TMA 02 Essay Example | Topics and Well Written Essays - 1500 words

TMA 02 - Essay Example The Parliament is the supreme legislative body, hence, it can enact any law it chooses; and its enactments are absolutely binding on all. Because of this supremacy, Parliament can delegate legislative power to subordinates and the delegated or subordinate legislation laid down by such persons is also binding on the courts. Because it is sovereign, Parliament can delegate some of its legislative powers (by parent or enabling’ legislation) to Ministers of the Crown, local councils, etc. For example, the Secretary of State for Trade possesses delegated power to regulate the licensing of those involved in the consumer credit industry under the Consumer Credit Act 1974. Delegated or subordinate legislation has become increasingly important in recent years as a source of new law because of lack of Parliamentary time, technicality, urgency and elasticity. The types of delegated legislation include orders in Council, statutory instruments (affirmative and negative procedure), and by-laws of local authorities. While these are the principal sources, to elucidate a difficult point, writings of jurists are resorted to. Since 1972, laws made by the European Communities may be applicable in the UK pursuant to the European Communities Act 1972, ss. 2 and 3. Such laws may take the form of Regulations and Directives from the European Commission and Council of Ministers and decisions of the European Court of Justice, which UK courts are bound to take notice of. As a member state of the European Community, the UK has to a very limited extent subordinated its legal system to that of the EC. Nevertheless, EC law is undoubtedly a source of English law. This is particularly true of directly applicable EC law, such as Article 119 of the Treaty of Rome, which provides for equal pay for work of equal value, irrespective of sex. In a series of cases, this principle has been held to apply to the UK. Courts have been careful to construe this principle as existing over British

President as global leader Essay Example | Topics and Well Written Essays - 500 words

President as global leader - Essay Example Prior to the onset of the Second World War presidents had only been interested in being leaders in the Western hemisphere, with the Monroe Doctrine asserted that America had the right as well as the duty to interfere with, or lead the countries of Central and Latin America.2 The only time that an American president tried to be a global leader was when Woodrow Wilson attempted to be one at the end of the First World War. Congress, who vetoed American membership of the League of Nations and returned to a policy of strict neutrality, overturned his efforts.3 In many respects the American president acting as a global leader was a consequence of American involvement in the Second World War, and also the Cold War, which followed on from it. President Roosevelt was able to portray himself as a global leader during the Second World War until his own death. The American use of the atomic bombs against Japan meant that President Truman could boast of being the most important global leader due to the Americans been the only nuclear power. The onset of the Cold War also ensured that America could not resort to a neutral foreign policy ever again. American presidents were in affect global leaders of the capitalist Western World, containing the spread of communism.4 Certainly in the Cold War period the majority of American presidents successfully presented themselves as being global leaders. Truman, Eisenhower, Kennedy, Johnson, Nixon, and Reagan all made viable claims about their status as global leaders. Presidents Carter and Ford were arguably less successful in that regard. The ability of these presidents to portray themselves as global leaders was shaped by internal and external factors as well as their own personalities. To a large extent all post-war American presidents have had the same constitutional powers as each other.5 In constitutional terms every American president has operated with actual as well as potential blocks to his or her

Fix the report of HR strategy of BWM in china Essay

Fix the report of HR strategy of BWM in china - Essay Example There are different laws, rules and regulations of different countries which will affect the global business activities. Cultures will be different, environmental factors will also be different. So the business may face some constraints, challenges and conflicts which may be raised from different laws, culture and societies. To operate business outside the national borders a company should think about their planning and taking decisions and it will take initiative to incorporate international business related considerations. The management of the company have to decide at first that what will be the goods and services or ideas that will be fitted in the international market, how the company will deliver goods to that market. Is the company delivering from domestic production unit or it will make production centre in the international market and goods will be supplied from there. The company should enter in the international market through trade or through investment this will be anot her point of decision. Customer’s behaviour also can be changed in different country’s market according to the time changes. The company should maintain the features of the product or the way to offer its services in accordance with the customer’s behaviour. If customers wants to get fast and quick services on time in case of logistics and transportation then the related companies in this field should be updated and change their speed of services. They will take some operational strategy to provide fast and quick services on time to meet the requirement of customers. If they will unable to take such initiatives then they will not survive in the international market. Recession is another big point in case of international business. Revenue, profit and sales will be declined. Company will stop to hire employees or cut down some manpower. Generally it will reduce the income of people and at a time reduce the purchasing power. Market change also helps to reduce the

India and women Essay Example for Free

India and women Essay INDIA and WOMEN Women empowerment is a moot subject. At earlier times, women got unprejudiced status with men. But the post-Vedic time was a difficult period when many were treated as slaves, a commodity earned by the man, a mode of produce kids. From the early twentieth century (national movement) their statuses have been slowly and gradually undergone changes. In this regard, we may mention the name of the English people. After then, independence of India, the constitutional makers and national leaders strongly emphasized on equal social position of women with men. Today, we have seen the women occupying the respectable positions in all walks of the sphere. Yet, they are not absolutely free from discrimination and harassment of the society. A few number of women have been able to establish their potentialities. Therefore, each and every one should be careful to promote the status of women. Women constitute approximately 50% of the world’s population, but India has shown disproportionate sex ratio whereby female’s population has been comparatively less than that of males. As far as their social status is concerned, they are not treated as equal to men in all the places. In the Western societies, the women have got equal right and status with men in all walks of life. But gender disabilities and discriminations are found in India even today. The paradoxical situation is such that, she is sometimes portrayed as a Goddess and at other times merely as slave. It is now that the women in India enjoy a solitary status of equality with the men as per constitutional and legal provision. But the Indian women have come a long way to achieve the present positions. First, gender inequality in India can be traced back to the historic days of the sacred Sanskrit poem, Mahabharata, when Draupadi was put on the dice by her husband as a commodity. History is a witness that women were made to dance both in private and public places to please the men. Secondly, in Indian society, a female was always dependent on male members of the family until a few years ago. Thirdly, a female was not allowed to speak in a loud voice in the presence of elder members of her in-laws or move around without covering her head and in some cases, the face in the presence of other elder or male members of the family. In the family, every faults had gone to her and responsible. Fourth, as a widow her dependence on the male members of the family increased but that was better than performing ‘sati’ where the widow  was burned alive during the cremation of her dead husband. In many social activities, she was