Unemployment In Jamaica Cause and Effect

Unemployment In Jamaica Cause and Effect This project is consisting of information on unemployment in Jamaica and what can be done to improve employment. Unemployment is macroeconomics There are different types of unemployment such as frictional unemployment this is a type of voluntary unemployment that arises because of the time needed to match job seekers with job openings, structural unemployment this happens when a large amount of unemployed workers (labor force) isnt qualify for a large amount of labor force demand. seasonal unemployment, this is when persons are employed temporary for reasons such as a hotel or supermarket needing extra help because of a season (Christmas, summer) but will cut loose those workers when that season period is finish and cyclical unemployment this is used to refer to the fluctuation in unemployment that is incurred by business cycles, more specially, the unemployment caused by economic recessions. In this project you will find information on this problem and why it is consider being an ec onomic one, the theories and model pertaining to unemployment, recommend economic concepts and inventions that can be employed to correct unemployment and the benefits of applying these concepts and inventions. What is the economic problem? Unemployment in Jamaica Unemployment Spikes to 14.1% with 23,000 Jobs lost Unemployment is one of the main problems affecting Jamaica. According to Streetdirectory, Unemployment refers to the condition and extent of joblessness within an economy, and is measured in terms of the unemployment rate, which is the number of unemployed workers divided by the total civilian labor force. (Sinha, 2012) According to The Gleaner, published Friday May 18, 2012, Some 23,000 jobs were lost last year after the current survey was done. In January 2012, The Labor force Survey release in May put the unemployment rate at 14.1 per cent compared to last year, which was at 12.9 per cent. The labor force has grown to 177,200 and the latest survey shows that some 9,300 people dropped out of the labor force, cutting the pool from 1.27 million to 1.26 million. The Gleaner also stated that The result for the January 2012 survey, which was conducted over the period December 18-24, estimate that there are 686,900 males and 573,700 women in the labor force. The employed pool totaled 1.08 million, of which was 56.7 per cent or 614,800 are men and 468,600 or 43 per cent are women. The Gleaner also states that, The spike in unemployment is heavily skewed towards females among whom the unemployment rate is 18.3 per cent, while for men it is 10.5 per cent. Sectors with the largest jobs cuts over one year included construction, 10,900 jobs lost, and professionals, senior officials and technician, 10,200 cuts. Statin estimates that the persons seeking work in the January 2012 survey as increased by 4.3 per cent. The effects unemployment has on Jamaica Unemployment affects majority of our Jamaicans especially the inter city areas and in particular the youth of this area. Unemployment creates many problems such as crime and violence, lowering of ones self-esteem, and poverty. Etc. Crime and Violence comes to present because when unemployed person are in need and cannot assist themselves or other, they turn to robbing and killing others to satisfy their needs and wants. The lowering of ones self-esteem may occur when they see another working and being able to assist themselves while he/she cant do the same. This can lead to crime and violence. Poverty is a big issue in today economy and most unemployed person are the one facing this situation. When person cant work and afford things, this lead to financial problems, divorce, children losing their education and health, hunger, fights and more which then can lead to poverty. Why consider unemployment to be an economic problem? 1. Unemployment is an economic problem due to the fact that when the economy is not doing well, businesses begin to lay off workers 2. It affects consumer confidence in terms of consumers that are employed will start to devote their money more in savings than to spend it on unnecessary items because of the fear of them losing their jobs. 3. High unemployment creates pressure on the government budget. High unemployment reduces the total taxation receipts the government receives because people without an income wont be able to pay their income tax. This will then place a drain on the government funds as the unemployed claim the job search allowance. 4. Unemployment reduces the output of goods and service that could otherwise have been produced by unemployed labor force. If unemployment rate is very high, an economy will produce below its potential. Etc Question 2 Economic Theories and model pertaining to this problem Classical economic theory 1. According to the lead authors, Global Development and Environment Institute, Neva R. Goodwin, Julie A. Nelson, Frank Ackerman, Thomas Weisskopf classical economic theory, unemployment is seen as a sign that smooth labor market functioning is being obstructed in some way. The classical approach assumes that markets behave as described by idealized supply-and-demand model. The labor market is seen as though it were a single, static market, characterized by perfect competition, spot transaction, and institutions for double auction bidding (Global Development and Environment, 2006). Resume help for Unemployed Assess the Gap 2. According to Teena Rose, director of resume-writing firm ExpertResume.com, the best way to address an employment gap depends on how long one has been out of work. She states that if one is unemployed for a year or less, then the best thing to do is to not say anything. This is not necessary to place on resume (Kim Isaacs, 2012). 