Assumptions Of The Heckscher Ohlin Model Economics Essay

Assumptions Of The Heckscher Ohlin Model Economics Essay Introduction Eli Heckscher (1919) and Bertil Ohlin (1933) found the basis for crucial and substantial theoretical developments of international trade by emphasizing the relationships between the composition of countries factor endowments and commodity trade patterns. The Heckscher-Ohlin (H-O) theory is the simplest explanation for why countries involve in trade of goods and services with other countries. Heckscher-Ohlin model, which is the general equilibrium mathematical model of international trade theory, is built on the Ricardian theory of comparative advantage by making prediction on trade patterns and production of goods based on the factor endowments of nations (Learner 1995). Assumptions of the Heckscher- Ohlin Model The following assumptions pertain to the 2*2 model of Heckscher-Ohlin. It is assumed that there are only two nations (1 and 2) with two goods for trade (X and Y) and two factors of production (capital and labour). For producing the goods, both nations use the same technology and they use uniform factors of production. In both countries, good X is labour intensive and Y is capital intensive. The tastes and preferences of both nations are the same (both countries can be represented in the same indifference curve). In both nations, the assumption of constant returns to scale is applicable for the production of goods X and Y. In both nations, specialization in production is not complete. Goods and factor markets in both nations are perfectly competitive. There exists perfect mobility of factors of production within each country though international mobility is not possible. There are no restrictions or limitations to the free flow of international trade. That is, there exist no transportation costs, tariffs, or like other obstructions either to control or to restrict the exports or imports. It is assumed that there exists full employment of all resources in both nations. That is, there will not be any under employed resource in either nation. The exports and imports between the nations are balanced. It means that the total value of the exports will be equal to the total value of imports in both nations. Implications of the Assumptions The assumptions are made in order to depict the theory in a two-dimensional figure. It is also implied that both countries have access to and use the same general production techniques. The labour-capital ratio (L/K) of commodity X is higher than that of Y in both countries with the same relative prices of factors. As constant returns to scale is assumed, increase in the amount of labour and capital will result in the proportionate increase in the output also. Another implication is that though free international trade exists, both of the countries produce both commodities and it can be presumed that both countries are not small in size. As the tastes and preferences related to demand are identical in both countries, if the relative prices of the goods are equal, the consumption of goods X and Y will be in the same proportion in both countries. Likewise, in both countries producers, traders and consumers are too small to affect the commodity prices. Mobility of factors of production implies that capital and labour are free to move from areas or industries of lower prices (earnings) to those of higher prices (earnings) until earnings become same equal in all areas or industries. That is, price equalization theory is implied here. International differences in the earnings exist because of the factor immobility in the absence of international trade. The assumption of incomplete production specialization implies that the process of specialization in production continues until the commodity prices (either relative or absolute) prices are the same in both countries. Again, if the transportation costs, tariffs or any other restriction are allowed, specialization will continue only until price differences by less than or equal to the costs or tariffs. The Heckscher-Ohlin Model Heckscher-Ohlin model is generally described as two countries, two goods and two factors model (2x2x2 model). This formulation of HO model was mathematically developed by Paul Samuelson. The goal of the model is to predict the pattern of international trade in commodities between the two countries on the basis of differences in factor endowments in both the countries. Definition: A nation exports the commodities which are produced out of its relatively abundant and cheap factors or resources and imports the commodity which is produced out of relatively scarce factors or resources. In another words, relatively labour abundant country exports relatively labour intensive commodity and imports the relatively capital-intensive commodity. Country 1 exports commodity X because X is the Labor (L) intensive commodity and L is relatively cheap and abundant factor in country 1. Country 2 exports commodity Y because Y is the Capital (K) intensive commodity and K is relatively cheap and abundant factor in country 2. The theory implicates two things: first, different supply conditions in terms of resource endowments explain comparative advantage and second, countries export goods that use abundant and cheap factors of production and import goods that use scarce and expensive factors. According to Heckscher-Ohlin theory, international and interregional differences in production costs occur due to the differences in the supply of factors of production. Under free trade, countries export the commodities whose production requires intensive use of abundant factors and import the commodities whose production requires the scarce factors. Hence, international trade compensates for the uneven geographic distribution of factors of production. The theory gives insight to the fact that