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Njomen Pride

WAREHOUSING AND LOGISTICS

  1. Distinguish between private and public warehousing what are the advantages and disadvantages of

Answer:

Private warehousing Public warehousing
Own and operated by the company whose products are store in the warehouse, and as such have total control over the goods that comes in and out, though may not own the land and the building. An example of this is Happahali warehouse in Kokkola A warehouse with varieties of goods own by so many companies, it is open for hire to anyone who wishes to come in for storage, and mainly for short term basis. An example of this is the police.

reocities.com outline a basic difference in public and private warehousing cost wise as follows:

Cost Component Private (Company) Warehouse Public Warehouse

Capital Cost

       Building cost

       Facilities & equipment

       Material -handling equipment

       (Un)loading docks/rails

Not applicable

Expenses

       Safety equipment

       Insurance, taxes,

       Maintenance/ repairs

       Utilities

       Salaries/wages

       Employee benefits

Per unit cost based on the type of services used

Rates/ Fees

Not applicable

Time based: Storage charges

Transaction-based:Handling charges; in/out special handling fees, documentation, special services, etc

Risks

The company assumed all risks

Defined and bear in accordance with the standard terms and conditions of the warehouse agreement

Source: http://www.reocities.com/liame_/Warehousing.htm. Assed 03.02.2014)

The advantages and disadvantages of private and public warehousing are as follows:

Private warehouse

Advantages Disadvantages
o   offers total control over the warehouse

o   constructed to meet specific needs and wants

o   free access at any given time

o   there are building and allowance on government reduce tax payable

o   There is a maximum care in handling storage units.

o   Lack of flexibility, it becomes so difficult to change location or size of the building when market change

o   High fixed cost, the cost of maintain the building remain the same even if sales volume reduces.

o   High start-up cost

o   High risk, the firm might not be able to sell the house duel to it customise design.

Public warehouse

o   No capital is needed land, and construction of a warehouse

o   Provide great advantage for expanding, especially in new geographical areas where market is unstable or for a short term basis.

o   Cost can only increase when inventory increases. Very good for seasonal businesses

o   Tax advantages on property

o   Inaccessibility at will

o   Shortages of space might happened at times

o   The rate of handling may reduce the durability of a product.

o   Poor communication as the warehousing company might be handling other issues with other companies

  1. What are the basic functions of warehousing? Briefly describe each function

Answer:

Warehouses are used to safely temporally store goods and properties for a period of time, either for Receiving, put away. Storage, inventory tracking. Order entry, Picking, stacking. loading. Cross docking. Return processing. Packaging. Light assembly, blending, filling, kitting. Labelling, shrink wrapping. Display building/promotion. Etc. however we are going to look at some important functions of warehousing.

Receiving of goods: It is, the basic function of warehousing. When goods are handed over by the producer, it accepts the goods and assumes the responsibility to deliver the goods. It issues the receipts of goods

Storing: The basic functions of warehouses are to safely store piles of goods for various reasons. These goods are store after production or after raw material purchase.

Protection of goods: a warehouse is use to protect goods from possible theft or damage.

Processing: certain products are not consumed in the exact nature at which it is manufacture, some may require time to take its final form, and a warehouse may be use during this process. Example, Timber needs to be season, fruits needs to ripped, etc.

Consolidation: it refers to the act of packing or storing goods that are to be supply to other destination.

  1. Identify and describe some of the more important factors that affect the size of the organizations warehouse or warehouses

Answer:

The size of a warehouse basically depends on the type of goods to be stored and the duration of storage. Many other factors are a contribution to these factors such as:

Customer service level: the higher the level of demand, the more storage capacity a company will need. Example; a company with peak sales in a particular season will store more products prior to season.

Size of the market: the size of the market will determine the amount of stock produce, and hence the storage capacity.

Number of products marketed: full range of products need more space.

Size of the product: a metal company will definitely need a more storage space than a paper company. A furniture company needs more space than a food company.

Material handling system: some products needs cranes to be lift to place, why others need just manpower. The width of a lifter will determine the width of the warehouse.

  1. Explain the differences between following types of facility location strategies: Market positioned, Productions positioned and intermediately positioned.

Answer:

Facility location decisions are of significant aspect in strategic planning for a company. Aspect such as; target market, production position, and warehousing, should be analyst cost wise following the companies goes (short or long term run). Thus decision makers must select sites that will not simply perform well according to the current situation, but that will continue to be profitable for the facility lifetimes, even as environmental factors changes, populations shift, and market trends evolve. Below are the differences between the three main facilities in a firm.

Market position: Productions positioned Intermediately positioned.
Delivery-time reduces functions. Frequently, people assume that many automakers only manufacture cars based on individual customer requests or orders. Actually, production of the requested car begins before the order arrives. Otherwise, the delivery time Delivery time would take too long. As a result, warehouse inventories perform an acceleration function in the production process. The warehouse is used to store intermediate products, and these products only have to be assembled, completed or modified depending on feature options.

http://www.dhldiscoverlogistics.com/cms/en/course/processes/production_logistics/production.jsp. Assed 05.02.14

Most productions are warehouse dependent, from raw materials inventory, to semi-finish goods storage. he sales-focused production warehouse carries out a flexibility function when many end products can be made from a relatively small number of intermediate products or from a single raw product to respond to the requests of individual customers. In T-shirt production, for instance, manufacturers make only white T-shirts. These shirts are stored. Later, they are dyed or have an emblem added to them depending on the latest design requirements.

Source: http://www.dhldiscoverlogistics.com/cms/en/course/processes/production_logistics/production.jsp. Assed 05.02.14

A warehouse located between customers and manufacturing plants to provide increased customer service and reduced distribution cost.
  1. How can warehouse layout and design affect productivity and efficiency?

Answer:

A comprehensive and efficient warehouse should facilitate performance, especially in operator travel, picking and placing of materials. A good design and layout should be carried out in accordance with the type of equipment selected, ranging from conveyors, forklifts, RFI and many others that can determine best warehouse efficiency. Another factor that should be taken during warehouse design should be the location; the distance from the warehouse to the production line will delay production when raw materials need to be move into production line or when an unanticipated need of material arises. The location of any proposed warehouse will influence the on-going transport costs which are expenses and reduction of assets. The availability of labour should also be of prime importance when choosing sites or buildings. Other factors such as IR issues, capital, IT systems, risks, timing, client’s capability, etc. should be a choice of design options and layout.

