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Am I Eligible for Student Finance?

Am I Eligible for Student Finance?
International Student Guide

One of the major things student should ask, am I eligible for student finance Student worry if they are able to afford their living expenses as they are moving away from home. This includes educational materials and books, students have to consider rent, food, travel, and other household costs on top of their tuition fees. Student loans can help with these necessary expenses, but how do you know if you are eligible for student financeHow do beat the shortage of financial aid and funding

Qualifying for a student loan depends on many factors including where you live, which university or college you have chosen to attend, which course you are studying, if you have studied before, and your age.

Generally speaking, you will need to be a UK resident or have ‘settled’ status to qualify for a student loan. The university or college you are planning to attend must be a UK degree-awarding institution, a college which receives government funding, a private institution which offers specifically designated higher education courses, or one of the schools which take part in the SCITT (School-Centred Initial Teacher Training) Scheme.

Your course must lead to a first degree (such as a Bachelor of Arts, Education or Science), a Foundation Degree, a Diploma of Higher Education, a Certificate of Higher Education, a Higher National Diploma, or a Higher National Certificate. You are also likely to qualify if you are studying an Initial Teacher Training course.

Information regarding your eligibility can be found on government websites, and your college or university will also be able to help you determine if you are eligible, as well as guide you through the application process and help you avoid any unnecessary delays or mistakes with the paperwork.

There is plenty of help out there for students. In many cases, it is just a matter of asking for it!

Also review top 15 scholarships for International Students.

If you are looking for help with your Essay Writing, please get in touch with us today.

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Strategic Management Ansoff Matrix

1. INTRODUCTION

Corporate strategic decisions are usually based on the methods through which an organization could leverage its existing competitive advantage in promoting value and ensuring growth (Lynch, 2009), while sustainable competitive advantage depends largely on how well a company performs these actions (Porter, 2008). The need for companies to grow and expand has been known to drive product and marketing innovation, which in turn prompts them into adopting different organisational strategies, based on the products they sell and markets they target (Ansoff, 1984).

The Ansoff Matrix, developed by Igor Ansoff in 1957 highlights four major strategic options (Figure 1) through which an organisation could adapt its new or existing products into a new or existing marketplace. The matrix is employed by businesses in decision-making processes surrounding product offerings and market growth strategies. The matrix is also known as the Product/Market growth matrix and it major function is to help organisations in evaluating available options for growth given their product and market mix. Johnson et al (2008) also depict it as a method of ascertaining the benefits or risks associated with each strategic option. The major strategic options available, as depicted in Figure 1, are for an organisation to penetrate its existing market, develop its market, develop its products or diversity completely with a new product into a new market.

Ansoff matrix

Figure 1: Ansoff Matrix. Source: Ansoff (1957), adapted from Lynch (2009)

2. QUADRANTS

2.1. MARKET PENETRATION

As stated earlier, there are four output options for the Ansoff Matrix. The first of which is market penetration. This is a strategic option for an organisation seeking to expand its market share in an existing market, with an existing product. Mercer (1996) states that the growth strategy inherent in the Market Penetration option is for an organisation seeking to maintain or increase share of its existing products within the market place, gain market leadership, change competitive processes within a matured market, or increase awareness amongst existing consumers. According to Hooley et al (2004), the option to penetrate deeper within the marketplace is a low risk option that makes use of existing resources.

A typical example of an organisation using this strategy would be Southwest Airlines. Southwest Airlines aggressively offers low cost flights within small distance cities. The company’s existing product is low cost travel, which is an industry dominated by several companies and witnessing high competitive pressures across all major markets. However, through its combination of aggressive marketing and low cost pricing, the company is able to dominate the market within Southwest United States (Shaw, 2007).

Another example of market penetration strategy would be that of Pakistan State Oil. The company experiences competition from local and foreign oil companies that sell petroleum through retail petrol stations. However, it has been able to increase its market share from 40% to 65% over a period of 4 years by opening new retail outlets and investing in external advertisement (Economic Review, 2005). The strategy adopted by Pakistan State Oil is similar to that of Southwest Airlines, in that they operate within competitive markets, but by investing competitively, they are able to maintain market share and grow within their respective industries.

This strategy also illustrates the low risk advantage of market penetration. The companies utilise existing products in an already known market. They do not have to invest in research and development or excessively advertise within a new market in order to create awareness. Adopting this strategy would cement the organisation’s position within the industry and increase the barriers for entry for new competitors (Porter, 2008). Since market penetration is focused on retaining existing customers, it is a lot cheaper than acquiring new customers in an unknown market.

However, a major disadvantage of this strategy is that it does not promote corporate growth into other potentially higher earning sectors (Watts et al, 1998). By focusing simply on retaining existing customers, Watts et al argue that the company loses out on the new investment potential, while Fifield (1998) also depicts that expanding market share within an existing industry poses a significant risk as the industry growth may decline and the organisation has lower growth potential.

2.2. MARKET DEVELOPMENT

The option to develop a market is recommended by Ansoff to organisations that aim to offer an existing product into a new market. The various alternatives available would be to leverage an existing product into a new geographical region, using different product dimensions, distributing the products through new channels, or adopting different pricing strategies (Proctor, 2000). The major goal of market development would be to attract a new customer segment, using a slightly different strategy, into consuming an existing product (Ansoff, 1984). The risk associated with this strategy has been depicted by Watts et al (1998) to be moderate, due to the risks associated with entering a new market.

According to a case study in Christensen et al (2005, p.51), Arm and Hammer owned a small business selling baking soda product and were able to attract a new segment of customers by identifying new uses for baking soda. They realised that apart from being used solely for baking, the products could be used as a household cleaning and deodorizing product, so they repackaged its contents and marketed them to supermarkets and corner shops as effective cleaning agents. Due to the relative infancy of the market, they had to engage in a series of advertisement that helped to communicate the relevance of their product and methods through which it could be used for other purposes. Through this strategy, they were able to increase revenue and adapt one product to different market segments. This case study confirms previous assumptions that through market development, a company could leverage an existing product into a new market (Collis and Montgomery, 2008).

The market development actions they engaged in were essential in building product awareness amongst the new customers. According to Fifield (1998), companies engaging in market development would gain new customers, increase turnover and profits, and ensure corporate growth due to the relative potential for growth within the new segment. However, Hooley et al (2004) also discuss the risks associated with market development. The option to foray into a new market segment entails the cost of developing this new market, which consists of market costs and a potential change to the company’s marketing mix. If the strategy fails, then the company would have lost the substantial capital utilised in marketing and pushing this product into the new market.

2.3. PRODUCT DEVELOPMENT

The product development strategy is directed at organisations seeking to offer a new product into an existing market. This definition entails any new or modified product aimed at an existing market. Lynch (2009) asserts that the decisions to develop the product prior to delivery into the market is based on the company’s intention to exploit new technology, protect market share by introducing innovative products and also to utilise excess production capacity. This strategy entails a moderately high risk due to the level of product development and research required to develop a new product for a market that is already used to an existing product (Watts et al, 1998).

The Apple iPod is a real life example of a new product delivery into an existing market. Prior to its introduction, most individuals usually listened to music on cassette players, desktop computers and the Sony Walkman (CNet, 2008). There was no innovative product in the market that allowed individuals to carry their music library on a digital device without the need for cassettes or compact discs. The iPod is a typical example of product development due to its innovative approach to playing music. It consisted of the sleek wheel navigation system that was relatively easy to use and display methods, which made scrolling through vast amounts of music much easier. Due to the product innovation method employed during its development, the Apple iPod quickly gained market share and is now the market leader in music devices (CNet, 2008).

In accordance to Johnson et al’s (2008), the product development strategy associated with the delivery of the Apple iPod enabled the organisation to increase its customer base, brand awareness, brand into the music business, and utilise the iPod’s success as a platform in establishing the iTunes Music Store. Also confirming Hooley et al (2004) view that if a product development strategy for entry into a new market is successful, it may lead the company into introducing more innovative products into the same market or parallel markets, such as in the introduction of iPhone into the smart phone market, and most recently the iPad into the slate PC market.

However, the benefits associated with such a strategy seem to be limited to strong brands with an already existing brand image in similar markets. Watts et al (1998) depict that smaller firms aiming to introduce a new product into an existing market may face shortfalls in marketing the product and investing in product development. Doyle (1997) also states that the high costs and time related in developing a new product for an existing market may be discouraging. Lynch (2009) thereby concludes that careful research needs to be undertaken before an organisation can implement a product development strategy, due to the lack of guarantee regarding market success.

2.4. DIVERSIFICATION

The final quadrant in the Ansoff’s Matrix is a diversification strategy. Such a strategy entails offering a new product in a new market and is often used when a market has become saturated and profits are limited (Lynch, 2009). Doyle (1997) asserts that diversification strategies are usually in three forms: full diversification, backward diversification, or forward diversification. The diversification form adopted by the organisation usually depends on whether they are entering a completely new market, integrating backward and competing with suppliers or integrating forward and competing with buyers. Diversification, whatever form it entails has a generally high risk due the fact that the company would be offering an entirely new product in a new market.

The Virgin Group is a typical example of a company that has consistently diversified into new markets. It forayed into the credit card industry with Virgin Money offering competitive credit card rates to customers; it diversified into travel and offers holiday packages to holiday goers, it also diversified into the mobile phone market with Virgin Mobile and most recently into Fitness with its range of Fitness centres. Forward diversification is being utilised in all these business ventures and have proved successful for the company. It is able to consistently leverage its brand image across different market segments. Johnson et al (2008) argues that Virgin’s main product is its brand, which it sells across different markets, and not necessarily the businesses its runs.

Holbrook and Schindler (1996) state that companies that consistently practice diversification strategies are usually large with a reputable brand image such as Apple, General Electric and Virgin. They are able to leverage their brands across different markets due to high customer loyalty (Hooley et al, 2004). Therefore it seems that this strategy, just like that of Product Development is practised best by organisations with a reputable brand and resources required to develop and market a product effectively, be it an actual product or a brand. Lynch (2009) highlights that the potential benefits of diversification could be numerous. The company enjoys the benefits of operating within diverse markets, thereby ensuring improving profitability and customer loyalty. The company is also able to attain market leadership if the market is not crowded and if it has a unique product to sell. However Mercer (1996) criticises diversification strategies as a jack of all trade practice of venturing into several markets and not being the master of one, a statement that is typical of Virgin’s position. It is not a market leader in any of its markets.

3. CONCLUSION

The Ansoff matrix has proved useful, and with the use of real life evidence, it accurately depicts the most effective strategies that businesses could use depending on their market and customer segment. Though the four strategies apply differently to companies depending on their market and product intentions, it also depends hugely on firm specific capabilities such as brand image and research capabilities. Organisations seeking to adopt its usage when seeking strategic direction should therefore do so in due consideration of their firm specific strengths and benefits and how these could also be applied to the products being offered and markets being targeted.

Word Count: 2,063


4. REFERENCES

Ansoff, I. H. (1957) Strategies for Diversification, Harvard Business Review, Vol. 35 (5), pp.113-124

Ansoff, H. I. (1984) Implanting Strategic Management, Prentice-Hall: NJ, 455pp

Economic Review (2005) ‘Performance of Oil and Gas Sector.’ Economic Review, Vol. 36, pp4- 13

Christensen, C., Cook, S., and Hall, T. (2005) ‘Marketing malpractice: The cause and the cure.’ Harvard Business Review, Vol. 14(3), pp56-73

CNet (2008) The complete history of Apple’s iPod [online], www.crave.cnet.co.uk, [accessed: 30/03/10]

Collis, D. and Montgomery, C. A. (2008) Competing on Resources, Harvard

Business Review, Jul-Aug p140-150

Doyle, P. (1997) Marketing Management and Strategy, Prentice Hall: NJ, 4334pp

Fifield, P. (1998). Marketing Strategy, 2nd Ed, Butterworth Heinemann: NJ, 344pp

Hitt, M.A., Ireland, R.D., and Hoskisson, R.E. (2009) Strategic Management: Competitiveness and Globalization (Concepts and Cases). 8th edition. Mason, Ohio: South-Western Cengage Learning.

Holbrook M, and Schindler R. (1996) Market Segmentation Based on Age and

Attitude Toward the Past: Concepts, Methods, and Findings Concerning

Nostalgic Influences on Customer Tastes. Journal of Business Research, 37

(1): p27-39

Hooley, G. J., Saunders, J. A. and Piercy, N. (2004) Marketing Strategy and Competitive Positioning, 3rd Ed, Pearson Education: London, 622pp

Johnson, G., Scholes, K. and Whittington, R. (2008) Exploring corporate strategy: text & cases. 8th Ed. Pearson Education Limited: Essex, UK. 878pp

Lynch, R. L. (2009) Strategic management, 5th ed, Pearson Education Limited: UK, 826 pp

Mercer, D. (1996) Marketing. 2nd edition. Oxford: Blackwell Publishing Ltd.

Porter, M. E. (2008) The Five Competitive Forces That Shape Strategy. Harvard Business Review, Jan, Vol. 86 (1), p78-93

Proctor, T. (2000) Strategic Marketing: An Introduction, London: Routledge.

Shaw, S. (2007) Airline Marketing and Management. 6th edition. Burlington: Ashgate Publishing Company.

Watts, G., Cope, J., and Hulme, M. (1998) Ansoff’s Matrix, pain and gain, International Journal of Entrepreneurial Behaviour and Research, Vol. 4 (2), pp101 – 111

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Free Business Plan: Restaurant

1. EXECUTIVE SUMMARY

The following document is a plan of my intended business: Enilson’s Cafe, a coffee shop situated in Ealing Broadway. The intended premise is a 65 square foot commercial property situated on the high street. The premise would be designed in a coffee shop format, with a counter serving various items, and a large section where customers could come in during opening hours and feel comfortable. The major products sold would be coffee, tea, cappuccino, a variety of cakes, snacks and sandwiches, and food sold during lunch hours 12pm – 4pm. Product ingredients would be sourced from wholesale suppliers such as Makro, equipments that are required would be sourced from Comet and Cafe suppliers, while food ingredients would be sourced from food suppliers and outsourced Chefs.

Ealing, the location within which this coffee shop is intended is a culturally and religiously diverse neighbourhood, with a majority (55%) being of ethnic minorities. Therefore the major target market would be the general population of commuters, workers and people living within the neighbourhood, who would like widely desirable, yet religiously conscious meals. The coffee market is growing, and everyone eats good food, thereby signifying a need for our services. However, our main competitors such as Starbucks and local cafes operate in close vicinity.

The pricing strategy utilised for this venture would be that of value based pricing. Competition, cost-plus and market oriented pricing would be adopted for the different products we have on offer. Several promotion strategies would also be adopted to promote the business. The business would be registered as a Sole Trader, with the owner, being the manager. Supervisors and Shop Assistants would also be hired. The start-up cost required for the business is ?79,869, and in the first year, the cafe expects to make annual sales of ?204,480, gross profit of ?123,739 and net profit of ?13,099. Breakeven period is in the 9th month of the first year.

The Cafe’s mission is to join the Ealing community, provide appropriate products that suite their tastes and deliver exceptional service. It is our objective to use this initial store as a stepping-stone towards higher sales and more store openings in neighbouring areas and throughout London. We intend to become a multinational organisation just like Starbucks in 5 – 10 years, and we hope that you can join us in that dream.

2.COMPANY SUMMARY

This following document is a business plan report for a coffee shop start-up called Enilson’s Cafe. It would be located on the corner of The Broadway, West Ealing, London. The business premises would be leased from the current owners, and a total of 130 square feet would be secured up front, however, with the permission of the Landlord, only half of that space (65 square feet) would be utilised in the first year, pending business growth.

The business premises is currently being refurbished by the previous owners, however once done, it would be situated in a strategic location within the neighbourhood, with easy access to public transportation and a short distance from the train station. The premises would be designed to suite the coffee shop format, a counter would be situated adjacent to the main entrance, wherein customers can easily place their orders, whilst chairs and tables arranged in various seating formats, would be situated over the rest of the shop. The facilities that would be present within the store for it to run smoothly are expressed in Table 3, which also contains a breakdown of the price and the total start-up costs.

No licenses whatsoever would be required from the local committee, as the cafe would not be selling alcohol or opening beyond 11pm at night. However, information pack and booklets would be sought form the Healthy and Safety Standards agency within Ealing. The business is required by law to register premises used for food businesses, and strictly follows food safety regulations (Ealing, 2010). A licensed premises insurance cover would be taken out from Anglo Pacific Consultants (London) Ltd, which offers “package policy for public houses, wine bars, restaurants and cafe’s,” the insurance package covers all business risks including terrorism cover, personal accidents, and theft (Yesquote, 2010).

The business would be registered as a Sole Trader business, with me, Enilson Helder, being the sole owner of the business. All income from the business would be recorded as personal income, and I would be liable for any debts incurred. All profits would be taxed as income.

