Concepts At Servant Leadership

Concepts At Servant Leadership According to Greenleaf servant-leaders are driven to serve first, rather than to lead first, always striving to meet the highest priority needs of others. In comparing Christianity and Islamic religion in regards to servant leadership, the characteristics must be observed: listening, empathy, healing, awareness, persuasion, conceptualization, foresight, commitment to the growth of people, and building community. This paper will address two religions Islamic and Christianity one that is compatible and the other not compatible with Greenleafs characteristics of servant leadership. It will focus on TDIndustries, which has demonstrated servant leadership. Also, it will explain the importance of self-awareness and emotional intelligence and the role it play in enabling leaders. In 1977 Robert Greenleaf introduced the concept of servant leadership. Servant-leaders emphasize the development and elevation of followers. Servant-leadership is a natural feeling; it serves others by investing in their development and well being for the benefit of the common good. The core Christian values include hope, righteousness, love, and putting God first in our lives. Christianity share similar values of servant leadership. In Matthew 20:26-28, Christ tells us that we need, first of all, to lead in an attitude of servant hood. Christianity is about a personal relationships with God and with others. Christian servant leaders serve God through investing in others so that together they may accomplish a task for Gods glory. Christians, non-Christians, and women are treated equally in society and American court of law. The majority of Christians regard women with dignity and respect, having been created alongside men in the image of God. The Islamic religion share some but dose not share the essential characteristics of servant leadership. The Islamic religion treats Muslims and non-Muslims very different. Non-Muslims are referred to as dhimmi, which are considered second class citizens. They are not allowed to present evidence against a Muslim in a court of law governed by the Koran. Since his oath was unacceptable in an Islamic court his Muslim opponent could not easily be condemned. In order to defend himself, the dhimmi was obliged to purchase Muslim witnesses at great expense . The punishment that a guilty Muslim received for a crime would be greatly reduced if the victim were a dhimmi. The Islamic state is forbidden from discriminating between citizens on the basis of race, creed, colour or anything else. In origin all the rules of Islam apply equally to Muslims and non-Muslims. Under Islamic Shariah law, non-believers Christians and Jews anyway are permitted to live as long as they support Islam through thei r Dhimmi taxes and are willing to accept what amounts to a third or fourth class existence, always subject to false accusations and ill treatment. Dhimmis always live in fear. Dhimmi is the status of infidels under Islam who are permitted to live in Muslim jurisdictions but only with restrictions as second class citizens. Additionally, Muslim women also suffer under a dual standard and experience second class status. Jack Lowe, Sr. founder of TDIndustries dedication to servant-leadership began many years ago; he developed a leadership approach based on his religious convictions. It was the responsibility of his leaders to build his organization by ensuring the achievement of their employees personal and professional career goals. This servant leadership approach to and management has enabled TDI to make the necessary changes for survival during difficult times. For the last five decades, they seemed increased profit growth and employee satisfaction. By taking care of their employees, TDI is ranked number 36 on Fortune magazines 100 Best Companies to Work For (2006). What makes this organization so great? This is an employee-owned contractor company. The board of directors is elected by employees. According to Jack Lowe Jr. (2006) there are key elements of servant-leadership that are continuously emphasized at TDIndustries: being a servant first, making sure that other peoples needs are served, and serving through listening. Firstly, we are committed to providing outstanding career opportunities by exceeding our customers expectations through continuous aggre ssive improvement. Secondly, to ensure their employees needs are served annual survey are compared to a national average. Finally, top management would invite employees in to discuss critical issues and brainstorm ideas to solve business related problems. Jack Lowe Jr. believes in open communication and through these key elements all employees has an opportunity to share their views and suggestions at least once every two years. TDIndustries has consistently practiced and call attention to the success they have experienced as a result of institutionalizing these key elements of servant leadership. Their strong commitment to servant-leadership has created an environment of mutual trust and respect between employees and leaders. By encouraging and respecting an individual value, team trust is increased. Any by respecting others, the leader in turn earns respect. Where there is strong trust, there is strong commitment to a vision that creates value, meaning, and purpose. Employees know their voices are he ard and leaders are genuinely interested in their ideas. On an interpersonal level, the importance of self awareness to Marvin knows his strengths and weaknesses can help gain the trust of others and increase his credibility, which will increase his leadership effectiveness. On an organizational level, acknowledging the he does not have all the answers and will make mistakes and knowing when to ask for help. Marvin believes having good human skills will have a high degree of self awareness and a capacity to understand or empathize with others. By developing his emotional intelligence, he establishes a strong bond with employees and management. His emotional intelligence is key to his skills as a respiratory therapist. Being compassionate about serving his patients is an emotional competence base on empathy. Trustworthiness is a competence that is based on self-regulation. Both of these competencies are critical in helping to make him an outstanding therapist. In closing, servant leadership is not a particular style of leadership, but rather relates to the motivation behind a leaders thoughts, words and actions. Servant leaders must ensure that their vision and principles are in line with other in their organization. While serving other first may not appear easy and is the heart of servant leadership; it could be easier when leaders hold a similar vision and value for themselves. Christianity show more similar characteristics of servant leadership than Islam. Christian servant leaders serve God through investing in others so that together they may accomplish a task for Gods glory. This ultimate accomplishment of Christian leaders will spread to help mentor and grow additional leaders who can be sent out to establish new ministries and train even more leaders. Significant oppositions with servant leadership theory were found within Islam. These oppositions do not preclude servant leadership from being practiced within those traditions but r aise serious questions as to how compatible these traditions actually are with the whole theory and its implications. The Islamic state is forbidden from discriminating between citizens on the basis of race, creed, color or anything else. However, under Islamic Shariah law, non-believers Christians and Jews anyway are permitted to live as long as they support Islam through their Dhimmi taxes and are willing to accept what amounts to a third or fourth class existence, always subject to false accusations and ill treatment. Jack Lowe, Sr. of TDIndustries is regarded as a true visionary in taking this company to the next level in servant leadership. He utilized servant leadership and religious convictions, by consistently treated their 1400 employees the way he wish to be treated and a partner. This is reflected by being a servant first, making sure that other peoples needs are served, and serving through listening. Being true to himself and his employees through servant leadership, h elp to bridge the respect and trust between employees and leaders. Showing self awareness and emotional are key characteristics in servant leadership. Expressing compassion when serving patients and being conscious of what you are good at while acknowledging what you still have yet to learn. This includes admitting when you dont have the answer and owning up to mistakes.

