Management Techniques Research Paper Example | Topics and Well Written Essays - 2500 words

Management Techniques - Research Paper Example Hence, today’s managers adopt a contingency perspective to analyze the probable causes of a problem or situation and thereby recognize the most appropriate application. The ultimate objective of every management technique is to enhance planning, organizing, directing, and controlling functions of the management. In addition, the competitiveness of a management approach can have a significant influence on the organization’s productivity, profitability, and long term sustainability. An organization’s culture and long term objectives have vital roles in designing its management technique. A potential management approach would assist the organization to obtain a range of competitive capabilities over its market rivals. This paper will discuss various management techniques and identify where each technique would be most appropriate. The paper will also address why each technique is effective and how choosing one of the discussed management techniques can help a fledgl ing manager. Budgeting Budgeting is a management technique used by organizations to effectively plan their use of funds throughout the following fiscal year. The history of annual budgeting can be dated back to early 18th century. A budget is secured by managing product, sales, expenses, and profit which are within the capacity of the business. A budget expresses an organization’s financial policy. A well prepared budget can forecasts the firm’s production, sales, stocks for the next accounting period. In addition to managing financial aspects, budgeting practice can fuel a spirit of cooperation among departmental heads and coordinate various manufacturing departmental activities. As stated in the book The cost accounting function, budgeting â€Å"aims to reduce to an economic minimum the effects of seasonal fluctuations in sales on production programs† (243). The budgeting practice will help a firm to equal the business needs to the available finance so that th e firm’s anticipated financial needs during the term of the plan would be met effectively. A budget sets specific targets for employees and managers and hence it is easy to achieve planned organizational goals for the budget period. Moreover, budgeting assists to evaluate employee performance which in turn would benefit the organization to identify its internal management strengths and weaknesses. Effective budget planning and budgetary control would assist the company to cut down operational costs, to avoid crises, and to improve team spirit among employees. The budgeting management approach is always appropriate (or vital) for every business organization regardless of the firm’s nature, size, business, and industry sector. Cost accounting Cost accounting is another potential management technique where the expenditure is classified, recorded, and allocated properly for the purpose of determining the costs of products or services. Although Luca Pacioli, father of accou nting, did not actually propose the practice of cost accounting, the cost accounting technique emerged from his ideas. Cost accounting is defined by NAA as â€Å"a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail† (as qtd in Shim and Siegel 2). Under this management technique, different methods including historical costing, standard costing, and marginal

Entomology Essay Example | Topics and Well Written Essays - 750 words - 2

Entomology - Essay Example Dietary assessment has become an integral part of clinical evaluation and nursing assessment. Good nutrition is not only important for preventing disease, but also for comprehensive management of a sick patient. In this essay, I plan to reflect on the food I consumed over the previous week and compare with US guidelines for dietary consumption. Dietary assessment includes 24 hour recall of food intake of each day of the week, including the type and quantity, calories analysis, estimation of protein, fat and other important nutrients like vitamins and minerals and comparing with standard references for respective age, sex and physiological condition like pregnancy, lactation and adolescence. This is then averaged to per day analysis. One week's recall of food may not be the best guide for nutrition assessment. However, it keeps matter simple for calorie calculation. From my previous week food recall, it is evident that total calorie intake on an average is about 2500 kcal per day, in excess of my requirement. The recommended calorie requirement for my age and sex is about 1900 calories. The protein intake is about 25 grams when I need about 45 grams. Total fat is about 30% (when it should be less than 20%) and mainly constituting saturated fat and dietary fibre is only about 10% (when it should be 30%). Except for some iron and calcium in the breakfast and some vitamins in the snacks, my diet is poor in vitamins and minerals. Also, there is increased consumption of non milk extrinsic sugars in the form of coke and cookies. The diet does not contain fresh fruits or vegetables or starchy staple foods. Nor does the diet contain any milk. Of course, the amount of alcohol is in moderation. Due to the excess calorie intake and predominance of saturated fats and sugary foods, Ana is at risk of chronic diseases like obesity, cardiovascular disease, hypertension, arthritis and chronic pulmonary disease. Consumption of acidic foods and non milk extrinsic sugars (like in c oke, pastries, chocolates) are cariogenic and are the beginning of periodontal diseases. Also, diet poor in minerals and vitamins can lead to multi-vitamin deficiencies, anemia and malnutrition. Improper diet can also have a psychological effect leading to depression. It is important for me to refer to the dietary guidelines and alter my diet. First of all, the total calorie value of food should not exceed 2000 k cals. According to the National Food Guide to an adult’s diet, bread, cereals and potatoes should comprise one third of the diet and preferably whole grains. Another one third should comprise of fruits and vegetable

Stress and health in novice and experienced nursing students Essay

Stress and health in novice and experienced nursing students - Essay Example tate them all.) If there are not research questions and/or a hypothesis, indicate that is the case and provide your interpretation of what the research question and hypotheses are. The research questions that became used in the experiment included, What degrees of stress and types of stressful events perceived by students in their clinical practice, what the common biopsychosocial responses were during clinical practice periods, what the differences in reports of health and stress between experienced and novice groups of nursing students were. In accordance to the research paper, stress and coping tend to affect health in social, physical and psychological aspects. Since the medical team is highly dependent on the nurses, plus the nursing students need to learn, the research became aimed at knowing the outcomes of stress to their learning. The research used nursing students from the University for Higher School for Nursing positioned in Andalusia. The research became conducted for 3 years. The research involved all the 503 nursing students. The sample became representative of the whole nursing population. The size was appropriate as it involved all the nursing students. Such a sample was excellent though data collection from each of the students might have brought some issues. In data collection, two types of tools became used the Perceived Stress Scale and the Biopsychosocial Response Scale. The two became designed by Sheu. Reliability of the two tools became mentioned in the research, for instance, the Perceived Stress Scale got reasonable reliability indexes. Biopsychosocial Response Scale became reliable too in the process of data collection. In the research, the writer utilizes the use of tables. Tables offer a summary of the data collected in a simplified form. One can be able to understand the data displayed in the table since they are simplifies and direct to the point. In the table of the stress perceived by the use of Perceived Stress Scale, a

