Aes Case Solution Essays

Aes Case Solution Essays Aes Case Solution Paper Aes Case Solution Paper 1. How would you evaluate the capital budgeting method used historically by AES? What’s good and bad about it? â€Å"When AES undertook primarily domestic contract generation projects where the risk of changes to input and output prices was minimal, a project finance framework was employed. † Usually, project finance framework is used when the project has predictable cash flows, which can easily represent operating targets through explicit contract. When cash flows are certainty, the company can have higher level of leverage and it is easier to separate project assets from the parent company. Advantages and Disadvantages: ) Advantages a. Maximize Leverage b. Off-Balance Sheet Treatment c. Agency Cost d. Multilateral Financial Institutions 2) Disadvantages a. Projects V/S Division b. Complexity c. Macroeconomic Risk d. Political Risk: 2. If Venerus implements the suggested methodology, what would be the range of discount rates that AES would use around the world? If Vene rus and AES implement the suggested methodology, the projects would change while WACC changes. To find WACC we must first calculate the leveraged bets for each the US Red Oak and Lal Plr Pakistan projects, using the equation unleveled beta/(1-D/V). It is easy to find debt to capital ratios, which are 39. 5% for U. S and 35. 1% for Pakistan, and the unleveled beta, which are both 0. 25, in Exhibit 7a and 7b. Then we can obtain a leveraged beta for the U. S. , 0. 41, and for Pakistan, 0. 3852. Second we should find the risk free and risk premium rates. Because all debts are finance in U. S. dollar, we use the risk free rate, which is equal to U. S. T-bill, and risk premium rate, which is equal to U. S. risk premium, to calculate the cost of capital for all countries. Using equation cost of capital = Risk Free Rate + levered beta * Risk Premium, we can get the cost of capital for U. S. project, 7. 27%, and for Pakistan project, 7. 2%. After that we should find the cost of debt. Using the formula risk free rate + default spread, we can get the cost of debt for both U. S. project and Pakistan project are 8. 07% (4. 5%+3. 47%), in which both U. S. project and Pakistan project have a same spread, 3. 47%. To adjust we add the sovereign risk into calculation. In Exhibit 7a, the sovereign risk for the U. S. is 0% but for Pakistan is 9. 9%. We thereby get the new evaluation of the cost of capital and cost of debt, which are constant for U. S. and rise to 17. 1% and 17. 97% for Pakistan. Finally we calculate the WACC. The formula is leveraged beta * (cost of capital) + Debt to capital * (cost of debt) * (1-tax rate). Then we get for the U. S. WACC= 6. 48% and for Pakistan WACC= 15. 93%. Finally, we should adjust the WACC with its risk score. Because everything is calculated in U. S. dollar, the U. S. risk score is 0. So the U. S. projects WACC is constant. The Pakistan risk premium is 1. 425. So the change is 1. 25 * 500= 705bp = 7. 05%. Therefore, we get the final Pakistan WACC, which is 23. 08% (15. 93%+7. 05%). In conclusion, the difference between the U. S. and Pakistan projects is 16. 60%. Obviously, the U. S. project looks much more favorable. 3. Does this make sense as a way to do capital budgeting? The financial strategy employed by AES was historically based on project finance. The model worked well in the domes tic market and in the international operations. However, when AES started its diversification of business, it had to face to increasing symmetrical risks, such as business risk. In addition, project finance did not include the risk of devaluation of currency in developing economies which resulted in significant losses due to the inability of the company to survive its international debt obligations. And AES should also pay attention to political risk. Hence we see that the geographical diversification of business made project financing less recommendable as a symmetrical risk becomes more manifest. 4. What is the value of the Pakistan project using the cost of capital derived from the new methodology? If this project was located in the U. S. what would its value be? In order to calculate the value of project for the Lal Pir project in Pakistan, we first need to calculate the Weighted Average Cost of Capital (WACC) using the new proposed methodology. The first step is to calculate the value of levered ?. The value of the levered ? comes out to be 38. 52%, which essentially means that our project is not very highly correlated to the market return. Using this v alue of ? we now calculate the cost of Equity. We have used the return on U. S. Treasury Bond, which is 4. 5%, as the risk free return. The cost of equity comes out to be 7. % and similarly, using the risk free return and the default spread we calculate the cost of debt which comes out to be 8. 07%. It is important to note that the cost of debt and the cost of equity also need to be adjusted for the sovereign spread. Once we have the adjusted costs of equity and capital, the WACC comes out to be 15. 93%. However, now we need to adjust this WACC for the risks associated with doing the project in Pakistan. As mentioned in part 2, we get final WACC 23. 08%, which lead us to calculate NPV from the year 2004 to 2023. And it is -$234. 34 million. For U. S. , first we see the sovereign spread is equal to zero. Secondly, in this case we would need to calculate the business risk using the information given in Exhibit 7a. This score comes out to be 0. 64 and using this score, our business risk comes out to be 3. 23% and adding it to calculated value of WACC, we get our final WACC of 9. 64%. Using this we calculate our NPV for USA which comes out to be -$35. 92 million. 5. How does the adjusted cost of capital for the Pakistan project reflect the probabilities of real events? What does the discount rate adjustment imply about expectations for the project because it is located in Pakistan and not the U. S.? To calculate the adjusted cost of capital, we should adjust six common types of risks: Operational, Counterparty, Regulatory, Construction, Commodity, Currency and Legal. In Pakistan, it is possible to meet all these risks except construction. Additionally, the highest probability is the legal risk. When we calculate the WACC for Pakistan through traditional formula it comes out to be 15. 93%, however in order to incorporate the risk factor associated with Pakistan we need to adjust it for the Total Risk Score, which in this case is 1. 425. So we need to adjust our WACC 23. 08%. As mentioned earlier the discount rate is adjusted based on the total risk score of the country. This total risk score is compiled from 6 main types of risks, the probability of which varies from country to country. While currency, regulatory and legal risks are significantly high in Pakistan, the operational, counterparty and commodity risks are higher in U. S.. Similarly when come to the adjusted WACC for Pakistan (23. 08%) and WACC for U. S. (6. 48%), we can conclude that Pakistan is much riskier to invest than the U. S..

