Effect of Computer on Design Creativity

Effect of Computer on Design Creativity Are computers taking away the creativity in design? Abstract Computers are an integral part of todays design process. They, computers represent a time and cost saving device that aids designs in rendering shapes and looking at a broader parameter of possibilities than would be possible otherwise. In looking at design, one must be aware that it represents a part of a business process that has competitive considerations. The foregoing includes costs, materials, innovation, uniqueness, distinction, functionality, and utility in gathering clients and well as customers. The contribution of computers in this highly charged environment has helped to drive down costs, while developing innovation as well as approaches to creativity. As such, designers have been able to expand their creativity through the ability of the computer to permit them to look at more possibilities in their search to arrive at solutions that fit within the preceding parameters. As software programs advance on a technological basis, newer and more powerful programs are increasingly taking on more roles in the design process. This represents the foundation of this examination in that generative design has captured a new part of the preceding in that software can generate designs based upon input parameters. Is the preceding innovative? The answer would have to be a yes. Does the foregoing aid in the business aspects in terms of broadening the range of potential possibilities, and helping to keep costs low? Again, yes is the answer. So, computers do have their place in increasing the efficiency and range of design outputs. The question is, has their role starting to become so large that they, computers are taking over the design function, relegating the designer to a computer operator? Chapter 1 Introduction In equating the question as to whether computers are taking away creativity in design, an exploration into the key words of the examination is seemingly in order. The Houghton Mifflin (2007) dictionary defines generative as â€Å"Having the ability to originate, produce, or procreate†. Design, represents the process whereby one creates, fashions, executes and or constructs according to a plan (Merriam Webster (2007). The design process, depending upon the application that is being utilised, represents trial and error in working through the steps to the final design that fits the parameters of the project (Brown, 2001, p. 2). In order to focus in on the context, design as it relates to architecture, construction and new products such as vehicles, and machines shall represent the core of the examination as represented by the question as opposed to the design of clothing, packaging, and related forms whereby the product is designed based upon primarily internal considerations as opposed to client, and or competitive, and market considerations. As brought forth by McDonagh et al (2004, p. 13): â€Å"As established products have become more similar in technology, functionality, price and quality, companies have turned to design to differentiate their offerings through human-centred innovation and to create stronger emotional connections with their customers. More companies have followed the example of Apple, Braun and Philips, recognising design as a strategic function in their business-not one subservient to marketing, manufacturing or engineering† The design process has increasingly become more competitive in terms of differentiating products, and appealing to clients and customers, as â€Å"†¦companies seek competitive advantage through more integrated offerings, with differentiation through all points of customer contact that express their brand† (McDonagh et al, 2004, p. 13). Thus, design is a critical function most businesses, taking differing forms, thus the election to restrict this examination to the aforementioned categories. Rittel and Weber (1973, p. 158) tell us that design problems are more than just complex, they, design problems, represent what they term as â€Å"wicked problems†. Moran and Carroll (1996, p. 4) in elaborating on the aforementioned advise that design problems â€Å"†¦be stated per se or solved in the sense of definitive answers, because the criteria for evaluating goals and outcomes are innumerable, subjective, and conflicting†. They add that (Moran and Carroll, 1996, p. 4): â€Å"Any solution will generate waves of consequences that interact among themselves and with other problems, changing the problem situation in irreversible and unknown ways. Thus, each wicked problem is merely a symptom of further wicked problems; their solutions cannot even be finally evaluated.† In understanding the nuances as well as ramifications of design, it is necessary to note that design is a process that it usually proceeds under conditions that are represented by a high degree of uncertainty, whereby answers to critical facets cannot be had (Moran and Carroll, 1996, p. 4). The design process also is constrained by real world considerations as represented by time, and budgets, thus the boundaries of the process, design, are not unlimited. Thus, in view of constraints, the design process needs both ingenuity as well as creativity. As brought forth by Rittel and Weber (1973, p. 158), the complexity of design problems make design projects too large for on individual to handle as multiple â€Å"†¦technical disciplines are required, as well as management discipline, in addition to creative and integrative skills† (Moran and Carroll, 1996, p. 5). Evidence supporting the technical difficulties involved in the design process is presented by Brown (1998, pp. 45-46), who states the failure rate for new buildings of all types before construction starts is around 10%. For new products, such as electronics and related categories, the failure rate as a result of design is generally within Browns (1998, pp. 45-46) range, however there are exceptions, such as the 33% failure rate that Microsofts new Xbox 360 is experiencing (DailyTech, 2007). Pressures to get it right represent a critical business decision, whether there is a client involved, or if the design process represents an internal process for the companys own products. Thus, time, cost, simplicity, and failure rate minimisation are critical business concerns that the designer must