3.PRODUCTS AND SERVICES

Enilson’s Cafe would adopt a Coffee Shop format, in which the major product being sold would be a variety of coffee types, while additional products would also be sold. Coffee, Tea, Coffee Latte, Tea Latte, Cappuccino, amongst others would constitute the majority of our offering. Carbonated and no-calorie soft drinks would also be sold. A variety of cake, muffins, sandwiches, crisps, and chocolates amongst others would be sold within the cafe. During lunch periods, particularly between 12pm – 4pm, food menus would exists, cooked particularly by an outsourced chef, who would sell Rice, Chips, Chicken, Mashed Potato, Gravy amongst other lunch time meals.

Suppliers:

The refrigerator, coffee machines, microwave, dishwasher, and all other smaller but vital electronic equipments would be sourced from Comet (www.comet.co.uk), where a business membership account would be created.

All other catering equipments such as plates, spoons, trays, would be sourced from Makro (www.makro.co.uk), that sell a variety of wholesale food items for small businesses.

Food ingredients such as coffee beans, flour and sugar for in house baking or feed preparation would also be sourced from the superstore, as they offer a reasonable discount for small and medium business owners.

Sandwiches would be sourced from Gourmet Sandwich Co (www.gourmetsandwich.co.uk); they provide wholesale sandwiches on a day-to-day basis for small businesses, while the cakes would be sourced from similar external suppliers.

The lunch menu would be sourced by hiring an external chefs who cook on their premises and bring in the food during lunch hour, companies such as Sundrica (www.sundrica.rtrk.co.uk), a local catering company can provide these services.

The services provided would be a hospitality service, wherein customers can come in, have a drink, eat lunch or a snack, and just relax. Sofas, in addition to wooden chairs, would be provided for customers that would like to have a seat with friends, and forget their time within the store. The music would be of several genres, but would mostly alternate between popular Pop/Alternative and Hip Hop music. Staff would be friendly and helpful.

There are a number of direct competitors within close vicinity to the intended location. Subway is directly opposite and a Roosters Chicken is close by (Google Maps, 2010), both of which could prove a threat for lunchtime meals. However, unlike these competitors, Enilson’s Cafe provides seating space and lunchtime food. They also sell Coffee and Tea, in addition to soft drinks.

4.MARKET ANALYSIS

The Ealing borough is currently home to over 300,000 individuals, with 12,800 residing in close vicinity of the store. The population of individuals aged 20 – 44, are higher than the UK average. The region has one of the highest levels of international migration within London, and is the 4th most ethnically diverse, and 6th most religiously diverse borough within the UK, which in itself is a major attractant. 55% of all Ealing borough residents are from ethical minorities, 41% of which were not white (Ealing, 2010). Therefore the different market segments that exist are based mainly on ethnicity, which is a major dividing factor within the population.

The major target market segment is for the general population of commuters working or living around the store. The location is currently on a road in which several buses pass, and houses are located. People living and working within this region, no matter their ethnicity or nationality would be sought as potential customers. We intend to sell a wide vary of ethnically acceptable food for all residents. Meat and Chicken would be halal, but sold in a contemporary and modern fashion. Meals such as Chips, Chicken, and Mashed Potato would be suitable for everyone, and the Muslim population would appreciate the religious considerations. According to Mintel (2009), coffee shops are always sought after, and due to the scarcity of one in immediate vicinity to the proposed location, then it could be said that there is a need for one. The food products being sold are fresh, which would appeal to people that want to eat good food.

The coffee market has grown consistently over the years, with large stores such as Starbucks, Costa, and Pret A Manger, breaking the ?1billion mark in 2007 (Mintel, 2009). There is room for growth within the UK, as the store density of coffee shops is lesser than that of developed countries such as the US, while the UK still has a low level of coffee consumption compared to other developed countries. Direct competition is low within the Cafe’s close vicinity, however the shopping mall opposite however contains a Starbucks and several other Cafes, which pose a considerable threat. Stores such as Starbucks, Costa, Cafe Nero, Pret A Manger, EAT, and several other established coffee and cafe chains pose a considerable threat, due to their long established status, and the financial resources at their disposal to displace competition.

5.STRATEGY

The pricing strategy being adopted by the cafe would be based on the overall strategy of the firm, which is to target low – mid income earners (population demographic), with easily affordable coffee and lunch. Therefore, our products would not be priced too high that it would deter customers; neither would be priced too low that it would be unprofitable. Due to the broad based generic product strategy we are adopting (Johnson et al, 2008), we would be adopting a value based pricing strategy, in which the price of each product being offered would be based on how much we believe the customers within this region are willing to pay.

Enilson’s Cafe intends to adopt the following pricing tactics for all/some of our product ranges.

Competition based pricing would be adopted for the price of Coffee and Tea products. They would be based mostly on the price being offered by competitors in the market. Though ours would be priced slightly cheaper, it would still be brewed and prepared to high quality, with a good taste.

Cost-Plus pricing would be adopted for those products such as Sandwich and Cakes that we have sourced from external vendors. If they have been bought at a wholesale price of ?1.50 each, then they may be priced at ?1.95 or ?2, depending on what competitors in the immediate vicinity charge.

Lastly, market oriented pricing would be utilised for the food products sold during lunch break. We expect to attract a large number of low earners, and pricing our products appropriately would assist our strategy (Monroe, 2003).

Sales Forecast

The following is a weekly sales forecast for Enilson’s Cafe. A minimum of 200 coffees, tea, cappuccinos and soft drinks would be sold each weekday for an average price of ?1.50, less on weekends. 100 cakes, sandwiches and crisps would be sold daily for an average price of ?1.50, more on weekends.

Table 1: Cafe Sales Forecast

MonTueWedThurFriSatSunWeekly
Drinks?300?300?300?300?300?200?200?1,900

Snacks?150?150?150?150?150?180?180?1,110

Food?150?150?150?150?150?250?250?1,250

Total

?4,260

Promotional Mix

The major forms of advertising for Enilson’s Cafe would be in the form of in store displays, brochures and catalogues available to new comers to the store, and external banners. Full-page adverts would also be placed in the Yellow Pages, online and offline, while print ads in newspapers particularly indigenous to Ealing would be utilised.

Personal selling would be utilised on all customers, especially new ones, in order to make them repeat customers. All staff would be taught how to provide the sort of service required for customers to come back frequently.

Sales promotions would be conducted within the first month of opening the store. Free coffees and snacks could be offered to customers as a form of tie in to ensure their continued patronage.

The major form of public relations to be conducted would be in local newspapers, an article that discusses our products, services and how we intend to please the local populace.

The business would be launched during a public holiday. Most probably a bank holiday weekend or Muslim holiday when most residents would be out shopping or celebrating.

6.MANAGEMENT STRUCTURE

As the business is being operated as a sole trade, it would be composed mainly of Enilson, as the store manager and owner.

Other members of the management team would include a Cafe supervisor/Assistant Manager, who would supervise procurement of supplies and running of the store.

The Staff Supervisor would supervise the rota and ensure that all staff are being friendly and offering the level of service expected.

Store assistants would also be present and would be the company’s main point of contact with customers. They would receive orders and attend to each customer’s needs.

Table 2: Sample Rota and Payroll

9am – 6pm

9am – 6pm

9am – 6pm

9am – 6pm

9am – 8pm

10am – 8pm

10am – 6pm

Store Hours

9

9

9

9

11

10

8

65

Wage

Mon

Tue

Wed

Thurs

Fri

Sat

Sun

Weekly

Wage

Manager

?10

7

7

7

7

7

5

0

40

?400

Asst Mngr

?8.50

0

7

8

9

0

8

8

40

?340

Staff Supervisor

?7.50

8

8

0

0

8

8

8

40

?300

Sales Assistant 1

?6.50

5

5

0

0

5

5

0

20

?130

Sales Assistant 2

?6.50

0

0

5

5

0

5

5

20

?130

Sales Assistant 3

?6.50

8

8

8

8

0

8

0

40

?260

Sales Assistant 4

?6.50

5

5

0

0

5

5

0

20

?130

Sales Assistant 5

?6.50

0

0

5

5

0

5

5

20

?130

Total Hours

240

?1,820

7.FINANCE

The start-up cost for Enilson’s cafe would be based on the price of the following facilities. The total startup cost for the venture would therefore be ?79,869, as illustrated in Table 3.

Table 3: Start Up Cost. Source: Startups, 2010; Buycatering.com)

FacilitiesForecast Price
Facility Rent?30,000
Industrial Refrigerators?1,295
Dishwasher?1,275
Six Burner Range?1,899
Heated and Refrigerated Merchandisers?3,475
Microwave?300
Coffee/Cappuccino Machine?2,175
Domestic Food Appliances?3,450
Kitchen?9,500
Restroom?2,500
Furniture?9,000
Cafe Outfitting?15,000
Total?79,869

Table 4: Projected Profit and Loss 1 Year

Revenue

?204,480

Cost of Sales

?80,741

Coffee

?18,240

Snacks

?32,501

Food

?30,000

Gross Profit

?123,739

Expenses

Staff Salary

-?68,640

Rent

-?30,000

Maintenance

-?6,000

Misc

-?6,000

Net Profit

?13,099

The sales forecast depicted in Table 1 has been utilised for the projected profit and loss statement. All weekly forecast has been multiplied by 4 weeks in order to get the average forecast for one month (for the cash flow), then multiplied by 12 months. The cost of sales has been calculated based on projected cost of goods obtained from Startups (2010). The profit margin for coffee used was 80% that for Snacks was 40%, while the profit margin for good was 50%. The net profit for the first year is ?13,099.

Table 5 is a representation of the forecast cash flow and breakeven analysis for the first year of business. The information presented above illustrates that Enilson’s cafe would make a profit of ?13,099 in the first year of business. The breakeven would be in the 9th month of the first year. Particularly, money back analysis illustrates that the company may not get its total investment of ?79,869 back within the first year. Most probably in the second year depending on how well the cafe is able to improve sales and profit.

Table 5: Cash Flow Forecast (1 Year)

Month

0

1

2

3

4

5

6

7

8

9

10

11

12

Revenue

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

Cost of Sales

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

Coffee

?1,520.0

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

Snacks

?2,708.4

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

Food

?2,500.0

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

Gross Profit

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

Start-Up Cost

-?49,869

Staff Salary

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

Rent

-?30,000

Maintenance

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

Misc

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

Monthly Profit

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

Profit Cumulative

-?30,000

-?26,408

-?22,816

-?19,225

-?15,633

-?12,042

-?8,450

-?4,858

-?1,267

?2,324

?5,916

?9,507

?13,099

Total Cumulative

-?79,869

-?76,277

-?72,685

-?69,094

-?65,502

-?61,911

-?58,319

-?54,727

-?51,136

-?47,544

-?43,953

-?40,361

-?36,769

Start-up capital required: ?79,869.

Operating capital required till breakeven: First month Expense = ?6,728

Total Capital Requirement = ?86,597, half of which is sought from bank.

8.REFLECTIVE ESSAY

During the business plan writing session, we were all meant to work in teams of 2, wherein each team member would contribute equally towards the achievement of the eventual business plan. We were all meant to research a particular business idea, and come up with a plan through which we could secure funding from the bank. However, for unforeseen reasons, I was unable to join a team and had to do mine myself. The first business plan I wrote was on a Barbershop, and resulted in a fail.

I was told I failed because I did not write a plan on a company within the hospitality sector. Most of us were meant to write on restaurants and hotels, and I wrote on a barbershop. Now that I think back towards that decision, I believe that I wrote it that way because I was unsure of the true requirements of the essay. I had difficulties coming up with a true hospitality company to start up a business with, thus deciding to go ahead with something I was pretty familiar with, the barbershop. Now that I had failed and had to choose another, I eventually chose a coffee shop cafe, after much deliberation. My decision regarding the coffee shop cafe and its location were of utmost significance to me, because if I truly did have the funds, that is what I would have invested in. The location did not have any immediate coffee shop and I thought that was something that neighbourhood needed.

The decision to write a business plan left me initially confused because I had no idea on how to write one. We were provided with notes and guides on how to write it but I was still confused, and judging by the fact that I was meant to write mine myself when most of my classmates did theirs in groups, I felt left out and thought I was not going to make it. However I sought advice, and did all that was required of me, and eventually I have found that it is educating creating such a plan. My newfound skill in research on businesses makes me proud, as this is not something I could easily have boasted about previously. Also, it has taught me how to undertake financial analysis, especially using cash flow forecast in ascertaining how much a business is realistically going to make given its condition, location and potential. Which is satisfying. During future research, I wound endeavour to seek advice prior to commencing any project I am not sure about, that way I would not fail.

9.APPENDICES

Appendix requirements such as start-up cost, list of suppliers, sales calculation, duty rotas, staffing and planning applications are already included in the main body of the business plan.

a. Market Research Analysis

The following market research analysis is based on Mintel’s (2009) report on Coffee Shops in UK.

The rapid expansion amongst coffee shops has eroded their USP and significantly increased competition within the industry.

Operators within the UK market are generally optimistic about the future growth of the coffee shop format.

As a result of the economic recession, an increasing number of customers are resorting to eat indoors or take lunch to work to increase savings.

Branding is increasingly becoming a prerequisite and a key factor for success within the industry.

Ethical responsibility is increasingly becoming an issue amongst coffee shops that mainly source their produce internationally.

There is huge competitive rivalry amongst competitors within the industry, with companies such as Starbucks, Pret A Manger, EAT, and Cafe Nero, leading other coffee brands.

Barriers to entry within the industry are very low, anyone can open a coffee shop with little cost.

Buyers have a high bargaining power due to the availability of a wide number of coffee shops within every neighbourhood, therefore coffee shops that have a premium price, without high quality products or effective branding may lose out.

Within the UK, more than half of all adults visit coffee shops, although on a relatively infrequent basis, while per capital coffee consumption within the UK is much lower than in other countries, thereby giving room for growth.

Cost issues such as overhead cost, coffee prices, staff costs and utility prices have all increased substantially in recent years.

Growth within the population of 20 – 34 year olds, and that of ABC1 customers, should increase the demand and patronage in coffee shops.

Coffee shop industry is relatively fragmented with a variety of shops operating in different geographical markets, citing high competition and potential for consolidation.

The lack of differentiation, increased competition, premium perception and failure to engage customers are all seen as weaknesses within the Coffee Shop industry.

However, there exists substantial growth potential, economy of scale to be achieved, wide product range to be utilised and brand equity to be built, all of which could substantially increase competitive advantage.


b. FLOOR PLANS


c. SAMPLE MENU AND DRINKS LIST

Drinks

Coffee

?1.80

Cappuccino

?2.50

Latte

?2.20

Carbonated Drinks

?1.00

Non Carbonated Drinks

?1.20

Water (75cl)

?0.75

Snacks

Cake

?1.95

Muffin

?1.70

Sandwich

?2.50

Crisps

?0.50

Chocolate

?0.50

Food

Mashed Potato and Chicken

?4.95

Rice and Chicken

?4.55

Fries and Chicken

?3.99

d. SAMPLE COSTINGS

Average cost for products sold

Drinks

80% Profit

Coffee

?0.36

Cappuccino

?0.50

Latte

?0.44

Carbonated Drinks

?0.50

Non Carbonated Drinks

?0.60

Water (75cl)

?0.38

Snacks

40% Profit

Cake

?1.17

Muffin

?1.02

Sandwich

?1.50

Crisps

?0.36

Chocolate

?0.30

Food

50% Profit

Mashed Potato and Chicken

?2.48

Rice and Chicken

?2.28

Fries and Chicken

?2.00

Profit figures are obtained from Startups (2010), as described in the main text.

e. OPENING TIMES

Monday 09.00 – 18.00pm

Tuesday 09.00 – 18.00pm

Wednesday09.00 – 18.00pm

Thursday09.00 – 18.00pm

Friday 09.00 – 20.00pm

Saturday10.00 – 20.00pm

Sunday 10.00 – 18.00.pm

BUSINESS LAUNCH POSTER


10. BIBLIOGRAPHY

Business Link (2010) Price your product or service, www.businesslink.gov.uk, accessed: 21/05/10

Ealing (2010) Starting a food business; Ealing Demographics, www.ealing.gov.uk, accessed: 21/05/10

Google Maps (2010) Ealing Broadway, www.maps.google.co.uk, accessed: 21/05/10

Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy, 8th edition. Prentice Hall

Mintel (2009) Coffee Shops – UK – February 2009, www.mintel.com, accessed: 21/05/10

Monroe, K. B (2003) The Pricing Strategy Audit, Cambridge Strategy Publications, p4

Startups (2010) Starting a Coffee Shop, www.startups.co.uk, accessed: 21/05/10

Yesquote (2010) Restaurant Insurance and Cafe Insurance, www.yesquote.co.uk, accessed: 21/05/10

Categories
Free Essays

Free Counselling Dissertation

Abstract

This study looks at the value of counselling in supporting clients with low self-esteem and low confidence due to poor body image. The complex nature of poor body image and its links to low self-esteem and other negative conditions are traced. The nature of the more serious condition, body dysmorphic disorder, is set out. The role played by the media is considered in detail, as is the differences between men and women regarding poor body image. In order to understand the best approaches in counselling and therapy for clients with poor body image, various theoretical positions are set out. The discussion of the nature of body image issues informs the discussion of three different therapeutic approaches to poor body image. Different approaches are compared. All have value, and it is suggested that further research might compare approaches to better tailor provision of care for sufferers. A short primary study seems to confirm these findings.