3. Short Run Phillip Curve The short run Phillips curve shows the inverse relationship between unemployment and inflation rate. According to theory, when there is high unemployment, producers can set lower wages and still attract labor. When unemployment level is low, firms will have to pay high wages in order to attract labor as there wouldnt be much competition between them. This theory contradicts with two of the four main aims of the government low/stable inflation rate and low unemployment level. Question 3 Economic concepts or intervention that can be used to correct unemployment 1. According to Kimberly Amadeo and About.com Guide, the solution for unemployment is obviously to create new jobs. They state that a healthy economic growth rate of 2-3% is enough to create the 150,000 new jobs needed to keep unemployment from rising. (Kimberly Amadeo, 2012) 2. According to Answers, the solution for unemployment can be correct in many ways, such as, a) cutting in real wage, cutting in real wage are a reaction to the view that through their demands for higher wages, some groups of workers have priced themselves out of a job. b) Unemployment agencies could tighten their job search and acceptance requirement. c) Improving the education and training provided to young people, with a greater focus on vocational skills. d) Government support to struggling industries in order to try and save jobs. e) The government needs to try and create demand in economy. This could give grant to businesses to produce goods, have projects such as road building, cut interest rates to encourage spending and cut income tax to encourage spending. f) Countries need to ensure that their welfare systems do not provide disincentives to workers. (Answers, 2012) 3. Phillip curve Its a large believe that unemployment could be solve using the Phillips curve. This involves increasing inflation to reduce unemployment by fooling workers into accepting jobsat at a lower rate than they would otherwise have done, due to the declining value of money. 4. Demand side supplies Monetary policy and fiscal policy can both be used to increase short-term growth in the economy, increasing the demand for labor and decreasing unemployment. The demand for labor in an economy is derived from the demand for goods and services. As such, the demand for labor will increase, increasing employment and wages. 5. Supply side policies Minimum wages and union activity keep wages from falling, which means too many people want to sell their labor at the going price but cannot. Supply-side policies can solve this by making the labor market more flexible. This includes removing the minimum wage and reducing the power of unions, which act as a labor cartel. Other supply side policies include education to make workers more attractive to employers. Cutting taxes on businesses and reducing regulation, creates jobs and reduce unemployment. (curve) Question 4 What are the benefits of applying the economic concept above? 1. Creating new jobs Creating new jobs accommodates employment, growth in GDP, develop infrastructure, help to reduce depts and more. Having a job is essential in living life and retiring at a comfortable age and this is something that all individual looks forward to and without them having a job this may lead to crime and violence. The concept of creating new job will increase employment and decrease unemployment. 2. A. Cut in wage Not cutting the real wage can allow persons to keep their job instead of pricing themselves out. B. Unemployment agencies could tighten their acceptance requirement and job search. Job agencies tightening their acceptance requirement and job search could lead to more persons that are not fully qualified or have the right requirement to have the chance to be employed instead of them being unemployed. C. Improving the education and training provided to young people, with a greater focus on vocational skills. Improving the education and training of young adult will help them to be better equipped for the working world. One way is to train them by actually allowing them to do the work instead of teaching them orally and from them writing. This will help them to better understand and to have gained some experience. D. The government needs to try and create demand in economy. Government creating demand in the economy will also workers to produce more goods and interest rate will be cut which will then produce more spending of consumer. E. Government support to struggling industries in order to try and save jobs. Government supporting struggling industries and trying to save jobs will help in building the economy, reduce unemployment and more. 3. Supply side policies Inputting supply side policies will allow wage and union to not fall to a lower price so a lot of person will be able to sell their labor at a going price. This can make the labor market more flexible by removing the minimum wage and reducing the power of union, which act as a labor cartel. 4. Demand side supplies Monetary policy and fiscal policy can both be used to increase growth in the economy. This can increase the demand for labor and decrease unemployment, the demand for economy is derived from the demand for goods and services so the demand for labor will increase which will increase employment and wages. Recommendation I would strongly recommend that the government of Jamaica try to find new ways to implement strategies that can produce employment in Jamaica because with so many person unemployed, it is affecting the economy and also affecting the citizens. With so many persons being out of job it affects their daily life which leads to disaster such as robbery, crime and violence, lack of education to children and young adult and more. Conclusion It has been concluded that unemployment have a major effect on Jamaica economy. With unemployment rate increasing each year, it affects families, students and others. Unemployment is an economic problem due to the fact that when the economy is not doing well, businesses begin to lay off workers, It affects consumer confidence in terms of consumers that are employed will start to devote their money more in savings than to spend it on unnecessary items because of the fear of them losing their jobs and more.

