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Journal entry for Readings

This essay provides a very good understanding about Art and I found it very interesting. Art is basically a conceptual concept. In other words, it can be defined as a creation, which is created by the will of person. As per my study, different forms of art exist but the author has laid the emphasis on graphic art. In this type of art, the design is created on a material like Plexiglas or rubber so as to move the designs onto another medium like wood, paper, cloth, metals, and plastics etc.

In the present scenario, Japanese manga are inspiring the comic artists of the west, fashion designers, modern artists and millions of ordinary readers. The appearance of the wide-eyed figures of manga are found over t-shirts, video games, CD covers and even in the museums of art (Manga and Japanese Contemporary Art, 2005).

I found the article very informative as it depicts the collection of the most appealing artists from modern manga and also tells me about the different variety of manga styles. It also contains the prints of woodblock by Hokusai. The exhibition of graphic art and its program of events depict the fan culture, which is closely linked with manga. The examples include cosplay or dressing similar to the manga characters.

This program of events permits the visitors to attempt their hand at manga, listen to lectures on modern Japanese culture and also provides an experience of singing karaoke. In this article, the author has depicted cute and funny figures along with the strange and aggressive figures similar to those of manga (Manga and Japanese Contemporary Art, 2005).

Journal entry for controversies

In my point of view, art is created by the mind. It is the blend of ideas and concepts. In my point of view, art should be such, which doesn’t hamper any religion, values or beliefs i.e. art should form the basis of inspiration for the viewers by containing effective messages in it. But if the art is developed for a particular reason, it might lead into big controversies (Cox, 2006).

A controversial event took place in the Dallas Museum of Art. Here, Sydney McGee who was a teacher (female) took a group of children aged 9 to 10, in Frisco from Fisher Elementary School to the Art museum of Dallas. It was found that the father of a child has filed a complaint that his child has been exposed to art which was absolutely unauthorized as he was shown an abstract nude. As a result, this brought controversy upon the school. Therefore, art should be created so that it is appreciated by its viewers and creates a good impact on them (Cox, 2006).

Another controversial issue was that Hitler could not become part of the art school because it was painted in a traditional style and hence, was not able to fulfil the criteria of the art school. Art school requires a contemporary way of painting, which is less realistic. Hitler, during his regime, barred new artists, who were selling artwork and was in favour of the traditional artists. Art varies from place to place and as a result to this, the frequency of controversy increases.

Journal entry for movies

I found certain movies like Girl with a Pearl Earring and The Agony and the Ecstasy very artistic. Both of these movies have depicted art in their content but in different ways. In the movie Girl with a Pearl Earring, an artistic temperament is depicted by girl. The movie reveals an artistic passion.

The photography in the film is very sensuous, showing the golden age of Dutch culture. The pictures in the photography contain fantastic colour and scale, crowded with plentiful costumes and magnificent architecture. This photographic art keeps the eyes engaged.

In 1930s, the art scene in America was greatly dominated by the practicality and regionalism. The film on Jackson Pollock by Ed Harris presents a powerful picture of Jackson Pollock. The film has performed in an outstanding manner by evoking the true feeling of the time duration with the help of the costumes and scenery. The film depicts the darker side of Pollock’s life as he struggled with demons. This movie became the centre of attention for those American people who liked the modern art.

Art in Exile

On the other hand, the film Agony and ecstasy shows huge interesting reflection of art. It is characterized as the superior period piece, which became an epic. I really appreciate this movie as it pictured Charles Heston as the grand artist. I really found it fairly attractive, the way they have displayed the stressed relationship. The movie depicts the true sense of the art and love. This movie clearly describes how art can move the soul of the person. I admire the extent of time spent by chuck in learning how to paint (Reed, 1965).

Journal entry for the relevance with the Puerto Rico:

In the late 20th century Graffiti has turned into a well-known force in urban settings. The extent of attitudes towards graffiti has shown a broad and contentious concept. Most of the writers regard the graffiti as a social term, which was introduced for culture around 70’s. Therefore, I would use graffiti as writing.

The tradition of folk art for carving the santos i.e. using saints of wood for house hold devotion forms the par of Puerto Rican culture. The santos from the past served as the prime object of devotion, but at present they form the part of artistic merit, which is because of the link with the ancient culture of Puerto Rico.

Both the old and new santos of Puerto Rican function continuously in a devotional framework for a few number of their owners and santeros. For the carvers of Puerto Rico, carving a santos forms a religious experience (Dennant, 1997).

Graffiti showed inter connected factors to the world of hip-hop, sometime also studied as a part of its own entity. Graffiti depicts an artistic aspect of confrontation towards the authority and simultaneously reflects expression towards subculture. I have found that in the early time of Christianity, saints were given honour as role models, courageous heroes and guardians.

In the present time the carving of the santeros remind me of the fundamental task played by these holy pictures in the everyday lives of supporters. From the point of dedication towards the signs of Puerto Rican traditions and art, the modern santos from Puerto Rico fit into the highly prosperous tradition, which goes forward to progress in response to the changes in the political, social and religious context.

References

Manga and Japanese Contemporary Art. (2005). Retrieved August 23, 2008 from http://www.taidemuseo.hel.fi/english/tennispalatsi/programme/manga.html

The Santos Tradition. (2004). University of Florida. Retrieved August 23, 2008 from http://www.harn.ufl.edu/santos/introduction.php

Carol Reed (1965). The Agony & The Ecstasy. [ONLINE] Available at: http://charltonhestonworld2.homestead.com/AgonyEcstasyPg1.html. [Last Accessed 23 August 2008].

Ian Cox (2006). Teacher Sacked Over Nude. [ONLINE] Available at: http://coxsoft.blogspot.co.uk/2006/10/teacher-sacked-over-nude.html. [Last Accessed 23 August 2008].

Pamela Dennant (1997). The Emergence of Graffiti in New York City. [ONLINE] Available at: http://www.hiphop-network.com/articles/graffitiarticles/emergenceofnycitygraffiti.asp. [Last Accessed 23 August 2008].

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The Greek Revival and the Gothic Revival are terms that carry specific meanings in relation to the history of architecture. What did they represent at the time and what was the nature of the conflict between the respective adherents?

The Gothic Revival represented chiefly two things: firstly, in its earlier form, it was a Romantic celebration in stone of the spirit and atmosphere of the Middle Ages; secondly, in its later and more serious form, the Gothic Revival reflected the architectural and philosophical conviction of its exponents that the moral vigour of the Middle Ages was reflected in its Gothic architecture, and that the reintroduction of this Gothic style of architecture to eighteenth-century society could re-invigorate it morally. Neo-Gothic architecture in its earlier forms, typified by buildings such as Horace Walpole’s Strawberry Hill, was characterized by a highly ornamental, decadent, visually powerful and intricate style; and, what is more, a style that cared little for functionalism or strict adherence to specific structures. By these characteristics Neo-Gothic architecture encapsulated the Romantic literary and poetic spirit of the age, as had been evinced in the works of men like Horace Walpole, Alfred Tennyson and Sir Walter Scott. In this sense, the Neo-Gothic was a nostalgic and sentimental backward glance. In a different sense the Gothic Revival represented the attempt of certain architects and churchmen to transfer the liturgical vigour of Gothic churches of the Middle Ages to the eighteenth century by capturing it in stone. Thus men like Augustus Pugin and John Ruskin came to argue that the Gothic Revival represented a standard of moral excellence that was to be practised and imitated as widely as possible.

The Greek Revival grew out of the neoclassicism movement, and represented in essence an attempt by its adherents to find in the architecture of antiquity a form of architecture that corresponded to the principles of reason and order emerging from their own Age of Reason and Enlightenment. Neoclassicism, and the Greek Revival in particular, represented a pursuit for architectural and intellectual truth. An architect could perceive in the forms of antiquity principles of excellent reasoning and intelligence that prevailed in the rationalistic spirit of his own age, and by reinvigorating the ancient style the neoclassical architect could build buildings that were inspired by and inspired in others principles of reason and rationality. Neoclassicism and the Greek Revival conflicted with the Gothic Revival because they perceived the moral truths claimed by the Gothic revivalists as chiefly illusory and false. The Gothic Revival was, in the neo-classicist’s eyes, a decadent celebration of style over substance that elevated illusion and ornament above reason and truth. Neo-Gothic architects were seemingly content to produce endless copies and weak imitations of Gothic style merely to please frivolous aristocrats; neo-classicists however believed that their architecture was a creative act that gave birth to constantly new adaptations of the classical model. Neo-Gothic architects in turn conflicted with neoclassicism because it was cold and devoid of emotion, feeling or moral purpose; its elite attitude rendered any collaboration between the two styles most difficult.

Art historians divide the Gothic Revival into two stages, and each of these stages came to represent quite different ideas. The first stage of the Gothic revival was characterized a ‘raw’ and naive imitation of Gothic architecture that lacked either an architectural philosophy or a coherent system of organization. The first building of this early type was Lord Horace Walpole’s villa Strawberry Hill which was built in 1747; another prominent early specimen was Fonthill Abbey designed and built by James Wyatt. Both of these buildings, in the spirit of Walpole’s atmospheric novel Castle of Otranto (Walpole, 2004), were attempts to preserve in stone the Romantic atmosphere of the Middle Ages; both also demonstrated perhaps more clearly than any other buildings of this time the impracticality and lack of structure of much Neo-Gothic building. This first flourishing of Neo-Gothic architecture was extended into the public sphere also: for instance in the new Houses of Parliament designed and built by Sir Charles Barry and A.W. Pugin. In America too, this nascent Neo-Gothic style was reflected in buildings such as Richard Upjohn’s Trinity Church built in New York in 1840 and Renwick’s St. Patrick’s Cathedral also built in New York. The picturesque quality and organization of many of these buildings led to applause for its Romantic splendour, but also much criticism for its lack of substance and for its unfaithful imitation of the original Gothic form.

If the first stage of the Gothic Revival lacked diligent observation and restoration of Gothic architecture or philosophical principles, then serious efforts were made at the turn of the century to ground the movement more securely upon such principles. The ‘late’ period of Neo-Gothic is thus characterized by a stricter adherence to medieval architectural form and to a philosophical interpretation that viewed Gothic architecture as a paragon of moral virtue and excellence. In England two men were of foremost importance in the development of this second stage: A. Pugin and J. Ruskin. (In France, Eugene-Emmanuel Viollet-le-Due played an equally important role). By this time, architects were no longer content to merely imitate Gothic forms and designs, but sought to create original works founded upon the principles of the original Gothic architecture and which fitted to the particular circumstances of nineteenth-century society.

Thus at the turn of the nineteenth-century it is possible to observe a clear evolution in the form of the Gothic Revival away from the loose sentimentality and picturesque quality of the early period and towards a style of dominated by precise architectural limitation of Gothic form as made possible by detailed and comprehensive investigations into this style. One such early investigation was John Carter’s The Ancient Architecture of England (Carter, 1795) which was the first work that recorded with extensive detail and exactitude the Gothic style of medieval buildings; Thomas Rickman’s An Attempt to Discriminate the Styles of English Architecture (Rickman, 1817) gave an extensive account of the varieties of Gothic styles, whilst Pugin’s Specimens of Gothic Architecture (Pugin,1821) deepened and extended the range and accuracy of these initial investigations. Nonetheless, despite the great advances that had been made in the scholarship of the Gothic Revival, the actual building of Gothic buildings remained for some time in the earlier ornamental style that characterized the first period of the movement — famous examples being Windsor Castle which was restored in 1824 by Sir Jeffrey Wyatville, and King’s College Cambridge in 1827to 1831. The greatest use of the Neo-Gothic style at this time was however for church buildings — the style being cheaper and easier to construct than neoclassical designs.

For all the diligent and pain-staking work of the Gothic Revival scholars to come to life in actual buildings it took the skill and vision of one particular man. This man was Augustus Charles Pugin: he presented the argument that Neo-Gothic architectural style was the most fitting emblem of the spirit of the Catholic Church and so was also therefore the only permissible architectural form to express the work of Godin his Church. In Contrasts (1836) Pugin argued that architectural form imitates the condition of the society that creates it; since the society of medieval times was a paragon of virtue and moral integrity then it was natural and obvious that Gothic architecture is the most moral form of architecture. Thus in The True Principles of Pointed or Christian Architecture (1841) Pugin was able to set down comprehensive and coherent principles for the justification of the Gothic Revival. In a major step away from the earlier decadence or the style, Pugin argued that all features and designs of a church must be essential for its correct functioning and structural shape; architecture form must be clean and purposeful since these are also the qualities that we expect of our moral condition. Pugin put this architectural philosophy into practice most assiduously in the years 1837 to 1844: in St Mary’s Church in Derby, in St. Wilfred’s Church in Manchester and in St. Oswald’s Church in Liverpool and many other church buildings. Pugin’s work quickly became an inspiration for Anglican Church reformers such as the Tractarians in Oxford who used his architectural church style as an ideal form by which to carry out their own agenda of church building restoration.

It should be noted here that Pugin’s work as well as that of many other architects across Britain and Europe was profoundly influenced by the ideas of John Ruskin and his two seminal works The Seven Lamps of Architecture (1849) and The Stones of Venice (Ruskin,1854). Ruskin’s ideas were inspired by the architectural forms that he had seen in Italy and particularly in Venice; Ruskin thus argued that Gothic was the supreme form of architecture due to the ‘sacrifice’ made by stonemasons in detailing every stone of a building. Ruskin thus exalted Doge’s Palace as ‘ the central building in the world‘ (Ruskin, 1854) — arguing that Pugin’s programme of Gothic Revival in churches should be extended to government buildings also. Moreover, Ruskin himself by his teachings extended the Gothic Revival further by promoting a ‘polychromatic’ style of work inspired by Italian Gothic architecture. This work in turn inspired buildings such as Butterfield’s All Saint’s Church, Keble College in Oxford and Rugby School.