Market Research proposal report Essay Example | Topics and Well Written Essays - 1000 words

Market Research proposal report - Essay Example The industry gives transport services for freight and also passengers. Businesses within the industry aim at making it very interesting to woo customers to desire to use services provided by the industry. The study of the industry reveals that there are political, economic, socio-cultural and legal factors that affect it. The Pest analysis should be used to analyze the environment in which the industry operates in. This simple analysis involves understanding the industry's political, economic, social, and technological environment with references to the various companies within the industry. (Massingham, et al. 1988) Political factors have a direct and indirect effect on the performance of the various companies within the airline industry. There are some decisions which have been made by the federal government of the United Kingdom which has really had a negative effect on the performance of the industry. For instance, in 2001, the federal government brought legal suits and made decisions to minimize the production and marketing of high performance to countries believed to be a threat to the security of U.K. This move impacted negatively to the general operations of companies within the industry. (Michael, 1985) The industry has also been affected by economic factors. These include: Currency exchange rate, interest rate policy, consumer factors, and fiscal policy rates. The industry has to adhere to the fluctuations in the market depending with how a consumer perceives the offered products. In the times of economic recession, less people use air transport because of the low affordability of this kind of transport. Hence the industry has continually suffered for lack of customers. Therefore, the industry makes minimal profits because of the few customers it is able to acquire at such times. (Jan, 2002) The market has also been affected by social factors. Forces within the society such as media, family and friends have affected the operations of companies within the industry. The media has played a role in influencing customers to believe that the services offered by the industry are of high quality. Social factors have affected the opinions, interests, and attitudes of the industry's potential customers. The industry's success can be greatly attributed to social factors. (Scholes, 1993) Technological factors have also played a role in affecting the industry's performance. The internet for example has assisted the industry to extend its global out reach. Most of the marketing mix strategies which the airline has used have kept in touch with changing technology and modernization in the ever changing world. E-commerce and Radio Frequency identification-RFID are some of the modern technological aspects embraced by the industry. The industry has tried to always keep abreast with technology. The modern technology present in the industry has given it a competitive edge over other related industries. The technology has also greatly increased the effectiveness of the services offered by the industry. (Schlesinger, 1991) Some of the services that can be introduced in to the industry include postal services. Here, letters and mails will be transported via planes to where they are needed. This enhances the speed of postal services in the world as a whole. The targeted customers will include rich business people who need to deliver mail to business people based in other parts of the world urgently. The cost of this service will

Organisational Change Management Essay Example | Topics and Well Written Essays - 2750 words - 1

Organisational Change Management - Essay Example This majorly applies to the employees who will not be directly affected by the changes and closure of the UK company branch. There need to be a way to maintain their attachment to the company and interest in the success of the company (DiPlacido, 1976). D2 is bound to receive several challenges during the execution of the proposed changes. These challenges will particularly emerge from the employees who will need to shift locations and apply their expertise in another D2 branch. This will be done in that the services of product development team in Didcot will be imported to France. This will help boost the production in France and make the company profitable. Though crucial to the success of the company, likelihood of facing resistance from employees who will have to undergo both personal and geographic change is eminent. This will trigger feelings of victimization and negative attitude towards the company (Wiltshire, 1995). Despite all the challenges, the bard of D2 has decided to p ractice the following strategic changes as immediate actions in their organizational change management: a) Operational Change: According to Truscott, centralizing the available resources to a specific production line gives the company a chance to improve its internal operational competency (2003). This D2 will achieve by stopping part of their production and opting for service outsourcing if need be. This will also enable them to get a specialized service attention. b) Strategic Change: Inefficient strategy normally neutralizes the efforts of the employees (Gutek, 2000). For this reason, D2 aims at adapting a strategy that focuses on reducing both their production and operational costs. Unlike before when they mainly focused on widespread investment, D2 will... D2 is looking forward to making significant operational changes that will also affect its employees. First, D2 is aiming at shutting down their UK site at Didcot in a bid to enable them to centralize their management and resources to the highly profitable branches and maximize on economies of scale. This will greatly affect the employees who were working at the site. D2 is also looking forward to relocating its employees at Didcot and settling them in France so that they can help improve their product design and make the company branch in France more profitable. The changes that the company will undergo while performing all these requires expertise and careful handling as it concerns employees who will have to shift their physical location. Relocating employees from one physical location to the other usually have various effects on the employees. While some might welcome it as a way of exploring new locations, many will always find it inconveniencing considering their attachment to t he location they were in. For this reason, there are several effects to the overall operation and functionality of D2 that will result from the shutdown of the Didcot site and the transfer of the employees from Didcot to France. According to Waterhouse and Brown, there are several factors and constraints that are normally associated with employee relocation (2001) that must be considered to provide for a smooth transformation of the company.  

