Introduction

Since the ideas of global warming and sustainable living developed, there has been a lot of discussion concerning the future of oil. “Oil’s very future is now being seriously questioned, contested, and challenged” (Yergin). Saudi Arabia has been reassuring the world about the vastness of its oil reserves in its role as the owner of the world’s largest oil terminal, Ras Tanura (Maass 1), while the rest of the world has remained suspicious of Saudi Arabia’s claims. This is due in part to the fact that Saudi Arabia has always kept information on its oil reserves concealed and has refused to allow foreign audits. Furthermore, Saudi Arabia has not released numbers on its oil reserves, and most of the information that is now circulated throughout the globe is based on assumptions and estimates. Nevertheless, Saudi Arabia has always overestimated the supply of oil for the years to come:

Naimi’s [Saudi Oil Minister’s] role is to assuage a nervous market. He blames the continued run-up in prices on “speculators.” And he asserts that Saudi Arabia would be able to meet the world’s rising demand for years to come.  Many experts find themselves between these two poles. (Mufson 8).

Owing to lack of accurate information about the sufficiency of oil reserves in the future, alternative sources of energy that include but are not limited to solar energy, wind energy, water energy and underground heat are being examined, explored and increasingly made use of particularly in the technologically advanced countries of the world. This paper tends to estimate the most likely and most desirable scenarios for 2020 with respect to energy and assess the government’s role in achieving the same.

Predictions for 2020

Scenario 1:

World Scenario of 2020 if Alternate Sources of Energy Are Not Explored and Used:

If a thorough analysis of the recent decade is made to study the pattern of oil demand and supply, it becomes clear that the demand of oil has increased manifolds while the supply has become rather elusive, in the four years from 2001 to 2005, the price of an oil barrel made by the Organization of the Petroleum Exporting Countries had almost doubled on the average, and a 40 percent increase was noticed after that (Mufson 1). The immense increase in the price of oil had caused the economy to inflate at the end of the first decade of the 21^st century. At that time, oil accounted for more than half of the trade deficit in US. Now that it is 2020, and ten years have passed since the last analysis was made, circumstances, in general, have become worse than ever before. Today, oil accounts for more than 80 percent of the trade deficit in the US. Many big economies of the first decade of 21^st century have totally collapsed because of unbearable inflation. There has been an enormous increase in the world population in the last decade. This has resulted in an increase in the demand for oil, while the reserves have always been limited and are rather diminishing. The economical balance of the world has collapsed because of a lack of tendency of the world to shift from oil to other potential sources of energy.

Scenario 2:

World Scenario if the Present Day Practices are Sustained:

The debate about energy crisis that had instigated some 20 years ago with the start of the 21^st century has reached its apogee and so has the price of oil across the globe. The whole world is relying upon the statements of the Saudi Oil Minister, Ali Al-Naimi who has been making pacifying statements for the last 20 years. Al-Naimi sounds more than ever optimistic about the sufficiency of the reserves of oil. Al-Naimi refers to the two big oil reserves that have been identified in Saudi Arabia in 2015 and 2017 with the help of technology. So far, Al-Naimi has been fortunate enough to have sufficient evidence for his blind claims, but the results of recent research suggests that the controversy about oil that had been temperated by the discovery of two oil reserves in Saudi Arabia will soon gain full form because the discovery of new oil reserves has done little to improve the economical health of America and many big economies like her. So far, the pressure exerted by rising oil prices has been sufficiently countered by the exploration of new sources of energy. According to an estimate made by the Minister of Energy in America, American economy would have collapsed totally if the country had totally relied upon the statements of Saudi Oil Ministers. Minister of the US Department of Energy (USDOE), Greenwood said, “America has largely sustained its economical strength as compared to other rising economies of the past like China and India who totally relied upon oil as the source of energy. Thank God, we did not trust those Saudi Oil Ministers that have kept the world in black for the last 20 years and did not spare our efforts of exploring and expanding the use of alternate sources of energy!”

Scenario 3:

World Scenario of 2020 if Alternate Sources of Energy are Explored and Use of Oil is Abandoned:

Till 2010 or more precisely, till some part of 2015, use of alternate sources of energy like solar-electric modules was considered to be too expensive. The fact that they consumed more money than the conventional sources of energy i.e oil discouraged people from relying upon them. However, technological improvements in the last five years have done a lot to reduce the cost of solar-electric modules as a result of which, their usability has drastically improved. Solar-electric systems which are also known as Photovoltaic systems capture the energy from sunlight and transform this energy into light (Turner). Soon after the reduction in price of photovoltaic system, it became spread everywhere in the world. Its popularity in both the developed and the developing countries instigated the green movement by the end of 2015. In the green movement, all countries took an oath to completely abandon the use of oil for vehicular purposes. Vehicles have been the fundamental consumers of oil ever since their development. By making the vehicles run on photovoltaic systems instead of oil, all countries of the world have not only been able to save a lot of money that previously went into buying oil, but have also played their respective part in saving the environment and making this world a better place to live for the future generations. Today, in 2020, streets are as crowded as they were in 2010, but carbon emissions from vehicles have reduced to almost zero.

Analysis of Scenarios

In the present age, there is huge emphasis upon the identification, exploration and ways of use of alternate sources of energy. The debate about global warming and sustainability of natural resources drew the attention of scientists towards the need to explore newer sources of energy as a result of which, alternate energy sources are being increasingly made use of both for domestic and industrial purposes. In the present year i.e. 2011, a lot of buildings in US that are under construction have one goal in common, which is to be green! To be green essentially means to be environment friendly as well as to be energy efficient. Thus, the use of alternate sources of energy has already started. According to the US Department of Energy (USDOE), there will be a 25 per cent increase in the use of residential energy in US by the year 2025. “A small but increasing share of that extra power will trickle in from renewable sources like wind, sunlight, water, and heat in the ground. (Walker). This essentially speaks of the fact that oil will continue to remain a major source of energy in 2025, though America would have increased its reliance upon secondary sources of energy like wind, water, sunlight and underground heat. This idea is consistent with the second story that says that in 2020, five years before 2025, oil will still be in use and world’s great economies would still be relying upon oil heavily for accomplishing matters of everyday significance, though there would be an increase in the use of alternate sources of energy. In light of this discussion, it feels safe to say that scenario 2 is the most likely scenario of the three.

As a result of the recent technological improvements, there has been a rapid decline in the price of solar-electric modules. This can be estimated from the information given by Collins from the American Solar Energy Society which says that the average cost of one kilowatt-hour of the photovoltaic energy in the 1980s used to be 95 US cents which had dropped to about 20 cents in the year 2004 (Walker). However, the price of energy collected by photovoltaics, at 20 cents per kilowatt-hour, was still roughly 8 cents per kilowatt-hour more than the average national price of power in the United States. Nonetheless, research has continued to be conducted in the same direction and it is expected as well as quite desirable that by the year 2020, technology would have been improved to the extent that it would be possible to make electricity from the photovoltaic systems at a rate of 5 or 6 US cents per kilowatt-hour. “[T]omorrow’s electric cars will be as easy to fill with juice from a socket as today’s are with petrol from a pump” (The Economist). If the energy from photovoltaic system becomes that cheap, there is no reason denying that the whole vehicular traffic would make use of this energy and a Green Movement would commence in which all countries would stand hand in hand to make the life sustainable and world a greener place for the future generations. In light of this discussion, it becomes obvious that the most desirable scenario of the three is the third one which talks about the Green Movement and replacement of the use of oil with solar-electric energy.

            Key actions that government and the involved agencies can take to make the desirable scenario happen is promote research and technological advancement because the future of alternative sources of energy is fundamentally associated with the research. Government should lavishly spend upon research to promote technological advancement so that use of photovoltaic system can be enhanced. For making the most likely scenario happen, governments should maintain their policies as they are going presently because the most likely scenario is totally consistent with the existing policies of the government.

Works Cited

• Maass, Peter. “The Breaking Point.” The New York Times. 21 Aug. 2005. Web. 22 Jun. 2011.
• Mufson, Steven. “This Time, It’s Different: Global Pressures Have Converged to Forge a New Oil Reality.” Washington Post. (2008): 1-9.
• The Economist. “The future of energy.” 19 Jun. 2008. Web. 22 Jun. 2011. <http://www.economist.com/node/11580723>.
• Turner, B. “What is Photovoltaic Power?” 2011. Web. 22 Jun. 2011. <http://www.wisegeek.com/what-is-photovoltaic-power.htm>.
• Walker, Cameron. “The Future of Alternative Energy.” 28 Oct. 2004. Web. 22 Jun. 2011 <http://news.nationalgeographic.com/news/2004/10/1028_041028_alternative_energy.html>.
• Yergin, Daniel. “It’s Still the One.” 2009. Web. 22 Jun. 2011. <http://www.academia-research.com/filecache/instr/e/n/546785_energy1.pdf>.

Does Graffiti Provide A Voice for People Alienated from Our Culture? If not, Why is Graffiti Created? Does Graffiti Influence Commercial Artwork and If So, Why?

Every day in the real world, we come across graphic design: a designer’s task is to communicate a message to the public through various styles of photographs and typography. A message may be communicated in a variety of forms, including broadcasting, publishing, advertisement, and stenciling. Graffiti and how individuals use it to communicate their own personal messages has increased dramatically over the last decade. Graffiti is taken from the Italian word’sgraffio,’ which means ‘to scribble,’ which has existed since the dawn of time. Within the Lascaux caves, there is proof of vandalism cut into the cave walls with bones and stones.

Graffiti is now produced using chalk, enamel paint, rollered throw-ups, and stencils, but many graffiti artists also believe spray cans to be the most real. These techniques grab the eye and successfully convey a meaning in an articulate manner. Graffiti may be sentimental, sarcastic, satirical, or sometimes damaging, and it allows artists to convey themselves in their work. Often graffiti artists use stickers, or branding as they like to term it, to promote themselves. It entails creating your own graffiti theme and writing your own tag.

Many people, especially the older generation, regard graffiti as vandalism and even a form of social activism, but is being unique and seeking attention always such a bad thing? Rather than being slandered, the ability to be known with a specific talent should be celebrated. I’m sure it’s tough to know where to draw the line on anything like this, but in the architecture community, graffiti is one of the strongest means of advertising and collaboration. It can be made almost anywhere, and often graffiti artists prefer locations where their work would be seen by the public, regardless of how dangerous or unsafe it is to ‘get up’ a piece there. Subways, trains, and buses, for example, are top priorities because everybody requires public transportation. Graffiti artists also mix cynicism with humour to produce thought-provoking messages, and all of them utilize solid form and concepts.

Tristan Manco Who Has Written a Number of Graffiti Books Including ‘Stencil

Graffiti,’ says:

“Street art is both an expression of our culture and a counterculture in itself. ‘Communication’ has become a modern mantra: the city streets shout with billboards, fly posters and corporate advertising, all vying for our attention. They almost invite a subversive response. As high-tech communications have increased, a low-tech reaction has been the recent explosion in street art.” [1]

Stencil Graffiti is growing in popularity and provides an influential forum for creating personal dreams that connect with our everyday lives. Fly banners, buttons, collage, freehand, and spray cans are used by stencil artists to make their work. Within meaning, a stencil can be easily shaped on any board. It has been used in Europe since the 1980s, but it was first tested in New York subways, and it can be tracked back to cave drawings from the dawn of time. Egyptian pyramids were decorated with leather stencils, and Chinese silk and Buddha figures were decorated with paper stencils. These lovely techniques inspired stencil art in Europe during the Middle Ages. Fantastical stenciled fabrics were used to paint the church walls, floors, and chairs. What has evolved from what is considered to be one of the oldest art styles is incredible.

American artists such as Robert Rauschenburg and Andy Warhol created innovative screen-printing methods and visual ideas as early as the 1950s and 1960s, having a significant influence on the art and design community. They were considered forerunners of today’s stencil graffiti artists due to their hybrid strategies. Pop artist Andy Warhol was influenced by commercial art and mainstream culture. Here’s an illustration of his stenciled art:

Protest art and the art deco decorative tradition collided in the early 1980s to create something entirely different. Blek Le Rat, who discovered the Pochoir system, was an instigator and pacesetter in this (to hand colour by means of stencils). When attending the Ecole des Beaux-Arts, which is best known for its involvement in the 1968 Paris riots. Blek was a trailblazer and tried to change the way graffiti looked and was viewed. His work was often crude and shocking, as he wanted people to take note of his [2] stencils as he states:

‘My intention was simply to speak out through imagery, to address the collective was a commentary on love and hate, life and death. It’s a kind of therapy for me. I highlight the finer things in life by covering the walls with images that delight in distracting passers by from their own concerns.’ Despite the police’s underhand campaign to clamp down on graffiti, I continue to strike in dark streets because for me it’s a vital part of the evolution of art.  The scope for public paintings becomes more and more restricted as urban space is compartmentalized, and graffiti derives increasing meaning from its relationship to the surrounding architecture and social environment.’1

Other pioneers such as Jerome Mesnager and Nemo joined Blek Le rat in his quest for innovative new forms of graffiti. Although Mesnager was not a stencil artist he echoed similar forms in the way in which he painted, for instance the way in which his drawn figures are broken apart below:

By the late 1980’s graffiti had become international and was continuing to develop and mutate. In 1989 a Rhode Island design student named Shepard Fairey created the Obey Campaign.[3]  He used the image of the famous Russian wrestler, Andre the Giant, and a whole new idea took off; stickers began to appear and a cliquey absurd fictitious gang evolved headed by a 7’4” wrestler. An example of the sticker is below:

While graffiti is primarily a product of rebellion and its canvas is normally someone else’s property (either public or private), it is considered illegal and therefore criminal damage. So should this exclude it from entering the realms of art?

In her book Wallbangin (1999) Susan Phillips proposes that:

 ‘Graffiti allows people to create individuality, share social values, redefine spaces, and construct inclusive or exclusive relations’ (Phillips, 1999:46).[4]  Its canvas is situated within public space and therefore accessible to all, however, its presence evokes diverse reactions. Amongst the general public it may for some, provoke a sense of high regard; for others it may simply evoke a sense of fear. Characterized by instability, graffiti’s key dynamic is its transitory nature in which the act holds more relevance than the actual product, a feature which, perhaps we might consider, is analytical of the fragmentary nature manifested in the post modern world. It may also depict transference of control as the authorities to the alienated deviant elements of society who have, in effect, won that space lose the latter.

The British Transport Police have an anti-graffiti unit to whom the artistic merits of graffiti are irrelevant. They perceive instead, a situation in which one section of the population imposes itself upon [5] the rest. The very nature of graffiti production, however, may be perceived to necessitate the presence of such adversaries in order to provide the risks essential to prove oneself.

Perhaps we might also consider that the risks and dangers to which the graffiti artist is exposed, give fresh meaning to the concept of suffering for one’s art, a notion that invites us to discover further the private sentiments that motivate this phenomenon.

Macdonald (2001) [6] emphasizes the intrinsic agenda of the Graffiti subculture that distinguishes it from other activities, which are supposed to symbolize class resentment. Although placed amongst the realms of vandalism, graffiti fails to manifest the malevolence connected with many sub cultural activities. Macdonald explains the drive of graffiti artists who endeavor to reach their own goals rather than those of others and indicates that such features are at variance with the arguments of Cohen (1955) who stresses the concepts of ‘hit back’ motives or ‘status frustration’.

Macdonald cites Willis’s (1990:2)[7] words:

‘There is work, even desperate work in their play.’1. Macdonald argues that under closer examination, the underlying values honored by this subculture strongly reflect those manifested in wider society. Absolute commitment, hard work and the tenacity to overcome all obstacles might be considered to mirror the qualities, which aid the establishment of status for individuals in many legal professions. However, graffiti artists are instead characterized as ‘testosterone adolescents’ representative of [8] environments depicting ‘chaos and anarchy.’ Macdonald urges us to look beyond this stereotypical image in order to appreciate the concept of young individuals who are striving in their own meaningful way, to conform to their own particular guiding principles (Macdonald, 2001: 92, 93). She states:  “What all writers share, regardless of their differences, is a common motive. All of them enter this subculture with an ambition to be the best, the most famous, the most respected, and it is this that makes a graffiti career a ‘moral career’ in its purest form.” (Macdonald, 2001: 92)

McDonald (2001) examines the opportunities, which exist for graffiti artists who, reaching maturity, make a conscious decision to pursue a more serious and accountable lifestyle. For some ‘moving over’ and earning a living from performing graffiti presents a logical advancement from that which, hitherto, has been a risk taking hobby. Commercial commissions, such as murals or clothing prints remove writers from the realms of subculture. However, whilst expanding their audience through work, which is both legal and commercial, they may also retain the audience previously acquired during the phase of subculture in which their talents were established. Legal painting sites include basketball courts or playgrounds, which, similarly to art galleries, are visited by numerous other artists who photograph and publish the showcased items. The ensuing fame, which guarantees a more widespread audience, may also provide the opportunity to achieve international standing. (Macdonald, 2001: 91) Drax explains the importance of the increase in profile that must accompany such a step:

[9]“For bigger writers and more accomplished ones, once you’ve proven to everyone in London you do it and earn your respect in London, you have to move on from that. You know, you’ve got to crave for something more, worldwide respect . . . because you can only achieve so much here. Once you get that big as well in the illegal scene, you’re going to be so much in the eye of the police and stuff, its going to be impossible to do anything, so you need to, kind of like expand beyond that.”.(1)

Macdonald argues against the view that attempts to squeeze subcultures into a predominantly working- class mould with a ‘poor kid’ stereotype. Her own subsequent observational research suggests that graffiti writers span the entire social spectrum, a concept, which encourages her to look for explanations beyond the class, based Marxist framework.(3). She assesses instead, the value of sub cultural theories such as those put forward by McRobbie (1994), which, she feels, demonstrate considerably more theoretical leeway:

“Now that the search for the fundamental class meaning underpinning these formations no longer constitutes the rationale for their cultural analysis, we can afford to be more speculative, more open to reflecting on meanings other than those of class.” 2

One such question focuses upon why graffiti offenders manifest a predominantly male membership. Macdonald (2001) suggests[10] that in order to pursue meanings amongst this particular subculture the emphasis should be upon ‘why men carry out graffiti’ rather than ‘why women tend not to.’ She invites us to consider the subculture as a space for the construction of masculinity in a male dominated and seemingly misogynistic environment by reference to the sentiments expressed by the writers themselves:

“I think it’s attractive to boys because of the so called machoism with regard to risk and adventure.” (1)

“Not many girls do it…it’s more of a guy’s thing because of the risks you take and that.” (2)

Further questioning of the writers reveals that rebellion continues to occupy a major position within the subculture. The boys feel, however, that although girls may share similar feelings of rebellion, cowardice deters them from expressing it with the degree of vehemence. Macdonald compares the perception of a girl writer with that of the boys. She asks Pink “why is it, more women aren’t into graffiti?” In the answer given, she deduces that although Pink’s perceptions favor nurture over nature she nevertheless, cites female incapacity to be the predominant reason for the lack of female writers (Macdonald, 2001: 96-100).

Pink states: “Because it’s a dirty job, a dirty hard job. You have to carry paint in the dark, crawl through God knows what and hide behind disgusting things and scale big fences. Basically it’s men’s work. It’s that, you know, most girls are raised to be little feminine things…. it just takes some qualities and girls are just way too feminine and they don’t have nearly as much guts to do daring things like that.”(3)

[11] Raphael (1988, cited in Macdonald 2001: 101, 102) perceives graffiti as a form of ‘initiation rite’ or ‘rite of passage’ in which configuration and principle manifest enduring similarities in both modern and primitive societies. Such rituals mark the individual’s progress from one status to another enabled by some form of test or tribulation. Macdonald (2001: 102)) endorses this argument claiming that graffiti presents writers with numerous hazards that may be perceived to test an individual’s fortitude. The fear of detention, the threats of oncoming tracks, and the electrified third rail are only a few of them. She cites Mear who describes graphically the dangers involved:

“We used to cross tracks at stations, which is a real risk. You’ll be standing on the platform, jump down onto the tracks and tag the opposite wall. There are three rails and you’ve got to cross each one to keep your balance to reach the other side. If you’re on the third one for long enough and the train’s coming, you’re definitely going to get fried. I was on it once and I did a tag and I could feel a tingling in my foot and I ran back and the bottom of my shoe had melted.” [12]

The importance attached to the predominantly male membership within the graffiti culture may be elaborated upon in the arguments of Kitwana (2002) who questions the pervasive sexism which exists in hip hop culture manifested in the lyrics of gangster rap. She questions why misogynistic beliefs should endure even in spite of the development of more progressive thinking. Kitwana infers that resentment is engendered by the high degree of success experienced by black women in comparison to the ‘overwhelming

[13] failure’ of black men, it is, however, a feature which tends to be underestimated in the prevailing emphasis on racism. She contends that, even though the constraints of apartheid have diminished, black men may be perceived to continue to cite white racism too frequently for failures encountered in education and employment. The success of increasing numbers of black women and individuals belonging to other minority groups only serve to fuel the resentment, which black men harbor towards black women. (1)

Perhaps it might be argued that the arguments proposed by Kitwana may hold relevance for other societies in which the increasing success of young women in education and other spheres may have prompted young males to reflect upon the roles, which may now be assigned to them. In explanation of why this expressive but risk taking culture transcends class boundaries, perhaps we may consider that young men of all classes may feel vulnerable in meeting the demands considered to express manhood in the sanitized environment of modern society. Primitive societies, perhaps, presented less ambiguity for young males to dissipate their energies and to earn respect. These notions and those of Raphael pertaining to initiation rites are, perhaps, represented within the words of Kilo who claims:  

“The excitement, the risks, the challenge. It’s those sorts of things that attracted me to it. You know, the buzz you get out of the challenge involved…pushing yourself to the limit.” (2)

[14] Ferrell (1999) looks for meanings within the phenomenon of freight train graffiti, a popular medium for marginalized populations who possess few economic or political resources. The widespread painting of outward-bound freight trains has continued to develop despite high profile campaigns and severe legal sanctions. When Ferrell examines the topic of his study hundreds or thousands of miles from its original sense of significance, he encounters a certain crisis. He fails to find the evidence of the ongoing public conversations evident in hip hop graffiti in which pre-existing sub cultural status may be visited and reflected by other writers.

Freight train graffiti demonstrates instead the transient nature of a dialogue, which affords no time for response. Hip hop graffiti artists label their tags with their own subcultural nicknames or, in some cases, the name of their crew. In the case of freight train graffiti artists, though, the names of neighborhoods or three-digit area phone numbers can be used to indicate local roots and identification. In conducting his research Ferrell, from necessity was obliged to adopt unapproved methods in order to gain access to the rail yards in which formal interviews had been denied. He felt, however, that by sharing in some part, the risks previously faced by writers he had never even met, that this enabled him to establish [15] a certain rapport with them (1)He also stresses the dilemma in which criminologists find they concerning the phenomenon of hip hop freight train graffiti stating that:

“Like minded criminal justice practitioners would no doubt agree, and might add that traditional techniques of prevention and enforcement, grounded as they are in static conceptions of crime, criminals and criminality, today seem all but overwhelmed by sub cultural worlds swirling with impermanent imagery, renegotiated meaning, and ongoing self-invention. Other criminologists, more attuned to the dynamics of crime and resistance rather than those of crime and control, might instead marvel at the ingenuity of graffiti writers and other ‘outsiders’ in constructing networks of symbolic meaning, and thus collectively engineering an escape from the claustrophobic constraints of isolation and marginality.” (2)

Ferrell contends that the relatively recent phenomena of painting on freight trains, has its roots in traditions of spatial mobility and sub cultural dislocation. He reminds us that in the USA, transient populations and the disenfranchised as a means of transportation have

historically appropriated freight trains for themselves and their subcultures. Hip-hop graffiti’s rise further shows close links to train technologies and history. As a result, the first seminal book on hip-hop graffiti, Subway Art, was released (3.)  [16] indicates that rail yards have, in effect, been appropriated as ‘playgrounds for graffiti writers where disused locomotive turning houses have been transformed into illegal graffiti museums. Slow moving freight trains continue to be utilized as free transportation or as a means of escape from the pursuing authorities (Ferrell, 1999: 235-236).

Potter (1995) elaborates upon the means by which links are established between marginalized individuals, he also examines the wider impact of the hip hop culture in which its message of disaffection and rage has resonated within many facets of post-industrial America. Potter argues that historically, every aspect of black culture seems to have been appropriated and commodified in order to enhance the experiences of white culture, which, devoid of such input might otherwise be perceived as somewhat bland. (1)Potter perceives hip hop culture to be the ‘ultimate incarnation of this ‘spectacular cultural exchange.’ In addition to the commercial aspect of hip hop’s popularity it has impacted upon post-industrial America by enabling the emergence of a form of empathy which transcends the boundaries of class, gender, and race. He suggests that hip-hop may be indicative of representing generational rather than racial characteristics and as such, its invitation to traverse forbidden territory poses a threat to [17] the prevailing race-class system. Potter examines the notion of hip-hop as a “transnational, global art form capable of mobilizing diverse disenfranchised groups.” He demonstrates this feature by reference to Bhangramuffin music derived from an amalgamation between West Indian and East Indian communities in England. Potter emphasizes the notion that the line between cultures which were previously as high culture or popular culture may no longer be distinguished with such certainty. (1) Lachmann (1988) highlights similar notions concerning the empathy which may be expressed by this medium:

            “In terms of both its day-to-day practice and its cultural referents, then, hip hop graffiti has from the first emerged in a context of subcultural mobility and of portable and transitory images circulating between subcultural members. Speaking of early subway graffiti in New York City, a writer recalls that “we would see some fine cars go by … knowing there were masters out there we’d never seen .We knew them as artists before we got to know them as men” (Lachmann, 1988: 241 cited in (Ferrell, 1999: 237).

Although we cannot dismiss the aspect of illegality in graffiti art, perhaps we ought, nevertheless, to look beyond its constraints, in order to penetrate the meanings, which underpin this cultural practice. Ferrell speaks of the empathy, which may be exhibited amongst marginalized individuals for those they have never even met. Macdonald highlights the importance of constructing male identities and Kitwana elaborates upon this theme citing the feelings of resentment demonstrated by black men towards black  [18] women in their particular form of manhood crisis.

Macdonald (2001)[19] cites Willis (1990): 11) who contends that:

“Being human means to be creative in the sense of remaking the world for ourselves as we make and find our own place and identity.” (1) furthermore:

 “Rather than see humans as lumps of ‘labour power’, meaningful only in work or altogether ‘redundant’, we will then need to see them as creative citizens full of their own sensuous symbolic capacities and activities and taking a hand in the construction of their own identities.(2) (Willis, 1990: 145 cited in Macdonald, 2001: 229)

Macdonald (2001: 229) believes that the adoption of the latter manner of thinking would propel us beyond the ‘faceless landscape of the Marxist world, furthermore it might add dimension to the meaningless and robotic landscape of the postmodern world. 

The British transport police are disinclined to appreciate the artistic merits of graffiti, or of the meanings, which underpin its allure. To them and to others, graffiti is perceived as the primary element of a spiral of decline and its abundance signifies a lack of police or railway management control. Adopting the broken window theory, they feel that if graffiti is permitted to remain, it may induce others to contribute to its existence, [20] furthermore, it may invite other ‘undesirable types’ to believe that they may also act with impunity. Graffiti, if left uncontrolled, is thought to create a sense of anxiety among certain customers for using the railway. Therefore dealing with graffiti attacks is an important issue although it diverts valuable police and staff resources.[21]

The aforementioned views of the authorities may be perceived as brittle and unimaginative, however, a softer approach may be considered to deny graffiti writers the vital element which sustains their aspirations. To the Graffiti artist there exists an almost grudging respect for their adversaries, because without their pursuit, there could be no war, no opportunity to put into action the ‘rite of passage so vital for the construction of manhood. We have heard from the writers themselves, that fame and respect are the key dynamics which motivate their actions, characteristics which, in a different setting, might be revered. Therefore, perhaps we might consider that the rhetoric needs to change and terms of war must be replaced with some form of acknowledgement for the creative [22] abilities of writers. ‘Moving over’ might then be facilitated at an earlier stage and talents harnessed for the benefit of all. Every body deserves a chance to be heard, but perhaps the celebrity culture which has emerged in more recent times demands ever greater proof of simply being ‘somebody’. Therefore, perhaps it might be argued that, there is a strong case for not regarding graffiti solely as a crime, because in so doing, its expressive and cultural values are truly negated. However, perhaps we might also consider the consequences of too much understanding. A scenario, which invites legalized and controlled graffiti, may benefit the authorities and the general public, but what are the implications for the ‘writers’? Devoid of the elements of risk and danger, proving oneself will become purely a matter of talent, therefore, for those who cannot meet such demands, perhaps too much ‘understanding’ may be perceived to withdraw their last vestige of constructing the identities essential for self respect.

Graffiti has a significant presence in the field of industrial artwork. Many artists incorporate graffiti elements into their work. Graffiti is often used to deface billboards and advertisements in attempt to convey a deeper meaning. ‘Culture Jamming’ is a term used to describe this phenomenon. Rodriguez de Gerada is well-known for his culture jamming, which involves parodying commercials and hijacking billboards to dramatically change their messages. He discusses how these commercials include models sailing, skiing, or golfing, rendering the brands enticing to children who are trapped in the far reaches of the earth, yearning for a chance to get away. He needs his work to be accepted within group debates about the government’s policy around public room, unlike advertisers who present a pitch and then leave. People should be able to react to commercial and corporate notifications that they have not requested. Advertisers’ the belligerence in the communal sphere has bolstered this claim in recent years. Ads are painted on roads, wrap around whole buildings and buses, enter classrooms, gyms, and, of course, the internet. There is also an increase in the number of public town squares with shopping malls and superstores where only commercial messages are allowed. Many jammers are also also more concerned that the consolidation of media rights has devalued the right to free expression by separating it from the right to be understood.

Many people believe that the time has come for the public to cease requesting that any public land be left alone and to begin reclaiming some of it. Since it sells its way into our public environments, Culture Jamming seriously rejects the concept of advertisement, however it must be passively embraced as a one-way communication source.

Humans have tried to show off their opinions since the dawn of time. Graffiti is perhaps one of the oldest forms of expression in this regard. Graffiti is described as “typically illegal writing or drawing on a public surface,” according to the Merriam-Webster Online Dictionary. This includes anything from scratched, written, carved, or painted sketches, designs, scribbles, or messages on walls and other surfaces. 

A fairly universal phenomenon, graffiti has been found through the ages on pre-historic cave walls, rock surfaces and ancient monuments. The Lascaux caves in Dordogne, France for example, are embellished with paintings and engravings said to date back from 18000 BC. [23] In fact, any blank surface is fair game. Trees, school desks, even the walls of public lavatories have been freely used by people who have wanted to express themselves. Ranging from witticisms to obscenities, art to vandalism, graffiti reflects the mood of the people, and expresses freedom, rebellion and (mostly) original thought.

Over the centuries, graffiti has in turn influenced and entertained people, roused them to anger, indignation, frustration and thought…. Take the simple example of the ubiquitous scribble ‘Kilroy was here.’ There are so many legends attached to it, one no longer knows where it actually originated. This unremarkable line has been seen almost anywhere on the planet. On the torch of the Statue of Liberty, the Marco Polo Bridge in China, Polynesian huts, and a girder on the George Washington Bridge in New York, atop Mt. Everest, the underside of the Arc de Triomphe, scribbled in the dust on the moon, a confined outhouse at the Potsdam meeting, pillboxes in Germany, Paris sewers, walls, street signs, and freshly poured cement According to one account, Hitler thought Kilroy was some sort of American super agent because the graffiti kept showing up in safe Nazi facilities. The influence of graffiti is undeniable.

