Posted on

A Review of Status Characteristics Theory

Status Characteristics Theory There are several human behavior characteristics that should be evaluated when studying the behavior of organizations. In studying how human behavior effects the organization as a whole, a look at the status characteristics theory is warranted. This theory states that there are differences in status characteristics that create status hierarchies within groups (Robbins & Judge, 2009). The term “status” refers to a position or rank in relation to others (Merriam-Webster, 2010). In simpler terms, people assign a status to individuals within groups based on differing reasons.

The status that is assigned to an individual can have both positive and negative effects. This theory is important to understand because it is inherent in human behavior and may have wide spreading effects on organizational goals and commitments. The status characteristics theory states that status is derived from one of three sources. The sources are identified as (Robbins & Judge, 2009): 1)The power a person yields over others 2)A person’s ability to contribute to a group’s goals 3)An individual’s personal characteristics

Beginning with the first source, the power a person yields over others, reveals that people within an organization that have the ability to control the organization’s functions have distinct status. For instance, a manager who schedules and provides direction has a distinct status as a decision maker. The organization as whole generally assigns a higher status to people who are of a higher position. The next source that is addressed by the theory involves a person’s ability to contribute. People who are considered experts and those that perform at higher level than the organization overall are usually assigned a higher status.

Peers may view someone in this category as being more valuable and therefore less likely to suffer consequences of workplace turnover. Lastly, the theory addresses an individual’s personal characteristics, such as age, beauty, race, gender as well as attributes such as intelligence, charisma and of course, wealth. People who possess characteristics that peers tend to envy or enjoy are generally assigned a higher status. It stands to reason that subordinates within an organization will assign or even defer a higher status to a person who is superior in position.

The power source of status does not seem to rely as much on physical attributes or a mastery of skills, but more so on a subordinate’s view of the level of influence and effectiveness they hold over them. If a personality conflict occurs or the subordinate observes behavior of a superior to be inconsistent with the organizational norms, a feeling of distrust may develop but the subordinate still recognizes the superior’s status. In contrast, if a person who derives status from their abilities or their personal characteristics behaves similarly, peers are not as likely to afford them the higher status classification.

With all three sources of the theory considered, personal behavior can affect status level in some way. In a study conducted in 2005, researchers evaluated how a woman’s physical attractiveness impacted social status and international power. The study theorized that attractive women would given a higher status and would be more successful that woman with lesser desired physical attributes. The study found that a positive correlation exists between beauty and status (Haas & Gregory, 2005).

Another study conducted in 2000 took a look at how status affects double standards. The study concluded that persons who have a higher status are not as likely to suffer under double standards and that women tend to have stricter standards placed upon them than men (Foschi, 2000). From the studies discussed, having a lower status can place a person at a disadvantage. However, motivated people who are viewed as having a lower status by themselves and others may be persuaded towards goals of achievement and self improvement to obtain a higher status.

The motivating factors can either be extrinsic or intrinsic rewards. The status characteristics theory focuses on how people are assigned personal status. People make mental determinations about others through stereotypes, first impressions and physical attributes. It is inherent to human nature to categorize each other in terms of leaders and followers, the strongest, the fastest, and the prettiest are generally placed in a higher status than those with less talent and average appearance. The theory falls hort of defining the innate feelings or emotions that drives people to make distinctions such as status but appears accurate on the surface. References Foschi, M. (2000). Double standards for competence: theory and research. Annual Review of Sociology, 26, 21-42. Haas, A. , Gregory, Jr. , S. (2005). The impact of physical attractiveness on women’s social status and interactional power. Sociological Forum, 20 (3), 449-471. Robbins, S. , Judge, T. (2009). Organizational behavior. Upper Saddle River, NJ: Pearson Prentice Hall

Posted on

Spch(Chlhood Obesity)

————————————————- Start of Free Informative Speech Childhood Obesity Obesity has been called the new American epidemic by many doctors. It is estimated that fifty eight million Americans living in the United States are obese, and that eight out of ten people who are over twenty-five are overweight. Obesity is, easily, America’s fastest growing health concern. This condition, though, is not limited to American adults. Doctors have recently found that nearly thirteen percent of all American children suffer from this problem and that statistic seems to go up each year.

Understanding the jump in childhood obesity rates is directly linked to understanding obesity itself. The American Academy of Pediatricians defines childhood obesity as occurring in kids who have a BMI of more than 30. Other institutions, though, suggest that a child whose body weight is at least 20% higher than a child of a similar height is obese. No matter what the exact definition, obesity is, simply, excess body fat. Why, though, is obesity such a concern? I mean, hey, an extra twinkie or two can’t really harm a kid, can it? Actually, yes, it can.

Obesity cannot only increase the risk of psychological problems in kids, like eating disorders, depression, and anxiety problems, it can also put them at risk for all sorts of physiological problems including heart disease, high blood pressure and diabetes. In fact, forty-five percent of all new cases of juvenile type-II diabetes are obesity linked. Childhood obesity increases the risk of orthopedic problems. Because kids are forced to carry extra weight that their bone structures simply cannot handle, bowed legs and arthritis are increasingly present.

Obese kids also have more skin disorders than children of a healthy weight. Obesity increases the skin area subject to folds, which, in turn, increases problems like heat rash and dermatitis. All of this can create serious problems for the child and for our health care system. In 1979, hospital costs associated with childhood obesity were $35 million. At the end of the decade, they had risen to $127 million. Some may suggest that the rise in childhood obesity rates are due to naturally occurring medical conditions like hypothyroidism and Cushing’s Syndrome.

Each child who demonstrates symptoms of obesity should be carefully evaluated by a medical professional for these conditions, although most doctors suggest that the occurrence of these problems in children is quite low, and the obesity epidemic is linked to more serious societal problems like low physical activity levels and poor eating habits. There is little doubt that childhood obesity rates are on the rise, and treatments for the problem may be simpler than you think. The best treatment for the problem, on a societal level, is prevention.

This can be accomplished by increasing the number of mothers who breastfeed their babies, thereby delaying the introduction of solid foods to six months of age, limiting the television and video game intake of toddlers and older kids alike, providing healthy, low-fat nutritious snacks and meals for kids of all ages, and creating family exercise plans. If obesity has already occurred, treatment should include a manageable weight loss plan, behavior modification therapies, nutrition counseling, and an exercise plan. Childhood obesity is on the rise, and clearly, everyone is at risk from the effects of this devastating condition.

This “unknown” problem in America needs attention. The children are our future, and thus, it is unacceptable to put them at risk for obesity and the health problems associated with being overweight. By advocating healthy diets, exercise, and education, the fast increase in childhood obesity throughout the country can be ended. ————————————————- End of Free Informative Speech Hopefully this free informative speech on childhood obesity will inspire you to write your own speech to teach and impress your audience!

Posted on

Mcdonalds Marketing Strategy

ULSTER BUSINESS SCHOOL MASTER OF BUSINESS STUDIES STRATEGY AND MARKETING MANAGEMENT (Module code: BMG 777) Submitted to: Darryl Cummins and Geoff Simmons Submitted by:- B00541804 – Kevin C Abraham B00543323 – Sanoj Thaj B00544264 – Hemanth Ram B0054 – Akshay Kanda B00545863 – Rahul Shivpuje Date : 30 th April 2010 CONTENTS Title McDonald’s in India Main challenges in entering Indian market Industry trends: Overall McDonald’s marketing mix Product Life Cycle Comparison of McDonald’s with its rivals McDonald’s India in 2010 Market Orientation

McDonald’s Indian future References Title: McDonald was founded by Raymond Kroc in 1954. Today McDonald is the world’s leading food service retailer with more than 31000 restaurants in 119 countries serving more than 50 million customers each day. McDonald’s In India: McDonald’s, the ninth valuable brand in the world has opened its doors in India on October 1996. McDonald’s India has a joint venture with Connaught Plaza restaurants and Hard Castle restaurants. McDonald’s [India] has a 50 percent equity stake each in both joint venture companies.

Connaught Plaza restaurants manage operations and expansions across North India led by Vikram Bakshi where Hard Castle restaurants operate restaurants headed by Amit Jatia who manages operations and expansions across Western India. Main challenges in entering Indian Markets: Re-engineering the Menu: McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tastes and culture. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities.

So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian palate. The Vegetarian Customer: India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages of procurement, cooking and serving. McDonald’s Indian Menu: Vegetarian Non Vegetarian McVeggie Chicken Maharaja Mac McAlooTikki McChicken Burger

Paneer Salsa Wrap Shahi Chicken McCurry Crispy Chinese Wrap Chicken Mexican McCurry Pan Fillet-O-Fish Pizza McPuff Currently McDonald’s have 132 outlets in 34 cities: McDonald’s has 157 restaurants in India where 83 in North and East India and 74 in West and South India. Industry Trends: Overall Fast food and chain service restaurants continue to gain in popularity. Fast food has typically been viewed as against healthy eating. But that’s no longer a perception. This is because sub way which was voted top overall for food.

But when considering McDonald and Burger king, they did not make it in the top food. But McDonald is doing well in other categories like child friendly and best drive thru (http://industry. bnet. com). The main strategy that McDonald’s following is the ‘three- legged stool’. According to this, the company focuses mainly on employees, owners and suppliers. For the successful growth of the company, these three are essential and must be strong. Another McDonald’s strategy is the ‘plan to win’ approach and it functions as a global McDonald’s benchmark for its operation.