In short, by the end of the eighteenth century the Gothic Revival had been transformed from what began as a Romantically inspired fondness for majestic ornamentalism, into a style of architecture grounded upon powerful moral and philosophical principles as well as an intricate and comprehensive awareness of Gothic form.

The Greek Revival, a growth out of the neoclassicism movement, flourished in the years 1750-1830, and was in many ways the antithesis of the Neo-Gothic form of architecture with which it was contemporaneous. As we have seen, whatever its later manifestations, the Gothic Revival had been a product of Romanticism and of the passions and emotions; the Greek Revival, in complete contrast, exalted reason, the intellect and rationality above all else. Neoclassicism sought as its highest aim to realize architectural and intellectual purity and truth — in stark contrast to what it perceived to be the ornamentalism and illusory truth of the Neo-Gothic style. ‘Neo’-classicism was founded upon a corpus of work that had in antiquity achieved canonical status, that is, it was based upon the observation of ‘classic’ art and classic form. In the words of Crook (1995) ‘ Ideally – and neoclassicism is essentially an art of the ideal – an artist, well-schooled and comfortably familiar with the canon, does not repeat in a lifeless reproductions, but synthesizes the tradition anew in each work ‘. In other words, neoclassicism — of which the Greek Revival was to become the most refined example — sought the highest possible levels of artistic achievement; the neo-classicist style existed only to reinterpret for contemporary circumstances the great work and principles that had already been achieved in the past. Thus, in Crook’s words (1995), ‘Neoclassicism exhibits perfect control of an idiom’ (Crook,1995); that is perfection already achieved, the architect’s task is to fit that perfection of antiquity in a modern cast. All of these above points are significant for understanding the opposition of architects of the Greek Revival against the Gothic Revival. For, in the beginning, much of Neo-Gothic architecture consisted of little more than crude and naive imitations of far superior original Gothic works. Thus in such imitation work there was no creativity and no continuation of the development of an existing idiom. Thus Neo-Gothic form was viewed by Greek revivalists as superfluous and as inferior to their own architectural pursuits.

The emergence of the Greek Revival was made possible by an astonishing efflorescence of archaeological exploration into the sites and cultures of classical Rome and Greece around the middle of the eighteenth century. The discoveries of the archaeologists inspired and sustained the Greek revival. In 1719 Bernard de Montfaucon’s released his giant ten-volume opus Antiquity Explained and Represented in Diagrams (Montfaucon, 1719). This book was hugely popular and intrigued the imaginations hundreds and thousands of European tourists who began to flock to the sites of ancient Rome and Greece. Furthermore, the sensational excavations of cities like Pompeii and Herculaneum in 1748 and 1738 further fuelled the imaginations of architects, archaeologists, novelists and many others. Many other works on classical art and architecture such as Giovanni Piranesi’sPrima Parte di Architecttura, Robert Wood’s Ruins of Palmyra (1753) and Robert Adam’s Ruins of the Temple of the Emperor Diocletian (Adam’s, 1764)were soon published and led to still further thousands going on adventures to the Continent.

This general interest in classical antiquity quickly transformed in the eighteenth century into a burst of fascination with Greek antiquities in particular and displayed a conviction as to the superiority of Greek above Roman architecture. The discovery of the sixth-century ruins of Paestrum received much publicity and was recorded by Italian artist Domenico Antonini and French architect Jacques-Germain Soufflot; soon afterwards Pancrazi published his seminal Antichita Siciliane and Dumont released his Ruins de Paestrum. Deeper investigation into the Greek mainland territory led James Stuart and Nicholas Revett to publish The Antiquities of Athens (Stuart & Revett, 1750) which was highly influential upon architects in England. Whilst it took some time for this appreciation of Greek form to be turned into actual imitative buildings nonetheless the superiority of Greek to Roman architecture had been established by the time of Johan Winckelmann’s Reflections on the Painting and Sculpture of the Greeks in 1765.

Thus architects of the Greek Revival sought to infer from these classical forms principles of order and reason that corresponded to those being discovered in their own age of Enlightenment; neoclassical architects argued that if their own buildings came to embody these principles then society at large would be edified by the experience. Nonetheless, the Greek Revival, like Neoclassicism generally, contained an inherent paradox. Its longing backward-stare to the times of antiquity was inspired by as much by an emotional fondness for antiquity (supposedly the characteristic of the Romantic Gothic Revival) as a predilection for principles of pure reason and rationality. Thus some twentieth century arthistorians have come to speak of this aspect of the Greek Revival as ‘Romantic Classicism’ (Stillman, 1998).

After 1800, in England, the internal dynamics of Neoclassicism directed the movement away from Roman architecture and toward that of ancient Greece – as such, a huge number of buildings were built in these years according to the architectural principles of ancient Greece. Sir John Soane, the architect of the Bank of England, developed a highly influential architectural style that involved promoting the linear abstraction of classical Greek forms and, by using extensive archaeological evidence to inform the designs of patterns, he achieved a spectacular dramatization of the interior spaces of his buildings — a style reminiscent of Etienne-Louis Boullee and Claude-Nicholas Ledoux on the continent. A prominent example of this new style in England was Downing College, Cambridge, modelled upon the Erechtheum from the Acropolis in Athens. The Covent Garden Theatre in London, built by Sir Robert Smirke, was the first Doric style building in the capital; the planning of Regent Street as well as Regent Street Park by John Nash reflected the use of classical Greek styles of city planning and organization. So too the British Museum in London built in 1847 is perhaps the most prominent example of ionic Greek imitation in Britain. In Edinburgh — named admiringly the’ Athens of the North’ by locals at the time — the Greek Revival was extremely influential in the eighteenth century, as shown in buildings such as the Royal High School and the Royal Scottish Academy. The dominance of Greek neoclassical architecture would dominate the British landscape until the advent of Modernism in the twentieth century.

In the final analysis, even if it is paradoxical to say so in light of the sustained conflict that existed between them, both the Gothic Revival and Greek Revival had similar goals, and used similar means to attain those goals. The Gothic Revival began life as a celebration of the spirit and forms of a time other than its own: the Middle Ages. So too, the Greek Revival was engendered by a renascent fascination with classical archaeology and the Greek Revival’s preoccupation was with the ideals and forms of ancient Greece – somewhere even more removed than Medieval Europe! The Greek Revival ultimately represented an attempt to renew and reinvigorate the classical Greek belief in the purity and perfection of architectural form and its corresponding revelation of ‘truth’. It was thus no coincidence that the spirit of the neoclassical age was also dominated by the Enlightenment and the Age of Reason. The Greek Revival thus cast the ancient principles of classical Greece in the mould of eighteenth century rationality; the aim here, like with the later Gothic Revival, being to produce a form of architecture that would edify society. The bitter conflict between the Gothic Revival and the Greek Revival can be explained simply by the fact that each were prepossessed by attitudes quite contrary to the other: one exalting reason and order, the other passion and emotion. Both revivals were each consumed in the whirlwind of their own zeitgeist and only with retrospect and the other advantages of history is it possible show the equal validity of their separate truths.

BIBLIOGRAPHY

Adam, R. (1764). Ruins of the Temple of the Emperor Diocletian. Graham Henry, London.

Atterbury, P. (1996). A.W.N. Pugin: Master of the Gothic Revival. Yale University Press, Yale.

Carter, J. (1795). The Ancient Architecture of England. Sawsbury Press, Sawsbury.

Crook, J.M. (1995). The Greek Revival: Neoclassical Attitudes in British Architecture 1760-1870. John Murray, London.

Eastlake, C.L. (1970). A History of the Gothic Revival. Leicester University Press, Leicester.

Ferguson, F.G. (1973). The Neo-Classical Architecture of James Wyatt. Harvard University Press, Massachusetts .

Hamlin, T. (1946). Greek Revival Architecture in America. Open University Press, London.

Montfaucon, B. (1719). Antiquity Explained and Represented in Diagrams. London.

Pugin, A, P. (1821). Specimens of Gothic Architecture. Nattali Press, London.

Pugin, P,A. (1836). Contrasts. Peter Cough Books, London.

Pugin, P,A. (1844). The True Principles of Pointed or Christian Architecture. Berry Press, Burnside.

Rickman, T. (1817). An Attempt to Discriminate the Styles of English Architecture. Threebells Press, Glasgow.

Ruskin, J. (1849). The Seven Lamps of Architecture. Trent House Press, London.

Ruskin, J. (1854). The Stones of Venice. Trent House Press, London.

Stillman, D. (1998). English Neo-Classical Architecture Vol.1. W Zwemmer, London.

Stuart, J. & Revett, N.(1750). The Antiquities of Athens. Dasterfield Press, Bedford.

Walpole, H. (2004). The Castle of Otranto. David & Charles, Newton Abbott.

Wiebenson, D. (1969). Sources of Greek Revival Architecture. A Zwemmer, London.

Winckelman, J. (1765). Reflections on the Paintings and Sculptures of the Greeks. John Paul, Edinburgh.

Wood, R. (1753). Ruins of Palmyra. Falstaff Press, Dublin.

This work was produced by one of our professional writers as a learning aid to help you with your studies

What were the distinctive features of the Manchester school of anthropology?

Structural-functionalism, which dominated British social anthropology for much of the twentieth century, interpreted society in terms of its institutions. Institutions provided society with its structure and worked together to keep society, a bounded unit, in a state of equilibrium.

A person’s role or position in the structure determined their behaviour. In the early 1950s, criticisms of the structural-functionalist approach began to emerge from the Manchester school of anthropology, a group of anthropologists involved with the anthropology department at Manchester University. The Manchester school reacted against the obsession with formal institutions and the structure they supposedly produced.

Many felt it was time to move away from the search for ideal types and focus on the much-neglected individual and how he/she coped in a system full of contradictions and inconsistencies. The Manchester school developed a distinctive approach which focused on the role of conflict in society, acknowledged the importance of the wider context (particularly the impact of colonialism), shed light on the issue of multiple identities through their studies of urban and rural communities, and advanced a new analytical model; namely social network analysis. Although the school is distinct in certain ways, its continued reliance on the structural-functionalist paradigm must be realised.

In contrast to structural-functionalists, the Manchester school did not see social equilibrium as “a simple affair, resulting from the neat integration of groups or norms. On the contrary it emerges through the balancing of oppositions in a dialectical process” [Kuper 1973, 139]. In other words, conflict is an inherent part of society but certain mechanisms exist to ease the tensions and maintain an equilibrium. Ritual, according to Max Gluckman, was one such mechanism.

He analysed “rituals of rebellion” in southern African societies and argued that “whatever the ostensible purpose of the ceremonies, a most striking feature of their organization is the way in which they openly express social tensions” [Gluckman 1963, 112]. One such ceremony occurred in Swaziland. The dominant cleavage in the society was between the king and his subjects.

During the ceremony various groups formed cross-cutting ties which undermined and reduced the severity of the dominant cleavage and the king’s subjects were given the opportunity to voice their hatred towards him. “This ceremony is…a stressing of conflict, a statement of rebellion and rivalry against the king, with periodical affirmations of unity with the king” [Gluckman 1963, 125]. One could infer that such a ritual could totally disrupt a society based on the domination of the ruled by the ruler.

Crucially however, the people are rebelling specifically against the king, and not against the institution of kingship; “the rebellious ritual occurs within an established and unchallenged social order” [Gluckman 1963, 126-27]. In sum Gluckman explains,

The acceptance of the established order as right and good, and even sacred, seems to allow unbridled excess, very rituals of rebellion, for the order itself keeps this rebellion within bounds. Hence to act the conflicts, whether directly or by inversion or in other symbolic form, emphasizes the social cohesion within which the conflict exists [Gluckman 1963, 127]

The ritual reaffirms and perpetuates the social order.

Gluckman’s fieldwork in Zululand and Swaziland established conflict as an unavoidable aspect for analysis in the study of society. However, he has been criticized by many for continuing to use a structural-functionalist paradigm. His studies address the issue of conflict but always in terms of how it is contained by mediating mechanisms (such as ritual) which reaffirm the social order. Kuper explains that this

emphasis on the maintenance of equilibrium grew out of his study of white-ruled Zululand, ‘which despite its many unresolved and irresoluble conflicts, “worked”’, obliging him to consider ‘how social systems could contain the deep conflicts which are present in all of them’ [Kuper 1973, 141].

In other words, Gluckman concentrated on repetitive (as opposed to changing) social systems in which “changes occur not by alterations in the order of offices, but by changes in the persons occupying those offices” [Gluckman 1963, 128]. This, Kuper argues, is “the most vulnerable feature of Gluckman’s theory” [Kuper 1973, 140]. Although it may shed light on small-scale, non-centralized communities, it ignores conflicts “in which the contending parties no longer share the basic values upon which the legitimacy of the social system rests” [Swartz 1966, 34].

From the viewpoint of the sociology of knowledge, it is no accident that this alteration of analytical focus from structure to process has developed during a period in which the formerly colonial territories of Asia, Africa, and the Pacific have been undergoing far-reaching political changes that have culminated in independence [Swartz 1966, 3]

In other words, with many countries engaged in the struggle for their independence, anthropologists working in the 1950s and 1960s finally accepted that “the total political situation should be taken into account” [Kuper 1973, 142]. As the Manchester school anthropologists carried out most of their work in British Central Africa they focussed particularly on the impact of colonialism and capitalism in the societies they studied. Gluckman argued for the recognition of “a Central African Society of heterogeneous culture-groups of Europeans and Africans” [Kuper 1973, 141].

The point of articulation between imperial and indigenous cultures was epitomized in the position of the headman or elected elder, an office institutionalised by the British. He was seen as an “inter-calary figure”, caught between the demands of the state and the demands of his people [Kuper 1973, 143]. As Epstein’s classic study of Politics in an Urban African Community shows, when Africans rioted against the British in response to an increase in taxes in 1935, the elected elders were also attacked and forced to take shelter with the colonial masters [Kuper 1973, 146]. Such studies shed light on the flaws of the colonial system and the social problems it had caused, topics almost entirely avoided by previous anthropologists.

