Londons urban transport from the Victorian era

Londons urban transport from the Victorian era Over the past 200 years the geography of London has changed dramatically. No better has this change been reflected than in Londons urban transport systems. The Victorian era saw mass migration to the capital as industrial progress both at home and abroad, and by 1800 London was the grandest city in the West and probably the world, with almost a million inhabitants. By 1881 the population has soared to 4.5 million and by 1911 to over 7 million [Porter 1994, pp 220]. To deal with these patterns of population growth London has seen large changes within its urban transport systems, on both land and water, and some have even attributed the growth of London itself to increased migration promoted by changes to public transport [Roberts, 1996 pp 322]. London is a scattered city, its past not attributed to coherent Government led development (as with other global cities such as New York or Paris). Instead, the most significant technical development which affected the size and functioning of London was the development of mass public transport, which was dictated not only by technological advances, but also the ways in which firms invested in the new forms of conveyance and competed with each other and alternative forms of travel [Ball and Sunderland 2001, pp 227]. When looking at urban transport, it is important to consider that, during the 19th Century the most common form of travel remained on foot. A traffic survey of the city in 1854 showed that almost 70 per cent of people travelling in and out of the City daily were doing so on foot. Even as late as 1897, when extensive public transport systems had been developed, less than a quarter of South London trade unionists were regular users of these systems as prices remained fairly high for other forms of commuter transport [Ball and Sunderland, 2001, pp 228]. In a scattered and geographically condensed city (in 1825 the built up area of London still only stretched for four miles north to south and six miles east to west) it remained the best way to get quickly and efficiently from a to b. As today, traffic congestion was a problem for London during the Victorian era, and walking was often the most rapid form of travel. Pedestrian travel was also aided by new technologies that improved road safety for those travelling on foot. Road conditions began to show improvements (with drainage improved), street lighting was introduced through the 1830s, and the extension of the police force made travelling alone safer. The development of Londons road systems throughout the century also reduced journey times [Ball and Sunderland, 2001, pp 229]. Changes in Water Transport: At the start of the Victorian era, the River Thames provided a faster and often more desirable way to travel across the city with Watermen offering to taxi people in small rowing boats known as wherries. The development of paddle steamers would displace these wherries, and by 1850 they were carrying several million passengers a year. These steamboats began offering services down the River Thames in 1815, unburdened by mileage duty and able to carry hundreds of passengers at a time in 1830 a regular service operated between London and Gravesend, Woolwich and Richmond [Ball and Sunderland 2001, pp 234]. Despite this, they remained unable to operate in bad light or weather, difficult and dangerous to board and leave and were involved in regular collisions. Water transport thrived during this time, dependent on the influence of the powerful river-using industries, which had restricted river bridges. During the early part of the 19th Century, however, their influence began to decrease, and new bridge crossings were. Vauxhall (1816), Waterloo (1817), Southwark (1819) and London (1824-31) all reduced the need for river transport on a commuter level, and also stimulated further road constru ctions south of the river through the latter half of the century [Ball and Sunderland, 2001, pp 229]. By 1890, the development of the road and railway networks had all but decimated the steamboat trade. The Horse and Carriage The Horse and Carriage as a means of transport was indelible throughout the Victorian era, and despite growing congestion throughout the 19th Century (along with the escalating costs of keeping and feeding horses in London) there were still 23,000 private carriages travelling through the city in 1891 [Ball and Sunderland, 2001, pp 229]. Road network developments and improvements were implemented throughout the Victorian era, all of which had to take into account the very particular needs of horse and carriage transport. The avoidance of steep gradients and limitations in the manoeuvrability of the carriages may have contributed to the levels of congestion seen throughout London throughout the Victorian era, and perhaps even up to today (with the maintenance of many of the road networks from the past century). This reliance on forms of horse drawn transport, not only encouraged walking in the lower classes (who couldnt afford the maintenance of a horse and carriage), but was also perhaps responsible for maintaining the compactness of London and restraining the outward movement of industry. Though gradually replaced by other means of public transport up to the First World War, the horse and carriage has remained the dominant means of road transport for a very long time. The upper classes had their own carriages, hackney carriages The rich had their own carriages, hackneys were available, and hansom cabs were introduced in 1834. Some got to work by short-stage coaches (four or six passengers inside and a handful outside). Horse and Carriage also remained the main form of transport in the movement of good around London (on the eve of the First World War most of Londons good vechicles were still horse drawn) [Ball and Sunderland, 2001, pp 229]. The Omnibus and Commuter Transport One thing that has defined patterns of social change within a transport context in London over the past two centuries has been the establishment and growth of the commuter and associated public transport. The very term commuter came into being during the 1850s as more and more people were able to travel to work from greater distances, and the average Londoners journeys on public transport increased from 20 in the late 1860s to almost 140 in 1902 [Ball and Sunderland 2001, pp 230]. In the early 18th Century, short-distance stagecoaches, known as short-stagers appeared throughout Londons streets. These coaches carried four to six passengers inside and up to seven outside on the roof, and were used to provide regular services from the centre of London to the outskirts. This means of transport was introduced to serve the better-off when they moved out to the then desirable suburbs. By 1825, stagers had become commonplace, with probably around 600 such vehicles making around 1,800 journey s a day [Ball and Sunderland 2001, pp 233]. These most popular of these coaches was the Hackney Carriage, which had a monopoly on the central areas of London up to 1832. Another idea developing at the time was the idea of the omnibus, which many believe single handed began the commuter revolution. The service was first established in July 1829 by George Shillibeer, running from the Stingo public house, Paddington, to the Bank, along to