Area Study Merging with Cross-National Approach

Area Study meeting with Cross-National ApproachOverviewAre res publica studies and a cross-national glide pathing really that different or they cast more in common than we might expect? I think it is the latter, having three workplace(ip) correspondentities. First, these studies make believe increasingly integrated to seek domineering explanations that cut finished regions, which had been thought to be fundamentally different or exceptional (such(prenominal) as Latin America). As such, the second likeness is that they stick in addition puzzle to sh be rough roles, such as confirming a surmisal. Third, the intensify of mingled method approach that mint combine bowl ponder and cross-national approaches save illuminates non nevertheless the second similarity further besides a common and ultimate goal shared by the devil approaches, which to flourish our knowledge.At the same time, how they go ab prohibited contend similar roles and accomplishing the shared goal remains as a study difference. In other words, to answer the second question, each approach is better suit than another(prenominal) to answer especial(a) types of questions. Area studies that are often in qualitative nature ask for conditions necessary or sufficient for particular out numerates to occur, while cross-national approach that tend to be in vicenary in nature is often suited for asking the average execution of an independent variable on such government issues.Similarities Area Study Merging with Cross-National ApproachOnce again, I think empyrean studies and a cross-national approach have summate much closer to each other, having three major similarities. The first major similarity is that both studies seem to have want imperious explanations that cut by regions. While it is straightforward that a cross-national approach seeks such accounts, I argue that this similarity has emerged due to a change in seeing what sweep study should be.Fundamentally, com monwealth study is a study that focuses on particular areas or regions of the world. In the mid(prenominal) twentieth century, an area study approach had particularly been utilise as a cookie cutter strategy. That is, it snips out regions or areas that do not conform to accepted ideas or particularly the iodins that are studied through the scope of ethnocentrism (Wiarda 1993, 16). Thus, the study is driven by the ideawhat works in one context may not work in another and utilized to understand not just deviant or outlier but exceptional cases (Wiarda 2005, 2). For instance, ODonnells area studies on Argentina and brazil-nut tree (1973 1976) caught grater attention in the 1970s he challenged Lipsets modernisation scheme (1959 1960) that came out a decade ago based on western sandwich states as a widely accepted idea displaying the positive kin amongst economic development and rustic. Contrarily to Lipset, ODonnell showed that a offset of modernization actually yielded a burea ucratic-authoritarian regime in the richest countries in the region. dependency theorists, such as Frank (1969) and Dos Santos (1971) also elevated the magnificence of area studies by arguing that Latin American economies would not keep abreast the path of western sandwich states because the region was exploited as satellite economies by the West and ended up contributing to the Western modernization. Recently, Mainwaring and Perez-Linan (2003) empirically exhibit a non-linear relationship mingled with economic development and democracy in Latin America they concluded that Latin American exceptionalism existed in the mid to late 20th century because of typical economic policies (ISI) and a have-to doe with between semi semipolitical elites.Regardless of Mainwaring and Prez-Linans work, however, I see area study to increasingly become a lesson-drawing approach (Wiarda 2005). Instead of pointing out regional distinction and exception as an end goal, these differences are used as lessons for building a mega-theory or producing systematic accounts regarding comparative degree politics. This is in part because of the rise of other area studies focusing on the shopping centre East and East Asia, which show their paths towards democracy that are distinct from both Western states and Latin America. These studies, therefore, diminish Latin America exceptionalism. In addition, area studies, namely of ODonnells (1973 1976) have come under much attack for being ad hoc explanations, since Latin American turned to re- democratise in the 1980s. All of these f meanss have then called for a more systematic investigation for providing an account, which identifies common and different conditions contributing to such outcomes (Acemoglu and Robinson 2006).For instance, Acemoglu and Robinson (2006) recognized Lipsets modernization theory as one of four paths, quite than the only path, and sought conditions that make democratization likely, using the cases of Argentina, S ingapore, and South Africa.ODonnells later work with Schmitter (1986) on Latin America also merged with Przeworski (1991) and Haggard and Kaufman (1995), which utilized cases from various regions, such as the Philippines, South Africa, Bolivia, Uruguay, and Nepal. These studies have then provided a powerful account, declare oneselfing the entrance and exit or authoritarianism to depend on a strategic bargaining between political (military) and economic elites in the wake of economic downturns.Hence, the first major similarity is, once again, a tendency of both area studies and cross-national approaches to seek systematic accounts that cut through regions. While cross-national approach is essentially thought to have such a goal, area studies have come to understand the admit of the goal, while no single region seems to stand as merely exceptional or can be isolated from the rest of the world.As such, the second similarity is that they have also come to share around roles. When area studies, at least some parts of the studies, have come close to cross-national approach theoretically, these studies can play a similar uninflected role as well, namely the role in confirming a theory.The theory of political activism may be a good exemplar. chiefly based on Western states, including the United States, empirical cross-ational studies have suggested that well-established democracies have increasingly faced a legitimacy crisis or increase in democratic deficits (Norris 2011, 3-5). Using a wide range of indicators such as a declining civic engagement or voter turnout (Teixiera 1992 Putnam 2000), declining caller loyalties (Aldrich 1995 Dalton et al. 1984), and surveys, they show dissatisfaction and decrease in confidence in national governments (Norris 2011). As such, Fung and Drakeley (2013) conducted an area study focusing on East Asia, ranging from South Korea to Indonesia and Cambodia, and confirm that even in transnational democracies face similar challeng es with old democracies or what Norris (2011) calls democratic deficits. The area study shows that East Asian states are remarkably similar with Western democracies in a sense that democratic regime may be flawed but not broken.In turn, cross-national studies can also confirm a theory based on area studies. For instance, Lipsets modernization theory on the basis on Western Europe has been reinforced with a growing number of empirical cross-national studies (Boix and Stokes 2003 Epstein et al 2006), although debatable (e.g. Przeworski and Limongi 1997 Kennedy 2010 Teorell 2010). Geddes (2003, 351-365) explicitly stated the literature on modernization theory has become much more persuasive because large-n studies have begun to play a greater role in the comparative development fields.Third, the rise of mixed method approach that can combine area study and cross-national approaches further illuminates not only the second point but also a common and ultimate goal shared by the two appro aches, which to expand our knowledge. For instance, Liberman (2005) recently suggested a mixed-method approach, called nested abbreviation, which is a seek design employing both a Large-N statistical analysis and small-N case studies for in-depth investigation. In particular, this approach advocates the use of a large-N analysis as a guide to draw a posterior small-case N analysis for two different purposes a sample-building tool for exam an outlier case and a model-testing tool for confirming an online case. Coppedge (2002) is a good example of the nested analysis he developed a large-N study to determine the subscribe of an area study on Venezuela, which appeared to have a large wad of residuals since the 1990s. Fish (2005) also employed a mixed approach, which conducted a large-n analysis and the Russian case study.Similarly, King et al (1994) and Brady et al (2006) also suggest a mixed approach, which, though unlike Liberman, utilizes area studies to draw a large-n analys is. For instance, Krieckhaus (2006) briefly reviewed areas of Latin America, East Asia, and Sub-Saharan Africa to argue distinctive effects of democratic governance on economic growth. This area study thus confirms not only a null relationship between the two variables in cross-national studies but also the positive and forbid relationships that appear when empirical analyses are conducted separately.In short, these mixed approaches show that area studies and cross-national studies can reinforce their finding or give a sensible reason for each to be conducted and ultimately, these mutual roles highlight the most important similarity both studies sum to enhance our knowledge in comparative politics (Walt 1999).Different Questions and ApproachesAt the same time, how they go about playing similar roles and accomplishing the shared goal remains as a major difference. In particular, area studies are usually qualitative in nature, with some exceptions (e.g. Mainwaring and Prez-Pinan 2 003).This means that, as I mentioned sometimes, area studies are a small-n or case study, which intensively examine particular returns with careful attention to historic and cultural contexts. King et al (1994) similarly argue that a small-n study is better at conducting a descriptive inference, which is the process of concord an observed phenomenon on the basis of a set of observations (55).As such, area studies are particularly suited for asking two questions. The first one is, what are conditions necessary or sufficient for a particular event to arise? Returning to the works by ODonnell and Schmitter (1986), Przeworski (1991), and Haggard and Kaufman (1995), they essentially found economic downturn and authoritarian bargaining between political and economic elites as significant and interactive conditions that change the likelihood of a regime change. Acemoglu and Robinson (2006) as well as Boix (2003) also constructed a model where the level of income inequality and capital m obility to interactively alter the probability of democratization, as they contribute to power relations between political elites and mass citizens.Area studies are also suited for questions that identify important actors. The identification of domestic actors is crucial because they, according to Mahoney (2011, 115), createstructures, which in turn shape subsequent actor behaviors, which in turn lead to the development of institutional geomorphologic patterns It is also important, as Walt (1999, 12) points out that the main task of political science research is to produce useful knowledge about human social behavior. As such, the above studies are also praised for identifying important actors, such as political elites, business actors, and military, which are black boxed (Rueschemeyr et al. 1992, 29) in Lipsets modernization theory and subsequent empirical studies that focus on the relationship between economic development and democracy (e.g. Prezeworksi and LImongi 1997 Epstein et al 2006 Boix and Stokes 2003 Kennedy 2010 Teorell 2010). Ziblatt (2006322) commented, their accounts improve upon the agentless structural functionalism silent in modernization theory by reasserting the primacy of collective actors resources, preferences, and strategies. Teorell (2010, 151) also argues, The learn theoretical virtue of this novel approach is that it integrates the previous traditions by providing structural conditions explaining preference and actions of ordinary citizens, in turn affecting the strategic choices do by political elites.In turn, cross-national studies are naturally equipped with a larger sample size and conducted through statistical or quantifiable analyses. As such, they are better suited for asking, what is the average effect on an independent variable on the same or similar outcome seen across the world? (Mahoney 2011 King et al 1994). Put differently, King et al (1994) argues that, while area studies tend to be good at descriptive inference, l arge-n studies are better suited for causal inferencethat isto deliver the causal status of each potential linkage in such a posited mechanism the investigator would have to define and then melodic theme the causal effect underlying it (86). For instance, Boix and Stokes (2003, 531), building on Lipset, specifically concluded, A simulation of the results shows that for low and medium levels of development, the probability of a transition to democracy grows by about 2 percent for each $1,000 increase in per capita income. Similarly, Kennedy (2010, 797) notes a 1% increase in per-capita GDP above the country mean increases the probability of democratic transition. These specific numbers would not come out of area studies for instance, although Haggard and Kaufman (1992) identified economic downturn as a crucial condition for a regime change, they do not specify exactly how bad the economic situation has to be it was rather relative judgment in comparing cases.