With time, a modern language has sprung up around graffiti, ranging from “marks,” a graffiti artist’s stylized logo, to “toys,” inept or novice graffiti artists. There has been a significant shift between the types of graffiti and the motivations of the graffiti artists who create it. The most prominent of these wall art trends started in the late 1960s and early 1970s, and has been expanding and changing for the past 35 years or so. Hip hop graffiti, also known as graffitti, has exploded like flames across the world’s capital cities and has now reached cult status.

Kids in deprived neighborhoods of New York City began spraying their neighborhood with ‘tags,’ which were stylized signatures of names they had made up for themselves. As more teens joined the bandwagon, they started to clash with one another, and the graffiti became bigger and more colorful, bursting with the graffitist’s personality and that of his “crew,” or group.

At that time, no one really thought about graffiti as ‘art’. To Cholo graffiti artist Charles “CHAZ” Bojorquez, “…the early New York style was about ‘getting up’ writing individual names, it was about ‘identity’. While (…) in L.A., it was about defining ‘territory’.”[24]    Whether it was about identity or territory it was a fierce personal form of expression, it was a way the rebellious youth of the day made their presence felt and demanded respect from the people who had squashed and oppressed them for so long.

Since graffiti began in ghettos and low-income neighborhoods, most Americans have associated it with urban gangs seeking to infiltrate the space and privacy of the middle class by challenging elite aesthetics and desecrating buildings. It has become a source of anger and irritation amongst property owners as well as the government. Since 1989, the US government has spent over 4 000 000 000 dollars per annum to get rid of graffiti.[25] It is uncertain how much of the damage can be attributed the hip hop culture, but there is definitely a clear differentiation between hip hop graffiti and other forms of vandalism.  

Hip hop graffiti actually evolved out of the rap music that burst out from New York’s Brooklyn and Harlem districts. Rap music was the ghetto’s rebellious answer to disco music, which was all the rage at the time. [26]

For the impoverished groups at Brooklyn and Harlem, rap music proved to be a great substitute for the more expensive and elitist disco parties at bars and pubs. Their street corners soon rocked to the sound of the rhythmic beats and lyrics of rap, which allowed rappers to express their feelings towards the conditions of ghetto life, politics, current events, and whatever else took their fancy.

Several DJs began to experiment with sound, using turn tables for ‘scratching’ out rhythms which gave hip hop an original edge that made it stand out even more from the music of the day. ‘Break dancers’ performed acrobatic moves to rap music, drawn from African and Brazilian dance traditions. This new mode of expression had a natural visual spin off – hip hop graffiti.

Hip hop graffiti originated from the same background, shared the same history as these hip hop musicians and dancers. In fact, very often they were the very same people, simply using a different mode to express themselves. They too reassembled and reshaped familiar bits of their life and history into fascinating original forms of art. “Together these music, dance, and visual expressions comprised a new urban culture, a rich mix of artistic practices that have come to be known as hip hop.”[27]  

Hip hop graffiti has also shown to be a great place for young people to vent their frustrations. Without it, there is no doubt that a greater number of urban youths may have been embroiled in abuse and crime. According to anthropologist Susan Phillips, “hip hop graffiti has actually functioned as an antidote to gangs,” with “writers” forming themselves into crews who compete “by style and production rather than aggression.”[28]

Graffiti becomes an entirely modern type of art as a result of the meticulous craftsmanship of graffiti artists, with graffitists being more obsessed with their style and ingenuity.

Soon, these ornate, colorful ‘pieces’ (from masterpieces) could be seen on the sides of trains and subways, as well as on walls, bridges, and billboards.

Graffiti artists started to form collaborations or crews to create ‘burners’ instead of operating alone (a particularly high quality piece with crisp outlines with no drips).[29]

The first ‘tag’ to get famous belonged to a boy called Demetrius, a.k.a ‘Taki 183’ (he lived on 183^rd street). His tags appeared all over New York, especially on the subway, and spawned a whole generation of youth intent on out-tagging the other. With the advent of spray paint, simple graffiti tags evolved from monochromatic scribbles to ‘throw-ups’, or dual colour tags with bubble lettering and simple outlines.

‘No other art medium engages in this manner with our everyday lives, utilizing our urban space as its surface…[it is] conceptual, uncensored, and interactive [offering] great potential for expression…using humor and cynicism to relay thought-provoking messages regarding today’s culture,’ says Tristan Manco, graphic designer and creator of ‘Stencil Graffiti.'[30]

The very fact that graffiti interacts so closely with the daily lives of people makes it an ideal medium to communicate with them. It’s one of the main reasons why graffiti has become so popular with commercial enterprises for marketing their products.

Yet graffiti is diametrically the opposite of commercial art. While graffiti is illegal, unpaid for art, commercial art is legal and has a budget. And yet they have their similarities. Both forms are splashed in public places, vying for attention from the passersby, and are not always welcome. Comments about both range from complementary – it’s the purest form of art; to the derogatory – it’s the lowest form of vandalism. After all, both encompass a range of quality that runs the gamut from the lowest form of junk to moments of soaring brilliance. The interesting bit is that neither of them looks to art establishments for sanction or guidance. They have an aesthetic that’s purely their own.[31]

In spite of these similarities the fact remains that the soul of graffiti is in its illegal status. ‘Graffiti’ in commercial art is merely a look-alike of the real thing, which by definition cannot be contained and yoked to sell a product, like commercial art does. Yet, as with commercial art, ever since the first graffitist scribbled his ‘tag’ in pre-historic caves, the desire to communicate has been its driving force. So it’s almost inevitable that graffiti as illegal communication, and commercial art as legal communication should cross paths.

Graffitists are split in their views as to whether or not graffiti should be used commercially. Graffitist Rich Nasa graffiti as a positive stepping stone to a career in marketing and design. He argues that, “…graffiti is advertising, marketing and design all-in-one. Your name is your advertising, where your up is your marketing and your graff skills is design….like I said all-in-one!! Then utilizing those skills in the industry….your already one step ahead from the regular kids that went to school to learn that shit….you’ve got hands on experience!!!” [32]

Crispin Sartwell, on the other hand shows his contempt for billboards by defacing them. He claims that, ‘Advertising is the public expression of wealthy people and organizations. Graffiti is the public expression of people who are more or less broke. And that is exactly why advertising is authorized and graffiti is eradicated…”[33]   

To society’s powerbrokers, graffiti will always be simply vandalism. But to disenfranchised people, it’s a tangible form of expression, clawing back a stake in the psyche of society.[34] Jim Prigoff, co-author of the groundbreaking 1987 collection of graf murals, Spraycan Art, notes that anti-graffiti sentiments are not always about visual pollution, “Think about billboards. They’re the ugliest graffiti of all. But they’re OK. They have to do with money, the transaction of the advertising company getting money, the transaction of them selling you something. But there was no outcry there.”[35]

Eventually it all boils down to the war between art and commerce. Whether or not graffitists feel they should sell their art, it cannot be denied that, like all art forms, graffiti too has influenced commercial art tremendously. Not surprising, given that graffiti represents expression of self and the flip side of self-expression is communication. Since commercial art by its very nature is a communication tool, it takes its influences from the world around it. And in that world, hip hop cult is a force to reckon with.

In the last decade or so, hip hop culture, and within it, hip hop graffiti has suddenly caught the imagination of youth, overshadowing every other music genre and spreading like wildfire across the globe. Eventually, hip hop graffiti has become so trendy it has transformed itself into what marketing personnel call a ‘major lifestyle choice’. [36] Marketers, recognizing the market value of this underground culture, have lost no time in trying to harness graffiti as a marketable commodity.

Today, examples of graffiti-led art proliferates in advertisements, in various media from TV to posters and hoardings, in clothing, in brands and logos, music covers, and just about anywhere. As the demand for these products is increasing, so also is the demand for graffiti artists to design this kind of merchandise. As far as the artist is concerned, much of this media can be regarded as an extension of his/her canvas. A music cover, for example, can be designed by a graffiti artist who is merely expressing what he hears, in visual terms. There are also graffiti artists who put their talent to commercial use by selling their art on t-shirts and posters, designing movie sets and painting backgrounds, the common factor being art. Where a true graffiti artist draws a line, is at hard-core commercialism. Is it ok to sell out?  After all, even graffiti artists need to pay the rent. Should you resist commercialization, especially when you are broke and your art is being lapped up by marketers?

It’s true, graffiti-inspired outdoor advertising is definitely an emerging trend. Graffiti artists are being enlisted to sell products. More than that, corporate bodies and multinationals are not just imitating graffitists’ edgy work they are also commissioning graffiti artists to create art for them. So does that mean that graffiti is selling out to the corporate world? Or is graffiti managing to retain its identity? The interaction between the two media is too complex to be laid down in black and white.

Take Altoids, for instance, a well-known brand of breath mints. The British candy giant that owns them has commissioned three known graffiti artists to create billboards for them. But, the pieces don’t actually advertise Altoids; for this is just part of the company’s initiative to collect and support contemporary art.[37]  

In 2002, the city of San Francisco fined IBM and its advertising agencies with a $20,000 fine for its ‘Peace, Love and Linux’ campaign. They had apparently hired kids to illegally spray paint stencils of a heart, a peace sign and the Linux penguin on city streets and sidewalks.[38]

Nissan Cars is another company that tried to sneak in at the back door to reach out to young, trendy influentials, who advertisers are convinced, tune out traditional advertising. They had someone slather graffiti on their own street posters advertising the Nissan Altima. Though the company itself is pleased with its work, their effort has not been received too well by the graffiti artist community. Posts on the popular site “Wooster Collective’ have tended to be unsupportive.

One person wrote, “I hate these ads, (Nissan is) sneaking into a club they have no fucking right to join, and taking up more space with more blah blah buy buy blah blah. It’s sneaky and rude.” Another complained, “Nissan is cashing in this worldwide movement we call street art, they are using our aesthetics to sell us their products.”[39]

More recently, a graffiti-based campaign for Adicolour, by Adidas was lauded by the same site, which is dedicated to street art, because ‘they had got it right’. The advertising campaign started of with white billboards that practically begged for graffitists to tag and vandalise. Then a week later, the actual ads were put up. These incorporated the original graffiti and added on its own ‘seeded’ tags to direct you to their shop.[40] Done cleverly, it was received appreciatively even by the graffitist community!

At the opposite end of the spectrum, Sony recently hired graffiti artists in major urban areas to spray-paint buildings with images of kids playing with their latest product – the PSP III. This blatantly commercial venture at graffiti flopped miserably, scorned by the very hipsters Sony was trying to win over, with critics expressing their disapproval by vandalising the Sony graffii.[41]  The issue with Sony is clearly not the fact that they blasted the streets with their phony wall art. Rather, it was the fact that not only was the graffiti faked, it came across as inauthentic. As Grasse says, “Two kinds of people are going to be annoyed by this—community groups trying to clean up graffiti” and “people who are into authentic street culture that find this an appropriation of what they think is sacred. I think people respect brands that don’t try and be a part of their scene.”[42]

This sends out a clear message that graffiti that it is so obviously a badly disguised sales ploy cannot touch the hearts and minds of people, but graffiti that expresses itself with honesty can reach out even when under the banner of a brand.

Marshall McLuhan, communications theorist, once made famous the statement “the medium is the message” and nowhere is this better demonstrated than in the desire of these organisations to use spaces that are traditional bastians of graffiti artists. Graffiti artists have made the streets not merely a medium, but a medium with attitude.

Today more than ever, commercial art is incorporating the aesthetics of graffiti to sell products. But there are still many people out there who feel that there is a whole world of graffiti that cannot be encompassed into either the fine art world or the world of commercial communication, because as Randall Lane, whose NY-based design firm often incorporates graffiti-inspired creative, says “… it’s too raw, too ugly, and in your face. Tags and throw-ups, graffiti is all about getting up and destroying shit–that mentality and the work it creates can’t be co-opted by these other worlds.” Grey, one of the three artists commissioned for the Altoids project agrees: “It is not possible. True graffiti is illegal. Legal ‘graffiti’ just borrows the look and tools of graffiti and leaves out the core element, which is the criminal act.” [43]

Despite this edginess, or maybe because it, graffiti sells. And there are many graffiti artists willing to sell their art to the extent their conscience allows. After all, if a graffiti artist is commissioned to produce something for a leading brand then it is his prerogative to do so. He can profit from the work, make a living from his art, and pursue more independent projects without worrying about paying the rent. This is a perfectly acceptable hypothesis but one which again treads the line between art and commercialization, and whether the artist is compromising on his personal style and tainting his individual identity when he adopts the standardized elements of style peculiar to corporate branding. Is he then in danger of crossing the line from tag to logo?[44]

TATS CRU, a group of Bronx-based muralists began their careers some 20 years ago as subway artists. Today they are reputed group of professionals painting murals for small businesses and organizations throughout New York City. Fellow graffitists, while accepting the fact that even graffiti artists have to make a living feel betrayed that TATS CRU has been painting for companies like Coca-Cola (who have been slammed by lobbyists for  international human rights abuses) and Hummer (an ‘epitome of America’s environmentally deadly SUV fetish’). They feel that before selling out “members of TATS CRU might want to take these concerns into consideration before accepting future commissions that impose negative images on communities that have sponsored their art and livelihoods for years.”[45]

Of course there are an equal number of instances when commissioned art is not compromised by materialism, some of the most famous examples being Michelangelo and Raphael, commissioned by the Vatican. Nearer to the world of graffiti, acclaimed graffiti artist and painter, Justin Bua, has been-there-done-that. Having worked on billboard campaigns, including a campaign for Nike, he refuses to have anything to do with them any longer. He claims he has no belief in their value systems because, “It’s all economics and capitalism just trying to soften the people, in my mind. Those billboards are the people’s enemy – McDonalds, the fast food chains and that kind of stuff. Most advertisements are about the dollar bill. I won’t do it anymore, wouldn’t do it for a million dollars. I don’t have any corporate branding either. I keep it all real, keep it all raw. And something’s right, because I sell more posters than anybody in America and Canada.”[46]

Clearly the war between art and commercialization cuts across all barriers. A brief peep into the world of commercial art will tell you a similar story – that of creative people, both artists and writers, struggling between art that’s true to themselves, and art that’s bastardized for the purpose of selling. It is telling that annual advertising awards regularly laud those who have produced the most creative work, rather than those who have induced the highest sales. Advertising too, like graffiti, has had its moments. It has entertained, moved and motivated us, and as Marshall McLuhan once said, “Historians and archaeologists will one day discover that the ads of our time are the richest and most faithful daily reflections any society ever made of its whole range of activities”.[47] The same can well be said for graffiti, in its own turf!

So despite the reservations of the purists of graffiti artists, it is obvious that the influence of graffiti on commercial art is here to stay. It is inconceivable that a raw, powerful in-your-face medium like graffiti with the power to inspire and influence people can escape the notice of commercial art. It is not only the language of the streets, but also one that represents a lifestyle that the youth of today aspire to.

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• [12] (Mear cited in Macdonald, 2001:102)
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•  107) 2 (Kilo cited in Macdonald, The Graffiti Subculture, Pallgrave Macmillan, Basingstoke, UK. 2001:101)
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• [15] Ferrell, J. and Websdale, N. (1999) Making Trouble, Aldine de Gruyter, New York.
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Introduction

McDonald’s Corp was founded in 1955 in Illinois, US, as McDonald’s Systems Inc, opening its first franchised restaurant in Des Plaines. McDonald’s was the first real exponent of the fast food principle, trading on a platform of limited menu choice, fast service, high volumes and low prices. This strategy allowed the company to develop swiftly, which it achieved through issuing franchises. Franchising became a core component of expansion strategy not only for McDonald’s but also for fast food as a whole.  The first overseas unit was opened in Canada in 1967 and the company established its International Division in 1969. The company expanded into Japan, Germany and Australia in 1971 using the same detailed formula established in the US, after the failure of several attempts to adjust menus to local tastes.  (Vignali, 1999; Rowley, 2004; Blackhurst, 2005) Soon after, McDonald’s also entered France and the UK. These six overseas markets remain the core of McDonald’s international business and together with the US account for around 80% of total sales.

By 1968, the chain comprised 1,000 units, which rose to 5,000 units by 1978. By 2001, the company operated around 30,000 units worldwide. Whilst keeping menus limited, McDonald’s diversified its range from its original hamburgers and cheeseburgers. In 1964, the company launched its Filet-o-Fish sandwich, followed by signature burger the Big Mac in 1968, Happy Meals in 1979 and Chicken McNuggets in 1983. (Keynote, 2003; Leitch; 2004) While the majority of sales remain concentrated on burgers and fries, drinks and desserts are important and the brand periodically experiments with other menu additions, such as salads and local specialities. McDonald’s currently gearing up for the introduction of a new salad range in 2006.

The late-1990s saw McDonald’s shift its focus, as burger fast food, especially in the US, seemed dangerously crowded and mature. Consequently, McDonald’s focused on diversification, introducing new menu items and aiming to attract a more adult demographic, while retaining its core consumer base of children. 2000 saw the introduction of salads, low-fat desserts and a wider choice of chicken and fish burgers. The company also began to relax the McDonald’s formula, introducing more regional menu variations and experimenting with new formats, such as cafés and kiosks. This strategy of diversification also resulted in a number of acquisitions during the review period, seeing a shift away from its traditional single-brand focus. In 1998, McDonald’s purchased London-based coffee chain Aroma and in 1999 and 2000 McDonald’s purchased US chains Donatos Pizzeria (Ohio based), Mexican self-service cafeteria brand Chipotle (Denver based) and Boston Market with an emphasis on “home-cooked meal” style fast food.

Beyond acquisitions, McDonald’s also made a series of strategic investments. In February 2001, McDonald’s acquired a minority interest (33%) in the British sandwich chain Pret a Manger. In 2002, McDonald’s formed a joint venture with Fazoli’s, a fast casual Italian restaurant concept based in Lexington, Kentucky, to develop 20-30 Fazoli’s restaurants in the US. (Leitch; 2004) This also gave McDonald’s the option to purchase the entire company at a later date. The company also opened its first multibranded unit, offering Boston Market, Donatos and McDonald’s. However, these acquisitions did not prove wholly successful. In 2002, the company experienced a difficult year, culminating in its first ever quarterly loss. This poor performance was partly due to weak economies in Latin America and APMEA (Asia-Pacific, Middle East and Africa) and to increasing competition in mature US and Western European fast food. However, the company also felt that its strategy of brand diversification was diluting its focus on core brand McDonald’s. In 2002, Aroma was sold to Caffè Nero and in 2003 McDonald’s sold Donatos Pizzeria back to its founder Jim Grote and exited the joint venture with Fazoli’s. It closed down all Donatos outlets outside of the US and also closed down all Boston Market restaurants outside the US. (Rowley, 2004; Blackhurst, 2005)

While McDonald’s currently retains its minority interest in Pret a Manger, it no longer appears to have its previous interest in internationally expanding the brand. McDonald’s originally sought a buyer for the 13 Pret a Manger stores operating in Japan before eventually closing them. McDonald’s stated in 2006 that a decision was yet to be made concerning its remaining Chipotle and Boston Market brands. The McDonald’s brand was therefore the focus for growth in 2003 and the company returned to strong growth of 11% in system-wide sales over the previous year. In September 2003 the company launched its “i’m lovin’ it” brand campaign, an unprecedented, multi-dimensional, global brand campaign. The slogan is designed to help the brand connect with customers around the world. This launch was followed in December 2003 by the unveiling of new global packaging featuring images of people enjoying life’s simple pleasures. Conversion of all packaging in McDonald’s 35,000 restaurants worldwide is expected to be complete by late-2006.  Also, in November 2003 McDonald’s announced a new multi-category licensing initiative called McKids. The new McKids retail line will feature top quality, action-oriented toys, casual contemporary clothing, interactive videos and books and will be rolled out in 2006. This innovation is indicative of the company’s current creative focus on marketing the McDonald’s brand.

Early 2006 saw the company focusing on menu innovations and marketing. It signed a multi-year agreement with NBA superstar Yao Ming to act as brand representative. Following much publicised consumer and government concerns regarding obesity, McDonald’s also announced that it will be discontinuing its super size option on meals, although it stated that this was intended to standardise product offerings globally. The brand also announced a new range of salads, which will be rolled out over the course of 2006. In Spring 2006, the company launched a number of initiatives in keeping with its new balanced lifestyles platform which focuses on three key areas: food choice, education and physical activity. One of the key components is Go Active! to be tied in with McDonald’s sponsorship of the Athens 2006 Olympic Games. Olympic themed-promotions continued with its collaboration with AT&T Wireless to introduce the Olympia Trivial Game, using text messaging. So far it is the largest mobile marketing promotion of its kind in the US. The company also announced its Olympic Champion Crew Team, selected from its global pool of employees to serve at the company’s three full-service restaurants at the Athens 2004 Olympics. (Beverland, 2005; Royle, 2005;Perry, 2005)

In addition, a number of new marketing relationships were established with entertainment companies, such as Sony for its Big Mac Meal Tracks promotion in six selected countries, and Warner Home Videos for Ronald McDonald’s videos and DVDs, release in 2006. In 2004 the company have celebrate its 50th anniversary since Ray Kroc opened his first restaurant in Illinois. The company is gearing up to this important year, and announced a new flagship design in one of its most profitable outlets in Chicago.

Principle Activities

McDonald’s Corp’s prime focus is operating and franchising McDonald’s restaurants in burger fast food. McDonald’s restaurants serve a value-priced menu in more than 100 countries around the world with a restricted number of menu choices. McDonald’s also operates the McCafé format in many larger outlets. It is also currently testing the McDonald’s with the Diner Inside concept in the US. The company also operates Boston Market in fast food and Chipotle Mexican Grill in the fast casual segment in the US and has a minority ownership interest in UK-based bakery fast food Pret a Manger. It also operates two 4-star hotels in Switzerland through Golden Arches Suisse SA and its brand, Golden Arches. (Blackhurst, 2005)

The review period saw McDonald’s first diversify and then contract its business focus. It acquired the Aroma coffee-shop chain in the UK prior to selling it in 2002 and the Donatos Pizzeria business in the US prior to selling it in 2003. In 2003, the company also exited a joint venture with Fazoli’s fast casual Italian restaurant. The fate of Boston Market and Chipotle remains undecided currently, although Boston Market will be trialled as part of a co-branding initiative alongside McDonald’s. (Sweney, 2004)

Organisational and Geographic Structure

McDonald’s divisional breakdown is as follows:

• US
• Europe
• APMEA (Asia-Pacific, the Middle East and Africa)
• Latin America
• Canada

McDonald’s management structure witnessed a structural change in 2001, when Asia-Pacific, the Middle East and Africa grouped together as APMEA. This year also saw the introduction of a separate segment covering Partner Brands and comprising Aroma, Boston Market, Chipotle and Donatos Pizzeria. However, from 2003 McDonald’s opted to focus more on its core brand and as it had shed a number of these brands it removed the Partner Brands segment, replacing it with a less specific segment named “Other”. (Ritson, 2004) In October 2001 McDonald’s US division was reorganized under three divisions, creating 21 new regions from the current 37. (Kotler, 2003) This enabled the division to combine staff functions and improve efficiency. Each region is led by a general manager, whose team reports directly to them. Each region also has a vice president of quality, service and cleanliness. The restructuring freed up operations consultants to spend more time in restaurants, helping owner/operators and restaurant managers to deliver a better restaurant experience to customers.

Number of Units and Employees

McDonald’s increased units and employees strongly overall during the review period, with unit volume growing by 18% and employees by 33%. However, this growth was largely limited to the first half of the review period. In 2003 units remained almost static and employee numbers increased by only 1.5%. In connection with its restructuring in 2001, McDonald’s eliminated approximately 850 positions. 700 were shed in the US and 150 in international markets. However, employee numbers initially continued to grow as the company acquired new brands and expanded its offering. (Rooney, 2005; Arndt, 2004; Boyle, 2004)  This slowdown in unit and employee growth in 2002 and 2003 was a key strategy for the company, which claimed it was making a deliberate shift from growing by being bigger to growing by being better. In 2002, McDonald’s registered US$302 million in pre-tax charges related to the closure of 751 under-performing restaurants primarily in the US and Japan, but also in Europe and Latin America. (Royle, 2005)The outlets that were closed mainly had negative cashflows and/or very low annual sales volumes. (Blackhurst, 2005) The company continued its pruning and in 2003, closed about 50 strategically selected restaurants in Latin America, although this was less than the 135 outlets it initially planned to close prior to a reassessment of the region. (Leitch; 2004; Sweney, 2004; Ritson, 2004; Gray, 2003)

Corporate Strategy

Overview of Business Strategy

McDonald’s moved through two distinct company strategies during the review period, shifting its focus from growing through becoming bigger to growing through becoming better.  During the first half of the review period, it focused on growth through adding new restaurants, with associated high levels of capital expenditures and increasing levels of debt financing. It also diversified its offering by acquiring new brands, in response to the increasing maturity of US fast food. This strategy combined with challenging economic conditions and increased competition to adversely affect growth. (Beverland, 2005) In 2003, McDonald’s introduced a comprehensive revitalization plan to increase McDonald’s relevance to consumers and improve financial discipline. It focused on adding more customers to existing restaurants. This is aligned around its customer-focused Plan to Win, designed to deliver operational excellence and leadership marketing. This Plan contains aggressive goals and measures for success based on the five drivers of exceptional customer experiences:

• People: the use of well-trained and friendly servers and management.
• Products: the right range of products available.
• Places: restaurants must be clean, contemporary and welcoming.
• Prices: prices must cover an affordable range.
• Promotions: promotions must resonate with key consumer groups.

The company’s short-term goal is to fortify the foundation of its business but its long-term goal is to create a differentiated customer experience with brand loyalty and sustained returns. To enable this it introduced its multi-level marketing campaign “i’m lovin’ it”, accompanied by new global packaging to be introduced in 2006. It introduced more frequent outlet evaluations by company personnel, independent mystery shoppers and customer research to evaluate performance. (Perry, 2005)

McDonald’s eliminated projects not directly impacting customer experience and narrowed its non-McDonald’s brand activities in 2003. This saw it sell Donatos and its Japanese Pret a Manger outlets. It also extricated itself from the joint venture with Fazoli’s and closed all international Boston Market outlets. (McDonald, 2003; Bryman, 2004) It has announced no plans as yet to divest Chipotle or Boston Market and a dual-branded Boston Market/McDonald’s outlet is planned for trial in Chicago mid 2006 and if successful, may secure its future within the McDonald’s brand portfolio. 2004 and 2005 also saw the company close a large number of under-performing outlets and streamline its international operations. It withdrew from a handful of underperforming markets and closed a considerable number of outlets in the US, Japan and Latin America. It remains committed to growing internationally but now intends to do so by focusing on key countries such as the US and Australia, with growth in these countries hopefully boosting awareness in other countries. McDonald’s has aimed to improve productivity around the board. It increased service speed by making restaurants more competitive by reorganizing the kitchen, front counter, and drive-through zones. It also streamlined its product line by removing certain sizes and slow-moving pieces.

 The new strategy bore fruit in 2005 with excellent growth. McDonald’s growth targets for 2006 and beyond are:

• Annual sales and earnings increases of 3-5 percent for the whole scheme (constant currencies).
• A 6-7 percent annual increase in operating revenue (constant currencies).
• Over 15% annual return on additional resources spent (constant currencies).

Consumer Foodservice Operations

Brand Portfolio

The review period initially saw McDonald’s expanding its brand portfolio in response to the threat of declining burger sales, prior to contracting its portfolio once more to focus on reinventing its core eponymous brand. Acquisitions saw it expand into pizza with US brand Donatos, specialist coffee shops with UK brand Aroma, home-style fast food with US brand Boston Market and Mexican fast casual with US brand Chipotle Mexican Grill. Meanwhile, the company also invested in Italian fast casual full-service restaurants with a joint venture in Fazoli’s and in premium sandwiches with an investment in UK brand Pret a Manger. The introduction of a single-brand focus in 2005 resulted in the immediate streamlining of its portfolio. Donatos was sold and McDonald’s extricated itself from the Fazoli’s joint venture. Aroma had already been shed in 2004 and while McDonald’s retained a minority interest in Pret a Manger it closed a number of outlets in Japan. It also closed the international outlets of Boston Market and stated that the fate of Boston Market and Chipotle currently remains undecided with a planned co-branded Boston Market/McDonald’s test outlet planned for mid 2006. This leaves McDonald’s Corp able to focus on the McDonald’s brand, which it did with considerable success in 2005. Following a poor performance in 2004, with the company’s first ever quarterly loss, growth returned strongly in 2005 following its revitalization campaign.

Concept and Product Development

2000-2005 saw McDonald’s broadening its focus from burger fast food to incorporating a number of new brands, including Aroma, Donatos, Boston Market and Chipotle. However, following a poor performance in 2005 the company decided to switch back to a single-brand focus and concentrate on growing through improvements in its core brand rather than growing through being bigger in terms of units and brands. This resulted in the company shedding or reducing its interest in most brands other than McDonald’s and a rejuvenated approach to product development for its core brand.

“I’m lovin’ it”

A key element of its revitalization strategy was leadership marketing centered around its “i’m lovin’ it” campaign, launched in September 2005. This is an unprecedented, multi-dimensional and global brand campaign designed to connect with customers in a global, relevant and culturally significant way. The slogan is more than simply a tagline and was integrated into every aspect of the business from employee training to national sponsorships, promotions and all local street marketing. The slogan is intended to create an emotional bond with McDonald’s and focuses on how people live, what they love about life and what they love about McDonald’s. While the campaign is intended to reach an almost universal consumer base, the brand’s partnership with Justin Timberlake is primarily aimed at “teens” and young adults. Justin Timberlake was chosen, as he unusually possesses both huge mass appeal and a contemporary and fashionable image. Timberlake appeared in the launch advertisements for the “i’m lovin’ it” campaign and sings the theme line. McDonald’s also sponsored his European tour, which featured a song based around the campaign.

The second generation of “i’m lovin’ it” adverts was rolled out in May 2006 tailored to specific local markets. The company reported that consumer advertising awareness of the new global campaign reached 86% within the first six months.

In December 2005, McDonald’s unveiled new and innovative global packaging inspired by the “i’m lovin’ it” global brand campaign. This features images of people enjoying life’s simple pleasures and aims to further connect the brand with customers worldwide in a fresh and relevant way. Beginning in January 2006, the United States, Canada, and Latin America would be among the first markets to use the latest global packaging for adult serving bags and cold cups. All of McDonald’s 35,500 restaurants around the world are planned to be converted by late 2006. This represents the first time that McDonald’s has used a single set of brand packaging with a single brand message concurrently around the world. In November 2005, McDonald’s announced ambitious plans to introduce a major new multi-category licensing initiative called McKids. This retail line will feature quality, action-oriented toys, casual contemporary clothing, interactive videos and books. It is intended to reflect today’s active lifestyles and provide a contemporary approach to targeting children. It will unify all retail licensed products under one brand, with a single-focus look and vision. The new McKids brand will be introduced beginning in spring 2006 in the US, Canada, Mexico, Japan, China, Australia, Korea and Taiwan, with additional countries to follow.

Nutrition Comes to Fore

In August 2005 McDonald’s appointed a Director of Worldwide Nutrition to guide McDonald’s nutrition and active lifestyles initiatives. Following this, McDonald’s turned its attention to innovation healthy eating.  With obesity hitting dangerous levels in many markets and a lot of media and consumer attention in the connection between obesity and fast food eating, this is a hot topic right now. In 2004, two New York teens sued McDonald’s, alleging that dining at the fast food restaurant caused them to gain weight. Despite the passage of the Personal Responsibility in Food Use Act in March 2006, which prohibits people from engaging in comparable conduct, the possibility of regulatory intervention to restrict food advertising persists, with several countries proposing a “fat levy” on unhealthy foods. Many consumers are currently striving to lose weight or improve their diets and McDonald’s, like competitors, wants to be viewed as part of the solution, rather than as part of the problem. McDonald’s already offers Premium Salads in the US, the Salads Plus Menu in Australia, which features several products with 10g of fat or less and introduced healthier Happy Meal choices in 2005. In spring 2006, the company rolled out its Salads Plus Menu in Europe, introduced first in Germany, the UK and France with the aim of expanding to 16 countries in total by the end of the year. This represented the biggest shake-up to the company’s permanent menu in its history. Main course chicken salads, yoghurts, fruit, and organic milk were released in the UK and Germany at the end of March before being rolled out throughout the continent. French chef Olivier Pichot created the latest items at a McDonald’s culinary studio in Paris.