the New Road. Shillibeers omnibuses were long three-horse vehicles with benches for twenty passengers [Porter 1994, pp 237]. The idea was to increase the numbers of passengers that were able to travel by stage-coach, thus lowering the fares for the daily commuter. Because of the Hackney carriage monopoly of the central areas of London, however, the venture failed by 1831. This stimulated the Stage Carriages Act of 1832 which allowed the omnibuses and all other types of vehicle into the central areas, freely plying the streets for trade. The Stage Carriages Act also stimulated the advent of the omnibus back into the world of commuter travel as they could now access the central areas. The cheaper fares (they were nearly half the price of the Hackney Carriages) and their increased speed made them more convenient for the middle class commuter. There were also considerable negative impacts associated with the development of Londons public transport during this period. A paradox quickly arose as thousands of extra vehicles took to the streets improving public transport, whilst simultaneously exacerbating congestion issues in the city. It should also be noted that despite this rise in use of these services, the fares of public transport remained fairly high and prohibitive for most working-class people until the introduction of subsidised services towards the end of the century [Ball and Sunderland, 2001, pp 228]. As a result of this, combined with the service hours (they generally ran from eight in the morning when the majority of the working class workers were in work), the service remained, like the stagers before them, a largely middle class service. They proved effective, however, in permitting suburban living among tradesmen and clerks, and gave the inner suburbs a crucial boost during the 1830s and 1840s [Porter 1994, pp 240]. The success of the omnibus continued and was encouraged by low taxation (taxes on public transport were cut by up to a half in 1839) and competition and 1851, the year of the great exhibition, omnibuses carried around 20,000 passengers daily [Ball and Sunderland 2001, pp 236]. The closure of this however brought rapid growth to an end and fares plummeted as many firms went bankrupt. One success story however was the London General Omnibus Company, which, by 1900 owned nearly half of the 3,000 horse-drawn buses and trams, carrying some 500 million passengers a year [Porter 1994, pp 240] stimulated by rising incomes and a suburban migration during the late 1800s. The loss of monopoly during the 1832 Act had also led to a doubling of the number of hackneys and investment in new equipment and innovations, with the hansom cab eventually becoming the norm [Ball and Sunderland 2001, pp 234]. Eventually competition from other means of transport put an end to the days of horse drawn public tr ansport with the last known service in 1914. Railways The great material transformations of the 1800s, combined with the physical and social geographies of the city led to a major transformation in the railways of London. From the 1830s the cuttings ploughed into the northern suburban areas on their routes into Euston, then Kings Cross and St Pancreas [Porter 1994, pp 230]. These developments reinforced east/west social divides, devastating some areas while bettering others, however Londons traffic problems were becoming ominous, as a result of the vast increase of traffic and the absence of any policy. For these reasons, the coming of rail transport, overground and underground was critical in keeping the metropolis moving and in permitting the city to expand. But if the railways brought benefits these were purchased at a high cost. The downwards shift of some of these neighbourhoods is mainly attributable to later railway building that destroyed many inner-urban neighbourhood environments and made it possible for their more prosperous residents to move further out [Ball and Sunderland 2001, pp 233]. Underground Road Improvements In 1800 Londons road infrastructure was generally main thoroughfares running from east to west above the River Thames. These were often narrow, poorly maintained and blocked by street markets and other local activity, and little inner city road improvement was undertaken before the Commercial Road development in 1810 which sped transport to the dockland areas [Porter, 1994, pp 235], which seemed to stimulate a spurt of road networks. Major developments in the central area included Regent Street (1817-23) and Moorgate, cutting north-south thoroughfares through the traditional east- west pattern, and the major trunk routes constructed to the north of the built-up area including New North Road (1812), Archway Road (1813), Caledonian Road (1826) and Finchley Road (1826-35) [Ball and Sunderland, 2001, pp 231]. There were also a number of new river crossings introduced during this period including Vauxhall (1816), Waterloo (1817), Southwark (1819) and London (1824-31). This period also saw road conditions beginning to be improved via increased expenditure on widening, paving and drainage, and on new routes [Ball and Sunderland, 2001, pp 240]. Cycling Cars and Buses As previously discussed, the horse and carriage remained the dominant form of road transport throughout the Victorian era. Despite the many drawbacks of motorised transport, it has been rightly quipped that the invention of the motor car saved large cities in the nick of time from being engulfed in mountains of horse dung [Ball and Sunderland, 2001 pp 229]. Hackney motor cabs were first introduced in 1903 and proved immensely popular, particularly after the 1907 introduction of the taximeter. Ball pp 233. The growth of the bus use amongst the middle classes preceded the major change in motive power, from the horse to the petrol engine and the emergence of underground and electrified tram services and it was the petrol-driven motor buses that were to revolutionise public transport from their first introduction in 1899. The first bus service was operated by Motor Traction Co, who, for a short while ran two double-deckers between Kensington and Victoria. Cumberson, uncomfortable and generally unreliable they were initially unsuccessful. However, their advantages quickly became apparent they had greater carrying capacity than their horse-driven counterparts and travelled at somewhat higher speeds (though these were restricted by legislation), enabling routes to be longer. Running costs were lower and less variable and their success encouraged further investment in 1905 with the establishment of the London Motor Omnibus Company and Vanguard [Ball and Sunderland 2001, pp 239]. In the 1900s competition grew (from 1906 to 1907 the number of buses nearly quadrupled from 242 to 808) and many services saw a period of consolidation as congestion grew. New regulations lead to the development of the B-type bus in 1910 and by 1914 the public had taken the new motorised bus to heart with 757 million passengers. Today cities are designed on the premise of the car, on an autologic which underlines policy and planning in large parts of the world [Brudett, 2008]. Overview of Victorian Era: After centuries that had brought little alteration in ways of getting about, the Victorians created a transport revolution that changed not just the face of the town but the status map of the metropolis [Porter 1994, pp 235].

