How Do Critical Perspectives On Crime Differ From Traditional Essay Example for Free

How Do Critical Perspectives On Crime Differ From Traditional EssayCritical perspectives on crime differ from other perspectives in that they focus on ways people and institutions respond to crime and criminals. Critical perspectives be much called social reaction theories. The different theories covered under exact perspectives include Labeling guess, interlocking and radical theory and feminist theory. Labeling theory states that deviance is non the act itself that a psyche commits a deviant label lead lead us to be more deviant. Labeling theory is one of the most signifi keept perspectives in the study of criminology. Amongst these theories is the labeling theory which is one of the most significant theories studied. Labeling theory adopts a relativists definition, by assuming that nothing about a given behavior automatically makes it deviant. While traditional theories accept the accuracy of formalised labeling such as the arrest and prosecution, Labeling theory cha llenges the view and says some peoples behavior is more likely to be labeled deviant than others.Conflict and Radical theories take up where labeling theory leaves off. They argue that law is only controlled by the powerful and that they argon often preserved by the dominant, unlike traditional theories that promote the law and nervous strain the positive aspects of it. One area inspired by feminist work is often called sexual urge-ratio it is the study of female rates is so much lower than males rates in violent crimes. Within the feminist theories we have victimization, differences in crimes, Gender Differences, Masculinity. A great train of focus is spotlighted on masculinity of crimes. Researchers argue that in order to reduce crime manpower mustiness be socialized more and male authority must be illuminated.It was noted in Chapter 3 that we already do a good job of raising our girls not to be criminals, however how can we implement this into the virile side of things. Ma sculinity and crime is the significant focus of the work of gender-ratio cases. The problem according to sociologists is that crime is essentially a male issue and we need to figure out how we get to it being much less of an issue. Most crimes against women are either produced as a crime against a weaker person or a crime because the criminal is the dominant one. It seems to be a double edge sword.Power-Control theory explains the level of female criminality by examining the gender process of families. It highlights the roles played by women and men in perspective to their class. Power Control theory looks at two primary sections, the first is Patriarchal households in which only the father works outside the home and the mother is left at home to care for the children. In this type of household boys learn the masculine roles and girls learn the feministic roles.The other is egalitarian, in which both the matriarch and patriarch works outside the home, therefore the guidance is not there to justify roles which tends to lead to criminality in both gender children. Although most tests of Power control theory produce mixed results. Feministic theories show us just how unequal women are pictured in law and society. The main issue with control theory is a mothers occupational place vs. a fathers occupational place in the family. It focuses on the balance of power and control and how this affects the childs preferences for risk taking.Criminal law divides murder and non-negligent manslaughter into four subgroups first point in time murder, second degree murder, voluntary manslaughter and involuntary manslaughter. Some of the patterns described in our hold back include geographic patterns in which is chronicled with info statistics. It focuses on the different regions and shows the highest statistics in the South, with the Northeast and Midwest being low to mid. According to data the highest weapon used in homicides are handguns at 68 % with knives and blunt obje cts at 13%. Researchers say that the south is the highest percentage of crime due to the high temperature and crowded urban areas. According to our book (P200) an adequate explanation of homicide and aggravated assault must answer the following questions why does the United States have a higher homicide rate than any other industrial nation? This is answered by research that provides data that the United States has more inequality than other nations and thus this produces more crime.There is a vast difference between the rich and the poor. The other reason or answer given to this is that in the United States more handguns are owned, and since handguns are the major cause of homicides, this also contributes to the higher rates. Within the United States, why are homicide and aggravated assault rates highest in the urban areas? This is best answered with Socialdisorganization, anomie and strain theory help explain why crime in general is higher in urban areas this includes higher popul ations, denser areas of habitation, household overcrowding as well as dilapidated living conditions. There is also a probability of higher unemployment rates. Why do men commit almost all homicides and aggravated assaults? The masculinity theories were brought up in chapter 9, but this question is answered as this seems to be shaped in adolescence and the need for boys to grow up stronger and better than women who are looked upon as less dominant.Poverty also interacts with masculinity, the competitiveness in families and social groups. Why do African-Americans and other people of color have high rates of homicides and aggravated assault, both as offenders and victims? This question is explained in similar ways to those above. It has been a question full of hard emotions and personal opinions. It could also be construed as a racist or stereotypical question. Because it is such a touchy number most researchers go about it in explaining how minorities have criminogenic structural an d ecological factors which cause their crime rate to be higher. There is social disorganization stress, the stress of being deprived and discriminated against. Also listed are negative family and school experiences along with the peer pressure from other deviant youths that are common in the urban areas. All of these factors separate may not have much effect, but together it proves to be the perfect combination to put African Americans, especially unripened African Americans at a higher risk for crime.For which two types of violent crime are womens rates of victimization much higher than mens victimization rates? At what rates are women victimized for these crimes? Describe cultural myths supporting rape and battering that are discussed in the textbook Rape/sexual assault and domestic violence/violence committed by intimates are at the top of the list for crimes committed against women more than men. (P220) Our book states that women represented 89% of all sexual assault crimes an d 79% of aggravated assaults. Many of the cultural myths are involved in overseas and third humankind countries which see women as possessions or less than worth compared to a man. In India, as well as Pakistan Dowry deaths which claim the lives of thousands of women are committed daily. These deaths are sanctioned as legal or usually overseen by law enforcement with payment.Dowry deaths are committed againsta bride by either a keep up or the husbands family because the brides dowry was not paid as it was supposed to be. Wartime rape and batteries is also high in other countries and often overlooked in the judicial system. Some of the myths involved in these victimizations include women like to be raped or they ask to be raped. Our book uses the start scene in Gone With the Wind to express one of the many portrayals of women enjoying being sexually assaulted , she is whisked up-stairs against her will, and then is shown with a smile on her face in the morning. The other myth is t hat women ask to be raped by the way they dress or how they behave.This has been an excuse used by many, even today. The blame does not go on the abuser in these cases but looks at how the woman was behaving prior to the sexual assault. For domestic violence and assaults the women is again said to have asked for the overcome by antagonizing the abuser. The woman is blamed for saying or doing something to anger the male and therefore deserved the beating or abuse they received. Women are also blamed because they do not leave the abuser when they have a chance to leave, nor do they press charges when they often have the chance to. Women normally do not leave abusive spouses because they are often the sole providers, women have children and often no money to leave or pay for housing anywhere or legal fees to divorce or put restraining orders on abusers.

