The Washington And Post Washington Consensus

The Washington And Post Washington Consensus Abstract The present term paper is an attempt to explore and put forth the theoretical exposition of the two major development paradigms the market-oriented and the state-cum-market centric development models, plausibly portrayed in terms of what is often phrased as the Washington Consensus and the Post-Washington Consensus. These discourses must not be only analysed keeping in mind the benefits and costs of the implementing the policy prescriptions advocated by these two sets of development paradigms in different economies over the years, but at the same time its long-term effects on the individual economies, be at the centre or periphery, and the repercussion effects of any alteration in economic variables in one country on the other as a consequence of openness of economies, while pursuing the universal policies, granted for the fact that today we believe the world no less than a global village where the governance concept has modified radically over the last a few decades at the behest o f the key Bretton Woods institutions like the World Bank and the International Monetary Fund. The development discourse must also account for the individual capability and capacity of countries to absorb the economic policies in the development agenda of individual countries in question, as put forth by these institutions. Naturally enough, the failure of the sound theoretical programs would invite criticisms, at least because it has worked unevenly in almost every country trying to employ these policies and unfortunately there are no dearth of evidences from all corners of the globe to prove that the universal policy design uniformly for all countries, in order to bring about meaningful economic development globally has actually failed or at least been partly successful. The overall idea is to make an insight into the Washington Consensus and the Post-Washington Consensus and evaluating to what extent any scrutiny for these policies could be hence put forward. Introduction The economic development discourse of nations had been under constant influence of the economic ideology prevailing in particular nations at any point in time. The economic history of nations itself suggests that how we have witnessed the changing development paradigms have evolved after the Second World War in 1944-45, primarily seen as the deliberate developmental assistance to the war-affected nations. The focus used to be mainly the need to correct market failure through command and control mechanism through various state-oriented developmental strategies and economic programmes like the import substitution industrialisation policy for the promotion of indigenous industries for better comparative advantage in production and exchange, financial repression etc. But the decade of 70s precisely late 70s, apparently proved the defects and malfunctioning of the centrally planned economies. The two major oil shocks, first in 1973 and the next in 1979 put the greatest challenge before th e policy makers and development economists, which completely destabilised the global economy along with many other politico-economic developments around the world. This would be clear in the following excerpts. The 1980s were a hell of a decade. They began with the reverberations of the second OPEC oil shock. They ended with the fall of the Berlin wall. In between, we had the Reagan-Thatcher-Kohl economic policy era in North America and Europe, the Volcker interest rate shock, the Latin American debt crisis, collapse in Africa, the start of rapid growth in China and in India, and on and on. Oh, and by the way, in 1989 John Williamson coined the term Washington Consensus (Williamson, 1990:3) It became a questionable affair to challenge the efficacy of how far government policies can actually benefit or harm the economic environment. This tendency of statist model inevitably led to emergence of an alternative theory of development fundamentally rests on the assumptions of the neo-classical model of a free-market enterprise economy. The Washington Consensus per se is primarily affiliated to this school of economic thought, which states for the minimal role of the state in carrying out economic activity. That is governments should limit their interferences in the economy, only to maintain macroeconomic stability and to secure law and order and provision of public goods. In other words, the Washington Consensus is the market-centered strategy designed to counter the ill-effects of excessive state intervention in the economy, under the aegis of World Bank and the International Monetary Fund (IMF), which claimed to provide a universal mechanism for the efficient allocation of economic resources and promoter of economic growth world wide. However, the validity of Washington Consensus was under strict scrutiny for not fulfilling its much hyped economic policies and soon criticised for its failure. At this preliminary level, it is important to introduce the other parallel but pole opposite of Washington Consensus, that is, the emergence of the Post-Washington Consensus in mid-1990s, which advocates for a mixed-blend of interventionist and market strategy for better economic development of nations, granted a few conditions of the Washington Consensus like the trade liberalization to be continued along with deliberate state intervention in the economic affairs. The Pros and Cons of the Washington Consensus The Washington Consensus, sometimes synonymously used as the set of neo-liberal economic policies or a universal policy package was originally designed by the key Bretton Woods institutions like World Bank and IMF, to restore economic growth and to correct the balance of payments crises or the debt crises and hyper-inflation kind of situation facing the Latin American countries, such as Argentina and Mexico. The term Washington Consensus was coined and formulated by John Williamson in 1989 at the Peterson Institute of International Economics in the US. According to Nobel Laureate in Economics in the year 2001, Joseph E. Stiglitz, The Washington Consensus policies, however, were based on a simple model of market economy, the competitive equilibrium model, in which Adam Smiths invisible hand works, and works perfectly. Because in this model, there is no need for the government that is, free, unfettered, liberal markets work perfectly the Washington Consensus policies are sometimes referred to as neo-liberal based on market fundamentalism, a resuscitation of the laissez-faire policies that were popular in some circles in the nineteenth century (Stiglitz, 2002: 74). This neo-liberal orthodoxy prevailed over the entire global economy from the beginning of the late 1970s to the mid of 1990s irrespective of the nature and extent of economic growth parameters in different countries. The set of policy prescription was purely of market-oriented model of economic growth. This policy package eventually effectuated in what is better known as the Structural Adjustment Policy (SAP) of the World Bank and the IMF to help countries get rid of debt-crises aftermath of the oil shock of 1979 from the sharp decrease in the primary commodities prices and increasing interest rates, the World Bank and the IMF put forward conditionalities in order to receive credits or financial