Importance of Infrastructure Investment in the UK

Importance of Infrastructure Investment in the UK Acknowledgements In 1999, I completed the 1st year of the full-time Quantity Surveying course at Glasgow Caledonian University before moving to America in 2001. After a five-year stay, I returned to Glasgow in September 2006 and re-enrolled in the Part-time Quantity Surveying course. Ten years on from the first experience of the QS course, it gives me great pleasure and pride to be submitting one of the last pieces of work in the honours year. It has been an amazing and unexpected journey. I would not be in this position if it were not for the incredible levels of support and encouragement shown by so many and would like to take this opportunity to acknowledge some of these people. First, I would like to thank Raymond McCafferty Michael Heggarty of Cruden Building Renewals for employing me and giving me this opportunity. Their continued support and encouragement throughout this process has given me the focus and drive to continually improve my work. My colleagues at Cruden also deserve a special mention for their support during the dissertation and without the laughs during the day; this process would have been so much more difficult. Thanks guys!!! I would also like to thank Halbert Mills at Glasgow Caledonian University for accepting me back into the course and believing that I had the potential to get to this stage. During the course of this dissertation, I had some challenging times when I felt like I did not know how to develop my chosen topic. I would like to give my sincere thanks to my supervisor, Dr. John Lowe, for his inspirational input when I had these difficulties. Unfortunately, I cannot name everyone but I want to thank all my friends and family who without their support I would never have completed this piece of work. Mum, Dad, Gran, thank you so much for everything. Finally, the love and support shown by my Wife, Brooke, during this process has been a major source of inspiration. We will both be glad when the late night studying and completing of projects is finally over. Peter McLellan 1. Chapter 1 Introduction 1.1 Rationale for the Study Infrastructure forms the economic backbone of the UK. It is the fabric that defines us as a modern industrialised nation. The standard and resilience of infrastructure in the UK has a direct relationship to the growth and competitiveness of our economy. (Skinner, 2010) For the UK to retain its competitive edge, a longer-term view of investment in infrastructure must lead policy making. (Stewart, 2009) This dissertation offers an opportunity to explore and research a highly topical issue. The United Kingdom finds itself still in the midst of one of the worst economic downturns in recent memory and in a period of fiscal consolidation. As a result of this depressed economic situation, difficult decisions have had to be made by all sectors within the UK to work together to drive the country out of the recession. The recent edition of the Economic and fiscal Strategy Report and Financial Statement and budget by the Chancellor of the Exchequer, highlights the importance of implementing measures that will promote sustainable growth. Despite modest growths to GDP of 0.4 per cent in the final quarter in 2009 (NSO, 2010), the general consensus is that the United Kingdom is in the early stages of recovery. The 2010 budget, called Securing the recovery, outlines ways in which it aims to support this vision. One of these policies, is to invest in infrastructure, including additional funding for transport and local roads and creating a Green Investment bank. (UK Budget, 2010) Also, the Eddington Report, published on 1 Dec 2006, was a study jointly commissioned by the Secretary of State for Transport and the Chancellor of the Exchequer. Its role was to analyse the long-term relationships, within the boundaries of the Governments wider commitment to sustainable development, between transport and the UKs growth, stability and economic productivity. The findings of this study will be discussed and compared to the investment required to meet the future demands of the UK. Furthermore, in a recent study carried out by the British Chambers of Commerce (BCC), it revealed that inadequate energy, transport, and communications infrastructure continues to reduce the opportunity for UK businesses to grow. It also outlines that during this period when businesses play a vital role in the recovery of the economy, productivity is being affected as a result of lack of capacity, thus restricting the UKs economic potential. (BCC survey, 2010) In response to the survey carried out in 2010, David Frost, the Director general of the BCC stated the following: A countrys infrastructure is crucial to the success of its businesses. In the current environment of economic uncertainty and public spending constraints, our energy, digital, and transport networks must be up to the job if business is to deliver growth and create employment. The intriguing situation that the UK Government now face is deciding the best way to stimulate economic growth without increasing the deficit. One of the issues with increasing deficits is the Government will have to borrow to service the debt. As a result of the world-banking crisis over the last few years, there is reluctance to increase the UK debt further and therefore this might have an impact on infrastructure investment in this country. This dissertation provides an opportunity to research the level of infrastructure required in the UK and review the part it plays to the long-term sustainable growth of the UK economy. Furthermore, in doing so, the author intends to see if further investment in Infrastructure works is viable in the current economic climate. 1.2 Aim The aim of this dissertation is to assess the importance of infrastructure investment in the United Kingdom and how this impacts on the long-term sustainable growth of the UK Economy given the current economic constraints. 1.3 Objectives To review Fiscal and Monetary policy theories available to the UK Government. To review the current and future demands for infrastructure works in the UK. To understand the level of importance of infrastructure work investment to the UK economy. To understand the roles, responsibilities and options available to public and private bodies in raising capital to invest in infrastructure works in the UK. To highlight the economic and social benefits gained as a result of increased investment in chosen infrastructure sectors by utilising hypothetical cost model projections. 1.4 Outline Methodology of the Research 1.5 Dissertation Contents Chapter 2 Provides an extensive Literature review on the topic area. The author will provide a general overview of economic theory, introduction to infrastructure, and a review of the relevant studies published worldwide that reveal intellectual thoughts on infrastructure investment impact on the economy. This will be carried out in the way of both descriptive and an analytical approach to all the appropriate literature sourced to aid in this dissertation. Naoum (2007) states It is descriptive in that it describes the work of previous writers and it is analytical in that it critically analyses the contribution of others with a view of identifying similarities and contradictions made by previous writers. According to Naoum (2007), the literature review will serve two purposes. First, it allows for gathering of information to allow development of issues and themes within the chosen topic that ultimately shape the research design. Second, the literature review will help form the basis of the research design by analysing previous research designs. Chapter 3 Chapter 3 introduces the reader to the numerous research techniques available to the author and will highlight the strengths and weaknesses of each and merits of each approach, before indicating the chosen methods of quantitative analysis technique Chapter 3 examines the various research