Marshall’s Theory of Citizenship

marshals Theory of Citizenshipmarshals possibility of citizenship and its relevance inBritain in 2017Introductionmarshals citizenship theory is concerned with fond rights, pedagogics, and voting. marshalls theory on citizenship is compatible with Britain in 2017 due to the event that schools ar influenced by ideological, economic, and cultural forces, and citizenship considers the flair in which education functions in class formation, deal, capital accumulation, and the legitimation of the privileges of dominant groups (Apple, 20174). In fact, in that respect is no question that schools are institutions of economic and cultural reproduction (Apple, 2017). Similarly, Marshall (2009149) opines that the institutions most closely connected to citizenship and civilisation are the educational system and the fond services. Citizenship has also raised questions on the sense of tender solidarity and integration in any given community (Turner, 1990). Thus, citizenship, and every nouslised version of it, holds relevance immediately. Marshalls theory in particular, has relevance in 2017 due to the fact that there are several distinct forms of citizenship, and each force out be understood by victorious Marshalls vision of citizenship as a whole, rather than a sum of parts. Turner(1997) n 1s that society is faced with two contradictory principles scarcityand social solidarity. Scarcity results in exclusionary events such as genderdivisions, social classes, and status groups, whilst social solidarity requirescohesive community structures, regardless of ones social stand (Turner,1997). Gender divisions are the one area that Marshalls theory on citizenshipfails to consider. Inaddition to the above characteristics of Marshalls theory, Marshalls theoryon citizenship considered legal rights as the first form of citizenship(Turner, 1997). In the 19th century, political rights and theirinstitutionalisation in parliament was Marshalls second fancy of citizenship(T urner, 1997). Next, Marshall rememberd that citizenship was related to socialrights, and that those social rights were institutionalised in the offbeat pronounce (Turner, 1997). When considering these three forms of rights, Marshallargued that citizenship mitigates the inequalities created by capitalism(Turner, 199711). Marshall referred to modern industrialist capitalistsocieties as hyphenated societies, due to the fact that such societies havesome degree of democratic redistribution of wealth by the institution ofcitizenship.Marshallstheory on citizenship relies on post-war societies and their relationshipsbetween social class, welfare, and citizenship (Turner, 1997). At the heart ofMarshalls theory on citizenship is identity. For instance, contemporaryBritain has faced anxiety in granting unconditional universal citizenshipto Hong Kong nationals (Turner, 1997). Turner (19977) describes this conceptas social closure in which citizenship is determined on aninclusion/exclusion basis, in an attempt to exclude extinctsiders and drive outdiversity. The idea of social closure is exempt a pervasive concept in 2017, asevidenced by Brexit. Openness to diversity and difference is an infixedcomponent of a liberal democracy (Turner, 1997), yet the sentiment of some UK citizensis in conflict with the idea of diversity. Brexit and immigration are discussedlater in the essay. critical review of Marshalls TheoryMarshallstheory of citizenship has been criticised for being Anglocentric andevolutionist (Mann, 1987). Mann (1987) suggests that emphasis should be placedon understanding ruling class interactions and anciens rgimes rather than risingbourgeois and proletarian classes, which has been the status quo in previouspolitical studies (Mann, 1987).Othercritics discount Marshalls concept of citizenship due to the fact that histheories were developed in the mid 70s (Bulmer & Rees, 1996) and the post-WorldWar II political dynamic is much different than it is at once. part this whitethorn bethe case, it does non negate the fact that Marshalls lived experiences as aprisoner in Germany and as a social worker, provides a knowledge and culturethat potful only be subsumed from such experiences. Such experiences can betriangulated to the adversity that many UK citizens feel today it is non anoverseas war that many in the UK are fighting- it is an internal war at whichthe allow of the underclass of Britain and Britains diminishing middle-class isthreatened.It isarguable that Marshalls theory on citizenship will always have relevance,whether it is in the year 2017, 2060, or later. For instance, in 1978, somescholars pointed out that the concept of citizenship had gone out of fashionamongst political thinkers (Kymlicka & Norman, 1994). Yet, 15 long time later,citizenship has become a buzz word in political discourse (Kymlicka &Norman, 1994). Considered even minimally, it is arguable that Marshalls theoryis relevant in a cyclical nature. During certain points in time, it could bemore relevant than in other time periods, although the concept itself is alwaysrelevant. Marshall has considered the entitlements of economic structure andcapitalist society (Turner & Hamilton, 1990 199), and these concepts willalways be a constant. Social Class & Welfare ReformSocialclass, like citizenship, is a system of in equality (Marshall, 2009). Thus,Marshalls theory on citizenship takes account of the impact of citizenship onsocial class (Marshall, 2009). In fact, Marshall (1950) notes that citizenshipand social class are in conflict. The paragraphs below discuss social class andwelfare reform.Socialwelfare reform has been a central part of Britains political agenda sinceMargaret Thatchers policies of the materialistic government (McLaughlin, 2000).Thatchers social welfare reforms included less governmental intervention andless social assistance so as to allow citizens to be more active in theirsocial and economic standing. Thatchers policies al so known as Thatcherismencouraged greater citizen freedom and free market (McLaughlin, 2000). The ideaof a free market is in line with Marshalls view on citizenship. FollowingThatchers policies, the Labour government reinvented social welfare after their1997 win (McLaughlin, 2000). Given the stark contrast between the Conservativegovernments policies and the Labour Partys policies, it is arguable thatMarshalls understanding of citizenship is very much relevant to todaysBritain.Marshallshypothesis rested on an economic calculation that the cost of providingeducation for all would increase a countrys productivity (Marshall, 1950 6).Although Marshalls hypothesis was calculated at a time in which strong-armlabour was heavily utilised, affordable access to education is a concept thatmany in Britain worry about (Yuan & Powell, 2013). While Liberals and theLabour Party defend for more social services such as education bursaries andgrants for lower income families, Conservatives hold the v iew that educationshould not be a part of the social welfare system (Counts, 1978). Thus, this isthe very notion of citizenship in which minimal access to education furtherwidens inequality and inequality is mutually correlated with citizenship.Inequality is inversely correlated with citizenship due to the fact that thehigher the inequality that exists, the lower the participation of citizenship,due to the fact that individuals faced with economic hardship are less likelyto pick out (Rosenstone, 1982). Arguably, the higher the citizenship, the lower theinequality of citizenship.Priorto the Labours win in 1997, the Labour Party stated that welfare reform wouldbe one its major campaign promises that it kept (Powell, 2000). The Laboursrhetoric was said to be a new and distinctive method that differed from boththe old left over(p) and the new right (Powell, 2000). At the heart of the partyscampaign, however, was the need for social change and reform. Marshallsconcept of citizenship i s relevant to that period and todays period due to thefact that social reform is still a heavily debated concept in 2017.Anotherelement that points to the relevance of Marshalls theory on citizenship iswelfare malingerer. Welfare fraud is a hot-button topic for many political campaigns,despite its occurrence on a lessened scale. The British existence believes that 27%of the UKs welfare budget is lost to fraud (Trade Unions Congress, 2013) whilethe governments records of funding lost to welfare fraud is 0.7% (TUC, 2013).And according to a poll conducted by the Trades Union Congress (TUC), Ministersshould not assume that ballotingrs will continue to support Ministers devices to capwelfare benefit rises. The TUCs research further notes that electors who areleast able to provide accurate results on benefits are most likely to back thegovernments plan to cut benefits (TUC, 2013). The poll results paint a bleakpicture on citizen perception on unemployment. For instance, the TUC poll showsthat once citizens learn that the benefits cap will concern workers in low paidjobs the most, support moves away from the government (TUC, 2013). The pollalso demonstrated that 61% of individuals polled believed that 41% of theentire welfare budget goes to lazy people, while the true figure is 3%(TUC, 2013). Overall, the results of the poll demonstrate that misconceptionson poverty and unemployment are what fuel misleading news stories andsensationalised campaign points. This is relevant to Marshalls notion ofcitizenship because people need to understand the real causes and issuesplaguing social welfare and unemployment welfare fraud is not one of them. Byremaining uninformed, an electorate may very well vote against their betterinterests, and in turn, this foster inequality. Marshall (1950) suggested thatit was the states social responsibility to help the working class and wretched toutilise their political and civil rights, and this can only be accomplishedwith an informe d voter base. This is especially true due to the fact that cutsin social security programs have disproportionately affected women (Shelley& Gavigan, 2004). Cuts to these programs have affected single mothers inparticular (Shelley & Gavigan, 2004). Shelley and Gavigan (2004) make acritical point when they note that universe discourse and social images onwelfare fraud erroneously link poverty and welfare to crime.Brexit & ImmigrationPriorto Brexit, many political analysts suggested that the determining actor onattitudes for leaving or staying in Britain was immigration, while otherssuggested that the determining factor was the advantage versus the disadvantageof EU membership (McKee & Galsworthy, 2016). Although Brexit took placein 2016, the effects of the vote are apparent in 2017.Tiedto Brexit is immigration. As immigration is a global concern, minority groupsand liberal assimilationist concepts of citizenship have dominated politicaldiscourse. The same can be said for Britains im migration problem.Thepublic vote to leave the EU brought about issues of citizenship and otherness(Goodwin & Milazzo, 2017). In fact, a poll conducted by the BritishElection Study (BES) demonstrated that anti-immigration rhetoric shaped publicsupport for Brexit (Goodwin & Milazzo, 2017). For instance, increases inthe rate of immigration in the UK were key predictors of the vote for Brexit(Goodwin & Milazzo, 2017). It is not strike that Britain has takenissue with immigration for several years. journalists and reporters have seenincreased attacks on EU migrants and minorities in record number, and itappears that this problem has only increased