The Manchester school also focused their attention towards urban and not just rural localities. Through recognition of the urban as a valid and necessary unit of study, the school brought the issues of multiple identities and situational selection to the fore. The process of urbanization in colonial Africa markedly increased the number of identities people associated with themselves. “Sometimes a man might side with Bemba against non-Bemba; at other times with clerks against underground workers; and then again line up with fellow Africans against the white mine authority or the government” [Kuper 1973, 146-47].

In other words, people responded to this identity dilemma by choosing to use or ally with different identities, depending on the social situation; this technique is known as situational selection. In the Kalela Dance Mitchell argues that the same group of people can have very different relationships depending on whether they are in a tribal or urban setting. Thus, “ethnic identity is both situational and negotiated by actors amongst each other, and any continuity is possible in principle but not guaranteed” [Rogers 1995, 23].

In 1954 Barnes published his study of a Norwegian Parish and introduced the concept of the social network as an analytical tool [Mitchell 1969, 5]. “Basically, network analysis is very simple: it asks questions about who is linked to whom, the nature of that linkage, and how the nature of the linkage affects behaviour” [Boissevain 1979, 393]. Social network analysis studied the relationships of interacting people in actual situations.

The individual, instead of structures or institutions, was the starting point. This allowed anthropologists to “concern (themselves) with individuals using social roles rather than with roles using individuals, and with the crossing and manipulation rather than the acceptance of institutional boundaries” [Rogers 1995, 20]. In contrast to the structural-functionalist approach which viewed a person’s role in the structure as determining their behaviour, social network analysis considered how individuals adopt and modify the rules to further their own interests and “use network linkages in order to achieve desired ends” [Mitchell 1969, 38].

Network analysis was found to be particularly useful for studies of larger scale communities. As Mitchell argues, this is because of the “large number of single-stranded relationships in them, therefore institutional integration is relatively weak” [Mitchell 1969, 48]. In other words, in bigger, more complex communities people have fewer overlapping relations; using an institutional approach is simply not sufficient for such societies. Also, “social network analysis facilitates the tracing of the connections between locality and wider contexts”, an important factor in an approach so concerned with the “total” situation [Rogers 1995, 18].

An interesting aspect of social network analysis is its application of mathematical methods to anthropological study. Mitchell argues that the “use of graph theory and probability mathematics provides an intriguing method of erecting model networks with which empirical networks can be compared” [Mitchell 1969, 34]. This “openness to methodological innovation” was a key feature of the Manchester school but the school also widely accepted that statistical methods should be used as an aid, and not form the basis of anthropological analysis [Kuper 1973, 142].

There are numerous problems with social network analysis. “The study of personal networks requires meticulous and systematic detailed recording of data on social interaction for a fairly large group of people, a feat which few fieldworkers accomplish successfully” [Mitchell 1969, 11]. Social network analysis is simply too time-consuming and detailed for it to be a viable analytical model in many situations.

Also, although the level of abstraction is not as great as it is in the structural-functionalist approach, the anthropologist must still identify the limits or extent of a network, and select the individual or group at the centre of it. The isolation of one part of the network is “based on the fieldworker’s judgement of what links are significant in explaining the behaviour of the people with whom he is concerned” [Mitchell 1969, 13-14]. Just as structural-functionalists “found” structures in society, the Manchester school “found” networks.

However, the important factor to keep in mind with regard to social network analysis is that it was always intended as a complement to structural-functional analysis. As Mitchell outlines, the “notion of social networks is complementary to and not a substitute for conventional frameworks of analysis” [Mitchell 1969, 8].

In conclusion, it is clear that the Manchester school was distinctive for several reasons. Firstly, it was an action-oriented approach which described the social system as it actually was, full of conflicts and contradictions. Cleavages and tensions were dealt with through various redressive mechanisms. Secondly, it rejected the view of society as a bounded unit and acknowledged the influence of a wider context in all situations; the role of colonialism in causing social problems in Africa was highlighted.

In addition, the Manchester school addressed both urban and rural localities and in doing so furthered anthropology’s understanding of multiple identities and the necessary application of situational selection. Finally, the school advanced the use of social network analysis, applying mathematical methods to the study of culture and bringing the individual and his/her interactions with other actors in actual settings to the centre of study.

Despite these advances, the Manchester school continued to function within a structural-functionalist paradigm. This is shown, for example, by the fact that conflict was studied only in relation to equilibrium; the school did not account for social change or transformation. Also, although they emphasised the impact and inequalities of the colonial system, the Manchester anthropologists did not provide a general theoretical approach for the colonial situation.

Finally, its analytical model was designed as a complement to structural-functionalist modes of analysis. The Manchester school is characterised by several distinct features however, overall it “represents more of a shift of emphasis than a complete departure from pre-war structuralism” [Kuper 1973, 148].

Bibliography

Boissevain, J. 1979. Network analysis: a reappraisal, Current Anthropology 20: 392-394.

Gluckman, M. 1963. Order and rebellion in tribal Africa. London: Cohen & West.

Hannerz, U. 1992. The global ecumene as a network of networks, in A. Kuper (ed.) Conceptualising society. London: Routledge.

Kuper, A. 1973. Anthropology and anthropologists: The modern British school. London: Routledge.

Mitchell, J.C. 1969. Social networks in urban situations. Manchester: Manchester University Press.

Rogers, A. & S. Vertovec. 1995. The urban context: ethnicity, social networks and situational analysis. Oxford: Berg.

Swartz, M., V. Turner & A. Tuden. 1966. Political anthropology. Chicago: Aldine Publishing Co.

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Question: What was the reaction of British anthropologists to Levi-Strauss’s work?

Claude Levi-Strauss (1908) was and is the pope of structuralism, to quote Marcel Henaff. (1998:2) As my account of his contribution to the shaping of this ‘method’ or ‘tool’ – as he himself insisted on calling it (Kuper 1996:175, Henaff 1998:6) – later in this essay illustrates, that is something that can hardly be disputed. It is not so self-evident, however, what the overall importance of his work for social anthropology was, and how well-received his ideas were at the time of their emergence. In this essay, I will focus on the latter question in the context of Britain, in particular with reference to Edmund Leach (1910-1989).

To come to an answer to this question, I will first briefly describe the British anthropological landscape before the introduction of Levi-Strauss’s concept of structuralism. Then I will give an outline of Levi-Strauss’s ideas and his applications thereof, and assess of every aspect of Levi-Strauss’s work to what extent it was valued, adopted and applied by British anthropologists such as Leach.

It is hereby necessary that I pay attention to the positive reactions as well as the substantial criticism Levi-Strauss received from British anthropologists. Finally, by summarizing previously made points, I will hopefully be able to assess whether the reaction of Leach and others to Levi-Strauss’s structuralism and the ideas it brought forward was predominantly positive or negative and what the overall impact of Levi-Strauss on Leach’s anthropology was.

Needless to say, Levi-Strauss was not the first French theorist whose ideas would have noticeable influence in British anthropology. In the first half of the 20^th century, after the ‘fall’ of Frazer’s evolutionism that aimed to compare the details of human culture on a worldwide scale, Durkheim’s sociological theories were a major inspiration for one of the central figures in British social anthropology: Radcliffe-Brown. (Leach 1970:7)

His focus was on coherence within groups in (primitive) societies; put very simply, the dominant view was that all institutions and ‘aspects of cosmology’ such as religion served primarily to maintain the group structure, by functioning as tools for the recreation of appropriate sentiments and the enforcement of norms. (Kuper 1996:160) Radcliffe-Brown’s anthropology was clearly naturalist, in the sense that Radcliffe-Brown and his followers tended to assume that the associations and oppositions which people seized upon were somehow presented to them by their environment. (Ibid:170)

Another important aspect of British anthropology, introduced by its ‘founding father’, Malinowski, was the fact that it was thoroughly empiricist. The belief reigned that theories had to be distilled from empirical facts obtained through fieldwork. (Ibid:170) Malinowski and those in his tradition can be classified as functionalists, for the purpose of their research was to show how a community functioned as a social system, and how its individual members lived their lives. (Leach 1970:7)

Levi-Strauss was not the first anthropologist to be concerned with structure either. In fact, the Oxford school in the 1940’s, led by Radcliffe-Brown, were already looking into the explicit code of social behaviour. However, they did not pay much attention to ‘psychological problems’, that is to say, processes of thought, which was a result of their sociological orientation characterized by neglect of the tradition of Tylor and the culture concept. (Kuper 1996:159-160)

It is worth noting that Levi-Strauss entered anthropology from philosophy, for this explains the choice of many of his focal points. (Henaff 1998:2) Levi-Strauss, too, was inspired by Durkheim – particularly by his later work on a model of society built up of segments integrated by force of mechanical or organic solidarity – as well as by Mauss’s work on exchange, yet he came to different conclusions than Radcliffe-Brown and other British anthropologists, as we will see. (Kuper 1996:160,162)

Other sources of inspiration for Levi-Strauss were American cultural anthropologists from the tradition of Boas, as well as trends in psycho-analysis (notably Freud), mathematics and communication. (Leach 1967:XVI) But the most determinative influence on his work came from Roman Jakobson and his De Saussure-inspired linguistic theory, based on the distinction between ‘parole’ (code, utterances) and ‘langue’ (message, grammar). (Kuper 1996:160, Leach 1970:45-46)

In the following section of my essay I will give an outline of the conclusions Levi-Strauss came to through his research inspired by the abovementioned. I will first explain the goal of his work and his definitions of and views on certain concepts, and then discuss how he applied his method of structuralist analysis to the major themes in his work (in chronological order): kinship, primary classification, and myth.

At the same time, I will shed light on the reactions of British anthropologists to these ideas, with specific reference to Leach. The interest of British social anthropologists in structuralism arose in the 1950s and 1960. British imperialism was falling into decay, and partly because of these circumstances British anthropology became more open to new, foreign ideas. (Kuper 1996:161)

The goal of Levi-Strauss’s anthropology was a fundamentally different one from that of functionalists. His ultimate concern was to understand social relations by uncovering the social structure and, in that way, to establish facts which are true about ‘the human mind’. To achieve this, he reasoned, one should use models. (Henaff 1998:14, Leach 1970:7)

“In anthropology as in linguistics […], it is not comparison that supports generalization, but the other way around. If, as we believe to be the case, the unconscious activity of the mind consists in imposing forms upon content, and if these forms are fundamentally the same for all minds – ancient and modern, primitive and civilized […] – it is necessary and sufficient to grasp the unconscious structure underlying each institution and each custom, in order to obtain a principle of interpretation valid for other institutions and other customs, provided of course that the analysis is carried far enough.”

(Levi-Strauss 1963:21)

In order to understand his work, it is important to determine what Levi-Strauss understood when using the term ‘social structure’. He went further than Radcliffe-Brown, who defined social structure as the set of social relations organized in a system, by arguing that a structure was in fact a model of which social relations are just the “raw materials” and that therefore “social structure can, by no means, be reduced to the ensemble of the social relations to be described in a given society”. (Henaff 1998:13-14)

According to Levi-Strauss, a structure was conceivable only where there was a sufficient degree of internal motivation (as opposed to arbitrariness). Therefore, certain objects only were receptive to the structural approach; their nature had to be closed and finite, and their function had to be to differentiate and order positions and statuses and to link groups through individuals. Levi-Strauss focused primarily on primitive societies, for their forms of organization were stable and tending toward stability, and their activities limited and integrated. (Ibid:8-9)

This groundwork of structuralism became a source of inspiration and guidance for various social anthropologists in Britain, such as Douglas, Needham, and most notably Leach, who Kuper described as “the most enthusiastic and original of the British social anthropologists who experimented with structuralism” and who was responsible for extending its range of applications. (Kuper 1996:173) Levi-Strauss revived their interest in the study of systems of thought and encouraged them to apply linguistic methods onto their anthropological research, as I will illustrate when discussing individual themes in Levi-Strauss’s work.

Leach and other British structuralists adopted his notion of an ‘underlying grammar’, that was based upon a series of binary oppositions which were related to form a system. (Ibid:172) Moreover, Leach always praised Levi-Strauss for causing innovation in anthropology, in the sense that the latter was responsible for applying an original method to categories of orthodox ethnography and directing anthropologists’ attention towards problems that earlier British anthropologists scarcely considered. (Leach 1967:XVI-XVII)

However, this is not to say that Leach was a ‘slavish imitator’ of Levi-Strauss. (Leach 1967:XV) In fact, he challenged or in some cases even set aside some of the very foundations of Levi-Strauss’s approach. (Henaff 1998:70)

First of all, the goal of Leach’s research was different from Levi-Strauss’s. Leach did not aim to identify psychological universals, but rather to elucidate particular social systems. (Kuper 1996:167) This different viewpoint on the purpose of structuralist analysis was caused by Leach’s non-belief in the universality of the mind; he saw it as Levi-Strauss’s own ‘invention’, meant to create a philosophical extension of ethnological results. (Henaff 1998:113)

Besides, Leach considered the linguistic model Levi-Strauss employed too simplistic for the purpose of reaching into ‘the human mind’. (Leach 1970:112) Rather than displaying the structure of the human mind, Levi-Strauss had “ended up by telling us something about the structure of aesthetic perception.” (Ibid:113) Through ‘verbal juggling’, as Leach called it, Levi-Strauss tried to convince his readers of this theory that was generalized and paradoxical, for what is universally true must be natural while Levi-Strauss held the humanity of man to be non-natural by definition (as I will explain in the section on primary classification). (Ibid:82,112) Leach, for one, never came to understand Levi-Strauss’s notion of the mind fully. (Henaff 1998:262)

But perhaps the most important point of criticism from Leach and other structuralists and critics of Levi-Strauss was that the initial model – revolving around ‘universally true, basic meaningful principles’ – which Levi-Strauss relied on was in fact a product of the observer’s own prejudiced presuppositions and rarely corresponded closely to an ethnographic reality. (Leach 1970:19,110)

This point is related to the different stances on empiricism that Levi-Strauss and most contemporaneous Anglo-American anthropologists held. Levi-Strauss did value and indeed conduct observation, but as he believed in an underlying social structure and universality of the human mind, he saw ethnographic facts as displays of a theoretical model at work; mere examples of what is possible. (Ibid:42) As Henaff put it:

“In fact, he asked anthropology to proceed just like any science of observation: to be very empirical and meticulous regarding data gathering and very conceptual regarding the theorization of the set of such data.” (Henaff 1998:15)

Not surprisingly, this position caused significant resistance among British social anthropologists, even those who viewed structuralism positively. According to Leach, among others, it led to Levi-Strauss treating his topics too theoretically and systematically and ignoring time, space, emotion and taboo throughout his research. (Leach 1970:87,60) In other words, he criticised Levi-Strauss’s reductionism.