techniques that were available to the author and describes the strengths and weaknesses of each of the approaches in respect to the available data. In particular this chapter presents the reasoning behind the authors decision to adopt the quantitative analysis technique and explains how this approach was applied. This chapter also describes the source of the data and highlights any potential bias or limitations that the author experienced within the analysis. Furthermore this chapter explicitly explains the process for selecting and categorising the appropriate data prior to analysis in a consistent manner. John Hannah paragraph Chapter 4 Chapter 4 builds upon the process described in the previous chapter and examines the primary source of data to assess what trends are evident with each of the particular categories. This section goes on to expand upon the original quantitative analysis and examine a series of quantitative case studies to assess the extent of early warning events and compensation events that occurred on completed projects. John Hannah paragraph Chapter 5 In conclusion, chapter 5 summarises the findings of this research and consider if the original aim and objectives have been achieved. Finally, this chapter discusses the authors findings and proposes a list of recommendations for future studies. John Hannah paragraph 2. Chapter Literature Review 2.1 Introduction The purpose of research is to make a contribution, however small, towards understanding the phenomenon being studied and ultimately towards the total body of knowledge (Parahoo, 2006) The intended purpose of the following literature review is to provide a general background to the chosen topic that will aid in the understanding of the following areas: How the UK Economy functions and what factors drive it. Description analysis of previous research on the impact of infrastructure investment on the economy. The role the construction industry plays in the UK Economy. The information presented within the literature review will enhance the readers knowledge of the topic with a view of providing clarity and understanding on the findings presented in chapter 4. Economic Theories There are conflicts of opinion on economic theory. For instance, monetarists argue that rises in the money supply cause inflation whereas Keynesians argue that it is changes in inflation which cause changes in the money supply (Stanlake Grant, 1995) Keynesian Economics John Maynard Keynes was a British economist whose ideas have been a central influence on modern macroeconomics, both in theory and practice. He advocated interventionist government policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics. Keynes solution to poor economic state is to introduce impetus spending or as the US President Franklin Roosevelt described, prime the pump. Keynes argues that the government should step in to increase spending, either by increasing the money supply or by actually buying things on the market itself. A supporter of Keynesian economics believes it is the governments job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation. Alternative Economic Theories Since Keynesian economics advocates for the public sector to step in to assist the economy generally, it is a significant departure from popular economic thought, which preceded it â‚ ¬Ã¢â‚¬  laissez-fair capitalism. Laissez-fair capitalism supported the exclusion of the public sector in the market. A number of laissez faire consequences are drawn from Says law. Say also advocated public works to remedy unemployment. Say argued against claims that business was suffering because people did not have enough money and more money should be printed. Say argued that the power to purchase could be increased only by more production and is also best known for coining the phrase supply creates its own demand (Curwen, 1997) James Mill used Says Law against those who sought to give economy a boost via unproductive consumption. Consumption destroys wealth, in contrast to production which is the source of economic growth. The demand for the product determines the price of the product, but not if it will be consumed. Alternatively, Keynes is an advocate of trying to stimulate consumption by government intervention. Views on Economic thoeries Cutting support now, as some are demanding, would run the real risk of choking off the recovery even before it started, and prolonging the global downturn. (Darling, 2009) If consumers, markets and businesses get the message that government wants to carry on spending and isnt serious about dealing with the deficit, they will start to conclude that the UK is no longer a safe place to invest in, spend in or build a business in, (Cameron, 2009) Importance of Construction industry to UK Economy A recent survey commissed by the UK Contractors Group and carried out by LEK Consulting to demonstrate the impacts of the Construction industry on the UK Economy was distributed September 2009. The main aim of this report was to specifically highlight the benefits of investing in construction. The report covered 3 main areas: Contribution of the construction industry at national and regional level. Key contribution that construction makes to national employent levels. The role that the construction industry plays in the broader economic and social objectives. The reports contention is that the construction industry is vital to the overall UK economy while still being in a recession as it provides the following: Construction is a major contributor to the UK DGP. Construction sector employs circa  £3m people throughout 300,000 firms. Construction is also an important driver for other sectors, without which there would be a loss of domestic production capacity and skills. The report, Construction in the UK economy: The Benefits of Investment, shows that construction is the best sector for stimulating employment. It also shows that every  £1 spent on construction leads to an increase in GDP of  £2.84, as the spending not only creates construction output worth  £1, but also stimulates growth elsewhere in the economy worth  £1.84. With the Chancellors Pre-Budget Report looming, the CBI is continuing to press the case for protecting capital spending by government. (John Cridland, CBI Deputy-Director General, 2009) A strong economy needs fit-for-purpose schools and hospitals, and it will be the construction industry that builds the new transport and energy infrastructure needed to shift to a low-carbon economy. (John Cridland, CBI Deputy-Director General, 2009) Introduction to Infrastructure Works Infrastructure investment impact: Previous Research Over the last 30 years there have been various economic models developed to help in the research of the impact of infrastructure investment on the economy. The in-depth empirical studies have mainly utilised macro-economic level data, which includes cross-state and cross-country data. (Straub, 2007) edinburgh paper According to the studies carried out by Aschauer (1989) he states that when analysing the importance of public investment to the productivity improvement and economic growth, added weight must be attributed to the public investment decisions made by the Government. Furthermore, the study indicates increased productivity and growth in the economy by investing in areas such as highways, sewers, streets, and water systems. To ascertain these findings, Aschauer took the average annual growth rates of total factor productivity and the non-military public capital stock in America over the period 1950-1985; Aschauers data indicated a close relationship between level of investment in non-military infrastructure and productivity. Put in Tables from study Further research in the United States carried out by Munnell (1990) analysed the impact of the stock of public capital on economic activity at the regional and state levels. In conclusion, Munnell found that the US states that had invested in infrastructure had greater output, increased levels of private investment, and