Chipotle case analysis Study Example | Topics and Well Written Essays - 500 words

Chipotle examination - Case Study Example The organization has additionally had the option to keep up overall revenues of about 36% as showed by the outline below(Fundable, n.d). CMG’s business level system incorporates cost initiative and item separation. In accordance with a powerful corporate administration under the authority of Steve Ells, all Chipotle eateries are organization claimed as opposed to diversified. Chipotle acknowledges fax orders combined with the utilization of online business from their site, just as, an iPhone application permitting clients to find close by cafés, place arranges, and prepay with their blessing or charge card. These procedures offer dynamism, comfort, and productivity to the clients, huge deals, and benefits turnover (Fundable, n.d.). To begin with, Chipotle’s â€Å"food with integrity† mantra has been steady during the time giving new and old clients something to relate to. Second, supporting neighborhood ranchers, just as, securing animals fill in as the key open connection assets. Entrenched flexibly chains decrease coordinations in any event, during pick hours while center around new and normally raised fixings is a corresponding to a large portion of its rivals (Fundable, n.d.). Truly. On the off chance that CMG remains on the taught development path all things considered, it can in any case keep up an obligation free accounting report. Besides, avoiding mergers or diversifying may permit it to keep a solid handle on the ventures, value, just as, comes back to interest in accordance with its business systems. The best test is rivalry. For instance, from Panera Bread Company. Another is globalization. With the flood in globalization, cafés are growing up, it may lose clients, and along these lines, incomes may diminish (Fundable, n.d.). It must be creative; advertise situated, and keep up a human first culture. Along these lines, it will recapture control of the miniaturized scale and full scale financial variables. It additionally needs to contribute more on publicizing, just as, a comprehensive design. For example, CMG permits the clients to see the food being readied.

Development During Adolescence :: Human Development Teenagers Essays

Youthfulness is the formative stage among adolescence and adulthood; it for the most part alludes to a period extending from age 12 or 13 through age 19 or 21. In spite of the fact that its start is regularly offset with the start of adolescence, puberty is portrayed by mental and social stages just as by natural changes. Immaturity can be drawn out, brief, or for all intents and purposes nonexistent, depending on the kind of culture where it happens. In social orders that are straightforward, for model, the change from youth to adulthood will in general happen rather quickly, and is set apart by generally recommended section customs. to differentiate this, American and European social orders the progress time frame for youngsters has been consistently stretching in the course of recent years, offering ascend to a pre-adult subculture. Because of this drawn out transitional stage an assortment of issues and concerns explicitly connected with this age bunch have created. Analysts single out four territories that particularly address immature conduct and advancement: physiological change and development; subjective, or mental advancement; character, or character development; and parent-juvenile relations. Physiological Change: Between the ages of 9 and 15, practically all youngsters experience a fast arrangement of physiological changes, known as the youthful development spray. These hormonal changes remember an increasing speed for the body's development rate; the improvement of pubic hair; the presence of axillary, or armpit, hair about after two years. There are changes in the structure and working of the regenerative organs; the mammary organs in young ladies; and advancement of the perspiration organs, which frequently prompts a flare-up of skin inflammation. In both genders, these physiological changes happen at various occasions. This time of progress can demonstrate to be upsetting for a pre-teenager. For during this phase of life appearance is significant. A youthful kid who grows early or amazingly late can take a great deal of mocking from their friends. Be that as it may, the time at which a young lady experiences this stage and a male experiences it are extraordinary. Young ladies normally start their development spray not long after age 10. They will in general arrive at their top around the age 12, and will in general wrap up by age 14. This spray happens very nearly two years after the fact in young men. Accordingly young men experience a disturbing period where young ladies are taller and heavier than them. This ungainly period happens from ages ten and one-half to thirteen. Time isn't the main distinction in the pubescent period for young men and young ladies. In young ladies, the expansion of the bosoms is normally the main physical

Coping With a Family Member in Alcohol or Drug Rehab

Coping With a Family Member in Alcohol or Drug Rehab Addiction Coping and Recovery Methods and Support Print Coping With a Family Member in Alcohol or Drug Rehab Why Your Encouragement and Support Is Important By Buddy T facebook twitter Buddy T is an anonymous writer and founding member of the Online Al-Anon Outreach Committee with decades of experience writing about alcoholism. Learn about our editorial policy Buddy T Updated on October 22, 2019 ONOKY - Eric Audras / Getty Images More in Addiction Coping and Recovery Methods and Support Overcoming Addiction Personal Stories Alcohol Use Addictive Behaviors Drug Use Nicotine Use Having any member of your family in rehab for drugs or alcohol means that youre inevitably facing and perhaps even struggling with a lot of concerns, questions and maybe some misconceptions about how professional treatment works. Things to Keep in Mind When Your Loved One Is Getting Treatment for Addiction The following may answer some of those questions. Theyre in Good Hands First, relax and take a deep breath. Your family member is not being held against his will, and he is not locked up. Apparently, he had a substance abuse problem and has decided to get professional help. If that is the case, he is exactly where he needs to be to get the help that he needs. He is in the hands of a staff of professionals, including medical and nursing personnel, who have received specialized training and education to help people who have alcohol or drug problems. He is also surrounded by peers who are or have been in the same situation that your family member is in and will provide an additional support system for him while he begins recovery. He will receive group therapy, individual counseling, medical care, and a balanced diet. In other words, your loved one is in the hands of exactly who he needs, to get the help he needs to address his substance abuse issues. Dont Take It Personally Your family member is in a medical facility. Due to confidentiality concerns and federal privacy laws, the staff of the facility is prohibited from giving you any information about his situation. Your loved one will have to tell you himself. No, you cannot talk with him right now, but dont take it personally. In the early days of his rehab program, his contact with the outside world will be highly restricted. He wont be reading newspapers, listening to the radio or watching television, either. This is necessary so that he can concentrate on getting and staying sober with as few distractions or outside influences as possible. In the early hours and days of his treatment, his entire focus needs to be on doing what he needs to do to maintain abstinence. Your Involvement Can Be Helpful A point will come in your loved ones rehab when you are asked to become involved. Most professional alcohol and drug rehab programs include the family of the patient in his recovery process because research has shown that it reduces the risk of relapse. Usually, during the first month of his rehab, you will be invited to the treatment facility for a Family Psychoeducational Workshop, or family day. During this time, you will be able to express your concerns, questions, experiences, and feelings related to your addicted family member. The Benefits of Family Involvement Participation in the family workshop is beneficial in several ways: It allows the rehab counselors to gain input from the family, observe how the family interacts and learn more about family dynamics.It can encourage your loved one to continue with his treatment program knowing the family supports him.It offers your family member an opportunity to learn how the entire family has been affected by his addiction. What You Can Expect to Learn in Family Workshops The primary purpose of involving you in the workshop is to provide you with information about the dynamics of alcoholism and addiction, and how family members can be affected by the substance abuse of others. The goal is to lessen the familys burden, increase helpful behaviors, and decrease any unhelpful behaviors. According to the National Institute on Drug Abuse, the following topics are commonly addressed during the family workshop: An overview of substance abuse and dependence, including prevalence, symptoms, causes, and basic concepts.Effects of substance use disorders on the individual, family system, and individual family members, including children.Overview of recovery issues for the affected person (physical, psychological or emotional, social, family, spiritual and other) and how to measure outcomes.How the family can help, including enabling behaviors for the family to avoid and behaviors that support the addicted family members recovery.How a family member can heal from the adverse effects of involvement in a close relationship with an alcoholic or addict.Self-help programs for family members and how they can help.Common warning signs of relapse, the importance of relapse prevention planning, how the family can be involved, and how to deal with an actual relapse. Family Workshop Is Not Therapy Although there are many benefits to attending a family educational workshop while your family member is in rehab, those sessions are not therapy. Many times these workshops will bring out strong feelings among family members, and they can become emotional. But from the treatment centers point of view, these sessions focus on support and education, not therapy. The rehab programs purpose is helping the addicted family member. If you feel that you or other family members have been psychologically or emotionally affected by your loved ones alcoholism or addiction, you will need to seek additional help on your own. Consider Seeking Help for Yourself You can seek professional marriage counseling, family counseling or individual therapy for yourself. For further support, you can participate in mutual support groups, such as Al-Anon or Naranon, and your children can participate in Alateen. Many family members of alcoholics and addicts have found that joining an Al-Anon Family Group can be a positive, life-changing experience. You can also begin to educate yourself about alcoholism and addiction and how it can affect every member of the family. The more you know about the dynamics of a family affected by addiction, the more you will be able to offer your addicted family member understanding and encouragement.