not permitted to meet with other members of the family. A woman whether a widow or not had very little share in political, social and economic life of the society and had to vote for the party the family supports, even if she had her views against it. The early twenty century was rise of the National Movement under the leadership of Mahatma Gandhi who was in favor of removing all the chains tied to a woman. At the same time, Raja Ram Mohan Rai, Iswar Chandra Vidyasagar and various other social reformers laid stress on women’s education, prevention of child marriage, withdrawals of evil practice of sati, removal of polygamy etc. The National Movement and various reform moveme nts paved the way for their liberations from the social evils and religious taboos. After independence of India, the constitution makers and the national leaders recognized the equal social position of women with men. The Hindu Marriage Act, 1955 has determined the age for marriage, provided for monogamy and guardianship of the mother and permitted the dissolution of marriage under specific circumstances. Under the Hindu Adoptions and Maintenance Act, 1956, an unmarried women, widow or divorce of sound mind can also take child in adoption. Similarly, the Dowry Prohibition Act of 1961 says that any person who gives, takes, or abets the giving or taking of dowry shall be punished with imprisonment, or fine or with both. The Constitution of India guarantees equality of sexes and in fact grants special favors to women. These can be found in three articles of the constitution. Article 14 says that the government shall not deny to any person equality before law or equal protection of the law. Article 15 declares that government shall not discriminate against any citizen on the ground of sex. Article 15 (3) makes a special provision enabling the state to make affirmative discriminations in favor of women . Article 42 directs the state to make provision for ensuring just and human conditions of work and maternity relief. Above all, the constitution regards a fundamental duty on every citizen through Articles 15 (A), (E) to renounce the practices derogatory to the dignity of women. The concept of empowerment flows from the power. It is vesting where it does not exist or exist inadequately. Empowerment of women would mean equipping women to be economically independent, self-reliant, have positive esteem to enable them to face any difficult situation and they should be able to participate in development  activities. The empowered women should be able to participate in the process of decision making. The government of India has ratified various international conventions and human rights instruments committing to secure equal rights to women. These are CEDAW (1993), the Mexico Plan of Action (1975), the Nairobi Forward Looking Strategies (!985), the Beijing Declaration as well as the platform for Action (1995) and other such instruments. The year of 2001 was observed as the year of women’s empowerment. During the year, a landmark document has been adopted, ‘ the National Policy for the empowerment of women.’ For the beneficiaries of the women, the government has been adopted different schemes and programs i.e. the National Credit Fund for Women (1993) , Food and Nutrition Board (FNB), Information and Mass Education (IMF) etc. But is all this actually working is what everyone wants to know. Are women actually empowered ? Or is all this only in papers and even in the 21st century women fear leaving their houses alone? Do they fear wearing clothes they want to wear ? Well I feel that the answer to this is a big YES. In the 21st century, where India is an emerging super power the women are not confident that they will return home safely. But why is it so? Some say that because ‘boys are boys’ and they can do whatever they want to or maybe because the kind of clothes a woman wears instigates men to look at her with those greedy eyes and lay their dirty hands on her? Well NO ! Did that women in a burqa who was raped while going back home in her own car provoke anybody? Or the 5 year old girl who was studying in school provoke her teacher? But boys will be boys who make mistakes. For once forget about the boys, they will defend themselves but when the head of the Mahila Vibhaag (women’s association) says that the mistake lies in the girls, don’t you believe it? I don’t. I think it is time for every girl to take a stand for herself and for every other girl in this world because it is not just India where women are not treated equally, a study conducted in the US in 2012 says that about 14% of women who were fired from their jobs was because the boss wanted something more than a normal boss and employ relationship. Also a study conducted in London in 1998 says that about 33% of divorces happen because the man is not willing to let the wife go out for a job or to pick up the kids because she might just have an affair. It’s also time for every parent stop telling their daughters to wear longer dresses and tell their sons to respect girls  because nobody should be judged by the way they dress. It is said that if a man is educated he will earn bread for the entire family but if a woman is educated then she will make sure that the entire family is educated. To sum up, women empowerment cannot be possible unless women come with and help to self-empower themselves. There is a need to formulate reducing feminized poverty, promoting education of women, and prevention and elimination of violence against women.

Inflation and Stock Returns in Nigeria

Inflation and Stock Returns in Nigeria This study empirically examines the relationship between inflation and stock returns in Nigeria during 1997-2006. The study focuses on different econometric models to investigation this relationship using monthly data of the All Share Price Index from the Nigerian Stock Exchange and Nigerian Consumers Index. The simple OLS regression result suggests that the residuals are stationary, which implies that stock returns and inflation are co integrated. Therefore we can conclude that there is a long run relationship between stock returns (LOGASI) and inflation (LOGCPI).The Engel co-integration results reveals that there is long run relationship between inflation and stock returns .the study further goes on to the determine the causal long run relationship using the Error Correction Model (ECM). This article offers evidence of a positive relationship between stock market returns and inflation. This result confirms that stock returns act as a hedge against inflation. CHAPTER ONE INTRODUCTION 1.1 Background to the Study The advent of oil boom in Nigeria in the early 1970s, has led to the instability of stock prices. This has been attributed to many factors such as: budget deficit monetization, inflow of foreign capital from crude oil sales and financial markets creation of excess private domestic credit. Since early 1970s, inflation rates in Nigeria has been highly unstable; the high inflationary change was in excess of 30 percent. This is evident in the high correlation of money supply growth and high inflation due to the fact that real economic growth is less in real term to money growth. This can be observed from the growth in money supply and some structural factors such as; supply shocks arising from famine, unfavorable terms of trade and devaluation of currency. Furthermore, Structural Adjustment Program (SAP) introduced by the government in the late 1980s also accounted for the increase in price level in the economy. Consequently, inflation in Nigeria has overtime responded to structural changes. These changes can be characterized into four periods based on the pattern and events that occur at that period. The first period of inflationary increase in Nigeria was noticed from 1974 to 1976; inflation increased by 30 percent. This inflationary pressure was as a result of the following: High cost of agricultural produce caused by drought in the Northern part of Nigeria, Excessive oil revenue monetization, increase in wage rate based on the recommendation of the Udoji commission of 1974, Folawewo (2005), and political instability The second period was from 1983 to 1985 when inflation rate reached 40 percent. This period noticed very little economic growth, The Nigerian government was under intense pressure from debtor groups to accept International Monetary Fund conditionalitys of devaluation of domestic currency because government debt has increased above 70 percent while excess money growth was around 41and 43 percent. This period also witnessed poor external trade performance.CBN (, 2006) The third period was from 1987 to 1989 when inflation rate hovered around 35 percent. During this period, the economy experienced high inflationary pressure brought about by fiscal expansion noticed in the 1988 budget, the debt for equity swaps conversion