high levels of employment growth. The study highlighted above, Aschuer (1989) estimated an elasticity of output with respect to public infrastructure capital in the United States during 1950-1985 of between 0.38 and 0.56. These results have been shown to be econometrically suspect and subsequent work suggests the elasticity is much smaller. The average elasticity across OECD countries for the period 1960-2001 has recently been estimated to be 0.2 (Kanps, 2004). Aschauers paper has, however, proved very fruitful in terms of subsequent research, which it stimulated. (Crafts Leunig, 2005) A number of empirical studies have looked at the relationship between all public infrastructure investment and GDP growth. On average these studies seem to indicate a positive elasticity of output to public capital of around 0.20. Put another way, a ten per cent increase in public capital stock increases GDP by around 2 per cent. (Eddington report 2006) The eddington report suggest that there are limitations to these empirical studies and the results should be viewed with caution. OECD (2003) argues that early empirical work on the link between infrastructure investment and economic performance overstated the magnitude of the impact on GDP and productivity growth (The sources of economic growth in OECD countries, OECD, 2003) In particular, studies that focus on public investment in capital and infrastructure in a broad sense, rather than on transport specifically, do not really distinguish between types of investment in terms of new build, upgrade, maintenance etc although some do make specific conclusions about the value of transport infrastructure investment. Later studies using more complex modelling suggest a positive, albeit weaker relationships between infrastructure and GDP. These include: Kocherlakota and Yi (1997), Demetiades and mamuneas (2002), OFallon (2003), and Nijkamp and Poot (2004). (see figure 1.5 eddington report 2006) In 1993, Easterly and Robero carried out further research to expand on the work in this field. Called Fiscal Policy and Economic Growth: An Empirical Investigation, it details several conclusions that support the findings expressed by Aschauers research in 1989. It tackled areas such as the rate of growth and the level of development by employing historical data and recent cross-section data. The main findings outlined that there is a strong relationship between a countries fiscal structure and the development level and that investment levels in communication and transport is consistently correlated with growth. This therefore indicates that infrastructures are important in the economic prosperity of a nation (Easterly, Robelo 1993). Put in reference Eisner (1991) highlighted that public infrastructures not only serve as an intermediate good in physical goods production, they can also be final consumption goods. For example, water and sewage systems benefit environment, better transportation saves time spent on travelling, public parks give people pleasure, etc. Canning, Fay, and Perotti (1994) found substantial effects of physical infrastructure on economic growth based on the international data set. The strategy for national infrastructure also states, The majority of empirical research indicates that there is positive relationship between infrastructure and economic growth (strategy for national infrastructure, 2010). Introduction to Infrastructure What is Infrastructure? Set-up in December 2009 to help meet the infrastructure requirements in the UK for the next 10-20 years, Infrastructure UK defines Infrastructure as key economic sectors which include: Water, Waste, Energy, Transport and communications (strategy for national infrastructure, 2010). Infrastructure networks enable people, goods, energy, information, water, and waste to move efficiently around the UK and, in some cases, across its borders. The extent, capacity and quality of these networks has a direct bearing on the economy of the UK, the environment and the quality of life of everyone who lives in or visits the UK. Infrastructure Studies in the United Kingdom Extensive research carried out in the United Kingdom has indicated the level of infrastructure required for each sector and this can be cross-referenced with studies highlighted in the previous section. For example, the findings from the research carried out by Eisner, 1991 and Easterly, Robero 1993 indicated a relationship between transportation and its impact on the growth of the economy. The Eddington report was published on the 1st December 2006 and was carried out by Sir Rod Eddington under the instruction of the UK Government. The report is an examination of the impact transportation decisions will have on the UK environment and economy. The report analyses the current global economic demands and how our current transportation infrastructure must meet the demands of the 21st century. It states that with rising population and resultant greater demands on the country, higher levels of congestion and issue with reliability will have adverse effects on the economy if the correct infrastructure is not in place. It contends that by not having the required infrastructure in place it costs businesses more money while also effecting peoples social environment (Eddington Report, 2006). As well as utilising the Eisner, Easterly and Robero findings, the Eddington Report drew on research carried out in more recent times. The studies used in the development of the Eddington Report comprised: The historical significance of Transport for Economic growth and Productivity (Crafts Leunig, 2005), Step change transport improvements (Mann, 2006), and transport and labour market strategies (Gibbons Machin, 2006) Assessing transports contribution to the economy Transport can impact on the performance of the economy in a number of different ways: Transports impact on GDP Transport can impact on the economy and will ultimately impact on overall output. Gross domestic product (GDP) is currently the best measure of the size of the economy as it measures the total value of goods and services provided. Transport can have an impact on economic output (GDP) thorugh two channels: Firstly, transport can affect GDP though a number of inputs that are used, for example transport may increase employment either by allowing greater access to labour or stimulating the creation of new firms, which can increase the number of goods and services produced and lead to an increase in GDP. Secondly, transport can improve the efficiency with which firms use inputs, in other words transport can have an impact on productivity. For instance, a well functioning transport network can raise productivity by redusing journey times. Transport investment can impact on the drivers of productivity by encouraging prictae investment through raising its profitability; facilitating labour mobility and thereby increasing the returns in investment skills; and enabling effective competition even when economic activity is geographically dispersed. Identifying the impact of transport on productivity is important because improving productivity is a key to determinant of long-term growth and living standards. These effects can either have a one -off effect on the level of productivity or a sustained impact on the growth rate of productivity. Transport can impact on the growth rate of productivity by stimulating innovation through its impact on agglomeration economies, trade and foreign direct investment. In practice these dynamics are very difficult to measure, but are nevertheless extremely valuable, as they determine how quickly the economy grows and therefore the rate of growth in GDP. Transports role in supporting quality of life Critically though, GDP measures alone fail to capture the impacts of transport on the environment or its contribution to the wider well being of society. Transports impact on the environment, for example through carbon and other emissions, can increasingly lead to unsustainable growth, as well as impacting