assistance from these institutions basically to the governments of the developing countries. Therefore, stable macroeconomic policies, outward orientation, and free-market capitalism became the central instruments of the Washington Consensus. In other words, the three big ideas underlying these reforms as Williamson asserts are: The macroeconomic discipline, a market economy, and openness to the world. The first three reforms are, so far as I am aware, widely accepted among economists (Williamson, 2000: 251). Williamson also provided a more specific list of ten policy areas or tenets of that could be used to characterize the consensus as listed below: (1) fiscal discipline, (2) redirection of public expenditure toward the areas of education, health, and infrastructure, (3) tax reform, (4) interest-rate liberalization, (5) competitive exchange rates, (6) trade liberalization, (7) liberalization of inflows of foreign direct investment, (8) privatization, (9) deregulation, and (10) secure property rights (Williamson 1990). We can say that all these reforms fundamentally rest on the premises of the neo-classical paradigm that supports the laizzez-faire doctrine as panacea for all economic problems in a capitalist economy. Therefore, the whole concern was through following these policy package, the markets could be freely allowed to take its own course in order to set the prices right, which comes from the essence of free trade as a major component of the Washington Consensus. The widespread and often excessive state intervention was being seen as the making the economy weak and therefore it was contended that imperfect markets are better than imperfect states. Giving the logical corollary to prove this point, Lal (1983: 63-64) at different occasions asserted that The cost of government failures arising from the rent-seeking and price distortions associated with excessive protectionism would always outweigh market failures associated mostly with imperfect competition an under-provision of public goods. The Washington Consensus was thus increasingly based on the understanding that imperfect markets are always superior to imperfect states. Some scholars like Colclough and Manor (2000: 263) summarised the resurgence of the neo-liberal thinking in development discourse in following words. The emerging neoliberal orthodoxy advocated a new development model based on the primacy of individualism, market liberalism, outward-orientation, and state contraction. The organising principle of neo-liberal political economy was the notion of a minimal state, whose primary functions were to secure law and order, ensure macroeconomic stability and provide the necessary physical infrastructure. Further, according to Colclough and Manor (2000: 263) Trade liberalisation and state contraction were necessary tools to curb the excessive powers enjoyed by politicians and bureaucrats, a process which was regarded as crucial for rapid and equitable economic growth. Originally the policy reforms as envisaged in the Washington Consensus was designed and intended to cover all the Latin American countries, later it was applied to almost all countries and was intentionally penetrated into the economic policy agenda of Third World Countries. Regarding the supremacy of the Washington Consensus on all the earlier prevalent economic thoughts, different opinions came into the picture. Say for instance, much before the arrival of such an economic ideological discourse, economists like J. M. Keynes (1936), who is considered to be a pioneer of the welfare state, believed that a policy of fiscal discipline would neither avoid the current account crisis, nor it can lead to a fully employed economy where all the factors of production and economic resources are optimally employed. So J. M. Keynes basically challenged the classical axioms for the smooth functioning of the economy. Since the classical axioms are not very close to the real world phenomena of perfe ctly competitive markets, the essence of the Washington Consensus way of looking at the economy could be better described in the words of Keynes in the following lines: It happens not to be those of the economic society in which we actually live; with the result that its teaching is misleading and disastrous if we attempt to apply it to the facts of experience (Keynes, 1936:30). Infact, it is felt that the last of the ten policy reforms, that is, securing property rights for efficient production in the economy however, cannot be refuted easily. If the state is capable to ensure that the production ownership should go in the hands of those who value it more, who has also the capability to augment resources, further there is no harm in transferring property rights to develop right entrepreneurship in the economy. What is important here is to note that the Washington Consensus was treated like a shock therapy for the countries suffering from debt-crises of any sporadic shock like the one oil shock of 1979, because it was assumed that trade liberalisation and privatisation will take care of the economic disturbances affecting the normal working of the economic system. However, the experiences of the last 20 years or so have shown that the reforms envisioned through the Washington Consensus have actually led to disaster in many countries. This understanding of the neo-liberal orthodoxy could be better explained in the following lines of John Williamson. I wrote a background paper in which I listed 10 policy reforms that I argued almost everyone in Washington thought were needed in Latin America as of that date. I labeled this reform agenda the Washington Consensus, never dreaming that I was coining a term that would become a war cry in ideological debates for more than a decade. Indeed, I thought the ideas I was laying out were consensual, which is why I gave them the label I did (Williamson, 1990). The evidences we have clearly indicate that Washington Consensus as a universal policy package became a soft target of severe criticisms in recent years primarily from the countries at the periphery. The consistent episodes of criticisms labeled against the Washington Consensus pave the way for the future insights in the economic development discourse. Whats wrong with the Washington Consensus A wide range of criticisms had been put forward as a result of the practical problems faced by the countries pursuing the reforms as recommended by the Washington Consensus since the year of its introduction. One of the criticisms which is generally labelled against the Washington Consensus is regarding the fundamental assumptions of the neo-classical model of free market ideology. In this connection, Stiglitz (2002:73-74) maintains that: Behind the free market ideology there is a model, often attributed to Adam Smith, which argues that market forces the profit motive drives the economy to efficient outcomes as if by an invisible hand. It turns out that these conditions are highly restrictive. Ironically occurring precisely during the period of relentless pursuit of the Washington Consensus have shown that whenever information is imperfect and markets incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly. Significantly, there are desirable government interventions which, in principle, can improve upon the efficiency of the market. So in this way the basic premises on