method adopted by the Government of Nigeria and the drastic contraction in monetary policy, all accounted for this change that span through to the early 1990s. Finally, the fourth period occurred between 1993 and 2000, as a result of fiscal deficit expansion which caused a 70 percent increase in money supply with a knock-on effect on domestic credit of the private sector of the economy.CBN, (2006) Overall, inflationary pressure can be largely attributed to structural factors such as; real income reduction caused by fluctuation in oil revenue, high nominal wages and debt obligation in form of expansionary fiscal deficit. These invariably mean that over the years, fluctuation in commodity price is a normal feature of the Nigerian economy. One major commodity considered in this study is the capital market stock, i.e. the Stock market. Stocks listed in Nigeria are traded on the floor of the Nigerian Stock Exchange (NSE) while the Securities and Exchange Commission (SEC) is the apex regulatory body which oversees the activities and affairs of the major players on the floor of the Stock Exchange. The Nigeria Stock Exchange was established in September 15, 1960 but commenced business on June 5, 1961 with 19 securities listed and traded on the Lagos Stock Exchange. Based on the recommendation of the Government Financial System Review Committee in 1976, the Lagos Stock Exchange was renamed and made part of the Nigerian Stock Exchange in December 5, 1977. The Nigerian Stock Exchange has nine branches established in major commercial cities in Nigeria. The main exchange of stocks of large enterprises are traded in the Nigerian Stock Exchange while small and medium scale enterprises are listed and traded in the Second tier Securities Market (SSM). From 1963 to 1990, the Nigerian stock exchange witnessed an overwhelming increase in government stock which exceeded the equities of industrial companies; however this trend changed from 1991. The value of equities of industrial companies increased to billions of Naira, while government stock traded on the Nigerian Stock Exchange was worth millions of Naira this decrease continues till date, a development to the deregulation of the economy. Despite the increase in market capitalization noticed in the economy at that period, the ratio of this amount to the Gross Domestic Product and Gross Fixed Capital Formation was still low. This increase was between 4.8% and 25.4% for gross domestic product while the ratio for gross fixed capital formation is between 28% and 55% from 1963 to 1990 (CBN, 2006). The ratio of market capitalization in the gross domestic product and gross fixed capital formation increased geometrically from 1990 to 1995. Although there was decrease in the share of market capitalization in gross domestic product and gross fixed capital formation, the return on investment did not follow the same pattern. This decrease noticed at that period was caused by a banking crisis in which a total of 26 banks were liquidated in 1998. However, with the recapitalization of the banking sector in 2005, the industry remains the most active participant in Nigerian stock market up till date. The trend in Nigeria Stock Exchang e causes the price and return on stocks to be highly volatile. 1.2 Problem Statement Price stability is essential in determining whether an economy is stable or not. Inflation which is the constant increase in price creates uncertainty in the economy; uncertainty makes both domestic and foreign investors unwilling to invest. In Nigeria inflation has led to increase in nominal interest rates which affect the value of interest payment of banks and financial institutions. Furthermore, determination of the problem caused by inflation depends upon the degree in which inflation is anticipated correctly or not. If inflation is anticipated correctly and the monetary authority is seen to be credible, the fluctuation in price would be managed effectively but if inflation is unanticipated, some economic agents will gain while others will lose. Unanticipated inflation impact negatively on saving ability of the citizens and as a result, low saving leads to a fall in the demand for stocks and equities as financial wealth. This decrease in demand causes the price of equities to fal l thereby reducing returns on equities and stocks. Furthermore, the prices of stock determine how effective and efficient the stock market allocates shares and equities based on preference and availability of market information. Increase or decrease in price of stock create uncertainty for the investors and in turn affect the demand and supply of stocks. Therefore, general increase in price level may affect peoples potential investors investment decision which has negative impact on the total returns on stocks in the economy at large. This situation is prevalent in the Nigerian economy; therefore there is the need to examine the effect of inflation on stock returns and its implication on investment. The Fishers hypothesis (Fishers effect) suggests that stocks or equities hedge or evade inflation, empirical investigation suggest that inflation and stock returns are negatively related. This study will be looking at relationship between inflation and stocks in Nigeria. The study of this relationship is essential in improving and in the understanding of stock markets, thus providing standards for decision-making about asset allocation.This study contributes to the existing literature by providing evidence for whether inflation affects stock returns both in the long run and in the short run. 1.3 Justification for the Study Despite the large number of empirical studies on the relationship between inflation and stock returns, there is no general consensus on the causal direction of this relationship. Empirical works as; Nelson (1976), Shwarts (1977), Fama (1981), Geske and Roll (1983), Gultekin (1983), Marshall (1992), Bakshi Chen, (1996), Zhao (1999), Chatrath et al (1997), Spyrou (2001), Omran and Pointon (2001), Crosby (2001), Gallagher and Taylor (2002) and Floros (2002), suggested a negative relationship between inflation and stocks while Boudoukh and Richardson (1993), Graham (1996) and Choudlery (2001) in different studies take the opposing view, i.e. that there exists positive relationship between inflation and stock returns. However, most of these studies were carried out in industrial nations and some selected developing countries most especially Latin American countries. Specific studies on the exact relationship between inflation and stock returns in Nigeria have not been explored rigorously. Furthermore, considering the negative impact of inflation on prices of commodities in Nigeria coupled with the volatility of stock returns, this study seek to provide a rigorous analysis of the dynamics of inflation and its implication on stock returns in Nigeria using an Error Correction Model to create a parsimonious and encompassing model that would show both short-run and long-run relationship between inflation and stock returns in Nigeria. 1.4 Plan of Study Following the introductory remarks in chapter one, chapter two will review the existing literature on this subject. While chapter three will focus on the theoretical framework, methodology, model specification, estimation technique and sources of data. The summary of result of the empirical analysis is presented in chapter four while the study will be rounded up in chapter five with summary of findings, policy implication and conclusion. CHAPTER TWO LITERATURE REVIEW 2.1 Introduction Section 2.2 of this chapter discusses the underpinning theories of inflation and stock returns. Section 2.3 examines the empirical literature review on inflation and stock returns this is to help identify the link between inflation and stock returns. Finally section 2.4 examines the methodological literature on inflation and stock returns. 