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TRANSPORTATION, AND LOGISTICS

  1. Incoterms -what do they mean?

Answer:

They are internationally recognized commercial terms use in international transactions or procurement processes, published by the International Chamber of Commerce (ICC). The last version incoterms 2010 (published on January 1, 2011) was updated from the incoterm 2000, to 11 rules, as compare to the 13 in incoterms 2000. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. These terms are:-

(1) C&F ( Cost And Freight),     (2) CIF (Cost, Insurance, And Freight),       (3) DAT (Delivered at Terminal ) ,   (4) DAP (Delivered At Place)     (5) Ex Works     (6) FAS (Free Alongside Ship),     (7) FOB ( free on board) (8) FOB Airport   (9) FOR/FOT ( Free On Rail/Free On Truck),     (10) Free Carrier (11) Free carriage paid to and Free Carriage Paid To And insurance.

  1. Explain how product characteristics influence supply chain design!

Answer:

It is very important to analyse a product before designing the supply chain. Saramal.blogspot.fi analysed 9 product characteristics when designing a supply chain. They are: the products value, technicality of the products, the degree of market acceptance, the degree of substitutability, the product bulk, products perishability, the degree of market concentration, seasonality, and the with and depth of the product line. Product characteristics will determine the cost of transportation, warehousing and inventory associated with distributing a specific product. They will also influence the selling costs and other marketing related costs. Consequently, product characteristics will influence the number and type of potential intermediaries as well as the ability of the manufacturer to perform marketing and logistics activities internally.

Value: the inventory cost of products will differ from the other, depending on the type of product and cost per unit value. As such, companies with limited resources and capacity would outsource this area -inventory- . More so; it may be safer, cheaper, faster and more convenient to shipped products by air, rail, roads, or sea, depending on the type and nature of the products.

Technicality: Highly technical products would need the help of the producer`s installation and or maintenance, consequently, shipment would depend on the availability of an expert.

Market acceptance: the volume and rates of goods shipped per time is determined by the amount of consumers.

Substitutability: supply would increase in the areas where a company’s product has been chosen as a substitute over the other, so, a means of transportation must be made to keep the consumers.

Bulk: very low per unit goods are produce in bulk and so, the means of transportation would require special handling.

Perishability: perishable products are likely to damage, and so must be transported fast.

Market concentration: when the market is concentrated in a geographical area, direct supply chain may be the most effective and efficient method of distribution.

Seasonality: products with peak sales volume at seasons would need to get the products to the right retailers before the start of the season.

Width and depth: manufacturers with low per-unit value may choose to do direct sales.

  1. Explain how market related factors affect on supply chain design

Answer:

Competitions in today’s business have force companies to change or redesign some of its supply chain process. In order to stay in business, companies want to keep a low cost as possible and to deliver high quality goods to its customers, this are mostly achieved by outsourcing some part of its supply chain to specialise enterprises. The distances needed to transport the goods also have a significant change on supply chain, the mode of transportation and quantity of goods has to be different from short distances delivery. More-so, government regulations can also limit the amount of production and inventory such as in manufacturing industries (to curb the level of air and water pollution).

Seasonality, for some products, sales volumes peak at certain times of the year (toy sales at Christmas); in other cases, raw materials, such as fresh fruits and vegetables, may only be available at specific times, and When the market is concentrated in a geographic area, direct supply chains may be the most effective and efficient method of distribution.

  1. Go online and find real-life cases on following:
  2. Find examples of actual companies here in Finland that are common carriers, Contract carriers, Exempt carriers and Private carriers
  3. Create a chart where you analyse pros and cons of basic transportation modes

Answer:

  1. Common carries. A for-hire carrier that holds itself out to serve the general public at reasonable rates and without discrimination, such as VR. HSL (Helsinki region transport), Finn air. etc.
  2. Contract carriers. A contract carrier is a business which works with a select group of shippers to move people and goods between locations serviced by the contract carrier, such as Nurminen Logistics, SA-TU Logistics Oy, etc.
  3. Exempt carrier. a company operating vehicles performing services or carrying goods, as taxicabs or cargo trucks, that are not subject to the regulatory laws of the Interstate commerce  Such as Veolia Transportation, Finn air taxi, etc.
  4. Private carrier. It is a company that transport only their own goods, and which primary aim is not transportation such as: Posti, kotirannan vihannesjaloste, etc.
Transportation mode pros cons
Roads Cheap, convenient, flexible, private Noisy, pollutes the environment, less safe than alternatives, stressful for drivers, potential delays, can be expensive where there are congestions or road charges
Rail Fast, safe, more environmentally friendly than alternatives, does not add to congestion Limited routes, inflexible routs and timetable, expensive, sometimes unreliable
Air Fast for long distances deliveries, safe Expensive, unsuitable for some goods, limited routs, inflexible timetables, pollutes the environment, airport taxes very slow, relatively few ports, inflexible routs and timetable
Sea Cheap for large volumes Port duty or taxes, requires inland transportation for door-to-door delivery,
Courier Fas, reliable, secure Expensive, weight of delivery is limited
Electronic deliver Instant, cheap, for international and domestic deliveries Insecure due to viruses and hackers, limited to certain goods and services.