Gag Clauses Essay Example for Free

Gag Clauses Essay For the past ten years, the Health Management Organizations (HMO), who is responsible on the health care programs, had imposed a new system that restrict and inhibit physicians in communicating to their patients. (Wynn, 1996) This is known as ‘gag clause†. The physician must not discuss the medical condition and all treatment options of their patients. These include the right health care plan, the appropriate treatment and medications that may be benefit to the patient in terms of cost. (Liang, 1998) The issue on the gag clauses creates a big noise especially on the practitioners and physicians. This issue receives many criticisms. According to some critics, it is the obligation of a physician to educate and inform his patient on what kind of treatment, and the kind of health care plan. This is because physicians are trained to treat the bad health conditions of their patients. The gag clause thus inhibits the open discussion of the two parties. Because of the gag clause issue, the House of Representative and the Legislature of United States are now making a proper move to inhibit the gag clauses in physician contracts. But almost 200 million of the citizens of the said country rely on health care programs of HMOs. The lawmakers of United States, who had made laws and enforces these to protect its citizens, medicine companies as well as the practitioners from the HMOs, still HMOs finds a way to control the actions of their hired physicians. This is the termination-without-cause clause. In this clause, the physician to be hired by HMOs can be fired for any reason. The restrictions of physicians in communicating to their patients produce major problems especially on the side of the patient. One of these problem is the lost of trust and confidence of the patient if his original physician has been deselected. Then the second physician must handle the latter treatment on the patient which is very difficult because of little time. Then the second physician also faces a constraint in communicating to his patient. This will result to low quality health care service given by HMOs. The welfare of the patients is being jeopardized because of gag clauses. A study was conducted on the performance of physicians experiencing gag clauses from their health care company. From the physicians who were interviewed, majority do their medical obligation as part of their ethical duties in providing the necessary medication and treatments for their patients. They do not even read carefully the provisions of the contracts they signed in handling their patients. But because of the alarming issues on the deselecting, physicians were limited on communicating to their patients the health conditions and proper treatment. While on the side of physician sectors, there profession is being put at risk. As a physician, their responsibility is to take care of their patient which is the core of their medical responsibility. If these physicians were unluckily deselected, their ethical responsibility to raise and support their family will be affected. Thus, physicians are faced in a two situations were they must choose which will they do. Thus the purpose of their profession is being sacrificed. In almost contract signing, there are some elements to consider and understand by both parties before they undergo in signing. Some of the key terms to consider are the payment terms, duty and obligations of parties, representations and warranties, conditions on the closure of the contract, some liability issues and termination rights. In contract signing in a managed care setting, the identification of the parties who will sign the contract must first be done. In terms of managed care setting, the health care provider, physicians and the consumers or patients are the main characters. Then the recitals will follow. In this part, it contains the background of the contract as well the objective. The obligation of the parties involved is the next element to be discussed before signing. The health care provider will provide all the necessary treatments needed by the patient for his wellness. This includes the necessary and appropriate health care plan. While the physician medical responsibility is to provide the necessary treatment needed by the patient in which he can apply his profession. These include care and medication of the patient. And lastly, the obligation of the patient is in term of financial obligation for the health care provider and to the physician. (Allbusiness, 2007) Next to be considered are the terms of the contract. It must be clearly stated what are the sanction if one of the terms was not made. Also, the contract must be known if it is an only one time or it can be renewed. And if the contract is renewable, how it can be renewed? These questions must be first answered before the signing of the medical health care contract. After this, the price must be set. How much will it cost the service of the health care provider to their costumers or patients and the salary of the physician assigned, as well as the terms of payments between the parties? When will the due of the payment and what are the consequences if the due was not met by one of the party concerned. Warranty is also part of a contract. The warranties must be clearly stated on how it can be claimed and in what way. If the health care program does not meet the terms, how will the health care provider pay the consequence? And how long the warranty will is good for. And lastly is the term of termination of the contract. When will the health care program end in concern on the patient? When will the physician medical obligation ends. The above are mentioned are the key terms in contract signing in a health care setting. (Allbusiness, 2007) In contract signing in a health care setting, a major concern that must be considered is that-if the contract contains provisions of illegal act? Because majority of the HMOs contract’s contain provision of not letting communication on the physician-patient relationship, the Federal government of United States enforce these HMOs to eliminate these gag clauses. In a contract, it is stated that the patient under a health care program is entitled to all benefits of the health care program. ( Scanlon, 1999) Because of this, the Health Care Financing Administration force HMOs to eliminate gag clauses on their contracts. If a contract contains illegal act such that of the gag clauses, it will be considered as a violation on the Medicare law. This is because almost physicians believe that inhibiting them in communicating with their patients about their medical condition might result to increase on the risk on their health condition. (Frascati, 2005) Even tough some of the health care plans of HMOs were revised in connection with the gag clauses; still there are provisions and conditions that hinder the communication of physician-patient relationship. Some of these provisions are the business confidentiality clause, nondisparagement clause and nonsolicitation clause. These provisions are discrete form of inhibition of the communication. (Lott, 1997) If one of the provisions in a contract is unenforceable like no legal action or waiver of right to trial by jury, and then the contract is considered void. (Higuchi, 1995)