The company also stated that sales of Chicken McNuggets soared 35% since the company began making them with all-white meat to appeal to health-conscious consumers. In the UK, the company reduced the salt content of its Chicken McNuggets to appease government bodies and parental concern about children’s dietary intake. It also stated its commitment to providing customers with increased transparency of dietary information in-store, on packaging (including tray liners) and on the internet. However, further changes are imminent. Over the course of 2006, super sized fries and drinks will be phased out across McDonald’s units except in certain promotions, although the company claimed this was chiefly in order to standardise menus. The brand offered chicken-breast strips and low-carbohydrate versions of its sandwiches in spring 2006 and tested five or six new products, including flatbread deli sandwiches in the US. In terms of low-carbohydrate items, however, Burger King and smaller competitors such as Hardee’s already offer low-carbohydrate burgers and non-burger competitors Subway and TGI Friday’s actually have Atkins-endorsed ranges. McDonald’s gave consumers the option of choosing salad over fries as well as offering bun-less burgers. The corporation is creating a pan-European smart labeling scheme based on pictograms to assist consumers in making smarter product decisions. The corporation intends to devote 20% of its ad expenditure in Germany and the United Kingdom to advertising the latest menu products at first.

Consumer Foodservice Sales

Over the review era, McDonald’s increased customer foodservice revenue by 19 percent. However, this statistic conceals a bad showing in the center of the decade, with development of just 1% and 2% in current value terms in 2003 and 2004, respectively. The firm has experienced its first quarterly loss in 2004. However, in 2005, the organization launched a revitalization strategy that included a worldwide awareness initiative and a removal of non-core interests. In the United States, it increased revenue by extending operating hours and offering a value menu, as well as focusing more on activities. This culminated in a system-wide revenue increase of 11% in 2005 compared to the previous year.

Particularly in the review era as a whole and in 2005, company-operated channels grew more than those owned by franchisees and associates. This was partially attributed to the business’s 2002 takeover of the Boston Market chain, which is run entirely by the company. A general yet gradual transition towards business-operated channels also occurred, with the company expanding the unit range in key areas. Despite this, franchising is still important to the business, with franchised or related units accounting for 72 percent of total system revenue in 2005.

Unit Profile

McDonald’s maintains a versatile unit placement policy. The most important factors to weigh are consumer convenience and the company’s long-term sales and earnings opportunities. Before making a decision, McDonald’s looks at travel and walking habits, census statistics, school enrollments, and other related data. McDonald’s actively separates unit selection from franchisee selection to ensure consistency, with franchisees expected to be equally adaptable in their place if accepted. McDonald’s Corp. either buys the property and builds the units itself, or secures long-term contracts on restaurant locations, ensuring long-term occupancy privileges and lowering prices.  (Bryman, 2004)  A large number of outlets are built in standalone city centre or busy suburban sites. However, during its policy of rapid unit expansion in the 1990s, McDonald’s was a pioneer in seeking non-traditional locations for its outlets. It has outlets in airports, gas stations, theme parks, shopping malls, retail units and colleges. McDonald’s follows a policy of adapting outlets to suit their environment, with play areas offered in suburban outlets with a large number of child customers or business centers offered in airport McDonald’s. (Parker, 2003) Gas stations are an important area of focus for McDonald’s, which joined forces with major oil brands and independents in the US to develop co-branded facilities from the 1990s onwards. (Schröder, 2003) These offer an outlet with dining room and drive-through connected to the gas station and convenience store. There are over 400 co-branded units of this nature currently in existence and they are particularly important in areas where high land costs can preclude development or rural areas with lower sales expectations.

Management Type

McDonald’s was a pioneer of the franchise system and remains committed to growth through franchising. Unsurprisingly, therefore, franchised outlets account for the majority of units, with a share of 58% in 2005. They increased in unit volume by 14% over the review period as a whole and by 2% in 2005 over the previous year. However, directly operated outlets were the fastest growing in terms of unit volume. Their volume increased by 48% over the 2001-2005 period, primarily due to the acquisition of Boston Market in 2002. (Wier, 2002) This brought with it over 700 company-operated outlets in the US. However, in 2005 company operated unit volume declined slightly as the company turned its attentions from sales growth through expansion to sales growth through improved same-store sales and innovative marketing. Affiliated-operated outlets declined by 6% over the review period and by 5% in 2005 alone. These outlets are operated under joint venture agreements and are principally located in Argentina, Japan, Malaysia, the Philippines and the US. Earlier decline during the period occurred due to the restructuring of its operations in the Philippines. Decline in 2005 occurred with the company continuing restructuring in Latin America and curtailing its Pret a Manger joint venture in Japan.

Formats

Generally, McDonald’s minimum site size for traditional outlets is 32,616 sq ft (3,030 sq m), although it is prepared to be flexible in its size requirements for exceptional sites. Ideally, the company seeks a corner or corner wrap location with signage on two major streets and close to an intersection with traffic signals. Its building size is up to 5,500 sq ft (510 sq m) with a minimum height of 22 ft (7m) and sites must offer parking to meet all applicable codes.  Most McDonald’s units are of a standardized design, with counter service, dine-in areas and takeaway options. Some units include additional facilities such as drive-through services, which are particularly common in the US, and children’s’ play areas. 2005 saw the introduction of wi-fi Internet access to a number of outlets. In 23 countries worldwide and approximately 400 outlets there are in-site McCafé areas. This brand was initially developed as standalone outlets but is now invariably housed in traditional McDonald’s outlets. McCafé serves premium specialty coffees, cakes and pastries.

Another store-within-a-store concept that McDonald’s makes use of is its McDonald’s with the Diner Inside. This offers the option of tip-free table service and Classic American diner favorites along with McDonald’s traditional menu, with a greater focus on breakfast and dinner. These outlets also feature a “Diner to Go” area for ordering and pick-up. However, the concept currently remains limited to a small number of units in the US. In addition to traditional outlets, McDonald’s makes use of satellite units, which are scaled-down units with limited menus. These are mainly located in the US, Canada, Japan and Brazil and are often used in alternative locations, such as retail units (notably Wal-Mart), shopping centers, train stations and leisure areas. In 2005, McDonald’s opened 513 traditional McDonald’s restaurants and 319 satellite restaurants and closed 486 traditional restaurants and 184 satellite restaurants. Within satellite units, McDonald’s is experimenting with alternatives on a regional level, with formats such as McTreat Spots and McSnacks, offering desserts and snacks respectively. In mid 2005, it was reported that the company plans to pilot a dual-branded outlet featuring McDonald’s and Boston Market side-by-side within the same building but having separate kitchens and counters

Geographical Spread

More McDonald’s outlets are based in the US than any other region, with this country having a share of 44% in unit volume terms in 2005. However, McDonald’s is the most global of all the leading consumer foodservice players, with over half its units being located beyond the US and a presence in over 100 countries worldwide. North America remains a key focus for the brand, however. Canada was the fastest growing area during the review period as a whole and in 2005, growing unit volume by 3% in this year. Also, the US remains the major focus area for the brand, which intends to follow a strategy of boosting global sales through a stronger presence in key countries. Europe is another growth area, increasing unit volume by 13% over the review period as a whole and by 2% in 2005 alone. Europe is a key area of focus for McDonald’s in 2006, with the brand introducing new menus to key countries France, Germany and the UK before expanding new menus to a further 13 countries.

APMEA is the second most significant region, comprising Asia-Pacific, the Middle East and Africa. However, while this region grew by 10% over the review period as a whole, its unit volume declined by 1% in 2005 over the previous year. This occurred as the brand scaled back its operations in Japan. However, in 2006 it intends to focus its attention on growing brand equity in key country Australia. Latin America was the slowest growing region during the review period and witnessed a 2% decline in unit volume in 2005 over the previous year. This occurred as the company closed a number of outlets, although it scaled back its initial restructuring plans from 135 outlets following a strategic reassessment.  From 2004, Partner Brands were considered separately from the regional split of McDonald’s outlets. The company shed a number of Partner Brand units and brands in 2005 and the remaining units were reclassified as “Other”. These outlets declined by 13% in 2005 alone, as McDonald’s focused on reducing their number and are likely to continue to reduce in 2006 whilst exploring the possibility of dual-branding with Boston Market.

Franchising, Licencing and Concessions

McDonald’s has been a franchise leader from its creation and is dedicated to franchising as a means of expansion. McDonald’s maintains a high level of influence regarding franchise distribution and assigns qualified franchisees to available locations, requiring complete regional diversity. Sweney (2004, Sweney, Sweney, Sweney, Sweney The majority of franchise options are currently open in small towns. Its hiring procedure does not necessitate prior restaurant experience, but rather strong “simple business sense,” a proven capacity to successfully direct and improve employees, and a track record of previous business and life achievement. Individuals, not companies, partnerships, or passive investors, are qualified to become franchisees. An employee must fulfill financial requirements and be able to commit his or her full time to the restaurant’s day-to-day operations. All other active commercial interests are sold by franchisees. The average expense of a new restaurant is between US$461,000 and US$788,500. The cost depends on the restaurant’s scale, venue, pre-opening costs, supplies, kitchen equipment, signs, and design and landscaping design. In addition, all new McDonald’s restaurants would pay an upfront charge of $45,000 to McDonald’s Corp before they launch. A traditional acquisition requires a minimum cash investment of US$175,000, whereas a Business Facilities Lease requires a minimum cash investment of US$100000 (BFL). Candidates who succeed in other areas but are unable to fulfill the financial standards of a traditional franchising scheme are qualified for BFL franchises.

Franchisees add to the company’s profits by paying leasing and utility costs dependent on a percentage of sales, with nominal rent charges and initial fees. The average franchise agreement lasts for 20 years, and franchising policies are very consistent all around the world. Franchisees in the United States were given the choice of purchasing new restaurant buildings in 2004 and 2003. McDonald’s, on the other hand, phased out this alternative in 2005 and now owns much of the properties, receiving extra rent from franchisees. Many restaurant leases are for a period of 20 to 25 years, with rent escalations and extension opportunities available in certain situations. Franchisees are responsible for the the occupancy charges, such as property taxes, benefits, and repairs.  McDonald’s also operates through a number of concession agreements in gas stations, theme parks and retail units. Many of these are operated on a small scale and restricted to one country or region. Gas stations are the chief focus for these concessions, with McDonald’s operating approximately 400 units linked to gas station convenience stores. These agreements are both major and local players and major oil brands linked with McDonald’s in this manner include Amoco, Mobil and Citgo. Meanwhile in theme parks, McDonald’s has an agreement with Disney to operate units in all Disney theme parks. In retailing, McDonald’s major agreement is with Wal-Mart to operate McDonald’s outlets in its retail units.

In 2006, McDonald’s introduced a major new licensing initiative in the form of McKids. This unified all retail licensed products and will include action-oriented toys, casual contemporary clothing, interactive videos and books. US, Canada, Mexico, Japan, China, Australia, Korea and Taiwan were targeted primarily with additional countries to follow. Partner brand Boston Market licenses a range of frozen entrées and jarred gravies manufactured by HJ Heinz Co and sold in supermarkets. Boston Market also operates three “stores within a store” in Stop & Shop grocery stores in Massachusetts.

Company Performance

Sales and Profits

McDonald’s experienced a poor performance in the middle of the review period before returning to strong form in 2005. The worldwide economy weakened in 2003, exacerbated by the terrorist attacks of this year and sales were also hindered by concerns regarding beef safety. Anti-globalisation and anti-US campaigns in 2004 also negatively impacted its performance. Finally, the decision by the company to close a number of under-performing McDonald’s outlets impacted sales in 2004 but is likely to result in a better long-term performance. (Bryman, 2004) The company also feels that its poor performance in 2003 and 2004 stemmed from its diluted focus, thus cutting back on its non-core interests in 2005. Its renewed single-brand focus in 2005 boosted its fortunes dramatically. Therefore, while revenue grew by only 29% during the review period and operating profits declined by 15%, 2005 saw revenue growth of 11% and operating profit growth of 34%. System-wide sales grew by 11% in 2005 following a poor performance in 2004. This was chiefly due to the impressive effects of the “i’m lovin’ it” campaign, along with improvements in menu, service and value initiatives. Extended opening hours and an improvement in the US economy also assisted growth. Revenues also increased by 11% in 2005, chiefly due to this growth in system-wide sales. Operating profit and net profit grew dramatically in 2005, despite an overall decline during the review period. However, net profits were constrained by a US$237 million loss relating to the company’s sale of Donatos Pizzeria, extrication from the Fazoli’s joint venture and closure of outlets.

Performance by Geographic Area and Division

The US continues to account for the largest share of revenues and operating profit, at 35% of revenue in 2005. In common with many regions, it achieved a good level of revenue growth in 2005, with new menu, service and value initiatives and a strengthening economy. However, it was the slowest growing region in terms of profits, growing by only 19% in 2005 over the previous year. This was, however, chiefly due to its already high operating efficiency, with the highest operating margin of all the regions. Canada was the fastest growing region in 2005 in terms of revenue. This was due to McDonald’s continued expansion in the country. However, it remains the smallest area in terms of revenue, accounting for only 4.5% in 2005.

Europe is the next most significant region in terms of revenue, accounting for 34% in 2005. This is impressive, given that it accounts for only 19% of units. Within Europe, France, Germany and the UK are the most significant countries and account for the bulk of sales. Europe achieved a good growth in revenues and profits in 2005, which was chiefly due to expansion and same-store sales growth in Russia and France. However, this good performance was partly offset by weak results in the UK and Germany. APMEA achieved a fairly low growth in revenues of 3% in 2005, benefiting from good growth in Australia and China, although it was affected by SARS in the first half of the year. However, APMEA achieved a striking growth in operating profit of 252% over the previous year. This occurred as the company streamlined its operating processes in China and closed a number of under-performing outlets in Japan. Latin America and Other experienced losses in 2005. This was chiefly due to losses incurred in connection with the closure of a number of under-performing outlets in Latin America and continuing difficult economic conditions in the region. The company is currently in litigation with about a third of its Brazilian franchisees, which further compounded losses. Meanwhile, the sale of Donatos Pizzeria and closure of outlets resulted in losses for “Other”.

Company Efficiency

McDonald’s profit margins experienced a precipitous decline throughout most of the review period, reaching their lowest point in 2004. In that year, the company’s operating profit margin dropped to 14% and net profit margin fell to 6%. The company’s restructuring in 2004 and its shift to a single-brand focuses with the removal of less profitable and non-core interests resulted in a much stronger performance in 2005. In 2005, operating profit margin climbed to 17% and net profit margin to 9%. This strong performance inevitably impacted EPS, although these remained considerably lower than at the start of the review period. The company’s focus on growing sales through an improved performance and same-store sales growth strongly benefited sales per unit and employee. These grew by 11% and 9% respectively in 2005 over the previous year.

Strategic Evaluation

SWOT Analysis

Strengths

• McDonald’s has an almost unassailable position in consumer foodservice, with sales nearly twice those of its nearest competitor.
• McDonald’s currently has a rejuvenated corporate identity, having implemented its new slogan “i’m lovin’ it” at every level.
• McDonald’s benefits from a wider geographical spread than other competitors and is thus less reliant on mature and competitive US fast food.
• Following its sale or closure of a number of non-core interests, the company now has a considerably more streamlined portfolio.
• Due to its size, McDonald’s benefits from economies of scale and is able to draw on impressive financial strength.

Weaknesses

• While McDonald’s achieved an excellent performance in profits in 2005, there is still much progress to be made before it recovers ground lost during the middle of the review period.
• The company currently owns Boston Market and Chipotle, two non-core brands with an undecided future.
• McDonald’s initial results to menu and marketing changes were excellent in 2005. However, the brand is planning more innovation in 2006 and it will require considerable skill to shift the emphasis of the brand whilst retaining consumers and brand identity.

Opportunities

• McDonald’s revitalisation strategy and new global marketing campaign appear to be resulting in strong growth, which seems set to continue in the near future.
• The introduction of a new salad range and a healthier menu focus in Europe is likely to result in good growth for year end 2006 and could influence menu innovation globally.
• McDonald’s holds a leading position in many of the world’s major long-term growth markets, including Russia, India, Brazil and China.
• McDonald’s McKids licensing range should provide excellent growth in 2006, if it is successfully positioned to appeal to both children and adults.

Threats

• As the leading brand in consumer foodservice and a leading US brand, McDonald’s remains under attack from many sources and must continue to face challenges including boycotts, media attacks and even physical attacks on outlets.
• Consumer concerns regarding weight and nutrition are high and rising, which could prove challenging for McDonald’s core burger offering and may result in damaging legislation being introduced in key countries.
• Although McDonald’s does not currently face any competitor of its size, it could experience long-term erosion by smaller or innovative players with perceived healthier products.

Positioning Vis-à-Vis Competitors

McDonald’s is the leading global player in terms of consumer foodservice system-wide sales and far exceeds its nearest competitor Yum! Brands. Yum! Brands leads in terms of unit volume, although this is unlikely to worry the company in the near future, with its current emphasis on growing same-store sales rather than unit volume. Within burger fast food, McDonald’s dwarfs its competitors, with system-wide sales more than three times the size of its nearest competitor Burger King.  However, while McDonald’s continues to outrun the competition, it remains mindful of competition from other global brands such as Burger King and Wendy’s. McDonald’s also faces a major threat from local chains, such as the Quick burger chain in France and Belgium. In the US, it faces competition from players Berkshire Hathaway and CKE, along with a host of smaller chains and independents and the emerging fast casual chains. Burger fast food is an increasingly crowded and mature area, particularly in key countries such as the US.

McDonald’s closest competitors in burger fast food are Wendy’s and Burger King, with the latter being the only brand with a strong international focus. Burger King and McDonald’s have a strong and historic rivalry and their price wars continue in the US. 2006 saw Burger King innovate ahead of McDonald’s by introducing a low-carbohydrate burger, and McDonald’s introduced the option of burgers without buns, in response to heightened concerns about high levels of carbohydrates in foods.  KFC acts as a strong rival to McDonald’s in Asia-Pacific, with its sales far exceeding McDonald’s in China in 2005. While KFC is positioned in chicken, its increasing emphasis on chicken burgers places it in competition with McDonald’s, particularly in regions with a cultural or religious aversion to beef. McDonald’s expansion into more diverse brands brought it into competition with a wider range of competitors. Chipotle faces competition from Mexican fast food leader Taco Bell in the US, although it is positioned more in competition with “fresh-Mex” fast casual restaurants, such as Wendy’s Baja Fresh. Boston Market is a chicken fast food brand but competes with traditional full-service restaurants such as Applebee’s.

Finding and Recommendations

Franchising remains the primary engine for growth in overseas expansion for many consumer foodservice operators, although it is still largely confined to fast food. Franchising enables companies to build and extend brand coverage and improve margins through economies of scale. The franchising route to company expansion is an attractive option for ambitious companies keen to expand but prevented from doing so by lack of capital or weakly motivated line-management. Franchising agreements vary between the various operators. Generally, brand franchising consists of a franchiser granting the right to sell its branded goods to someone wishing to set up their own business, the franchisee. A license agreement allows the franchiser to insist on manufacturing or operating methods and the quality of the product. Both franchisees would usually utilize consistent branding, menus, architecture templates, and administration structures to maintain uniformity, both domestically and globally where necessary. In certain franchise deals, the franchisee is granted the freedom to operate a certain named restaurant for a fixed amount of time, such as 10 or 20 years. These privileges which involve the usage of the franchiser’s operational procedures, stock management, bookkeeping, accounting, and marketing, as well as the company’s logos, restaurant furniture and designs, signage and equipment configuration, the recipe and requirements of menu products, and the franchiser’s methods of operation, stock control, bookkeeping, accounting, and marketing.

The consumer foodservice industry was characterized in recent years by industry consolidation, particularly in traditional sectors such as cafés/bars. This trend is expected to continue, as small, independent outlets are unable to compete with emerging niches such as specialist coffee bars. Furthermore, fast food operators are likely to continue to close unprofitable locations – in the short term at least – in order to focus on improving throughput in core locations.

This offers opportunities for consumer foodservice operators to provide outlets offering quick service in convenient locations, at affordable prices. This encompasses sectors such as fast food, 100% home delivery/takeaway and street stalls/kiosks. These trends will also benefit certain FSR, such as casual dining and outlets offering drive-thru or takeaway concepts.

In 2003, there was a strong trend – notably in the US and other developed markets – towards the development of healthier menus and concepts. This was in response to growing concerns over obesity levels, especially among children, which were the object of much publicity. Foodservice operators are likely to continue to develop healthy options, without sacrificing taste. The next few years could also see the introduction of more health foods and drinks targeted specifically at children, including milk, fruit and salads, in order to appeal to nutrition-conscious parents.

Due to the high demand in the US for low-carbohydrate foods, many operators launched low-carbohydrate and Atkins-approved menus and products in 2003. As Atkins and similar diets are becoming increasingly popular in the UK and other developed markets, it is possible that consumer foodservice outlets in these markets will also extend their menus to include low-carbohydrate items over the next few years.

It is possible that the future may see the introduction of nutritional labelling on menus, in order to prevent litigation against foodservice operators accused of contributing to obesity levels. In the US, nutritional-labelling bills were being debated in several states during 2003, which if passed would force chains with between 10 and 20 outlets nationwide to post various nutritional information, including calorie, sodium and saturated fat, on hand-held menus.

There are likely to be further food scares in the future, such as contamination with e-coli or listeria, BSE scares or epidemics such as Asian bird flu. Furthermore, the government introduced stringent policies over imported beef and severe sanctions, which should pave the way for much restored consumer confidence in the long run.

Obesity has become a major concern in many developed markets, and is a growing problem in emerging markets. Obesity plays a significant role in other chronic health conditions, most notably heart disease, and type 2 diabetes, with which it is strongly correlated. Other, less dangerous conditions associated with obesity include osteoarthritis and hypertension. High levels of obesity around the world have been blamed on the growth of the fast food industry, as well as trends towards snacking and more sedentary lifestyles.

While eating in consumer foodservice outlets does not cause obesity and overweight, certain aspects of foodservice are very likely contributing factors for overweight consumers who use consumer foodservice on a frequent basis. Food portions in the US are generally very generous. Indeed, restaurants such as Claim Jumper are famous for piling on the food, and many restaurants in Las Vegas and elsewhere offer unlimited buffets.

A further challenge for diet-minded consumers is the kind of food that is usually served through consumer foodservice channels. While low-fat options are usually available, the more appealing options and signature dishes are usually high in fat and feature fatty meats. Pizza chains compete for bragging rights in terms of pounds of cheese and this feature is not likely to change. Americans love fatty food and the consumer foodservice industry is there to cater to their desires, not those of their doctors. Obesity also became an issue in the UK, particularly among children. In this country, there are believed to be three million cases of child obesity and a total of 10 million people diagnosed as obese.

Obesity is a growing problem in emerging markets, largely due to changing diets as well as less active lifestyles as a result of the introduction of more sophisticated technology and higher disposable incomes. This is the case of India, where there is already a high incidence of coronary heart diseases due to the large intake of buttermilk (ghee) in the north and coconut milk and ghee in the south.

The industry’s response to concerns over obesity was to introduce healthier options and for companies to promote themselves as being healthier than competitors. For example, the low fat message has been a core part of the marketing strategy of Subway, one of the US’s fastest growing fast food chains, for several years. The chain offers a range of low-fat menu items, which are promoted as such through, for example, the “7 subs with 6 grams of fat or less” slogan, and a general focus on the fat content of other items, including even the bread used for sandwiches.

While the largest multibranded FSR operators will probably continue to rationalize their brand portfolios in order to focus on their most successful concepts in the light of increasingly competitive market conditions, co- or multiple branding will become more popular among fast food operators; Brands and Allied Domecq, which are both committed to expanding multibranded units.

Trends towards casual dining will continue in the US and other countries over the forecast period, especially in fast-casual FSR. Although growth in fast-casual concepts is beginning to slow in its original market of the US, there is still plenty of room for growth in other developed markets. The concept of fast food with a more premium positioning, more healthy ingredients and a better class of service is appealing to today’s more discerning consumer.

At the same time, higher disposable incomes and economic growth in other countries are leading to the growth of restaurants positioned at the premium and super-premium end of the market. Specialist coffee shops will continue to grow strongly in many countries, as the coffee culture remains strong in the West, and these outlets offer novelty value in developing markets. Starbucks remains committed to its ambitious development agenda, which would most certainly fuel global expansion.

In the future, a large number of chains will become equipped with technology that will allow better communication between servers and kitchen staff and therefore speed up cooking and service time, and reduce errors. Increased use of the internet and mobile phones will be beneficial to the consumer foodservice industry. It will enable companies to use the internet as a promotional tool, and allow customers to order take-away food by internet and WAP.

Mcdonald’s Strategic Options: Generic Strategies

McDonalds Business Strategy and Generic Strategies are described by a fast food worker’s reaction to the market framework. For a big fast food chain like McDonald’s to gain a viable competitive edge, they could use one of Porter’s three generic tactics.

The first cost leadership approach is for Mcdonald’s to compete for the lowest rates in the sector and to sell its goods and services to a wide range of customers at the lowest prices. This approach would be dependent on Mcdonald’s willingness to keep overhead expenses under check so that they can market their goods competitively and achieve large profit margins, giving them a huge competitive edge.

If Mcdonald’s chooses a new differentiation approach, it would strive to include offerings and merchandise with specific characteristics that consumers enjoy. Mcdonald’s would be able to develop brand loyalty with their products, resulting in price inelasticity among customers. Differentiation may take several forms, including product variety, innovations, unique features, and customer support.

The final target approach may be either a cost leadership or differentiation strategy targeted at a specific, narrow sector. Mcdonald’s pursues a cost leadership approach by focusing on operational efficiencies that can enable the company survive competitive pressures. As a result, it is fair to assume that Mcdonald’s would have regular contacts with the environment’s governmental/regulatory and supplier markets.

Although all overall cost leadership and differentiation strategies are targeted at the general market, Mcdonald’s can opt to confine their goods to particular market areas or sell a narrower line of products to the broad market, thereby following a focus or niche approach, according to this structure. Mcdonald’s, in other terms, pursues a cost leadership or differentiation approach in a particular industry or for specific brands. Any organizations run the risk of being “stuck in the centre” if they attempt to achieve all three. That is not applicable in the case of McDonald’s, since they have a strong business model and a well identified fast food consumer category.

Future Opportunities and Strategies Implementation

Strategy frameworks and structuring tools are key to assessing the business situation. Risk and value trade-offs are made explicit, leading to concrete proposals to add value and reduce risk. Explicit plans for action, including effective planning need to be developed by Mcdonald’s as the strategic alternative.  From the generic strategies discussed above, Mcdonald’s is likely to employ two strategic options of focus on fast food market development though partnerships and diversification through new product development.

By entering new fast food markets like China and Japan it can serve as a key growth driver of the company’s revenues and expansion strategy. Mcdonald’s interests in Japan are likely to continue growing in due course, as Asian fast food markets are showing an increase in consumer spending and increased trend towards fast food marketing. These new fast food markets are also demographically high opportunity markets. In the case of Mcdonald’s, one of the suggested strategic options is in international alliances with the local fast fooders in Asian fast food markets. It will be considered as a method of development and may be formed to exploit current resources and competence.  By entering into joint ventures or partnerships, in order to gain a larger economies of scale and larger fast food market presence, Mcdonald’s will draw on the extensive local knowledge and operating expertise of the partner whilst adding its own supply chain, product development and stores operations skills to deliver a better shopping experience to customers. However, given the huge scale, potential and complexities of these markets, Mcdonald’s may feel that being the first mover is not necessarily an advantage. The success of the partnership will be related to three main success criteria: sustainability, acceptability and feasibility. Sustainability will be concerned with whether a strategy addresses the circumstances in which the company is operating. It is about the rationale of this expansion-market development strategy. The acceptability relates to the expected return from the strategy, the level of risk and the likely reaction of stakeholders. Feasibility will be regarded to whether Mcdonald’s has the resources and competence to deliver the strategy.

Ansoff’s matrix also suggests that if new products are developed for existing fast food markets, then a product development strategy has to be considered by the management level of a company. In expanding and diversifying Mcdonald’s product mix, it is also crucial to implement internal development when new products are developed. The nature and the extent of diversification should also be considered in relation to the rationale of the corporate strategy and the diversity of the portfolio. By following the changing needs of the customers Mcdonald’s can introduce new product lines. This may require more attention to R&D, leading to additional spending.

Fast food marketing industry is experiencing an overcapacity and innovative services and products being the major competitive advantage. Therefore, innovation has to be a major driver for Mcdonald’s product development. For example, Mcdonald’s can develop a portfolio of different store formats in the UK, each designed to provide a different shopping experience. While the majority of Eastern European and Far Eastern outlets are hypermarkets, Mcdonald’s can also develop different store types in these fast food markets as well. This value added by the uniqueness will eventually lead Mcdonald’s to command a premium price. The management of technological innovation is increasingly involved in strategic decision-making. Mcdonald’s have to exploit their internal strengths and minimize their internal weaknesses in order to achieve sustained competitive advantage.

Conclusion

The success of Mcdonald’s shows how far the branding and effective service delivery can come in moving beyond splashing one’s logo on a billboard. It had fostered powerful identities by making their retiling concept into a virus and spending it out into the culture via a variety of channels: cultural sponsorship, political controversy, and consumer experience and brand extensions.

In a rapidly changing business environment with a high competitors’ pressure Mcdonald’s have to adopt new expansion strategies or diversified the existing in order to sustain its leading fast food market position in an already established fast food marketing market. The company must constantly adapt to the fast changing circumstances. Strategy formulation should therefore be regarded as a process of continuous learning, which includes learning about the goals, the effect of possible actions towards these goals and how to implement and execute these actions. The quality of a formulated strategy and the speed of its implementation will therefore directly depend on the quality of Mcdonald’s cognitive and behavioral learning processes.

In large organizations as Mcdonald’s strategy should be analyzed and implemented at various levels within the hierarchy. These different levels of strategy should be related and mutually supporting. Mcdonald’s strategy at a corporate level defines the businesses in which Mcdonald’s will compete, in a way that focuses resources to convert distinctive competence into competitive advantage.