This strategy focuses on profit growth and long term sustainability of the company. The strategy includes the central 5 P’s which are; people, products, place, price and promotion and the objective is to enhance the customers’ experience and satisfaction. Each P has its own vision, specific objectives and performance measures (Worldwide CR Report, 2006; McDonald’s Worldwide, 2008; Annual McDonald’s Report, 2006). McDonald’s is segmented geographically into the Area of the World (AOW) which consists of North America, Europe and Latin America and there is also the Asia/Pacific, Middle East and Africa (APMEA) segment.

These segments help the company control quality and distribution of required resources and products (http://eprints. ru. ac. za). McDonald’s Marketing Mix (4 P’s) in India McDonald’s 4 P’s are, Product| Price| Place| Promotion| Product: Product is the physical product or service offered to the consumer which includes certain aspects such as packaging, guarantee, looks etc. McDonalds bring with it a globally reputed brand, world class food quality and excellent customer specific product features. McDonalds studied the behavior of the Indian customer and provided a totally different menu as compared to its International offering.

It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonald’s serve vegetarian menu along with few chicken and fish items. The fast food retail chain has separate production lines and processes for its vegetarian and non-vegetarian offerings. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja Mac. The Mc curry Pan, an original reation of India is very popular dish in Indian McDonald’s restaurants. Another thing to consider while placing a product in a new market is its life cycle. According to Sir Adrian Cadbury (2005) for brands to endure they have to be maintained properly and imaginatively. Brands are extremely valuable properties and, like other forms of property, they need to be kept in good repair, renewed from time to time and defended against squatters. ” Importance of PLC in McDonalds: The requirements of customers change over time and thus the product offering has to be changed accordingly.

What is the fashion today may be out of market within few weeks. Thus continuous innovation is required. (Source: www. managementfunda. com). To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC A perfect example of revitalizing a product in decline phase: Source: www. managementfunda. com). The French Fries have been an important part of the McDonalds menu worldwide. But now it was in the stage of decline and was actually not generating proper return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it from to the decline stage. This is used to delay the decline of a well established product which has the potential of generating further revenue (www. managementfunda. om Price: Pricing is one of the most important elements of marketing mix which includes all costs associated with the product, service or program. It is the only mix which generates a turnover for the organization. There is a very popular punch line of McDonald’s-“Aap Ke Zamane Mein Baap Ke Zmane Ka Daam “ , is used to attract the middle class and the lower class people of India. The result of this is very much positive i. e. not only the upper class prefers going there but all class of people go there. McDonald’s Value Pricing:– * Happy meal – small burger, fries, coke + toy Medium meal combo – burger, fries, coke-veg Rs. 75 , Maharaja Mac meal Rs. 95 * Family dines under Rs. 300 * Price lower than Pakistan, Srilanka 50% lower than U. S. Pricing strategy, N. D. Available at: www. learnmaketing. net. [Accessed: 10th april 2010] Place: The place is where the customer receives the product, service or program. It refers to how an organization will distribute the product or service they are offering to the end user. A place that meets his or her needs better may be worth more. The ambience and the environment are same at all the outlets of McDonald’s.

Direct Distribution Indirect Distribution Manufacture Manufacture Retailer consumer consumer Promotion: Promotion decisions involve advertising, public relations, media types etc. According to Kotler [ 1994] Promotion or communication mix is consist of five major tools: Promotional mix Advertising| Public relation| Sales promotion| Personal Selling| Direct Mail| DDB Needham and Leo Burnett are the advertising agencies of McDonald’s world wide. The subsidiary of both the companies pitched for the account and the Indian partner ‘Mudra’ got the account.

Since the very beginning Mudra has been the advertising agency of McDonald’s India. The Mudra team meets up the Marketing team of McDonald’s and discuss the new strategies to be adopted. Advertising is conducted on TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines. Al the outlets are decorated with the pictures of the toys and even the paper mats has description of the burgers and toys. Some of the lucky promotion strategies were like: * Collaboration with coke, M TV, hungama. com, Sony music etc. * Scratch cards on large jumbo meals. Prices- caps, T- shirt, internet card, CD’s, free tickets to Lucky Ali’s contest. * Purchase of second meal in a month qualified for foreign trip/ lucky draw etc. Promotional techniques used for increasing the sale in India: * Increase its product line. * Lower the supply chain cost so that it helps in cost reducing. * Educate about healthy life style. * Focus on gifts for all generations [ kids , youth & senior citizen ] * Increase the space for provision of birthday parties. * Special promotions during festivals. * Try to sponsor college festivals * Work for social welfare of the society.

Co-Branding: McDonald’s has major tie ups with various companies as their co- branding strategy. Few of the companies are – Coca-cola, Barbie, Cadbury, Hot wheels etc. A comparison of McDonald’s with its rivals (World wide): Recorded revenue for 2006: (Graph1 Source: Worldwide CR Report, 2006; Welgens, 2006:6; Datamonitor, 2008). X- Companies, Y- Revenue ($ million). From the above graph it is clear that McDonald’s is dominating the fast food industry. The recorded revenue of McDonald’s for 2006 is $ 21, 586 million worldwide, which is by far greatest as compared to its main rivals Burger King and Yum brand.

Burger King’s revenue for the same period was only $ 2, 048 million. For KFC, which falls under the Yum brand had revenue of $ 9, 561 million in 2006, which is quite lower than McDonald’s McDonald’s competitors in India: McDonald’s competes with fast food chains like Pizza Hut, Domino’s Pizza, Subway, Nirula’s and KFC in India. McDelivery Online In India: McDonald’s first launched home delivery of meals in Mumbai in 2004. McDonald’s now has plans to launch web-based delivery service in India (across 75 McDelivery cities) in 2010, a pilot for which has already been tested by it in Hyderabad.

The company hopes to add 5 per cent to sales via Web delivery. McDonald’s web-based delivery model will be based on serving the customer quickly wherein the drive time does not exceed seven minutes because its food has to be eaten within ten minutes of preparation. The footfalls in India are amongst the highest in the world, but the average bill is amongst the lowest. At present (March 2010), Domino’s Pizza (operated by Bhartia Group-promoted Jubilant Food works under a master franchise agreement) has a 65% market share in the home delivery segment. McDonald’s India in 2010 In 2010, McDonald’s India plans to open 40 more outlets. The company has also earmarked a budget of Rs 50-60crore to market its new products and initiatives for consumers. Its new marketing campaign is titled – ‘Har Chotti Khushi Ka Celebration’ – in other words ‘celebrate little joys of life’ where it positions McDonald’s as a venue for enriching life of consumers. In South India, McDonald’s has 29 outlets and plans to add 10 more by end of 2010. * For its unparalleled benchmarks established in the QSR sector McDonald’s India has been bestowed with many prestigious awards.

In 2009, McDonald’s India won the CNBC Awaaz Consumer Awards for the third time in the category of the Most Preferred Multi Brand Fast Food outlets. * McDonald’s has an aggressive growth plan for India and has committed Rs 400crore over the next three years nationally, Bakshi said. While 40% of this money will go for expansion of the brand and introduction of new formats, the rest 60% will be directed towards back-end operations. McDonald’s company has achieved its globalization through applying the maxim ‘think global, act local’, which is one of the most important reasons for their success in India.

Market Orientation: Grinstein (2008) recommends market orientation as the culture of organization that enhances the effective and efficient supervision of market, to attain significance for sellers and buyers leading to profitability. Narver et al. , (2004) suggested that there are two types of approaches to market orientation: proactive and responsive approach. Proactive approach is based upon solutions and satisfying unidentified needs of consumers which are latent. Responsive approach is based upon solutions and satisfying identified needs of consumers which are expressed.

Due to diabetes, obesity, and other health problems are consumers are swapping their style of eating towards healthy conciseness (Bold, 2006; Warner ; Barriounuevo, 2005). India’s health problems have made consumers choosier and health oriented. Parents are becoming more cautious about their children’s diet (Gibson, 2007). Low salt, sugar and fat: McDonalds in order to meet consumers expressed needs; they are bringing various series of changes. It all started of in 2003 by introducing healthy menu with products that are low in salt, sugar and fat (Klienman, 2003).

By 2006 McDonalds swapped their usage of saturated fat to vegetable trans-fat free cooking oil. Later McDonalds introduced Diet Coke, Sprite Zero and reduced their usage of sugar content in burger bun. Lastly McDonalds cut down large percent of salt in french fries, Vegetarian McNuggets and Chicken McNuggets (Bowery, 2006). Lacto Vegetarians: McDonald’s in the process of product adaptation to gain foothold in the Indian fast food market. Indian fast food market consists of 30% population of vegetarian consumers. Beef and Pork was strictly not accepted by Indian population, which are the main ingredients of McDonald’s hamburger.

McDonalds India despite introduced McAloo Tikki burger for vegetarians and chicken, fish for non-vegetarians. McDonalds India provide “Shudh Shakari Experience” means pure vegetarian experience, where cooking for vegetarian products is separate to non-vegetarian. www. mcdonaldsindia . com Latest nourishing menu: The McDonalds products with low salt, sugar and fat followed up with latest serial of nourishing and healthy menu. McDonalds have removed super-size meal from their menu after many encounters and added salads to replicate the demand of the market (Bowery, 2006).