subsequent to Brexit (Goodwin& Milazzo, 2017). supercharge to the violence and anti-immigrant sentiment, theanger and xenophobia against immigrants are expected to become more intense(Goodwin & Milazzo, 2017). Inconsidering the other side of the argument, Marshalls theory may not be as relevantto the year 2017 due to the fact that Marshalls t heory focused on the exerciseof political power and voter turnout for Brexit was low (Goodwin & Heath,2016). Marshall noted that citizens exercise participation of political powerby voting, and if citizens do not exercise this right, they cannot be said tobe involved in the political process. Arguably, a lack of participation pointsto apathy or hopelessness. Marshall argued that citizenship is a statusbestowed on all those who are unspoilt members of a community. (Marshall,195028). Such members carry out their responsibilities by voting andcompleting civic obligations. On the other hand, Banks (2008) theory oncitizenship which is still evident in todays society is similar to Marshallsnotion of citizenship as Banks rejects assimilation, arguing that citizenshipshould reflect diverse cultures and languages. Further, diverse groups rightscan aid individuals in attaining structural equality.Education ReformEducationreform has been a hot button issue for the past 20 years (Torres, 1998) .Education reform and citizenship are interrelated concepts due to the fact thatcitizens exercise their rights to vote on education. Education is not only ahuman right, but it is a concept that is at the forefront of the electorate.While some authors note that the discussion of schools in the UK remainmarginal to the policy process or they are heard minimally through teachingunions (Bowe, Ball, & Gold, 2017), the consensus is that educational reformis an important campaigning point, and this is acknowledged by politicalpundits.Anotherreason why education reform and citizenship are link is because the socialdivision of labour and educational systems are connected. This is in line withMarshalls theory on citizenship due to the fact that discussions oneducational reform have centred around schools and their ability to reduce thedivision of labour and lessen existing inequality (Apple, 2017).The UKs Housing CrisisThecurrent lodgement crisis in the UK is another issue that is related t ocitizenship, due to the fact that it is a social phenomenon that the electorateholds a stake in. The housing crisis also exacerbates inequality, andinequality is a fundamental educational activity of citizenship, as noted by Marshall.Thehousing crisis in the UK is a problem that began after World War II (Gurran& Whitehead, 2011). Post-war planning legislation was instated in secernate toensure that there was adequate supply of housing land, but much of thelegislation failed to account to for Britains growing population (Gurran &Whitehead, 2011). Since the passing of such legislation, there has been awidening gap between housing demand and supply in the UK, leading to thehousing crisis (Gurran & Whitehead, 2011). The question of whetherMarshalls theory on citizenship pertains to todays housing crisis in the UK,rests on government intervention. While Marshall was largely against stateintervention in some respects, Marshall back up the state using its power foreducation and basic a ssistance (Marshall, 1950). Proponents of improved andaffordable housing conditions suggest that the government should vigorously beinvolved in the planning process and provide adequate housing provisions forlow-income households (Gurran & Whitehead, 2011). While Conservativesbelieve that the private market should be able to balance development and theinterests of the UK citizens, Liberals believe that state intervention willprovide equitable and socially beneficial forms of housing for those that aremost in need (Gurran & Whitehead, 2011). Gurran and Whitehead (2011) arguethat state intervention is the only solution that will ease the housing crisisdue to the fact that less land will be available for activities that generate prejudicial externalities, resulting in higher housing prices, whilst more landwill be available for uses that include greater social benefit. Stone (2006)also notes that affordable housing is a social issue that must take account ofcurrent incomes in the UK. A ffordable housing can mean subsidised housing andliveable housing conditions (Stone, 2006). Thus, Marshalls theory wouldinclude support for affordable housing, given the inequalities that exist inthe housing shortage.FeminismAsfeminism has gained move in the last 20 years, so has the quest for equality(Brooks, 1997). Postmodern feminism and citizenship moves beyond the mainlywhite, male, middle-class perspective that much of history has been found on. Further,the absence of gender causes problems for understanding citizenship (Walby,1994). Walby (1994) argues that discussions on citizenship must consider theways in which gender can be integrated into citizenship (Walby, 1994). Thus,citizenship must consider a dynamic theory of gender relations and politicalcitizenship that destabilises patriarchy and restores equal citizenship (Walby,1994).Somescholars note that Marshalls theory of citizenship is not applicable todaybased on Marshalls linear view on citizenship. These scholars arg ue thatMarshalls perspective on citizenship is that of a white, heterosexual male,and that it does not take account of minorities, women, lesbians, orhomosexuals (Turner, 2009).Lister(2003) notes that active citizenship can be accomplished by questioning deeplyentrenched dichotomies and understanding the more imperious forms of active citizenshipwhich are dominated by political agendas. The other way that active citizenshipcan be accomplished is by refusing to accept unfounded definitions andconstructions of insiders and outsiders in relation to individual rights oncitizenship, and this requires a deep regard for gender equality.Postmodernistfeminist also allows issues of child care, education, and work-life balance tobe considered as a matter of both genders, despite those issues beingconsidered as female issues. Lister (2003) has allowed poor gendered versionsof citizenship to be questioned, which is what Marshalls theory on citizenshipfails to do.ConclusionWhile Marshalls theory on citizenship focused mainlyon the free market, Marshall also considered with the inequalities that camewith citizenship. On this end, Marshalls theory is still applicable to Britainin the year 2017, due to the fact that inequalities linked to citizenship stillexist in Britain. The housing crisis has also demonstrated the applicability ofMarshalls theory. Brexit has demonstrated that there is anti-immigrantsentiment, despite the fact that the selling point for joining the EU was thefree movement of people and goods. The one area that Marshalls theory oncitizenship may not apply to, is feminism.In regards to gender and inequality, the negativehistorical treatment of poor women on welfare have clouted public discourse(Shelley & Gavigan, 2004) on the real social welfare issues. Thecriminalisation of poverty in Britain raises theoretical questions on theregulation and control of Britains welfare state. Thus, Marshalls theory oncitizenship fails on this particular point due to the fact that Marshallsperspective considers that of the white male, while largely ignoring women andtheir struggle and position as second-class citizens. As citizenshiphas re-emerged as an issue which is central to political concerns regarding healthcare,education, and social security (Turner, 1990), it must also consider the fightfor equality and feminism- otherwise, citizenship is not truly considered inits totality.BibliographyApple, M.W. 2017. Cultural and Economic Reproduction inEducation Essays on Class, Ideology, and the State (London Routledge).Banks, J.A.2008.Diversity, Group Identity, and Citizenship Education in a international Age. Educational Researcher, 37(3), 129-139.Bowe, R., Ball, S.J., Gold, A. 2017. Reforming Education and Changing SchoolsCase Studies in Policy Sociology (UK Routledge).Brooks, A. 1997. Postfeminisms Feminism, Cultural Theory andCultural Forms (NY Routledge).Bulmer, M., & Rees, A.M.1996. Citizenship Today The ContemporaryRelevance of T.H. Marshall. (Lond on Routledge).Chunn, E.D., & Gavigan,S.A.M. 2004. Welfare Law, Welfare Fraud, and the moral Regulation of the NeverDeserving Poor. Social & LegalStudies, 13(2), 219-243.Counts, G.S. 1978. Dare the School Build a New Social Order?(London Southern Illinois University Press).Faulks, K. 1998. Citizenship in unexampled Britain(Edinburgh Edinburgh University Press).Trades Union Congress.2013. Support for benefit cuts dependent on ignorance, TUC-commissioned pollfinds. Accessed 5 May 2017. Available from https//www.tuc.org.uk/social-issues/child-poverty/welfare-and-benefits/tax-credits/support-benefit-cuts-dependentGoodwin, M., &Heath, O. 2016. The 2016 Referendum, Brexit and the Left Behind AnAggregate-level Analysis of the Result. ThePolitical Quarterly, 87(3).Goodwin, M., &Milazzo, C. 2017. Taking tooshie Control? Investigating the role of Immigrationin the 2016 vote for Brexit. BritishJournal of Politics and International Relations.Gurran, N., &Whitehead, C. 2011. Planning and Afford able Housing in Australia and the UK AComparative Perspective. Housing Studies,26(7-8).Jones, H., Gunaratnam,Y., Bhattacharyya, G., Davies, W., Dhaliwal, S., Forkert, K., Jackson, E.,& Saltus, R. 2017. ImmigrationControversies and Performative Politics. (UK Oxford University Press).Kymlicka, W., & Norman, W. 1994. Return ofthe Citizen A Survey of Recent Work on Citizenship Theory. An International Journal of Social,Political, and Legal Philosophy, 104(2).Lister, R. 2003. Citizenship Feminist Perspectives. 2ndEdition, (Basingstoke Palgrave Macmillan).Mann, M. 1987. notion Class Strategies andCitizenship. Sociology, 21(3).Marshall, T.H. 2005.Developing the Global Gaze in Citizenship Education Exploring the Perspectivesof Global Education NGO Workers in England.International Journal of Citizenship and Teacher Education, 1(2), 76-91.Marshall, T.H. 2009. Inequality and Society, alter by JeffManza and Michael Sauder (NY W.W. Norton and Co.)McKee, M., & Galsworthy, M.J. 2016. BrexitA Con fused Concept that threatens Public Health. Journal of Public Health, 38(1), 3-5.McLaughlin, E. 2000. New Managerialism, New Welfare? Eds.John Clarke, Sharon Gewirtz. (London Sage).Powell, M. 2000. New Labour and the third wayin the British welfare state a new distinctive approach? small Social Policy, 20(1)Rosenstone, S.J. 1982. Economic Adversity andVoter Turnout. American Journal ofPolitical Science, 26(1), 25-46.Stone, M.E. 2006. What is HousingAffordability? The Case for the Residual Income Approach. Housing Policy Debate, 17(1), 151-184.Torres, C.A. 1998. Democracy, Education, andMulticulturalism Dilemmas of Citizenship in a Global World. Comparative Education Review, 42(4),421-447.Turner, B.S. 1990. Outline of a Theory ofCitizenship. Sociology, 24(2).Turner, B.S., & Hamilton, P. 1990. Citizenship Critical Concepts, Volume1. (London Routledge).Turner, B.S. 1997. Citizenship Studies AGeneral Theory. Citizenship Studies,1(1). 5-18.Turner, B.S. 2009. T.H. Marshall, social rights and English national identity. CitizenshipStudies, 13(1), 65-73.Walby, S. 1994. IsCitizenship Gendered? Sociology, 28(2),379-395.Yuan, L., & Powell,S. 2013. MOOCs and Open EducationImplications for Higher Education, AWhite Paper. (UK Centre for Educational Technology & InteroperabilityStandards).

