The Presence of Fear in Lord of the Flies free essay sample

The presence of fear in Lord of the Flies Lord of the Flies is a relatively short book, but within its small amount of text William Golding is able to do much more than tell an exciting story. He digs deep into human nature and the natural corruption in peoples souls. He specifically explores the impact that fear has on people and how it makes them act. In Goldings eyes, humans are doomed just as the children on the island are, and that is because of fear. He believes that just the presence of terror causes people to overreact and lose common sense, tearing away at the bonds that hold society together. In an attempt to calm or soothe their worries, people end up separating, singling out others and letting their inner savage take over, leaving themselves in an even worse situation. In Lord of the Flies, fear slowly drives all common sense and civility out of the boys and brings them back to a state of savagery. We will write a custom essay sample on The Presence of Fear in Lord of the Flies or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The boys are scared from the beginning of the novel. At first, they are too excited about having an island to themselves to dwell upon their insecurities, but nonetheless they are there. The fear is not openly shown or discussed, but the boys are already subconsciously trying to cover it up. The boys do such things such as singling out Piggy in an attempt to make themselves feel more powerful and in control. Then, Jack pulls a knife on the piglet to try to show power and also to try to show immunity to fear, however, when he did so his face was white under the freckles. (31). Jack is already trying to act tough but at this point this cover that he puts on to hide from the fear has not reached nearly the point of savagery that it does later in the story. It is not until the first fire that the boys begin to openly show fear and even then they quickly change the subject. The cause of this realization of reality is that one of the littleuns disappears. The idea of making a rescue fire is so exciting that they let it get out of control. When the fire burns out they realize that one of the children is missing. When asked what has happened to the child with the mark on his face Ralph replies by saying Perhaps he went back to the, the-. . He knows what has happened, the boy was burned to death, but he does not want to admit it. This is like a wakeup call for the boys and they start to see the reality and the dangers of the situation. As the novel continues the fear is progressively growing in all of the children. By page 59, the fear of not knowing what would happen to them and if they would ever be rescued had grown to the point where the littleuns suffered from untold terrors in the dark and they huddled together for comfort. The littleuns were certainly afraid but had no way to really explain their fear or anything to blame it on. It is for this reason that they subconsciously create the beast. At first the biguns are too old and mature to believe in this beast. They realize that it is a figment of the littleuns imaginations and dont give it much thought. However, as their fear of being alone and not being rescued grows, so does their need for something concrete to aim their insecurities toward and to distract them from their real problem. This causes the biguns to begin to lose their common sense and to believe in the beast as well. Simon sees this, but when he tells the others maybe its only us, (89) referring to the beast; he is laughed off. The other boys will not even consider Simons ideas because they have convinced themselves that the beast is reality. As their fear grows so does their image of the beast, and unfortunately their savagery grows as well. This is most evident in Jack. When he is hunting he feels powerful. He is in control and he loves it. Hunting starts to become more than just a food source, it becomes his life. Not only does his hunting activity increase in frequency, it also becomes more and more vicious.

Pronouncing the Decimal Comma in Spanish

Pronouncing the Decimal Comma in Spanish Its pretty much as you might have guessed: In casual usage, you can pretty much follow the convention of English, except that instead of saying something like three point two five, you can use the Spanish word for comma, which is coma: tres coma dos cinco. International Standard of Using Decimal Commas The international standard is to use a comma in numerals where English would use a decimal point. But the Royal Spanish Academy does recognize use of the decimal point (or period) when used by Spanish-speaking people in English-language countries, and in those parts of Latin America (such as Mexico) where English-language influence has led to use of the decimal point. In those areas, 3.25 can be pronounced as tres punto dos cinco. A more formal way of pronouncing the same number, and one that doesnt depend on how it is written, is tres enteros y veinticinco centà ©simos (the y is often omitted), the equivalent of three and twenty-five hundredths. (Entero is used to refer to whole numbers.) Youll hear some speakers use cà ©ntimos instead of centà ©simos to refer to hundredths in this context. The number could be rounded down to 3,2 (or 3.2 in parts of Latin America), which would be tres coma dos or tres enteros y dos dà ©cimos (three and two-tenths).

