4 Multiple Regressions The ordinary least squares (OLS) or linear least squares are a method to examine the unknown parameters in a linear regression model. It is used to assume the distribance, ui. According to Gujarati (2003), ui stands for the normal distribution representing zero mean and constant variance, à Ã†â€™2 in the multiple regression models. With the normality assumption, OLS estimators 1, and 2 are linear functions of ui. Therefore, if ui are normally distributed, so 1,and 2 will make hypothesis testing more straightforward. OLS estimators of the partial regression coefficients are identical with the maximum likelihood (ML) estimators. There are the best linear unbiased estimators (BLUE). Besides, the least-square estimators are best unbiased estimators (BUE); it means that they have minimum variance in the entire class of unbiased estimators. 3.3.5 Multicollinearity Multicollinearity shows the two or more independent variables in a multiple regression model are highly linearly related. The multicollinearity test is perfect if the correlation between two independent variables is equal to 1 or -1. Multicollinearity will occur when there is a strong linear relationship among two or more independent variables. The equation below is refer the variables is perfectly multicollinear if there exist one or more exact linear relationships among some of the variables. Estimates for the parameters of the multiple regression equation is The ordinary least squares estimates include inverting the matrix XTX where, It indicate that if the linear relationship (perfect multicollinearity) is exactly with the independent variables, the rank of X is less than k+1 and the matrix XTX will not invertible. One of the detection of multicollinearity is used detection-tolerance or the variance inflation factor (VIF) for multicollinearity where R2j is the coefficient of determination of a regression of explanatory j on all the other explanators. Tolerances of less than 0.20 or 0.10 or a VIF of 5 or 10 and above reveal a multicollinearity problem. 3.3.6 Breusch-Godfrey Serial Correlation LM Test Breusch-Godfrey Serial Correlation LM test is a test of autocorrelation that is basically allows for nonstochastic regressors such as the lagged values of the regressand; higher-order autoregressive schemes such as AR (1), AR (2), etc and higher-order moving averages of white noise error terms such as t. Two variable regression models to illustrate the test, regressors can be added to the model and also lagged values of the regressand can be added to the model. Yt =ÃŽÂ ²1 +ÃŽÂ ²2Xt +ut The error term ut assume that the pth-order autoregressive, AR (p), Ut = ptut-1 + ptut-2 + à ¢Ã¢â€š ¬Ã‚ ¦+pput-p + t. where t.is a white noise error term. The null hypothesis H0 can be show as Ho: p1 = p2 = à ¢Ã¢â€š ¬Ã‚ ¦ = pp = 0 (no autocorrelation) At 5% significant level, if the computed p value of Chi-square is less than Chi-square tests, do not reject the null hypothesis, meaning that there is no autocorrelation problem. If computed p value of Chi-square is more than Chi-square tests, reject the null hypothesis, meaning that there is autocorrelation problem. 3.3.7 Autoregressive Conditional Heteroscedasticity Test In econometrics, Autoregressive Conditional Heteroskedasticity (ARCH) model assume that the variance of the current error term is related to the previos one. Autoregressive Conditional Heteroskedasticity model is used to model the time series with time-varying volatility such as stock price. 3.3.8 Specification error Ramsey Regression Equation Specification Error Test (Ramsey RESET test) is used to examine the specification error. The specification test for the linear regression model. More specifically, it is used to test the specification error in the equation. As the result, if the non-linear combinations of the independent variables have any power in explaining the dependent variable, means that the model is mis-specified. Consider the model Ã…Â · = E {y | à Ã¢â‚¬ ¡ } = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ The Ramsey test is used to test whether the (ÃŽÂ ²1à Ã¢â‚¬ ¡)2, (ÃŽÂ ²2à Ã¢â‚¬ ¡)3à ¢Ã¢â€š ¬Ã‚ ¦,(ÃŽÂ ²k-1à Ã¢â‚¬ ¡)k has any power in explaining y. The Ramsey test is executed by calculate the following linear regression Ã…Â · = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ + ÃŽÂ ²1Ã…Â ·2 +à ¢Ã¢â€š ¬Ã‚ ¦+ ÃŽÂ ²k-1Ã…Â ·k + ÃŽÂ µ After examine the test, the means of the F-test is to determine whether ÃŽÂ ²1 through ÃŽÂ ²k-1 are zero. If the null hypothesis reveals that all regression coefficients are zero, means that the null hypothesis cannot be reject, the Ramsey test is unable to detect any misspecification. If the null hypothesis is rejected, means that the model is misspecification. 