Managing Foreign Exchange Risk in International Trade

Managing Foreign deputise Risk in Inter discipline TradeMANAGING FOREIGN EXCHANGE RISK IN world-wide TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIESAbstractThe purpose of this research is to investigate how international vocation companies in the East Midlands manage strange veer encounter.This study utilises descriptive statistics in presenting and analysing data from the primary research.The findings of the research indicate that a majority of the truehearteds used broad business st arraygies in managing their inappropriate re-sentencing put on the line. The master(prenominal) problems the trues had with managing contrary shift endangerments centred on customer retention and receiving payments on time. The results to a fault indicate that there were a few squiffys which took an integ sum upd improvement to mitigating outside(prenominal) transmute run a risk.This research is of value to unassailables knobbed in international mete out and overly business develo pment agencies which seek to assist levels which argon grooming to enter or atomic number 18 already operational in conflicting craftinesss.Chapter 1IntroductionInternational cover involves exporting and importing of goods or service across alien borders and, as soon as a unwaveringly engages in import and/or export it is exposed to numerous risks. As a result watertights direct outside their home country, fork over to cumulus with the scotch conditions of the immaterial country in which it wishes to ope respect in. One of the sepa come out issues watertights knotty in import and/ or export atomic number 18 faced with is compensateing with immaterial coin in as this is the only means by which the step in of goods or function is facilitated. To this end it is import to study and understand the impact which hostile cash has on international trade.Following the demise of the Bretton Woods compact (1971) whereby deputise rank were allowed to float freely, managing overseas supplant has run low important (Heakel, 2009). Consequently the footings of currencies were determined by grocery store forces that is, demand for and supply of m integrityy (Mastry and Salam, 2007). payable to the constant changes in demand and supply which be in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms argon exposed to exotic put back risks also known as currency risks. Firms trading in distinct currencies are exposed to three types of contrary rallying risks sparing, transaction and translational risk (Czinkota et al, 2009). Firms which are composite in international trade are exposed to economic and transaction risks as they both pose strength threats to the firms m acey flow over time (Czinkota et al, 2009). Studies pretend shown that distant alternate fluctuations stand affect the value of a firms hard cash flow over time (Aretz, Bartram and Dufey, 2007 , Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). to a greater extent so, domestic firms although not dealing with unusual currency are also affected by foreign transfer fluctuations as the terms of the good they trade in are also affected (Abor, 2005).Most of the extant belles-lettress sustain focused on corpo localise risk management for pecuniary firms and as much(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) m geniustary hedgerow with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms knobbed in international trade, these methods of managing foreign exchange risks involve st postgic and operational risk management. still most of these studies bedevil been carried out in isolation financial hedgerow techniques carried out in isolation of strategic and operational hedging methods and vice vers a. Little has been d unrivaled to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literary worksPurpose of the explore collectible to the disposition of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks. seek QuestionsConsequently the research hopes to answer the following questionsDo import and export firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage th eir foreign exchange risks? What problems they encounter with managing these risks?Definition of Key TermsHedgeA skirt frameation be defined as making an investment to reduce the risk of ominous price movements in an asset. Investors use this strategy when they are incertain of what the food securities industry pass on do (Investopedia, 2010).DerivativesDerivatives are instruments whose achievement is derived from an underlying asset (Arnold, 2002)Spot RateThe spot rate is defined as the rate of exchange quoted immediately if procureing or selling currency (Watson and Head)International TradeThis involves the flow of goods and operate amongst nations it involves import and/ export of goods and operate (Harrison et al, 2000)The subsequent atomalisation provides a break down of how rest of the research is set out.Chapter 2 Literature Review this chapter provides an overview of the research topic by mapping out the tombstone areas theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is thus narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks which include the types of foreign exchange pictures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic.Chapter 3 Research Methodology in this chapter the research design and strategy are discussed.Chapter 4 Research Findings and Analysis this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader accomplish a clearer understanding. An analysis of the findings is carried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences.Chapter 5 Conclusion and Recommendation this chapter concludes the research and recommendations are made.Chapter 2 Literature Review2.1 Risk Management-Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such(prenominal)(prenominal) as political, economic and social conditions risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of dominance returns. It can also be defined as the chance that the actual return from an investment pull up stakes be dis corresponding than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a invalidating connotation. Markowitz was one of the earliest academics to point this out, by establishing a link amongst risks and return (risk-return tr ade-off). Essentially the theory Modern Portfolio Theory (MPT) involves expected return and the horizontal surface of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts the higher the potential for increased returns (Yorke and Droussiotis, 1994).While MPT purports a lordly correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as the public presentation of activities designed to minimize the banish impact (cost) of uncertainty (risk) regarding possible losses (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies a introducest financi al loss thereby protecting the value of the firm, tralatitious finance theory such as that proposed by Modigliani and Miller suggests that the merchandise value of a firm is determined by it earning power (Arnold, 2002). The basic arrogance of Modigliani and Miller theorem is that in an efficient market place with the absence of taxation, bankruptcy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). nonetheless empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a devoted level of risk by diversifying their investments across a range of assets ((McClure, 2006).MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the view of not putting all of ones eggs into one basket.2.2 Types of RiskThere are two broad classification of risks Unsystematic and self-opinionated (Rossi and Laham, 208) self-opinionated risks refers to risks which affect the entire market due to events such as exchange rate movements, changes in the price of commodities, war, recession and interest place, howeverUnsystematic risks are risks which are specific to individual companies (reference).These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management dress through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks about depends on other underlying factors and that the relationships are dynamic. They further order that major events such as planetary uncomely movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the akin, that is they are more a like(p)ly to more generate confirmingly correlated, moving down at the kindred time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008).However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no symmetry on the risk -return relationship amongst previous studies which had used data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But thence it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a sturdy factor which has to be dealt with.2.3 Foreign Exchange rate as a Systematic RiskBackgroundForeign Exchange rate can be defined as the price of one currency expressed in terms of another (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is 1.3 = 1.00, this means that 1 is equivalent to 1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one section or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The obtainers and sellers of foreign currencies include exporters/importers tourists fund managers governments central banks speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an take in charge to make a profit by speculating on future movements of exchange evaluate (Arnold, 2002).Foreign Exchange RiskAfter the demise of the Bretton woods conference (1973) exchange range were allowed to float freely exchange rates were no yearner fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the risk that an entity will be bringd to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made (Abor, p.3, 2005).Thus considering the potential variability of Forex and the impact it can have on international investments and internat ional business, irrespective of the business sector, it is clear that Foreign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market.Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in piece 2.72.4 Types of Foreign Exchange ExposureThere are three types of foreign exchange risks or impressions Economic exposure, doing exposure and Translational exposure (Maurer and Valiani, 2002). action exposure is the risk that arises as a result of an existing tweetual agreement involving a commitment in foreign currency, this sort of risk is in the briny associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US will have an agre ement ( take away) that the US firm buying the goods will pay for the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an esteem or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (Arnold, 2002)Translational exposure relates to a firms earnings it involves a firms accounting works (Waston and Head, 2007). This risk arises from the legal solicitment that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide trading operations an nually (Czinkota et al, p. 334, 2009). This implies that, as firms rede and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007).Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency advises and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency cargo area (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or good on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a connatural exchange rate against Hong Kong Dollar.Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on.2.5 Foreign Exchange Risk and Natural HedgingThe nous of applying natural he dging strategies as tools to hedge foreign exchange exposure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below.NettingThis technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit art object the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00 (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised manag ement system to reduce the size of the currency flows. Consequently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002).Leading and LaggingThis technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit percentage point allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either jimmy or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments.Invoicing in the Domestic CurrencyThis method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer).Operational and Strategic Metho dsThere is no one singular acceptable definition of operational hedging as it varies match to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in exercise methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this understructure operational hedging can be described consort to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the location of their production facilities, sourcing of inputs, the temperament and scope of products, strategic financial decisions such as the currency denomination of debt, the firms survival of markets and market segments (Bradley and M oles p.29, 2002).It involves the use of non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004).2.6 Hedging with Financial DerivativesThe different types of financial derivatives are Forwards and Futures, Foreign currency Options and Currency Swaps.Forward curve This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example tending(p) by Horcher and Karen (p.95, 2005) illustrate the concept further a company requires 100 million Japanese wa ste in three months to pay for imported products. The live spot exchange rate is 115.00 smart per U.S. dollar, and the forward rate is 114.50. The company books a forward read to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than stream market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more expensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty.Futures Contract A futures contract refers to an agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a pri ce agreed between two parties (Watson and Head, 2007). Although it bears some similarities to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies slice the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006).Foreign currency Options This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option grant is required (Watson and Head, 2007).Currency Swaps A currency swap is an agreement between two parties to exchange principal and interest payments i n different currencies over a stated time detail (Watson and Hedge, p. 382, 2007). Basically what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007).2.7 A review of Literature on hedgingThis section critically examines the rationale for hedging foreign exchange risk.The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in popular is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a subsidy to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008).Essentially finance theory states that shareholders are diversified term managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham).In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements the Law of one price (LOP)/ purchasing power pa rity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrina and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009). legion(predicate) studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the armorial bearing of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). more(prenominal) so, that market segmentation also leads to price differentiation (Engel and Rogers, 1996).This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attacking to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the stand of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007 Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be concern about hedging as these imperfections in the market can affec t the cash flow, profit and ultimately the overall value of the firm. Thus in the kindred vain PPP should not hold.In regards to PPP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the alike across different borders.So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk.2.8 Review of literature on financial derivatives and operational StrategiesThe extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the stagecoach of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, part instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all that needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the fictile nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures.Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is tractile and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it.In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that large firms have numerous resources available to them in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives.On the other hand Kim and Sung (2005),Managing Foreign Exchange Risk in International TradeManaging Foreign Exchange Risk in International TradeMANAGING FOREIGN EXCHANGE RISK IN outside(a) TRADE WITH A FOCUS ON EAST MIDLANDS COMPANIESAbstractThe purpose of this research is to investigate how international trade companies in the East Midlands manage foreign exchange risk.This study utilises descriptive statistics in presenting and analysing data from the primary research.The findings of the research indicate that a majority of the firms used broad business strategies in managing their foreign exchange risk. The main problems the firms had with managing foreign exchange risks centred on customer retention and receiving payments on time. The results also indicate that there were a few firms which took an integrated approach path to mitigating foreign exchange risk.This research is of value to firms involved in international trade and also business development agencies which seek to assist firms which are homework to enter or are already operating in foreign markets.Chapter 1IntroductionInternational trade involves exporting and importing of goods or services across foreign borders and, as soon as a firm engages in import and/or export it is exposed to numerous risks. As a result firms operating outside their home country, have to deal with the economic conditions of the foreign country in which it wishes to operate in. One of the key issues firms involved in import and/ or export are faced with is dealing wi th foreign currency as this is the only means by which the exchange of goods or services is facilitated. To this end it is import to study and understand the impact which foreign currency has on international trade.Following the demise of the Bretton Woods agreement (1971) whereby exchange rates were allowed to float freely, managing foreign exchange has become important (Heakel, 2009). Consequently the prices of currencies were determined by market forces that is, demand for and supply of money (Mastry and Salam, 2007). Due to the constant changes in demand and supply which are in turn influenced by other external factors, fluctuations arise (Czinkota et al, 2009). As a result of these fluctuations firms are exposed to foreign exchange risks also known as currency risks. Firms trading in different currencies are exposed to three types of foreign exchange risks economic, transaction and translational risk (Czinkota et al, 2009). Firms which are involved in international trade are ex posed to economic and transaction risks as they both pose potential threats to the firms cash flow over time (Czinkota et al, 2009). Studies have shown that foreign exchange fluctuations can affect the value of a firms cash flow over time (Aretz, Bartram and Dufey, 2007, Judge, 2004, Bradley and Moles 2002, Allayannis and Ofek 1998, Chowdhry, 1995, Damant, 2002 and Wong 2001). More so, domestic firms although not dealing with foreign currency are also affected by foreign exchange fluctuations as the price of the commodity they trade in are also affected (Abor, 2005).Most of the extant literatures have focused on corporate risk management for financial firms and as such financial hedging with derivatives has been the central theme of currency risk management. On the other hand there has been evidence to show alternative methods exist for firms involved in international trade, these methods of managing foreign exchange risks involve strategic and operational risk management.However mo st of these studies have been carried out in isolation financial hedging techniques carried out in isolation of strategic and operational hedging methods and vice versa. Little has been done to provide an integrated perspective, on utilising both techniques of managing foreign exchange risks with regards to international trade firms. This is the area in which the present study intends to explore thereby contributing to the overall literaturePurpose of the ResearchDue to the nature of international trade which expose the firm to foreign exchange movements, thus subjecting the firm to currency risks, the purpose of this research is to explore how international trade firms deal with foreign exchange risk. The research focuses how import and export firms in the East Midlands manage their foreign exchange risk. This study also aims to explore the problems involved in managing those risks.Research QuestionsConsequently the research hopes to answer the following questionsDo import and expo rt firms in the East Midlands actually manage their foreign exchange rate risks? How import and export companies in the East Midlands manage their foreign exchange risks? What problems they encounter with managing these risks?Definition of Key TermsHedgeA hedge can be defined as making an investment to reduce the risk of adverse price movements in an asset. Investors use this strategy when they are timid of what the market will do (Investopedia, 2010).DerivativesDerivatives are instruments whose performance is derived from an underlying asset (Arnold, 2002)Spot RateThe spot rate is defined as the rate of exchange quoted immediately if buying or selling currency (Watson and Head)International TradeThis involves the flow of goods and services between nations it involves import and/ export of goods and services (Harrison et al, 2000)The subsequent section provides a break down of how rest of the research is set out.Chapter 2 Literature Review this chapter provides an overview of the r esearch topic by mapping out the key areas theories within the risk management and finance literature are identified, explored and analysed. The concept of risk and risk management is explored. A broad classification is made on the types of risks and this is then narrowed down to include foreign exchange risk. The chapter proceeds by exploring the concept of foreign exchange and foreign exchange risks which include the types of foreign exchange exposures. The common techniques for managing foreign exchange risks are explored. This is followed by a review of relevant literature in the key areas of the research topic.Chapter 3 Research Methodology in this chapter the research design and strategy are discussed.Chapter 4 Research Findings and Analysis this chapter presents the findings of the research which were obtained from the questionnaire. The findings are presented using tables, graphs and charts, to enable the reader gain a clearer understanding. An analysis of the findings is ca rried out by cross-tabulating the responses of the respondent in order to observe for any commonalities and/or differences.Chapter 5 Conclusion and Recommendation this chapter concludes the research and recommendations are made.Chapter 2 Literature Review2.1 Risk Management-Risk is an intrinsic part of any business, due to unpredictability of the forces which govern business transactions such as political, economic and social conditions risk is a factor which cannot be completely eliminated (Watson and Head, 2007). Arnold (2002) describes risk as a situation where there is more than just one possible outcome, but a range of potential returns. It can also be defined as the chance that the actual return from an investment will be different than expected (Lamb, 2008). From the above definitions, risk does not necessarily spell doom or does not necessarily have a negative connotation. Markowitz was one of the earliest academics to point this out, by establishing a link between risks and return (risk-return trade-off). Essentially the theory Modern Portfolio Theory (MPT) involves expected return and the