operate within. Thus, the design function, while being creativity, is also subject to the foregoing pragmatic considerations. Generative design software represents the processes whereby new designs can be automatically produced at the push of a button (Mass Customization Open Innovation News, 2006). The preceding represents computer software taking various design specifications and formulating them into a final design matrix based upon the input variables within the software program (Mass Customization Open Innovation News, 2006). The basic forms, patterns and or objects is modified automatically by an algorithm, thus permitting faster trail and error processes (Mass Customization Open Innovation News, 2006). The process of automatic design generation permits thousands of differing designs to be produced, as well as permitting new ones, as the design process is not restricted to the designers imagination (Mass Customization Open Innovation News, 2006). It, generative design is â€Å"†¦ the power or function of generating, originating, producing, or reproducing† (Merriam Webster, 2007). The designing of architecture, and products represent processes that are three-dimensional (Beilharz, 2004). Parameters as represented by colour, texture, utility design input constraints, space, regulations, gravity, materials, heat (in the case of certain products) and costs are the boundaries to the structure as well (Beilharz, 2004). The application of generative systems to design affects the design process phases and â€Å"†¦ integrates the macrocosmic and microcosmic relations of the design system†. For the purpose of clarification, macrocosmic represents â€Å"and large or complex system or structure made up of similar smaller systems or structures †¦Ã¢â‚¬  (allwords.com, 2007), whereas microcosmic is defined as â€Å" a little world †¦ a community or other unity that is an epitome of a larger unity† (Merriam Webster, 2007). This examination shall look at whether or not computers are taking away creativity in design by focusing on generative design, and how it affects the designer. In delving into the preceding, a number of important areas shall be examined in order to understand the design process, what it entails, along with what creativity is and how it is utilised. Chapter 2 -The Design Process In designing a product, building, vehicle or machine the principle output as represented by the design process is its specification as represented by either an annotated CAD rendering and or a schematic (Moran and Carroll, 1996, p. 324). The design rationale represents the why the design is done in the manner that it is, with the foregoing including various types of information (Moran and Carroll, 1996, p. 324). Fry (1999, p. 22) takes a wider view of design, stating that â€Å"†¦ it is one of the most powerful ways to understand how a world is prefigured, made and acts†. Mitchell (1990, pp. 67-71) explains the design process as one that depending upon the context, takes on differing forms. He explains that the most usual computational variations represent transformations, which he terms as unary, as well as binary operations of shapes as represented in either two dimensional drawings, and or three dimensional geographic models (Mitchell, 1990, pp. 68-69). Mitchell (1993, p. 25) states that there are areas in computer-aided design that fail to support creativity, citing shape emergence as an example. Mitchell (1993, p. 25) argues that: â€Å"that design intentions evolve through the course of a creative design process, that these intentions determine how emergent shapes in drawings will be recognized, interpreted, and reinterpreted, and that interpretation (and reinterpretation) of emergent shapes plays a crucial role in directing design explorations. Traditional computer-aided design systems do not effectively support creative design because they provide only very limited and inflexible ways of interpreting shapes.† In elaborating on the foregoing Mitchell (1993, p. 25) adds â€Å"†¦Computer-aided design systems can, however, be developed on an alternative foundation that provides the necessary flexibility†. Jun and Kim (2003) have a differing opinion of the preceding. They argue that shape semantics in CAD systems offer the potential for the emergence of shape semantics. In presenting their view, Jun and Kim (2003) offer the following rationale: â€Å"Drawings in the early phase of design support both continuity and change in a process of design through the use of two different types of drawings (1): context drawings which hold the evolving design decisions, and exploration drawings which are abstracted from the context drawing and act as graphic probes to investigate selected issues. The notion of emergence in design is found here. The ambiguity of the exploration drawings enables a designer to read more out of a drawing than he or she puts into it; that is, to generate new meanings within the design task. Through exploring drawings that are ambiguous until concept formation (2) is reached, various interpretations, in particular in visual aspect, are possible. As a consequence new drawings emerge. This process plays a crucial role to develop conceptual form in architectural design.† The limitations found in CAD systems are based in the fact that they are fixed, in terms of the representation that are embedded (Jun and Kim, 2003). They argue that there are three types of emergence in the architectural field, â€Å"†¦ shape emergence, shape semantics, and style emergence† (Jun and Kim, 2003). The rationale for this brief look at emergent shape semantics is that it represents a visual design concept, thus representing a segment of creativity (Jun and Kim, 2003). An alternative view of computers and creativity is offered by Kathleen Gibson, an associate professor of design and environmental analysis, who believes that computers actually aid in increasing creativity (Winter, 2003). Professor Gibsons unconventional approach is based upon the rationale that the designer can look at a multitude of differing examples, shapes, configuration and styles as part of their own internal creative processes and potential come up with ideas, shapes, and approaches that they may not have worked on without the aide of a computer to run through variations (Winter, 2003). Mathias (1993) advises that the more time and