Chapter Five Of Give Me Liberty ! By Eric Foner - 1283 Words

In chapter five of Give Me Liberty! , Eric Foner asks a very interesting question of the reader. The question the author poses is â€Å"What key events sharpened the divisions between Britain and the colonists in the late 1760s and early 1770s?† (Foner 174). This question is important because it allows one to gain a better understanding of why the colonists will take the actions they do and why some of the events in the 1770s occur. Although there were many reasons that caused the divide between Britain and the North American colonists to further and become even more apparent in the late 1760s and early1770s, there seems to be several key events that had a significant impact on the relationship between the two groups. These events ranged from taxes (often called acts) placed on various items to violent uprisings. It is important to note that even before the 1760s, the relationship between the colonist in America and the government in England (as well as its presence in America ) had already been deteriorating. In fact, one of the reasons why some groups made the journey across the Atlantic was because they wanted to be left alone by Britain. In fact John Winthrop, a puritan leader who held the belief that his colony could be a â€Å"†¦ a city upon a hill†¦Ã¢â‚¬  (par. 14) if not interfered with by the English government. This belief would eventually morph into a disdain for England, its key political figure(s), and its government. This attitude would be carried on throughout the colonialShow MoreRelatedvoices of freedom paper1432 Words   |  6 PagesIn chapter, five there are several points. However the biggest points are if the colonists should be independent from Britain, the colonists reaction to the laws and acts made by the British Empire, and the rights of the colonists. These points summarize the contents of chapter five of â€Å"Voices of Freedom† and â€Å"Give Me Liberty†. The articles in voices of freedom that are ar guing the primary points the first article is the â€Å"Virginia Resolutions on the Stamp Act (1765)†. This article is about Virginia’sRead MoreSlave Culture And Resistance Of Slavery Essay705 Words   |  3 PagesSlave Culture and Resistance to Slavery In chapter eleven, The Peculiar Institution: Slave Culture and Resistance to Slavery written by Eric Foner the author of Give me liberty! An American History published in 2012 briefly describes the slave culture and how it was. Included will be a piece on Incidents in the life of a slave girl, written by herself in 1861. Courtesy of University of Michigan Library, Making of America. In the Resistance to Slavery Foner will demonstrate how individuals both slavesRead MoreThe Outcomes Of The Revolutionary War1911 Words   |  8 Pages The outcomes of the Revolutionary war paved the way towards an expansion of territory sought out to respect civil liberties by outlawing slavery , reforming the education platform and is considered one of the most important legislative acts of the confederation congress. Thomas Jefferson was a key player as he created a vision with an empire based on principles novel at the time. On July 13, 1787 the Northwest Ordinance came into place, a new legislati on which expanded the original 13 states westwardRead MoreEssay Review Questions4116 Words   |  17 PagesGive Me Liberty! Eric Foner Focus Questions Chapter One: -What impelled European explorers to look west across the Atlantic? The European conquest of America began as an offshoot of the quest for a sea route to India, China, and the islands of the East Indies, the source of the silk, tea, spices, porcelain, and other luxury goods on which international trade in the early modern era centered. Profit and piety-the desire to eliminate Islamic middlemen and win control of the lucrative tradeRead MoreUrban Sprawl Essay3380 Words   |  14 Pages1950s and the 1960s. While talking about the society and government during Lyndon Johnson’s presidency, Eric Foner wrote, â€Å"with deindustrialization urban decay affecting numerous families and most suburbs still being off-limits to non-whites, the median wealth of white households remained ten times greater than that of blacks, and nearly a quarter of all black children still lived in poverty† (Chapter 25). While today the situation may not be as serious, some racial and class separation still existsRead MoreOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 PagesJohn McMillian and Paul Buhle, eds., The New Left Revisited David M. Scobey, Empire City: The Making and Meaning of the New York City Landscape Gerda Lerner, Fireweed: A Political Autobiography Allida M. Black, ed., Modern American Queer History Eric Sandweiss, St. Louis: The Evolution of an American Urban Landscape Sam Wineburg, Historical Thinking and Other Unnatural Acts: Charting the Future of Teaching the Past Sharon Hartman Strom, Political Woman: Florence Luscomb and the Legacy of Radical

Effects Of Stress On Children Suffering Of Posttraumatic...

Section B: 1. Considering the trauma Tony had faced at 8 years old and especially taking into consideration the injuries of his family that occurred from their house burning down we can relate it to the difficulties Tony is now facing. Of this incident, Tony can no longer remain on his own, as he tends to be irritable and hyperactive as well as experiencing difficulty during the night as it often contains frightening nightmares of being trapped. Therefore, this has the result to Tony refusing to sleep on his own he must be accompanied by both parents. However, based on these emotional difficulties Tony has been experiencing he is experiencing a Posttraumatic Stress Disorder (PTSD). In reference to his terrifying nightmares of feeling†¦show more content†¦In regards, of Tony’s emotional difficulty in terms of suffering from PTSD this can contribute to further emotional or psychiatric difficulties. Firstly, this can result of one to also experience a generalized anxiety which r elies on a heavy concern of worrying of events and activities which could trigger for Tony as he already can not tolerate being alone. Next, can also contribute to separation anxiety, which tends to describe youths who suffer from a significant amount of anxiety when separating from a parent as noticed in Tony’s circumstance he can’t sleep without both parents being present. Also, another factor could result of panic which consist of a sense of fear or terror (Wicks-Nelson Israel, 2013). In association to Tony, we already witness horrifying nightmares about being trapped. However, depression is often as well an associated symptom, which consist of a person undergoing a very dark moment conflicting ones ability of functioning which can be highly reflected upon Tony as he has been referred to as not doing well. Lastly, ADHD is also a concern that consist of one who to have difficulty sustaining focus, and leading one to be fidgety where this has been apparent in Tony a s he has been

City of Kelsey Budgeting Free Essays

Tiera Bristol November 19, 2012 Policing in Kelsey: Budget Report Professor Charles McClelland Abstract Working as the budget director for the mayor of the city of Kelsey, we have recently been getting numerous complaints from the citizens about an increase in crime and also an issue of the public demanding for more police officers. With the population of the city growing daily, the increase of crime is continuing to progress as well. The mayor has informed us that this past year is the highest increase in crime in the city’s history, that the federal government has reduced the federal pass-through money for the state and that the budgeting group needs to revamp the budget for the coming year. We will write a custom essay sample on City of Kelsey Budgeting or any similar topic only for you Order Now Within this document as the Budget officer, we will take a close look at the present budget to determine the changes that need to be made in order to come up with a solution that is politically feasible. In doing so we will examine numerous things in depth which includes looking at how the changes affect the fiscal cycle of your budgeting, how the preparation, execution, and evaluation of the budgeting cycle would change, our budgeting approach based on the changes and the reasons, differences of the chosen budgeting approach from those not used, a plan to address the crime issue, and lastly a summary of the cost-benefit analysis of your plan. Main According to Apollo Group (2007), â€Å"Kelsey is nestled in the hills of the Northwest Valley. With a population of 625,000 Kelsey offers the amenities of the big city, but still retains its small town charm† (para. 1). In addition to the limited budget, there has been a recent budgetary reform at the federal level, which has put additional pressure on local police agencies to use the federal money before it expires. The state Chiefs of Police Association is lobbying the state for a 15% public safety tax for a temporary 3-year period in order to make up the deficit. The state legislature and local governments are wary of adding any additional new taxes on citizens. In addition, the state’s Sierra Club organization is putting pressure on state and local government to hire less police officers, build more prisons, and develop the state’s infrastructure. There are different types of budgeting that businesses typically use and those include Operating budgets, Capital Budgets and there are many subtypes that exist because a budget can also be created for special events, the recruitment and retention of new staff, and to manage the advertising expenses and return on investments for a business (Demand Media, 1999-2012). According to Demand Media (1999-2012), â€Å"An operating budget outlines the total operating expenses and income for the organization, typically for the period of a fiscal year. Capital budgets evaluate the investments and assets of the business, and a cash budget shows the predicted cash flow in and out of the business over a period of time† (para. 2 ). According to the Cost-Benefit Analysis (2012), â€Å"Capital budgeting has at its core the tool of cost-benefit analysis; it merely extends the basic form into a multi-period analysis, with consideration of the time value of money. In this context, a new product, venture, or investment is evaluated on a start-to-finish basis, with care taken to capture all the impacts on the company, both cost and benefits. When these inputs and outputs are quantified by year, they can then be discounted to present value to determine the net present value of the opportunity at the time of the decision† (â€Å"Cost-Benefit Analysis,† 2012). In taking steps to resolve these issues in the city of Kelsey and coming up with a solution that is politically feasible we will use the cost-benefit analysis which is the process of determining costs and benefits for programs, decisions, and projects and making a true yet equal determination for an end result. This process in my opinion is almost like a prediction for what the end result will look like†¦ â€Å"In governmental planning and budgeting, the attempt to measure the social benefits of a proposed project in monetary terms and compare them with its costs† (â€Å"Cost-Benefit Analysis,† 2012). When it comes to looking at different Business decisions that would use the cost-benefit analysis, the reasoning could be, but not limited to â€Å"whether or not to add employees, introduce a new technology, purchase equipment, change vendors, implement new procedures, and remodel or relocate facilities† (â€Å"Cost-Benefit Analysis,† 2012). According to the Cost-Benefit Analysis (2012), â€Å"Cost-benefit analysis is the exercise of evaluating an action’s consequences by weighing the pluses, or benefits, against the minuses, or costs. It is the fundamental assessment behind virtually every business decision, due to the simple fact that business managers do not want to spend money unless the resulting benefits are expected to exceed the costs. As companies increasingly seek to cut costs and improve productivity, cost-benefit analysis has become a valuable tool for evaluating a wide range of business opportunities, such as major purchases, organizational changes, and expansions† (â€Å"Cost-Benefit Analysis,† 2012). In coming up with a plan that demonstrates how the preparation, execution and evaluation of the budgeting cycle would change would look like this, according to the Cost-Benefit Analysis (2012), â€Å"A formal cost-benefit analysis is a multi-step process which includes a preliminary survey, a feasibility study, and a final report. At the conclusion of each step, the party responsible for performing the analysis can decide whether continuing on to the next step is warranted. The preliminary survey is an initial evaluation that involves gathering information on both the opportunity and the existing situation. The feasibility study involves completing the information gathering as needed and evaluating the data to gauge the short- and long-term impact of the opportunity. Finally, the formal cost-benefit analysis report should provide decision makers with all the pertinent information they need to take appropriate action on the opportunity. It should include an executive summary and introduction; information about the scope, purpose, and methodology of the study; recommendations, along with factual justification; and factors concerning implementation† (â€Å"Cost-Benefit Analysis,† 2012). When it comes to coming up with ideas to address the issue of crime there are no set strategy that can be deemed perfect. Instead it is a good idea to proactive, alert and daily trying to come up with new ideas to address this issue. Crime is on the rise and everyday criminals are getting smarter and coming up with new tactics and ways for committing crimes, therefore it is critical for law enforcement, as a unit to put just as much time and effort, if not more, in coming up with new/advanced approaches, tactics, plans and policies to deter crime. Through research I found that Governor Snyder’s plan to fight crime in the State of Michigan to very interesting. After examining the Governor’s plan we feel that it would also be a good idea to look at some of the same things within the city of Kelsey around coming up with a plan to address the current crime issues. According to Michigan Radio Newsroom (2012), â€Å"Secure Cities Partnership (provide local assistance and coordinate teams of local, state and federal law enforcement officers to direct patrols and provide investigative resources), Fire and first responders (forming an advisory council that will recommend ways to provide better emergency services statewide with a long-term, sustainable cost model), Prosecutorial support (investment for prosecutorial support in distressed cities), Mental health courts (They can require individuals to comply with treatment, which may keep them from committing crimes), Drug courts (Drug treatment courts address the revolving-door cycle in which drug and alcohol offenders move in and out of the justice system; a high-risk, high-need drug court initiative that expands drug court programming), Human trafficking (protects victims and goes after the individuals who profit from this crime), New paths for young people (help teens from urban areas realize tha t promising opportunities exist), Removing abandoned buildings (Abandoned buildings often are havens for illegal activity. orbid individuals with unpaid taxes or who own blighted properties from buying any more property at auction), Truancy (placing more social workers within public schools)† (para. 3). Conclusion Throughout this document we have analyzed ways to come up with a solution that is politically feasible in making corrections to the budget. Using the cost-benefit analysis tool is essential and highly beneficial in determining what will stay and what organizations will be dismissed. We have looked at the Governor of Michigan plan and approach to address the crime issues and of those mentioned and described, would be necessary to analysis within the city of Kelsey. Reference Apollo Group. (2007). The City of Kelsey. Retrieved from How to cite City of Kelsey Budgeting, Essay examples