which the Washington Consensus rests itself became questionable in the academia. Furthermore, Stiglitz (2002: 74) went on to criticise the theoretical validity of the neo-classical model in his following words: Even if Adam Smiths invisible hand theory were relevant for advanced industrialised countries, the required conditions are not satisfied in developing countries. The market system requires clearly established property rights and the courts to enforce them; but these often these are absent in developing countries. The market system requires competition and perfect information. But competition is limited and information is far from perfect and well-functioning competitive markets cannot be established overnight. The theory says that an efficient market economy requires that all of the assumption be satisfied. In some cases, reforms in one area, without accompanying reforms in others may actually make matters worse. This is issue of sequencing. Ideology ignores this matters; it says simply move as quickly to a market economy as you can. But economic theory and history show how disastrous it can be to ignore sequencing. Apart from the theoretical loopholes in overall framework of the Washington Consensus, many other empirical evidences can be put forth for its failures. These are listed below: The fundamental claim of the Washington Consensus that full-scale liberalisation, at all costs, is associated with superior economic performance was doubtful. For instance, it has been maintained that the highly successful story of the Newly Industrialised Countries (NICs) in East Asia such as Japan and Taiwan better known as the East Asian miracle, gave a reason for the resurgence of the neo-liberal policies. These NICs, no doubt, performed appreciably not only in making rapid and high economic growth but also progressed in terms of key social indicators paved a strong supporting pillar for the neo-liberal paradigm constituting the Washington Consensus. Many believed that these NICs are very close to the norms of the free-market economy. However, this story is partly true. What is significant at this point is to know that the institutions pertaining to industrialization and export growth were performing robustly well and these were the factors which were at the heart of success of t hese countries. Onis (1998: 197-216) has tried to give the valid argument in following words: Strong growth and diversification of industrial output and exports could not be accounted for simply for the logic of the free market: interventionist strategies and an active industrial policy, dictated by considerations relating to longer-term competitiveness and dynamic comparative advantage, constituted the central elements contributing their success. If we see the world economic growth rate, it had infact strikingly lowered, and become more unstable during the neo-liberal era. Not only this, the degree of inequality in the global economy appeared to have increased during this period of neo-liberal economic restricting (UNCTAD 1997). Even the gap between the developed and the developing countries had widened and there had been increased divergence within the Third World. For example, as compare to the hyper-growth in Asian NICs, the Latin American countries in 1980s and sub-Saharan Africa lagged far behind over the same period of time (Rock, 1993: 1787-1801). Moreover, excluding China, there is an increase of poor people and the poverty rate had declined from 28.5 percent to 25 percent (Fischer, 2003:8). According to Stiglitz (2002:76), There is a more fundamental criticism of the IMF/Washington Consensus approach: It does not take acknowledge that development requires a transformation of society. Even it completely ignored the fairness concept. A few more instances could be put forward to support the argument that the collapse of Washington Consensus was inevitable such as the success of Argentina in the first few years of accepting the policies and later how its economy collapsed. The case of Turkey is another example where the Washington Consensus policies totally failed. Exposure of many middle income countries to the vagaries of financial globalization actually proved costly for them because opening of their capital accounts before taking into account the macroeconomic stability fell in the trap of the World Bank and the IMF. These high volatile capital flows and frequent financial crises, because of unregulated financial markets led to repercussion effect of one country could be easily felt in another, which we have thoroughly witnessed in the Asian Crisis of 1997 and the Russian Crisis of 1998, which had myriad socio-economic-politico impacts on different economies. Last but not the least in the series of criticisms that had been labelled against the popular programmes of the Washington Consensus is of course a paradoxical situation when the Washington Consensus talks about minimising the bureaucratic inefficiency, rent-seeking, and other forms corruption and pervasive state failure, it had come to our observation that it had actually happened the other way round these all social and economic evils had actually aggravated during the neo-liberal regime. Keeping these issues in mind, during the mid-1990s there emerged a new and thought provoking policy focus of the key Bretton Woods institutions away from the hard-core neo-liberalism to a new synthesis of states and markets as emerging Post- Washington Consensus. The Post-Washington Consensus: Is it inevitable? The Post-Washington Consensus goes further in detailing the nature of the failures of the Washington consensus (Stiglitz, 1998:17). Joseph E. Stiglitz who is supposed to provide the intellectual backbone to the emerging Post-Washington Consensus maintains that there was lack of understanding between the policies put forth by Washington Consensus and the contextual framework of developing countries. In the following words, Stiglitz tries to state his position: There was a failure in understanding economic structures within developing countries, in focusing on too narrow a set of objectives, and on too limited a set of instruments. For instance, markets by themselves do not produce efficient outcomes when technology is changing or when there is learning about markets; such dynamic processes are at the heart of development; and there are important externalities in such dynamic processes, giving rise to an important role for government. The successful East Asian countries recognized this role; the Washington consensus policies did not (Stiglitz, 1998:17-18). Stiglitz and Greenwald (2003) further believe that the Post-Washington Consensus recognizes that There is a role for a market; the question is to what extent the neoliberals recognize that there is a role for the state, beyond the minimal role of enforcing contracts and property rights. There is no theoretical underpinning to believe that in early stages of development, markets by themselves will lead to efficient outcomes. Moreover, the Asian crisis of 1997 proved to be an important turning point for the rethinking about the Washington Consensus for the reason that for the first time in its history, the IMF was confronted with serious criticisms from all over. It was criticised not only for failing to predict the crisis but also to make the situation worse aftermath the crisis. To