Outsourcing In Logistic

  1. What is the role of outsourcing in supply chain management?

Answer:

In business, outsourcing is the contracting out of a business process to a third-party, basically to reduce cost or to improve quality and to gain customer satisfaction. Global market competition has force companies to focus more on each departmental head to improve quality and reduce cost. Companies have chosen to improve or maintain their quality by outsourcing those areas of incompetence’s or those which do not generate any profit. There are several reasons why outsourcing is becoming a habit. For example, Nabisco and Goodyear Tire and Rubber have third parties operating their distribution centres. Retailers, such as Kroger are using third parties to operate some or all of their warehousing facilities. In the telecom industry, Lucent Technologies, Nortel Networks and Cisco outsource some of their manufacturing operations to companies like Selectron. The simplest reason to outsource is to alleviate administrative burdens and focus on strategic areas- Some roles outsourcing play in supply chain management are:

  1. Reduce cost: specialise companies buy at huge volumes, thereby minimizing the cost of raw materials; outsourcing project parts to such companies would result to lower cost and higher quality, more so, if a company happened to be at a poor financial situation, it can outsource parts of it project to other companies to stay back in business and meets customers demand.
  2. Focus on core functions: each company have a number of functions that are ideal to the survival of its business, why other functions or activities are ideal but are not a core to the business. A company may want to focus and improve more on its area of expertise, or of importance, and to outsource those none-ideal activities to other specialise companies to gain more time to supervise and develop the core of its business. A company might even want to change a business model and to focus on a particular area and may choose to outsource other activities since it’s no more an important activity in its business plan.
  3. Acquire new skills: A company may find that its in-house skill set is inadequate for a given function. This is the most common reason and is used for outsourcing those functions that require high skill levels, such as engineering and computer services.
  4. Acquire better management: a company might find itself in a range of activities beyond its supervisors and management team, causing problems such as; absenteeism, poor work products, missed deadlines etc. Therefore outsourcing an activity can help to gain more control and supervision over all its processes and departments.
  1. Give an example of a firm that uses postponement and a firm that uses speculation in the supply chain?

Answer:

Postponement is a situation whereby a manufacturer produces a generic product, which can be modified at the later stages before the final transport to the customer, while speculation is the investment in stocks, property, etc. in the hope of gain but with the risk of loss.

An example of such business concepts are:

Postponement Speculations
Manufacturers of umbrella by finishing the colour at the peak season Manufacturers of winter jackets, by producing in advance of the season
Manufacturers of paint by mixing it at the retailers store Manufacturers of Christmas toys, by producing in advance of the season
Sunoco by blending gasoline at the filling station pump Manufacturers of snow tires by shipping the tires to dealers in the fall and invoicing them in January.
  1. How can company decide, which links in supply chain should be managed, which monitored and which can be Not-managed at all

Answer:

Integrating and managing all business process links throughout the entire supply chain is likely not appropriate. Since the drivers for integration are situation and differ from process link to process link, the levels of integration should vary from link to link, and over time. Some links are more critical than others. As a consequence, the task of allocating scarce resources among different business process inks across the supply chain becomes crucial. Four fundamentally different types of business process links can be identified between members of a supply chain; manage process link, monitored process link, not-managed process links, and non-member process links. (http://books.google.fi/books?id=eue8KAZ4mn4C&pg=PA207&lpg=PA207&dq=How+can+company+decide,+which+links+in+supply+chain+should+be+managed,+which+monitored+and+which+can+be+Not+-+managed+at+all&source=bl&ots=7Kh1eCJX-G&sig=_54P4UUhHl7t3CcGODJ01Nv3Mlw&hl=en&sa=X&ei=QuLjUu7cEcHAyQOU-oEo&ved=0CEIQ6AEwAg#v=onepage&q=How%20can%20company%20decide%2C%20which%20links%20in%20supply%20chain%20should%20be%20managed%2C%20which%20monitored%20and%20which%20can%20be%20Not%20-%20managed%20at%20all&f=false. Assessed 26.01.2014)

PROCESS LINKS Classification
Managed process links Very important process link to integrate and manage
Monitored process links Important-necessary- but not very critical links
Not-managed process links Least important links- none critical to the company- and or outsource links.
  1. Identify eight supply chain processes and explain why they are cross functional?

Answer:

The eight supply chain processes are: 1. Customer relationship management. 2. Customer service management. 3. Demand management. 4. Order fulfilment. 5. Manufacturing flow management. 6. Procurement. 7. Product development and commercialization. 8. Returns. The aim of supply chain management is to coordinate the various activities or functions as one activity and thus, each process need information from the other. The purchasing department place orders on demand or forecast, then the marketing, in-charge of customer demand; communicate with distributors and retailers to get the product to the consumer. Meeting the customer’s needs often leads to demands for expedited operations throughout the supply chain, as sales zoom. All this process flow is done with the aid of the eight business processes above.

Each function of any process together make a unique business process aim at meeting a define target.

Basic of Logistics

  1. How do the improvements of logistic productivity affect the economy as a whole, as well as the position of individual consumer Logistics is as vital to a company as blood is to human, a well plan transportation system in a company can reduce cost and hence gain customer satisfaction, continues stay in business, pay taxes which is a plus to the economy and continues employment to

employees.

The word is fast becoming a global village, and services are becoming a prime sector or even the major sector in all develop world. In order to meet the fast completive market, a country or a company needs to invest in its logistics infrastructure and technology. A well manage maintain logistics systems will be able to deliver the right goods, at the right time, and at the right place. In military science, maintaining one’s supply lines while disrupting those of the enemy is a crucial—some would say the most crucial—element of military strategy, since an armed force without resources and transportation is defenseless. The defeat of the British in the American War of Independence and the defeat of the Axis in the African theater of World War II are attributed by some scholars to logistical failures (http://en.wikipedia.org/wiki/Logistics). The sustainability of any economy depends on how effective and efficient its companies can meet the challenges of delivering exceptional logistics services and while maintaining handling chargers and operating cost at a competitive level. Facilitating both flows of goods and services distribution will benefits both the customer and the economy.

Logistics has become an enormously important component of the gross domestic product (GDP) of industrialized nations and thus affects the rate of inflation, interest rates, productivity, energy costs and its availability and other aspects of the economy as well (http://www.ukessays.com/essays/business/assignment-on-integrated-logistics-business-essay.php. assessed 15.01.13)

customers/ consumers (individual) are the prime beneficial of a well improve logistics systems, they expect all kinds of goods to be available or deliver to them on time – when a consumer orders goods online, he or she have the desire of expecting the right product from the vendor and on time, if the consumer finally get disappointed –late delivery- there is a problem for both the vendor and the customer – the vendor gets a negative rating, and the customer have to missed the important date of usage of the item, or the interest is no more. In order to cut warehousing cost, companies can cut the amount of inventory if its logistics department is efficient and hence reduction in cost, timely delivery and customers satisfaction.