Chinas Logistics Industry

Chinas Logistics Industry Abstract The aim of this paper is to introduce development of China logistics industry in last decade. This paper examines problems during the development and the implementations to further develop China logistics industry in the future. The first part of this paper introduces the background of China logistics industry, problem statement and research objective. The measurements of development of China logistics industry are as dependent variables discussed in Chapter four. The second part talks about literature review for logistics, 3 elements in development of China logistics industry which are cost, productivity and expansion. Also, factors that affect development of China logistics industry are given which are transportation, governments regulation, warehousing and storage, IT supporting and infrastructure. Chapter three looks at research methodology which contains source of data, method of data analysis, questionnaire and interview. The theoretical framework shows the relationship between independent variables and dependent variables. Chapter four is mainly focuses on data analysis; the results are shown to indicate the main factors that limit the development of China logistics industry. Finally, the chapter five gives the conclusion and recommendation to solve the problems that effect development of China logistics industry that is integrated information technology to reduce transportation cost. KEYWORDS: logistics, cost, information technology, transportation. Chapter 1 Introduction 1.1 Background of Study With the increase of the global competition and the rapid development of the Information Technology (IT), the logistics industry has become one of the most important industries in the 21st century. The scope and role of logistics have changed dramatically over recent years. In the past, logistics has played a supportive role to primary functions such as marketing and manufacturing. Now the scope of logistics has expanded beyond its traditional coverage of transportation and warehousing activities to include purchasing, distribution, inventory management, packaging, manufacturing and customer service. More importantly, logistics has dramatically evolved from a supportive role characterized and cost absorbing to a primary role and become an important of competitive advantage. Companies experiencing growing pressure to reduce costs and provide better service so that they engage in improving the logistics by outsourcing/expansion, an option that can improve both efficiency and effectiven ess. Modern theory of logistics in China was introduction in 1980s to pilot program of logistic and distribution centres built-up in early 1990s and then evolved into full-fledged industry by the end of 1990s. Since its economic reform and opening up in 1978, Chinas economy keeps booming, with an annual GDP growth rate of nearly 10 percent which has become a global manufacturing centre with its high economic growth rate (Wang et al. 2006). In 2001, a condition for China to become a full member of the World Trade Organization (WTO) was the removal of restrictions to foreign logistics investments. At the beginning, foreign capital was allowed only in form of joint ventures where Chinese partner held a majority (Goh and Ling, 2003). At the end of 2005, the restrictions were completely phased out. At present, state-owned, privately/locally owned, and foreign owned logistics companies are all equally allowed to enter and compete in logistics industry in China. Chinas logistic industry has been experiencing fast growth driven with the help of sustainable national economic expansion. Although there are tremendous opportunities, still the intense competition exists, especially after 2001. The logistics industry reported an annual growth rate of 31% in 1999, 35% in 2000, and 55% in 2001, and was expected to continue to expand rapidly in the future (Business knowledge on demand, 2007). According to Exhibit 1, the average annual growth rate of the logistics industry in China was 22.2%, and logistics expenditures accounted for about 21.8% of the GDP between 1992 and 2004 (business knowledge on demand, 2007). This sector has been developed in a physically sound way under improved infrastructure and external environment. According to Asia consulting, Added value has reached to RMB 1.4 trillion in 2006 up 13.9% over 2005. The transportation fee has been RMB 2.1 trillion increasing 12.1 %. The increase can be seen in inventory and delivery service along with 16.7% of warehousing fe es. It is expected that Chinas logistics market value will reach RMB1.1972 trillion, and will continue to maintain an annual growth of 20% in 2010. 1.2 Total Logistics Market Size The GDP of China is above RMB 10 trillion by the first time in 2002 that achieved a real growth of 8%. In the 10th Five-year Plan, the government is forecasting an average growth rate 7% per annum in 2002-2007. According to the forecasts by State Development Planning Commission (SDPC), the GDP will be quadruple, about US$4.3 Trillion by 2020. The price level will be stable because of higher price pressure within the economy. In a detailed survey by the China Federation of Logistics and Purchasing (CFLP), the total logistics market was estimated at RMB1, 788 billion, 20% of the GDP in 2000. In 2002, it was estimated that the total logistics market of China were about RMB 2 trillion. Though the economy was expanding in 7%, logistics expenses were going to increase in a slower rate. It was because there is sufficient supply of logistics capacity such as trucks, warehouses and other fixed assets. Government registration shows 700,000 logistics service providers are operating. On the othe r hand, improving logistics efficiency also reduces its proportion to the GDP. A moderate rate of 4.0%-4.9% growth is estimated in the coming five years. According to HK Trade Development Council, leading logistics companies in China such as UPS, FedEx and DHL-Sinotrans have all recorded annual growths in over 30% on operations in China and there are more outsourcing contributes to the growth of professional logistics firms. Moreover, as competition increases, it is expected that market share is shifting from local companies to foreign invested enterprises (FIEs) or local giants, who can offer more efficient services in lower fees.