20 Best Study Playlist Ideas for College Students

20 Best Study Playlist Ideas for College Students Building playlists is more art than science. There’s nearly limitless songs to choose from, with countless others being uploaded by bands and record labels around the globe every month. The internet is awash with different playlist building websites and services like Pandora or Spotify, so let’s start talking about 20 of the best study playlist ideas that can get you started. Enjoy! Idea #1: Consistently Random Conversations Playlist: The joy of playlist building is in the discovery of new music. You can browse other people’s playlists online and spend hours listening to songs you know nothing about, or you can make it a habit to talk with people about their playlists (we all have them) and get direct recommendations. After a while you can have a really random playlist that keeps the creative/memory juices flowing for study. Idea #2: The Healthy Mix Playlist: Try not to stick with one genre of music while you study. Make sure that the energy moves up and down. Quiet at times, but then louder or more upbeat at others. There should be highs and lows. You’ll find that this will make it easier for you to focus and sustain your brain power for longer. Idea #3: Generational Hop Scotch Playlist: Pick songs from the 50s, 60s, 70s, 80s, 90s and 21st century songs and then make sure that the shuffle is awesome or that they’re arranged in a certain way so that you bounce around. This can be especially useful for contemporary history classes/majors! Idea #4: The Wordless Eastern Euro-Trance Playlist: I’ve got two words for you, Paul Oakenfold. If you’re unfamiliar with European Trance, or Lyrical Trance then prepare to experience something with real drive. Paul has hours of content and it’s almost all without exception awesome for study sessions. Idea #5: Opera Creationism Playlist: Choose a language you know nothing about, like say Japanese or Italian, and then build a playlist of symphonic opera songs. Those things will make you think, and they’re really sensual. Idea #6: The Almighty Grouch Playlist: If you’re looking for Hip Hop with something to say, that’s intellectually seductive, then build a playlist of songs from â€Å"The Grouch† and you won’t be disappointed. Idea #7: The Themed Playlist: You could build around an emotion, a certain day of the week or make it seasonal. Picking themes is the easy part, and you’ll be hard-pressed to think of one that hasn’t been tried yet. There are tens of thousands of playlists out there. Idea #8: The Ambient Playlist: Wordless, driving, drifting, pulsing, flowing. Ambient music is really cool. Just make sure that you get some songs with energy or you might fall asleep on your textbook! Idea #9: The Fitness-based Playlist: Studying is the equivalent of a great workout for your mind. Build a mental workout playlist! It’s almost too easy to build playlists for sweating in the gym, why not the library? Idea #10: The Nostalgic Playlist: Take it back to childhood, unless you were raised by wolves or something, but even then you could do an â€Å"Underworld† themed playlist. Go for a â€Å"Werewolf† playlist! The idea is to take yourself into the past where you can feel comfortable and settle into your studies. Idea #11: The Adrenaline Rush Playlist: These playlists should be entirely composed of songs that make you feel like you’re cliff diving. Idea #12: Visions of Greatness Playlist: When you tilt your head, get that misty look in your eyes and picture a time when you’re a true success, what songs come to mind? What songs will people listen to as they visit the many statues of your likeness? Idea #13: The Instrumental Hip Hop Playlist: It’s Hip Hop without the words so there won’t be anything to distract you. Lyrics can be a mental nuisance to some when they’re trying to study. Idea #14: The Meditative State Playlist: There’s a big difference between ambient and meditative songs. Meditative stuff is far calmer, typically sporting some howls of the wind with soothing wave sounds†¦something like that. Again, just try not to fall asleep or into a meditative state while studying for a math exam or reading. Idea #15: Going Full-Acoustic Playlist: Acoustic guitar + great vocals = on the playlist. Make it feel like a campfire session. Idea #16: The Swing Playlist: When was the last time you listened to some quality Swing from the 20s and 30s? Check it out! Idea #17: The International Focus Playlist: Pick a county or a group of regional nations and build a playlist of the top hits they’re sporting. Idea #18: The My Funeral Playlist: What songs would you want to play at your funeral? Or better yet, if you could have a music player installed into your tombstone that would just continue to play on and on at your grave†¦? Hey, it could be solar powered! Idea #19: The Getaway Playlist: Imagine you’re in a car running from the mob, the law or perhaps alien spacecraft. What are the perfect songs for a high speed getaway? Tip: they should help you focus. Idea #20: The When I Was Born Playlist: What were the songs of the day on the day you were born? What about you though, what’s your study playlist look like and why?