on peoples quality of life. Transport improvements that free up wasted travel time allow people to spend more time with friends and family, and enjoy more leisure activities. An economic welfare measurement would seek to measure such broader impacts of transport on society and the environment rather than just a pure GDP measure. These benefits to general well being are known as economic welfare, or welfare. The use of existing transport networks: What benefits do provide Erenburg (1994) finds that policy measures that make more efficient use of existing transport infrastructure through pricing mechanisms or other traffic management solutions can have a significant impact on growth (linking public capital to economic performance, Erenburg, 1994) Hulten and Schwab (1996) estimate that a 1 per cent increase in infrastructure effectiveness would have an impact on growth seven times larger than a 1 per cent increase in the rate of public infrastructure investment. (the public capital hypothesis: The case of Germany, Hulten and Schwab, 1996) OECD/ECMT (2001) paper on the benefits of transport concludes that wider economic benefits may be achieved more efficiently by introducing prices which correspond more closely to costs, or by reallocating existing infrastructure more efficiently between users, or by adopting other transport policies. (Assessing the benefits of transport, European Conference of Ministers of transport, OECD, 2001) Victoria transport policy institute (2003) argues that investment in alternative modes of transport and in management strategies to encourage more efficient use of existing road capacity tends to provide greater economic benefit than expanding existing highways to reduce congestion. The study also argues that the benefits of transport improvements are heavily dependant on local circumstances, in that they will only increase economic development where inadequate transport is a significant constraint on economic activity. EVIDENCE OF CONDITIONS NECESSARY FOR TRANSPORT TO IMPACT ON THE PERFORMANCE OF THE ECONOMY Caning and Fay (1993) assert that infrastructure should not be seen as a factor of production but as a condition for high growth. Kessides (1993) notes that infrastructure does not create economic potential; it only develops such potential where appropriate conditions exist, i.e. other inputs such as labour and capital are available to drive output growth. Indeed, lynde and Richmond (1993), Trinder (2002), and OFallon (2003) assert that public and private capital are complements; that physical infrastructure requires the existence of available productive private capital in order to realise economic growth potential, and that infrastructure investment can boost the productivity of such private capital. Infrastructure investment may also feed through to increased labour productivity. Canning and pedroni (1999), banister and berechman (2000), Trinder (2002) and OFallon (2003) highlight other important underlying conditions that will influence the impact of transport investment on the economy (SEE REFERENCES FIGURE 1.7 EDDINGTON REPORT) In summary, these include: Economic conditions, a stable macroeconomic policy climate, local market circumstances, agglomeration, and labour market conditions Investment conditions; available funds, timing and structure of investment, type of infrastructure investment, location of investment in terms of network structure and political and institutional conditions, decision making, planning, sources, and methods of finance, level of investment, supporting legal and organisational policies and processes, and method and governance of infrastructure delivery and provision. Funding and delivery mechanisms for UK national infrastructure The National Infrastructure is funded and delivered in a number of ways: Commercially driven, user-paid infrastructure e.g. unregulated airport and ports where it is for the developer to decide what and when infrastructure is built. Any developments is then paid for by consumers (but prices are not regulated because competition exists) Commercially driven, user paid but price-regulated infrastructure with a stronger role for Government. Regulated airports are an example. Government supports investment in additional capacity but this is a commercial decision for airport operator (and where prices are regulated to protect from monopoly power). The energy sector also largely follows this model but prices are set by the market or thorough Government intervention. Price regulated businesses where independent regulators play a stronger role in determining the level and nature of investment. For example, water, where the regulator has an input into the nature of the investment programme but infrastructure investment in funded by users. Price regulated business that is funded by the taxpayer and users e.g. Network Rail. This is a model where the business is funded both by users and taxpayers where the DfT have a central role in setting out the outputs it wants from the railways and the level of funding to achieve that. The regulator sets the efficiency targets and prices for the company. Publicly decided and publicly funded infrastructure e.g. roads. Government decides where they should go, when they should be built and pays for them. This may include some provate finance but ultimately government rather than users pay. Clearly Government enjoys much greater control over infrastructure, but only a small part of the overall picture. Infrastructure essential for supporting economic activity and growth Many key investment projects rely on private finance either as direct investment or through mechanisms such as PPPs. In the current economic climate the Uk faces stiff competition in securing investment from private investors and from within Government budgets. In this environment, there needs to be a clear vision from Government about the future and needs for infrastructure. This will be essential to persuade the provate sector to invest in the national infrastructure and, in particular, provaste sector investors need long-term certainty in order to judge whether to commit major funds. Chapter 3 This chapter gives a brief description of the methods used for collecting independent data and why they are relevant to the research objectives. Research Strategy Quantitative Quantitative research is objective in nature. It is defined as an inquiry into a social or human problem, based on testing a hypothesis or a theory composed of variables, measured with numbers, and analysed with statistical procedures, in order to determine whether the hypothesis or the theory hold true (Cresswell, 1994). This statement is expanded on further by Bouma and Atkinson (1995), who state Quantitative data is, therefore, not abstract, they are hard and reliable; they are measurements of tangible, countable,

Branches of Philosophy Essay