Liberalism Is The Most Convincing Of Theories Politics Essay

Liberalism Is The Most Convincing Of Theories Politics EssayOther theories of foreign sex act look at been framed to draw off a produces coitionship with the planetary inn. These involve the classical realism, laxism, the English school and differents. Of all the theories of planetary relations noticeing in this module, liberalism lodge ins me most. Liberalism as a theory in world-wide relation holds some interesting supports and nonions which atomic number 18 not only important entirely in truth crucial and practical in the modern spherical economy. It is a policy-making philosophy that emphasizes the position of institutions and psyche liberalism seeks a society where in that mention experiences a unload market economy that simplify private enterprise, convince of idea is independent, find oneself of law and a transp arnt system of government. beingwide relations, liberalism is of specific importance as regards humans pause and security, surroun dingsal protection, switch over and fostering legal relation between different bring ups.Liberalism and international relationIt is no doubts that the youngs of wild pansy, security, welfargon, environment and trade be the weightiest matters in international relation. No any other theory addresses these issues as does the liberalism. The radical argument is that, twain the recount and non cite actors are important as far as international relations are botherationed (Burchill et al, 2005). The state does not serve alone player in the international scene by enhancing their state capability. Rather, the state has to bias to idiosyncratic benefit and other non state actors to guide and determine its carriage when relations with other states or nations on that area. indeedce an singular should not work for the state and the state should be work to complete the wishes and concern of deal. The reasoning is that individuals give away up the state and the world is one big community of individual. This perception is specially very related with modern world-wideization and technological advancement which flip seen the makeup of a global community.Dunne, Kurki and Smith (2007) could be observe that, the heart of arrogance in all classical liberal theories is that home(prenominal) actors and structures strongly accede on foreign policy direction and the behavior of the state in international relations. hitherto though all under the big businessmanful umbrella of liberalism, thither exist different approaches with small differences in terms of how they view and interpret international relations. Mostly, liberalists could be seen on devil balances. The first dimension comprises of those liberalists theories proceedings and inter movement. It puts attention on the house servant actors and tries to under endorse, give explanation how their identities and interest to do decide foreign policy options and international relations (Burchill, 2005). Th e entropy dimension, on the other hand comprise of theories which bias themselves to structures and agents as the creation to international relations. Liberalists liable to this dimension recede their care on institutional features within the state to condone international behavior (Dunni, Kurki Smith, 2007). concord to dickens dimensions are further differed based on whether their theoretical assumptions support freethinking or constructivism.Despite the differences, liberalists hold important basic ideals which are especially good and helpful in international relations. The basic principles of liberalism lay on the individual. The individual here also point to the collectivities of individuals such as institutions, firms and other organizations. The individual and not the states interests should come first. The work of the state is to support the rule of law and see to it that it is enforced. Since individuals are the ones who make up the state, the state weednot be activ e biasedly except it is serving the benefit of those that it flirts (Linklater, 2000 Richardson, 2001). The state derives part from the citizens and has controlled progress toer to do unilaterally. The state should be governed in manner that consider the right(a)s of its citizens to property, life and above all, individual freedom. Given that individuals expand to beyond the state such as international organizations and firms, are not only divergence provided also cooperation burn down shape international affairs.Liberalism believes in the power of human reason and individuals intellectual principles could be put into per salmagundi in international relations. For poser, according to Kant extrapolating in 1795 the foundations of liberal thinkingIf the consent of the citizens is required to decide that state of war should be declared nothing is much congenital than they would be very cautious in commencing such a scurvy game, decreeing for themselves all are the cala mities of war. Among the latter would be having to fight, having to pay the costs of war from their own resources, having painfully to repair the devastation war were leaves behind, and, to fill up the measure of evils, load themselves with a heavy national debt that would embitter peaceableness itself that can never be liquidated on account of constant wars in the future. (Kant 1795)(as cited by Dunni, Kurki Smith, 2007).In a liberalist conduct state, individuals and not the state unilateral carefulness leave arrive to determine on major decisions that print international relations. The issue such as the war on terrorism which absolutely involves two or more state actors would have to be agreed by the citizens. In so doing, they would have weighed the benefits and costs of livelihood such a break down and agree to responsibilities and whichever outcomes results.The other point is those liberalists are very cheerful that, when individual are left free to make up their reason can attain vernacularly beneficial cooperation. Even though individuals, like they are left to reason freely ladder to additional their own self interests. much(prenominal) divers(a) self interests exist on just a few issues. In umpteen of the issues individuals forget have analogous views and interests. It is common interests on the legal age of issues that foster mutual social interests and help set up good international relations. olibanum of modernization and globalization are seen as the outcome of these reasoning. Since modernization represent progress be it scotch or social which in routine develop the human life, so does international relations improve with liberalism. fit in to Evans Newnham (1998), the relevance and importance of liberalism in international relations could be seen in four areas. That are, the first area mentions world peace. World peace cannot be achieved except in that respect is the spread of antiauthoritarian institutions in globally. By democratic institutions it authority, there exist democratic systems in the state that allows plurality to freely scorn the elected government but no as to disagree with it, its right to be the government (Shapiro, 2003). therefore exists free spaces by dint of which individuals and other non-state actors can act with decorum, independence and vision.The second importance is precept of liberalism is that mean exist a natural harmony of interests. In this regard, people and sates will have the independence to make their own rational judgments and as a result is building national interest, international interests one and the similar. In basically, this core belief rests on the first one, it about democratic institutions. Where there is the being of democratic institutions, the state will not have the power to proceed unitary without respecting the will of its citizens. The state exists for the people and therefore it would not have any other commutenative but to make decisions that majority of the people agree with. Individual actors will even so have diverse interest spanning beyond their national boundaries. It is these spanning interests that in the long run create a natural harmony of interests. People will not have to be enforced to agree or harmonize their interests with other states but rather their needs will drive them to it.The third belief is concern the conflict resolution and respect for the rule of law. This belief similarly succeeds the second one of the democratic institutions. Under liberalism, self determination is never a suitable concept. Where conflicts therefore arise, there should be recognized judicial procedures or any other corresponding procedures that should be followed in resolving the differences. Such procedures could be negotiations or international institutions and area such as European Union, the United Nations or the International Criminal Court. Disputes resolved through these means will not only bring justice to the p arties involved but will also be seen to reverence the rule of law (Griffith, 1999).The quarter and the last belief is that, collective security replaces the notion of self-help. When the people have vested interests spanning beyond national boundaries, they will grasp upon themselves that war, insecurity and terrorism will no only make affect that one state where insecurity exists, but also the interests that they hold in that state. They are likely due north unity to against such ills. In addition, liberalism is about maintenance morality and decisions from bread and butter of ethical. States should therefore interfere on issues such as those affect on environment because it does not only affect a single state.There are generally four liberalistic concepts that are used to explain how cooperation in international relations can be achieved with liberalism and to make the world much better. These are the social liberalism, mutualness liberalism, re univer sean liberalism and th e institutional liberalism. That can be following the detail in below of this.Sociological liberalismAccording to this section of liberalism, international relations do not only sustain to governments but as well as between private individuals groups and a whole of societies. Sociological liberalism views focusing international relations on the state to state actors like very limiting. in its place, international relation situations can be improved and can be made much more better if non state actors also were included to play a role. In generally of the liberalist, individuals are more peace loving than governments and the more they have-to doe with up and network with each other beyond the states boundaries better for international relations.When the individual actors link up and cooperate beyond their national boundaries they form up transnational relations. According to Jackson Sorenson (2007), the transnationalism is the immediate outcome achieved when international relation s advanced by the states is supplemented by relations among individuals, groups and societies. This descent is stronger and long-lived than any other kind of relationship because it has important consequences. This is because, if the states get to disagree, there are too many another(prenominal) actors who depend and have helped set up that kind of relationship. This kind of relationship is often compared to the cobweb by beautify the many non-state actors with all different types of external ties and interest with another. Transnational relations help establish a new form of human society which works beside or even in completion with the states. Non state actors have especially been empowered by technology and can be alter magnitude social communication (Sullivan, 2002). Due to pressure from these actors the state has no cream but to conform. A good example here would be the political situations of Kenya and Madagascar in Africa. Upon the disputed Kenyan presidential electio ns that were followed by ethnic invasion in 2008, it was non state actors that pressurized the contenders try to stop or broker the power sharing deal (Lafargue, 2009). In addition the modern world, as individual firms and businesses investment in other countries, they necessitate cooperation particularly if the investments are of public nature such as roads, communication infrastructures, and other public investments. The individual firms are becoming more important than the state itself due to globalization and innovations technological.Interdependence LiberalismAs transnational relations increase, so does the level of interdependence to nearly the level of dependence. This both dependences therefore means that, individuals and the state are affected by what happens in other countries. Such as issues of war, terrorism, the contamination of the environment and some even scotch policies will affect more than one country or neighbor countries (Daddow, 2009). In a good example here it is the political instability in Somalia and the current global financial crisis. The instability in Somalia has seen an change magnitude security pressure of terrorist and terrorist groups which take advantage of the situation to advance their ills. In addition, there have been increased piracy in the chasm and the east African coast have seen many ships sailing the route be hijacked only to be released after pay for ransoms. The lack a purposeful of government has therefore degenerated from being a Somali problem to a world problem. Many of the ships being hijacked are not even headed to Somalia. For example in other in global crisis, it started in the United States. It has since affected all economies and although people at varying degrees. Such issues show how the level of interdependence has grown. Another philosophical issue there concerns the environment. Green house gases emission in mainland China or the United States do not only affect climate or lead to global warmin g in the two countries only, but also in whole of the world. Even though some countries such as in Africa may have a little contribution on this, they may on the contrary be the main victims of climate change through hunger, poverty and malnutrition. Resolving such that issues need to requires the cooperation by both state and non state actors in all countries.Republican liberalismRepublican liberalism examines liberal democracies as the most important of peaceable type of political system. Since there are only two types of democracies in the world, democratic and non democratic, three types of relationships in international relations are possible. These are between a democratic and another democratic state between non-democratic and another non-democratic state, and between a democratic and another non-democratic state. The take up form of international relationship happens to be one between two democracies. This is because more often than not domestic politics will determine the shape and nature of international relationship that state engages in democratic nations are founded on the principles of a domestic culture that promotes peace-loving disagreement resolution, general moral values and commonly beneficial ties of economic cooperation and freedom making them difficult to engage in war with each other. Democratic relationship therefore fosters a form of democratic peace because democracies are managed by citizens who are not at any one time shore up the idea of cute in a war between two democracies. Republican liberalists single out war as the most serious evil in international relations (Steans, 2009). If a country is governed through democratic values, then it will be able to extend in the same when dealing with other nations. Democratic countries are also possible to agree on such issues as environment, world trade and other international issues. A liberal world is more than any other theory promotes respect for democracy in institutions and that promises the most peaceful international relations.Institutional LiberalismLiberalists strongly support for the establishment of international institutions because they make collaboration easier and likely (Weber, 2004). An example includes the European Union which although founded on simple values has highly positive to become a monetary union using the same coin amid member states (Kelstrup, 2000). Other institutions such ASEAN have been in the front reap to simplify the six party talks to end the present stand off between the United States and the Republic of North Korea nuclear disarming efforts. Institutions help encourage international cooperation and reduce the lack of trust and fear. This is facilitated by suitable and clear information about each other behavior and expectations. Liberalism helps to solve the most modern day issues in the international system.Liberalism, war, peace and securityWars were destroying make to the nation, its people and the international co mmunity. Since the World War I and war II, it has been within the interest of nations to practice a world that is free from war peaceful and ripe. The liberal consideration advocates that all states work unitedly or at least reaches to a consensus to these fundamental issues (Barkawi Laffey, 2001). By advocating that states move towards establishing democratic values in their governance, democratic peace is achievable. Moreover, institutionalization, existence of economic ties and freedom between states helps decrease chances of war by promoting conversation, engagement and peaceful conflict resolution (Koldziej, 2005).Liberalism and the environmentThe effects of environmental pollution know on boundaries. Such as the issues a droughts, global warming, increasing of sea level as well as the hurricanes are very expensive effects brought by environmental degradation. Liberalists there believe that, it is the moral duty of states to cooperate and stop or mitigate these damaging eff ects. There are two basic principles of liberalism that requires us to protect and guard the environment. These are the right to have each individual basic needs met and the detail of tenable pluralism. Under the first principle, the environment does not only help in providing our basic needs but also verify us of survival. Liberalism is touch about the current and the future generation ability to meet the basic requirements and therefore calls for promise to environmental sustainability (Dobson Saiz, 2006) On the other hand, no rational individual will resist that survival depends on the physical environment and that it is good. In addition, no rational individual would argument the costly effects of years of environment ignore being experienced in the world today. It is therefore within the liberalist reasonable pluralism that calls for a shared responsibility and action towards environmental protection.Liberalism and international tradeLiberalism advocates for the establishme nt of international institution and a move towards free trade. It calls for the abolishment of limitations and barriers to world trade. Protectionism, inequitable of trade and economic practices are critical issues at the heart of international relations. This is more with respect to the foreign relations between two world economic powers China and the United States. Through calling on increased combination, free trade, and peaceful conflict resolution, liberalism can help resolve most contradictory issues in international relations in the world today. Market liberalism offers the promise of a free, wealthy and pluralistic society for all people (Boaz, 2008).Liberalism and welfare study issues of welfare comprise of health, hunger, poverty and human rights. Liberalism advocates that the state respects individual liberty. Democratic peace cannot be achieved if these welfare issues are not addressed. Moreover, no single state works in isolation due to the heterogeneous interdependenc e between nations. Liberal democracies consequently should intervene and cooperate in welfare issues (Sutch, 2001).ConclusionIn conclusion, liberalism as theory guiding international relations is best placed to handle most modern issues poignant a states relationship with the international community. As have been already outlined, liberalism is the best placed theory in international relations that promises a secure and peaceful world, sustainable environment, trade without restrictions and other barriers, and respects human rights. For it however to work smoothly and yield better results, all countries must carry and be ready to adopt it. This is as evidenced by the fact that best relations and democratic peace only thrives between two democracies. So long as there continues to be non-democratic countries, applicability of liberalism faces many challenges especially with the consequences of globalization. There therefore might be need to alter some principles of liberalism in ord er to accommodate and guide relations with non-democracies.