(LI FUNG, 2003) 1.3 Players in the China Logistics Market Chinas logistics market is fragmented, characterized by tens of thousands of logistics companies and many of them are small, poorly organized with fundamental infrastructure and technology. A vast majority of the players are lack of nationwide capabilities and serve a narrow customer base; and mainly focus on simple transportation and storage functions. Competition is fierce, particularly in the low-end market. Traditionally, Chinas logistics market is dominated by the state-owned enterprises (SOEs) which provide 90% of the logistics services, but none of these has a market share over 2%. 1.31 State-Owned Players There are many state-owned players in China logistics market. Prior to 1980, under economic conditions in that time, Chinas logistics business could only be managed by state-owned enterprises and logistics was a monopoly industry, mostly for transpiration and warehousing. The characteristics of their management mode are small-scale native enterprises, slow product renovation, poor management, production plans following from various government agencies, etc. Due to government investment and monopolistic operation, these enterprises acquired large assets and became relatively large-scale business firms. Relying on their sufficiency capital and existing market share, in the past several years these enterprises rapidly became leaders in China logistics industry. However, due to the monopolistic nature of the industry and the separated management system, it will take time for these logistics firms to become truly comprehensive. The following is a list of todays relatively powerful state-o wned backbone logistics enterprises that operate nationwide: China Ocean Shipping (Group) Company (COSCO); China Railway Express Company Limited (CREC); China Post Logistics Company Limited (CPLC); China Railway Container Transport Company Limited (CRCTC), etc. COSCO Logistics COSCO Logistics is a branch of COSCO, China Ocean Shipping Company. It was formed in 2002. Because of the parent companys network and infrastructure, in 2004 to 2008 it ranked number 1 in China in terms of comprehensive logistics capacities. COSCO Logistics has 300 logistics facilities, covering 90% of the China market and the service is strongly marine transport related. 1.32 Private Players Since the mid-1990s, Chinas private domestic logistics enterprises started to develop themselves. For example: EAS International Transportation Ltd (Shanghai). This company was founded in 1985 and it involves international business. In the past twenty years, EAS has gained notable achievement in building the unique operation platform to development modern logistics business according to the demand of customers. There are many other private domestic logistics companies in China, such as St-Anda, PGL, China Overseas logistics and so on. They are all medium-size Chinese logistics provides emerged in the last 10-20 years. These firms have enjoyed the fastest growth in the market due to their light-asset nature and high efficiency. They are more focused on geographies, service and customers. But they have problems in lacking sufficient financial support for market expansion and internal management mechanisms and effective organization to support high growth and profitability. (Fu Qinqin, 2007) 1.33 International Logistics Players(ILCs) Although the domestic companies dominate the general China logistics market, ILCs are playing a more important role, and their market shares are increasing rapidly. Among which the most important are the four giant ILCs that started with parcel and courier services. The international logistics players are: DHL, TNT, UPS, FedEx and so on. Deutsche Post World Net/DHL Deutsche Post World Net (DPWN) has a uniformed brand and image for its logistics, courier and parcel, and transport service; that is DHL. DHL first entered China in 1981. In 1986, it formed a joint venture with Sinotrans in courier and parcel delivery. Mainly because of this earliest partnership, DHL-Sinotrans has the biggest market share in courier service. Both parties enjoy a very fruitful partnership. For this reason, in 2002 when the first partnership ended, DHL and Sinotrans renewed the cooperation agreement for another 50 years, till the year of 2052. In May 2004, DHL initiated its domestic delivery of parcels in China, and again, DHL led the market. In the courier and parcel delivery market, the partnership between DHL and Sinotrans is the most stable. In the past twenty years, DHL has invested about $215 million in China. Out of its total investment of $1.1 billion in Asia, that was only about 20% of DHLs investment in Asia. However, DHL plan to invest about $273 millions in China from 2004-2008, or almost 2/3 of its $400 million investment in Asia over the same period. Clearly, the investment is heating up in the China logistics market. (Xuepin Cen, 2005) Nowadays, many foreign logistics companies have established good cooperation relations with Chinese logistics firms by using joint ventures. The advantage foreign companies have competitive advantage in technology and management, but only when they are combined with experiences and existing service network of Chinese enterprises that they could be brought into full play. Therefore, some Chinese logistics companies usually face Merge and acquisition (MA) risk. A number of foreign companies that have never touched on the Chinese market patiently search for Chinese companies for cooperation projects. Many inland Chinese cities promise many commercial opportunities in the logistics sector, and it needs time for foreign companies to fully penetrate into the Chinese market. However, for foreign logistics companies they are being challenged by infrastructure and customer base and of lack of on-the-ground capabilities in China. 