In order to narrow the aims of discussion philosophy was broken into branches. Traditionally philosophy has been broken into four main branches; however we would like to add a fifth branch in our text -Epistemology Epistemology, from the Greek words episteme (knowledge) and logos (word/speech) is the branch of philosophy that deals with the nature, origin, and scope of knowledge and love. -Metaphysics Metaphysics (derived from the Greek words â€Å"ta meta ta physika biblia†) – meaning ‘the book that follows the physics book’. It was the way students referred to a specific book in the works of Aristotle, and it was a book on First Philosophy. (The assumption that the word means â€Å"beyond physics† is misleading) Metaphysics is the branch of philosophy concerned with the study of â€Å"first principles† and â€Å"being† (ontology). In other words, Metaphysics is the study of the most general aspects of reality, such as substance, identity, the nature of the mind, and free will. In other way is a study of nature and the nature of the world in which man lives -Logic Logic (from Classical Greek (logos), originally meaning the word, or what is spoken, but coming to mean thought or reason) is most often said to be the study of arguments, although the exact definition of logic is a matter of controversy amongst philosophers (see below). However the subject is grounded, the task of the logician is the same: to advance an account of valid and fallacious inference to allow one to distinguish good from bad arguments. -Ethics Ethics is a general term for what is often described as the â€Å"science (study) of morality†. In philosophy, ethical behavior is that which is â€Å"good† or â€Å"right. † The Western tradition of ethics is sometimes called moral philosophy. Other Branches Philosophy of Education: Fairly self-explanatory. A minor branch, mainly concerned with what is the correct way to educate a person. Classic works include Plato’s Republic, Locke’s Thoughts Concerning Education, and Rousseau’s Emile. Philosophy of History: Fairly minor branch (not as minor as education), although highly important to Hegel and those who followed him, most notably Marx. It is the philosophical study of history, particularly concerned with the question whether history (i. e.the universe and/or humankind) is progressing towards a specific end? Hegel argued that it was, as did Marx. Classic works include Vico’s New Science, and Hegel and Marx’s works. Philosophy of Language: Ancient branch of philosophy which gained prominence in the last century under Wittgenstein. Basically concerned with how our languages affect our thought. Wittgenstein famously asserted that the limits of our languages mark the limits of our thought. Classic works include Plato’s Cratylus, Locke’s Essay, and Wittgenstein’s Tractatus Logico-Philosophicus. Philosophy of Law: Also called Jurisprudence. Study of law attempting to discern what the best laws might be, how laws came into being in the first place, attempting to delimit human laws from natural laws, whether we should always obey the law, and so on. Law isn’t often directly dealt with by philosophers, but much of political philosophy obviously has a bearing on it. Philosophy of Mathematics: Concerned with issues such as, the nature of the axioms and symbols (numbers, triangle, operands) of mathematics that we use to understand the world, do perfect mathematical forms exist in the real world, and so on. Principia Mathematica is almost certainly the most important work in this field. Philosophy of Mind: Study of the mind, attempting to ascertain exactly what the mind is, how it interacts with our body, do other minds exist, how does it work, and so on. Probably the most popular branch of philosophy right now, it has expanded to include issues of AI. Classic works include Plato’s Republic and Wittgenstein’s Philosophical Investigations, although every major philosopher has had some opinion at least on what the mind is and how it works. Philosophy of Politics: Closely related to ethics, this is a study of government and nations, particularly how they came about, what makes good governments, what obligations citizens have towards their government, and so on. Classic works include Plato’s Republic, Hobbes’ Leviathan, Locke’s Two Treatises, and J. S. Mill’s On Liberty. Philosophy of Religion: Theology is concerned with the study of God, recommending the best religious practises, how our religion should shape our life, and so on. Philosophy of religion is concerned with much the same issues, but where Theology uses religious works, like the Bible, as it’s authority, philosophy likes to use reason as the ultimate authority. Philosophy of Science: Study of science concerned with whether scientific knowledge can be said to be certain, how we obtain it, can science really explain everything, does causation really exist, can every event in the universe be described in terms of physics and so on. Also popular in recent times, classic works include Hume’s Treatise on Human Nature, Kripke’s Naming and Necessity, Kuhn’s Structure of Scientific Revolutions. Empiricism is a philosophical idea based on the idea that all reliable knowledge about the world is gained in the process of experience. Famous empiricists were Hume, Locke and Berkley, basing themselves on ideas already postulated by Aristotle, that we are born with the Tabula Rasa which receives throughout our lives information on which it can base all thinking and knowing. The movement of empiricism was in part a countermovement to what Descartes and Spinoza had proposed as rationalism. Knowledge derived from experience is called a posteriori. ————————————————- Doing Philosophy Many fields can be studied and learned without ever actually working with the tools in the field. For instance, chemistry can be learned in depth without ever picking up a test tube or mixing ionic compounds. Philosophy, however, is more about the methodology behind deriving answers than it is about the answers themselves. As such, students studying philosophy must use the methodology of philosophy on the philosophy they are learning as they are learning it. Doing philosophy involves asking the right questions, critically examining the work of previous philosophers, truly understanding the works and the reasoning behind the works, and possibly building on the works of previous philosophers by expanding or testing this methodology.

Nintendo Strategy

Simplifying the design and use of the WI system allowed the developers to create the perfect entry strategy for their new target market with great success. In the first half of 2007, the Nintendo WI sold more units in the united States than the Oxbow 360 and Plantation 3 (ASS). In the first quarter of 2008, Nineteen's net sales were up over 20% from the same quarter the previous year and WI was outselling Its seventh generation home system rivals the Sony Plantation 3 and the Oxbow 360.Nineteen's net income in the same quarter was up over 30% from the same quarter the previous year due to the intended strength of WI and Nintendo ADS hardware and software sales. Finally, most believe that both Sony and Microsoft had been traditionally operating at a loss with anticipated gains In software and game sales while Nintendo enjoyed operating profits. Although initially surprised by Wig's resounding broad appeal, Sony and Oxbow were prepared for a series of competitive counter moves designed to attack Wig's popularity going into the 2008 holiday season.Some of your students may have received early versions of game consoles such as Nintendo 64, Saga Genesis, or Plantation or handheld games such as Nintendo Gamey as gifts when they were children. Given he increasing popularity, sophistication and complexity of consoles, it's also likely Tanat a majority AT your students currently own one AT ten inhumane game or consoles mentioned in the case.The case will allow you to illustrate concepts from Chapters 3 – 6 if used as a stand alone case or can be paired with Case 11–Competition in the Video Game Console Industry if you prefer to use the case to focus on the strategy options presented in Chapters 5 and 6. The case provides sufficient information to allow students to prepare a review of the industry dominant economic characteristics, Lully examine the competitive forces at play in the video game industry, consider the industry driving forces and key success f actors, and examine Nineteen's internal situation and recent financial performance.The case also allows students to understand how focused differentiation strategies are capable of yielding above- average profit margins without a reliance on premium pricing. The case also allows students to understand the appeal of Nineteen's Blue Ocean strategy and observe how the company has turned a first mover advantage into what appears to be a sustainable advantage. This teaching note reflects the thinking and analysis of the case authors, Professor Lou Marino and Sally Garrett, both of the University of Alabama.We are most grateful for their insight, analysis and contributions to how the case can be taught successfully. 