3.3.9 Jarque-Bera Test of Normality Jarque-Bera test of normality is used to test the normally distributed. It is large-sample or an asymptotic test and based on the OLS. The test first calculates the skewness and kurtosis measures of the OLS residuals. JB = n Where the n = sample size, S = skewness coefficient, and K = kurtosis coefficient. The normally distributed variable, S is zero and K is three. Hence, the Jarque-Bera test of normality is a test of the joint hypothesis that S and K are zero and three, respectively. Therefore, the value of the Jaque-Bera statistic is expected to be zero. For the null hypothesis the residual is normally distributed, asymptotically (i.e., in large samples) the Jarque-Bera statistic gives the chi-square distribution with two degree of freedom showed by Jarque and Bera (Gujarati 2003) For the alternative hypothesis the residual is not normally distributed. At 5 significant levels, computed p value is less than Jarque-Bera statistic, we can reject the null hypothesis that the residual is not normally distributed whereas computed p value is more than Jarque-Bera statistic, we do not reject the null hypothesis that the residual is normally distributed. CHAPTER 4: RESEARCH RESULTS AND INTERPRETATION 4.1 Introduction This chapter consists of the results and interpretation of the relationship between Unemployment as an Indicator of Macroeconomic Performance Unemployment as an Indicator of Macroeconomic Performance The rate of unemployment is one of the most important indicators of macroeconomic performance. Unemployment arises due to the distortions in the supply of labor cause by the non-competitive wage differential. During the period from 1945 until at least 1968, unemployment rates in the major European economies were extremely low by todays standards. For instance in the United Kingdom, the average rate of unemployment for the entire period was about 1.8% of the labor force and in worst years it did not even exceed 2.5%. The main driving force was autonomous rather than policy related. These forces include waves of new products and processes, spread of trade and development around the world. However the cause of unemployment problem in Europe in comparison to the United States was their labor market institutions while the United States is far more superior due to the flexibility of their labor market. In this paper, determinants of unemployment in US are the concerns with economic growth as the main concern. Economic growth of a nation is the increase in a nations real output that occurs over time. In general, growth and unemployment are closely related as unemployment affects the growth rate through the scale of operation of an economy. Besides that, FDI inflow and inflation are taken into account altogether to identify the relationship towards the unemployment rate. 1.1 Background As unemployment is one of the most important economic indicators, the unemployment rate provides useful information such as how the labor market works as well as the percentage of human capital that is not used in the production process, which is especially crucial towards policy makers. Consequently, it is important to analyze the factors that impact the unemployment rate regardless short or long term perspective. The United States of America is a developed country which has one of the largest population and production in the world (Encyclopedia, 2010). As unemployment are explained by structural factors mainly by inflexible labor market. One may wonder the about the impact which economic growth, inflation and FDI have on the unemployment rate of the United States of America as the clutches of unemployment are hard to escape even for a develop country, especially for US which possesses by far the most flexible labor market. As a case study, the United States of America has been chosen as the research country. United States of America is reckoned to be particularly appropriate as United States of America labor market has proven by all accounts to be more dynamic in the sense of a higher level of job turnover, resulting in high vacancy levels at any point in time. Recently, unemployment rate in the United States of America has been found to be as high as 9.6% as of August 2010 compared to the 4. 1% ten years ago (Bureau of Labor Statistics, 2010). In the mean time the real GDP growth in 2000 was at 4.14% when the unemployment rate was 4.1% while the real GDP growth in 2003 was at 2.49% when the unemployment rate was 5.8% (Bureau of Labor Statistics, 2010). From here, it can be seen that unemployment rate moves in the opposite direction of economic growth, yet there were different versions of results concluded by different previous researchers. 