  1. How is logistic related to the marketing effort? Be sure to discuss customer service, customer

satisfaction, integration of efforts, and cost and performance outputs.
The resources managed in logistics can include abstract items, such as time, information, particles, and energy. In the seven dimensions of customer service, three are from logistics: availability, delivery quality and communication; and four are from marketing: pricing policy, quality, product support-sales representatives and product support-customer service representatives. Differences between a company and its competitors are their price and customer service. Creating a level of satisfaction, to customers that they do not want to consider an alternative means. Timely supplies mean more sales/availability. Most services providers are acutely aware that if they do not support their customers with the service, information, parts and attention they require, they can generally find the level of support they require – elsewhere. some customer services are characterize by long hours of waiting time –listening to bored messages- which often cause customers to even drop the call, or even change the service. Giving a customer the information he wants, respect, loyalty and on time will often cause the customer to come back for more, and hence a good customer satisfaction, consequently, integration of efforts. When a customer gets the information or directives on time and friendly, the performance of that company is rated with information such as -The service during my pick up was great; They were very thorough and careful with all of our things, While my things were in transit; your service was also good. I received calls and emails with updates; I will definitely recommend your moving services to others, thank you! Consequently the performance of a company is based on the efficiency, timely, reliability, availability, convenience, willingness, quality, of information and directives delivered to customers.

  1. What are the different types of utility and how logistics directly or indirectly affect each one?

 

Utility is usefulness, the ability of something to satisfy needs or wants, it represents satisfaction experienced by the consumer of goods, is a representation of preferences over some set of goods and services. The difference forms of utility are:

Form utility: manufacture- production or operations process, the value of making materials available in complete state. The assembly of a piece of work is accompanied by so many actives and materials, most of which have to be timely transported to the factory. Logistics play a very important and direct rule in this because it facilitates early delivery and hence commencement of work.

Time utility: value created by making product or services available when it is needed. By making a product available at a convenient time can only be achieve by a well plan logistics. Logistics directly affect this process because it actually transports the product from warehousing to retailers, or from retailers to the consumers.

Place utility: value created or added to product or services availability where it is needed. Making the product easy for customers to shop whenever they want and then have their purchases delivered to them. Delivery is done by the logistics department.

Possession utility: value added to a product allows the customer take ownership. This is achieve when the customer have the goods or are experiencing the services, or easy transfer of ownership. creating a more simply and easy way to allow a customer to easily pay for an item is of vital importance, logistics indirectly affect this process because the final components or product were transfer to the factory or to the warehouse using transportation.

  1. What is the profit leverage effect of logistics and what are the greatest costs saving opportunities for logistics?

The definition of the profit leverage effect is when a business cuts its costs by using technology designed for cost cutting or other means. At the same time, profits are increased by the company using special promotions and advertising. There are a number of ways that a business can cut costs. For example, they may choose to stock less products. There are also numerous ways that a business can try to raise profits. An example is when a business has a buy one get one half off promotion (http://www.ask.com/question/profit-leverage-effect-definition. assessed 15.01.13)

When a business effectively manage its logistics, it cut cost such as cost of inventory, etc., the company save money and hence a decrease in purchase expenditure, warehousing expenditure, and increase in assets.

  1. Of the 13 key activities listed which do you believe will experience the most change in next five

years, why?

Traffic and transportation is likely to have a dramatic change within the next five years duel to it evolution since 1960. (Fragmentation 1960), (evolving integrations 1980), (total integration 2000). All these are due to the following facts: advances in computer technology, quantitative techniques, development of the systems approach, total cost analysis concept, recognition of logistics role, erosion of firm’s profits, profits leverage, and economic condition. during the past years, transportation of information ad and products have been assign to departments such as ; packaging-storage-, material handling- traffic and transportation-, logistics communication – customer service – parts and service support- demand forecasting planning – plant and warehouse site selection etc. due to over specializations and simplification of transportation, it is likely to develop over the next five years because of the research been carried out in the various specialties.

COMPETITION POLICY OF THE EUROPEAN UNION

  1. Explain the aims and principles of the Lisbon strategy. Explain also at what stage the Lisbon strategy is at this moment?

Answer:

The Lisbon strategy was a 10 years plan, adopted in Lisbon on March 2000 by the European council. The aim was to make Europe the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion by the year 2010. The strategy was mainly base on economics, social, and environmental renewal and sustainably, focusing on innovation as the motor for the economic change; learning economy; and social and environmental renewal. The Lisbon treaty was succeeded by Europe 2020 strategy, which addressee’s three priorities, five headline targets and seven flagship initiatives. Achievements in the past 5 years include better access to justice and ensuring the right to a fair trial.

  1. The European Parliament ratified the Services directive in the end of the year 2006. Explain shortly the aims and contents of this directive. Explain also what kind of problems this directive might cause in the EU

Answer:

The directives create a binding legal framework to facilitate freedom of establishment for service providers and the free movement of services.

It is based on the following fundamental objective:

  • to ease freedom of establishment for providers and the freedom of provision of services in the EU;
  • to strengthen rights of recipients of services as users of the latter;
  • to promote the quality of services;
  • To establish effective administrative cooperation among the Member States. ( European union, 26.04.2011)

However, This Directive covers a wide group of service activities which represent around 40 % of the EU’s GDP and employment. It covers services such as:

  • construction and craft industries;
  • retail trade;
  • the majority of regulated professions (lawyers, architects, engineers and accountants, for example);
  • business services (office maintenance, management consultancy and publicity for example);
  • tourism;
  • real estate services;
  • Private education. (European union, 26.04.2011)

However, certain types of services such as telecommunication, financial services, transport, health care services, etc. are excluded from this directive. The original draft had, at its core, a ‘Country of Origin Principle which meant that Member States should allowed any person or company registered in one Member State to provide services or establish itself in another whilst remaining regulated only by the laws applicable in its home state. However, the breadth of the Services Directive’s scope, and its lack of positive regulation to balance out the deregulation implied by the Country of Origin principle led some Member States to fear that it could produce unfair competition or a ‘race to the bottom’.