1.34 Third Party Logistics companies (TPLs) Chinas market for TPL is still in its early stage. Also, TPL is a relative new concept for most of the Chinese companies. A TPL company normally provides process-base services rather than a function-base logistics service, which generally toward to the integration and full control of a part or whole process of customers logistics network. The rationale for outsourcing logistics is to achieve cost saving through economics of scale. Small or middle sized companies may not always have economics of scale to economically manage logistics operation, but this is precisely one of the advantages for third-party logistics companies. The year of 2006 is the first year of Chinas 11th Five-Year Plan (2006~2010), and is also the first year when logistics is opened up completely. From the year of 2006 to 2010, the basic frame and main functions of Chinas southern international logistics centre will come into being. The proportion of logistics cost in GDP will decrease more than 3%. The third party logistics will share up to 23% in the logistics market.(Fu Qinqin, 2007) 1.4 Major modes of Transport The first few years of the 21st century have been characterized by the rapid construction of transport infrastructure in China. During the five-year plan from 2001 to2005, transport infrastructure has been built significantly including 250,000 kilometres of highways and 24,700 kilometres of expressways. By the end of 2006, the total length Chinese highway has reached 3,457,000 kilometres and 77,000 kilometres of railways (Waters, 2007). The current five-year plan (2006-2010) has an ambitious agenda and will spend hundreds of billions of dollars over the next five years to develop Chinas roads, river ports, and railroads. (Richard Brubaker,2005 ) 1.41 Ports According to Richard Brubaker, (2005) since the central government opened Chinese ports to overseas investment in March of 2002, Chinese Port facilities have received massive amounts of investment and have taken huge steps towards significantly increasing capacity. In 2003, the total investment in Chinese port development and construction was US$2.2 billion, and in 2004, the Ministry of Communication has reported this figure was to reach nearly US$4.3 billion in 2004. Currently, Chinas coastal cities like Dalian, Tianjin, Qingdao, Shanghai, Ningbo, Guangzhou and Shenzhen, are all competing to complete new berths and establish themselves as dominant regional logistics centres. (Exhibit 2) In Shanghai for example, container throughput of 11.28 million Twenty-Foot Equivalent Units (TEUs) for 2003 is expected to increase to 14.5million TEUs in 2004, with massive expansion already underway. In addition to expansion that will add more than 2m TEUs of capacity in 2005, Shanghais massive Yan gshan deepwater terminal is also under construction and will eventually handle 25m TEUs at a cost of â‚ ¬1.5bn. Although such massive investment and expansion, the improvements brought by increasing use of foreign terminal operators, Chinese ports still need to keep up with increasing demand. 1.42 Road Benefit from government heavy investment and the unreliability of other options for instance rail and inland water, road transport becomes most popular choice for the inland distribution of goods in China. Beijing has already emphasised on a plan to double Chinas expressway mileage. (Richard Brubaker,2005) By 2005, as Chinas new inter-provincial highway system nears completion, almost 200,000 km of new roads will bring the national total to roughly 1.5 million km. Among the most significant of these developments, Shanghai-Chengdu Highway and Beijing-Zhuhai Expressway are the most arresting plan. Because most of Chinas highways are financed using a fixed return toll based system, tolls account for roughly 20% of costs faced by long distance trucking operators and create huge incentives to overload trucks. Nearly 75% of Chinas more than 100,000 traffic fatalities per year have been attributed to overloaded trucks. These deaths have led to new road safety laws, which if observed, could have significant implications for the efficiency and the costs of trucking operations where trucks are overloaded on average by 30% and often by 50%. However, at present the trucking industry in China remains extremely fragmented and is not organized on a national basis. The largest of the nearly 3 million trucking service providers in China is Sinotrans, with a registered fleet of 3,000 trucks specializing in long-distance service. Short-distance trucking services in China are generally provided by local operators who offer relatively cost effective and competitive services. In spite of national policies, this separation between local and long distance trucking operators is in part due to efforts by local and city authorities to protect local businesses. By the end of 2004, Chinas WTO commitments require that Chinas trucking sector be fully opened to foreign firms. Experts said that current market fragmentation and the benefits of newly expanded infrastructure make the trucking sec tor particularly attractive for consolidation and foreign investment. 1.43 Rail According to Richard Brubaker, (2005) Chinas Railway infrastructure has received relatively low levels of investment compared with Chinas road and port infrastructure. The Ministry of Railways has relatively modest plans to increase Chinas existing rail network from 72,000 km to 100,000 km in 2020. Use of the Chinese rail system increased 6% year on year between January of 2003 and January of 2004, though it would appear that this relatively modest increase can be less attributed to weak demand than the limitations posed by serious under capacity. Railway bottlenecks and the inability of the railway system to transport the requisite amounts of coal were in large part responsible for the power shortages of the summer of 2004. This has since led to the prioritization of coal shipments leaving other commodities and cargoes sitting on docks. Many importers, most notably Chinas steel mills have been struggling to find enough railcars to carry cargo and now often resort to barges and truck s at much greater cost. Poor handling practices, delays, unpredictable delivery times, bulk shipment requirements, theft, minimal shipment tracking, the lack of inter-modal facilities, and a general lack of infrastructure all plague the Chinese railways. However, despite these issues exist, the heavy subsidization still makes Chinas railway become the cheapest form of overland transport compare with shippers. 