Levi-Strauss generally provided too little ethnographical evidence, and if he did, he seemed to select this ethnographical evidence to fit his theories. (Ibid:87,90,98,117) A consequence of this is that the contrary is difficult to demonstrate, and therefore Levi-Strauss’s theories can not be critically tested. (Ibid:50,117)

Kinship was the first object that Levi-Strauss regarded receptive to the structural approach, and this is the field where the influence of Mauss was most perceptible.

Levi-Strauss came to the conclusion that reciprocity was the key for understanding kinship. He went as far as to say that marriage was the primary exchange system and that the system of exchanges of women formed the basis for the organization of all societies with any ideology of unilineal descent. (Ibid:104) A central position in his theory about kinship was occupied by the incest taboo, which provided certain prohibitions and in ‘simple’ kinship systems also a positive marriage rule as to who one can/cannot/should marry.

In the case of the latter he drew an additional distinction between generalized and restricted exchange, and created a third ‘bastard form’: delayed reciprocity, which is basically a generalized exchange system where the next rather than the same generation returns a woman. Levi-Strauss identified the problem that generalized exchange was speculative and led to differences between groups in terms of their ‘richness in wives’ despite its egalitarian and integrative nature, an idea that Leach agreed with. (Kuper 1996:162-164)

While studying kinship, Levi-Strauss assumed that both the marriage rules and the actual marriage choices were more or less independent refractions of the single underlying, unconscious grammar of reciprocity and opposition. Therefore, he believed that the way to discover this grammar was either through an analysis of the people’s model, or of the statistical distribution of marriage choices, with a preference for the first method because of the influence political, economic and demographic factors have in practice.

Levi-Strauss was convinced that analysis of simple kinship systems could also illuminate complex kinship systems, for his research had shown that even in the absence of explicit rules a pattern of choices could be discovered. (Kuper 1996:164-165)

Leach and his students adopted Levi-Strauss’s view of society as a system of communication in which women were the ‘message’. He made Levi-Strauss’s analysis more specific by defining the units that exchanged women: local groups of adult males recruited by descent. (Kuper 1996:166-167) Leach did however reveal ambiguities in Levi-Strauss’s ideas about kinship: Levi-Strauss’s confusion of ‘marriage’ and ‘exogamy’, the unclear meaning of ‘elementary structures’ and the mistaken presumption that unilineal descent systems were universal. (Leach 1970:102-105) Most importantly, Leach argued against Levi-Strauss by pointing out that forms of exchange were adapted to political and economic circumstances. (Kuper 1996:167)

In the 1960s, after having published several books on kinship systems, Levi-Strauss himself too noticed that kinship was too embedded in social action to provide a sure guide to mental processes, which is why he shifted his scope to ‘purer expressions of social thought’ that did not deal with objects: primary classification and myth. (Ibid:169)

In his works La Pensee Sauvage and Le Totemisme aujourd’hui, among others, Levi-Strauss studied the way in which the social and natural environment was ordered by verbal categories. The human mind, he argued, imposed patterns on its world by classifying objects using terms that were arbitrary, yet the relationships between these terms had a more universal character. In this way, our process of thought created a set of binary oppositions that formed a system that could be applied to other kinds of relationships, for example between social groups. (Ibid:169-170)

The most important oppositions in the structural conceptual system, and therefore in Levi-Strauss’s work, were Culture/Nature and – closely related – Humanity/Animality. (Ibid:172, Leach 1970:36) Totemism, the application of transformations of the animal level categories to the social classification of human beings, is a method for members of a society to distinguish their fellow humans according to their mutual social status. (Leach 1970:39-40)

Levi-Strauss saw distinguishing between ‘two poles’ as necessary in the analysis of primitive thought and manifestations thereof, such as myth, language, colours, and foodstuffs and their modes of preparation:

“Where Barthes opposes system and syntagm, the corresponding contrasts in Levi-Strauss are metaphor and metonym or sometimes paradigmatic series and syntagmatic chain […]. Although the jargon is exasperating the principles are simple. As Jakobson put it, metaphor (system, paradigm) relies on the recognition of similarity, and metonymy (syntagm) on the recognition of contiguity.” (Ibid:48)

The final conclusion Levi-Strauss came to on the topic of the human mind, was that its ‘algebra’ could be represented as a rectangular matrix that could be read horizontally and vertically, and that this principle was universal.(Ibid:52)

Levi-Strauss’s works on primary classification belonged to his most Durkheimian, and they therefore became the ‘entry’ for many British social anthropologists to structuralism. (Kuper 1996:169) As I have made clear earlier, British structuralists were extremely critical of Levi-Strauss’s use of mathematical models.

Despite the fact that he did not take all of Levi-Strauss’ applications of structuralist analysis in the field of primary classification seriously (as was the case with Levi-Strauss’s study on food preparation), Leach applied his less reductionist version of structuralist analysis in ‘new’ fields, for example on animals.

Leach, as well as Douglas, had a particular interest in anomaly, and the taboos originating from it. Douglas was more critical than Leach on this point: she rejected Levi-Strauss’s system of categories of thought for it failed to take into account the emotive force of symbolic action, and she also suggested the addition of a third term to binary oppositions. (Ibid:173)

More or less simultaneously with studying primary classification, Levi-Strauss started looking into myth. According to Levi-Strauss, the aim of myths was to provide logical models capable of resolving some of the contradictions and problems people faced in their lives. (Ibid:172) Many of the myths he analysed had by that time already become divorced from their religious context, but in Levi-Strauss’s eyes this did not make them any less valid for they still possessed their essential structural characteristics. (Leach 1970:56)

Put very simply, Levi-Strauss believed that the real message of myth was contained in a system of relationships (often binary oppositions) with which the myth concerned itself. (Kuper 1996:172) To identify these relationships, the myth should be broken up into incidents. (Leach 1970:62) Levi-Strauss already referred to the importance of taking all versions of one myth into account in order to compare them. He saw the mythology of a given society as a whole as a ‘system’, and each individual story as a syntagm of that system. (Ibid:67-69)

Leach developed this latter notion further. According to him, the existence of multiple myths was a matter of ‘redundancy in communication’ and an intrinsic and necessary feature of mythic tradition, for it ensured that the message, determining the myth’s social and political value by being a system of concepts and categories in terms of which a claim for power or status may be made, got through.

The combination of several versions of one myth formed a structured system of categories organised in local relations of identification, opposition and mediation, which blurred the otherwise stark paradoxes and mysteries that arose. Therefore myth had a cognitive function. Only structuralist analysis could reveal abovementioned system, Leach argued, and thus discover the real message of a myth. (Hugh-Jones and Laidlaw 2000:14-15)

While clearly using his method, Leach criticized Levi-Strauss’s own research on myth for using sources that ‘normal’ people could not consult, and for considering predominantly myths about animals endowed with human attributes, thereby supporting Levi-Strauss’s – from Rousseau derived – thesis that the Humanity/Animality (or Culture/Nature) opposition was a primary concern in human thought. (Ibid:15, Leach 1967:IX)

Finally, Leach disagreed with Levi-Strauss’s belief that structuralist analysis could not be applied to the traditions of the world traditions as it was ‘sacred history’ rather than myth. Leach proved his point by conducting structuralist analysis on the Bible. (Hugh-Jones and Laidlaw 2000:16)

Now I have described both the praise and criticism of Leach and some of his fellow British anthropologists that Levi-Strauss’s structuralist analysis and his applications thereof received, the moment has come to return to the central question of this essay: what was the reaction of British anthropologists, specifically Leach, to Levi-Strauss’s work?

As I have shown, Levi-Strauss’s structuralism was a departure from the functionalism and empiricism that reigned British anthropology in the middle of the 20^th century. The reductionism and the supposed universality of the human mind that Levi-Strauss advocated were generally rejected, and his cavalier use of ethnographic evidence was disapproved of.

Leach definitely was a fierce critic of the errors in Levi-Strauss’s analysis, but at the same time he considered the ‘study of fallacies’ rewarding, and the complexity of Levi-Strauss’s work revealing. (Leach 1970:111,118) Moreover, he and most other British ‘reviewers’ of Levi-Strauss’s work could not deny that Levi-Strauss had made significant theoretical observations and was responsible for creating a ‘new anthropology’.

Leach, like Douglas and Needham, drew a great deal of inspiration from Levi-Strauss structuralism as abovementioned examples from the fields of myth, primary classification and to a lesser extent kinship have demonstrated. By taking both positive and negative aspects of Levi-Strauss’s method into account, Leach developed a less generalized, more empirical form of structuralist analysis, with a more realistic goal in mind, which he used come to improved conclusions on topics Levi-Strauss had already looked into as well as to study other phenomena.

“He has provided us with a new set of hypotheses about familiar materials. We can look again at what we thought was understood and begin to gain entirely new insights. It is not a question of Levi-Strauss being right or Levi-Strauss being wrong; it is more like literary or dramatic criticism. Faced with the challenge of a new point of view one is suddenly able to see the familiar in quite a different way and to understand something which was previously invisible.” (Leach 1967:XVIII)

Bibliography

Henaff, M. 1998. “Introduction: Levi-Strauss and Structuralism”, “Structures of Kinship”, “Unconscious Categories and the Universality of the Mind” and “Notes”. In Claude Levi-Strauss and the Making of Structural Anthropology, 1-21. Minneapolis: University of Minnesota Press.

Hugh-Jones, S. and Laidlaw, J. 2000. “On Scholastic Nonsense: Myth and History”. In The essential Edmund Leach, Volume II: Culture and Human Nature (ed.) S. Hugh-Jones and J. Laidlaw, 13-18. New Haven/London: Yale University Press.

Kuper, A. 1996. “Levi-Strauss and British neo-structuralism”. In Anthropology and Anthropologists: The modern British school, 3^rd edition, 159-175. London: Routledge.

Leach, E. 1967. “Introduction”. In The Structural Study of Myth and Totemism (ed.) E. Leach, VII-XIX. London: Routledge.

Leach, E. 1970. Levi-Strauss. London: Fontana/Collins.

Levi-Strauss, C. 1963. “Introduction: History and Anthropology”. In Structural Anthropology, 1-30. New York: Basic Books.

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Essay Question: Research and evaluate the corporate governance arrangements for Tesco PLC

Tesco Plc, one of the largest food and beverages retailers in the world is a non-cyclical company that has seen enormous investment from around the globe including Warren Buffet’s parent firm Berkshire Hathaway. On grounds of the company’s established strategy and mature business model it is a recommended investment for the client.

The report:

Defines Corporate Governance
Discusses Tesco’s governance structure
Value drivers for corporate governance
Corporate Governance:

The fundamental pillar as to how corporations are run day to day and all stakeholder interests (shareholders, management, suppliers etc) are taken into consideration is referred to as “Corporate Governance”. The term encompasses the framework for internal controls that a company has in place to help management and those in charge of running the company to act in the best interests of the shareholders (CFA Institute, 2013).

Principles relevant to Corporate Governance that achieve maximum shareholder wealth are attributed to three fundamentals (CFA Institute, 2013):

Ability of shareholders to voice their opinions and concerns in regard to running of the company with minimum hassle; and
The management responsible for running the company acts in an ethical as well as an independent capacity towards all stakeholders of the company so as to ensure the most efficient running of the corporation
Consistent high quality financial reporting so as to ensure investors are receiving all relevant information in a timely and verifiable manner that eventually results in maximum profitable allocation of resources and capital.
Tesco PLC Structure of Governance

Tesco’s operations around the globe have allowed it to develop a strong and fair framework for running the company across all the markets it operates in. The Board of Directors incorporating the Chairman, the Chief-Executive alongside Non-Executive Directors who provide independent appraisal of the vision of the company whilst adding insight to the strategy lies at the forefront of governance (Tesco, 2014). Furthermore, a senior Independent Director is also present on the Board to ensure all conflicts amongst management and shareholders are resolved in the interests of the shareholders which eventually prevents any “agency problems” or front running by the management in regard to the shareholder investments.

The specialised tasks of running the company have called for segregations of major duties to respective committees in the corporation. At present Tesco Plc supports its vision with the help of five committees (Tesco, 2014).

Tesco PLC Board Committees

The major drivers of each committee alongside its evolvement over the years are summarised below.

The Audit Committee: The committee is tasked to ensure that the risk management principles for the company are effective and are consistently updated to keep risk management of Tesco in line with its strategy (Tesco, 2014). Furthermore, interim audits and financial disclosures are verifiable and accurately presented to any person who demands knowledge of them.

The Audit committee is also responsible for recommending the appointment of an independent external auditor for the yearly audit and conducting inquiries into management in regard to any investigative matter it deems fit (Tesco, 2014). Over the years the committee has hired external legal counsel to advice on matters that have raised concern.

“Corporate Governance” Critique for Tesco
Presence of knowledgeable financial experts to help the operating environment of the company
External auditors appointed through shareholder participation and not by management decision
Adherence report in regard to compliance with the UK Governance Code
Continuous training of personnel on the committee to remain updated on matters of accountancy and finance

The Remuneration Committee: The Remunerations committee is primarily responsible for determining the compensation agreements of senior management as well as analyse structure of compensations that needs to be extended out to Executive members so as to retain the most competent and diligent executive management for overseeing the company (Tesco, 2014).