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Appendix

Table 1  McDonald’s Corp: Number of Units and Employees 2001-2005

Units                                            2001               2002               2003               2004               2005

                                                      26,309            28,707            30,093            31,108           31,129

% growth                                     7.3                   9.1                    4.8                   3.4                  0.1

Employees                                  314,000          364,000         395,000        412,000         418,000

% growth                                    10.6                  15.9                  8.5                  4.3                  1.5

Table 2  McDonald’s Corp: Consumer Foodservice Sales 2001-2005

US$ million                                    2001               2002               2003               2004               2005

Operated by franchisees             28,979            29,714            29,590            30,026           33,138

    & affiliates

Operated by company                 9,512            10,467            11,040            11,500           12,795

TOTAL                                          38,491            40,181            40,630            41,526           45,933

Table 3  McDonald’s Corp: Number of Units by Management Type 2001-2005

Number of units                              2001               2002               2003              2004             2005

Franchised                                        15,949            16,795            17,395            17,864           18,132

Directly operated                            6,059              7,652              8,378              9,000            8,959

Operated by affiliates                     4,301              4,260              4,320              4,244            4,038

TOTAL                                             26,309            28,707           30,093            31,108          31,129

Source:          Euromonitor International from company reports

Table 4  McDonald’s Corp: Number of Units by Division 2002-2005

Number of system-wide units       2002               2003               2004               2005       % growth                                                                                                                                                    2002/2005 

US                                                       12,804          13,099           13,491            13,609              6.3

Europe                                               5,460             5,794             6,070             6,186                13.3

APMEA                                              6,771              7,321              7,555              7,475               10.4

Latin America                                   1,510              1,581              1,605              1,578               4.5

Canada                                               1,154              1,223              1,304              1,339               16.0

Partner Brands                                1,008              1,075              1,083              942                 -6.5

TOTAL                                             28,707            30,093            31,108            31,129                  8.4

Table 5  McDonald’s Corp: Financial Summary 2001-2005

US$ million                                       2001               2002              2003             2004            2005

System-wide sales                            38,491           40,181            40,630          41,525          45,933

% growth                                             7.0                 4.4                  1.1                   2.2                10.6

Revenue                                              13,259            14,243           14,870           15,405          17,141

% growth                                             6.7                  7.4                  4.4                  3.6                11.3

Operating profit                                3,320             3,330             2,697              2,113            2,832

% growth                                             20.2               0.3                 -19.0               -21.7             34.0

Net profit                                            1,948              1,977              1,637              894              1,471

% growth                                             25.7                1.5                  -17.2               -45.4             64.7

Table 6  McDonald’s Corp: Financial Results by Division 2004/2005

US$ million                                        Revenues          % value       % growth      Operating       % growth

                                                                2005               2004/ 2005   profits 2005   2004/ 2005

US                                                         6,039               35.2                11.4              1,982             18.5

Europe                                                  5,875               34.3                14.4              1,339             31.1

APMEA                                                 2,448               14.3                3.4                226              251.9

Latin America                                     859                  5.0                  5.5                -171                n/a

Canada                                                  778                  4.5                  22.8              163                30.1

Other                                                    1,142                 6.7                  10.7              -295              341.8

Corporate                                              –                       0.0                    –                  -413               n/a

TOTAL                                               17,141              100.0               11.3              2,832            34.0

Table 7  McDonald’s Corp: Efficiency Indicators 2001-2005

Unit                                                            2001          2002             2003              2004             2005

Operating profit margin  (%)                25.0           23.4               18.1                13.7                16.5

Net profit margin (%)                             14.7            13.9               11.0                 5.8                 8.6

Earnings per common share (US$)      1.44           1.49               1.27                0.70               1.15

Sales per unit (US$)                                1,463,035      1,399,693      1,350,148      1,334,866      1,475,582

Sales per employee (US$)                     1,225,828      1,103,874      1,028,608      1,007,888      1,098,885

Chapter 1

Introduction

Background

          There has been a tremendous reliance on fossil fuels over the last half-century. In particular, fossil fuel use has risen by more than fivefold. Oil use peaked at 1.7 billion tons in 1950 and peaked at about 8 billion tons in 1999. These estimates specifically indicate that fossil fuels account for 85 percent of global energy use. The transportation business consumes the majority of this energy. It has been suggested that the reliance on fossil fuels has negative consequences for cities, especially in terms of the construction of new housing, roads, and other urban facilities. These areas, should they continue to depend on fossil fuels, they risk the occurrence of being dysfunctional in the future. The problem with using fossil fuels to provide power and electricity is that in addition to not being environmentally friendly, these fossil fuels are easily depleted (Gowdy 1998). In fact, it has been predicted that if the world were to still depend on fossil fuels such as oil, there is a high occurrence for oil to expire in the year 2050. Other fossil fuels have been predicted to deplete within the years 2020 to 2030. Natural gas, on the other hand, has been predicted to not be available in the market anymore by the year 2040. Consequently, coal as an energy resource has also been predicted to expire before the year 2100. Uranium as well, has been said to reach the stage of depletion starting from the middle of the 2030s (Droege 2002).

          The UK Renewable Energy Advisory Group (REAG) has identified renewable energy to be energy that is produced naturally by the environment to be used by man for his own use and benefit (REAG 1992). In Europe, it has been said that renewable energy resources supply 5.3 percent of the total energy being consumed by the entire continent. In the United Kingdom, renewable resources make up only 1 percent. However, in a green paper presented by the European Commission in the year 1996, it has been revealed that members of the European Commission shall increase its target to 12 percent by the year 2010. This easily translates to a significant decrease in the carbon dioxide emissions to around 250 million tonnes. Of course, over the years, the percentages have increased and according to a report released by the EU, it has been revealed that the target of EU member countries would be to make sure that at least 20 percent of their energy needs are derived from renewable energy resources by the year 2020. Based on the report, it has been mentioned that the majority of renewable energy acquired would come from the renewable gas produced by sewage and other wastes. This would have an effect of significantly reducing the cost needed to meet the target set, since huge investments are already needed to just upgrade sewage treatment infrastructure just to meet water quality directives. In addition, to make sure that wind and solar energy is used, it has been suggested that new electricity grids that link member states of the EU with North Africa have to be constructed. Finance investments can be provided by the EU itself. Furthermore, in order to make sure that the target for renewable resources are met, it has been suggested that certain agricultural activities such as livestock farming, be reduced in order to also decrease the usage of artificial fertilizers which are harmful to our environment (Tindale 2010).

          The concept of geoeconomic time refers to the time period that is needed in order to analyze global warming. This time period is determined by paying attention to how the economic system interacts with the earth’s biophysical systems. Basically, geoeconomic time allows individuals to be able to emphasize on both the future and the past. It is what allows researchers and experts to analyse the future of global warming in an economic context. Put simply, the future geoeconomic time frame is based on the expectations held by an individual with regards to the interaction of geological resources. This includes sticks of fossil fuels. Thus, the geoeconomic time frame includes the earth’s situation in the past and whether this is similar to the condition expected in the future. Based on research studies, the amount of carbon dioxide produced in the earth was much higher eons ago. Since the beginning of the earth’s existence, the main source of carbon dioxide came from the plants, due to the photosynthesis process where carbon dioxide was released in order to create hydrocarbons. In the study conducted by Hall (1996), it was revealed that man has been quite ignorant with regards to the consequences brought about by global warming. Based on the research studies conducted, it has been concluded that energy policy is part of the global warming policy. In fact, energy policy consists of three factors. These are environmental pollution, national security and finally, uncertainty. Policy analysis is one that only calculates the costs and the benefits of decreasing the amount of carbon dioxide. Policy options refer to the options that help cut down carbon dioxide emissions, thereby also reducing acid disposition, decreasing urban air pollution, increasing national security and reducing the possibility of economic uncertainty. Policies addressed to combat global warming from carbon dioxide production and emissions are done if there are alternative sources to fossil fuels. It is widely known the pollution is caused as a result of the combustion of burning coal, oil and natural gas (Hall 1996). Thus, in this study, the researcher would like to investigate the various ways in which the occurrence of global warming can be reduced by placing emphasis on the usage of alternative energy resources.

Aim of the Study

          Through this study, the researcher plans to find out whether Scotland has the potential of reaching its target of generating 50 percent of its electricity from renewable sources by the year 2020. Thus, the researcher shall approach this study by gathering relevant information that can present the potential of Scotland to catch up with other countries all around the world in attaining the same goal.

Objectives of the Study

Through this study, the researcher shall:

• Gain thorough knowledge of the disadvantages brought about by fossil fuel dependency.
• Present information about alternative and renewable energy resources.
• Gain thorough knowledge about the current environmental situation in the United Kingdom, with the focus being on Scotland.
• Provide recommendations on how Scotland can attain their goal of decreasing fossil fuel dependency and relying instead on alternative and renewable energy resources.

Significance of the Study

          The increase of cities and infrastructures all over the world, especially in the 19^th, 20^th and 21^st century also meant the increase in the usage of fossil fuels (Abernethy 1993). Currently, the growth and operation of cities all around the world meant that the world uses up around three quarters of the fossil fuels available in the world. This easily translates that fossil fuels supply 85 percent of the energy used up by the world. Due to the large frequency of dependency on fossil fuels, the world has to look for alternative sources of energy before fossil fuels completely vanish. In addition to this, the usage of fossil fuels also contributes to global warming, thereby giving way to climate change. The main fossil fuels responsible for this is the coal and oil, the combustion of which produces the greenhouse gas, carbon dioxide. As a result, there is indeed a demand to look for and use alternative sources of power. In addition to this, cities all over the world may also have to make use of new technologies to redesign and reengineer existing and future infrastructures, transportation and land use systems, as well as other facilities.

Chapter 2

Literature Review

          According to Leva & Zaninelli (2006), the world’s energy sources has changed due to the attention provided to and the environmental concerns towards the effects brought about by the generation of energy. Due to the increasing environmental concerns and the spread of media focusing on the effects of a lack of energy resources, the impact of producing electricity has been minimized and efforts are being made to make sure that electricity can be driven from sources that are renewable. The energy policy is one that consists of the renewable energy sector. The latter possesses the ability to reduce the greenhouse gas emissions and pollution, to exploit local and decentralized energy sources, and to make use of the world’s high technology industries (Brander & Taylor 1997). The main benefits to be received from the generation of electricity from renewable sources is that once this happens, the occurrence of harmful gas emissions is lessened significantly, and the sources that would be used is infinitely available. Apparently, there is a relation between the quality of the living environment and the generation of energy, therefore meaning that the usage of fossil fuels as the source of energy has generated environmental effects that negatively affect the well-being of all individuals (Dilworth 1994). These days, the European energy markets are faced with both the liberalization issue and the fulfilment of environmental targets. Since the most that man can do is to develop the principles of sustainability and protect nature, it helps to make sure that the future generations have enough energy resources to meet their needs (Wang et al., 2006). There are three different factors that help influence the development of a community. These are namely 1) the availability of energy resources, 2) the cost of producing energy and 3) the impact of the energy sources that man has chosen (Leva & Zaninelli 2006),

          According to the Commission of European Communities (2007), the European Union’s usage of renewable energy should only make up 20 percent of its energy mix by the year 2020. This is a challenging fear since 6.5 percent of the energy used up by all the members of the European Union is currently acquired from renewable sources. However, the target percentage cannot be reached if there is not a properly functioning energy market that would make certain that the development of an effectively functioning emission trading mechanism and an industry that runs on renewable energy. It has been said that a single European market for renewable energy shall bring forth a competitive environment in which renewable energy production will rise and develop in a manner that is efficient. Thus, the goal of all member countries that are part of the European Union would be to meet the target. This way, greenhouse gas emissions are reduced as well as import dependence (Zervos 2007).

Green Certificates

According to NERA Economic Consulting (2005), achieving the European Union’s energy policy objectives will necessitate the creation of tradable green credential systems by member states. The standards will be defined as a result, and a certain amount of electricity would be produced using renewable energy sources and other “green” energy sources. A tradable green credential is one that requires member states to meet their clean energy production targets in deregulated power markets. The core idea behind green certificates is to provide a support mechanism through which the market determines the amount of support given to electricity produced by renewable energy. Producers of energy from renewable sources will be the ones to obtain a certificate for each fixed unit of electricity produced under such a scheme. This credential would act as a representation of the importance of energy to humanity and the community. The aim of establishing green certificates is to create rivalry among producers of “green” electricity. As a result, policymakers are under pressure to ensure that the green quota is met in a cost-effective way. A tradable green certificate scheme guides the production of two distinct goods through the development of energy from a sustainable source. Both are 1) power, which is known to be sold in a traditional sector, and 2) renewable certificates, which are known to be exchanged in a green certificate market. The scheme of tradable green certificates ensures that energy produced from sustainable markets can be sold as regular electricity. The added expenses of generating energy from sustainable energies, on the other side, was offset by the sale of green certificates. As a result, a major demand for renewable energy has emerged. To put it another way, the markets for renewable certificates and energy are not the same thing. In fact, the two are distinct. In order to introduce a green credential scheme, incentives for the generation of energy from sustainable sources must be given. As a result, a long-term electricity generation scheme is developed (Nilson & Sundqvist 2007).

          In Sweden it is the policy of the Swedish government that the country shall acquire its energy from renewable energy sources for years to come. In the country, there exists two reasons to continue the support for promoting electricity production from renewable resources. This is due to the high security of supply and the continuous transformation of the energy system itself. In addition, increasing the production of renewable resources and the usage of this also leads to a reduction in the import dependency of non-renewable resources such as oil for instance. Therefore, there is then an increased security that non-renewable resources would not cease to exist as was predicted. The green certificate system in Sweden was first introduced in the year 2003, and has been established for the purpose of producing renewable electricity and making this process even more cost efficient than before. The green certificate system in this area is based on the quota obligations from the people who use the electricity themselves, and there are penalties for those who do not comply with the rules set by the Swedish government. Thus, all electricity users are expected to really support and use renewable resources such as solar energy, wave energy, hydro energy, bio –fuel and peat. Ultimately, it is the market that makes the decision on which technologies would be useful in helping them achieve the target set by the governments, and this in itself encourages the deployment of renewable energy resources in a manner that is cost efficient. Or Can Scotland Reach its Target of Generating 50 Percent of its Electricity from Renewable Sources by 2020?

          In Sweden, the production of renewable electricity is supported by all customers who use the electricity for their own basic needs. The electricity producers in turn are expected to receive electricity certificates from their local government. They are also obliged to purchase and submit electricity certificates based on the production that is incurred by the company and the electricity that is consumed by the customers. There is an increased demand for renewable electricity due to the varying quota required of the producers every year. In this context, there is also an increased production of electricity certificates. Since the production of such certificates requires money to make, the customers are charged with extra for these certificates and in exchange, the environmental impact brought about by the generation of electricity is reduced. The producers of electricity are also required to provide information to the Swedish Energy Agency, wherein they are expected to declare the electricity that they have sold for the year. Their quota obligation can be calculated by the amount of electricity that is sold and the quota that they have reached for the previous year. New green certificates must be purchased in order to meet the new quota obligations for the following year. Through the sale of electricity certificates, the electricity producers are able to gain a certain amount of income, thereby making it easier for them to invest in projects that promote the usage of renewable energy sources (Nilson & Sundqvist 2007).

Green Certificates in Scotland

          The case for green energy schemes in the UK is powerful since it requires electricity providers in the UK to purchase a growing proportion of their electricity from renewable sources. In reality, the government of the United Kingdom has set a goal of producing 10% renewable energy by 2010 and another 20% by 2020. (Office of Gas & Electricity Markets 2007). The Renewables Obligation in Scotland, as well as the Renewables Obligation in Northern Ireland and the Renewables Obligation in the United Kingdom, were all created to encourage the use of green energy in the power generation sector. A variety of agencies assisted with the implementation of those plans. The Department of Trade and Industry (formerly known as the Department for Business, Enterprise and Regulatory Reform), the Scottish Government and the Department of Enterprise, Trade and Investment, as well as the Gas and Electricity Markets Authority, are among them. The Renewables Obligation’s basic premise is that energy providers in England and Wales, Scotland, and Northern Ireland must source a certain percentage of their electricity from renewable sources. In the year 2002 to 2003, England, Wales and Scotland sourced at least 3 percent of their electricity from such renewable generators. This percentage increased to 5.5 percent between the years 2005 to 2005, and then in 2006 to 2007, this percentage increased to 6.7 percent. 2007 to 2008 required the 3 areas to increase their percentage to 7.9 percent and in the year 2008 to 2009, this increased further to 9.1 percent. In the year 2015 to 2016, this increased to 15.4 percent and this level is expected to be maintained until the year 2026 to 2027 (Office of Gas and Electricity Markets 2008).

          In Scotland and the rest of the United Kingdom, the certificates issued by the Renewable Obligation state that the sources of electricity have to be derived from sewage gas, landfill gas, wave power, wind power, tidal power, hydro power, photovoltaic cells, biomass, and biogas from anaerobic digestion processes. Basically, the Renewables Obligation is designed to provide incentives for electricity generation that stem from renewable resources. This was established in England in 2002, along with Wales and Scotland, and it was introduced in Northern Ireland in 2005. Electricity suppliers are obliged to present their green certificates or Renewables Obligation Certificates. In cases when electricity suppliers are unable to fulfil their obligation due to the lack of certificates, payments are made into the buy-out fund. The money invested in such funds are then paid back to the suppliers depending on the certificates that they are able to present (OFGEM 2010).

Renewable Resource Management

          According to Ullah (2007), overexploiting renewable resources and mismanaging them is nothing new. Other resources that have been overexploited by man over the years include forests, groundwater reservoirs, soils and even fish and whales. There are two reasons why overexploitation of resources occurs. The first reason is due to the ‘tragedy of commons.’ Under this theory, individuals who have access to a resource compete with other individuals in order to benefit from the resource. As a result, the common pool community suffers because of such an imbalance. Aside from the ‘tragedy of commons,’ the other theory that contributes to the overexploitation and mismanagement of resources is the ‘commons’ problem. This refers to the overexploitation of common renewable resources. However, despite the elimination of the latter problem, overexploitation shall still exist. One other explanation for its existence is that the people themselves are not aware regarding how they can manage their resources properly. This has been attributed to their tendency to systematically have misconceptions with regards to the dynamics of bioeconomic systems.

          The study conducted by Ullah (2007) suggested that the performances of individuals with regards to managing their resources can help through the development of accurate mental models of renewable resource systems. This is done by training these individuals through the usage of computer simulation-based interactive learning environments, abbreviated as CSBILEs. Sessions would include debriefing these individuals as well. Through the study conducted, a comprehensive model was also developed and used. This model consisted of four evaluation criteria, namely 1) knowledge, 2) heuristics, and 3) time that it takes to make a decision and 4) task performance. The results of the study revealed that the process of debriefing proved to be effective across all four criteria. Such a process was found to improve task performance, allowed users to gain more knowledge about the decision domain, heuristics were also developed and less time was needed in the dynamic decision making process (Davidsen, 1996). These findings are crucial for the renewable resource management process because decision makers are more able to reflect on their performance and they are also able to assess their own perceptions with regards to the task at hand in a constructive manner.

Renewable Energy and Social Enterprise Activity

          Power supply companies (ESCOs), according to van der Horst (2008), are not known to offer power or energy. Instead, these companies focus on expanding, implementing, and financing policies aimed at rising energy efficiency, reducing greenhouse pollution, and minimizing long-term plant maintenance costs. With the advent of climate change and increasing oil prices, it is important that renewable energy efficiency increases, in addition to increased government support. Since the early 1990s, renewable energy technology is said to have been grown in the United Kingdom. Energy provision in developed countries is largely described by the relationship between fuel types and other technologies that utilize that energy. For eg, automobiles run on fuel, while storage heaters run on nuclear power and electricity. Mining and exporting infrastructures have started to use state and continental coverage foil and gas pipe lines over time, in addition to a power grid. Such distribution grids were initially utilized by entrepreneurs, and the usage of these grids slowly expanded. In the 1990’s, neo-liberalism was able to influence the privatization of national electricity markets as well as the deregulation of these markets. This decade also saw the threats brought about by climate change, which was in turn brought about by the increase in human activities. As a result, the government started to take control, and there has been an increasing support from the state to continue using renewable energy resources (Byrne & Rich, 1992). In the United Kingdom, technologies that help bring about further developments in renewable energy was really supported, and these technologies were sold through the grid. In the same decade, a funding programme known as the non-fossil fuel obligation or NFFO, was able to make sure that renewable energy sources were used up. However, there were some disappointing projects that failed to carry out the wishes of the government with regards to using renewable energy. In fact, the planning process itself served as the key obstacle since many projects that were proposed were also opposed by the general public. There were also some projects that were rejected altogether and at the very least, delayed. To date, developing renewable energy in the private sector has not resulted in what was first expected. The results have been quite disappointing and fallen behind the target set by the UK government. Thus, within the EU, the United Kingdom is really behind with regards to renewable energy development. However, the government itself has been performing well enough in making sure that allocated funding for such projects have been well spent. This is thanks to the increased support of domestic renewables.

According to a report undertaken by van der Horst (2008), alternative energy sources such as solar water heaters, biomass energy, and land source heat pumps have replaced the bulk of social enterprise-renewable energy projects in the United Kingdom. In reality, schools have resorted to utilizing solar photovoltaics to partake in the use of green resources. While social enterprises that use green energies are still uncommon in the UK, their numbers are growing. In reality, many wind cooperatives in the world that run on small windfarms have demonstrated their productivity in recent years. Such windfarms can be found in England in Baywind, Wales in Bro Dyfi, and Scotland in Findhorn. Bro Dyfi and Findhorn were also involved in group living projects in the 1960s and 1970s, which resulted in the founding of the Center of Alternative Energy (CAT) and the society of Findhorn. The Scottish highlands are home to the second association of green energy social enterprises. It is here where urban residents have been able to buy the private estates on which they have existed thanks to laws and state assistance. As a result, this mechanism became a resurrected mode of shared land ownership (managed as a trust), allowing local communities to assess income-generating potential on their land.

Case Study of North Assynt Estate in Scotland

          Hanley and Nevin (1998) conducted a study on the North Assynt Estate, located on the North West coast of Scotland. In the study conducted, three scenarios were presented for the development of renewable energy on the Estate, to both visitors and residents. Apparently, on the Estate, there existed a three turbine wind farm on the Stoer Peninsula, a biomass development located at Culkein and the Stoer Peninsula. Finally, there was also a small scale hydroelectric scheme on the Loch Poll. The methodology of the research study conducted included the researcher resorting to a simple random sampling technique. Prior to the actual testing stage, there was also a pre-test stage and a final visitor questionnaire was administered. The researchers made sure that the a four part questionnaire was administered during the pre-test stage, and the process itself proved to be valuable when making the final questionnaire. Overall, around 76 respondents agreed to participate in the study, and this number basically makes up 8 percent of the estimated total visits during the entire sampling period set by the researchers. During the data collection process, the researchers showcased the three scenarios for renewable energy, and this was done through the presentation of the three scenarios with the use of photomontages. These photomontages showed the exact locations where the renewable resource projects would be established and the predicted effects on the environment. The respondents were then asked to determine their answers through the Likert scale, where they were to score their opinions on a scale of 1 to 5. Basically, they were asked to share their opinions while at the same time considering the environmental effects of each option. They were also asked whether the development of the mentioned areas may affect any future trips to the area, while affecting spending habits and behaviour as well. In other words, the study focused on the economic and tourism impacts on the mentioned areas and whether the development of renewable energy resources would affect the tourism sector.

          Judging from the results, it was seen that from both the perspectives of the visitors and the residents, the small scale hydro scheme was the most preferred option for the ideal renewable energy source. Due to the low visitor expenditure in the area, the local economic impact study had problems in ranking the options chosen by the respondents with the basis on the effects of tourism spending. In conclusion, the researchers concluded that renewable energy developments are very beneficial for communities in rural and remote areas. It is particularly beneficial for these areas if there is a sense of community ownership is exhibited and the community members themselves are involved in the projects supporting the usage of renewable energy. Thus, the findings of the researcher show that should there be other areas in Scotland to adopt the usage of renewable energy resources, then other areas would also enjoy similar advantages (Hanley & Nevin 1998).

Alternative Forms of Energy

          According to Wang & Singh (2008), there is an energy crisis occurring in several areas around the world. At the same time, man is also experiencing environmental crisis brought about by changes in the climate, and the increase of greenhouse gas emissions, which contributes to climate change. The main purpose of developing renewable energy technologies would mean that mankind does not have to dependent on the earth’s natural resources, which are depleting over time. In addition, the development of renewable energy also brings about more benefits. Taking this seriously means that healthier environments are created and the Earth is protected (Ponting 1991). It must be mentioned that most of our energy resource comes either directly or indirectly from the sun. This easily means that using the sun as an energy resource will not deplete in the near future. However, the sun is only available for a certain period of time. When night time strikes, people have to rely on other resources, such as imported fossil fuels. Fossil fuel combustion is something that contributes largely to the change in climate due to the emission of the greenhouse gas, carbon dioxide. Coal, for the longest time, has been a resource that used to be abundantly available. It has also been very reliable but the usage of coal for energy and power generation has had to face extreme pressures due to the environmental regulations set in almost all areas around the world. As a result, it is indeed essential for man to start looking for other alternatives that would not pollute the environment and would not deplete over time. It must be noted that using fossil fuels as an energy resource is non-renewable. Upon using fossil fuels for energy, man does not only consume limited resources, but using such resources can prove to be detrimental to the environment in so many ways. In addition to this, using such fossil fuels are cost effective as well.

          In Wang & Singh’s (2008) study, a number of alternative energy sources have been described. One of the popular renewable energy resources include wind turbine generators (or WTGs). Wind power generation has gained popularity in areas such as Germany, Spain, the Netherlands and Denmark, occupying around 84 percent of the total European wind capacity. It has been predicted that by the year 2020, wind power will fulfil the residential demands of about half of the population in the European region. In the United States, on the other hand, the usage of wind energy has grown in the last 5 years to as much as 24 percent. Wind energy is something that is widely available, is renewable and is clean (Kamp, et al. 2004). It is something that can be easily converted into electricity and this can happen via the usage of wind turbines that can be installed both onshore and offshore (van de Wekken & Wien 2006). Large scale wind farms can use them for nation-level power grids, and at the same time, small turbines can also be used for homes in the rural areas or grid-isolated locations. Wind turbine generators are usually powered by windmills, which are in turn, operated by utilities and independent power producers (or IPPs). Such windmills are also usually built either onshore or offshore, and the usage of such structures make sure that energy can be brought about without giving way to pollutant emissions (van de Wekken & Wien 2006). The only drawback of wind power is that it is highly dependent upon the weather conditions. This means that the weather is the major determinant on whether energy can be produced or not. Thus, the volatility of wind power is something that should be considered well when designing a renewable-based power plant. Based on the study conducted by Wang & Singh, other sources of power are also being taken advantage of in order to mitigate or balance the fluctuations that occur as a result of the intermittency of wind power (Wang & Singh 2008).

          Solar power can be utilized to produce electricity via Photovoltaic cells, otherwise known as PVs. PV panels make use of the photovoltaic effect of semiconductors to produce electricity from the sunlight. In the United States and in Europe, PV power plants with capacities of 300 Kilo Watts to 500 Kilo Watts have been linked to power grids. Just like power generated from wind power, solar energy from the sun is influenced by meteorology. Due to its intermittent power supply, solar energy may need to be supplemented by storage batteries in order to smooth out any fluctuations. The main advantage of OV panels is that they do not produce direct emissions, and can therefore be considered to be environmentally friendly. In addition, it does not take a lot to maintain PV panels, since there has been significant improvements in technology in recent years. Furthermore, PV panels also require minimum financial investment. Further research is currently being conducted to make sure that the usage of PV cells will be less expensive and more efficient in the coming years (Wang & Singh 2008).

          Tidal power has also been described to be a great alternative source that does not pollute the environment. The concept of tidal power is that it produces energy contained in moving water mass because of strong waves of rides. It is fairly efficient and is also fairly reliable. However, it is a source of energy that requires the investment of large capital, but once barrages are successfully installed, there is little need for labour and maintenance. However, using tidal power as an energy resource is something that may significantly affect the water inside the basin in addition to disturbing fish activities. Aside from such disadvantages though, tidal power has been considered to be capable of supplying continuous and predictable power and it has been anticipated to increase significantly in a matter of time (Wang & Singh 2008). According to Strategic Direction (2009), the United Kingdom possesses one of the best tidal and wave energy resources, thereby suggesting that depending on such resources alone can easily make up a fifth of the United Kingdom’s electricity demand. Given such resources, it has been suggested that the only factor missing would be the innovation of existing technologies that support the usage of such renewable resources. In addition, further research studies can also be carried out to ensure optimum development. This way, the United Kingdom can really compete with other countries around the world to make sure that they utilize their tidal and wave energy resources in a manner that it can really be used and benefitted from on a much wider scale. The SeaGen has been identified to be one of the most advanced devices for generating tidal streams, especially when it comes to commercial usage. The device was first developed by the Bristol based Marine Current Turbines (MCT) and it measures 122 feet long. An ‘inverted windmill’ helps to capture some of the energy by allowing the water instead of air, turn its sails during the flowing process. The SeaGen has been identified as the world’s first tidal stream generating system and it has already been installed in Northern Ireland- in Strangford Lough to be exact. As compared to other tidal current systems, the SeaGen has been identified to be more than four times as powerful, and as soon as it is fully operational. It has also been mentioned that once it is commercialized, its twin rotors shall operate for up to 18 to 20 hours per day with a generating capacity up to 1.2 Mega Watts. Current research studies at the Oxford University reveal the development of what is regarded as second generation tidal turbine. In comparison to existing turbines, the newly designed tidal turbine with its longer cylindrical rotor and triangulated blades, the newly developed tidal turbines have more potential to make use of tidal energy in a highly efficient manner. This is due to the designing being incorporated with the largest possible area of available flow. In addition, the costs associated with the newly developed tidal turbines are much lower than the existing ones. To further illustrate how promising the newly designed tidal turbines are, the manufacturing costs are estimated to be around 60 percent lower and the maintenance costs are also 40 percent lower as compared to the current equipment being used to harness tidal energy. Another system, currently being developed by Pulse Tidal is also on the way to being commercialized. It is supported by funds given out by the UK government and soon, there shall be a prototype tidal stream generator to be released in the Humber Estuary. The system shall be available for trials, and this will be done through the help of underwater currents, which shall move a pair of 11m hydrofoils in a vertical motion to generate electrical current. Yet another device that can be used to help bring about tidal energy, is the Pelamis Wave Energy Converter, which is another introduction in the marine renewable energy scene. This new piece of technology has been developed by the Edinburgh-based Pelamis Wave Power, and has gone through several years of engineering tests. It is also one of the world’s most advanced offshore wave energy converters. Four long cylindrical sections are connected together at hinged joints, and this is done through the help of power conversion modules, all of which house a power generation system. The device is semi-submerged and the motion produced at each joint is resisted by hydraulic rams. Thus, the waves are used to pump high pressure fluid through the hydraulic motors through smoothing accumulators. The hydraulic motors, in turn drive electrical generators to create electricity. A number of devices can be connected together and they can also be connected to the shore through one seabed cable. Other breakthrough devices include the Oscillating Water Column (or OWC), which works by allowing the sea to rise and fall within a chamber. This movement compresses the air and drives the turbine generator that creates the possibility of electricity. For a while, this has been one of the preferred solutions for applications that seek to convert wave energy into electricity. The key of such a device is to keep the entire system as simple as possible. This means that there are no moving parts. Wavegen is one of the companies that operates the Limpet, which is the world’s ‘first commercial scale wave energy plant.’ At the moment, the company is currently developing the Siadar Wave Energy Project (or SWEP), which aims to harness the power produced by waves from the Atlantic Ocean, in Siadar Bay in particular. This is done by the construction of a new breakwater that will ‘house the Wavegen turbines.’ This project is based on the OWC technology, but it must be noted that OWC is still not as efficient as many would hope it would be. However, researchers are at work to make sure that the OWC would be much more efficient in the coming years. Finally, the Anaconda is also one of the latest innovations built on the concept of wave energy. This innovation is one that consists of a giant rubber tube, is closed at both ends and is filled with water completely. It has been designed in such a manner that it is set just below the surface of the sea, with one end of the tube being made to keep contact with the oncoming waves. Thus, a wave that hits the end squeezes it and this causes a bulge wave to be formed inside the tube. As soon as the bulge wave runs through the tube, pressure is created and the tube is squeezed more and more, allowing the bulge to be bigger. This bulge wave, due to the pressure is then able to turn a turbine fitted at the far end of the device and power is produced. Finally, a cable is used to gain advantage of the power and convert it to electricity. Due to its design and the materials used to make it, the Anaconda is much lighter and easier to not only make, but also use, as compared to other devices that are meant for taking advantage of wave energy.