1.44 Inland Waterways Infrastructure on inland waterways, most significantly the Yangtze River, increased 8% between January 2003 and January 2004. (Richard Brubaker,2005) Rivers such as the Yangtze can handle ships of up to 6000 tonnes and are generally uncongested; however, canals and low bridges can be problematic and projects such as the recently completed 3 Gorges Dam can serve to prolong dry seasons and keep water levels low. 1.45 Air freight Although Chinas airfreight sector is constrained by inadequate infrastructure, its development has been rapid. China is the second-largest domestic airfreight market in the world after the United States. According to Boeings World Air Cargo Forecast, the market has grown at more than 20 percent annually since 1991. (Richard Brubaker,2005) Airports are seeing rapid expansion in three principal economic areas: the Yangtze River Delta (YRD), the Pearl River Delta (PRD), and the capital city of Beijing. Expansion in the PRD is very important that it threatens to cut into the volumes handled by Hong Kong, the worlds largest air cargo airport. But a large proportion of the goods exported from South China are routed through Hong Kong. Its position has been strengthened, moreover, by an agreement that allows Chinese airlines to expand their international services via Hong Kong and gives Hong Kong airlines greater access to the mainland. 1.46 Warehousing Most of Chinas warehousing facilities are older or old-style facilities with a range of associated issues. Many facilities do not have computerized stock supervision systems in place. Single and multi-story warehouse designs limit efficiency by preventing the use of multiple racking levels and by modern forklift trucks. Cross contamination is an issue as are unsealed loading platforms at refrigerated facilities, which expose food products to ambient air temperatures during loading and unloading. The shortage and shortcomings of existing facilities as well as the opening up of the Chinese warehousing under its WTO commitments by the end of 2005, have led to considerable investment and anticipation in this sector. (Richard Brubaker,2005 ) For example, in Shanghai, several foreign logistics services providers hoping to invest in the future and capitalize on preferential policies and proximity to port facilities (including APL Logistics, DHL and OOCL Logistics) have or are planning to es tablish massive logistics centres in Shanghais Waigaoqiao Logistics Park / Free Trade Zone. The park has been established as an international transit, delivery, sourcing and transhipment hub to promote and coordinate the development of Shanghais sea and air transport, warehousing and logistics industries. 1.5 Statements of the Problem 1.51 High Cost Since the late of 1990s, China has been aiming at fostering logistics industry and improving logistics management skills, for the huge manufacturing industries in China has driven logistics industry growing rapidly in recent years. With its imminent entry into the World Trade Organization (WTO), China is embracing a big opportunity to develop its logistics industry, officials and experts noted. Zhang zhigang, deputy director of the State Economic and Trade Commission (SETC), said that: it is urgent that China reforms its old circulation system and speeds up the development of its logistics industry as China faces new challenges in the globalization process. But the high logistics cost nibble the competence of firms. According to the data released by Development Research Center of the State Council of PR China, Chinas logistics expenditures amounted to 20% of the GDP in 2000 whereas logistics spending accounted for 10.3% of United Statess GDP, 14% of Japans GDP, and 10 to 13% of Europ ean Unions GGP (Waters, 2007). The annual growth rate of total logistics expenditures is 10.29, 12.99, 16.76 and 12.86 percent from 2002 to 2005 (National Development and Reform Commission, 2004). Statistics published by China Federation of Logistics and Purchasing show that Chinas total logistics expenses reached RMB3.8414 trillion in 2006, up 13.5% year on year at current price, a growth 0.6 percentage points higher than in 2005. The rate of total logistics expense of GDP was 18.3%, 0.2 percentage points lower than in 2005. This is the mainly problem that slow down the development of China logistics industry. The total logistics cost encompasses transportation, inventory storage and management. In 2007, the total logistics cost increased by 18.2% to 4540.6 billion yuan. The total logistics cost in China generally includes three cost components, namely, transportation, inventory storage and management cost. According to Exhibit 3, it is clear that the total logistics cost increased rapidly during 1991-98, since then the growth started levelling off. In 2004, the total cost amounted to 2911.4 billion yuan (US$ 352 billion), grew by 16.6%. Of this total, transportation cost made up the largest portion and witnessed the highest growth rate. Transportation cost was 1655.8 billion yuan (US$ 200 billion), accounting for 56.9% of the total logistics cost. On the other hand, inventory storage and management cost were 846.7 and 408.9 billion yuan (US$ 102 billion and US$ 49 billion), accounting for 29.1% and 14% of the total logistics cost respectively (US$ 15.7 billion). Adding the costs of packing, transport, storage and damage, the ratio of total logistics costs to total industry production ranges from 40% to 60%, whereas in the United States this percentage is close to 20% (Smyrlis, 2006). If logistics costs are broken down, transport accounts for 57% of costs, inventory and storage accounts for 29%, and management accounts for 14% (Exhibit 4). Percentage wise, transport costs in China are twice as expensive as in developed countries (Wakers, 2007). 