The Unabomber: Is He Serious? Essay -- essays research papers

The Unabomber: Is He Serious?   Ã‚  Ã‚  Ã‚  Ã‚  There comes a time when everyone has something to say. The next step would be to find someone to listen. If that doesn't work, I suppose you just have to make them listen.   Ã‚  Ã‚  Ã‚  Ã‚  The Unabomber's Manifesto was probably one of the most interesting and thought provoking points of view that I have read in a while. It's just too bad that every time he made a point that I could relate with, he would contradict himself before I was finished with the paragraph. In my opinion, the entire manifesto and every viewpoint expressed therein, was a strange mix of confusion, fact and storytelling. Although written with an abundance of detail and many strong convictions, I finished reading the selection without being able to see the purpose behind it all and what he stood to gain. I'm sure that wasn't exactly his intentions when he wrote it.   Ã‚  Ã‚  Ã‚  Ã‚  I feel there is one thing the author deserves credit for right from the start; his uncanny ability to set a pessimistic mood. From the minute you glance at the introduction, he, assuming the author is male, begins to paint a picture of destruction and demise of the world in which we live. What could cause such a catastrophe? According to the author, it would have to be industry and technology of all things. He was convinced that due to the industrial- technological system in which we live, ultimately humans are going to be subjected to world wide suffering and inevitably a total shut down of humanity. Now at this moment I felt a little disbelief. I had heard he was actually an intelligent person, but I was starting to wonder.   Ã‚  Ã‚  Ã‚  Ã‚   His whole theory was based on the fact, that at one point or another, the human race will be taken to the point of complete break down. He feels that if it's bound to happen, we should make it happen now. The longer we wait, the more people will suffer. Now, I know our sun will eventually burn out, so does that mean that it should be the concern of everyone on the planet to devise a method to destroy it immediately and save us the trouble of having to do it later? I guess I wasn't too surprised when I read how he intended to induce an early break down with a revolution, but the next thing I read left me a little confused. I was interested in how and when he planned to d... ...here who actually make a difference.   Ã‚  Ã‚  Ã‚  Ã‚   Technology was a turning point in man's struggle in life. When we were first learning to use it, we used it for the wrong reasons. I believe we're moving past that now. We don't fear technology like he does any more. More and more people, including older generations are learning to use it. Not because they have to, but it's only natural for the majority of us to try something new. When everyone begins to use it, working together, that's what advances us into tomorrow. If everyone was as pessimistic as he, where would we be? Sometimes it takes someone like him to remind us what we used to be and how we used to think. It helps us all stay on track. In the long run, he just becomes someone who wouldn't change and society will forget him. It's ironic to think that we already have. People don't want war, revolution, or violence. We don't need to be the aggressor and more. Our survival isn't assured, but at least we have the means to provide it, to really harvest it when that need arises. People like the Unibomber only give us the motivation to keep on going. And what do we have to thank for our advancement? Technology.

Developing yourself as an effective Human Resources practitioner Essay

Briefly summarise the HRPM and comment on the activities and knowledge specified within any one professional area, at band two, identifying those you consider most essential to your own HR role The HRPM is a working tool that underlines behaviours, knowledge and skills that the CIPD understand are needed for the personal and workplace development on all levels of the HR profession, and how it will add value to yourself and your organisation. It looks at improving things not just at the present time but looks forward at how improvements can be made in the future. It has been created to be of use to all levels of professionals in all sectors in any part of the world. The HRPM is set out over ten professional areas; there are 8 specialist Professional areas that specify the activities and knowledge that are needed to provide HR support to your organisation. They are Service delivery and HR, employee relations, performance and reward, employee engagement, learning and development, resourcing and talent planning, organisation development and organisation design. There are also two core professional areas, ‘insights, strategy and Solution’ and ‘Leading HR’, they are at the centre of the map and are professional areas that are considered relevant to all HR Professionals at any stage in their career. The ten professional areas cover what you need to do and what you need to know at all four bands and the behaviours you will need to carry out your activities. The eight behaviours identify how professionals should be carrying out their daily work activities to ensure that they achieve success for themselves and their organisation . The eight behaviours are Role model, Curious, Decisive thinker, skilled influencer, courage to challenge, driven to deliver, collaborative and personally credible. The behaviours are all about helping you to identify how to carry out your professional activities in order to benefit your organisation; each behaviour comes with a contra behaviour which outlines the negative impact. The behaviours are then split out into four bands, (The relationship between professional and customer, where they spend their time, the focus of the activity what services are provided, how  their contribution and how their success is measured) they set out the competencies you need at each level of the HR career, and it also has guidelines to help move from one level to the next. I have chosen the professional area of resourcing and talent planning at band two. I believe that the most essential activities and knowledge of my role within band two is advising and managing individuals or teams based on HR issues and problems. I help managers to identify the skills and capabilities they need to deliver current and future work and support them in making the right choices to fill the need. I manage and resource talent, ensuring they are fit for purpose and can deliver required out comes. I have the knowledge on how to execute a recruitment plan to agreed standards and deadlines and I know how to deliver effective talent and succession solutions whilst working with managers needs. I can also use a variety of induction and transitional tools as an outlined below. I have just finished a module on Resourcing talent in my CIPD level three; I have used the knowledge gained to improve the recruitment and talent management process in my organisation. I arranged meetings with directors and managers to discuss a more effective way of recruiting, and suggested ways to train and develop the staff that we already have. I also created more effective exit interview and appraisal forms, improved the induction process and brought in sifting tools and interview documents. Outline how an HR practitioner should ensure the services they provide are timely and effective As the sole HR practitioner in my company, I deal with many varied customers. I