Competitive Advantage and Strategic Information System free essay sample

Business organization with emphasize on information systems is try to gathering desirable information for decision making. Because of comprehensive change in business background and emerge of computers and internet, the business structure and needed information had change, the competitiveness as a major factor for life of organizations in information edge is preyed of information technology challenges. In this article we have reviewed in the literature of information systems and discussed the concepts of information system as a strategic tool. Keywords: Strategic information systems, Information technology, Information sciences, Decision support systems, Competitive advantages 1. Introduction The potential usefulness of different kinds of Information System (IS) for environmental management is well recognized (Diez et al, 2009). Perhaps we can say advances in information provision have led organizations to attempt to develop IS or information technology (IT) strategies which interrelate with their business strategies and which together support corporate missions (Rogerson et al, 1994). The three general types of IS that are developed and in general use are financial systems, operational systems, and strategic systems. Well-directed financial systems and operational systems may well become the strategic systems for a particular organization. Relationship between IS functions and corporate strategy was not of much interest to top management of firms in recent years and so many problems because of failure in achieving strategies and that disconnecting for organizations go to existence. Modern organizations are increasingly seen as knowledge-based enterprises in which proactive knowledge management is important for competitiveness (Holsapple et al, 2000). One of the hot research topics in new decades is research about strategic IS and its aspects and Project management IS has changed considerably over the last decade (Ahlemann, 2009). One of the major factors in competitive environment is knowledge management and companies for achieving the competitive advantages should concentrate in its IS. IS has a vital role in business operation and financial and non-financial aspect such as decision making as a big role of management. ISs were thought to be synonymous with corporate data processing and treated as some back-room operation in support of day-to-day mundane tasks (Rockart, 1979). Nevertheless, in the 80’s and 90’s, there has been a growing realization of the need to make ISs of strategic importance to an organization. Strategic SISs are systems that support or shape a business unit’s competitive strategy (Callon, 1996, and Neumann, 1994). Strategic ISs are touted throughout the trade press and the academic literature as the way to achieve the greatest benefits from an investment in new IT (Bajjaly, 1998). An SIS is characterized by its ability to significantly change the manner in which business is conducted, in order to give the firm strategic advantage (Turban et al, 2006). In literature we have many definitions for strategic IS such as: The IS to support or change enterprises strategy (Wiseman, 1985). But clear definition is a system that helps companies change or otherwise alter their business strategy and/or structure. It is typically utilized to streamline and quicken the reaction time to environmental changes and aid it in achieving a competitive advantage. Key features of the Strategic ISs are the following: 58 ISSN 1833-3850 E-ISSN 1833-8119 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 1) Decision support systems that enable to develop a strategic approach to align IS or IT with an organizations business strategies 2) Primarily Enterprise resource planning solutions that integrate/link the business processes to meet the ent erprise objectives for the optimization of the enterprise resources 3) Database systems with the data mining capabilities to make the best use of available corporate information for marketing, production, promotion and innovation. The SIS systems also facilitate identification of the data collection strategies to help optimize database marketing opportunities. 4) The real-time ISs that intend to maintain a rapid-response and the quality indicators. Any IS that a change the goals, processes, products, or environmental relationships to help an organization gain a competitive advantage or reduce a competitive disadvantage is a strategic IS (Turban, 2006). According to Porter (1985) a competitive strategy is a broad-based formula for how a business is going to compete, what its goals should be, and what plans and policies will be required to carry out those goals. Turban et al (2006) believes that any organization seeks a competitive advantage in their industries in other word an advantage over competitors in some measure such as cost, quality, or speed. Competitive advantage is at the core of a firm’s success or failure (Porter and Millar, 1985, and Porter, 1996); such advantage seeks to lead to control of the market and to larger-than-average profits. Some of the more common ways of thinking about gaining competitive advantage are: 1. Deliver a product or a service at a lower cost. This does not necessarily mean the lowest cost, but simply a cost related to the quality of the product or service that will be both attractive in the marketplace and will yield sufficient return on investment. 2. Deliver a product or service that us differentiated. Differentiation means the addition of unique features to a product or service that are competitive attractive in the market. 3. Focus on a specific market segment. The idea is to identify and create market niches that have not been adequately filled. IT is frequently able to provide the capabilities of defining, expanding, and filling a particular niche or segment. The application would be quite specific to the industry. 4. Innovation. Develop products or services through the use of computers that are new and appreciably from other available offerings. A strategic IS helps an organization gain a competitive advantage through its contribution to the strategic goals of an organization and/or its ability to significantly increase performance and productivity. Turban et al (2006) believes an SIS enables companies to gain competitive advantage and to benefit greatly at the expense of those that are subject to competitive disadvantage. They said Competitive advantage in the digital economy is even more important than in the old economy. For some businesses the impact of the digital economy is revolutionary. Frequent changes in technologies and markets and the appearance of new business models can introduce radical changes in industry structure (Deise et al. , 2000) and the nature of competition can shift rapidly (Afuah and Tucci, 2003, and Choi and Whinston, 2000). At the same time, the digital economy has not changed the core business of most firms. For most businesses, Internet technologies simply offer the tools, sometimes very powerful tools, which can increase their success through their traditional sources of competitive advantage—be that low cost, excellent customer service, or superior supply chain management. Bithos (2001) believe that for the overwhelming majority of businesses, the first step to competitive advantage in the digital economy are to ask and answer the question, â€Å"Where, given my industry and position, does my competitive advantage come from? † Then the follow-up question, â€Å"How can IT, especially the Internet, help my business? will be easier to answer. As Figure. 1 shows, there were five business pressures on the company. Rosenbluth’s strategic response was (1) to eliminate the retailing activities, which were most likely to be impacted by the pressures, and (2) to change the revenue model from commission-based to fee-for-service-based. Such strategy required extensive IT su pport (Turban et al, 2006). At first, strategic information systems were considered to be outwardly focused—that is, aimed at increasing direct competition in an industry and visible to all. For example, strategic systems have been used to provide new services to customers and/or suppliers, to increase customer switching costs, and to lock in suppliers, all with the specific objective of achieving better results than one’s competitors. But since the late 1980s, strategic systems have also been viewed inwardly: They are focused on enhancing the competitive position of the firm by Published by Canadian Center of Science and Education 159 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 ncreasing employees’ productivity, streamlining business processes, and making better decisions (Turban et al, 2006). In the next part of this article we consider the role of the IT in strategic management. As Bhatnagar (2006) believes the advances in IT have affected the lives of most of the human beings in their day-to day lives, but the strategic IS may deliver a product or service that is at a lower cost, that is differentiate d, that focuses on a particular market segment, or is innovative. With the passage of time, the technology has evolved immensely and so have the opportunities. IT is being used in the business activities for improving the efficiency and effectiveness of the people and the business on the whole. The increasing demand of IS and IT has made the management of the more and more complex and difficult. SISs are different from other comparable systems as: They change the way the firm competes. They have an external (outward looking) focus. They are associated with higher project risk. They are innovative (and not easily copied). 2. The Role of IT in Strategic Management A strategic IS has been defined as the information system to support or change enterprises strategy. Strategic management is the technique that an organization can plans the strategy of its future operations; in the other word a SIS is a system to manage information and assist in strategic decision making. The term strategic points to the long-term nature of this mapping exercise and to the large magnitude of advantage the exercise is expected to give an organization (Turban 2006). Four critical factors in developing and strategic IS are Initiation, data collection, strategy formulation and short-term development. These factors are used to prioritize proposed ISs, so that those giving competitive advantage to the organization can be highlighted for immediate development (Karababas et al, 1994). IT contributes to strategic management in many ways (for addition information see Kemerer, 1997, and Callon, 1996). Turban et al (2006) introduce these eight factors; we show these eight in figure. 2: 1. Innovative applications. IT creates innovative applications that provide direct strategic advantage to organizations. For example, Federal Express was the first company in its industry to use IT for tracking the location of every package in its system. Next, FedEx was the first company to make this database accessible to its customers over the Internet. FedEx has gone on to provide e-fulfillment solutions based on IT and is even writing software for this purpose (Bhise et al. , 2000). 