2.2 Theoretical Literature Review on Inflation and Stock Returns The Fisher hypothesis suggests that there is a positive relationship between interest rates and inflation. (Berument Jelassi, 2002) Fisher (1930) argues that nominal interest rate is entirely a sign of the existing information in relation to the likely future values of the rate of inflation. This hypothesis has come to be known as ‘‘the Fisher effect in the economic literature; it states that expected nominal rates of interest on financial assets should move one-to-one with expected inflation. Choudhry (2001) Fisher hypothesis, in its strict sense, predicts a positive homogeneous relationship of degree one between stock return and inflation. (Luintel Paudyal, 2008) The proxy-hypothesis was introduced by Fama (1981) to explain the predominance of negative stock return-inflation trend. The main principle on which Famas version of the proxy-effect hypothesis is based on is the observed negative relationship between inflation and stock returns which appears to be spurious since this relationship is a result of the positive relationship that exist between stock returns and expected economic activity and an inverse relationship between expected economic activity and inflation. Inflation simply serves as a proxy for expected economic activity in a statistical relationship between stock returns and inflation. (Lee U. , Monday, June 22 1998) The proxy hypothesis states that the negative relationship between inflation and stock returns is spurious and really only proxies for the positive relationship between stock returns and real variables. Previous testes of the proxy hypothesis have used actual values instead of forecasted values for the real activity variable. (McCarthy, Najand, Seifert, 1990) did not find a support for the proxy hypothesis using only forecasted variables. Gonedes (1981) the failure to use indexation means that real income tax rates will vary directly with rates of inflation. This substantive effect of mere bookkeeping methods is frequently predicted even though it is known to have some adverse implications. This is the tax effects of inflation hypothesis. 2.3 Empirical Literature Review on Inflation and Stock Returns The empirical literature on the impact of inflation on stock returns records major contribution by different scholars over the years. But the empirical evidence provided by most of these studies has been mixed, and a consensus has not yet emerged. While studies like Pierrel and Kwok (1992), Geske and Roll (1983), Floros (2002), Ugur (2005), Yeh and Chi (2009), Pesaran et al (2001), Den Haan (2000), Crosby (2001), Syros (2001), Roohi and Khalid (2002) among others have found a negative relationship between inflation and stock returns; Boudoukh and Richardson (1993), Graham (1996), Choudhry (2001), Patra and Posshakwale (2006) and Lee et al (2000) among others reported positive relationship between these variables. Concerning the review of the approaches of modeling the effect of inflation on stock returns, Pierrel and Kwoks (1992) estimates and tests the alternative versions of hypothesis that explain the relationship between these two variables. The study employs distributed lags in order to empirically arrive at a dynamic structure of inflation. Pierrel and Kwoks concluded that this dynamic structure conform to Fama (1981), Benderly and Zwick (1985), and Geske et al (1983) hypothesis that suggest a negative relationship between inflation and return on stocks. Yeh and Chi (2009) tested the validity of the various Hypotheses that explain this relationship. The empirical result of this study on 12 OECD countries shows that these countries exhibit a short-run negatively significant co-movement between stock returns and inflation. Moreover, countries like Australia, France, Ireland and Netherland do not display a long-run relationship between the two variables in equilibrium. This result is consistent with the hypotheses of Fama (1981), Modigliani et al (1979) and Feldstein (1980) which suggested that an increase in inflation reduces real returns on stock. This result is also in line with Caporale and Jung (1997) and Rapach (2002). They argue respectively that there exist a negative significant effect of inflation on real stock returns after controlling for output shock and that inflationary trends do not erode returns on stocks. The Fishers Hypothesis was tested by Spyros (2002). His results reflect a contrary view that returns on stocks hedges inflation. This study shows that there is negative but not statistically significant relationship between inflation and stock returns in Greece from 1990 to 2000. In this same vein, Floros (2002) carried the same study on Greece economy and concluded that inflation and stocks in Greece should be treated as independent variables because the result of the various test conducted show that there is no relationship between inflation and stock returns in Greece. Crosby (2001) investigates the relationship between inflation and stock returns in Australia from 1875 to 1996 and found out that the Australian economy does not experience permanent changes in inflation or stock returns. The result shows that there exist short-run negative relationships between these two variables that depend on the period of time that is considered. On the contrary, Lee et al (2000) examine the impact of German hyperinflation in the 1920s on stock returns. This result of this study show that the hyperinflation in Germany in early 1920s cointegrates with stock returns. The fundamental relationship between stocks returns and both realized and expected inflation is highly positive. They concluded that common stocks appear to be a hedge against inflation during this period. Choudhry (2001) in his study on the impact of inflation on stock returns in some selected Latin and Central American countries (Argentina, Chile, Mexico and Venezuela) from 1981-1996, reveal that there is one- to-one relationship between the current rate of nominal return and inflation for Argentina and Chile. Their result also reveals that the lag values of inflation affect stock returns and this result infer that stocks act as a hedge against inflation. Patra and poshakwale (2006) conducted a study on the impact of economic variables on market returns in Greece from 1990 to 1999. Empirical results show that some macroeconomic variable like money supply, inflation, volume of trade and exchange have both short-run and long-run relationship with stock price in equilibrium in Greece while there was no short-run or long run relationship noticed between exchange rate and stock prices. Ugur (2005) in a study on the effect of inflation on return on stocks in turkey from 1986 to 2000 reveal that expected inflation and real returns are not correlated. The results suggest there is a negative relationship between inflation and stock returns which may be caused by the negative impact of unexpected inflation on stock returns. This results did not contradict Fisherian hypothesis because of the non correlation of inflation and real returns but the results is in line with the proxy hypothesis since a negative significant relationship exist between the two variables. Aperigis and Eleftheriou (2002) results also concurred that there is negative link between inflation and stock returns in Greece than in interest rate and stock returns. Similar study like Adrangi et al (1999) and sellin (2001) also support the proxy hypothesis. Khil and Lee (2000) in their study on ten pacific-rim countries and the US that all the countries except Malaysia reveal negative relationship between in flation and stock returns. The tax-effects Hypothesis which asserts that there is negative relationship between inflation and stock returns was tested by Geske and Roll (1983). Empirical result from the reveal that random negative or positive real shock affects stock returns which in turn, signal higher or lower unemployment and lower or higher corporate earnings. This has effect on the personal and corporate tax revenue leading to increase or decrease in the treasury through borrowing from the public. The economy paid for this debt by expanding or contracting money growth and this would lead to higher or lower inflation. They concluded that random shocks on stock returns are both fiscal and monetary in nature in the U.S.A. Roohi and Khalid (2002) considered the Efficient Market Hypothesis and Rational Expectation Theory to investigate the effect of inflation on stock returns. Empirical results of the study suggest that the relationship between real stock returns, unexpected inflation and unexpected growth are negatively significant. They concluded that the control of real output growth makes the negative relationship between these two variables to disappear over time. 2.4 Methodological Literature Review on Inflation and Stocks Returns The empirical relation between inflation and stock returns has been investigated through various approaches since the 1970s. Spyros (2001), adopted Vector-Auto regressive (VAR) model and the cointegration test to confirm if there was any relationship between inflation and stock returns in Greece. Pierrel and Kwok (1992) investigated the relationship between stock returns and inflation in the United State between 1962-1992 using Vector- Autoregressive (VAREC) model, and Granger Causality, Crosby (2001), used Vector-Autoregressive (VAR) model, Ordinary Least Square (OLS) and correlation analysis to examine the relationship between inflation and stock returns in Australia from 1875-1996. Floros (2002), investigated the relationship between stock returns and inflation in Greece from 1988-2002 by considering both the lag and lead periods of inflation and stock returns using Ordinary Least Square (OLS), Johansen Cointegration Test and Pairwise Granger Causality Test. In this same vein, Ugur (2005) used the