commodities are the bundles of factors (land, labour and capital). Thus, the exchange of commodities is indirect arbitrage of factors of production and the transfer of services of otherwise immobile factors from regions where factors are abundant to regions where they are scarce. The H-O theorem identifies the basic reason for comparative advantage and international trade as the different factor abundance or factor endowments among nations. Because of this particular reason, the theory is known as factor proportions or factor endowment theory. The theory postulates that the difference in relative factor endowment and prices is the main reason for the difference in relative commodity prices between two countries. Factor Endowments Factor endowment can be defined as the ratio of capital to labour (K/L). If the capital labour ratio in country 1 is greater than in country 2, then country 1 is said to be relatively capital-abundant (and labour-scarce) while country 2 is labour abundant (and capital scarce). Symbolically, this can be represented as: (K/L) 1 > (K/L) 2 Important implication of different factor endowments is for autarky prices of factors of production (the autarky prices are implied in the figure represented below). For two countries with same demand patterns, relative factor prices leads to relative factor scarcities. Country 2 will have relatively inexpensive labour and country 1 is in a position to provide relatively inexpensive (abundant) capital. Factor Intensities, Factor Abundance and Production Frontiers under H-O Model Factor Intensity Commodity Y is said to be relative capital intensive and commodity X is relatively labour intensive if the capital labour ratio used in the production of Y is higher than that of the production of commodity X. That is, (K/L) y > (K/L) x If the for the production of commodity Y, the country use 2K and 2L, then K/L = 1 and if the production of commodity X requires 1K and 4L, K/L=1/4. In this case, it can be said that commodity Y is capital intensity and commodity X is labour intensive. Factor intensity depends on K/L rather than the absolute amount of K and L. At the equilibrium points, for producing the commodities, both countries choose capital-labour ration that minimize the factor costs at the prevailing relative factor prices. The relative factor prices are represented as W=w/r where w is the price of labour and r is the price of capital. Though in principle, the factor intensities can be reversed when factor prices change. But it is assumed that this does not exist in H-O model. There is no factor intensity reversal. Factor Abundance Factor abundance can be defined in terms of two ways:1) Physical Units and 2) Relative Prices of factors. In terms of physical units, the overall amount of capital and labour available to each country is taken into consideration (that is, TK and TL). As per this definition, country 2 is capital abundant if the ratio of total amount of capital (TK) to total amount of labour available in country 2 will be greater than that in country 1. The ratio of TK/TL is important rather than total absolute amount of K and L of the countries. Country 2 may have less capital than country 2 and still there may be the capital abundant country if TK/TL in country 2 exceeds TK/TL in country 1. In terms of relative factor prices, country 2 is capital abundant if PK/PL is lower in country 2 than in country 1. As the price of capital is taken to be the interest rate, r and the price of labour is wage, w, then PK/PL= r/w. The ratio of r/w is important, not the absolute level of r or w, in determining whether a country is capital abundant or labour abundant. The first definition takes only the supply of factors into consideration, while the second considers both supply and demand factors. Factor Endowments and Production Frontiers When country 2 is capital abundant and the commodity Y is capital intensive, country 2 can produce relatively more of commodity Y than in country 1. Similarly, if country 1 is labour abundant and commodity X is labour intensive, country 1 can produce relatively more of commodity X than country 2. This situation gives a relatively flatter and wider production frontier curve for country 1 than country 2. Diagrammatic Representation of H-O Model The following figure represents the Heckscher-Ohlin model diagrammatically. As it is assumed, two countries have same tastes and preferences for demand, both the countries are represented in the same indifference map. I is the highest indifference curve that country 1 and country 2 can achieve separately in the absence of international trade. The points A and A/ represent equality of production and consumption of both countries in the absence of trade. The tangency points of A and A/ determine the no-trade equilibrium prices of PA and PA/ in country 1 and country 2 respectively. When PA The right side of the figure shows that country 1 specializes in commodity X and Country 2 in commodity Y when both countries involve in international trade. Specialization proceeds at point where country 1 achieves the point B and country 2 reaches at point B/. At these points transformation curves are tangent to the common relative price line of PB. Country 1 exports commodity X in exchange for commodity Y and consumes at point E on the second indifference curve (IC II). Likewise, country 2 exports commodity Y in exchange for commodity X and the relative equilibrium point of country 2 is point E/ which coincides with point E. In this context, it is important to note that country 1s exports of commodity X equal country 2s imports of commodity X (that is, BC=C/B/). Similarly, country 2s exports of commodity Y equal country 1s imports of commodity Y (that is, B/C/= CE). When PX/PY>PB, country 1 wants to export more of commodity X than country 2 is able to import at this high relative price, and