Analysis of Motives and Prospects within the OLI Framework: A Case Study of German FDI in China

Abstract This study deals with an analysis of German FDI in China using the OLI framework, an eclectic framework for analysing FDI. Other theories that aid in explaining German FDI’s motives and prospects in China are the internalisation theory and the product cycle theory. This study is mainly qualitative, using secondary data from existing literature. It suggests that German FDI is guided by internalisation advantages, location-specific advantages, and ownership advantages in its motives and prospects in the Chinese market. The internalisation advantages for German FDI in China include incentives derived from conducting such FDI in the country over other locations or through exporting. Location-specific advantages are identified as cheap, trained labour, export-oriented nature of existing FDI, quality of local infrastructure, access to natural resources, and cooperation agreements with local suppliers and the Chinese government. Ownership advantages, on the other hand, are identified as technology-based infrastructure and management know-how. Introduction This report deals with the analysis of motives and prospects within the OLI framework, focusing on a case study of German foreign direct investment (FDI) in China. To begin with, it is important to define and describe what the OLI Framework is. The OLI framework was developed by Dunning (2010) and is considered an eclectic approach to the study of FDI. It has been a guaranteed viable means to think about MNEs, which likewise paved the way for a range of applied works in economics and international business. Albeit it does not constitute a formal theory in itself, the OLI framework is nevertheless helpful in classifying many recent empirical and analytical studies concerning FDI (Reinert et al., 2009). Foreign direct investment (FDI) has been an important characteristic of globalisation. It is different from portfolio investment since it involves a package of assets and intermediate products and is generally carried out by MNEs (Blanco and Razzaque, 2011). Germany is China’s mo st important trade partner from Europe. In 2003, German companies were placed as the top European investors in China and were ranked as the seventh largest investors in the country. Albeit the ˆ7.9 billion investment of German companies in China comprised a tenfold increase from 1995, this only constituted 1.2 per cent of total German FDI. Most of these investors were manufacturing companies (around 2/3 of all German investors). Some of the pioneer German companies in China are Bayer, Siemens, and Volkswagen, which have been doing business with China for more than a hundred years (Reinert et al., 2009). China has large market potential as proved by about 76 million abundant consumers in the country, which is even larger than Germany’s total population. China is also characterised by low-cost assembly line, which serves as a major driver for investing in the country. Apart from it, its WTO membership has been an important driving factor behind German FDI, as WTO enabled ea sier access to China’s market (Bao, Lin, and Zhao, 2012; Reinert et al., 2009). The issues besetting German FDI in China are the unrelenting legal uncertainties in the country, as shown by the lack of intellectual property rights protection; limited market transparency; the rapidly changing regulatory framework conditions and obstacles; inadequate potential supplier networks; and difficulty in searching for relevant market information due to the problem involving the identification of individual market segments (Reinert et al., 2009). Potential German investments also face high input prices in China, such as high prices for raw materials and electricity, thereby making it all the more difficult to attain profit margins. There is also a rising competition in China in the midst of the growing attractiveness of its market. Given this context, this research intends to look into the intentions and outlook of German FDI in China, using the OLI framework to evaluate them.1.1 Objecti ves of the ResearchThe objectives of the research are described as follows: To analyse the German FDI in China in terms of its motives and prospects within the OLI framework; To describe the theoretical underpinnings surrounding German FDI activities in China; and To analyse how the OLI framework functions as a relevant model for the dynamic development of MNEs and German FDI within the increasingly growing Chinese market. Literature Review This part of the research report presents an array of published works relating to the topic of investigation to give light to the important concepts and to serve as evidence to the claim that may be posited. It also involves a description of methodology and data used.2.1 Methodology and Data UsedThis research is characteristically qualitative, which means that it is value-bound and relies on interpretations. It is predominantly inductive and is carried out in natural settings, discounting the use of quantities and measurements, which are confined within the domain of quantitative research (Klenke, 2008). This research also uses a case study method, which is described as â€Å"the study of the particularity and complexity of a single case† (Simons, 2009: 19), which in this report is the German FDI in China. Case study as this report’s research approach acknowledges the tradition in which it is drawn upon, specifically qualitative research (Simons, 2009). Secondary data a re solely used for this report. These are data that have been collected by a person (e.g. an author) and are being used by another (e.g. a researcher) for his/her own purpose (Oleckno, 2008). These data are therefore non-original. In this research report, they are mainly taken from books, academic journals, and relevant online resources relative to the topic being investigated. The search engines used to locate the needed materials are Google, Scholar Google, and Books Google, from which a number of sources have been uncovered. The journal articles utilised from these search engines are published by Wiley and Elsevier.2.2 Literature Review on the Motives and Prospects of German FDI in ChinaAccording to Zhang (2005), China’s location characteristics would help to understand and appreciate massive FDI in the country. The four determinants of China’s location-specific factors for the influx of FDI are its export-promotion strategy for FDI, its dominant availability of che ap labour, and export-orientation of FDI injected by the countries entering China. In the case of Hong Kong and Taiwan, unique links with China (the Chinese connections) are important determinants. The study uses a qualitative method and a case study design in dealing with the subject matter. Its applicability to the topic under investigation is seen in its direct focus on FDI in China and how China has flourished as a location for countries to engage in FDI. The limitation posed by the study is its emphasis in Hong Kong and Taiwan and does not include German FDI, which does not however mean that the study is already totally irrelevant. In the work of Chen and Reger (2006), German FDI in China has been described as one that has grown larger in size and of higher quality (alongside related