Profissonal development and communication skills in english Coursework

Profissonal development and communication skills in english - Coursework Example In this formula; b is the peak induction, f is magnetsing frequency, A is the cross sectional area of the sample and n is the number of turns of the search coil around this sample. In order to evaluate the Curie temperature, a sample of the sheet metal is placed in an insulated temperature controlled furnace, which is then heated above its curie point. The sample is then let cool using a low frequency 10hz magnetic field. Curie temperature is established by measuring magnetic induction and induction-temperature. The experiment was conducted using the following materials: a furnace tube, a solenoid tube, a secondary tube, two identical search coils and a sample sheet. The arrangement of above materials is illustrated in Figure 1. The search coils were wound around a smaller tube, which was inserted inside another longer and larger tube in a way that the axes of both tubes aligned together. The solenoid was wound around the larger tube. The entire construction was then inserted inside the furnace tube. The furnace was heated approximately to 840 C; because of it, the solenoid and the search coil also got heated to the same temperature. The steel sample was then inserted into one of the two search coils as shown in the figure 1. After a period, the sample, solenoid and the furnace reached the same temperature. The furnace was switched off, and the solenoid was switched on once the entire system reached the temperature equilibrium. The sample was then allowed to cool unforced. The experiment used 30 x 28 mm steel samples of various thickness; cross-sectional areas of the samples are shown in the attached table. The use of two identical search coils in series connection eliminated air flux induction, thus ensuring that the induced EMF was caused by the sample magnetisation alone from an uniform magnetic field produced by the solenoid. The solenoid used a sinusoidal time varying magnetic field; the strength of it

Critical analysis of assessment strategies and practice in the Essay

Critical analysis of assessment strategies and practice in the workplace - Essay Example The ability to pass that knowledge to other is extremely beneficial if the knowledge is to cause an impact. This calls for skilful verbal skills. This is because a student must have the ability to communicate with teachers, colleagues and clients or patients, (Banta, 2007, p57). There are moments that a direct discussion with a patient helps to make some procedures much easy, (Nicklin, and Kenworthy, 2000, p142). This should also be matched with the ability to consult is a verbal way freely and confidently. It therefore, becomes extremely necessary to find out whether the students know how to express themselves. Accuracy and precision is also extremely vital factor. This is because most of the complicated procedures are time bound and of a sensitive nature, (Neary, 2000, p124). This explains why a single delay can end up costing a lot. The student has to be able to work with the required time frame and also demonstrate accuracy and precision, (Banta, 2007, p57). This reveals the extent and reliability capacity of the student. The willingness to learn is demonstrated in a wide range of factors. A meritorious student should show the ability to learn new things, (Nicklin, and Kenworthy, 2000, p130). This includes asking the necessary questions and interacting with consultants, lecturers and other professionals who are way ahead. The student should also involve colleagues and fellow students so that they can exchange ideas, (Friedlander, 2004, p112). This too enhances understanding and learning process. It also shows that the student is willing to learn. The questions should be clear and should assess the subject matter with a sense of accuracy, (Neary, 2000, p124). The research questions and data collections methods in the assessment should be relevant and detailed, (Banta, 2007, p57). This is to make sure that crucial data is obtained from the student and give a precise assessment of the level of understanding and competence of the student,

The Cinematography Of American Beauty Film Studies Essay

The Cinematography Of American Beauty Film Studies Essay Cinematography is an art form, not just an aspect of a movie. Cinematography affects the mood and tone of a movie as well as the viewers feelings while watching a movie. In American Beauty this is demonstrated beautifully through camera techniques, lighting, and the framing of the shot. Camera techniques include aerial, deep focus, pan, shallow focus, slow motion, soft focus, and the tracking shot. Lighting is more than just shining a light on a character. The cinematographer must know how to manipulate the lighting to create the mood and the correct throw of the light. He must know when to use soft light and when to use hard light to create the lines and shadows desired. The framing of a shot also adds to a movie. Framing the shot is the placement of objects and people in a scene to create the mood or to direct the viewers focus. These are all elements to think about when watching a movie and they are all shown superbly in American Beauty. American Beauty is narrated by Lester Burnham, the husband of Carolyn Burnham and father of Jane Burnham. He informs the audience that he has less than a year to live but in reality he is already dead; and the whole movie looks back at his life through his eyes. Lester Burnham is a 42-year-old who is unhappily married and is despised by his wife and daughter. Behind the red door of their home, the family is falling apart. The dinner table is a battleground, where the mother and father tear apart one another s unhappy lives and their daughter retreats into a balanced yet flawed reality she has no thought of being loved. Carolyn is only driven by success and Lester has just had enough. He makes friends with the cool, confident Ricky Fitts (who supplies him with drugs) and becomes a rebel, no longer even pretending to accept his family s criticisms. Meanwhile his wife has an affair with the real estate King, Buddy Kane, and even when Lester finds out he does not care. Lester develops an obsession with his daughter Jane s friend Angela and his only goal in life is seducing her because he believes she is