Huckleberry Finn in High Schools :: essays papers

Huckleberry Finn in High Schools High Schools in the United States should not ban The Adventures of Huckleberry Finn. This book is one of the most important components of American literature in our libraries today, it throws the reader into a time when slavery was lawful and accepted, and gives the reader a new perspective on slavery in general. Until civil rights groups can come up with a better argument than the word â€Å"nigger† creating a â€Å"hostile work environment†(Zwick) it should not be taken off the required reading list of any High School in the country. Every one hundred years dialects change and what is considered â€Å"politically correct†, or socially acceptable, changes. â€Å"David Bradley argues that ‘if we'd eradicated the problem of racism in our society, Huckleberry Finn would be the easiest book in the world to teach’† (Zwick, Jim. â€Å"Should Huckleberry Finn Be Banned?†). If we, as a nation, make it a point to rule out all books that could possibly offend students, then every hundred years or so our library of American Literature will be completely different. Even today, modern day authors use vulgar language, lurid sexual content, and racial slurs to get their point across. If The Adventures of Huckleberry Finn is taken off of required reading lists across the country, then that could create a never-ending cycle of books being taken off of school shelves every time words and ideas become unacceptable. If this is the way that American society is turning then something must be done, and the Superintendents, Deans, and Principals of every High School around the country must take it upon themselves to do it because the students will not. The people who are trying to ban The Adventures of Huckleberry Finn are only trying to block out a part of American history that they would just as soon be forgotten, but every part of American history needs to be dealt with and accepted by everyone at a young age. Trying to shield students from any important part of history is a crime within itself. Hannibal, Missouri is a prime example of this type of crime. Every year they have a citywide celebration of Mark Twain, but they do not celebrate The Adventures of Huckleberry Finn or The Tragedy of Pudd'nhead Wilson nor do they teach it in their schools. Best stated by Shelly Fisher Fishkin, the theater company in Hannibal â€Å"was upholding a long American tradition of making slavery and its legacy and blacks themselves invisible†(Zwick, Jim.

Pride And Prejudice :: essays research papers

Elizabeth’s Pride and Darcy’s Prejudice?   Ã‚  Ã‚  Ã‚  Ã‚  Jane Austen’s Pride and Prejudice is a timeless social comedy which is both satirical and full of sentiment. The title refers to the personalities of the two main characters and cues the reader to Austen’s broader thematic purpose: to satirize nineteenth century manners and morals, especially as they relate to courtship and manners. Although both characters contain both these traits, it is mainly Mr. Darcy who exemplifies ‘pride’ while Elizabeth Bennet exemplifies ‘prejudice.’ However, one of the book’s many ironies is that the prejudiced Elizabeth thinks it is Mr. Darcy who has the overall prejudiced disposition. Likewise, proud Darcy thinks it is Elizabeth who is most often proud. Through the course of the novel, these characters grow and through each other, discover their own foibles-- Elizabeth is indeed prejudiced and Darcy is indeed proud. Armed with this growth and heightened moral insight, the couple is rewarded wi th happiness and fulfillment at the end of the novel. But what if their initial beliefs were correct? Let’s say that Mr. Darcy’s pride and Elizabeth’s prejudice were switched within the context of Austen’s plot and narrative structure. Could a proud Elizabeth and a prejudice Darcy grow in self-awareness through the circumstances of the novel and gain a better understanding of human condition? Before Austen allows her characters to have a ‘fairy-tale’ ending, they must undergo self-growth. Given Austen’s overall view of English class structure and her empathy towards independent and spirited young women, it would be unlikely that Elizabeth and Mr. Darcy would resolve their differences and grow as human beings.   Ã‚  Ã‚  Ã‚  Ã‚  It is Mary, Elizabeth Bennet’s younger sister who seems to pinpoint a working definition of “pride'; as it is portrayed in the novel. She says: “Pride is a very common failing I believe. By all that I have ever read, I am convinced that it is very common indeed, that human nature is particularly prone to it, and that there are very few of us who do not cherish a feeling of self-complacency on the score of some quality or other, real or imaginary... Pride relates more to our opinion of ourselves...'; (67) Both Elizabeth and Darcy’s characters show evidence of pride, yet Austen clearly takes Darcy’s pride to an extreme. His character is first introduced at Netherfield Ball-- he quietly keeps to himself, occasionally speaks to one of the upper class, and declines all introductions to any young ladies.