2. Competitive weapons. ISs themselves have long been recognized as a competitive weapon (Ives and Learmouth, 1984, and Callon, 1996). Michael Dell, founder of Dell Computer, puts it bluntly: â€Å"The Internet is like a weapon sitting on the table, ready to be picked up by either you or your competitors†. . Changes in processes. IT supports changes in business processes that translate to strategic advantage (Davenport, 1993). For example, Berri is Australia’s largest manufacturer and distributor of fruit juice products. The principal goal of its enterprise resource planning system implementation was â€Å"to turn its branch-based business into a national organization with a single set of unified business processes† in order to ac hieve millions of dollars in cost-savings (J. D. Edwards, 2002a). Other ways in which IT can change business processes include better control over remote stores or offices by providing speedy communication tools, streamlined product design time with computer-aided engineering tools, and better decision-making processes by providing managers with timely information reports. 4. Links with business partners. IT links a company with its business partners effectively and efficiently. For example, Rosenbluth’s Global Distribution Network allows it to connect agents, customers, and travel service providers around the globe, an innovation that allowed it to broaden its marketing range (Clemons and Hann, 1999). . Cost reductions. IT enables companies to reduce costs. For example, a Booz- Allen Hamilton study found that: a traditional bank transaction costs $1. 07, whereas the same transaction over the Web costs about 1 cent; a traditional airline ticket costs $8 to process, an e-ticket costs $1 (ibm. com/ partnerworld/pwhome. nsf/vAssetsLookup/ad2. pdf/$file/ad2. pdf). In the customer service area, a customer call handled by a live agent costs $33, but an intelligent agent can handle the same request for less than $2 (Schwartz, 2000). . Relationships with suppliers and customers. IT can be used to lock in suppliers and customers, or to build in switching costs (making it more difficult for suppliers or customers to switch to competitors). 160 ISSN 1833-3850 E-ISSN 1833-8119 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 7. New products. A firm can leverage its investment in IT to create new products that are in demand in the marketplace. Acco rding to Vandenbosch and Dawar (2002, p. 8), â€Å"The redefinition of ICI’s role not only generated much higher margins for the business, it also gave ICI a much more defensible competitive position†. 8. Competitive intelligence. IT provides competitive (business) intelligence by collecting and analyzing information about products, markets, competitors, and environmental changes (Guimaraes and Armstrong, 1997). Turban et al, (2006) believe in battle, information about one’s competitors can mean the difference between winning and losing a battle in business many companies continuously monitor the activities of their competitors to acquire competitive intelligence. Such information-gathering drives business performance by increasing market knowledge, improving knowledge management, and raising the quality of strategic planning; Comcowich (2002) considered the following uses of competitive intelligence: A sporting goods company found an activist group planning a demonstration and boycott months in advance, enabling the company to implement a counter strategy. Within days of launch, a software firm found dissatisfaction with specific product features, enabling the technicians to write a â€Å"patch† that fixed the problem within days instead of the months normally required to obtain customer feedback and implement software fixes. A packaging company was able to determine the location, size, and production capacity for a new plant being built by a competitor. The otherwise well protected information was found by an automated monitoring service in building permit documents within the Web site of the town where the new plant was being built . A telecommunications company uncovered a competitor’s legislative strategy, enabling the company to gain an upper hand in a state-by-state lobbying battle. The creative team embarking on development of a new video game used the Internet to identify cutting-edge product attributes that game-players prefer. The intensive research uncovered three key â€Å"gotta haves† that were not identified in focus groups and had not been included in the original design specification. Desouza believes (2001) that, Competitive intelligence can be done with technologies such as optical character recognition, intelligent agents and especially the Internet. The Internet is a company’s most important tool to support competitive intelligence (Teo, 2000, Bell and Harari, 2000, and Buchwitz, 2002). Power and Sharda (1997) proposed a framework in which the Internet capabilities are shown to provide information for strategic decisions. According to the framework, shown in Figure. 3 the external information required (upper left) and the methods of acquiring information (upper right) can be supported by Internet tools for communication, searching, browsing and information retrieval. Power and Sharda (1997) emphasize the search capability of the various tools of the Internet. Using these tools an organization can implement specific search strategies. Turban et al, (2006) believe that with respect to this terms, it’s not enough just to gather information on a competitor. Analyzing and interpreting the information is as important as collecting it. They suggest that one can use IT tools ranging from intelligent agents to data mining. Another, more sinister, aspect of competitive intelligence is industrial espionage. Industrial espionage is considered to be unethical and usually illegal. 3. Strategies for Competitive Advantage As Howard et al, (1999) believed if ISs design and strategy development are addressed simultaneously, Strategic competitive advantage can be gained (Howard et al, 1999). Porter’s model identifies the forces that influence competitive advantage in the marketplace. Of greater interest to most managers is the development of a strategy aimed at establishing a profitable and sustainable position against these five forces (Turban et al, 2006). To establish such a position, a company needs to develop a strategy of performing activities differently from a competitor. Porter (1985) proposed cost leadership, differentiation, and niche strategies. Additional strategies have been proposed by other strategic-management authors (e. g. , Neumann, 1994; Wiseman, 1988; Frenzel, 1996). Turban et al, (2006) sited 12 strategies for competitive advantage here and we present again turbans literature. Published by Canadian Center of Science and Education 161 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 1. Cost leadership strategy: Produce products and/or services at the lowest cost in the industry. A firm achieves cost leadership in its industry by thrifty buying practices, efficient business processes, forcing up the prices paid by competitors, and helping customers or suppliers reduce their costs. 2. Differentiation strategy: Offer different products, services, or product features. By offering different, â€Å"better† products companies can charge higher prices; sell more products, or both. 3. Niche strategy: Select a narrow-scope segment (niche market) and be the best in quality, speed, or cost in that market. 4. Growth strategy: Increase market share, acquire more customers, or sell more products. Such a strategy strengthens a company and increases profitability in the long run. Web-based selling can facilitate growth by creating new marketing channels, such as electronic auctions. 5. Alliance strategy: Work with business partners in partnerships, alliances, joint ventures, or virtual companies. This strategy creates synergy, allows companies to concentrate on their core business, and provides opportunities for growth. 6. Innovation strategy: Introduce new products and services, put new features in existing products and services, or develop new ways to produce them. Innovation is similar to differentiation except that the impact is much more dramatic. Differentiation â€Å"tweaks† existing products and services to offer the customer something special and different. Innovation implies something so new and different that it changes the nature of the industry. 7. Operational effectiveness strategy: Improve the manner in which internal business processes are executed so that a firm performs similar activities better than rivals (Porter, 1996). Such improvements increase employee and customer satisfaction, quality, and productivity while decreasing time to market. Improved decision making and management activities also contribute to improved efficiency. 8. Customer-orientation strategy: Concentrate on making customers happy. Strong competition and the realization that the customer is king (queen) is the basis of this strategy. Web-based systems that support customer relationship management are especially effective in this area because they can provide a personalized, one-to-one relationship with each customer. 9. Time strategy: Treat time as a resource, then manage it and use it to the firm’s advantage. Time is money,† â€Å"Internet time† (i. e. , three months on the Internet is like a year in real time), first-mover advantage, just-in-time delivery or manufacturing, competing in time (Keen, 1988), and other time-based competitive concepts emphasize the importance of time as an asset and a source of competitive advantage. One of the driving forces behind time as a competitive strategy is the need for firms to be immediatel y responsive to customers, markets, and changing market conditions. A second factor is the time-to-market race. By introducing innovative products or using IT to provide exceptional service, companies can create barriers to entry from new entrants. 10. Lock in customers or suppliers strategy: Encourage customers or suppliers to stay with you rather than going to competitors. Locking in customers has the effect of reducing their bargaining power. 11. Increase switching costs strategy: Discourage customers or suppliers from going to competitors for economic reasons. 4. SIS, competitive advantages, value chain and internet effects Strategic systems are those ISs that may be used gaining competitive advantage. Michael Porter’s competitive forces model is one of the most popular framework for analyzing competitiveness (Porter, 1985). Porter’s theories on competitive advantage are not tied to ISs, but are used by others to involve information services technologies. Porter says that there are two central questions in competitive strategy: 1. 