Operation Management at Ups - 1409 Words

Operation Management at UPS Katina Taylor FSJC Jacksonville Operation Management Michael Neff December 1, 2012 Abstract This paper will discuss the different operation management policies and leadership practices at United Parcel Services (UPS), one of the premier shipping companies in the world. This paper will discuss the growth and different training programs that UPS offers to its managers and employees. It will also review the way external and internal works, failures of operation and how to anticipate a problem that UPS deal with on a daily day, UPS links millions of organizations and individuals together, by delivering an average of 15 million packages†¦show more content†¦UPS achieved record earnings per share in 2011, well surpassing our previous peak in 2007. Our operating margin and free cash flow are the envy of our industry. Three key tenets: Create Value for our customers, transform our customers, transformed our business, and invest for growth. In 2011, we executed the financial results of our business segments this strategy and the results were rewarding. UPS was honored with the prestigious United Technologies Corporate (UTC) Supplier Gold award. UPS is the only global transportation and logistics company to receive the highest possible supplier rating from the UTC for three consecutive years. UPS manages the facility that stores engine parts for Pratt amp; Whitney – a UTC company. Pratt amp; Whitney makes aircraft engines used by commercial airlines and the United States military. UPS fulfills and ships orders to customers all over the world from the Georgia Distribution Center in Atlanta, GA. â€Å"We are honored to be recognized for all the hard work and outstanding results achieved by our employees,† said Stephen Hydrick, UPS vice president of distribution. â€Å"Working closely with Pratt amp; Whitney our people have demonstrated the commitment and innovation required to achieve the year over year quality advancements needed to secure this award. It is gratifying that UTC recognizes UPS as a world class partner.† UTC awards suppliers and partners who achieveShow MoreRelatedStrategic Marketing Planning : Operations And Management Teams Focus On Coming Up With And Implementing Practical Marketing Essay2075 Words   |  9 PagesMBA 505E, Strategic Marketing Course Content Feedback Questions Fall Semester 2016 QUESTIONS 1 In strategic marketing planning, operations and management teams focus on coming up with and implementing practical marketing strategies that can assure a steady flow of business for the organization. In order to do this, these teams determine the primary objectives of the organization and what methods / resources are necessary to put to action to achieve these objectives. A key part of strategic planningRead MoreOperation Management1673 Words   |  7 PagesWhat is Operations Management? 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Cultural Practices Influence The Way We Perceive The World

Cultural practices influence the way we perceive the world. Our Western world is more exposed to â€Å"different† things yet have a difficult time accepting Eastern cultures and how things beyond us work. A major issue that is affected by culture is sexuality. A subtopic of sexuality is, slut shaming. Slut shaming is, â€Å"the act of making any person feel guilty or inferior for certain sexual behaviors or desires that deviate from traditional or orthodox gender expectations,† (Your Dictionary). My outside source, â€Å"Teen girls’ sexual double standards and sexting: Gendered value in digital image exchange,† explains the prominent gender inequalities and sexual double standards. However, the issue of culture shaping thinking with slut shaming as the core issue at hand is asserting gender, religion, equality and parenting. Slut shaming shapes thinking of gender and equality because of how the double standards works. In the eyes of many cultures a man would sleep with 5 women and be a legend, yet a woman sleeps with 5 men and she is worthless trash. In Eastern cultures this is extremely prominent. In many Eastern cultures, such as Middle Eastern cultures, it is very well known that such cultures practice polygamy. Polygamy is â€Å"the practice or custom of having more than one wife or husband at the same time.† (Webster). This practice however is more seen throughout the male cohorts of the culture. A woman is shunned and in most cases killed if she is with more than one man. In WesternShow MoreRelatedPerception Is A Matter Of Interaction Between The World And The Self1534 Words   |  7 PagesPerception is a matter of interaction between the world and the self; the self is a person’s being that separates them from anyone else in the world. At its simplest, the world gives people events ; in return people give those events meaning by interpreting and acting upon them. 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The two articles reviewed both focus on this corporate responsibility but they have very different approaches and draw very different conclusions. John Darleys article How Organisations Socialize Individuals into Evildoing summarises someRead MoreHow Culture Affects Nursing Care And The Way Humans Care For Themselves946 Words   |  4 PagesAssumptions Leininger presented a general theory statement in 1985, â€Å"with the theory, I predict that different cultures perceive, know, and practice care in different ways, yet there are some commonalities about care among all the cultures in the world (Reynolds Leininger, pg 11).† Leininger states the theory can help to show how culture affects nursing care and the way humans care for themselves. Leininger holds to the idea that care is the central concept for nursing theory and research. The

Boosting Key Milk Nutrients May Help Lower Free Essays

The report (ScienceDaily screen 1) mainly focused on the important contributions of vitamin D, calcium and magnesium in risk prevention for diabetes; most especially the type 2 diabetes. (qtd in ScienceDaily, screen 1) The language used is fairly comprehensive with the use of familiar words and with only a few technical terms. The author’s understanding of the previously reported findings is sufficient to allow him or to allow her to thoroughly explain the findings of the studies presented. We will write a custom essay sample on Boosting Key Milk Nutrients May Help Lower or any similar topic only for you Order Now In both studies conducted by Pittas et al. and Larsson et al., meta-analyses approaches were conducted to obtain the results. (qtd in ScienceDaily, screen 1) Studies performed were mainly based on American diet, therefore similar studies may be conducted to evaluate whether these findings apply for other racial and ethnic populations. These information would really be useful for individuals who have diabetes or are at risk of developing diabetes; as well as the general population for the promotion of health and prevention of disease. However, to a reader without extensive nutritional background, results of this study may be misleading. The report may mislead by giving the reader the notion that drinking milk alone will be prevention enough against diabetes. Other preventive measures for diabetes should have been included in the report to avoid misinterpretation. Reference: ScienceDaily. â€Å"Boosting Key Milk Nutrients May Help Lower Type 2 Diabetes Risk†. (13 July 2007). 16 July 2007 http://www.sciencedaily.com/releases/2007/07/ 070711001452.htm. Web address: http://www.sciencedaily.com/releases/2007/07/070711001452.htm More on: Diabetes, Dietary Supplement, Vitamin, Hormone Disorders, Nutrition, Osteoporosis Boosting Key Milk Nutrients May Help Lower Type 2 Diabetes Risk Science Daily — Most Americans fail to get the calcium and vitamin D they need, but this shortfall could be affecting more than their bones. It may, at least in part, be one reason behind the epidemic of type 2 diabetes, suggests new research conducted at Tufts University. Drinking more milk — a leading source of calcium and vitamin D in the American diet — could help decrease the risk of type 2 diabetes by nearly 15 percent, according to the new meta-analysis and review published in the Journal of Clinical Endocrinology Metabolism (1). In the thorough analysis of previously published studies, the researchers found chronically low levels of vitamin D were linked to as high as 46 percent greater risk of type 2 diabetes. Yet boosting vitamin D alone would likely have little effect in healthy adults. Instead, the researchers suggested that a combination of vitamin D and calcium, like that found in milk, would have the greatest potential to help prevent diabetes, especially among those at highest risk for the disease. Examining the intake of milk and milk products specifically, the researchers found there was nearly a 15 percent lower risk for type 2 diabetes among individuals with the highest dairy intake (3-5 servings per day) compared to those getting less than 1  ½ servings each day. Most of the studies assessed were observational and the limited number of intervention trials makes definitive conclusions difficult, yet the Tufts researchers suggest calcium and vitamin D may affect the body’s ability to produce or utilize insulin, the hormone the body makes to process sugar that is impaired in those with diabetes and pre-diabetes. Beside calcium and vitamin D, milk is the primary beverage source of magnesium, which a second meta-analysis found may also reduce the risk of type 2 diabetes (2). The analysis concludes that for every 100 milligram increase in magnesium up to the recommended dietary intake, the risk of developing type 2 diabetes decreased by 15 percent. Type 2 diabetes and insulin resistance syndrome (or pre-diabetes) affect a staggering 75 million Americans and death rates from diabetes have increased nearly 45 percent over the past 20 years, elevating the importance of finding new ways to treat and prevent this deadly disease. Milk is a primary source of calcium and vitamin D in the American diet. In fact, government reports indicate that more than 70 percent of the calcium in our nation’s food supply comes from milk and milk products. Additionally, milk is one of the few food sources of vitamin D, which is fast emerging as a â€Å"super nutrient.† The recommended three servings of lowfat or fat-free milk provides 900 mg of calcium, 300 IU of vitamin D and 80 mg of magnesium daily. Reference: (1) Pittas AG, Lau J, Hu FB, Dawson-Hughes B. REVIEW: The role of vitamin D and calcium in type 2 diabetes. A systematic review and meta-analysis. Journal of Clinical Endocrinology Metabolism. 2007;92:2017-2029. (2) Larsson SC, Wolk A. Magnesium intake and risk of type 2 diabetes: a meta-analysis. Journal of Internal Medicine. 2007. doi: 10.1111; epub ahead of print. Note: This story has been adapted from a news release issued by Weber Shandwick Worldwide How to cite Boosting Key Milk Nutrients May Help Lower, Essay examples