the personification of beauty. Ricky likes to film things that are beautiful which includes Jane. At first this freaks her out, but in the end the two develop a relationship. Lester attains his chance with Angela but he discovers that he has been living a fantasy and she is nothing more than a scared little girl. In the end, Lester is killed by Colonel Fitts (Ricky s father). The movie opens with an aerial shot of the street where the Burnhams live. The nameless, one of many streets in the city, provides a sense that the Burnhams are small and unimportant in the world. For the first part of the movie, Lester is shot from above and small in the shot, making him seem small and unimportant. However, as the film progresses and Lester becomes more powerful, shots of him tend to come from below, depicting his power. Also in the office the camera shoots a still deep focus shot, or a shot that keeps the entire image in sharp focus, of the cubicles in the office showing the ceiling. The shot of the ceiling with the lights glaring down makes the scene feel oppressive, like the office is more powerful than man. When the neighbors come to welcome the Fitts to the neighborhood, the camera shows Colonel Fitts opening the door and when the door; swings in front of the camera, it switches to a shot of the people at the door. Cutting the scene when the door swings by make s the scene appear seamless and smooth to the viewer. A swish pan, or a very fast panoramic camera movement, is used when Ricky is filming Jane through his window and his dad comes in yelling. Ricky turns fast to look causing the camera image to blur giving a sense of chaos to the scene. After Lester is shot, he talks about his life and remembers the good times. A left to right tracking shot is used for this scene, making all the memories flow together smoothly and the left to right movement of the camera imitates his life. These are just a few examples of the camera techniques used in American Beauty to help bring the movie to life. Lighting also plays an important role in the audience s perceptions of characters while creating the mood for the scene. Lester has a dream where he walks down a hallway and finds Angela in a bathtub in a room filled with steam at the end of the hall. The entire scene is in soft light, light not directly from the source, to provide the impression of a dreamlike state. Also whenever Jane and Ricky are together, they are filmed in low soft light. The darkness and the soft light help add to the romantic mood and create a kind of calm feeling about the shot. Lester wants to get in shape for Angela so he goes down to the garage to find his old weights. He then undresses and looks at his reflection in the window. The shot of Lester looking at his reflection is lighted from above to make him seem overly chubby. One of the best example of framing the shot are the shots of the Burnham family at the dinner table. Carolyn is seated at one end, Jane in the middle, and Lester at the other end of a long table. This long shot frame that includes all the people and some of the surrounding environment shows the distance between Carolyn and Lester and yields the impression that Jane is just caught in the middle. After an argument at the dinner table Lester talks to Jane in the kitchen. The camera shot from outside through the window shows the window pain splitting Lester and Jane as a sort of dividing line between them giving the impression of a wall. Another example of framing the shot is that of Carolyn driving home from the gun range and the camera shows her gun sitting on the seat next to investment books, suggesting that money kills. Many people share the opinion that American Beauty is a great movie. Michael Wilmington and Jay Carr, two men that review movies, both agree. Its a picture with a great cool shiny surface, and it boasts superb actors, witty and iconoclastic writing, vigorous and imaginative direction and brilliantly stylized cinematography states Wilmington (Wilmington). Also, a millennial classic says Carr (Carr). American Beauty received five, well deserved, Academy Awards one of them for cinematography. For cinematography to be good, the techniques used should not be apparent to the viewer: they should only add to the movie. Conrad Hall shows his style and mastery of the camera and lighting in American Beauty. The audience is not consciously aware of the techniques used but subconsciously they have a big impact on the viewers emotions. Truly, Conrad Hall is a master of the big screen.

Vertical Boundaries

Chapter 10: Vertical boundaries Chapter 10: Vertical boundaries Aim of the chapter To understand the factors that influence the ways in which transactions on a vertical chain (value chain) should be/are located on the market–organisation continuum. Learning objectives On completion of this chapter and the essential reading, you should have a good understanding of the following terms and concepts: †¢ transaction cost economics †¢ strategic calculation. Essential reading Buchanan, D. and A. Huczynski Organizational behaviour: an introductory text. (London: Prentice Hall, 2008) Chapter 18. Douma, S. nd H. Schreuder Economic approaches to organisations. (London: Prentice Hall, 2008). Further reading Besanko, D. , D. Dranove and M. Shanley Economics of strategy. (New York: Wiley, 1996). Coase, R. H. ‘The problem of social cost’, Journal of Law and Economics 3 1960, pp. 1–44. Grossman, S. and O. Hart ‘The costs and benefits of ownership: a theory of vertical and lateral integration’, Journal of Political Economy 94(4) 1986, pp. 691–719. Williamson, O. E. ‘The economics of organization: the transaction cost approach’, American Journal of Sociology 87(3) 1981, pp. 548–77. 10. 1 IntroductionAs noted in Chapter 1, we may regard the basic unit in organisational analysis as an exchange or transaction generated in the division of labour. The division of labour (exogenous/endogenous – Chapter 3) creates value or vertical chains; for example as shown in Figure 10. 1(a) running from crude oil extraction to the retailing of petroleum products. We now operate at the level of organisations or firms (recognising that at a greater level of disaggregation the points in the chain are also based on chains of the division of labour) and pose the question as to where their boundaries should be located on the value chain.In fact the picture is usually more complex than the one depicted in Figure 10. 