1.2 Problem Statement Unemployment has been a famous macroeconomic variable that researchers tend to use to study on but even with so many researches carried out, some of the results obtained are not consistent with one and another. For instance, the debates among Monetarist and Keynesian views of unemployment as well as the new contributions of Lucass approach and new Keynesian Economics shows that there was no reason to account for growth in the unemployment model. However, a significant innovation occurred with Pissarides'(1990) formulation of an unemployment theory in equilibrium. In many previous attempts, he formalize a unique framework to study the labor market dynamic perspective, providing useful tools to analyze both long and short run unemployment. Pissarides also introduced a first link between long run unemployment and growth which matches the neoclassical framework of economic growth. ( Pissarides, 1990 Ch. II) In the case of US, its economy began its current economic recovery in December 2001. However, rather than experiencing employment growth, not only did the unemployment rate increase but the number of new jobs created in the economy actually declined significantly during the first year of the recovery (Seyfried). Thus this paper is conducted so as to affirm the relationship of economic growth has on the unemployment rate of the country. As some results obtained by past researchers showed that economic growth impacts unemployment whereas the others came to a conclusion that unemployment causes economic growth whereby the existence of Granger Causality relationship is quite possible. In this study, economic growth, inflation and FDI serves as explanatory variable to determine the relationship towards unemployment rate in the United States of America. 1.3 Objectives This study aims to investigate the determinants of unemployment rate in the United States of America with economic growth as the main concern in addition with inflation and FDI (foreign direct investment) to further assure that it is coherent with the results obtained from previous studies. 1.3.1 Specific objectives This paper aims to examine the relationship between economic growth, inflation and FDI towards the unemployment rate. On the other hand, this paper serves to probe further into the relationship between economic growth, FDI, and inflation towards unemployment to sustain the existence of granger causality relationship. 1.4 Significance of study The contribution of carrying out this study is to allow policy makers to have an insight of unemployment so as to allow them to decide on suitable policy that will help bring down the unemployment rate while sustaining appropriate inflation level and attract sufficient FDI inflow. The results generated will help provide insight to the nature of the relationship between economic growth, inflation, and FDI towards unemployment. It would be useful to policy makers to know the rate and relationship of economic growth as it is necessary to reduce the unemployment rate, or at least keeping it from rising. Moreover, in previous studies, FDI is found to have impacted the unemployment rate indirectly through spillover effects from economic growth. In this study, however, FDI is incorporated directly to affect unemployment growth; therefore the effectiveness of the implemented policy will be taken into account more effectively. CHAPTER 2: Literature Review 2.1 Conceptual Model According to Alexopolous (2003), in the case where there is technological growth in the economy, families will increase their investment in capital, which in turn increase the amount of family purchased consumption workers receive over time. As a result, firms optimally increase the wage rate proportionately in order to prevent workers from shirking on the job. Therefore, the rate of unemployment along the balanced growth path will not change over time, since the marginal product of labour and the marginal cost of labour grow at the same rate. Based on De Groot, in general, growth and unemployment are intimately related for two reasons. Unemployment affects the scale of operation of the economy and thereby the growth rate. Growth affects inter-temporal decisions of workers about where to allocate on the labor market once they are laid off, and thereby it affects equilibrium unemployment. According to Brecher (2007), rapid economic growth and FDI, accompanied by higher per capita income, usually increase output growth. Thus, domestic firms and foreign multinational corporations will demand