The Shawshank Redemption Essays

The Shawshank Redemption Essays The Shawshank Redemption Paper The Shawshank Redemption Paper Essay Topic: Literature The Shawshank Redemption Andys wife Linda Collins dufresne suddenly decided to Take golf lessons in 1947.At Falmouth Hill Country Club Linda took lessons for four month and her instructor was Glenn Quentin. Andy found in August 1947that Glenn and his Wife had become lovers. They argued bitterly. On September 10,1947 Linda wanted to divorce Andy. Linda went to spend the night at Glenns. The next morning the cleaning woman found and Linda and Glenn dead in bed. They were found shot four times each Red is a guy who can get anything for you. He came to Shawshank when he was twenty years old. He committed murder. He was young good looking and poor. He killed his wife by loosing up her brakes but he did not expect her to pick up the lady next door and her son. He also did not expect to get caught. He is a cool person and every one is fine and okay with him. People new that they could not play around with him cause then when they needed something from the out side he would not get it because like I said he was the one who got everything. Inciting Incident As soon as Andy walked inside Shawshank the first people who laid eyes on him were the sister they wanted him to be his female and lose his mind hood. But Andy did not and he insisted but the sisters were always there to make his life miserable. At one time the sisters beat on Andy because he was not willing to give up. On time they put him behind the laundry room and almost beat him to death. The inmates did not like Andy because when he first got there he looked as if he was the boss and he thought he was a big man but really he was not it was that trial was not fair and they had convicted of a crime he did not commit. That was most of the reasons that a lot of inmates had problems with him others just left him alone. Rising Action When the sisters were all up on him and making him bend down and do all the things a man needs to keep for himself. After Andy started doing the taxes for the guards the guards got respect and beat up the sisters so that they would not bother Andy any more that was the deal Andy had with the guards. Thats how the whole deal with the guards started about Andy doing them a favor for a favor and then it got to Warden and soon Warden was taking Andy into his office and having conversations with him because he knew that he had to keep Andy on the good side because he was the one who was doing all the taxes and bills. In no time all the staff in the prison had their own time to spend time with Andy and they would get the work done well actually Andy was the one who got the work done around there. Climax When Andy was ready for his escape the night before he was giving out things so the inmates thought that he was going to commit suicide. Also when Warden was or actually killed Tommy for knowing what he knew about Andy and he had to keep his mouth shut and the only was Warden was going to be sure that he was not going to say anything was by killing him but he knew that Tommy had already told Andy and the rest of the guys Andy hangs around with. Most of the stories and specially the climax were with the sisters When he got out all the things for the library and people were coming to Andy so that could learn and Andy was willing to help. When Tommy got involved and told Andy what he knew the truth that Andy had known since the moment the jury said guilty he knew that he was innocent and that was what Tommy told him. Now there was another person who knew that he was innocent. And was willing to speak out. Falling Action When Brook committed suicide and had no reason to live so he hung himself in an old room that parole had given him but Brook was locked up for so many years that every thing was new to him and he was scared and thought that he had no right to be there. Andy had told Red about Zinhuatahejo and Red started believing and said that he was going to be there t one day when he was a free man. When the jury or the people who decide to give Red his parole because now he had no reason to be in Shawshank anymore Andy escaped and Red has parole. Red is out left parole and is searching for Andy was lying about zinhuatejona the days it took him. But finally he found the letter. Andy had left him with one hundred dollars and now it was deciding whether to go or not, should he believe or is Andy is still playing with head. He takes the chance to find out if its true or not. Appearance Andy came to Shawshank when he was thirty year of age; he was a short neat little man. His hair was sandy and small cleaver hand. Andy wore gold-rimmed spectacles; his fingernails were always clipped and always clean also very conservative guy. Hadley was a big guy; he was the one that would kill you with his eyes. No one messed with him, because he was big and tough and also very quiet. Personality Andy is a shy and patient guy, keeping all his stuff to himself. He is not very trustworthy towards nobody and lives in his own world. When he is around people, tend to observe their action and their personalities. The opposite of Andy would be Red a humorous guy with the ability to make anyone laugh. Red is also similar to Andy, he keep this stuff to himself. They are somewhat compatible to each other. Background When Andy was a free man, he was a vice president in the Trust department in a bank. Andy loved numbers and could figure out most equations. He had very little family it was just his wife Linda and him. He had a normal life until that day. The day Linda started an affair with Glen and wanted a divorce. Andy had very little friends; some that worked in the bank and a special friend that was helping him while he was in jail find a new identity and money. Red doesnt really say much about himself; all we know is that he came to Shawshank when he was twenty years old. Red was living with his wife he had no children. Red might have been tired of his wife and killed her. He got convicted of murdering his wife, next-door neighbor and her son. Relationships When Andy was working in the bank, ha had high-class friends. He lost all those so-called friends when they found out what he had done. They just abandoned him like if they did not even care. His relationship with his wife at the beginning was normal but as time passed she got tired of him and started an affair with Glen Motivations Andy love to sculpture rocks and decorate his window in his cell room. Andy always found something to do to keep his mind busy. Also he was very cleaver, he knew that escaping would take years to accomplish. Meanwhile Andy created a library also found ways to get money to create the library with donating and worked at the library. Andy also taught the prisoners how to read and write. He even helps a young man get his G.E D. Red really did not have any dreams beside being a free man Red would get anything that the inmates wanted which include posters, drugs and tobacco. Red realized that Andy was very cleaver when he found out that Andy had escaped from prison with just a little hammer. Conflicts Andy had many conflict in the story first he was sentenced to prison for a crime he did not commit. Second he had problems with the Sister because they wanted to abuse him sexually and he never let them. They beat him up and that make Andy very miserable. Another problem that faces was when he found enough prove to clain his freedom and the warden did not even let him have a second trial the wanted to keep Andy in prison for his personal use. Tommy had many conflicts also he knew that Andy was not the killer, because he also knew who the killer really was and no one believed him. Another conflict arose when the warden found out that Tommy knew who was the real killer and plot a escape to kill him. Which at the end Tommy dies and with him the real killer identity. Changes Andy came in alone and was alone for a while until he started gaining respect and soon became a well respected manthat everyone turned to. When he escaped no one could belive it because he was really well educated and no one thought he would do such a thing. Andy soon was know at the prison and cool with most people. Not like at the beginning when he was a loner now he was the center of attraction. Red was really the same throught the story and was that he was a really patient and a serious type of guy when he started telling us about him he was already the man that could get anything but I belive that that was not the way when he first came into the prison. At the end when he got the letter he was still the same old Red. Person versus society Again it is all about society and the way people treated him. One example was when he was convicted people said that he was guilty because he did not make a big scean and he took it like a man so thats why people said that he was guilty but he wasnt . Another one was that there was the conflict with the inmates at first that they didnt like Andy so they made his life imposible the first couple of months. One main thing was with the sisters about his man hood even though that was a storgle those were some of the really main conflicts with society. Person VS Person Warden was the one who was making Andys life miserable at the end and new the truth. But still didnt want to let him go and fought till the end. Warden made any do all the work and that was why Warden didnt wan to let him go because he knew that if he was to let Andy go he was going to lose a lot of money and that was one thing he was not willing to lose. The sisters wanted to get Andy and make him their female and like I said it was a very difficult situation for Andy but still it was a struggle and it was a really bad conflict person versus person sort of situation but at the end Andy got them back for all the beatings that he got from the sisters. Andy never gave up in searching for his freedom and fighting what ever was going to be a startle for him. He honored a new friend ship that was red some one that was helping him through out ten years of his life. He really trusted Red in every way that you can possibly imagine .Red also trusted him even though Andy always beat around the bush when it came to saying things you sort of had to guess what he was trying to say. Red was patient because after thirty years they the people who wok at the prison finally gave him his parole. Still they thought he was not rehabilitated. He learned how to survive by being the man and by being the guy who could get anything, and making side money for himself. The main point of the story is that even though Andy was a really quiet guy he was always doing some thing that no one knew and that was planning his escape. After ten years of pain and suffering he finally does it and does every thing he said he was going to do which was own his own business and be rich wit his good friend by his side which was Red.

Critique a Research Article Paper Example | Topics and Well Written Essays - 1250 words - 1

Critique a Article - Research Paper Example The author further puts forward questions for research regarding the symptoms that are associated with acute kidney injury. The author is trying to put forward that the nurses should know about acute kidney failure and the causes of it. The early signs should be detected by the nurses and they should intervene at the right moment to help it not progress towards end stage renal disease. The author gives the necessary signs and symptoms leading to it along with the steps that a nurse should take when intervening. Hypothesis The author proposes that acute kidney failure can be prevented by experienced nurses who have the necessary knowledge in intervening during the course of the injury. The author put forward a real case of a patient who developed acute kidney injury but she did not progress to chronic renal failure because the nurses intervened at the right time. Evaluation Author provides a literature review by highlighting the main points of acute kidney injury and the mechanisms in volved. She further uses research to strengthen her hypothesis. The author has used recent literature review to prove her hypothesis and she has complemented the research with a real life example of a patient suffering from Acute Kidney Failure. I believe that the article in all ways is relevant to the current health issues and problems faced by nurses in handling such cases. The mortality rate of the patients with acute kidney injury have increased in the recent past and such an intervention as laid down by the author can certainly decrease the risk and help in decreasing the mortality rate as well. Â   The author has utilized a case study as she already has selected a patient and the nurses have intervened at the right time to avoid the serious consequence of chronic renal injury. The sample selected for this article was only one and it was in co-relation with the topic as the author selected an individual with the injury only. The sample was hence appropriate for the research ar ticle. This work has been crafted by the author by selecting an individual who seemed to be suffering from the disease that the article is referring to. The author has made this research more practical by laying down the nursing intervention techniques. I believe that is practical and applicable in the real world because the nurses can play a great role in intervening of the progress of acute kidney injury to chronic and avoid mortality. The author has emphasized on the role of nurses to understand the risk factors and diagnostic criteria for acute kidney injury. The relevant nursing assessment that is required to be done on the patients has been emphasized by the author. These factors would help nurses to identify the patients who are at risk of developing acute kidney failure. I believe, the application of this research in the real life is possible only if nurses are trained to handle such cases. However, in this research only one such case was analyzed by the author and hence it cannot be concluded with certainty that it would be applicable to all cases in different situations. Moreover the author does not include training programs for the nurses to carry out the relevant intervention with the patients who are suffering from the disease. I believe that the nurses should be trained properly along with the knowledge of the intervening techniques when it comes to the patients of acute kidney

Military History Paper Research Example | Topics and Well Written Essays - 1250 words

Military History - Research Paper Example Army professional can draw from military history how areas such as casualty evacuation were managed during the Vietnam War as compared to the Civil war. Moreover, military history also enables army professionals to promote the continuity of this history by learning its value. These incentives reinforce why army professional should study military history. Introduction Winning a war requires a combination of factors, and military history is part these forces. Being in the army calls for a rich understanding of military history, which dates back to hundreds of years (Jessup, Robert, & Coakley, 2005). Today, there are few people who see the value of military history. Instead, many people believe that study of military history has no place in the current world, where war is modernized and fought using sophisticated arms. Needless to say, there are many incentives that military professional can gain through the study of military history. The United States has a collection of chronological records detailing the experiences of soldiers, war events and development of arms that add to the rich history of its military history. Overlooking these resources is not welcome, particularly when military professionals do not take time from their busy schedules to glean from these records. While many military professionals remain deployed in various hot spots, taking the time to study military history has the potential of increasing their success in war. Through the study of military history, army professionals can learn how to make appropriate decisions, manage situations in war, engage threats in war, and promote continuity of military history. Value of Military History Managing war The role of military history in teaching army professionals how to manage wars cannot be underestimated. Professional army personnel must be ready to understand how wars are managed in order to achieve defined objectives. The methodology to manage wars is an essential aspect of military history. This is because those studying military histories can see those gains made by other soldiers and reflect on them. Possibly, these army professionals can gain new insights on how war and surrounding situation can be managed to produce outcomes that align with desired objectives. For instance, there are many aspects of management that army professional can learn from history. During the Vietnam War, the United States army made significant gains by making one of the most lauded evacuation programs in military history. Military history books detail that the United States army used helicopters to conduct aeromedical evacuation that helped save the lives of many soldiers in the war. Army professionals taking military history can study this literature in depth and gain a thorough understanding of how these evacuations were possible. When studying this information, military professionals would appreciate that such services were available during the American Civil war where many solider died of their wounds (Britannica Educational Pub, 2010). Certainly, military professionals who study military history will understand the value casualty management and other facets of war. Decision making Studying military history has the potential of improving the ability of army professional to make correct decisions. Decision-making is an art that requires perfection over time. Nonetheless, reading military histo