1(a). Activities usually depend on inputs at all points down the vertical chain, as depicted in Figure 10. 1(b). So organisations or market exchanges could control and coordinate each of these transactions. Furthermore, some of these inputs may be common to the points on the main chain (see Appendix 1. 2 in this guide), like accounting services, in which case the picture looks more like Figure 10. 1(c). Note the use of di-graphs once again. 91 Organisation theory: an interdisciplinary approach a) Oil extraction Refining Retailing †¢ (b) Shipping or pipe †¢ †¢ †¢ Distribution †¢ †¢ †¢ †¢ (c) †¢ †¢ †¢ Accounting †¢ Figure 10. 1 †¢ †¢ †¢ In general we are asking the question as to whether a particular transaction should be internalised (make) or left in the market (buy), as depicted in Figure 10. 2; that is, whether a point on the chain should be a department/ function or division or remain independent. For the momen t we restrict our attention to this simple choice rather than the more elaborate positioning on the market–organisation continuum.We shall return to the more elaborate issue later on. †¢ †¢ Market (Price mechanism) Figure 10. 2 Start by asking what the benefits and costs of using the market might be. The benefits could include the following: †¢ Independent firms may be able to reap the benefits of economies of scale (i. e. operate at an output that minimises unit costs) whereas internal departments may not. Unless the firm itself can absorb all the efficient output of the department, it must either operate below the optimal output level or sell on to another firm.This might compromise any information advantages of the purchasing firm (see below). †¢ Independent firms are more subject to market disciplines than departments and may hold down costs they can control more effectively. Costs may be difficult to identify in departments. Firms might, though, attem pt to replicate market incentives inside organisations. Tapered integration refers to a situation where a firm is supplied partially by an independent firm and partially by its own department. This allows their relative cost structures to be compared. Independent firms (i. e. their managers) may have stronger incentives to innovate when compared with managers of departments. †¢ †¢ Organisation †¢ 92 Chapter 10: Vertical boundaries The costs of using the market might include the following: †¢ Private information may be leaked to independent firms – particularly if there is a need to share technical information. †¢ The focal firm becomes to a degree dependent upon an independent supplier (depending upon switching costs).Thus the latter has a power resource (see Chapter 6) and may use it to hold up the focal firm. It may prove difficult to control and co-ordinate flows of goods and services down a vertical chain of independent firms. This may be particul arly so where there is a need to fit the products closely. ‘Just-intime’ methods seek to overcome this problem and permit independent firms often with long-term relational contracts (see below). The way most economists (following Coase and Williamson) think about the choice between a market and organisational exchange/transaction is entirely predictable – choose the arrangement that minimises costs. The innovation here is to ntroduce the idea of transaction costs – the costs involved in making (controlling and co-ordinating) the transaction. They are sometimes referred to as agency costs, and agency efficiency is found where they are minimised.So, if both production costs (which relate to technical efficiency) and transaction costs vary between organisational transactions and market transactions, then the total costs should be minimised. Activity Now read Sections 8. 1 and 8. 2 in D and S. If you would like to read a slightly more comprehensive economic ap proach to vertical integration, then read Besanko et al. 1996). In a world of fully informed, rational actors where contracting is complete, there are no transaction costs and the choice between market and organisational exchange is of no consequence (at least as conceived within this framework) unless production costs vary (which, again, they should not under the same assumptions). It is because we relax both the assumptions of full rationality and full information in the context of ‘real markets’ that transaction costs arise and the choice between market and organisational transaction is pertinent.Transaction costs theory is used both in a normative and positive sense. The new assumptions are as follows: †¢ Individual bounded rationality: people are intentionally rational but limitedly so. Individuals are neither able to make very complex calculations nor to assimilate large amounts of information. As you might expect, sociologists tend to like this assumption; t hey see it as more realistic than the full assumptions of rationality. †¢ Opportunism: individuals are not only self-interested but behave with guile.For example, in the context of game theory, individuals will issue promises which are not credible, make use of asymmetric information and they cannot be trusted. †¢ Contracting about transactions is incomplete because of inherent uncertainty and incomplete information. †¢ Contracting can thus lead to ex ante opportunism (namely, adverse selection) and ex post opportunism (namely, moral hazard). †¢ These hazards will be exacerbated to the degree that there is little choice of transacting partners and therefore reputations (see Chapter 7) in respect of third parties will not constrain opportunism – small numbers exchange. 3 Organisation theory: an interdisciplinary approach †¢ Anticipated repeated interaction will make reputations important to both parties but if in the process there is learning by doing, it is then costly to later switch exchange partner. Williamson (1981) calls this the ‘fundamental transformation’ – it ties the parties into the relationship. †¢ Williamson also observes that parties to a transaction might have a preference for a certain type of transaction in addition to the costs and benefits. He calls this ‘atmosphere’. In effect Williamson is introducing wider motives/utilities.Although the vocabulary introduced by Williamson is rather daunting at first sight, it has the advantage that it should link your thoughts into many of the ideas you have already encountered. Activity Think of transactions as a prisoner’s dilemma or trust game. Both parties would like to contract to achieve Pareto efficiency but each is wary of the other and in the absence of some mechanism to offset this wariness, the exchange does not materialise – the Nash equilibrium. So what mechanisms are available? You should be able to list the mechanisms.They can be derived as follows. Competitive market – the price as a sufficient statistic; here the prisoner’s dilemma does not model the situation. Organisation – three possible mechanisms which can produce the Pareto-efficient outcome rather than the Nash equilibrium are: 1. Authority and power. 