Literacy Learning For Aboriginal Children And Phonics - Samples

Question: Discuss about the Literacy Learning For Aboriginal Children And Phonics. Answer: Complexities of literacy learning for Aboriginal children and measures for supporting positive literacy in them: Literacy learning has been a major issue in the social scenario of Australia singe ages. Various measures and initiatives have been undertaken to remove such disparities existing in the social scenario of the country. However, the process of eliminating the difference in rendering education to the children and closing the gap that prevails among them has been significantly slow. The prevention of children to nurture proper learning from such an early age affects their future negatively. Thus, collaboration of education system with the communities of the children and their families helps to develop the child in a proper way. There are various complexities in the literacy learning of the aboriginal children in Australia (Klieve Fluckiger, 2015). The opinions and perspectives of the people are mostly undervalued and not addressed properly, compared to the mainstream communities. Since an early age, the children use a different accent and language that makes them unable to understand the common language used for education and learning. The cultural difference also acts as barriers for the children that make learning ineffective. The members of the immediate family of these children need to realize the importance of literacy learning for their children so that they are influenced to enlighten the kids. The children residing in the remote areas also fail to access the educational facilities that are generally provided in the main cities. Considering the concern of increasing literacy learning for the aboriginal children, various methods have been adopted. It is found that children are more active in learning when their parents are engaged in the process. Thus, partnership between the parents and schools have been emphasized by programs like PaL and Mums n Buds that enacts the belief of DEEWR to improve the literacy learning in aboriginal and indigenous children, thereby increasing their rate of participation in education and schools (Fluckiger, Diamond Jones, 2012). Preschool teachers also interact effectively with the mothers of the aboriginal children for their concern and support who now promote literacy in the lives of their children. The courage of these women is rendering progress and development of literacy learning of the aboriginals. They are engaging the children to learn standard Australian English that serves as the basis for the learning process (Australiancurriculum.edu.au, 2018). The approach to promo te power in the communities than power over them has been proving very effective for these groups of people. Participation, knowledge building and decision-making processes are developing the activities working to promote learning in these groups (Hill, Glover Colbung, 2011). Transparency in organizations with clear visions and missions to identify the aboriginals as nothing different would help to improve the situations. Development of proper school learning with no judgmental differences in looking at children belonging from different communities and initiations of greater family-school partnerships make the learning process for the children more effective (Maher Bellen, 2015). Public libraries also have a good influence to promote better learning facilities to the children hailing from different backgrounds. Focusing on the vocabulary of the children from an early age and improving their reading skills in order to access the library on their own also helps to fight the competen cies. Setting preschools in different parts of the country and proving bus services to make the children reach to the mainstream areas to pursue education are some basic considerations that are needed to promote literacy for the aboriginals living in the remote places. Various events are held to influence the people residing in the corners of the country to realize the need of education to be served to children from a preliminary stage that would foster their bright future and help to combat the challenges to a significant extent. Considering the various aspects of literacy learning in aboriginal children of Australia and the challenges that are faced in promoting education to them, it can be analyzed that there are more initiatives to be undertaken to bring all of them under the canopy of getting educated and enlightened. The indigenous people are recently found to have admired and participated in the processes to bring in a change and develop the future of their kids, which clearly indicates a success of the aim to promote literacy learning to every child, irrespective of their culture and background. Advantages and disadvantages of phonics and whole language approaches for reading and a brief study on the Blended approach of study: The reading strategies that are taught to children to determine the incorporation of parts of language to create a meaning is known as the whole language approach in literacy methods (Vaish, 2014). It serves to be the basis of effective reading and phonetics play a very crucial part in the approach (Campbell, 2015). Phonetic approach is the effective method of teaching and learning based on the alphabets and the associated sounds of them (Turk et al., 2014). It acts as the primary method to ensure knowledge of letters in children who becomes able to identify them and decode words accordingly. However, there are various advantages and disadvantages of the approaches that are discussed below. The approach helps to develop the spelling of the children from an early age. It renders confidence to the children who become able to identify words and decode them. The main problem regarding phonetics is not every word is spelled phonetically. Another disadvantage is through this approach; the children often easily read the sentences but fail to understand the meaning of them. Students even often fail to spell words properly having improper phonic instructions. The potential of each child differs from each other. Thus, the approach may not be evident for all the children who may find difficulties in the approach of learning. Thus, educators for the young children integrate different approaches of teaching. English orthography is the alphabetic spelling system of the English language. A depth of knowledge in English orthography is very effective for teachers that help them to understand and respond to young childrens reading and writing ways. Young children do not have a sense of phonics, thus they must be given opportunities to talk and communicate freely, go through variety of words in picture-story books, see and writing practice on regular basis, reciting rhymes together and teaching them to identify alphabets and sounds together enable the kids to learn the language effectively. All the children develop better learning if the teaching sequence for them is the same (Block Duke, 2015). Instead of making the process of learning complex and complicated for the small kids, there must be a sense of joy in the learning process. In the 21st century, the blended learning is gaining momentum that uses e-learning methods and modern technologies for the process of learning (Hornsby Wilson, 2014). The approach of learning is very effective for both the teachers and the students. It is delved in online methods and deviates from the traditional physical classroom environment. However, it is not very applicable to the young kids who need the individual care and face-to-face acknowledgement from their educators that smoothen and develop their learning abilities largely. Thus, a whole language approach serve to the basic with the phonics-based methods of learning that teach the children to decode words and learn spelling in a better and integrated way. References: Australiancurriculum.edu.au. (2018).English. [online] Available at: https://www.australiancurriculum.edu.au/english/curriculum/f-10?layout=1 [Accessed 15 Mar. 2018]. Block, M. K., Duke, N. K. (2015). Letter names can cause confusion and other things to know about letter-sound relationships.YC Young Children,70(1), 84. Campbell, S. (2015). Feeling the pressure: Early childhood educators' reported views about learning and teaching phonics in Australian prior-to-school settings.Australian Journal of Language and Literacy, The,38(1), 12. Fluckiger, B., Diamond, P., Jones, W. (2012). Yarning space: Leading literacy learning through family-school partnerships.Australasian Journal of Early Childhood,37(3), 53. Hill, S., Glover, A., Colbung, M. (2011). My favourite book!: young Aboriginal children's book choices.Australasian Journal of Early Childhood,36(1), 77. Hornsby, D., Wilson, L. (2014). Early literacy is more than phonics.Practically Primary,19(3), 12. Klieve, H., Fluckiger, B. (2015). Towards an evidence base: Exploring the impact of community-based literacy programs in remote Indigenous communities.Australasian Journal of Early Childhood,40(2), 89. Maher, M., Bellen, L. (2015). Smoothing childrens transition into formal schooling: Addressing complexities in an early literacy initiative in remote Aboriginal communities, Northern Territory, Australia.Early Childhood Education Journal,43(1), 9-17. McTurk, N., Lea, T., Robinson, G., Nutton, G., Carapetis, J. R. (2011). Defining and assessing the school readiness of indigenous Australian children.Australasian Journal of Early Childhood,36(1), 69. Vaish, V. (2014). Whole language versus code-based skills and interactional patterns in Singapores early literacy program.Cambridge Journal of Education,44(2), 199-215.