The committee sets out the incentive fee specifications for senior management as well as deliberates on the aptness of expenses that can be claimed by management so as to focus on long term profitability and not short term goals (Tesco, 2014).

“Corporate Governance” Critique for Tesco
Disclosures regarding share scheme payments to management are discussed in the Annual Reports or any other public document
“Clawback” provisions are present to discourage management from participating in short term profitability at the expense of long term ones
Use of external counsels and consultants to ensure no conflict arises in regard to compensation between management and the committee
Outlining philosophy for compensation to management and shareholders so as to assess compensation in “Best case” and “Worst case” situations

The Corporate Responsibility Committee: The committee was established in 2012 and incorporates the principles of the Companies Act 2006 to help govern its scope of operation (Tesco, 2014). The committee ensures Tesco acts in a sustainable manner to benefit the communities and environment. Moreover, it considers impact of corporate actions by Tesco or any of its subsidiaries on the ethical culture present across all its markets of operation.

“Corporate Governance” Critique for Tesco
Consistent and timely updates on ethical stances of Tesco throughout its financial year and implications of such actions on the communities
Updating investor and consumer beliefs in regard to sustainable business model and sourcing of operations for Tesco Plc
Develop strong communication channels to ensure investors are aware of business model and the company is living up to its reputation

The Nominations Committee: The Nominations committee lies at the heart of the company. It is tasked primarily with all matters relevant to management. Acting in accordance with the Companies Act 2006, the committee ensures that executives on the board possess relevant skill to discharge duties, project a vision for the achievement of goals and the balance required between executive and the non-executive directors so as to maintain independence within the organisation (Tesco, 2014). Furthermore, the committee deals with regular appraisal of management so as to make sure the leadership quality of the board is not compromised.

Since its development the committee has also taken up the responsibility to ensure that equitable nomination procedures are drawn and implemented on a firm wide basis as well as a smooth transition mechanism is prevalent for passing over of responsibility when managerial personnel change.

“Corporate Governance” Critique for Tesco
Presence of independent members ensure shareholder interests are at the forefront of discussion
Linking management performance to compensation by means of regular appraisals helps Tesco ensure that it is extending out the most cost-effective expertise at every level

The Disclosures Committee: The committee not only makes sure that consistency prevails in financial statements making them easily verifiable but also scrutinizes the annual reports to ensure that accounting estimates or policies are not inappropriate for treatment of various matters (including financial and operating leases) (Tesco, 2014). The committee also deals with incorporating a framework within the firm to handle “material nonpublic information” and how it is to be disclosed.

“Corporate Governance” Critique for Tesco
Helps ensure effective risk management with regard to insider information and assessing best course of action to dealing with speculations in the market
Enhancing investor confidence by making sure that notes to the financial statements are comparable over periods of time

The Corporate Governance framework at the Executive Management level is limited to the Board, the Board’s composition and the committees formed to review their respective matters. To deal with corporate governance on a business strategy level Tesco ensures that each division possesses its own strategic plan to enhance performance and help achieve the company’s vision. The committees can be thought of as being responsible for a distinct business segment of the company and at the moment are made up of the following (Tesco, 2014):

Compliance Committee
Multichannel Committee
People Matters Group
Property Strategy Committee
Social Responsibility Committee
Technology Committee
Commercial Committee

Given the nature of the work of such committees the overall oversight responsibility lies with the Chief Executive of the company. These add value by ensuring the laying down of a strategy for fulfillment of objectives.

A brief critical outline for other minor stakeholders is also provided below. However, corporate governance should be more closely linked with management, the Board and shareholders. (CFA Institute, 2013).

Customers

Tesco’s “Clubcard” rewards programmes and the “Finest Product” range helps the mature company retain its trusted image. Customers see such aspects as the most value efficient means for satisfying their needs. A store format from hypermarkets to corner stores ensures that each store type caters to the unique needs of the community it is housed in. Tesco’s ability to house a multichannel leadership under one roof helps keep barriers to new entrants high and protect market share in the UK.

Employees

Tesco places immense importance on the skill and betterment of its employees. The company trained more than 250,000 employees last year in light of turning around the company. The employees are not only encouraged to suggest improvements in stores or company policies through Tesco’s feedback approach but are also made to feel as an intangible asset of the company by continuous investment in their betterment.

Regulators

Legislation has a huge impact on how Tesco conducts its businesses around the globe. The impact is further magnified when the company’s policies are in the spotlight. Anti-competitive and employment legislation have affected Tesco the most over the years, whether in developing or developed markets (Tesco, 2014). For a better public image and to comply with local legislation Tesco actively hires from the local community where new stores are opened. Furthermore, Tesco actively participates in sustainability projects where its huge hypermarket stores open up so as to benefit the community.

Suppliers

Tesco’s significant market share allows it to obtain favorable terms from its suppliers from a monetary point of view whereas special teams such as the agricultural team within the corporation help make sure that the company obtains products of utmost quality from its suppliers (Tesco, 2014). Moreover, the “protector line” initiative by Tesco under which any wrongdoing on part of the supplier can be raised by the suppliers’ employees on behalf of Tesco would enable Tesco to improve its operations (Tesco, 2014).

Having analysed the broad corporate governance framework prevalent at Tesco, improvements that can be instituted to reflect better corporate publicity and reputation are related to three main aspects of the company. The table below illustrates methods for strengthening the prevalent model.

The BoardElection policy of the Board members should be with staggered whilst keeping a majority of independent members at all times thus making sure that shareholders’ interests are paramount
Related party transactions or any conflict of interest arising from people serving on the Board should be disclosed in all interim reports and annual reports
The board should meet without the presence of the management so as to prevent any over riddance of independence
Little or no barriers to communication with investors or shareholders should be prevalent

ManagementEstablish a Code of Ethics to dictate corporate culture of the firm
Increased transparency of options, their exercise period and fees paid out to management for their services rendered (currently amounts disclosed in Financial Statements)
Choosing the optimal “peer group” to benchmark performance so as to allow for the most meaningful comparison
The use of company assets and property should be limited to circumstances as determined by shareholders and the usage as such should be disclosed at the Annual General Meeting

ShareholdersUse of different share classes with different voting powers are fully known to the shareholder
Whether the company allows for shareholders to cast their vote in absence (proxy voting)
Procedure for raising concerns at the Annual General Meeting
Procedures that need approval from the shareholders prior to implementation by the management ( such as defenses in takeovers)

Recommendation Summary

The complex and ever-changing nature of Corporate Governance does not allow for a limited set of principles that govern the matters. The interpretation of the framework for the corporate governance lies with the collaborate interaction of the shareholders and the management.

Given Tesco’s strong framework to delegate matters of public interest and scrutiny to committees independent of the Board and delegating internal strategy vision to segments within the corporation, Tesco successfully ensures that all stakeholder interests are looked after at all times.

The continuous updating of the foundations that form the Corporate Governance framework allows the company to retain its strong customer base and investor confidence. The internal review and revamping of the company’s strategic committees after the “Horse-meat scandal” ensure that the company strives to deliver the very best of responsibility at all levels. Given the responsibilities of various committees of the Board and a “Corporate Code of Ethics” within the firm it is safe to conclude that the company has established an effective corporate governance framework.

Reference List

CFA Institute (2013). Corporate Finance & Portfolio Management. USA: Wiley.

Tesco PLC [2014] Annual Report [Online] Available from www.Tescoplc.com/files/pdf/reports/ar14/download_annual_report.pdf

Bibliography

Gray, I. & Manson, S. (2011). The Audit Process. 5th ed. USA: South Western – Cengage Learning.

Hillier, D., Ross, S. & Westerfield, R. (2010). Corporate Finance. 1st European Edition UK: McGraw-Hill Higher Education

Robinson, T., Greuning,H., Henry,E. & Broihahn, M. (2009). International Financial Statement Analysis. USA: John Wiley & Sons Inc

Seal, W., Garrison, R. & Noreen, E. (2009). Management Accounting. UK: McGraw Hill Higher Education

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Letscommunicate Ltd
Introduction

Letscommunicate Ltd produces mobile phones for sale in supermarkets. In today’s competitive market of mobile phones with short product life cycles, it is important for mobile phone producers to develop and market products that not only meets the customers demand for features at a certain price level but also generate the desired profits. This essay analyses the benefits and limitations of using target costing and life-cycle costing systems over the existing costing and performance measures used by the company. The current techniques used by the company are useful for keeping costs under control but they do not provide an indication of either the maximum costs allowable for defined product features or profits over the total life of a product.

Target costing

Target costing is a method to determine the cost at which a product with specified parameters must be produced to generate the required rate of return. It involves cost analysis during the developmental phase as well to keep the overall costs below the threshold. The cost control techniques currently used by the company are useful in managing costs during production stage. However, moving cost management efforts from the production stage to the product development stage translates into higher profits because of lower costs . This is particularly useful for companies producing mobile phones for supermarkets because supermarkets drive tougher bargains.

The benefits of target costing are higher if specific targets for costs and product features are established earlier in the product development cycle . Cost analysis in earlier stages of the product development may indicate whether it is feasible to produce a mobile phone that not only meet customers’ expectations of price and quality but also generates the desired returns for Letscommunicate Ltd. Also, modifications to the product in the initial development stages cost less and will increase the company’s profit and ability to compete better.

However, the target costing concept will take lower priority if Letscommunicate were to focus on meeting fast time-to-market demands because of shorter time to launch a mobile phone . It is also difficult to forecast price in the future due to rapid technology developments in mobile phones and changes in customer preferences .

Life-cycle costing systems

The competitive nature of the mobile sector means that mobile producers have to not only manage with lower profit margins and shorter product life but also spend a significant amount on developing new products and features. This means that costing methods like absorption costing systems that only look at production costs are less useful because they neglect research and development costs in evaluating profitability of a product. Life-cycle costing systems overcome this drawback as they evaluate costing from the research and development phase through to the eventual conclusion of a product’s life. This approach is useful in determining the overall profits from a product like a mobile phone that has high development costs and a short product life due to new products being launched constantly by competitors.

The major challenge of using the life-cycle costing system is that it would be difficult for Letscommunicate to estimate full life-cycles of a mobile phone in a rapidly changing environment and increasing competition.

Conclusion

Target costing overcomes some of the drawbacks of the current costing and performance techniques used by Letscommunicate as it focuses on maximum allowable costs during the development phase so that the company can generate the required returns. Life-cycle costing is useful as it will incorporate high development costs and short product life in determining the feasibility of a product.

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Executive Summary

The company’s profits are falling and there is a build-up of inventory within the production process. This report considers three management systems which could rectify the situation. Considering theory of constraints, just in time and programme evaluation and review technique, the report recommends that more information regarding the cause of the problems is undertaken, and a suitable programme of revaluation of the business processes is undertaken.

Introduction

The role of management accounting in the organisation has become so much more that the reporting of the score to managers (Hansen, Mouritsen 2006). In the wake of the decline of Western Manufacturing and the relevance crisis of management accounting to modern business as outlined by Kaplan and Johnson in ‘Relevance Lost’, the traditional cost accounting approach has been largely replaced by alternative methodologies (Kee, Schmidt 2000). The role of the management accounting in the modern firm is not only to report the score, but to seek to influence the score by using techniques and theoretical approaches to improve the business processes. As such it is important for managers to understand the use and usefulness of a variety of alternatives to traditional accounting approaches, especially traditional cost accounting and look to introduce other techniques which may have practical advantages for the firm (Dugdale, Jones 1998). There is no one size fits all approach which will work in any case and the application of cost accounting can and will always provide key information about how the business is doing in terms of its goals. Indeed many of the newer techniques focus on particular applications within industry and each of them has something to offer the firm in terms of improving the business processes (Plenert 1993). This report considers three approaches in the context of practical application to a range of common problems, problems which may be responsible for the inventory build-up of the firm in question and its declining profits. The approaches are the Theory of Constraints (TOC) and the attendant logic of Throughput Accounting (TA), Just in Tim Inventory Management (JIT) and wider implications to ‘Lean’ manufacturing methodologies and the Program Evaluation and Review Technique framework (PERT). The report outlines the main features of these methodologies and the advantages and limitations of them with specific reference to their usefulness in a variety of practical situations. The report concludes that each of the methodologies has something to offer and that any management decision must be based on the goals and objectives of the company and its strategic direction.

Theory of Constraints and Throughput Accounting

Developed by E.M. Goldratt as a response to the criticisms of traditional cost accounting, the TOC states that the traditional variable costs of Cost Accounting do not apply, or rather, they apply with less rigour in a modern management situation (Bragg 2007). In the past Labour was seen as a totally variable cost, workers would work to the management’s discretion and short time and layoffs were dictated by the level of production need. Goldratt argued that this was no longer the case as changes to society and legislation had meant that the workforce was more of a fixed cost for the organisation (Wei, Liu et al. 2002). The TOC states that even though modern managers are still evaluated by labour use, such efficiencies can lead to decisions which harm the organisation rather than help optimise production. This criticism led Goldratt to develop the TOC as an alternative system, identifying ‘constraint’ as a decision relevant concept in the service or production process (Watson, Blackstone et al. 2007).

The central idea to TOC and TA is that each organisation has a specific goal (or a set of specific goals) which can be effected by decision making, better decision making leads to better completion of the goals (Linhares 2009). If one takes the normative assumption of a profit orientated organisation as the maximisation of the owner’s wealth, then the ‘goal unit’ will be the ‘throughput contribution’ (TC) which is similar to the ‘total contribution’ marginal costing (Hansen, Mouritsen 2006). The difference in TA is that ‘throughput contribution’ is defined in the TOC as Sales (S), less total variable cost (TVC) which is he cost of raw materials (not labour). This is placed in the context of two further conceptual mechanisms, Investment (I), which refers to money tied up in the system in terms of inventory and work in progress, as well as with machinery and buildings and the like, the second is Operating Expense (OE) which is the money spent by the system on generating goal units, but not the cost of raw materials, so items such as utilities and wages (Davies, Mabin et al. 2005).