input designers spend on conceptualising through drawing, visualising as well as re-evaluating designs, the more they, in general, generate new information through multiple reviews and analysis, also resulting in reasoned explanations concerning problems, and proposed solutions. Lawson (1980, p. 6) advises that design represents a mental process that is highly organised, that is capable of manipulating differing as well as many kinds of information. He adds that the preceding blends that data into a set of ideas that is coherent, and finally results on the generation of ideas related to the process (Lawson, 1980, p. 6). Design, as shown throughout this examination, is a process, involving creativity, mental reviews, the manipulation of data and ideas, along with design possibilities, and then synthesising the process toward the end solution. In looking closely at the foregoing, it can easily be deduced that the limitations of the foregoin g are represented by the breathe of experience, exposure and mental foundation bank of the designer. This thus further explains why Mathias (1993) makes his statement that the more time designers spend on ‘drawing, visualising as well as re-evaluating designs, the more they, in general, generate new information through multiple reviews and analysis, the more they see other approaches, solutions and ways in which to accomplish the task, thus heightening their creativity. The explanation of the design process foregoing represents the use of non-creative facets, such as a systematic approach to the design issues and problems (Browne and Smith, 1993, pp. 1209-1218). Hertz (1992, pp. 396) brings forth what he terms as the mental synthesis-creation cycle, which represents the process of exploring alternatives in the development of the design that solves the end product and or building / structure. This represents the same approach, in general conception, as offered by Lawson (1980, p. 6). Chapter 3 Creativity Creativity, as stated by Turner (1994, p. 21) represents â€Å"†¦ the bringing forth of an original product of the human mind †¦Ã¢â‚¬ , which also has what he terms as its â€Å"†¦ mundane side as well†. The creative process is present in all of us. It represents our approach to problem solving for issues that we have not experienced before, through utilising past knowledge combined in new ways to result in a solution (Turner, 1994, p. 21). In equating creativity Weisberg (1986, p. 10) tell us that a solution is creative if it has significant novelty, and is useful. In order to qualify as creative, the new approach, and or solution must be new as well as different from those that preceded it, and, those differences need to be significant (Weisberg, 1986, pp. 12-13). The utility, usefulness, is the second facet present in a creative solution, it must solve the problem in a new, and better manner than those that preceded it, that can include at less cost, fewer parts, faster response time, etc. (Weisberg, 1986, pp. 12-13). In the design process, Cross (1986, p. 15) advises that the special ways in which designers think is embedded in their visual thinking process. Their process of creativity is based in lines, relationships, drawings and formulas representing their approach to problems (Cross 1986, p. 17-18). It must be noted that Dorst et al (1991, pp. 39-40) brought forth that the field of study in terms of design thinking was found lacking in three important areas. Dorst el al (1991, p. 42) identified the preceding as 1. a lack of research clarity, 2. lack of consistency in the tools, methods and theories utilised, and 3. the lack of a common unifying purpose. In defining design thinking, Dorst et al (1991, p. 43) advise that it represents the totality of cognitive activities during the design. The preceding is called ‘design reasoning that is distinguished from inituition as a result of the conscious as well as predictable use of rules representing inference for the outcomes of using and mani pulating design information. The preceding brings forth the facet of intuition as an important part of the process (Dorst et al, 1991, p. 46). It, intuition, resides in the subconscious, which represents the synthesis of experiences, ideas, new approaches and concepts to result in approaches (Dorst et al , 1991, p. 46). In subjecting the preceding to experimentation, Dorst et al (1991, p. 46-48) utilised four designers in a reasoning task that was comprised of a series of architectural drawings for buildings of modest size containing 9 errors. The designers had to locate the errors in a think aloud mode to let their processes be known, which was being recorded, and also making sketches, along with marking the drawings (Dorst et al, 1991, p. 46-48). Later analysis of the recordings resulted in the formulation of two groupings. One represented the mental process of new design generation through changes in the drawings and designs (Dorst et al, 1991, p. 46-48). The second category revealed that the verbal statements made led to new information generation that built upon prior statements they uttered aloud (Dorst et al, 1991, p. 46-48). Their prior histories and experiences represented the database to ascertain the errors, and pose solutions. In commenting upon this Dorst et al (1991, p. 46-48) noted th at the resulting changes were not novel, nor creative, but did solve the errors. The purpose of the foregoing is that the designers were only given a limited time frame in which to conduct their reviews, which demonstrated visual thinking as well as visual reasoning processes (Dorst et al, 1991, p. 46-48). The importance of the preceding is that it brought forth the manner in which designers use visual thinking to stimulate their processes. Wiggins and Schon (1992, pp. 45-51) provide illumination to this direction in advising that drawings and representation represent the manner in which designers communicate, not only with themselves, they also use it to communicate with others in furtherance of their ideas. Important in the preceding, is that designers employ visual thinking that consists of three types of visual imagery. The preceding is represented by what they see, what they imagine, and what they draw (McKim, 1980, p. 26). The foregoing is a highly important point in this examination, thus the rationale for the exploration these areas. Drawings and