References:

Call for Evidence, OCTOBER 2013.Single Market: Free Movement of Services review. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251659/bis-13-1254-call-for-evidence-single-market-free-movement-of-services-review.pdf. Accessed. 24.03.2014

European Union, April 2011. Services’ Directive. Available: http://europa.eu/legislation_summaries/employment_and_social_policy/job_creation_measures/l33237_en.htm. Accessed. 24.03.2014

European Union, March 2014. EU outlines priorities for justice and home affairs to 2020. Available: http://europa.eu/citizens-2013/sk/node/3094. Accessed. 24.03.2014

European funding, Europe 2020 Strategy. Available: http://www.dfpni.gov.uk/index/finance/european-funding/content_-_european_funding-future-funding/content_-_european_funding-europe-2020.htm. Accessed. 24.03.2014

Wikipedia, 27 January 2014. Lisbon strategy. Available: http://en.wikipedia.org/wiki/Lisbon_Strategy. Accessed 24.03.2014.

COMMON FOREIGN AND SECURITY POLICY (CFSP)

Make a notion of your own in question of the future foreign and security policy’s definition. What do you personally think of the EU’s own defence core or should the EU unify its notion prorates to the defence alliance NATO?

Answer:

The common foreign and security policy is a joint effort of the European Union to outstand its image in the international scene. Its’ aimed at maintaining security and defence, diplomacy and actions. Though CFSP deals only with specific parts of the EU’s external relations, which domain include mainly trade and commercial policy, funding to third countries, and work in collaboration with NATO for the territorial defence of Europe and peace-making. However, the EU can go ahead to act if NATO refuses to. CFSP stands to be the future defence and foreign policy of Europe as the continent is becoming more federated. The EU has however reduce it spending’s on military weapons which is a good thing. The concentration of the European defence core to humanitarian and peace keeping mission mostly in developing countries would in turn save lives and prevent the rise of dictators who can be of potential threat to the peace and stability of Europe. However, Before the Treaty of Lisbon entered into force, the tasks which could be carried out under the framework of the Common Security and Defence Policy were:

  • humanitarian and rescue tasks;
  • conflict prevention and peace-keeping tasks;
  • tasks of combat forces in crisis management.

The Treaty of Lisbon adds three new tasks to this list:

  • joint disarmament operations;
  • military advice and assistance tasks;
  • tasks in post-conflict stabilisation.

So, the new objectives of the EU’s defence’s policy differ far from the policies of the 40s, which were never disarmaments but competition in military arms. On my own point of view, the objectives are however in-line with the 21st century world.

Taking from cost point of view, it will be a great cost if the NATO forces are to embark on a mission with joint operation with EU’s forces. however, A phrase that is often used to describe the relationship between the EU forces and NATO is “separable, but not separate”: The same forces and capabilities form the basis of both EU and NATO efforts, but portions can be allocated to the European Union if necessary. Concerning missions, the right of first refusal exists: the EU may only act if NATO first decides not to. So it is a nice ideal for NATO and EU to work together, but as separately entity because not all NATO’s members are EU’S members and so share differences.

References:

European Union, 2010. Common Security and Defence Policy. Available: http://europa.eu/legislation_summaries/institutional_affairs/treaties/lisbon_treaty/ai0026_en.htm. Accessed. 23.03.2014

Wikipedia, 2014. Common Security and Defence Policy. Available: http://en.wikipedia.org/wiki/Common_Security_and_Defence_Policy. Accessed. 23.03.2014

Hartmut Bühl. Europe’s Security and Defence Community. Available: http://www.magazine-the-european.com/icc/magazine/nav/4aa/4aa1043a-f1f9-d331-dfa6-df8607b988f2.htm. Accessed. 23.03.2014.

Wikipedia, 2014. Common Security and Defence Policy. Available: http://en.wikipedia.org/wiki/Common_Foreign_and_Security_Policy. Accessed. 23.03.2014

Centre for European studies. Common Foreign and Security Policy (CFSP) – What is it? Available. http://www.unc.edu/depts/europe/conferences/eu/Cfsp/cfsp4.html. Accessed. 23.03.2014

OTHER EU-POLICIES

  1. Explain shortly the principles for the taxation policy in EU?

Answer:

The taxation policy in EU as outline by the European commission’s tax policy strategy of 23 May 2001 set out the following principles after a request to harmonize member’s States tax policy.

The commission emphasise on the grounds that, there is ‘’no need for an across the board harmonisation’’ of member States tax systems. Provided they obey the EU guidelines. ‘’member states are free to choose the tax systems’’ that they deem necessary to their economy. More so, any proposal for EU action in the tax field needs to take account of the principles of subsidiarity and proportionality. The EU will only intervene when individual member States strategies could not yield results.

However, the commission set out a tax policy that tackles the interest of individuals and businesses operating within the internal market by concentrating on the ‘’elimination of tax obstacles to all forms of cross-border economic activity’’, and the ‘’fight against harmful tax completion’’ and facilitating efficient ties between tax administrations in guarantee control and fight against fraud and discrimination – double tax-.

This focus on the taxpayer is linked to the Commission’s general objective of ensuring that tax policy supports wider EU policy objectives, as set out most recently in the “Europe 2020 strategy” for smart, sustainable and inclusive growth in the EU and in the Single Market Act. Increased tax policy co-ordination would help Member States to meet these objectives. (European commission, 2014)

  1. What is the REACH system?

Answer:

REAH (registration, evaluation, authorisation and restriction of chemicals) is a regulation of the European Union, adopted on 13 December 2006 by the plenary of the European parliament to improve the protection of human health and the environment from risk that can be cause by chemicals, while promoting the competitiveness of the union’s chemical industry. The regulations also promotes the use of alternatives methods to cut the rate of tests on animals. The objectives of this chemical legislation are as follows:

  • To establish a coherent registration system designed to provide basic hazard and risk information on new and existing chemical substances manufactured in or imported d into the EU;
  • To reverse the burden of proof, moving it away from Member States’ authorities to producing and importing companies, who will be responsible for demonstrating that substances can be used safely;
  • To introduce responsibility for downstream users to provide information on uses and associated risk management measures relating to substances;
  • To maintain the existing restriction system and to introduce an authorisation p procedure for the most hazardous substances as a new instrument;
  • To ensure greater transparency and openness for the public by providing easier access to relevant information on chemicals;
  • To establish a European central entity (the Agency) to facilitate the administration of REACH and ensure that the system is applied in a harmonised way across the EU.