PX/PY tends to diminish to PB, which is equilibrium and normal price. Likewise, when PX/PY At point E, more of commodity Y and less of commodity X than at the point A are involved. However, country 1 will gain from international trade because E lies on higher indifference curve (IC II). Similarly, though at E/ more commodity of X and less commodity of Y are involved compared to the point of A/, country 2 gains from the trade because E/ lies on higher indifference curve, IC II. Prepositions of H-O theorem and other empirical Studies As a connotation of H-O theorem, three other prepositions or theorems are associated: Factor price equalization theorem 2) Stopler-Samuelson theorem and 3) the Rybcsynski Theorem (Jone 2002). The Factor Price Equalization Theorem Even though the national frontiers rule out the international mobility of factors, free trade in commodities leads to reduce the disparities in demand relative to supply of factor and thus to decrease the disparities in factor returns among different countries. International free trade leads to sharing of same technology by different countries and bringing of equality of factor returns if the factor endowments are similar and sufficient quantity of commodities are produced commonly (Samuelson 1992). The Stolper- Samuelson Theorem Changes in relative commodity prices as brought by free international trade have strong effects on the factor prices or rewards. If there is no joint production, some factors may raise their rewards uncontrollably and other rewards may be lowered unambiguously. If the number of factors equals the number of commodities and production is non-joint, the relative changes in commodity prices will raise the price of any particular factor (Uekawa, 1971). The Rybczynski Theorem If there is unbalanced growth in factor supplies, it may lead to stronger asymmetric changes in outputs also. If the quantity of factors of production and commodities are evenly matched and production is non-joint, this pattern of asymmetry may pertain to growth in some factors of production (if there is given commodity prices) and may lead to the reduction of outputs. Empirical Legitimacy and Leontiefs Investigation Leontief (1953) was the first to confront the Heckscher-Ohlin model with empirical investigation. He had developed a set of data in the frame of input-output accounts for the U.S economy and he computed the amounts of labour and capital used in each industry for 1947. Likewise, he made use of U S trade data for the same year to compute the factors of production (labour and capital) used in the production of $1 million of US exports and imports. Table 1 Leontief Test (1953) Export Import Capital ($million) $2.5 $3.1 Labor (Person-years) 182 170 Capital/labour($/person) $13,700 $18,200 Each column of the table shows the amount of labour and capital required to occur $1 million worth of international trade (exports or imports) to United States in the year 1947. Firstly Leontief measured the capital and labour required for the exports from US. This estimation required the labour and capital used in each and every exporting industry and from the first row of the table, it is seen that $2.5 worth of capital was used to export worth of $1million. For labour, 182 person-years were used to produce the same exports. Taking the ratio of labour and capital, it can be said as in the third row of the table, each labourer is working with $13,700 worth of capital. Turning to the import side of the calculation, there emerged a problem non-availability of data on foreign technology. Still Leontif managed to estimate the model assuming that same technology of US used in imports. The estimation on imports (i.e., $3.1 million of capital, 170 person- years and capital-labour ratio as $18,000) indicates that capital labour ratio of imports is higher than that of US exports. But US economy is found in 1956 as capital-abundant and this appears to contradict the H-O theorem. Thus the findings of Leontief came to be called as Leontief Paradox (Learner 1995). Under the framework of H-O theorem, many explanations have been proposed for the existence of this paradox. U S and foreign technologies are not same unlike the assumption of H-O theorem. The year 1947 was not usual year as World War II has just ended As H-O model assumes, the U S was not engaged in free trade. Other Empirical Estimations of H-O model By examining the limitations of Leontief s estimation, Bowen, Leamer and Sveikauskas (1987) estimated the H-O model by using data on a large number of countries. It was estimated to check whether countries are net exporters of the factors of production (which are relatively abundant) as factors of production are indirectly embodied in the trade. Cline (1997) suggested a more generalized H-O model by taking into account more and disaggregated factors of production. It was recognized that factor endowments change over a period of time as the investment and technological advances occur. Concluding Remarks H-O theorem has been vehemently criticized on many grounds including in terms of its basic assumptions. Some empirical studies even questioned the validity of the theory. Despite of the many criticisms and drawbacks, H-O theory has its own merits and contributions in the theoretical history of international trade. By taking both commodity and factor prices into consideration, H-O theory provides a more and satisfactory explanation of international trade. In comparative cost theory of David Ricardo, it was pointed that comparative cost difference is the basis for international trade. But H-O theorem better explains the reasons for these cost differences in terms of factor endowments. The price equalization principle, a concomitant of H-O theorem comprehensively explains the situation which is of course, superior to the previous theories of international trade.