McDonalds offered Indian Customers with vegetarian nuggets, vegetarian and non-vegetarian gourmet salads, vegetarian burgers like McAloo Tikki Burger, whole-wheat buns for sandwiches, yoghurt parfait, orange juice and bottled water. The McDonalds kids meal in India have been altered to suit the health preferences of parents towards their children, where McDonalds provide the option to choose between soft drink, French fries with fruit smoothies and fruit bags with no artificial colors and very less grams of saturated fat. Nutrition values:

McDonalds in USA faced various encounters of law suits and media exposure of its denial in displaying nutritional facts are the final result of McDonalds in 2005 worldwide came out with decision to display its nutrition facts on the tray liners, online and in store brochures. McDonalds also re-designed and changed its packing accordingly to display nutritional facts. Currently the only fast food chain to display nutritional facts in India is McDonalds. (www. indiaenvironmentportal. org). McDonald’s India in 2006 at its 10th anniversary announced an investment of US$ 100 Million for 3 years to add 130 restaurants. ww. ojica. fiu. edu) McDonald’s Indian future: McKinsey Global Institute in 2007 reported that India will be leading global consumer market by 2025 with 63% teenager, adults’ population and 32% of children population in India. India is one of the major market potential and is considered as one among top 10 markets for McDonald’s. Despite perception of McDonalds as American cultural imperialism, encounters, allegations are only the smaller challenges compared to product tweaking, which is a major challenge for McDonalds to suit themselves to India.

McDonalds Hamburger University can be setup in India to test and tweak products to suit Indian consumer market as it is established in USA. McDonald’s opportunity to be food sponsor for Delhi Commonwealth games 2010 can help McDonald’s to gain better perception among Indian consumers. McDonalds believe to follow and stand on its founder’s vision – service, cleanliness and quality. But the expectations of consumers on McDonalds are growing enormously. The vision itself is not sufficient and there are more expectations to be met for this generation consumers in India.

McDonalds can achieve its expectation by creating balance among the market orientation, entrepreneurial orientation and learning orientation instead of focusing only on market orientation to achieve its profitability. References: Bold, B. (2006). TBWALondon wins McDonald’s health brief. Campaign (UK), 1. Bowery, J. (2006). McDonald’s gets back to basics. Marketing 16. Czinkota, M. (1993, International Market, Dryden Press, Fort Worth, TX. Gibson, R. (2007). McDonald’s Is working On Healthier Happy Meal. Wall Street Journal, p. B3D. Grinstein, A. 2008). The relationships between market orientation and alternative strategic orientations: A meta analysis. European Journal of Marketing, 42, 115-134 India Environmental Portal. (2008). Knowledge for Change. Available: http://www. indiaenvironmentportal. org. in/node/258411. Last accessed 20 March 2010. Jaworski, B. J. , ; Kohli, A. K. (1996). Market orientation: Review, refinement, and roadmap. Journal of Market Focused Management, 1(2), 119-135. Kleinman, M. (2003). Burger chains to lure back dinners. Marketing, 4. Kotler,P. 1994), Marketing Management ,Prentice-Hall ,Englewood Cliffs ,NJ. MacCarthy, E. J. (1993, Basic Marketing, Irwin, Homewood, IL. Managerial perceptions of corporate social responsibility and social practices present at McDonald’s South Africa, available at http://eprints. ru. ac. za/1579/1/Bockle-masters-tr09-117. pdf. Accessed on, 21/04/2010. Marketing Strategies of McDonalds Available at: http://fliiby. com/file/369043/582plkc1f. html [Accessed on: 11th April 2010]. McDonald’s – Business Strategy in India,2010. Updated: Friday, January 8, 2010 Available at:

Posted on

Modern Portfolio Theory

INTRODUCTION: The investment terrain has seen some major changes in the last two decades. Financial and technology companies came and went, stock market values soared, plummeted and rebounded, housing derivatives blew up, and other foundations were laid bare. Even the core of investing theories related to portfolios has come under pressure. Yet the belief in Modern Portfolio Theory has remained strong amongst the investors.

Modern Portfolio Theory (MPT) is a theory that tells investors how to minimise risks associated with investment and at the same time, maximise return on the investments by proper resource allocation and diversifying their portfolios – it is based on the theory that risk can be lessened by diversifying into uncorrelated asset classes. However, unless the correlations of the various asset classes are predictable, the reduction of risk may be lost. Investors expect to be rewarded for the level of risk they are taking in a particular market.

According to the theory, it’s possible to construct an “efficient frontier” of optimal portfolios offering the maximum possible expected return for a given level of risk and there are four basic steps involved in portfolio construction: Security Valuation, Asset Allocation, Portfolio Optimization and Performance measurement. This theory of portfolio selection was coined by Harry Markowitz in his paper ‘Portfolio Selection’ which was published in the Journal of Finance in March, 1952.

Even before Markowitz in 1952, investors were familiar with the notion being able to reduce exposure to risk by diversifying their portfolios. The proverb ‘never put all your eggs in one basket’ underlies this idea. Through his paper, Markowitz was able to use a mathematical framework to study the effects of asset risk, return, correlation and diversification on probable portfolio returns and was awarded the John von Neumann Theory Prize and the Nobel Memorial Prize in Economic Sciences. GROUND BREAKING:

Considering that Harry Markowitz was carrying out his final dissertation in Linear programming – which by the way is a field that uses mathematical models to maximise output for a given level of cost or to minimise the cost of a given level of output – and yet, he was able to relate this to investing; is pretty fascinating stuff! His approach centred on the belief that the desired ‘output’ from an investor’s portfolio is a high return, while the ‘cost’ to be minimised is the volatility of that return.

Markowitz stated that a portfolio – given it is properly diversified – would provide maximum return for a given level of volatility or on the other hand, minimum volatility for a given level of return. He went further to outline a model that showed how this ‘efficient’ portfolio could be constructed. These insights were nothing short of groundbreaking. His 1952 paper laid the foundation for the development of modern portfolio theory, a range of new ways of looking at investing. His ideas also contributed to many practical applications widely used by investors today. CRITICISMS:

Markowitz’s ideas have been widely praised and criticised as well. One criticism is the idea that volatility can be used as the ‘cost’ to be minimised. As can be imagined, anti-MPT scholars argue that risk is the true price of higher returns – and that risk is not adequately represented by volatility. Another contention is that the portfolio-building approach outlined in ‘Portfolio Selection’ is dependent on forecasts that too often rely on the assumption that the future will be like the past. From experience, numbers such as returns, volatilities and correlations tend to vary over time.

Accordingly, I think historical data has limited value as a guide to what lies ahead. Indeed, as the all-too-familiar warning advises, past performance is no guarantee for future results. In 1952, Markowitz wrote that the key to forecasting might be found in a mixture of ‘statistical techniques’ and ‘the judgment of practical men’. It could therefore be said that, Markowitz acknowledged that anticipating the future could be as much an art as a science. This helps explain the common tendency to rely on the past as a guide, despite its limitations.

After all, in the absence of other tangible information, historical numbers might not be much, but they are something. In the real world, MPT often requires investors to rethink notions of risk. Sometimes it demands that the investor take on a perceived risky investment (futures, for example) in order to reduce overall risk. That can be a tough sell to an investor not familiar with the benefits of sophisticated portfolio management techniques. Furthermore, MPT assumes that it is possible to select stocks whose individual performance is independent of other investments in the portfolio.

But market historians have shown that there are no such instruments; in times of market stress, seemingly independent investments do, in fact, act as though they are related rather than unrelated as most people would think. Likewise, it is logical to borrow to hold a risk-free asset and increase your portfolio returns, but finding a truly risk-free asset is another matter. Government-backed bonds are presumed to be risk free, but, in reality, they are not. Securities such as gilts and U. S. Treasury bonds are free of default risk, but expectations of higher inflation and interest rate changes can both affect their value.

CONCLUSION: In conclusion, I would add that the market is hard to beat and that the people who beat the market are those who take above-average risk. It is also implied that these risk takers will get their reward when markets are down. Then again, investors such as Warren Buffett remind us that portfolio theory is just that – theory. At the end of the day, a portfolio’s success rests on the investor’s skills and the time he or she devotes to it. Sometimes it is better to pick a small number of “out-of-favour” investments and wait for the market to turn in your favour than to rely on market averages alone.

Sixty years so, the work of Harry Markowitz is still widely used by investors around the world – at least to some extent. This goes a long way, I think, to tell us that his theories are NOT in fact reflections of the market dynamics of a bygone era; and are quite relevant in the modern, globally distributed economic system. ——————————————– [ 1 ]. http://www. investopedia. com/terms/m/modernportfoliotheory. asp [ 2 ]. “Portfolio Selection” page 91 [ 3 ]. http://www. investopedia. com/articles/06/MPT. asp

Posted on

Mission Statement

Mission Statement Tracey McPeek Mount Vernon Nazarene University Group BBA009NW MAN4033 Strategic Planning July 12, 2010 Aetna’s Mission Statement Aetna’s mission statement summarizes our core purpose, the fundamental reason the company is in business. The mission is both our heritage and our reason for being in business. Aetna is dedicated to helping people achieve health and financial security by providing easy access to safe, cost-effective, high-quality health care and protecting their finances against health-related risks.