2. How structurally attractive is the industry? What is the firm’s relative position in the industry? Both of these questions are dynamic, and neither is sufficient alone to guide strategic choices and can be influenced by competitor behavior, and both can be shaped by a firm’s actions. Porter’s model give techniques for getting a handle on the possible average profitability of an industry over time. The analysis of these forces is the base for estimating a firm’s relative position and competitive advantage. Accrding to porter(1985) the principal types of competitive advantage are low cost producer, differentiation, and focus. The firm has a competitive advantage if it is able to deliver its product or service at a lower cost than its 162 ISSN 1833-3850 E-ISSN 1833-8119 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 competitors. If the quality of its product is satisfactory, this will translate into higher margins and higher returns. Another advantage is gained if the firm is able to differentiate itself in some way. Differentiation leads to offering something that is both unique and is desired, and translates into a premium price. Again, this will lead to higher margins and superior performance. According to Turban et al, (2006), porters model has been used to develop strategies for companies to increase their competitive edge and it also demonstrates how IT can enhance the competitiveness of corporations. It seems that two types of competitive advantage, lower cost and differentiation, are mutually exclusive. Another point of Porter’s is that competitive advantage is gained through a strategy bases on scope. It is necessary to look at the breadth of a firm’s activities, and narrow the competitive scope to gain focus in either an industry segment, a geographic area, a customer type, and so on. Competitive advantage is most readily gained by defining the competitive scope in which the firm is operating, and concentrating on it. The concept of value chain As Recklies (2001) said, the term Value Chain was used by Michael Porter (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. He believes: Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage (Recklies, 2001) . Porter (1985) distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency. There are four main areas of support activities: procurement, technology development (including RD), human resource management, and infrastructure (systems for planning, finance, quality, information management etc. ). The Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive advantage. The goal of Primary Value Chain activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin. †¢ Inbound logistics include the receiving, warehousing, and inventory control of input materials. †¢Operations are the value-creating activities that transform the inputs into the final product. †¢Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfillment, etc. Marketing Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc. †¢Service activities are those that maintain and enhance the products value including customer support, repair services, etc. Any or all of these primary activities may be vital in developing a competitive advantage. The primary value chain activities described above are facilitated by support activities. Porter identified four generic categories of support activities, the details of which are industry-specific. Procurement the function of purchasing the raw materials and other inputs used in the value-creating activities. †¢Technology Development includes research and development, process automation, and other technology development used to support the value-chain activities. †¢Human Resource Management the activities associated with recruiting, development, and compensation of employees. †¢Firm Infrastructure includes activities such as finance, legal, quality management, etc. Published by Canadian Center of Science and Education 163 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 Support activities often are viewed as overhead, but some firms successfully have used them to develop a competitive advantage, for example, to develop a cost advantage through innovative management of ISs (porter, 1985) IT is also pervasive throughout all parts of the value chain. Porters model recognizes five major forces that could endanger a company’s position in a given industry. These forces are and in the figure 4 Porter’s five forces model, including the major determinant of each force presented: 1. The threat of entry of new competitors 2. The bargaining power of suppliers 3. The bargaining power of customers (buyers) 4. The threat of substitute products or services 5. The rivalry among existing firms in the industry A. Cost and Competitive Advantage: Cost leadership is one of Porter’s two types of competitive advantage. The cost leader delivers a product of acceptable quality at the lowest possible cost. It attempts to open up a significant and sustainable cost gap over all other competitors. The cost advantage is achieved through superior position in relation to the key cost drivers. Cost leadership translates into above-average profits if the cost leader can command the average prices in the industry. On the other hand, cost leaders must maintain quality that is close to, or equal to, that of the competition. Achieving cost leadership usually requires trade-offs with differentiation. The two are usually incompatible. To sustain cost advantage, Porter gives a number of cost drivers which must be understood in detail because the sustainability of cost advantage in an activity depends on the cost drivers of that activity. Some of the cost drivers which must be analyzed, understood, and controlled are: Scale. The appropriate type of scale must be found. Policies must be set to reinforce economies of scale in scale-sensitive activities. Learning. The learning curve must be understood and managed. As the organization tries to learn from competitors, it must strive to keep its own learning proprietary. Capacity Utilization. Cost can be controlled by the leveling of throughput. Linkages. Linkages should be exploited within the value chain. Work with suppliers and channels can reduce costs. Interrelationships. Shared activities can reduce costs. Integration. The possibilities for integration or de-integration should be examined systematically. Timing. If the advantages of being the firs mover or a late mover are understood, they can be exploited. Policies. Policies that enhance the low-cost position or differentiation should be emphasized. Location. When viewed as a whole, the location of individual activities can be optimized. Institutional Factors. Institutional factors should be examined to see whether their change may be helpful. Porter gives five steps to achieving cost leadership: Identify the appropriate value chain and assign costs and assets to it. Identify the cost drivers of each value activity and see how they interact. Determine the relative costs of competitors and the sources of cost differences. 1. 2. Develop a strategy to lower relative cost position through controlling cost drivers or reconfiguring the value chain. Test the cost reduction strategy for sustainability. B. Differentiation Advantage. Differentiation is the second of Porter’s two types of competitive advantage. In the differentiation strategy, one or more characteristics that are widely value by buyers are selected. The purpose is to achieve and sustain performance that is superior to any competitor in satisfying those buyer needs. A differentiator selectively adds costs in areas that are important to the buyer. Thus, successful differentiation leads to premium prices, and these lead to above-average profitably if there is approximate cost parity. To achieve this, efficient forms of differentiation must be picked, and costs must be reduced in areas that are irrelevant to the buyer needs. ISSN 1833-3850 E-ISSN 1833-8119 164 www. ccsenet. org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 C. Internet and Impact on Competition: According to turban et al (2006), because the Internet has changed the nature of doing business, it has also changed the nature of competition. Porter himself argues that the Internet doesn’t change the model, but that it is only another tool to be used in seeking competitive advantage. In his words, â€Å"The Internet per se will rarely be a competitive advantage. Many of the companies that succeed will be the ones that use the Internet as a complement to traditional ways of competing, not those that set their Internet initiatives apart from their established operations† (Porter, 2001, p. 4). Porter (2001) and Harmon et al. (2001) present some ways the Internet influences competition in the five factors: 1. The threat of new entrants. 2. The bargaining power of suppliers. 3. The bargaining power of customers (buyers). 4. The threat of substitute products or services. 5. The rivalry among existing firms in the industry. Porter conclud es that the overall impact of the Internet is to increase competition, which negatively impacts profitability. According to Porter, â€Å"The great paradox of the Internet is that its very benefits—making information widely available; reducing the difficulty of purchasing, marketing, and distribution; allowing buyers and sellers to find and transact business with one another more easily—also make it more difficult for companies to capture those benefits as profits† (2001, p. 66). 5. Implementing and sustaining SIS The major problem that companies now face is how to sustain their competitive advantage. Implementing strategic ISs may be a complex undertaking due to the magnitude and the complex nature of the systems (turban et al, 2006). Strategic ISs are designed to establish a profitable and sustainable position against the forces that determine industry competition. A sustainable strategic advantage is a strategic advantage that can be maintained for some length of time. During the period from 1970 through the late 1990s, businesses implemented numerous successful IT-based strategic systems that lasted many years. These SISs enabled the companies that owned them to enjoy a competitive advantage for several years before competitors imitated their systems (Turban et al, 2006). Ross et al. 1996) suggest the three IT assets— people, technology, and â€Å"shared† risk and responsibility—as a way to develop sustainable competitiveness. Porter (1996) expanded his classic competitive forces model to include strategies such as growth and internal efficiency that facilitate sustainability. Turban et al, (2006) suggest some way for accomplish competitive sustainability with the help of IT. 1. Using inwar d systems that are not visible to competitors. 2. If a company uses outward systems to sustain competitive advantage, one way to protect those systems is to patent them. 3. Developing a comprehensive, innovative, and expensive system that is very difficult to duplicate. 4. Using modified approach. 6. Conclusion Because information has emerged as an agent of integration and the enabler of new competitiveness for today’s enterprise in the global marketplace and because strategic IS supports or shapes competitive strategies, the concepts of ISs is so important, IT can be used to support a variety of strategic objectives, including creation of innovative applications, changes in business processes, links with business partners, reduction of costs, acquiring competitive intelligence, and others. In this article we consider the opinion of some of ISs scientists and reviewed the literature of strategic ISs, competitive advantage and porters model for competitive situations. According to above subject we can say one of the important factors in new challengeable business environment is emphasis on strategic ISs and this is no ended research topic. We believe for achieving successfulness, organizations must establish all aspects of their planning structures based on strategic planning and otherwise only word that can communicative of results is failure. Published by Canadian Center of Science and Education 65 www. ccsenet. org/ijbm International Journal of Business and Management.