technological activities), with long-term motives and broad market orientation. German FDI also seeks new markets and expands market shares within China. The authors second Zhang’s (2005) ea rlier claim for FDI determinants in China, such as cheap, abundant labour, and export orientation; and added some more, including China’s huge domestic market, access to natural resources, and enforced tax incentives. The research approaches used by the authors include a mail survey and a database analysis. The work is applicable to the present study because of its emphasis on the nature of German FDI in China. In a separate study by Pikos (2013), the author presents an investigation of the consequences of FDI for German companies in China. The author highlights the differences amongst the following: FDI in China, FDI elsewhere, and exporting. When size and sector activity are controlled, attributes to FDI in China include turnover, employment, net income, profit margins, and total assets, to name some. Albeit performance is boosted through FDI elsewhere, this is however on smaller scale. It is noted that investing in China results in better outcomes than doing FDI in another country, and this is due to China’s large and rapidly growing market. The methods used by Pikos (2013) are descriptive and econometric analysis in order to address the research topic. The applicability of the work to this research is its description of German FDI in China, thereby aiding the research to give light to the topic. A limitation of the study is its focus on location-specific factors for FDI. On the other hand, Zhang and van den Bulcke (1999) state that the expansion of FDI and its embodied technology are two of the key forces that molded the development of the Chinese automotive industry. Germany is an important source of inward FDI in China’s automotive industry, third to Hong Kong and the United States respectively. FDI in the automotive industry during the 80s was highly focused on the assembly of whole vehicles. In the 1990s, FDI became highly concentrated on the manufacturing of parts and components. Since the Chinese government in the 1990s had stric t control of the Greenfield investment projects for whole vehicle manufacturing, the latecomers encountered quite high entry barriers since dominant positions were already occupied by early movers. European automotive multinationals strongly influenced the restructuring of China’s automotive industry since the 80s. Moreover, China’s European car manufacturers have engaged in cooperation agreements with the Chinese government and local suppliers and often extend technical and financial assistance to local suppliers. An example of this is a 5-billion Chinese Yuan contribution of Shanghai Volkswagen for localisation funds (Zhang and van den Bulcke, 1999). The approach of Zhang and van den Bulcke’s (1999) study is chronological, mainly basing from existing secondary literature. The study is relevant and applicable to the topic under investigation as it provides useful and sufficient insights on the nature of the Chinese automotive industry and the chronological deve lopment of European FDI in the country, which can aid in analysing the current motives and outlook of German FDI in China. The research limitation is bounded within the study’s concentration on the Chinese automotive manufacturing industry. Analysis and Discussion The analysis and discussion provided for this research report is anchored on the literature review being carried out for German FDI in China.3.1 Analysis of German FDI in China Using the OLI FrameworkThe OLI Framework pertains to the three potential sources of advantage; namely Ownership, Location, and Internalisation, that lie beneath an organisation’s decision to enter into a multinational level of operation. Ownership advantages explain the reason/s why firms operate abroad whilst others do not, and indicate that successful multinational enterprises (MNEs) possess firm-specific benefits that enable them to overcome the costs entailed in operating in a foreign country. Location advantages, on the other hand, concentrate on the location aimed by an MNE (Reinert et al., 2009). Access to natural resources serves as a location advantage for choosing China for which to invest, as in the case of German FDI. Additional determinants of location selection for FDI are availability of cheap trained labour (e.g. Chen and Reger, 2006; Pikos, 2013; Zhang, 2005) and quality of local infrastructure (Tang, et al., 2012). Other critical factors are a smooth relationship with Chinese authorities, both central and local; and experience to cope with Chinese bureaucracy (Tang, et al., 2012). Such relationship is the bottom line for German FDI to engage in cooperation agreements with the Chinese government and local suppliers, as earlier highlighted by Zhang and van den Bulcke (1999). Zhang (2005) also highlighted in his work that China’s location characteristics would help to understand and appreciate massive FDI in the country. Internalisation advantages – another embodiment of the OLI framework – provide the influence on how a firm decides to operate abroad, making a trade-off between transaction savings and monitoring costs of a completely-owned subsidiary, on one hand; and the advantages of other forms of entry, such as joint venture and exports, on the other. A main characteristic of this approach is that it provides emphasis on the incentives for the individual firm. Mainstream international trade theory has considered this a current standard, which was not the case in the 1970s when FDI was classically regarded as an international movement of physical capital in pursuit of higher returns (Reinert et al., 2009; Taliman, 2007). The internalisation advantages embodied in the OLI framework are also found in the study of Pikos (2013) in the literature review, which magnifies the differences amongst conducting FDI in China, elsewhere, or through exporting, apparently aiming to ascertain the incentives that can be gained from choosing the most suitable out of the three options. The OLI framework is in fact an eclectic paradigm that provides a general theoretical framework for ascertaining firms’ FDI activities beyond their national borders. The eclectic paradigm is an analytical theory that accommodates other FDI theories a nd views most of the theories as having complementariness with each other (rather than having substitutability) of which their application can be fully enhanced (Tang et al., 2012). Internationalisation theory is one of the general theories of FDI, which views a MNE as an organisation that engages in utilising its internal market to produce products and distribute them efficiently in situations where a regular market encounters failure of operation. In effect, the internationalisation theory regards MNES taking on FDI activities abroad as a way to respond to goods and factor market imperfections, which have in fact prevented international trade and investment to operate efficiently (Tang et al., 2012). Through FDI, MNEs are able to produce and distribute their products via internal markets, thereby enabling them to optimise efficient production and improve the total profits. This notion must also constitute the motives and prospects for German FDI to conduct business in