need to ensure that I deal with them in a fair, timely and efficient manner at all times. I have given three examples of customers as per below; Payroll/finance I assist the Payroll/finance department in many ways but mainly I provide them with reports on sickness and absences or changes to pay/salary due to overtime, pay rise or a promotion as an when required. Managers/Line managers I assist Mangers and Line mangers to support their staff and help keep them informed of any changes to policies and procedures. They also require my assistance when the need arises to take on new staff. Recruitment Agencies I assist recruitment agencies when managers/line managers inform me that they are looking for new staff. I will prove the agencies with a good brief of the job and all necessary information they will need. Then keep an open communication with them regarding interviewees. Prioritising conflicting needs Often customers will need help information or reports from me at the same time. As I am the sole HR practitioner in my work place it is important for me manage my time effectively. I will make a list of the jobs I need to get done and then check the deadline for each and prioritise in order, often there are conflicting needs, when this happens I contact the customers involved and let them know that I have other jobs that need doing with equal importance often talking this over resolves the problem and deadlines are moved or I am able to send parts of reports over and send the rest at a later date. Effective communication in my workplace In my organisation I tend to use the following methods of communication; I have given examples below:- Verbal – Telephone or face to face This method of communication works well for me when I need to inform a manager if I am unable to meet a deadline or if there is a delay with  sending a report, speaking to them face to face or over the phone I will be able to get much better feedback with regards to rescheduling the deadlines and what they require of me. The disadvantage of this is that I would have no record of the conversation and details can be forgotten, with this in mind I always follow up any conversation with an email to reiterate. Written- Email I find that in my organisation an email is best for communication when you need to give managers or staff information or reports as you can ensure that all the information is passed across and none is missed as could be the case if you were to tell them face to face. The disadvantage of this method is that sometimes emails go missing, so I will always call and check the managers have received the email and also use a read receipt on the email. I would also use email to invite attendees to interview; I will be able to send them a list of documents required and information of the date and time. I would also call and speak to them to get confirmation of attendance in case they do not check their emails regular or do not have a lot of access to a computer. The company intranet The company intranet is great for letting staff know about up and coming changes in the work place or staff social functions as it is open to view but all members of staff. The disadvantage of using the intranet is that not everybody may use it, or check it regularly. I would always send a backup email with updates via email or make sure that it is communicated to staff through their line managers. Effective Service delivery Delivering services on time It is important in my job that I respond to all requests from customers in a timely and efficient manner, I am the sole HR Practitioner in our  organisation and I cannot delicate or ask advice. With this in mind I need to spot problems early, isolate and solve before it becomes an issue. I also need to prioritise my work load and deal with each job as efficiently as possible, it is important for me to communicate clearly with each person requesting work from me regarding the urgency of the job, sometimes line managers will issue a job as a priority when in actual fact they do not need the requested report until next week. Delivering services on budget I am not asked to comply to a budget, but I am always aware of funds and I make a conscious effort to keep costs low where possible. Dealing with difficult customers I have to deal with negative employees in my organisation; I deal with this by listening to the employees’ complaint. Sometimes that is all it takes to resolve the issue, as they feel that their grievance is being listened to. I always make sure to ask relevant questions, this lets them know that I am listening and helps me to decide if they have a valid complaint, or if they are just sounding off. I will always follow this on by asking if they would like my help or support in the matter. Most of the time they just wanted somebody to listens to them. Handling and resolving complaints I don’t see complaints as a bad thing in my organisation; I think that I can learn from them so that things can be done better or I can put in place things that are missing. Feedback is a good thing regardless of whether it is positive or negative. I have set up a suggestion box in the kitchen so that employees can give feedback or complain anonymous. If an employee makes a serious complaint I will always defer to the directors and line managers.

Foreign Exchange Financial

Sample details Pages: 16 Words: 4863 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Chapter 1 Introduction This chapter will introduce the reader to the subject at hand and why the chosen research area is of interest and relevance for further development. Finally, the chapter includes a problem discussion, which in turn ends up in the research purpose of the thesis. 1.1 Background of the Study The deepening of globalization process has led to an increase in foreign exchange transactions in international financial markets. This has determined a higher volatility of exchange rates, and, implicitly, an increased foreign exchange risk. There are many types of risks, but only few of them can bring losses as large as foreign exchange risk. In these conditions, the development of new modern and effective methods for managing foreign exchange risk becomes a great necessity for the players in international financial activity. Foreign exchange risk management is crucial for companies frequently trading in the international market. Empirical research shows that profits of multinational companies are affected by volatile floating foreign exchange rates. Nevertheless, small firms trading exclusively on their domestic markets also become increasingly exposed to foreign currency fluctuations. Actually, small firms depend on the volatility of the main currencies because many of th em out-source their production to foreign countries. This means that they incur costs in a foreign currency (wages, taxes, material, etc.) and they also need to manage this exposure. Other small firms are exposed indirectly given that their strategic position can be affected by volatile FX rates. By definition, all entrepreneurial activities incur risks, and coping with risk has therefore always been an important managerial function. In recent years, however, risk management has received increasing attention in both corporate practice and the literature. This is particularly true for the management of financial risks, i.e. the management of foreign exchange risk, interest rate risk and other financial market risks. A major reason for this is the development of markets for derivative financial