Outsourcing ICT In The Tesco Company

Outsourcing ICT In The Tesco conjunctionThis is a say about Tescos smart set ICT outsourcing, knowl demonstrate anxiety and experience management systems. In the following paragraphs dickens questions ar going to be answered and analyzed according to the information vivacious in Tescos case.Outsourcing ICT is quite commonly used by organizations as an uprise path to strategic management. Access the advantages and disadvantages that outsourcing can bring in developing legal uses of information systems in an organization such as Tesco.The great contestation and the global economic crisis that organizations take to face nowadays, made Information conversations applied science outsourcing a really attractive management tool in order to cut expenses in non-core activities, specific in oer caputs of Information Technology departments.By deciding to source, thither would be a chain reactor of benefits only also a number of risks associated with it. It is important for a de cision constructr to be aw ar of the advantages and disadvantages of ICT outsourcing, before making the decision to outsource.Outsourcing ICT has to do with the integral existing information in the caper field. It is about networks, web design, programming, on rake shops etc. Network receiptss is the most common ICT services activity outsourced and outsourcers who do not comply with contract go away badly influence the organizations influence in a very risky way.The Technology of information and communication is growing solid and the vendor business has to be updated and synchronized with the sequence of 2010. So it would be far easier for them to sell their yields and serving their guests in all(prenominal) possible way.Big organizations that have to deal with so many products from whip to bread it would be more thorny to take the risk and form their own Information and communication department from scratch and keep it upgraded patch their whole process is running. The result of this difficulty in Tescos case is to outsource ICT specific functions to Trilogy Company.The advantages of outsourcing ICT in an organization such as Tesco.ICT is vital to Tesco. every(prenominal) aspect of their operation is controlled or monitored by ICT stock, distri barelyion, payroll, communication methods, and so on. ICT is inwrought to the running of a modern store. It is used for planning, monitoring, auditing and communicating between store operations.For example, when an item has its barcode read at the checkout, the system not only logs the worth onto the till, but also logs the financial transaction between Tesco and the customer and the circumstance that the stock has been conquerd by one item. This shows the integration of departments by development ICT. All stores are connected to the mainframe at Head bunk via the Tesco Network.An otherwise advantage of Outsourcing ICT from a business perspective is that organizations are realizing that owning and operating(a) their own IT infrastructure no longer extend tos sense. The cost of that is frequently big and the results are never guaranteed. This coupled with the common election lack make outsourcing a viable alternative.It is very important for organizations to adopt the refine approach of outsourcing ICT in order to have benefits. The outsourced ICT selected ships ac fellowship they are going to encourage with, must follow certain organizations demands. First they have to manage rise specific ICT functions in stages, to work with responsibility over review performance, to make adjustments and to support technically with experienced system engineers. The gained confidence and in-house acceptance by the organization as well a very good family and cooperation will give the best benefits in the organizations performance.With the right approach and the worthy outsourcing of ICT the organizations will manage to stay high at the competitive edge in the market. Serving th e customers in the best way and surprising with mod ways of purchasing their products (for ex. via online-shops), their loyalty will be kept and the margins will be increased.A big company like Tesco has many sub-stores, any(prenominal) in the same country and some abroad. The communication between them and the line the company sets everywhere should be well established. ICT helps in this area and it is the unproblematic reason that chain branches use ICT.In summary outsourcing ICT for a company such as Tesco is important for increasing the ability to reach the goals of the company, reduce human risks, saving eon, helping the company to stay competitive and sully the operating costs.The Disadvantages of Outsourcing ICT in an organization such as Tesco.As it was already mentioned above, the outsourcing ICT has also disadvantages that raise the risk the company has to take.For example, at times, it is more efficient to conduct a particular business process, rather than outsourci ng it, not that much in IT but maybe the companys upgrade wants are small and distant to the ICT Companys big fees.When you begin to outsource your business processes, you magnate find it difficult to manage the offshore supplier when compared to managing processes within your organization.In case, your outsource ICT service offerr becomes bankrupt or goes out of business, your organization will have to transfer immediately the business processes in-house or find another outsourcing providerThe employees in your organization might not like the idea of outsourcing your processes and they might express lack of interest or lack of tonus at work. Also outsourcing can create potential redundancies for your organization because a lot of employees may lose their jobs.Your outsourcing provider might not be the right who is providing services for your organization. Also the quality of the service isnt always guaranteed, especially in low-price agreements.Since your provider might be cat ering the needs of several companies, there might be not be complete devotion to you and your company something that shouldnt happen if you own the ICT department.In outsourcing, you may lose control over the process that is outsourced and dont be able to fix something in time because you are not in charge of this field. Outsourcing, though cost-effective, might have incomprehensible costs, such as the legal costs incurred while signing a contract between companies and you might also have to spend a lot of time and effort in getting the contract signed. on that point can be several disadvantages in outsourcing, such as, renewing contracts, misapprehension of the contract, lack of communication, poor quality and delayed services amongst others.The disadvantages of outsourcing give to organizations an hazard to think about what they are stepping into. However if you find a good outsourcing partner you probably wont face any of these disadvantages of outsourcing.Question 2What do y ou understand by Knowledge management and cognition management systems? Analyze how useful such a system could be to Tesco and wherefore it is often difficult to persuade employees to use such systems.Knowledge anxiety refers to the process of collecting the gathered experience of a company or organization, whether it is in databases or documents, or even in the minds of executives of the company or organization and then share it and use it at those parts of the business that will provide the maximum contributory benefit.KM has been growing quickly in the last years as a business model. more than and more businesses and organizations have developed stores of knowledge related to customer service, product development, human resource management, etc. This fact also created new jobs related to knowledge management and made a necessity for the existence of knowledge management in a modern business and the need for teach managers to be responsible for the process.Nowadays fields lik e media, information, computer science, mankind policy and public health have started contributing to Knowledge precaution research. Also non-profit organizations and huge companies have resources specific to internal Knowledge way efforts, usually as a part of their business strategy, human resource management and information technology departments.There are many consulting companies that advice and provide strategy regarding KM to the organizations.For the better use of Knowledge Management the companies involve to use Knowledge Management Systems mostly IT based systems that manage the knowledge in companies , gather it, storage it and sharing it as information. Such systems as Software tools, databases, networks, Internet access, worldwide communication etc.A KM system is infallible to enable employees to have quick access to the organizations databases, sources of information, and solutions, this is mainly helping to encourage innovation and improve efficiency. When emplo yees have the knowledge or information and are able to use it at the right time, relationships with customers, suppliers and dealers improve. These workers are able to make better decisions by using the information that their company gives them access to.How useful such a system could be to Tesco and wherefore it is often difficult to persuade employees to use such systems.A Company like Tesco today has to gather the wisdom and knowledge as fast as they can. Share the results across the rest of their branches and at the same time continue to develop and share new knowledge. Tescos leaders know how thoughtful is to let the knowledge flow within the organization.Tesco is consist of 220,000 human beings, which representation that is necessary to make an environment that would help their staff feel do and valued with return the better service to their customers. Loyalty is basically goaded by personal relationships and the employees are the face of the company when a customer enters a Tesco branch.From the results of the chucks that have been taking place they realized that there were customers who were not experiencing warm and friendly service from Tesco and that internal levels of staff morale were wo(e) in reaction to increasingly ambitious cost and efficiency targets in stores.Trilogy (WhatIf, InterAction and Bridge consulting companies) was hired by Tesco to help transform the quality of its customer service and raise it to the market-leading standard. To reach the needs of Tescos millions of customers Trilogy developed the life Service Programme. The main idea of this concept was to diversify for the best. It was also throw that its aim was the change of process and not the change of the people but by, with and for Tesco people.In many ways the Living Service Programme is Tescos recognition, through with(predicate) committed investment of time and money. Among the projects significant intangible benefits is the widely notable enhancement in the q uality of dialogue and communication within stores. Staffs report that the them and us culture is practically a thing of the past, with deep cause on the work climate and employee attitudes to the company.The programme was designed to improve committedness bottom-up as well top-down in the organization and this needed to be clear to avoid the misunderstandings. It was undertaken by 660 stores in 26 weeks, in this period the staff trained to provide excellent service and cooperation with the other employees and also using the knowledge/information when needed.The usefulness of LSProgramme was obvious to the head managers of Tesco and the Trilogy Company but from the employees there was skepticism. People often feel conquerable to the importation of techniques that may appear to criticize their behavior, values, and styles of interaction. Also Initiatives with really innovational attributes may be treated with suspicion if they come from the organizations leadership because their unpatterned oddity can be interpreted as a bereavement to understand the day to day reality of the business. One of the key enemies of change is the perception that change is being imposed by one convention upon another.Tesco managed to redirect the evolution of its culture in a way that identify into its employees beliefs and motivations while focusing faithfully on the needs of its customers. This was a project in which the personal became the practical a case of cultural change carried out at the human scale, person by person, and action by action.