717 718 Case 12 Nineteen's Strategy for the WI-?Good Enough to Beat Oxbow 360 and Plantation 3? Finally, the case's strong decision focus allows students to consider what Nintendo must do next to ultimately win the battle among next generation video game consoles. To give stud ents guidance in what to do and think about in preparing theNintendo case for class discussion, we strongly recommend providing class members with a set of study questions and insisting that they prepare good notes/answers to these questions in preparing for class discussion of the case. To facilitate your use of study questions and making them available to students, we have posted a file of the Assignment Questions contained in this teaching note for Nintendo on the student section of the publisher's Online Learning Center for the 17th edition (www. Meme. Com/Thompson). You should be aware that there is a set of study questions posted in the student LLC for each of the 26 cases included in the 17th edition. ) In our experience, it is quite difficult to have an insightful and constructive class discussion of an assigned case unless students have conscientiously have made use AT pertinent core concepts Ana analytical tools In preparing ostentatious answers to a set of well-conceived study questions before they come to class. In our classes, we expect students to bring their notes to the study questions to use/refer to in responding to the questions that we pose.Moreover, students often find having a set of study questions is useful in helping them prepare oral team presentations and Ritter case assignments-?in addition to whatever directive questions you supply for these assignments. Hence, we urge that you insist students spend quality time preparing answers to study questions-? either those we have provided or a set of your own questions. There is a 2:48 second video that accompanies this case that discusses how the WI has expanded the market for video games by appealing to non-traditional gamers.It is best to show the video at the very beginning of the class discussion. The case can be used effectively for a written assignment or oral presentation. Our recommended questions for written assignments are as follows: 1. You have recently been hired by Nintendo o f America as an analyst and have been assigned to its WI strategy group. During your first meeting with the strategy group, the team leader asked that you prepare an analysis of the video game console industry for distribution at the next meeting.Please prepare a 5-6 page report that includes a description of the industry dominant business and economic characteristics, evaluates competition in the industry, assesses industry driving forces, and lists industry key success factors. Your report should also include a tragic group map of the entire video game industry and specific strategy recommendations that will allow the WI to remain the leading next generation console. 2. As a newly hired Nintendo of America retail representative, you have been asked to Join a cross functional strategy group.The group's charge from upper level management is to make a set of recommendations designed to further solidify the company's number-one ranking in the industry. Your recommendations to upper ma nagement should be in the form of a 2 – 3 page executive summary and must be supported with a complete industry analysis, company situation analysis, and uncial analysis. Each recommendation should be supported by your analyses and must clearly specify what elements of your analysis led to your conclusions.The exhibits, tables and figures used in your analysis should be attached to your executive summary and carry an equal weight in determining your grade for the assignment. ASSIGNMENT QUESTIONS 1 . What are the defining business and economic characteristics of the video game console industry? What is the industry like? 2 want Is competition Like In ten peeve game console Industry:' DOD Twelve-Tortes analysis to support your answer. Which of the five competitive forces is strongest? Which is weakest?Would you characterize the overall strength of competition in video game consoles as fierce, strong, moderate to normal or weak? Why? Crafting & Executing Strategy 17th Edition 3. What forces are driving changes in the video game console industry? Are these driving forces acting to make the industry more or less competitively intense? Are the driving forces acting to make the industry more or less profitable in future years? 4. What 3-5 key factors determine the success of video game console developers like Nintendo? 5. What is Nineteen's strategy?Which of the five generic strategies discussed in Chapter 5 is Nintendo using? What are some of the recent offensive and/or defensive strategies that Nintendo has employed? Have these tactics been successful? 6. Is it fair to characterize Nineteen's introduction of the WI as a blue ocean strategy? Why or why not? 7. How well is Nineteen's strategy working in terms of the financial performance it is delivering? Should shareholders be pleased? Why or why not? What 2-3 weaknesses do you see in Nineteen's financial performance? 8. What does a SOOT analysis reveal about the attractiveness of Nineteen's overall taxation? Is the company's competitive position as solid as top management seems to believe? Does the company have a competitive advantage? If so, what is the basis for this competitive advantage and is the advantage sustainable? 9. What does a competitive strength assessment (as per the methodology in Table 4. 4 of Chapter 4) reveal about whether Nintendo has a competitive advantage? 10. What recommendations would you make to Nintendo to improve its competitiveness in the video game console industry and to maintain its favorable positioning visit-Г-visit Microsoft and Sony?TEACHING OUTLINE AND ANALYSIS . What are the defining business and economic characteristics of the video game console industry? What is the industry like? Students should be able to identify the following business and economic characteristics of the console segment of the video game industry: v Economies AT scale: competitors In ten Industry are large Ana conclave cost advantages by producing large quantities. However, both Sony and Microsoft have traditionally operated at a loss in part due to heavy investments into research and development. Product innovation: Competitors win market share from rivals by developing arduous that are technologically superior and more powerful than the products offered by rivals. New products often contain technological breakthroughs such as advanced graphics or interactive motion-sensitive controllers as the basis for competition. V Degree of product differentiation: Products in the market are becoming increasingly more differentiated. Some products offer high definition graphics and play DVD's while others offer controllers with motion sensors to fundamentally change the way gamers play and interact with the game. Scope of competitive rivalry: Competition occurs on a global scale to help bread research and development costs while driving revenues. For the largest competitors, non-American sales account for the majority of worldwide sales with the exception of Oxb ow v Segmentation: The industry was segmented into console hardware, console software, handheld hardware, handheld software, PC software, online games, interactive TV, and mobile phone games. V Market size: The total size of the global video game industry exceeded 69 million units sold in 2008. 