instruments. Forward contracts, futures, options, swaps and other, more complex financial instruments today allow firms to transfer risks to other economic agents who are better able, or mor e willing, to bear them. In 1971, the Bretton Woods system of administering fixed foreign exchange rates was abolished in favour of market-determination of foreign exchange rates; a regime of fluctuating exchange rates was introduced. Besides market-determined fluctuations, there was a lot of volatility in other markets around the world owing to increased inflation and the oil shock. Corporates struggled to cope with the uncertainty in profits, cash flows and future costs. It was then that financial derivatives foreign currency, interest rate, and commodity derivatives emerged as means of managing risks facing corporations. The interest in the potential vulnerability of multinational firms to foreign exchange rate risk is heightened by the wide currency fluctuations experienced during the last few decades and this issue has engendered a considerable amount of research (Muller, A., Verschoor, W.F.C. 2006). In India, exchange rates were deregulated and were allowed to be determ ined by markets in 1993. The economic liberalization of the early nineties facilitated the introduction of derivatives based on interest rates and foreign exchange. However derivative use is still a highly regulated area due to the partial convertibility of the rupee. Currently forwards, swaps and options are available in India and the use of foreign currency derivatives is permitted for hedging purposes only (Giddy et.al. 1992). Don’t waste time! Our writers will create an original "Foreign Exchange Financial | Finance Dissertations" essay for you Create order 1.2 Problem Statement Transaction exposure to foreign exchange risk results from the effect of (unanticipated) changes in the spot exchange rate on the base currency value of foreign currency cash flows (contractual payables and receivables). Financial hedging of transaction exposure is implemented by taking an opposite position (to the spot position) on a currency derivate (such as forwards, futures and options) or by using money market hedging. In some cases, however, financial hedging may not be possible or it may be too expensive. For example, forwards, futures, and options may not be available for some currencies or for long maturities, and it may not be possible to obtain credit lines in certain currencies (which precludes money market hedging). This observation is particularly valid for countries where financial markets are rudimentary. If a firm facing (transaction) exposure to foreign exchange risk cannot indulge in financial hedging, it may resort to the operational hedging techniques of risk sharing and currency collars, which can be implemented by using customised hedge contracts embedded in the underlying trade contracts. Under a risk sharing arrangement, the benefits accruing to one party of a transaction as a result of a favourable change in the exchange rate (which is necessarily an unfavourable change for the other party) are shared by the two parties. A currency collar, on the other hand, is used to set a minimum value for the base currency value of cash flows at the expense of setting a maximum value. Thus, it involves a trade-off between potential loss and potential gain. The unpredictability of forex market may erode or even eliminate the profit margin built into an international sale at the time the sale was carried out, when selling on terms of weeks and even months. Foreign exchange rate keeps on fluctuating and they depend upon the market forces of demand and supply (Platt, G. 2007). Hedging refers to managing risk to an extent that makes it be arable. In international trade and dealings foreign exchange play an important role. Fluctuations in the foreign exchange rate can have significant impact on business decisions and outcomes. Many international trade and business dealings are shelved or become unworthy due to significant exchange rate risk embedded in them. Historically, the foremost instrument used for exchange rate risk management is the forward contract. Forward contracts are customized agreements between two parties to fix the exchange rate for a future transaction. This simple arrangement would easily eliminate exchange rate risk, but it has some shortcomings, particularly getting a counter party who would agree to fix the future rate for the amount and time period in question may not be easy. In India many businesses are not even aware that some banks do provide forward rate arrangements as a service to their customers. By entering into a forward rate agreement with a bank, the businessman simply transfers t he risk to the bank, which will now have to bear this risk. Of course the bank in turn may have to do some kind of arrangement to manage this risk. Forward contracts are somewhat less familiar, probably because there exists no formal trading facilities, building or even regulating body. 1.3 Research Objectives and Questions There is a need to identify, quantify, and evaluate a firms risk exposure and to choose appropriate procurement strategies. The general objective of this study is to incorporate procurement and marketing decisions into a single hedging model, considering risk factors typically faced by firms in the textiles and garment industry. There are several reasons to explain why foreign risk management has gained in popularity over the last decades. The most important reason lies in the increased volatility of exchange rates, interest rates, and commodity prices, causing firms cash flows to become more uncertain. Secondly, firms tend to focus more on their core business, which makes them less diversified. As a consequence, the volatility of firms cash flows may increase. A third reason for the growing importance of foreign risk management can be found in the globalization of business activities, in which competition has increased and profit margins have declined. A final explanation we of fer is the growing number of opportunities to manage risks. Based on the problem discussion our research objectives are formulated as follows: To review and critically analyse the practices adopt by the Indian exporters to hedge the forex risk. To evaluate the impact of foreign exchange risk on exporters and exports of a country like India To critically compile the issues faced by the Indian exporters in hedging foreign exchange risk. Based on the above stated research objectives the following research questions have been developed: RQ 1: How the export company determines foreign exchange risk? RQ 2: Which level the company can actively manage foreign exchange risk? RQ 3: How it can hedge the forex risk? RQ 4: What techniques are preferred by company in its forex risk management? 