China. It mu st be noted that a MNE only employs FDI if the cost is outweighed by the benefits (Suneja, 2006; Tang et al., 2012). Worthy of note is the idea that in the lens of the internationalisation theory, knowledge, information, and research are intermediate products to be readily and directly traded to other countries due to the risk of loss of knowledge advantage (Rugman, 2002). However, MNEs possess vertical and horizontal integration, enabling the creation of their own internal markets, whereby intermediate products such as technology know-how are converted as a firm’s valuable property. This reflects the ownership advantage embodied in the OLI framework, as discussed by Reinert et al. (2009) and Taliman (2007). Hence, as the MNE sustains its competitive advantage, its ownership such as management know-how can be utilised and bolstered (Tang et al., 2012). The Uppsala Model looks at the internationalisation process as cyclic, experiential, and resource-based learning-by-doing, wh ich seems to foresee later research flows regarding dynamic capabilities and temporary competitive advantages with the internalisation framework (Sanchez and Heene, 2010). Based on the analysis, the internationalisation theory cannot in fact be seen as a separate body of thought from the OLI framework because it has a similar trail with such framework in relation to understanding the motives of a MNE (e.g. German firm) and its outlook to engage its FDI in a country like China. Meanwhile, the product cycle theory describes the so-called ‘wild geese flying’ patterns of foreign trade to explain the different economic development phases of countries. This theory cites three phases of industrial development with which each country attempts to elevate itself o the top phase of industrialisation. The theory says that the mature phase takes place once industrialisation development has been extensively laid down over the entire region or country with robust dynamic growth (Tang et al., 2012). It is interesting to consider that the OLI framework may be fastened over the product cycle theory in analysing German FDI in China, and that the relevance of the framework cannot be set aside when the chronological developments involved in the industrialisation process are taken into account. The applicability of the twin analysis of OLI framework and the product cycle theory is seen in Zhang and van den Bulcke’s (1999) study, which uses chronological discussions to describe the growth of European FDI in China, and cites the ownership-specific, location-specific, and internalisation-specific factors of European firms (e.g. German firms) to invest in the Chinese automotive sector.4. ConclusionThis research report deals with analysing the motives and prospects of German FDI in China within the OLI framework. The OLI framework is an eclectic framework that accommodates other theories of FDI and explains the intentions and outlook of MNEs to engage in FDI in China . The motives and prospects of German FDI to continuously seek to invest in Chinese market is propelled by internalisation advantages (e.g. incentives through conducting FDI in China rather than elsewhere or through exporting); location-specific advantages (e.g. cheap trained labour, export-orientation of FDI; access to natural resources; quality of local infrastructure; cooperation agreements with the central and local governments and local suppliers); and ownership-specific advantages (e.g. management know-how; technology-based infrastructure). The rapidly growing globalised market ushers the German FDI to continuously seek newer FDI prospects within China, beset by the growing competition and search for competitive advantages. References Bao, S., Lin, S., and Zhao, C. (2012) The Chinese Economy After WTO Accession. England, Ashgate Publishing Limited. Blanco, E. and Razzaque, J. (2011) Globalisation and Natural Resources Law: Challenges, Key Issues and Perspectives. Glos: Edward Elgar Publishing Limited. Chen, X. and Reger, G. (2006) The Role of technology in the Investment of German Firms in China. Technovation, 26 (3), 407-415. Dunning, J. H. (2010) New Challenges for International Business Research: Back to the Future. Glos: Edward Elgar Publishing Limited. Klenke, K. (2008) Qualitative Research in the Study of Leadership. Bingley, IWA: Emerald Group Publishing Limited. Oleckno, W. A. (2008) Epidemiology: Concepts and Methods. IL: Waveland Press, Inc. Pikos, A. K. (2013) German FDI in China: Consequences for Firms’ Performance (Published Thesis]. Denmark: Aarhus School of Business, Aarhus University. Reinert, K. A. and Rajan, R., Glass, A. J., and Davis, L. S. (2009) The Princeton Encyclopedia of the World Economy. Oxfordshire: Princeton University Press. Rugman, A. M. (2002) International Business: Theory of the Multinational Enterprise. New York: Routledge. Sanchez, R. and Heene, A. (2010) Enhancing Competences for Competitive Advantage. First Edition. Bingley, IWA: Emerald Group Publishing Limited. Simons, H. (2009) Case Study Research in Practice. First Edition. London: SAGE Publications Ltd. Suneja, V. (2006) Understanding Business: A Multidimensional Approach to the Market Economy. New York: Routledge. Taliman, S. B. (2007) A New generation in International Strategic Management. Glos: Edward Elgar Publishing Limited. Tang, S., Selvanathan, E. A., and Selvanathan, S. (2012) China’s Economic Miracle: Does FDI MatterGlos: Edward Elgar Publishing Limited. Zhang, K. H. (2005) Why Does So Much FDI From Hong Kong and Taiwan Go to Mainland ChinaChina Economic Review, 16 (3), 293-307. Zhang, H. and van den Bulcke, D. (1999) The restructuring of the Chinese Automotive Industry: The Role of Foreign Direct Investment and Impact of European Multinational Enterprises. Belgium: University of Antwerp. Analysis Of Motives And Prospects Within The Oli Framework: A Case Study Of German Fdi In China Introduction There are a number of theories that explain motives and prospects of FDI. OLI framework is the one that is most widely used by economists. According to OLI, there have to be advantages that can offset costs of making direct investment abroad. In this paper we apply the OLI framework to understand the motives behind German FDI in China. A case study of Volkswagen China is conducted to show the application of OLI in practice, and to demonstrate why FDI abroad can be a success story despite all the difficulties a company faces in a foreign environment. Literature Review One of the earliest theories explained FDI in terms of market imperfections. Kindleberger (1969) argued that for companies to gain advantage by investing abroad market has to be imperfect . If we assume that markets are perfect there is nothing foreign companies can exploit to make enough profits that will offset costs and risks associated with investing abroad (Kindleberger 1969).. The concept of firm-specific advantages was introduced to explain how market imperfections lead to foreign investment. Among these advantages are superior technology and marketing (Caves 1971), cheap labour (Grubel 1968), management skills (Wolf 1977), and exclusive access to natural resources (Lall and Streeten 1977). . Only when a foreign company possesses these firm-specific advantages can it successfully invest and become a major player in a foreign