more labour force with skills to create products. Hence, economic growth can promote future employment growth for labour force based on new Keynesian theory of the output-inflation tradeoff. Some studies found that overseas investment replaced domestic employment in developing countries; however, the same result did not happen in developed countries. Tremblay (2007) pointed out that based on classical economic theory, the Phillips Curve illustrated long-run tradeoff between unemployment and inflation. There is an inverse relationship between inflation and unemployment, that is saying inflation will rise when unemployment decrease and vice-versa. Futhermore, Luciano Fanti and Piero Manfredi (2003) mention that the neoclassical Solow model, which still provides excellent econometric fits and shows a globally stable positive growth equilibrium, but also shows two restrictive features as regards the scope of this paper: (1) it does not take into account the stylized fact of the existence of unemployment, which is generally not only positive but also strongly fluctuating; (2) in such a model fluctuations have never been endogenously determined Meanwhile, Martin Zagler (2006) noticed that the cost associated with economic growth is structural unemployment, as structural change destroys jobs in one firm and creates jobs in another. The source of unemployment is the rate of intra-sector structural change associated with faster economic growth. Besides, Bonatti (2007) says that an increase of the workers influence on the political process may raise the fraction of GDP allocated to finance the welfare state, thus leading to a higher unemployment rate and to a lower growth rate. The research work done by Chang (2007) noticed that when the degree of trade openness of Taiwan is larger, the unemployment rate of Taiwan will increase, this is because the young men and young women in Taiwan desire to extend their education in working age. According to Phillips (1998), the negative relationship between inflation and unemployment can be explained through governments expansionary policy to increase the consumption level of the citizens. As labor market tightens, unemployment rate will fall as money wages tended to rise more rapidly. Unemployment will then increase as government tries to control the inflation rate. This is because the increment in wages is closely related with the increase in price. Therefore, the trade-off between these two variables can be seen. 2.2 Methodology Effects panel regression methods were used by Zagler (2006) on the relationship between economic growth and unemployment. Moreover, Zagler (2006) checked his estimated model with the unit-root test to test the stationary of the model. In order to obtain information about the relationship between inflation and unemployment, the procedure of den Hann was employed by Bae (2006), which has the advantage as no assumptions about the order of integration in the variables of interest is required. The procedure estimates a vector regressions (VAR) model and analyzes the correlations of VAR forecast errors of inflation and unemployment at long horizons. Chang (2007) used vector autoregression method of variance decomposition and impulse response function analysis are applied to analyze various relationships among foreign direct investment (FDI), economic growth, unemployment and degree of openness in Taiwan. Besides that, he also uses the unit root test of augmented Dickey-Fuller (ADF and KPSS) test to examine the stationary properties of the economic time series. The appropriate lag-length in the ADF regression is selected by minimizing the Akaikes information criterion (AIC). He also uses co-integration test to determine whether there exists a long-run equilibrium relationship among variables and weak exogeneity, and multivariate Granger-causality test to determine their causal direction in the short-run between all variables. Besides, he also has applied the VAR technique of variance decomposition and impulse response function analysis to analyze various inter-relationships between FDI, unemployment rate and GDP variables in the case of Taiwan from the period of 1981 to 2003. Meanwhile, Eric Heyer, FrÃÆ' ©dÃÆ' ©ric ReynÃÆ' ¨s, Henri Sterdyniak (2006) present the results of the DF-GLS unit root test to test the growth rate of consumer price and also unemployment rate. 2.3 Empirical Result Zagler (2006) has carried out a research which empirically investigated the link between economic growth and unemployment, using micro econometric evidence for the United Kingdom. The results generated showed a significant and negative relationship between unemployment and economic