1.4 Relevance of Research Currently there is a scarcity of research papers about currency exposure management in companies in emerging markets. Theoretical studies like that of Copeland and Copeland (1999) are usually supported by the findings from developed countries (the USA, Canada, the UK). Therefore, the application of such studies might be complicated in developing markets. Researchers that analyze the foreign exposure management in companies often use large samples and questionnaires to evaluate the derivate use, and are successful in describing countries with well-developed markets. For emerging markets like India such quantitative approaches are extremely rare. Most often the situation with currency exposure management and application of derivatives by non-financial institutions is reflected in the newspapers. Yet, these articles are not academic papers and serve only as descriptions of the situation. Therefore, this study will be distinctive in several areas. First, it concentrates on India and will contribute to the increase in the number of academic studies about emerging markets. Second, it will contribute to the business community , as it will analyze the application of derivatives by exporting companies for hedging currency exposure and reveal the causes higher or lower popularity of derivatives. Third, it will apply the theoretical model which was developed based on the practice in developed countries, and test if the results from model application match the empirical findings in reality in India. 1.5 Outline of the Study This dissertation consists of five chapters (see Figure 1.1). In chapter one, a relative broad description is given in the beginning, providing the reader with a background and discussion of issues related to the problem area. This discussion lands in a specific research problem, which has been broken down into research questions. Chapter two gives a presentation of theories relevant for the research problem. Continuously, a description and justification of the methodological approaches chosen in this thesis is given in Chapter three. In chapter four the received empirical data is presented and contains an analysis of the collected data against the theory. Finally, conclusions and implications are presented in chapter five. Literature Review This chapter reviews the literature theory of foreign exchange risk management include the concepts of foreign exchange risks, its characteristics by different types, and hedge theory of foreign exchange risks. 2.1 Foreign exchange risk Whenever a company is running overseas business, the company is exposed to different categories of risk including commercial risk, financial risk, country risk and foreign exchange risk (Oxelheim 1984). Country Risk Foreign Exchange Risk Financial Risk Commercial Risk Figure2.1 The company risk Source: Oxelheim 1984, p14 Foreign exchange risk is commonly defined as the additional variability experienced by a multinational corporation in its worldwide consolidated earnings that results from unexpected currency fluctuations. It is generally understood that this considerable earnings variability can be eliminated-partially or fully-at a cost, the cost of Foreign Exchange Risk Management. (Jacques, 1981). According to Shapiro (2006), foreign exchange rate exposure can be defined as a measure of the potential changes in a firms profitability, net cash flow and market value because of a change in exchange rates. 2.2 The existing classifications of foreign exchange risks In the recent literature of foreign exchange exposure management, the types of exposures are usually summarized and simplified into three categories, translation, transaction, and economic ( Cowdell, 1993; Girnblatt and Titamn, 1998; Eitman et. al.,1998 and Shapiro, 2006). It is conventionally stated that the exposure to currency risk is categorized into three factors; seen below in figure 2.2. Figure 2.2 Types of currency risk exposure Source: Eun et al.,2007 Transaction Exposure The transaction exposure concept concentrates on contractual commitments which involve the actual conversion of currencies. A firms transaction exposure thus consists of its foreign currency accounts receivables and payables, its longer-term foreign currency investments and debt, as well as those of its foreign currency cash positions which are to be exchanged into other currencies. Until these positions are settled, their home currency value may be impaired by unfavorable parity changes. There exist four possibilities by which transaction exposure may arise (Eiteman 2007): When prices are stated in foreign currencies and the firm decides to purchase or sell goods or services. When borrowing or lending funds while contractual agreements on repayment are to be make in a foreign currency. When becoming a party to an unimplemented foreign exchange forward contract. When incurring liabilities or acquiring assets which are denominated in foreign currencies. The total transaction exposure consists of quotation exposure, backlog exposure and billing exposure, see figure 2.3: Figure 2.3 The life span of a transaction exposure Source: Eiteman et al., 2007 2.2.2 Economic Exposure The economic exposure, also called the operating exposure, measures any change in the present value of a company resulting from changes in future operating cash flows caused by unexpected changes in currency exchange rates. The analysis of economic exposure assesses the result of changing exchange rates on a companys own operations over coming months and years and on its competitive position in comparison with other companies. By measuring the effects on future cash flows related to economic exposure, the goal is to identify strategic moves or operating techniques that a company might wish to adopt in order to enhance its value in the face of unexpected exchange rate changes (Eiteman et al., 2007). Loderer and Pichler (2002) assert that firms often manage economic exposure by lending and borrowing in foreign currencies. He cites the following reasons for not hedging economic exposure: firms are unable to measure the size and the currency of future expected cash flows with muc h confidence, firms already hedge transaction exposure, firms consider that in the long term currency fluctuations offset each others. Surprisingly, the cost of hedging economic exposure is not an obstacle. 2.2.3 Translation exposure By consolidating its financial statements, a parent company with foreign operations must translate the assets and liabilities of its foreign subsidiaries, which are stated in a foreign currency, into the reporting currency of the parent firm. Basically, foreign subsidiaries must restate their local currency into the main reporting currency so the foreign values can be added to the parents reporting currency denominated balance sheet and income statement. The translation is usually used for measuring a subsidiarys performance(McInnes, 1971), providing accurate information for decision makers and investors (Ross, 1992; Bartov, 1995), and for both internal and external users (Sercu and Uppal, 1995). The common reason for translation from a foreign currency into the home currency is to meet the requirements of accounting regulations of home countries. External Hedging Methods As it is shown, the exposure to currency risk may involve current business transactions, future business transactions as well as financial statement translations. However, as there are factors or risk, so are there strategies for dealing with them. For companies, there are a number of external methods to use for the management of currency risk, namely the use of financial derivatives. The name derivative arises from the fact that the value of these instruments is derived from an underlying asset like a stock or a currency. By using these instruments it is possible to reduce the risks associated with the management of corporate cash flow, a method known as hedging. Financial market hedging instruments include (Butler, 2004): Fig 2.4: External Hedging Techniques 2.3.1 Foreign Exchange Forwards A foreign exchange forward is an agreement to buy or sell one currency at a certain future date for a certain price with a specific amount. It is the most common instrument used to hedge currency risk. The predetermined exchange rate is the forward exchange rate. The amount of the transaction, the transaction date, and the exchange rate are all determined in advance where the exchange rate is fixed on the day of the contract but the actual exchange takes place on a pre-determined date in the future. In major currencies, forward contracts can be available daily with maturities of up to 30, 90 or 180 days (Bodie Marcus 2008). A survey by Belk and Glaum (1990) indicates that the most common method used to hedge exchange rate risk is the forward contract. An empirical study of Pramborg (2002), also demonstrates that firms can be fully hedged with forward contracts. 