market and compensate for the disadvantages of being foreign in the country of its operation (Hymer 1976). Vernon’s product life cycle is another major FDI theory that tries to explain motives and the rationale behind FDI. Vernon (1966) dissected product life cycle into three distinct phases – innovation, maturity and standardisation Established companies in developed economies invest in new projects to design innovative products that will sell in future and guarantee a new profit channel for them. When a new product is designed, it is sold in the domestic market. Consumers gradually get used to it and demand new products. This leaves the company with two not mutually exclusive choices – get back to the innovation phase and design something new, or go abroad and produce the same products there. Going abroad is sometimes a better choice because foreign producers (such as China) start to imitate the existing product and become so good at it that the differences with the original become marginal (Vernon 1966). A later theory developed by Dunning (1977) has become widely used in attempts to understand the motives behind FDI. The theory became known as OLI: Ownership, Location and Internalisation. All three elements should be present in order for FDI to occur. This theory will be explained in greater detail in a separate chapter of this paper. Theoretical FrameworkDefinition of FDIAccording to the Organisation for Economic Co-operation and Development (OECD) (2008) 4th Edition of Benchmark Definition of FDI, FDI is â€Å"a category of cross-border investment made by a resident entity in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor† . Companies carry out FDI because they want to have direct control over their enterprise. This is what makes FDI different from portfolio investments which usually result in an ownership of less than 10 per cent of a foreign company’s capital. Hence the investor does not have real control over the foreign company (OECD 2008). Mergers and Acquisitions (M&A) and Greenfield investments are the two different types of FDI. The choice between them has different implications for the parties concerned. M&A happen when an existing company is bought out by a foreign firm. In contrast Greenfield investments are investments into new assets. For developing economies, including China, M&A are more common, for developed economies like Germany Greenfield investments are a popular choice (Shatz and Venables 2000). FDI are divided into horizontal and vertical; only in a few cases do the two occur simultaneously. Horizontal FDI occurs when a company invests in a firm built to serve the foreign market (Shatz and Venables 2000). . This foreign firm then performs the same activities as the host firm does in its own domestic market. With vertical FDI, the production cycle is fragmented so that each phase can be completed in a country where it can be done cheapest of all (Shatz and Venables 2000). OLI Framework The OLI framework is a theory that explains motives and the rationale behind multinational corporations’ (MNCs) decision to choose FDI instead of licensing use of their name or product to foreign producers or sellers (Lynn 2008). . FDI is a foreign investment so, for it to occur, the investing firm has to acquire assets in a foreign country. FDI is called direct investment because it results in a direct and real control over the acquired capital. MNC acquires a right to produce what it wants in a foreign country and decide where it wants to sell the product. As explained above, the whole product (horizontal FDI), or parts of it (vertical FDI), can be produced in a foreign country based on the considerations of cost-effectiveness (Shatz and Venables 2000).. FDI occurs because there are advantages to it. The first one is ownership advantage which stands for â€Å"O† in the OLI abbreviation. There has to be some advantage to owning the foreign asset. These can be lower costs, greater reputation, or swifter transition to a foreign market. Take for example Apple. The company has a reputation for high quality products so by owning a production facility in a foreign developing country it can still make profits that will offset costs of FDI (Lynn 2000). . Ownership advantage alone is not enough for FDI to occur. Here is when the â€Å"L† comes into play. â€Å"L† denotes the location advantage. A less costly labour force, access to the natural resources needed in manufacturing and a better geographic position (which leads to more efficient logistics), are some of the location advantages that can make companies seriously consider investing abroad (Lynn 2000). . Again this is not enough for FDI because everything described above can be achieved by brand licensing or through establishing joint ventures. FDI needs a third element – internalization, or control, advantage. This is the â€Å"I† in OLI. When it is believed that MNC can lose market share in case another company gets access to the same asset, FDI becomes the only choice available (Lynn 2000). . It is known that at some stage, foreign producers start copying products produced in the developed world and when they do it they are able to offer cheaper prices thus outperforming foreign producers in sales. To prevent this scenario many companies prefer to go with FDI and gain exclusive control over their assets. Methods and Data In this research, we conduct a critical review of the main theories of FDI, paying special attention to the OLI framework. While we acknowledge the importance of OLI in understanding international business and FDI in particular, we provide a short overview of criticisms of the paradigm so that readers have an understanding of the potential limitations of this research. A case study of German car manufacturer Volkswagen is used as a method of understanding FDI under the OLI framework as applied to the German investor interest in China and the two country’s bilateral economic relations. Additionally, we use statistical information to put some numbers into perspective and cite a research by Deutsche Bank which includes some forecasts as to the future of German FDI in China. Volkswagen (VW) Case Study Volkswagen was founded in 1937 (Datamonitor 2011). The name of the brand translates as â€Å"the car of the people† (Datamonitor 2011).. Volkswagen is represented in China through two ventures – with Shanghai Automotive International Company founded in 1985 and with First Automotive Works started in 1990 in Changchun (VW Annual Report 2010). VW has always regarded China as an important market. Today, there are 9 production facilities in China and 2 more are planned. VW’s target is to sell 3 million cars per year. Through 2015 VW is set to invest a total of 10.6 million euro to expand its production in China. VW is actively involved in producing electric vehicles in China. Both E-Golf and E-Lavida were presented in China and the first electric test was made here in 2011. VW is also set to produce a new brand specifically for the Chinese fast-paced economy (VW Annual Report 2010). Volkswagen Analysis Based on the OLI ParadigmOwnership advantageVW is one of the world’s most successful car manufacturing companies and, as such, it has a lot of advantages. VW is known in Europe for its technological advances and efficient production system. VW brand is strong