Emirates Airlines

Table of Contents Introduction Objectives and methodology Linkage with the Public Administration Issues References Introduction Emirates airlines is an air services provider based in Dubai. It is ranked as one of the best performing airlines worldwide. This company according to Namaki (2008) â€Å"has played a major role in the economic development of the United Arab Emirates by promoting tourism besides the region being the rich in oil deposits† (35).Advertising We will write a custom essay sample on Emirates Airlines specifically for you for only $16.05 $11/page Learn More Before the inception of emirates airlines, the main airline was the Gulf air whose relationship with the leadership of Dubai was faulted by the fact that Dubai had refused to open up its skies for the company’s operations. This prompted the Gulf air to end and withdraw bigger percentage of its operations in Dubai, leading to a partial paralysis of travels in and out of the region. Emirate airline was incepted to facilitate movement of people and goods in and out of Gulf region. Observations made on the growing trends of Airline companies indicate that, Emirates Airlines is steadily growing, serving more than 100 destinations all over the world. The success of this company is mainly based on strict management practices anchored in the company culture hence guaranteeing a sustainable survival. Objectives and methodology The study of the management practices in Emirates airlines are meant to ravel the strengths of the company that have ensured its continuity to growth over the years. Middle East is one of the areas despite being endowed with natural resources; it is hard for companies to survive, owing to the political climate of the region. This region has been facing political instability since civilization existed. It is therefore amazing how this company has managed to survive in this area and rise above many other companies which are operati ng in the most stable economies (Kuye, 2002). Research shows that Dubai, the headquarters of emirates airlines, is also the fastest growing tourists’ destination. Perhaps, this may be due to the hostility in the neighboring regions. Many researchers believe that the presence of Emirates airlines has played a major role in development of this city into a leading tourist destination. Again, this leaves one wondering the reasons behind such credibility to Emirates airline that started with a few numbers of operations in the region. The research questions in this case, therefore include, what is the management structure in the company, how management duties allocated are and how the management team guarantees accountability (Pathi, 2010).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The methodology for conducting this research will involve an intensive data collection activity. The ma in methods to be used in collecting the data will involve using structured questionnaires to obtain information from the Emirates airlines branches, obtaining performance information from airports authorities and researching through the company’s publications. This will also require data collection from secondary sources which will form the literature review of the study. The data analysis and presentation techniques that will come in handy in this research includes using tables to record the data and coding continuous data to give it discrete values for easy manipulation. This will be followed by writing a report on the research findings and this report should mainly concentrate on findings related to the management practices that have contributed to the success of Emirates airlines. It should also highlight the weaknesses that need to be addressed in order for the company to maintain the growth prospects in many years to come. Linkage with the Public Administration Issues T his research on the management of Emirates Airlines is related to public administration because; the company is owned and managed by the government of Dubai. The topic of public administration deals with the â€Å"implementation of government policies and the administration of government services† (Theaker, 2008, p. 265). Another definition of this is, the study of the decision making strategies applied by the government in policy making and analysis as well as the inputs that led to the development of these policies. The management of Emirates airlines is done directly from the government offices and any issues affecting the government affects this company as well. Some of these issues include the political instability in the Middle East which has been a hindrance for development in this area for a very long time. The United Arab Emirates is has however never been affected by this political tension directly, but the instability in the neighboring regions in threatening. Anot her public administration issue when it comes to the management of public companies is competition from the private sectors (Kuye, 2002). In most cases, the private operations do well compared to the public ones and this can be as a result of the private companies being more innovative hence taking over the market. In this case for example, Emirates airlines is facing stiff competition from Qatar and Etihad airlines and if the management of emirates does not take protective measures against this competition, they may end up losing their already established market to these new companies. It is hard for an existing company to regain its initial position once its operations begin to decline especially when the cause of the decline it competition from upcoming companies.Advertising We will write a custom essay sample on Emirates Airlines specifically for you for only $16.05 $11/page Learn More References Kuye, J., 2002, Critical Perspectives on Public Admin istration: Issues for Consideration, Heinemann, Sandown Namaki, M., 2008, Strategy and Entrepreneurship in Arab Countries, Palgrave Macmillan, London Pathi, S., 2010, Public Administration Today: Macro and Micro Issues, Dominant Publishers and Distributors, New Delhi Theaker, A., 2008, The Public Relations Handbook, Routledge, New Jersey This essay on Emirates Airlines was written and submitted by user Pedro Green to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here. Emirates Airlines Abstract Financial statement analysis helps to improve the Emirates Airlines Company management’s decision making activities. Emirates Airlines Company is one of the world’s fastest growing airline companies. The company is based in Dubai, United Arab Emirates. The financials statement analysis shows that Emirates Airlines Company performed profitably well during the 2011 operational year.Advertising We will write a custom research paper sample on Emirates Airlines specifically for you for only $16.05 $11/page Learn More The financial statement analysis ratios include the current ratio, quick ratio, net profit ratio, and return on investment ratio. The SWOT analysis is used to determine Emirates Airlines Company strengths. In addition, the SWOT analysis is used to determine the Emirates Airlines Company’s weaknesses. The company’s SWOT analysis delves into the company’s opportunities to increasing its revenues. The SWOT analysis shows that the company hast o contend with its encroaching threats. Consequently, Emirates Airlines Company must focus on retaining its current position as the top passenger and cargo entity in the United Arab Emirates. Indeed, Emirates Airlines Company profitably performed in United Arab Emirates’ airline business operations during 2011. Introduction Emirates Airlines Company focuses on increasing its revenues. The research centers on financial statement analysis of Emirates Airlines Company. The research centers on The SWOT analysis of the company. Emirates Airlines Company generated favorable SWOT and Financial Statement Analysis figures for 2011. Background Emirates Airline Company is the official flagship of the United Arab Emirates. The company offers air transportation services to its current and prospective clients. The clients come from different parts of the world. The clients arrive from different locations around the world. Similarly, the Emirates Airlin es Company is strategically located in the United Arab Emirates residents. The residents are eager to leave their home country, United Arab Emirates, for a vacation or business trip to any part of the global market place. Further, the Emirates Airlines Company generates different revenue types. Food service revenues are significant contributors to the Emirates Airlines Company’s revenues. The Emirates Airlines Company offers cargo flight serves. The service helps the augment the Emirates Airlines Company’s total revenues. The company also generates revenues from carrying physical mails. Physical mails may perish or become lost within the transportation delivery dates.