          Geothermal energy is also another energy resource that is renewable. It usually refers to heat found in the earth and can be used to generate power. It is a resource that is more competitive in areas that have restrictions on fossils fuels as energy resources. All over the world, the usage of geothermal energy for generating electricity has been gaining popularity, reaching an estimate of 8,000 MW. The increase of fluctuating power prices have made geothermal energy an ideal source of energy because of its economic disadvantages (Wang & Singh 2008).

          Another source of renewable energy comes in the form of hydrogen and fuel cells. A fuel cell is basically an electrochemical device that has the capabilities of converting hydrogen and oxygen into water. While doing so, it also produces electricity. The best features of using fuel cells is that they do no emit pollutant gases and that they also do not need to use up oil. These fuel cells have also been especially useful when it comes to producing power and electricity in locations that are in rural or isolated areas. Isolated areas include the location of spacecrafts. The power generated from fuel cells can be used in producing base-load power supplies, along with heat and power generation (El Shatter et al. 2002). They can be used to run electric and hybrid electric vehicles, off-grid power generation and so much more. The fuel cell has been considered to be the ‘microchip of the energy industry,’ because of its promising advantage to generate power and electricity in a clean manner (Wang & Singh 2008).

          Production of power and electricity can also be acquired from biomass, which refers to plant matter that is grown in order to produce biofuel. In addition, biomass can also be used to produce biodegradable wastes that can be burnt to produce fuel as well. Primary components of biomass include biofuels, landfill gas, sewage treatment plant gas and solids. It is energy that is very sustainable, but it still contributes to global warming because of the gas produced from the combustion process. If biomass is burnt without considering combustion filtering measures, it is highly likely that environmental pollution problems will occur as a result. Available technologies have shown that the production of liquid fuels from the combustion of biomass is not cost effective because of the expenses incurred during the biomass production process along with the conversion procedure. The conversion procedure is one that converts biomass into alcohol, for use in generating power and electricity. However, by the year 2030, it has been predicted that the usage of biomass to produce electricity will increase three fold, thereby making up 2 percent of the demand for world energy (Wang & Singh 2008).

          Storage batteries have been used by both wind turbine generators and photovoltaic cells in order to fix any fluctuations that may occur. Thus, storage batteries can be utilized to make sure that the supply and demand relationship is balanced  by serving as a buffer. When the power generated by wind turbine generators and photovoltaic cells goes over the load demand, a certain amount of surplus power shall be stored in the batteries for use in the future. In addition to this, the stored power in these batteries can be used to enhance the reliability of the system, thereby reducing the occurrence of power dumping and minimizing the operational cost (Wang & Singh 2008).

Encouraging Low-Carbon Living

          In a study conducted by Broer & Titheridge (2009), it was reported that the UK government aims to set its carbon dioxide emission target to 80 percent by the year 2050. In addition to this, targets have also been set at 20 percent in the year 2010 and 30 percent in the year 2020. These percentages refer to reductions in carbon dioxide gas emissions that the UK plans to attain. Despite the fact that setting such targets have been described to be quite ambitious, the UK seems determined to reach the set targets in the near future. In so doing, obvious solutions come in the form of energy efficiency and renewable energy. In the domestic sector, there are current government policies that aim to make sure that there is a significant decrease in the carbon dioxide emissions that have so contributed to the pollution experienced by the world in general. Since the domestic sector is largely composed of infrastructures, the government has decided to implement policies that target construction projects. Thus, in the United Kingdom, new homes are required to meet Part L regulations with regards to energy efficiency. Such regulations are aimed to reduce the occurrence of carbon dioxide gas being emitted when it comes to the construction of the house itself and all the other activities that would take place inside the house once the construction has been completed. From this alone, the government aims to gradually improve the emission of carbon in new homes. This is done by achieving a 25 percent reduction in energy that is consumed within the home by the year 2010, which will increase to 44 percent by the year 2013 and then zero percent by the year 2016. The final stage aims to make sure that by the year 2016, there are zero homes that give off carbon emissions. Simply put, the main idea of a zero carbon home is that there are no net carbon dioxide emissions from the energy consumed by the house’s inhabitants. However, this goal excludes the actual energy used for constructing the infrastructure, and the energy that is contained in the construction materials. Research studies have found out that homes in the United Kingdom consume 11 percent of the total energy to satisfy their needs with heating and lighting. However, even though there are potential solutions to make sure that energy and carbon savings are achieved through the construction and design process (for example: building insulation, high performance glazing and an efficient energy system), there are still other issues to be addressed with regards to the behavioural and lifestyle changes of the people instead. This extends to their activities outside the home as well. Since carbon emissions are also common in the transport sector and naturally, an individual has to spend more in order to travel from one place to another, it is wise to make sure that the land planning process is conducive to the reduction in carbon dioxide emission foals. For instance, when planning a new housing project, it is wise to really study the proximity of the housing project with other services and facilities. Thus, if a person who lives in House A wants to go to a shop, it is best if the shop is already located near the person’s residence in order to save on the amount of energy consumed for travel purposed only.

          The Climate Challenge Tool is the tool used to calculate the carbon missions being saved by each individual and the cost implications that are available to builders in the construction industry. Besides capital costs, other costs that are accounted for include energy savings and the maintenance costs. Other further costs include the costs required for replacement. With regards to energy resources, it has been found out that the costs of energy resources range from approximately £ 200 to £700 for each ton of carbon dioxide gas saved. Based on such findings, it has been suggested that the UK establish cost-effective energy efficiency measures before renewable. In order for this to happen, it has been suggested that homes begin to gain energy resources from solar energy for their heating needs. It has also been suggested that the entire UK begin to start looking into developing wind parks. Instead of simply focusing on reducing the carbon dioxide emissions produced by each household in the domestic sector, it has been concluded that the government instead focus on achieving the carbon dioxide targets by focusing on sustainable lifestyles. This is because supporting low-carbon lifestyles have more advantages towards the residents than energy efficiency and renewable energy measures. Thus, the government should really look into providing good low carbon transport provisions ( supporting activities such as walking, cycling, using public transport, and car pooling), providing easier access to jobs, amenities, recycling facilities and the like. It has also been suggested that employing sustainability officers could help control and maintain the lifestyles held by UK residents, instead of merely focusing and paying attention to the renewable energy and energy efficiency measures (Masters, 2006).

Chapter 3

Methodology

Introduction

          In the previous chapter the researcher was able to gather relevant information that would show the potential of Scotland to reach their reduced carbon dioxide emissions by the year 2050. The main aim of most countries including the United Kingdom would be to revert to alternative sources that are renewable and are environmentally friendly. In this chapter, the researcher shall present the methodology used for the rest of the study, with the focus being on content analysis.

Research Approach

          Since the researcher plans to focus on content analysis for this research study, the research can therefore be said to be qualitative. According to the Colorado State University (2009), the qualitative method presents data the way it is and thus does not require as much data analysis as would be expected. As compared to quantitative data that requires numerical facts in order to present information, the qualitative approach is one that depends on words and written facts.

          Content analysis has been defined to be the study of recorded works with regards to information that these works hold. Thus, content analysis can come in the form of books, websites and the like, all of which contain information that can further be studied. When it comes to studying content, there are a number of details that must be taken care of. The researcher has to be able to find out 1) the data being analyzed, 2) the definitions included in the data being gathered, 3) the population from which the data is being gathered from, 4) the context from which the data is being analyzed, 4) the limitations of the boundaries of the research being analyzed, and 5) the target of the inferences. However, despite the fact that these are all ideal questions that must be answered, the analysis is still largely dependent on the content used for the data analysis process (Krippendorff 2004).

Data Collection

          For this study, the researcher made use of valid Internet articles and journals in order to gather necessary data for the literature review section or Chapter 2 as well as the Introductory section or Chapter 1. This type of method is known as secondary data collection since it makes use of the theories, ideas and works of other individuals, most of whom are already experts in the field of education. This information shall also serve as a good backdrop when it comes to drawing conclusions about the data retrieved from primary data collection, as well as summing up conclusions for the entire study. Thus, when presenting the gathered data in the discussion section later on in this study, the researcher shall make references to the literature previously mentioned in the second chapter when appropriate, in order to satisfy the objectives as mentioned in the very first chapter.

Time Period

          In any research study, it is crucial that the time taken to conduct the research should be carefully considered. This paper is no exception. One of the most important factors that the researcher had to take note of was the time required to conduct the entire study, while focusing on the tasks that need to be accomplished. Before proceeding with the study, setting aside a time period allows the researcher to be more organized when it comes to keeping up with the set schedule. This way, the researcher would be able to know which tasks have to be prioritized and which tasks may be kept aside for the meantime. Should the researcher fail to keep up with the set time period, the schedule can be adjusted appropriately in order to complete the work required.

          In order to write up the literature review, the researcher utilized a period of 1 month in order to gather the necessary materials required. As was mentioned in the previous paragraphs, the data collected was mainly sourced from valid journals, in relation with the topic at hand. For the data analysis period, the researcher took a total of five days to go through the relevant material, as well as write up the material that would be included in this study. For the convenience of the researcher it is important to set aside a timeline wherein the researcher can list down the tasks that need to be accomplished along with the deadlines set for each task completed and each task that has yet to be prioritized. Such an organized manner of setting aside dates and deadlines allows the researcher to know what tasks need to be completed first before the others, thereby ensuring that the study to be carried out in an organized and efficient manner (Oppenheim, 1992).

Literature Search / Search Strategy

          In order to accomplish this study, the researcher had to go through several articles that could be found through online databases. Three online databases were used to search for the relevant journals. These are namely: 1) Sage Online, 2) Science Direct, and 3) Emerald. With regards to actually searching for the materials online, the researcher made sure to use the search words of ‘renewable energy,’ ‘UK,’ and ‘Scotland,’ in order to generate appropriate journals that could be used for this study. However, although there were numerous journals pertaining to renewable energy resources, the researcher found it challenging to look for journals that particularly focus on Scotland and the renewable sources sector. This was because most of the research studies conducted previously focused on the situation in other countries such as the USA and China.

Selected Data

          The researcher decided to focus on a total of journals. The works included for the data analysis process were namely : ‘Enabling low carbon living in new UK housing developments, by Broer and Titheridge (2009), ‘Debriefing can reduce misperceptions of feedback,’ by Ullah (2007), ‘Social enterprise and renewable energy: emerging initiatives and communities of practice,’ by Van der Horst (2008), ‘Hybrid design of electric power generation systems including renewable sources of energy,’ by Wang and Singh (2008), ‘Innovations: taming sea energy, leading marine renewable energy technologies, from the journal Strategic Direction (2009), ‘Using the market at a cost: how the introduction of green certificates in Sweden led to market inefficiencies,’ by Nilsson and Sunqvist (2007), ‘Renewable energy and the city: Urban life in an age of fossil fuel depletion and climate change,’ by Droege (2002), and ‘Appraising renewable energy developments in remote communities: the case of the North Assynt Estate, Scotland,’ by Hanley and Nelvin (1998).

Chapter 4

Discussion

Introduction

          In the previous section, the researcher presented the methodology utilized in order to conduct this study. It was mentioned that the researcher has planned to conduct a content analysis of the data gathered with regards to non-renewable energy resources and whether Scotland has the capability of reaching its target to depend on renewable energy by at least 50 percent. In this chapter, the researcher shall analyse the content gathered from the journals that are the focal point of this study.

          The study conducted by Wang and Singh (2008) outlined the various renewable energy resources that is not easily exhaustible. The most popular energy resource has proved to be wind turbine generators (or WTGs), which is also currently being used in a number of European countries. Based on the information provided, it has been predicted that the usage of wind power as a source of electricity and power shall be able to fulfil the demands of half of the population by the year 2020. The main advantages of using wind as a reliable energy resource is that it is not only clean, but it is also widely available. In fact, wind turbines can also be constructed in offshore places and not just onshore. At the moment, wind energy is being powered by windmills. The only disadvantage of being dependent on the wind for energy is that using wind as such would also mean that man would have to constantly be on the lookout for weather conditions that would help wind energy to be efficient.

          Solar energy has also been identified to be a source of energy that can be used for a variety of uses- lighting and heating mostly. This can be done through the use of Photovoltaic cells, which may also be known as PVs for short. The main concept of PV panels is that they take advantage of the photovoltaic effect of semiconductors and electricity is easily generated with the help of sunlight. Although solar energy is indeed capable of providing energy up to 500 Kilo Watts, solar energy is still largely dependent on weather conditions just like wind power.

          Other great alternative resources include storage batteries, which are used by both wind powered turbine generators and solar power as well. The usage of such batteries is not as popular but despite this fact, it is undeniable that they are very helpful in making sure that the reliability of the system is enhanced and they also have the advantage of minimizing operational costs. Hydrogen fuel cells have also been identified to be a renewable energy resource. The basic concept of fuel cells is that they are capable of converting hydrogen and oxygen into water. This then makes it possible for electricity to be generated. The main advantage of such a method is that no pollutant by products are produced, making the method extremely environmentally friendly. Another renewable source of energy can be found in the combustion of biomass to produce biofuel. This is a very good method to recycle wastes especially since it means that materials that go into sewage are put to good use and can produce energy. However, despite such good advantages, this method is still discouraged due to the pollution that is still causes to the environment. This is because the gas produced as a product of combustion contributes to increased levels of global warming, and the combustion of biomass itself is not cost effective due to the financial investments that are needed during the conversion process of generating energy.

          Judging from the studies conducted, it appears that for an area such as Scotland, the best bet would be to support energy produced by tidal waves. Not only is this method very reliable, it is also quite efficient and does not need to depend on the weather in the same way as wind power and solar power does. In addition, there are also several devices that help improve the rate of tidal power and its contribution to generating more energy. In fact, by depending on tidal power alone can already make up a large percentage of the demand for power by the entire United Kingdom. Technologies that help bring about tidal power and increase its efficiency include the SeaGen, the Pelamis Wave Energy Converter, the Oscillating Water Column and the Anaconda. In the future, there may be more devices developed for the sole purpose of increasing the usage of tidal power as the top source for running energy all across the world. Since the United Kingdom is surrounded by the ocean, it is highly likely and it would be wise to develop further technologies to make sure that tidal power is used as the preferred energy resource (Strategic Direction 2009).

          In relation to tidal wave power, the study conducted by Hanley & Nevin (1998) revealed that out of all the respondents chosen to participate in the survey administration process, it was pointed out that the majority of tourists and community members feel that developing the small scale hydro scheme is ideal for serving as the power source in the North Assynt Estate in Scotland. The researchers add however that in order for such projects to be successful, it is also wise to encourage the participation and the support of the community members as well.

          On the other hand, the study conducted by Broer & Titheridge (2009) made it clear that if an area such as Scotland plans to attain its target of increasing dependency on renewable resources, it is best that the UK government invest more in building infrastructure that also does not depend on non-renewable resources. Thus, when it comes to constructing new infrastructure and facilities, it would be wise to really make sure that energy and carbon savings are achieved from the start of the design process, the construction process and even after the infrastructures and facilities are used. This means that construction builders and engineers have to make sure that the activities to be conducted by the inhabitants or the users of infrastructures and facilities would not harm the environment. Since 11 percent of the energy used in homes throughout the UK are used for heating and lighting, it would be advisable if all buildings (especially new buildings) were to contain or consist of devices that need not depend on non-renewable energy resources. However, although the government can help with this matter, it has been suggested by Broer & Titheridge (2009), that the activities of the human population residing in the UK be monitored as well to make sure that carbon emissions are kept at the lowest levels possible. The researcher agrees with Broer & Titheridge because the design and the engineering process can only do so much in reducing the dependency on non-renewable resources. Individuals must be informed and provided with constant information on how they can reduce their carbon footprints in order to help the environment and preserve resources for use in the future.

          In the study conducted by van der Horst (2008), it was mentioned that the United Kingdom is not oblivious to the positive effects brought about by the usage of renewable energy resources. In fact, it was in the early 1990’s when renewable energy started to be developed and supported as a new source for powering electricity all over the UK. However, despite the efforts of the government to ensure that renewable energy resources are used for all household and industrial activities, it seems that the UK still falls behind the standards set by the EU. This can only imply that the UK government needs to implement stricter rules and regulations with regards to the resources being used to run the activities of the nation. There have been several problems in the past that showed the lack of importance given to renewable energy resources. Projects that were set to support the issue have previously been cancelled and delayed, contributing to the depletion of non-renewable energy sources such as coal and oil. Apparently, there is a need for the nation’s government to keep their priorities in check. If the opposite were to be true, then the United Kingdom and the whole world, may face a future without any resources at all to depend on.

          The concept of green certificates is that member states are required to create a support system wherein renewable energy resources are used in order to produce electricity. This means that the producers of electricity are to receive certificates that show the value of electricity on both the society and the environment. It is a method to encourage competition between electricity producers, and at the same time, the government is able to make sure that the electricity produced reaches a quota which depends on renewable resources and which is cost effective. In Scotland, it is expected that through the method of issuing green certificates, the region would be able to achieve its goal level of producing electricity from non-renewable resources to 15.4 percent by the year 2027 (Nilson & Sundqvist 2007, Office of Gas and Electricity Markets 2008). As compared to other countries like Sweden, the United Kingdom places more obligations to the electricity suppliers and the government itself in making sure that the targets are met for producing renewable electricity. In Sweden, even the users of electricity are obliged to comply with the rules and regulations set by the Swedish government. Otherwise, they are subject to penalties. The researcher feels that the UK can take a few tips from the Swedish government with regards to handling their electricity production and making sure that the sources of electricity are from renewable resources.

          Clearly, there is a need to really support projects that aim to use electricity from renewable resources due to the alarming rates of the depletion of non-renewable resources. These are mainly oil, coal, natural gas and even uranium. It has been estimated that later on in the 21^st century, such fossil fuels would have ceased to exist completely due to the pressure put on them by the demand of mankind (Droege 2002). If the UK government were to take action, and policy makers are actually able to deliver in achieving their goals of using renewable resources by the set year, then the entire nation would have saved on using non-renewable resources by up to 250 million tonnes (Tindale 2010).

Chapter 5

Conclusion and Recommendations

Introduction

          In the previous chapter, the researcher outlined the information gathered from the journals selected and the information was discussed. In this final chapter, the researcher shall provide the final conclusion derived from the data collected and also provide recommendations based on what has been learnt about the electricity sector in the United Kingdom.

Recommendations

          It has been found out that as compared to other countries such as Sweden, the United Kingdom is one that depends more on the electricity producers and the government in order to reach the targets set regarding renewable sources. Although this means that the government is indeed serious about reaching their set targets and that non-renewable resources are well on their way to being conserved, it also means that there is more pressure on the electricity producers and the government itself to comply with set obligations. This leaves out the consumers who are also largely responsible for the energy that is being used up. The researcher therefore feels that there should be obligations also to be fulfilled on the part of the public and that they should be aware of the consequences faced by the depletion of non-renewable resources. Further usage of such sources like oil and coal also further lead to global warming contributions due to the production of greenhouse gases. In addition, if individuals all over the world were to continue support of such gases, it would mean that there would be less left for future generations to consume, if there was any left at all.

          In this study, the researcher has outlined the major renewable resources to be used by the nation in order to produce electricity in a cost effective manner, which is also environmentally friendly. Out of all the renewable resources that would be beneficial for Scotland, tidal power has been described to be the most desirable renewable energy resources that is reliable, efficient and abundant, due to the geographical location of the United Kingdom itself. In fact, based on the case study by Hanley & Nevin (1998), tidal power has been identified to be the preferred choice of tourists and community members as the top electricity provider. In the same study, it has also been mentioned that the development of such projects would not have been possible if there was no support on the part of the general public. Thus, if Scotland is indeed serious about reaching their target goals for generating renewable electricity by the year they have set, it is absolutely necessary that the government not only collaborate with the electricity providers, but also collaborate with the electricity consumers.

          Another study conducted by Broer & Titheridge (2009), also pointed out the consumer’s part in making sure that there is a significant reduction on carbon footprints. The researcher would like to suggest that the government pay time and attention to informing these consumers on how they can best conserve electricity and energy resources, and in so doing, it would be even more possible for the government to reach its target goals. The researcher would like to suggest that school curriculums in schools be modified in such a way that they include information about renewable electricity resources and conserving energy, so that at a very young age, individuals can be aware of the effects brought to the environment if continued support of non-renewable resources were to exist. After all, in the future, it would be the children who would benefit from the resources left behind. Thus, aside from investing large amounts of money towards the development of new devices and equipment, the researcher would like to suggest that the government also invest in the education that is imparted to the new generation.

References

• Abernethy, V.D. 1993. Population politics: the choices that shape our future, New  York: Plenum.
• Brander, J.A, & Taylor, M.S 1997. International trade and open access renewable resources: The small open economy case. Canadian Journal of Economics, 30 (3): pp. 526-522.
• Broer, S., and Titheridge, H., 2009. Enabling low carbon living in new UK housing developments, Management of Environmental Quality: An International Journal, Vol. 21, No. 1, pp. 90-107.
• Byrne, J., & Rich, D. (1992). Energy and Environmental Policy: Vol. 6. Energy and environment: The policy challenge. New Brunswick, NJ: Transaction Publishing.
• Colorado State University (2009) Advantages of Qualitative Observational Research. [Online] Available at:           http://writing.colostate.edu/guides/research/observe/com2d1.cfm [Accessed on January 30 2010]
• Commission of the European Communities, 2007. Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/54/EC concerning common rules for the internal market in electricity, Brussels, 1 September, COM (2007).
• Davidsen, P.I, 1996. Educational features of the system dynamics approach to modeling and simulation, Journal of Structured Learning, 12 (4), 269-290.
• Dilworth, C., 1994. Two perspectives on sustainable development, Population and Environment, 15 (3): 441-467.
• Droege, P., 2002. Renewable energy and the city: Urban life in an age of fossil fuel depletion and climate change, Bulletin of Science Technology Society, 22, 87. 
• Gowdy, J.M. 1998. Biophysical limits to industrialization: Prospects for the twenty-first century. In The coming age of scarcity: Preventing mass death and genocide in the twenty first century, edited by M.N. Dobkowski and I. Walliman. Syracuse, N.Y: Syracuse University Press.
• Hall, D., 1996. Geoeconomic time and global warming: renewable energy policy and conservation policy, International Journal of Social Economics, Vol. 23, pp. 64-87.
• Hanley, N., and Nevin, C., 1998. Appraising renewable energy developments in remote communities: the case of the North Assynt Estate, Scotland, Energy Policy, pp. 527- 547.
• Kamp, L., Smits, R. and Andriesse, C., 2004, Notions on learning applied to wind turbine development in the Netherlands and Denmark, Energy Policy, Vol. 32, pp. 1625-37.
• Krippendorff, K., 2004. Content analysis: An introduction to its methodology, 2^nd Edition, Thousand Oaks, CA: Sage.
• Leva, S. and Zaninelli, D., 2006. Sustainable energy and economic evaluation in stand-alone photovoltaic systems, Proceedings of the 2006 IASME/WSEAS International Conference on Energy and Environmental Systems, Chalkida, Greece, May 8-10, 2006, WSEAS Press, Stevens Point, WI, pp. 76-82.
• Masters, G.M, 2004. Renewable and efficient electric power systems, Hoboken, NJ: Wiley Science.
• Nilsson, M. and Sundqvist, T., 2007. Using the market at a cost: how the introduction of green certificates in Sweden led to market inefficiencies, Utilities Policy, Vol. 15 No. 1, pp. 49-59.
• Office of Gas and Electricity Markets, 2007.  Obligation. What Is the Renewables Obligation (RO)?, Vol. 10, [Online] Available at: www.ofgem.gov.uk/Sustainability/Environmnt/RenewablObl/Pages/Renewabl Obl.aspx [Accessed January 27 2010]
• Office of Gas and Electricity Markets, 2008. Renewables obligation: guidance for licensed electricity suppliers (GB), London, [Online] Available at:  www.ofgem.gov.uk/Sustainability/Environmnt/RenewablObl/Docu          ments1/Supplier_guidance__GB_2008.pdf [Accessed January 27 2010]
• Oppenheim, A. N., 1992, Questionnaire design, interviewing and attitude measurement, London, UK: Pinter Publishers.
• Ponting, C. 1991. A green history of the world: The environment and the collapse of great civilizations. New York: Penguin.
• Tindale, S., 2010. How to meet the EU’s 2020 renewables target [Online] Available at:http://74.125.153.132/search?q=cache:daLXLSDicEcJ:www.cer.org.uk/pdf/pb          _renewables_tindale09.pdf+european+commission,+renewable+resources,+target&cd=2&hl=tl&ct=clnk&gl=ph [Accessed on January 29 2010]
• REAG, 1992. Report to the President of the Board of Trade, Energy paper No. 60. Renewable Energy Advisory Group, HMSO, London.
• Strategic Direction, 2009. Innovations: Taming sea energy: Leading marine renewable energy technologies, Vol. 25, p. 34.
• Ullah, H.Q, 2007. Debriefing can reduce misperceptions of feedback: The case of renewable resource management, Simulation Gaming, pp. 382.
• Van der Horst, 2008. Social enterprise and renewable energy: emerging initiatives and communities of practice, Social Enterprise Journal, Vol. 4, No. 3, pp. 171-  185.
• van de Wekken, T., & Wien, F., 2006. Wind power, power quality and utilization guide. Brussels, Belgium: European Copper Institute & KEMA Consulting.
• Wang, L. And Singh, C., 2008. Hybrid design of electric power generation systems including renewable sources of energy, Bulletin of Science, Technology & Society, p. 198.
• Wang, S.-C., Huang, P.-H. and Wu, C.-J., 2006. Study on fuzzy models of wind turbine power curve, Proceedings of the 2006 IASME/WSEAS International Conference on Energy and Environmental Systems, Chalkida, Greece, May 8-10, 2006, WSEAS Press, Stevens Point, WI, p. 33.
• Zervos, A. 2007. Europe sets the renewables standard, Wind Directions,  March/April, p. 5

Table of Contents

• Executive Summary
• Capability
• Market analysis
• Product extension
• Market trends
• Conclusion

This has to be an IM

Executive Summary

Today, audio media is an integral and crucial component of every company. Decent audio input may make or break a commercial enterprise. Audio media includes televisions, radios, CD players, cassette players, MP3 players, cell phones, rotary phones, intercom systems, and even the internet. The need for audio equipment is well-established in today’s culture. This is unquestionably correct. However, analog transmissions through point-to-point networks are still the most popular technique of delivering audio. Despite the fact that digital distribution has apparent benefits over analog, it has failed to fully permeate the market. However, there is a shift taking place. Much of today’s audio equipment is digital on the inside. In the previous half-decade, the advancement of digital technology has had a huge impact on how people interact. A digital audio networking technology is about to hit the market.

Capability

The ability to pick up or send numerous audio signals over a single link is one of the many benefits of digital communications over analog ones. Digital signals are also less susceptible to attenuation and noise, and numerous A/D and D/A conversions may be avoided, resulting in less deterioration and delay. In the digital world, audio delivery, processing, and even mixing may all be done.

Despite these benefits, however, digital distribution has not gained the traction that investors had hoped for. Unfortunately, the main reason for the lack of popularity and poor sales rates is that the digital goods available so far have been labeled as proprietary and inflexible.

A realistic product to present to the market at this time – to eliminate this digital resistance – is one that is revolutionary in the realm of digital audio networking technology. A product that is compatible with standard internet protocols, not only Ethernets, will achieve a level of market penetration never before seen in the industry, and, most importantly, it will open the doors and pave the way for digital technology to reach its full potential; a product that connects all of the benefits of digital audio technology and makes them accessible.

Market Analysis

Despite the fact that market research data on digital audio consumption in Australia is few, it is possible to use the situation in the United States as a case study for comparing the situation in Australia. Sirius Satellite Radio is one of the most revealing illustrations of the dilemma surrounding digital media in the United States.

Bridge Ratings (2006), a market research firm located in the United States, predicted that weekly listenership for analog radio will decline from over 95% now to 70% by 2020. This is a sign that the need for digital technologies is increasing.

Bridge Ratings predicted that satellite radio will reach over 34 million consumers by 2010 and 60 million by 2020 in their 2006 assessment. The satellite radio/digital radio concept, on the other hand, would have to change its existing state of extremely low market penetration as a requirement of this. By the end of the year, the market penetration was anticipated to be at 555,000, with best efforts to increase HD to over 20 million in 2010 and 46 million by 2020.

Evidence that the emergence of HD radio virtually coincided with the expansion of Internet radio was another aspect of the issue. Unlike digital audio and its transmission on satellite radio, Internet radio is very popular. It will also benefit substantially from widespread Wi-Max, or Wide Area Wireless Access, which, by 2008, will bring Internet Radio to portable devices, including car radios.

For young Americans, Internet radio streaming is already the favored means of audio listening. Its popularity is only going to rise as more people have access to broadband internet.

The gradual expansion of High Definition terrestrial radio (HD) may also benefit from new free channels and the improvement of its analog offering, since Internet radio is already the dominant medium over satellite radio and conventional radio (Bridge Ratings, 2006).

However, a viable means of combining digital audio technology with internet radio and other such popular features is certainly available. The bottom line: there is a viable potential to tap the market of listeners in Australia and even around the world by providing a means of accessing quality digital audio sound via a variety of digital audio equipment in combination with providing viable services, such as internet radio content, that will force prospects to try digital audio.

This market research establishes the fact that there will be a definite need for digital audio transfer technology in near future. As more and more forms of audio media will be in demand, the need for marketing the technology will have a ready market.

You keep going, but where is the IM focus?

Development Plan

There is an existing and increasing audio market: Internet radio streaming is currently the preferred source of supplementary audio entertainment among young Australians, and it is continue to rise as broadband technology penetration increases fast throughout the nation. Although, as in the United States, podcasting is growing at a slower rate than expected, it remains a popular form of audio communication. What’s being seen is that the early adopter and innovator population is backing away from podcasting. A number of consumer groups have allegedly reduced their podcast use and are listening to fewer podcasts in a normal month.

Part Two of the File

The point point is that Internet radio is swiftly overtaking satellite radio and conventional radio as the favored medium among 15-30 year old early adopters. The best way to develop interest and build a positive sales level for digital audio products is to find a viable means of providing digital audio equipment that will compliment popular mediums such as Internet radio.

Source: Bridge Ratings, LLC: http://www.bridgeratings.com

Product Extension

With growing demand of audio equipments in various forms, the digital audio distribution technology is expected to have a huge demand. At the same time, with the right range of digital audio equipment placed on the market, digital audio networks will be able to leverage features and functions of digital audio and digital audio control that computer network implementers have had available for years. Products can be developed that are aesthetically pleasing, that have a low cost redundancy, high availability, bandwidth aggregation and even encryption.

Digital media equipment such as that offered by the company DANTE in Australia offers a compelling solution to the problem surrounding digital audio. Techniques such as Zeroconf facilitate easy network set-up so that users can establish connections across the internet using specific digital audio equipment.

This is one built-in, no-hassle feature that will turn digital audio into a successful medium. Targeting the already popular online medium of audio file sharing and communication, such as podcasting and now web phones, a company like DANTE can develop and market products such as speakers, audio recording devices, microphones, headsets, phones, and even radio features that will incorporate digital audio and thus showcase its various advantages over analog, and feed into an audio industry sector that is already thriving. The technology is available to enable equipment via Ethernet switches, power up, set up the audio routing. Appropriate digital audio equipment can be used to make the most of audio over the internet while also make its own advantages known to a wider audience of consumers.

Market Trends

The primary driver driving today’s reappraisal of the nature of media and communications is convergence. It’s most often used to describe the process of dissolving. This bodes well for the future of digital audio technology.