all over the world. Many consumers associate vehicle design innovation, cost-effectiveness, and high safety standards with VW and consider it as their first choice when making decisions on buying a vehicle (VW official website 2011). Not surprisingly, VW had a competitive advantage over all Chinese manufacturers at the time of the entry into the market (VW official website 2011). In fact, VW is still superior to any of the Chinese car producers. VW exploited its technological dominance and increased its brand recognition. Chinese consumers were happy with the product offered and enjoyed VW’s presence in their country. Currently, VW strives to adjust its technology to meet changing customer need s and develop sustainable models for future (Yu 2010). .Location advantageVW’s joint venture in Shanghai was the most successful car enterprise in China at the time it was established in 1985 and it retains the top position today (Li 2000). . Locating in China, and Shanghai in particular, was the best possible decision for VW in terms of location because the region is rapidly developing and the people’s life standards are improving. Shanghai is the most densely populated and prosperous city in China and it has close ties with the central part of the country (Li 2000). Products from Shanghai are considered to have high quality across China and do not face any obstacles due to local protectionism. It should be also noted that at the time VW entered China it received many incentives and support from the government. The government still stimulates the automobile industry to increase domestic sales and contributes to the development of the sector. Thanks to these location a dvantages, VW China became a success and continues to be a source of decent income for the parent company (Li 2000)..Internalization advantageVW had the first mover’s advantage which helped it to become a major player in the new market. The company managed to take control over the major share of the Chinese market and realise all its ownership advantages. This first mover advantage till today helps VW to be very competitive with regards to Japanese and American rivals. To retain its market share, VW continues to innovate according to the changing tastes of the Chinese consumers and requirements to reduce the strain on the environment resulting from manufacturing and exploitation of automotive vehicles (VW official website 2011).Future of German Interest in ChinaChina has attracted German interest more than any other emerging country since 1997 (Deutsche Bank Research 2004). German companies explain their excessive interest in China by citing the country’s huge market p otential. In 2001 there were about 76 million prosperous consumers in China – a population that is worth FDI in any country despite possible barriers and foreign culture-related challenges (Deutsche Bank Research 2004). This number of prosperous consumers in China is greater than the total population of Germany and it is set to increase tenfold by 2015. The second most important argument for German FDI in China is the â€Å"extended low-cost assembly line† (Deutsche Bank Research 2004). Cost has always been one of the most important considerations in business decision-making.. Heated global competition for competitive advantage and market shares across virtually all industries means that companies need to find cheaper options for manufacture. China is often the best solution because of the low-cost labour force it offers. Not surprisingly, Germany, alongside other strong economic powerhouses, chooses China as a low-cost manufacturing site and actively invests there (D eutsche Bank Research 2004). Another reason for German FDI is the growing economy of China and its potential to become a dominant power. Germany has to defend its interest in a country which is set to become a global leader with an over 1 billion of potential buyers of products and services. Of course, China is a completely whole new world for German businesses that has to be explored until there is sufficient understanding required for making informed decisions. Usually, most foreign companies entering China lack information vital for their success and have to be quick to adapt or risk becoming a failure. China cannot be considered â€Å"one country – one market†. It is bigger than both Eastern and Western Europe put together (Deutsche Bank Research 2004) and it is naive to think that one product design or pricing strategy will work across the whole country (Deutsche Bank Research 2004). Hence a lot of prior planning is required (Deutsche Bank Research 2004). Among other obstacles that can potentially deter German interest in China are high input prices. There are a lot of protectionism locally, and also many logistic and bureaucratic inefficiencies that are not easy or cheap to overcome. Moreover, the global prices for raw materials and energy resources a re growing which adds to the cost of production even in China (Deutsche Bank Research, 2004). The final commonly-cited obstacle to German interest in China is the heated competition amongst different foreign companies coming from such developed nations as USA, Canada, and Australia. Everyone knows about advantages of investing in China and hence there is a lot of competition for assets and control over the market.Criticism of OLI frameworkThe OLI framework offers a very useful insight into the motives and the rationale behind FDI. The paradigm has evolved over the time to adapt to changes in the way international business is conducted (Narula 2010). Critics of the theory argue that because of expansion of OLI’s application to all MNE-related phenomena, it now risksbecoming tautologous (Narula, R. 2010). Narula proposes a return to the classic OLI framework and using alternative theories to understand the more complex new developments rather than internalising everything so th at it fits OLI. Narula acknowledges the importance of OLI in early research on the international business and FDI, but argues that it is not suited for explaining everything that happens in business (Eden 2003). In fact, it is becoming cumbersome to apply OLI to understanding international business, as the latter has became complex (Eden 2003).There is a need for new frameworks. OLI can still be a valuable tool in understanding some aspects of international business and FDI, but should lose its dominance in the academic community (Narula, R. 2010). Conclusion German interest has been present in China for almost half a century. Because Chinese market is huge and has a big growth potential, German companies are likely to look for more opportunities there. Before a decision to invest is made, companies always asses its prospects. OLI framework is often used to see whether FDI is justified. OLI’s critics now say that there should be some additional analysis involved in decision-making, because, as good as the paradigm is, it still cannot explain every complex aspect of international business. References Caves, R. (1971). International Corporations: The Industrial Economics of Foreign Investment. Economica, Vol. 38, pp. 1-27 Datamonitor (2011). Automotive Manufacturing in China http://360.datamonitor.com.www.baser.dk/Product?pid=10C672D5-7559-4A0A-90B3-5EFBDF97D73C [accessed 31 March 2014] Dunning, J. (1977). Trade, location