This delineation of the costs of production and services allows the processes to be viewed in terms of a number of optimization questions. Typically firms need to ask themselves how throughput (TC) can be increased, how Investment (I) can be reduced and how Operating Expense (OE) can be reduced. These questions in turn will affect the Net Profit, Return on Investment, Productivity and Investment.

Therefore it can be argued that the maximisation of throughput contribution is key to the maximisation of all of the above key performance indicators. The firm can seek to maximise TC by optimising a number of aspects of the production processes. There are five common steps associated with this process;

Identify the system constraints

Exploit the system constraints

Subordinate everything else to the decisions made

Elevate the system’s constraints

Restart the process if a constraint has been broken

The following example illustrates the process.

Company A has two workers and produces two products (Workers, A,B, Products X & Y). Product Y Requires ten minutes of Worker A’s time, and product X requires fifteen minutes. Potential demand for X is 100 units, for Y is 50 units. If the total time available to worker A is 2000 minutes per week Worker A is not a constraint as the total time to manufacture both products is equal to the total available time (15 minutes x 100, 10 minutes x 50 = 2000 minutes). Worker B also works on the two products but takes 15 minutes on both products (15 minutes x 100, 15 minutes x 50 = 2250), assuming that Worker B has the same maximum time available (2000 minutes) there is a constraint around Worker B. Thus the constraint has been identified.
Step two seeks to exploit the constraint. Concentrating on Worker B as this is where the constraint occur, the exploitation of the constraint means the company (according to its goal of maximising wealth) needs to make a decision based on how to allocate production. To do this the managers need to know what the Throughput Contribution is for each unit. Assume that TC for product X is ?75 per unit and for product Y it is ?120 per unit. The constraint here is time, measured in units of a minute, therefore the TC per unit of constraint is found by dividing the TC by the time taken with each worker, at the point of constraint this is as follows (X, 75/15 = ?5, Y, 120/15 = ?8.33), as there are only 2000 minutes available the TOC suggests that all 50 units of product Y should be produced with a total time taken of (50 x 15 = 750, TC = ?8.33 x 750 = ?6247.5) leaving 1250 minutes to produce product X (TC 1250 x ?5 = ?6250). Net profit will therefore be (6247.5 + 6250 = ?12497.5). In this example this is how the TOC makes all other considerations subordinate to this decision.

TOC does have its problems, it makes many of the normative assumptions about the behaviour of costs that traditional cost accounting does, and largely ignores costs of changing the activities of many of the business processes to suit a particular set of circumstances (Rand 2000). Yet it is a powerful decision making tool and one which, if used properly can alter the success of a manufacturing process in terms of the goal of maximising the wealth of the company .

Just In Time (JIT)

JIT Inventory Management is one of a set of ‘Lean’ manufacturing methodologies which has grown out of the Japanese Approach to management accounting (Abdul-Nour, Lambert et al. 1998). In particular much of modern JIT management is based on the Kanban system of Inventory management which is a part of the Toyota Production System (TPS) which is famous the world over for its efficiency and speed to market with new products (Houghton, Portougal 1997). JIT as a part of a Lean system relies upon the pull of the market rather than the push of production targets and generally states that investment in inventory, both in terms of raw materials and work in progress, also finished goods, represents a waste to the company (White, Prybutok 2001). JIT requires the accurate organisation of the production process in terms of both processes and components of production and finds a minimum level of stock holding at every level of the process. The original Kanban system was based around a set of two cards which accompanied an individual component through the production process. At each point where a component was removed from stock to be used in a process of manufacturing one of the cards would be returned to the previous process to alert that process that another was required. This meant that without the aid of sophisticated computers the TPS managed to cut its value of stock in the factory to a fraction of what it had been, requiring less investment of working capital, lower overheads in terms of storage and warehousing, and less risk of over production of any components or of finished goods (Abdul-Nour, Lambert et al. 1998).

JIT is a system which has largely been adopted in many of the larger production facilities which have adopted ‘Lean’ technology. These range from most car manufacturers to manufacturers of high technology. But there is growing evidence that it may be very useful in terms of the smaller manufacturer, and even the service industry, especially as the cost of raw materials is rising in the face of increased demand for core materials (Abdul-Nour, Lambert et al. 1998, Khan, Sarker 2002).

JIT is difficult to implement and requires considerable investment in the production processes (Hansen, Mouritsen 2006, Houghton, Portougal 1997). It is impossible to implement JIT unless there has been a programme of business process redesign to allow such minimum stock levels to be held, and this can present a large investment cost in the firm which may or may not ultimately benefit from such an inventory management programme. JIT requires the firm to invest heavily in partnerships with suppliers as well and to evaluate the supply chain from almost every angle to prevent a total collapse of the production system (David, Eben-Chaime 2003). This is because there is little room for error in the process, if demand is poorly predicted and is higher than expected then the firm will run out of the raw materials of production and may lose custom (Kelle, Al-khateeb et al. 2003). If lower than predicted the firm will not have the capacity to store inventory (die to process redesign). Further if suppliers fail to deliver for any reason the process will come to an abrupt halt. JIT therefore requires a significant amount of managerial information from both the external market and the internal processes to get right and there have been many cases of difficult implementation, especially in smaller companies (Abdul-Nour, Lambert et al. 1998).

Notwithstanding this there is a lot of evidence that with more and sophisticated modelling techniques from increasingly advanced technology, JIT systems are getting easier to implement (White, Prybutok 2001, Yasin, Small et al. 1997). Therefore as long as the systems are set up correctly there are major advantages in reducing the waste of inventory throughout the process of manufacturing. Because of its requirements, and making everything subordinate to the level of inventory, it is not applicable for JIT systems to be used in conjunction with the Theory of Constraints, as managers are unable to subordinate all decisions within the production process to a ‘bottleneck’. Therefore some would argue that JIT systems are less flexible, or certainly allow less flexibility that TOC does (Yasin, Small et al. 1997).

Programme Evaluation and Review Technique (PERT)

Put simply a PERT map is a model of complex processes which occur to facilitate an outcome (Castro, Gomez et al. 2008). The PERT framework is very similar and often used in conjunction with a critical pathway diagram which shows the key processes involved in such an outcome (Mummolo 1997). PERT modelling makes a number of assumptions and has many conventions. In drafting a PERT chart the processes will be numbered in tens, to allow for further additions as the model grows. Further the model assumes that there is a linear relationship between the processes and therefore a number of key relationships (critical pathways) are determined (Cox 1995). These are often termed predecessor events and successor events. The PERT model deals with time in a number of ways giving an optimistic time and a pessimistic time for the completion of a process. It allows managers to view a project, task or process in a way which will help to maximise the efficiency of such a task in terms of a number of variables (Shipley, de Korvin et al. 1997).

Implementation of PERT requires a significant investment of time and expertise and so can have an impact on the costs of an activity, which must be weighed with the advantages or benefits such analysis brings to the process redesign (Azaron, Katagiri et al. 2006). Often PERT is a useful way to implement ‘Lean’ techniques of production as it allows the mapping of existing processes to look for ‘slack’ in the system. But its complexity can also be a disadvantage in terms of the time it takes to complete and the risk of errors in the model having unintended consequences to any new or redesigned process (Azaron, Katagiri et al. 2006).

PERT is most useful at outlining the dependencies of a process and the identification of the critical pathways which affect the outcomes of a process. Further the methodology allows for the identification of the benefits of early, late and slack starts or a process (Cox 1995). It is also a way of organising a large and complex amount of information I a way which is relatively easy to understand by non-specialist managers, and as such allows the input of many areas of speciality in the redesign process, some of which may not be heard in terms of purely operations or accounting systems such as JIT and TOC.

Yet PERT can have a number of significant disadvantages when used. First and foremost is the possibility of thousands of critical and interrelated aspect of a singly process (Mummolo 1997). The time taken to map out all of them can be considerable and even if they are all mapped out the subtle interrelationships are often difficult to place into such a restrictive framework. It is a given that in real life the process will not always work in the way in which it is modelled, and small changes across a few key aspects can vastly change the outcomes and behaviours of many of the assumptions behind PERT analysis. PERT is very useful in terms of initial investigation of a process or event, but it takes both art and science to appreciate how something will work in the real world situations of manufacturing or service industries. In this respect PERT should be seen only as an aid to understanding and not a ‘right’ answer (Castro, Gomez et al. 2008).

Conclusions

The three managerial tools which have been outlined in this report are all powerful providers of decision relevant information. Further all three allow the management to view not only the outcomes at the current time, but also to make significant changes to the processes of production or provision of services which can dramatically improve performance. The case given points to both poor profits and returns on investment and poor inventory management as problems for the company, as such it is important before any decisions are made about the implementation of new management practices, as to why these are occurring. If the drop in profits are due to a slackening of demand, a change to JIT and the attendant redesign of the business along ‘Lean’ philosophy may be significantly advantageous, as it will allow tight control over inventory and allow the company to respond to the needs of the market more effectively. By removing overproduction and inventory as wastes to the business, profits would be expected to recover, as long as the business is still a going concern (Hansen, Mouritsen 2006).

If, however, the company still has similar levels of demand for its products then the company will need to investigate where the problems in the existing processes are. TOC would be one way of looking at this problem, so too would JIT. It is felt if the levels of demand are broadly similar it may well be worth the management of the company undertaking some analysis of the business processes with a view to coming to a decision about the suitability of either TOC or JIT, but it must be appreciated that each of these approaches carry some significant costs and risk if the analysis is not well thought out. PERT analysis will map out the internal process and identify the various problems with slack and time, but it does not look in much detail at costs. Other methodologies the company may like to consider as a part of any process redesign are the Activity Based approaches to costing, management and budgeting, these fit well with JIT management, but not so well with TOC. TOC has significant limitations because it subordinates everything to the constraint, and as new constraints appear the process has to be restarted from scratch. This criticism also gives it the flexibility that the other systems mentioned herein do not possess. This report recommends that managers identify the reason for the falling profits, and look to find out why inventory is building up (are these a symptom of slack demand, or of inefficiencies within the business). Based on these findings a decision as to what further systems are needed can be made.

References

Abdul-Nour, G., Lambert, S. and Drolet, J., 1998. Adaptation of jit phylosophy and kanban technique to a small-sized manufacturing firm; a project management approach. Computers & Industrial Engineering, 35(3-4), pp. 419-422.
Azaron, A., Katagiri, H., Sakawa, M., Kato, K. and Memarianai, A., 2006. A multi-objective resource allocation problem in PERT networks. European Journal of Operational Research, 172(3), pp. 838-854.
Bragg, S.M., 2007. Throughput accounting: a guide to constraint management. Wiley.
Castro, J., Gomez, D. and Tejada, J., 2008. A rule for slack allocation proportional to the duration in a PERT network. European Journal of Operational Research, 187(2), pp. 556-570.
Cox, M., 1995. Simple normal approximation to the completion time distribution for a PERT network. International Journal of Project Management, 13(4), pp. 265-270.
David, I. and Eben-Chaime, M., 2003. How far should JIT vendor–buyer relationships go? International Journal of Production Economics, 81-82, pp. 361-368.
Davies, J., Mabin, V.J. and Balderstone, S.J., 2005. The theory of constraints: a methodology apart?—a comparison with selected OR/MS methodologies. Omega, 33(6), pp. 506-524.
Dugdale, D. and Jones, T.C., 1998. Throughout Accounting: Transforming Practices?, The British Accounting Review, 30(3), pp. 203-220.
Hansen, A. and Mouritsen, J., 2006. Management Accounting and Operations Management: Understanding the Challenges from Integrated Manufacturing. In: Christopher S. Chapman, Anthony G. Hopwood and Michael D.Sheilds, ed, Handbooks of Management Accounting Research. Elsevier, pp. 729-752.
Houghton, E. and Portougal, V., 1997. Trade-offs in JIT production planning for multi-stage systems: balancing work-load variations and WIP inventories. International Transactions in Operational Research, 4(5-6), pp. 315-326.
Kee, R. and Schmidt, C., 2000. A comparative analysis of utilizing activity-based costing and the theory of constraints for making product-mix decisions. International Journal of Production Economics, 63(1), pp. 1-17.
Kelle, P., Al-Khateeb, F. and Anders Miller, P., 2003. Partnership and negotiation support by joint optimal ordering/setup policies for JIT. International Journal of Production Economics, 81-82, pp. 431-441.
Khan, L.R. and Sarker, R.A., 2002. An optimal batch size for a JIT manufacturing system. Computers & Industrial Engineering, 42(2-4), pp. 127-136.
Linhares, A., 2009. Theory of constraints and the combinatorial complexity of the product-mix decision. International Journal of Production Economics, 121(1), pp. 121-129.
Mummolo, G., 1997. Measuring uncertainty and criticality in network planning by PERT-path technique. International Journal of Project Management, 15(6), pp. 377-387.
Plenert, G., 1993. Optimizing theory of constraints when multiple constrained resources exist. European Journal of Operational Research, 70(1), pp. 126-133.
Rand, G.K., 2000. Critical chain: the theory of constraints applied to project management. International Journal of Project Management, 18(3), pp. 173-177.
Shipley, M.F., De Korvin, A. and Omer, K., 1997. Bifpet methodology versus PERT in project management: fuzzy probability instead of the beta distribution. Journal of Engineering and Technology Management, 14(1), pp. 49-65.
Watson, K.J., Blackstone, J.H. and Gardiner, S.C., 2007. The evolution of a management philosophy: The theory of constraints. Journal of Operations Management, 25(2), pp. 387-402.
Wei, C., Liu, P. and Tsai, Y., 2002. Resource-constrained project management using enhanced theory of constraint. International Journal of Project Management, 20(7), pp. 561-567.
White, R.E. and Prybutok, V., 2001. The relationship between JIT practices and type of production system. Omega, 29(2), pp. 113-124.
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I. Introduction

Archer’s Organic Foods plc is a producer and distributor of organic foods. The company is looking to expand the business by acquiring a farm in the North of England. This report analyses the financial viability of two farms by using a number of investment appraisal methods. The two farms differ in their initial investments, sales and costs. The freehold of option 1 farm will be acquired at the beginning of the project. The farm in option 2 will be taken on a 10-year lease with deposit and annual rent payments. The report makes a recommendation on the final selection of a farm by evaluating the results, strengths and weaknesses of four investment appraisal methods.