Expanding the FMLA in CAlifornia Essay -- essays research papers

Problem Identification Every day in California, working men and women face conflicts between their work responsibilities and their families. In order to work they must make arrangements for their children and elderly family members who need assistance. They address these conflicts through a variety of child-care, after-school, and eldercare arrangements. But sometimes when a child is seriously ill, an aging parent’s health deteriorates suddenly, or a baby is born or adopted, these daily arrangements are no longer adequate. At such times of family need, an employee simply must take time off from work because no alternative care arrangements will do. That is why in 1993, Congress passed the Family and Medical Leave Act (FMLA), which was the first national policy designed to help working people balance their work and family responsibilities. It guarantees that people who work for companies with more than 50 employees can take up to 12 weeks’ unpaid leave a year to care for a newborn or newly-ado pted child or for certain seriously ill family members, or to recover from their own serious health conditions. Unfortunately, taking unpaid family leave is a luxury most Californians can not afford, so new mandates must be instituted to help insure that our state’s families can have a healthy and affordable balance between work and family responsibilities. Many groups have different views on how this issue should be resolved and that is why I have chosen to use the group theory to explain this problem. There are three workable resolutions that I have chosen to discuss; expanding the FMLA to cover businesses with 25-49 employees, expanding the use of sick leave, and expanding the State Temporary Disability Insurance (TDI) Program to provide partial wage replacement to employees who are on parental leave. Search For Solutions The first possible solution was formed when it came to public attention that many caregivers couldn’t afford to take unpaid family leave due to the laws restrictions. In a national survey it was discovered that nearly two-thirds of employees who needed but did not take family or medical leave because they could not afford it. In addition, almost one in ten FMLA leave-takers was forced to turn to public assistance to help cover the wages they lost as a result of taking family or medical leave. As if the unpaid restrictions weren’t enough, it tu... ...on(actual 1990 expenditure) Number of Employees Covered by TDI  Ã‚  Ã‚  Ã‚  Ã‚  11.1 million (1989) Eligibility Requirements for New Benefits  Ã‚  Ã‚  Ã‚  Ã‚  Employees must be eligible for state disability insurance Length of Absence Covered  Ã‚  Ã‚  Ã‚  Ã‚  12 weeks Purposes of Absence Covered  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚ · Care for newborn or newly adopted children · Care for ill parents, children or spouses Estimated Number of Leave-takers Likely to Use New Benefits  Ã‚  Ã‚  Ã‚  Ã‚  619,250 Average Weekly Benefit  Ã‚  Ã‚  Ã‚  Ã‚  $102.82-193.57 Estimated Length of Leave  Ã‚  Ã‚  Ã‚  Ã‚  5-10 weeks Estimated Total Annual Cost of Expanding TDI to Include Family Leave  Ã‚  Ã‚  Ã‚  Ã‚  $835 million New Cost as a Percentage of Total Program  Ã‚  Ã‚  Ã‚  Ã‚  34 percent Average Cost Per Covered Worker  Ã‚  Ã‚  Ã‚  Ã‚  $6.27 / month$1.45 / week   Ã‚  Ã‚  Ã‚  Ã‚  So by reviewing the data it seems probable that expanding the SDI to include family leave would be a feasible and logical solution that most Californians and politicians would stand behind and implement.