Health Care Providers in Different Religions Essay

Health Care Providers in Different Religions - Essay Example In many cases however, one does encounter a variety of different faiths when seeking out health care. In Christianity there are seven aspects of providing health care to patients. All of these are tied to religion and the Holy Bible and its sayings. The first is a moral code of conduct and justification that will guide health care providers to tend to patients in a manner that is in alignment with religion. Such as the fact that they cannot present life threatening drugs or force people to take a drug that may cause death. At the same time, women cannot be advised of abortion etc. Secondly the doctor patient relationship needs to be built on the element of trust; the patient is entitled to receive all the information regarding treatment, health care and any aspect of a procedure that they have to undergo. Even though the provider is the true healer and is believed to be so by the patient as well, all sides of the story is a duty of the doctor to the patient. Thirdly, patients are aut onomous, that is, they are allowed to make any decision they want to, after being presented all the facts of the situation. At the same time, health care providers have to act like good citizens, taking it on their conscience to care for the patient and heal them; and not just go through with this procedure in a mechanical fashion, but to be caring and loving and compassionate towards the patient. God will only show mercy to him who showed mercy on his creation, and so providers need to offer not just treatment but compassion and mercy to patients, praying for their well-being and taking it as a duty as God’s servants to take care of his creation. At the same time there is the concept of non-maleficence in Christianity; which essentially translates into â€Å"never harm anyone.† According to this principle, health care providers need to be such that they give the right kind of prescription to the right patient and they need to assess whether a particular treatment woul d harm or benefit the patient in question. Christianity also believes in the principle of justice. Therefore patients are all to be treated equally and fairly, and treated till depth of the provider’s ability as that is their right as not just patients of the doctor, but also as human beings. He is also to provide access to the patients to health care if he himself cannot suffice. Lastly, it is believed that one, no matter what profession he follows, must have a character of integrity and virtue, so that no matter who he is dealing with, he will uphold his virtuous character and refer to the Bible and never wander from what it deems to be right and wrong. (Benedict M. Ashley, 2006) It is the general view, that all the principles aforementioned should be followed, whether the person seeking treatment is a Christian or otherwise. Doctors need to be compassionate, caring, try their best to bring the proper and complete treatment to their patients, while at the same time, upholdi ng the ethics of their profession, that is, anything that can cause harm to their patients is supposed to be out of the question. However, some cultures and religions have different aspects or an addition to the aforementioned principles. Buddhism originated through the concept of suffering, the state of the soul being in trouble rather than the body being in any agony. The Buddhists believe in both technique and discipline, and those principles along with the eight fold path determine all other aspects of life even health care. The eight fold path includes right speech, right view, right