other visual representations aid in the stimulation process. It is the combination of these factors that are utilised by designers in the process of creating new designs and creative solutions. Further elaboration on this process is important in understanding the manner in which visual representations aid the design, and creative processes. Wiggins and Schon (1992, pp. 102-122) tell us that drawings help the designer in seeing, interpreting what can be potentially moved, re-evaluated, and or transformed. Tovey (1989, pp. 26-31) argues that seeing is an important part of the design process as it aids the designer in imaging, which prompts creativity and drawing. The preceding three processes work together to encourage visual thinking. The connection between the use of computers as an aid in this process will be further explored to draw upon examples that either support or refute if generative design impacts the designer, and if it aids or diminishes creativity. Herbert (1988, pp. 26-40), in his exploration of the design process states that once a designer begins to perceive the task, images, and or pictures representing solutions start to be generated in the designers mind. He adds that in the beginning of the process, these images, pictures, ideas and thoughts are not really well defined, thus needing further development (Herbert, 1988, pp. 26-40). The next stage on the process moves towards more refinement as potential solutions, a means to these ends and the routes and ideas as to how to arrive there start to develop (Herbert, 1988, pp. 26-40). The foregoing was brought forth by Mathias (1993) who advised that designer tends to utilise drawing as a means to move to developing their first ideas, and in later stages of the process, drawings are utilised for synthesis. This is what Mathias (1993) describes as stepping back and then forward in the mental processes to be engaged, and then reflect on what has been thought, to re-engage the pro cess again. Mathias (1993, pp. 113) diagrams the preceding as follows: Diagram 1 Designers Framework for Idea Development (Mathias, 1993, p. 113) Analysis of problem statement Holistic solution concept Problem Solution concept Convergence Exploration Validation Solution Mathias (1993) and McKim (1980) follow the same conceptual foundation in terms of imagery (drawings), representing a foundational facet in the design process. The preceding is part of the creative mental synthesis process whereby ideas begin as a result of engagement with the project. Verstijnen (1997), conducted experiments based upon the research methods of Finke (1990) as well as Helstrup and Anderson (1993). The six experiments conducted by Verstijnen (1997) used undergraduate industrial design engineering and psychology students to investigate emergent figures and drawing / sketching relationships. The experiment called for some students to utilise sketching and drawing, and the others to use mental processes only in resolving the problem of wire frame drawings that had figures embedded (Verstijnen, 1997). The second experiment represented the investigation of creative mental synthesis tasking asked to generate shapes that were creative based upon a cube, sphere and cone. The results indicated that the restrictions of memory was not a motivating factor in sketching as an aid in creative mental synthesis experiments (Verstijnen, 1997). In the reinterpretation of shapes, the task proved difficult based upon the utilisation of imagery alone, thus suggesting an aid was needed, drawing (Verstijnen, 1997). She added that sketching for use in synthesis may not play a significant, and or important role, however in creative mental synthesis, sketching helped to yield a higher number of creative forms (Verstijnen, 1997). A comparison of the engineering students, and non-students was not included in her study (Verstijnen, 1997). From the foregoing, the data thus far reviewed seemingly indicates that visual thinking represents an important facet of creative mental synthesis, which is important in the design of new objects. The foregoing also seems to point to the fact that the manipulation of visual images in a mental mode is an important aspect of mental creative synthesis. In addition, the preceding seems to also point to the fact that drawing is important in supporting the process of creative synthesis in new design. The use of the word seemingly and seem are utilised as there is little to no empirical evidence to support the preceding, thus the views are based upon the views as expressed by a number of authors and researchers. Chapter 4 Generative Design In generative design, the description and design of relationships and components is accomplished by the use of powerful algorithms (MacDonald et al, 2005). These algorithms permit users to manipulate geometry and dynamically model through the application of rules that capture relationships in geometric features, along the defining of complex forms (MacDonald et al, 2005). Under a generative design program, the designer, utilising a CAD tool that specifies parameters and the restraints, the program then generates a number of outcomes that the designer then utilises as input, and or for another generation of shapes, forms or approaches, solutions (MacDonald et al, 2005). The generative design approach is applicable in the whole design process, once the parameters have been input and modified (Gatarski and Pontecorvo, 1999). Generative design has been employed in the development of cars, cell phones, structures and other areas. CAD and Design Automation software has long been utilised to optimise the assembly of differing design elements. Through the use of visualisation software, designers are able to see the results without having to build prototypes. In the generative design methodology, outcomes are rendered after a detailed and high level of input specification, thus saving time over the CAD and Design Automation approach that requires time in that each instance of an idea has to be imagined, manually expressed, and evaluated (Gatarski and Pontecorvo, 1999). On the most basic level, generative design systems consist of four elements (Gatarski and Pontecorvo, 1999): design representation, generation engine, expression engine, mechanism for evaluation and selection of the new generated specifications The following, further