The four investment appraisal methods used in this report are the Accounting Rate of Return (ARR), payback period, Net Present Value (NPV) and Internal Rate of Return (IRR). The results of the four investment appraisal methods may not be similar because of differences in their approaches and calculations. Hence, it is beneficial to use more than one investment appraisal method and understand the benefits and limitations of each method before making a final decision.

II. Investment appraisal methods

The four investment appraisal methods can be classified into two main categories. The ARR and payback period are non-discounting methods whereas the NPV and IRR are discounting methods. The ARR method measures the accounting profit rate by dividing the average income by the average investment (Hansen and Mowen, 2007, p. 568). The method is simple to use but has major limitations. It ignores the time value of money which is a major drawback in case of projects with long lives. Also, a benchmark rate is required for comparison.

The payback period calculates the time required to recover initial investment from the operating cash flows of a project (Brigham and Houston, 2007, p. 373). Shorter payback period projects are preferred as they generate cash equal to initial investment in a shorter duration and this can be viewed as a proxy of risk.

However, the payback period method ignores the time value of money (Kinney & Raiborn, 2011, p. 655). It also ignores the cash flows after the payback period which could result in a selection of a project that adds less value.

The NPV method calculates the net value of a project by discounting the cash flows at a rate which reflects the risks of those cash flows. The discounting of the future cash flows is a major advantage of the NPV method over the non-discounting methods. This is very important for valuing the two alternatives as cash flows are spread over 10 years.

The drawback of the NPV method is that it assumes constant gearing to maintain same cost of capital. This rarely happens as cash inflows over the period change the gearing. A company will have to issue debt regularly to maintain same gearing (Delaney, 2008, p. 37). This is difficult to do due to administrative issues and costs. It is also not easy to calculate cost of capital that is used for discounting cash flows (Howe, 1992, p. 34). Finally, the NPV method is not useful on its own when a company faces capital rationing. The profitability index may have to be used along with the NPV to evaluate investments in a capital rationing scenario.

IRR method also discounts the future cash flows and gives the cost of capital at which the NPV would be zero. This gives an idea about the margin of safety that is available in terms of possible decline in the rate of return before it equals cost of capital. The limitation of the IRR method is that it can give two IRRs for same set of cash flows if the pattern of cash inflows and outflows reverses more than once during the life of a project (Brigham and Daves, 2009, p. 421). It also assumes that cash inflows during the life of a project will be reinvested at the IRR which may not be true as the firm may not have similar opportunities to invest in.

The investment appraisal methods have their pros and cons and it is useful to use more than one method to get a better picture.

III. Results of investment analysis

The first option is the freehold acquisition of a farm at ?1,500,000. The calculations and results of the investment appraisal methods of option 1 are shown in appendix I. It is assumed that the farm will be sold for ?1,500,000 at the end of 10 years. It implies that the average investment over the period will be ?1,500,000.

ARR = Average profit / Average investment = ?313,000 / ?1,500,000 = 20.83%

The cumulative cash flows turn positive for the first time in year 6.
Payback period = 5 + (245,000/360,000) = 5.68 years.

The NPV of option 1 is ?739,000 and the IRR is 19.43%.

The second option is to lease a farm for 10 years. A down payment of ?300,000 will be made at the beginning of the 10-year period. It is assumed that the down payment will be returned at the end of 10 years. The average investment will be ?300,000. The calculations and results of the investment appraisal methods of option 2 are shown in appendix II.

ARR = Average profit / Average investment = ?190,000 / ?300,000 = 63.33%

The cash flows are adjusted to reflect the fact that annual rents will be paid in advance. The rent for year 1 will be paid at the beginning and hence shown in year 0. The rent for year 10 will be paid at the end of year 9 and hence ?150,000 cash is added back to the profits of year 10.

The cumulative cash flows turn positive for the first time in year 5.
Payback period = 4 + (160,000/190,000) = 4.84 years.

The NPV of option 2 is ?623,000 and the IRR is 27.48%.

IV. Analysis of results

The ARR of option 1 is 20.83%. There is no benchmark available for comparison but it is significantly more than the cost of capital of 12% and hence the ARR method approves investment in option 1. The payback period is 5.68 years. Though the payback period is significantly lower than the 10-year life of the project, it does not meet the 5-year cut-off period set by the finance director. Hence, the investment in option 1 is not approved under the payback period method.

The NPV of option 1 is very high and positive ?739,000. Purchase of the farm will increase the net value of the firm by ?739,000 over a period of 10 years and hence the investment is approved under the NPV method. Finally, the IRR of 19.43% is also higher than the cost of capital of 12% which again approves the purchase of firm.

The ARR of option 2 is 63.33% which is substantially higher than the cost of capital of 12% and hence the ARR method approves investment in option 2. The payback period is 4.84 years and it meets the 5-year cut-off period set by the finance director. The investment in option 2 is also approved under the payback period method.

The NPV of option 2 is positive ?623,000. Option 2 is also approved under the NPV method. Finally, the IRR of 27.48% is also higher than the cost of capital of 12% which again approves the purchase of firm.

Option 2 is preferred over option 1 by the ARR, payback period and IRR methods. However, the option 1 is preferred over option 2 by the NPV method because the NPV of option 1 is more than that of option 2.

The difference results under the various investment appraisal methods are not unexpected. The ARR and payback period methods do not discount the future cash flows. This is a major drawback in this case as cash flows are spread over a long life of 10 years. Also, the cost of capital is a high 12% and not discounting the cash flows does not reflect the risk of the investment. In view of the above arguments, the results of the ARR and payback period methods should be viewed with caution.

The NPV method favours option 1 as its NPV is ?116,000 higher than the NPV of option 2. However, option 1 uses higher initial investment and this is reflected in its IRR which is lower than that of option 2.

The company should opt for option 1 as it adds the maximum net value to shareholders. However, if funding is restricted than option 1 should be preferred because it adds higher net value per unit of investment. The net value per unit investment is ?2.08 for option 2 as compared to ?0.49 for option 1.

In addition to the above analysis, the investment decision should take into account few other but important points into consideration. Firstly, in the analysis of option 1, it was assumed that the farm will be sold for ?1,500,000 after 10 years. However, the prices of land and farms have increased in the recent years. The table below shows the sensitivity of the NPV to the changes in price of the farm.

An annual farm price inflation of 6% over a 10-year period would substantially increase the NPV to ?1,121,000. This is a significant jump. Even if the annual farm price inflation is -2%, the NPV is still positive. On the other hand, the changes in farm prices would not have any impact on the NPV of option 2. The possible significant benefit from purchase of a farm should also be included in final decision making.

Secondly, the evaluations are also sensitive to changes in cash flows. Projections are rarely met in practice (Arya et al., 1988, p. 499). It is difficult to accurately predict cash flows over a 10-year period because of a number of factors. The demand may change due to economic-wide changes. The costs of raw materials and labour may rise faster than anticipated. Adverse weather may also play havoc on the production. Hence, it is beneficial to do a sensitivity analysis of cash flows. It is assumed that the variable costs will move in direct proportion to the changes in revenues. The tables below show the sensitivity of the NPVs to changes in sales and variable costs.

The above tables show that option 2 is more sensitive to the changes in sales and variable costs. At 80% of the base case sales and variables costs, the NPV of option 1 is significant positive but that of option 2 is marginally positive. The option 2 will turn into a negative NPV investment if actual cash flows are just less than 80% of the projected cash flows.

Thirdly, the NPV is also sensitive to changes in the cost of capital. The tables below show the sensitivity of the NPVs of two options to changes in the cost of capital. Option 1 is more sensitive to changes in the cost of capital. The company should analyse the likely increases in the cost of capital over 10 years before making a final decision.

In addition to the above-discussed points, the company should also analyse some of the key non-financial matters to ensure that the investment will yield positive results. It should analyse whether there would be local demand for organic foods in case of each option. Organic foods are sold at a premium to inorganic foods. The buying power of consumers is linked to the general overall economic conditions. The UK economy is passing through a tough phase with consumers concerned about government cuts in public expenditure. This may make it difficult for the company to sell its produce in the local region.

The company should also consider the resources that would be involved in effective monitoring of the farm in the North as opposed to current operations in the South. Monitoring and control is important for success of an investment and long-distance could hamper it.

V. Conclusions

The results of four investment appraisal methods did not match and there is no unanimous choice. Option 2 is preferred on the basis of the ARR, payback period and IRR methods. Option 1 is the preferred option because of its higher NPV and the possibility to gain from an increase in farm prices.

The NPVs of two options are also sensitive to a number of factors like cost of capital and changes in sales and variable costs. The NPV of option 2 is more sensitive to changes in cash flows whereas the NPV of option 1 is more sensitive to changes in the cost of capital.

VI. Recommendations

The recommended option is option 1 because of its higher NPV and also the potential to reap even higher benefits due to increase in value of farm over 10 years. If the project does not meet sales expectations, the company will have the option to sell the farm and exit early in option 1. On the other hand, the company will end up paying lease rent for 10 years in option 2.

References

Arya, A., Fellingham, J.C., and Glover, J.C., 1988. Capital budgeting: Some exceptions to the net present value rule. Issues in accounting education, Vol. 13, No. 3, pp. 499-508.

Brigham, E.F., and Daves, P.R., 2009. Intermediate Financial Management. 10 edn. South-Western Cengage Learning.

Brigham, E.F., and Houston, J.F., 2007. Fundamentals of financial management. 11 edn, Thomson Higher Education.

Delaney, C.J., Rich, S.P., and Rose, J.T., 2008. Financing costs and NPV analysis in finance and real estate. Journal of Real Estate Portfolio Management, Vol. 14, Issue 1, pp. 35-40.

Hansen, D.R., and Mowen, M.M., 2007. Managerial accounting, 8 edn. Thomson South-Western.

Howe, K.M., 1992. Capital Budgeting Discount Rates Under Inflation: A Caveat. Financial Practice & Education, Vol. 2, Issue 1, pp. 31-35.

Kinney, M.R., & Raiborn, C.A., 2011. Cost Accounting – Foundations and Evolutions. 8 edn, South-Western Cengage Learning, Mason.

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Critically appraise the circumstances where an impairment loss is deemed to have occurred
Introduction

IAS 36 Impairment of assets published in 1998 and subsequently amended in 2004 and in 2008, seeks to ensure that an asset is not carried on the statement of financial position at a value that is greater that it’s recoverable amount. This paper aims to critically appraise the circumstances where an impairment loss is deemed to have occurred and explain when companies should perform an impairment review of assets, while discussing the effects of impairment decisions on the firm’s financial position and performance.

Previously there was little authoritative guidance on the accounting for asset impairments. The absence of explicit guidance for many assets permitted substantial discretion in terms of amounts and timing of write offs (Francis et al, 1996). Over time accounting standards have moved towards presenting more items at fair value on the Balance Sheet. In doing so IAS 36 tries to remove as much discretion as possible. The primary objective of IAS 36 Impairment of Assets is to ensure that an entity’s assets are carried at no more than their recoverable amount and the standard sets out the criteria for defining how the recoverable amount is determined. Entities are required to conduct impairment tests where there is an indication of impairment of an asset, with the exception of goodwill and certain intangible assets for which an annual impairment test is required. Intangible assets with an indefinite useful life, an intangible asset not yet available for use and acquired goodwill should all be measured annually whether or not there is any indication of impairment.

Impairment is deemed to occur when the carrying amount is higher than the recoverable amount (i.e. the value in use. the asset’s net selling price or the fair value as determined in accordance with IFRS 13). At the end of each reporting period an entity is required to assess whether there is any indication of impairment. If an indication of impairment is evident then the assets recoverable amount must be calculated [IAS 36.9]. An impairment loss is recognised where the recoverable amount is below the carrying amount [IAS 36.59]. The impairment loss should be immediately recognised, generally as an expense unless it relates to a revalued asset where the impairment loss is treated as a revaluation decrease [IAS 36.60]. In the case of goodwill, a cash-generating unit to which goodwill has been allocated shall be tested for impairment at least annually by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit: [IAS 36.90] In each situation, if the carrying amount of the unit exceeds the recoverable amount of the unit, the entity must recognise an impairment loss. This is a radical change in accounting for goodwill. Previously, International Accounting Standards required recognition of Goodwill subject to amortisation over its useful lifetime.

Indicators of impairment are set out in IAS 36 with a view to making the decision less subjective than previously was the case. Negative changes in technology, markets, economy and law could all have adverse impact on the value of an entity’s assets. Indicators of impairment could be as a result of internal or external sources. The market value of an asset may decline as a result of usage or the passage of time. Other external indicators of a decline in value could be the result of significant technological, market, economic, or legal changes which occur and have an adverse effect on the asset or entity. Market interest rates may impact the discount rate used in calculating the value in use of an asset and therefore decreasing its recoverable amount. Internal indicators of an impairment review could be the result of obsolete or physically damage assets, or if an asset is part of a restructure or held for sale, or where the economic performance of an asset is worse than expected.