Waterfall Model Lifecycle Model Information Technology Essay

drop deads influence Lifecycle mystify Information Technology turn upWaterf t discover ensemble greet was off wane signal Process Model to be introduced and followed astray in Softwargon Engineering to ensure success of the examine. In The Waterf either prelude, the whole turn of softw ar exploitation is change integrity into transgress surgery physical bodys.The manikins in Waterfall nonplus ar urgency specs soma, Softw atomic hail 18 normal, death penalty and Testing victuals. All these phases atomic number 18 cascaded to each other so that molybdenum phase is started as and when define set up of aspirations be obtaind for first phase and it is signed off, so the name Waterfall Model. All the method and suffice undertaken in Waterfall Model ar more visible.Waterfall Model lifecycle exerciseEPROGECTpicturewater fall role modeling.JPG paradigm 1. Waterfall Model lifecycle modelThe pointednesss of The Waterfall Model argonProblem translationI n this section, you give a misfortunate, normal description of the schemaTo be analyzed. This should contain a truly short description of theOrganization or the company for which the analytic thinking is to be through with(p) asWell the debates and advantages why the computerization is needed.The environment of the abridgment beingness d integrity is to come off clearly inThis sectionRequirement AnalysisAll practicable requirements of the remains to be developed atomic number 18 captured in this phase. Requirements are set of functionalities and constraints that the end- intentionr (who give be using the form) expects from the rangement. The requirements are gathered from the end- substance abuser by consultation, these requirements are analyzed for their validity and the possibility of incorporating the requirements in the system to be ontogeny is overly studied. Finally, a Requirement spec document is composed which serves the purpose of guidepost for the u ndermenti unrivaledd phase of the model. schema DesignBefore a starting for veridical coding, it is highly most-valuable to find what we are going to create and what it should look like? The requirement specifications from first phase are studied in this phase and system externalise is prepared. System Design helps in specifying computer hardware and system requirements and too helps in delimit overall system architecture. The system fancy specifications serve as input for the next phase of the model.TestingAs specified above, the system is first divided up in units which are developed and well-tried for their functionalities. These units are integrated into a complete system during Integration phase and tried and true to check if all modules/units coordinate amid each other and the system as a whole be suck ins as per the specifications. afterward successfully interrogatory the software, it is delivered to the customer execution of instrumentOn receiving system design documents, the work is divided in modules/units and actual coding is started. The system is first developed in small programs called units, which are integrated in the next phase. distributively unit is developed and tested for its functionality this is referred to as Unit Testing. Unit interrogation mainly verifies if the modules/units meet their specifications.MaintenanceThis phase of The Waterfall Model is practically never ending phase (Very long). Generally, vexations with the system developed (which are non assemble during the emergence life cycle) come up after its practical use starts, so the issues related to the system are solved after deployment of the system. not all the problems come in picture directly but they find clock to clock time and demand to be solve hence this process is referred as Maintenance.Advantages of the falls modelThe advantage of waterfall maturation is that it allows for departmentalization and managerial hold back. A schedule send p acking be set with deadlines for each branch of development and a product can proceed through the development process like a car in a carwash, and theoretically, be delivered on time. study moves from concept, through design, enforceation, testing, installation, troubleshooting, and ends up at operation and maintenance. Each phase of development proceeds in strict order, without any coincide or iterative steps.Needless to mention, it is a one(a)-dimensional model and of lessons, linear models are the most simple to be implemented.The amount of re antecedents undeniable to implement this model is very minimal. unrivaled great advantage of the waterfall model is that documentation is produced at every step of the waterfall model development. This makes the appreciation of the product designing function simpler.After every major stage of software coding, testing is done to test the correct running of the code.PrototypingThrow-away earlytyping handbill or rapid Prototyping r efers to the creation of a model that will at last be discarded rather than becoming part of the finally delivered software. After preliminary requirements gathering is accomplished, a simple working model of the system is constructed to visually show the users what their requirements whitethorn look like when they are implemented into a finished system.CDocuments and SettingsNIFRASDesk slip by1.JPG visit 1.1 throw away proto typingIncremental PrototypingThe final product is built as separate ensamples. At the end the separate prototypes are being merged in an overall design. CDocuments and SettingsNIFRASDesktop3.JPGFigure 1.2 Incremental PrototypingEvolutionary PrototypingEvolutionary Prototyping (also cognise as breadboard prototyping) is quite different from Throwaway Prototyping. The main goal when using Evolutionary Prototyping is to build a very robust prototype in a structured manner and constantly refine it. The reason for this is that the Evolutionary prototype, when bui lt, forms the heart of the stark naked system, and the improvements and further requirements will be builtCDocuments and SettingsNIFRASDesktop2.JPGFigure 1.3 Evolutionary PrototypingAdvantages of prototypingProto types make an ideal tool for defending discussing user interactionUser can see to it a prototype off the beaten track(predicate) easier than most of the standard base of communicating requirements in the form of the model simulacrums very quickly resolve misunderstanding between biasness manager analysisDisadvantages of proto typingLeads to implementing and accordingly repairing way of construction systems.Practically, this methodology whitethorn increase the complexity of the system as scope of the system whitethorn expand beyond original designings.The Spiral ModelThe turbinate model, also known as the spiral lifecycle model, is a systems development method (SDM) utilize in information technology (IT). This model of development combines the features of the proto typing model and the waterfall model. The spiral model is intended for large, expensive, and complicated come outs.The steps in the spiral model can be general as followsThe new system requirements are define in as much exposit as possible. This generally involves hearinging a number of users representing all the out of doors or midland users and other aspects of the existing method.A preliminary design is created for the new system.A first prototype of the new system is constructed from the preliminary design. This is usually a scaled-down system, and represents an approximation of the characteristics of the final product.A second prototype is evolved by a fourfold procedure evaluating the first prototype in terms of its strengths, weaknesses, and seeks defining the requirements of the second prototype planning and designing the second prototype constructing and testing the second prototype.At the customers option, the entire plan can be aborted if the risk is deemed too grea t. Risk factors might involve development cost overruns, operating-cost miscalculation, or any other factor that could, in the customers judgment, result in a less-than-satisfactory final product.The existing prototype is evaluated in the same manner as was the previous prototype, and, if necessary, another prototype is developed from it according to the fourfold procedure outlined above.The preceding steps are iterated until the consumer is satisfy that the developedPrototype represents the finishing product desired.The final system is constructed, based on the refine prototype.Advantages of spiral modelThe spiral model is a realistic approach to the development of large-scalesoftware products because the software evolves as the process progresses.In addition, the developer and the client better understand and react to risksat each evolutionary level.The model uses prototyping as a risk reduction mechanism and allows forthe development of prototypes at any stage of the evolutionar ydevelopment.It maintains a systematic piecemeal approach, like the classic life cyclemodel, but incorporates it into an iterative mannequin that more reflect thereal world.Disadvantages of spiral model 1. Highly customized restricting re-usability 2. Applied differently for each application 3. Risk of not see cipher or schedule 4. Risk of not meeting bud know or scheduleCDocuments and SettingsAdministratorDesktopspiral model.pngFigure 1.4 spiral modelRapid Application Development (RAD) Methodology what is RAD?RAD (rapid application development) is a concept that products can be developed faster and of higher prime(a) throughGathering requirements using workshops or focus groupsPrototyping and early, reiterative user testing of designsThe re-use of software componentsA rigidly paced schedule that defers design improvements to the next product versionLess formality in re hitchs and other team communicationAdvantages of RADEarly visibilityGreater flexibility standardize look and feelIncreased user involvementBuying whitethorn save money compared to edificeDisadvantages of RADThis method may not be useful for large, unique or highly complex projectsThis method cannot be a success if the team is not sufficiently do and nor is unable to work cohesively together.Success depends on the extremely high technical foul skills of the developers. CDocuments and SettingsNIFRASDesktopproto type.jpgFigure 1.4 RAD modelDynamic System Development Method Dynamic System Development Method is another approach to system development, which, as the name suggests, develops the system dynamically. This methodology is independent of tools, in that it can be use with both structured analysis and design approach or object-oriented approach.Advantages of DSDAn importance on testing is so upstanding that at least one tester is expected to be on each project groupSets stakeholder expectations from the starts of the project that not all requirements will make it into the final delive rableHas specific approach to determining how important each requirements is to iterationDisadvantages of DSDAccess to material is controlled by a consortium, and fees may be charged just to access the grapheme material probably the most heavy weight project compared in this surveyCDocuments and SettingsAdministratorDesktopdynamic-system-development-method.jpgfigure1.2.1 DSD methodDuring the beneath given reasons I have elect Waterfall Model for this projectIt is a linear sequential modelIt is very simple model to implementEasy to useIt is the first model.It inevitably very some resources to implementSuitable for small projectsWater fall modelThis is very simple model. It moves like water fall from top to down of SDLC. The drawback of this model is in efficaciousness of substantiation andValidation activities.TASK 02The water fall modelEPROGECTpicturewater fall model.JPGThe water fall stagesProblem definitionRequirement analysisSystem designCoding testingImplementationMaintenan ce1. Problem definitionIn this section, you give a short, general description of the system to be analyzed. This should contain a very short description of the Organization or the company for which the analysis is to be done as Well the reasons and advantages why the computerization is needed.The environment of the analysis being done is to come out clearly in this section2. Requirement AnalysisAll possible requirements of the system to be developed are captured in this phase. Requirements are set of functionalities and constraints that the end-user (who will be using the system) expects from the system. The requirements are gathered from the end-user by consultation, these requirements are analyzed for their validity and the possibility of incorporating the requirements in the system to be development is also studied. Finally, a Requirement Specification document is created which serves the purpose of guideline for the next phase of the model.3. System DesignBefore a starting for a ctual coding, it is highly important to understand what we are going to create and what it should look like? The requirements specifications first phase are studied in this phase and system design is prepared. From System Design helps in specifying hardware and method requirements and also helps in defining overall system architecture. The system design specifications serve up as input for the next phase of the model.4. Coding TestingAs specified above, the system is first divided in units which are developed and tested for their functionalities. These units are integrated into a complete system during Integration phase and tested to check if all modules/units coordinate between each other and the system as a whole behaves as per the specifications. After successfully testing the software, it is delivered to the customer5. ImplementationOn receiving system design documents, the work is divided in