(Council of the European Union 2006.)

The regulation applies to all substances manufactured or imported into the EU over 1 tons per year and sufficiently evaluated and registered. It covers about 30,000 substances.

References:

Council of the European Union, Brussels, 18 December 2006 16889/06 (Presse 368). EU new chemicals legislation – the REACH system. Available: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/misc/92234.pdf. Accessed. 26.03.2014

European chemical agency. REACH. Available: http://echa.europa.eu/web/guest/regulations/reach. Accessed. 26.03.2014

European commission, 2014. The Lisbon Treaty and tax legislation in the EU. Available: http://ec.europa.eu/taxation_customs/taxation/gen_info/tax_policy/article_6759_en.htm. Accessed. 26.03.2014

European commission, 2014. EU Tax Policy Strategy. Available: http://ec.europa.eu/taxation_customs/taxation/gen_info/tax_policy/index_en.htm#main. Accessed. 26.03.2014

How Society Shapes Personal Values

ECONOMIC AND MONETARY UNION (EMU AND THE EU

  1. How have the EMU countries, the citizens and enterprises of these countries been said to benefit from the common currency, Euro?

Answer:

EU citizens stand great chances to gain from the euro, this is because the Economy and Monetary Union manages and offer lower cost, stable prices, more transparency and economic stability. The ease to compare prices while shopping, no risk or stress on exchange. The level of inflation has been cut to a minimum as compare to the 80s, and the euro has created: an easier, safer, and cheaper borrowing. However, the amount of jobs as increase and public investments has risen. In addition, the single currency has given lots of advantages to business in many aspects, in addition to cutting costs and risk, it encourages investments and bring more certainty to business planning –thus allowing businesses to be more effective overall. More so, creating more cross-border trade and competitions, better borrowing, better planning, and more investments. so, it has given economise more stability and encourages growth, leading to prosperity and employment. Consequently, the laws and follow-up policy of the EU has led to a sound and stable public finances, better government budgeting and assistance, more resistance to external shocks and more cohesion.

  1. What are the potential risks of the common currency Euro and the membership of the Economic and monetary union (EMU)?

Answer:

The enormous advantages of the euro comes also with its own disadvantages in the sense that: members countries do not have the autonomy to control their currency in times of an economic shock, however, posing a potential risk, in that a member country could collapses financially and adversely affect the entire EMU system. More so, in case of an economic shock, a country cannot devaluate it currency to encourage foreign purchases of their goods, which would pump more money to the economy and put it back to normal, or when lay-offs increase and unemployment benefits get higher, the government cannot increase its spending to make these payments and put money back into the economy and encourage spending which prevent recession, because of EMU policy, governments spending’s are limit, which limits freedom in spending during hard times. However, the largest contributors in the Eurozone, Germany, France and Italy, have serious projected state pension deficits and other members could face same situation in the future, and thus pension benefits will be cut and taxes may be raise higher, consequently lowering growth and worsen unemployment.

  1. What are the euro-area countries nowadays?

Answer:

24 states including 18 EU members with about 320 million citizens, are using the most powerful currency in the world now, the euro, they are:

1) Andorra 2) Austria 3) Belgium 4) Cyprus 5) Estonia 6) Finland 7) France 8) Germany 9) Greece 10) Ireland 11) Italy 12) Kosovo 13) Latvia 14) Luxembourg 15) Malta 16) Monaco 17) Montenegro 18) Netherlands 19) Portugal 20) San Marino 21) Slovakia 22) Slovenia 23) Spain and 24) Vatican City.

  1. Name the EU-countries that are non-Euro members? What kind of plans/ timetables do they have about the Euro-area membership?

Answer:

The EU-countries that are non-euro members are: United Kingdom, Denmark, Sweden, Romania, Poland, Lithuania, Hungary, Czech Republic, Croatia and Bulgaria. The UK doesn’t have any plans to adopt the euro as public pools keep voting against, Denmark on the other hand like the UK sign an opt-out treaty that permits her to use the euro or not. In 2000 a referendum was held and 46.8% voted for, however, supports joining the currency has fallen over the year, the government plan to organise another referendum in the near future. Sweden is obliged to adopt the euro in the near future. However, Romania, Poland by 2015, Lithuania has not yet met the requirements. Hungary does do are not yet prepared to adopt euro till 2020, Czech Republic speculate to adopt the euro between 2014 and 2020, Croatia speculate to adopt the euro by 2019, and Bulgaria will not be able to adopt the euro till 2015 duel to its inflation crisis.

  1. How has the exchange rate of the Euro-currency developed against USD during its history? What kind of consequences the exchange rate development of Euro has for the Finnish economy?

Answer:

The exchange rate of dollar against euro from 2000 to 2013 is as shown below.

As it can be seen from the graph above, the exchange rate between 2000 to 2003, 2006 to 2007, and 2012 to 2013 show how the euro has become weak over the dollar, consequently boosting the Finnish export to the US and making imports more expensive, thereby decreases the nation’s trade deficit. There, the higher the value of net exports, the higher a nations GDP. However, from 2009 till date, the exchange rate has been relatively stable thereby boosting the flow of capital into the Finnish economy.

REFERENCES:

Economic Policy Research, London. A version appeared in Economic Policy, April 2000, with comments by economists on the Economic Policy Panel

Roseveare, D., W. Leibfritz, D. Fore, and E. Wurzel (1996) Ageing populations, pension systems and government budgets: simulations for 20 OECD countries , OECD Economics Department Working Paper no. 168, OECD, Paris

Patrick Minford, 2010. The costs and benefits of Economic and Monetary Union to the UK economy – the ‘fifth (overview) test. Available: http://www.euro-know.org/europages/bforsEMUTEST5r8.pdf. Accessed. 24.03.2014

European commission, 2013. Economic stability and growth. Available: http://ec.europa.eu/economy_finance/euro/why/stability_growth/index_en.htm. Accessed. 24.03.2014

European commission, 2013. The Euro. Available: http://ec.europa.eu/economy_finance/euro/why/business/index_en.htm. Accessed. 24.03.2014

Howstuffworks, 2011. How the Euro Works. Available: http://money.howstuffworks.com/euro11.htm. Accessed. 24.03.2014

Wikipedia, 2014. The member States of the European Union. Available: http://en.wikipedia.org/wiki/Member_state_of_the_European_Union. Accessed. 24.03.2014

Investopedia, 2013. The Effects Of Currency Fluctuations On The Economy. Available: http://www.investopedia.com/articles/forex/080613/effects-currency-fluctuations-economy.asp. Accessed. 24.03.2014.