explains the workings within these steps (Gatarski and Pontecorvo, 1999): design representation, The design representation are input as a set of parameters, along with the corresponding constraints. In the preceding, the parameter sets represent the genetic design elements, defining the form as well as structural aspects. The constraint set controls the aesthetic as well as the fabrication facets, meaning the limitations as afforded by the material dynamics to be utilised. The foregoing constraints, and rules thus place a limit on the range of the generated design. generation engine This aspect of the generative design process represents the internal process that generates the new design descriptions. It represents a set of prototype design descriptions that are also termed as ‘parents, and then utilises the algorithm to take the parameter sets and combine them into new descriptions, or children. In general, the algorithms use operations that are based upon the concepts found in the mutation and crossover aspects found in genetics. The preceding thus ensures that the descriptions, children, are drawn from the parameter values as contained in the prototype set. expression engine In the process of generative design, the expression engine interprets the descriptions, rendering them into a structure or model. The process can be set so that it is modular, thus permitting it to be able to support a host of alternative interpretations. mechanism for evaluation and selection of the new generated specifications The generative design approach is based upon having an objective function that evaluates the fitness output of the specifications of the design. In creative design area this facet is usually embedded in the human using the system. The foregoing is termed the human user in the loop as it provides a more intelligent and analytic capability as opposed to computed functions. The preceding is described as being a better match for the ranges of possibilities offered by the generative approach. Generative design offers the ability for designers to try as many ideas as possible, a critical facet when time is a constraining factor. It permits designers to thus present a variety of solutions that can thus be evaluated internally and or through focus group testing to refine the process and move to the final design variables. The foregoing recognises the fact that the design process has always been a process that is subject to the acceptance of the end user, which is either the client, or the general public. It, generative design, thus represents a means to work through a wide variety of approaches to achieve faster approximations of what will work. Chapter 5 The Role of Computers If computers are potentially limiting, and or taking away design creativity, it would seem appropriate to example the role of computers in the design process and attending questions. In the pragmatic sense, unlimited time to render and use a design is not a function of the design process. Whatever the function, be it architecture or products, there is a limited time frame for the design process to take shape, evolve, become proven through mathematical, structural, component material and cost / build considerations. The preceding represent constraints on the process that are real as well as binding. Computers have advanced the process of design through software such as CAD that enable users to perform a number of functions in time saving fashion. The preceding takes in such functions as (SAP, 2006): wire frame geometry creation, solid modelling, 3D parametric, freeform surfaces, automated assembly design, engineering drawings from solid models, re-utilisation of design components ease on design modification and the generation of multiple versions, automated generation of design components, design simulation without prototype building, data exchange, as an aid in visualisation process for areas such as rotation, shading, etc., design studies as a few of the more important, or used functions. In equating this segment of the examination, the question of creativity resurfaces. As previously mentioned by Turner (1994, p. 21), creativity brings  ·Ã¢â‚¬ ¦ forth of an original product of the human mind †¦Ã¢â‚¬ . In the design process, it aids in the production of multiple view, as well as ideas. Gero (1991) indicates that there are, in his view, five creative design processes that result in the introduction of new variables in the design prototype. These are (Gero, 1991): Combination Mutation Analogy First Principles, and Emergence The following sets forth the preceding in more detail Combination Gero (1991) tells us that ‘combination represents the combining of two or more prototype designs, with the new resulting variable introduced into the original from the former. Within this process, mutation represents the alteration of variables as accomplished by external agents (Gero, 1991). Mutation Within the preceding process, mutation represents the alteration of variables as accomplished by external agents (Gero, 1991). Through mutation, new variables can result due to extrapolation, and or combination of the variables (Gero, 1991). Analogy This is also known as ‘case-based reasoning, representing structural elements applied by one prototype design into another design problem, as well as the use of past processes for a new design problem (Gero, 1991). First Principles The above is a process whereby new relational knowledge is logically derived from the behaviour of existing structures without the knowledge of the prototype (Gero, 1991). Emergence The process of inferring structural elements that are new through the extension of elements that exist, represents emergence (Gero, 1991). Indurkhya (2002), in defining creativity from a different perspective, provides insight into Geros (1991) concept of new variable introduction. H

Financial Crisis Is a Man Made Catastrophe