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Literature review There are different Emirates Airlines Company segments. Emirates Airlines Company operates from Dubai, the fastest growing cities in the global market place (Taneja, 2008). The Destination and Leisure Management is one very popular Emirates Airlines Company segment. The company also operates its own subsidiary. One of the subsidiaries is the Emirates SkyCargo. Another Emirates Airlines subsidiary is the Skywards cargo services. A third Emirates Airlines Company is the Emirates official store display center. The Emirates Airlines Company operates its own commercial store; the store’s name is EmQuest. Further, the Emirates Airlines Company includes an engineering division. Lastly, the company opens its own airplane store market segment. The company sells its passenger tickets at low prices. The low prices are understandable. The private enterprise would have to charge higher passenger and cargo fares to cover the amounts allocated to government taxes. Most companies prefer using Emirates Airlines Company’s services because it is faster than sending the cargo through land (Morrell, 2011). In addition, the company must include an additional amount to cover the operating expenses of the company. The operating expenses include the employees’ salaries. In addition, the operating expenses include the advertising expenses. Further, the operating expenses include the cost of repairing and maintaining the Emirates Airlines Company airplanes in good working condition. The operating expenses include the fuel, oil, and other expenses to ensure the Emirates Airlines Company planes can fly the customers to their preferred destination. The low Emirates Airlines Company passenger prices encourage the current Air France and Qantas airline passengers to shift to the cheaper Emirates Airlines Company’s airplanes (Besanko, 2009). Methodology In terms of methodology, the financial statement analysis was used to determine the financial health of the company, Emirates Airlines. The use of SWOT Analysis complements Emirates Airlines’ 2011 financial statement analysis. Application (data analysis) Financial statement analysis For the year 2011, Table 1 indicates the above Emirates Airlines’ financial statement analysis’ current ratio shows the company’s current assets of 21,867 is 1.07 times higher than the company’s current liabilities of 20,498. The ratio indicates the company has enough current assets to pay its currently maturing current liabilities during the year.Advertising We will write a custom research paper sample on Emirates Airlines specifically for you for only $16.05 $11/page Learn More For the year 2010, Emirates Airlines’ current ratio analysis shows the company’s current assets portion amounting to 18,677 is 1.01 times higher than the company’s 18,520 current liabilities portion. The financial statement ratio indicates the company has enough current assets available for the payment of its currently maturing current liabilities during the year. Comparing the two accounti ng audited financial statements’ accounting periods, the year 2011 current ratio of 1.07 shows a better financial statement liquidity performance compared to the lower 1.01 current ratio financial statement performance for the year 2010. In terms of clarification, the company’s current assets portion of the financial statements is composed of cash, cash equivalents, short term investments, accounts receivable, short term loans, inventories, taxes, other current assets and assets held for sale during 2011 and 2010. The company’s current liabilities portion of the financial statements include the company’s short term borrowings, accounts payable, dividends payable. For the year 2011, table 2 shows that the above financial statement analysis shows the company’s total debt to total equity ratio includes the company’s total debt amounting to only 44,188. The figure is 2.11 times the company’s total equity amounting to 20,902. The companyâ €™s total debt figure is higher than the company’s total equity amount. For the year 2010, the above financial statement analysis shows the company’s total debt to total equity ratio. The ratio indicates the company’s total debt amounts to only 38,072. The figure is 2.18 times the company’s total equity amounting to 17,475. The ratio indicates the company’s total debt is higher than the company’s total equity. The best debt to equity ratio is defined as a one to one relationship. Thus, the company must generate loan amounts equal to the amount invested by the stockholders of Emirates Airlines Company. Comparing the two accounting periods’ audited financial statements, the year 2011 debt to equity ratio of 2.11 is financially better because the 2010 financial statement liquidity performance ratio is lower when compared to the 2.18 debt to equity ratio for the year 2010. The Emirates Airline Company’s preference for bank loan s is understandable. The company may not prefer generating cash inflows from offering new shares of stocks. The shares of stocks are generally issued to current stockholders and future stockholders. In turn, the current stockholders and future stockholders will automatically become shareholders of Pfizer Company. The owners’ share in the company is arrived at by dividing each stockholder’s own share by the total number of shares being offered to both the current investors and future investors. In turn, the current shareholders as and future shareholders prefer to invest their funds in the company with the intention of generating dividend income.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Dividends are arrived at by dividing the company’s annual net income amount by the total number of outstanding common stocks. In terms of prioritizing dividend payments, Emirates Airline must prioritize the payment of the preferred shares’ dividend income. After the preferred shareholders of the airline company are paid, the excess dividend amount is distributed to the owners of common stocks (Maguire, 2007). Table 3 shows that Emirates Airlines Company’s 2011 quick ratio shows the company’s quick assets of 20,577is 1.00 times higher than the company’s current liabilities of 20,498. The Emirates Airlines’ 2010 quick ratio shows the company’s quick assets of 17,592is 0.95 times higher than the company’s current liabilities of 18,520. The comparison shows the company has enough quick assets available to pay the company’s currently maturing current liabilities within the same year. Comparing the audited financial statements of 2011 and 2010, 2011 is financially better than 2010 because the 2011’s quick ratio of 1.00 is higher than the 2010 financial statement liquidity performance (quick ratio) of 0.95. In terms of clarification, the company’s quick assets are composed of cash, cash equivalents, short term investments, and accounts receivable (Fabozzi, 2010). In terms of cash ratio analysis, table 4 shows that the 2011 Emirates Airlines’ 10,196 cash, cash equivalent, and marketable securities amount is 0.50 times lower than the company’s current liabilities. The higher liabilities amount is 20,498. The financial statement ratio shows the company does not have enough cash and cash equivalent amounts available to pay the airline company’s maturing current liabilities during the year. For the year 2010, the above financial statement analysis shows the company’s 9,335 cash, cash equivalent, marketable securities amount is 50 percent of the company’s 18,520 current liabilities amount. The financial statement ratio indicates the company does not have enough current assets available for the payment of the company’s currently maturing current liabilities. Comparing the two accounting periods’ audited financial statements, Emirates Airlines has similar cash ratio results for both 2011 and 2010 (Wahlen, 2011). For the year 2011, Table 5 shows that the above financial statement analysis (return on investment) shows the Emirates Airlines’ 5,129 net income is 9 percent of the United Arab Emirates’ 60,318.50 average total assets. For the year 2010, the above financial statement analysis computation (return on investment) shows the company’s 3,418 net income amount is 6 percent of the company’s average total assets amounting to 55,547. Comparing the two accounting periods, the 2011 accounting period fared better than the 2010 accounting period (Pratt, 2010). SWOT analysis Strengths Using SWOT analysis (F errell, 2010), Emirates Airlines has proven itself to be one of the world’s best airlines, in terms of quality service. As proof, the company was able to generated an estimated 20 percent airline passenger revenue has increase during the2001 November season. The passenger seat sales continue to remain at 80 percent or more. In addition, the Emirates Airline Company generated an asset increase. The asset increase is on its 7th year continuing trend. In fact, the Emirates Airline’s fleet increased from its 60 aircraft status (2004) to its current 141 aircraft status (2011). Specifically, Emirates Airline has the most number of A380s as well as 17 crafts. In addition, the company has the largest number of Boeing 777s. In addition, the Emirates Airlines Company caters to the airline passenger needs leading to and coming from more than 114 destinations around the world and within the United Arab Emirates. Emirates Airlines Company also fills the needs for airline flight goi ng to and coming from over 66 countries around the world. As usual, the Emirates Airlines Company is planning to add more flights to fill the increased needs for airline flights during 2012. The company will increase its A380 airplane passenger type from its currently owned 90 units s to the higher 120 units. The company is currently purchasing an additional 192 units of passenger airplanes for fill the increasing demand for the company’s passenger planes in 2012. In addition, the Emirates Airlines Company has constructed seven lounges to fill the comfort needs of the Emirates Airlines Company current and prospective clients. Another of the airline company’s strength is the Emirates Airlines Company’s open policy. The company is welcome to diverse inputs. The inputs include those coming form the company’s current and