growth. According to the result generated by Muscatelli and Tirelli (2001), it is proven that there is a negative relationship between economic growth and unemployment as Japan, Germany, Italy, France and Canada. This result is generally in favour of those theories which predict a negative linkage between unemployment on economioc growth Besides, Pehkonen (2000) stated that a fall in GDP has significant relationship with unemployment as a drop in the GDP in Finland leads to an increase in the unemployment since demand for labor have shrunk. Therefore, Pehkonen (2000) concluded that unemployment would increase as a result of a decrease in economic growth. Meanwhile, Mitra and Sato (2007) found that the major links between external scale economies and growth are perceived in terms of technical efficiency, and higher growth is taken to reduce the unemployment rate. Futhermore, Scahaik and Groot (1998) found that the unemployment and economic growth relationship in imperfect competition economy and different periods, where structural changes occur, has a negative correlation and effect of different degrees through testing the structural stability. Chang (2007) proved that economic growth as well as FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. In addition, according to Solows growth theory, employment for labour force with skill can further promote economic growth and this can be verified by Taiwans economy model. Okuns law stating that reducing unemployment for labour force can promote further economic growth is then verified. Furthermore, unemployment is very sensitive to changes in GDP and vice versa, which does lend support that rising economic growth can obviously affect unemployment for labour force. shock of unemployment rate has negative effect on economic growth . He also mentions that the shocks in economic growth and FDI inflow decrease the unemployment rate. This means that rapid economic growth and FDI inflow, accompanied by higher per capita income can promote future employment growth for labour force. In the research study of Meckl (2001), correlation between growth and unemployment is shown to be positive if the research sector is of the high-wage sector in the economy, and negative if the research sector is the low-wage sector. Arico (2003) has already observed that the rate of growth is negatively related with the rate of unemployment. If the growth rate increases, it will decrease the net rate at which the stream of profits is discounted. For each firm the entry will result less costly. More vacancies will be created, reducing the unemployment rate. (Capitalization effect).On the other hands, It will reduce the life-time of each firm, by increasing the price for human capital. Each innovation will generate fewer vacancies than before. That will be reflected in an increase of the rate of unemployment. (Indirect creative destruction effect). Besides, Fanti and Manfredi (2003) has shown a negative relation between unemployment and growth , though we should also mention the positive relation between unemployment and growth obtained in the particular creative disruption context according to Schumpeters idea. Fanti and Manfredi alsomshows a surprising relation between unemployment and growth (via effects on population which is an endogenous engine of growth): this relation can be either positive or negative depending on the relative levels of cost of childrearing of workers and unemployed persons and the level of unemployment benefits. Meanwhile, Bonatti (2007) noticed that reduction of government transfers in favor of the workers allows decreasing the ratio of total tax revenues to GDP, thus monotonically increasing the growth rate and leading to a lower unemployment rate. CHAPTER 3: RESEARCH METHOD 3.1 Data Analysis 3.1.1 Unemployment Rate In this study, unemployment rate is the main study which was examine by using some explanatory variables. According to BLS, Bureau of Labor Statistics, (2009) those people who are with jobs can be considered as employed. On the other hand, a person will be classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Dixon Shepherd (2002) stated that the unemployment rate can be considered as one of the most important indicators of macroeconomic performance in a country. The data of unemployment rate is obtained from the Bureau of Labor Statistics (BLS) which if measured in percentage from those people who are 16 years old and above from year 1970 to 2007. The method which BLS used to calculate the unemployment rate in United States is: X 100% 3.1.2 Real Gross Domestic Product Real gross domestic product (Real GDP) in a country can be measured by the