Internationalization of Asian Multinational Enterprises

Internationalization of Asian Multinational Enterprises INTRODUCTION Background Internationalization can be defined as the desire to be a member of the international society by satisfying a certain standard, or strengthening the influence of a nation on other nations. It becomes the process where multinational enterprise (MNE) engaging, it is very important for these companies to penetrate international market if they want to be accepted and remain successful. (Sreenivasan Jayashree and Sahal Ali Al-Marwai). The internationalization process helps MNEs in maturate their operation in foreign market and enhance their competitive position abroad. According to Hedman (1993), three main alternatives for distributing the enterprises product exist, that is, indirect export, direct export and alternatives to export. When distributing indirectly, the different distribution activities are assigned to one or several intermediaries in the home market. When distributing directly, the producer itself conducts the distribution activities, such as distribution to a foreign importer, which in his turn forward the products to another intermediary or the end customer. (Molnar, 1990) the third alternative, alternatives to export, can take place through, for instance, own production in the target country, or licensing (Hedman, 1993). The rapid changes in todays business world call for new models of internationalization (Fillis, 2001; Meyer and Gelbuda, 2006), especially to be able to capture the early phase of internationalization in a better manner than the traditional models (Johanson and Vahlne, 2003). In contemporary research, Coviello and McAuley (1999), in line with Leonidou and Katsikeas (1996), have pointed at three theory directions that are preferable for studying internationalization, namely Foreign Direct Investment (FDI)-theories (a.k.a., the theory of the Multinational Firm), Stage models and Network theory. Even though these are different theory directions, they are seen to be complementary views where a combination of views is preferred since it is difficult to capture the internationalization concept using only one theoretical framework (Bell et al., 2003; BjÃÆ' ¶rkman and Forsgren, 2000; Coviello and Munro, 1997; Meyer and Skak, 2002). Network theory is increasingly being combined with stage theory in order to understand and explain the rapid internationalization of the firm (in Bell et al., 2003; Johanson and Vahlne, 1990, 2003; Meyer and Skak, 2002). The process of internationalization has been the subject of widespread theoretical and empirical research (for example, Johanson and Wiedersheim-Paul 1975; Johanson and Vahlne 1977; Bilkey 1978; Cavusgil 1980; Turnbull 1987; Welch and Loustarinen 1988) and finds a general acceptance in the literature (Bradley 1991; Buckley and Ghauri 1993; Leonidou and Katsikeas 1996). The internationalization process is described as a gradual development taking place in distinct stages (Melin 1992). Internationalization processes in emerging markets, as in international markets in general, take place in a stepwise manner (Jansson, 2007). Companies commit themselves through a gradual learning process. Learning is incremental and takes place by doing. Firms learn about doing business abroad, for example, learning about the conditions in particular markets. Companies tend first to establish themselves in geographically and culturally proximate markets and increase their commitment, starting with agents, and passing through sales companies to manufacturing companies (Johanson and Vahlne, 1977; Johanson and Wiedersheim-Paul, 1975). Within the last decades, the business world has changed drastically through globalization and internationalization à ¢Ã¢â€š ¬Ã¢â‚¬Å"creating a new and fierce business environment for companies. We can now see a third wave of internationalization of firms in which companies domiciled in mature Western markets establish themselves on a large scale in emerging markets such as Central and Eastern Europe (CEE), Russia, China and India (Jansson, 2007). A recent phenomena of firm from Asian capital exporting countries were internationalizing and multinationalizing their business activities and have emerged or are emerging as Asian multinational enterprises (World Bank, 1993). They started the internationalizing activities and investing and setting up operation in other countries since mid-1980. Research interest which focus on these Asian enterprises and their direct investment activities arise in recent years (Ting, 1985; Ulagado et al., 1994; Yeung 1994, 1997). Foreign direct investment (FDI) started on the early 1980s. According to studies done by Lall, 1983;Well, 1983; Kumar and McLeod, 1981; Khan, 1986; Monkiewicz, 1986; Aggarwal and Agmon,1990; Tolentino, 1993, FDI of Third World multinational enterprises (TWMNEs), slightly different with the traditional MNEs from the western developed countries in term of their characteristic. The growth of East Asia (World Bank, 1993) in late 1980 and early 1990, has increased intra-regional direct investment. The directed investment process from Japan , followed by Korea, Taiwan, Hong Kong and Singapore and the activities transferring from one level of economies to another in Malaysia, Indonesia and Thailand has been depicted as wild flying geese pattern. (Toh and Low,1994; Guisinger, 1991). As a result, these Asian capital exporting countries firm internationalizing and multinationalizing their business activities and have emerged or are emerging as Asian multinational enterprises (World Bank, 1993). Problem Statement During these extremely competitive times, the international business environment is one that is normally full of immense uncertainty, volatility as well as a high rate of failure when it comes to international expansion The research on the nature, organization and operations of these emerging Asian international and multinational enterprises are limited. This is because research in international business and trade has been dependent largely upon economistic and western-centric theories developed predominantly in industrial and institutional economics (Buckley and Casson, 1985; Dunning, 1988, 1993). A study shown internationalization is the crucial factor for a firm to grow and develop economically and technologically (Syed Zamberi Ahmad and Fariza Hashim, 2007). Hence, it is very important for multinational companies to conduct a comprehensive examination of the various important factors that could influence the type of strategy that is to be selected for international market entry. 1.3 Objectives This research is dedicated to all local Malaysian companies who are looking at ways and means to internationalize their operations to a foreign market and would be of tremendous assistance to them in determining the correct strategic path and improve the understanding of the Asian MNEs characteristic. 1.4 Research Question According to the problem statement above, the author has formulated some question to meet the research objective. The questions are: What are the key characteristics and success of their foreign ventures? What are the motives for internationalization? What are the entry strategies? What are the strategic advantages and traits? Research Contribution Government: Through this study, government can carry out some government policy to lead more firm success in their international proses in expanding their business. Firms: This study provides information to provide better understand characteristic and strategy for the purpose of internationalization which can increase the net profit of the firm. Economic: This study enable economist to better understand how development of economic on a country can help MNEs in their internationalization process. 1.6 Summary This study proposal consists 3 chapters. Chapter 1 provides the overview of the recent phenomena of internationalization, the problem statement, objectives, and question. Chapter 2 displays literature review by past research, followed by concept and theories, and research framework. Chapter 3 describes the research methodology, sampling technique, data collection, data analysis and research planning that use to analysis the finding in Chapter 4. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction This chapter reviews the past studies about the concept and theory which included internationalization process, entry notes and process, eclectic explanation, foreign direct investment, regional and global internationalization processes, Uppsala model and Asian context. After that it follows by the research framework. 2.2 Concept and Theory 2.2.1 Internationalization processes Internationalization processes in emerging markets, as in international markets in general, take place in a stepwise manner (Jansson, 2007). Companies commit themselves through a gradual learning process. Learning is incremental and takes place by doing. Firms learn about doing business abroad, for example, learning about the conditions in particular markets. Companies tend first to establish themselves in geographically and culturally proximate markets and increase their commitment, starting with agents, and passing through sales companies to manufacturing companies (Johanson and Vahlne, 1977; Johanson and Wiedersheim-Paul, 1975). Research on the exports of mainly North American companies has reached similar results (Bilkey, 1978; Cavusgil, 1980; Czinkota, 1982; Reid, 1981). Such process theories are highly useful especially when studying international 66 H. Jansson, S. Sandberg / Journal of International Management 14 (2008) 65à ¢Ã¢â€š ¬Ã¢â‚¬Å"77 business in CEE. Learning processe s are essential since the company needs to adapt to an emerging and different business context, such as exists in the CEE (Meyer and Gelbuda, 2006). As noted by Sharma and Blomstermo (2003b) a basic assumption in internationalization process theory is that knowledge accumulation is continuous and dependent upon the duration of foreign operations. The longer firms have been involved in foreign operations, the more knowledge they accumulate about such operations. There is a relationship between knowledge accumulation and risk so that the more knowledge a firm has, the less uncertain they perceive the foreign market to be. Firms that lack knowledge about foreign markets even tend to overestimate risks. This corresponds to what Jansson (1989) found concerning establishment processes in a regional perspective, namely that the pace of investments in Southeast Asian countries accelerated, the more experienced the firms became in an area. Johanson and Vahlne (1990) stated that Uppsala model of internationalization indicated firms reveal an evolutionary process in internationalizing through a series of evolutionary stage. 2.2.2 Entry nodes and entry processes Firms entering emerging markets face several barriers according to Meyer (2001). These barriers include a lack of information, unclear regulations and corruption. According to traditional research on internationalization processes, market entries either take place through intermediaries such as agents or distributors or through a firms own representative in the exporting/importing country, mainly a subsidiary. In terms of research in this area, scholars have found that relationships are at the core of the internationalization process (Axelsson and Johanson, 1992; Ford, 2002; HÃÆ' ¥kansson, 1982; HÃÆ' ¥kansson and Snehota, 1995; Hammarkvist et al., 1982; Jansson, 1994, 2007; Johanson and Vahlne, 2003; MajkgÃÆ' ¥rd and Sharma, 1998). According to the network approach to internationalization, entries into local market networks take place through establishing relationships. The international marketing and purchasing of products and know-how through a direct exporter/importer network means that a vertical network in the exporting region (e.g. a suppliers supplier network) is indirectly connected to another vertical network in the importing region (e.g. a buyers buyer network). This large vertical network will, in turn, be embedded in other regional and national networks, such as a financial network (Jansson, 2006, 2007). From a network perspective, establishment points in foreign market networks are defined as entry nodes. There are various routes into these networks, or nodes by which a firm can enter a network. Entries through trade either take place H. Jansson, S. Sandberg / Journal of International Management 14 (2008) 65à ¢Ã¢â€š ¬Ã¢â‚¬Å"77 67 directly with customers or indirectly through intermediaries. Direct relationships, dyads, can be established between buyer and seller in the respective countries. Indirect relationships, triads, involve an outside party or other type of entry node, usually an intermediary such as an agent, dealer or distributor. Dyads can also be established through the entry mode FDI (a subsidiary in the importing country). Entry processes take place by building relationships to form networks in foreign markets. Irrespective of entry node, the development of international buyer/seller relationships tends to follow a five stage pattern (Ford, 1980, 2002; Ford et al., 1998). Each stage of the entry process can be described by a number of relationship factors, such as how the experience, commitment and adaptations of the parties increase across the stages and how the distance and uncertainty between them are reduced across the stages. The first stage includes the taking-up of marketing/purchasing activities before a formal relationship begins. The next three stages show how direct buyerà ¢Ã¢â€š ¬Ã¢â‚¬Å"seller relationships within networks are established: from their beginning and to their deepening. Experience indicates the amount of experience the respective parties have with each other. They will gauge their partners commitment to the relationship, e.g. by the willingness to make adaptations. Distance is multifaceted and it can be split into social, cultural, technological, time and geographic distance. Uncertainty deals with the fact that at the initial stages, it is difficult to assess the potential rewards and costs of the relationship. In the fifth and final stage, the relationship is extensively institutionalized and habitual, with commitment being taken for granted. Based on Terpstra and Sarathy, 1991; and Baek, 2003, joint ventures with host governments and local partners in the host country were among the preferred entry strategies for international operational operation. Petronas in South Africa entered into a commercial alliance with Engen in 1996 as a strategic partner. The acquisition was to enable both companies to implement a shared growth strategy in Africa and the Indian Ocean Rim, while allowing the development of potential operational synergies between the two business entities (Padayachee and Valodia, 2002). 