describe it more clearly in words of Stanley Fischer, The Asian Crisis was also important in terms in producing a serious rift between the two Bretton Woods institutions again for the first time for many decades. Following the rethinking process that has occurred, the IMF now tends to pay far more attention to regulatory reforms, notably in the context of the banking and financial system, and recognises far more than on the past the importance of strong institutions and good governance (Fischer, 2002:385). Stiglitz (2002:155) further added that the IMF until the Asian Crisis used to be crititicised by the countries at the periphery or the Third World countries, but now the criticisms were also put forward by the countries at the centre or the developed countries. He maintains that: With the onset of the Asian Crisis, the IMF especially became the object of serious criticism from the centre within the key Bretton Woods institutions themselves (Stiglitz, 2002:155-156). One of the key ingredients of the Post-Washington Consensus is the recognition that states have a great role to play in the economic development process. However, the Post-Washington Consensus favours the market liberalisation, the twin concepts of states and markets are considered as of complementing rather than substituting in nature. Greater role for the state institutions has been prescribed for better and efficient working of the economy. There is a clear indication about the regulation of financial markets in order to avoid any uncertainty arising out global flows of capital between countries. And the most important, it is thought that certain areas like human development, equality and to alleviate poverty, states can replace the market failures in accomplishing these issues. The question remains how to improve the state efficiency or to avoid state failure. In this regard, Stiglitz (2001:17) highlights that: The effectiveness of states can be improved by using market-like mechanisms. An interesting symmetry is established by noting that states are important for the effective functioning of markets but also that markets or market-like mechanisms are important for the effective functioning of states. Conclusion While analyzing the whole set of ideas and instruments put forward by each of these different line of thinking about the development discourse it is certain that the policies advocated by them may work in some countries and may not in others. What is important is the debate over the sufficiency conditions put forth for the pervasive development of countries primarily the Third World countries. So far nothing appreciable has been achieved since the introduction of either Washington or the Post-Washington Consensus in developing countries. What is apparent here is the fact that all policies whether its neo-liberal or structuralist in from and nature has not benefitted much from the development assistance programmes initiated by the World Bank and the IMF Post-Second World War period. While the role of the state cannot be undermined in economic progress of any country, it is also important to scrutinise its position and capability in the global scenario marked by excessive dominance of the global governance agenda before it. The irresistible wave of globalisation to a large extent undermines the possible intervention in formulating policies at least at the domestic levels for the countries. The concern in the developing countries is how to bring growth with equity. The balanced approach of the Post-Washington Consensus between states and markets along with reforming the governing institutions is far more impressible strategy than that of believing the automatic working of the economy exposed to liberalisation of markets and openness of economy. At least the gains and losses can be mutually appropriated between these two institutions of markets and states. Relying heavily on the free trade and the consequent trickle-down effect to happen automatically has become a far fetched dream for majority of the countries in the larger paradigm of global governance with varied socio, economic and political implications. What is sure is the trade-off between states and markets would to a large extent provide a new outlook for the development discourse for individual countries presuming institutions of governance are at their best of their capacity, capability and efficiency fronts.

Infant and Child Development Essay

This assignment will critically review Howlett, Kirk and Pine’s (2011) study, which aims to investigate whether attendance of gesturing classes affects parental stress. Howlett et al. , (2011) attempt to examine claims, advertised by commercial products, that believe attending gesturing classes can improve child-parent communications, thus reducing parental stress. Participants gave demographic information and completed a Parenting Stress Index (PSI) questionnaire. ANCOVA was used to look at whether attending gesturing classes affected parental stress, mothers attending a gesture group and mothers attending a non gesture group were compared; with ‘sibling status’ and ‘birth order’ controlled. Researchers found that mothers who attended infant gesture classes had higher stress scores than mothers who had attended non-gesturing classes. From these findings the following claims are made: that mothers in the gesture group had higher pre-existing stress than in the non gesture group, * that mothers attended gesturing classes in an attempt to alleviate their pre-existing stress, * that gesturing classes may cause mothers to view their child negatively. This critique will firstly provide an overall evaluation of the article with reference to strengths and weaknesses found. Flaws will also be highlighted with suggestion to how these could be rectified. Points of detail in the evaluation will then be expanded and conclusions di scussed. Overall evaluation First and foremost, the overall presentation of the article appears to lack in structure and organisation; this results in a lack of flow and clarity. In the introduction, the research question and key definitions of interest (i. e. ‘gesture, ‘non gesture’ and ‘stress’) are not discussed at the beginning. Characteristics of non gesturing mothers are instead firstly mentioned in the discussion section. The outline of categories in the background demographic questionnaire should have been made aware to readers in the methodology. Furthermore, in the results, findings from the study should have been stated in the opening paragraph. A fundamental flaw consistent throughout the article regards its lack of sufficient detail in ensuring strength of argument. In the introduction and discussion more research is needed in relation to how and why parental stresses occur to support findings. Furthermore unjustified claims are used to sustain argument which questions the validity of the research. The lack of detail regarding the direction of study also instigates ambiguity. More information is also needed about the procedure of the study so as to allow for replication. Further details as to how these flaws can be rectified are discussed later. Fundamental flaws are apparent regarding the non-random sample used and the lack of baseline stress measures. As no baseline pre-test has been conducted authors’ claims, as stated previously, can only be based on speculation. More