Medieval Ballad vs. Modern Interpretation in Get Up and Bar the Door Es

Medieval Ballad vs. Modern Interpretation in Get Up and Bar the Door  Ã‚   An often used literary form in Medieval English literature was the folk ballad, an example of which is "Get Up and Bar the Door." A typical ballad is humorous, its author is unknown, and it focuses on one subject. This subject and the events of the story are conveyed both by the words written and those implied. The implied thoughts are conveyed and emphasized using a variety of literary techniques such as symbolism, repetition, and rhyme. The anonymous author of "Get Up and Bar the Door" tells his story make use of these and other literary techniques. The basic conflict in this ballad is one if not widely used, easily recognized: man vs. woman, or more specifically, husband vs. wife, a battle of the wills. The setting of this story is mid-November, in the home of a man and his wife, most likely of the lower two-thrids of society, since the wife must do her own housework. The wind is blowing and coming in through the door, and the man, in the typical male fashion, tells his wife to shut the door. She repl...

How Does Steinbeck Use Setting to Present Key Ideas in ‘of Mice and Men’? Essay

When the enemy reached the trench, they soon realized that they could not break through the line that the trench provided. They also realized that the trench provided the Germans with shelter from their fire. Soon after, the allies began to dig their own trenches and, therefore, trench warfare began. Not very long after the first trenches of the war were dug, a network of trenches came up. This network spread across France and Belgium for many miles. Within the network, there were three different types of trenches: front line trenches, support trenches, and reserve trenches. The first line of trenches was called front line trenches. These were usually two meters deep and had a zigzag pattern to prevent enemy fire from sweeping the entire length of the trench. In order to prevent the trench form caving in, sandbags were stacked against the trench walls. Between the trenches of opposing forces laid no man’s land. This area between the opposing front line trenches was filled with barbwire and mines to prevent enemy crossing. If a soldier was ever injured in no man’s land, he usually was killed because of his vulnerability to enemy fire. The second and third types of trenches were the support and reserve trenches, respectively. These trenches were constructed to easily move supplies and troops to the front trenches. All of the trenches were linked to each other by other trenches, underground tunnels, or telephone communications networks. Barbwire was also stretched across the line to protect from enemy attack. While the design of the trenches and the network of trenches seemed like a great tactic, the reality of the life in the trenches was a different story. Life in the trenches took its toll on the soldiers involved in the war. 2. Trenches were built by the soldiers who had to fight in them. They had to dig these out with spades and other equipment. There was a very clever layout for the trenches. They were built in zigzags to prevent major loss of soldiers if enemy forces breached the trench, also if they were bombed this would prevent lots of loss of life. v

External Environment Analysis Slp Essay

In this part of the paper an external analysis regarding the California Pizza Kitchen (CPK) will be conducted. The main objective of this external analysis is that to scan the external environment for factors which might open up new opportunities or present threats to survival for California Pizza Kitchen. To do that an external analysis based on Porter’s Five Forces Model and a PEST analysis will be carried out. Porter’s Five Forces Model Porter’s Model of Five Forces is one of the most versatile frameworks to analyze the industry external environment. With the application of this model California Pizza Kitchen will be able to understand and get a handle on the competitive and market characteristics of the food and beverage industry Bargaining Power of Suppliers The supplier power is based on the concentration of suppliers and the availability of suppliers within the region where California Pizza Kitchen operates like China, USA or Japan etc. It is important for CPK to pay a close attention to the needs and the wants of their suppliers. (Cravens, 2000) Bargaining Power of Customers Here California Pizza Kitchen has to be careful because the customer’s influence increases over a company. it is extremely important for California Pizza Kitchen to lookout for the tastes and preferences of the customers so that they are able to cater to all their needs. For example, Pizza Hut when it opens a new franchise in any company, does product adaptation so that it would suit the local tastes, therefore this needs to be done by CPK as well. (Cravens, 2000) Rivalry among Competitors There is a great deal of competition between 2 similar companies in the same industry. For example, the biggest rival among the competitors of California Pizza Kitchen is Pizza Hut. Pizza Hut is one of the oldest and the most famous pizza chains all over the globe, it has somewhere around 34,000 franchise outlets, delivery units and kiosks all in over 100 countries. Availability of