Boeing Case Essay

1. Why did Boeing adopt the radical change approach for designing and developing the 787 Dreamliner? What were the risks? In your opinion, was it a good move? Defend your choice. Boeing adopted the radical change approach for designing and developing the 787 Dreamliner because they were in competition with Airbus and needed a new approach in which they could use innovation to stand out upon their competitiors. Boeing was looking to reduce manufacturing costs and development times. Boeing took an aggressive approach to apply their techniques. There was not enough time to fully establish the project or to even communicate with vendors. The project was delayed mainly because of their global supply chain network. Boeing did not have the necessary technology to fulfill the needs of the 787 Dreamliner which unfortunately caused it to have many delays and problems. In my opinion, this was not a very good decision. It was a financial burden to the company and caused unnecessary stress on the company as a whole. They were left with no choice but to make up for the losses to airlines that purchased the 787 Dreamliner. 2. Using the Silo Perspective versus Business Process Perspective, analyze the Dreamliner program. When analyzing the Dreamliner program using the silo perspective, we can see that the program had difficulty communicating between Boeing and its vendors. However, the silo perspective was good for individual departments within the company. It increased efficiency within these departments, but created processes of supply chains to become incompatible. The plan at Boeing was to use various suppliers in which would each have expertise over the different parts of the plane to quicken the process, when it reality it delayed it extremely. When looking at the business persceptive, Boeing needed IS to monitor the connection with their vendors, resolving problems in a shorter time frame. 3. What are your conclusions about the design of the integrated supply chain? Give some specific ideas about what could have been done to integrate it  better. The design of the integrated supply chain lacked a control system that was able to monitor the designing, planning, and manufacturing, as well as the suppliers. There was too many vendors in the supply chain, which ultimately caused it to fail. To integrate the supply chain better, Boeing needed to have a full understanding of supply chain management and monitor it closely using IS. Supply chain management is the flow of goods. Boeing could have been tracking the movement and storage of the parts of the planes. They also could have been tracking what their vendors were doing and when by having them record down specific times and dates that they were working on the parts. Lastly, they would have been able to keep track of the overall time it took to make each part. With this information they could have been able to find more efficient ways to build the parts. All of these would be done through IS and would have caused the Dreamliner from failing. 4. If you were the program manager, what would you have done differently to avoid the problems faced by the Dreamliner program? If I were the program manager, I would have looked to establish a manufacturing factory that focused solely on production of the parts for the plane. This way, more attention would be paid to the specific parts and communication between the vendors would have been more effective. This factory would need employees which would be skilled in their specific function and that would be able to produce the parts in a timely and efficient way. Enforcing more guidelines will ensure that the vendors are able to get their jobs done. It is also important to plan for the future, because the Dreamliner held high expectations it was in high demand. Boeing should have predicted an increase in orders and better prepared themselves for what was about to come their way. An IS would have helped to track data that would have been useful in determining the projection of the Dreamliner.

Analysis Of The Movie Their Eyes Were Watching God

Aditya Ramkumar Ms. Gould Honors American Literature 7 April 2017 The Analysis of Race Relations instead of Feminism Throughout the history of the United States, race relations have proven to be a major issue. From slavery in the early years of the nation to Jim Crow laws, African Americans have been continually oppressed in US history. The Harlem Renaissance, provoked by national prosperity in the Roaring 20s, propelled the progress of creative writing within the black community, helping form a new black national identity. This movement gave birth to many ardent civil rights activists, such as Richard Wright, who strongly believed that novels should address the issue of racism in America. Wright’s assertion that Hurston’s novel Their†¦show more content†¦While Wright focuses his argument on the fact that Hurston doesn’t analyse the issue of race relations, he fails to recognize the novel’s focus on feminism. The fact that Wright is focused on civil rights and the fact that he is looking primarily for evidence s upporting race relations can be seen, as he states that Hurston depicts blacks in a â€Å"safe and narrow orbit in which America likes to see the Negro live† (Wright). While he may be correct that this is the case, he fails to notice that that was not what Hurston was focusing on, and that was not what she intended to convey. Hurston was rather focusing on the Women’s Rights movement, as shown by Janie making her own choices and given increasing rights throughout the book. Janie moved from a marriage that was set up for her (with Killicks), to a marriage that she chose to take part in but was suppressed (with Joe Starks), to a marriage where she was treated as an equal (with Tea Cake). After strained relationships with Killicks and Joe Starks, Janie exclaims about her relationship with Tea Cake that â€Å"Somebody wanted her to play [checkers]. 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The Relationship Between Aristotles Conception of...