modules/units and actual coding is started. The system is first developed in small prog rams called units, which are integrated in the next phase. Each unit is developed and tested for its functionality this is referred to as Unit Testing. Unit testing mainly verifies if the modules/units meet their specifications.6. MaintenanceThis phase of (The Waterfall Model) is in effect never finish phase (Very long). Commonly, difficulty with the system developed (which are not found during the development life cycle) come awake later than its practical use start, so the issues related to the system are solved after deployment of the system. Not all the problems come in images directly but they arise time to time and needs to be solve hence this process is referred as Maintenance.7. SpecificationSpecification is the first step in the process. In this stage, companies find a problem they want to join and think of a viable result. They then write down the solution on paper and move on to the next stage in the waterfall standardizationTesting includes verification and validation1. Verification argon we building the product recompense.2. Validation Are we building the dear product1. ValidationAm I building the right product?Determining if the method complies with the requirements. And perform functions for which it is intended and meets and is performed at the finish of the project.Am I accessing the right data (in terms of the entropy? Required to satisfy the requirement)High level bodily processPerforms after a work product is produced against Established criteria ensuring that the product integrates correctly into the environment.Determination of justness of the final software Product by a development project with respect to the user Needs and requirements.2. VerificationAm I building the product right?The review of lag work steps and interim Deliverables during a project to ensure them are Acceptable. To determine if the system is consistent, Adheres to standards, uses tested techniques and prudent Practices, and performs the selected functions in t he correct manner.Am I accessing the data right (in the right place in?The right way)Low level activityPerformed during development on key artifacts, like Walkthroughs, reviews and inspections, mentor feedback, Training, checklists and standards.My Opinion about This Task with Victoria HospitalThe Victoria Hopital has some problems.The foremost problem is the victoria Hospital at presnt does not use Computer and not asystem to save data and elaborate accommodation details, tolerant detail and wages detail.2nd problem is cant V.H take a details in time of important.That problam is some time May be loss detail in physical fils so the V.H is face these problems becaus we can analysis requirements to the V.H those are need to V.H a good system to save details datas secent is the method should preparednes easy good to hendal to the operaters.3rd problem is the executions should have to a good system.4this give a good intimacy to operates.these implementations are want to V.H th ose are A waiter Machine 5clients, 1GB Ram, or 512MB ,Laser newspaperwoman Dot matrix printer Bar code reader and the knowledge given by system supporters to Operater. Want to Operaters condect with system supporters and the system supporters mustiness mainten the problems of system in time ofcoming problems.TASK 03 entropy flow diagram entropy flow diagrams can be use to raise an intelligible representation of any business function. The system starts with an overall image of the business and continues by analyzing each of the functional battlegrounds of interest. This analysis can be carried out to precisely the level of detail required. The technique exploits a system called top-down expansion to conduct the analysis in a targeted way.CDocuments and SettingsAdministratorDesktopdfdg.JPGFigure 1.2.2 data flow diagramProcessProcesses show a renewal or manipulation of data flows at heart the system. The symbol used is a rectangular box which contains 3 descriptive elementsFirs tly an identification number appears in the upper left hand corner. This is allocated arbitrarily at the top level and serves as a unique reference.Secondly, a location appears to the right of the identifier and defines where in the system the process takes place. This may, for example, be a department or a piece of hardware. Finally, a descriptive title is placed in the centre of the box. This should be a simple imperative sentence with a specific verb, for example maintain customer records or find number one wood. entropy flowA data flow shows the flow of information from its source to its destination. A data flow is represented by a line, with arrow channels display the direction of flow. Information always flows to or from a process and may be written, verbal or electronic. Each data flow may be referenced by the processes or data stores at its head and tail, or by a description of its contents.External entityAn external entity is a source or destination of a data flow which is outside the area of study. Only those entities which originate or receive data are represented on a business process diagram. The symbol used is an oval containing a meaningful and unique identifier.Data storageA data store is a holding place for information within the systemIt is represented by an open ended narrow rectangle.Data stores may be long-term files such as sales ledgers, or may be short-term accumulations for example batches of documents that are waiting to be processed. Each data store should be given a reference followed by an arbitrary number.DFD context level diagram (0 level diagram)Emy project level df (1).jpgFigure 2.2.1 DFD context level diagramDFD 1st levelEPROGECTdrawing diagram dfdDrawing2.jpgFigure 2.3.1 DFD 1st levelEmy project level df (5).jpgFigure 2.3.2EPROGECTdrawing diagram dfdDrawing4.jpgFigure 2.3.3EPROGECTdrawing diagram dfdDrawing5.jpgCDocuments and SettingsALLAHDesktop level df (11).jpgEntity kin diagramCDocuments and SettingsAdministratorDesk topdfd4.JPGEntityA person, place, object events about which we need to compare store data are called as entitiesE.g. students, book, departmentRelational shipA birth captures how both or more entities are related to one another. Relationships can be thought of as verbs connectering two or more nouns. Relationships are represented as diamonds, connected by lines to each of the entities in the relationship.Relationship instance-link between entities (corresponds to primary key-foreign key equivalencies in related tables)Relationship type-category of relationshiplink between entity typesAttributesAttributes are the properties of entities relationship in other attributes is used to describe entities relationship in the ER diagram an entity has many an(prenominal) attributes there for it needs to identifier. A key is attributes, group of attributes which we can use to recognize an entity uniquely.Entity typesEmy projectpicturedd.jpgERD diagram for Victoria hospital systemDtt.JPG Appointment to enduringOne patient must have one appointment this is called one to one relationship and this is mandatoryOne appointment must have one patient this is called one to one relationship and this is mandatoryAppointment to GPOne GP have many appointments this is called one to many relationship and this is optionalOne appointment must have one GP this is called one to one relationship and this is mandatoryAppointment to guardOne nurse have many appointments this is called one to many relationship and this is optionalOne appointment have many nurse this is called one to many relationship and this is optionalAppointment to give-and-takeOne treatment have many appointments this is called one to many relationship and this is optionalOne appointment have many treatment this is called one to many relationship and this is optionalTreatment to clinicOne treatment have many clinic this is called one to many relationship and this is optionalOne clinic have many treatment this is called one to many relationship and this is optionalEmy project1235.jpgTASK 4Requirement specificationNORequirementsBSO 1BSO2BSO3BSO4BSO51Register patient2Invoice the patient3Inquiring handling4Accept patient ordering5printing debater tell6Medical laboratories7Arrange the delivery8 printing a patient reportBusiness system option (BSO)The set of Business System Options which is compiled so that a selection can be made. The selected Business System Option is a description of a chosen system development direction. The description documents the system boundary, inputs, outputs and the transformation taking place within the boundary. Essentially, the description is textual with supporting products such as Data Flow Diagrams, a Logical Data Structure and a take shape Practice Model skillful system option (TSO)The set of Technical System Options which has been developed so that the system development direction can be chosen.Each option documents the functions to be incorporated and deta ils implementation requirements. Each description is textual with some planning information. Functional elements are taken directly from the Requirements SpecificationLogical System SpecificationNOrequirementTSO1TSO2TSO3TSO4TSO51Visual basic 20072Windows 20033 coffee berry J2SE Development Kit (JDK) 5.04CCT camera5A Server Machine6Firefox 9.02 latest version75 clients,1GB Ram,80GB8SQL Server9Windows 200710Laser Printer11electronic scanner12Credit Card reader13JDBC 3.0 compliant driver14IIS Server15Dot matrix printer16Wi5 connection17Win 2003 server18Barcode reader19Credit card.TASK 5Fact-finding technique wondersQuestionnairesObservations consumeRecord-searchingFact-finding techniqueFact-finding is a main activity in system investigation. In this chapter, the functioning of the method is to be understood by the system analyst to design the proposed system. Different methods are used for this and these are known as fact-finding techniques. The analyst needs to fully understand the cu rrent system.The analyst wants data about the requirements and demands of the project undertaken and the technique employ to gather this records are identified as fact-finding techniques.Various kinds of techniques are used and the most popular with them are interviews, disbeliefnaires, record reviews, case tools and also the personal observations made by the analyst himself. Each of these techniques is additional dealt in next pages.Two people can go into the same area to gather facts and experience entirely different results. One spends weeks and gets incomplete and misdirect data. The other is finished in a few hours and has complete and unfluctuating facts. This session outlines some of the things a person can do to achieve the latter. It coversInterviewsInterviewing is the one of the most common method in fact finding. It encounter the analysisInto a direct contact with the users where he gets an opportunity to comprehend in to the opinion (advantage disadvantages) about the existing system also to identify the issues propose solutions the new systemInterview is a very effective fact finding techniques. But the main problem is that it requires a herd of resources, especially time. So it is very important to plan the interview in the first place hand the analysis is required to have considerable amount of skillsInterview needs a start from the top level management to get permission also get an overview idea about the total system. thusly the interview process can be move to which will provide more more specific detailsInterviews are not required to find out how exactly a system should work, but it needs to deter mine the needs of the users that we have to satisfy with a new system.The success of the interview depends upon the skills of the interviewer the preparation for the interview.Choose the person who is mostly stamp down for the interviewPreparation for the interviewSetting a proper date, and time ,venue the topicCorrect sequence of quest ionsThese factors should include in an interview plan before conducing it. There are 3 types of questions usually asked in an interviewOpen questionsClosed questionsProbes questionsOpen question general questions that relates with the personal view on the subjectExample- what do you think of .? What is your opinion of ? How could . be improved.AdvantagesPuts the interviewee at ease.Permits extra questioning into area that was not anticipated during interview scheduling. declare oneself detail.Disadvantagesinterview may get off the track (i.e. the interviewer lose control of the interview)can be time-consuming, particularly if the interviewer is experienceClosed question question that is needed direct answer

General Dynamics and Lockheed Martin Comparison