19 720 Students should further identify the following as important attributes of the industry: v Entry/Exit barriers. Barriers to entry were all but insurmountable. Successful new entrants were required to have sufficient capital and technological capabilities to develop sophisticated game hardware systems capable of performing highly complex calculations. Other barriers to entry included the establishment of an installed base of sufficient size to provide an adequate incentive for independent software developers to create games for a new game system. Scope of rivalry. Rivalry in the industry could be considered global, with the three largest sellers of game systems competing against each oth er in all world arrest. Competition exists on the basis of technologically-advanced and unique v scale economies. Economies AT scale were necessary to Keep game system Ana component development expenses at acceptable per unit levels. Next generation game system and component development costs were so high that analysts believed Sony and Microsoft consistently operated at a loss. V Consumer characteristics.While typical gamers could be thought to have demographic characteristics of being young and male, a new trend is emerging whereby traditional non-gamers are now potential consumers. This has expanded nonuser characteristics to include a wider array of ages along with male and female consumers. 2. What is competition like in the video game console industry? Do a five-forces analysis to support your answer. Which of the five competitive forces is strongest? Which is weakest? Would you characterize the overall strength of competition in video game consoles as fierce, strong, moderate to normal or weak? Why?Substitutes for Video Game Systems Competitive pressures coming from the market attempts of outsiders to win buyers over to their product s Suppliers of Raw Materials and other inputs used in the Manufacturing f Video Game Consoles Competitive pressures stemming from supplier-seller collaboration and bargaining Rivalry among Competing Video Game System Sellers Competitive pressures created by the Jockeying of rival sellers for better market position and competitive advantage seller-buyer collaboration and bargaining Buyers of Video Game Systems Competitive pressures coming from the threat of entry of new rival s Potential New Entrants Into ten Vivo Game console Industry v The bargaining power and leverage of buyers – a weak competitive force Big box electronics store and discount store buyers had relatively little leverage in estimations with sellers of video game consoles. Consumers expected retailers to carry the three leading brands of consoles and the top two brands of handheld games.A decision by retailers not to carry the leading brands of game consoles would negatively impact the retailer's image with consumers. Students may suspect that manufacturers had uniform pricing for retailers, regardless of size, because of the standardized retail prices of game consoles. V The bargaining power and leverage of suppliers – a moderately strong competitive force Students will easily conclude that suppliers of microprocessors and graphics recessing units (Spins) had a moderate degree of leverage with console manufacturers because of the collaborative development process utilized in the industry. Console makers were unable to negotiate between sellers of core components, since microprocessors and Spins were specifically designed for a system.Students can rightfully argue that video game console producers did have the ability to negotiate terms with components manufacturers prior to the development of a next generation system. V Competition from substitutes – a moderately strong competitive force There were many recreation and entertainment substitutes to video games. Video gamers could engage in outdoor sports or other activities or find entertainment indoors by watching television, reading, listening to music, surfing the Internet, playing board games, or playing a musical instrument. However, the interactive nature of video games was very intriguing for many young people and older gamers. Students should point out that other gaming platforms such as PC games, handheld games and mobile phone games were also substitutes for console-based video games. Threat of entry – a weak competitive force Entry barriers that include considerable console development costs, advanced genealogical skills, a sizeable installed base of game consoles, game software development costs, volume guarantees to suppliers of key components and access to retailers make the threat of entry weak. The most likely new entran ts would be established computer technology companies such as Apple. V Rivalry among competing video game console producers – a fierce competitive Torte Students should conclude that rivalry among competing sellers is fierce. Competition between Nintendo, Sony and Microsoft centers primarily on the technological capabilities of the consoles and having a wide variety of appealing name titles developed either internally or through partnerships with independent game developers. The intensity of competition had driven console development and production costs to more than $800 per unit for the Plantation 3.A third competitive weapon utilized by console makers was aggressive pricing, which resulted in a loss of more than $300 per unit on every Plantation 3 sold. Microsoft's Oxbow 360 pricing was also believed to be below its production costs. Nintendo had chosen not to compete aggressively on technological capabilities when developing the WI and has earned refits on the sales of WI units. Overall Assessment: Students should conclude that the video game industry is only modestly attractive when looking at the console segment. The greatest percentage of industry profits seemed to generate from the sale of game software and peripherals. Students may compare the video game business to the razor/razor blade industry, whereby razors are sold at a loss or breakable and blades carry high margins.The development of a large installed base of console systems is essential to earning substantial profits from the sale of game software over the lifespan of a console. Therefore, students should recognize that the video game industry requires patience on the part of participants to see profits from their investments in next generation technology. 721 722 3. What forces are driving changes in the video game console industry? Are these driving forces acting to make the industry more or less competitively intense? Are the driving forces acting to make the industry more or less p rofitable in future years? Driving forces that students should be able to identify include: v Product innovation.Students should note that since the beginning of the died game industry, each new generation of video game consoles has been dramatically more technologically advanced than prior generations. Technological advancements have included better graphics (I. E. , high definition) and motion sensor controllers. V Emergence of new video game devices. Students will comment on the emergence of new video game devices such as mobile phones, ‘Pods, and other handheld devices. V Emergence AT Internet-Dates peeve games. Beginning wilt ten Good Ana Play 2, game consoles were capable of connecting to the Internet to play Internet-based game software or multilayer games. Societal trends.Changes in societal trends influence the disposable income of consumers to buy consoles. The industry is said to be resilient to recession. Changes in demographic groups present an opportunity in unta pped market segments. V Changing consumers. There has been a change in the target audience for video game console industry competitors with the introduction of Nineteen's WI. Incumbents are likely to take note of this new segment. Students should conclude that the individual and collective effect of industry driving forces will drive development costs higher-?making the industry less attractive for new entrants and increasing the number of unit sales necessary for current console makers to achieve breakable.Students could make the argument that, as development and production costs continue to climb, consoles must evolve into central entertainment hubs that all consumers would like to have in their homes to achieve sales volumes necessary to support profitability. In addition, students may suggest that the cost of developing handheld systems will likely rise as features are added to defend against game features included on wireless telephones and pod- type devices. 