prospective clients. The client inputs include complaints regarding the company’s current services, suggestions on how to improve the Emirates Airlines Company’s services, recommendations to hasten the speed and quality of the company’s services. The company includes inputs from the competitors’ products and services in line with retaining the company’s current position in the United Arab Emirates airline passenger market segment. The company continues to increase the number of flight schedules. The increase is needed to cater to the increasing demand for airline seats going into or going out of the United Arab Emirates. Weaknesses In terms of weaknesses (Ebers, 2007), Emirates Airlines Company’s current business operations is affected by the United States’ 2008 economic depression. The depression triggered a drop in the demand for airline tickets. Many of the people lost their jobs due to bankruptcy. Many companies closed their shop during the 2008 economic meltdown. Consequently, the unemployment rate increase precipitated to a decrease in the company’s airline t ickets. Specifically, the company’s net profits had declined to only 982 m Dirhams ($267.4 million) the 2011 annual accounting period. Emirates Airlines Company Chairman Sheikh Ahmed bin Saeed Al Maktoum emphasized the economic depression triggered a decline in the demand for airline tickets. In turn, the decline in the Emirates Airlines Company airplane tickets triggered a decline in other business types within the United Arab Emirates territory. The Emirates Airlines Company revenue decline precipitates to the decline in Dubai’s tourism industry. The Dubai businesses cater to the demands, needs, wants, and caprices of local and foreign nationals. Opportunities In terms of opportunities (Ebers, 2007), the Emirates Airlines Company is committed to enhancing its current popular images as one of the best passenger -centered passenger plane companies. To comply with the projected Emirates Airlines Company image, the company is serving the passenger passing through the doo rs of the Unite Arab Emirates airport. By increasing the company’s current airplane units, the Emirates Airlines Company is able to continue the Emirates Airlines Company’s current high quality service to the current and prospective discriminating clients. The company can increase its current airport passenger volume to new destinations around the world. The company can negotiate with the countries to allow Emirates Airlines Company to increase its current flights going into a new country destination as well as increasing the number of flights going into the United Arab Emirates. To successfully increase the number of airline passenger, the company implements courage, honesty, and strengths in all its global business operations. In terms of operations, the company focuses on research and development activities. The activities are geared towards increasing operational efficiency, passenger service effectiveness, cost reduction processes. Another opportunity it to replac e the decline for airplane passenger tickets with an increase in Emirates Airlines Company cargo space. The company can maximize the benefits of setting up the company own global airfreight business. The company can hire sales agents who fill focus on increasing Emirates Airlines Company airplane cargo space. Further, the company will focus on advertising its online website. The clients will find it easier to book their next flights online. The online passenger registration system will encourage the current and prospective clients to book their flights in the safety and comfort of their homes, offices, restaurants, beach, and while travelling from one place to another. Threats Based on the threats (Ebers, 2007), the increase in gasoline prices significantly affected the other businesses within the Dubai environment. In addition, Emirates Airlines Company is dependent on third party vendors. Emirates Airlines Company is forced to buy its raw materials and other requirements. To resol ve the situation, the Emirates Airlines Company should accept the supply bids from three or more suppliers. With the three supplier alternatives, Emirates Airlines Company can reduce its dependence on the suppliers. On the other hand, Emirates Airlines Company’s use of only one supplier will force the company to succumb to the pressure of the monopolistic one supplier resource. Having three competing suppliers encourages the Emirates Airlines Company to choose the company having the least possible cost, highest possible quality and best after sales supplier services. In addition, the volatility of the global oil prices hurts the Emirates Airlines Company financially. The increasing prices of oil precipitate to an increase in company’s gasoline and oil expenditures. The wars have contributed to the increase in the global market price of the fossil fuel, gasoline. The increase in gasoline and oil expenses forces the Emirates Airlines Company to increase its current airli ne ticker prices. An increase in the Emirates Airlines Company passenger and cargo selling prices will translate to a lower demand for the airline passenger tickets. One of the economic principles (supply and demand theory) indicate that as the prices of commodities increase, the current and prospective clients’ demand for the commodities decrease. The selling prices of the Emirates Airlines Company passenger and cargo tickets are not exempt from the supply and demand theory of economics. Conclusion Based on the above discussion, financial statement analysis aids in enhancing the Emirates Airlines Company management’s decision making activities. The financials statement analysis indicates that the company fared profitably well during the 2011 operational year. The SWOT analysis indicates how Emirates Airlines Company should focus on keeping its current position as the top passenger, and cargo entity in the United Arab Emirates. Indeed, Emirates Airlines Company generat ed positive financial statement analysis and SWOT data 2011. References Besanko, D. (2009). Economics of Strategy. New York: J Wiley Sons Press. Ebers, M. (2007). SWOT Analysis. New York: Grin Press. Fabozzi, F. (2010). Analysis of Financial Statements. New York: J Wiley Sons Press. Ferrell, O. (2010). Marketing Strategy. New York: Cengage Press. Maguire, M. (2007). Financial Statement Analysis. New York: Grin Press. Morrell, P. (2011). Moving Boxes by Air: The Economics of International Economics. New York: Asghate Press. Pratt, J. (2010). Financial Accounting in an Economic Context. New York: J Wiley Sons Press. Taneja, N. (2008). Flying Ahead the Airplane. New York: Ashgate Press. Wahlen, J. (2011). Financial Reporting: Financial Statemetn Analysis and  Valuation. New York: Cengage Press. This research paper on Emirates Airlines was written and submitted by user Ivy L. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

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Reformation of Chinas Pension Scheme During the time of writing my dissertation, I have has many help from people both intellectually and emotionally. I would like to take this space to thank first of all, my supervisor, Mr. Robert Plumb, for offering me the support and guidance all the way through. I am grateful to my friends in the BSc Actuarial Science class for the great time I had during the three-year study at Cass Business School. I would like to thank all the lectures for making our lives at school so convenient and pleasant. Last but not least, many thanks to my family and other friends who have always given me encouragement and support during this process. Abstract The rapid ageing population in China has slowed down economic progress. Certain steps should be taken in relation to the pension system in order to cope with such a situation. There are several models of pension reform in the world, the most important one is perhaps the multi-pillar pension system advocated by World Bank. China actually reformed the current pension scheme based on this multi-pillar model. With a responsible attitude, the experience gained in Chinese pension reform will lead to a stronger and deeper national system that can eventually provide social welfare for the entire Chinese population. In Chapter 1, I will introduce the main types of pension schemes and the historical background of China pension system and illustrate how it developed. The current situation of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension system is displayed by the Melbourne Mercer Global Pension Index in Chapter 2. The four main problems of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension system and the urgency of reform is explained fully in Chapter 3. The different types of reform are followed by, along with what China chose to do in Chapter 4. In Chapter 5, the performance of reform is evaluated. Chapter 6 is mainly about the problem pointed out in the recent China Two Conference and the future trend of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension reform. Table of Contents Acknowledgements2 Abstracts-3 Chapter 1 Introduction-5 Chapter 2 Current situation of China pension system8 Chapter 3 Problems of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension system and reasons for pension reform10 Chapter 4 Different types of pension reform and what China chose to do15 Chapter 5 Evaluation of pension reforming-20 Chapter 6 Conclusion-23 Reference25 Chapter 1 Introduction Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s population has been ageing rapidly, and financial