Risk assessment for commercial loans

Introduction The twelve member- countries that make up the European Union (EU) formed in the year 2002 have for a long time now been using the euro as their common currency.Advertising We will write a custom term paper sample on Risk assessment for commercial loans specifically for you for only $16.05 $11/page Learn More The use of this currency was implemented at Maastricht with an aim of strengthening the European Union as a key player in the world economy as well as to decrease the distortions and uncertainties that have been attached to the many currencies that have been used in the market1. The 1997 adoption of the euro zone took place with an aim of ensuring that budgetary discipline was maintained within the EU. Germany was during this time the greatest influence towards the implementation of the agreement (Williamson, 600). As a way of ensuring that the European Monetary Union (EMU) effectively performed its role, the 12 member countries came to an agreement referred to as the rule or the special international institution also referred to as the Stability and Growth Pact (SGP). The role of this rule was to enhance as well as ensure that there was economic homogeneity among all country members of the EMU before they introduced the use of the Euro as a common currency as well as internal stabilization of the Euro zone2. The use of the Euro by the member states was a way of agreeing that all money spent and borrowed is kept under control as a way of enhancing the stabilization. By maintaining budget discipline among the member countries, the pact seeks to ensure that it prevents excessive deficits and debts thus promoting monetary stability. Here, economic policies within the member countries are coordinated at the European level. The pact has more often been discussed during the past as well as the current times with debates ranging on whether it has been a success or not. Some countries such as Germany, France and Portugal h ave continuously been found to fall short of the criteria set by this pact and have instead used their strong political power over other countries to reduce the strength of the pact.Advertising Looking for term paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More It is the poor and unequal performance of the Euro among these member states led to the reformation of the SGP in 2005 as a way of seeking more flexibilities within these states3. This paper explores on the implementation of the Stability and Growth Pact with focus being on its various functions and importance to the members of the European Union as well as to the global economy. The Stability and Growth Pact (SGP) of the European Union (EU) History The history of the European Union dates back to the early years of 1969 when governments and presidents made a decision to create a monetary and economic union and make it an official European integration goal4. T his was followed by the Werner Plan of 1970 which saw to the proposition to have coordination of the economic policy among the six member states as well as the development of a system where there were fixed parties and use of one common currency. This plan was however hindered by the collapse of the Bretton-Woods-System which was a system, functional between 1945 and 1971, where foreign exchange rates all around the globe were fixed5. After a number of years of with unpredictable floating rates, the European Community (EC), with an exception of the United Kingdom, came to an agreement to form the European Monetary System (EMS) in 1979. The implementation of this system was to allow for moderate floating rates for all its currencies. Though revaluations could be done on the bilateral -rates, the allowed flow of currencies was only within a 2.25% band on either side. Failure to obey this regulation would call for the intervention of the central banks.Advertising We will write a c ustom term paper sample on Risk assessment for commercial loans specifically for you for only $16.05 $11/page Learn More This system incorporated the use of currencies in the years that followed up to 1992 when it broke down as a result of critics and propaganda against a number of currencies that included the Swedish crone, Sterling Pound and the Italian Lira. Despite its reformation, this system did not come to gain its former value gain with a number of the currencies leaving the system while others expanded their bands to 15% hence not much could be fixed. Prior to the downfall of this system, a number of stern actions towards monetary integration were embarked on. After the 1988-1989 Delor Report, complete capital movement liberalization was attained in 1990. 1992 saw to the creation of a treaty through which the European Community through which a number of achievements were made. These achievements included the establishment of a common market, incorpo ration of modern aspects of political and economical integration to the treaty system as well as the establishment of the European Union (Hule, 32). The Maastricht agreement of 1992 defined 3 monetary integration stages6. Stage one ran between 1990 and 1994 and had various technical necessities that included central bank legislation and capital movements. Stage two which ran between 1994 and 1999 aimed at strengthening economic- policy convergence between state members as well as the establishment of the European Monetary that would act as a monitoring body. Stage three was to ensure that eligibility criteria be identified. The pact It became very distinct and clear in the 1990’s that the Maastricht treaty’s criteria and regulations were not a guarantee to a transitioned without hiccups on the common currency factor7.Advertising Looking for term paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The 1997 Amsterdam treaty had a political pact which was linked to the convergence criteria which was erstwhile agreed upon in Maastricht with four legal documents in its roots; article 99 and article 104 of the Maastricht treaty, June 17th general council resolution, and July 7th regulation 1466 and 1467 of the council8. The stability and growth pact is made up of three main elements; political adherence by all parties, preventive elements and dissuasive elements. Preventive elements are convergence programs that ensure monetary convergence in the European community which is to be reported by all members to the commission. The dissuasive elements are mainly the excessive budget deficit procedure. Of most importance to the pact are the obligations which are to be met by the members, the council and the commission but not the convergence criteria. Member countries have a commitment to a balanced budget or a certain medium run surplus and they ensure all the required goals are met to make this a reality. One function of the commission is reporting of the excessive budgets to the members as a criterion of early warning and facilitation of strictness, timeliness and effectiveness in the functioning of the pact. The commission is the core guardian which monitors the main body of the stability and growth pact. It carries out coordination matters whilst decision making is left to the council in order to make the body run smoothly. The council also has the critical function of enhancing timely and rigorous implementations of the pact elements if there happens to be violations in the convergence criteria9. The Convergence Criteria In addition to the self-commitment of all significant players in EMU, the accord on certain criteria of convergence is very crucial for the SGP10. These criteria approved on in 1992 and yet again in 1997, and functional from 1997 on for likely and authentic members, are as follows; Price stability: inflation should be less than 1.5 per cent greater than in the three countries’ most price stable. Interest rates Convergence: the long term interest rates has to be less than 2% higher than in the 3 countries most price stable. Exchange rate stability: the exchange rate’s is not permissible to lead the groups of the  EMS (in fact 15 per cent whichever side) or its innermost rate to be de-evaluated for at least 2 years (this decisive factor leads to a two years delay of any additional attainment, so that an improvement of the Euro zone is not possible before the year 2006, and improbable before the year 2007). Budgetary balance budget and a debt criterion): national budget shortfalls are not permissible to go beyond 3 per cent comparative to GDP and the overall lack of debts is not tolerable to surpass 60 per cent comparative to GDP, even though these duties are declining continually11. The first 3 of these criteria have proven to be and are particularly significant during the accession progression to the â €Å"monetary union†, the fourth is additionally important for assessment of the existing EMU. While on or after accession on the first 3 criteria are not in national capability, but mainly in the accountability of the â€Å"European Central Bank† (ECB), the responsibility for the 4th relics with the national governments. This has raised an eyebrow amongst many scholars on whether a common policy is a possibility in an area where there are differing fiscal policies12. Precisely due to the reason that the member states remain committed, it is not enough to have self control which is interdependent and the European Union has to do the monitoring and the controlling of the processes. Economic point of view The method of thinking following the SGP represented from unswervingly from the assumption of optimum legal tender sections (which in actual fact is there or thereabouts a theory of â€Å"in service† currency regions). At the center of this theory (in whatever alt ernative) 2 â€Å"influences† are analyzed: the influence of economic directness within the individual area and the influence of economic union13. Both powers act in favor of â€Å"monetary union: the more open countries are (the more they trade Relative† to the GDP), the more they are damaged economically by exchange rate changes and consequently it makes logic to bring in a single currency (in addition to due to the cost cutting effect of trade facilitation by the regular currency); the more there is economic union between countries, the reduced amount of likely non-symmetric shocks are and the less likely it is essential or even makes logic to accurate for shocks by means of the available exchange rate changes14. The Convergence Criteria are unswervingly drawn from this examination, particularly from the convergence account and to a third significant account: to provide self-assurance in the monetary union. All tangible goals that are to be reached (the slim inflati on, rates of interest, and exchange rates corridors, and the existing numbers in lieu of budgetary discipline) in actual fact have been brought in to promote economic union before – and optimistically during the monetary union (MU) at the individual rate and level15. This is particularly true for the criterion measuring price increases, because large price increases and differences between the member countries put demands on the set exchange rates and for that reason these countries cannot outline a most favorable currency region (and might also have troubles in forming an operating currency region). This is measured by the inflation rate decisive factor in the diminutive run, at the same time as the interest rate decisive factor has been set up to compute inflation prospects in the long run16. The exchange rate measures has been put into practice to integrated marketplace forces into the scheme as some variety of routine stabilizers and as scheming forces. If the marketplace believes that union will be sustainable to a sufficient amount, then the exchange rate will not be critically re-valued by the marketplace. Also the budgetary criterion is due to putting weight on the states so as to guarantee this important sustainability. Large shortfalls may lead to price increases in the average run and a far above the ground debt ratio hence means that more hazard of budget deficit in the long run. As a final point, to extend confidence in this joint self commitment of all affiliate countries, the supporting obligations have been subjected to a code. This makes it potential to take lawful actions at the â€Å"European Court of Justice† (Court) to elucidate, who has dishonored the treaty17. One may justifiably doubt if this attentiveness on the â€Å"convergence account† and the particular focus on the â€Å"self-assurance account† are sufficient to ensure the changeover of the associates of the ‘monetary union† into a most favo rable currency region (or at least an operating currency area). Some extra as well significant forces have considered: from the economist’s opinion especially labor markets and wage suppleness, from the politician’s standpoint particularly centralization of observation, and authorizing power. The stability and growth pact institution The SGP is a structure of rules about the association between states within a group of people to provide global public merchandise like economic stability and also growth18. These â€Å"merchandise† are â€Å"globally public† due to the significance of â€Å"stability and growth† contained by an area which is economically extremely mutually dependent and owing to the reality that countries can take pleasure in the reimbursement from â€Å"stability and growth† without paying the cost. Growth in particular pertaining to the leading economies in the union leads due to the widespread marketplace and to trade put in to effect the effects to expansion in the EU as a sum total and to more augmentation in all of its associate countries, and monetary steadiness leads to extra predictability of the monetary surroundings and for that reason reduces threats and costs for all the members19. Furthermore the SGP is a multifaceted organization, because it is entrenched into the institutional structure of the European Union in a multi-layer organization. It can be analyzed as an economic organization in this logic either with regard to its tangible rules (for example the information used for the union criteria) at the height of â€Å"supremacy† or with revere to its overall structure (for example what competencies what a particular