1.Introduction

1.1 Overview

Poor body image is a common problem in Western and Westernised societies, particularly amongst girls and women, although increasingly, also, in men. Having a poor body image may also lead to other psychosocial problems and clinical difficulties such as eating disorders, depression, social anxiety and low self-esteem (Strachan and Cash, 2002). Relatively recently, ‘Body Dysmorphic Disorder’ (BDD) has been recognised as a clinical condition. In this, individuals have an extremely distorted body image, and are preoccupied by a real or imagined defect in their appearance (Insel Insel, Turner and Ross, 2009)

There is an important distinction to make between body dissatisfaction and body dysmorphic disorder (BDD), with the latter more serious; however both can be targets for counselling and psychotherapy (Veale, 2004). There have been numerous attempts to place body image dissatisfaction and BDD within a theoretical framework, with conflicting and over-lapping explanatory systems used, and the variety of theoretical frameworks is matched by a wide variety of techniques used to treat these conditions. Cognitive behaviour therapy (CBT) specially modified for body image problems, for example, is an emerging therapy and is being utilised to help individuals with body image dissatisfactions and dysphoria. This therapy has been seen to be effective in altering body image perception directing a more positive outlook for obese patients, as well as patients suffering from BDD, and various elements of CBT have been implemented into the treatment of eating disorders with considerable success (Strachan and Cash 2002). Despite the success and prevalence of CBT and other cognitive approaches, other treatments do exist, for example dissonance-based prevention programmes have been usefully applied, particularly for university age women. Other therapeutic perspectives based around person-centred themes are not so prevalent, but seem to offer an alternative approach to treating body image problems and BDD, although are used less often nowadays and seem under-researched in comparison.

This paper will critically evaluate various elements of body image, self-esteem and confidence, drawing upon various studies mainly emanating from the UK, Europe and the US. It focuses upon studies incorporating weight, self-esteem and the media influence in order to reflect an evolving problem that concerns both males and females, from adolescence into adulthood.The study will first take a general view of the nature of body image and dissatisfaction with body image, tracing its impact, diagnosis, treatment and various theories which have been developed to explain it, and will look particularly at the connection between media influences and body image. The condition of BDD or ‘imagined ugliness’ will also be discussed. Once the nature of the problem has been established, different treatment possibilities will be explored, looking particularly at counselling and psychotherapy, and issues associated with these. The different therapeutic approaches will be traced, and the established success of cognitive-based methods will be acknowledged. Whether client-centred approaches, originating in Object theory and in work by Carl Rogers, offer a viable alternative will also be discussed. Although the primary focus in the study will be to understand the benefits and drawbacks of different therapeutic approaches, a primary study will also be included in the research to interview recipients of different therapies and analyse their response to treatment options. The primary study will be informed by the areas discussed in the secondary review.

1.2 Importance and relevance of the study

BDD, eating disorders, excess dieting and exercise are damaging to the health and are increasing in both men and women, with the prevalence rate reported as 0.7% in the general population, 5% in cosmetic surgery settings, and 12% in a dermatology clinic (Veale, 2004). Such disorders are detrimental to both physical and mental health, and can have further effects by influencing others to mirror the behaviour of sufferers, particularly if the subjects are in a position of authority (Yager and O’Dea 2009). They are highly disruptive in terms of daily functioning (Chrisler and McCreary, 2010). It is therefore useful to look at the most effective measures for treating such disorders and preventing their occurrence.

1.3 Research aims and overall methodology

The main part of the study will take the form of a critical review of secondary literature gathered from academic databases and utilising a number of keyword searches including the terms ‘body image’, ‘body image disorder’, ‘body dysmorphic disorder’, ‘eating disorders’, ‘CBT’ ‘CT’ ‘person-centred therapy’ and ‘client-centred therapy’, both alone and in combination.

The study aims first to understand the nature of disfunctions in body image and its relation to self-esteem, and to look at the condition of body dysmorphic disorder, and to understand ways in which these conditions are theorised, particularly in regards to media influence upon their development.It also aims to uncover the most successful forms of treatment for poor body image and BDD, and to present this in the light of the discussion of the nature of the conditions. Finally, it aims to compare treatment options and discover whether there is a place for person-centred therapies alongside education programmes and cognitive therapies.

A short primary study will also be conducted. This will gather quantitative data from a number of people who have had therapy treatment in the past, to collect details about treatments undertaken, and to assess how successful the recipients of therapy felt their treatment to be.Full details of methodology for the primary research will be set out below.

2. Body image, self-esteem and the impact of media, gender and other factors.

2.1 Overview

The term ‘body image’ can be traced to the English word ‘body’ which originally meant ‘person’, and to the Latin verb ‘imaginari’, which means to represent through an image. The term was first used in the 30’s by Schilder, who described a person’s body image as the picture they make in their mind representing the way their body appears to them (Flaming, 1993).

2.2 Impact of poor body image

Poor body image has been associated with a number of other negative health issues including depression, low self-worth, poor nutrition and eating disorders (Eldin and Golanty, 2009). Poor body image and high levels of dissatisfaction with the body can also impact upon career choice. Higher levels of BDD and associated disorders have been found amongst young people training for professions including nutrition and other careers (nutritionists, psychologists, dieticians, home education teachers) associated with eating and health. An Australian study for example found that health and physical education teachers had significantly higher levels of over exercising, exercising disorders, poor body images and increased dissatisfaction (Yager and O’Dea, 2009).

2.3 Body image and self-esteem

Particularly linked with low body image are issues of self-esteem.Self-esteem according to Harter (1990) is composed of two aspects, firstly how a person believes themselves to be perceived by significant others and secondly, how they view their performance in areas considered important. Body image is also characterised as divided into different components. Some distinguish two elements, perceptual (evaluation of one’s physical body) on the one hand and affective / cognitive on the other (a person’s attitudes towards his or her body) (Allgood-Merton and Lewinsohn, 1990). Others distinguish a third element, the behavioural, looking at actions toward and involving the body. In either case, a poor body image can be thought of as a failure of function of one or more of the three constituent components (Farrell, Safran and Lee 2006).

There has been a large interest over the last 30 to 40 years in the way body image perception, distortion and self-esteem are connected. The bulk of these studies have been directed towards students, with particular attention paid to females and adolescents (Furnham, Badmin and Sneade, 2002). For example, Mellor, Fuller-Tyszkiewicz, McCabe and Ricciardelli, in an Australian study, found that higher self-esteem is associated with lower body dissatisfaction, and that women are more dissatisfied with their bodies than men. A comparative study of boys and girls carried out by Allgood-Merton and Lewisohn (1990) indicated that body image is a critical component of self-esteem within the age group 13 to 18, particularly for girls. Studies are not confined to the UK, New World and USA, but have been carried out across the world including Hong-Kong and Poland, with widespread agreement that poor body image is associated with a number of negative outcomes including eating disorders. The research into a positive correlation between satisfaction with the body and enhanced self-esteem is less conclusive, but a connection seems to have been established in studies of both men and women (Furnham et al, 2002). Grilo Grilo, Maseb, Brody, Burke-Martindale and Rothschild (2005), for example, found a correlation between self-esteem and body image dissatisfaction among obese men and women seeking surgery.

2.4 The relationship between body image and weight.

Issues of body image have been correlated with weight issues. Adolescent girls and women are the two groups most predisposed to poor body image and most likely to use dieting to overcome their issues (Groesz 2002). A number of studies have underlined the connection between weight and poor body image, for example one US study found that between those individuals classified as overweight are more likely to have lower self-esteem and poor body image (Pesa et al, 2000). Studies also found such a correlation amongst men (Silberstein, Striegel-Moore, Timko and Rodin, 1988). Being overweight is also associated with reduced emotional well-being, as suggested by a study by Loth, Mond, Wall and Neumark-Sztainer of around 2,500 adolescents. In addition, children who are overweight are in danger of being stigmatized and isolated from their peers. These results are more notable among women than men, although this difference only appears during adolescence (Loth et al 2010).

2.5 The relationship between poor body image and other factors

A number of other factors including race, gender and socio-economic status contribute to perceptions of body image: a study in the USA with over 1000 older adults showed race and gender and socio-economic differences signicant factors in how subjects perceived their weight (Schieman, Pudrovska and Eccles, 2007). It should be noted however that this study looked at perceptions of being over-weight alone, rather than body image in general. Within school children, it has also been found that lower socio-economic status is correlated with being overweight, having erratic meal patterns, disordered eating and body image issues, while self-esteem is lowest amongst girls in middle or higher socio-economic status (SES) For boys, self-esteem is lowest with low SES (O’Dea and Caputi 2001). Other studies have found that dieting is most common in higher SES (Walters and Kendler 1995).

Racial factors can also play a part: Xue, Zhou and Zhou (2003) suggest that Chinese males are susceptible to idealized body images. In addition, there is some suggestion in research that white women are more concerned with body image and weight than are men or black women, with corresponding higher incidences of bulimia and anorexia nervosa (Henriques and Calhoun, 1999).

Country of origin can also make a difference. While many studies look at the situation in Western countries such as the UK and USA, other studies have looked at other areas. Bissell and Chung (2009) looked at South Korea, finding that there are significant differences between the way people in South Korea and USA evaluate attractiveness in others, and the way this links to self-esteem and other variables including BMI. There is some suggestion in research that white women are more concerned with body image and weight than are men or black women, with corresponding higher incidences of bulimia and anorexia nervosa (Henriques and Calhoun, 1999).

2.6 Gender, media influences and body image

One major mediating factor in poor body image is gender, and many studies have investigated this area. Gender is a key factor as it impacts social norms and meanings associated with appearance. It is important to recognise that both men and women can be effected by body image issues, in order that prevention and treatment be given where it is most needed.

While there are important insights in theories rooted in individualistic and internally focussed psychoanalysis and therapy, the predominant theoretical position on poor body image traces a link between social and cultural influences, particularly those from the media, and dysfunctional views of one’s body. This theoretical background will be examined in more detail below.This influence has distinct characteristics for men and women. Whereas it was previously assumed that only women are influenced by media ideals of body image and thinness, more recent research shows that men are also subject to intense pressure to confirm to stereotypical ideals. However, for women particularly, idealised female figures in media have a negative impact on body image and self esteem. (Xue et al, 2003). Up to 19% of US female students are reported to be bulimic, and 61% have some form of eating disorder below the clinical level (chronic dieting, binging, purging). Between 70 and 94% of female students want to be slimmer, with 80 to 91% dieting (Yager and O’Dea, 2008). There is higher pressure on women to be thin and attractive, and women are traditionally expected to be more involved with their appearance than are men (Scheiman et al, 2007). The correlation between a negative body image and a poor self concept has been studied over several decades. Despite this awareness of the problem, women still find it a challenge to accept their bodies, and this lack of comfort with their appearance expands beyond immediate dissatisfaction with looks to effect other aspects of their lives including their concept of self (Dworkin and Kerr, 1987).

The role the media plays in women’s poor body image has expanded greatly with the advent of new communication possibilities, but has been around for centuries. Objectification of women’s appearance has occurred since early culture with a standard of beauty portrayed through art, literature and music. Nowadays, however, the explosion of accessibility and universality through electronic and print media have been highlighted by body image and eating disorder experts as increasing pressure on women to be concerned with their appearance (Thompson and Heinberg, 1999).

Repeated exposure to media, both directly and indirectly (both by experiencing images of women in the newspapers or on TV, for example, but also through conversations with peers, family members and other members of society) mean that pressures to be thin are transferred, and younger women are particularly vulnerable However, the relationship is not a straightforward one, but is mediated by factors including extent of the internalisation of the ideal, social comparison and the extent to which a schema for thinness is active (Lopez-Guimera Lopez-Guimera, Levine, Sanchez-Carracedo and Fauquet, 2010). Numerous studies have looked at various elements of specific media; television exposure (Gonzalez-Lavin and Smolak, 1995; Stice, Schupak-Neuberg, Shaw and Stein, 1994); type of program viewed (Tiggemann and Pickering, 1996), and exposure to print media (Stice et al, 1994) for example. There is widespread agreement that the media overall portray idealized images of women and thus contribute to negative feelings about body image and the development of pathological beliefs in some women. These studies have been reinforced by more recent investigations (Tucci Peters, 2008).

Of particular importance in idealising women’s appearance and leading to negative body image are women’s magazines. These have played this part over several decades. Women’s magazines have played an ambiguous role. As early as the 1980’s women’s fashion magazines such as Cosmopolitan and Elle began to publish articles reporting women’s eating disorders, and during the 90’s a new trend for fitness magazines heralded a new style with an emphasis on positive self-esteem and self-acceptance. A positive attitude about your own body was publicised, and portrayed as being a prerequisite for overall self-confidence. Further, during the mid 90’s a condition known “ body image distortion” – or BID, was also highlighted by fashion magazines who emphasised their social conscience and relevance to real women. Such magazines recognised BID as a “serious illness”, threatening many women and linked with low self-esteem, sometimes reported to be more common than anorexia and bulimia nervosa. On the other hand, while promoting their caring credentials through discussing eating disorders and problems of poor body image, magazines continued to portray idealised images of women, particularly with the development of digital imaging techniques and the enhanced possibilities for presenting a fiction as photo-realistic reality. Women are bombarded through fashion shoots with the message that ‘pretty women equal thin women’ (Markula, 2001). Research in this area confirms that exposure to editorial and advertisements in women’s magazines impact upon body image through promotion of standards of beauty (Groesz, 2002). The first meta-analytical statistical review of media impact upon girls and women from 25 previous studies revealed that individuals expressed differences in their motives for social comparison with their own image and that this was associated with diverse measures of negative body image. Results in this study supported the inverse relationship of body image after participants viewed images on thin models in comparison with images of average size models, plus-sized models and inanimate objects (Groesz, 2002; Stormer and Thompson, 1996). In addition, such magazines promote a need for endless consumption of lifestyle accessories and garments, with the underlying message that women need to purchase the latest styles to be acceptable. Some also argue that magazines thereby support capitalism and patriarchy (Gough-Yates 2003).

Women are also more subject to gender-related harassment in public than are men, perhaps as a result of widespread dissemination of idealised images. A recent study has suggested that these experiences of harassments and women’s emotional reactions to such incidents can play a part in feelings of low self-esteem and poor body image as well as feelings of shame and dislike towards the body (Lord, 2010). Low body image, when combined with high self-esteem, has also been linked to indirect aggressive behaviours amongst young women (Young, 2008).

While the impact of media upon body image has been, until recently, predominantly studied in women, it is gradually being recognised that men are also prone to body dissatisfaction through media influence. Men’s concerns tend to differ from those of women, most notably in that men’s main concern is muscle, with men reporting more desire for increased muscle mass than women (Krayler et al, 2007). Higher levels of muscle dissatisfaction have been correlated with higher levels of depression, lower self-esteem, pathological eating patterns and higher levels of social anxiety. Body fat is also an area of concern for men, and this has also been associated with other conditions including eating pathology, social anxiety and depression. Height dissatisfaction has been studied less, but also appears as a cause of body image dissatisfaction in men (Blashill, 2010). Gay men are less studied, but would appear to report higher levels of muscle dissatisfaction and desire for thinness than heterosexual men.

Research into men’s issues with body image started in the 80’s. An early study revealed almost 100% of college-aged men were dissatisfied with a part of their body, and 70% thought a discrepancy existed between their current and ideal body shapes (Mishkin, 1986). More recent studies have confirmed the existence of a range of eating disorders and dysfunctions in body image in men, including disordered eating, body dysmorphic disorder and excessive exercising (Drummond, 2002). Between 17 and 30% of undergraduate men diet to lose weight; there is also increasing adaptation of weight lifting, body building and steroid use.5-10% of individuals with eating disorders are male (Yager and O’Dea 2008).