What is Financial Crisis? The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth; they do not directly result in changes in the real economy unless a recession or depression follows. TYPES Is financial crisis really a man-made disaster? Let’s take example of Late 2000’s financial crisis also known as Global Financial Crisis. The financial crisis was triggered by a complex interplay of valuation and liquidity problems in the United States banking system in 2008. The bursting of the U. S. housing bubble, which peaked in 2007, caused the values of securities tied to U. S. real estate pricing to plummet, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Many causes for the financial crisis have been suggested, with varying weight assigned by experts. The United States Senate issued the Levin–Coburn Report, which found â€Å"that the crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street. Causes of Financial Crisis Macroeconomic conditions: Low interest rates made bank lending more profitable, while trade deficits resulted in large capital inflows to the U. S. Both made funds for borrowing plentiful and relatively inexpensive. The U. S. housing bubble: The falling prices of houses and low interest rates to finance or refinance the house s were easily available. As such home loans were very easily available. But when time came to pay back the loan many defaulted which led to bursting of housing bubble and its impact led to financial crisis. Relaxation in rules led to large banks to increase their financial leverage and expansion of issuance of mortgage backed securities. Inaccurate credit ratings: Credit ratings were awarded inaccurately which led to an inflated balloon and when it busted it led to financial crisis. Technological factors: The cause of the crisis can be seen also in principles of technological development and in long economic waves based on technological revolutions. Crisis and stagnation were a result of the end of the long economic cycle originally initiated by the Information and telecommunications technological revolution in 1985-2000. The market had been already saturated by new â€Å"technical wonders† (e. g. everybody has his own mobile phone) and – what is more important – in the developed countries the economy reached limits of productivity in conditions of existing technologies. Boom and collapse of the shadow banking system (SBS): The shadow banking system is the collection of financial entities, infrastructure and practices which support financial transactions that occur beyond the reach of existing state sanctioned monitoring and regulation. The core activities of investment banks are subject to regulation and monitoring by central banks and other government institutions – but it has been common practice for investment banks to conduct many of their transactions in ways that don't show up on their conventional balance sheet accounting and so are not visible to regulators or unsophisticated investors. The shadow banking system saw a boom but once investors started losing interest and no more wanted their funds to be used in SBS and changes in business policies led to its collapse which ultimately led to financial crisis.

Assess the Global Role and Local Impact of Multinational Companies.

Assess the global role and local impact of multinational companies. A multinational company is often defined as a corporation whose operations and investments are broaden across a number of countries. They are also referred to as transnational companies. Therefore given this definition it would be expected that if a company operates over such a large territory that it would indeed have many effects and impacts, locally and globally, and its role would also be quite significant as it can have a direct influence on an economy, the environment and general effects on society. However, changing the way they run things in order to accomidate society could break there business down and they could eventually have no impact on society so looking at the situation is they impacts worth the change? ‘Theory has evolved over the years regarding social concerns, society’s expectations and corporate responsibility. Indeed, early management and economic theorists viewed the corporation as having a strong fiduciary responsibility to shareholders, but stopped short of considering any real obligation to other stakeholder groups’ (Friedman 1962; Teece 1984) (Corporate social responsibility, Accountability and Governance; Istemi Demirag). This statement I think is very true, due to the fact that, as time continues people’s opinions of what is deemed socially responsible in both corporate and everyday society varies, as it is a sensitive topic that is very opinion based. Corporate social responsibility is when companies realise that their activities have economic, social and environmental influences. However, to put it simply it can be divided into two broad categories; one-off activities and larger issues of policy and strategy. One-off activities basically cover things such as charitable donations of money and time given to charities or community projects, all of which are at the discretion of the owners of the company. Larger issues of policy and strategy is where the company needs to have a much more devoted awareness to the firms moral, social, ethical and environmental acts within its operations. This requires the company to take a look at other external influences that directly affect the business, such as pressure groups. This could be seen as a type of contingency planning as it helps a firm avoid future conflicting interests with the outside world. Acting socially responsible brings many benefits to both the company and society, if the correct approach is used. So by a firm accepting social responsibility, everyday problems can be reduced such as unemployment and pollution. Therefore you would also see a vast improvement in the quality of life, as society would be factored into the day to day decision making process of the company. A business which includes this approach is most likely to see more of a tangible outcome, as they will probably benefit from increased financial performance from activities such as reduced operating costs from recycling instead of waste disposal. The company could also enhance its brand image from a good reputation and gain the ability to attract capital and trading, so will therefore see the benefits from increased sales and customer loyalty. However, this could also be a case for firms to not accept this responsibility, as they can suffer from lack of customer interest if they haven’t found the right approach for them. This is because various businesses see corporate responsibility being relatively constricting, as in some cases it has lead to products having a lack