2. Trust (cultural mechanisms). 3. Repeated transaction and reputation effects. As we have seen in earlier chapters, alongside monitoring and employment contracts (incentives), we expect organisations to avail themselves of a mixture of these mechanisms.But note, if we think in terms of ‘real markets’ rather than the ideal type of perfect markets, then the price mechanism is not sufficient and perhaps these mechanisms might also apply at different positions on the market–organisation continuum. We shall return to these matters later. Transaction cost economics embraces not only an unorthodox model of the individual but characterises aspect s (‘dimensions’, to use D and S’s terminology) of transactions that impact upon the transaction costs.Activity Now read Section 8. 3 in D and S. The argument is that asset specificity (sometimes called ‘relation-specific assets’), uncertainty/complexity and frequency of exchange all increase the likelihood that a transaction will be placed (governed) inside an organisation (that is, make) rather than left to the market (that is, buy). Asset specificity comes in different forms: †¢ site specificity – adjacent sites, usually to economise on transport and communication costs †¢ physical asset specificity – e. g. pipeline delivering crude oil †¢ dedicated assets – assets of a particular buyer dedicated to a particular relationship †¢ human asset specificity – skills dedicated to a particular relationship which would be less valuable elsewhere. 94 Chapter 10: Vertical boundaries So we now have a predictive t heory about vertical integration and, incidentally, contracting out. By and large, empirical evidence has supported transaction cost theory – particularly the impact of complexity in the context of uncertainty – though one should bear in mind what Williamson terms ‘atmosphere’.If there are widespread specific preferences – for instance, managers might prefer the power implied by organisation – this would complicate the picture. Furthermore, other factors might influence the choice between market and organisation. Regulation and taxation can confer advantages in deciding where profits are generated. For instance, taxation might favour small firms, and firms operating across different national tax regimes may find it an advantage to contract out. An organisation might vertically integrate to gain a monopoly or acquire information or to limit the flow of information to competitors (see below).Given all these possibilities, it is perhaps surprisi ng that such strong empirical support for transaction cost theory is found. Appendix 10. 1 in this guide gives a slightly more formal approach to Williamson’s reasoning. The transaction costs approach still leaves open two questions: 1. Will the integration, if appropriate, be backwards or forwards? 2. What type of organisation – e. g. centralised or decentralised hierarchy? (I leave an answer to this question to Chapter 12. ) An extension of transaction costs theory called property rights theory (which is not covered in D and S) provides an answer to the first question.When a transaction is internalised within an organisation, then ownership should (note the normative word) go to the party with the greatest impact upon the post-contractual rents. Activity Although this theory falls beyond this course, you might like to read Grossman and Hart (1986). Property rights theory is essentially a theory of bargaining power. Incomplete contracts mean that residual extra-contra ctual control of assets is important. Ownership confers bargaining power over operational decisions when enforceable contracts break down.Anticipation of post-contractual hazards determines earlier investment decisions. We now need to complicate the picture by reintroducing the market–organisation continuum, as in Figure 10. 3. I use the term ‘continuum’ with a certain amount of licence as the alternative positions on it vary in a number of respects and could be reordered. The continuum runs from perfect competition, at one end, to integration or organisation, at the other. The question now is: where should a transaction be placed on the continuum?Before answering this, let us look at what B and H have to say about the issues we have been discussing. 95 Organisation theory: an interdisciplinary approach Spot markets (perfect competition) Real markets Bargaining Franchising Long term contracts (network organisations) Tapered organisations Virtual organisations All iances Joint venture Monopoly (small numbers) Externalities Asymmetric information Fixed cost (risk to supplier) Risk sharing Cost plus (risk to buyer) Decentralised Integration (up/down) organisation Figure 10. Activity Now read Chapter 18 in B and H. Again, this chapter in B and H is extremely detailed; you need to master the main ideas running down the left-hand margin. None of them is inconsistent with anything you have learned from D and S; though note that the definition of vertical integration is in fact backwards vertical integration. Table 16. 3 in B and H gives a good overview of what I have termed the organisation–market continuum. So let us now return to the continuum – see Figure 10. 