Ordinary Least Square (OLS) and Standard Granger Causality to examine the relationship between inflation, stock returns and real activity in Turkey. Choudhry (2001), estimate the impact of inflation on stock returns in some selected Latin and Central American countries using the Auto-Regressive Integrated Moving Average (ARIMA), unit root test and spectral regression model. Lee et al (2000); and Geske and Roll (1983), also used ARIMA, OLS and unit root test to investigate the effect of German hyperinflation and stock returns, and the impact of inflation on stocks returns in the USA respectively. Patra and Poshakwale (2006) on the other hand, used the Error Correction Model (ECM), Johansen Cointegration Test and Pairwise Granger Causality Test to show if economic variables such as money supply interest rate, exchange rate, volume of trade and stock prices have impact on stock returns. Yeh and Chi (2009) in their study on 12 OECD countries measures correlation at different forecast horizon by using Autoregressive Distributed Lag (ARDL) bound test, unit root test and confidence interval method to investigate the inflation illusion hypothesis that suggest that there is negative relationship between inflation and stock returns. Pesaran et al (2001) and Den Haan (2000) also employ the same technique and arrive at the same result. This study examines the relationship between inflation and stock returns in Nigeria. Furthermore a test is carried out to see if theres a cointegration and causality within these variables. Methods used in this study are explained in chapter three. This study fundamentally aims to analyses the above relationship for a period of 1st of January 1997-31st of December 2006 .monthly values of the Nigerian Stock Exchange (NSE) and Nigerian Consumers Price Index (CPI). CPI was collected from the Central Bank of Nigerian Statistical bulletin (2006), while (ASI) All Share Index was collected from Nigerian Stock Exchange data bank. The reviews of literature above reveal that there are basically four major hypotheses discussing the relationship between inflation and stock returns. These theories are Fisherian hypothesis, proxy hypothesis, tax-effect hypothesis and inflation illusion hypothesis. Considering the level of price stability in Nigeria over the period of our study, the study seeks to adopt Fisherian hypothesis which suggest that stock hedges inflation. This is based on the fact that literature suggests that the price of stock is a major determinant of stock returns which is affected positively by expected or unexpected inflation (consumer price index). CHAPTER THREE MODEL SPECIFICATION AND METHODOLOGY 3.1 Introduction This chapter covers the theoretical framework, specification of the models utilized in the study as well as the methodologies that will be adopted. Accordingly, the estimation procedures, and data requirements; types and sources of data are also discussed in this section. 3.2 Theoretical Framework The reviews of literature in chapter two reveal that there are basically four major hypotheses discussing the relationship between inflation and stock returns. These theories are; 1. Fisherian hypothesis 2. Proxy hypothesis, 3. Tax-effect hypothesis and; 4. Inflation illusion hypothesis. The Fisherian hypothesis is thus specified; Where is the real returns, is the actual inflation which is the combination of the unexpected and expected inflation. While is the error term that is distributed randomly and normally with zero mean and constant variance. This sign of determine if the specification is in line with the fisherian hypothesis. Thus; a significant and positive sign suggest that stock hedges inflation while a negative sign suggest contrary. 3.3 Model specification Based on the outcome of our theoretical framework which attempts to explain the relationship between real stock returns and inflation, we specify the model for estimation. Stock return represented by all share indexes (ASI) is the dependent variable while the explanatory variables are, one-period lagged inflation represented by consumer indexes (CPI) and one-period lagged stock returns (ASI). This is based on the common belief that stock returns (ASI) takes some time to react to inflationary changes (ΔCPI) and changes in all share indexes (ΔASI). In this study, it is assumed that stock returns depend on a set of variables denoted as: Therefore, our empirical specification is stated as: 1 3.4 Methodology and Estimation Procedures This study makes use of Augmented Dickey Fuller (ADF) unit root test to check for the stationarity of the series used in this study, Engle and Johansen cointegration tests is used to confirm if the series have long run relationship while causal long run relationship is determine using an Error correction Model (ECM) which will reveal both the short run and long run relationship between inflation (LOGCPI) and stock returns (LOGASI). 3.4.1 Unit Root Test Assume we have the following AR (1) process: (1) and is a white noise error term. We can manipulate the above expression by subtracting from both sides; Thus: (2) In practice, instead of estimating equation 1, we estimate equation 2 and test the hypothesis that =0. If =0 then that is we have unit root meaning the time series is non-stationary ( for unit root is non-stationary). Thus we can take the first difference of and regress on to see if () is zero or not in order to confirm if the series are stationary or not. Under the null, the estimation for ÃŽ ´ is not distributed T-student, so the Dickey Fuller test is required. We use the Augmented Dickey Fuller (ADF) table to correct for possibility of the error term () been auto correlated. The ADF test is specified in the equation below: 3 Where is a white noise Error Term. 3.4.2 Co integration Tests Trended data can be regarded as potentially a major problem for empirical econometrics. Trends may give rise to spurious regression and uninterpretable t- statistics. The stack reality is that in economics most time series are subject to some type of trend while differencing in series until it becomes stationary is one major solution. This has been shown that differencing can lead to loss of long run properties of a series. Based on this the combination of series that are difference once I(1) will give us a model that is stationary I(0). In achieving this aim this study consider two different co integration tests which are; Engle and Granger co integration test and Johansen co integration test. According to Engle and Granger (1987), a time series and are said to be co integrated of order db where d ≠¥ b ≠¥ 0 written as: CI (db) if: Both series are integrated of order d There exists a linear combination of these variables say; which is integrated of order d-b. The vector and is called a co integrating vector. The Engle and Granger co integration test involve two steps; the first step is conducting an OLS regression on the variables in the model specification. The second step is to conduct an ADF test on the residual from the regression if the residual is stationary, then the series are said to be co integrated. The Johansen co integration test on the other hand involves the use of a VAR model and the different maximum likelihood ratios are used to determine the co integrating vectors. These tests are; trace test and maximum eigen value test. Different information criteria such as Akaike Information Criterion, Schwarz information criteria (SIC), Hannan-Quinn Information Criterion, Final Prediction Error and Sequential Modified test Statistic are used in determining the lag length. 3.4.3 Error Correction Model Co integration analysis provides a test for spurious correlation. Finding co integration between apparently correlated I(1) series validate the regression but failure to find co integration is an indication that spurious correlation maybe present thus invalidating the inferences drawn from such correlation. Co integration analysis also helps in formulating the process of dynamic adjustment. However time series data lose their long run properties when they are differenced; allowing only for conclusions on the short run determinations. Therefore there is a need to construct a model that would combine both the short run and long run properties of the variables in the model. As suggested by Engle-Granger representation theorem that if two series are co integrated then they will be efficiently represented by an error correction mechanism. The Error Correction Model is used to capture both the short run and long run properties of the series. The method involves developing a model from it g eneralized form (over parameterized) to a specific form (parsimonious). In addition if the series are co integrated these dynamic specifications will encompass any other partial adjustment model. The error correction of the Auto regressive distributed lag (ADL) takes the form: where the long run properties are derived from the proportionality between and. The above specification relates the short run change in the dependent variable to the short run change in the explanatory variable.this is called the impact effect () but ties the change to the long run impact through a feed-back mechanism. 