Building on our 156-year heritage, Aetna will be a leader cooperating with doctors and hospitals, employers, patients, public officials and others to build a stronger, more effective health care system. Aetna has been in the insurance business for over 156 years. They provide more than just health insurance. They provide peace of mind when it comes to finding affordable, trustworthy and high- quality healthcare as it states in their mission statement.

Aetna demands diversity within its own corporate walls and recognizes the importance of diversity in all aspects of its business-their workforce, customers, supplies, health care professionals, and in their products and services. Revised Mission Statement Aetna will provide best in class service to not only all of their employees but to all their constituents’. Aetna will continue to hold itself above all to be honest and true to the values and everything that we stand for. How will we do this you may ask? By meeting our constituents’ needs, we can fulfill our mission and achieve business successes.

Diversity plays a key role in our company. Aetna’s Mission will consist of four elements: Our Mission (why we exist), our overarching goals (what we are trying to achieve), our values (what we believe in) and our business principles (how we run our business) These elements of the Aetna Way are as important to us as they are to you. They are all mutually reinforcing the components that guide us as a company and as individual employees. Our company’s mission, values and goals are expressed through The Aetna Way.

The Aetna Way, comprising the elements below, encompasses our shared sense of purpose and provides clarity as we pursue our operational and strategic goals: • Why We Exist: The Aetna Mission • What We Believe In: Our Values • What We’re Trying to Achieve • How We Run Our Business Aetna will provide best in class service to not only all of their employees but to all their constituents’. Aetna will continue to hold itself above all to be honest and true to the values and everything that we stand for. How will we do this you may ask? By meeting our constituents’ needs, we can fulfill our mission and achieve business successes.

Diversity plays a key role in our company. Diversity is a reality in labor markets and customer markets today. To be successful in working with and gaining value from this diversity requires a sustained, systemic approach and long-term commitment. Success is facilitated by a perspective that considers diversity to be an opportunity for everyone in an organization to learn from each other how better to accomplish their work and an occasion that requires a supportive and cooperative organizational culture as well as group leadership and process skills that can facilitate effective group functioning.

Organizations that invest their resources in taking advantage of the opportunities that diversity offers should outperform those that fail to make such investments. A diverse workforce and climate enable employers to tap into a diverse talent pool/knowledge base, and make full use of contributions from all employees. A successful organization leverages the differences in employees and allows employees to attain their full potential. We seek to achieve superior customer satisfaction through nnovative products, comprehensive health and related benefits choices, effective service and easy-to-understand information Our goals are: • To give individuals and families affordable coverage choices, helpful service and information so they can make better-informed decisions to optimize their health and financial security. • To respect and work effectively with doctors and hospitals by establishing efficient processes and providing prompt claims payments and useful information that helps them provide safe, cost-effective, high-quality health care. To provide employers information, advice, cost-effective benefits options and programs that improve the health and productivity of their employees, thus providing real value for their investment in employee benefits. • To partner with brokers and consultants through responsive best-in-class service, timely information and attractive commissions so they may effectively advise employers on their employee benefits choices. • To offer employees an engaging and diverse work environment that enables them to satisfy their professional ambitions, take pride in their contributions and share in Aetna’s success. To be a responsible corporate citizen, improving the quality of life in communities where we live and work. • To award shareholders a superior return on their investment in our company. Based on our values, which guide our day-to-day activities, we adhere to specific business practices that help us fulfill our mission, reach our goals, and achieve profitable growth. • Plans: We build and monitor business plans, taking corrective actions on negative variances. • Products: We develop and accurately price innovative products. Networks: We develop and manage networks of doctors and hospitals to support multiple product and funding choices. • Access to Care: We provide our members access to cost-effective high-quality health care while accurately predicting and managing medical costs. • Claims and Billing: We achieve timely and accurate claims payments and premium billing and collection. • Productivity: We pursue continuous productive and process improvement. • Service: We work together effectively cross the organization to give our customers quality service. Information: We provide objective information to help our members make informed decisions about their financial and health care needs. • Integrity: Achieve financial and operational integrity through clear, prompt and reliable information that accurately reflects our financial and operational performance. • Rewards: We appreciate effort but we recognize and reward employees for achieving business results. • Satisfaction: We deliver superior customer satisfaction. • Respect: We treat each other with respect and collaborate to achieve results.

Aetna will be the industry leader in the diverse marketplace. We will deliver best-in-class service to our customers because we want them to be comfortable when doing business with us. To earn the distinction, financially and by reputation, of being the preferred benefits company in all aspects of our business. We strive to be the industry leader by including the best ideas and perspectives available. This in turn enables Aetna to develop the most relevant solutions for each of our markets. To achieve this mission we will: |[pic| |Create innovative and tailored product and service solutions that will meet the unique needs of our customers |] | |Develop a diverse supplier base reflecting our multicultural environment that supports innovative ways to deliver best-in-class | | |services to them | | |Build a workforce that fully understands the diverse communities where we do business | | |Foster a culture of inclusion that grows a diverse talent pool and recognizes and rewards the contributions of every employee while | | |allowing employees to do their best work | | |Aetna’s focus on corporate responsibility is evident in everything we do, from adherence to strict ethical guidelines and corporate | | |governance standards to longstanding support of the communities where we do business.

We have a clear track record for social | | |responsibility that starts with our member-focused mission statement and set of values and culminates in responsible business | | |policies and practices. It is a record that speaks directly to the priorities of many firms today that want and expect to do business| | |with socially responsible companies | | | | | References Aetna. (2010, July 10). Retrieved from http://www. aetna. com/about-aetna-insurance/aetna-corporate-profile/index. html Thompson, A. (2010). Crafting and executing strategy. New York, NY: McGraw-Hill

Posted on

Unemployment Introduction Unemployment

C L AS S I CA L A N D K E Y N E S I A N E CO N O M IC E X P LA NAT I O N S FO R U N E M P LOY M E N T Michael Griffiths 5/12/2007 Prof. Roy Rotheim EC103: Introduction to Macroeconomics Classical and Keynesian Economic Explanations for Unemployment Introduction Unemployment is a key measure of economic health. It is a major factor in determining how healthy an economy is; if the economy maximized efficiency, everyone would be employed at some wage. An individual unemployed is both unproductive and a drain on society’s resources.

However, while unemployment seems a basic statistic – the number without jobs divided by those with jobs – the issue is anything but. Unemployment is a powerful statistic that shapes government policy and personal decisions. The government keeps a close eye on the unemployment rate. Not only does unemployment indicate that the economy isn’t operating at peak efficiency, but politicians have noticed that high unemployment correlates with losing elections. The Federal Reserve believes that unemployment below a certain threshold they refer to as the natural rate of unemployment leads to inflation, reflecting an observation by the economist A.

W. Philips correlating unemployment to inflation during the 1960s. The Bureau of Labor Statistics is the US agency that monitors and reports on unemployment and other labor statistics. In 2006, the average unemployment rate was 4. 6%1. This number only includes a subset of the total US population: the currently unemployed people who are willing and able to work. This subset of the population excludes children and infants, people in the prison system, and people who choose, for various reasons, not to work. Choosing to measure unemployment this way assumes that a classical free 1 arket perspective works. That is, people making free choices will inevitably lead to the best outcome; everyone who wants a job will receive a job. In that sense, it is pointless to measure people who are unable or unwilling to work: if they wanted a job, they could get a job, and they evidently have a good reason not to work. This perspective envisions unemployment simply as the time spent between jobs; assuming people keep looking for a job, they will find one. John Maynard Keynes criticized this viewpoint as misleading.

He pointed out that the people who drove demand for goods and services are the same people participating in the labor market. Unemployment means less income, which in turn means less demand; less demand causes the demand curve in the labor market to change, creating a feedback cycle. This paper will examine unemployment from both the classical and Keynesian perspective. 2 Classical Model of Unemployment Under the classical perspective, …unemployment is seen as a sign that smooth labor market functioning is being obstructed in some way.

The Classical approach assumes that markets behave as described by the idealized supply-anddemand model… (Goodwin 12) This paper will present a basic model of a labor market under the classical perspective. This model will treat both labor supply and demand independently, and assumes that the market exists in Bureau of Labor Statistics Michael Griffiths Economics | Prof. Roy Rotheim Skidmore College Classical and Keynesian Economic Explanations for Unemployment isolation. While the labor market may experience external shocks, the labor market does not depend on exterior circumstances.

This paper will then use the presented model to explain how unemployment works under a classical perspective. Furthermore, we will assume that this example occurs in the short term and thus revenue per product sold, wage per worker, and cost per unit of capital are all constant. Thus, we can express this as a function P (n, i, m) that describes profit: (1) P(n, i, m) 3 Classical Labor Demand The demand for labor in the entire economy is simply the aggregate demand for labor from each company.

It follows that the behavior of the demand curve is the aggregate behavior of every company in the economy. In this light, it is easier and simpler to analyze unemployment from the standpoint of an individual company and extrapolate that behavior to the entire economy. We can safely assume that the ultimate goal of any company is to maximize profit. It is a small leap from there to assume that as long as employing additional labor will increase profit, the company will employ additional labor; and that the inverse is true. Profit is defined as a firm’s revenues minus its expenses.