information is provided on these flaws in the latter section. Strengths highlighted in the article include the demographic information provided. This information is useful as it allows for generalisation of results by ensuring groups are appropriately matched and offers useful information for future research in the region. (Keith, 2010). Furthermore the PSI questionnaire used, is well validated (Colver, 2006); using a creditable measuring instrument like this increases the reliability of the study. Moreover, the correct statistical test has been used, ANCOVA, and results are also provided with appropriate information. Abstract and Introduction The abstract fails to provide a rationale for the study; as this is unclear, readers may misjudge the subject matter. There is also no description of the stimuli used; the meaning of ‘gesturing’ is unexplained. Authors should elaborate upon what they mean by ‘gesturing’ so as to avoid misinterpretation. However, principal findings and design measures used in the study are stated. The introduction appears to lack in structure and organisation. No initial description of research question with reference to what it attempts to demonstrate is present; this is firstly mentioned in the third paragraph. Furthermore, authors first provide a definition of ‘gesturing’ in midpoint of this section. Considering this topic is the phenomenon of the study it would have been more appropriate to be stated at the beginning, rather than after the discussion of the benefits of gesturing; this may prevent misinterpretation. Although an explanation of ‘non-gesturing’ is provided in the discussion section, it would also be helpful for readers if it were included in the introduction; this enables differentiation between the two conditions. Similarly, a definition of the authors’ interpretation of ‘stress’ could have been stated at the start in ensuring readers’ clarity of terms. There is also no statement of hypothesis. nd authors do not provide a rationale or historical backdrop, therefore it lacks in significance and does not substantially contribute to the literature. Moreover, research discussed appears to be framed as a general review of literature and set out in list form with a lack of evaluation. For example, research has been described in relation to a study that has found no relationship between gesturing and linguistic benefits in infants (Kirk, Howlett, Pine and Fletcher), however it has not been evaluated or linked to the aims of the study. Furthermore, there are limited findings provided relating to the negative aspects of gesturing. Considering the paper is directed towards whether these classes affect parental stress, more research should be discussed in relation to the disapproval of gesturing classes, to support findings in the article. In addition, the article has included different research examples to support their view that parental stress can inhibit parent-child relationships, however there is no development in argument of how or why these stresses occur. To rectify, in ensuring clarity, more detail should be provided whereby these examples should be put in context with direct reference to the research question. Moreover, unjustified claims have been used in an attempt to sustain argument; for example, Howlett et al. , (2011) highlight ‘‘advertising claims that baby sign will reduce parental frustration and stress have little empirical foundation’. As this statement is not explained, it may seem misleading and as an ineffective use of argument. There is also no valid reference provided. In improving the structure and validity of their argument, authors should use evidence from influential papers to provide further detail in supporting their claims. The direction of study also appears ambiguous as authors switch between terms when stating the aim of the research. It is unclear whether authors are focusing on gesturing affecting stress or gesturing reducing stress. Howlett et al. , (2011) firstly state, ‘there are valid reasons to suggest that gesturing with an infant could reduce parental stress, this paper evaluates that claim’, (p. 438) they continue by stating, ‘this research investigates whether gesturing with an infant affects parenting stress’ (p438). One clear statement of what is being intended to measure needs to be used throughout the article so as to avoid confusion. The final paragraph includes a vague definition of variables whereby readers are left to determine their own assumptions. For example, it is stated that the frequency and duration of gesture use was used to measure the relationship between gesture use and stress, however it is unclear at this stage whether authors are implying ‘gesturing’ in terms of when mothers’ attended gesturing classes or their general use of gesturing; in and out of classes. The PSI is outlined, however researchers have not explained its benefits or why it have been use; this may leave readers questioning its credibility. Furthermore, it is important for researchers to include a statement of predictions, however this is not present. Methodology The authors recruited 178 participants (mothers) from the south-east of England; the sample size represents regional bias as mothers’ solely attending gesturing classes in this region is not representative of the whole country. Age range of infants used in the study is firstly mention in this section. It is stated infants ranged between 3 and 36months; however research discussed in the introduction only refers to the importance of gesturing from 9 months. Therefore authors have not justified the relevance of focusing on infants younger than 9 months; in certifying readers understanding, this could have been mentioned in the introduction. Authors have stated the measuring instruments used in the study. A strength regards the sufficient detail provided about the PSI booklet; examples of typical features such as the subscales of both the child and parent domains have been described. However no further details are provided about the background demographics questionnaire; categories are presented in the results section, however, it would be helpful for readers if details were included in this section. The potential confounding effects of using self-report questionnaires should also be noted. Social desirability bias may be apparent whereby participants may respond in a favourable light; mothers may not want to admit they are experiencing difficulties and respond untruthfully. Furthermore, as questionnaires are standardised, ambiguous questions cannot be explained; this may lead participants to misinterpret questions. Motivation for parents to complete questionnaires may also be scarce, resulting in superficial responses. In helping overcome these difficulties, authors could have stated whether participants were informed about why the information was collected and how the results will be beneficial; if participants knew the importance of their responses and were informed that negative responses were equally as helpful as positive, it may have made them want to answer more honestly. A fundamental flaw in methodology regards the fact that authors have not measured parental stress levels before conducting study. As there is no baseline stress measures prior to class attendance, there is no way of knowing if gesturing classes caused an increase in