total output value of goods and services which produced from the domestic labor in the country in a given year, expressed in base-year prices. In this study, it is expected that there is a negative relationship between the Real GDP and unemployment rate in United States. The source of the United States Real GDP data is from the World Bank World Development Indicators and International Financial Statistics of the IMF. On the other hand, the data obtained was converted to a 2005 base year. The formula to calculate the data of United States Real GDP is as below: 3.1.3 Foreign Direct Investment Foreign direct investment (FDI) is a kind of investment which is made to serve the business interest of the investor in a company which is in a different nation distinct from the investors country of origin. An example of FDI is a foreign company comes into a country to build or buy a factory and run a business there. Many economists believe that FDI is good for an economy, because it provides domestic job opportunities and increase domestic capital. In this study, net inflows of foreign direct investment in the measurement of current US Dollar are used. A net inflow of foreign direct investment is the total amount or value of the investment flow into United States from foreign investors to operate their business in United States and negative relationship between foreign direct investment and unemployment rate is expected in United States. 3.1.4 Consumer Price Index Consumer price index (CPI) is measured that examines the weighted average of prices of a basket of consumer goods and services in a country, such as transportation, food, rental fees and utilities fees. CPI is one of the measurements of inflation rate. According to Bureau of Labor Statistics (BLS), the prices for the goods and services used to calculate the CPI are collected in 87 urban areas in United States from about 23,000 retail and services establishments. The CPI data used in this study included all consumer items in United States from year 1970 to 2007. 3.2 Research Framework 3.2.1 Unemployment rate and Real Gross Domestic Product Based on the study, unemployment and real gross domestic product is expected to be negatively related. Edward (2007) stated there is a negative relationship between real gross domestic product and unemployment because of the theory of Okuns law. According to Okuns law, 1% increase in the unemployment rate will decrease GDP by 3%. However, Christopher (2010) said that, Okun coefficients can change over time because the relationship of unemployment to output growth depends on laws, technology, preferences, social customs, and demographics. 3.2.2 Unemployment and Consumer Price Index Consumer price index is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation. Therefore, we expect that there is an inverse relationship between the rate of unemployment and rate of inflation. According to the Phillips Curve theory, if the unemployment is high, inflation tends to be low. The diagram below shows the Phillips curve. Inflation Phillips curve Unemployment However, the result shows a positive relationship in our regression model. This problem will occur because of the multicolinearity problem in our regression model. But when one independent variable by one independent variable with the unemployment is tested, negative sign for consumer price index and unemployment are obtained. Bae (2006) stated that there is a positive long run relationship between unemployment and inflation. 3.2.3 Unemployment and Foreign Direct Investment In this study, inflow of foreign direct investment were expected to affect the unemployment rate significantly and expected that foreign direct investment has a negative long run relationship with unemployment. Foreign direct investment will increase job opportunities so, unemployment rate will decrease. Shu (2007) stated that FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. 3.3 Econometric Methodology 3.3.1 Introduction This chapter consist the used of the method to examining the relationship between the unemployment and economic condition in United State by using the time series data ranging from the year 1970 to 2007. First, the result testing will start with the test of stationary by using Augmented Dickey-Fuller unit root test and proceed with the cointegration test. Secondly, the Multiple Regression Analysis and several ways to detect the assumption of the Classical Linear Regression Model (CLRM). The multicollinearity is used to test the correlation analysis. Breusch-Godfrey Serial Correlation LM Test is used to test the existence of serial autocorrelation, Autoregression Conditional Heteroscedasticity