IS THE EU A CONFEDERATION OR A FEDERATION

Introduction

The European Union of today is neither a confederation nor a federation, but rather a union of compound states. It is shown that this mixture of two forms of constitutional contracts implies inconsistencies prone to political deadlocks. The problem now is which approach will best suggest a clear choice between neither a confederation nor a federation. From such statements, it seems that the idea of the EU as a federation or a confederation does not exist; instead the union bears characteristics of both. It becomes understandable that the EU is a unique entity that shares characteristics of both confederal and federal systems.

(Confederal-Federalism in the EU). The Union is an economic and political union of international and transnational bodies, consisting of 28 member states ( soon 27), for the purpose of uniting Europe (Archer, 2007). It represents the fruits of a process which began in the 1950s with the establishment of the European Coal and Steel Community (ECSC), the European Economic Community (EEC) and the European Atomic Energy Community (Eurotam). The integration was due to WWII, which was seen as a cause from nationalism, and called for a supranational approach to European politics for peace and stability in Europe. The founding fathers of the EU had hoped to see a Federal United States of Europe. However, the outcome was more towards a confederation

.WHAT IS A CONFEDERATION AND FEDERATION? To assess the level in which the EU is a confederation, a comparison is made with the USA. One must also have an understanding of what constitutes a confederal and federal system. The key difference between a confederation and federation is the inability of a confederation to exercise power over citizens of member states. EU AS A CONFEDERATION A confederation is a union of independent and sovereign states that keep their separate identities but give specified powers to a central authority for reasons of convenience, mutual security or efficiency (McCormick, 2002). It involves a top-down, loose system of administration. This is similar to an intergovernmental organization – different member states cooperating with one another on matters of common interest (Nugent, 2006), which aims to maintain member states sovereignty. States are the supreme decision-making bodies with the central government (centre) being relatively weak. The centre only exercises power that had been delegated to them by the member states. Citizens are not represented in a confederation; instead member states are. The centre’s decisions only bind the states. Citizens of member states relate to their own government, and only indirectly to higher authority. Two or more levels of government coexist within a federation with separate or shared powers, each have clearly defined and independent functions, but neither have supreme authority over the other in a federation. The centre is able to exercise power over its constituents and citizens. Thus, there is a direct relationship between the government and citizens. Sovereignty in a federation is non-centralized. It involves a central government at federal level and member governments at state level. Member states give up decision-making power in certain areas to the centre, the one with the higher authority. In specified areas in the constitution, the centre is the supreme decision-making body. An individual is a citizen of the centre, and each of the levels of government he or she resides in. Democracy exists whereby there is direct citizen participation to elect representatives to the legislative assemblies for each level (Mueller, 1997). The EU as a federation Concerning the strong position of federal elements discussed above, it has much reason to state, that “not only has the EU developed into a political community with comprehensive regulatory powers and a proper mechanism of territorially defined exclusion and inclusion (Union citizenship). It shares most features of what the literature defines as a federation“, including two levels of government with shared competences, and resources, the application of majority decisions, the supremacy of community law, the role of the ECJ (EU court of justice) and a directly elected parliament. Is the EU already a federation? Taking into account our definition of a federation, despite all these elements above, the Union still lacks, even after the constitution, key features of a federation. No doubt that the document sets up two levels of government. (One could say, that it even goes further with establishing a three-level-federalism, concerning the new role of the regions.) These two levels however, are not in the same position. On the one hand, as we stated above, what the Union still lacks at is independent of its member states. Even more significant however, that the EU simply does not have a coherent structure of competences, but a system, where the rights and procedures of the community level are different in every single policy area. Even the so called “co-operative federalism, like Germany, expresses its high decentralization, meaning a single institutional, policy, and decision-making construction”. On the other hand, the legitimacy of the EU by the people is still not complete. Although in some sense  “is able to relate directly to the individuals who are dual citizens of both the federation and their constituent units”, as there is a European citizenship, with certain rights, facilitating political participation as well (e.g. EP-elections, citizens’ initiative in the constitution), and the EU can make laws, which directly bind individuals. However, the implementation of that law already requires member state actions, because there is almost no EU public administration. Secondly, contrary to almost all federal constitutions, the people do not act as a constituting power in the Union, which gains thus its competences from member state governments and so remains dependent on them. The reason for these all is ultimately that the EU does not have sovereignty. A federation or federal state is an independent sovereign entity. The EU is a federal polity, without being a federation, described by Murray Forsyth as “being a federal union, that is to say a permanent linking together of states to form a corporate entity with a distinct boundary vis-á-vis the outside world, and possessed of two coexistent structures of government, one at the centre, and one at the level of the Member States.” A European Confederation For such situation however, there is a proper solution to describe a political community, where members do care their full sovereignty, but they establish a common political order. The concept of confederation describes a form, where “several pre-existing polities joined together to form a common government for strictly limited purposes, which remains dependent upon its constituent polities in crucial ways and must work through them,” however “it is not about the effective fulfillment of certain special tasks through administrative co-ordination, but about forming a new political community, which although differently as the federal state has an orientation towards federalism. There is also much reason to define the EU as a very intensive confederation. Yet the EU is actually a too intensive confederation. Several elements of the Union are so far beyond that degree of integration, that the confederative model is at best insufficient to describe the Union. A parliament, directly elected by European citizens, having a legislative power, supremacy of the directly applicable community law, qualified majority voting, to name but few, simply break the barriers of a confederation, moreover some key features of the Union are even typical to the whole conceptual framework. The confederative model is thus either insufficient or even unsuitable to define the EU. It seems that we have to leave the traditional categories. 2. The “in-between” theories That the European integration and also the Union is a dynamic process, is no scientific opinion, or observation, but law, as the Maastricht Treaty explicitly states the desire to “continue the process of an ever closer union among the peoples of Europe.” It is thus can be rightly declared, that the EU is somewhere “in between”: moving either form a confederation, or from an international organisation to a federation. Both opinions however, include actually more concepts.