stress or what would have happened regardless of the implementation of the program; to rectify, researchers should use a pre-test methodology. Furthermore, another weakness in the methodology regards the fact that no ethic considerations are discussed. For example, authors could have included whether participant confidentiality was taken into account and whether de-briefing was offered subsequent to the study to respondents who may have expressed signs of upset. Description of procedures appears to lack in detail whereby there is no sequential pattern to how the research was carried out. There is also no precision in relation to what is investigated, to whom, and under what conditions. For example, Howlett et al. , (2011) state ‘contact was made with the infant groups’ (p. 39); more information should be provided such as how and when participants were contacted. Furthermore, no information is provided on how many classes parents had attended before the study or when the questionnaires took place; more sufficient detail is needed so as to allow replication and in ensuring consistency. There are also issues surrounding the amount of time participants were given to complete the PSI; it is stated the questionnaire takes approximately 30 minutes to complete, however, the procedure of collection differed between participants. Some gave completed questionnaires to a group leader, others were returned by post; the same conditions should be applied to all participants in ensuring standardisation. In addition, authors have not provided details of data collection or analysis undergone in the study; to avoid ambiguity it is important to include where the scores used in the analyses have derived from. An apparent fundamental flaw in the procedure relates to the fact that participants were not randomly allocated to the two groups in the study; randomisation is important as it eliminates sources of bias and ensures unpredictability. To rectify, random selection of mothers from a population could participate in the study. Results The beginning paragraph of the results is too vague; the hypothesis is not stated and no information on what statistical tests were used is provided. Furthermore, what the study found has not been not stated; it is firstly mentioned half way through this section. However, a strength in the article regards the demographic information provided for the two groups of mothers. Hours a week mothers’ work, maternal education, family income and siblings were included. It also highlights the similarities and equivalence between the two groups, making the interpretation of results valid. Another strength to this study regards the fact that researchers have applied the correct statistical tests. Two analyses of ANCOVA were conducted to measure the differences between the gesturing and non gesturing groups’ PSI scores. ANCOVA is appropriate to use as it allows to compare one variable (PSI stress scores) in two or more groups (gesture group and non gesture group) ith consideration for variability of other variables; covariates (‘sibling status’ was used as a covariate in the first ANCOVA and ‘birth order’; in the second). Controlling ‘sibling status’ and ‘birth order’ stops these conditions being confounding variables and ensures validity. As ‘sibling status’ and ‘birth control’ covariates have been controlled, it may have been more beneficial for readers if authors ma de aware of these strategies used prior to the results section as there is no discussion relating to siblings until this point. Results found from ANCOVA also confirm to readers exactly what the researchers were intending to measure; after confusion from the introduction, uncertainties are clarified and findings explain that the focus is upon whether attending gesturing classes affects parental stress. Results are also provided with adequate information whereby the obtained F value, df and level of significance have been stated. Furthermore researchers are correct in using a Pearson’s r correlation in confirming results which is used to see if there is a correlation between at two continuous variables. By doing so, it was found that there was no relationship between how long or often gesture groups mothers had been gesturing with their infant, and the mothers’ total stress scores. Therefore mothers stress levels were unrelated to frequency and duration. Furthermore, in this section descriptive statistics have been provided in two separate tables. In ‘Table One’, which shows the ‘mean (S. D) stress scores for each item on the PSI by group’, data does not seem to be explained in full. The scale used is unclear and readers have not been informed on the system used whereby there is confusion as to what the numbers mean. Tables 2 which shows the ‘summary of two ANCOVA results’, is more coherent as a brief description is displayed underneath describing the covariates. Discussion In this section, yet again, the aim of the research remains unclear; it is stated ‘the aim of the study was to investigate the impact of gesturing with an infant upon parental stress’ (p442), authors need to be more specific in their interpretation of ‘gesturing’, whether they are referring to attendance of gesturing classes or general use of gesturing is uncertain. Possible explanations for findings have been discussed, such as the view that there may have been a difference between gesturing and non gesturing mothers due to gesturing mothers feeling more stressed prior to the study. Authors continue by suggesting these mothers chose to attend gesturing classes because of these feelings of stress in hope that they would help. However, authors’ claims can only be seen as speculation as no baseline measurement was used. It should be noted that researchers have evaluated their findings and acknowledged that as baseline measures are not present, no assumptions can be made as to why mothers who attended gesturing classes had increased stress levels compared to non gesturing mothers or whether they were more stressed before attending the classes. Due to the lack of solid findings, like in the introduction, groundless claims have been used in an effort to uphold argument in explaining mothers’ cause of stress. For example, it is stated ‘mothers have high aspirations for their child and the parenting industry may, albeit unwittingly, foster maternal insecurities’(p443); no justification has been provided for this claim. Moreover, additional research is needed to support the authors’ concluding claims that attending gesturing classes may be detrimental and effect mothers’ perception of their infant in a negative light. Only Hyson’s (1991) study relating to mothers who induced academically focused activities on preschool children has been used as evidence to back up this claim, this does not justify the authors’ inflated claims. To conclude, even though this article has used creditable measuring instruments and appropriate statistical tests, Howlett et al’s claims can only be seen as speculation as no pre-test baseline is used. No findings can be validated without measuring the stress levels of mothers prior to class attendance, whether increase in stress has occurred due to attending gesturing classes in unknown. For future recommendations, authors could use a baseline measures to test mothers’ stress scores prior to the study.