support for the pension system is facing a number of resultant problems. The system itself is also divided unevenly across regions and sectors. Furthermore, globalization makes the transaction between countries and sectors more difficult. Therefore, reforming Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension scheme has become an urgent issue. This report will begin with a brief overview of the historical background of the Chinese pension system. It will move onto the pension crisis and relevant problems at present, followed by the different types of pension reform and the way China has chosen to reform. Finally it will conclude with the evaluation of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension reform. The main goal of pension reform is to ensure the elderly live a peaceful life in retirement. In order to achieve this goal, China still has to solve a lot of economic and social problems. The Chinese government started its national pension system reformation in the 1990s by setting up a three-pillar state pension system in urban areas, which is a remarkable step in pension reform. Recently, Melbourne Mercer Global Pension Index revealed that the Chinese pension system is facing a large challenge. There are five main problems occur in Chinese pension system: Financial problem; Ageing population; Institutional problem and problems occur in transaction. Several types of pension reform can be chosen and after considering the situation in China, the multi-pillar system stands out to become a wise solution. Compare to those developed countries, Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension reform still has a long way to go. With positive attitude, we believe that the system will become mature in the fu ture. The main types of pension scheme as follows: A pension scheme can be classified as a defined benefit scheme or a defined contribution scheme according to the determination of benefits. A defined contribution (DC) scheme is dependent on the amount of money contributed and the performance of the investment. A traditional defined benefit (DB) scheme is a plan in which the benefit on retirement is determined by a set formula, rather than depending on investment returns. Another definition of a defined benefit scheme is that it is an arrangement where the benefits payable to the members are determined by the schemeà ¢Ã¢â€š ¬Ã¢â€ž ¢s rules. Value of Pension Fund Assets DB Value of Financial Assets DC Value of Pension Fund Assets Value of Financial Assets Basically, the pension scheme in China is a defined benefit, PAYGO system for older employees and retirees, multi-pillar system combining social pooling and individual accounts for younger employees. This system includes (a) a mandatory defined benefit paid out of social pooling account, (b) a monthly annuity paid out of the defined contribution, employee individual account, and (c) a voluntary supplementary individual account. After briefly explaining the main types of pension scheme, the historical background of China pension system will be illustrate as follows: In 1949 the Chinese government adopted a provisional constitution of the common Programà ¢Ã¢â€š ¬?, which mentioned that the labour insurance system should be introduced progressively in companies; this provided a legal basis for the establishment of a unified, national labour insurance system. On February 25, 1951, the Central Peoples Government promulgated The Peoples Republic of China Labour Insurance Regulations, which required companies to implement pensions, medical insurance and industrial injury insurance for their employees. This was Chinas first social security law; it clearly defined insurance coverage, insurance premium collection, insurance items and standards, as well as the implementation and supervision of the insurance industry as a whole. During the next three decades the government gradually improved the pension system. Then, in 1984 China overhauled the entire pension system. The change was started in some rural areas first. The system was based on being paid mainly by individuals, supplemented by the communities, supported by government policies and resulted in the accumulation of funds in personal accounts. In 1991, thanks to economic development, the government established a combined system with a state pension, company pension and private pension. Basis of calculating accrual of pension insurance during that time: Range of income Rate of pension insurance 60% 60%-300% of average income actual income >300% of average income 300% In 1997 the Chinese government formulated a new policy, which started to establish a unified nationwide pension system for every enterprise employeeà ¢Ã¢â€š ¬Ã¢â€ž ¢s insurance. Chinas basic pension system is a combined model of state and individual accounts. The basic pension covers workers in urban enterprises; all urban enterprises and their employees must fulfill the obligation to pay the basic pension. At present, employers contribute about 20%, and employees 8%, of the total income. The rates paid by employers are partly used in the state pension and the rest goes into the personal accounts; the rates paid by employees are used in private accounts. In 1997, the policy became clearer. It can now be seen that the main purpose of the basic pension in the future is to protect the basic livelihood of retirees in their twilight years. After several years of reform, the people involved in pension scheme increased from 86.71 million (at end of 1997) to 108.02 million (at the end of 2001); the number of people receiving the basic pensions raised from 25.33 million to 33.81 million. The average monthly basic pension increased from 430 RMB to 556 RMB. In order to ensure the timely and full payment of the basic pension in recent years, the Chinese government have made efforts to improve the pooling level and constantly increased the financial input into the basic pension fund. From 1998 to 2001 the central government expenditures for pension fund subsidies amounted to 86.1 billion RMB. Chapter 2 Current situation of China pension system Recently, Melbourne Mercer Global Pension Index revealed that the Chinese pension system is facing a large challenge. They measured the ranking according to the adequacy, sustainability and comprehensiveness of the system in each state. From the comparison of the private and public pension systems index in five continents, across eleven countries, Chinas system achieved relatively low ratings. This shows that Chinas growing pension system needs to be further developed and reformed in order to cope with continued pressure from the ageing population, and in order to remain competitive in the world. According to the pension index (total 100) estimates, the Netherlands ranks first, with an index of 76.1, followed by Australia (74.0), Sweden (73.5) and Canada (73.2). The UK ranked fifth with 63.9, while the lowest-ranked pension systems are those of Japan (41.5), China (48.0) and Germany (48.2).    Melbourne Mercer Global Pension Index Country Overall index value Sub-index values Adequacy Weighting 40% Sustainability Weighting 35% Integrity Weighting 25% Netherlands 76.1 80.5 62.5 88.2 Australia 74.0 68.1 71.0 87.8 Sweden 73.5 68.5 75.2 79.1 Canada 73.2 76.2 64.2 80.9 UK 63.9 56.6 56.4 86.3 USA 59.8 49.2 69.4 63.4 Chile 59.6 48.9 54.1 84.5 Singapore 57.0 51.7 68.9 49.1 Germany 48.2 60.8 44.3 33.7 China 48.0 64.7 38.5 34.7 Japan 41.5 39.2 34.4 55.2 Average 61.4 60.4 58.1 67.5 Source: Melbourne Mercer Global Pension Index Among these countries there was no one pension system which achieved A-Level (an index of more than 80). Mercer said that this shows that even the worlds most advanced pension system needs to be adjusted in order to ensure that the support is sufficient for a rapidly aging population. Although the lowest-ranked countries are not yet falling into the lowest level, the category E (an index of less than 35). However if the major defects are not resolved, the effectiveness and sustainability of all these systems will face challenges. Chapter 3 Problems of China pension system and reasons of pension reforming Chinas pension system is actually still in personal accounts, which are kind of on a à ¢Ã¢â€š ¬Ã‹Å"PAYGOà ¢Ã¢â€š ¬Ã¢â€ž ¢ system, combined with some public administration. The system is presently in a transition period. Of the results, the following problems stand out: 3.1 Financial Problems Firstly there are the financing problems. The actual payment rate is low and it keeps decreasing. Since the payment of the transition cost is still a problem, the pension accounts in many places have fallen into financial bankruptcy. According to the statistics from the Ministry of Labour and Social Security, the state-owned enterprises owe 38 billion RMB to the state in unpaid pensions all over the country. That is why the money raised in personal accounts is being used to pay current retirees. Even so, the funding is still not enough and when there is a deficit in financing, the local tax revenue is used to bridge the gap. In fact, the local and central government is working to save a lot of places where the pension co-ordination is already in bankruptcy. If the situation does not improve, it could threaten the sustainability of the central government. Another financial problem is that the personal account is actually just a name, which means it guarantees nothing. Since the Govern ment has not clearly informed us how they will pay for the transition costs over the past few years, all the money that has been raised in these accounts