2.2.3 Eclectic Explanation Eclectic Paradigm is a proverbial known explanation of international production. Dunnings (1977, 1988, 1993, 1995). Eclectic Paradigm stated that the extent and pattern of international production is determined by: 1) Ownership advantages (for example, proprietary technology, products, expertise and skill) 2) Internalization advantages (for example, transaction costs reduction, maximize economic return), and 3) Location advantages of host and home countries These OLI (Ownership Location Internalization) variables listed above explain the reason internationalization occurs but overlook the dynamic process of internationalization. The Eclectic paradigm is provided by the Investment Development Path (Dunning, 1981, 1986) with a dynamic dimension, and relates the net outward investment of a country to its stage of economic development. Five stages of IDP ( Investment Development Path) Stage 1: At low level of economic development, there is little inward or outward investments. Stage 2: Inward investment becomes attractive, especially in import substitution projects as the country develops. Some outward investment may take place in neighborly countries which at lower stages of development. Most developing countries with some outward investments are at this stage. Stage 3: With economic development move forward, net inward investment declines while outward investment increases (relative to inward investment). Increasing of outward investment may take place in countries at lower IDP stages in order to overcome cost disadvantages in labour intensive industries and also to seek markets or strategic assets. Singapore, Taiwan and South Korea are said to be at this stage. Stage 4: As production being multinationalized, net outward investment becomes positive. Most developed countries are at this stage. Stage 5: The shift from advantages based more on factor endownment to those based on internalizing international market convergent outward and inward investment flows. Empirical research on Third World (including Asian) multinationals has given general support to the IDP concept (Dunning, 1986; Tolentino, 1993; Dunning Narula, 1996; Lall, 1996). Dunning and Narula (1996) acknowledge that country factors may influence the IDP pattern of a country, such as resource endownment, home market size, industrialization strategy, government policy, and the organization of economic activities. TWMNEs were smaller than their counterparts from developed countries and have limited number of overseas operations. The competitive advantages of TWMNEs were based on cost advantages (particularly labour cost) and greater responsiveness to host country needs which is different from western MNEs. They served market niches which were not covered by the traditional MNEs and so were not in direct competition with them. The major motivation for these FDI was protecting export markets rather than exploiting rent from proprietary technological know-how (or other ownership spe cific advantages characteristic of western MNEs) explained in theories, such as the eclectic paradigm of Dunning (1977, 1995). TWMNEs possessed first or second generation labour-intensive technologies and produced standardized products mainly for the domestic host country market which at stage 4 of IDP. Wells (1983) presupposes a pecking order hypothesis to suggest that the TWMNEs technologies could fill the technological gap between the advanced technology of developed country MNEs and the rudimentary technology of less developed countries (LDCs) in a pecking down order. Lall (1983) emphasized the flexibility and adaptability of TWMNEs technologies to be more suitable or appropriate to LDC situations. 2.2.4 Foreign Direct Investment (FDI) It may seem surprising that there is significant number of foreign direct investments by some firms from developing countries because it is usually credited to more developed countries. A number of studies indicate that FDI flows not only from the industrialized or well-developed countries, as well as developing countries. Scholars such as Lecraw (1981, 1993), Wells (1977, 1981), Lall (1983a, and 1983b), Kumar and Lim (1984), Ulgado et. al., (1994) are only some of those who have carried out empirical studies and researched FDI flows from developing country firms in the 1970s and 1980s. Comparisons between the nature of international expansion of firms from developing countries and the nature of those corporations that originated from developed countries are made in most of these studies (Dunning, 1986; Vernon-Wortzel and Wortzel, 1988). In general, it has been depicted that the competitive advantages of MNCs from developed country are derived from advanced proprietary technology or other superior resources (Yeung, 1994). While ability to reduce costs of imported technology through de-scaled manufacturing or smaller scale of production is focus of the competitive advantage from developing country MNCs were derived from their This is a process whereby technologies from industrialised countries are adapted to suit smaller markets by reducing scale, replacing machinery with manual labour, and relying on local inputs (Ramamurti, 2004). Outward direct investment from developing countries started to grow rapidly to a sizeable magnitude during the mid-1980. This became the main tool of developing country multinationals in demanding that their constituent firms prepare for the drastically international competition that they were about to face(Kumar, 1996, 1997). The emergence of new technologies in the late 1980s somehow decreases the interest in outward direct investment from developing countries subsided (Kumar, 1996; Oh et. al., 1998; Pananond and Zeithaml, 1998; van Hoesel, 1999). Pananond and Zeithaml(1998) and van Hoesel(1999) recounted that aggregate analyses of developing country MNEs conducted at the industry level get attention from scholars and yielded interesting results by the early 1990s. They concluded that there were marked differences in characteristics between developing country MNEs in the 1980s and 1990s. Scholars posited that these two groups of MNEs belonged to two different waves of development i n term of their respective historical backgrounds, nature of businesses, extent of the role of government in operations and transactions, geographical direction, and mode of internationalisation activity. MNEs in the 1980s are more concerned with cost competitiveness with their competitors (van Hoesel, 1999). In contrast, developing country MNEs in the 1990s placed greater emphasis on the development and reset business strategies due to the dynamic changing patterns of world business structure brought about by trade liberalisation and economic globalisation (Dunning et al., 1997). Besides this, they put more effort on technological competence as the source of competitive advantage (Pananond and Zeithmal, 1998). They noted that notwithstanding these differences, there existed several significant interrelated points of convergence between the two groups (Dunning et al., 1997; van Hoesel, 1999). 2.1.5 Regional and global internationalization processes In analyzing the early internationalization steps of smaller and less experienced companies, the internationalization process model by Johanson and Vahlne (1977) is regarded as a highly useful tool. In internationalization research, few studies have been conducted on higher level internationalization where companies are established in several countries and have fully-owned businesses (Meyer and Gelbuda, 2006). The more countries in a region a firm exports to, the more extensive is the regional internationalization process. The more regions a firm exports to, the more global is the internationalization process. New stages of internationalization are established when a firm extends its business from one major type of market to another or from one type of foreign environment to another. The main factor behind these stages is experiential knowledge, meaning that firms gradually build a knowledge base through operating in foreign markets. They learn from past experience by transforming this experience to useful knowledge. There are three types of such knowledge (Eriksson et al., 1997). Internationalization knowledge about how to perform international operations is an expression of a firms current stock of knowledge in the form of its resources and capabilities. The more novel the foreign environment, the more difficult it is for the firm to apply its current stock of knowledge to that foreign market. This means that there is a gap between a firms present internationalization knowledge and the knowledge the company has about how to do business in the specific foreign market, i.e. concerning its network experiential knowledge and institutional knowledge (Blomstermo et al., 2004). Based on a firms experiential knowledge process, internationalization processes are often divided into different degrees of internationalization. Johanson and Mattsson (1991) discuss the internationalization process for firms with various degrees of internationalization and propose that the process is mainly valid during the early stages of a firms internationalization: inexperienced firms tend to follow a traditionally slow and gradual pattern, while the internationalization of a more experienced company is less slow and gradual. 2.2.6 Uppsala model The Uppsala model (Johanson Weidersheim-Paul, 1975; Johanson Vahlne, 1977) provides an explanation of the dynamic process of internationalization of individual firms. The Uppsala model emphasize on the importance of gaining knowledge and experience about the characteristics of foreign markets along the internationalisation path, and helps MNEs reduced risks and levels of uncertainty in unfamiliar foreign environments before investing (Wiedersheim-Paul et al., 1978). The successive steps of increasing highly commitment are based on knowledge acquisition. Foreign activities started with export to foreign country through independent representative or agent, after that establish sales subsidiary and finally start production in the host country. The internationalization of the firm across many foreign markets was particularly related to psychic distance which included differences in language, education, business practices, culture and industrial development. Firstly, enter foreign market which closer in term of psychic distance, followed by subsequent entries in markets with greater psychic distances. Same goes to entry mode of foreign market. The incremental expansion of market commitment meant that the initial entry was typically some form of low commitment mode and followed by progressively higher levels of commitment. Obviously, commitment of the level of ownership in different markets was correlated with their psychic distance. The Uppsala model had received general support in empirical research (Welch and Loustarinen, 1988; Davidson, 1980, 1983; Erramilli et al., 1999) and its largely intuitive nature and evolutionary learning perspective made it attractive as an explanatory model. A related view regards learning was that TWMNEs built up their advantages through the accumulation of technology and skills. Lall (1983) emphasized on the localization and adaptation of technology to suit local markets by TWMNEs. Tolentino (1993) focused in term of the accumulation of technological competence in the expansion of firms from developing countries which was consistent with the resource-based view of building competitive advantage in strategic management. The accumulation of knowledge and competence especially its knowledge of developing markets and not so much its technology by the CP Group in Thailand was the key to its internationalization. There are also differences between the CP Group and Western MNEs (Pananond and Zeithaml, 1998). Mathews (2002, 2006) postulated that emerging firms could foster internationalization via leverage of their contractual linkages with other foreign firms to acquire resources and learning new capabilities. He indicated that this explanati on complemented the OLI framework and could be used to explain the rise of such latecomer firms which he dubbed as Dragon multinationals. 2.2.7 Asian Context Yeung (1999); Zutshi Gibbons (1989) portrayed that western theories on internationalization have neglect the active role played by the state and overlooked the institutional or contextual perspective in the internationalization of Asian. Asians state always plays a direct and active role in the internationalization of its MNEs. For example, the Singapore government played a key and direct role in the promotion of outward FDI (e.g., growth triangles, industrial parks in foreign countries), particularly from the early 1990s in its regionalization programs (Pang, 1994; Tan, 1995; ESCAP/UNCTAD, 1997). Incentives and other programs for instance tax incentives, finance schemes, training also provided to foster the rapid development of local entrepreneurship in the regionalization efforts. In Malaysia, the government took a very active role in promoting the internationalization of Malaysian firms. Investment promotion missions abroad were organized and often lead by the Prime Minister. The government provided incentives including tax abatement in 1991 and subsequently full tax exemption in 1995 for income earned overseas and remitted back to Malaysia. An overseas investment guarantee program was instituted. Malaysian government instructed firms to defer non-essential overseas investment in order to reduce the impact of the effects of the 1997 Asian financial crisis. In the Asian context, the state has played a very active and direct role in promoting the internationalization of its national firms. This is much different with the western context, where the role of the state is benign and indirect. 2.3 Summary This chapter first discussed the internationalization process in terms of entry notes and process, eclectic explanation, foreign direct investment, regional and global internationalization processes, Uppsala model and Asian context. The following chapter discusses the research method, survey development, and sample selection CHAPTER 3 METHODOLOGY 3.1 Introduction This chapter provides an overview of the research method. It starts by explaining the appropriateness of the research method. Then discusses the research design which consists of seven steps: questionnaire development, literature review, proposal, data collection, data analysis, discussion and conclusion, and write-up. Next the data collection and sample selection is discussed with reasons for each of the decisions involved. The next section discusses the statistical methods. Lastly, a Gantt chart will be use to estimate the times use in each activity. 3.2 Sampling Technique A case study approach will be using in this paper. It tends to provide in depth information and intimate details about the particular case being studied. This approach was used to collect comprehensive and holistic data (Eisenhardt, 1989; Internationalization Strategies of Emerging Asian MNEs 491 Yin, 1994) about firms that have internationalized their operations over time. The focus here is on MNEs from Malaysia (a fast developing country). Case studies mean that the research investigates few objects in many respects (Wiedersheim-Paul, Eriksson, 1991). Case studies are most suitable if you like to get a detailed understanding about different kinds of process (Lekvall Wahlbin, 1987). The researches may, for instance, choose a line of business and an enterprise, and conduct an in depth investigation (Wiedersheim-Paul, Eriksson, 1991). Yin (1994) states, that when the form of the questions is why and how, the case study strategy is most likely to be appropriate. The research problem I have investigated was how the internationalisation process of a MNEs when entering to foreign market can be characterised , which was divided into four research questions. 