Starbucks Delivering Customer Service

Lifetime Value For Unsatisfied, Satisfied And Highly Satisfied Customers The story of Starbucks transformation from a small independent coffee shop tucked away in a corner of Seattle’s Pike Place Market to a cultural phenomenon spanning the globe is legendary. A number of factors have been attributed to the success – one being a keen understanding of its patrons. There are multiple methods used to obtain customer information and the value derived therein. Customer lifetime value is one. Customers are assets, and their values grow and decline.Segmenting customers based on their lifetime value is a powerful way to target them because marketing mix activities can then aim at enhancing customer value. (Ho, 2006) Roughly translated, customer lifetime value is the projected profits that a customer will generate during their lifetime. We used the case data to segment Starbucks customers into three distinct categories of unsatisfied, satisfied and highly satisfied. Fortunately, the case provided some useful data to make our initial assumptions about the stream of expected revenues from each category.Exhibit 9 UnsatisfiedSatisfiedHighly Satisfied Number of Starbucks Visits/Month3. 904. 307. 20 Average Ticket Size/Visit$3. 88$4. 06$4. 42 Average Customer Life (Years)1. 104. 408. 30 The data allowed us to calculate the annual expected revenues by taking 12, the number of months in a year, times the product of each component given in Exhibit 9 for each category of customer. UnsatisfiedSatisfiedHighly Satisfied Expected Lifetime Future Revenue$ 199. 74$ 921. 78$ 3,169. 67To derive the CLV it is necessary to determine the profits. This requires taking costs against the expected future revenues. The expected costs are typically any amount incurred from attracting, selling and servicing customers. The best representative cost of servicing the customer from the given data was the gross margin from Starbucks financial statements. After all, this number reflects the true costs incurred in servicing each customer, while leaving out extraneous expenses such as depreciation and other corporate overhead that have little relation.FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 Average Net Revenue1,308,700,0001,686,800,0002,177,600,0002,649,000,0003,288,900,0002,222,200,000 Gross Profit730,200,000939,200,0001,215,700,0001,536,200,0001,938,900,0001,272,040,000 Operating Profit109,200,000156,700,000212,300,000281,100,000310,000,000213,860,000 Net Income68,400,000101,700,00094,500,000181,200,000215,100,000132,180,000 Gross Profit Margin55. 80%55. 68%55. 83%57. 99%58. 95%56. 85% Operating Profit Margin8. 34%9. 29%9. 75%10. 61%9. 43%9. 48% Net Profit Margin5. 23%6. 03%4. 34%6. 84%6. 54%5. 0% The average of the five years of financial statement data was used for the margin to take against revenue. The figures below represent the CLV for each category using a discount rate of 12% to give the present value. A discount rate between 10% – 20% is typically used in these applications. Starbucks is a mature company at this stage of development and the cost of capital is likely to be toward the lower end of the spectrum. Unsatisfied Satisfied Highly Satisfied Expected Lifetime Future Revenue $ 199. 74 $ 921. 78 $ 3,169. 7 Gross Margin56. 85%56. 85%56. 85% Discount Rate 12% CLV Undiscounted $ 113. 55 $ 524. 03 $ 1,801. 94 CLV Discounted$105. 88 $405. 59 $1,137. 64 Finally, we calculated the annual CLV for each category to provide information for our upcoming problem facing Starbucks about investing in increasing staffing levels. The annual amounts were derived by annualizing the products of visits/month and average ticket size/visit. Unsatisfied Satisfied Highly Satisfied Number of Starbucks Visits/Month 3. 90 4. 0 7. 20 Average Ticket Size/Visit$3. 88 $4. 06 $4. 42 Customer Annual Value $ 103. 23 $ 119. 10 $ 217. 10 Traditional Customer Annual Value (textbook version)$209$241$440 For comparison, our group also decided to calculate the textbo ok version of CLV by taking the average retention rate of 75% derived from Exhibit 8 and inputting it into the formula used in the text. We used the same discount rate, 12%, and took that rate times the product of the number of Starbucks visits/month and average ticket size annualized.CLV = m * r/(1 + I – r) Exhibit 8 % of Starbucks’ customers who first started visiting Starbucks . . . In the past year27% 1–2 years ago 20% 2–5 years ago 30% 5 or more years ago 23% Average25% $40 Million Investment In Improving Its Customer Service Using the data provided from Exhibit 3 in the case in regards to sales data broken down for each company operated store in North America we derived the figures in the table below. DailyWeeklyMonthlyYearly Average Store Sales$2,194$15,400$66,733$800,800 Average ticket/visit$3. 85$3. 85$3. 85$3. 5 Average Customer Count5703,99017,338208,050 One assumption made was the investment in improving customer service would be restricted to North American stores (4,574) from our calculations regarding the forecasted cost of $40 million. As mentioned in the case, â€Å"the company had plans to open 525 company-operated and 225 licensed North American stores in 2003. † (MOON, 2006) Consequently, these were the figures used to determine the forecasted North American store growth in 2003 and the same growth projections were made for subsequent years.Additionally, using the customer count derived from the calculations in the previous table we projected the change in customer count by using the same retention rate of 75% calculated from Exhibit 8 to determine the amount of retained customers. This is also supported by the fact the Starbucks’ cannibalizes its existing store revenue by opening new stores in geographically clustered markets. But this is offset by the total incremental sales associated with new store concentration. That figure was then used to provide the new customers by taking (1 – 75% = 25%) the percentage times the retained customer count.Thereby, our total projected customers equaled the sum of the two and those amounts were continually projected forward. YearCustomers Retained/storeNew Customers/storeTotal Customers/storeNumber of Stores 2002208,0504,574 2003156,03839,009195,0475,324 2004146,28536,571182,8566,197 2005137,14234,286171,4287,213 2006128,57132,143160,7148,396 2007120,53530,134150,6699,772 2008113,00228,250141,25211,375 One final assumption, the growth rate in stores was halted in 2008 to reflect the effect of the recession.All of these amounts allowed the $40 million investment in customer service to be broken out per store over our projected period spanning years 2002 – 2008. Year2002200320042005200620072008 Customer retained/store156,038146,285137,142128,571120,535113,002 New customer/store39,00936,57134,28632,14330,13428,250 Total customer count /store208,050195,047182,856171,428160,714150,669141,252 Number of Stores4,5745,3246,1977,2138,3 969,77211,375 Improvement/Acquistion Cost per store$8,745$7,513$6,455$5,545$4,764$4,093$3,517As shown, the growth in stores allows for a considerable reduction in the per store cost over the projected period. The initial acquisition cost was made by simply dividing the initial $40 million cost by the number of stores in 2002. From the information provided on Page 11 Fig A – Customer Visit Frequency, we calculated the customer base for each satisfaction level. Added to this information was the data derived from the prior table to break out the forecasted revenue stream less the acquisition cost to arrive at the profits made from improving customer service. 