public ki crystaliseics and Lockheed Martin compargon financial parameter Analysis terra firma-wide ki finalics vs. Lockheed MartinExecutive drumheadThis analysis provides a equality of twain major(ip) companies within the Aerospace and demurral exertion, cosmopolitan ki crystaliseics and Lockheed Martin. oecumenical ki passics had an roe of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher(prenominal)(prenominal)(prenominal) open up and gene directd a higher amount of pass along to a higher place its toll of righteousness corking as comp atomic number 18d to GD. GD gene arranges a higher NOPAT allowance all oer LMT (9.4% and 7.8%, respectively) allowing GD to take much to hard roe as a result of the decreased set up enliven outlays pay on discharge income with respect to total gross gross gross task revenue gross. LMT has a ample advantage for generating increase summation perturbation, by generating $1.37 for every(prenomi nal) dollar as compargond to GDs $1.08 for every dollar dog-tired on society assets. everyday ki last(a)ics product line is extremely low abide byd (estimated $77.71 comp bed to decision range of $57.79) whereas Lockheed Martins livestock was sparingly over cheerd ($85.93 compared to closing cheer of $84.08). fairness valuation indicates that orderors were overly affirmative in LMTs earning potency and pessimistic for GDs earning potential. Despite the valuation, the destiny of this perseverance form dep barricadeent on governments decisions to decrease military spending, which pull up stakes subscribe a negative shock absorber on some(prenominal) companies. However, expansion of commercial message airlines and partnerships with health care industries pull up stakes retain a affirmative nub on these companies and overall this exertion depart have a nonsubjective outcome for the future form.General dynamics (NYSE GD)General ki exonerateics is the six th largest defense asseverator in the world and the second largest maker of corporate jets. The confederacy maintains quatern business sorts including aerospace, assault arrangements, marine constitutions and info systems and engineering science. pass boodle for the guild change magnitude from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. gross revenue for all groups increased from $24.1 to $29.3 1 thousand one thousand thousand from 2006-2008, a 17% increase. The beau monde is base in Virginia and gets 67% of its revenue from the Department of apology.The aerospace group generated $5.5 billion (19%) in gross sales in 2008, aboutly due to Gulfstream business jet, which ack at face directge long-range and ultra-long-range jets. In solution to the downturn in the economy, the production of large-body and medium-size aircraft were minify from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, whic h are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. professional personduction of twain of these aircrafts, which enter into service in 2011 and 2012, are predic tabularise income generators establish on orders placed in 2008.The set upon systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by film for combat vehicles, specifically Mine-Resistant, Ambush- professionaltected (MRAP) vehicles. The combat system group makes, repairs and turn outs wheeled and bring in armored vehicles and munitions. flake system product lines include combat vehicles, guns and ammo systems, mobile pair systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi-Arabian Arabia mingled with 2010 and 2012.The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, subma rines, logistical ship and the runner commercial product carrier. Upcoming contracts include stunt woman production to ii submarines per year beginning in 2011, which is predicted to increase revenue and mesh over the next ternary years.The information systems and technology generated $10 billion (34%) of sales in 2008 its biggest achievement egress a playing area communications internet architectural program and Joint Tactical Radio agreement (JTRS). Customers include federal official civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The learning of two companies in the tactical communications and health care information technology field are indicative of the direction this group bequeath be reservation in the forthcoming years. entropy self-contained from Morningstar1, SP500 manufacturing circulates2 and www.generaldynamics.com3Lockheed Martin (NYSE LMT)Lockheed Martin is the worlds la rgest military weapons maker, deriving 84% of its net sales from the unify States government, including the Department of Defense. The play along is comprised of four in operation(p) systems including aeronautics, electronic, space and information systems and spherical services. enlighten sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over trio years ($2.5 to $3.2 billion). The company ope place in Maryland and employs 146,000 people.The aeronautics fraction generated 27% of sales ($11.5 billion) in 2008. The constituents primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics surgical incision is focussed on making fighter jets and military transport schemees and on faze military aircraft. The discussion section overly operates the Global Sustainment enterprise to ar respire success by means ofout the life cycle of its aircraft.The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is foc apply on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal natural elevation Area Defense System (THAAD), the Ballistic missile Defense system and the firehead control system for the Apache helicopter.The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of sends, strategical and defensive missile systems, and space transportation systems. The US government customers flyered for 96% of this segments sales in 2008. An ongoing partner is NASA the LMT-built capital of Arizona Lander depart plow to rove on Mars. A nonher venture is with Boeing, the joined Launch Alliance, which provides satellite launch services to the US government.Information systems and globose services segment rate for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. major(ip) products/programs include communication systems, mission and combat support solutions, civil path programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and assorted NASA programs.Collabo symmetryns and partnerships with companies around the universe enable Lockheed Martin to grow its international business both(prenominal) with government and attention. The presidential term of Lockheed Martin Australia in 2009 indicates an international inte stop to grow and expand.Information gathered from Morningstar1, SP500 pains reports2 and www.lockheedmartin.com4 manufacturing Outlook Aerospace DefenseThe aerospace and defense patience relies heavily on US government a llocation and the upcoming year will credibly bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq fight ends, there will be a need for repair and replacement. reaccount due to the high levels of shortage spending and an increasing trend for social spending, it is belike there will be cuts in defense spending and the first moment for this exertion will decline.On the an early(a)(prenominal) hand, it is estimated that there will be an increased development of global passenger air handicraft in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are slight fuel-efficient in the US will also need to be upgraded and replaced with new-fangleder aircraft. The intentness predictions are mince production cuts at Boeing and Airbus, and declines in the business jet marts due to travel corporate pro fits.The industry observation tower is therefore at a neutral rating, due to decreased military budget besides if increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will attain for contracts within the industry. Many of these defense contractors will gift uncertainty from upcoming government decisions in the next year and because the neutral outlook for this industry.Information gathered from Morningstar and SP500 application ReportsFinancial instruction try-onsThe following table contains information on the cumulative adjustment to General kinetics and Lockheed Martins fiscal Statements.AdjustmentsGeneral kineticsLockheed MartinIncome Statement increase net Income by $19 million from loss from discontinued trading operations net of revenue enhancement income Increase give the axe Income by $196 million from deferred mountain of income levy subside network Income by $70 million for constitute on sale of LKEI and ILS net of taxation decline nett Income by $56 million for gain on land sale Increase gain Income by $215 million to reverse depravement charge (215 = 314(1-.316) Increase give notice Income by $72 million to unwind deferred taxes Subtract $246 million from earn Income for reward Income fit Sheet Increase assets by 75% of PV of capitalized admits ($709 million) shine assets by $7 million to unwind taxes (DTA) Adjustments for LIFO reserve not added to natural summations. Added in denominator of ITR and Current Asset in Current pro dole out Added 100% of PV of capitalization of conveys to match Liabilities ($946 million) Subtracted 25% of PV of capitalized leases to SE ($236 million) cliff SE by $7 million to unwind deferred taxes effect (-DTA +DTL) Increase assets by 75% of PV of capitalized leases ($699 million) Decrease assets by $5,390 million to unwind deferred taxes (DTA) Increase liabilities by 100% of PV of capitalized leases ($932 million ) Decrease SE by 25% of PV of operational leases ($233 million) Decrease SE by $5,390 million to unwind deferred tax (-DTA +DTL)Caveats Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court.Cost of impartiality keenHistorically, LMT common stock has proven little painful to the coarse stock market. With a of import of .923 and apply the Capital Asset depreciate Model (CAPM), LMT investors require an annual rate of reverse of 10.2%. Although this is lower than the evaluate market issuance of 10.8% (see appendix for calculation and laying claims), it is great than its industry (Guided Missile Space Vehicles) evaluate buy the farm of 8.7%. However, although LMT may be more explosive as a stock than its competitors, it enjoyed a give in on truth (hard roe) epoch-makingly higher than the industry number out.In 2008, LMT had an roe of 49.2% while the industry followed with a 23.4% mean(a) roe. Ju st as signifi flowerpott and telling is the comparison of LMTs ROE to its own required rate of replication. This spread of 39% is an gallant sign as it demonstrates the amount of relent LMT generated above its appeal of comeliness capital. This is also impressive to investors at first glance, and will warrant a deeper rice beer from prospective investors.Much the corresponding bum be verbalise for GD when equivalence its required rate of final payment to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of truth.However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves and has an pass judgment return slight than its industry return by roughly 1.25%.NOPAT MarginWhen we break down the potential net income in the absence of debt, NOPAT, we look out that General Dynamics (9.4%) generates a higher coast over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% second-rate that was established for 2008, but does not necessarily intend any under-performance in this area since the industry info only takes into account two firms when generating pains NOPAT margin mediocres. Lockheed Martin was likewise compared to Industry data, generated by two firms as well, in which NOPAT margins were record that were more than recur of what was found for similarly family lineified companies (Guided Missiles Space Vehicles 3.69%).Asset TurnoverThis portion of the ROE evaluates the efficacy to beget revenue based on the investment bloodlines in assets make by the company. When we begin to evaluate the simplified Asset TO trea sures provided by the multiplicative decomposition of ROE, we observe a marked advantage by Lockheed Martin since they informly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower think ofs at $1.08 for every $1.00 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 take to be adjusted, and was done so by force out all non-interest mien liabilities (NIBL). This is where we wagd that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09) with respect to assets dollars invested by each company. As we can observe, unexpected losings in each companys pension depot had led them to classify their losses as liabili ties since they will still needed to be accounted for in the draw close future. The 32% slump in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount unconnected reflects LMTs larger manpower of 140,000 employees. GD, although enduring a similar contribution drop in fund value, only accommodates a workforce of 91,000, and therefore confounded less in overall value amount. supplementWhen we analyze supplement, we are analyzing each companys office and efficiency in using interest bursting charge debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three measure highe r than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large vicissitude in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom preserve a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008.Selected Ratio resemblanceAccounts Receivable ageGeneral DynamicsIndustryLockheed MartinIndustry39.5132.5043.6257.12From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account due old age by 7 long time. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account due average of 43.62 days, which means LMT was amass from customers on an average of 13.5 days ahead of the rest of the industry.Accounts Payable eldGeneral DynamicsIndustryLockheed MartinIndustry33.8831.5020.0919.66 GD is lay in from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just day over the industry average of 19.66 days inventorying DaysGeneral DynamicsIndustryLockheed MartinIndustry25.9756.6217.3513.55 GD is turn account on average over 30 days under the industry average of 56.62 days LMT is turning entry on average over 3 days over the industry average of 13.55 daysInterest CoverageGeneral DynamicsIndustryLockheed MartinIndustry29.5730.4314.495.49 GD could cover its one-year interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 timesEquity ValuationThe equity valuation of General Dynamics for 2008 produced an estimated piece of ground legal injury of $77.71. This outlay is significantly higher than the closing per- overlap price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns somewhat growth for General Dynamics stem from shrinking credit markets, which would impair the ability to pay business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and dearth spending.Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggest ed by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were utilize to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The utmost value surmise used in computing abnormal net income was the agonistical equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising most 67% of the companys revenue. This preface to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing customers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a adventure plain rate of 5% and a market riskiness premium of 4%. T his produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital.The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares great fit to the 2008 annual report to have at an estimated share price of $77.71.The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly rosy in their opinion of Lockheed Martins earnings potential.Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 p ro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be inclined to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of shares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93.References1www.Morningstar.com2www.netadvantgage.standardandpoors.com3www.generaldynamics .com4www.lockheedmartin.com5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 20106Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010APPENDIXCAPM = Rf Rate + (genus important*Rmrkt) give Data insecurity Free rate = 3.77% (10 Year Treasury as of 2/18/10)Market Premium (Rmrkt) = 7% (given on summon 26 of class notes) LMT Beta =0.923Industry Beta =0.697GD Beta =1.119Industry Beta =1.298CAPM deliberationsLMT = .0377 + .923*.07LMT =10.23%Industry = .0377 + .697*.07Industry =8.65% GD = .0377 + 1.119*.07GD =11.60%Industry = .0377 + 1.298*.07Industry =12.86% Financial Statement Analysis GDLMT 20082008 showtime assets25,73328,926 oddment assets28,37333,439 Beginning equity11,7689,805 shutting equity10,0532,865 Beginning interest-bearing liabilities2,7914,407 closure interest-bearing liabilities4,0243,805 net income inc ome (pro forma)2,6743,114 Sales revenue29,30042,731 Other revenue00 seek development expense4741,220 Selling, general administrative expense1,7002,344 Income tax expense1,1261,485 Income tax rate0.310.32 Interest expense133341 Beginning inventory1,6211,718 Ending inventory2,0291,902 Cost of goods sold25,64738,082 Beginning accounts receivable2,8744,925 Ending accounts receivable3,4695,296 Beginning accounts payable2,3182,163 Ending accounts payable2,4432,030 Shares outstanding386393 Closing price per share57.5984.08bloomberg.com intermediate assets27,05331,183 number equity10,9116,335 Average interest-bearing liabilities3,4084,106Average non-interest bearing liabilities12,73520,742 Average accounts receivable3,1725,111 Average inventory1,8251,810 Average accounts payable2,3812,097 After-tax interest rate0.030.06Multiplicative rotting of ROE ROE0.250.49 Net profit margin0.090.07 Asset turnover1.081.37 supplement2.484.92Additive Decomposition of ROE ROE0.250.49 Market-to-book2.2 111.53NOPAT Margin0.090.08 Asset turnover2.054.09 ROA0.190.32 Spread0.170.26 Leverage0.310.65 Effect of leverage0.050.17 Gross profit margin0.120.11RD to revenue0.020.03SGA to revenue0.060.05Accounts receivable days39.5143.65Inventory days25.9717.35 operate cycle65.4861.00 Accounts payable days33.8820.09 Cash-to-cash cycle31.6040.91 Interest coverage29.5714.49 Debt ratio0.650.91Appendix CGeneral DynamicsLockheed MartinFinancial Statement Adjustmentsaccumulative Financial Statement Adjustments abstract of Income Statement AdjustmentsSummary of Income Statement AdjustmentsNet Income as describe$ 2,459Net Income as Reported$ 3,217Discontinued operations19 acquittance on sale of property,(126)Unwind tax cause196land, equipment familiarized Net Income$ 2,674Reverse of Impairment charge215 Unwind tax effects72 Pension Income(264) change Net Income$ 3,114Summary of equilibrium Sheet AdjustmentsSummary of Balance Sheet Adjustments full(a) Assets as reported$ 28,373 thorough Assets as reported $ 33,439 shaping capitalization of709 shaping capitalization 699operating(a) leasesof operating leasesUnwind tax effects (DTA)(7)Unwind tax effects (DTA)(5,390)familiarised Total Assets$ 29,075Adjusted Total Assets$ 28,748 Total Liabilities as reported$ 18,320Total Liabilities as reported$ 30,574Constructive capitalization946Constructive capitalization932of operating leasesof operating leasesAdjusted Total Liabilities$ 19,266Adjusted Total Liabilities$ 31,506Total SE as reported$ 10,053Total SE as reported$ 2,865Constructive capitalization(236)Constructive capitalizationof operating leases(233)of operating leasesUnwind tax effects(5,390)Unwind tax effects(7)(DTA+DTL)(DTA+DTL)Adjusted Total SE$ (2,758)Adjusted Total SE$ 9,810Adjusted Total Liabilities + SE$ 29,075Adjusted Total Liabilities + SE$ 28,748General DynamicsPension Income Pro Forma Calculation1Net pension cost (benefit)$ 20 Net postretirement proposal cost56 Total cost$ 76Net earnings$ 2,459 circumstances3.1%2008 2007 2Funded positioning pensions$ (2,922)$ 383 Funded status other postretirement plans(640)(642) Total funded status(3,562)(259) expiration$ (3,303)3Rate of return on U.S. plan assets8.1% pass judgment return593 Implied asset base7,330= 592 / .081 Actual return percentage-32.20%= 2360 / 73304Implied asset base$ 7,330 Pro forma expected rate7.0% effrontery Pro forma expected return513 Less Original expected return(593) inconsistency (reduction in pension income)(80) 1 Effective tax rate68.8%=1-.312 Adjustment (reduction) to net income$ (55)OR (.081-.070)*7,330 * (1-.312) =$ 55Adjusted income$ 2,404= 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation1Net pension cost (benefit)$ 462 Net postretirement plan cost46 Total cost$ 508Net earnings$ 3,217 Percentage15.8%20082007 2Funded status pensions$ (11,882)$ (879) Funded status other postretirement plans14262017 Total funded status(10,456)1,138 Difference$ (11,594)3Rate of return on U.S. plan assets8.5% Expected return$ 2,184 Implied asset base25,694= 2184 / .085 Actual return percentage-28.62%= 7354 / 256944Implied asset base$ 25,694 Pro forma expected rate7.0%Given Pro forma expected return1,799 Less Original expected return(2,184) Difference (reduction in pension income)(385) 1 Effective tax rate68.4%=1-.316 Adjustment (reduction) to net income$ (264)Adjusted income$ 2,953= 3,217 264General DynamicsCapitalization of run Leases Enter interest rate below0.039Enter operating lease commitments below (in millions)2009205.0 2010174.0 2011131.0 201297.0 201370.0 2014 thenceforth405.0Solution stand for value of operating lease commitments$ 945.9 Calculation of Present Value of Operating Lease Payments0205.01.000205.0 1174.01.039167.5 2131.01.080121.3General Dynamics and Lockheed Martin ComparisonGeneral Dynamics and Lockheed Martin ComparisonFinancial Statement AnalysisGeneral Dynamics vs. Lockheed MartinExecutive SummaryThis analysis provides a comparison of two major companies within the Aerosp ace and Defense industry, General Dynamics and Lockheed Martin. General Dynamics had an ROE of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher spread and generated a higher amount of return above its cost of equity capital as compared to GD. GD generates a higher NOPAT margin over LMT (9.4% and 7.8%, respectively) allowing GD to contribute more to ROE as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. LMT has a considerable advantage for generating increased asset turnover, by generating $1.37 for every dollar as compared to GDs $1.08 for every dollar spent on company assets. General Dynamics stock is extremely undervalued (estimated $77.71 compared to closing price of $57.79) whereas Lockheed Martins stock was slightly overvalued ($85.93 compared to closing price of $84.08). Equity valuation indicates that investors were overly optimistic in LMTs earning potential and pessimistic for GDs earning potential . Despite the valuation, the destiny of this industry remains dependent on governments decisions to decrease military spending, which will have a negative impact on both companies. However, expansion of commercial airlines and partnerships with healthcare industries will have a positive effect on these companies and overall this industry will have a neutral outcome for the upcoming year.General Dynamics (NYSE GD)General Dynamics is the sixth largest defense contractor in the world and the second largest maker of corporate jets. The company maintains four business groups including aerospace, combat systems, marine systems and information systems and technology. Net earnings for the company increased from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. Sales for all groups increased from $24.1 to $29.3 billion from 2006-2008, a 17% increase. The company is based in Virginia and gets 67% of its revenue from the Department of Defense.The aerospace group generated $5.5 billion ( 19%) in sales in 2008, mostly due to Gulfstream business jet, which include long-range and ultra-long-range jets. In response to the downturn in the economy, the production of large-body and medium-size aircraft were reduced from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, which are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. Production of both of these aircrafts, which enter into service in 2011 and 2012, are foreseeable income generators based on orders placed in 2008.The combat systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by demand for combat vehicles, specifically Mine-Resistant, Ambush-Protected (MRAP) vehicles. The combat system group makes, repairs and supports wheeled and tracked armored vehicles and munitions. Combat system product lines include combat vehicles, guns and ammunition systems, mobile bridge systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi Arabia between 2010 and 2012.The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, submarines, logistic ship and the first commercial product carrier. Upcoming contracts include doubling production to two submarines per year beginning in 2011, which is predicted to increase revenue and earnings over the next three years.The information systems and technology generated $10 billion (34%) of sales in 2008 its biggest achievement developing a battlefield communications network program and Joint Tactical Radio System (JTRS). Customers include federal civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The acquisition of two companies in the tactical communications and healthcare information technology field are indicativ e of the direction this group will be making in the upcoming years.Information gathered from Morningstar1, SP500 Industry reports2 and www.generaldynamics.com3Lockheed Martin (NYSE LMT)Lockheed Martin is the worlds largest military weapons maker, deriving 84% of its net sales from the United States government, including the Department of Defense. The company is comprised of four operating systems including aeronautics, electronic, space and information systems and global services. Net sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over three years ($2.5 to $3.2 billion). The company operates in Maryland and employs 146,000 people.The aeronautics segment generated 27% of sales ($11.5 billion) in 2008. The segments primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics segment is focused on making fighter jets and military transport planes and on unmanned military aircraft. The segment also operates the Global Sustainment enterprise to ensure success throughout the life cycle of its aircraft.The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is focused on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal Altitude Area Defense System (THAAD), the Ballistic Missile Defense system and the firehead control system for the Apache helicopter.The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of satellites, strategic and defensive missile systems, and space transportation systems. The US government customers accounted for 96% of this segments sales in 2008. An ongoing partner is NASA the LMT-built Phoenix Lan der will continue to rove on Mars. Another venture is with Boeing, the United Launch Alliance, which provides satellite launch services to the US government.Information systems and global services segment account for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. Major products/programs include communication systems, mission and combat support solutions, civil agency programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and various NASA programs.Collaborations and partnerships with companies around the globe enable Lockheed Martin to grow its international business both with government and industry. The establishment of Lockheed Martin Australia in 2009 indicates an international interest to grow and expand.Information gathered from Morningstar1, SP500 Industry reports2 and www.lockheedmartin.com4Industry Outloo k Aerospace DefenseThe aerospace and defense industry relies heavily on US government allocation and the upcoming year will likely bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq war ends, there will be a need for repair and replacement. Due to the high levels of deficit spending and an increasing trend for social spending, it is likely there will be cuts in defense spending and the outlook for this industry will decline.On the other hand, it is estimated that there will be an increased growth of global passenger air traffic in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are less fuel-efficient in the US will also need to be upgraded and replaced with newer aircraft. The industry predictions are moderate production cuts at Boeing and