3.3 Data Collection 3.3.1 Secondary data Eriksson Wiedersheim-Paul (1997) points out that secondary data is data, which already has been collected by someone else, for another purpose. Statistics, and reports issued by governments , trade associations, and so on, are some sources of secondary data (Chisnall, 1997). The annual report and the enterprises homepage, are another sources of secondary data (Wiedersheim-Paul, Eriksson, 1991). Secondary data research should always be carried out before doing any field survey (Chisnall, 1991). When I had defined the research area, I started to search for relevant literature. The databases that I have used to find relevant literature are EBSCOhost, Science Direct, Libris, ABI/INFORM, and Helecon. The keywords used when searching the databases were international business, Malaysian MNEs, internationalization, strategies, mode of entry. These words were combined in different ways, to maximise the number of hits. 3.3.2 Primary d Internationalization of Asian Multinational Enterprises Internationalization of Asian Multinational Enterprises INTRODUCTION Background Internationalization can be defined as the desire to be a member of the international society by satisfying a certain standard, or strengthening the influence of a nation on other nations. It becomes the process where multinational enterprise (MNE) engaging, it is very important for these companies to penetrate international market if they want to be accepted and remain successful. (Sreenivasan Jayashree and Sahal Ali Al-Marwai). The internationalization process helps MNEs in maturate their operation in foreign market and enhance their competitive position abroad. According to Hedman (1993), three main alternatives for distributing the enterprises product exist, that is, indirect export, direct export and alternatives to export. When distributing indirectly, the different distribution activities are assigned to one or several intermediaries in the home market. When distributing directly, the producer itself conducts the distribution activities, such as distribution to a foreign importer, which in his turn forward the products to another intermediary or the end customer. (Molnar, 1990) the third alternative, alternatives to export, can take place through, for instance, own production in the target country, or licensing (Hedman, 1993). The rapid changes in todays business world call for new models of internationalization (Fillis, 2001; Meyer and Gelbuda, 2006), especially to be able to capture the early phase of internationalization in a better manner than the traditional models (Johanson and Vahlne, 2003). In contemporary research, Coviello and McAuley (1999), in line with Leonidou and Katsikeas (1996), have pointed at three theory directions that are preferable for studying internationalization, namely Foreign Direct Investment (FDI)-theories (a.k.a., the theory of the Multinational Firm), Stage models and Network theory. Even though these are different theory directions, they are seen to be complementary views where a combination of views is preferred since it is difficult to capture the internationalization concept using only one theoretical framework (Bell et al., 2003; BjÃÆ' ¶rkman and Forsgren, 2000; Coviello and Munro, 1997; Meyer and Skak, 2002). Network theory is increasingly being combined with stage theory in order to understand and explain the rapid internationalization of the firm (in Bell et al., 2003; Johanson and Vahlne, 1990, 2003; Meyer and Skak, 2002). The process of internationalization has been the subject of widespread theoretical and empirical research (for example, Johanson and Wiedersheim-Paul 1975; Johanson and Vahlne 1977; Bilkey 1978; Cavusgil 1980; Turnbull 1987; Welch and Loustarinen 1988) and finds a general acceptance in the literature (Bradley 1991; Buckley and Ghauri 1993; Leonidou and Katsikeas 1996). The internationalization process is described as a gradual development taking place in distinct stages (Melin 1992). Internationalization processes in emerging markets, as in international markets in general, take place in a stepwise manner (Jansson, 2007). Companies commit themselves through a gradual learning process. Learning is incremental and takes place by doing. Firms learn about doing business abroad, for example, learning about the conditions in particular markets. Companies tend first to establish themselves in geographically and culturally proximate markets and increase their commitment, starting with agents, and passing through sales companies to manufacturing companies (Johanson and Vahlne, 1977; Johanson and Wiedersheim-Paul, 1975). Within the last decades, the business world has changed drastically through globalization and internationalization à ¢Ã¢â€š ¬Ã¢â‚¬Å"creating a new and fierce business environment for companies. We can now see a third wave of internationalization of firms in which companies domiciled in mature Western markets establish themselves on a large scale in emerging markets such as Central and Eastern Europe (CEE), Russia, China and India (Jansson, 2007). A recent phenomena of firm from Asian capital exporting countries were internationalizing and multinationalizing their business activities and have emerged or are emerging as Asian multinational enterprises (World Bank, 1993). They started the internationalizing activities and investing and setting up operation in other countries since mid-1980. Research interest which focus on these Asian enterprises and their direct investment activities arise in recent years (Ting, 1985; Ulagado et al., 1994; Yeung 1994, 1997). Foreign direct investment (FDI) started on the early 1980s. According to studies done by Lall, 1983;Well, 1983; Kumar and McLeod, 1981; Khan, 1986; Monkiewicz, 1986; Aggarwal and Agmon,1990; Tolentino, 1993, FDI of Third World multinational enterprises (TWMNEs), slightly different with the traditional MNEs from the western developed countries in term of their characteristic. The growth of East Asia (World Bank, 1993) in late 1980 and early 1990, has increased intra-regional direct investment. The directed investment process from Japan , followed by Korea, Taiwan, Hong Kong and Singapore and the activities transferring from one level of economies to another in Malaysia, Indonesia and Thailand has been depicted as wild flying geese pattern. (Toh and Low,1994; Guisinger, 1991). As a result, these Asian capital exporting countries firm internationalizing and multinationalizing their business activities and have emerged or are emerging as Asian multinational enterprises (World Bank, 1993). Problem Statement During these extremely competitive times, the international business environment is one that is normally full of immense uncertainty, volatility as well as a high rate of failure when it comes to international expansion The research on the nature, organization and operations of these emerging Asian international and multinational enterprises are limited. This is because research in international business and trade has been dependent largely upon economistic and western-centric theories developed predominantly in industrial and institutional economics (Buckley and Casson, 1985; Dunning, 1988, 1993). A study shown internationalization is the crucial factor for a firm to grow and develop economically and technologically (Syed Zamberi Ahmad and Fariza Hashim, 2007). Hence, it is very important for multinational companies to conduct a comprehensive examination of the various important factors that could influence the type of strategy that is to be selected for international market entry. 1.3 Objectives This research is dedicated to all local Malaysian companies who are looking at ways and means to internationalize their operations to a foreign market and would be of tremendous assistance to them in determining the correct strategic path and improve the understanding of the Asian MNEs characteristic. 1.4 Research Question According to the problem statement above, the author has formulated some question to meet the research objective. The questions are: What are the key characteristics and success of their foreign ventures? What are the motives for internationalization? What are the entry strategies? What are the strategic advantages and traits? Research Contribution Government: Through this study, government can carry out some government policy to lead more firm success in their international proses in expanding their business. Firms: This study provides information to provide better understand characteristic and strategy for the purpose of internationalization which can increase the net profit of the firm. Economic: This study enable economist to better understand how development of economic on a country can help MNEs in their internationalization process. 1.6 Summary This study proposal consists 3 chapters. Chapter 1 provides the overview of the recent phenomena of internationalization, the problem statement, objectives, and question. Chapter 2 displays literature review by past research, followed by concept and theories, and research framework. Chapter 3 describes the research methodology, sampling technique, data collection, data analysis and research planning that use to analysis the finding in Chapter 4. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction This chapter reviews the past studies about the concept and theory which included internationalization process, entry notes and process, eclectic explanation, foreign direct investment, regional and global internationalization processes, Uppsala model and Asian context. After that it follows by the research framework. 2.2 Concept and Theory 2.2.1 Internationalization processes Internationalization processes in emerging markets, as in international markets in general, take place in a stepwise manner (Jansson, 2007). Companies commit themselves through a gradual learning process. Learning is incremental and takes place by doing. Firms learn about doing business abroad, for example, learning about the conditions in particular markets. Companies tend first to establish themselves in geographically and culturally proximate markets and increase their commitment, starting with agents, and passing through sales companies to manufacturing companies (Johanson and Vahlne, 1977; Johanson and Wiedersheim-Paul, 1975). Research on the exports of mainly North American companies has reached similar results (Bilkey, 1978; Cavusgil, 1980; Czinkota, 1982; Reid, 1981). Such process theories are highly useful especially when studying international 66 H. Jansson, S. Sandberg / Journal of International Management 14 (2008) 65à ¢Ã¢â€š ¬Ã¢â‚¬Å"77 business in CEE. Learning processe s are essential since the company needs to adapt to an emerging and different business context, such as exists in the CEE (Meyer and Gelbuda, 2006). As noted by Sharma and Blomstermo (2003b) a basic assumption in internationalization process theory is that knowledge accumulation is continuous and dependent upon the duration of foreign operations. The longer firms have been involved in foreign operations, the more knowledge they accumulate about such operations. There is a relationship between knowledge accumulation and risk so that the more knowledge a firm has, the less uncertain they perceive the foreign market to be. Firms that lack knowledge about foreign markets even tend to overestimate risks. This corresponds to what Jansson (1989) found concerning establishment processes in a regional perspective, namely that the pace of investments in Southeast Asian countries accelerated, the more experienced the firms became in an area. Johanson and Vahlne (1990) stated that Uppsala model of internationalization indicated firms reveal an evolutionary process in internationalizing through a series of evolutionary stage. 2.2.2 Entry nodes and entry processes Firms entering emerging markets face several barriers according to Meyer (2001). These barriers include a lack of information, unclear regulations and corruption. According to traditional research on internationalization processes, market entries either take place through intermediaries such as agents or distributors or through a firms own representative in the exporting/importing country, mainly a subsidiary. In terms of research in this area, scholars have found that relationships are at the core of the internationalization process (Axelsson and Johanson, 1992; Ford, 2002; HÃÆ' ¥kansson, 1982; HÃÆ' ¥kansson and Snehota, 1995; Hammarkvist et al., 1982; Jansson, 1994, 2007; Johanson and Vahlne, 2003; MajkgÃÆ' ¥rd and Sharma, 1998). According to the network approach to internationalization, entries into local market networks take place through establishing relationships. The international marketing and purchasing of products and know-how through a direct exporter/importer network means that a vertical network in the exporting region (e.g. a suppliers supplier network) is indirectly connected to another vertical network in the importing region (e.g. a buyers buyer network). This large vertical network will, in turn, be embedded in other regional and national networks, such as a financial network (Jansson, 2006, 2007). From a network perspective, establishment points in foreign market networks are defined as entry nodes. There are various routes into these networks, or nodes by which a firm can enter a network. Entries through trade either take place H. Jansson, S. Sandberg / Journal of International Management 14 (2008) 65à ¢Ã¢â€š ¬Ã¢â‚¬Å"77 67 directly with customers or indirectly through intermediaries. Direct relationships, dyads, can be established between buyer and seller in the respective countries. Indirect relationships, triads, involve an outside party or other type of entry node, usually an intermediary such as an agent, dealer or distributor. Dyads can also be established through the entry mode FDI (a subsidiary in the importing country). Entry processes take place by building relationships to form networks in foreign markets. Irrespective of entry node, the development of international buyer/seller relationships tends to follow a five stage pattern (Ford, 1980, 2002; Ford et al., 1998). Each stage of the entry process can be described by a number of relationship factors, such as how the experience, commitment and adaptations of the parties increase across the stages and how the distance and uncertainty between them are reduced across the stages. The first stage includes the taking-up of marketing/purchasing activities before a formal relationship begins. The next three stages show how direct buyerà ¢Ã¢â€š ¬Ã¢â‚¬Å"seller relationships within networks are established: from their beginning and to their deepening. Experience indicates the amount of experience the respective parties have with each other. They will gauge their partners commitment to the relationship, e.g. by the willingness to make adaptations. Distance is multifaceted and it can be split into social, cultural, technological, time and geographic distance. Uncertainty deals with the fact that at the initial stages, it is difficult to assess the potential rewards and costs of the relationship. In the fifth and final stage, the relationship is extensively institutionalized and habitual, with commitment being taken for granted. Based on Terpstra and Sarathy, 1991; and Baek, 2003, joint ventures with host governments and local partners in the host country were among the preferred entry strategies for international operational operation. Petronas in South Africa entered into a commercial alliance with Engen in 1996 as a strategic partner. The acquisition was to enable both companies to implement a shared growth strategy in Africa and the Indian Ocean Rim, while allowing the development of potential operational synergies between the two business entities (Padayachee and Valodia, 2002). 