3.5 Data The study will utilize monthly time series data from 1997–2006. Data for the variables will be sourced from Central Bank of Nigeria Statistical Bulletin (2006) and the Nigerian Stock Exchange Annual Reports (2006). The variables of interest in this study are all in logs. These variables are; consumer price indexes (CPI) as inflation series and all share indexes (ASI) as stock returns. CHAPTER FOUR SUMMARY OF EMPIRICAL RESULTS The summary of the statistics used in this empirical study is presented in the appendix. As can be observed from the Table, (see pagexx) the mean value of stock returns is 9.359606 while inflation is 8.442205. It is also observed that both LOGCPI and LOGASI are positively skewed. The kurtosis value is positively low and Jarque-Bera (J-B) statistic test value is relatively high. These suggest that the two series are skewed to the right. Figure1below depicts the graphical illustrations of the data that were used in this empirical analysis. The figure reveals that stock return witnessed significant increase within the period of this study. Figure 1: Graphical illustration of statistics used in the analysis Table 1: Stationarity Test Result Variables Levels First Differences ADF 1 ADF 2 ADF 1 ADF 2 LOGASI 0.712327

General Motors Inc. Essay -- Business, Entrepreneurship, Innovation

General Motors incorporates entrepreneurship and innovation into its business objectives. This is evident in General Motors Vision statement which states that its goal is to â€Å"lead in advanced technologies and quality by creating the world’s best vehicles†. (1) For instance General Motors has an extensive R & D, Design, and Engineering department that oversees the creativity, innovation, and invention of its strategic technologies and innovation programs which are aligned with its corporate vision. In order to lead in advanced technologies of the world’s best vehicles General Motors incorporates entrepreneurship and innovation concepts, which are essential to competing in the global market place.(2) In the spirit of entrepreneurship, which is the process of discovering new ways of combining resources,(5) General Motors is a majority shareholder in GM Daewoo Auto & Technology Company of South Korea, and has product, powertrain and purchasing collaborations wit h Suzuki Motor Corporation in Japan.(3) These associations allow General Motors to maneuver into specific customer markets and broaden its product base. Being an innovative organization also requires General Motors to establish advanced technology collaborations, which it has with Daimler AG and BMW AG of Germany and Toyota Motor Corp. of Japan (3) as well as promoting competitiveness and deferring the cost of the research and development. (2) One example of innovation, which is the process of devising a new idea or thing, or improving an existing idea (5), is the two-mode hybrid system being used today on GM’s hybrid pickups and SUV’s. This was a result of the partnership between BMW and GM in which both manufacturers benefited. BMW benefited from GM’s battery, extended ran... ...nd meet their quality targets. Your most important customer will be able to pick and choose any type of options that they want on their Cruze, when they want it. Competition – Our scissor lifts were bought in a package deal for our paint shop and three others. Not installing this new lock retaining nut will leave us susceptible to thousands of units being lost along with idling hundreds of people. Not to mention the increase in the cost per vehicle because we did not meet or production targets. In conclusion, innovation and the need for it will never diminish no matter how big or small. For me, my company, and my country innovation is the key to our success and our very existence. With that being said, you better not have a great idea and have no one to sell it to. The customer will always be first, second, and third for that matter, if we are to succeed.

Management of a World Class Company Toyota

Content I. Introduction of Toyota Motor Company II. Management of Toyota Motor Company 1. Coprporate Governance of Toyota Motor Company 2. The Toyota Way 3. Toyota managerial problems III. Conclusion Management of World Class Company – Toyota Motor Company I. Introduction of Toyota Motor Company Toyota Motor Company or TMC is a Japanese automobile manufacturer and it is stationed in the city of Toyota in the Aichi prefecture. The relationship between the city and the company gave the name of the city which was previously known as Koromo.Toyota is the largest automobile manufacturer in Japan[1] and it is also the largest worldwide as of the first half of 2012[2] by volume of sold cars ahead of General Motors and Volkswagen AG. The company was created in 1937 by Kiichiro Toyoda as a spinoff to Toyota Industries to create automobiles. As of 2012, Toyota own several different brands as Lexus – luxury cars, Scion – brand only for North America, aimed towards the Gener ation Y and 51% in Daihatsu – the oldest car manufacturer in Japan. Akio Toyoda is the current CEO of Toyota, he is grandson of the creator Kiichiro Toyoda[3].Toyota have produced more than 200 million cars all over the world with their biggest market in North America – 32%, followed by their home country Japan – 25%, Europe – 14% and Asia – 11%[4]. Toyota is publicly traded company of three of the major Stock Exchanges: New York Stock Exchange(NYSE), London Stock Exchange(LSE) and Tokyo Stock Exchange (TSE). In the end of 2009 and the beginning of 2010, Toyota recalled 9 million cars on various technical faults[5]. 5. 3 million of them was over a faulty â€Å"all-weather† floor mat, additional 2. 3 mil. For a faulty accelerator pedal and 1. 7 for both problems.On 14th of November 2012, Toyota announced that it will recall additional 2. 7 mil. cars over problems with the steering wheel and water pump system. This comes four weeks( 10th Octob er) after another 7 mil. cars recalled over faulty electric windows mechanisms[6]. The 2010 recalls hit the company hard with huge financial loses, because of the recalls and stop of production for some time of the affected vehicles. Severe damage to the brand in the eyes of the public. An estimate of 1. 93 billion dollars were lost, because of missed sales, output and another recall related costs[7].A 15% drop in shares was experienced by the company. Toyota is one of the leading manufacturers in pushing the hybrid electric vehicles. Their hybrid technologies make them the first company to mass produce such an automobile with the Toyota Prius in 1997. As of October 2012 the Prius around 3 mil. units[8] . 19 other Toyota branded vehicles are also available with the hybrid technology. So are models from the Lexus sub-brand. II. Management of Toyota Motor Company 1. Coprporate Governance of Toyota Motor Company Toyota Motor Company(TMC) is a public listed company, which means everybod y can buy shares in it.This mean that the is a specific corporate structure and management operations. Toyota is with top-down centralized way of management. The company is headed by Fujio Cho, he is the chairman which in the Japanese system, that puts him in charge of the country's and world's largest automaker. He is only the second person to head Toyota and to not be from the Toyoda family after they stepped out in 1995. He joined Toyota in 1960 and previous titles include: Managing Director, Senior Managing Director, Vice President, President and Vice Chairman of the Board. He stepped in as a chairman in September 2006[9]. 