Substitutes A substitute product for any California Pizza Kitchen product can cause the company to lose its business. Any product that is available in the market has a substitute available and the substitute for pizza is burgers and fried food. For example, California Pizza Kitchen is easily substituted for Burger King, McDonalds, Subway or KFC. (Hollensen, 2003) Threat of New Entrants This is another one of the competitive forces that affects the company in a big way. For example, the entrance of Dominos within the food and beverage industry can cause California Pizza Kitchen to lose some of its business. PEST Analysis The abbreviation for PEST analysis is Political, Environmental, Social, and Technological analysis. This analysis will help California Pizza Kitchen to know its environmental challenges and in how to operate the company in the present and by helping it to prep itself for the future. This analysis will help California Pizza Kitchen to match its resources with its activities and to help it move in the right direction. Political Analysis Here the political term refers to the global, national, regional and local trends, changes or events. Since CPK operates in somewhere around 10 countries around the globe, the company needs to adhere to the rules and regulations of that country in which it operates. California Pizza Kitchen needs to work with various special interest groups within the company and the market as well. (Kevin & Kotler, 2008) Environmental Analysis California Pizza Kitchen is extremely committed to the environmental responsibility. The outlets of company follow the environment regulations and promote cleanliness in their surroundings. California Pizza Kitchen has a very clean and tidy environment and has a very proper system to dispose of the garbage. The company supports charitable programs and takes the first steps for promoting, supporting and participating in the welfare of the community. California Pizza Kitchen has even sponsored educational programs in local community schools and the company also provides funds for different events like Fundraisers and the money collected at these fundraisers go to non-profit schools, which focus on children, youth sports and education. (Kevin & Kotler, 2008) Social Analysis The social term in the analysis refers to the developments within the society that is means culture, behavior, the expectations of the customer, the attitude of the company towards the society etc. California Pizza Kitchen has introduced   CPKids Programs under California Pizza Kitchen Foundation for children ranging 10 years and under in schools and a variety of organizations , for example,   Restaurant Tours and Incentive Awards for outstanding accomplishments to Fundraising Events and Sports Team Partnerships. California Pizza Kitchen also has a great deal of programs for the community as well. Technological Analysis The technological term over here refers to the development, such as, the processing of the products, how the machines are operated. With the use of technology in the operations, CPK has been able to reduce the cost of production, the performance of the organization has increased, has helped the company with its supply chain operations. CPK needs to introduce multinational development teams so that it ensures that the system design needs the need of the company. With the help of parallel development CPK will be able to assign different parts of the system to different subsidiaries of the business. The manager needs to listen to the ideas of the employees as well. Change the department’s structure so that it would be able to fit the communication needs. (Kevin & Kotler, 2008) Conclusion The end result after conducting the environmental analysis is that California Pizza Kitchen needs to keep a lookout for the taste and preferences of its customers and it needs to follow trends and information revolution by leveraging greater consumer insight to deliver superior value products to the customers which in turn creates sustainable, yet incredible business results for the benefit of their stakeholders. The company needs to improve its technological aspects and it needs to follow all the rules and regulations. If they are able to do so then they would have a competitive advantage over their competitors, where they would lock-in customers and lock-out competitors. References Cravens, D W. (2000), Strategic Marketing. New York: McGraw Hill Hollensen, S, (2003), Marketing Management: A Relationship Approach. Financial Times/Prentice Hall Kevin, K. & Kotler, P. (2008), Marketing Management. Prentice Hall

Jp Morgan Chase and Company