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Borderline Personality Disorder Explored in Girl Interrupted

Girl Interrupted is a 1999 film in which Susanna, a high school senior on the verge of graduating with her class in 1967, is rushed to the Emergency Room because she consumed a whole bottle of Aspirin, followed by a bottle of Vodka. After being treated, Susanna is seen by a friend of her fathers, who is a Psychiatrist who believes that her actions were an attempt at suicide. Susanna, of course denies this, instead stating that she was making an effort to rid herself of a headache. The Psychiatrist recommends that she stay at a mental hospital named Claymore for a rest. While there, Susanna meets a number of individuals with a diverse array of disorders. One individual in particular, Lisa essentially runs the group of girls because†¦show more content†¦In Girl Interrupted, Lisa displays unstable relationships with people, difficulty controlling anger, emotional unpredictability, attempts to avoid abandonment, carelessness for oneself and enduring feelings of emptiness, and. 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Organizational Change Management Case Study Report for free

Question: Discuss about the Case Study Report for Organizational Change Management. Answer: Case Background The purpose of this report is to investigate the impact of change when Rapid Supply Electronics Components Limited (RSEC) acquired Electronic Bits Fast (EBF). With the growing need to counter competition, RSEC saw acquiring EBF as an opportunity to become a market leader. RSEC plans were to integrate EBFs system and processes to improve its service delivery and products development. Though the idea was good, RSEC had carried no in-depth analysis put enough supporting systems up to ensure the success of their strategy. Just eleven months after the acquisition, the board swiftly made its intentions clear of integrating all logistics, sales and customer service functions. The board made this decision without enough expert knowledge of how to implement the system across the whole company. For a change to succeed, the board needed to bring every member of the organization the change would affect directly or indirectly on board (Simatupang, Govindaraju and Amaranti, 2016). The goal of the project was to absorb the brand values and customer service principles of EBF in addition to sales and logistics system. The integration of the three components would have created and captured value from the merger. The project aimed at introducing the RSEC staff to the newly acquired system from EBF. The operations designed to create a centralized head office for the functions. This would have helped RSEC to reduce the costs associated with these functions plus aid the company to provide services efficiently. RSEC had a good plan to counter competition from other companies though the strategy was not well thought through. The company management wanted to capitalize on an available opportunity though they were in a rush, did not use experts and had limited knowledge on the task at hand. Analysis Problem Identification RSEC faced many issues that always accompany any change implementation in any organization. The problems presented a lot of challenges to the management. The biggest problem was that rather a new system benefits the company; it just managed to help the company create losses. The problems began with poor communication of the change about to be implemented (Bernardes, 2015). The employees who were going to be affected by the new system got the news at the same time as every other employee. The employees were not consulted or given a chance to air their views. Most of the employees were against this change as they knew it would interfere with their routine and since RSEC was acquiring EBF, the new staff would have to adjust to RSECs system. The employees did not see a need for a centralized system since to them the individual departments were performing well. The change involved some employees relocating to the central office in Sydney. These employees were not alerted before the change implementation process started to give them ample time to prepare themselves and their families and to hand over pending issues. The change rendered many customers service staff redundant and thus was released by the company. Those who did not feel like moving were also left unemployed. The high turnover of customer service staff paralyzed the operations of the centralized unit. The manager was having a hard time in meeting the set goals and objectives given limited resources regarding staff. The change did not progress as well as planned due to the staff shortage and the speed of the change. In Sydney, much time is spent to train replacement agency workers leaving a lot of work undone thus tainting the brand image and increasing custome r complaints. Problem Analysis and Justification RSEC has experienced a lot of problems brought about by the need for a centralized system. The companys problems began right from the acquisition (Paun, 2015). Though the acquisition was a brilliant idea by RSEC the process involved was shoddy and could not bear any profits for RSEC. RSEC did not openly communicate its intentions to the employees because it did not want to raise alarms and needed the merger to go through smoothly. Though the management could justify its reasons not to involve its employees, the action proved costly to the organization. The employees were an integral part of ensuring smooth change transition and success of the centralized, integrated function. The board had a success roadmap which they wanted to follow. The board made prior decisions about centralizing these primary functions even before the merger was complete and all necessary systems put in place. The board appointed the business systems manager from the original RSEC Company as the change manager. The business systems manager seemed to have technical expertise necessary to facilitate the implementation of the change. This was justified to the board as the manager had collaborated with the board during the development of a change plan and they thought he had the required knowledge to oversee the implementation process (Antonellis, 2016). The board was in a hurry to implement the new changes that it got rid of redundant employees quickly even before the system was a success. The board wanted to reduce the costs incurred and because it had faith the system would succeed. In doing so, the board got rid of skilled employees who could have helped the company succeed. Some actions of the board were justified, but the impact they had on the organization were severe. The resultant effect was a company performing poorly with fewer staff and a poor communication channel in