Digitization technologies facilitate technological convergence. This word describes the growing capacity to transport and transform ‘content,’ such as sound, data, picture, or text, into other formats. Broadcasting, telecommunications, computers, and publishing, which were formerly independent sectors of the communications economy, have combined or formed partnerships to cope with and exploit the impacts of technological convergence. The merger of Time Warner and AOL in 2000 is one example of this (Cunningham & Turner, 2002).

However, convergence has a deeper connotation, one that goes beyond this. Trevor Barr (2000: 22–24) uses the term functional convergence to characterize the tight business ties that exist across the three sectors of information technology, media, and telecommunications. Institutional convergence occurs when companies from these industries develop strategic agreements or combine (Barr, 2000).

Foxtel, Australia’s main pay television business, is an example of primary convergence since it is a joint venture between Telstra and News Corp and Publishing and Broadcasting Ltd (PBL), two significant media firms (Cunningham & Turner, 2002).

In the history of media and communications law and policy, there have been three phases of convergence. The first stage, which was based on scarcity, witnessed the emergence of protection, universal service, and public interest. Throughout most of the twentieth century, this stage was seen in motion. The second stage, which is currently drawing to a close, is concerned with plenty, liberalisation, competitiveness, efficiency, and variety.

The third stage will focus on decentralizing communications infrastructure and beginning to integrate media and communications into a larger and more general regulatory framework for the services industry (Pavlik, 1996: 259).

It’s time to rethink how sound is disseminated. As previously said, most of today’s audio equipment is digital on the inside, but when it comes to dissemination, most individuals utilize analog signals through point-to-point networks. There is no compelling reason not to utilize digital to disseminate audio information, and in this era of internet networking, digital audio distribution is tremendously beneficial. People will be able to not only enjoy all of the advantages of higher sound quality compared to analog, but they will also be able to do what they appear to like: exchange audio material with other Internet users and those who carry portable communications devices, thanks to digital audio distributors, which include everything from loudspeakers to microphones.

Digital audio signals are less susceptible to attenuation and noise, as well as the deterioration and delay associated with numerous A/D and D/A conversions, since they may be sent out on a single link. Any firm with the desire may easily gain a market edge with the correct items – digital audio goods that encourage audio sharing over the internet and through portable communication devices, in addition to the traditional means. Despite digital’s broad availability, digital audio capabilities have failed to have a significant impact on the market. With the appropriate idea in place, the possibility to do so exists.

Conclusions

The market analysis and the product capability discussed above show the bright prospects of investing in the digital audio industry.

The market analysis has shown us the upcoming trend of convergence. This will blur the lines between media systems, media content, and the trade that results between them. It is also the latest technology buzz word requiring a logical definition. We can understand it by looking at the activities of a communications company such as Optus that offers services such as TV, telephones, and Internet provision (Cunningham & Turner, 2002). The market no more belongs to single product industries. This is an indicator that digital audio technology will be needed by one and all related to any form of media as they all will be dealing with this technology by default. They will not be able to survive and compete in the market place without embracing this technology.

So far these companies are either not dealing with all kinds of products or the ones who are dealing with anything that may require audio distribution technology, has been using the analog technology. Very soon the advantages of digital technology over the analog system will become widespread. With introduction of easy-to-use products, this will gain a wide acceptability. In times to come the analog system will be totally taken over by the digital system, there is no doubt about this fact. Thus, digital audio technology has a great prospect in very near future.

References

• Audinate (2007). Audinate.com. NSW, Australia
• Barr, T. (2000). newmedia.com. Allen & Unwin, Sydney
• Berryman, B. (1999). ‘Converging Signals: Digital Radio and Program Associated Data’, Media International Australia incorporating Culture and Policy, no 91, May, pp 43–54.
• Bridge Ratings (2007). Bridgeratings.com. Glendale, CA
• Cunningham, S. & Turner, G. (2002). The Media & Communications in Australia. Allen & Unwin. Place of Publication: Crows Nest, N.S.W.
• Emmison, M. (1997). ‘Transformations of Taste: Globalisation, Generational Changes and Australian Cultural Consumption’, Australian and New Zealand Journal of Sociology, vol 33, no 3, pp 321–43.
• Emy, H.V. (1993). Remaking Australia: The State, the Market and Australia’s Future, Allen & Unwin, Sydney.
• Pavlik, J.V. (1996). New Media Technology: Cultural and Commercial Perspectives, Allyn and Bacon, Boston.
• T.Jeffery., S. Stephen, (2003), New Venture Creation Entrepreneurship for the 21^st Centuary, 6 EDN., McGraw Hill.
• Nigel., C. Stuart., & J. Robert., (2007) “Operations Management” 5 Edn, Prentice Hall. England.

Brief was:

• An individual assignment will be submitted in report format

Topic:

•    Prepare an Information Memorandum on technology, service, or product of your choice for presentation to a seed investor.
• Length: 5 pages max + exec summary
• Due Fri 2 November 2007 1200 (noon) Adelaide time (or before)

Anorexia Nervosa

Anorexia nervosa is a disease that is primarily caused by a distorted perception of one’s physical appearance. Anorexia is defined by Dr. Laura Hill, a “clinical assistant professor of psychiatry at the Ohio State University Medical Center and Harding Hospital,” as “a person’s inability to cope with life stressors” (Twitty, 2000). Anorexia nervosa is a condition in which a person believes he or she is too fat and needs to starve in order to lose weight. In order to accomplish this, the person starves until the body begins to reveal ribs and skeletons, but the person is still unsatisfied and continues to starve until death. This is essentially a psychological disorder that wreaks havoc on a person’s health and leads to death. Anorexia nervosa sufferers are unable to stop dieting once they have reached their ideal body weight. Their weight falls below what is appropriate for their age and height. Still, the patient believes that if he or she eats, he or she will gain weight and, as a result, lose their attractiveness. Excessive exercise, dieting, and medication are some of the most common methods for losing weight.

Anorexia Nervosa means “nervous loss of appetite”. This definition is not particularly good, since it is based on misunderstandings. The people who suffer from Anorexia Nervosa do not at all have lack of appetite, they are only scared of putting on weight. Therefore, the term “selfstarving” would be more suitable, or even better expressed “weightfobia”. (Gehlin, 2008).

Anorexia nervosa was originally described in 1684, but it wasn’t officially diagnosed until 1870. (Gehlin, 2008). The emergence of this new health problem was linked to the changes that occurred in society throughout the ages. Young ladies started to idolize ladies who were exceedingly slender and intelligent. Slimness became the standard of beauty, and a woman had to be slim to be considered lovely. The appearance obsessed society has influenced much of the history of anorexia nervosa. That is why anorexia nervosa is more prevalent nowadays than it has ever been before. Another example of culture’s influence in the development of anorexia nervosa is the fact that the great majority of anorexia nervosa sufferers are models in the fashion industry, which sets the trends for the general public to follow. To be trendy in today’s world, you must be skinny. Slimming down is promoted in the media. To obtain the perfect figure, people use a variety of slimming tactics, some of which may lead to eating disorders like anorexia nervosa. Aside from the perception that being slender is something to be proud of, the contemporary age’s heavy dependence on technology lessens the body’s need for nourishment since no energy is spent performing things manually. A person’s existence in the current period is inextricably linked to the media. The media’s focus on exercise and fitness naturally instills a desire to be clever, and the eating patterns that result enhance a person’s vulnerability to anorexia nervosa. Because of the media’s effect on society, anorexia nervosa has become a significant communal concern.

The community health nurse must demonstrate a unique and higher degree of health care while treating an anorexia nervosa patient. The role of the community health nurse should be more like to that of a counselor than that of a traditional health care professional. To begin therapy, the patient must be made aware that he or she is unwell, both medically and psychologically, since patients often deny having any condition at all. The majority of people do not seek treatment until their condition has become exceedingly visible and dangerously severe.

Healthypeople.gov is an organization that establishes national health goals. Some of the objectives identified by Healthypeople.gov (n.d.) for 2020 are:

1. Increasing the adolescent population that takes part in the out-of-school and extracurricular activities.
2. Increasing the schools in proportion that implement breakfast programs in schools.
3. Increasing the adolescents in proportion that go through a complete wellness examination in the last year.

Eating disorders have long been an issue all over the Ohio State. “According to the American Anorexia Bulimia Association, Inc. (AABA), eating disorders — anorexia nervosa, bulimia nervosa and binge eating disorder are psychiatric illnesses that affect over five million American women and men” (Twitty, 2000). In the same report by Twitty (2000), AABA states that 1 per cent teenage girls in the US become a victim of anorexia nervosa, as a consequence of which, 10 per cent lose their life. Children acquire this disease upon the commencement of their menstrual cycle, i.e. around the age of 13 and 14 years.

Prevention is not possible in every case, though a vast majority of the cases can be prevented through encouraging the victims to adopt realistic and healthy behaviors towards diet and weight. This can often be achieved through talk therapies. Primary prevention can be made by encouraging the victims to eat through ads displayed on billboards and TV. The more the patients would read and see information regarding anorexia nervosa, the more likely they are to realize that they are the victims too. This realization is the first step towards prevention. Secondary prevention can be made by screening. One way to screen is to send the community health nurses to schools to look out for early symptoms of anorexia nervosa in the students. Tertiary prevention is essentially meant for an individual who has already acquired anorexia nervosa. Such patients need to go through the complete rehabilitation process, talk therapy and counseling in order to be convinced to come out of the dreadful condition.

Anorexia nervosa is a psychological disease that forbids the victim from eating at all, as a result of which, the body starts to feed on the stored fat and the victim loses weight till death. This is a rare disease, and is more common in teenager girls than boys. It is a community health issue and is largely, an outcome of the culture and social trends. In order to treat the patient of anorexia nervosa, the patient’s relatives and friends need to make the victim break the diet. The community health nurse has to counsel the patient psychologically in order to make him/her come out of the disease.

References

• Gehlin, L. (2008). The History of Anorexia Nervosa and other Eating Disorders. Retrieved from http://web4health.info/en/answers/ed-anorexia-history.htm.
• HealthyPeople.gov (n.d.). Adolescent Health. Retrieved from http://www.healthypeople.gov/2020/topicsobjectives2020/objectiveslist.aspx?topicId=2.
• Twitty, S. (2000). People often deny weight issues. The Lantern. Retrieved from http://www.thelantern.com/2.1345/people-often-deny-weight-issues-1.100887.

(A Systematic Review of Anti-Tobacco Initiatives)

List of Abbreviations

• ACTT intervention programs denotes Acadian Coalition of Teens Against Tobacco
• ANOVA Analysis of Variance
• ASSIST means “A Stop Smoking in Schools Trial”
• CINAHL Cumulative Index to Nursing and Allied Health Literature
• CDC Centers for Disease Control and Prevention
• DARE Drug Abuse Resistance Education
• ERIC Education Resources Information Center
• ELISA Enzyme-linked immunosorbent assay
• The HS Study intervention Hutchinson Study of High School Smoking
• HSPP Hutchinson Smoking Prevention Project
• NHS National Health Service
• NICE means National Institute for Health and Clinical Guidance
• SCPPs Smoking cessation pilot projects

1. List of Tables: Table: 1: Randomized Control Trials, Table: 2, Table: 3: % of children smoking by age England 2008, Table: 6.1: Key Provisions in the Framework Convention on Tobacco Control
2. Figure: Figure 2.1 Ever Smoked by Age (Adopted from NHS 2008 Survey)

Figure 2.2 Lifetime Prevalence of Use for 8^th, 10^th, and 12^th Graders (Observed percentage) – Adopted from the Monitoring of the Future Study, University of Michigan Research Institute

Figure 2.3 Trends in 30-Day Prevalence of Daily Use of Cigarette (Adopted from the Monitoring the Future Study, University of Michigan Research Institute)

Figure 2.3.1 – The Relationship of Perception of Risk and Reduced Smoking Among Youth Age 12 to 17. (Data from Department of Health and Human Services 2007 National Survey on Drug Use and Heath)

Figure 6.6 Stages of the Worldwide Tobacco Epidemic

Figure 6.7 Percentage of the Children Smoking Regularly by Age, England, 2008

3. Abstract:

Background: Public health interventions is complex (Rothman et al. 2008, p.465) and may include programs to improve the health of special populations with a community, system-wide approaches that involve interactions between health care providers and representatives of community agencies, advocacy groups, and the media (Chalk & King 1998, p.207), and difficult theoretical issues influencing practice and evaluation of initiatives (Rothman 2008, p.77). The health effects of cigarette smoking have been the subject of intensive investigation since the 1950s (Elders 1994, p.15). Smoking kills more people than AIDS, diet and sedentary lifestyles, car accidents, alcohol, homicides, illegal drugs, suicides, and fires combined (Edlin & Golantry 2009, p.397; Boyle 2004, p.281). Today, research is largely directed at young people as the onset and development of cigarette use occur primarily during adolescent.  The health consequences of smoking among young people are considered of great public health significance because results of investigations of the health effects in school-age youth revealed the adverse effects of smoking during childhood and adolescence.

Objective: The primary and sole objective of this systematic review is the review and redemption of useful information and data with the aim to attain complete success in smoking cessation and control interventions amongst young people.

Method and Data Sources: The secondary data for this particular study on public health intervention due to smoking amongst young people and its preventive measures is comprehensively collected from the following sources:

• the authorized and authenticated research bases, press releases, surveys and as well as many other syndicated data source
• the inexhaustible information, facts and figures provided at the hospital and medical centre’s website, resource centre and even declared data and internal survey results
• the government declarations and census data
• the infinite information bank through the internet
• the relevant medical books and journals available in plenty at important libraries and medical book and magazine stalls

Like any traditional reliable data sources, internet at the current scenario has invariably proven to be as the extensive, expansive, exhaustive and excellent resource of dynamic, authenticated, and qualified information bank, of course with its equal share of advantages and disadvantages.

Study Selection & Data Extraction: These readily accessible and timely updated secondary data resources are analyzed on the basis of systematic review in the following manner:

• Fundamental for identifying, describing, formulating and ascertaining the problem solutions, conjectures, speculations or any divergences
• Rationale for scrutinizing the true insight and philosophy

Data Synthesis: In the very short limited period of time, to delve deep into the mind of the matter and to equalize it to the reactions and responses addressing global clinical case environments in regards to prevention and cessation of smoking amongst young people, the unbiased data was collected and coordinated, planned and programmed as such to the best in line with its reliability and authenticity. To arrive at a universally accepted truth secondary data are chosen as such that equilibrium is maintained in terms of age, gender, marital status, education, economical and socio-cultural conditions. Due congruence is restrained in respect to the confidentiality and privacy rights of the secondary data resources without having the slightest chance to divulge in public the shared views which may pose a conflict of understanding otherwise.

Results:  The media campaigns adopted by the Johnson et al. (2009) in their intervention program may have brought some positive results. However, exploiting informal channels and peer influence in addition to Social Cognitive Theory and Motivational Interviewing although helps the intervention reach more people with non-smoking messages; it is not clear if it has a direct effect on smoking behavior.

Conclusion: Although with limited participation caused by various limitations such as venue, availability, and budget, the use of media as the primary intervention tool helps the program work best and attain at least a realistic result. However systematic reviews pointed out that out of diversified results particularly cognitive-behavioural procedures and primary school level educational clinical environmental case practice and setup are comparatively effective and prospective towards attaining the target of smoking cessation interventions amongst the young budding generations. Furthermore cessation surveillance programmes should be systematically implemented and practiced to arrive at the target aim of complete abstinence from smoking amongst youth.

Keywords: public health, young people, tobacco use, prevention, cessation, smoking, intervention, smoking statistics, prevention, prevalence, better practice

Chapter: 1

1. Introduction

This chapter gives an outline of topics that are important to include when doing comprehensive analyses of public health initiatives. For various people, public health conjures up different ideas, and it can imply different things in different situations, but it is better described as an aim of enhanced health conditions and health status that can be accomplished by the efforts of all of us (Turnock 2004, p.27). In several cases, public policy seems to be unique, and public health programs have become significant contributors to health progress, with the potential to contribute much more in the future. Since most public health systems are defined by their inputs, actions, results, and effects (Novick et al. 2005, p.497), assessment is generally recognized as a conceptual approach to data management as part of the quality assurance method.

Evaluation is an essential component of public health practice (Stellman 1998, p.30) and evaluation of public health interventions is necessary as without sufficient evaluation, the effectiveness of public health interventions cannot be assessed and assured. In contrast, with sufficient evaluation, the design and deliver of future intervention can be modified in the light of the successes and failings of past efforts (Lin & Fawkes 2007, p.115). A process attempts to determine as systematically and objectively as possible the relevance, effectiveness, and impact of activities in light of their objectives (Stellman 1998, p.30). Public health initiatives or health promotion in general, employ a broad range or mixed methods to accumulate data thus a number of design strategies for evaluation have been developed (Rothman 2008, p.78). Evaluators adopt different approaches depending on the questions at hand. Some are concerned with the strategies and processes that are used to implement programs. Others are more interested in documenting the immediate effects of programs or examine the long-term effects and the extent to which program aims have been met (Lin & Fawkes 2007, p.116). In view of these complexities, evaluation of public health initiatives may require the use and expansion of existing guidelines (see Section 1.4 “the review question, scope and planning”) to produce a truly systematic review. In the literature review, all of the evaluations are systematically analyzed, assayed, and evaluated in order to arrive at the best available methodologies for smoking abstinence in young people by public approaches through a coordinated framework of systematic review. The aim of this chapter is to present crucial and relevant concerns surrounding public health programs that should be taken into consideration during the evaluation phase, a systematic review is required before any judgments are reached on whether programs can be extended, minimized, or sustained.

1.1 Background

People in Europe and America are concerned about the potentially harmful consequences of cigarette smoke, after the publication of several medical publications claiming that it can induce cancer of the lip, tongue, and lungs. Furthermore, a host of experimental studies have shown a number of health risks associated with cigarette smoking. It has been linked to the progression of coronary heart disease, bronchitis, emphysema, laryngeal cancer, oral cavity cancer, bladder and stomach cancer, duodenal ulcers, and allergies (Edlin & Golantry 2009, p.396). Acute effects of nicotine can cause heart attack, stroke, and number of poisoning and deaths from ingestion of nicotine were reported including acute intoxication in children after swallowing tobacco materials (Frances et al. 2005, p.112). Nicotine intoxication can cause nausea, vomiting, abdominal pain, diarrhea, and death due to paralysis of respiratory muscles (Frances et al. 2005, p.112).

“Tobacco is the leading preventable cause of death in the United States” (Marks et al. 2005, p.156) as it can cause diseases in nearly every organ of the body. In the United Kingdom, the Health Education Authority survey in 1996 found that 24 % of girls aged 15-16 smoked on a daily basis compared with 15% of boys (Coleman & Hendry 1999, p.123). Smoking contributes to 17 percent of all women’s deaths and significantly to at least one-third of all cancer deaths. The cumulative risk of death from lung cancer by age 75 in the UK in one large case-controlled study rose from 1% to 10% in female smokers from 1950 to 2000, as compared with a rise from 6 to 16% in male smokers. Smoking prevalence in the United Kingdom has been measured regularly since 1972 as part of the General Household Survey. These survey shows that the prevalence of cigarette smoking on adults fell substantially in the 1970s and early 1980s but in 1998, concerned with the rising prevalence on schoolchildren ages 11 to 15, the UK government set out a comprehensive strategy to tackle smoking in its White paper “Smoking Kills”. Smoking prevalence increases sharply with age and in 2001, about 1% of 11 year olds smoked regularly compared with 22% of 15 years olds (Boyle 2004, p.211).

1.2 Justification for the Review

As there are 1.1 billion people aged 15 and older who smoke globally, and 300 million of them live in developing countries, the issue of cigarette smoking and tobacco-related illness is not restricted to the United States or Europe. As a result, 4 million people suffer per year from tobacco-related diseases, about one every eight seconds. The key explanation given for the huge uptick in tobacco-related deaths is that the long-term impact of cigarette smoking on certain young people will only become apparent today (Boyle 2004, p.281). As a result, where a substantial amount of young adults smoke in one region, there would be a significant increase in tobacco-related deaths 50 years later. According to estimates, smoking would be responsible for 60 million premature deaths in developing countries during the second half of the century (Ammerman et al. 1999, p.94).

Smoking can cause significant damage to children, including eye and throat inflammation, elevated blood pressure, respiratory and immune defects, and pre-cancerous gene mutations. Furthermore, starting to smoke at a young age increases the likelihood of eventually consuming illicit substances (Elders 1994, p.15).

The systemic assessment of social services was first utilized in education and public health, and substantial attempts have been made to reduce death and morbidity from infectious diseases by public health interventions (Rossi et al. 2004, p.8). Smoking is still a public policy concern (Siegel & Biener 2000, p.115) and a major public health issue with a variety of reported negative health consequences (Haldeman 2004, p.193). As a result, a variety of public health professionals have continued to implement smoking cessation initiatives to combat the harmful effects of cigarette use in adults and youth. For example, in the United States, anti-tobacco media efforts, a prohibition on smoking in public spaces, and a major tax rise on tobacco goods (Atun & Sheridan 2007, p.51), and in the United Kingdom, the 1998 Department of Health initiative “Smoking Kills” that actually established tobacco as a severe health danger (Atun & Sheridan 2007, p.51) (Griffiths & Hunter 2007, p.134).

Since young people are more concerned about their appearance and social standing among their peers than their wellbeing in the long run, smoking among teenagers has become a public health issue and a frequent subject of systemic analysis (Schneider 2000, p.228). Despite the increased usage of anti-smoking advertising ads, nothing is learned regarding their efficacy and the findings are sometimes contradictory. For example, neighborhood and school-based approaches outlined in a mass media initiative in Vermont, New York, and Montana decreased smoking initiation rates among teens, but failed to affect smoking behaviour among youths in southern California (Siegel & Beiner 2000, p.116). According to Koop (2004, p.244), one of the challenges with evaluating the results of smoking interventions is that some of these trials are sometimes badly planned, with flawed methodologies and quality control. After reviewing and analyzing a variety of assessment cases involving smoking cessation treatments for young adults, the most promising and successful cessation program is chosen and suggested for implementation in order to plan and orchestrate the most efficient and convincing smoking cessation intervention process.

1.3 Aims and Objectives

The primary review objective is to gather evidence systematically from existing studies to determine why young people smoke and how effective tobacco use interventions in preventing this dangerous habit.

1.4 Review Planning, Scope, and Review Questions

Addressing the scope of the review and identifying important questions are necessary before any meaningful review can begin, as they can affect the key areas specified in the systematic review protocol. In addition, considerations must be given to a number of relevant and experienced groups such as practitioners and members of the community affected by the intervention, to ensure all questions developed are relevant and useful to decision-makers.

The CDC or the US Centre for Disease Control and Prevention developed a framework for public health initiatives evaluation in 1999, which may offer some useful guidelines. These guidelines contain six important elements and four broad standards for program evaluation. These elements include identification of stakeholders, description of the program, clear statement of evaluation’s purpose, accumulation of credible and important sources of evidence, justified conclusions including analysis, and sufficient mechanisms for feedback. The four evaluation standards are specifically focus in the accuracy of evaluation design and ensuring that it is working to its full potential (Turnock 305). The CDC was responsible for the creation of the Task Force on Community Preventive Services in 1996 to address a broad range of interventions, targeting communities and health care systems. This task force also provides public health decisions makers with recommendations on population-based interventions to promote health and to prevent disease, injury, disability, and premature death at the state and local levels (Sheinfield & Arnold 2000, p.77).

Another method aimed to address limitations in conventional experimental designs and seeking to understand better the ways in which programs achieve their effects in a particular context is the “realist” approach (Tones & Tilford 2001, p.176). The rationale for this approach is to understand what may work for whom in specific circumstances by identifying the desired goals, context variables, and the mechanisms which may or may not operate within the contextual circumstances. This evaluation process has been used in a number of interventions such as the UK Health Action Zone developments and smoking cessation interventions (Tones & Tilford 2001, p.177).

A closely related model according to Tones & Tilford (2001, p. 177) is the Theories of Change approach where theories are expressed in the form of causal relationships. The Theories of Change advocates that social programs entail theories of change about how a program will work, whether these are made explicit or are implicit. This evaluation method combines both process and outcome elements that is designed to find the extent to which the theory holds up when a programmed is implemented. Similar to realistic evaluation, the use of data collection methods is diverse. This type of evaluation methods were used to evaluate health promotion program undertaken by the Health Education Board in Scotland (Tones & Tilford 2001, p.177).

Although decision makers may allow an evaluation of health program for a wide range of reasons, typically evaluations are done to answer to basic questions. “Did the program succeed in achieving its objectives? And why in this case?” (Grembowski 2001, p.19). However, in other programs, decision makers may want to know more about program implementations than its success in achieving objectives since they see it somewhat premature particularly in new programs (Grembowski 2001, p.19).

These fundamental questions can be narrowed down into several specific questions to ensure the production of information that decision makers specifically wants. These questions can be in the form of “Did the smoking prevention program reduce cigarette smoking behavior among adolescent between the ages of 13 and 15?” Grembowski (2001, p.19) or “Under what conditions does it work and how much does it cost?” (Smith & Taylor 2006, p.170). However, in this systematic review, the underlying principle of the intervention is considered the most appropriate source of questions. For instance, tobacco prevention campaign under the CDC follows certain principles based on the guidelines set by CDC on school-based intervention on tobacco use. According to these recommendations, a school initiative can first implement and adopt a tobacco usage strategy, offer awareness about the harmful physical and social effects of smoking, instruct children from kindergarten through 12th grade, offer specific teacher instruction, pursue parental or family involvement, promote abstinence, and evaluate the intervention on a regular basis. According to this information, aside from the basic question to determine why people smoke? or the reasons for smoking initiation, the most appropriate questions in evaluating the intervention can be as follows:

1. Is tobacco use policy developed, implemented, and enforced?
2. Did it provide the right information to the target population?
3. Are the children from kindergarten through 12^th grade receiving the education required?
4. Are parents or families involved?
5. Does the program support cessation
6. Is the program assessing itself regularly?

The ultimate goal or objective of this research study is to systematically review the smoking cessation through realist evaluation cases and answer the two primary basic questions, namely, “In what exact procedures do the interventions operate?” and “To what extent to they serve the objectives of the systematic review?” The aims are:

1. Systematic scrutiny of the intervention procedures
2. Any alterations or modifications necessary to expedite and support the aim
3. The realist responses noted from the target audience, i.e., the youth and their acceptability
4. The measures taken to standardize and stabilize the matter
5. To estimate the achievement of the short- and medium-term objectives and the feasibility study

1.5 Structure of the Report

This study is broken down into parts. The first chapter includes the review’s outline, history, reasoning, preparation, scope, and review concerns. The literature review in Chapter 2 examines the incidence of smoking in the United States and the United Kingdom. The explanations why people smoke, as well as an analysis in behavioral modification and intervention efficiency. The evaluation portion of Chapter 3 covers the quest approach, inclusion and exclusion requirements, results that were discussed, assessment methodology, and analysis limitations. Chapter 4 contains the study’s conclusions, while Chapter 5 contains the debate.

Chapter: 2

2. Literature Review

2. Prevalence of Smoking in the United Kingdom and the United States

In 2008, a poll of 7,798 students from 264 schools across England found that 32% of students attempted to cigarette at least once, and 6% of students smoke at least once a week. The percentage of students who smoke ranges depending on their gender and age. Girls are more likely than boys to smoke (33 percent vs. 31 percent). Smoking rates rise with age, with one in ten 11-year-olds (ten percent) having ever smoked, relative to more than half of 15-year-olds (55 percent) (NHS 2009, p.9).

Figure 2.1 Ever Smoked by Age (Adopted from NHS 2008 Survey)

In the United States, tobacco use is generally more widespread than use of any illicit drugs. In the 2008 survey conducted by the University of Michigan Institute for Social Research, 45% of 12th graders tried cigarettes once or twice and 20% have been occasionally smoking at the time of the survey. Surprisingly, 21% students even in the 8^th grade have also tried cigarettes and 7% of them have been occasionally smoking (p.85). Cigarette smoking initiation according to the data from the 2008 statistics for eighth graders tend to occur particularly early. The peak years for cigarette smoking start during the 6^th and 7^th grades at 10% between 11 and 13 years of age. However, there are indications that a small percentage of students initiated smoking much earlier as 7.8% of eighth grader admitted they had their first cigarette by 5^th grade (p.271).

Figure 2.2 Lifetime Prevalence of Use for 8^th, 10^th, and 12^th Graders (Observed percentage) – Adopted from the Monitoring of the Future Study, University of Michigan Research Institute

Figure 2.3 Trends in 30-Day Prevalence of Daily Use of Cigarette (Adopted from the Monitoring the Future Study, University of Michigan Research Institute)

2.2 Reasons for Smoking

2.2.1 Family Inspired Smoking

There is a wide range of factors that impinge on, or affect young people’s health and one them is the family (Coleman et al  2007, p.10). In the NHS 2008 survey of young people’s smoking, drinking, and drug use, one of the main reasons found why young people smoke was family influences. Among those surveyed, 59% lived in households where no one else smoked, 24% where one person smoke, 13% where two people smoked, and 4% where there or more people smoked.  Those who lived in a household where someone else smoke seems more likely to smoke as the survey data shows an increase in the proportion of regular or occasional smokers according to the number of smokers they lived with.  Regular smoking increase from 3% (living in households where nobody smoked) to 21% in households with three or more smokers lived (NHS 2009, Statistics).

Another influence is the perceived family attitude to young people’s smoking. Although majority of families including those with three or more smokers are taking a negative attitude towards smoking, it appears that they are more lenient with their approach to stop their children from smoking. The result of the survey shows that the amount or the quantity of cigarettes a smoker would depends on their perceptions of their families’ attitude toward smoking. This is because, opposed to 52 percent of casual smokers and 73 percent of non-smokers, 39 percent of daily smokers said their relatives might want to discourage them from smoking. Furthermore, relative to 2% of casual smokers and 1% of non-smokers, 14% of frequent smokers believe their relatives will do little to deter them from smoking.

2.2.2 Convenient Sources of Cigarettes

Young people get their cigarettes from various sources such as convenience stores, bars, eating establishments, friends, and relatives (Slovic 2003, p.44). Despite the legislation banning the selling of tobacco to minors, children under the age of 16 purchase cigarettes from shops (44%) and vending machines (10%), according to the findings of a 2008 NHS study. However, other individuals, such as acquaintances (58%), relatives (10%), and parents themselves (63%) are the most popular suppliers of cigarettes, according to the results (6 percent ).

The proportion of young people buying cigarettes from the shop in 2008 decreased by 23% compared to the 2006 figure of about 78%. Similarly, regular smokers purchasing from vending machines dropped by 12% compared with 17% in 2006. However, the number of regular smokes who are getting their cigarettes from other people increased to 52%, which is 12% more than the percentage points recorded in 2006. The decrease in young people’s buying cigarettes from shops is attributed from the difficulty to purchase. This is because among those students surveyed, 57% of those who attempted to purchase cigarettes from a shop were refused at least once. Similarly, those regular smokers who purchased their cigarettes from vending machine dropped from 37% to 12% due to strict monitoring being implemented by National Association of Cigarette Machine Operators (NHS 2009, p.27).

2.2.3 Level of Perception on the Danger of Smoking

The degree to which teens feel these drugs can affect them is one significant aspect that may determine whether or not they will consume tobacco or alcohol (Department of Health and Human Services 2008, p.59).

Measuring certain attitudes and beliefs about tobacco use can help explain and understand why young people smoke. For instance, in the 2008 survey of the University of Michigan Institute for Social Research (2008, p.338), 74% of 12^th graders believed that smoking one or more packs of cigarettes per day could harm them while 39% think cigarette smoking is harmless. Students still do not believe that smoking a pack or more is risky despite the growing health consequences of cigarette smoking. From 1993 to 1995, perceived risk of smoking decreased at all grade levels and became fairly level between 2000 and 2003. However, it has increased again from 2004 to 2006 for 12^th graders but it has declined with 3.3% point drop in 2008.