In this simplistic model, we will assume that the only expenses a company incurs are the cost of capital and the wages paid to employees. While the firm will incur other expenses such as legal fees, marketing, pensions, and general operating overhead, the model does not need to consider these factors to explain the relationship between firm profit and labor demand. Therefore, if we have a company such as General Motors, its profit will be a function of how many cars it can sell and at what price, minus its expenses, which are the number of workers employed at some wage and the cost of the capital.

Michael Griffiths rn wi km Refer to the following table for an explanation of the symbols chosen: VARIABLES P(n,i,m) = function describing profit n = amount produced = function n(i) dependent on i. i = number of workers m = number of units of capital CONSTANTS r = revenue per product sold w = wage per worker k = cost per unit of capital Profit will be maximized at an inflection point for the function P(n, i, m) . In other words, the rate of change of function P(n, i, m) with respect to i will be zero. This is the partial derivative of the function: 2) dP(n, i, m) di r dn di w Skidmore College Economics | Prof. Roy Rotheim Classical and Keynesian Economic Explanations for Unemployment we can make some deductions. The expression dn is referred to as di the marginal product of labor, because it represents the change in output for each change in the number of workers. In the short term, the marginal product of labor will decrease after a certain point. For example, General Motors cannot hire any workers beyond a certain point, regardless of how much they are paid.

Each factory only has a finite number of spots on each assembly line, and attempting to pack more workers onto the line is sure to result in both missing limbs and lawsuits, but also a loss of productivity with people incessantly getting in the way. From that perspective, the point at which r dn di w will be where P1 Profit The specifics of this function will vary for each company. However, 4 L1 The function r dn di Labor w explains how the aggregate demand curve for the economy is expressed. As wage decreases, the point at which r dn di w will move ‘to the right’ on the graph; the company can hire rofit is maximized. From then on, profit will diminish with each additional employee. The following graph illustrates the impact of the marginal product of labor on profit, with L1 the point at which r dn di w: additional workers without reducing profitability. Thus, demand for labor increases within each company as wages drop, and so demand for labor increases in the overall economy as wages drop. A stylized demand for labor graph is below: Michael Griffiths Economics | Prof. Roy Rotheim Skidmore College Classical and Keynesian Economic Explanations for Unemployment Wage

Demand for Labor soccer practice, or watching the latest episode of 24, people do more than work, eat, and sleep. People also place some sort of value on their non-work time; otherwise, people would universally work as much as they possibly could. Instead, the amount individuals choose to work varies. The variation in how much people choose to work suggests that people are maximizing something other than money. Economics typically uses the philosophical notion of utility, initially invented to promote an ethical paradigm.

Utility is largely synonymous with happiness, which makes sense: people try to maximize their happiness. Dissecting utility can be complicated – for instance, determining short-term utility vs. long-term utility – and is a problem often left to psychologists and politicians, with mixed results. The function describing utility would be different for every individual, and cannot be easily expressed mathematically. Still, we can assume the relationship between the amount of work and the amount of non-work time is a basic indifference curve: the more of something people have, the less they value more of it.

As in the labor market indifference is a clear-cut choice between work and leisure, the indifference expression is simple and can be visualized in a stylized graph: 5 W1 W2 W3 L1 L2 L3 Labor This stylized graph assumes that r dn di w is a linear function. However, it is entirely possible that marginal utility is not linear. For example, most manufacturing companies do not allow the public into the production area. Quite ignoring sabotage and safety, this is because people milling around in an assembly line would slow down the process.

Keeping people out of the way has a value of more than zero, as the existence of security firms that protect corporate property indicate. At some point, even if a worker was not paid, an additional individual within the factory would reduce the overall productivity of the factors. Classical Labor Supply People are not companies and do not maximize profit. Nonetheless, people still maximize something: they choose personal time over work time. Whether they are cleaning the house, taking their kids to Michael Griffiths Economics | Prof. Roy Rotheim Skidmore College

Classical and Keynesian Economic Explanations for Unemployment Work 6 G(H) H(H) W2 W1 Leisure This implies that if people have a preponderance of work, they are unlikely to accept more without an increase in compensation, and that if people have a preponderance of leisure they are likely to accept a lower wage than otherwise. The rate of change of the indifference curve would be the value of the individual to another unit of work at some point on the graph. If the wage available for the additional unit of work is high enough, then the individual will work the extra hour. This would be different for every individual.

For instance, the following stylized graph contrasts the utility functions for Greg and Harry, represented respectively by G(H) and H(H). The variable H represents the number of hours worked. H1 H2 Work The graph illustrates how Greg and Harry value their time differently. Greg, for example, values his leisure time highly, and will only work additional hours for a substantially higher wage. However, Harry either values work more or leisure time less, and will work more hours with little complaint. The difference between Greg and Harry could be explained a number of ways.

For example, if Greg recently purchased a home theatre with a 50” flat screen TV, he might prefer to spend his time watching football than working, while if Harry recently had his TV repossessed, he might prefer to work a little extra so he can match Greg’s home theatre. However, in this scenario both Greg and Harry have an upward sloping demand curve which mirrors their indifference curve – they both need to be paid more to work more. This explains why companies offer overtime wages higher than regular wages: if managers want people to work overtime, people demand to be compensated at a

Michael Griffiths Economics | Prof. Roy Rotheim Wage Skidmore College Classical and Keynesian Economic Explanations for Unemployment higher rate to compensate them for their loss of comparatively more valuable time. The overall supply of labor is the aggregate of all utility functions. We can extrapolate from the two stylized utility functions graphed above that under classical economics, the supply of labor curves up; the higher the wage, the more hours an individual is willing to work. This means that the supply of labor can increase without adding additional people.

The supply for labor is graphed below: Wage Demand Supply 7 W1 Wage Supply for Labor W3 W2 W1 L1 Labor L1 L2 L3 Labor The Classical Labor Market and Unemployment The classical labor demand and labor supply can be combined If we combine the lines for Labor Supply and Labor demand. We can construct a stylized labor market graph: Labor Demand and Labor supply interact as a market with a simple price determinant; the market will always tend towards equilibrium at W1=L1. In this ideal representation of the labor market, nothing will interfere and prevent the market from achieving equilibrium.

If the labor market is at any point other than equilibrium, the market will move towards equilibrium over time. This diagram thus shows that unemployment will only occur when the existing wage is greater than the market-clearing wage. The amelioration of unemployment will only occur when the market wage changes to meet the market-clearing wage at equilibrium. Classical Unemployment Unemployment is, in its most basic definition, the state of not being employed. The number of individuals who are unemployed in a Skidmore College Michael Griffiths Economics | Prof.

Roy Rotheim Classical and Keynesian Economic Explanations for Unemployment labor market is the unemployment rate. Classical economics analyzes the labor market at the market level; it is also possible to subdivide the national labor market into smaller markets, such as a labor market centered on a single industry or geographical region. Each smaller labor market has certain requirements to be included, For instance, a labor market describing Saratoga Springs would only include people and business living in or within commuting range of Saratoga Springs.

Another labor market could be for rocket scientists; in that case, the only people included would be people qualified to be a rocket scientist, and the only companies involved would be those who require a rocket scientist. The unemployment rate for each market differs, and averages in aggregate to the national unemployment rate. The following stylized graph visualizes the labor market at some point when it is not at equilibrium: Under classical economics, an ideal labor market will always reach equilibrium over time. The stylized graph shows that at W1, the market will employ L1 people, while L3 people are willing to work.

Thus, the wage in the above market will fall from W1 to W2, and the number of people employed will change from L1 to L2, while the number of people willing to work for that wage will fall from L3 to L2. However, this assumes both that there are no external shocks to the labor market, and that there is no interference in the market. Thus, unemployment can exist in a non-ideal labor market; this does not change the fact that the market will continue to tend towards equilibrium. Unemployment manifests in four different ways: frictional, voluntary, structural, and institutional.

Frictional Unemployment Frictional unemployment allows for the fact that a certain amount of time may pass between jobs. As many people have sadly discovered, an offer of employment is not immediately below a pink slip in one’s inbox. People will register as unemployed while they are attempting to find a new job; since the labor market changes over time, there will always be a certain number of people unemployed at any one time. Even though the unemployment rate may remain constant over any period, the individuals unemployed will change over time.

Frictional unemployment can be explained in terms of smaller markets described above. For example, suppose Tom is laid off from a manufacturing plant in Iowa when the plant closes. He attempts to get a new job, but plants are more interested in shutting down than hiring more workers – and there is a lot of Skidmore College 8 Wage Demand Labor Surplus W1 W2 Supply L1 L2 L3 Labor Michael Griffiths Economics | Prof. Roy Rotheim Classical and Keynesian Economic Explanations for Unemployment competition for the few positions available, since Tom is one of many individuals without work.

However, Tom discovers that there are factories opening in Kentucky, where state subsidies and special tax rates are persuading companies to open factories there. Tom decides to move to Kentucky and find a job there. Tom moves from a labor market with a labor surplus located in Iowa to a labor market with a labor shortage in Kentucky, and consequently can easily find a job. The amount of time it takes Tom to find this out, sell his house, move to Kentucky, and find a new job is referred to as frictional unemployment.

Frictional unemployment simply acknowledges that things take time; as elegant as a market that updates instantaneously is, real world markets do not. Structural Unemployment Structural unemployment “occurs when the skills, experience, and education of workers do not match job openings” (Goodwin 27). Structural unemployment is a form of frictional unemployment, but usually lasts longer. As expressed above, if there are labor markets for each industry or position – such as rocket scientists – then there can be higher or lower unemployment in that submarket than in the national market.