a) The EU between a confederation and a federation. As we have seen above that the Union has many elements, which are common to clear-cut federations, it is quite convincing to say, that “the European Union today looks like a federal system, it works in a similar manner to a federal system, so why not call it an emerging federation,” which is not a federal state, but a becoming one. There are some developments, which support, that the EU “moves between the back of the international organisation, that it has left long ago, and are stateless, that it has not yet achieved.” One could also describe the EU as a mix of a federation and a confederation, put differently as a “federation of member country’s” too. Although with other emphasises this “transitional” characteristic of the Union was described by the Federal Constitutional Court of Germany as well in its Maastricht decision. The court has defined the EU as a compound of states, which made clear, that the court does not consider the EU as a sovereign entity, but only as a special cooperation of independent states. Yet “what this actually means, was left open” by the court. No one would protest that the EU is not a cooperation of independent country’s or states; many say however that it is not only the states that play a significant role in the Union. The term is very probably suitable for the EU, the question is rather if it is also sufficient and to answer this one would clarify, what the phrase could actually mean. A less traditional approach describes however the EU as not or not only a compound of states, but of constitutions, thereby presupposing the emergence of constitutional orders without a state. That means also that “a constitutional law has arose at the European level that is in its contents in a compound with the constitutional orders of the member states,” functioning with mutual effect and influence on each other. This let us to interpret the state-like features of the EU, without declaring, that it is itself a state.

CONCLUSION

Regarding your first question, the European Union (EU) is not a federal State like the United States of America because its member countries remain independent sovereign nations. Nor is it a purely confederate organisation like the United Nations because the member countries do pull some of their sovereignty, and thus gain much greater collective strength and influence than they could have acting individually. They pull their sovereignty by taking joint decisions through shared institutions such as the European Parliament, which represents the EU’s citizens and is directly elected by them and the Council of the European Union, which represents the governments of the individual member countries. Regarding your second question, the integration within the EU will continue in the fields in which the Member States consider in their best interests. (The traditional EU framework covers issues like trade, globalisation, the single market, regional and social development, measures to promote growth and jobs, etc.)

THE PRESIDENCY Regarding the Presidency of the EU, the presidency rotates among the Member country’s every six months in accordance with a sequence determined by the Council. The Presidency of the Council has great impact for the way in which it carried out the activities of the Council its runs. The country  leading the Presidency has the duty of organizing and chairing all the Council’s meetings, and each country has its own priorities for the matters and areas it wishes to promote during the course of its Presidency. Should matters reach an impasse, or should other problems come up, it is also the task of the state holding the Presidency to attempt to devise a solution. It is therefore important that the country holding the Presidency does not use its period of office to ‘feather its own interest’. The Presidency should be control in a neutral and impartial manner, and the country holding the Presidency must often set its own interests aside in favour of achieving unity among the Member States. THE EU COUNTRIES THAT ARE THE BIGGEST NET CONTRIBUTORS. The net contributors to the EU are those Countries that pay more into the budget than they get back naturally wants to keep spending down. This bloc includes the UK, Sweden, the Netherlands, Finland, France, Germany and contrary to popular belief, Italy. In December 2010, a letter co-signed by the UK, France, Germany, the Netherlands and Finland called on Commission President Barroso to ensure that “commitment appropriations over the next multi-annual financial framework do not exceed the 2013 level with a growth rate below the rate of inflation.” Since then, about ten member states which also support a freeze along these lines have formed a loose coalition, although they disagree internally over which areas of the budget should be subject to spending restrictions within members countries.

THE EU COUNTRIES THAT ARE THE BIGGEST NET RECEIVERS Countries that get back more from the budget than they pay to the union are the net receivers. They are generally contented and happy to see the budget rise. This group includes traditional beneficiaries such as Greece and Portugal, and the new Central and Eastern European member states. Together they form what is called ‘Friends of Cohesion Policy’ group, which aims to ring-fence the structural funds and cohesion funds, from which they currently benefit. The table below shows Member States’ net contributions to the EU’s annual budget for the period from 2000 to 2011. The list has been compiled by the Commission, and it should be noted that the list of which countries are net contributors or net receiver can be calculated differently with other amounts as the result. The Commission’s list of net contributions is based on a method which uses the individual countries’ contributions in the form of their resources, such as value added tax (VAT) and gross national product (GNP), as the basis for the calculations. Agricultural levies and customs duties are not included as contributions because they are not regarded as country-specific contributions. Administration costs are not included in the list on the expenditure side. First, the extent of a country’s contribution of VAT and GNP as a percentage share of the total contribution of VAT and GNP is calculated. The result is used to calculate the amount the Member State should receive from the EU if there were to be a balance between payments and receives between the Member State and the EU. If, for instance, a country’s contribution amounts to 9% of the total contributions, the country should also receive an amount which corresponds to 9% of the EU’s total payments. The net contribution is then calculated by looking at the amount the country actually receives from the EU, from which is subtracted the amount the Member State should receive according to the above. Lastly, the individual country’s contribution to the financing the British rebate is then deducted. It should be noted that if the figure that results from the above calculation is negative, it means that the country has received fewer payments from the EU than it should and is therefore, according to the above model, a net contributor to the EU’s budget. Negative amounts mean that, according to the Commission’s calculations, the country has paid more towards the EU’s budget than it should if there were to be a balance between payments and receipts between the EU and the Member State.

HOW HAS THE SITUATION FOR FINLAND BEEN DURING 2000-2009 (NET CONTRIBUTOR/ NET RECEIVER? Finland being one country of the EU has greatly acted as a net contributor and net receiver of the total budget of the union. It should be noted that Negative amounts mean that, according to the Commission’s calculations, the country has paid more towards the EU’s budget than it should if there were to be a balance between payments and receipts between the EU and the Member States, Finland from the year 2000 was a net receiver of the EU budget, but it did not last for long. From the year 2001 up to 2009, Finland became one of the contributors as she paid more toward the union.

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