3 – keeping the rich descriptions in B and H’s chapter in mind.First, look at what I have termed ‘real markets’. Here we recognise that in the real world the market environment is often far from perfectly competitive. If the transaction is left to th e price mechanism, then various market distortions may undermine the price as a sufficient statistic. If, for instance, a supplier holds a monopoly, then backwards vertical integration may look attractive to a buyer. Likewise, a buyer might be tempted to vertically integrate backwards in order to acquire information or to reap benefits of vertical synergies (externalities).Long-term contracts (which will inevitably be incomplete) enable organisations to engage in a protracted relationship. They often occur between buyers and suppliers in a vertical chain. D and S introduced the idea of ‘relational contracting’ (an equivalent term). Remember, whenever you think in terms of contracts you need to think of the incentive, risksharing and information aspects. Fixed-term contracts put the risk of, say, increases in input prices to the supplier on the supplier’s back. Cost plus contracts reverse the situation. Between these two extremes, risk-sharing contracts can be des igned.If the buyer and supplier have differing risk preferences then, other things being equal, an optimal contract can be found. Network and virtual organisations (see B and H) are usually based upon long-term relational contracts, as are alliances. Joint ventures imply equity contribution from both the supplier and buyer. Centralised 96 Chapter 10: Vertical boundaries So the question now is: where should a particular exogenously generated (by the division of labour) transaction be placed on the market–organisation continuum? (The normative question. Alternatively, where is it placed and why? (The positive questions. ) Transaction cost economics claims to be both normative and positive and answers both questions – minimise transaction and production costs! But as we have seen, this is only part of the story. Activity Now read Section 9. 8 in D and S. In summary, the choice of the position of any vertical transaction on the market–organisation continuum may be s haped by: †¢ economies of scale †¢ anticipated information leakage †¢ acquiring information †¢ transaction costs †¢ residual property rights †¢ market imperfections †¢ regulation.But how are these various strands to be woven together? Unfortunately there is, as far as I am aware, no embracing theory. B and H introduce you to the concept of corporate strategy and to what many organisation theorists term strategic choice. Although the idea that organisational arrangements designed to control and co-ordinate activities are a matter of choice was first introduced by sociologists in reaction to an earlier tradition that spoke of ‘determinism’ – often technological determinism – we can now see this as an unhelpful distinction.Economists will always speak of choice where changing technology might either enhance or restrict the opportunity set which rational decision-takers face. We might then like to think of technological deter minism when for whatever reason, the opportunity comprises a single option. I encourage you to think in these terms even if you want to question the restrictive notion of rationality (see Chapter 1). Activity Now read Chapter 9, particularly Sections 9. 1–9. 7, in D and S. Sections 9. 1 to 9. 6 of D and S cover issues of strategic planning that impinge upon organisation theory but are more often encountered in courses on management theory.You will benefit from reading them but they are not central to this unit. The central idea in management theory concerns the sources of what is termed sustained competitive advantage (SCA). Why do some firms/organisations manage to sustain a better performance than their competitors, while operating in the same markets? Statistics tend to suggest that this is a common experience in many markets. Firms often earn above-average returns (loosely rents) on their assets over relatively extended periods of time. The assumption is that they have so me characteristics (but which? that their competitors find it difficult to replicate or improve upon, at least during the time in which the advantage is sustained. From an organisational theory point of view the question to ask is – are there ways of organising which can confer SCA? Notice that when an organisation possesses a competitive advantage, for whatever reason, then this implies that perfect competition is not operating. In so far as those running organisations seek SCA, they are trying to undermine 97 Organisation theory: an interdisciplinary approach competitive forces.The early sections of D and S’s chapter show how game theory is an indispensable tool in studying competitive strategies. 10. 2 Vertical contracting and strategic choice Consider a transaction between B and S, as in Figure 10. 4. The problem is to design a contractual relationship to gain any possible rents. In terms of competitive advantage this amounts to placing the transaction on the marke t–organisation continuum more effectively than the competition. Assume that there is need for relation-specific assets and a complete contract cannot be signed because of inherent uncertainties.Suppose now that B would like to persuade S to make the relation-specific investment. S’s ex ante problem is that in the absence of trust and credible promises, s/he anticipates that, once the investment is made, B will take advantage of the situation. S anticipates that B will always be able, once the contract is entered into, to find contingencies not covered by the contract. By making the investment, S in effect confers bargaining power upon B – who may even use this power to renegotiate the original contract (attempt to reduce the price of the good or service exchanged).S will then anticipate these moral hazards and accordingly not invest; the transaction will fail and both S and B will be less well off than they could be. Thinking in terms of the (for the moment, one -shot) prisoner’s dilemma, S and B find a Nash equilibrium rather than the Pareto-efficient outcome. So what can be done to achieve the Pareto superior outcome? S Figure 10. 