Test is used for testing the heteroscedasticity variance of error of the model and Ramsey RESET Test is used to detect the linearity regression and misspecification error. Unemployment = f (RGDP, FDI, CPI) RGDP = Real Gross Domestic Product FDI = Foreign Direct Investment CPI = Consumer Price Index The change in unemployment is our main study that we want to examine with using a few of variables which are RGDP (Real Gross Domestic Product), FDI (Foreign Direct Investment) and CPI (Consumer Price Index). y = ÃŽÂ ²0 + ÃŽÂ ²1Ln (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3 (FDI) + Econometric Model with Expected Sign: = ÃŽÂ ²0 + ÃŽÂ ²1L (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3(FDI) (-ve) (-ve) (-ve) Where +ve indicates that there is a postive relationship between the explanatory variable and dependent variable. On the other hand, -ve indicates that there is a negative relationship between the explanatory variable and dependent variable 3.3.2 Unit root A unit root test is used to examine whether a time series variable is stationary. In the model, T-statistic, F-statistic and R-squared are used to determine to ensure the validity of the test statistics is stationary. The result will become spurious regression problem if the non-stationary series in the ordinary least square (OLS) regression is used. Spurious regression result in high significant T-statistic and highly value for the coefficient of determination R-squared, and the R-square is larger than Durbin Watson. Therefore, if the stationary does not hold, estimate is not consistent and result will be misleading. To avoid the spurious regression problem, the Augmented Dickey-Fuller test (ADF) is used to examine the stationary of the variable. An Augmented Dickey-Fuller test (ADF) is used to test for a unit root in a time series sample. The Augmented Dickey-Fuller (ADF) statistic used in the test is a negative number. Therefore, the more negative value is, more power the rejection of the hypothesis that there is a unit root at some level of confidence. The equation for Augmented Dickey-Fuller (ADF) test Where ÃŽÂ ± is a constant, ÃŽÂ ² is the coefficient on a time trend and p is the lag order of the autoregressive process. ÃŽÂ ± = 0 and ÃŽÂ ² = 0 corresponds to modeling a random walk and ÃŽÂ ² = 0 corresponds to modeling a random walk drift. By including lags of the order p, the ADF formulation allows for higher-order autoregressive processes. This means that the lag length p needs to be determined when applying in the test. One possible approach is to test from high orders and examine the t-value on coefficients. The criterion such as the Akaike information criterion (AIC), Schwarz-Bayesian information criterion (SBIC) or the Hannan-Quinn information criterion (HQIC) test is used to examine the lag length. 3.3.3 Granger Causality The Granger Causality test indicates that a time series Y is said to be Granger caused by X if X helps the prediction of Y or equivalently if the coefficients on the lagged X are statistically significant. Granger Causality shows two-way causation in the case. X Granger causes Y and Y Granger causes X. It usually through a series of t-tests and F-tests on lagged values of X and lagged values of Y. 3.3.4 Multiple Regressions The ordinary least squares (OLS) or linear least squares are a method to examine the unknown parameters in a linear regression model. It is used to assume the distribance, ui. According to Gujarati (2003), ui stands for the normal distribution representing zero mean and constant variance, à Ã†â€™2 in the multiple regression models. With the normality assumption, OLS estimators 1, and 2 are linear functions of ui. Therefore, if ui are normally distributed, so 1,and 2 will make hypothesis testing more straightforward. OLS estimators of the partial regression coefficients are identical with the maximum likelihood (ML) estimators. There are the best linear unbiased estimators (BLUE). Besides, the least-square estimators are best unbiased estimators (BUE); it means that they have minimum variance in the entire class of unbiased estimators. 