In 2002, JP Morgan signed a seven-year outsourcing arrangement with IBM, worth 5 billion dollars. This deal included data centres, help desks, distributed computing, and data and voice networks. JP Morgan viewed this agreement with IBM as a competitive advantage that would serve as a platform for efficient growth and innovation. It was an attempt to further enhance the performance of the company, while reducing their costs. However, two years later, JP Morgan announced the premature ending of their contract. JP Morgan ended the outsourcing deal with IBM, claiming that it caused technological stagnation in their operations.Apparently, IBM refused to take on tasks without additional charge, particularly necessary improvements to the system. This structure lengthened certain procedures, and as result, projects sat idle and processes were stalled. Another reason behind the deal cancellation was internal organizational changes. JP Morgan merged with Bank One, which has cancelled a similar deal with IBM a few years earlier. With the combined resources and technology of the banks, management reassessed its capability of managing its core information systems, and realized that the IBM deal was no longer necessary.JP Morgan Chase and Co. wanted to leverage on the assets it acquired from Bank One, including a $500 million investment in data centers. Also, ending the deal would mean saving the margins paid on hardware and software purchased through IBM, as the size of the newly merged bank would enable it to negotiate better bargains with suppliers – JP Morgan Chase and Co. , after that time, emerged as the second largest financial conglomerate next to Citigroup. Analysts believed that the primary catalyst for the back sourcing was the change in leadership.Many of the key officers of Bank One took over JP Morgan Chase and Co. by holding the same positions that they had in the former. Some of these were CEO James Dimon and CIO Adam Austin. As emphasized by Austin, t he new management wanted to have greater involvement in every aspect of their business, and IT is an important part of it. In fact, Dimon, being in the industry for years, had made a reputation of investing in internal strategies, which explains why experts were not really surprised by the premature death of the IBM contract. ANALYSIS AND CRITIQUEGiven the different scenarios that happened, it is necessary to focus on the impact of the outsourcing and backsourcing deals of the company, and deducing which arrangement is better for the company. The Impact of Outsourcing JP Morgan Chase’s contract with IBM is said to be one of the largest outsourcing deal on record. However, this 5 billion-worth of contract was only in its second year when JP Morgan opted to end its supposed-to-be-7-years relationship with IBM. Apparently, the outsourcing deal hugely affected the operations of the company.First of all, outsourcing had a negative impact on the effectiveness on some key processes of the bank. Things that used to get done no longer got done. In just a short span of time, instead of improving the company’s productivity, the outsourcing deal had caused so much delay. Among the projects not getting done were server migrations, data center upgrades, and network patches. Corollary to that, even in office supply procurement, there were also delays. It even reached the point where project managers had to go and buy their own reams of paper.Secondly, there were vague contract details in the agreement between JP Morgan and IBM. As a result, whenever there is a need to make improvements and updates, IBM had to charge extra fees to the bank. Thus, every additional improvement in the system entailed additional costs. Because of the bank’s resistance to pay for extra but often necessary improvements, JP Morgan’s innovation and efficiency in its information technology was compromised. Thirdly, to implement the outsourcing deal, JP Morgan had to lay off 4000 employees, which lead to a drop in employee morale.With the loss of job security, employees lost their trust in management. Employees refused to commit to any project, and started to slack off. As a result, a lot of work were not getting done, which led to a decrease in the productivity of the company. The Impact of Backsourcing In the light of the shortcomings of the outsourcing deal and the implications of the merger with Bank One, JP Morgan opted to backsource. Bringing their IT back in-house also had huge effects in the company. Firstly, employee morale remained low. Many were resentful that the reasons why management outsourced- i. e. o gain competitive advantage, to improve efficiency, and to accelerate innovation- were also the reasons why they backsourced. As a result, they lost trust in the honesty and soundness of management’s judgment. Job security was still an issue, as more layoffs occurred, not only because of the backsourcing arrangement, but also because of the merger of the two banks. Some employees reapplied for their jobs, but were paid with less than 20% of their original salaries. With such a low morale, productivity in the company dropped, employees were reluctant to commit to projects, and more work piled up.Secondly, the company spent twice the cost of reorganization: that is, they had a huge capital outlay to support an outsourcing deal, then incurred another set of expenditures to reverse those actions and set up a backsourced environment. Outsourcing costs incurred by JP Morgan are mainly due to the huge consultation fees for process reengineering. They also invested in counselling and retention bonuses to retain the employees through the transition period. As JP Morgan backsourced IT, they incurred huge losses for prematurely ending the contract.Moreover, the changes made in outsourcing were done all over again in reverse. With that, they had to spend twice for the costs of reorganization. They had to re establish all t heir systems, staffs, operating procedures, organizational structure, and corporate strategies. Fortunately, JP Morgan was able to capitalize on the $1 billion