of sales, or makes the product less profitable. This is due to the fact that introducing some of these socially responsible policies into a firm is very costly, so this can lead to an increase priced products for the customers or a smaller profit margin on the product for the company. However, during the recent economic crisis companies are less likely now more than ever to not act socially responsible as they are more focused on profit and survival. On the other hand there could be a contrasting theory as corporate responsibility can just be used by a firm as a marketing ploy, as a company’s overall strategy is to make profit by responding to what their consumers want, so they may just use this method in order to maximise their product life cycle therefore increasing its revenue. Contradictions of corporate responsibility have been seen many times over the years within companies such as; ‘Barclays Bank CLAIM: We have the skills, resources and determination to make a positive and lasting contribution to the communities in which we operate. ’ (Barclays social review, 1999) ACTION: Barclays bank closed 172 branches in April 2000’ ‘Proctor & Gamble CLAIM: An employee should be able to answer â€Å"yes† to the questions: is this the right thing to do? With this action uphold p&g’s reputation as an ethical company? (Proctor & Gamble code of conduct) ACTION: Proctor & Gamble continues to trade in Burma, while other companies have pulled out because of the appalling record of the Burmese government on human rights. ’ ‘BAT (British American Tobacco) CLAIM: its corporate social responsibility report defines targets for reducing energy use, water consumption and waste products, and describes its commitment to enlightened employment practices. ACTION: it markets its tobacco products ruthlessly to young people – it was caught on television handing out packets of Benson & Hedges cigarettes to teenage volley ball players in the Gambia. ’ (All three examples used is from AQA AS Business studies, John Wolinski & Gwen Coates) Number of companies using corporate social responsibility reporting, 1994 – 2006 Source: EarthTrends, 2008 using data from UNPE, 2008 The chart above does in fact show that business are starting to realise the importance of corporate responsibility and meeting their customers’ needs by adapting to it. As the chart show continuous growth overall from 1994 to 2006 which does show the significance of the topic to society and the business world. Overall, positive externalities are created for society by companies that except corporate social responsibility as well as direct benefits to the firm. However, a lot of multinational companies are based in more of the westernised countries, so there main offices are seen as socially responsible some of which could be just due to the law in which it is governed by. Some of these companies may on the other hand have ‘back offices’ from outsourcing operations in counties such as China and India, where it is not ensured that these socially responsible factors are being kept, which is an increasing problem as more and more companies do it each year. Multinational companies also have to be aware of their global role in terms of business ethics. Business ethics can be defined as the entwining of ‘morals or a principle of what is right or wrong in human behaviour’ (business and society, Edmund Marshall) into a business’s activities. Every company starts with some kind of ethics whether intentional or portrayed by the owners or employees. These ethics are what help structure the way the business is run, even if they are not generally the right ones for society. However, all firms do have to have ethics which coincide with the law of which it is governed by. This does in fact make it trickier for multinational companies to obtain ethics which both abide by the laws of each country its company occupies, and have them be socially correct so that they are morally respected. Although, not doing so could have major effect on the businesses reputation, as multinational companies are more commonly known as they are generally larger. Therefore, it could result in heavy dents in their consumer base which would later affect the company’s revenue. Throughout recent years businesses have been forced to notice their participation and effects on the environment, mainly due to societies pressure to do so. However, responding to such pressures can give a firm many advantages such as, marketing opportunities, financial advantage and human resource opportunities. When a company is being ‘Environmentally friendly’ it portrays t its customers a very good reputation which is a very positive marketing tool. This can help achieve brand recognition more powerfully and even persuade a customer to choose them over a competitor. So could overall increase a business’s sales as well as give them stronger brand loyalty. This could even give a firm the opportunity to increase their products profit margins, so that the costs occurred from the change that would benefit the environment will be covered. However, although this change can have a beneficial effect on a company they do have to make vast changes on their operations so that it doesn’t have adverse effects on the environment. Such as, such as the use of raw materials and energy, many companies use finite resources like coal and oil as they are cheaper, but they will eventually run out and leave negative chemicals behind. So firms need to find more of a renewable energy resource that suits them. Another environmental impact that occurs often is the disposal of waste and by-products. Currently gases may be released into the atmosphere, liquids into rivers and solids into landfills all of which are extremely harmful to the environment. On the other hand, I do see that it is costly to find other ways of disposal so i think the company should focus more on changing the ways the waste is produced so that less is created. Also when obtaining environmental responsibility, a company needs to make a contingency plans, mainly so that negative externalities do not occur. By doing this if an environmental disaster occurs they can minimise risks and costs so that both the company and society will have less of an effect from t. However, if multinational companies are to take this seriously they are also to look at how their