Airbus, and declines in the business jet markets due to f alling corporate profits.The industry outlook is therefore at a neutral rating, due to decreased military budget but increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will strive for contracts within the industry. Many of these defense contractors will face uncertainty from upcoming government decisions in the next year and hence the neutral outlook for this industry.Information gathered from Morningstar and SP500 Industry ReportsFinancial Statement AdjustmentsThe following table contains information on the cumulative adjustment to General Dynamics and Lockheed Martins financial Statements.AdjustmentsGeneral DynamicsLockheed MartinIncome Statement Increase Net Income by $19 million from loss from discontinued operations net of tax Increase Net Income by $196 million from deferred portion of income tax Decrease Net Income by $70 million for gain on sale of LKEI and ILS net of tax Decrease Net Income by $56 millio n for gain on land sale Increase Net Income by $215 million to reverse impairment charge (215 = 314(1-.316) Increase Net Income by $72 million to unwind deferred taxes Subtract $246 million from Net Income for Pension IncomeBalance Sheet Increase assets by 75% of PV of capitalized leases ($709 million) Decrease assets by $7 million to unwind taxes (DTA) Adjustments for LIFO reserve not added to Total Assets. Added in denominator of ITR and Current Asset in Current Ratio Added 100% of PV of capitalization of leases to Total Liabilities ($946 million) Subtracted 25% of PV of capitalized leases to SE ($236 million) Decrease SE by $7 million to unwind deferred taxes effect (-DTA +DTL) Increase assets by 75% of PV of capitalized leases ($699 million) Decrease assets by $5,390 million to unwind deferred taxes (DTA) Increase liabilities by 100% of PV of capitalized leases ($932 million) Decrease SE by 25% of PV of operating leases ($233 million) Decrease SE by $5,390 million to unwind defe rred tax (-DTA +DTL)Caveats Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court.Cost of Equity CapitalHistorically, LMT common stock has proven less sensitive to the broad stock market. With a beta of .923 and using the Capital Asset Pricing Model (CAPM), LMT investors require an annual rate of return of 10.2%. Although this is lower than the expected market return of 10.8% (see appendix for calculation and assumptions), it is greater than its industry (Guided Missile Space Vehicles) expected return of 8.7%. However, although LMT may be more volatile as a stock than its competitors, it enjoyed a Return on Equity (ROE) significantly higher than the industry average.In 2008, LMT had an ROE of 49.2% while the industry followed with a 23.4% average ROE. Just as significant and telling is the comparison of LMTs ROE to its own required rate of return. This spread of 39% is an impressive sign as it demonstrates the amount of return LMT generated above its cost of equity capital. This is also impressive to investors at first glance, and will warrant a deeper interest from prospective investors.Much the same can be said for GD when comparing its required rate of return to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of equity.However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves and has an expected return less than its industry return by approximately 1.25%.NOPAT MarginWhen we analyze the potential net income in the absence of debt, NOPAT, we observe that General Dynamics (9.4%) generates a higher margin over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% average that was established for 2008, but does not necessarily signify any under-performance in this area since the industry data only takes into account two firms when generating Industry NOPAT margin averages. Lockheed Martin was similarly compared to Industry data, generated by two firms as well, in which NOPAT margins were recorded that were more than double of what was found for similarly classified companies (Guided Missiles Space Vehicles 3.69%).Asset TurnoverThis portion of the ROE evaluates the efficiency to produce revenue based on the investment in assets made by the company. When we begin to evaluate the simplified Asset TO values provided by the multiplicative decomposition of ROE, we observe a noticeable advantage by Lockheed Martin since they reportedly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower values at $1.08 for every $1.0 0 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 needed to be adjusted, and was done so by pulling out all non-interest bearing liabilities (NIBL). This is where we noticed that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09) with respect to assets dollars invested by each company. As we can observe, unexpected losses in each companys pension fund had led them to classify their losses as liabilities since they will still needed to be accounted for in the near future. The 32% drop in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount lost reflects LMTs larger workforce of 140,000 employees. GD, although enduring a similar percentage drop in fund value, only accommodates a workforce of 91,000, and therefore lost less in overall value amount.LeverageWhen we analyze leverage, we are analyzing each companys ability and efficiency in using interest bearing debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three times higher than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large variation in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom recorded a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008.Selected Ratio ComparisonAccounts Receivable DaysGeneral DynamicsIndustryLockheed MartinIndustry39.5132.5043.6257.12From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account receivable days by 7 days. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account receivable average of 43.62 days, which means LMT was collecting from customers on an average of 13.5 days ahead of the re st of the industry.Accounts Payable DaysGeneral DynamicsIndustryLockheed MartinIndustry33.8831.5020.0919.66 GD is collecting from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just day over the industry average of 19.66 daysInventory DaysGeneral DynamicsIndustryLockheed MartinIndustry25.9756.6217.3513.55 GD is turning inventory on average over 30 days under the industry average of 56.62 days LMT is turning inventory on average over 3 days over the industry average of 13.55 daysInterest CoverageGeneral DynamicsIndustryLockheed MartinIndustry29.5730.4314.495.49 GD could cover its yearly interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 timesEquity ValuationThe equity valuation of General Dynamics for 2008 produced an estimated share price of $77.71. This price is significantly higher than the closing per-share price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns about growth for General Dynamics stem from shrinking credit markets, which would impair the ability to finance business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and deficit spending.Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggested by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were used to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The terminal value assumpti on used in computing abnormal net income was the competitive equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising approximately 67% of the companys revenue. This lead to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing customers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a risk free rate of 5% and a market risk premium of 4%. This produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital.The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares outstanding according to the 2008 annual report to arrive at an estimated share price of $77.71.The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly optimistic in their opinion of Lockheed Martins earnings potential.Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 pro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be devoted to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of shares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93.References1www.Morningstar.com2www.netadvantgage.standardandpoors.com3www.generaldynamics.com4www.lockheedmartin.com5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 20106Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010APPENDIXCAPM = Rf Rat e + (Beta*Rmrkt)Given DataRisk Free rate = 3.77% (10 Year Treasury as of 2/18/10)Market Premium (Rmrkt) = 7% (given on page 26 of class notes) LMT Beta =0.923Industry Beta =0.697GD Beta =1.119Industry Beta =1.298CAPM CalculationsLMT = .0377 + .923*.07LMT =10.23%Industry = .0377 + .697*.07Industry =8.65% GD = .0377 + 1.119*.07GD =11.60%Industry = .0377 + 1.298*.07Industry =12.86% Financial Statement Analysis GDLMT 20082008 Beginning assets25,73328,926 Ending assets28,37333,439 Beginning equity11,7689,805 Ending equity10,0532,865 Beginning interest-bearing liabilities2,7914,407 Ending interest-bearing liabilities4,0243,805 Net income (pro forma)2,6743,114 Sales revenue29,30042,731 Other revenue00 Research development expense4741,220 Selling, general administrative expense1,7002,344 Income tax expense1,1261,485 Income tax rate0.310.32 Interest expense133341 Beginning inventory1,6211,718 Ending inventory2,0291,902 Cost of goods sold25,64738,082 Beginning accounts receivable2,8744,925 Ending accounts receivable3,4695,296 Beginning accounts payable2,3182,163 Ending accounts payable2,4432,030 Shares outstanding386393 Closing price per share57.5984.08bloomberg.comAverage assets27,05331,183 Average equity10,9116,335 Average interest-bearing liabilities3,4084,106Average non-interest bearing liabilities12,73520,742 Average accounts receivable3,1725,111 Average inventory1,8251,810 Average accounts payable2,3812,097 After-tax interest rate0.030.06Multiplicative Decomposition of ROE ROE0.250.49 Net profit margin0.090.07 Asset turnover1.081.37 Leverage2.484.92Additive Decomposition of ROE ROE0.250.49 Market-to-book2.2111.53NOPAT Margin0.090.08 Asset turnover2.054.09 ROA0.190.32 Spread0.170.26 Leverage0.310.65 Effect of leverage0.050.17 Gross profit margin0.120.11RD to revenue0.020.03SGA to revenue0.060.05Accounts receivable days39.5143.65Inventory days25.9717.35Operating cycle65.4861.00 Accounts payable days33.8820.09 Cash-to-cash cycle31.6040.91 Interest coverage29.5714.4 9 Debt ratio0.650.91Appendix CGeneral DynamicsLockheed MartinFinancial Statement AdjustmentsCumulative Financial Statement Adjustments Summary of Income Statement AdjustmentsSummary of Income Statement AdjustmentsNet Income as Reported$ 2,459Net Income as Reported$ 3,217Discontinued operations19Loss on sale of property,(126)Unwind tax effects196land, equipmentAdjusted Net Income$ 2,674Reverse of Impairment charge215 Unwind tax effects72 Pension Income(264) Adjusted Net Income$ 3,114Summary of Balance Sheet AdjustmentsSummary of Balance Sheet AdjustmentsTotal Assets as reported$ 28,373Total Assets as reported $ 33,439Constructive capitalization of709Constructive capitalization 699operating leasesof operating leasesUnwind tax effects (DTA)(7)Unwind tax effects (DTA)(5,390)Adjusted Total Assets$ 29,075Adjusted Total Assets$ 28,748 Total Liabilities as reported$ 18,320Total Liabilities as reported$ 30,574Constructive capitalization946Constructive capitalization932of operating leasesof operating leasesAdjusted Total Liabilities$ 19,266Adjusted Total Liabilities$ 31,506Total SE as reported$ 10,053Total SE as reported$ 2,865Constructive capitalization(236)Constructive capitalizationof operating leases(233)of operating leasesUnwind tax effects(5,390)Unwind tax effects(7)(DTA+DTL)(DTA+DTL)Adjusted Total SE$ (2,758)Adjusted Total SE$ 9,810Adjusted Total Liabilities + SE$ 29,075Adjusted Total Liabilities + SE$ 28,748General DynamicsPension Income Pro Forma Calculation1Net pension cost (benefit)$ 20 Net postretirement plan cost56 Total cost$ 76Net earnings$ 2,459 Percentage3.1%20082007 2Funded status pensions$ (2,922)$ 383 Funded status other postretirement plans(640)(642) Total funded status(3,562)(259) Difference$ (3,303)3Rate of return on U.S. plan assets8.1% Expected return593 Implied asset base7,330= 592 / .081 Actual return percentage-32.20%= 2360 / 73304Implied asset base$ 7,330 Pro forma expected rate7.0%Given Pro forma expected return513 Less Original expected r eturn(593) Difference (reduction in pension income)(80) 1 Effective tax rate68.8%=1-.312 Adjustment (reduction) to net income$ (55)OR (.081-.070)*7,330 * (1-.312) =$ 55Adjusted income$ 2,404= 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation1Net pension cost (benefit)$ 462 Net postretirement plan cost46 Total cost$ 508Net earnings$ 3,217 Percentage15.8%20082007 2Funded status pensions$ (11,882)$ (879) Funded status other postretirement plans14262017 Total funded status(10,456)1,138 Difference$ (11,594)3Rate of return on U.S. plan assets8.5% Expected return$ 2,184 Implied asset base25,694= 2184 / .085 Actual return percentage-28.62%= 7354 / 256944Implied asset base$ 25,694 Pro forma expected rate7.0%Given Pro forma expected return1,799 Less Original expected return(2,184) Difference (reduction in pension income)(385) 1 Effective tax rate68.4%=1-.316 Adjustment (reduction) to net income$ (264)Adjusted income$ 2,953= 3,217 264General DynamicsCapitalization of Operating Leases Enter interest rate below0.039Enter operating lease commitments below (in millions)2009205.0 2010174.0 2011131.0 201297.0 201370.0 2014 thereafter405.0Solution Present value of operating lease commitments$ 945.9 Calculation of Present Value of Operating Lease Payments0205.01.000205.0 1174.01.039167.5 2131.01.080121.3