960–1966, apprentice and training employee; 1966–1974, Production Control Division; 1974–1984, manager in Production Control Division; 1984–1986, manager in Logistics Administration and project manager in Production Control Division; 1986–1987, manager in Administration; 1987–1988, manager of Toyota North America Proje ct and executive vice president of Toyota Motor Manufacturing USA; 1988–1994, president of Toyota Motor Manufacturing USA; 1994–1996, managing director; 1996–1998, senior managing director; 1998–1999, executive vice president; 1999–, CEO and president[10].The Vice Chairman of the Board is Takeshi Uchiyamada since April 2012 and also serve as Vice President of the Company. Mr. Uchiyamada served as Executive Vice President of Toyota Motor Corp. since June 2005, as the Chief Production Control & Logistics Officer of Toyota Motor Corp. since 2004, as Senior Managing Director of Toyota Motor Corp. from 2003 to June 2005. He served as the Chief Vehicle Engineering Officer of Toyota since 2003 and joined Toyota in 1969[11]. Akio Toyoda is the President and Chief executive officer of the company.He is also President of Toyota Finance Australia Ltd. , Toyota Motor North America, Inc. and Toyota Motor Credit Corporation since June 2009. Mr. Toyoda serves as Senior Adviser of Toyota Media Service Corporation. He has been the President of Hitachi Ltd and Honda Motor Co. since March 2009. He served as an Executive Vice President of Toyota Motor Corp. from January 21, 2005 to June 2009, Senior Managing Director and Chief of Asia & China Operations Officer since 2003 and also served as its Division General Manager of Taiwan & China Offices. He joined Toyota in 1984[12].The company also have 7 Executive Vice Presidents,63 Directors, 7 Corporate Auditors, 18 Senior Managing Officers and 35 Managing Officers[13]. The company’s top management priority is to steadily increase corporate value over the long term. In order to achieve that, Toyota builds favorable relationships with all of its stakeholders, including shareholders, customers, business partners, local communities and employees. In house committees and councils are used for monitoring and discussing management of the company from the viewpoint of the stakeholders.In 2003 was int roduced the current system of management in which Chief Officers, who are directors, serve as the highest authorities of their specific operational functions across the entire company, while non-board Managing Officers implement the actual operations[14]. Toyota's philosophy of emphasizing developments on the site, the Chief Officers serve as the link between management and on-site operations, instead of focusing exclusively on management. The company have different divisions all over the world, United States of America, The United Kingdom.In the UK the division is headed by a General Manager – John Burton. He is responsible for two branches of the company, the office and shop floor. In the office part there is Assistant General Manager, Senior Manager, Section Manager, Specialist Engeneer – Senior, Specialist Engeneer, Lead Administrator and Administrator. For the Shopfloor we have the same structure till Section Manager with the adition of Group Leader- Senior, Grouo Leader, Team Leader and Team Member. As a publicly traded company Toyota have issued 3,447,997,492 shares and have 668,186 shareholders. 2. The Toyota WayThe most important created in the managerial sphere by Toyota is the Toyota Way. The Toyota Way is a set of principles and behaviors that underline the Toyota Motor Corporation's managerial approach and production system. Toyota first explained and summed up those philosophy, values and manufacturing ideals in 2001, calling it â€Å"The Toyota Way 2001. † It consists of principles in two key areas: continuous improvement, and respect for people[15]. The principles for a continuous improvement include establishing a long-term vision, working on challenges, continual innovation, and going to the source of the issues or problems.The rules relating to respect for people include ways of building it and teamwork. Toyota's management philosophy has evolved from the company's origins and has been used in the terms â€Å"Lean Manuf acturing† and Just In Time Production, which it was very important in developing[16] Toyota's managerial values and business methods which are known collectively as the Toyota Way. Toyota uses five principles for their operations: †¢ Challenge †¢ Kaizen (improvement) †¢ Genchi Genbutsu (go and see) †¢ Respect †¢ Teamwork[17] Another part of the Toyota Way is the Toyota Production System.The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that Cover its management philosophy and practices. The TPS organizes manufacturing and logistics for the company, how it interacts with suppliers and customers. The system is a major predecessor of the â€Å"lean manufacturing. † Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975. [18] Originally called â€Å"just-in-time production,† it develops on the approach created by the founder of Toyota, Sakichi Toyoda, his son Kiich iro Toyoda, and the engineer Taiichi Ohno.The principles of TPS are embodied in The Toyota Way. The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out â€Å"mura† (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or â€Å"muri† (overburden) since this generates â€Å"muda† (waste).Finally the tactical improvements of waste reduction or the elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS[19]: 1. Waste of over production (largest waste) 2. Waste of time on hand (waiting) 3. Waste of transportation 4. Waste of processing itself 5. Waste of stock at hand 6. Waste of movement 7. Waste of making defective products The system, is one of t he biggest aspect of the company, it is responsible for having made Toyota the company it is today.For long time Toyota has been recognized as a leader in the automotive manufacturing. [20] It is a myth that â€Å"Toyota received their inspiration for the system, not from the American automotive industry (at that time the world's largest by far), but from visiting a supermarket. † The idea of Just-in-time production was originated by Kiichiro Toyoda, founder of Toyota. [21] The question was how to implement TPS. When reading descriptions of American supermarkets, Ohno saw how the supermarket operated with the model he was trying to accomplish in the factory.A customer in a supermarket takes the desired amount of products off the shelf and buys them. The store restocks the given products with enough new ones to fill up the empty shelf spaces. Similarly, a work-center that needed parts would go to a ‘store shelf' (the inventory storage point) for the particular part and à ¢â‚¬Ëœbuy' (withdraw) the quantity it needed, and the ‘shelf' would be ‘restocked' by the work-center that manufactured the part, making only enough to replace the inventory that had been withdrawn. 22] While low inventory levels are a key outcome of the Toyota Production System, an important element of the philosophy behind its system is to work intelligently and eliminate waste so that only minimal inventory is needed. Many American businesses, having observed Toyota's factories, set out to attack high inventory levels directly without understanding what made these reductions possible. The act of imitating without understanding the underlying concept or motivation may have led to the failure of those projects. In 2004 a professor from University of Michigan, Dr.Jeffrey Liker published a book â€Å"The Toyota Way† in which he called Toyota way â€Å"a system designed to provide the tools for people to continually improve their work†. [23] â€Å"Since Toyo ta’s founding we have adhered to the core principle of contributing to society through the practice of manufacturing high-quality products and services. Our business practices and activities based on this core principle created values, beliefs and business methods that over the years have become a source of competitive advantage. These are the managerial values and business methods that are known collectively as the Toyota Way. —Fujio Cho, President Toyota (from the Toyota Way document, 2001)[24] According to Liker in the Toyota Way the people are what bring the system to life, working, communicating, resolving issues, and growing together. The Toyota Way encourages, supports, and in fact demands employee involvement. It is a system designed to provide the tools for people to continually improve their work. Toyota Way means more dependence on people, not less. It is a culture, even more than a set of efficiency and improvement techniques.You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose, and teamwork because if they don’t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialist, vendors, team leaders, and—most importantly—operators are all involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers. In it Liker summarized it in 14 principles. The principles are organized in four broad categories: 1)Long-Term Philosophy, 2) The Right Process Will Produce the Right Results (this utilizes many of the TPS tools), 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning. [25] 1)Long-Term Philosophy 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals. It is needed to replace the short term decision making wi th philosophical thinking of purpose. Understanding that the organization is bigger than money and that long term value for the customers and be responsible. )The Right Process Will Produce The Right Results 2. Create a continuous process flow to bring problems to the surface. Time management is very important, it must not be wasted. Creating good flow of the work with materials and people. 