2.2.3 Eclectic Explanation Eclectic Paradigm is a proverbial known explanation of international production. Dunnings (1977, 1988, 1993, 1995). Eclectic Paradigm stated that the extent and pattern of international production is determined by: 1) Ownership advantages (for example, proprietary technology, products, expertise and skill) 2) Internalization advantages (for example, transaction costs reduction, maximize economic return), and 3) Location advantages of host and home countries These OLI (Ownership Location Internalization) variables listed above explain the reason internationalization occurs but overlook the dynamic process of internationalization. The Eclectic paradigm is provided by the Investment Development Path (Dunning, 1981, 1986) with a dynamic dimension, and relates the net outward investment of a country to its stage of economic development. Five stages of IDP ( Investment Development Path) Stage 1: At low level of economic development, there is little inward or outward investments. Stage 2: Inward investment becomes attractive, especially in import substitution projects as the country develops. Some outward investment may take place in neighborly countries which at lower stages of development. Most developing countries with some outward investments are at this stage. Stage 3: With economic development move forward, net inward investment declines while outward investment increases (relative to inward investment). Increasing of outward investment may take place in countries at lower IDP stages in order to overcome cost disadvantages in labour intensive industries and also to seek markets or strategic assets. Singapore, Taiwan and South Korea are said to be at this stage. Stage 4: As production being multinationalized, net outward investment becomes positive. Most developed countries are at this stage. Stage 5: The shift from advantages based more on factor endownment to those based on internalizing international market convergent outward and inward investment flows. Empirical research on Third World (including Asian) multinationals has given general support to the IDP concept (Dunning, 1986; Tolentino, 1993; Dunning Narula, 1996; Lall, 1996). Dunning and Narula (1996) acknowledge that country factors may influence the IDP pattern of a country, such as resource endownment, home market size, industrialization strategy, government policy, and the organization of economic activities. TWMNEs were smaller than their counterparts from developed countries and have limited number of overseas operations. The competitive advantages of TWMNEs were based on cost advantages (particularly labour cost) and greater responsiveness to host country needs which is different from western MNEs. They served market niches which were not covered by the traditional MNEs and so were not in direct competition with them. The major motivation for these FDI was protecting export markets rather than exploiting rent from proprietary technological know-how (or other ownership spe cific advantages characteristic of western MNEs) explained in theories, such as the eclectic paradigm of Dunning (1977, 1995). TWMNEs possessed first or second generation labour-intensive technologies and produced standardized products mainly for the domestic host country market which at stage 4 of IDP. Wells (1983) presupposes a pecking order hypothesis to suggest that the TWMNEs technologies could fill the technological gap between the advanced technology of developed country MNEs and the rudimentary technology of less developed countries (LDCs) in a pecking down order. Lall (1983) emphasized the flexibility and adaptability of TWMNEs technologies to be more suitable or appropriate to LDC situations. 2.2.4 Foreign Direct Investment (FDI) It may seem surprising that there is significant number of foreign direct investments by some firms from developing countries because it is usually credited to more developed countries. A number of studies indicate that FDI flows not only from the industrialized or well-developed countries, as well as developing countries. Scholars such as Lecraw (1981, 1993), Wells (1977, 1981), Lall (1983a, and 1983b), Kumar and Lim (1984), Ulgado et. al., (1994) are only some of those who have carried out empirical studies and researched FDI flows from developing country firms in the 1970s and 1980s. Comparisons between the nature of international expansion of firms from developing countries and the nature of those corporations that originated from developed countries are made in most of these studies (Dunning, 1986; Vernon-Wortzel and Wortzel, 1988). In general, it has been depicted that the competitive advantages of MNCs from developed country are derived from advanced proprietary technology or other superior resources (Yeung, 1994). While ability to reduce costs of imported technology through de-scaled manufacturing or smaller scale of production is focus of the competitive advantage from developing country MNCs were derived from their This is a process whereby technologies from industrialised countries are adapted to suit smaller markets by reducing scale, replacing machinery with manual labour, and relying on local inputs (Ramamurti, 2004). Outward direct investment from developing countries started to grow rapidly to a sizeable magnitude during the mid-1980. This became the main tool of developing country multinationals in demanding that their constituent firms prepare for the drastically international competition that they were about to face(Kumar, 1996, 1997). The emergence of new technologies in the late 1980s somehow decreases the interest in outward direct investment from developing countries subsided (Kumar, 1996; Oh et. al., 1998; Pananond and Zeithaml, 1998; van Hoesel, 1999). Pananond and Zeithaml(1998) and van Hoesel(1999) recounted that aggregate analyses of developing country MNEs conducted at the industry level get attention from scholars and yielded interesting results by the early 1990s. They concluded that there were marked differences in characteristics between developing country MNEs in the 1980s and 1990s. Scholars posited that these two groups of MNEs belonged to two different waves of development i n term of their respective historical backgrounds, nature of businesses, extent of the role of government in operations and transactions, geographical direction, and mode of internationalisation activity. MNEs in the 1980s are more concerned with cost competitiveness with their competitors (van Hoesel, 1999). In contrast, developing country MNEs in the 1990s placed greater emphasis on the development and reset business strategies due to the dynamic changing patterns of world business structure brought about by trade liberalisation and economic globalisation (Dunning et al., 1997). Besides this, they put more effort on technological competence as the source of competitive advantage (Pananond and Zeithmal, 1998). They noted that notwithstanding these differences, there existed several significant interrelated points of convergence between the two groups (Dunning et al., 1997; van Hoesel, 1999). 2.1.5 Regional and global internationalization processes In analyzing the early internationalization steps of smaller and less experienced companies, the internationalization process model by Johanson and Vahlne (1977) is regarded as a highly useful tool. In internationalization research, few studies have been conducted on higher level internationalization where companies are established in several countries and have fully-owned businesses (Meyer and Gelbuda, 2006). The more countries in a region a firm exports to, the more extensive is the regional internationalization process. The more regions a firm exports to, the more global is the internationalization process. New stages of internationalization are established when a firm extends its business from one major type of market to another or from one type of foreign environment to another. The main factor behind these stages is experiential knowledge, meaning that firms gradually build a knowledge base through operating in foreign markets. They learn from past experience by transforming this experience to useful knowledge. There are three types of such knowledge (Eriksson et al., 1997). Internationalization knowledge about how to perform international operations is an expression of a firms current stock of knowledge in the form of its resources and capabilities. The more novel the foreign environment, the more difficult it is for the firm to apply its current stock of knowledge to that foreign market. This means that there is a gap between a firms present internationalization knowledge and the knowledge the company has about how to do business in the specific foreign market, i.e. concerning its network experiential knowledge and institutional knowledge (Blomstermo et al., 2004). Based on a firms experiential knowledge process, internationalization processes are often divided into different degrees of internationalization. Johanson and Mattsson (1991) discuss the internationalization process for firms with various degrees of internationalization and propose that the process is mainly valid during the early stages of a firms internationalization: inexperienced firms tend to follow a traditionally slow and gradual pattern, while the internationalization of a more experienced company is less slow and gradual. 2.2.6 Uppsala model The Uppsala model (Johanson Weidersheim-Paul, 1975; Johanson Vahlne, 1977) provides an explanation of the dynamic process of internationalization of individual firms. The Uppsala model emphasize on the importance of gaining knowledge and experience about the characteristics of foreign markets along the internationalisation path, and helps MNEs reduced risks and levels of uncertainty in unfamiliar foreign environments before investing (Wiedersheim-Paul et al., 1978). The successive steps of increasing highly commitment are based on knowledge acquisition. Foreign activities started with export to foreign country through independent representative or agent, after that establish sales subsidiary and finally start production in the host country. The internationalization of the firm across many foreign markets was particularly related to psychic distance which included differences in language, education, business practices, culture and industrial development. Firstly, enter foreign market which closer in term of psychic distance, followed by subsequent entries in markets with greater psychic distances. Same goes to entry mode of foreign market. The incremental expansion of market commitment meant that the initial entry was typically some form of low commitment mode and followed by progressively higher levels of commitment. Obviously, commitment of the level of ownership in different markets was correlated with their psychic distance. The Uppsala model had received general support in empirical research (Welch and Loustarinen, 1988; Davidson, 1980, 1983; Erramilli et al., 1999) and its largely intuitive nature and evolutionary learning perspective made it attractive as an explanatory model. A related view regards learning was that TWMNEs built up their advantages through the accumulation of technology and skills. Lall (1983) emphasized on the localization and adaptation of technology to suit local markets by TWMNEs. Tolentino (1993) focused in term of the accumulation of technological competence in the expansion of firms from developing countries which was consistent with the resource-based view of building competitive advantage in strategic management. The accumulation of knowledge and competence especially its knowledge of developing markets and not so much its technology by the CP Group in Thailand was the key to its internationalization. There are also differences between the CP Group and Western MNEs (Pananond and Zeithaml, 1998). Mathews (2002, 2006) postulated that emerging firms could foster internationalization via leverage of their contractual linkages with other foreign firms to acquire resources and learning new capabilities. He indicated that this explanati on complemented the OLI framework and could be used to explain the rise of such latecomer firms which he dubbed as Dragon multinationals. 2.2.7 Asian Context Yeung (1999); Zutshi Gibbons (1989) portrayed that western theories on internationalization have neglect the active role played by the state and overlooked the institutional or contextual perspective in the internationalization of Asian. Asians state always plays a direct and active role in the internationalization of its MNEs. For example, the Singapore government played a key and direct role in the promotion of outward FDI (e.g., growth triangles, industrial parks in foreign countries), particularly from the early 1990s in its regionalization programs (Pang, 1994; Tan, 1995; ESCAP/UNCTAD, 1997). Incentives and other programs for instance tax incentives, finance schemes, training also provided to foster the rapid development of local entrepreneurship in the regionalization efforts. In Malaysia, the government took a very active role in promoting the internationalization of Malaysian firms. Investment promotion missions abroad were organized and often lead by the Prime Minister. The government provided incentives including tax abatement in 1991 and subsequently full tax exemption in 1995 for income earned overseas and remitted back to Malaysia. An overseas investment guarantee program was instituted. Malaysian government instructed firms to defer non-essential overseas investment in order to reduce the impact of the effects of the 1997 Asian financial crisis. In the Asian context, the state has played a very active and direct role in promoting the internationalization of its national firms. This is much different with the western context, where the role of the state is benign and indirect. 2.3 Summary This chapter first discussed the internationalization process in terms of entry notes and process, eclectic explanation, foreign direct investment, regional and global internationalization processes, Uppsala model and Asian context. The following chapter discusses the research method, survey development, and sample selection CHAPTER 3 METHODOLOGY 3.1 Introduction This chapter provides an overview of the research method. It starts by explaining the appropriateness of the research method. Then discusses the research design which consists of seven steps: questionnaire development, literature review, proposal, data collection, data analysis, discussion and conclusion, and write-up. Next the data collection and sample selection is discussed with reasons for each of the decisions involved. The next section discusses the statistical methods. Lastly, a Gantt chart will be use to estimate the times use in each activity. 3.2 Sampling Technique A case study approach will be using in this paper. It tends to provide in depth information and intimate details about the particular case being studied. This approach was used to collect comprehensive and holistic data (Eisenhardt, 1989; Internationalization Strategies of Emerging Asian MNEs 491 Yin, 1994) about firms that have internationalized their operations over time. The focus here is on MNEs from Malaysia (a fast developing country). Case studies mean that the research investigates few objects in many respects (Wiedersheim-Paul, Eriksson, 1991). Case studies are most suitable if you like to get a detailed understanding about different kinds of process (Lekvall Wahlbin, 1987). The researches may, for instance, choose a line of business and an enterprise, and conduct an in depth investigation (Wiedersheim-Paul, Eriksson, 1991). Yin (1994) states, that when the form of the questions is why and how, the case study strategy is most likely to be appropriate. The research problem I have investigated was how the internationalisation process of a MNEs when entering to foreign market can be characterised , which was divided into four research questions. 3.3 Data Collection 3.3.1 Secondary data Eriksson Wiedersheim-Paul (1997) points out that secondary data is data, which already has been collected by someone else, for another purpose. Statistics, and reports issued by governments , trade associations, and so on, are some sources of secondary data (Chisnall, 1997). The annual report and the enterprises homepage, are another sources of secondary data (Wiedersheim-Paul, Eriksson, 1991). Secondary data research should always be carried out before doing any field survey (Chisnall, 1991). When I had defined the research area, I started to search for relevant literature. The databases that I have used to find relevant literature are EBSCOhost, Science Direct, Libris, ABI/INFORM, and Helecon. The keywords used when searching the databases were international business, Malaysian MNEs, internationalization, strategies, mode of entry. These words were combined in different ways, to maximise the number of hits. 3.3.2 Primary d