body has) at the height of â€Å"surroundings†20. The following argument will be centered on the competencies with only a few considerations with reference to the previous criteria, although a tangible history of only faintly more than ten years is not exceptionall y long for an â€Å"environmentally oriented† institutional organization to develop fully. This associates that the procedure of potential transformation of the SGP is quite sluggish, and that this procedure is centered on the splitting up of competencies between associate countries, the Commission, and lastly the Council. Furthermore the study is entirely focused on general necessities and regulations (e.g. â€Å"we need convergence criteria†); not on existing measures (e.g. â€Å"what criteria should be implemented†)21. This also entails, that the study is educational in the logic, that the recent communal discussion in relation to the SGP is not very much reproduced in it, for the reason that this discussion is focused on punctual modification of the agreement (which seems not to be very effective, predominantly in the middle and extended run), and not on legitimate questions similar to anchoring the SGP in a novel European constitution and also on how (which happens to be extremely significant for the future of EMU)22. The inquiry to be responded is, if there is equilibrium of players and a stability of power included in the SGP that will show the way the economic procedure to the outcome desired. Connection of the SGP to the political system of the European Union The SGP in its current design features three more troubles, directly associated to the political organization of the Union: the equilibrium of actors and consequently the equilibrium of power are not made certain; the means of alteration are indistinct; and each and every one if this leads to the truthful unfeasibility of sanction. The three pertinent actors for the SGP are the Council, Commission, and lastly the associate state(s). The association between these players is not very obvious, which has shown the way to a grievance by the Commission at the â€Å"Court† against the â€Å"non action† of the Council in the case of countries like Germany and France in the autumn of 2003. In the month of July 2004 the Court affirmed this as an infringement of the pact, which to some extent changed the equilibrium of power in favor of the â€Å"guardian of the treaties†23. Until in recent times the Commission was having a serious shortfall in pressure compared to the associates states, since the final choice concerning an â€Å"excessive deficit procedure† and concerning sanction was politically motivated, to be decided on – by competent majority in the Council. Therefore, the associates, in particular the big ones which include France, Germany, and Italy, in actual fact were capable to triumph over any stern restriction on the budgetary guidelines, on condition that at least there was a hazard that adequate other countries may have comparable problems in close proximity to the future. It has been demonstrated by some researchers in advance of the EMU that this is a vital problem related to the SGP, for the reason that in actua l fact there was never be severe consequences for the countries which were violating the agreement. This was viewed to be a specific risk for confidence in the steadiness of the monetary merger. Although not sufficient time has passed over to confirm this thesis in an empirical manner, the proof seems to be fairly clear and confirming. On the other hand, at the moment the Court has elucidated that the main Council and also the associate states are also closely connected by the SGP. But still after this pronouncement the query remains opened, if the Court will be capable to really consign the Council and the associate states. In actual fact the Court does not have real sanctioning authority. The Court still made clear that the Council on one side does not have the right to stop the extreme deficit procedures entirely, but at the other face has the right to setback the procedure owing to reasons particular probably impromptu by this organization. Thus also the way of change of the tre aty is very much connected to this issue of power. This is one significant reason why no more than negligible alterations of the pact came about during the debate about the Convention24. These transformations do not correct for authority imbalance and do not describe the relationship amid the Council, the Commission, the Supreme Court, and the associate countries more clearly, but they are slight ones nurturing the flexibility of the accord: deliberation of the business phase and of augmentation and employment consequences, and also the recommendations found in several fields25. Fiscal rules rationale Fiscal regulations in a monetary merger can serve up a double purpose; that of fostering the acceptance of time dependable fiscal policy within states and improving the policy harmonization between the countries concerned. Drawing some parallel with the monetary strategy, an effectual way to show aggression on the politically persuaded shortfall bias and a main obstruction to the mediu m and the long term fiscal restraint in many states is from end to end a rules based fiscal structure that holds back the prudence of policy makers and promotes the adoption of plausible, time consistent policy. Moreover, rules are capable of playing a crucial responsibility in coordinating the fiscal policies athwart different controls, especially by plummeting detrimental spill-over. The architects of the EMU were predominantly mindful of the supra-national measurement26. Under unchecked caution, the political communications can encourage time-inconsistent policies, which may include a fiscal debit bias. The most advantageous fiscal policy is recurrently viewed all the way through the prism of inter-temporal tax even, with the current net present value of expenditure equivalent to the net present value of the revenues. With this probably being the case, the budget is upheld in structural equilibrium but deficits can be able to arise from the liberated play of routine stabilizers. However, such a strategy might not be followed by policymakers for a variety of the reasons relating to the political structural design. Alesina and Perotti (31) said persuasively that the conflicting fiscal results across industrialized countries, chiefly in the 1970s and also in the 1980s, could not be put in plain words by the prevailing economic hypothesis absent from any political and economy issues27. The literature gives you an idea about that a plethora of inter-related aspects like fragmented regimes, a high quantity of high spending ministers acting autonomously, relative electoral systems, electoral vagueness, and short government durations, can all proceed to make sub-optimal, time inconsistent fiscal guiding principles (Roubini and Sachs, 1989; Grilli, Masciandaro, and Tabellini, 1991; Kontopoulos and Perotti, 74; Milesi-Ferretti, Perotti, and Rostagno, 613)28. Before the coming on of the Maastricht treaty, the results of unconstrained caution manifested themselves thro ughout various structures of time inconsistent policies. For the most part, many countries had persistent and indefensible deficits that fed in the course of the rapid public arrears accretion, countries like Belgium, and Greece saw their arrears spiraling higher than 100 percent of the GDP for the duration of the 1980s or in the early hours of 1990s with deficits suspended around 10 percent of the GDP in countless years. Secondly, most EU states ran highly pro-cyclical fiscal courses of action, particularly during high-quality times (Jaeger, 20). This also leant to be more probable under alliance governments (Skilling, 29) and wherever political powers were dispersed (Lane, 2665)29. Thirdly, most governments in most of the countries tended to create long term welfare states assurances with slight concentration to how it was possible to pay for them, foremost to the accretion of large implied liabilities (Alesina and Perotti, 24). In addition to this, electoral deliberations affecte d proposed fiscal policy outcomes across all of the European democracies (Alesina, Roubini, and Cohen 213). Spillovers on or after lax fiscal policies in a monetary merger created their own common pool difficulty, justifying region wide fiscal regulations. The aptitude to pass on in any case some of the costs of extravagant fiscal policies to other associates can worsen the common pool trouble and intensify the tendency in the direction of time inconsistent policies in any monetary amalgamation. In the euro region, the most commonly raised issues include: A country that is running into fiscal some intricacies could be bailed out by some other countries or probably by the ECB obtaining its debt. Although prohibited by the â€Å"Maastricht treaty†, many of the observers deem that this pathway would be selected to stave off a crisis in the banking system. The probability of such a rescue leads to ethical hazard problem30. Price constancy could be put at risk as the ECB incurs pr essure from extravagant states to lower the interest rates and also to be able to inflate the debt away. Any announced price rises targets could consequently lack trustworthiness, leading to an inflation preconceived notion (Kydland and Prescott, 481; Barro and Gordon, 591). This defeat of credibility might manifest itself throughout the depreciation of the euro, even though some policy in the counterpart countries obviously also plays a role in such a circumstance31. Expansionary fiscal strategy in one country may perhaps add to area-wide interest rate. Domestic policy makers fell short to take into consideration the feel of the local fiscal policy on the other countries in the region. The relation between local fiscal plan and interest rates is hence loosened32. Procedure for excessive deficit A deficit superior than 3 percent of the GDP will trigger the EDP on condition that the surplus is not well thought-out to be outstanding, provisional, and close to the allusion value. This decisive factor is also content if the shortfall has declined considerably and incessantly and comes close up to 3 percent of the GDP. A comparable caveat for the arrears ratio is still looser: in this realm, all that requirements to come to pass is for the proportion to be approaching the 60% of the GDP threshold at a reasonable pace. When putting in order its original report below the EDP, the Commission takes into consideration as to whether the shortfall exceeds administration investment and at the same time considers â€Å"all other relevant factors, including the medium term economic and budgetary position of the member state†33. Exceptional conditions An exception is characterized to have stemmed from â€Å"an occasion externalized from the command of the associate states†¦ which has a most important consequence on the financial situation of the common government, or when ensuing from a harsh economic slump†. In such a case like this one case, a stern econo mic slump is defined as a plunge in actual GDP by at least 2%. A drop between 0.75 and 2% may perhaps be exceptional, given the supporting confirmation. It is usually not the same case when it is less than o.75%. The shortfall is termed to be provisional if it will â€Å"fall under the value which is used for reference subsequent to the end of the odd event or the harsh economic slump†. The SGP is not known to define the nearness principle. All the three must be relevant for this run away clause to be made use of34. First stage: in three months after the coverage date, the ECOFIN Council comes to a decision whether an extreme deficit possibly exists. If that is the case, it will right away issue a suggestion giving: four months to obtain â€Å"effective accomplishment† and; A time limit for the elimination of the unnecessary deficit, which is characteristically the year that follows its classification, therefore barring the special circumstances. Second stage: After a period of four months, on condition that the ECOFIN Council thinks that the associate states is not putting into practice the measures, or that they are insufficient, or that information indicates that the disproportionate shortfall will not be approved within the instance limits which are specified, it will budge on to the subsequent step. If the state is deemed as to have taken some effective act, the modus operandi is positioned in abeyance35. Otherwise, in one month, the Council goes ahead and gives notice for the associate states to take, in a specified instant limit, the measures required to reduce the shortfall. This phase is only appropriate to countries in the concluding stage of the EMU. The Council might request the associate state to present regular reports to keep an eye on the adjustment efforts which are under the enhanced fiscal observation. Final stage: If the associate state is in conformity with the given notice, the course of action is detained in abeyance. If this is not the case, the ECOFIN Council moves to the sanctions stage surrounded in two months. By this schedule, sanctions are able to be imposed in ten months of the coverage date. A non interest incurring deposit will hence be requisite. The first phase of the deposit includes a fixed constituent of 0.2% of GDP and a changeable component equivalent to 1/10 of the difference amid the deficit and the 3%, in percent of the GDP. Each subsequent year, the Council might decide to strengthen the sanctions by having need of one more deposit (variable constituent only). No solitary deposit can go beyond 0.5% of the GDP. If the extreme deficit has not been approved two years subsequent to the time that the deposit was completed, it shall be transformed into a fine. If, prior to a time when two years are up, the lead Council thinks about the excessive shortfall to be corrected, it consequently abrogates the modus operandi and precedes the deposit. Fines are however not reimbursed. Interests on deposits, and the fines, shall also be distributed amongst member countries without too much deficits (Schwartz, 9). Criteria for good fiscal rule The SGP is required to be judged along two equivalent dimensions; first, does it promote the adoption