Initially, it was assumed that men would not be influenced by images of idealised bodies in the media as, it was hypothesised, men are less affected by visual images than women. Later investigation found, to the contrary, that men find visual material more evocative than females and therefore are faced with a greater degree of body image concerns than was originally thought (Barthel, 1992). A study carried out by Agliata and Tantleff-Dunn (2004), incorporating several previous studies, suggested that when men are exposed to media images of the ideal male body, which is defined as “lean and muscular”, it can lead to negative effect upon their mood and their satisfaction with their body. There has also been an explosion of men’s media over the last 20 years, with magazines devoted to health and fitness, ‘lads’ culture, and the ‘metrosexual’ man, concerned with his looks and physical impact upon others.The development of these ‘fashionable masculinities’ can be seen as a by-product of capitalism, as corporations attempt to sell new and profitable market segments to both advertisers and consumers. While the traditional markets for image related products – women – is more or less saturated, and while the gay market will always form a minority group, the target group of heterosexual men is underdeveloped (Cova, Kozinets and Shankar 2007). It is unsurprising therefore that the last 2 decades have seen an explosion in the volume and variety of idealised male images. As a result, men are beginning to face the same pressures as women to possess physical characteristics considered attractive and masculine. There are specific differences between the way a desirable body is communicated to each gender. Male-targeted magazine often advertise exercise and weight lifting to a greater extent than in female magazines, which focus on dieting. Print media encourages males to mould their bodies into their ideal shape, through exercise and subject them to a “culture of masculinity” (Agliata and Tantleff-Dunn, 2004). In addition, it has been suggested that exposure to ‘Lad’ Magazines, such as the 90’s UK publication ‘Loaded’, which feature highly sexualised images of desirable and seemingly available women paradoxically increases awareness of male readers own bodies. A study amongst undergraduate men found that such magazines can lead to increased dissatisfaction with body image in men, perhaps due to assimilation and subsequent projection to their own case of messages about women and idealized images (Aubrey and Taylor, 2005).

2.7 Measuring body dissatisfaction and poor body image

A number of scales have been introduced to help assess the extent of body dissatisfaction, including the Pictorial Body Image Scale (PBI), Body Dissatisfaction subscale of Eating Disorders Inventor (EDI), Visual Analogue Scale (VAS) amongst others. The Body Esteem Scale (BES) incorporates weight satisfaction, and can also be used as a measure of physical attractiveness assessment (Groesz, 2002).

2.8 Theories of poor body image

Research has suggested that there is an investment in an ideal of thinness in girls as young as 3 (Harriger Harriger, Calogero, Witherington and Smith 2010), so it is important to look at how such ideals are ingested, and theories of how poor body image comes about. By understanding how this happens, and particularly whether poor body image is primarily caused by external influences in society or culture or by traumas to the psyche at key developmental periods, it is easier to select appropriate types of therapy or counselling to address the problem. Equally, by understanding that different theories can have value for explaining body issues, it is possible to see the value of different ways of treating the disorder. Theories of poor body image can be placed in the context of ideas about how body image in general comes about. Some suggest that the development of body image has four characteristics. It is first an integration of physical, psychological and social factors, second it changes over time, third it is a learned behaviour, and fourth it has both conscious and unconscious components The physical element concerns the way in which someone relates his or her body to the rest of the environment. Psychological issues concern the values attributed to different parts of the body and the way in which the self is defined in terms of these. These values can change of time, and different parts of the body become more or less important at different life stages. Finally, sociological aspects include the way other people react to a person’s body, and how these reactions are processed by the subjectBody image changes over time, as a result of changes in the three factors described above. Developing the ability to use different senses, for example, triggers body image changes. In addition, changes in the environment impact upon body images. Finally, body image is psychologically complex containing both elements in conscious awareness and elements which are hidden from awareness (Flaming, 1993). Such an understanding of the multi-faceted development of body image could be seen to lend weight to the validity of different treatment programmes to account for the complex nature of the condition with conscious and unconscious elements and with causes both internal and external.

There are a number of theories which suggest ways in which a poor body image develops. These divide broadly into two types, those which link poor body image to social and cultural factors primarily the objectification of the body in the media, and those which develop from a psychoanalytical model which prioritises internal processes of the psyche. Each type of theory can be used to support a different treatment approach. It has been seen above that the media play an enormous role in creating and maintaining idealised body image and awareness of individual shortfalls in both men and women. This role is confirmed by the first two theories discussed below.

2.8.1 Objectification theory

Objectification theory was developed by Fredrickson and Roberts (1997), but is rooted in earlier feminist theory such as works by De Beauvoir, It describes a process whereby the sexualisation of women’s bodies is the norm. Women come to see themselves as objects to be looked at critically. Women learn early, both directly and through indirect influence, that looks are a currency, and that how people assess looks determines how an individual is treated. This has an effect upon social and economic life outcomes. Women develop a ‘third person’ perspective upon their bodies, in order to anticipate criticism and control how they are treated. This supplants a more healthy ‘first person’ perspective or ‘inside’ view of their body. The process of objectification, the theory suggests, leads to a variety of negative emotional and behavioural consequences including increased self-consciousness and increased preoccupation with the outward appearance of the body, rather than with its efficiency or health. Objectification can also lead to shame, disgust and anxiety as the body fails to correspond to desired ideals, and also to a range of behavioural and emotional outcomes including eating disorders. Objectification theory also predicts different stages of objectification, from the start of the process at puberty, when the maturing female starts to experience external attention and critical, sexually related evaluation from others, through to mid-life, when women are more able and willing to step out of the arena of body assessment (Chrisler, 2004). The media plays a central part in the process of objectification which results in individuals taking the perspective of an outsider on their physical self, and to constantly monitor their appearance (Aubery 2006).The initial development of objectification theory suggested that women are more susceptible to objectifying their bodies and to the feelings of shame and anxiety generated when they feel their bodies as objects to be viewed and evaluated by others are less than perfect. However, it has more recently been suggested that men also can be affected by the process, with a recent study, for example, finding that increases in body surveillance after exposure to sexually objectifying media occur only in men (Aubrey, 2006).In addition, more recent explorations have pointed out that not only is much this research amongst men carried out only with heterosexual men, but also that gay men seem to have higher levels of body dissatisfaction than heterosexual men. This is an area which demands exploration, and there have been some attempts to explain it rooted in developing objectification theory by suggesting that gay men are under more pressure to have a body that is desirable and attractive, as they are (like heterosexual women) trying to attract men as partners, and men place more emphasis upon physical attractiveness.In addition, gay culture and media highlights male attractiveness, thus increasing the pressure on gay men (Blashill, 2010).

Other theories, less directly related to objectification theory, include the ‘femininity hypothesis’, which suggests that gay men have higher levels of ‘female’ traits than heterosexual men, and that these traits are associated with higher body dysmorphia. (Lakkis, Ricciardelli, and Williams, 1999).

2.8.2 Other theories incorporating social influences

Other theories incorporating media influences include the Dual Pathway Model, with foundations of low self-esteem, and the Social Comparison Model, which traces a relationship between media exposure to pressures and elevated internalisation of media values. These models all aim to explain specific mechanisms by which the media generate negative effects (Thomson and Heinberg, 1999).

The Dual Pathway Model develops out of objectification theory. Originally suggested by Stice and Agras (1999), it holds that body dysmorphia is created by a social and cultural pressure to be thin, often through media influences. A ‘thin ideal’ is internalised by this social pressure. The dysfunctional body image thus created can leads to eating disorders and other negative behavioural patterns through two pathways, either of which is sufficient to cause these patterns. The two pathways are the ‘Restraint’ and the ‘Affective’ pathway. With the restraint pathway, dissatisfaction with the body leads to attempts to restrain eating which in turn causes pressure upon the individual, leading to eating behaviours such as binging. The affect pathway sees body dysfunctional views provoking negative feelings about the self as negative assessments of appearance lead to negative emotions. In addition, negative feelings can also be prompted by dieting either because of low energy levels or, when the diet fails, feelings of self-hatred (Munsch and Beglinger 2005) The success of dissonance-based prevention programmes (discussed below) adds support to the dual pathway model, as such programmes target the internalised ideal of thinness (Stice, Mazotti, Weibel and Agras, 2000).

Social comparison theory suggests that people process social information by comparing themselves with others and by identifying similarities and differences. It can help us understand the processes by which social messages concerning appearance influence people’s body image. The theory suggests a relationship between an attribute (the aspect which is compared, for example weight), the target (the person with which the attribute is compared) and the comparison appraisal (the way the comparison is carried out).It can be used to elucidate the ways in which media messages influence the way people perceive their bodies. The idea was introduced by Festinger (1954). Different comparison appraisals are used depending upon context. They can be self-evaluation, self-improvement or self-enhancement. The first consists of gathering information about how one relates to others. Self-improvement concerns learning how to change a particular characteristic, and self-enhancement is a mechanism whereby the other is discounted as not relevant to the self, or lacking in other attributes the self possesses (Krayler et al 2007).

2.8.3 The Developmental transition model

By contrast, the Developmental Transition Model takes a different perspective, and is rooted in psychoanalytic theory. It can be traced to Object Relations Theory, the notion that the self develops through interaction with an environment, which was developed by a number of writers including Winnicott and Klein. The development transition model is concerned with problems that occur as a child separates from his or her mother as part of the process of individuation. This process is thought to be easier for men, because they do not have the same level of identification with their mother. In order for women to successfully separate from their mother, they need to deal with feelings of anger towards their mother. One way in which this might take place is by the daughter turning these feelings of rage against themselves, and becoming a perfect daughter, well-behaved, clean and neat. Their body becomes their enemy, an object to be controlled, and can be associated with the mother. The daughter strives to control her body to prevent it becoming like that of her mother. The process of individuation first takes place in early childhood, but can resurface at adolescence as the daughters body starts to change and resemble that of the mother. Such dysfunctional transitions are particularly likely to occur where the mother is over-controlling, or where she sees the daughter as part of herself, hoping to live out her own dreams vicariously (Yates, 1991). Theories rooted in psychoanalysis seem to take a second place to theories which underline the role played by social and cultural conditions, particularly given the central role played by the media, but given the complexity of the phenomenon of eating disorders and poor body image, it is important not to rule out the insights generated by a more individualistic, internal perspective.

3. Body dysmorphic disorder.

The sections above have given a broad picture of the nature of body image, the impact of poor body image and theories of how these develop. One specific negative condition which deserves more consideration is the mental disorder ‘Body Dysmorphic Disorder’, as it takes a poor body image to an extreme where it becomes all consuming for the sufferer.Body dysmorphic disorder (BDD) is also known as “dysmorphobia” and is an under recognised but severe common mental condition. Although first described by Enrico Morselli in 1891, it has only recently been the subject of research. BDD is a “distressing or impairing preoccupation with an imagined or slight defect in ones appearance” (Phillips and Diaz, 1997).

3.1 Definitions of body dysmorphic disorder

BDD is multi-dimensional and has both positive and negative aspects (Cash, 2002). It consists of three components, one concerning the perceptual, one concerning attitudes and one concerning behaviours (Cash, 2002; Jarry and Berardi 2004). Perceptual factors of BDD include inaccurate estimations of body size or weight, or seeing a feature as very unattractive. Attitudinal factors include the extent of satisfaction and / or dissatisfaction with appearance and the way appearance is self-evaluated. Behavioural factors include ‘acting out’ such as repeated checking of perceived imperfections (Jarry and Berardi 2004). Features of BDD continue over time, but are also changed as a result of experience and the environment (Melnyk, Cash and Janda 2004). BDD is often found with other conditions, for example poor psychological adjustment or depression, social phobia and obsessive compulsive disorder (OCD) (Phillips 2005; Pollice, Bianchini, Giuliani, Zoccali, Tomassini, Mazza, Ussorio, Paesani, Roncone and Casacchia 2009). There is a degree of heterogeneity amongst those affected by BDD, as each sufferer presents with very different symptoms from a dissatisfaction with the nose to feeling generally ugly, however the underlying pathology is that BDD sufferers are preoccupied with the idea that their appearance, or a feature of it, is unattractive, ugly or deformed. Further to this, over time nature of the disturbance may change, often explaining why post-surgery, BDD patients often are dissatisfied with the results (Veale 2004). Unfortunately, this condition has significantly high lifetime rates of suicidal ideation (approx 78-81%) and attempts of suicide (22-28%) (Phillips, 2005) with a poor prognosis for recovery. BDD is a dynamic condition, which affects typically facial flaws, asymmetric/disproportionate body features, incipient baldness, acne, wrinkles, vascular markings or extremes of skin colour. BDD has been linked to requests for cosmetic surgery procedures. It has been estimated that between 6 and 15% of people requesting plastic surgery suffer from the disorder (Pollice et al 2009, pp. 5-10). Given the severity of the condition, there is a clear need to find successful treatment routes in addition to addressing poor body image generally.

3.2 Risk factors

Risk factors for BDD include genetic predisposition, shyness, perfectionism, anxious temperament, childhood adversity (e.g. teasing/bullying about appearance or competence), history of dermatological or other physical stigmata (e.g. acne) and having an higher sensitivity to aesthetics than the average person. This heightened aesthetic sensitivity equates to a greater emotional response to other individuals whom they find more physically attractive and elevates their value of appearance and identity (Veale, 2004)

3.3 Clinical features and diagnosis

Individuals may describe themselves as unattractive, most often focusing on their facial attributes or their head, however this displeasure can include any body area, or in fact their entire body. This concern can take up almost 3-8 hours of their day, carrying out repetitive behaviours such as mirror checking, and is often associated with emotions such as rejection, low self-esteem, shame, embarrassment, unworthiness and being unloved by those around them. The diagnosis of BDD usually occurs after 15 years form the onset of this mental disorder, this is due to many patients being too ashamed to reveal their symptoms however when exposed to a doctor is typically diagnosed using the DSM-IV criteria (Veale, 2004; Phillips, 2004).

The DSM-IV-TR diagnostic criteria for BDD is as follows:

a) Preoccupation with an imagined defect in appearance. If a slight physical anomaly exists the persons concern in markedly enhanced,

b) the preoccupation creates clinically significant distress or impairment in social, occupational or other important areas of functioning

c) the preoccupation is not better accounted for any another mental disorder (e.g. body dissatisfaction with body shape and size in anorexia nervosa).

(Phillips, 2005).

A number of measures have been used to test for BDD, including the Self-report Symptom Inventory and the Body Uneasiness Test (Pollice et al 2009). Instruments commonly used to measure BDD include the ‘Body Shape Questionnaire’ which looks at concerns about individuals size and shape, the ‘Multidimensional Body-Self Relations Questionnaire’, an attitudinal measure, the ‘Body Image Avoidance Questionnaire’, which assesses body image issues in terms of avoidance behaviour, the ‘Appearance Schemas Inventory’, measuring body image attitude, and the Situational Inventory of Body Image Dysphoria, which measures the frequency of negative body emotions. (Jarry and Berardi 2004). Other instruments include the Body-Cathexis Scale, looking at 46 body parts and functions, and the related Self-Cathexis scale, containing 55 items which represent conceptual aspects of the self. Both are rated on a 5-point Lickert scale (1 wish to change, 5 satisfied with the aspect) (Dworkin and Kerr, 1987).

3.4 Prevalence

Although BDD occurs relatively frequently in both clinical and non-clinical settings, no large scale epidemiological surveys have been carried out to date. Within the UK, only two studies have been reported in the community and show the prevalence to be 0.7%, occurring at a higher frequency in adolescents and young adults. Both genders seem to be affected equally, and the majority of sufferers fall into the category of single, separated or unemployed (Phillips, 2004; Veale, 2004). An Italian study has suggested that it affects a higher percentage of the population, at 1-2% (Pollice et al 2009). The rate of BDD amongst people seeking cosmetic surgery is high: of those presenting at cosmetic surgery clinics it is estimated 6-15% suffers from BDD, and within dermatological settings the estimate is 9-12% (Phillips 2005).

3.5 Treatment

Treatment of BDD usually involves cosmetic surgery dermatological treatment (where there is an associated cosmetic condition), pharmacotherapy in the form of serotonin-reuptake inhibitors (SSRI) or cognitive behaviour therapy (CBT) (Veale, 2004).

Although psychotherapy options available have been seldom researched, CBT does appear an efficient form of treatment. Numerous studies have used a combination of cognitive elements (e.g. cognitive restructuring) alongside behavioural elements, which consists predominantly of exposure and response prevention (ERP). ERP aims to decrease social avoidance and repetitive behaviours (such as mirror checking and grooming). There has been reported positive correlation between various combination therapies with BDD symptom severity showing a significant decline. There is no published data to substantiate the use of other types of psychotherapy other than CBT (Phillips 2004). In addition, a school intervention programme consisting of classes looking at media images of women, body size and weight control methods was found to have some success in reducing BDD (Paxton 1991). Intervention programmes typically involve larger groups of patients and as such might be less costly than CT or CBT which often involve one-to-one therapy sessions. Social comparison theory can also be used to build a case for intervention programme treatments for ED and BDD, as it helps us understand why some individuals don’t react negatively to comparisons with media images about body shape and weight. Programmes which build resistance to known risk factors such as ideal media images are useful, with cognitive interventions seeming to produce good effects (Krayler et al 2007). Yager and O’Dea (2010) studied the effect of two interventions among trainee PE and Health education teachers, identified as at risk of poor body image. One intervention was a self-esteem and media literacy programme, the second combined self-esteem and media literature with dissonance and used online and computer-based activities. Intervention 2 produced the best results, particularly for men.