For example, if trade agreements allow companies to outsource work to a different country at a lower cost than employing rocket scientists, then the labor market for rocket scientists will diminish within the country. Rocket scientists may then find that they lack the training or requirements for other labor markets. Consider the plight of Ted, a rocket scientist, who becomes unemployed because his work is outsourced to China, and finds that he is not eligible for many jobs (either because he is overqualified or lacks the necessary experience).

Ted may find that he needs to Michael Griffiths retrain to gain access to other labor markets he is interested in – such as acting. The time it takes for Ted to retrain is a type of frictional unemployment, and is referred to as structural unemployment. Voluntary Unemployment Voluntary unemployment is functionally another type of frictional unemployment, and occurs when people choose not to accept a market-clearing wage. People have a certain amount of pride, and over time become accustomed to a certain quality of life that is funded by their salary.

An unemployed individual may turn down a job at a market-clearing wage because he believes the pay less than he deserves. Similarly, a company may offer a number of unemployed people jobs, only to be consistently turned down because the wage the company offers is below the market-clearing wage. In both cases, after a certain amount of time each party will get desperate and modify their strategy. The individual will accept a lower wage, and the company will increase their compensation.

Of course, the time it takes someone to accept a lower wage – in effect, how stubborn an individual is – depends on how badly they need a job. This will vary from person to person, depending on their financial reserves, and will also be affected by any government social welfare programs that give them a wage even while unemployed. Institutional Unemployment Institutional unemployment explains how interference in the labor market can create unemployment. The government is the most common instigator of institutional unemployment. Governments Skidmore College 9 Economics | Prof. Roy Rotheim

Classical and Keynesian Economic Explanations for Unemployment can set taxes, create price floors or price ceilings, and indirectly support other factors of institutional unemployment such as labor unions. Like any other market, the imposition of a tax will create market deadweight, causing the market to reach equilibrium at less than full employment. The following stylized graph illustrates how an tax on wages – such as an income tax – creates a market deadweight: Imposing a tax increases voluntary unemployment – people or companies unwilling to accept employment at the market wage.

Consider the example of Delta Communications, who wanted to hire another IT specialist to increase operating uptime. However, a government tax of 30% on the wage for an IT specialist increases the cost of an IT specialist above the point where the company would break even if it hired one. Thus, the company voluntarily chooses not to employ an IT specialist. The government could also decide that everyone needs to earn a minimum amount of money – less than that is simply unfair to its citizens. A government-imposed minimum wage establishes a price floor that prevents supply and demand coming to equilibrium.

The following stylized graph illustrates the effect a price floor has on the labor market: 10 Wage Deadweight Supply WC WL Tax Demand Wage Price Floor Supply Unemployed W1 WE L1 LE Labor Demand If a tax is imposed on a labor market, then there is a difference between the wage a company pays and a wage employees earn. Under a tax, WC is what companies pay while WL is what employees receive –the amount that companies pay minus the size of the tax. The number of people employed subsequently falls from LE to L1. Michael Griffiths Economics | Prof. Roy Rotheim L1 LE L2 Labor Skidmore College

Classical and Keynesian Economic Explanations for Unemployment The above stylized graph shows that a price floor instituted at wage W1 will force the wage to increase from the market-clearing wage of WE to W1. The labor demand will decrease from LE to L1, while the labor supply will increase from LE to L2. This will create unemployment, as indicated on the graph. However, not all institutional unemployment comes from the government. Labor unions can create an effective price floor for a single company or industry, such as the United Auto Workers creating a price floor for compensation in the car industry.

The government can also indirectly sponsor unemployment through social welfare programs. Unemployment compensation reduces the incentive for an individual to get a new job rapidly, thus increasing frictional unemployment. A recent bill supported by the Democrats in Congress proposes creating “wage insurance” for the unemployed: if an unemployed individual in unable to find a job at the same wage as his previous place of employment, he can accept a lower paying job and the government will make up the difference (up to some limit).

Natural Rate of Unemployment Unemployment under the classical perspective treats the labor market like a single market that can be studied under basic microeconomic theory. Unemployment will always exists, because the labor market is not perfect, but the labor market will always tend towards some equilibrium and, over time, unemployment should always decrease to some point. However, the fact that the labor market is not an ideal market leads to a classical explanation for a natural rate of unemployment. The natural rate of unemployment is the rate of unemployment that would prevail in the absence of business cycles.

The economy has cyclical cycles of boom and busy, and so the labor market will be continually shocked by the overall economic cycle. Thus, the labor market will continually move towards equilibrium, but never reach it – the ‘natural’ rate of unemployment – and so be in a constant state of change. The following highly-stylized graph illustrates the concept: 11 Unemployment Rate Actual rate Natural rate Time The actual rate of unemployment would only reach the natural rate of unemployment in an environment with no economic boom/bust cycle.

Keynesian Model of Unemployment Keynes criticized the classical economic understanding of the labor market as misleading. He claimed that classical economic theory may be good for analyzing single, isolated markets, but the labor market was not isolated. The labor market is in fact unique among Skidmore College Michael Griffiths Economics | Prof. Roy Rotheim Classical and Keynesian Economic Explanations for Unemployment all markets because of the relationship between unemployment and demand. Keynes pointed out that a nation consumes a majority of what it produces.

It follows that the economy needs to have a level of demand equal to the level of production within the economy. Keynes also pointed out that, ultimately, individuals purchase a majority of products within society. Thus, the more money people had the greater demand for goods and services. The greater demand for goods and services, the more that needs to be produced, and the more labor hired to increase production. The labor market is a proxy for the overall economic health of the economy; and unemployment is bad because it decreases aggregate demand in the economy. Aggregate demand is linked to demand for abor, since the greater the demand the greater the production – and companies need to hire more people to produce more. Or, if aggregate demand falls, companies will lay off people because their work is not needed. The following diagram, from Macroeconomics in Context, illustrates the relationship between employment, income, and aggregate demand. The three variables are all proxies for each other; a change in one necessitates a change in all. Either an increase or a reduction in any variable, for whatever reason, will move the entire economy in that same direction. 12

The diagram illustrates how income directly affects aggregate demand that in turn affects the level of employment. If there is resistance to change at any point in the diagram – practically, either employment level or income level – then the system may arrive at equilibrium below full employment. The following graph illustrates what could happen in Keynesian theory. If the market is at equilibrium, and there is an external shock to the economy that results in a high level of unemployment, then demand in the economy would fall as the unemployed reduce their consumption of goods and services.

As demand in the economy falls, production will fall to meet demand. Employers don’t need as many people to produce less work, so their demand curve moves to the left. Thus, if the initial position of the market is at W2=L2 using Demand-1, and a shock to the market results in the Skidmore College Michael Griffiths Economics | Prof. Roy Rotheim Classical and Keynesian Economic Explanations for Unemployment market moving to point W1=L1 on Demand-1, then over time the demand curve to move to Demand-2 as the demand for labor falls. In that case, equilibrium would occur at W3=L1. arket, which could be an aspect of unemployment in the first place. 13 Conclusion Employment, as seen by those who espouse classical view of an economy, is simply an expression of the overall labor market where the market wage equates the freely determined demand for and supply of labor. The labor market is a series of aggregates of supply and demand, originating with the individual and the company. The behavior of the market can be extrapolated from the behavior of the individuals within the market; there are few dependencies. The classical explanation of unemployment differs only in one detail from later Keynesian theories.

The cyclical nature of the economy and the level of employment drive aggregate demand, which in turn drives the level of unemployment. Keynes believed that while classical economics provided a solid theory to analyze unemployment on a microeconomic level in submarkets, it ignores the cyclical nature of the economy on a macroeconomic level. Wage Unemployed W1 W2 W3 Supply Demand-1 Demand-2 L1 L2 L3 Labor The graph shows a scenario where the labor market could be at equilibrium at a point that would leave the same number of people unemployed as during the market shock, and at a lower wage because of increased competition in the labor market.

While the market is at equilibrium and operating normally under a classical viewpoint, Keynes believed that this was a waste. In the long run the market may correct itself, but in the long run you’re dead. The criticism John Maynard Keynes levied against the classical model was that it treated the labor market as isolated within the entire economy. However, Keynes’ view linked the labor market with the overall economy, establishing a feedback cycle. Unemployment would then be the result of changes in the overall Michael Griffiths Economics | Prof. Roy Rotheim Skidmore College

Classical and Keynesian Economic Explanations for Unemployment Bibliography Goodwin, et al. Macroeconomics in Context. Tufts University: Global Development and Environment Institute, 2006. Harford, Time. The Renter’s Manifesto: Why Home Ownership Causes Unemployment. Slate. 2007. Mishel, Lawrence, Jared Bernstein, and Sylvia Allegretto. The State of Working America. Cornell: Cornell University Press, 2007. Rotheim, Roy. Notes on Employment and Unemployment: A Mainstream Perspective. Skidmore College. 2007 14 Michael Griffiths Economics | Prof. Roy Rotheim Skidmore College

Posted on

Sustainable Development and Globalization Are Two Popular Concept with Respect to Present Context. Is Globalization Is a Threat for Sustainable Development ?