degree of accompanying risk for an investment (Yorke and Droussiotis, 1994). A central theme of this theory is that the greater risk an investor accepts the higher the potential for increased returns (Yorke and Droussiotis, 1994).While MPT purports a positive correlation between risk and return, the fact that an investment can have a range of possible outcomes is an uncertainty which can be very costly. As a result risk management is also a part and parcel of business. Risk management can be defined as the performance of activities designed to minimize the negative impact (cost) of uncertainty (risk) regarding possible losses (Abor, p.307, 2005). The objectives of risk management are to minimize potential losses, reduce volatility of cash flow thereby protecting earnings (Abor, 2005). While the objective for risk management is to protect companies against financial loss thereby protecting the value of the firm, traditionalistic finance theory such as that proposed by Modigliani and Miller suggests that the market value of a firm is determined by it earning power (Arnold, 2002). The basic boldness of Modigliani and Miller theorem is that in an efficient market with the absence of taxation, bankruptcy costs and information asymmetry, the value of the firm is unaffected by its capital structure (Arnold, 2002). However empirical research (list authors) has shown the existence of capital market imperfections, such as taxes, agency problems and financial distress exists thus justifying risk management (Chowdhry, 1995). Furthermore, MPT also suggests that the risk and volatility of an investment portfolio can be reduced, and the gains can be enhanced, all by diversifying the portfolio among several non-correlated assets (Pearce Financial, 2008). That is, investors can maximise their expected return for a given level of risk by diversifying their in vestments across a range of assets ((McClure, 2006).MPT involves risk management through diversification of investments. In a simplified expression, MPT is based on the idea of not putting all of ones eggs into one basket.2.2 Types of RiskThere are two broad classification of risks Unsystematic and Systematic (Rossi and Laham, 208)Systematic risks refers to risks which affect the entire market due to events such as exchange rate movements, changes in the price of commodities, war, recession and interest rates, howeverUnsystematic risks are risks which are specific to individual companies (reference).These distinctions were made by Sharpe (1960) in addition to Markowitz Modern Portfolio theory (MPT), the rationale behind it was that despite risk management practise through diversification, there were still underlying factors which affected the return potential of an investment portfolio. Chesnay Jondeau (2001) clearly point out that the correlation of assets which Markowitz talks ab out depends on other underlying factors and that the relationships are dynamic. They further found that major events such as general adverse movements in markets can significantly change the correlations between assets (Chesnay Jondeau, 2001). Empirical studies show that in financial crisis, assets tends to act the same, that is they are more likely to more become positively correlated, moving down at the same time (Ardelean, Brandt and Malik, 2009). Essentially, severe market crises will have a spill over effect and cause investments in several different asset classes or markets to succumb to sudden liquidation (Vocke and Wilde, 2000, Pearce Financial, 2008).However findings from Xing and Howe (2003) are contradictory, their findings show that the failure of previous studies to find a positive risk-return relationship may be as a result of model misspecification. Essentially they found that there was no agreement on the risk-return relationship amongst previous studies which had u sed data from one market (Xing and Howe, 2003). Thus they argued that the world market should be taken into consideration in assessing risk return-relationship in a partially integrated market (Xing and Howe, 2003). But then it only stands to reason that if markets are integrated partially or wholly, a catastrophic economic cycle such as financial crises would have an adverse effect on the world market. Thus clearly it does not matter how much one diversifies unsystematic risk, the underlying systematic risk is a tough factor which has to be dealt with.2.3 Foreign Exchange rate as a Systematic RiskBackgroundForeign Exchange rate can be defined as the price of one currency expressed in terms of another (Arnold, p.973, 2002). For example, if the exchange rate exchange rate between the European Euro and the Pound is 1.3 = 1.00, this means that 1 is equivalent to 1.3. Foreign Exchange (Forex) is traded on the foreign exchange market, the purpose of which is to facilitate trade and the exchange of currencies between countries (Czinkota et al, 2009). The Forex market is an informal market which does not have a central trading place (Czinkota et al, 2009). Trade is carried out it is a 24 hour market as it involves financial institutions from around the globe, as trade moves from one financial centre to another (Arnold, 2002). Thus as one market closes in one field or continent another opens in a different place (Arnold, 2002). The major trading centres are in Tokyo, Singapore, London and New York (Waston and Head, 2007). The buyers and sellers of foreign currencies include exporters/importers tourists fund managers governments central banks speculators and commercial banks (Arnold, 2002). However large commercial banks account for a larger percentage of Forex trading in the currency markets, as they deal currencies on behalf of customers (Arnold, 2002). They also undertake transactions of their own in an attempt to make a profit by speculating on future movements of exchange rates (Arnold, 2002).Foreign Exchange RiskAfter the demise of the Bretton woods conference (1973) exchange rates were allowed to float freely exchange rates were no womb-to-tomb fixed and currencies were allowed to float freely in value to each other (Czinkota et al, 2009). However freely floating exchange rate poses problems for investors and firms alike who deal with different currencies as the uncertainty of exchange rate movements can have a positive or negative impact on an investment (Czinkota et al, 2009). Foreign exchange risk also known as currency risk is the risk that an entity will be required to pay more (or less) than expected as a result of fluctuations in the exchange rate between its currency and the foreign currency in which payment must be made (Abor, p.3, 2005).Thus considering the potential variability of Forex and the impact it can have on international investments and international business, irrespective of the business sector, it is clear that Fo reign exchange risks can be classed as systematic risks. Forex risk is an un-diversifiable risk as it affects the entire market.Having established the relationship between Forex and systematic risk and understanding that it cannot be diversified the question which presents itself is, what can be done about it? Theory states that the only way out is to hedge this risk (Bartram, 2007), the decision to hedge will be examined in constituent 2.72.4 Types of Foreign Exchange ExposureThere are three types of foreign exchange risks or exposures Economic exposure, Transaction exposure and Translational exposure (Maurer and Valiani, 2002).Transaction exposure is the risk that arises as a result of an existing contractual agreement involving a commitment in foreign currency, this sort of risk is primarily associated with import or exports (Arnold, 2002). For example a firm which exports goods from the UK to the US will have an agreement (contract) that the US firm buying the goods will pay fo r the goods at a later date (could be 30, 60 or 90 days), however changes in the exchange rates to either currency (whether an appreciation or depreciation) will either positive or negative consequences for either firms. Transaction risks also come as a result of firms making foreign investments such as opening subsidiary branches (Arnold, 2002). These risks arise in the form of payment costs associated with constructing or establishing new branches (Arnold, 2002). In order to make the necessary payments, the home-based firm would exchange its home currency for foreign currency, thereby giving rise to potential transaction risk (Arnold, 2002)Translational exposure relates to a firms earnings it involves a firms accounting practises (Waston and Head, 2007). This risk arises from the legal requirement that all firms consolidate their financial statement (balance sheet and income statement) of all worldwide operations annually (Czinkota et al, p. 334, 2009). This implies that, as firms understand and consolidate foreign assets, liabilities and profits into domestic currency, there is the possibility of the firm experiencing a loss or gain (Waston and Head, 2007). This is mainly an accounting risk and as such give a real indication of the impact of exchange rate fluctuations on the value of a firm (Watson and Head, 2007).Economic exposure impacts a firms long-term cash flow, positively or negatively (Czinkota et al, 2009). This kind of risk not only affects firms involved in international trade but also has an impact on domestic firms as it can also affect the price of commodities sold (Czinkota et al, 2009). Furthermore, this sort of risk also undermines the competitiveness of a firm (Arnold, 2002). It can affect the firms competitive position directly if the home currency appreciates and foreign competitors are able to offer a much cheaper price, compared to the firms products which have become expensive as a result of the currency appreciation (Arnold, 2002). Economic risk can also affect a firms competitive position indirectly even if a firms home currency does not experience adverse movements (Arnold, 2002). For example Arnold (2002) illustrate that a South African firm selling in Hong Kong with a New Zealand firm as its main competitor can lose competitive edge if the New Zealand dollar weakens against the Hong dollar. Thus the products or commodity on offer by the New Zealand firm would be cheaper than that of the South African firm assuming both currencies (South African Rand and New Zealand Dollar) had a similar exchange rate against Hong Kong Dollar.Economic and transaction risk are more related to businesses involved in international trade, translational exposure more to do with accounting practises (Waston and Head, 2007). Consequently these are the foreign exchange exposure that will be focused on.2.5 Foreign Exchange Risk and Natural HedgingThe idea of applying natural hedging strategies as tools to hedge foreign exchange expo sure is one that has received a lot of attention in recent times, as the concept focuses on using non-financial methods to mitigate the volatility of future cash flows and possibly add value to the firm (Kim et al, 2006). The various natural hedging strategies are explained below.NettingThis technique relates to multi-nationals which have foreign subsidiaries, it involves reducing funds transferred by netting off the transaction between the parent company and the subsidiary firm (Watson and Head, 2007). For example if a UK parent owed a subsidiary in Canada and sold C$2.2m of goods to the subsidiary on credit while the Canadian subsidiary is owed C$1.5m by the UK company, instead of transferring a total of C$3.7m the intra-group transfer is the net amount of C$700,00 (Arnold, p. 982, 2002). This implies that rather than both the parent and subsidiary firm managing their exposure separately they opt for a centralised management system to reduce the size of the currency flows. Consequ ently transaction costs and the cost of purchasing foreign exchange are mitigated (Arnold, 2002).Leading and LaggingThis technique involves either settling foreign accounts by either postponing payments (lagging) till the end of the credit period allowed or prepayment (leading) at the beginning of the transaction (Watson and