3.3.5 Multicollinearity Multicollinearity shows the two or more independent variables in a multiple regression model are highly linearly related. The multicollinearity test is perfect if the correlation between two independent variables is equal to 1 or -1. Multicollinearity will occur when there is a strong linear relationship among two or more independent variables. The equation below is refer the variables is perfectly multicollinear if there exist one or more exact linear relationships among some of the variables. Estimates for the parameters of the multiple regression equation is The ordinary least squares estimates include inverting the matrix XTX where, It indicate that if the linear relationship (perfect multicollinearity) is exactly with the independent variables, the rank of X is less than k+1 and the matrix XTX will not invertible. One of the detection of multicollinearity is used detection-tolerance or the variance inflation factor (VIF) for multicollinearity where R2j is the coefficient of determination of a regression of explanatory j on all the other explanators. Tolerances of less than 0.20 or 0.10 or a VIF of 5 or 10 and above reveal a multicollinearity problem. 3.3.6 Breusch-Godfrey Serial Correlation LM Test Breusch-Godfrey Serial Correlation LM test is a test of autocorrelation that is basically allows for nonstochastic regressors such as the lagged values of the regressand; higher-order autoregressive schemes such as AR (1), AR (2), etc and higher-order moving averages of white noise error terms such as t. Two variable regression models to illustrate the test, regressors can be added to the model and also lagged values of the regressand can be added to the model. Yt =ÃŽÂ ²1 +ÃŽÂ ²2Xt +ut The error term ut assume that the pth-order autoregressive, AR (p), Ut = ptut-1 + ptut-2 + à ¢Ã¢â€š ¬Ã‚ ¦+pput-p + t. where t.is a white noise error term. The null hypothesis H0 can be show as Ho: p1 = p2 = à ¢Ã¢â€š ¬Ã‚ ¦ = pp = 0 (no autocorrelation) At 5% significant level, if the computed p value of Chi-square is less than Chi-square tests, do not reject the null hypothesis, meaning that there is no autocorrelation problem. If computed p value of Chi-square is more than Chi-square tests, reject the null hypothesis, meaning that there is autocorrelation problem. 3.3.7 Autoregressive Conditional Heteroscedasticity Test In econometrics, Autoregressive Conditional Heteroskedasticity (ARCH) model assume that the variance of the current error term is related to the previos one. Autoregressive Conditional Heteroskedasticity model is used to model the time series with time-varying volatility such as stock price. 3.3.8 Specification error Ramsey Regression Equation Specification Error Test (Ramsey RESET test) is used to examine the specification error. The specification test for the linear regression model. More specifically, it is used to test the specification error in the equation. As the result, if the non-linear combinations of the independent variables have any power in explaining the dependent variable, means that the model is mis-specified. Consider the model Ã…Â · = E {y | à Ã¢â‚¬ ¡ } = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ The Ramsey test is used to test whether the (ÃŽÂ ²1à Ã¢â‚¬ ¡)2, (ÃŽÂ ²2à Ã¢â‚¬ ¡)3à ¢Ã¢â€š ¬Ã‚ ¦,(ÃŽÂ ²k-1à Ã¢â‚¬ ¡)k has any power in explaining y. The Ramsey test is executed by calculate the following linear regression Ã…Â · = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ + ÃŽÂ ²1Ã…Â ·2 +à ¢Ã¢â€š ¬Ã‚ ¦+ ÃŽÂ ²k-1Ã…Â ·k + ÃŽÂ µ After examine the test, the means of the F-test is to determine whether ÃŽÂ ²1 through ÃŽÂ ²k-1 are zero. If the null hypothesis reveals that all regression coefficients are zero, means that the null hypothesis cannot be reject, the Ramsey test is unable to detect any misspecification. If the null hypothesis is rejected, means that the model is misspecification. 3.3.9 Jarque-Bera Test of Normality Jarque-Bera test of normality is used to test the normally distributed. It is large-sample or an asymptotic test and based on the OLS. The test first calculates the skewness and kurtosis measures of the OLS residuals. JB = n Where the n = sample size, S = skewness coefficient, and K = kurtosis coefficient. The normally distributed variable, S is zero and K is three. Hence, the Jarque-Bera test of normality is a test of the joint hypothesis that S and K are zero and three, respectively. Therefore, the value of the Jaque-Bera statistic is expected to be zero. For the null hypothesis the residual is normally distributed, asymptotically (i.e., in large samples) the Jarque-Bera statistic gives the chi-square distribution with two degree of freedom showed by Jarque and Bera (Gujarati 2003) For the alternative hypothesis the residual is not normally distributed. At 5 significant levels, computed p value is less than Jarque-Bera statistic, we can reject the null hypothesis that the residual is not normally distributed whereas computed p value is more than Jarque-Bera statistic, we do not reject the null hypothesis that the residual is normally distributed. CHAPTER 4: RESEARCH RESULTS AND INTERPRETATION 4.1 Introduction This chapter consists of the results and interpretation of the relationship between