4 B Some possibilities (neither exclusive nor exhaustive) are: †¢ B makes the relation-specific investment (but then B confers bargaining power to S) †¢ B nd S make a joint investment – an alliance or joint venture †¢ S continues to make the investment but enters into a long-term contract with B (note that relation-specific investments tend to imply long-term relationships in the first place) †¢ forward or backward integration (here non-market incentives/ monitoring/authority/power/culture achieve the move from the Nash equilibrium to the Pareto outcome). But let us continue to assume that B wants to find a non-integration solution and still to encourage S to make the costly upfront relation-specific investment.S/he might do this in the recognition that S, as an independent orga nisation, may be relatively small, flexible and focused. S, furthermore, may be driven by a more entrepreneurial spirit than if it were to be a division or department in B’s ‘bureaucracy’. An independent S may be more innovative. Also small organisations tend to have lower labour costs (production costs). If so, then both S and B can benefit. The strategic problem is whether or not the transaction costs (ex ante and ex post) can be kept down while reaping these potential advantages.To offset S’s anticipated moral hazard problems, B needs to search for ways of reducing her/his own and increasing S’s relative bargaining power. To the degree that this proves possible, the strategy will offset S’s anticipated moral hazards. B needs to make her/himself more dependent upon S before the contract is signed. One notable way s/he can secure this is to decentralise some design and innovation responsibilities to S. B now becomes partially dependent 98 Ch apter 10: Vertical boundaries upon S. Furthermore, B can commit not only to a long-term contract but also to relatively unconditional contract renewal.These strategies do of course put B at some risk. But since we are thinking in terms of incentives to transact, you should by now recognise that risk-sharing is another aspect of the possible contracts between S and B that can be subjected to strategic reasoning. Not unreasonably, I think, assume that S is risk-averse and B is risk-neutral. So S will accept a reduction in rent in order to reduce his/her risk and, relatively speaking, B will be prepared to shoulder more risk. So, a risksharing, long-term contract can conceivably lead to a Pareto improvement. Think in terms of post-contractual price negotiation.With a fixed-cost contract any increase in S’s costs will have to be borne by S. S will be reluctant to sign such a contract. With a cost-plus contract, on the other hand, B will bear all the risks of S’s cost incre ases. Furthermore, S will have no incentives to hold costs down nor, perhaps more importantly, to innovate in order to reduce costs. Clearly, B wants S both to innovate and, where possible, to hold down costs. It is not in B’s interests to take the risk from S and undermine these incentives. How can s/he provide appropriate incentives while reducing S’s risks and in so doing make the contract interesting to S?What B needs to do is to accept those risks of cost increases which S cannot control while making S responsible for those s/he can control – a tricky business. B needs to know the nature of S’s cost structure (an information problem – no problem with full information but with information asymmetry it is another story) before s/he can achieve this. Of course, integration might dispel this problem but then we encounter the bureaucratic losses mentioned above. What can B do? Go back to your principal–agent model (see Chapter 4). We can reg ard B as a principal and S as an agent.P (B) can acquire information by having more than one agent (S) operating in the same environment (in practice this is not easy). This is called multiple sourcing. It could be achieved by either multiple external sourcing or having an in-house comparator (tapered sourcing). But, of course, one needs to ask whether B’s sourcing requirements are of sufficient magnitude to reap any economies of scale across the multiple sources. If not, would it be sensible – from an information leakage point of view – to allow the sourcing organisation to sell to other organisations on the open market?If B has decentralised design to S then this might prove hazardous. As we have observed, long-term relationships (see Chapter 8) can invoke trust and reputation effects. Traditionally it was assumed that one of the advantages of integration into an organisation derives from the repeated interaction effects. B and S being in the same organisation , they repeatedly interact and, indeed, they will assume that there is a high enough probability that they will once again interact in the future. Thus prudent calculation can overcome the moral hazards in incomplete contracting.In game-theoretic terms B and S may play TFT (the folk theorem). B may also wish to protect her/his reputation for fair play. In short, an organisation can control and co-ordinate vertical relations by cultural means. However, long-term contracts with a continuation clause also produce repeated interaction (the Japanese were largely responsible, in the 1980s, for recognising this) and, thus, reputation and trust can be generated at other points on the market–organisation continuum. Cultural mechanisms can operate outside formal organisations.If B and S can trust each other not to behave opportunistically, then the advantages of S’s independence and reduced transaction costs can be realised. 99 Organisation theory: an interdisciplinary approach Finally, reverting to an extended value chain where S’s suppliers are also brought into the picture, we obtain the situation as in Figure 10. 5. †¢ †¢ R S B Price and market > †¢ > †¢ †¢ R S B Long-term contracts > †¢ > †¢ †¢ R S B Organisation span of co-ordination = 3 > †¢ > †¢ Figure 10. Should the whole chain be co-ordinated by integration (span of coordination) or perhaps co-ordinated by long-term contracts, etc.? If the latter, should B contract with S and R or should B contract with S and S with R? In either case we have examples of network organisation and even virtual organisation if the relationships are mediated by modern information technology. The strategic complexion of these sorts of organisation is little understood. Why don’t you have a go! I hope this section has given you some appreciation of how to analyse organisation choices from a genuinely strategic point of view.Much of the abo ve reasoning can be underpinned from a game-theoretic standpoint. This further supports my earlier contention that modern organisation theory often requires a knowledge of strategic thinking and game theory. A reminder of your learning outcomes On completion of this chapter and the essential reading, you should have a good understanding of the following terms and concepts: transaction cost economics strategic calculation. Sample examination question 1. Explain why a transaction should be placed in a market or an organisation. 100