According to the findings of the 2007 study, rises in the perceived probability of consuming a drug are often correlated with declines in the rate of current usage of that substance (Department of Health and Human Services 2008, p.60).

Figure 2.3.1 – The Relationship of Perception of Risk and Reduced Smoking Among Youth Age 12 to 17. (Data from Department of Health and Human Services 2007 National Survey on Drug Use and Heath)

[Directly extracted from Smoking Statistics available online at the URL:http://info.cancerresearchuk.org/cancerstats/types/lung/smoking/index.htm]

[Directly extracted from Smoking Statistics available online at the URL:http://info.cancerresearchuk.org/cancerstats/types/lung/smoking/index.htm]

TABLE: 3: % of children smoking by age England 2008

[Directly extracted from Smoking Statistics available online at the URL:http://info.cancerresearchuk.org/cancerstats/types/lung/smoking/index.htm]

[Directly extracted from Smoking Statistics available online at the URL:http://info.cancerresearchuk.org/cancerstats/types/lung/smoking/index.htm]

2.3 Understanding Behavioural Change

Complex interventions are often led by a hypothesis, which may be helpful in forecasting results and deficiencies. Other rationalities, such as coping or enjoyment, can direct human actions (Earle 2007, p.134). For certain individuals, the position of smoking in stress belief, for example, makes it seem reasonable to continue smoking despite the fact that it is considered to be unhealthy. The theories of Reasoned Action and Planned Actions would aid the researcher in comprehending behavioral adjustment at the person level, when people’s intent to behave in such ways is the determining factor in whether or not they do so (Earle 2007, p.134). Furthermore, a person’s behaviour is usually affected by the assumption that if a given behavior is followed, a certain outcome will arise, and that the consequence would be favorable to health (Earle 2007, p.134). For example, if people think they may die early in the immediate future, they are more inclined to give up smoking. They might also have a more optimistic outlook about leaving if they think it would make them smell better and appear better.

Another influential factor is the person’s belief about what others think they should do and to their motivation to comply with the wishes of others. For instance, if a person who uses tobacco feels that most people do not use it and most of those whom he values think it would be better for him to give up smoking, they he is more likely to develop a subjective norm that favor giving up.

Theories of planned behavior can be helpful in developing an intervention intended to meet an individual’s needs. The theory emphasizes that a person’s belief about an issue is essential since their decisions to improve their health or not entirely depends on how he or she perceived the issue. In the “Stages of Change” model, the five stages of change were developed to explain how people are motivated to adopt norms that would improve their health. At the ‘pre-contemplation’ stage, an individual is at the point where he or she actually intends not to change or adopt any positive change in their behavior. In the following stages, people are “contemplating” or already considering adopting a particular behavior and making progress or “preparing” to have serious commitment to change. In the fourth and last stages, they begin to take “action” or start making changes in their behavior and try to “maintain” them eventually. According to Earle (2007, p.135), although some people may not move quickly than others and not always intend to move forward through these stages, the change model is considering the reality that people are predictable and normally move through these stages.

The stages in the Change Model can help public health intervention particularly those that involve behavioral change, to plan their approach. For instance, if an intervention to prevent tobacco use would consider the first stage of the model, their initial action will be to raise awareness and provide information on the health risk of smoking. Similarly, they would also try to encourage people to think about the pros and cons of their existing behavior and consider the health benefits of change. The public health intervention may consider the two last stages and support those who decided to quit and help them maintain it through constant follow-up.

2.4 Addressing the Quality of Intervention Delivery

Public health interventions are traditionally characterized in terms of levels of prevention. Primary prevention is an approach that is focus to ‘prevent’ the occurrence of a public health concern. Secondary prevention on the other hand is more focus on immediate responses such as emergency services, treatment, etc. The third level of intervention is an approach that promotes long-term care such as rehabilitation and reintegration (Krug 2002, p.15).

To determine if the intervention is delivered correctly as planned, knowledge of the campaign’s underlying principle is necessary since these would disclose how the program would plan and pursue its objectives. The ACTT Campaign was planned based on the results of a Health Habits Survey completed prior to launch, but the report acknowledged that it did not take into account the CDC or Centers for Disease Control and Prevention guidance when designing target criteria for school-based smoking prevention initiatives. According to the CDC’s recommendations for school-based health services on cigarette use and abuse, school-based health initiatives may be able to inspire children and youth who have never attempted smoking to stay away from it. For those who have already tried, the programs should be able to encourage them to stop and refrain from further use. Additional assistance should be given to those who are unable to stop or quit tobacco use (MRWR 1994, p.9). Fundamentally, school-based programs according to CDC guidelines should succeed in attaining the following objectives:

1. Reduce the rate of tobacco smoking to at least 15%.
2. Reduce the number of adolescents and teenagers who start smoking cigarettes to at least 15%.
3. Establish tobacco-free neighborhoods and incorporate tobacco-use education into both primary, high, and high school curricula.

The CDC thus recommends the following strategies for school-based programs:

1. Establish and implement a tobacco-free school curriculum.
2. Teach about tobacco’s short and long-term harmful physiologic and social effects, social impacts on tobacco usage, societal expectations on tobacco use, and refusal abilities.
3. Have kindergarten to 12th grade instruction.
4. Provide teachers with program-specific instruction.
5. Seek parental or family involvement and assistance.
6. Encourage school employees and students who use cigarettes to quit.
7. Evaluate the tobacco-use avoidance initiative on a regular basis.

The tactics mentioned above are examples of the campaign’s strategy that must be implemented in order for it to be effective. The campaign must, in particular, adopt and implement a school curriculum that is compliant with state and local laws. Help students consider how cigarette usage leads to decreased endurance, stained teeth, poor breath, and social isolation, as well as the anti-tobacco standards. Let the youth feel that there are other ways for them to appear mature and welcomed by their peers besides smoking. Assist students in developing the knowledge and confidence to counter tobacco-promotional advertisements from the public, their peers, and their families. Teachers should be educated about the program’s basic ideas and reasoning, and parents or relatives should be involved in program preparation and reinforcement of instructional messaging at home. To assist those who need to stop smoking, have emotional reinforcement, anger control, and rejection skills. Finally, to evaluate the tobacco-use reduction initiative on a daily basis while keeping the above key questions in mind.

1. Is the tobacco usage program being applied and executed according to plan?
2. Does it promote the necessary awareness, attitudes, and skills to help people quit smoking?
3. Is compulsory schooling given from kindergarten through the 12th grade?
4. Do parents or families participate in the creation, execution, and evaluation of programs and policies?
5. Does the service promote and help people who are trying to stop smoking?

These questions can be use to determine if the ACCT intervention was delivered as planned.

Chapter: 3

3.1 Methodology

Systematic Review is the organized methodology of systematically scrutinizing and speculating the varied different intervention evaluations – which in these regards are done here following the Cochrane Collaboration format by formulating in the form of:

1. Systematizing a clinical issue
2. Identifying and isolating selective studies
3. Critical analysis and assessment of studies
4. Congregating valuable information and databanks
5. Assaying, analyzing and apprising the outcome
6. Elaborating and elucidating the results
7. Developing improved reviews

3.1 Selection Criteria

3.1.1 Inclusion Criteria

Credible studies published in English particularly those sponsored and funded by government health organizations. These include results of nationwide surveys on young people’s tobacco use and secondary research appearing in the published literature.

The study’s primary interest is on combustible tobacco products that are being marketed to young people through aggressive advertising on television, posters, billboards, and the Internet. It is beyond the scope of this review to investigate the ill effects of tobacco use on health, as it is more interested in factors that influence young people to smoke and the quality of intervention applied to stop it.

This systematic review is after the young members of the community or those who are still in school because they are the common objective of numerous school-based interventions aiming to prevent the use of tobacco among children and young people. For instance, the NICE or National Institute for Health and Clinical Guidance for public health interventions in the United Kingdom was created to prevent smoking on young people and supports a number of related government policies for children’s welfare such as the Children Act 2004 and the National Service Framework’s preventive efforts for children. In addition, it also supports school-based interventions such as “Smoking Kills” and the latest Department of Health national strategy for tobacco control. Similarly, school-based preventions were also launched in the United States based on the idea that schools have a role to play in reducing serious problem of smoking and tobacco use by young people.

The common initiatives of both countries were encouraged by the result of various studies from government agencies and non-governmental organizations, which suggest that more than 1,000 kids in the United States today are becoming regular smokers under the age of 18. The studies also suggest that the addiction rate for tobacco smoking is much higher than the addiction rates of alcohol and illegal drugs such as marijuana and cocaine. Moreover, 90% of all adult smokers started at a very early stage in their life and 20.4% of students studying in high school are current smokers when they finish high school.

Since public health interventions are complex and typically involves numerous components, this systematic review will only include interventions based on a single theoretical underpinning following the CRD’s guidance for undertaking reviews in health care.  Even randomized controlled trials (RCTs) which are critically scrutinized in the process of this systematic review are studied to evaluate the effectuality of smoking cessation interventions amongst the youth. All RCTs are conducted with youth aged equal to or lesser than twenty years and extracted from journal studies between 2002 and 2006 and also inclusive of research in PubMed and PsycINFO from 2001 to November 2006.

3.1.2 Exclusion Criteria

This study excluded sources that were not published in the English language, narrative reviews, too few samples used to represent the majority, newspaper and magazine reports, factsheets, and conference proceedings.

3.2 Search Strategy

This study was prepared using a structured method of literature scanning and compilation. Language and publishing date were used to narrow down the results.

3.2.1 Principal Sources of Information

The following websites and other sources were search using the restrictions mentioned above and search terms specified in the following section.

• Drogues, sante et societe, Vol. 6 n^o 1, juin 2007 Supplement II
• PubMed Central
• PsycINFO
• Jϋni P, Altman DG, Egger M. Systematic Reviews In Health Care: Assessing The Quality Of Controlled Clinical Trials
• The United States Department of Health and Human Services through SAMHSA http://oas.samhsa.gov
• US National Institute of Drug Abuse
• US National Institute of Health
• The University of Michigan Institute for Social Research
• The National Cancer Institute
• The UK NHS Information Centre for Health and Social Care
• The UK Office for National Statistics ons.gov.uk
• The US Centre for Disease Control and Prevention
• The Cochrane Library

3.2.2 Search Term Used

A comprehensive literature search was undertaken for sources that has “tobacco use” or “smoking” associated with terms “young people”, “statistics”, “prevention”, and “prevalence”.

3.3 Study Selection

The studies were selected initially from their titles, summaries, abstract whenever available. If two or more sources are related, the most up-to-date copies containing the full text of the studies was selected to avoid duplication and confusion. Randomized Controlled Trials (RCTs) have been implemented to get the optimum data extraction in this systematic review.

The Data Extraction and Study Selection Form used are delineated below:

[Directly extracted from Cochrane CFGD November 2004]

Study Selection, Quality Assessment & Data Extraction Form

Study eligibility

 * Iissue relates to selective reporting – when authors may have taken measurements for particular outcomes, but not reported these within the paper(s). Reviewers should contact trialists for information on possible non-reported outcomes & reasons for exclusion from publication. Study should be listed in ‘Studies awaiting assessment’ until clarified. If no clarification is received after three attempts, study should then be excluded.

References to trial

Check other references identified in searches. If there are further references to this trial link the papers now & list below. All references to a trial should be linked under one Study ID in RevMan.

Participants and Trial Characteristics

 Trial characteristics

see Appendix 1, usually just completed by one reviewer

Methodological quality

We recommend you refer to and use the method described by Jϋni (Jϋni 2001)

Were withdrawals described?    Yes  Š     No Š         not clear  Š

Discuss if appropriate…………………………………………………………………………………………

…………………………………………………………………………………………………………

Data Extraction

References to other trials

Appendix 1

* If cross-over design, please refer to the Cochrane Editorial Office for further advice on how to analyse these data

References:

• Jϋni P, Altman DG, Egger M.. Systematic reviews in health care: Assessing the quality of controlled clinical trials. BMJ. 2001 Jul 7;323(7303):42-6.]

3.4 Randomized Controlled Trials (RCTs):

“Description of intervention and controlled conditions in RCTs of youth smoking cessation interventions

TABLE: 1: Randomized Controlled Trials

[Directly extracted from Drogues, sante et societe, Vol. 6 n^o 1, juin 2007 Supplement II Available at A Systematic Review of Randomized Controlled Trials of Youth Smoking Cessation Interventions by Andre Gervais et al (2007)]

 3.4.1 Randomized Controlled Trials of Youth Smoking Cessation Interventions

Sussman 2001 (Project EX): Sussman et al (2002) have evolved through systematic review that an approximate average smoking quit proportion of 12% with 3-12 months continued follow ups in intervention cases whereas only 7% in controlled group cases. However under the current scenario Sussman et al (2006) have administered a statistical assessment of 48 controlled live cases amongst which only 19 were RCTs and hence developed the theory that smoking cessation schedules have encouraged immediate complete quitting of about 3% in addition inspired the people’s desire towards quitting to about 46%. Moreover involving school students in tobacco control programmes like moulding through motivation enhancement, cognitive-behavioural methodologies and advances through social impact in five continued schedules have produced much higher quit results. Very lately the Cochrane collaboration analysed six RCTs, seven cluster-randomized controlled trials, and two non-randomized controlled trials that assessed the effectuality of the cessation schedules with six months’ follow-up programmes monitoring smoking habits. Cases pertaining to transtheoretical practical model proposition which has yielded average long-lasting achievement enduring with continuous two-years’ follow up study. Cognitive behavioural healing cure mediation generated essential efficacies when varied results developed were merged on account of combined studies.

Of the RCTs that abided by the inclusion criteria are Sussman 2001 (Project EX), Robinson 2003 (Start to Stop), Adelman 2001, Pbert 2006 – they carried out cessation programmes with school students under clinical settings. Abstinence was quite evident in cases of Sussman 2001 and Robinson 2003. However drop-out rates could be captured in the study of Robinson et al (2003) as 8% in only a month’s behavioural monitoring schedules to resurface students caught smoking who were then rehabilitated to quit.

3.4.2 Appraisal of Studies

The evaluation generally selected studies in terms of credibility, study design quality, and freshness of contents. However, these factors are only serves as general guide to quality as each study may be designed with specific strengths and weaknesses.

3.4.3 Limitiations of the Review

This study has used a structured approach to ensure quality outcome but it also acknowledge the few inherent limitations associated with systematic reviews. The quality of this review is thus limited by the quality of the studies selected along with the inherent weaknesses of the review methodology itself.

Another limitation is the restriction in language as only studies that are in written in the English language were considered. This restriction limits the scope of the study to the United States and United Kingdom. In addition, the review was limited to the published academic literature and did not have the opportunity to review unpublished works. Although majority of the studies were read and analyzed for inclusion, there may be equally relevant studies that were overlooked during the search.

Finally, data extraction, critical review, appraisal, and report preparations were carried out by a lone reviewer over a limited timeframe thus the reader is advised to consult the original sources cited for more details

Chapter: 4

4.1 Findings

4.1.1 Johnson et al. (2009) –A School-based Environmental Intervention to Reduce Smoking among High School Students: The Acadian Coalition of Teens Against Tobacco

The intervention, a randomized, controlled study is a school-based environmental program involving teachers and all students in the 19^th grade. It was implemented in 20 schools located within south central Louisiana in the United States.

The ACTT intervention programs include teacher workshops in which they received most up-to-date information about tobacco use and were encouraged to support the intervention program and persuade their students to participate. A school-based media campaign through posters and public service announcement were implemented to deliver positive modeling, verbal and pictorial persuasion. The media campaign used different theme each academic year that varies according to the budget level of the campaign. Low budget media campaign are those obtained from CDC and the American Cancer Society free of charge while medium and high budget media campaign consist of materials developed inside the campus and implemented by social marketing firms respectively.

The intervention was originally as cohort study but due to the difficulty capturing classroom time, the program was changed to an environmental intervention where the entire student body is the target. The activities of the intervention program such as the media contest, quiz and video were conducted at the rate of 1-2 per months and actively delivered to target audiences. However, since the school wide activities were limited to the school’s main hallway during lunchtime, the participation rates were considerably lower when compared to the total number of students in the school.

The implementation of the intervention was assessed for fidelity, exposure, impact, reach, and environmental context. Fidelity in the sense that activities were delivered as planned through observation and key components checklist. Reach is determined by the quantity of students attending a particular activity. For instance, for classroom presentations such as introduction and video, reach is considered the actual number of participants while an ‘estimate’ when measuring activities in hallways. Exposure and impact on the other hand were measured with via student survey. Environmental context such as hurricane or turnovers of health educators associated with the program were considered barriers.

In this study, the school was the unit of randomization and analysis. Mean, medians, and frequencies were employed to sum up the data. The Fisher’s exact test and t-tests were used to evaluate the differences in the baseline group. The prevalence of 30 and 7 days smoking were computed for each of the 20 schools while group intervention and year differences in prevalence were evaluated with mixed models repeated measures ANOVA.

The result yields the information that there were more students in the control group relative to the intervention group. White dominated the sample for 9^th and 12^th grade with mean age about 15 years for both intervention and control groups. Moreover, there more females than males for both intervention and control groups.

The 30-day prevalence of cigarette smoking for intervention and control over the four years of the program for 9^th grade was 23% (for intervention schools) and 26.1% (for the control schools) at baseline. The variation in prevalence between these schools at baseline was insignificant considering the fact that there were no intervention activities during the first year. However, when activities began in the second year of the program, the prevalence in the intervention schools dropped by about 2% at 21.9% and rose in the control schools to 30.7%. In the next year of intervention, prevalence unexpectedly increased to 24.1% in interventions schools and 31.3% in control schools, which is over 1% rise in the baseline. In the final year of the program, the 30-day prevalence between intervention and control schools was 7% (27.3% for intervention schools and 34.3% for control schools).

Similarly, the 7-day prevalence yields almost the same results. In the first year, prevalence in intervention schools was 14.8% while 17.2% in control schools. In the second year, prevalence increase by 1.2% for intervention schools and 5.6% in control schools. In the third year of the program, prevalence in intervention schools was at 16.2% and 23.8% for control schools. The increase marked the 7.6% difference between intervention and control schools. In the fourth and final year of the program, the increase in prevalence was as high as 9.9% for control school and 6.4% in intervention schools.

Assessment of 30-day prevalence by individual schools reveals that only five schools (4 in the intervention and 1 in control schools) showed reduction in prevalence over the fours of the program. All the schools showing reduced prevalence were mostly African-American while no decrease was recorded with any of the white schools.

The absence of significant effects was not from deficiency of the study design since it is based on a well-accepted standard for school-based randomized trial in the United States. Secondly, the randomization scheme was suitable based on the available information. However, although there are some advantages of the environmental program since exposure is bigger compared to classroom-based, it may have been affected by the limitations of an environmental program. For instance, low participation rates in hallways activities, lack of program recognition, weakened budget affecting the value of student incentives, and decreased importance in the school routine may have reduced the effectiveness of the program. This is because there are evidence to suggest that activities done inside the classroom capture more audience and had greater participation that those activities done in the hallways. Activities such as these particularly when it becomes a lunch time affair can affect the number of participation since those students who are already smoking are least likely to attend such activities. Therefore, a significant number of students who actually need the intervention were missed resulting to low program dose.

Another problem why the program did not attain its goals is the fact that the program’s budget was not originally intended for the entire student body. The budget was not enough to produce quality gift and incentives that could encourage students to participate.

4.1.2 Campbell R. et al. (2008)- An Informal School-based Peer-led Intervention for Smoking Prevention in Adolescence (ASSIST): A cluster randomized trial

Two hundred twenty three secondary schools in the west of England and Southeast Wales were invited to participate in the ASSIST open cluster-randomized controlled trial in February 2001. ASSIST or “A Stop Smoking in Schools Trial” intervention was an adaptation of previous initiative promoting sexual health. ASSIST on the other hand aimed to spread and sustain new norms of non-smoking behavior on young people aged 12 to 13 years by creating a social network in schools.

Out of the 223 invited schools, 113 responded positively but only 66 were selected. However, only 59 schools signed in and agreed to continue with their existing smoking education program and policies, and to be randomized by control group or by intervention group. To avoid being a classroom-based, ASSIST strategically select and trained influential students to act as peer supported during information interactions outside the classroom. In this manner, peer supporters can encourage their peers not to smoke. Influential students were identified through a nomination questionnaires sent to students in both intervention and control schools.

Ten thousand seven hundred thirty students aged 12-13 years in 59 schools in England and Wales went under the ASSIST cluster randomized controlled trial. 5,372 students from 29 schools were randomly assigned by stratified block randomization to the control group while 5,358 students from 30 schools to the intervention group. Outcome data were gathered at baseline from September 20, 2001 to February 12, 2002, January 30, 2002 to May 27, 2002 just after the intervention, after a year follow-up from November 28, 2002 to May15, 2003, and after two-year follow-up from November 18, 2003 to May 12, 2004 with questionnaire completed in the classroom. Two weeks before every data collection, schools involved in the study circulated to all parents and carers information regarding the program along with a reply slip that has to be returned if they did not wish their child to participate. Consequently, those students that were withdrawn by their guardians or parents did not take part during the data collection stage for students in the relevant year group.

All participating students provided saliva samples and were give questionnaires about smoking behaviors. The samples were analyzed with ELISA Technique to evaluate the frequency of misreporting. The study also explored teacher’s opinion of the intervention and examined the views of peer supporters about their roles and their actions with reference to these roles. Moreover, to determine the role of the social network in the propagating the intervention and distribution of the peer supporters within their year groups, data about the participant’s social networks were gathered. The cost of the intervention was also considered and staff time, travel time and distance, consumables, accommodation, and so forth were being recorded on weekly basis. Statistical analysis was done based on the 1998 Health Behavior in School-Aged Children Survey in Wales. Consequently, it was assumed that 30% of students were in the high-risk group of smoking initiation and 30% were assumed to smoke each week with an intra-cluster correlation of 0-02.

The results of the study shows 90% of eligible students provided self-reported data for smoking despite some problems. Two schools withdrew after randomization because management of the schools suddenly changed decisions to participate but those in list of interested schools replaced them. Out of the 11,043 students in 59 participating schools, 3% were withdrawn by their parents before data gathering at baseline.  One school closed after the follow-up was taken after the intervention while one school close after the first year follow-up. However, majority of students from these schools were not lost to follow-up as out of the 123 students enrolled in these schools, 117 were transferred to schools involved in the trial.

Some differences were noticed between the characteristics of schools at baseline as more students in schools under the control groups reported smoking each week. There was no significant differences noticed between intervention and controls schools in terms of students occasional and experimental smoking behaviors. 16% of peer supporters who completed their training achieved the expected target of 15% of the year group as they are generally fitted for the particular group in terms of sex, ethnic origin, and smoking status. Retention rates were also high for those students who were trained and willing to work continuously as peer supporters at 99% while 84% submitted their completed diary at the end of the intervention period.

In general, smoking rate for all year group increased from 5. 7% at baseline when the students were aged 12 to 13 years to 13.8% in the first follow-up, 20.3% in the second follow when the students were already 14 to 15 years of age.  Prevalence of smoking was less in interventions schools for all three follow-up points. In the first follow-up, the odds ratio of being smoker was 95% with schools in the intervention group. However, the odd ratio was not significant in the 2^nd year follow-up indicating that reduction in intervention has an immediate effect. Results for high-risk group, the odd ratios were at 0.56 to 0.99 in the first follow-up and 0.70 to 1.02 in the second year follow-up. These ratios suggest that the intervention had no considerable impact on students identified in the baseline as occasional and experimental smokers. Results of the comparison between self-reported smoking data and salivary cotinine content suggest that students self-reporting accuracy is 99% since only 1% of salivary cotinine had been found. The average cost of the intervention was £27/student or £4,700/school.

Overall, the study demonstrated that the ASSIST training program is an effective tool to achieve and sustain reduction in uptake of regular adolescent smokers for 2 years after its delivery. The peer-led intervention was well received by students and schools evidenced by the high response rate of over 90%, the retention of all schools, and the consensus shown between self-reported smoking data and salivary cotinine. In addition, the ‘external trainer’ approach that deliver training program through independent trainers outside the school, was also well received by students and school staff and contributed to young people’s sense of ownership of the intervention. The exploitation of informal channels of information and peer influence help the intervention reach those that are more susceptible to non-smoking messages.

4.1.3 Liu et al. (2007) – Addressing Challenges in Adolescent Smoking Cessation: Design and Baseline Characteristics of the HS Group-Randomized Trial

This smoking cessation intervention utilized multiple strategies to address known barriers in tobacco use intervention programs through proactive identification of smokers in the population and direct approach to encourage participation. It has invited both smokers and non-smokers and proactively delivered the intervention to protect smoker’s privacy. It tailored the intervention to participants and communicated respect for adolescent and their choices.

The intervention is base on Social Cognitive Theory and incorporated Motivational Interviewing to enhance smokers’ own motivation and will for quitting smoking. It has also utilized cognitive behavioral skills training to build skills for smoking cessation and relapse prevention. The reason given for choosing Motivational Interviewing was its potential to reduce smoking using non-judgmental and non-prescriptive approach.

Since privacy is one of the intervention’s strategy and many teens have easy access to a telephone, intervention was delivered via counselor-initiated telephone calls. The study believed that telephone counseling could provide privacy and personalization of face-to-face counseling at a lower cost. In addition, through proactive telephone interventions teens’ participation is easy and allows all smokers to be involved including those infrequent smokers that are typically overlooked by cessation programs for teens. Moreover, teens’ receptivity is enhanced by tailored content and dose since it increases relevance to specific smoker. Consent for intervention participation, particularly those at minor-age, from parents was taken through mail with telephone follow-up. Smokers in the trial were selected through a confidential baseline survey before being invited to participate. The proactive approach according to the study provides the opportunity to recruit a range of adolescent smokers.

Fifty high schools were randomly selected from one hundred sixty eight Washington State public high schools that met the study’s eligibility criteria. Out of the 50 selected schools, 93.1% of high school junior went a baseline survey. Those with schools with foreign students who were unable to read or understand English were eliminated from the survey – 1,188 high school juniors in total. Smokers who were smoking for the last 30 days and been smoking at least monthly were included based on their answers of three primary survey questions. These are those who answered “once a month or more” on how often they smoke cigarettes, responded ‘yes’ on using one or more cigarettes in the last 30 days,   and answered ‘within the past 30 days’ when asked the last time they smoked or tried a cigarette. The study capitalizes on the existing social network and positive social interactions and includes non-smokers who reported that they have smoking friends, interested in learning more about quitting, and willing to do whatever they can do to help friends stop smoking. In total, 2,151 smokers and 743 non-smokers were identified and selected for the intervention.

The high school was chosen as the experimental unit to prevent contamination due to social mixing of intervention-exposed students and unexposed students, enable wider reach, and capitalize on the smoker’s interaction. The randomization of schools was pair-matched by prevalence of smoking, number of smokers, cessation stage and percentage of student’s eligible for free/reduce-price school meals. The matched random assignment was performed via a computerized coin flip for each randomly ordered pair. Trained study staff with scripted explanation of survey procedures and study information administered the in-class survey in regular classrooms. To ensure the accuracy of self-reporting of smoking behavior, make believe saliva samples were taken. Students who were absent during the initial survey were contacted for an in-class clean-up survey 2 weeks after and those who cannot come were asked to complete the survey questionnaires by mail.

Collection of baseline data was done on both schools and students. The Survey of High School Principals provided the information required on school demographics and smoking-related characteristics such as rural or urban composition, staff smoking, etc. Similarly, to collect baseline information on older teens’ smoking and to identify potential participants for the trial, data from the Survey of High School Juniors was utilized.

Permutation-based methods were used to evaluate the intervention. This is to find out the differences between the two arms in endpoint outcomes. The permutation method of analysis acknowledges the intra-class correlation within individuals in the same schools by permuting school, as opposed to individual, among set of all possible intervention assignments, to calculate the test statistics and form a null distribution. The test static observed based on the actual assignment is then referenced against this null distribution for hypothesis testing. This analytic method avoids modeling and distribution assumptions, relying solely on the random assignment of intervention, and is flexible for covariate adjustments. Analysis of subgroups was also conducted based on strong empirical or theoretical evidence to detect differential intervention impact in specific subgroups.

The sample size calculation were done taking into account the group nature of the experimental unit and accounted for the within-school intra-class correlation. The sample size calculation used the following parameters. First, 6-month abstinence rate of 0.06 at the study endpoint in the control group. Second, 90% participation rate in endpoint data collection, based on prior experience on the Hutchinson Smoking Prevention Project (HSPP), a 12-year trial on adolescent smoking. The third, interclass correlation coefficient for cessation among high school senior smokers, conservatively estimated to be 0.025 from prior HSPP data on cessation among high school seniors. Fourth, resulting variance inflation factor of 2.11. Fifth, two-sided test that accommodates the intra-class correlation and sixth alpha = .05. Therefore, the trial seems to include sufficient schools and participants to evaluate properly the effectiveness of the intervention.

The trial used a “wave’ design in which recruitment of high schools and subsequent activities were phased-in over 3 years. Fourteen high schools with 515 smoke trial participants were recruited in the first year -2002), 20 schools with 966 smokers in the second year and 16 schools with 670 smokers in the third year. The HS Study intervention, experimental design, procedures and instruments were reviewed and approved by the Hutchinson Centre’s Institutional Review Board.

For the baseline results, the percentage of valid data range is from 86% to 100%. Average enrolment for the 50 participating high schools is 1,224 students, ranging from 204 to 2,376 students. An indication of the school’s status is the percentage of students eligible for free or discounted price school meals. The average of this percentage for participating schools was 24.6%. 50% of families in 21 high schools lived in rural areas. 49% of the 12,141 baseline survey respondents were females, 73.5% White, 7.2% with multiple races or ethnicity, 6.4% Asian, 6.1% Hispanic, 2.9% Black, and the rest is either Pacific Islander or American Indians. Majority of the survey participants were at age 16 or 17 at the time of survey or 94% while only 4.9% were older than 17. Smokers in these high school juniors is around 2,175 or 17.9% and 6.8% or 794 were identified as daily smokers.

The study found that smoker trial participant’s smoking patterns were different.  The cumulative use of cigarettes however showed that 52.4% have smoked in excess of 100 cigarettes and concerning smoking frequency, students who smoke at least daily gathers 37.2% compared to 62.8% of those who smoke less daily. However, the study found 69.9% of smokers were generally having strong motivation to quit while 30% lacked motivation.

Examination of results reveals that smoker’s trial participants in experimental and control conditions were very similar with regard to most characteristics with the exception on the percentage of daily smokers which were 39.9% in experimental compared to 34.5% in control. However, although there have been some variations in the smoking frequency among smokers, almost 60% of daily smokers were past quit attempts compared to 34.2% of less-than monthly smokers and 36.5% of monthly-but-not-weekly smokers. Majority of those who smoke less-than-monthly has no intention to smoke in the future at 73% compared to 48.8% of daily smokers who do not have plans to quit. In general, those who smoke more frequently got no motivation to quit and lower self-efficacy for quitting.

Considering the size of the population involve in the intervention, the HS Study perhaps is the largest group-randomize trial in adolescent smoking compared to the last two intervention discussed. The design of the intervention generally aims to overcome difficulties commonly identified in adolescent smoking literature. For this reason, it has several new features not found in standard programs. The inclusion of “proactive” identification of smokers and use of a liberal definition of smokers help expand the intervention to cover even low-frequency adolescent smokers and those that were unmotivated to quit.