of economic activity and the multinational enterprise: A search for an eclectic approach. University of Reading diuscussion papers in international investments and business studies, no. 37 Eden, L. (2003). A Critical Reflection and Some Conclusions on OLI. Vox Professori. http://www.voxprof.com/eden/Publications/Eden-Reflections-on-OLI-2003.pdf [accessed 1 April 2014] Foreign Direct Investment in China – Good Prospects for German CompaniesChina Special (2004). Deutsche Bank Research. http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000196028.PDF [accessed 30 March 2014]Grubel, H. (1968). Internationally Diversified Portfolios: Welfare Gains and Capital Flows. American Economic Review, Vol. 58, pp. 1299-1314. Hymer, S. (1976). The International Operations of National Firms: A Study of Direct Investment. PhD Thesis. Massachusetts Institute of Technology Kindleberger, C. (1969). American Business Abroad: Six Lectures on Foreign Direct Investment. Yale University Press Lall, P. and Streeten, S. (1977). Foreign Investment, Transnationals and Developing Countries. London: Macmillan Li X. (2000). Foreign Direct Investment in China: The Importance of Market Entry Timing. The Haworth Press, Inc Lynn, W. (2008). The OLI Framework Temple University. Lecture Notes. http://astro.temple.edu/~pippin/oli.htm [accessed 30 March 2014] Narula, R. (2010). Keeping the eclectic paradigm simple: a brief commentary and implications for ownership advantages. United Nations University. Working Paper Series. https://www.google.com/#q=Narula%2C+R.+(2010).++Keeping+the+eclectic+paradigm+simple%3A+a+brief+commentary+and++implications+for+ownership+advantages [accessed 30 March 2014] OECD (2008). OECD Benchmark Definition of Foreign Direct Investment, 4th Edition, pp. 1-241 Shatz, H. and Venables, A. (2000). The Geography of International Investment. Policy Research Working Paper, Vol. 2338, The World Bank, Washington, D.C. Vernon, R. (1966). International investment and international trade in the product cycle. Quarterly Journal of Economics, Vol. 80, pp. 190-207 Volkswagen Annual Report (2010). http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/03/Volkswagen_AG_Geschaeftsbericht_2010.-bin.acq/qual-BinaryStorageItem.Single.File/GB_2010_e.pdf [accessed 31 March 2014] Volkswagen official website (2011). With a new sales record Volkswagen Group China, http://www.volkswagenag.com/vwag/vwcorp/info_center/en/news/2011/01/With_a_new_sales_record_Volkswagen_Group_China.html[accessed 31 March 2014] Wolf, B. (1977). Industrial Diversification and Internationalization: Some Empirical Evidence. Journal of Industrial Economics, Vol. 26, no. 2, pp. 177-191. Yu, Q. (2010). BlueMotion’ powers VW to save energy, boost sales. http://www.chinadaily.com.cn/business/2010-12/20/content_11728087.htm [accessed 31 March 2014] Additional Resources Chunlai, C. (1997). The Location Determinants of Foreign Direct Investment in Developing Countries. The University of Adelaide. http://www.rrojasdatabank.info/97_12.pdf [accessed 30 March 2014] China (2013). German Federal Foreign Office. http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-Nodes/China_node.html [accessed 30 March 2014] Franco, C., Rentocchini, F., Marzetti, G. (2008). Why Do Firms Invest AbroadAn Analysis of the Motives Underlying Foreign Direct Investments. University of Bologna and University of Trento. http://www.etsg.org/ETSG2008/Papers/Franco.pdf [accessed 30 March 2014] World Economy FDI: The OLI Framework. University of Oxford. http://users.ox.ac.uk/~econ0211/papers/pdf/fdiprinceton.pdf [accessed 30 March 2014]

The Secret of Ella and Micha Chapter 21

Micha The hospital lights are bright and the air is a little cold, but Ella's warm hand in mine is comforting. The doctor doped me up with a sedative to ease the pain and then I lay down on the bed, waiting for them to come clean the fragments of the branch out of my wound. I was scared shitless when I crashed into that tree, worried I was going to die and leave Ella behind with no one. But now, I'm feeling pretty good. Ethan peers over me and scrunches his nose at the wound. â€Å"It's gnarly looking.† I shove him out of the way and pull Ella down beside me. â€Å"Hey there, pretty girl, come sit with me.† She giggles, then glances at someone and laughs harder. â€Å"I think you might be better off trying to shut your eyes,† she tells me. I shake my head from side to side. â€Å"No way, all I want to do is stare at you all day.† She snorts a laugh and then smoothes my hair back from my head. â€Å"Quit talking, before you say something embarrassing.† I search my brain, not finding anything embarrassing stashed away inside. â€Å"I'll be fine.† I reach over with my good hand and find her leg. Grabbing hold of it, I pull her over toward me so she falls onto the bed. â€Å"Micha,† she says, her green eyes so wide I can see my reflection in them. â€Å"There are people everywhere.† I glance from left to right, not seeing anything but blurry shapes. â€Å"I think we're good.† I move into kiss her and she gives me a quick peck on the lips, before leaning away. â€Å"How about you rest your head in my lap,† she says. â€Å"And I'll rub your back until you go to sleep.† â€Å"But what if I wake up and you're not here?† I ask, sounding like a little baby, but not giving a shit. She presses her lips together and sighs. â€Å"I'm not going anywhere.† â€Å"You promise?† â€Å"I promise.† She sits up and I rest my head on her lap. She rubs her fingers up my back and through my hair. I hold onto her as I drift into unconsciousness. Ella Micha is lying on my bed without a shirt on, fiddling with the bandage covering the hole where the branch stabbed into him. The doctors couldn't stitch it up because it was too wide of an injury, so he has to keep it covered and is not allowed to take showers, something he had jokingly griped about at the hospital as he winked at me. It's been a few days since the accident and the Chevelle is parked out in his garage in ruins. When I saw it in the light, I practically passed out because it doesn't look like an accident anyone would walk away from; the driver's door is caved in and the front fender fell completely off. â€Å"This is going to leave an awesome battle scar.† He pushes the bandages back down over the wound. â€Å"I'm glad you think so.† I read the email that showed up in my inbox the day after the accident. Turns out, I got the internship at the museum and now I have no idea what to do. I want to do it – it's a great opportunity, but I also don't want to leave him. â€Å"What are you reading?† he asks, sliding his legs off the bed, starting to get to his feet. â€Å"Nothing. I was just looking through my emails.† I shut the computer screen off, climb onto the bed with him, and lean back against the headboard, stretching my legs out. He points at the drawing of the broken mirror on my wall. â€Å"I like that one. Especially the guitar part.† It turned out to be my best piece, full of memories, and a future I wasn't able to see until I finally let go. A freedom given to me by Micha because he refused to let me go. â€Å"Me too,† I agree. â€Å"I think I'll probably turn it in as one of my art projects one day.† â€Å"It's got a lot of meaning in it,† he comments. I smile and slide down, putting my head next to his. â€Å"I know.† He rolls to his side carefully, so he doesn't hurt his shoulder and we're lying face to face. â€Å"Where's your head, Ella May? Ever since the accident, you've been really quiet.† I'm so close to him I can see the dark specks of blue in his aqua eyes. I've been quiet because that night made me realize something important. For a split second, I thought I'd lost him and it opened up my heart and freed what I'd buried deep inside me that night on the bridge. I look into his eyes, no longer afraid of what's in them, but afraid I'll lose what they carry. â€Å"I just don't ever want to lose you.† His eyebrows dip together as he props up onto his elbow. â€Å"Is that what it's been about? The accident? Because I'm fine.† He points to the bandages. â€Å"It's just a tiny scrape.† â€Å"I know you're okay,† I say, sounding choked. â€Å"But for a second I didn't think you were.† â€Å"Hey.† He cups my cheek and kisses me tenderly. â€Å"I'm okay. You're okay. Everything's okay.† I take a deep breath and let it out before I can suck it back in. â€Å"Micha, I love you.†