of time consistent strategies, remedying shortfall biases? Secondly, is there an advantage in having a supra-national law at all? The answer to both these questions is definitely a yes, despite a variety of enforcement impenetrability36. As a rule based structure, the SGP is well suitable to addressing the shortfall bias in the fiscal policy. As with monetary strategy, time consistent procedures can be attained by fastening the hands of the policymakers, by having nothing to do with unconstrained judgment, and by taking on a rule based structure. In a lot of ways, the framework for organizing fiscal policies of the EU countries shows the characteristics of a replica fiscal regulation and is generally suitable in the circumstance of th e economic union (Kopits and Symansky, 97). It is elegant, insofar as it remains simple, and also clearly defined, and crystal clear, particularly with respect to the parts that relay to unpleasant policy mistakes37. Also, the description of gross policy faults (deficits exceeding 3 percent of GDP) is sufficient regarding the goal of upholding stability in the economic union. Absent policies to correct the fiscal pressure correlated to aging, the monetary policy might face some major difficulties above the longer run. In addition, persistent breach of the 3 percent limit can destabilize the merger over the average run. In addition, the SGP doles out as a practical external promise technology, which is particularly valuable in nations with histories of macro-economic or even fiscal unpredictability, or politically induced shortfall biases. However, onlookers have raised issues over whether the structure is sufficiently flexible and also enforceable and also as to whether it allows fo r enough ownership. Critics have said that the EDP mechanism is too dull and perfunctory. Also, the â€Å"preventive arm† is seen as deteriorating to take country precise sustainability issues into account adequately, calling like in CBS in all affected countries in spite of the circumstances38. Mostly, on the other hand, this disapproval fails to provide due credence to the necessitation for any regulation to be straightforward and crystal clear, chiefly if it is supranational (Schuknecht, 48). Others have strained attention to shortages in the enforcement apparatus as the principal gap in the SGP’s protective covering (Buti, Eijffinger, and Franco, 20). Inman (1999) claims that at the same time as the EU fiscal structure is effective, it trips up on the enforcement that happens to be partisan rather than sovereign, and resulting from the peer-driven nature it has39. Enforcement harms tend to be connected to possession, as several have argued that SGP is too concentra ted and not adequately respectful of the subsidiary (DeGrauwe, 112). Criticisms General disapproval of the SGP is mostly about its pro-cyclical nature, the very weak consequences on the growth and also the employment and the possibility of exploitation, its universal incredibility, and the real criteria are approximately completely random. â€Å"Handling† of reported data happens for the duration of the configuration process of the monetary unification and it was expected that it will be probable to rule it out in the course of the yearly convergence and constancy reports. This leads to the extremely weak impacts on growth that are mostly due the reasons that are outlined a while before. Neither the pro cyclical quality of the agreement nor the disregard of public investment does assist economic expansion. Even supplementary, the whole agreement seems to hold only development effects that are constructed completely on prospects about the â€Å"spill-over-effects† and t he favorable market behavior. If the common legal tender will be commenced, than optimistic trade effects will take place, fostering invention and consequently leading to development. Nothing is given to ensure this. If the monetary unification is believable than the self-confidence of the economic players will be made stronger, lowering indecision, improving prospect, fostering ventures, and consequently leading to development. Nothing is made available to ensure this (Brunila, 58). If there is financial convergence prior to the monetary union, then the convergence will be also being sustainable and also later afterwards. Almost not anything is provided to make sure this, besides the yearly reports of associate countries, the harmonization of financial and economic politics, and a payable to political cause already strained. Especially a blend of low price rises’ rates and an impartial budget might even lead to deflation forces and consequently may decrease actual developmen t rates, dropping over to the other part of the EU (particularly if occurring in a big country)40. This shows the way to some concluding remarks about centralization, the prominent voting authority, and the sanctions. If the budgetary restraint is taken critically as a necessary component of the monetary union to keep away from the bailing out of â€Å"sluttish† associates, then more efficient management is needed (Bishop, 300). Political decisions build the possibility to define â€Å"exceptional circumstances† that permit for a divergence from the SGP in each single case on a country to country foundation. This has some advantages as well as some disadvantages. Particularly the disadvantages could be abridged by a centralization of a checking and the voting competences in the supra-national body which is like a commission, while an intergovernmental body (similar to the Council) could create suggestions if and what â€Å"Unique circumstances† exists that give good reason for a divergence from the SGP. Another answer might be the reweighting of the appointment authority in the Council for SGP based decisions in accordance to the budgetary regulation of the associates: the voting authority of affiliates with a fair budget or a budget excess should be enhanced, at the same time as the voting influence of members infringing the deficit measure is supposed to be reduced (Artis, 89). One might also put forward stripping affiliates that breach the pact of their voting control completely or to initiate a similar practice according to the price rises standards41. Works Cited Alesina, Alberto and Roberto Perotti. â€Å"The Political Economy of Budget Deficits,† Staff Papers, International Monetary Fund, Vol. 42, No.1, pp. 1-31. Alesina, Alberto, Nouriel Roubini, and Gerald Cohen. Political Cycles and the Macroeconomy. Cambridge, Massachusetts: MIT Press, 1999. Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. Barro, Robert, and David Gordon, 1983, â€Å"A Positive Theory on Monetary Policy in a Natural Rate Model,† Journal of Political Economy, Vol. 91, No. 4, pp. 589-610. Bishop, Graham â€Å"The Future of the Stability and Growth Pact†, in: International Finance 6 (2), pp. 297-308. Buti, Marco, Sylvester Eijffinger, and Daniele Franco â€Å"Revisiting the Stability and Growth Pact: Grand Design or Internal Adjustment?† European Economy Economics Papers, No. 180 (Brussels: European Commission). 2003. Brunila, Anne The Stability and Growth Pact: the Architecture of Fiscal Policy in EMU. Basingstoke: Palgrave. 2001. DeGrauwe, Paul.Economics of Monetary Union. Oxford: Oxford University Press.2001 Hule, Richard and Matthias Sutter: â€Å"Can the Stability and Growth Pact in EMU Cause Budget Deficit Cycles?† in: Empirica 30 (1), pp. 25-38. Inman, Robert. P. â€Å"Do Balanced Budget Rules Work? U.S. Experience and PossibleLessons for the EMU,† NB ER Working Paper No. 5838 (Cambridge, Massachusetts: National Bureau of Economic Research).1996 Jaeger, Albert â€Å"Cyclical Fiscal Policy Behavior in EU Countries,† IMF Staff Country Report No. 01/201 (Washington: International Monetary Fund). 2001. Kontopoulos, Yianos, and Roberto Perotti, â€Å"Government Fragmentation and Fiscal Policy Outcomes: Evidence from OECD Countries,† Fiscal Institutions and Fiscal Performance, ed. by James Poterba and Jurgen von Hagen (Chicago, Illinois: University of Chicago Press). 1999. Kopits, George, and Steven Symansky, â€Å"Fiscal Policy Rules,† IMF Occasional Paper No. 162 (Washington: International Monetary Fund). 1998. Kydland, Finn, and Edward Prescott, â€Å"Rules Rather Than Discretion: The Inconsistency of Optimal Plans,† Journal of Political Economy, Vol. 85, No. 3, pp. 473-92. Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. Milesi-Ferretti, Gian Maria, Roberto Perotti, and Massimo Rostagno, 2002, â€Å"Electoral Systems and Public Spending,† Quarterly Journal of Economics, Vol. 117, No. 4, pp. 607-57. Schuknecht, Ludger, â€Å"EU Fiscal Rules: Issues and Lessons from Political Economy,† European Central Bank Working Paper, No. 421 (Frankfurt: European Central Bank). 2003. Schwartz, Anna J. â€Å"Risks to the Long-Term Stability of the Euro†, in: Atlantic Economic Journal 32 (1), pp. 1-10 Skilling, David, â€Å"The Political Economy of Public Debt Accumulation in OECD Countries Since 1960,† mimeo, New Zealand Treasury. 2000. Williamson, Oliver E.â€Å"The New Institutional Economics: Taking Stock, Looking Ahead.† in: Journal of Economic Literature 38 (3), pp. 595-613. 2000 Footnotes 1 Williamson, Oliver E.â€Å"The New Institutional Economics: Taking Stock, Looking Ahead.† in: Journal of Economic Literature 38 (3), pp. 595-613. 2000 2 Kopits, Georg e, and Steven Symansky, â€Å"Fiscal Policy Rules,† IMF Occasional Paper No. 162 (Washington: International Monetary Fund). 1998. 3 Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. 4 Jaeger, Albert â€Å"Cyclical Fiscal Policy Behavior in EU Countries,† IMF Staff Country Report No. 01/201 (Washington: International Monetary Fund). 2001. 5 Hule, Richard and Matthias Sutter: â€Å"Can the Stability and Growth Pact in EMU Cause Budget Deficit Cycles?† in: Empirica 30 (1), pp. 25-38. 6 Hule, Richard and Matthias Sutter: â€Å"Can the Stability and Growth Pact in EMU Cause Budget Deficit Cycles?† in: Empirica 30 (1), pp. 25-38. 7 Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. 8 Schwartz, Anna J. â€Å"Risks to the Long-Term Stability of the Euro†, in: Atlanti c Economic Journal 32 (1), pp. 1-10 9 Skilling, David, â€Å"The Political Economy of Public Debt Accumulation in OECD Countries Since 1960,† mimeo, New Zealand Treasury. 2000. 10 Skilling, David, â€Å"The Political Economy of Public Debt Accumulation in OECD Countries Since 1960,† mimeo, New Zealand Treasury. 2000. 11 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 12 Bishop, Graham â€Å"The Future of the Stability and Growth Pact†, in: International Finance 6 (2), pp. 297-308. 13 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 14 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 15 Alesina, Alberto, Nouriel Roubini, and Gerald Cohen. Political Cycles and the Macroeconomy. Cambridge, Massachusetts: MIT Press, 1999. 16 Alesina, Alberto and Roberto Perotti. â€Å"The Political Economy of Budget Deficits,† Staff Papers, Inte rnational Monetary Fund, Vol. 42, No.1, pp. 1-31. 17 Williamson, Oliver E.â€Å"The New Institutional Economics: Taking Stock, Looking Ahead.† in: Journal of Economic Literature 38 (3), pp. 595-613. 2000 18 Williamson, Oliver E.â€Å"The New Institutional Economics: Taking Stock, Looking Ahead.† in: Journal of Economic Literature 38 (3), pp. 595-613. 2000 19 Milesi-Ferretti, Gian Maria, Roberto Perotti, and Massimo Rostagno, 2002, â€Å"Electoral Systems and Public Spending,† Quarterly Journal of Economics, Vol. 117, No. 4, pp. 607-57. 20 Milesi-Ferretti, Gian Maria, Roberto Perotti, and Massimo Rostagno, 2002, â€Å"Electoral Systems and Public Spending,† Quarterly Journal of Economics, Vol. 117, No. 4, pp. 607-57. 21 Kopits, George, and Steven Symansky, â€Å"Fiscal Policy Rules,† IMF Occasional Paper No. 162 (Washington: International Monetary Fund). 1998. 22 Kopits, George, and Steven Symansky, â€Å"Fiscal Policy Rules,† IMF Occasional Paper No. 162 (Washington: International Monetary Fund). 1998. 23 Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. 24 Kydland, Finn, and Edward Prescott, â€Å"Rules Rather Than Discretion: The Inconsistency of Optimal Plans,† Journal of Political Economy, Vol. 85, No. 3, pp. 473-92. 25 Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. 26 Kydland, Finn, and Edward Prescott, â€Å"Rules Rather Than Discretion: The Inconsistency of Optimal Plans,† Journal of Political Economy, Vol. 85, No. 3, pp. 473-92. 27 Alesina, Alberto and Roberto Perotti. â€Å"The Political Economy of Budget Deficits,† Staff Papers, International Monetary Fund, Vol. 42, No.1, pp. 1-31. 28 Alesina, Alberto and Roberto Perotti. â€Å"The Political Economy of Budget Deficits,† Staff Papers, Inte rnational Monetary Fund, Vol. 42, No.1, pp. 1-31. 29 Lane, Philip R., â€Å"The Cyclical Behavior of Fiscal Policy: Evidence from the OECD,† Journal of Public Economics, Vol. 87, pp. 2661-675. 30 Barro, Robert, and David Gordon, 1983, â€Å"A Positive Theory on Monetary Policy in a Natural Rate Model,† Journal of Political Economy, Vol. 91, No. 4, pp. 589-610. 31 Kydland, Finn, and Edward Prescott, â€Å"Rules Rather Than Discretion: The Inconsistency of Optimal Plans,† Journal of Political Economy, Vol. 85, No. 3, pp. 473-92. 32 Barro, Robert, and David Gordon, 1983, â€Å"A Positive Theory on Monetary Policy in a Natural Rate Model,† Journal of Political Economy, Vol. 91, No. 4, pp. 589-610. 33 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 34 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 35 DeGrauwe, Paul.Economics of Monetary Union. Oxford: Oxford University P ress.2001 36 DeGrauwe, Paul.Economics of Monetary Union. Oxford: Oxford University Press.2001 37 Kopits, George, and Steven Symansky, â€Å"Fiscal Policy Rules,† IMF Occasional Paper No. 162 (Washington: International Monetary Fund). 1998. 38 Schuknecht, Ludger, â€Å"EU Fiscal Rules: Issues and Lessons from Political Economy,† European Central Bank Working Paper, No. 421 (Frankfurt: European Central Bank). 2003. 39 DeGrauwe, Paul.Economics of Monetary Union. Oxford: Oxford University Press.2001 40 Bishop, Graham â€Å"The Future of the Stability and Growth Pact†, in: International Finance 6 (2), pp. 297-308. 41 Artis, Michael J. The Economics of the European Union. Oxford: Oxford University Press.2001. 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