According to the author, the HS Study is the first population-based survey to use proactive approach in identifying and recruiting participants, and the first intervention to target daily and less-than-daily smokers as well. The proactive identification evidently enables the study to carry out its functions without breaching the rights of individual and confidentiality of private information. Having both smokers and non-smokers in the trials undoubtedly gave the intervention the opportunity to use the non-smoking participants as a tool to help their smoking friends to quit. Significant advantages were added by the “Phase-in” or “Wave” design as it enables project staff to participate fully in recruiting and establishing important collaborative relationships with schools and reduce the annual cost of the study. In addition, it enables interim evaluation of the intervention process and incorporation of refinements into subsequent waves as required.

The intervention’s design innovations have enabled the study of mixed population of older adolescent smokers with different rate and frequency of smoking, varying level of motivation to quit, and different degrees of receptivity to cessation assistance. The baseline information gathered from these diverse types of smoking behaviors not only enhanced the study’s understanding of young smokers but also highlighted intervention-related issues and challenges that may be useful for future interventions. For instance, the fact that over one-third of less-than-daily smokers were making an attempt to quit in the past 12 months and the difference in quitting behaviors and beliefs between infrequent smokers and frequent smokers.

Assessing by the Study screening form, Data extraction form, Quality assessment process the following SYSTEMTIC REVIEW format/framework has been tabulated below:

Table: 2

Chapter: 5

5.1 Discussion

As recommended by the guidelines for systematic reviews, this review started with a brief description of the interventions involved. These include tabulations of details as mentioned above about the type of study, interventions, target population, a brief description of the population characteristics, and outcomes. To enhance the transparency and reliability of this systematic review, this study included theories of the intervention’s processes, the reason for selecting their approach, and the specific target of the intervention.

In a school-based environmental intervention presented by Johnson et al. (2009), media campaigning was the primary intervention strategy. Good modelling, auditory, and pictorial persuasion is delivered by posters and public service announcements. Media as often cited in literature influences both sides of the smoking habit. First, it influences minors to use tobacco through tobacco companies’ advertisements in television and promotional posters. According to Ammerman & Hersen (2001, p.186), tobacco companies’ efforts to hook children through the media are very effective and encourage the industry to advertise and promote smoking among the youth. However, media’s effectiveness can also work in reverse to stop smoking. For instance, counter marketing campaigns are good strategies to reduce youth initiation and prevalence (Wallace & Kohatsu 2007, 974).  In a study conducted on the effectiveness of media intervention in preventing cigarette smoking on four separate communities, results suggest a significant reduction in smoking initiation among children (Stoff et al. 1997, 369). Levesque (2007, p.111) also noted that media efforts as part of the nationwide comprehensive tobacco-control programs reduced smoking among adult and the youth. Similarly, the media campaigns adopted by the Johnson et al. (2009) in their intervention program may have brought some positive results considering that most of the campaign materials were from CDC and the American Cancer Society.

In contrast, an entirely difference approach were presented by Campbell et al. (2008) in there informal school-based “Peer-led” intervention program. A considerably large intervention covering 113 interested secondary schools, the intervention aim to spread non-smoking behavior by creating social networks in schools. Rather than focusing on media power, the services hand-picked and educated prominent students to serve as peer supporters. The peer supporter’s task is to encourage their peers not to smoke. The results of the program suggest that peer-led intervention was well received based on the high response rate and turn-out on self-reported smoking data. However, exploiting informal channels and peer influence although helps the intervention reach more people with non-smoking messages; it is not clear if it has a direct effect on smoking behavior. For instance, there were not significant difference recorded between intervention in terms of students smoking behavior and the only clear accomplishment was the success of peers fitting-in with the target groups and the high rates of peer supporters willing to work continuously. In fact, with their own admission, the intervention shows no considerable impact on students smoking behavior.

According to Wreder (2004, p.133), the reported success of peer related interventions have been subject to some debate and results of meta-analysis of anti-tobacco and sexual health prevention programs suggest that peer-led approach is not useful as it often produce less convincing evidence of program utility. Although there may be some advantages such as young peer supporters being more credible to their peers with respect to lifestyle and thinking and they may serve as a role model who can help alter school norms regarding drug use, peer supporters sometimes lack the motivation and have a tendency to preach or lecture to students in ways that turn students off to the behavior being supported (Sloboda & Bukoski 2003, p.64).

In the third intervention, Liu et al. (2007), address tobacco use prevention using multiple strategies. The intervention intends to eliminate barriers affecting intervention programs through proactive participation of smokers and non-smokers. This type of intervention is based on Social Cognitive Theory and Motivational Interviewing designed to enhance smoker’s motivation to quit. The intervention, in general, takes advantage of the current social network and constructive social connections. This approach, although it has a different in their strategy is similar to the second intervention discussed earlier. For instance, the second approach used student peer-supporter to influence their fellow students while this intervention utilized non-smoking students who are very willing to encourage their smoking friends to cease smoking. Moreover, both interventions relied on self-reporting of smoking behavior through survey forms. Clearly, both interventions capitalize in social network and interactions and using peer-led intervention to promote non-smoking behavior among the youth. Although the design of the intervention has several features that are unique compared with the previous intervention such as proactive identification of smokers, the phase-in or wave design, and inclusion of low-frequency adolescent smokers, the effectiveness of the intervention in terms of smoking prevention is unclear.

As mentioned earlier, peer-led intervention often produced confusing results and that are often subject to further evaluation. In fact, the result of this intervention suggest that with or without a peer-led support, majority of those students who smoke less-than monthly has no intention to smoke in the future. It also suggests that smokers have low self-efficacy for quitting and cannot be influenced by a peer. Evidently, the lack of clear results in terms of smoking reduction among smokers is the negative effect of using social networking theory in smoking intervention. Interventions mobilizing the resources of social network members may be effective only under specific circumstances and for specific problems. This is because according to Cohen et al. (2000, p.297), there were interventions of this type that are successful but some are not. For instance, behavioral change through members of the same social network may be less effective for smoking cessation that weight loss.

Overall, all interventions discussed earlier have effectively designed and implemented their programs but not all had realized their expected results. The school-based environmental intervention conducted by Johnson et al (2009) or the Acadian Coalition of Teens against Tobacco had a much convincing result than the other two.  Although with limited participation caused by various limitations such as venue, availability, and budget, the use of media as the primary intervention tool helps the program work best and attain at least a realistic result. Furthermore rigorous and strict attention has to be maintained by the adults such that children do not learn from them since it is more likely observed that youth are easily allured to give in to the smoking habit if they have persistently smoker parents in which context adults also need to follow an organized lifestyle toinspire and encourage their younger generations.

Chapter: 6

6.1 Conclusion and Recommendations

Though however limited truth can be accrued in regards to the impact and effectuality of the smoking cessation intervention programmes amongst the youth certain amount of analytical outlook has evolved from this in-depth literature research and review. Intervention programmes carried out in schools and under clinical environment have invariably developed and delivered effective results in contrast to therapy and treatment under strict pharmacological surveillance. In a brief conclusive note it can be derived from this systematic review that more frequent and diversely improved RCTs are required to be implemented and inculcated especially in school and clinical settings and to be widely examined, analyzed and assessed in a merged study of well-engineered RCT programmes.

In accordance to the intensive and extensive systematic review conducted in this research work the following policies can be adopted to assist in the cessation and complete eradication of the smoking ill-habit which is maligning the health and system of the young people at present:

National Policy:

1. To strategize a proactive, all-encompassing, new national anti-smoking and complete tobacco restrictive regulation with explicit vision and mission – both immediate and long term.
2. To legitimize and publicize a national appraisement and assessment guidelines for extensive tobacco control in order to examine evaluate and elevate the common beliefs clues and practices.
3. To set up a well-organized administrative supervisory body as Tobacco Control Committee with the sole accountability of governing and managing the estimation, analysis, inspection and improvement of the action plan for complete tobacco control.
4. To commence an entire evaluation programme of the opportunity and efficacy of intensive public research and review on smoking and tobacco use in the country especially in UK and USA taking note of comprehensive demographic diversities.
5. To establish practical goals with long-term persistent aims for 2015 to diminish and nullify the smoking ill-habits amongst all age groups with leverage to the youth society.
6. To propose to develop achievable goals to raise children with no smoking habits at their very home with the target to turn 25% of residential areas by 2015 as no smoking zones for all ages inclusive of parents and children.
7. To conduct cotinine tests on adult nonsmokers and adolescents on a daily basis, to emphasize objective methods of lying threadbare to secondhand smoke, and to set benchmarks to reduce cotinine amounts.
8. To establish missions for completely stopping the malpractices of tobacco smuggling:
9. With the sole aim to nullify the illegitimate distribution of tobacco as cigarettes to less than 8% by 2010 and 3% by 2015 and that also loose hand-rolled tobacco to less than at least 45% by 2010 and 33% by 2015
10. To set a programme that will involve cotinine testing among pregnant women so that the smoking prevalence in this group can be correctly measured.
11. To make commitment to undertake a full mid-term review of the new strategy in 2012, for tobacco control this includes setting new targets for 2020.

Tobacco Rules and Regulations:

11. Emphasize the ban of marking on some form of tobacco product packaging.
12. To make all cigarette advertisement displays and ads illegal at the point of sale.
13. Reintroduce a system that would result in an average market escalator for cigarette goods that is higher than inflation.
14. To combat tobacco smuggling and the selling of illicit tobacco, a comprehensive and well-funded state, national, and foreign policy is needed.
15. Ban tobacco accessory selling practices such as advertisement and marking, such as cigarette papers.
16. To provide accurate and reliable statistics on cigarette products, such as the amount of tar and nicotine released, as well as information about the dangers of smoking.
17. All cigarette packaging can contain details regarding the national NHS Smoking Helpline’s phone number.
18. Make it obligatory for all cigarette dealers to obtain a certificate, and make it a requirement of the license that they sell nicotine replacement therapy and other pure nicotine goods.
19. Enact strict legislation to ensure that the statutory age requirement for the selling of tobacco products is met.
20. To ban the selling of cigarettes by vending machines.
21. To create a fire-safe cigarette standard based on the globally recognized ASTM standard?

Mass Communications and Media:

22. To raise and implement a long-term media investment strategy to inform and strategize social messaging efforts, as well as to identify health gaps in the targeting of anti-smoking messages as a goal.
23. Strengthening and improving film licensing rules to reduce the appeal and visibility of photos of smoking as being associated with young people’s preferences. It would stop smoking as a sign of heroism by airing anti-smoking commercials that will prioritize various films or TV shows, like DVDs.

 Secondhand Smoking Addiction:

24. To nationally and locally advertise publicize and encourage the establishment of completely smoke-free residents and vehicles.
25. To legalize the absolute prohibition of smoking in public premises also while in cars whether traveling or driving.
26. To advertise and campaign internationally the 2010 policy review to build complete smoke-free legislative programmes with the state of art practices and sessions.

Quit Smoking Services

27. To infuse and inculcate all quit smoking services, sessions and interventions amongst the economically less privileged sections of the society – even the destitute, distressed and deprived people – both young and aged to initiate and instill a harmony in the programme.
28. To enhance all round initiations whether national or local in order to advertise, advocate and assist all forms of quit smoking efforts inculcated as community services in order to rehabilitate and reform the smokers and those prone to the habit.
29. To promote quit smoking and completely stop smoking sessions and interventions under clinical settings with the progress of the treatment processes.
30. To develop and train in top class international standards the selective specialized team to supervise and manage this complete smoking eradication programme.
31. To inculcate and inspect the fundamental knowledge and skills in quit smoking and smoking eradication programmes even to the primary school level and undergraduate students as mandatory health trainings.
32. To prioritize all NHS services to monitor, inspect and evaluate each and every quit smoking sessions and interventions as well as yield fundamental guidance in order to actively involve smokers to immediately admit to smoking eradication and quit smoking services and treatments.
33. To promote and prioritize attractive incentives and treatment services with the sole mission of pregnant smokers as well as young generations to quit smoking.
34. To popularize the prescribing of nicotine replacement therapy and connect all health professionals especially dentists with the primary vision and mission to abolish smoking as well as make this a free of charge services especially for smokers willing to quit.
35. To cultivate, exercise and teach the smoke addicts as well as all health professionals on the about the advantages, safety and securityof nicotine replacement therapy.
36. To campaign vast promotion and marketing of quit smoking and smoking eradication therapies and treatments also in areas of tobacco distribution points.

Pure Nicotine Products

37. To promote and prioritize strategies in order to legitimize regulations and restrictions on smoking and attract the old stringent smokers towards pure nicotine products as an alternative habit.
38. To campaign and advertise the pure nicotine products as a commercially viable replacement of smoking.
39. To promote and cultivate mass communications and public opinions to welcome pure nicotine products and quit smoking instead and also prioritize the practice of nicotine replacement therapy thus facilitating quitting and instead shift to the habit of relying on pure nicotine products as a healthier alternatives option.
40. To lessen the tax and VAT on pure nicotine products to make them easily available.
41. To estimate the commercial benefit of prescribing free use of pure nicotine products in case of smokers who are adamant to quit.
42. To encourage and prosper in-depth research and scientific developments on the long-term efficacies of pure nicotine products.

6.2 Bibliography;

• Adelman, W. P., Duggan, A. K., Hauptman, P., Joffe, A., (2001) “Effectiveness of a High School Smoking Cessation Program” Pediatrics 107 (4): 1-8
• Ammerman R., Ott P. & Tarter R. 1999. Prevention and societal impact of drug and alcohol abuse, US: Routledge
• Ammerman R. & Hersen M. 2001. Handbook of Prevention and Treatment with Children and Adolescents: Intervention in the Real-World Context. Canada: John Wiley and Sons
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• Introduction
  • • Industry background
    • Benchmarking
• Ratio Analysis
  • Profitability
    • Profit Margins
    • CAGR and YoY Growth
  • Return on Investments
  • Asset Utilization Ratios
  • Liquidity Analysis
    • Debt Utilization Ratios
  • Degree of Combined Leverage (DCL)
    • The Degree of Operating Leverage (DOL)
    • Degree of Financial Leverage (DFL)
    • Degree of Combined leverage
  • Dividend Yield and P/E Ratio
• Limitations of Research
• Conclusion
• Works Cited
  • Bibliography
• Appendices
  • Appendix 1: Table of Figures
  • Appendix 2: Financial Statements M&S
  • Appendix 3: Financial Statements J Sainsbury

Abstract

This report presents a fundamental analysis for financial and investment risks in Marks and Spencer Group Plc, considering its chief competitor J. Sainsbury PLC as a benchmark for performance. A comprehensive ratio analysis is conducted amongst the companies, whilst some figures are contrasted with industry demographics, others are just analysed amongst the two companies; this report places greater emphasis on gearing and working capital ratios, and critically evaluates the performance and managerial expertise of both organizations.

Introduction

Marks and Spencer group PLC is the 5^th largest retailer in the UK in terms of revenues (Retail Knowledge Bank, 2009), the group owns over 600 stores in the UK itself, and another 280 abroad under its brand name (Marks and Spencer PLC, 2010). The primary focus of the group is on its clothing range, and the group generates the largest revenues in terms of clothing sector in the UK, and is also the largest retailer of clothes in UK.

In the finance and commerce sectors the group is mostly known for its EBIT in 1997, which was more than £1 billion in the year, and which was a record for any retailer in the UK at that time. Although as of today the groups EBIT still stands strong at £870 million (2009 session ending), and in 2008 and 2007 the group’s EBIT was well over £1 Billion again.

The group’s profits took a plunge after the year 1999-2000 as it expanded its business demographics and sectors alike, when it introduced furniture and technology products as a part of its product range. Although the company’s executives proved their problem solving and change acceptance capabilities when instantly in the year 2001 the company had completely introduced a novel business model and changed its policies radically to regain most of its lost share of market, the company also sold its sinking financial services business in 2004.

But even as of today the massive blow that the company faced in the early years of this millennium is visible as the company continues to pay massive interests on debts incurred during the period and evidently it has lost a significant market share to its competitors like J Sainsbury and Next. Even though the company tried to fight its competitors, it continued to receive blows such as when Justin King left M&S for J Sainsbury and introduced a revolutionary CRM innovation code named ‘Making Sainsbury great again’. (BBC News, 2004)

Industry Background

As of the year ending 2009, clothing and textile stores held a market share of 13.4% amongst the total retail sector, and non-specialised food stores held a 40.8% of market share (Office for National Statistics: Newport, 2009: 1-2), which of course, was obvious as food is a FMCG commodity as well as a prime basic need. This also directly reflects that amongst the retail industry, the revenues of companies that sell FMCG goods through equivalent number and sizes of stores is bound to be higher, for example, the revenues of J Sainsbury PLC are almost twice than those of Marks and Spencer [Revenues of J Sainsbury for 2009 = £18.9 Billion (J Sainsbury, 2010); M&S = £9 Billion (Marks and Spencer Group Plc, 2010)]; Thus J Sainsbury holds an over 16% share of the market in the retail sector.

In January 2010 the retail industry broke a new 15 year low sales when it fell by 0.7% (Berwin, 2010); following this the retail sector is anxiously eying the next big blockbuster event for sales, the Valentines day; during which the retailers expect that revenues up to £1.6 billion would be generated for the industry. Even the retail companies that deal with groceries are hoping that the recent credit crunch would promote couples to dine at home rather than in cafes, bakeries or restaurants (Retail Week, 2010).

Benchmarking

J Sainsbury PLC, is a prominent retailer within the UK, and even though it’s prime focus of business is on sales of grocery items; but the business practices and management policies of Sainsbury and Marks and Spencer are quite equivalent and the competitiveness amongst both companies is visible to the general populace of UK. With almost 800 stores, J Sainsbury would be a perfect benchmark for the performance management of Marks and Spencer. Even the stock prices of both the companies tend to catch on to one another’s levels:

Figure 3: Stock Prices on London Stock Exchange [2005-current] (Yahoo! Finance, 2012)

Ratio Analysis

Profitability

Profit Margins

Table 1: All amounts in £ Millions (except for percentage amounts); (Marks and Spencer Group Plc, 2010)

The difference amongst the profit margins (both gross and net) of both the companies under concern is quite significant. The difference amongst the gross profit alone is a colossal 700%, with the gross profit margins of Marks and Spencer to about 37.21% and the gross profit margins for Sainsbury are just 5.47%. A gross profit margin of 5% is considered second-rate for any company and any industry, as it is after gross profits the company deducts the marketing and administrative expenses to get an EBIT.

Table 2: All amounts in £ Millions (except for percentage amounts); (J Sainsbury, 2010)

Even though the above stands true, that a GP margin of 5.5% is mediocre, and might even be considered a mistake if it were just mentioned without any supporting figures of revenues and cost of sales. But it is not, and after a careful analysis of the financial statements of the company, it was ascertained why the margins are so low, actually J Sainsbury PLC does not franchise its space, instead they operate on the traditional ‘buy more and cheaper’ routine, and therefore have significantly lesser marketing and selling expenses. The remaining costs of advertisements and other selling and staffing expenses have been placed within the cost of sales header under the Income Statement, and this accounting guideline (personal to the company) is the reason why the cost of sales of the company amount for 94.5% of its revenues; the actual cost of sales for the year 2009 of Sainsbury were £17.8 billion, while the revenues were £18.9 billion.

Figure 4: Gross Profit Margins

The gross profit margins of both these companies are quite synchronous in terms of growth and decline patterns. And therefore the operating policies don’t seem distinctive. But this still does not account for the distinctiveness amongst the net profit trend line…

Figure 5: Net profit Margins

Figure 6: Net profits

Due to significant investment in some new policies and expansion plans, the net income of Sainsbury was quit lower in 2006, although, a similar fall is witnessed in the Net profits of Marks and Spencer in the year ending 2009; the company supposedly blames the recession and higher celebrity endorsement costs for the recent fall (Talking Retail weekly, 2008).

Figure 7: Revenues

A common trend amongst both companies, is the fact that the revenues of Sainsbury and M&S are increasing at a steady rate, and yet net and gross profits have significantly fallen in 2009, and therefore it may be assumed that this fall is likely due to an external factor like the markets or recession.

Other figures such as interest expenses and dividends seem in order, with Sainsbury spending more in these areas, but considering the mammoth turnover of the company, which is more than double than that of M&S, these would appear normal. Yet Sainsbury is paying a lot more taxes than M&K which hits its net profit margins hard; against the profit before tax of £706 million M&S paid taxes worth £199 million (2009), and against a profit before tax of just £466 J Sainsbury is paying taxes worth £177 million; which amounts up to 40% in taxes alone for Sainsbury (2009). (Marks and Spencer Group Plc, 2010) (J Sainsbury, 2010)

The overall profit margins of Marks and Spencer are significantly higher as compared to Sainsbury because of its chief focus in the clothing business which comes with higher margin products as compared to the general departmental goods of Sainsbury, and even though Sainsbury does sell clothing, its revenues from other businesses severely affect the profit margins of the company. Overall, a net profit margin of just about 1.5% is extremely risky and does not provide Sainsbury with many opportunities to take considerable business risks for expansion.

CAGR and YoY Growth

Table 3: Amounts in £ millions. (Marks and Spencer Group Plc, 2010) (Biafore, 2004: 108)

Table 4: Amounts in £ millions. (J Sainsbury, 2010) (Biafore, 2004: 108)

Figure 8: cagr

Figure 9: YoY Revenues

In terms of sheer growth velocity in percentage, M&S’ growth speed has fallen sharply from over 10% per annum to just about 0.4% in just 3 years, whereas Sainsbury is far ahead in the same matter, even though the growth rate of Sainsbury was over 6% in 2007, and was over 6% again in 2009, this proves that even though Sainsbury is growing at a higher compounded rate. This is also supported by the CAGR figures which are about 5.6 for Sainsbury and 5.1 for M&S; and if M&S would not have presented the over 10% growth in 2007, these figures would have been completely different, with J Sainsbury taking a clear lead by a wide margin.

Undoubtedly, the CAGR analysis shows us that Sainsbury is a better option for short to long term investors who are looking for steady but sure growth, whereas the trend for M&S is quite uncertain and highly volatile.

Return on Investments

Table 5: ROInv; for financial year 2009 (Marks and Spencer Group Plc, 2010) (J Sainsbury, 2010) (Brigham and Houston, 2007: 114-121)

Figure 10: ROE

With a net income of 289 (Sainsbury) against the NI of M&S which is 508, it comes as no surprise that the rate of return on equity of M&S would be considerably higher than Sainsbury, especially since the Shareholders equity fund of Sainsbury is higher than M&S’ by 115%.

Then again, M&S’ business is also based on franchising, whereas Sainsbury’s business is highly focused on self owned assets, and therefore the ROE of 24.4% should not be judged by numbers alone, as it could be wrongly interpreted.

Figure 11: ROA

As discussed previously, some stores of M&S are also franchised, especially most of its international stores; and therefore the company owns lesser assets as compared to Sainsbury, and hence Marks and Spencer takes a lead here again thanks to higher net income and comparatively lesser assets.

Figure 12: ROCE

Undoubtedly, a company that holds a colossal amount of assets and makes lower profits (Sainsbury) as compared to another company that holds lesser assets and makes a higher profit (Marks and Spencer) will have a lower ROCE. And since Sainsbury holds assets worth 30% more than M&S, and a net profit which is approximately 45% lower than M&S, then a difference of 6.5 (Sainsbury) and a 14.2 (M&S) does not come as a surprise.

And since the Debt to asset ratio (see table 8) of both companies stand at a ratio of 1:1, then such results are not unexpected.

In terms of overall capital management, M&S has proved itself to be more aggressive and a better performer; whereas, Sainsbury is still stuck on using the traditional methodologies of business, with little improvement in its efforts. Nevertheless, EPS is a stronger factor and carries a higher authority over returns and stock prices.

Asset Utilization Ratios

Table 6: Asset Uti. (2009). Average inventory, Avg. Fixed assets, and Avg. Assets were calculated based on figures of year ending 2008 and 2009. (J Sainsbury, 2010) (Marks and Spencer Group Plc, 2010) (Tuller, 1994: 86)

Figure 13: Inv. turnover

The accounting fault of Sainsbury, which enables it to include selling expenses in Cost of Goods sold has finally been presented as an advantage for the company, as it has enabled the company to present an inventory turnover ratio of 26.1 against just 11.1 of M&S. Although it should be noted that considering the industry performance and general business, an inventory turnover of 11 is considered to be great; especially in clothing business where holding the stock for too long could in turn make the stocks obsolete, but a 26 is superb for Sainsbury considering the fact that it also deals in the FMCG sector and the risk of expiry of products is of higher importance.

Figure 14: AT

Figure 15: FA Turnover

Again due to its mammoth revenues Sainsbury takes the lead in both of the asset turnover ratios. Since their businesses primarily deal with investment in Fixed assets (land), but still, considering the margins of both the companies, these results still don’t prove that Sainsbury is a better investment.

Liquidity Analysis

Table 7: Liquidity analysis based on balance sheet of 2009 (J Sainsbury, 2010) (Marks and Spencer Group Plc, 2010) (Berman, Knight and Case, 2006: 162-165)

Figure 16: CR

Figure 17: QR

Both the companies perform extremely poorly when it comes to liquidity and debt ratios, especially considering the fact that they get most of their products on credit from suppliers and sell them for cash at their respective stores. A current ratio of 1+ is a minimum boundary for retail businesses, and the same goes for quick ratio which seems even worse as the inventories have been removed from the calculations. In layman’s terms this means that if the company were to square off its short term debts with current assets, they will only be able to pay back 60% (Marks and Spencer) & 54% (J Sainsbury) respectively.

Debt Utilization Ratios

Table 8: Debt Utilization: *Interest expenses figures were used to calculate Interest coverage and not net interest (which would make interest = Interest paid – Interest Received). All calculations were based on financial statements of 2009. (Block, Hirt and Short, 1999: 68)

Figure 18: Debt to equity

Figure 19: Debt to assets

Figure 20: Eq – A

Figure 21: Int Coverage

As stated within previous segments, that Marks and Spencer is extremely aggressive in terms of expansion and investing borrowed funds, and the debt to equity ratio of 349% proves it, the company has been borrowing extensively from the markets to fulfil its needs for growth, which may also be a reason as to why the company’s stock, revenue growth (%), profit margins, and capitalization are amazingly volatile. Perhaps this is also the reason as to why the company is spending most of its earnings before taxes paying interest accrued on its debts. Although since Marks and Spencer as well as J Sainsbury PLC both are a part of the retail industry, which is a very capital intensive sector, a risk ratio of above 2 is considered quite normal; but then again this secures the position of Sainsbury, whilst leaving Marks and Spencer under considerable risk with Leverage ratio of almost 3.5.

The interest coverage ratio also shows the afore mentioned as a ratio of 1.69 for both companies indicates that both of them are paying most of their earnings before taxes towards the interests accrued on their respective debts. In other words, it is extremely risky for such companies as if the profits fall due to any unfortunate and unpredictable poor market environments or change in interest rates, these companies will only be making enough money to pay off the interests on their debts, or worse, maybe they won’t even be making enough to pay off their debts.

Overall, these companies must reduce their debts until the point this ratio reaches to a minimum level of 2.0, in general business terminology, an interest coverage ratio of 2.5 is considered to be great; but a ratio of 1.69 will be rated as poor performance by the scholar.

Degree of Combined Leverage (DCL)

The Degree of Operating Leverage (DOL)

Table 9: DOL; * SG&A is the sum of Selling & Marketing exp. + Administrative Expenses

Degree of Financial Leverage (DFL)

Table 10: DFL

Degree of Combined leverage

Marks & Spencer             = (9062.1 – 5690.2) / (9062.1 – 5690.2 – 2644.5 – 164.5)

Marks and Spencer         = 5.99

J Sainsbury                          = (18911 – 17875) / (18911 – 17875 – 420 – 96)

J Sainsbury                         = 1.99

(Lee and Lee, 2006: 85-86)

Figure 22: DCL

The degree of combined leverage is quite higher for Marks and Spencer based on the fact that its operating leverage is notably higher than its counterpart, which is due to the mis-presentation of SG&A expenses by J Sainsbury, as it considers “all costs” related to product selling within the Cost of goods sold, and therefore we would consider that these figures are manipulated to some extent. But also considering the fact that the profit margins of Sainsbury are much lower than those of Marks and Spencer, this doesn’t come as a surprise.

Dividend Yield and P/E Ratio

Table 11: P/E M&S

Table 12: P/E Sainsbury

Limitations of Research

1. Sainsbury considers all selling expenses and any other expenses related to the process of purchase of goods or raw materials to getting them to the customer as a part of COGS, which is a mistake; and was especially troublesome for this report as M&S does not do that.
2. The prime focus of Sainsbury is on Groceries and M&S is on Clothing, and even though Sainsbury does deal in the clothing business, it is not entirely focused on the sector, and therefore the overall margins of the company were severely affected by this.
3. The data was available for the last 4 years (2006-2009), it would’ve been better if it were available for 5 years as the trend lines would have been much more clearer.

Conclusion

Considering gearing analysis, the accounting mistake of Sainsbury helped it take a wide lead in terms of Debt to equity ratio, and with a debt to equity ratio of 2.29, on the other hand, with a debt to equity ratio of 3.49, Marks and Spencer proves that it is interested in revenue growth by means of expansion through funds from the markets. A 3.49 debt to equity ratio could be countered by the fact that the interest coverage ratio of both the companies stands equal at 1.69, which states that the companies are paying an equivalent percentage of their EBIT as interest on debts.

Nevertheless, two companies making a same mistake does not make it right; an interest coverage ratio of 1.69 is quite low and has been rated mediocre; not to mention the fact that it increases the risk of the company being affected by adverse market conditions or interest rates by times fold. But here Marks and Spencer stands quite safer considering the fact that its net profit margins stand on 7.26% (4 year average), whilst Sainsbury’s Net profit margins are only 1.40% (4 year average).

The degree of combined leverage further clarifies this with a DCL of 5.99 for Marks and Spencer, and a 1.99 DCL for Sainsbury. Even if we eradicate the scope of the COGS mis-presentation by Sainsbury, we still expect to see the ratio significantly below that of M&S’.

As far as working capital management is concerned, Marks and Spencer is indeed the better performer in terms of Return on investments, with return on assets, return on equity, and ROCE ratios 6.9%, 24.4%, and 14.2% respectively; all of which are far ahead of J Sainsbury. Undoubtedly, Marks and Spencer is the aggressive one amongst the two in terms of expansion and revenue growth.

Based on Inventory and asset turnover ratios, Sainsbury is a better manager of Working capital; but if we consider the interpretation mistake of Sainsbury’s COGS; these figures should be considered wrong; therefore the scholar has opted to declare a tie in assets and inventory turnover ratios; so as to remain unbiased of course.

This tie takes Marks and Spencer to the lead as it is a better performer in terms of ROA, ROE and ROCE.

Overall, Marks and Spencer is undoubtedly the better manager of funds, but due to the aggressive planning and policies of the company, it is also extremely volatile. Sainsbury on the other hand is much more stable.

Works Cited

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Appendices

Appendix 1: Table of Figures

• Figure 1: Logo courtesy: (Hailes, N.D.)
• Figure 2: Logo Courtesy: (AnnualReports.com, 2008)
• Figure 3: Stock Prices on London Stock Exchange [2005-current] (Yahoo! Finance, 2012)
• Figure 4: Gross Profit Margins
• Figure 5: Net profit Margins
• Figure 6: Net profits
• Figure 7: Revenues
• Figure 8: cagr
• Figure 9: YoY Revenues
• Figure 10: ROE
• Figure 11: ROA
• Figure 12: ROCE
• Figure 13: Inv. turnover
• Figure 14: AT
• Figure 15: FA Turnover
• Figure 16: CR
• Figure 17: QR
• Figure 18: Debt to equity
• Figure 19: Debt to assets
• Figure 20: Eq – A
• Figure 21: Int Coverage
• Figure 22: DCL

Appendix 2: Financial Statements M&S

Appendix 3: Financial Statements J Sainsbury