1.52 Low in productivity The ratio of total logistics cost to GDP represents the efficiency of logistics operation in the economy which means the productivity of logistics industry. It is also used as an indicator of the development level of the logistics industry. In general, the higher the percentage, the less efficient is the logistics industry. Exhibit 5 shows the total logistics cost as a percentage of GDP in the 10th Five-year Plan period (2000-2005). Despite the total logistics cost as a percentage of GDP has been on a downward trend that decreased from 19.4% in 2000 to 18.57% in 2005 and the total cost savings in the 10th Five-year Plan period totalled 109 billion yuan; according to exhibit 3, the logistics cost was still higher than that in US, Japan and developed countries which means lower inefficiency of China logistics industry. As predicted by the CFLP, the ratio of total logistics cost to GDP will continue higher that resulting inefficiency of modern logistics services. CFLP predicted that tot al logistics costs during the 11th Five-year Program period (2006-2010) will grow at 10% annually, 2% lower than that of the 10th Five-year Plan period. It also forecasted that the total logistics cost will reach 5,400 billion yuan in 2010, the ratio of total logistics cost to GDP at around 16.8% and cost savings yield during the period will be around 435 billion yuan. 1.53 Slowly expansion/outsourcing One of the most significant drivers of growth in the global logistics industry is the trend of mergers and acquisitions. Such buyouts and mergers enable logistics players to build up their infrastructure and service scale, both of which are critical to remaining competitive. By merging their operations and collaborating on technology, complementary services partners can also scale up their logistics capability without having to invest heavily in infrastructure. The result is lower cycle-time, streamlined business processes and lower manpower costs, which in turn boosts companies productivity and profitability. Although the giant logistics companies in China have overseas offices established from the 1980s and 1990s as their overseas branches to support their international transportation, their businesses are heavily dependent on agents. For example, Sinotrans has business in 200 countries, but there are only 40 overseas offices. The most international business is done via the agents. As Contrill claimed, dont expect a wave of Chinese 3PLs to land on Western shores soon. The pace of change in China is slow by Western standards and there is much to do in the home market. 1.6 Research objective The objective of this research is twofold. On one hand, the objective is: To understand the development of China logistics industry in last decades. On the other hand is to investigate the factors affect the development of China logistics industry and find the solutions to solve the current problems to further develop logistics industry in China. On meeting the two objectives this paper will develop a framework to address the factors that affect the development of China logistics industry. 1.7 Research questions There questions will be discussed in this article: 1: To introduce the development of logistics industry in China in last decade. 2: What are the factors that affect the development of China logistics industry? 3: How to solve the current problems to further develop logistics industry in China? 1.8 Significance of study This research would contribute by indicating and analyzing some of the problems that affect development of China logistics industry and this study was designed to answer some questions from perspectives of both the researcher and some practitioners. The theoretical framework was based on an extensive review of the literature on the various theoretical models of factors affect development China logistics industry. 1.9 Limitations of the research Because of time restriction (from September to November, 2009), this thesis will be finished within 3 months, I will cover the detail of logistics management (Transportation, Warehousing and IT supporting) as specific as possible. Because of the location of sampling in Shanghai, China, the searcher has to come to China but only around 1month, so time limited to the questionnaire distributing and receiving which cause low response rate. There are many problems that influence the development of logistics industry in China; in this paper, we only focus the above 5 main problems. Because of some companies are not public listed companies, it is difficult to find the financial data from the current annual reports released by these companies, so we may analyze these companies using the previous data (Eg: Annual Report in 2007) Some of questions are directly related to the internal strategy of company management, so managers are unwilling to answer. 1.10 Chapter Outline Chapter one Introduction: This provides the reader with background information of the study, which creates a pictorial flow of the main research. Research objectives, background of study, problems and significance as well as the limitations faced by the researcher are clearly stated in this chapter. Chapter two Literature review: This chapter explores relevant literature; it basically dealt with pertinent literature on problems of current China logistics industry with discussions on related research variables such as government policy and regulations, transportation cost, warehousing and storage, training/education/IT supporting and infrastructure. Chapter three Methodology and Data collection: This chapter describes the research design used to conduct this research. This chapter will further disclose the ways used in analyzing data collected, limitations of the methods used and how the data was collected. This section concludes with discussions of the data gathering techniques and the data analysis procedures that were used to answer the hypotheses and research questions. Chapter four Results and discussions: This chapter outlines results of data analysis, provides discussion of research findings and builds bridges between objectives, findings and relevant literature. The result section summarizes the analysis of the data and present findings of the study with respect to the hypothesis and research questions. While the discussion section reviews the findings of the study in the context of the conceptual framework of the study. Chapter five Conclusions and recommendations are provided in this chapter together with discussions on the contribution of the study to the body of knowledge. This chapter concludes the research and documents the implications of the study with recommendations for future research. Chapter 2 Literature Review 2.1 Definition of logistics Logistic is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services and related information from their point of origin to point of consumption for the purpose of conforming to custom