Positive Effects of Peer Pressure Essay - 561 Words

Positive Effects of Peer Pressure When you think of the words â€Å"peer pressure’, what is the first thing that comes to mind? Majority of us would say that peer pressure is an influence from friends or classmates to do something risky that results in delinquent activities. Some people conform to such ways because as they say, â€Å"Everyone is doing it.† What if I told you that there is a positive side to peer pressure? Yes, you can be pressured into making the right choices. It can teach you to be mature, responsible and do what’s right all the time for yourself depending on the crowd you choose to hang with. Everyday your behavior is influenced my negative and positive approaches of others whether it’s at school or at work. Knowing how peer†¦show more content†¦I had to behave and dress a certain way because I was the one all cadets looked up. I was pressured by my superiors to always do my best. They were the reason I stayed away from troubl e, didn’t let anyone push me over or do anything that would jeopardize my future. Being mature and responsible was the way of life for me. I made that choice to do what is right all the time. You wouldn’t believe how many classmates came up to me and said they want to either be like me or earn the rank I had. They knew what it came with. It was all because when my instructors pressured me to do what is right, I pressured them. With that type of pressure, they have learned to overcome any obstacles in life, become more responsible and achieve fantastic grades. In fact, just like JROTC, at work, we are all motivated to strive for the best and do the right thing. Our bosses may breathe down our neck but when you are in an environment built on teamwork, the peer pressure is known as motivation. Our armed forces are pushed hard by each other to either achieve good grades in academic and inspections to overcoming the hardships of physical activity at war. They are taught to never give up. There is no such that as the word â€Å"cant† in their vocabulary. Positive peer pressure builds strength and pushes you to do things that you didn’t have the courage to do. All in all, peer pressure can be considered positive as well as life changing. Motivation is given andShow MoreRelatedPositive Effect of Peer Pressure962 Words   |  4 Pages CONCEPT PAPER GUIDELINES I. TITLE Positive effect of peer pressure to teens II. INTRODUCTION A. Background of the study As children grow into preteens and then into teenagers, they often become less dependent on the family and more dependent on their peers when it comes to making choices and developing morals and values. Peer pressure can have a positive effect when it encourages teens to develop social skills necessary for adulthood. UnfortunatelyRead MorePositive Effect of Peer Pressure954 Words   |  4 Pages CONCEPT PAPER GUIDELINES I. TITLE Positive effect of peer pressure to teens II. INTRODUCTION A. Background of the study As children grow into preteens and then into teenagers, they often become less dependent on the family and more dependent on their peers when it comes to making choices and developing morals and values. Peer pressure can have a positive effect when it encourages teens to develop social skills necessary for adulthood. UnfortunatelyRead MoreThe Positive And Negative Effects Of Peer Pressure1479 Words   |  6 PagesPeer pressure is a social issue that has been around in the past and will last in the future. It is one thing that all teenagers have in common. It is highly influential with positive and negative effects. Some teenagers are more likely to give in whereas others are more likely to stand their ground. 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Even belonging to one’s family is not enough. Individual will strive to belong to a wider group existing within his or her environment. Consequently, this exposes one to peer pressure. Peer pressure is the influence exerted on an individual by a person or a group to do something or act in a manner that he or she would otherwise not consider doing on his or her own. It has traditionally been associated withRead MoreNegative and Positive Effects of Peer Relationships1564 Words   |  7 PagesPossessing a functional or dysfunctional family is of much importance to a healthy development, helping children through peer pressure, acceptance, and the anxiety of belonging. Yet how important is the environment that a child is raised on, this being shared or non-shared? How difficult or easy can peer pressure be? Will peer pressure help or deter a child from being functional. How much do these factors affect develo pment from childhood to adolescence? This paper will explain the different stagesRead MorePeer Pressure Essay693 Words   |  3 Pagesgeneration. Peer Pressure. We have all at one stage in our lives, experienced it. We all know what it feels like to be pressured by a peer. Peer pressure today impacts on kids of my generation in a huge aspect. Teenagers feel social pressure in numerous ways such as clothing, music and entertainment choices, to unsafe areas such as drugs, alcohol and smoking. During adolescence, kids emphasize their independence and explore their identity. Yet they still crave the approval of their peers and worryRead MorePeer Pressure1013 Words   |  5 PagesPeer pressure From Wikipedia, the free encyclopedia Peer pressure is influence that a peer group, observers or individual exerts that encourages others to change their attitudes, values, or behaviors to conform the group norms. 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American Academy of Child and Adolescent Psychiatry states â€Å"Peers play a large roleRead MorePeer Pressure Affects Academic Performance of Second Year Students1117 Words   |  5 PagesTitle: Peer Pressure Affects Academic Performance of Second Year Students Dependent Variable: Academic performance of second year students Independent Variable: Peer Pressure Objective: To know how academic performance among second year high school students is being affected by peer pressure. Introduction: To be successful in life, one must begin by being successful in school. In high school, we were all told to work hard so that we could get good grades and scores that would get