While CBT and CT and intervention programmes seem appropriate treatments for BDD, and later these treatments will be discussed in more detail, there would seem to be a case for using more person-centred therapeutic approaches which aim to work with the client’s internal representations of their appearance. The following section will look at treatment approaches for BDD in particular, but also for poor body image and related disorders in general.

4. Counselling therapies

4.1 The development of counselling

While the roots of counselling can be traced back to Greek and Roman times, modern counselling developed out of a reaction against the religious world view which predominated until the late 19th century. Up until this time, behaviours that we would now characterise as medical conditions were seen as signs of demonic possession, within that prevailing religious framework of good against evil. Pioneering work by scientists including Pinel, Mesmer and Charcot helped establish the current medical framework in which mental conditions were seen as illnesses, similar to physical illness and equally treatable. This new approach meant that treatment options for mental illnesses appeared (Laungani 2004).

Modern counselling can be traced back to Freud’s work in the 1880’s. Freud developed a way of working with patients with hysteria, called ‘psychoanalysis’. He suggested that unconscious forces shape people’s actions and beliefs. Approaches to therapy descending from psychoanalysis focus upon the dynamic relationships between parts of the psyche and the outside world. Freudian psychoanalysis has been extremely influential not only in psychology and psychiatry but in related fields such as literature and art. A different approach was put forward by the behaviourists, primarily Skinner. Behaviourism rejects the notion of the unconscious and stipulates that mental processes can be thought of in terms of behaviours and observable variables. A ‘third way’ was put forward by Carl Rogers, influenced by Alder and rank. ‘Client’, or ‘Person’-centred therapy focuses upon the experienced world of the client, rejecting the untestable constructs of psychoanalysis while accepting the internal world of subjective experience ruled out by the behaviourists. Person-centred therapy developed into humanistic approaches including Gestalt therapy and psychodrama (Mulhauser, 2010).

The growth in the practice of counselling has been particularly rapid over the last 50 years or so. This can be traced to a number of factors, including a growth in people’s awareness of and interest in the self and identity, an increasingly fragmented society in which alienation is increasingly common and in which many lack social support systems, and a change in the nature of nursing and other ‘caring professions’ which mean they are unable to carry out the counselling functions which used to be part of their role (Robb and Barrett, 2003).

Until 1977, when the British Association of Counselling was established, counselling practitioners were entirely unregulated, and anyone could practice as a counsellor without checks. The establishment of the BAC meant a move towards professionalization with accreditation and checks on practitioners. Membership of the BAC grew rapidly, and the organisation split into 7 divisions in order to better reflect the very complex needs of today’s society. The BAC was renamed the British Association of Counselling and Psychotherapy in 2000 (Laungani, 2004).

In line with the historical development outlined above, psychological therapies generally are organised into three categories; behavioural therapies, psychoanalytical and psychodynamic therapies and humanistic therapies. Behavioural therapies focuses on cognitions and behaviour and encompasses cognitive therapy (CT) and cognitive behaviour therapy (CBT). The second category includes psychoanalytic therapy and psychodynamic therapy, with central importance given to the unconscious relationship patterns, which have evolved from childhood. Finally, the third category of Humanistic Therapies prioritise self-development and the “here and now”. In addition to Person-Centred Counselling (also known as “Client-centred” or “Rogerian” counselling) and Gestalt therapy, humanistic approaches include transactional analysis, transpersonal psychology and psychosynthesis and existential therapy (Counselling Directory 2011 [online]). Treatments for poor body image and BDD tend to be drawn from therapies of the behavioural type, although a case can be made for a broader approach to treatment.

4.2 The Practice of counselling for poor body image

Higgins (1987) outlined two basic kinds of negative psychological situations, firstly the absence of positive outcomes, either actual or expected. This is connected with depressive emotions such as disappointment, dissatisfaction and sadness). The second is the presence of negative outcomes (actual or expected), which is connected in turn to more active negative emotions such as fear, threat and edginess. Therapies aimed at counteracting a poor body image have to deal primarily with the first situation.

Therapy for people with poor body image and related disorders seeks to encourage positive thinking in order to boost the client’s self-esteem and overcome low confidence by altering these thoughts and behaviours. Counselling and therapy can also target issues by preventing behaviours which result from individuals internalising media images, promote positive internalisation of healthy norms, and inform clients about the negative consequences of extreme weight loss behaviours in attempts to gain an ‘ideal’ look (Thompson and Heinberg, 1999). The counsellor can work with a client with poor body image in several practical ways. First, he or she can look at previous patterns in how the client coped with body image changes in the past. These patterns, once uncovered, can be examined and analysed. Helpful coping strategies could be used again, and negative ones rejected.The counsellor can also look at the support system a client has in order to plan therapy more effectively. If members of a client’s family, for example, reinforce unhelpful behaviours this could be raised with the client (Flaming, 1993).

4.2.1 Ethical issues

Counselling and therapy for poor body issues, should, like treatments for other mental health problems, be conducted ethically at all times. The British Association for Counselling and Psychotherapy (BACP), first published in 2002, sets out an ethical framework which is subject to continual revision (BACP 2001, 200, 2007, 2009, 2010). This framework sets out areas which need to be incorporated by therapists and counsellors in any client’s treatment. These areas include values, principles and personal morals. The fundamental values of counselling and psychotherapy include “respecting human rights and dignity, protecting client safety”. In addition, therapist need to ensure they maintain integrity in relationships with clients, that they always act to improve professional knowledge, that they aim to reduce suffering and personal distress and to make the client’s experience more meaningful and effective. They should also strive to improve relationships between individuals and to respect the diversity of human culture and strive for equality (BACP, 2010). The therapist or counsellor should also try to integrate ethical principles into his or her practice including trustworthiness, autonomy, respect for the client’s self-governing, promoting the client’s well-being, fostering self-respect in the client and being committed to avoiding harming the client (BACP, 2010).

4.3 Types of therapy and their usefulness for BDD and body image problems

Empirical evidence from a number of studies suggests that counselling is a powerful instrument in promoting body- and self-acceptance in women. Evidence exists particularly for the effectiveness of cognitive therapy and cognitive behavioural therapy (Dworkin and Kerr 1987), although other approaches have been shown to be successful (prevention programmes) and other therapies seem, though relatively unexplored, to offer alternatives for clients for whom CT or CBT do not work well.

4.3.1 Cognitive therapy techniques (CT).

Cognitive therapy (CT) has emerged as a successful therapeutic approach for depression, altering states of irrational thought and re-shaping self-statements to a more positive outlook. This more general idea of utilising cognitive therapies to address irrational beliefs can be usefully adapted towards overcoming a disturbed body image and associating negative self-concepts (Dworkin and Kerr, 1987)CT involves educating, identifying and replacing beliefs and thoughts which might be considered distorted, and by identifying them altering the associated habitual behaviours and thoughts to which they are related. Cognitive therapy was originally developed by Beck (1976), and is based around the notion that dysfunctional representations (schemata) arise in childhood as a result of problems in relationships, particularly with parents. CT has four main components, first, an educative element (often patients are uninformed about their condition), second goal setting (getting patients to carry out progressively more challenging activities, often as part of homework tasks), third identifying negative thoughts (clients may be unaware of the thought patterns that are holding them back) and fourthly challenging negative and unhelpful thoughts (Champion and Power, 2000). By becoming aware of irrational beliefs and challenging them, clients are empowered to exchange them for more positive ones. Once clients understand the mechanism for challenging and changing their thoughts, they are able to do this for themselves outside of therapy sessions. CT has been shown to be effective in treating BDD, but no more so than other techniques. Focus upon changing negative self-statements into positive ones, teaches clients methods for doing this by themselves, can include homework tasks (Dworkin and Kerr 1987).

4.3.2 Cognitive behavioural therapy (CBT).

Cognitive Behavioural Therapy developed from Cognitive therapy, and combines both cognitive and behaviour therapies, incorporating the way one thinks (cognitive) as well as how these thoughts are responded to (behaviour). Similarly to CT, it concentrates on the ‘here and now’, and upon disassembling overwhelming problems so they are smaller and easier to manage (Farrell et al 2006). It also uses additional behavioural reinforcements for example self-reinforcement and imaginative or fantasy exercises. There have been suggestions that imaginative activities particularly can be used within therapies for eating behaviours, as imagination is a powerful adaptive activity that helps clients organise event meanings, plan for the future and guide them in goal achievement and decision making. While imagination can work negatively by being used as a coping mechanism with negative self-images and fantasy and help internalise negative perceptions of body image, it can also be targeted as a positive strategy to help change inset belief patterns (Hutchinson-Phillips Hutchinson-Phillips, Jamieson and Gow, 2005).

This addition of behavioural aspects to create CBT means the therapy is a more powerful way to tackle problems by allowing clients not only to change their belief systems into more positive ones, but also teaching techniques for clients to use to reinforce good practice (Dworkin and Kerr, 1987). CBT can incorporate numerous techniques including cognitive restructuring (questioning and challenging problematic thoughts), behavioural experiments (practical activities testing predictions which emanate from problematic beliefs and thoughts) and size-perception training (reviewing the accuracy of the clients body size) (Farrell et al, 2006).

Cash (1995) and Rosen (1997) have developed CBT techniques specifically for use with people with poor body image and eating disorders. Their programme has become widely used, and has been tested and found to have good results for at least a 3-6 month period after completion. The programme consists of three elements which work together: firstly psycho-education about body image, second guided exercises which help the client assess and challenge negative thoughts, and third skills-teaching to enable the client to master situations that have been shown to lead to body anxiety in the past (Levine and Smolak, 2005). In other research carried out with patients who have vitiligo, a visible disfigurement, CBT was demonstrated to be effective in enhancing ones self-esteem and body image (Papadopoulos, Bor and Legg 1999). CBT has been found repeatedly to be a very effective treatment for poor body image (Jarry and Berardi 2004).

CBT has been used specifically for BDD. It is a multi-component approach which involves an assumption that dysfunctional thoughts and behaviours are learnt responses and can be unlearned and more positive responses put in their place. CBT for BDD can include self-monitoring, desensitivisation, cognitive restructuring and behavioural modification as well as group work (Jarry and Berardi, 2004). However, Jarry and Berardi (2004) compared a number of treatment programmes for BDD using CBT, and found that while all addressed the attitudinal component of the illness, only some also addressed the perceptual and emotional contents. They found that body image therapy, based upon CBT techniques, is very effective with improvements to the attitudinal and behavioural components of the illness after treatment. Attitudes towards eating, and behaviour also improved after CBT based interventions. Jarry and Berardi’s of CBT-based treatments also seem to indicate the necessity of a therapist. While self-administered CBT can be effective, the absence of therapist seems to hinder behavioural changes and make client less able to comply.

Veale (2004;2001) has developed a model for explaining BDD based upon cognitive behavioural theory. Veale’s model relates to that developed by Cash and Pruzinsky to explain body weight and shape dissatisfaction in the non-clinical setting, but is applicable specifically to BDD and incorporates features unique to the disorder, including the client’s relationship with reflective surfaces for example mirrors which can trigger symptoms. His model helps understand why symptoms of BDD are maintained, and can be used by a therapist to help the client understand his or her symptoms and overcome them. In his model, there is a complex relationship between the client’s negative appraisal of their body image on the one hand, and several other factors on the other: the processing of the self as an aesthetic object; rumination on ugliness and comparing the self to the ideal; negative mood and safety behaviours to disguise the appearance. There is a two way relationship between the client’s appraisal and each of these four factors. In addition, triggers can act to start a cyclical relationship between the negative self-appraisal and processing of the self as an aesthetic object (Veale 2001; 2004). So far, Veale’s model seems not to have fed into the further development of CBT techniques for BDD.

4.3.3 Person-centred therapy

Client, or person-centred therapy is an approach rooted in the subjective experience of individuals. It contrasts with the Freudian approach, which looks at the play of influences which have contributed to the client’s situation, but also with CT and CBT approaches as it places less emphasis upon the client’s behaviours. The Person-centred therapist is concerned with the client’s personal view of the world, and how that client interprets and makes sense of events. It assumes a humanistic psychology, rather than a behaviourist one. In order to be successful, the therapist should understand the client’s life, values and experience. Person-centred therapy also differs from cognitive approaches in that the latter prioritise the process of thought, while the former concentrates upon feelings and emotions.

Key ideas in person-centred therapy were developed by Carl Rogers. Rogers believed that humans strive towards self-actualisation, that everyone wants to make full and best use of their potential. He also assumed that people are inherently good, and that irrational beliefs and acts are a consequence of fear. Key concepts Rogers developed include the notion of ‘self-image’ – how a person sees his or her self. This self-image determines a person’s outlook on life and his behaviour. He distinguished further between an ideal self-image – how a person thinks he or she should be – and how they perceive themselves to actually be. Rogers suggested that the self image (or self-concept) can be congruent with reality – match experience – or incongruent, for example when someone perceives themselves as being hated, without there being any evidence for this. Rogerian therapy therefore has two aims, firstly to reconcile differences between reality and the self-image, and second to reconcile differences between the concept of the ideal self and the concept of the actual self (Groenmann and Buckenham, 1992). A related concept to the idea of congruence and incongruence was put forward by Goffman (1963), who suggested the notion of stigma as ‘an attribute which is deeply discrediting’ for the individuals involved. According to Goffman, a stigma emanates during social interactions whereby an individual’s actual social identity (characteristics/traits thought to be possessed by this individual) fail to meet the expectations of the societies attitude of what constitutes normal, that being his/her virtual social identity. This situation results in a predicament whereby the individual has a spoiled social identity, and assumed to be incapable of satisfying the role requirements of social interactions (Kurzban and Leary, 2001). Various attempts to conceptualise stigma developing the work of Goffman have been proposed since, all sharing a fundamental tenet that stigmatization of an individual occurs through the culmination of negative evaluation, whether in terms of discrediting, adverse attributes, the perception of illegitimacy or as a result of devalued social status (Kurzban and Leary, 2001). Examples of the development of the concept include that by Jones Jones, Farina, Hastorf, Markus, Miller and Scott (1984), who established a six-dimensional method for examining stigma-associated health conditions. The six dimensions are first the extent to which the condition can be concealed (is the condition obvious to others and what is the extent of the visibility?), second the course of disorder (the general pattern of change and outcome of the condition in question), third disruptiveness (to what extent does the condition hinders communication and interaction?), fourth aesthetic qualities (to what extent does it make the sufferer repellent, ugly or upsetting?), fifth origin (the state of affairs in which the condition emanated) and finally, peril (to what extent does the condition pose a threat to others?). In addition, Link and Phelan (2006), described stigma arising as result of a combination of interrelated elements, essentially encompassing these five issues; identifying and labelling human differences, processing stereotype, separating “them” and “us” mentality, experiences of discrimination and loss of status and finally the exercise of power. This notion of stigmata seems particularly applicable to the way the person with BDD views the aspect of his or her body that is unacceptable to them.

Criticisms of person-centred therapy tend to come from a psychoanalytic perspective, and focus upon its lack of explanatory power as a model. Critics for example claim that it lacks a theory of personality, and especially is unable to account for child development. In addition it cannot explain how neuroses and psychoses develop (Wilkinson 2003).

One argument for utilising a person-centred, humanistic approach is that such approaches integrate the body more fully into the therapeutic process. While all schools of therapy acknowledge the importance of the body, they frequently limit its involvement to verbal, symbolic and intellectual discussions. Patient initiated movement tend to be ignored by many schools of psychotherapy (Miller 2000). Miller does not mention, but this can also be said to be true of CT and CBT. By definition these approaches concentrate upon thoughts and changing them, rather than integrating body sensations. Client centred therapies, however, are more likely to integrate the body into sessions.Berne’s ‘Transactional Analysis’ urges the therapist to look for references to body parts like the anus and mouth. Other client-centred approaches such as Gestalt, psychodrama and Bioenergetic Analysis integrate the clients physical being perhaps by repeating client gestures or trying to uncover how past experiences have been integrated into the clients body. Bioenergetic analysis, for example, suggests that the client uses physical techniques in childhood such as muscle contraction or reduction in breathing to cope with difficult situations, and that physical exercises can help unlock these long standing negative patterns. Such approaches see the client as embodied rather than as a set of cognitions (Miller 2000).