002200320042005200620072008 Number of Customers208,050195,047182,856171,428160,714150,669141,252 Customers – Unsatisfied87,38181,92076,80072,00067,50063,28159,326 Customers – Satisfied76,97972,16767,65763,42859,46455,74852,263 Customers – Highly Satisfied43,69140,96038,40036,00033,75031,64129,663 Total R evenue per store$800,800$840,840$882,882$927,026$973,377$1,022,046$1,073,149 Acquistion/Improvement Cost for store-$7,513-$6,455-$5,545-$4,764-$4,093-$3,517 Total Revenue – AC$833,327$876,427$921,481$968,613$1,017,953$1,069,632To increase the profitability based on the CLV data, the maximum bang for the buck is gained by increasing the customer level from satisfied to highly satisfied. Making this switch, Starbucks not only will see an increase in average ticket size from $4. 06 to $4. 42, but the frequency is also increased from 4. 3 to 7. 2 visits per month. All gains yield an additional $98 in incremental gross profit per every customer moved up in satisfaction. Additionally, customer life increases from 4. 4 years to 8. 3 years.As shown in the table below, it makes more sense to pursue after switching satisfied customers to highly satisfied customers as the NPV is far greater than the alternative. Using the NPV from the table and improvement cost for each store we can cal culate the minimum number of customers that we need to switch in 2003 per store. The minimum number of customers to be switched in 2003 = Improvement cost / NPV of satisfied to highly satisfied. = $7,513/$497 = 16 customers/store = 16 * 5,324 stores = 85,184 total customersCustomer LTV/yearChange in revenue by moving up in customer satisfaction levelAvg Customer LifeNet Present Value Unsatisfied$103 Satisfied$119$164. 4 yrs$51. 86 Highly satisfied$217$988. 3 yrs$497. 31 As Starbucks expands and builds more stores, improvement cost per store that is needed is reduced. This, in turn, has a direct effect in reducing the number of customers it needs to switch up one level. Qualitative assessment of Starbucks’ challenges Expectancy-Value ModelKey Attributes (Exhibit 10)Customer Ranking (Exhibit 10)Weights (Exhibit 11)Customer ranking (Exhibit 11)Combined ProbabilityRanking of Importance Treated as a Valuable Customer0. 75free cups after certain number of visits0. 190. 14251 Friend ly Staff0. 73Friendlier, more attentive staff0. 190. 13872 Appropriate Prices0. 65Reduce Prices0. 110. 07153 Fast service0. 65Faster, more efficient service0. 10. 0654 Knowledgeable Staff0. 39More knowledgable staff0. 040. 01565 Selection of merchandise0. 5Better Quality/Variety of Products0. 090. 00456 There is a direct relationship between customer satisfaction and number of visits and revenue which eventually leads to higher profits, Starbucks’ should raise the customer satisfaction levels of its current customer base by making them visit stores more frequently. By using key customer attributes from Exhibit 10 and the consumer weights which was given in Exhibit 11, we can use the expectancy value model to see what are the perceived values to the customer.We can then rank the attributes that consumers would value the most. The expectancy value model shows that faster service is not the highest in perceived value to consumers. There are others that rank higher. Specifically, Starbucks should focus on treating the customer as a valued consumer by rewarding the consumer with free cups of certain coffees after so many purchases. This would surely build more loyalty to the their brand, especially among both the newer and older customers.Starbucks can achieve this by doing one or more of the following: †¢Prices and Promotions – Since Starbucks’ typical customer profile is evolving, the company should look in to running promotions such as discounted prices or a free drink after so many number of visits which could generate additional revenue and possibly increase the average ticket size and customer life for both unsatisfied and satisfied customer level as well as build loyalty among newer and older customers. Improve value to customers with friendly staff – Knowledgeable staff who offer attentive service by greeting and knowing regular customers as well a remembering their drinks would help to improve the value proposition for Star bucks’. This will also try to bridge the gap between Starbucks’ and various other independent specialty coffee shops. †¢Cleanliness – Starbucks’s should ensure that the store is clean at all times (i. e. , restrooms, countertops, trash cans, seating areas, etc. as store cleanliness was ranked as key attributes in creating customer satisfaction (Exhibit 10) †¢Convenience – next on the list is convenience. Starbucks’ could continue to offer customized drinks and further promote sales of its SVC cards to help customers pay for their concoction at their convenience. †¢Improve the customer snapshot measuring techniques to strike a balance in measuring customer satisfaction level. †¢Improve the quality and variety of the coffee Explore additional opportunities to earn peripheral revenues in selling pastries, sandwiches, lunch menus or even liquor. †¢Study in making store atmosphere more conducive to ethnically concentrated geographical locations. WORKS CITED Ho, T. -H. (2006). Incorporating Satisfaction into Customer Value Analysis: Optimal Investment in Lifetime Value. Marketing Science , 260-277. MOON, Y. (2006). Starbucks: Delivering Customer Service. Harvard Business Review .

Customer Engagement Is Vital For Saas Success - 1186 Words

Customers desire experiences, not transactions. In a world full of distractions, engaging customers beyond the typical purchasing routine is vital for SaaS success. And B2B consumers crave unparalleled engagement. They want personalized advice, solution-oriented features, and revenue-generating products. An IBM annual survey noted that â€Å"as many as 65% believe customer engagement will be the primary driver of growth going forward.† Analytics is one of few ways to gain insights to meet your customers’ needs. It helps bridge the gap between providing a service to solving real problems. Enhance the experience between your brand and consumers. Build data into your customer engagement strategy. It Starts With Value Studies show that â€Å"86% of buyers will pay more for a better customer experience, but only 1% of customers feel that vendors consistently meet their expectations.† That’s a major disconnect for SaaS companies striving to improve customer engagement. B2B customers aren’t concerned about aesthetic features. And they aren’t amped to hear how your team worked around the clock to fix a bug. Your consumers want a service dedicated to solving their problems in an efficient manner. Natalie Chan, an expert handling customer retention at Outbrain Amplify, writes: â€Å"Businesses that focus on customers engagement are focused on value creation, not revenue extraction. These are businesses that know how to engage their customers by providing them with real value whether itShow MoreRelatedCurrent Environment : Key Statistics And Performance Metrics1670 Words   |  7 Pagesthe Department of Justices’ guidelines requirements. 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