Head, 2007). It functions based on the anticipation a firm has that future exchange rates will either appreciate or depreciate (Czinkota, 2009). Thus if a firm anticipated a depreciation in its home currency, it lead its payments conversely if the firm anticipated an appreciation in exchange rate it would lag its payments.Invoicing in the Domestic CurrencyThis method involves invoicing foreign customers in the firms domestic currency rather than in the foreign currency (Arnold, 2002). What this does is that it shifts the burden of risk to the foreign firm (buyer).Operational and Strategic MethodsThere is no one singular acceptable definition of operational hedgi ng as it varies according to the context it is been used. Boyabatli and Toktay (2004) in their work, review and discuss a diverse cross section of views on operational hedging, they delve into the similarities in lotion methods of operational hedging across different academic fields. They discovered that although there were some differences in meaning in various academic fields operations management, finance, strategy and international business, there were basic characteristics which were similar across all fields. On this basis operational hedging can be described according to its functionality. Bradley and Moles describe it as the decisions firms take in regards to the location of their production facilities, sourcing of inputs, the nature and scope of products, strategic financial decisions such as the currency denomination of debt, the firms choice of markets and market segments (Bradley and Moles p.29, 2002).It involves the use of non-financial methods to mitigate the volatil ity of future cash flows and possibly add value to the firm (Kim et al, 2006). The objective is geared towards reducing long-term economic exposures. Operational hedging can be said to be based on the principle of real options. Real options are opportunities to delay and adjust investments and operating decisions over time in response to resolution of uncertainty (Triantis 2000 cited in Boyabatli and Toktay p.6, 2004).2.6 Hedging with Financial DerivativesThe different types of financial derivatives are Forwards and Futures, Foreign currency Options and Currency Swaps.Forward contract This enables the business to protect itself from adverse movements in exchange rates by locking in an agreed exchange rate until the agreed date of payment (Brealey, Myers and Allen, 2006). The example given by Horcher and Karen (p.95, 2005) illustrate the concept further a company requires 100 million Japanese yen in three months to pay for imported products. The current spot exchange rate is 115.00 y en per U.S. dollar, and the forward rate is 114.50. The company books a forward contract to buy yen (sell U.S. dollars) in three months time at a price of 114.50 and orders its merchandise. In three months time, the company will use the contract to buy yen at 114.50. At that time, if yen is trading at 117.00 per U.S. dollar, the company will have locked in a price that, with the benefit of hindsight, is worse than current market prices. If three months later yen is at 112.00 per U.S. dollar, the company will have successfully protected itself against a more expensive yen. Regardless of price changes, the company has locked in its yen purchase price at the forward rate of 114.50, enabling it to budget its costs with certainty.Futures Contract A futures contract refers to an agreement to buy or sell a standard quantity of specified financial instrument or foreign currency at a future date at a price agreed between two parties (Watson and Head, 2007). Although it bears some similaritie s to the forward contract in that it also locks in the exchange rate, however one major difference is that a forward contract can be used in a wide range of currencies while the futures contract is applicable to a limited number of currencies (Brealey, Myers and Allen, 2006).Foreign currency Options This gives holders the right to purchase or sell foreign currency under an agreement that allows for the right but not the obligation to undertake the transaction at the agreed future date (Brealey, Myers and Allen, 2006). One key advantage of this method of hedging is that it gives holders the opportunity to take advantage of favourable exchange rate movements (Watson and Head, 2007). However a non-refundable fee on the option known as an option premium is required (Watson and Head, 2007).Currency Swaps A currency swap is an agreement between two parties to exchange principal and interest payments in different currencies over a stated time period (Watson and Hedge, p. 382, 2007). Basica lly what this implies is that a firm can gain the use of foreign currency but avoid exchange rate risk which may arise from servicing payments (Watson and Head, 2007).2.7 A review of Literature on hedgingThis section critically examines the rationale for hedging foreign exchange risk.The rationale which has been put forward for hedging risk in the existing literature (Judge, 2004) is that it maximises shareholder value. The idea behind hedging any kind of risk in general is that once a firm takes on the responsibility of actively managing risk, shareholder value is increased, thereby increasing the overall value of the firm (Judge, 2004). However finance theory proposes that shareholders are diversified and thus are not willing to pay a premium to firms for adopting hedging policies (Rossi and Laham, 2008). So in that vein, theory proposes that what is actually being maximized is the managers private utility (Tekavcic, Sernic and Spricic, 2008).Essentially finance theory states that shareholders are diversified while managers of firms are not, so in a bid to protect their income and personal asset, which are linked to the firm, they hedge against uncertainty (Baranoff and Brockett, 2008). Within this theory shareholders are willing to take on risk in exchange for greater returns (risk-return trade off) and so they invest in companies which they believe can provide such high returns. Thus managers hedging risks can be said to lead to underinvestment, which then flaws the theory of risk-return trade off (Baranoff and Brockett, 2008). This theory is based on the premise that financial markets are efficient and as such hedging activities of firm would not add value to the firm (Rossi and Laham).In addition to the complexities of the above theory, when the concept of hedging is put into the context of foreign exchange movements the Law of one price (LOP)/ purchasing power parity (PPP) suggests that identical goods are not affected by exchange rate variations (Hyrin a and Serletis, 2008). The law of one price is the foundation of the theory of PPP which posits that similar goods should have identical prices across countries once expressed in a common currency (Hyrina and Serletis, 2008, Czinkota et al, 2009).numerous studies have been carried out to test whether or not the theory holds, however there is no general consensus as to whether or not the theory is valid. Hyrina and Serletis (2009), Glen (1992), Choi, Laibson and Madrian (2006) found that there are some flaws within the theory as the real exchange rate is not stationary. Engel and Rogers (1996) examines the impact distance has on goods sold and whether the front of national borders separating locations were these goods are sold, also have any impact on the law of one price. Empirical evidence from the research shows distance and border have significant role to play on the differences in price of goods (Engel and Rogers, 1996). More so, that market segmentation also leads to price dif ferentiation (Engel and Rogers, 1996).This theory just like the first are both based on the principle that the market is efficient and as such inconsistencies such as movements in exchange rate even out in time (Zanna, 2009). Without attempting to disparage the above theories, in regards to the first theory, whether or not hedging is done to propagate the interests of managers, the fact is that, the basis of the theory (Efficient Market) is flawed as there are numerous empirical evidence (Nobile, 2007 Bartram, 2007, Allayannis and Ofek, 2003, Tekavcic et al 2008, Mastry, 2003) to suggest that there are imperfections in the financial market such as high interests rates, inflation, tax and of course foreign exchange movements which can affect a firm. Thus shareholders cannot afford not to be come to about hedging as these imperfections in the market can affect the cash flow, profit and ultimately the overall value of the firm. Thus in the same vain PPP should not hold.In regards to P PP it is necessary to indicate that there are other factors which affect the price of goods sold across national borders. Bradley (2005) states that the prices of goods for each firm are influenced by numerous factors such as Government policies, high inflation rates and corporate income tax and thus such prices of goods cannot be the same across different borders.So to state clearly the financial market is not efficient due to market imperfections. Thus movements in foreign exchange can affect the cash flow and overall value of the firm. Consequently it is necessary for firms to focus on how to manage this risk.2.8 Review of literature on financial derivatives and operational StrategiesThe extant literatures on hedging exchange rate risks with financial derivatives have focused on corporate risk management. The main thrust of literatures from authors such as Mastry (2003), Bartram et al (2003) and Galum and Roth (1993) have carried out studies which are aimed at finding the optimal financial derivative. However there is no general consensus as to an optimal financial hedging position. The reason for this can related to basic financial theory which suggests that derivative instruments should be chosen based on the degree of exposure of the firm and the payoff that can be gotten from the instrument (Bartram, 2006). Essentially what this implies instruments with linear characteristics such as forwards, futures and swaps should be used for linear exposures, while instruments with nonlinear profiles such as currency options are suitable to hedging nonlinear exposure (Stulz, 2003). Put simply the theory suggests that after firms assess the nature of its exposure, all that needs to be done is choose a derivative which matches that exposure. However, contrary to financial theory Bartram (2006), Ianieri (2009) found that as a result of the conciliative nature of options, options can be used to hedge various types of exposures and not just nonlinear exposures.Despite these findings, merely identifying the nature of exposure and matching it with a derivative is not enough. There are other factors which influence the decision on what derivatives to use besides the nature of exposure. For instance while an option is pliant and can be adapted to suit various types of exposures, it is also be a highly complex technical method to use. The problem with currency options is that they require highly skilled individuals who can understand and use it effectively. Ianieri (2009) states that even brokers who should know how to use this method have had bad experiences with it.In an alternative view, Masry and Salam (2007) in an attempt to understand the rationale for using financial derivatives found that the size of the firm impacts on a firms decision to use financial derivatives. A study conducted by Judge (2004) shows that there is a positive relationship between the size of the firm and the foreign currency hedging decision. The general idea is that larg e firms have numerous resources available to them in terms of personnel and information, and as such they are more likely to hedge using financial derivatives (Judge, 2004). So in essence the transaction costs which accompany the use of derivatives would discourage small firms from opting to hedge with financial derivatives.On the other hand Kim and Sung (2005),

The different types of video modeling