Despite the standard being objectively set, it can be difficult in determining the measurement of value attributable in assessing impairment options. The timings and measurement of asset write-downs rely heavily on estimates. A number of features of impairment testing and measurement process make implementation a challenge. Triggering events to indicate impairment are many and vary greatly in significance and severity. Different valuation models are used and there is little conformity in the selection of discount rates. (Comiskey and Mulford, 2010). A difference in nature continues to exist between fair values disclosed by management. While the standard seeks to increase transparency and eliminate the subjectivity of accounting for impairments, the exercise for determining if an asset is impaired and by how much remains at management’s discretion. It was felt that previously management took advantage of the discretion afforded by accounting rules to manipulate earnings either by not recognising impairment when it has occurred or by recognising it only when it is advantages (to them) to do so (Francis et al, 1996). The standard now seeks to address this discretion by requiring annual impairment (Goodwill and intangibles) or impairment reviews to be carried out whenever there is an indication of impairment. Even still, there is an element of discretion afforded to the calculation of impairments and so management incentives to manage earnings can still play a part in any impairment decisions. These estimates might be managed to alter or avoid impairments, limiting the comparability across firms. A goodwill impairment loss, for example, is estimated in most cases from management’s projections of future cash flows (Z Li et al, 2011). This is problematic to the investors who are unable to see through these potential manipulations. Indeed, investors and analysts have the option to adjust, or indeed totally ignore, reported accounting numbers, therefore it is far less certain whether this reporting behaviour actually misleads users or reduces reliability and relevance (Lhaopadchan, 2010). Additionally, financial statements differ from the management accounts used by an entity and the effect of any impairment further widens a gap already existing between management information accounts used by the board and the financial statements audited and published.

Earnings manipulation is one such concern given the judgemental approach to the indication of and calculation of impairment. One of the most widely cited papers that investigate the effect of executive compensation plan on accounting choice is Healy (1985). Healy hypothesizes that managers have an economic incentive to manipulate earnings in order to increase their cash compensation, this being the case certain accounting standards allow for this more than others and IAS 36 still allows for an element of judgement in the calculation of impairments. Furthermore, papers have cited the nature behind recognition (or lack of recognition) of impairments and IAS 36 permits an impairment loss on a long lived asset to be reversed if the economic value of the asset recovers. This has been seen to have a direct impact on the practice of impairments whereby reversibility has a positive effect on a manager’s decision to record asset impairments. ‘Permitting reversals significantly increases the likelihood that a manager will record the impairment’ (Trottier 2013) thus highlighting the discretion that management can withhold towards the treatment of impairments.

Volatile financial markets and shifting economic conditions can impact the value of a company’s assets across the Balance Sheet. The recent global meltdown of financial markets was accompanied by highly publicised asset write-downs (Spear and Taylor 2011) and so the standard seeks to address the transparency of the financial statements by ensuring that impairments are directly reflected through the profit and loss account and statement of comprehensive income, disclosed by class of asset. It is not surprising that the most frequent write down activities took place during periods of economic recession confirming the strong relationship between asset write-downs and economic conditions. In 2013 the consolidated results of PSA Peugeot Citroen saw a ˆ1,101 million impairment charge, mainly recognised with respect to the assets of the Automotive Division, primarily to reflect the deteriorating automobile markets and adverse exchange rate movements in Russia and Latin America. Additionally, in 2014 Vodafone’s end of year profits dropped after a ?6.6bn impairment relating to the value of European operations whereby lower than expected cash flows were the result of a tougher macroeconomic environment and heavy price competition contributing to a total decline in revenues. Both investors and financial analysts revise their expectations downward on the announcement of an impairment loss. The negative impact of the loss serves as a leading indicator of a decline in the future profitability of an entity. (Z Li et al, 2011).

Conclusion

In conclusion, despite the presumed benefits associated with Fair Value accounting, it is shown that in practice managerial self-interests and earnings management concerns appear to motivate many impairment decisions (Lhaopadchan, 2010). IAS 36 goes further than any previous standard and subsequent amendments to eliminate any subjectivity involved in highlighting and calculating an impairment loss. While goodwill should be assessed annually for impairment other potentially impaired assets are only reviewed in detail for impairment if there is an indication of impairment, some of which are highlighted by the standard itself, however the indicator of impairment could go unidentified resulting in misleading financial statements. Additionally many calculations of impairment use management projections which could include error or contain an element of managerial self-interest and manipulation. Generally speaking the reaction of market participants to any impairment disclosed in the financial statements is of a negative nature with the exception of restructuring costs for which highlight future spend. While the standard seeks to provide a truer and fairer representation of asset value it should be noted with caution the subjective nature of any calculations. Even with an unqualified audit report on the financial statements the audit opinion on impairment is only as good as the information provided and made available to the external auditors.

Hence, it can be concluded that IAS 36 Impairment of assets has come far to contribute to improve the transparency of the financial statements by successfully determining when and how impairment reviews should be conducted, however there will remain an element of managerial judgement for which caution should be taken by all users of the financial statements.

References

‘Causes and effects of discretionary asset write-off’, Francis, J.. J. D. Hanna, and L. Vincent. Journal of Accounting Research Volume 34, 1996.

‘Goodwill, Triggering Events and Impairment Accounting’, Eugene E Comiskey; Charles W. Mulford. Managerial Finance, Volume 36 (9): 22 – August 10 2010

‘Causes and Consequences of Goodwill Impairment Losses’ Z Li et al. Review of Accounting Studies, Volume 16 (4) – Dec 1, 2011 – May 11 – 2010.

‘Fair Value Accounting and Intangible Assets.’ Lhaopadchan. Journal of Financial Regulation and Compliance, Volume 18 (2)

‘The Effect of Reversibility on a Manager’s Decision to Record Asset Impairments’, Trottier, Kim. Journal Accounting Perspectives , Volume 12 (1) – Mar 1, 2013

‘The Effect/Decisions of Bonus Schemes on Accounting Choices’, Healy, P M. Journal of Accounting and Economics Volume 7 (1), 1985

‘Asset Write Downs: Evidence from 2001-2008’, Spear, Nasser A; Taylor, Alexandra M. Australian Accounting Review, Volume 21 (1) – Mar 1, 2011

This is what some people claim

Mankind has lived for thousands of years. As generations grow, we are becoming more and more aware of the harmful effects illness and stress impact on our bodies. Our awareness of the need to take the necessary steps to achieving a healthier lifestyle and prolong our life span is also growing. The number of diseases rising around the world makes it vital that people apprehend the importance of leading and living a healthy life. They believe health is accomplished by eating healthy food and exercising, but this is only one part of the healthy living process. There is more to being healthy and achieving an overall wellness and wellbeing than just eating well and exercising. Different elements assemble the human beings overall health, these elements are referred to as “the six dimensions of health” physical, psychological, spiritual, social, intellectual, and environmental. This report will discuss and define each of the six dimensions to provide adults with an understanding of the dimensions in hope of protecting our children from illnesses and diseases, and providing them with a more stable and a better future.

Background

Why is this report needed? Explain the six dimensions of health (Donatelle, 2006) and use this to explain to the reader why wellness and wellbeing are important in early childhood education and care.

The early childhood years sets the foundation to how children view themselves, each other, and the world around them. Their character which will develop further as they grow older begins in those early years. For this reason it is vital for Early Childhood Professions to understand the six dimensions of health in order to support children’s development in achieving wellness and wellbeing.

Bronfenbrenner believed children are influenced by the ecological system, (the system of relationships that form his or her Environment) particularly the microsystem (the immediate environment, e.g. family or school) Bronfenbrenner, 1998. He mentioned that positive emotional interactions and experiences between caregivers and children are crucial for the development of social and emotional wellbeing in children.

Donatelle, 2006 said “The motivation to improve quality of life within the framework of one’s own unique capabilities is crucial to achieving health and wellness”. As children’s services or early childhood settings fit into the microsystem stage of the child, it becomes imperative for us to set the building blocks for children to achieve the optimum wellness and wellbeing. Our interaction and experiences play a key role in their development, but what is wellness and wellbeing?. Donatelle, 2006 identified wellness and wellbeing as follow;

Physical heath : the way we function using our bodies, how sharp our sensors are, how fit we are, the ability to catch diseases and disorders and the ability to recuperate from illness and regain health,

Intellectual health: Mentally healthy , the capacity to think with clear judgment, the ability to learn, the ability to grow from experience and the ability to make critical decisions.

Social heath: the ability to socialise and interact well with others, the ability to adjust to situations at different levels

Emotional health: the ability to recognize and express feelings appropriately, the ability to control and balance these feelings with yourself and others. The ability to feel good about yourself, love and trust.

Environmental health: the ability to appreciate the world around you and to recognise the role you play in effecting the environment.

They believe

Spiritual health: the ability to have faith, hope, and belief. The ability to connect with the world around you as one, to love and respect nature and to feel the love and pain of the world.

Discussion

Discuss each dimension of health and explain what is happening or not happening to support children’s wellness and wellbeing in your service.

Wellness is a state of optimal health that is working towards or trying to maximize the individual’s potential to achieve a vibrant state of wellbeing and enjoyment of life. This is a lifetime process of working towards enhancing your physical, intellectual, emotional, social, spiritual, and environmental wellbeing.

When we think of Wellness and Wellbeing, it is good to remember that all aspects of the six dimensions impact each other. Although every dimension is important in its self, it is the balance that gives each individual the optimum wellness and wellbeing. For example if a person focus on his/her physical health and neglects the emotional health, the physical health would deteriorate soon after. Keeping an overall balance and a holistic approach would give us a higher chance in achieving wellness and wellbeing.

Factors that affect our Wellness and wellbeing.

The individual’s attitude and behaviors.

Heredity and family history.

The influence of the people around you, positive and negative.

Health care availability.

Let’s have a closer look at each dimensions and how does the centre cater for the dimension.

Physical health;

Physical health is most visible to us and the easiest to keep an eye on. It would probably be the one dimension we pay more attention on, than any other dimension. If we eat well balanced nutritious food and exercise regularly, minimise the consumption of harmful foods such as alcohol and cigarettes, the chances of us catching diseases are reduced but not eliminated.

How can it be achieved?

Exercise least 30 minutes a day.

Eat lots of fruits, vegetables and whole grains,

Replace bad fats with healthy fats, such as those found in olive oil

Visit your dentist regularly

Seek medical attention when required

Maintain a healthy lifestyle.

Centre’s approach to physical health;

The centre aims to:

Facilitate physical development by providing activities which foster fine and gross motor skills.

Provide children with 50% of their recommended dietary intake

Provide a healthy eating environment

Provide children with healthy food habits

Provide water throughout the day

Provided children with a balance of active and quiet activities

The centre focuses on providing children with a balanced nutritious food but fails to promote and link the importance of staying active to the physical health. Very little discussion is provided about health and fitness.

Intellectual health;

Intellectual health is our ability to perceive and process information accurately and the ability learn and Interact with the world around us. To achieve an intellectually healthy life, we must have the wish to learn and to have an interest in what is going on around us. Intellectual health also involves problem solving and creativity.

How can it be achieved?

Keep your mind active with learning

Participate in creative and problem solving activities.

Read the news each day.

Paint and draw.

Build something with your hands.

Work out a crossword puzzle each day, it can help keep our brains on alert.

Centre’s approach to intellectual health;

The centre aims to:

Facilitate intellectual development by providing activities and experiences which allow children to experiment, think and question the world around them and develop their problem solving skills.

Encourage children to develop a positive attitude towards learning, responsibility, self-discipline and self-esteem.

Design activities which allow children to develop their capabilities and interests at their own pace and according to their individual need.

Social health;

.

Socially healthy people engage, interact, and co-operate well with each other. That includes friends, family, co-workers and other groups. Being comfortable with oneself as well as others at different levels and maintaining relationships.

How can it be achieved?

Learn ways to relate with others.

Practice communication skills.

Try to be the kind to your friends or partner.

Be considerate and mindful of others.

Centre’s approach to Social health;

The centre aims to:

Facilitate personal and social development by group experiences with peers, friendly interactions with adults and activities which promote their sense of independence.

Develop programs which enhance children’s social and emotional skills

Emotional health;

The ability to understanding our feelings and emotions and finding vigorous ways of expressing them .Emotional wellness is one of the most important aspects of the six dimensions. It should be one of our main focus points of life in order to accomplish wellbeing. In order to be healthy or have good physical health you must have a good foundation of emotional wellness. You can notice this in your everyday life, by just noticing how having a “good day” or a “bad day” effects you physically.

How can it be achieved?

Learn to recognize your limitations.

Practice different ideas to create healthy relationships with others.

Maintain a sense of point of view.

Learn to deal with emotions such as sadness, anger, or frustration.

Centre’s approach to emotional health;

The centre aims to:

To help children recognise their feelings and emotions.

Encourage children to express feelings and emotions appropriately.

I don’t believe the centre is doing enough to cater for the emotional wellbeing in children. I think a lot more can be done to facilitate positive emotional development. (Refer to recommendation).

Environmental health;

Environmental health is to appreciate and respect the natural environment around you and do whatever you can to protect it.

How can it be achieved?

Better understanding of the environment

finding ways to minimise the waste going to the landfills such as donating clothes and donate computers and mobile phones to organisation.

Recycling

Centre’s approach to environmental health;

The centre aims to:

Promote the understanding and importance of recycling and energy saving.

Reuse material for children’s activities.

Promote environmental education in children’s everyday learning experiences

Role model the positive environmental approaches in daily routines such as reducing energy output and the use of water.

Spiritual health;

The ability to know that life is meaningful and has a purpose. Our morals, values and ethical believes guide us to making decisions and the direction to life.

How can it be achieved?

Take some time to discover your morals and believes.

Try to stick to your believes during difficult times.

Believe in yourself

Centre’s approach to spiritual health;

The centre aims to:

Families are encouraged to share their culture, language and home experiences.

Promote each child’s culture and language, and facilitate experiences whenever possible

Provide an environment that is anti bias and caters for the child’s cultural, family and linguistic diversity.

Promote equality by maximising the educational outcomes for all children, regardless of their gender, cultural backgrounds or socio-economics.

.