Rowan suggests that while there are three ways in which therapy can conceptualise the body, which correspond to three levels in a model by Wilber (1996), most therapies concentrate unduly upon the first way. At level one, the body is seen as separate from the mind, one can be treated in independence from another. At level two, mind and body are integrated, and the client is encouraged to see it in this way also. At level three, the body and mind are both part of a greater whole (Rowan 2000).

Another reason why a client centred approach might be useful is that there is some evidence that people with problems with eating also have problems with interpersonal relationships. CT and CBT do not work on such relationships. Interpersonal issues can both cause and perpetuate dysfunctional attitudes to the body. Person based approaches are able to help patients deal with issues that have been deeply entrenched.

Reflective therapy techniques are one form of person-centred therapy which seems particularly useful for treating BDD.Suggested by Dworkin and Kerr (1987), reflective therapy applies the basic principles of client-centred therapy and consists of exploring the patient’s feelings about body image during key periods in their development. It does not include techniques for challenging negative and irrational beliefs, but rather focuses upon exploring feelings about body image using techniques such as reflection, paraphrasing and journal based homework. By exploring the client’s feelings about body image, and looking back to key life stages, the approach differs sharply from that of CT and CBT. Dworkin and Kerr (1987) found it as effective as CBT. While it lacks the complexity of approach of true client-centred therapies, it is still useful. This also suggests that emotionally-focussed which look at the internal world of the client therapies may be useful. Research has in fact suggested a link between outcomes in therapy and the extent to which clients are able to explore and analyse emotional meanings. There has been little testing of treatments which work in this way, despite a recognition that CBT may not suit all patients (Jarry and Berardi 2004).

4.3.4 Prevention programmes

One possible critique of both CBT / CT strategies and person-based therapeutic approaches is that they focus upon the individual rather than society or culture as a whole. Such practices might be said to isolate individual clients by removing them from the social environment where negative thoughts and perception of self emerge. Therapists aim to treat individual behaviours and attitudes by either challenge emotions and thoughts or by uncovering their root in childhood experienced. As such they are addressed as symptoms of a disorder rather than as a valid response to a harsh social climate. Another approach would be to look at outside influences including the media (Markula 2001). While this awareness can be integrated into therapy and counselling, other strategies for treatment are very different.One such strategy is the treatment programmes for eating disorders and poor body image. Such programmes typically target individuals at a life-stage particularly prone to such problems, for example female undergraduates. They also typically involve groups of clients, rather than the therapeutic focus upon individuals. Another feature is the focus upon teaching media awareness. Typical programmes take a multi-faceted approach, for example combining strategies to reduce the internalisation of the thin ideal with promotion of body strategy through life skills and a media literacy promotion. Stress management skills can help improve communication and decision making and other activities promote self-esteem.Gail Gail, McVey, Kirsh, Maker,Walker, Mullane, Laliberte, Ellis-Claypool, Vorderbrugge, Burnett, Cheung and Banks (2010), for example, tested such a programme amongst university students alongside a university health-promotion team.

Stice and Shaw (2004) have looked in detail at the effectiveness of such programmes. They trace the development from the early ‘didactic psychoeducational material about eating disorders’. These early attempts were based on an assumption that informing participants of the adverse effects of eating disorders would act as a deterrent. The next wave of programmes retained the didactic content and universal focus but also included teaching tools for resisting social and cultural pressures towards the thin ideal, due to acknowledging that such pressures play a key part in developing eating pathology. The ‘third generation’ of interventions have targeted programmes at high-risk individuals and have a high degree of interactivity, as it has been suggested that such targeting renders programmes more effective. Prevention programmes are thought to be most effective when delivered during the period of development in which condition emerges.

Interactive programmes have been shown to be more effective than didactic ones, perhaps because the format allows participants to engage more fully with the content of the programme. Interactive exercises also allow participants to apply taught skills. They are also most effective when they are spread out over a period of time, for example at least 3 hour-long sessions once per week. The break between sessions allows participants to reflect upon the content, try new skills and seek advice in subsequent session. Content is also important – where the focus is upon established risk factors, there is more success than where non-established risk factors are targeted. In particular, programmes that aim to increase resistance to social pressures, increase self-esteem and body satisfaction produce better effects than those which do not address such factors. Successful programmes should also improve eating pathology (Stice and Shaw, 2004)

One effective form of prevention programme is the ‘dissonance-based’ prevention programme. These are based around the notion of ‘cognitive dissonance prevention’. Influenced by Stice’s dual pathway model, programmes try to reduce the extent to which the thin ideal is internalised by inducing cognitive dissonance, ‘an uncomfortable psychological state that occurs when beliefs and actions are inconsistent’.Typical dissonance-based prevention programmes include a series of verbal, written and behavioural exercises that challenge the ideal of thinness, for example discussing problems with the ideal and negative consequences of trying to attain the ideal. When individuals have to analyse and defend a belief, they are more open to changing that belief after the exercise is completed. Dissonance prevention has been tested and appears to reduce eating disorder risk factors significantly, and do so over a period of time extending beyond the programme period. Perez, Becker and Ramirez suggest that not only are such programmes effective, but also that they can be disseminated in the wider community successfully (Perez et al, 2010).

One advantage of these programmes is that they seem to be able to prevent the development of severer body issue conditions by targeting individuals who are at risk and doing so successfully. The cost of implementing them is therefore likely to be lower than intense therapy once a condition is established, and the cost to the sufferer is also less, as the disorder does not become so developed as to negatively effect life conditions. In addition, Jarry and Berardi (2004) suggest that there is a need to look at the effectiveness of other therapeutic treatments, for example reflective therapy, exercise therapy, weight control, and the use of VR environment.

5. Discussion of different therapeutic approaches to body image disorders

There are advantages to each treatment type. CBT in particular has been shown to be effective for body image problems when administered individually, in groups and self-administered (Lemberg and Cohen, 1999). The combination of CT with behavioural techniques, e.g. reinforcement and imagery is a particularly powerful and efficacious combination (Dworkin and Kerr, 1987). Not only is CBT able to reduce negative body issues, there are also other positive effects documented including improved social functioning and increased self-esteem (Lemberg and Cohen 1999). CBT treatments seem to represent an advance on CT treatments as they incorporate behavioural modification into programmes. Veale (2004) has presented a coherent model of BDD rooted in cognitive behavioural principles. In addition, CBT and CT fit well into the current health climate. They are often preferred as therapy options by the NHS as they offer a low cost alternative, that is relatively quick to administer. They seem to be based on sound scientific principles and are more easily tested and verified in research studies. They deliver a wide-range of testable outcomes. Consequently, they are accepted as more effective solutions to a range of problems (Wilson and Syme 2006). However, there are also arguments for the person-centred approach. Some clients are unwilling to take part in CBT or CT, finding it mechanistic and formulaic. Person-centred therapies take the background of the client into account, and it is possible that by uncovering deep seated issues with the therapist, longer lasting solutions can be found. Typical studies of CT and CBT seem to show success both at the time of treatment and for a period after treatment, however it is unclear how long this effects last. More research is needed to look at whether person-centred therapies offer a longer-term solution to body image issues. Moreover, person-centred therapies seem to acknowledge the importance of the body, and offer a way to integrate the body into therapy. While CT and CBT both deal with issues about the way clients see their body, they do so in a highly verbalised, non physical way, which could be argued to be a disadvantage.While RT, a form of person-based therapy, was shown by Dworkin and Kerr (1987) to be less effective than CT and CBT, it is still effective as a therapy, and more research would determine whether particular client groups are more able to benefit from this longer-term treatment.Moreover, Dworkin and Kerr (1987) suggest that the reason RT is less effective is that it is a short-term form of person-centred therapy. It is possible that longer-term options would be more effective.

Treatment programmes, for example dissonance based programmes, also offer a third alternative. These programmes have a number of advantages. First, they are primarily offered to groups of clients rather than individuals, and as such are a lower cost option. Secondly, they move the focus of treatment away from the situation of the individual to the way that individual is influenced by factors in society. They provide a way to acknowledge the central importance of social factors, particularly the media, in creating distorted body images, and teach clients to resist such pressure.Counsellors carrying out both CBT and person-centred therapies may not be aware of the extent to which they maintain the status-quo. They need to examine their own attitudes to body image and weight, to avoid an assumption that the client is in the wrong. They need to take into account wider research for example into dangers of dieting and also issues such as the way society highlights an ideal of perfect looks (Dworkin and Kerr 1987). By starting from the social and cultural perspective, treatment programmes render this need unnecessary.

Given that all three types of treatment for BDD and other body image problems have benefits and drawbacks, and given that the bulk of research looks at individual treatment types, it would be interesting to compare the three different treatments in one study to determine which is most effective, or whether each is most effective with a particular demographic or personality type. A further study of this nature would allow treatment programmes to be tailored to the individual and therefore, it would be hoped, be more successful.

Another way to inform the development of therapies for BDD might be to take on board a suggestion by Wood-Barcalow et al (2010). They point out that researchers have so far concentrated upon the negative features of body image in order to transform them into positive images. They have tending in doing so to conceptualise the positive aspects of body image as simply the absence of negative factors. However, this is an incomplete strategy, because ‘the absence of pathology does not always signal flourishing’ (Wood-Barcalow et al 2010, p. 106). There has been little research done on the nature of a positive body image, but that which has been done indicates that positive body image differs qualitatively from both negative and normative images. One study in 2004 (Williams, Cash and Santos) suggested that people with a positive image have lower internalisation of media influence, greater self-esteem, better social support and higher physical activity. Other characteristics include looking favourably at the body, accepting the body, and respecting its needs ( Wood-Barclaow et al, 2010).

In addition, the differences between men and women in terms of body dissatisfaction have been pointed out above. It has now been recognised that men, like women, can suffer from poor body image, but they seem to have a different experience of their body with an awareness of muscle and body fat particularly. Gay men also have their own preoccupations. With this in mind, a useful further study might look at the ways in which therapy of any time might be adapted to these differences in perspective between the genders and sexualities. For example, intervention programmes targeted at men might look at how media images of men are changing with a growth in advertising of men’s beauty products, an increase in magazines targeted at men, and similar factors. CBT and CT approaches might utilise questions which take into account the differences between men and women in regard to what they might consider to be unattractive about their body. In addition, and if further research indicates the need, it might be useful to look at ways ethnicity, race and social class impact upon body dysmorphia. For example, if women of a higher social class are more likely to suffer from BDD, targeted intervention programmes would need to take this into account.

6. Primary research methodology

The findings from the secondary data study can be compared with the research collected from the primary study.

The primary research study collected quantitative data amongst people who had undergone one of three types of therapy treatment (taking part in a prevention programme, person-centred therapy or related treatment type, or CBT / CT variations). The aim was to compare respondents’ ratings of their treatment type to see if there is significant differences between each of the three broad types of treatment for a number of factors including effectiveness of treatment in raising self-esteem and effectiveness of treatment in improving body image. While qualitative data, text-based, more detailed information gathered in-depth from fewer respondents gives a deeper picture of an issue (Gray 2009), the quantitative data was selected in this instance as it was felt that results could be tested for significance statistically.
A questionnaire was designed to collect information from respondents. A number of demographic questions were included, including age, gender and socio-economic background, in order to look at the impact such variables had on responses to therapy. Above the differences between the sexes for body image problems was discussed, and given that men and women have different concerns about their body it is possible that they react differently to different therapy types, for example. In addition, a number of questions to collect data about therapy type were included, for example asking the length of time since therapy, and duration of the therapy, as well as the type of therapy carried out. The majority of questions asked respondents to rate their satisfaction with different aspects of their therapy on a 1 to 5 Likert scale, where 1 means ‘not at all’ and 5 ‘completely satisfied’.The questionnaire started with a brief introduction to the study stating purpose of the data collection and emphasising confidentiality.

Babbie (2010) distinguishes between two main types of sampling (the process whereby the people interviewed are selected). Probability sampling draws individuals randomly from the entire population of interest. In this case, it would be everyone in the UK who had undergone therapy for poor self-esteem and issues with the body. This is clearly not appropriate for this survey, as there is no one list available containing all this population. The type of sampling used was non-probability. Confidentially posed a major issue for data collection. It was not possible to obtain lists of individuals who had undergone therapy from health services, Primary Healthcare Trusts or similar as authorities would not release such data. It was necessary to find individuals who had had therapy for body issues and/or self esteem in other ways. It was decided to approach users of online internet forums dealing with poor body image and related conditions, and based in the UK.One advantage would be that forum users would be more likely to have had therapy, compared with the general population, however one disadvantage was that it might introduce unconscious bias into the results. For example, people who use internet forums might have a particular personality type which is also associated with a particularly strong or poor response to therapy. This bias would skew the results of the study, as the only people interviewed would tend towards a positive or negative response.

Three forums for people with BDD and associated problems were approached. In all cases, the forum moderator was contacted to explain brief details about the study, and ask permission to post on the forums requesting volunteers to take part by completing the questionnaire. It was stressed that all results were completely confidential and would be used in statistical form only, with no personal details attached. Of the three forums, only 2 responded to the initial email, and only one gave permission to post the request. One further problem became clear when the request for volunteers was posted. Although many users responded well, saying they were interested in the study and supported its value, very few users were willing to give up their anonymity by passing on their email address for the questionnaire to be forwarded to them.In total, 19 respondents were recruited, and of these only 8 returned completed questionnaires.It is widely held that a sample size of at least 30 is necessary to allow statistical tests to be performed on the data, and recommended that the minimum base is much higher (Cohen, Manion, Morrison and Morrison 2007). Consequently, the data collected for the study was not analysed statistically, although it was decided to look at the results in general terms.

7. Primary research results and discussion

All 8 respondents answered all the questions. All had completed therapy, and all had finished within the last 5 years. All but 1 respondents were women, and ages were distributed as follows:

AgeNumber
16-241
25-343
35-441
45-542
55-640
65 or over1

Table 1: Age distribution

It is perhaps unfortunate that only 1 respondent was a man, as the results cannot throw light on the discussion above indicating differences between the genders in terms of body issues.

4 respondents had had CBT, with 1 having CT. One had person-centred therapy, and two counselling. CT and CBT treatments had been offered by the NHS, with counselling and person-centred therapies funded privately. Those with the NHS were not offered other treatment options. There was a distinction between therapies of the CT/CBT type and counselling and person-centred therapy, with the former therapies taking place over much shorter sessions, typically between 2 to 5 sessions. The person who had person-centred therapy had 10-50 sessions, and the counselling respondents both stated therapy lasted 6-10 sessions.Perhaps unsurprisingly, given the nature of the internet forums from which they were recruited, all respondents reported issues with poor body image. Table 2 reports the results of Q7 in more detail.

ProblemNumber
Poor body image8
Low self esteem6
BDD3
Eating disorder2
Other problem4

Table 2: Areas tackled by therapy

The high number of respondents who also reported low self esteem in addition to poor body image confirms the discussion above, where the link between the two conditions was pointed out.Other problems reported included depression and anxiety.

The division of respondents between CT/CBT on the one hand and counselling/person centred therapy on the other seems to be correlated with a difference in responses to the satisfaction questions at Q8. While the mean satisfaction amongst the 5 people undergoing therapy of the CT/CBT type was 4.2, the mean satisfaction for those undergoing counselling/person centred therapy was 3.8. This is still fairly high, and close to the score for CT/CBT, but also somewhat lower. This adds a little weight to the view, discussed above, that CT/CBT is more effective. This is underlined by the result of Q8C, with the mean score for satisfaction for the effectiveness of CT/CBT respondents is 4.1, and the mean for person centred therapy / counselling is 3.9. CT/CBT also scored slightly higher for giving tools to deal with difficult situations outside of therapy (4.0 as opposed to 3.7). The results for 8B 8D and 8E suggest, however, that person-centred therapy / counselling are more effective in other areas. They score higher on the mean than do CT/CBT, as follows:

Mean score CT/CBTMean score counselling / person-centred therapy
Q8B: Satisfaction with relationship with therapist3.94.4
Q8D: Satisfaction with extent to which therapy looked at role played by social and cultural factors3.43.9
Q8E.Satisfaction with extent to which therapy looked at role played by personal history and background3.74.3

Table 3: Mean Scores, Q8B, D and E

These results suggest that there are some aspects for which person-centred therapy approaches are most successful. However, while these might lead to greater client involvement and satisfaction for these areas, the effectiveness of CT and CBT was still rated higher. Unfortunately there were no results at all for prevention programmes, so it was not possible to test responses to these forms of treatment.

Due to the low response rate, the results from the questionnaire could not be assessed for statistical significance. It was therefore decided to extend the literature review element of the dissertation to make up for this shortfall. However, the data that was collected does not contradict the findings from the literature review, and in some areas reinforces it. The link between poor body image and other issues including eating disorders, weight and self-esteem is confirmed by the conditions reported by respondents.That CBT and CT are preferred by the NHS seems to be confirmed by the results of the study, as only privately funded respondents had other therapy options.