The different types of television system casting moving picture modeling is an evidence based workout used to teach a variety of favorablely relevant behaviors for children with Autism. Many times children with Autism are visual thinkers and learners. They learn best when information is presented to them visually earlier than orally. Using movie modeling, the children are provided with a visual model of a peer, adult, or themselves engaging in the targeted behavior they are expected to learn. After watching the image several times, the children are provided with an opportunity to imitate and generalize the behavior observed on the mental picture.A number of studies have shown that video modeling increases incline conversations between children with Autism and adults and peers. Since children with Autism struggle with social skills, it is beneficial to teach them to initiate frolic with others. Video modeling produces faster achievement of the behavior and greater generali zation in children with Autism than live modeling and without the use of reinforcements or prompting. Studies have confirmed that with video modeling, verbalization and play actions was maintained over time. Video modeling can be implemented from early childhood to adulthood and taught by professionals and parents in a variety of settings. It can be used in the classroom and at alkali by the parents to teach new skills the child needs to be successful.A benefit of using video modeling is that it allows for parents, teachers, and people collaborating with the child to use the analogous method to teach targeted skills. It is difficult to learn and master a skill if the child is practicing different ways with different people. Because children with Autism have difficulties generalizing it is important to work in concert to teach targeted skills the same way. Video modeling allows for caregivers to do this. By everyone working together the child can learn the initial skill quicker and then work on generalization systematically. The child will experience success when everyone is working together, using the same video, and teaching the same skill the same way. Video modeling procedures have been used successfully to teach a variety of adaptive behaviors such as social, play, self care, and academic skills.Types of Video Modeling there are several types of video modeling that are used with children with Autism. The most common types of video modeling include basic video modeling, video self-modeling, point-of-view video modeling, and video prompting. Basic modeling involves recording either an adult or a peer modeling the targeted skill. The child watches this video at a by and by time. Video self-modeling records the child with Autism displaying the targeted skill. The child then watches themselves in the video at a later time. The point-of-view video modeling shows a video recorded from the horizon of the child with Autism. Video prompting is used when teachin g a step by step skill. It is recorded by breaking the targeted skill into steps and pausing after steps to give the child with Autism an opportunity to practice each step. Many studies have found great success when combining models.ResearchA depicted object by Macdonald (2009) evaluated the effects of video modeling has in teaching children with Autism to engage in interactional pretend play with their peers without disabilities. The play included verbal interactions and accommodative play. The study consisted of two pairs of children, one with Autism and a peer without Autism. The pair was shown a video consisting of two adults acting out the sequence of pretend play. The children were directed to play and their responses, actions, and verbalizations were recorded. Both pairs demonstrated successful gains of play actions and increased verbalization between peers. The performance was maintained over time. The results of this study concluded that video modeling produced sequences of reciprocal pretend play between children with Autism and their peers without Autism. In this study, video modeling was an efficient strategy for teaching cooperative play. The appropriate play skills were gained with short exposure of the video and in the absence of reinforcements and prompting.A study conducted by Allen et al. (2010) examined the effects video modeling had on teaching vocational skills to four young men with Autism. The participants ages ranged from 16-25 years old. Video modeling was used to teach the four adolescents to wear a WalkAround Mascot costume and entertain the customers in a store. The video for the training showed a mascot performing in a scripted and naturalistic setting. The participants watched the video twice and were then taken to the store to imitate for 10 minutes the behavior seen in the video. check to the results of this study, all participants learned to use the vocational skills after watching the video model. The young men enjoyed th e experiment and reported they would be interested in continue to perform at the store when the experiment would be over. Allen (2010) states video modeling was an effective way to teach adolescents and young adults with ASDs to perform a vocational parturiency in a social setting.A study designed by Nikopoulos and Keenan (2007) was conducted to evaluate the effectiveness of video modeling on building sequences of social behaviors. The study included three boys with Autism from the ages of 6.5-7 years old. The boys were given common objects that included a ball, a table, two rags, a vacuum cleaner, a plant pot, and a jacket. These objects were selected because of familiarization and to avoid instructions of using the objects appropriately. The participants were shown the video and data was collected after 5 minutes by observing behaviors in the areas of social initiation, reciprocal play, imitative responses, and object engagement. The study data suggest that the participants wer e successful in building a sequence of social behaviors. All of the students performed the activities in the same sequence as presented in the video. The participants showed generalization crossways peers and the appropriate behaviors were maintained after the 2 month follow up period. Research proved that video modeling was successful for children with Autism in this study.In the presented studies, video modeling has proven to be effective on children and adolescent with Autism. Results from these studies have demonstrated success across different settings and with the application of different skills. The results have also indicated that video modeling teaches skills at a rapid pace and with short exposure to the videos.In conclusion, video modeling procedures have been used to successfully teach many types of skills and behaviors in the areas of academics, social, self-care, daily living, community, vocational, and play. When used effectively research has shown to produce more ra pid acquisition and greater generalization than live modeling. Video modeling has also shown that prompting and reinforcement are not necessary to help children acquire the targeted skill. Video modeling is a great tool because of the visually cued instruction that allows children with Autism to learn by observation.

The Success of Dell Computer :: GCSE Business Management Coursework

The Success of Dell Computer1. How and why did the personal computer industry come to have such depleted average favourableness?The PC industry has started to develop fast in the 80s when IBM launched its first PC series and later on when numerous small companies entered the market. PC is a new product and companies had to create the demand to it from the scratch. We shall apply the Porters 5 Forces model to examine the PC market and see how forces of competition influence the profitability of the market players.(See Appendix 1 for detailed description of how does certain parameter influence the market.)Entrance barriers areThe initial investment is relatively low (1.1) cross loyalty is average to low (1.2)Switching costs of the market player are average. (1.3)The threat of new competitors lowers the profitability of the marketCustomers bargaining powerIt is precise hard for the customers to join forces and fight for their interests. (2.1) According to the modern way of life the ne ed for computer in every work place and home is lavishly which decreases even more the power of the customers. However, the switching costs are low (2.2)In general the customer bargaining power is low and therefore it raises the latent of markets profitability. Though, most of the companies provide buy-backs and price protection that lessens the chance to cash on moderately strong manufacturers position.Suppliers bargaining powerSuppliers are divided into 2 study groups (3.1) See the attached table (3.2) for the detailed description what parameters influence the suppliers powers.The suppliers bargaining power is generally strong because of the big monopolies and the high importance of purchasing components and run system, therefore it decreases the profitability of the market players. Threat of substitute goodsSubstitute goods are different on for different market segments see (4.1) For most of the customers these substitute products cannot adjoin the needs covered by PC comput ers.The lack of suitable substitutes raises the industry profitability.Complimentary products product market is rapidly growing and therefore it raises the industry profitability. contender among established firms is fierce. There are several factors that illustrate this established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are pugnacious (6.2)Business environment. PC industry is affected by two opposite forces technological advance that pushes the industry forward and the industry sensitivity to economical stagnation (if the economical situation is bad customers wont upgrade their computers).

The Pit and the Pendulum :: Pit and the Pendulum Essays

The Pit and the Pendulum   The place where you die is where you become young again.   The accused in The Pit and the Pendulum is obviously being persecuted. For what religion or apply we do not know. For what crime it is not said. The prisoner does not even question his guilt or innocence. The accused in this story, to whom Poe does not give a name, is subjected to three life threatening situations.   Poe, along with other English Romantics believed that being born was actually coming to the end of another existence. With this in consideration could the grave in which the prisoner was confined be thought of as a womb? Could then the denounce be considered a tunnel that leads to a refreshful World?   Poe utilizes one of the most common and universal phobias in The Pit and the Pendulum, which is the darkness. Imagine you are condemned to death and wake to find that you cannot see your hand both inches from your face. Darkness commonly evokes feelings of anxiety, b ut under these circumstances I would think absolute terror. The tomb is dark, and only by an accident does the accused escape the pit and certain death. The victim searched for a rock in order to estimate the depths, which he just avoided. As the masonry hit the water far below, a swinging burst into his vault and a door swiftly shut. The slamming door was his first awareness that he was being monitored constantly his torturers were adjusting his torments to his abilities at avoiding disaster.   The prisoner wakes only to assimilate that he is strapped onto a board and bound by a surcingle. The word he uses is significant it can apply to the binding of saddle on a horse, or to the binding of a priests cassock. He perceived himself as bound like an animal by the belt of a priest, symbolically bound to the fed up(p) will of his prison-masters. Far above his bound body, on the ceiling of the chamber, was the figure of Time holding what appeared to be a scythe. Upon closer examin ation what appeared to be a scythe was a giant, razor sharp pendulum making a slow and deadly descent. One could interpret the figure of Time as the characters realization that his epoch is running out. I think Poes introduction of the figure of Time suggests to all of us that we have only the time that is given us.