day to day operations effect the environment, such as using private jets instead of flying with normal airlines. They could also offer company cars that give out less carbon emissions. Therefore large companies like multinationals will most likely benefit from environmental audits. Overall, over recent years society has began to realise that all businesses have effects on the world locally and globally, even more for multinational companies. Although businesses already realised this, but have just began to take notice more increasingly due to the pressures of society and recent changes in the law. Every aspect of a business has a knock on effect and not just on the economy which some people is lead to believe. The ethics of how the company is run or the ethic they portray are being mirrored on to society. So for the general public to react is not that uncommon whether it is positive or negative. However, I do think that people should force a company to have corporate responsibility; so that they know their actions will not just be affecting society without any consequences. Finally, I think that multinational companies have one of the biggest influences on society as they are both global and local too many countries as they are transnational. Therefore they should respect the people of the community they are in and try there hardest to impact lives positively not negatively. . However, changing the way they run things in order to accommodate society could break their business down and they could eventually have no impact on society at all, so looking at the situation is they impacts worth the change? References Books Harvard Business school press, Harvard business review, business and the environment Edmund marshall, Business and society Hans, gunter, transnational industrial relations Istemi demirag, corporate social responsibility, accountability and governance, global perspectives Sally eden, environmental issues and business, implications of a changing agenda John wolinski & gwen coates, a2 business studies, aqa John wolinski & gwen coates, as business studies, aqa

Understanding Quantiles Definitions and Uses

Summary statistics such as the median, first quartile and third quartile are measurements of position. This is because these numbers indicate where a specified proportion of the distribution of data lies. For instance, the median is the middle position of the data under investigation. Half of the data have values less than the median. Similarly, 25% of the data have values less than the first quartile and 75% of the data have values less than the third quartile. This concept can be generalized. One way to do this is to consider percentiles. The 90th percentile indicates the point where 90% percent of the data have values less than this number. More generally, the pth percentile is the number n for which p% of the data is less than n. Continuous Random Variables Although the order statistics of median, first quartile, and third quartile are typically introduced in a setting with a discrete set of data, these statistics can also be defined for a continuous random variable. Since we are working with a continuous distribution we use the integral. The pth percentile is a number n such that: ∠«-â‚ ¶n f ( x ) dx p/100. Here f ( x ) is a probability density function. Thus we can obtain any percentile that we want for a continuous distribution. Quantiles A further generalization is to note that our order statistics are splitting the distribution that we are working with. The median splits the data set in half, and the median, or 50th percentile of a continuous distribution splits the distribution in half in terms of area. The first quartile, median and third quartile partition our data into four pieces with the same count in each. We can use the above integral to obtain the 25th, 50th and 75th percentiles, and split a continuous distribution into four portions of equal area. We can generalize this procedure. The question that we can start with is given a natural number n, how can we split the distribution of a variable into n equally sized pieces? This speaks directly to the idea of quantiles. The n quantiles for a data set are found approximately by ranking the data in order and then splitting this ranking through n - 1 equally spaced points on the interval. If we have a probability density function for a continuous random variable, we use the above integral to find the quantiles. For n quantiles, we want: The first to have 1/n of the area of the distribution to the left of it.The second to have 2/n of the area of the distribution to the left of it.The rth to have r/n of the area of the distribution to the left of it.The last to have (n - 1)/n of the area of the distribution to the left of it. We see that for any natural number n, the n quantiles correspond to the 100r/nth percentiles, where r can be any natural number from 1 to n - 1. Common Quantiles Certain types of quantiles are used commonly enough to have specific names. Below is a list of these: The 2 quantile is called the medianThe 3 quantiles are called tercilesThe 4 quantiles are called quartilesThe 5 quantiles are called quintilesThe 6 quantiles are called sextilesThe 7 quantiles are called septilesThe 8 quantiles are called octilesThe 10 quantiles are called decilesThe 12 quantiles are called duodecilesThe 20 quantiles are called vigintilesThe 100 quantiles are called percentilesThe 1000 quantiles are called permilles Of course, other quantiles exist beyond the ones in the list above. Many times the specific quantile used matches the size of the sample from a continuous distribution. Use of Quantiles Besides specifying the position of a set of data, quantiles are helpful in other ways. Suppose we have a simple random sample from a population, and the distribution of the population is unknown. To help determine if a model, such as a normal distribution or Weibull distribution is a good fit for the population we sampled from, we can look at the quantiles of our data and the model. By matching the quantiles from our sample data to the quantiles from a particular probability distribution, the result is a collection of paired data. We plot these data in a scatterplot, known as a quantile-quantile plot or q-q plot. If the resulting scatterplot is roughly linear, then the model is a good fit for our data.