4. What 3-5 key fa ctors determine the success of video game console developers like Nintendo? Students should identify several factors that are necessary for competitive success in the console segment of the video game industry to include the following: v Large installed base.Students should be able to argue successfully that the development of a large installed base is the most important factor related to success in the console segment of the video game industry. A limited selection of game titles reduced consumer interest in the console-?regardless of its technological capabilities. V Technological capabilities. Video game console makers were required to develop next generation consoles that could fully exploit the capabilities of the latest microprocessors and Spins. Traditional gamers seemed most interested in games with realistic graphics. Nineteen's WI did not have the graphics rendering capabilities of the Plantation 3 or Oxbow 360, but did include a highly innovative and technologically advan ced wireless game controller. Partnerships with independent software developers. The availability of intriguing game titles was essential to building an installed base and earning residual pronto Trot game sales. Strategy 17th Edition rattling & Executing v Acceptable development and production costs. Development costs and production costs increased as each new generation of game console became more technologically advanced. The cost to develop microprocessors and Spins capable of performing increasingly complex instruction sets and the cost of innovative components such as Sonny's Blue-Ray HAD optical drive had caused the cost of each Plantation 3 unit to range from $805 to $840.The Plantation g's retail price caused Sony to lose as much as $305 per unit, which increased the volume of game software that must be sold to make the business unit profitable. Access to distribution. Students should determine without much difficulty that access to retail distribution through big box elect ronics stores and large discount stores such as Wall-Mart and Target are essential to building an installed base. Chapter 5 is Nintendo using? What are some of the recent offensive and/ or Students should identify a firm's competitive strategy as being concerned with the specific game plan management uses to compete successfully and to secure a competitive advantage over its rivals.This requires that a firm out-compete its rivals by doing a better Job of satisfying buyer needs and preferences. Companies can employ one of five generic strategies or some combination thereof to beat its rivals. Those generic strategies include the following: overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy and best-cost provider strategy. Students may find that Nintendo is using a broad differentiation strategy, which involves competing by being unique in ways that are valuable to a wide range of customers. Nineteen's WI uti lizes a game controller that is highly interactive by incorporating motion sensors.As such, Nintendo has successfully built a competitive advantage by incorporating features that enhance buyer satisfaction in uneconomic or intangible ways, which is one of the four ways to build a competitive advantage with a broad differentiation strategy. Nineteen's broad differentiation strategic approach has been successful since technological breakthroughs are a critical success factor in the industry. Additionally, Nineteen's recent offensive and defensive strategies have helped the company successfully implement its strategy. A core element of Nineteen's offensive strategy involved changing the market's perception of WI by offering a very different gaming

What Are Bombardier Beetles

If youre a small bug in a big, scary world, you need to use a little creativity to keep from being squashed or eaten. Bombardier  beetles  win the prize for the most unusual defensive strategy, hands down. How Bombardier Beetles Use Chemical Defenses When threatened, bombardier beetles spray the suspected attacker with a boiling hot mixture of caustic chemicals. The predator hears a loud pop, then finds itself bathed in a cloud of toxins reaching 212 ° F (100 ° C). Even more impressive, the bombardier beetle can aim the poisonous eruption in the direction of the harasser. The beetle itself is not harmed by the fiery chemical reaction. Using two special chambers inside the abdomen, the bombardier beetle mixes potent chemicals and uses an enzymatic trigger to heat and release them. Though not strong enough to kill or seriously maim larger predators, the foul concoction does burn and stain the skin. Coupled with the sheer surprise of the counterattack, the bombardier beetles defenses prove effective against everything from hungry spiders to curious humans. Researchers Look Inside the Bombardier Beetle New research, published in the journal Science in 2015, revealed how the bombardier beetle can survive while a boiling mix of chemicals is brewing inside its abdomen. The researchers used high-speed synchrotron X-ray imaging to watch what happened inside living bombardier beetles. Using high-speed cameras that recorded the action at 2,000 frames per second, the research team was able to document exactly what happens inside a bombardier beetles abdomen as it mixes and releases its defensive spray. The X-ray images revealed a passageway between the two abdominal chambers, as well as two structures involved in the process, a valve and a membrane. As pressure increases in the bombardier beetles abdomen, the membrane expands and closes the valve. A burst of benzoquinone is released at the potential threat, relieving the pressure. The membrane relaxes, allowing the valve to open again and the next batch of chemicals to form. Researchers suspect that this method of firing chemicals, with rapid pulses instead of a steady spray, allows just enough time for the walls of the abdominal chambers to cool between shots. This likely keeps the bombardier beetle from being burned by its own defensive chemicals. What Are Bombardier Beetles? Bombardier beetles belong to the family  Carabidae, the ground beetles. Theyre surprisingly small, ranging in length from just 5 millimeters to about 13 millimeters. Bombardier beetles usually have dark elytra, but the head is often orange in contrast. Bombardier beetle larvae parasitize the pupae of whirligig beetles and pupate inside their hosts. You can find the nocturnal beetles living along muddy edges of lakes and rivers, often hiding in debris. About 48 species of bombardier beetles inhabit North America, mainly in the south. Creationism and Bombardier Beetles Creationists, who believe all organisms were made by the specific, intentional act of a divine creator, have long used the bombardier beetle as an example in their propaganda. They assert that a creature with such a complex and potentially self-destructive chemical defense system could never have evolved through natural processes. Creationist author Hazel Rue wrote a childrens book promoting this myth called Bomby, the Bombardier Beetle. Many entomologists have skewered the book for its complete lack of scientific facts. In a 2001 issue of the Coleopterists Bulletin, Brett C. Ratcliffe of the University of Nebraska reviewed Rues book: †¦the Institute for Creation Research demonstrates that brainwashing is alive and well as it continues to wage its own cold war against reason in order to replace it with superstition. In this highly disjointed little book, the target is young children, which makes the authors’ sin of deliberate ignorance even more reprehensible. Sources: How some beetles produce a scalding defensive spray, by David L. Chandler, MIT News Office, April 30, 2015. Accessed online February 3, 2017.Review of HAZEL RUE, Bomby the Bombardier Beetle, by Brett C. Ratcliffe, University of Nebraska-Lincoln, The Coleopterists Bulletin, 55(2):242. 2001. Accessed online February 3, 2017.Genus Brachinus – Bombardier Beetle, Bugguide.net. Accessed online February 3, 2017.