for funds has been used to pay the current pensions of retired employees, which turns personal accounts into empty accounts. One of the biggest progresses in Chinese pension reform is the introduction of a defined contribution scheme. It is compulsory for the workers to join the savings plan, therefore the welfare responsibilities are transferred from the government and enterprises to individuals. However, an important question makes people pause for thought: will the funding of this defined contribution plan really indicate the fulfilling of the fund, or it is just a fanciful à ¢Ã¢â€š ¬Ã‹Å"PAYGOà ¢Ã¢â€š ¬Ã¢â€ž ¢ plan with no actual fund that plays the same role as the pillar I scheme. This issue has already led to misbehaviour in some local authorities. Some of the contributions to personal accounts have been used to pay current retirees, which leads to empty accounts and all the time the transition costs remain unclear. Implicit pension debt from the restructuring costs arose in the process of the old PAYGO pension system through the accumulation scheme. After we established the partly-accumulated system with social pooling combing individual accounts, the pension included two parts: a basic pension and an individual account pension. However, people who retired before the pension reformations did not have sufficient accumulation in individual accounts, while those who started to work before reform but retiring after reform only have limited personal accounts accumulated, and the basic pension can only provide a limited level of protection. Although there are no or only limited personal accounts pension accumulation for these two kinds of retirees, the commitments made under their old pension scheme still have to fulfilled, therefore this formed a pensions debt. Under the current PAYGO system, because the right of pensions is implied, the debt is called a hidden debt. However, when the pension system transferred to a whole or partly accumulation based one, the implicit debt became obvious. In order to ensure the continuity and fairness of the pension system, the new system must assume the responsibility for the debt. The Government has to fulfil the pension rights of those retirees. In our country, apart from these two parts of pensions, the additional pension to the retirees caused by inflation or wage increasing also belongs to the scope of implicit debt of the pension, generally speaking, Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s implicit pension debt includes payments to retired employees, transitional pension contribution to those who started work before the reform, as well as the adjustment fee applied to inflation and wage growth. Another important cause of the financing problems is that there are no specific responsibilities for historical debt between different levels of government. Our government did not specify the individual responsibilities between companies and governments with regard to the debt caused in transition period. The greatest problem of dealing with implicit debts is a lack of motivation and unclear responsibility allocation. Not only in the experimental areas, but also in other cities. Every party attempts to avoid its responsibilities. Both parties rely on each otherà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial input and lack of motivation in terms of the pension supervision. Therefore an increasing deficit became inevitable. 3.2 Ageing Population Secondly, the ageing of the population has now become a huge issue for many countries in the world. The problem is however, much more serious in China. Since China has a large population base, plus nearly 30 years of reform and opening up, peoples living standards have increased greatly. Health and medical conditions have been markedly improved. People expect to live longer and the elderly population increases every year; it is now more than 160 million. China has become the worlds largest elderly populous country, accounting for 1/5 of the total elderly population of the world, and 1/2 of Asia. Currently about 12% of the total population in China is aged over 60, although it is expected that this number will increase to 26% by 2050 because of the à ¢Ã¢â€š ¬Ã‹Å"one-childà ¢Ã¢â€š ¬Ã¢â€ž ¢ policy and the improvement in life expectancy. Now, the ratio of the working-age population to the retirement-age population is 8:1 and it will decrease to 2:5 by 2050. The average age in China is now 31 and it will reach 40 in 2050. The distribution of population in China Source: World Bank Institute (Dr. Wang Yan) This scenario showed that with a gradual decline in future population growth, Chinas labour force in 2020 to 2025 will stop growing, and decline thereafter. However, the population aged 65 and over will continue to grow. Therefore, the elderly dependency ratio will rise from 11% to 25% by 2030 and 36% by 2050. The system dependency ratio will not be less than the current 30%, which means that three workers support one retiree; by 2030 the ratio will rapidly reach 69% and 79% by 2050. The PAYGO system in 2000 has a 60 billion surplus, but the gap in pension income and expenditure will be significantly expanded. Over the next few years, the accumulation of pension reserves will become negative, and in 2050 it will reach 102,730 billion RMB. It is clear that the growing pension deficit will pose a threat to financial stability, and has already brought instability to Chinas future economic development. It has significantly increased the financial pressure on the system and makes the need for further reforms even more urgent. Nowadays, there are only 170 million employees are members of a pension scheme; that is less than 15% of the population. As the population grows older, if the current pension provision remains the same, the pension funds in China will have a deficit in next five years; furthermore, this can lead to a deficit in trillions by 2040. The national pension funds could be short 2.5 trillion RMB (which is around US$ 368 billion) over the next 20 years if nothing is done to remedy this now. 3.3 Institutional Problem Thirdly, the system itself is not well developed. The pension system is divided at all administrative levels. In 1999, 27 provinces were supposed to achieve co-ordination of the provincial funds according to documentation, but in fact only 5 (Beijing, Shanghai, Tianjin, Chongqing and Hainan) out of 27 provinces fully realized this co-ordination. In the other 22 provinces, only 1%-2% of the money from different cities was gathered in order to establish public funds. Due to the lack of co-ordination there are five provinces that have yet to establish such a fund, which means the policy was not really working out. Furthermore, the current co-ordination is not perfect in many ways. The collection and expenditure of pensions were not administered separately by different organizations. Also because of the payment strategy, which is that companies pay the à ¢Ã¢â€š ¬Ã‹Å"netà ¢Ã¢â€š ¬Ã¢â€ž ¢ value (pension income minus the money paid to retired employee) into funds, the contribution rates b etween provinces and cities, in some cases even between companies, have great differences. Moreover, the coverage of pension systems is narrow and they have regional imbalances. Until the end of 1998, the basic pension provision covered only 78.4% of employees of state-owned enterprises, 16.2% of group companies and 5.4% of other urban enterprises. There were no pension plans for self-employed and individual entrepreneurs in cities. For rural areas, there are some creative plans by local officers, but again coverage is very limited. The coverage of pension scheme in China is restricted based on employment in the work unit, rather than on citizenship, which means the reform only targets a small number of the population. This is in contrast to developed countries, where the pension system is relatively mature and covers nearly all of the workforce. In these countries, what they need to do is to avoid large future deficits and unsustainable ageing populations. However in China, there is far more to consider. More than half of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s population lives in rural areas. As a bequest of past economic and pension policies, there is great inequality in both economic development and pension coverage between the urban and rural areas (urban areas are mainly the eastern coastal areas and rural areas are mainly the western part of China); the urban population is generally better covered than rural and migrant populations. The special household registration system, which was used to control the movement of people between urban and rural areas, helped split the population into urban and rural. The productive workers from the rural areas migrated to cities for more attractive working opportunities and higher incomes. However they will not be able to benefit from the urban social security since they were not under the registration of the special system. The lack of regulation is another issue. Since there is no social insurance law in China, the local social insurance agencies are weak enforcers of power. This makes collecting payments even more difficult. Also since there is no such law, it is hard to apply penalties. From the international point of view, the states basic pension systems are mostly being legislated by state first, then organised by the Central Government. However, Chinas pension system formed gradually under the basis of summing up experiences of local reform. It is only written in the Constitution of the nationals that citizens have the right to receive substance. Other pension systems were implemented in accordance with regulations promulgated by the State Council. The Social Insurance Law, as it has already been called for many years, is still in the process of taking advice, which means that pension rights are infringed due to lack of legal protection. This further led to a large number of arrears and made mana gement of the pension system even harder, without any strong legal grounds. 