investment of BankOne in its own information system. Finally, in moving from an outsourcing deal to a backsourced environment, JP Morgan had to deal with organizational disruption. Management had to reengineer their processes and make huge readjustments in their systems and operations.Organizational responsibilities were redefined, and management completely reversed how things were done. Outsourcing Vs Backsourcing When JP Morgan prematurely ended their contract with IBM, the CEO said, â€Å"We believe managing our own technology infrastructure is best for the long-term growth and success of our company, as well as our shareholders. Our new capabilities will give us competitive advantages, accelerate innovation, and enable us to become more streamlined and efficient. † However, these were the same reasons that manageme nt gave when they entered the outsourcing deal.So the question is: which would provide greater benefits for the company – outsourced operations, or a backsourced environment? The main reason why companies outsource is to be able to focus on their core activities. Many businesses have generic functions such as phone reception and customer service. When these generic functions are outsourced, companies may focus on their key processes. Outsourcing would also lead to efficiency and cost savings, as overhead expenditure are reduced. Outsourcing can also provide operational control as poorly managed functions are provided by companies like IBM who are better in these areas.However, according to the studies of Deloitte Consulting, 70 percent of companies that outsource report significant negative experiences with their outsourcing projects. Apparently, outsourcing has a number of limitations and weaknesses. The most common issue is the loss of control when the management of certain functions is turned over to another company. The outsourcing company may lose the ability to adapt to a rapidly changing environment. Additionally, the quality of the service provided may not meet expectations, because the service provider is not driven by the same standards as its outsourcer.Service providers simply aim to meet the conditions of the contract, and not necessarily strive to provide the needs of the outsourcing company. Consequently, outsourcers incur more costs as they modify the terms of the contract, or as they settle for an inadequate system. With the said problems of outsourcing, companies may resort to backsourcing their operations. Nonetheless, in the aforementioned study by Deloitte Consulting, only 25 percent of the companies that had problems with outsourcing brought IT back in-house.The difficulty in backsourcing can be traced to the high costs of reorganization and the organizational disruption during the transition period. However there are a numerous be nefits of having an in-house system. Firstly, management would have complete control in their operations. This leads to greater flexibility, since changes in operations could be implemented more easily. Secondly, management could also control the quality of the operational functions of the company, by setting their standards of performance in their workforce.Finally, they would be able to avoid the need for ongoing renegotiations and the high recurring costs of modifications. The decision whether to outsource or insource should mainly depend on the processes of a company. Organizations may outsource processes that do not fall under their main competencies, or non-core processes that consumes much of their resources. This would save them time, effort, and manpower, while enabling management to focus on the company’s strengths and core operations. On the other hand, it may be more advantageous to insource specialized processes that are impractical to outsource like Research and Development.Moreover, as in the case of JP Morgan, it is better to insource because the company can actually provide better services at lower costs in-house, with the facilities of the acquired bank – Bank One – readily available for JP Morgan’s use. PHILIPPINE SETTING A similar case in the Philippines is the agreement between Government Service Insurance System (GSIS) and International Business Machines (IBM). In 2004, GSIS began migrating to a new computerized system, with an IBM DB2 software designed to manage all data pertaining to members’ and pensioners accounts.GSIS claimed that it spent around P40 million for the DB2 software and IBM P-series servers. Unfortunately, in March and April 2009, the database software encountered a problem with the pension firm’s Integrated Loans, Membership, Acquired Assets and Accounts Management System (ILMAAAMS). The ILMAAAMS, which ran on IBM’s DB2 database software, reportedly crashed because of the vast amount of transactions made by GSIS members, composed of about 1. 