3. Use â€Å"pull† systems to avoid overproduction. Providing customers with everything they want when they wanted it. There is no need for costly overstocking. There need to be flexibility with the day-by-day shifts in customer demand not convoluted forecasts. [26] 4. Level out the workload (heijunka). (Work like the tortoise, not the hare. )People and machines must not be overused. There must be leveled out workload. 5. Build a culture of stopping to fix problems, to get quality right the first time. Quality for the customer drives the value proposition. Building equipment capable of det ecting problems and stopping itself. Developing a visual system to alert team or project leaders that a machine or process needs assistance. Jidoka (machines with human intelligence) is the foundation for â€Å"building in† quality. Problems must be solved quickly. 6. Standardized tasks and processes are the foundation for continuous mprovement and employee empowerment. Capturing the accumulated learning about a process up to a point in time by standardizing today’s best practices. Allowing creative and individual expression to improve upon the standard; then using it into the new standard so that when a person moves on, to easily hand off the learning to the next person. 7. Use visual control so no problems are hidden. Use simple visual indicators to help people determine immediately whether there are problems. [27] 8. Use only reliable, thoroughly tested technology that serves your people and processes.Technology must be used for supporting the people not replacing t hem and it can lead to slow implementation. Tests can determine if it is viable to use new technologies. 3) Add Value to the Organization by Developing Your People 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. Creating leaders inside the company and not sourcing them outside of the company. Such leaders must be role-models. 10. Develop exceptional people and teams who follow your company’s philosophy. Creating a strong, stable culture in which company values and beliefs are widely shared and used over a period of many years.Corporate culture and teamwork must be adhered by the employees for exceptional results. [28] 11. Respect your extended network of partners and suppliers by challenging them and helping them improve. 4) Continuously Solving Root Problems Drives Organizational Learning 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu). Personal observation and data gathering for the proble ms that are encountered. Verification of information first hand. 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).Straightforwardness must not be accepted, alternative solutions must be taken into account. Also using other people for gathering information and helping with the decision is needed. 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Using improvement tools to determine the cause of inefficiencies and apply effective countermeasures. Once waste is exposed, having employees use a continuous improvement process (kaizen) to eliminate it. Using hansei (reflection) at key milestones and after you finish a project to openly identify all the shortcomings of the project.Develop countermeasures to avoid the same mistakes again. [29] By using TPS Toyota reduced time consumption and money, while it improved quality. This helped the company become the bigges t company by 2007 and be very profitable. But in recent years it looks that the TPS is not working so well or it is abandoned altogether. The recent technical problems of Toyota showed to some that maybe the TPS is not so good, but if it wasn’t good or it can’t be used anymore, Toyota would have not be able to go back to the top in such short time. The problems maybe are not part of the TPS, but rather other factors.Too big growth of the company in the 21st century. The central lead management don’t allow flexibility in tackling problems. Another issue it that problems become much more obvious with the increase of quantity and this will result in much more negative situation which can’t be handled or will be exploited by competitors. The complexity of cars is attributing factor to have more problems and this can’t be solved by the managers. Of course TPS can be blamed in some way. It support standardization in task and processes and when there is p roblem with one thing, that problem translate everywhere where standardization is used.And finally a problem experienced by almost all big companies all over the world – slow response to problems, because of the amount of bureaucracy that comes with complex management in big organizations. 3. Toyota managerial problems The management of Toyota today are not very successful, after the big vehicle recalls there was a serious lack of admittance by Toyota CEO Akio Toyoda that something is wrong at that was most prominently seen in his press conference about that matter where he stated: â€Å"Believe me, Toyota’s car is safety.But we will try to make our product better. † Another big problem for the management is the dysfunctional organization structure and a secretive culture. After a problem experienced in Europe and this problem could have affected North America there was absolute no communication between the different branches of the company. [30] Instead of admi tting that there is a problem Toyota denied that there are any problems with their cars. III. Conclusion As of mid 2012 Toyota is once again the leader in the automotive world.Although the problems that plagued the company for 2 years reduced their output, profits decreased substantially and the company image was severely damaged which led to the company losing a big sum of money and trust with their consumers, they managed to get out of the problem with relative ease. The company also realized some important things from all this: 1. They could not want to be a global leader and keep all the power in the hands of the headquarters in Japan. Even though they claimed that they are delegating management to other parts of the company around the world the crisis showed something different.When a lot of the production is happening outside Japan they couldn’t afford to still maintain all the power in Japan. 2. They must create friends in order to advance even if they have millions of customers. The crisis left them with no real allies and protection. 3. Toyota learned that it must maintain its reputation every minute. Claiming that they are the best don’t help. Consumers want to see and experience that in the real world not just through ads and statistics. ———————– [1] Wikipedia, Toyota [2] Tim Higgins – Jul 26, 2012, Bloomberg, http://www. bloomberg. om/news/2012-07-25/toyota-extends-global-sales-lead-over-general-motors-vw. html [3] Wikipedia, Akio Toyoda [4] Wikipedia, Toyota [5] Christian Science Monitor, http://www. csmonitor. com/USA/2010/0129/Toyota-recall-update-dealers-face-full-lots-anxious-customers [6] BBC, http://www. bbc. co. uk/news/business-20321594 [7] BBC, http://news. bbc. co. uk/2/hi/business/8493414. stm [8] Mike Milikin 8 Nov. 2012, Green Car Congress, http://www. greencarcongress. com/2012/11/tmchybrids-20121108. html [9] Wikipedia, Fujio Cho [10] Reference for business , http://www. referenceforbusiness. om/biography/A-E/Cho-Fujio-1937. html [11] Bloomberg Business Week, http://investing. businessweek. com/research/stocks/people/person. asp? personId=646436&ticker=TM [12] Bloomberg Business Week, http://investing. businessweek. com/research/stocks/people/person. asp? personId=1828739&ticker=TM [13] Toyota Global [14] Toyota Global [15] â€Å"Environmental & Social Report 2003†. Toyota Motor. p. 80. [16] Strategos-International. Toyota Production System and Lean Manufacturing. [17] Toyota internal document, â€Å"The Toyota Way 2001,† April 2001 [18] Strategos-International.Toyota Production System and Lean Manufacturing. [19] Ohno, Taiichi (March 1998), Toyota Production System: Beyond Large-Scale Production, Productivity Press [20] Brian Bremner, B. and C. Dawson (November 17, 2003). â€Å"Can Anything Stop Toyota? : An inside look at how it's reinventing the auto industry† [21] Ohno, Taiichi (March 1988), Just-In-Time For To day and Tommorrow, Productivity Press, [22] Magee, David (November 2007), How Toyota Became #1 – Leadership Lessons from the World's Greatest Car Company, Portfolio Hardcover, [23] Liker, Jeffrey (2004). The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 36 [24] Liker, Jeffrey(2004). The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 35 [25] Liker, Jeffrey (2004). â€Å"The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 36 [26] Liker, Jeffrey (2004). â€Å"The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 7 [27] Liker, Jeffrey (2004). â€Å"The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 38 [28] Liker, Jeffrey (2004). â€Å"The 14 Pri nciples of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 39 [29] Liker, Jeffrey (2004). â€Å"The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 40 [30] Wall Street Journal, http://online. wsj. com/article/SB10001424052748704820904575055733096312238. html