Sustainable development is a pattern of resource use that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for future generations. [pic] A representation of sustainability showing how both economy and society are constrained by environmental limits [pic] Scheme of sustainable development: at the confluence of three constituent parts “Let’s see the three overlapping circles: one representing environmental needs, one representing economic needs, and one representing community social needs.

The area where the circles overlap is the area of sustainability, the area of livability – the area where all the threads of quality of life come together. If we are to have it all, we must recognize that these three circles are not separate, unrelated entities”. “Sustainability is not a product but rather an ongoing process with no endpoint”. In my opinion, Globalization is a threat for Sustainable Development which is discussed below and relevant reasons found from the campaign of “Greenpeace international”

Globalization  describes a process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors.

Since World War II, barriers to international trade have been considerably lowered through international agreements — GATT. Particular initiatives carried out as a result of GATT and the World Trade Organization (WTO), for which GATT is the foundation, have included: Promotion of free trade: elimination of tariffs; creation of free trade zones with small or no tariffs Negative effects of Globalization Globalization has been one of the most hotly debated topics in international economics over the past few years.

Globalization has also generated significant international opposition over concerns that it has increased inequality and environmental degradation. In the Midwestern United States, globalization has eaten away at its competitive edge in industry and agriculture, lowering the quality of life in locations that have not adapted to the change. Effect on disease : Brain drain : Economic liberalization : Effect on Income disparity: Effect on environmental degradation: The Worldwatch Institute said the booming economies of China and India are planetary powers that are shaping the global biosphere.

In 2007, China overtook the United States as the world’s biggest producer of CO2. At present rates, tropical rainforests in Indonesia would be logged out in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestation is the logging industry, driven spectacularly by China and Japan. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996–2006. Crude oil prices in the last several years have steadily isen from about $25 a barrel in August 2003 to over $140 a barrel in July 2008. State of the World 2006 report said the two countries’ high economic growth hid a reality of severe pollution. The report states: “The world’s ecological capacity is simply insufficient to satisfy the ambitions of China, India, Japan, Europe and the United States as well as the aspirations of the rest of the world in a sustainable way. Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out by 2017, and terbium could be gone before 2012. 101] It said that if China and India were to consume as much resources per capita as United States or Japan in 2030 together they would require a full planet Earth to meet their needs. [102] In the longterm these effects can lead to increased conflict over dwindling resources[103] and in the worst case a Malthusian catastrophe. ENVIRONMENTAL PROTECTION ORGANIZATIONS EPA The United States Environmental Protection Agency, and a significant resource. Greenpeace The most well known environmental protection group, with a substantial range of campaigns.

Greenpeace International Encourage sustainable trade The World Trade Organisation (WTO) promotes free trade for the gain of private interests, over and above our health and the environment. It is fatally flawed and is moving the world in the wrong direction – away from peace, security and sustainability. By stalling on issues that are crucial to poorer countries, the WTO faces a crisis of legitimacy. 1. The WTO is secretive, non-transparent and undemocratic. Meetings are by invitation only, are hidden from public view and are closed to direct public input. . The WTO puts trade on the highest pedestal – before our health and the environment. This is because the WTO is driven by narrow corporate interests, like genetic engineering companies and the agri-business. These companies are behind the US attempt to use the WTO as a tool to force feed the world genetically engineered (GE) food. 3. The WTO threatens crucial environmental agreements, like the first legally binding global agreement that allows countries to reject genetically modified organisms, the Biosafety Protocol. 4.

So-called “free” trade is speeding up the use of natural resources such as water, forests, fisheries, and minerals, much faster than they can be regenerated. In essence, the WTO is a tool of rich and powerful countries. Poorer countries are losing out to the interests of the industrialised world. Freeing people from forced trade Greenpeace opposes the current form of globalisation that is increasing corporate power. Greenpeace demand that the World Trade Organisation (WTO) adopts a policy of trade that truly works for all and that preserves and restores the environment.

Greenpeace support global environmental standards. Trade must not take priority. Governments must work to achieve sustainable development. This means integrating three things: environmental, social and economic priorities. Greenpeace campaign to bring the concerns of citizens all over the world to the decision-makers at the WTO. Greenpeace International is calling on consumers to join us and demand a GE free world. Hence, Globalization is a threat for Sustainable Development which to be dealt delicately as the campaign of “Greenpeace international”

Posted on

Montessori Creative Imagination

Montessori believed that the imagination be encouraged through real experiences and not fantasy. She felt very strong that this powerful force was not wasted on fantasy. It was important to allow a child to develop their imagination from real information and real experiences. Montessori believed that young children were attracted to reality; they learn to enjoy it and use their own imaginations to create new situations in their own lives. They were just excited about hearing a simple story of a man going to the shop and buying bread, then they would be of hearing a made up story.

She felt that once the child was fed with plenty of real life experiences the child can then develop their own imagination from reality. “The young child has a tendency to create fantasies and dwell on them. Adults have been accustomed to consider these as proof of the child’s superior imaginative abilities. Montessori considered them proof not of his imagination, but of his dependent and powerless position in life”. Chapter 2, pg. 45 Montessori – A Modern Approach by Paula Polk Lillard It made sense from this belief that she did not like to encourage fantasy.

She did not object to the child creating objects of fantasy, but she did strongly object to the adult feeding the child someone else’s fantasy, instead of exciting reality. She believed that this was just satisfying the adult rather than the child. In particularly in younger children she found it quite damaging as a child of 3 years of age would not be able to decipher between what was and wasn’t real. A child would believe the story of the monster that came out at night time, and could at times become scared of this make believe creature.

Montessori believed that in time a child’s mind crowded with too much fantasy, not based on reality, wanders aimlessly in circles and eventually cannot focus. As the absorbent mind is a chief learning tool for children aged 3-6 years. Imagination is the chief learning tool for 6-12 years. For the 6-12 years, logical thinking has not yet developed and therefore the imagination drives the learning. For the younger children, the imagination creates mental pictures of a world they cannot see.

It is quite remarkable how Montessori recognised the power of the imagination in the learning process, something which to this today is still not totally utilised in traditional teaching. “Is the child’s mental horizon limited to what he sees? No. He has a type of mind that goes beyond the concrete. He has the great power of imagination. ” Chapter 17, Pg. 160 The Absorbent Mind by Maria Montessori Children with a lively imagination can be categorized as being good at “creative subjects”, such as music, drama, art etc.. nd would struggle at times in the more “logical subjects”, such as maths, geometry and so on. However Montessori felt that used correctly the imagination had had the power to bring human kinds to great levels and for both creative and logical subjects – it was just as powerful when painting a picture as well as working out a mathematical sum. “The secret of good teaching is to regard the child’s intelligence as a fertile field in which seeds may be sown, to grow under the heat of flaming imagination.

Our aim therefore, is not merely to make the child understand, and still less to force him to memorize, but so touch his imagination s to inflame his enthusiasm to the inmost core. It is along the path of the higher realities, which can be grasped by the imagination that the child at this age is to be led. ” Chapter 21, Pg. 367 Maria Montessori – Her Life and Work by E. M Standing She felt that the creative mind should not be seen as the opposite to the logical mind – rather its partner.

And that imagination is the power behind these two parts of the mind. Imagination is a power that leads to creativity. Ideas are abstracted and converted into reality again, which emphasises the importance of feeding imagination with reality. She warns us against the dangers of cultivating the imagination in separation from the intelligence. Montessori believed that the imagination needed a structure to work within and her plan for cosmic education includes these elements. When teaching the cosmic plan we start with the whole and then move to details.

It’s the details that provide a framework which the child can hold a clear view of the whole. Classification and other precise keys of study are the structures within which the imagination will thrive. The imagination working from a base of precision and order is able to take in the world of reality and abstract from it concepts and ideas. She was quite specific about what she suggested as the means for keeping contact with reality and most importantly ensuring that reality never became boring.

In the younger child she encouraged the “practical life” exercises and emphasised the importance of making these new, exciting exercises when presenting to the child. Later on for the older child, generally 6-12 years, it was a very important part of their education to make “day trips”, going outdoors and learning about the world around them, which was very exciting. She encouraged “preparation exercises” for these children such as packing an overnight bag to go camping, although this is something they were familiar with, it helped them contain their energy and to focus their mind.

She believed that adolescents should also gain practical life experience at this stage too, such as running a small enterprise eg. Farm, shop, guesthouse. As well as many other learning experiences, this exercise provided a way of focusing imagination in a reality based form. Sensorial exercises provide mental structure. Once again proving a reality base for imagination. Another part of the Montessori curriculum was cultural subjects, which played an essential part of the Montessori curriculum of inspiration.

However, sometimes in the Montessori schools for adolescents, they became “subjects” instead of “sources of inspiration”, due to so many different topics to cover on the curriculum. However this was solved by teachers using a cosmic integrated approach to teaching and by allowing students to guide their own work, whenever possible. Imagination plays an important role in all learning and creative thinking throughout our lives. And so it is understandable that Montessori felt so strong about utilizing this tool in the best way possible.

In my own experience, I have seen a child who filled with fantasy stories, from games, television, movies of pretend characters and unreal stories, is exhausted and does struggle in other aspects of their life struggle with concentration and keeping focus. It is a simple rule to encourage imagination through reality and it is the job of the teacher to ensure a prepared environment is available for her children and that practical life and sensorial life exercises are presented as exciting real life exercises to ensure that reality is never dull.