Global Warming and Greenhouse Gases Essay -- Climate Change, Greenhous

Global Warming and Greenhouse Gases The earth’s climate is predicted to change because human activities are altering the chemical composition of the atmosphere through the buildup of greenhouse gases –– primarily carbon dioxide, methane, and nitrous oxide. The heat-trapping property of these gases is undisputed. Although uncertainty exists about exactly how earth’’s climate responds to these gases, global temperatures are rising. Go to the Emissions section for much more on greenhouse gases. Energy from the sun drives the earth’’s weather and climate, and heats the earth’’s surface; in turn, the earth radiates energy back into space. Atmospheric greenhouse gases (water vapor, carbon dioxide, and other gases) trap some of the outgoing energy, retaining heat somewhat like the glass panels of a greenhouse. Without this natural â€Å"â€Å"greenhouse effect,†Ã¢â‚¬  temperatures would be much lower than they are now, and life as known today would not be possible. Instead, thanks to greenhouse gases, the earth’’s average temperature is a more hospitable 60 °ÃŒÅ F. However, problems may arise when the atmospheric concentration of greenhouse gases increases. Since the beginning of the industrial revolution, atmospheric concentrations of carbon dioxide have increased nearly 30%, methane concentrations have more than doubled, and nitrous oxide concentrations have risen by about 15%. These increases have enhanced the heat-trapping capability of the earth’’s atmosphere. Sulfate aerosols, a...

Frankenstein: Social Construct Essay

Although written in the 19th century, Mary Shelley’s Frankenstein has many themes that are still relevant today. Frankenstein, though it was sparked as a simple nightmare, is depicted as a social commentary. The rules of society remain the same, despite the two hundred year difference in time. The norms were being changed over time, yet they remained to those who decided to reject the social changes. Those people are rejected from society, and hold immense hatred because of the said rejection, and that hatred morphs their person. As this happens in the novel, Frankenstein turns into the monster everyone claimed him to be. With rejection, bitterness is sure to ensue, especially as human nature makes humans very sociable creatures. Shelley makes other social remarks concerning human nature, religion vs. science, and creation that are still holding strong through the years and remain true today. As previously mentioned, the townspeople treated Adam (the name the Frankenstein monster gave himself) in such a way because he had resembled a nightmare-riddled monster, and thought they could treat him as such because his looks justified it. He looked like a monster, therefore he did not have a soul. It is something classified as dogma or a social belief: people will accept as such without a second thought. As this is human nature, one will only act a certain way towards another from their personal appearance, in example: If the person looks weak, they will be treated as such. In another example, if a young man comes across feminine in the very least way, he is branded as a homosexual and is treated as such. People do not try to expand their minds and accept others, this being one of the major distinguishing and disgusting part of. With a society that has a mixture of everything and anything, saying that something is not exactly â€Å"normal† is just a distortion, as not one person could truly know what â€Å"normal† would be like in a society. But not only is the monster in Frankenstein judged for his looks, he is also judged for coarse manner of speech and his generally unrefined character. He manages to dwell in extreme natural temperatures, and exists on a different diet. Being superior to the average human in every way except appearance, Adam is a super human. On human standards, the Adam is not attractive or even acceptable, he is considered to be deformed and is outcasted. As is correct in the given time period, the monster is persecuted on how he looks and is constantly hunted down or harassed. Appearance is one of the fastest ways to see a societal difference, be it skin colour or hair colour. Social exclusions do not just limit themselves to being based on appearance only, though. Not only was human nature depicted in Frankenstein, but creation was as well. Victor is depicted as a god-like figure to Frankenstein, as the man is his creator and appreciates him as such. Also, Frankenstein feels that he has been abandoned and turns resentful and ruthless. Victor, being his creator/parental figure and rejected him so readily, gave Adam the motives, the want to cause pain to people because he could. This is a comment on how some feel abandoned by their godlike figures or parents in one way or another. By being surrounded by a strong disapproving society, who believes that whatever God created should be marveled at in wonder and not poked, prodded, or measured in any way, It is believed that everything their God created is perfect in every way, regardless of mishap or disfiguration. Judging by the definition of creation, and the fact that Frankenstein did not have the same creator as normal society, Frankenstein is different, and obviously then ostracised. But creation is not just limited to bringing a new life into the world, but something composers, artists and writers do as well. Creation is truly a burden to carry, or can be the thought that inspires one to pursue creation. It is almost like an illness that cannot be corrected or cured. Creation is a beautiful sickness, and yet a destructive one at the same time. This sickness is the same sickness that had created breathtaking symphonies by Bach and Beethoven, and also was the same sickness that lead Anne Sexton and Kurt Cobain to their early deaths. This sickness is born again as the monster; he is also infected by it. Victor worked madly to complete his creation, the monster, only to realize what he wanted did not turn out as he planned it. He tortured the monster and the monster fled, where the monster could do the same to others as his creator did to him. It is the same concept of a parent teaching their offspring, or of a God passing down beliefs to his followers. In Frankenstein, Victor had lost his faith. With that loss of faith in religion, he pursued the science aspect, and was then despised and then rejected for it. With the large variety religion has, Victor chose to abandon them all and push for the more probable aspect of things. He pursued to push nature to its limit in a way that is frowned upon by most religious followers, although science deems that to be okay. Religion and science have always been up against one another, both sides determined to prove that they are correct. Religion has many branches, with Christianity being one very significant aspect. Christians tell the world that God is the one who had created the earth and everything that lives there, although Science tells us that it was the Big Bang which created the earth. This is a huge battle between science and religion. Christians also say that God created man and from that the population today was created. However, science will argue that it is evolution that sparked the creation of man, and that everything was once something simpler before, and it grew smarter and stronger and became what it is today. Both religion and science disagree with one another. While religion is based on of faith and has no proof aside of text and interpretation, science is based on proof of theories solely. Although the two have differences that are never going to be resolved within the next century, they can manage to cooperate with each others’ difficulties. But there are also major instances where a resolution would not be exactly what is needed. Science has proven that there is, in fact, a gene that homosexuals have that make them homosexual, and are indeed born with it. Religion, Christianity in particular, believe that it is a disease and can simply be forgiven once the said â€Å"victim† has pleaded for forgiveness and can be â€Å"cured†. Religion seeks justification and science seeks answers. With religion’s ideology and need for uniform social understanding, people will blindly act without seeking to understand the whole situation. With pure â€Å"seeking of truth† people will not stop to wonder if it is a good or bad situation, and if it is something that needs to be sought out. People who are purely scientific will ignore what is not present in the evidence, no matter how obvious it may appear. They will ignore things that they cannot observe to be â€Å"true†. People who base their lives on what they â€Å"know† or have been told do not seek to understand precisely why is it how it is, and potentially stray from their path of righteousness, despite being faced with evidence that discredits their belief. The perfect compromise between the two based on the evidence is that one must both follow their own heart, their own intuition and what one has been taught, yet one also must seek new truths and be willing to adapt. Frankenstein is a novel holds a plethora of themes of human nature; the moral and immoral, creation, and religion versus science. These three major themes then are still major to today, and are constantly being used as examples in modern society and psychological affairs. This is why Frankenstein is such a timeless piece and can always relate to the current times. As a classic, is distinguishes a certain period in time where these things were relevant, and sent a shock throughout society, something that we now appreciate and use when teaching. Creation is a valued as a sickness that plagues a man’s mind with either beauty or destruction, the same sickness that had plagued Victor’s mind while creating Adam. Human nature pushed Adam to harm others and fear for his own life countless times. Religion versus science is a never ending battle between the two, even to this day. The classic novel, Frankenstein, has many themes that are absolutely timeless and still relevant today, which is what makes it so valuable, and allows others to learn from it and understand the social psychology behind the story and how it still applies to the times now.