addition to p oor managerial decisions. Alternative Solutions In this section, the report tries to develop some alternative solutions to RSEC organization and their acquisition of EBF. The acquisition proved to be a good strategic move to the company. The main goal the board had in mind was to centralize the main function s and adopt a system that would make them very competitive in the market. The company could have taken up the services of a consultant to help the company determine its cost drivers and ways to reduce the production cost in addition to designing brand values and customer service principles. Consultants have adequate knowledge and could advise the management on what to do. The consultant could have carried their investigation and determine what actions the firm can undertake to become cost drivers and improve their service delivery. Alternatively, the company could have first tried if the system is capable of achieving success for the two companies (White, 2006). Before enrolling the centralized system into full operation, the company could have adopted the change and try it out for a year or more to determine its suitability. It is crucial for companies to first try out a new system and carry out an in-depth evaluation of the system before settling on the final decision. RSEC could have adopted another solution to its problems through training. The organization could have trainers in the field of customer service to equip both managers and employees of competent skills and knowledge in quality customer services. Learning and training can help an organization counter the high competition in the industry. The trainers carry out research and have the up to date knowledge of the skills in the market. The organization could have gained a lot through training. Recommendations The following recommendations constitute some of the best actions RSEC could have taken on the issue at hand. To ensure that change is successful, the organization has to involve every member of the organization. By bringing every member on board, the organization will move forward as a single unit thus minimizing the chances for change resistance (Fox and Keisling, 2016). Through minimizing resistance to change, the organization would have reduced employee turnover and retain its talented employees. Before, during and after the implementation of change, the organization needs to develop an efficient and open communication channel. Communication is crucial during change implementation. Through effective communication, stress and conflict are minimized as all the issues are handled professionally. An open communication channel with information flowing up and down the organization helps the organization implement change that will have the support of the employees. During the implementa tion process, all the queries concerning the new system and any change needed to the system are made. The organization needed a professional consultant in organization change management to oversee the whole implementation process (Charlie, Perry and Loh, 2014). Consultants are useful to management by offering expert information needed to make the change implementation process successful. The implementation process determines the viability of the change to the organization. The company needs to develop a good rapport with the employees. The Human Resource (HR) manager already recognized that the employees are feeling less valued and have no morale to work. To improve the morale of the employees, the HR department needs to offer incentives such as outdoor training and seminars, offer gifts and financial rewards and also seek the services of counselors (Jarkas and Radosavljevic, 2013). Giving the employees an opportunity to be part of a decision-making process will also motivate them especially the older RSEC staff. The replacement agency workers need to have professional on the job tra iners and not fellow employees to ensure that productivity goes on. Implementation Change implementation is a necessary process for the organization to achieve its set goals. The implementation process should involve every member of the organization directly or indirectly affected by the change about to occur. To implement the recommendations, the organization could have sent information to every staff some weeks before the change management process kick starts (Dehmlow, 2016). Every employee should know the role he or she should play in the implementation process. It is important to bring the organization together at this point. Any employee stuck should seek assistance as soon as possible. The organization should tell the truth to the employees of what the coming changes contain and what benefits will accrue to the organization and the employees from the new system. There is no need for an organization to implement change and in the process lose all the talented and skilled employees due to poor change management. The employees should know they are very important and the change is for the better. Due to the limited number of staffs, the organization needs to implement an on the job training. The new employees should learn the specifications of the job while they are doing the job. The organizations should have professional trainers at the workplace and find coaches to help equip the new staff with the required set of skills. It is crucial to the organization for production to continue so as to satisfy the clients in the market and to address any customer issues that may crop up (Du Plesis and Mabunda, 2016). The organization also needs to provide an excellent communication system that can adequately support the implementation process. The communication channels should be open and give priority to any feedback regarding the implementation process. It is worrying that the board thinks the implementation process was successful while in the division units there is chaos. A good communication channel helps the organization avoid such issues and give the board real time information to address the issues. To motivate the employees, first, the organization needs to establish a good rapport with the employees. The organization has to be swift to turn around its misfortunes and capitalize on the opportunity as earlier planned. The inducements need to help the employees focus on the work and improve their productivity. The employees need to feel like part of the organizations future and that they have job security. To employees, job security is always a priority. For this employee saw their fellow employees lose their jobs, the organization will need to reassure them of job security. The implementation process is not easy, and it needs the A-game from the management and the board. References ANTONELLIS JR., P. J. (2016). 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