5 million government employees and 200,000 pensioners. This translates to about 3 million records on file coming from 8,000 agencies nationwide, simultaneously.According to GSIS, about 90% of its operations were adversely affected by the crash, which resulted to approximately Php5 billion in actual damages. The company blamed IBM for the disruptions, accusing the latter of supplying defective database software. GSIS filed a Php100 million legal case against IBM Philippines, who in turn filed a Php200 million libel suit against the GSIS for its series of negative advertisements against them, both in print and broadcast media. In November 2009, GSIS started migrating to the HP – Oracle System and was able to complete the process in just six weeks.At present, the legal war between GSIS and IBM continues. Recommendations: Outsourcing is a double edge sword. It could either benefit a company or it can also cos t that company a lot. Thus, many things need to be considered in choosing between outsourcing and the more traditional in-sourcing. Therefore, the situation of JP Morgan Chase and Co. could have gone on a better way if they just prepared and improved on certain aspects as follows: The negotiations with IBM should have contained certain terms which could possibly mitigate the risks involved in their contract.First, the contract negotiations should have had clarified the terms and limitations of both parties. Having clearer terms and limitations will help both parties adjust to different situations and formulate the right solutions to the problems that may arise. There should also be better preparation, a set plan of action and a ready exit strategy. Also, JP Morgan Chase and Co. should have asked for flexibility in the technology, the outsourcing partner uses. They should have specified that the process or technology should fit or, at the very least, work hand in hand with the busine ss’s existing processes.There should also be a stipulation regarding review points to allow the relationship to change or end. JP Morgan Chase and Co. should consider that contracts have shared elements of both risk and reward. Greater risks entail more rewards precisely why JP Morgan should strike a balance between these two. It should perform different analysis tools in order to weigh alternatives more accurately. This, in turn, will help the company decide what projects to perform and which deals to enter. For example in the case of JP Morgan, short-term outsourcing contracts benefit the company better than long-term contracts.In some cases, it could be a good mix of short-term and long-term contracts as determined by the nature of the contract that will provide the best rewards for the company. Essentially, it is a matter of being able to correctly judge and weigh alternatives that will yield the best results. ———————â€⠀Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- Finally, the company should learn how to value its most important asset, the people. It should have been more honest and open with the employees about matters affecting the situation and condition of the company.Being the most important asset of the company, human capital or employees should have been more involved in instances like this. As a summary, the following are the key points to be remembered from the JP Morgan and Chase experience: 1. For financial intermediaries in particular, outsourcing is not recommended. Outsourcing was a trend for many industries, especially in late 80’s until the early 90’s. This provides organizations the chance to concentrate on their core competencies by having their IT functions off shored.Much of the stories with regard to this business trend were written on the earlier years of the deal, stories on the implementation years however, remain scarce. A company has to consider how it will ultimately affect its operations before jumping in the outsourcing bandwagon. Financial intermediaries in particular would be better off without outsourcing as the latter adversely affects performance of the company, particularly its capability to innovate and be efficient which takes a toll on the totality of the organization’s performance. 2.Backsourcing is not for everyone. In a company where the latest data are the most crucial, it is recommended for them to keep their IT functions in house, especially in the case of JPMC where they had all necessary infrastructures ready for their IT functions. Departmental functions once outsource will incur twice the expenses if brought back once again to the company. Backsourcing is not a one size fits all solution rather it depends on the company’s available resources that determines its capability to bring in the IT functions again. 3. Negotiate shorter dealsShorter deals promote flexibility which proves to be the most important factor missing in the JPMC situation. Albeit more expensive, this provides companies less expensive solutions and exit strategies in case deals go awry. 4. Always remember the value of employees The outsourcing and insourcing juggle brought down the morale of many of the employees. What the company failed to see was the fact that this constituted much of the intangible costs incurred. 5. Remember to weigh alternatives carefully. Organizations often overlook or ignore the relationship between cost and quality of service.The relationship is a simple one. If you want to differentiate your IT service, provide the highest quality service and the highest quality products, it generally costs more. If the decision is IT costs too much, it is relatively straightforward to reduce IT costs, but commensurately you also reduce service. † (Hirschiem, 1998) Higher expectations, particularly in IT lead to higher costs. More than just following the current trends in t he industry, determining what to do with departmental functions involve planning and weighing alternatives carefully.