Unfortunately the lack of male respondents meant that the theories about gender-based differences between body image issues could not be tested. This is an area which could be investigated in further primary studies. In addition, further studies could look at the impact of the media in more detail, perhaps tracing media exposure amongst people with eating disorder, the extent to which people with BDD and poor body image compare themselves with media ideals, and differences between men and women’s ‘reading’ of the media.

8. Conclusion

This study has aimed to look at the increasing problem of poor body image. Originally thought to effect women rather than men, it is increasingly found in men also. It has a number of negative consequences for individuals, so there is a need to find an effective treatment. The first part of the study examined how poor body image and BDD comes about, and its relation to self-esteem and other weight issues. There are a number of theories which attempt to explain the issue, and it seems clear that media influence plays a large part in making individuals uncomfortable with their body. While there is a clear difference between men and women regarding the extent to which each gender displays body image issues and regarding the content of poor body image, other demographic factors including race, ethnicity and socio-economic group play a part. The second section of the study looks at treatments for poor body image and BDD. Treatment options divide roughly into three categories, cognitive or cognitive-behavioural approaches, person-centred therapies and intervention programmes. Each type of treatment has positives and negatives; CBT and CT seem effective although may not be suitable for all clients, person-centred therapies can also be effective and allow a deeper perspective, while prevention programmes address the social and cultural context. Person-centred therapies have been somewhat overlooked of late, despite their potential for going deeper into issues and incorporating the body more fully into their methodologies. A small primary study looked at experiences of therapy for people with BDD and body image problems, and seemed to broadly confirm the results of the secondary data discussed, however problems with data collection meant the results were not statistically significant.

This study has clear limitations. The primary research was very limited, although areas were suggested for further study. In addition, there exist other treatment options aside from the ones discussed which might offer useful solutions. Finally, space restraints mean that only limited discussion of some relevant areas has been possible.

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Appendix 1: Questionnaire

Information about Study

Thank you for agreeing to help with this research study. I am a student working on a dissertation about the use of counselling for body image and related issues. The results of the study will be used to inform others and may help with future research projects.

Any information you give on this questionnaire is completely confidential. Your name will

not be associated with any of the information, nor will it be possible to identify you from the information collected. Data collected will be used only for the purposes of this study, and will be destroyed after the study is over.

Please answer all the following questions and return by email to the address given.Indicate your answer by an ‘X’ or tick. Where more than one answer is possible, the question instructions will make this clear. If you are not sure how to answer any questions, please email me for further help.

Q1. How long is it since you received your last therapy session(s)(if you have had more than one series of therapy, please think about your most recent treatments)

1. Over 10 years ago

2. between 5 and 10 years ago

3. 2-5 years ago

4. 1-2 years ago

5. Under 1 year ago

6. I am still undergoing therapy

Q2. How long was your therapy?

1. 1 session only

2. 2-5 sessions

3. 6-10 sesssions

4. 10-50 sessions

5. Over 50 sessions

6. I am still undergoing therapy

Q3. Was your therapy privately funded, or obtained through the NHS?

1. Privately funded

2. NHS

Q4. What type of therapy did you have?

1. Cognitive Therapy

2. Cognitive Behavioural Therapy

3. Counselling (unspecified)

4. Person Centred Therapy (Sometimes known as client centred therapy)

5 Education programme (typically in groups, aimed at raising awareness of body image issues)

6. Other therapy type (PLEASE WRITE IN)

Q5. Were you offered different treatment options?

1. Yes

2. No

Q6. Did you have a preference for type of treatment?

1. Yes

2. No

Q7. What areas did your therapy tackle MULTIPLE ANSWERS POSSIBLE

1. Poor body image

2. Low self esteem

3. Body Dysmorphic Disorder

4. Eating disorder

5. Other area (PLEASE WRITE IN)

Q8. On a scale of 1 to 5, where 1 means ‘not at all satisfied’, and 5 means ‘completely satisfied’, how satisfied were you with the following aspects of your therapy?

Q8A. Length of treatment:

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8B. Relationship with therapist:

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8C. Effectiveness of treatment:

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8D. Looking at social and cultural factors and the role they played in your condition:

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8E. Looking at your personal history and background and the role they played in the problem

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8F. Giving you a set of tools you can use to deal with difficult situations outside therapy:

1 – not at all satisfied 2 3 4 5 – completely satisfied

Q8G. Satisfaction with therapy overall

1 – not at all satisfied 2 3 4 5 – completely satisfied

Finally, there are just a few questions to help us compare your answers with those of others

Q9. Are you male or female?

1. Male

2. Female

Q10. Which of the following age groups do you fall into?

1. 16-24

2. 25-34

3. 35-44

4. 45-54

5. 55-64

6. 65 and over

Q11.

What is your occupation?

1. Student

2. Working full-time

3. Working part-time

4. Unemployed seeking work

5. Not working through ill-health

6. Retired

7. Looking after family

8. Carer

9. Not working for other reason

Thank you for your help!

Categories
Free Essays

Free International Relations & Trade Dissertation


The National Law Centre for Inter-American Free Trade states that industrialised countries attained their status mostly by protecting their intellectual property and enacting protectionist measures, however developing and transitioning economies are being advised to liberalise their markets in order to achieve economic growth in the 21st century. Kazakhstan, a transition economy, after achieving independence from the Soviet Union in 1991, adopted democracy and took several steps towards liberalising its markets. Now it is a member of several international organisations and has vast natural gas reserves, however mixed results still exist on the effect that trade liberalisation has had on its economic growth and human development. The objective of this study is therefore to ascertain the effect trade openness has had on economic growth and human development. Hypotheses were conceptualised based on the review of existing literature, and secondary data was gathered from several statistical websites. The data were analysed mostly through correlation and linear regression analysis and the results obtained illustrated that trade liberalisation in Kazakhstan is indeed directly proportional to GDP Growth and UN Human Development Index (both of which were used to calculate Economic Growth and Human Development respectively). Trade openness was also directly proportional to FDI Net Inflow and Domestic Savings, but not so with Corruption. Based on these results, and analyses thereafter, it was concluded that trade liberalisation is indeed beneficial for transitioning economies as it positively influences human development and economic growth, this economic growth in turn promotes investment inflow and domestic savings within the country. Therefore transitioning economies intending to achieve these feats should deepen their liberalisation measures in order to gain considerable advantage in the international economy.

1.INTRODUCTION

a. GLOBALISATION

Ha-Joon Chang in his seminal book “Kicking Away The Ladder”, discusses the major steps that developed western countries, notably western European countries like Britain, France, Netherlands and the United States, took during the 19th and 20th century to achieve developed status and economic leadership. He emphasises that these major economies adopted protectionist measures to ensure their individual economic growth, before adopting free trade regimes with other multinationals. According to the US based National Law Centre for Inter-American Free Trade, the developed countries only attained that status by protecting their intellectual property and enacting some protectionist measures that favoured the development of their indigenous industries, such as high import tariffs, import substitution and export subsidies.

Following this era, when most western countries were fully westernised and attained economic prosperity through their advances in technology and intellectual property, the developing economies of South America, attained economic prosperity through import substitution, while socialist economies of South East Asia such as Taiwan, gradually adopted political and economic liberalisation policies, India had liberalised its markets, enhancing international trade, while China, after joining the WTO also adopted liberalisation measures, albeit keeping its political communism, all of which have promoted their economic growth. For instance, China and India are respectively the 2nd and 4th countries with the highest GDP as at 2009, after only recently liberalising their markets in recent years, as opposed to other western countries further down the list (Piasecki and Wolnicki, 2005).

These trade policies have been largely influenced by multilateral trade organisations such as the WTO, and regional trade blocs like the EU and NAFTA. Mexico for instance had to open up its borders to American and Canadian businesses, thereby highly influencing the expansion of Wal-Mart, which is now a market leader within its country (Wilson et al, 2002). Other countries aiming to ascend into the blocs such as EU, have to meet geographic, democratic, legal, economic, and most importantly market economy policies, which asserts that the country should be able to cope with “competitive pressures and market forces within the union”. The WTO requires that ascension countries adopt to specific trade agreements such as the TRIPS, TRIMS and GATTS agreements that protect international investors in issues such as Intellectual Property, Foreign Direct Investments and trade in Goods and Services (Wilson et al, 2002)

The increasing growth experienced recently by these developing countries has been attributed mostly to these free trade regimes and multilateral trade agreements (Levine, 2002). However according to Tavares (2007), the rate of growth experienced by these countries are mostly based on the current state of their industries and economy prior to liberalisation policies. For instance, Chinese countries with developed industries were better able to compete with their western counterparts once their borders were open, as opposed to other developed countries in Africa and Latin America that did not have these developed resources. Therefore, if a country has relevant industrial competence prior to adopting trade policies, then it is likely that its development and economic growth would be more rapid than those who do not.

b. KAZAKHSTAN AND THE SOCIALIST ECONOMIES

Following the collapse of the communist regimes throughout Eastern Europe and the former Soviet Union, most of the individual countries that claimed independence shortly afterwards were democratised (Fidrmuc, 2002). Following the democratic transition, the political freedom and civil liberties of three major countries Czech Republic, Hungary and Slovenia, were in par with those of other Western European countries, while other post communist countries also made considerable progress in their feat. Comparing this transition in relation to the world at large, Fidrmuc explains that the average communist country moved from a having political ideologies and civil liberties similar to Iran to those similar to those of Brazil within the first 2 years. These newly acclaimed post communist countries also achieved moderate levels of democracies albeit struggling and turbulent economic and political developments, military conflicts and coup attempts.

According to Piasecki and Wolnicki (2005), the collapse of the Soviet Union quickly led to the establishment of the Independent Republic of Kazakhstan on 16 December 1991. Like all the other former communist republics, the economy of the nation fell immediately after liberalising its markets and adopting democracy, which by 2005, when Piasecki and Wolnicki wrote their article, was still yet to recover. The immediate output of the nation decreased by 12 – 13% yearly following its independence, and even to as low as 25% in 1994 (EBRB, 1995). The main priority of Kazakhstan after its independence has been to achieve “national economic growth within the context of enhanced financial stability and social stability”. A national plan to achieve this feat, which stretches towards 2030, is currently being implemented, while discussions are constantly being held on the most appropriate constitutional and legal frameworks to facilitate the achievement of these plans (Wilson et al, 2002).

Kazakhstan is a vast country geographically with a landmass almost equal to that of Western Europe, with a population of just 16 million people, out of which 23.7% are Russians, and several others are Uzbeks and Ukrainians. It has a population density of 5.7 persons per sq. km, among the world’s lowest. There is abundant supply of easily accessible mineral and fossil fuel resources within Kazakhstan, as the development of oil and gas within the nation has attracted a vast majority of the foreign direct investments since its discovery in 1993 and also accounts for 57% of its industrial output and 13% of 2009 GDP (CIA.Gov, 2010). The country possesses huge reserves in Chromium, Lead, Zinc, Uranium, Copper and Manganese and ranks highly for Iron, Gold and Coal, whilst also being an exporter of Diamonds. Kazakhstan has had steady relationships with its post soviet neighbours and is a member o the UN, OECD, Organisation for Islamic Conference, World Trade Organisation, Commonwealth of Independent States, and several other multinational bodies. This, in addition to the exploitation of its natural reserves has contributed to its GDP growth, which has grown consistently since 2001, contrary to its production output decline following its independence.

c. RESEARCH OBJECTIVE AND STRUCTURE

Though Kazakhstan has been able to achieve these economic achievements by joining these bodies and engaging in open market systems, little information exist on the impact it is having on economic and human development, particularly of citizens within the state. The objective of this research is therefore to ascertain how adopting these trade policies have guided economic and human development growth within Kazakhstan over the past decade that it has transitioned its economy from communism to democracy.

This dissertation therefore aims to accomplish those research objectives by reviewing all relevant literature regarding this issue, as outlined in the following Literature Review chapter, then outline the hypothesis that would form the basis of the research question. Following that, the Methodology chapter would outline all the necessary steps that would be used to gather data, analyse data and verify or discredit those hypothesis. The results of these analyses would be outlined in Results, whilst the discussion and conclusion, which aim to give a detailed explanation of our research findings, would be included in the concluding chapters.


2.LITERATURE REVIEW

a. MARKET LIBERALISATION

Amartya Sen, winner of the 1998 Novel Prize in Economics, defines globalisation as the “intensification of the process of interaction involving trade, migration and dissemination of knowledge that has shaped the progress of the world over millennia” Gerber (2002 pg. 33). In accordance, Levitt (1983) also ascribes the world in modern times as being shaped by technology and globalisation. This increasing focus on globalisation has been spurred by economic development theories and experiences that have helped to explain why some countries and societies are not as rich as others, and do outline what policy makers can do to rectify these situations (Streeten, 2001). Studies by theorists such as Salih (2005) have focused on how low income or transition economies can acquire the high standard of living, security and amenities available in other developed countries, while theorists such as Wilson et al (2002) also argue that poorer societies are thriving to obtain and maintain high levels of economic and human development, which is one of several theoretical advantages of globalisation.

Foo (2005) argues that the ability to maintain and generate wealth enables developing countries to acquire relevant infrastructure, grow and develop faster, thus resulting in a better socioeconomic environment for the population. Therefore these nations actively seek policies and changes that result in better employability, higher productivity, higher income levels, and a narrowing of the gap between the rich and the poor. The objective of market liberalisation in developing or transition economies is therefore to improve the social wellbeing and quality of life of its residents, in terms of education, social amenities, small business growth, and other human development indexes, which subsequently builds the nation (Cukierman et al, 2000).

Numerous methods are normally utilised by developing countries to facilitate the increase in economic growth, and these methods mostly constitute one or more forms of political and economic liberalisations (Fidrmuc, 2002). Financial development (the structure of financial services and the width of products available) has been found to have a positive effect on economic growth (Salih, 2005). Bencivenga and Smith (1991) found that efficient financial markets promote domestic and foreign investments, thereby speeding up the process of economic growth. In their theoretical model, they find that the development of financial markets prevents the unnecessary premature liquidation by investors, improves investment liquidity, thereby promoting financial liberalisation supports economic growth.

Studies by Rajan and Zingales (1998) have found a positive relationship between financial development and economic growth. These studies have also been supported by Kolvu (2002) and Levine (2002), who find that the development of the financial structure within a nation, can accelerate the growth of its economy by affecting factors such as savings rate, directing savings to investments, and by improving investment productivity. Levine (2002) further finds that the development of a financial system, complemented strongly by an effective legal system that protects the right of outside investors, contributes to long-term economic growth. Thus concluding that financial development is essential for economic growth within a developing economy. However, Shan et al (2001) in contrast found that variations exist in the long-term positive effect between financial development and economic growth amongst countries, and its particular effect is affected by several factors not common amongst all countries.

b. LIBERALISATION IN POST SOCIALIST ECONOMIES

Prior to the dissolution of the communist economies in the 1990s, a famous characteristic of theories on developmental economies were on the benefits of industrial policies and state trade strategies, especially with respect to subsidies and state owned firms, which both cooperated in establishing relevant export industries, price intervention and protectionism (Piasecki and Wolnicki, 2005). According to Gerber (2002), this notion purportedly supported the nation state in being strong and active in the promotion of economic growth. However, advances in international trade and investments within democratic market economies of the developed West was eventually seen as indisputable proof of the need for a neo-liberal model in encouraging economic growth (Shan et al, 2001).

According to Streeten (2001), the concept of trade openness and economic development through globalisation and integration of regional blocs become new development paradigms that was sought after by other developing and transition economies that also wanted to develop. Globalisation has since equated with the democratization of global economic growth, an activity that converges the interest of both rich and poor counties. The different countries within Eastern Europe, especially the different segments of Central Eastern Europe, and Post Soviet Nations, have both pursued market reforms recently, and mostly achieved positive economic growth rates, however, due to susceptibility to external shocks, several of these countries have experienced lower growth rates since early 2000s, whilst countries like Russia, Romania and Ukraine, all part of the former soviet socialist economy, have experienced erratic economic growth (Foo, 2005).

Fries and Taci (2002) further explain that the ability of post socialist economies to attain market growth initially was limited as required structures were either inexistent or underdeveloped. Under the socialist economy, banks were limited to bookkeeping and depository functions for centrally planned allocations and household savings respectively. Intermediary services were restricted to investment directives of state owned enterprises. Enterprises and households were limited in their investment opportunities, whilst the government controlled interest rates. Financial supervision and legal protection were not practiced, whilst the functions of the commercial banks and central banks were usually identical, as a result the functions of socialist banks were restricted to servicing state owned enterprises, and agriculture and not necessarily in commercial banking.