3.4 Problems occurring in transaction Finally, another challenge will be the transfer between pension accounts. The disadvantage of migrant workers is that their accumulated benefits in their pension accounts from their previous employers cannot be moved. It is therefore a risk for them to give up their accumulated benefits in one work place and take another new position in a different city or province. It is difficult for the government to transfer the pension accounts from one city or province to another, especially when such workers tend to move frequently for immediate job opportunities. Therefore, the migrant workers cannot receive their pension benefits from past employment and finally lose out financially when they return to their homeland at the end. At present, in a large number of cities, pension consulting business is processed by computers. In more developed cities, pension consulting networks have been established. But as a whole, Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s pension-collection policy still has a lot to improve; information system coverage is still below average. It specifically shows in the following ways. Firstly, information authorities and management systems are not adapting to the overall development trend. Also, the lack of a complete and versatile information operating system of social security results in slow delivery of information and finance data, as well as slow construction of the reconciliation system among departments. Chapter 4 Different types of pension reform and what China chose to do Since the last century, many countries worldwide started to reform their pension systems. The following graph shows that most countries made parameter adjustment without changing the basic framework of the pension system, including the change to the fee structure, revenue structure and method of management reforms. In addition, about 21% of the countries made a fundamental structural change to the national public pension system. Proportions of different types of pension reform Source: Schwarz Demirguc-Kunt (1999) Different countries chose various forms of pension reform according to their countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s basic economic and social conditions. However, to sum up, there are five main types of pension reform, which are as follows: Parametric Reform Parametric reform is the adjustment of parameters of the existing public pension system, including adjustments of payment, remuneration, and benefit eligibility. The main purpose of such a system is to reduce the public pension expenditure Privatization Reform In order to alleviate the pressure on the public pension system, in recent years a major trend has been to expand the market for private pension funds. A number of countries have taken many measures to encourage voluntary private pension systems, such as giving preferential tax policies, reducing the size of the public pension system and other steps. Notional Account Reform The state transferred the PAYGO, defined benefit public pension system to a notional accounts system. Under such a pension system, employees are just like those in a private pension system, as its contribution is credited to individual accounts, and receives interest. Workers receive a pension upon retirement, depending on the amount of money in their personal accounts. However, there is no actual accumulation of funds in the employees personal account, as the money paid by active employees is used to pay retireesà ¢Ã¢â€š ¬Ã¢â€ž ¢ pensions. That is, the notional accounts system benefit has a defined contribution, but its means of financing is still PAYGO; therefore it is called a Notional Defined Contribution system. From Defined Benefit to Defined Contribution Although the transformation from the current PAYGO defined benefit system to a fully funded defined contribution system is one of the main trends of reform, a small number of African and Asian countries have chosen to do it the other way round. They have changed from a fully funded defined contribution system to a PAYGO defined benefit system. This is because these countries have accumulated a fund, which is managed by the Government provident fund system. Due to a lack of regulations and governments often abuse their powers, and such pension funds not only failed to obtain a reasonable rate of return, but in some countries also suffered serious diversion and erosion. In order to limit the rights of the government, these countries decided to change the pension system to a non-funded PAYGO system. Since under such a scheme there is no accumulation of funds, therefore the Government tends to be unlikely to abuse the funds. Multi-Pillar System After 100 years of development, the pension system has shown a wide variety of forms. Different forms of pension system have their own advantages in achieving their goals, but some shortcomings are inevitable. Therefore, the World Bank has been advocating the establishment of a multi-pillar pension system, allowing complementary advantages and risk diversification. In 1994, the World Bank proposed in à ¢Ã¢â€š ¬Ã‹Å"Averting Old Age Crisisà ¢Ã¢â€š ¬Ã¢â€ž ¢ the establishment of a three-pillar pension system: (a) the first pillar is a public, PAYGO, usually defined benefit and redistributive pension system; (b) the second pillar is a private, funded, almost always defined contribution pension system; (c) the third pillar is a private, funded, voluntary, supplementary, preferably defined contribution pension system. In 2005, the World Bank extended the establishment of the three-pillar system to a five-pillar system in the report of à ¢Ã¢â€š ¬Ã‹Å"21st Century Elderly Income Securityà ¢Ã¢â€š ¬Ã¢â€ž ¢. Among them, the zero pillar is to provide a minimum protection, non-contributory national pension system, the fourth pillar is the informal supporting system within the family to the elderly, or formal social welfare system. The five pillars have their own characteristics and different functions; and can be able to cope with different types of risk. Zero pillar is helping to eliminate poverty for the poor segment of society, as well as secure those groups working in informal sectors with low incomes. It is regarded as a part of the social safety net. The aim of the first pillar is to respond to a short-sighted individual risk, low-income risks, uncertainty in life expectancy and investment risks in financial markets, but it is vulnerable to demographic changes and political fluctuations. The second pillar through a mandatory savings system can prevent the short-sighted individual risk, while the privately managed pension system would avoid influence from political risks. However, the second pillar pension system is vulnerable to the impact of financial market risks, and transaction costs are relatively high. The third pillar can compensate for the rigidity in the design of the other pillars, but privatel y managed pension funds may have financial risk and agency risk. The fourth pillar has the main function of family protection, and through the social welfare system to provide medical care and housing protection to the elderly. Compared to a single pension system, the greatest strength of a multi-pillar pension system is its ability to withstand risks, which is significantly enhanced. This is because the factors affecting each pillar are not entirely relevant to each other. In many cases, the relevance is very small, even negative. For example, if the first pillar is a PAYGO, defined benefit pension system, the main factor affecting this pillar is the growth rate of wages. While the second and third pillar may be a completely accumulation based, defined contribution pension system, and the main factors influencing it will be the investment rate of return. As the correlation between the rate of wage growth and return on investment is very small, it is efficient to distribute the pension assets in these three pillars. In addition, there is also a complementary relationship among the different pillars. For example, in the individual defined contribution pension system, workers need to take an amount of savings in their personal accounts and convert it into an annuity. At this time, employees have to bear the risk of changes in interest rates, as well as the risk of death. However, defined benefit pension systems can spread the risk of death. Again, the third pillar à ¢Ã¢â€š ¬Ã¢â‚¬Å" a voluntary occupational pension system is vulnerable to income fluctuations and job changing, but the first and second pillar pension system can offset these effects. Many countries adopted the multi-pillar pension system because the World Bank recommended the concept of such a model. However, the specific choice of a mix of pillars depends on the national situation, including the status of the existing pension system, reform objectives, administrative capacity, the level of development of financial markets, the level of restructuring costs and other factors. In low-income countries, the goal of a pensions system should be defined as the eradicati