Montessori’s first school was “Casa dei Bambini”, meaning “The Children’s House”. Which nicely fits the picture of children living in a real world, when Montessori was approached about her views of children playing imaginary tea, pouring cups of tea to the dolls sitting around the doll house, she made the observation that the “dolls house” over the years was slowly getting bigger and bigger. She asked the question, what if it was to become as big as the child, and her answer to this was the child would make the transition from a make believe world to a real world, where they can work and ultimately they much prefer it.

Posted on

Should Organs Be Bought and Sold?

Whether human organs should be bought and sold, it really up to the person who is willing to go ahead with it. However, based on economics I think that human organs should be available for those that need them. An example would have to be that with our kidneys, we are able to live with only one of them, and if there was someone that we matched their blood type could we honestly say that we would refuse them one if their life were in the balance? I do also think that based on the economic part of it we should be willing to donate our organs once we do die to help those that need it.

I do know that the donor lists are long for those that need any part of the body. However, I do not think that they should be bought and or sold on the black market. Since some people will harvest organs on unwilling people and go and sell them on the black market. I do think that it should be possible for human organs to be bought and sold at a global level. If there was someone let’s say in Germany, that had the same type of match for someone in the United States that need the transplant, and no one in the United States had the same type of match then it should be ok to get the organ from Germany, if it is going to save someone’s life.

Something else that needs to be taken into consideration, is the medical schools, even though a cadaver may have missing organs, it should not stop them from taking them. Because the first thing that should come first is by helping out those in need, and that would have to be those that need a transplant. Those people should come first and foremost, since if they would die while waiting a transplant; it is not far to them or their family members.

Posted on

Water Crisis

Venue : Presidency Girls Hr. Sec. School , Egmore, Chennai NATIONAL SCIENCE SEMINAR WATER CRISIS ON THE EARTH PROBLEMS AND REMEDIES Submitted by A. NAVEEN ANTO, Sri Jayendra Golden Jubilee School, Sankarnagar – 627 357, Tirunelveli, Tamilnadu. Date : August 27, 2008 CONTENT ¦ INTRODUCTION ¦ WHAT DO WE MEAN BY WATER CRISIS? ¦ WHAT CAUSES & TRIGGERS THE WATER CRISIS ¦ IMPACTS OF WATER CRISIS ¦ REMEDIES FOR WATER CRISIS ¦ CONCLUSION WATER CRISIS ON THE EARTH PROBLEMS AND REMEDIES INTRODUCTION Water the elixir of life feeds the planets ecosystem, flows through our bodies and buildings connects humans through a source of life.

Even this 1%, which is renewed by hydrological cycle is put to severe stress due to overuse and pollution. The world is today facing a serious overall scarcity of water on one hand and on the other hand the available surface and ground water is becoming unsafe for consumption due to several agricultural, domestic and industrial pollution. 70% of our planets surface is water, yet only 2. 5% is fresh water. The remaining 97. 5% is salt water, out of the 2. 5%, 1% alone is available for human consumption. WHAT CAUSES & TRIGGERS THE WATER CRISIS Water crisis on earth has been caused by HIGH POPULATION GROWTH ¦ RAPID URBANIZATION ¦ EVER INCREASING DEMAND FOR COMPETING USES LIKE More than one billion people have no access to safe drinking water. It is estimated that by 2025, more than half of the World’s Population will be facing water vulnerability. India is one among the countries which face a severe water stress. This quantitative and qualitative water stress is known as water crisis. • DRINKING • AGRICULTURE • INDUSTRY AND • ENERGY WHICH HAS NOT BEEN BALANCED WITH PROPER EFFORTS FOR WATER MANAGEMENT AND CONSERVATION POPULATION GROWTH In year 2000 the world population was 6. billion compared with a mere 2. 5 billion in 1951. DEPLETION OF AQUIFERS The ground water and surface water potential on earth is facing a serious threat of permanent loss due to CLIMATE CHANGE Global warming leading to climate change will have a significant impact on water resources as this will greatly affect the hydrological cycle. Both droughts and floods may become more frequent. According to a UN climate report, the Himalayan glaciers that are the sources of Asia’s biggest rivers like Ganges, Indus, Brahmaputra, Yangtze, etc. could disappear by 2035 as temperatures rise.

In India alone, the Ganges provides water for drinking and farming for more than 50 crore. This growth in population has brought about a serious decline in the per capita availability of water. ¦ DEPLETION OF AQUIFERS ¦ GLOBAL WARMING AND ¦ CLIMATE CHANGE Water tables are falling due to erection of tube wells and over pumping of water. Depletion of aquifers without proper re-charge will result in subsidence of aquifers and permanent loss of ground water potential. Similarly in coastal cities like Mexico City, Bangkok, Manila, Beijing and Chennai, over pumping of round water has led to penetration of sea water into aquifers which makes the ground water salty, brackish and unusable. IMPACTS Water crisis leads to • FOOD AND AGRICULTURAL CRISIS • HEALTH CRISIS • ENVIRONMENTAL CRISIS AND LOSS OF BIO DIVERSITY • WATER POLITICS AND SOCIAL CRISIS FOOD AND AGRICULTURAL CRISIS An estimated 42,000 people die every week due to contaminated water. Malaria, Diarrhoea, Leptospirosis, Japanese encephalitis, Jaundice, Typhoid, which cause millions of preventable deaths in third world countries are associated with contamination of drinking water.

Black foot disease, peripheral nuritis, hyperkeratosis, skin and lung cancer, blue baby syndrome, itai itai and mental derangement are associated with arsenic, nitrates, mercury, cadmium and lead toxins in water. Environmental crisis leads to extinction of fish species and coral reef formation. Upland ecosystems are at risk due to diminishing of fresh water flow in upstream sources as they are diverted for human uses. The red run in madagascar plateau damaged riverine ecosystems due to gully erosion and heavy silting in rivers. Eutrophication results in the loss of biodiversity in water.

Water crisis leads to increased poverty, migration of people in search of water, social unrest and increase in violence. There are approximately 260 different river system worldwide, where conflicts exist crossing national boundaries. ENVIRONMENTAL CRISIS & LOSS OF BIODIVERSITY WATER POLITICS & SOCIAL CRISIS Desertification of Arid lands and disappearance of glaciers pose a serious threat to food security of millions of people. Water scarcity severely threaten freshwater fish populations, which serve as an important food source of millions of people worldwide.

Scientist say that 80,000 acres of farmland is already damaged along Noyyal river alone. Imagine the impact of polluted rivers on agriculture and food production of India in the future. HEALTH CRISIS “If the wars of the 20th Century were fought over oil – the wars of the 21st century will be fought over water” says Ismail Serageidin, Vice President, World Bank. REMEDIES How are we going to overcome the water crisis? What are the remedies? We can easily tackle water crisis if we integrate our traditional wisdom with modern scientific technologies and ideas like WATERSHED MANAGEMENT AND IRRIGATION

Holistic water shed management and planning through soil conservation, catchment-area treatment, preservation and increase of forest cover and construction of check-dams will help to reduce water stress. Similarly as Dr. M. S. Swaminathan says Drip irrigation sprinkler irrigation and traditional systems like Mulching and pitcher irrigation will help us to achieve optimal productivity per unit of water. Now let us look at a case study. 5000 years back the Indus valley civilization was successfully harvesting run off in the Thar desert whereas today Cherrapunji which gets 11000 mm rainfall suffers from serious drinking water threat.

So it does not matter how much it rains, if we don’t capture and manage it properly. The traditional indigenous methods and techniques like kul, Khatri, Eri, Oorani and Zabo followed by our water wise ancestors focus on catching water, conserving water and harvesting it. Such techniques are effective in recharging the ground water. Water quality management should also be emphasized. Effluents should be treated before discharging them into water sources. The principle of “polluter pays” should be followed. • Linking of Rivers • Desalination • Waste water treatment • Fog collection UV Water Purification, etc. CONCLUSION Let us collaborate to conserve water and encourage others to do the same. As a National Green Corps school we are already committed to the cause Let us not leave hell as a legacy to our children, let us leave them life. Ralegan Siddhi an arid destitute village of India has been transformed into one of the richest village by adopting these watershed Management and irrigation techniques. The transformation began in 1975. Storage ponds, staggered trenches, percolation ponds, gully plugs, check dams and reservoirs were constructed to catch and harvest rain water.

Drip irrigation was introduced. Tree felling and over grazing were banned. Energy needs were solved through solar power and Bio gas. Strict social discipline and community participation was inculcated. Such case studies prove that water crisis on earth can be solved by integrating technology and community participation. RALEGAN SIDDHI – A CASE STUDY A MODEL OF RALEGAN A VILLAGE THAT DEFEATED WATER LET US CATCH CONSERVE & HARVEST WATER TO DEFEAT Ralegan Siddhi an arid destitute village of India has been transformed into one of the richest village by adopting these watershed

Management and irrigation techniques. The transformation began in 1975. Storage ponds, staggered trenches, percolation ponds, gully plugs, check dams and reservoirs were constructed to catch and harvest rain water. Drip irrigation was introduced. Tree felling and over grazing were banned. Energy needs were solved through solar power and Bio gas. Strict social discipline and community participation was inculcated. Such case studies prove that water crisis on earth can be solved by integrating technology and community participation. RALEGAN SIDDHI – A CASE STUDY