2.3.2 Currency Futures In principle, a futures contract can be arranged for any product or commodity, including financial instruments and currencies. A currency futures contract is a commitment to deliver a specific amount of a specified currency at a specified date for an agreed price incorporated in the contract. The futures perform a similar function to a forward contract, but it has some major differences. Fig 2.5 Currency Futures The specific characteristics of currency futures include (Pike et.al., 1992): They are marketable instruments traded on organized futures markets. Futures can be completed (liquidated) before the contracted date, whereas a forward contract has to run to maturity. They are relatively inflexible, being available for only a limited range of currencies and for standardized maturity dates. The dealings occur in standard lot sizes, or contracts. They require a down-payment of margin of about 5 percent of the contract value, whereas forward contracts involve a single payment at maturity. Futures are usually cheaper than forwards contracts, requiring a small commission payment rather than a buy / sell spread. Table 2.1 provides a clearer summary of the major differences between forward and futures contracts. Table 2.1: Major Differences between Forward and Futures Contracts Forward Contracts Futures Contracts Customized contracts in terms of size and delivery dates Standardized contracts in terms of size and delivery dates Private contracts between two parties Standardized contracts between a customer and a clearing house Difficult to reverse a contract Contract may be freely traded on the market Profit and loss on a position is realized only on the delivery date All contracts are marked to market- the profit and loss are realized immediately. No explicit collateral, but standard bank relationship necessary Collateral (margins) must be maintained to reflect price movements Delivery or final cash settlement usually takes place. Contract is usually closed out prior to Maturity Source: Hull (2006), Moffett et al (2006) and Solnik and McLeavey (2004). 2.3.3 Currency options A foreign exchange option which is different from currency forward contracts and currency futures is to give the holder of the contract the right to buy or sell a certain amount of a certain currency at a predetermined price (also called strike or exercise price) until or on a specified date, but he is not obliged to do so. The seller of a currency option has obligation to perform the contract. The right to buy is a call; the right to sell, a put. There is option premium needed to pay by those who obtain such a right. The holder of a call option can benefit from a price increases (profit is the difference between the market price and the strike price plus the premium), while can choose not to excise when the price decreases (locked in loss of the option premium). Vice versa is for the holder of a put option. For the advantages of simplicity, flexibility, lower cost than the forward, and the predicted maximum losswhich is the premium, the currency option has become increasing popular as a hedging devise to protect firms against the exchange movements. Whenever there is uncertainty in the size of cash flows and the timing of cash flows, currency option contracts would be superior to traditional hedging instruments such as forward contracts and futures contracts. Grant and Marshall (1997) examined the extent of derivative use and the reasons for their use by carried out surveys in 250 large UK companies, found that a widespread use of both forwards and options(respectively 96% and 59%). The pointed that comparing to the primary reasons for the use of forwards were company policy, commercial reasons and risk aversion, a good understanding of instrument, and price were prominent while the primary reasons to use option for company management. 2.3.4 Currency Swaps Currency swaps are a hedging instrument for which two parties agree to swap a debt denominated in one currency for that in another currency. For example, an agreement between two firms to swap their debts of which one is denominated in Euro and that in US dollar (Leger and Fortin, 1994). In order to explain the use of currency of swaps, a Japanese firm that has exports to Australia is given as an example. The Japanese firm wants to protect its Australian-dollar receivables by using currency swap to match inflows in one currency with outflows in a foreign currency (natural hedging). Assuming the Japanese firm is not well recognized in the US financial markets, it may obtain funds from a domestic bank to swap with another firm that has dollar-denominated debt. This process is carried out by the swap dealers (usually banks) as an intermediary. The common objective of this type of transaction is that firms want to alter various future currency cash flows in its schedules into a p articular currency for which its future revenues will be generated (Eiteman et.al 1998). The preference of particular currency is caused by several factors, such as, capital market segmentation, differences in regulation governing investment by institutional investors and asymmetry in the tax treatment of interest income and capital gains/losses (Jacque 1996). Although there are other types of swaps involving foreign currencies, such as, foreign currency forward swaps, plain vanilla, and a three-way back-to-back currency swap, they are designated primarily for hedging interest rate exposure. 2.4 Internal hedging methods For the reason that external hedging techniques with derivatives to manage foreign exchange exposure are often costly, many multinational firms would rather turn to consider using internal hedging devices such as Michael (2006): Currency matching, which involves pairing suitably a multinational firms foreign currency inflows and outflows with respect to amount and timing Currency netting, which involves the consolidated settlement of receivables, payables and debt among the subsidiaries of a multinational firm Invoicing in domestic currency, which reduces transaction risk primarily related to exports and imports. 2.5 Fundamental Philosophy behind Hedging We have presented that authors embrace hedging as insurance, and hedging as a value-enhancing tool. We believe the common view of hedging can be summarized as follows: Hedging is one of the three most fundamental reasons for the existence of the financial market, alongside speculative and arbitrage activities (JÃÆ'Â ¼ttner, 2000). The hedging industry is evolving just like the rest of the business world. In fact, there is no definite set of tools or technique that can define hedging. As the world changes, new hedging mechanisms are derived; and as time passes, these mechanisms are refined and evolve into something new that can be better applied to the contemporary commercial marketplace (Batten et al, 1993; Faff and Chan, 1998; Alster, 2003;). Hedging is not a way of making money, but to assist management in better managing corporate revenue through reducing the corporate exposure to volatility in the foreign currency markets (Nguyen and Faff, 2002, 2003a; Anac and Gozen , 2003; Alster, 2003; De Roon et al., 2003; and Dinwoodie and Morris 2003). When used prudently, hedging can be effective insurance as well as a value-enhancing exercise for corporations. Effective hedging programs have been proven to allow corporations to minimize or transfer their foreign currency exposure. The diminished exposure to foreign currency fluctuations allows more stable and predictable cash-flows, notably in terms of revenue. As a result, firms are then capable of making more comprehensive financial plans, including more reliable estimations on tax, income after tax and dividends payable to shareholders. It is believed that a dividend payout is often of significant appeal to long-term, current or prospective shareholders (Nguyen and Faff, 2002, 2003b; Alster, 2003; Anac and Gozen, 2003; De Roon et al., 2003; and Dinwoodie and Morris, 2003). The three main questions surrounding hedging: when, what and how to hedge are shown in Figure 2.2 below as a decision tree. How to Hedge? Hedge Ratio 10% 50% 100% OR Any Ratio between 0.1%-99.9% What to Hedge? When to Hedge? Financial Tools Forward Futures Options Swap Hedge Under Currency Risk Exposure Non-Financial Tools Leading Lagging Fully participating market movements No Hedge Fig 2.7 Generic Hedging Decision Tree The question to hedge or not to hedge is a complex and controversial one in financial risk management. Natural hedges carry no explicit out of pocket cost and intrinsically form a better offset to economic exposures and so generally are preferred to synthetic hedges. Synthetic hedging can be likened to insurance, where the company incurs an explicit cost to reduce the risk or volatility inherent in its business results. The cost must be weighed against the risk-reducing benefits of the transactions, taking into account their precision and effectiveness. The real drivers of any hedging decision are 1) what is the risk tolerance of the company; and 2) what cost is acceptable for entering into transactions to reduce or eliminate the risk. Foreign currency-denominated activities engaged by Indian Exporters Expected payments of foreign exchange from trade Expected receipts of foreign exchange from trade Liabilities Assets Debt Debt Equity Net trade foreign exc hange exposure (before derivates) Net balance sheet foreign exchange exposure (before derivatives) Foreign exchange Derivatives Net foreign exchange exposure (after derivatives) Fig 2.8: Decision to Hedge Foreign Currency Exposures Some managers feel strongly that hedging either should always be done or never done, and their approaches vary tremendously. Indeed, there is an academic perspective that hedging is never appropriate since risks like FX exposure represent diversifiable risks from the shareholder perspective, and thus, the cost is wasted effort for shareholders. Some managers share this view, but most multinational businesses of significant size engage in some financial hedging transactions. Major arguments for and against hedging are displayed in Table 2.2 Table 2.2: Theoretical Arguments on Hedging For Against Managing earnings volatility for FX risk can reduce a firms potential cost of financial distress. PPP and CIP imply compensating levels of FX rates and prices. Firms in financial distress face higher contracting costs with customers, suppliers, and employees. FX rates even out over time. Firms that hedge and reduce their earnings volatility pay less taxes over the long run if tax rates increase the income levels. With transactions costs, hedging is a losing bet on average. Managing FX risk and smoothing earnings volatility has a positive effect on stock price and shareholder value. Shareholders can diversify their own portfolios to compensate for FX risk. Certainty may create administrative benefits such as more accurate performance evaluation or improved employee morale. Investors may choose a stock precisely because they want exposure to a particular currency for diversification. Source: Davis and Militello,1995 2.6 Determinants of Hedging Decisions The management of foreign exchange risk, as has been established so far, is a fairly complicated process. A firm, exposed to foreign exchange risk, needs to formulate a strategy to manage it, choosing from multiple alternatives. This section explores what factors firms take into consideration when formulating these strategies. 2.6.1 Production and Trade vs. Hedging Decisions An important issue for multinational firms is the allocation of capital among different countries production and sales and at the same time hedging their exposure to the varying exchange rates. Research in this area suggests that the elements of exchange rate uncertainty and the attitude toward risk are irrelevant to the multinational firms sales and production decisions (Broll,1993). Only the revenue function and cost of production are to be assessed, and, the production and trade decisions in multiple countries are independent of the hedging decision. The implication of this independence is that the presence of markets for hedging instruments greatly reduces the complexity involved in a firms decision making as it can separate production and sales functions from the finance function. The firm avoids the need to form expectations about future exchange rates and formulation of risk preferences which entails high information costs. 2.6.2 Cost of Hedging Hedging can be done through the derivatives market or through money markets (foreign debt). In either case the cost of hedging should be the difference between value received from a hedged position and the value received if the firm did not hedge. In the presence of efficient markets, the cost of hedging in the forward market is the difference between the future spot rate and current forward rate plus any transactions cost associated with the forward contract. Similarly, the expected costs of hedging in the money market are the transactions cost plus the difference between the interest rate differential and the expected value of the difference between the current and future spot rates. In efficient markets, both types of hedging should produce similar results at the same costs, because interest rates and forward and spot exchange rates are determined simultaneously. The costs of hedging, assuming efficiency in foreign exchange markets result in pure transaction costs. The three main elements of these transaction costs are brokerage or service fees charged by dealers, information costs such as subscription to Reuter reports and news channels and administrative costs of exposure management (Soenon, 1979). 2.6.3 Factors affecting the decision to hedge foreign currency risk Research in the area of determinants of hedging separates the decision of a firm to hedge from that of how much to hedge. There is conclusive evidence to suggest that firms with larger size, RD expenditure and exposure to exchange rates through foreign sales and foreign trade are more likely to use derivatives. (Allayanis and Ofek, 2001) First, the following section describes the factors that affect the decision to hedge and then the factors affecting the degree of hedging are considered. (Woochan and Sung, 2005).