According to Cukierman et al (2000), the continuing process of transition within former socialist economies entails a fundamental process of change in the structure of these economies. They have succeeded in replacing old stated owned institutions with new ones patterned after similar western institutions, in a bit to achieve market economy governments, required for sustainable growth. The creation of a western type of central bank has been one of the major factors constituting recent efforts by transition economies. In general, the banking systems within post-socialist economies have been upgraded over pre-reform periods.

Kolodko (1999) emphasises that transition into a market economy is a “lengthy process comprised on various spheres of economic activities”. Of key importance are the new institutional arrangements required for successful transformation. A market economy requires regulations that are liberal, private ownership, and adequate institutions, as expressed by Rajan and Zingales (1998). Successful transitions are usually executed in gradual processes, as the commissioning of new institutions entail a graduate process based on new organisations, new laws, and a change in behaviour in various economic activities. For transition economies, gradual processes could only lead to fully viable market economies, as radical “shock therapies” usually cause more problems than solved. Shock therapies according to Kolodko are only essential in liberalisation and stabilisation measures, and highly dependent on the scope of financial destabilisation and certain political conditions.

These newly enacted policies that direct developing and transition economies to adopt liberalisation views in both their politics and economy, is based largely on the Washington consensus, which advocates the importance of liberalisation, privatisation and the opening up of post socialist economies to foreign market, as well as the importance of maintaining discipline in the financial markets (Kennedy, 2002). However, according to Piasecki and Wolnicki (2005), the elements required for systematic overhaul, stabilisation and growth, are factors such as state sector privatisation, the need for corporate governance, redesign of the role of the state, and its urgent withdrawal from economic activities. Kolodko (1999) further asserts that the incorrect assumption regarding the rate that emerging markets can substitute government for institutional investors, have caused “severe contraction and growing social stress” within the transition economies.

Kolodko further argues that the only method through which a transition economy could achieve ultimate success in its transformation is in the design of suitable institutions, which would have to be developed from scratch. However, this development is apparently more difficult in post socialist economies of Eastern Europe, as there was a lack of basic institutions such as a central bank, national currency, and private property. The government’s involvement in the process of institution building, just like they were involved in administering the livelihood during the socialist era is of vital importance for post transition economies (Tavares, 2007).

Cukierman et al (2000) also asserts that governments would be unable to achieve the sort of results they require just solely liberalisation and privatisation, without being involved in taking care of institutional arrangements. Therefore by failing to design an appropriate institutional framework, market failures may prevail and informal institutions take over. A bandit capitalism market emerges instead of a sound market. Furthermore, Wilson et al (2002) advocates that the need for new institutions should be based on the belief that none were pre-existent, since they were not needed in the centrally planned economies. Transitioning into a market economy involves a new legal system and learning a new type of behaviour. The banks, civil service, state governments, households, and private enterprises must all learn how to exist within and accept the circumstances of the emerging market system (Shan et al, 2001).

Foo (2005) further argues that the major problem affecting transition countries is an easily identifiable lack of corporate governance oversight to protect investors, which Bennett and Dixon (1995) advocates as essential in market economies. The corruption risk of newly privatized firms also increases the importance of banks as financial intermediaries, who can provide loans and in turn perform oversight roles on behalf of shareholders. This speeds up the process of enterprise privatisation within transition economies and provides better corporate governance mechanisms for recently privatised firms.

Fidrmuc (2002) also argues that the high speed of democratisation in former socialist economies reflect the desire of citizens to live in democracy, and also represents the encouragement and pressure from developed western governments, that have influenced these governments into adopting democracy and market economies. The European Union especially has made democracy an explicit prerequisite for accession negotiations. Therefore post socialist economies aiming to enjoy the luxuries and benefits of being part of the EU have to open their economies and political systems and westernise them in accordance to their western counterparts. The process in which this has been carried out differs strongly from recently developed countries in Asia such as China, Chile, Taiwan and South Korea, which first achieved market economies by liberalising their economic systems before adopting democratic measures. China still practices communism. According to Gerber (2002), the sequence in which a transition nation adopts political and economic liberalisation does have an effect on their subsequent economic growth.

According to Fries and Taci (2002), banks are essential in financial development, as they are the financial intermediaries that promote efficient payment mechanisms and provide savers with a means of saving their excess income, and investing, both of which promote long term economic growth. They mobilize depositor savings efficiently, and appropriately channel credit to the investment opportunities with the best returns. Foo (2005) further asserts that they play a “useful and vital role” in transitioning a country to a market economy by being the intermediate between newly privatized firms and foreign and domestic investors. The lack of substantial financial entities is thereby an obstacle for the growth of the enterprise, which then hinders economic development.

In his study of the soviet era banking history, Foo (2005) argues that the socialist era banking system within the Soviet Union was inefficient and lost money. State enterprises that were inefficient and usually unprofitable were propped up by bank loans under the direction of the state. The most successful transition economies that have been able to achieve higher economic growth are those that have made great efforts in market reforms and opened up their markets to foreign participation in financial development. Those that are unwilling to incur economic, social and political costs in the restructuring of their pre-socialist banking system have achieved far less economic growth (Foo, 2005). Furthermore, Kolodko (1999) asserts that the faster the country can build its institutions, the better the environment is for business activities and economic growth. Government assistance and intervention usually hasten the process, but whenever it is mismanaged, it can also destroy the process and whatever progress had already been built. However, Shan et al (2001) advocates that the risk of failure should not be a reason not to engage in market liberalisation measures but should act as a call for wise guidance and rational intervention.

The privatisation of state owned enterprises is therefore seen as the path these economies could take to attain successful market economies and economic growth (Foo, 2005), however this has only been met with limited success within these economies. According to Caprio (2005), some of these economies have witnessed difficulties in eradicating soft budgets, inefficiencies within the system, corruption and inconsistent intellectual property rights. For example, western commercial bank operators and investors are new and somewhat inexperienced with transition countries; therefore depositors and investors need to be reassured of the legal recourse and protection of their investment. Financial crisis episodes in transition countries are somewhat devastating on its economy and growth (Gerber, 2002), whilst a successful banking sector is essential to support a growing privatized enterprise sector, which then supports economic growth (Salih, 2005).

c. PROMOTING ECONOMIC AND HUMAN GROWTH

As initially expressed by Kennedy (2002), the manner in which a country pursues economic and political liberalisation, could determine its growth rate and developmental success. According to Giavazzi and Tebellini (2005), the sequence of political and economical liberalisation is the most important, and not necessarily whether a country chooses to adopt any of both. For instance, they argue that countries that initially liberalise their economies, then transition into democracies, often perform better in terms of investment attraction, economic growth, trade volumes and macro policies, in contrast to those who democratise, then reform their markets.

A possible explanation behind these, as expatiated by Kolodko (1999), is that economic liberalisations first enacted are usually more effective, as it is associated with an increase in trade volumes during periods of liberalisation and after on. In contrast, economic liberalisations that are often preceded by democratisation often result in lower trade. Similarly, Rajah and Zingales (1998) also note the instance of inflation being lower in instances whereby economic liberalisation often precedes political liberalisation. The sort of economic liberalisation also differs in countries, as it is often a factor of whether or not it is a democracy. According to Salih (2005), democracies are effective in liberalizing economies, but not so in expanding trade, which suggests that although the economy is open in a formal way, protection remains in existence, whilst non-tariff barriers are usually enacted to replace previous tariffs. However, in dictatorships, such as in China, rulers are less likely to open up their economies, however, those who do so are able to suppress liberalisation and market economy opposition groups, thereby making liberalisation more pervasive and effective.

In accordance with these views, Kolodko (1999) asserts that the attention given to development policy and the treatment given to market oriented reforms are depicted to have contributed significantly to the high growth rate in China and Vietnam, which were previously centrally planned economies (Kennedy, 2002), this is essential as it differs significantly from the state of growth witnessed in post socialist economies of the former soviet union. The processes taken by various socialist economies in Europe to reform their systems, which failed for some, works for countries in Asia, where it was possible to take advantage of the system and adjust it as appropriate to the new challenges required for further growth (Kolvu, 2002).

Giavazzi and Tabellini (2005) use panel data in analysing the relationship between economic and political liberalisations, and their effect on growth, investment, inflation, budget surplus, quality of institutions, and corruption, and that found in isolation, the liberalisation of economic and political systems decreased corruption, however, in contrast to previous arguments, they found that the order in which they are enacted do not matter, but countries that undergo both types of liberalisations (political and economical), have lower forms of corruption. They also found that the impact of liberalisation on growth is usually positive and significant, especially during the transition period. Progress during the transition period, is an especially important determinant for economic growth.

They further found that a centrally planned economy could improve its average growth rate by 20 – 26% if they were more fully liberalised, than partially. According to Levine (2002), initial conditions and external environments also have a significant effect on growth. Fidrmuc (2002) thereby concludes that the introduction of democracy into a nation, does not positively promote the growth performance of transition economies, however its effect only appears ambiguous, especially when democracy is directly included as a measurement variable when ascertaining growth rates. However, democracy reinforces the liberalisation of the economy, which in turn inadvertently leads to better growth performance. Whenever political or economical liberalisations are accounted for, the effect of democracy on economic growth is usually found to be more profound later in the transition process, rather than at the outset (Fidrmuc, 2002)

d. LIBERALISATION CRITIQUES

In as much as political and economical liberalisation has been widely promoted, several theorists point out several issues that may cause unintended results. Salih (2005) states that globalisation, which has come to be known as a form of international economic integration, does not promote positive economic reaction amongst certain parties, as the sort of unilateral dependency amongst developing nations represent an issue for progressive integration. Furthermore, Shan et al (2001) asserts that the number of nations dependent on international trade, foreign direct investments and global financial markets has increased significantly, which has then increased the bargaining power of multinational firms against developing countries. The WTO has emerged as a powerful force within international trade, being able to influence the actions of individual countries towards following favourable trade policies.

The foremost criticism of liberalisation, especially on transition economies, was identified by Fidrmuc (2002) who found that dramatic contractions of output has been experienced since these socialist economies liberalised their economies and markets. In particular, within Czech Republic and Georgia, output fell between 15% and 75%, whilst the subsequent recovery was not enough to make up for depleted output. In addition, Fidrmuc finds that most post communist countries have not regained their levels of output since having liberalised in 1990s. Kolodko (1999) also points out that the widely held assumption that moving a country from a socialist economy to a market economy, would result in improvements in competitiveness and efficiency in the former soviet economies, within a short time and eventually lead to fast growth, have not occurred.

In contrast, according to Piasecki and Wolnicki (2005), the transitioning recession lasted much longer than anticipated, economic contraction was deeper than initially expected, while the eventual economic recover, in most cases did not turn out to be as smooth as proposed by government and international organisations. In contrast to the speedy recovery and strong growth, the economic contraction and drop in output led to a series of transitional issues, known as the Great Transitional Depression, which occurred in both Russia and Ukraine (Kolodko, 1999). Wilson et al (2002) also highlights the drop in GDP of post soviet states within the first decade of transition, as their weighted GDP for the 25 former soviet countries, still stood at around 65% of what they were initially. The output decline was unexpected, whilst the outcomes of these activities stirred the perception of international and domestic onlookers

According to Piasecki and Wolnicki (2005), the relationship between liberalisation and economic development, is generally hard to determine objectively, which depends highly on the state politics and the relationships it has to other countries. In contrast to theoretical underpinnings that globalisation could create opportunities for job creation, export expansion, and solve human development issues such as education, housing, environmental and health issues, it does not actually happen that way. International corporations are driven mostly to operate in developing countries, due to their cost savings measures, they actually invest in these regions because they are of lower cost, therefore decreasing their emphasis to contribute toward these measures. In terms of job creation and export expansion, developing countries actually offered their foreign investors higher tax holidays, subsidies, and various other incentives that reduce the net positive effect that is theoretical attributable to globalisation. According to globalisation critic, Chang (2002), the key issue for globalisation in developing and transitioning economies, is the deepening of the gap that occurs within finance and investment internationally, and the absence of relevant institutions that are capable of managing and enacting control over these liberalisation processes.

According to Treisman (2000), corruption is also a likely occurrence of trade liberalisation; especially in instances whereby the liberalisation is not extensive enough. For instance, if trade reforms are not accredited by international standards, then corruption may arise. Tanzi (1998) further argues that removal of barriers to entry, which were predominantly imposed by national barriers, may be effective, but does nothing to remove predominant barriers imposed by states and local governments. Tanzi further states that trade liberalisation has created new opportunities for corruption, as it increases the chance that bribes would be paid in order to obtain foreign contracts, privileged access to certain markets and tax incentives. Politicians that wish to be re-elected may also increase their chances by awarding contracts to foreign firms that offer bribes, which could in turn increase their financing for campaign (Giavazzi and Tabellini, 2005).

However, several other theorists have downplayed the effect of corruption. Krueger (1974) advocates that countries that are open, measured in terms of their share of imports in GDP, have lesser options of corruption, as the opening of trade barriers decreases the incentive for importers and custom officials to exchange bribes. Once trade barriers are open, local firms have to compete with foreign firms, reducing the economic advantage of local firms, and reducing the need for corruption. Thus, greater openness within an economy may reduce the possibility of corruption, as the more trade barriers there are, the more corruption there is (Treisman, 2000).

e. RESEARCH QUESTION AND HYPOTHESIS

Based on the literature review, it can be concluded globalisation has been widely seen by theorists and stakeholders alike, as the most suitable solution for transition and developing countries aiming to improve economic growth and human development, and also as a method to enhance trade relations between developed countries and the rest of the world. However, mixed reviews exist with respect to true importance for transition economies, and how exactly they could achieve relevant results.

The following research question has therefore been coined with reference to the progress of transition within Kazakhstan. To what extent is market liberalization beneficial or detrimental for economic and human development in Kazakhstan?

Based on the deductive methodology outlined further within the Methodology chapter, the following are the hypotheses that the research question has been based on, and this study would aim to verify.

Hypotheses 1

Trade liberalisation has had a net positive effect on social wellbeing and quality of life of residents within Kazakhstan.

Hypotheses 2

Trade and market policies have:

Positively influenced economic growth in terms of GDP, GNP and Per Capita Income
Reduced corruption within Kazakhstan

Hypotheses 3

Positive economic growth within Kazakhstan is beneficial to:

Domestic Savings
Foreign investment inflow


3.METHODOLOGY AND HYPOTHESIS TESTING

a. RESEARCH APPROACH

This methodology section aims to explain the procedures through which the aforementioned research question was answered by testing each hypothesis. The hypothesis has been coined based on extensive literature research regarding the topic of economic growth and human development within Kazakhstan, a transitioning economy. This research would adopt a deductive approach, which aims to verify each hypothesis by gathering and analysing quantitative and objective data. Though the general methodology of the dissertation would be to compare empirical data against existing literature, as proposed in the definition of the deductive approach by Babbie (2004), each hypothesis would include different forms of data gathering and analyses methodology, as they aim to measure slightly different variables.

However, each dependent and independent variable has been chosen based on extensive literature research, and each is important in answering the research question. Based on the question, the following have been depicted as the dependent variables: Economic growth and Human Development. Dependent variable 1, Economic Growth (EGRW) would be measured in terms of GDP growth, while Dependent variable 2, Human Development (HDEV) would be measured with respect to Kazakhstan’s Human Development Index over the past couple of years. These dependent variables are uniform and would be incorporated in the appropriate hypothesis testing. The Independent variable in this study would be Trade Liberalisation (TLIB). The research question is based largely on whether the occurrence of trade liberalisation in Kazakhstan, a transitioning economy, has been beneficial or detrimental to both dependent variables, therefore it is assumed that an increase in Trade Liberalisation that has occurred over recent years, would have had an effect on both dependent variables.

According to Salih (2005), Trade Liberalisation within an economy is subjective, as the processes and policies that one country enacts is different from another, all of which could affect human development and economic growth. Therefore the Index for Economic Freedom published yearly by Heritage.org and the Wall Street Journal, have been utilised as an effective measure of the degree of trade openness within an economy, as recommended by Gwartney and Lawson (2003). This index measures the degree of trade freedom, monetary freedom, government size, fiscal freedom, business freedom, financial freedom, freedom from corruption, labour freedom and property rights of all countries on a scale of 1 – 10, total scores are collated to give an overall ranking ranging from 1 – 100. Countries that have a ranking closer to 100 are more conductive for doing business by both domestic and international firms. Gwarney and Lawson (2003) note this ranking method as an effective method of ascertaining the level at which an organisation has liberalised its markets. Data from 2000 – 2009 would therefore be sourced from heritage.org.

However, since Salih (2005) has noted that trade liberalisation is subjective, it would be necessary to account for other factors that could also affect the rate at which liberalisation affects economic and human development growth, irrespective of the country’s international rating, thus the following Control Variables have been identified.

Corruption (CRPT): As identified earlier by Foo (2005), the level of corruption within a country could denote whether investors are willing to invest. Corruption in some countries is so widespread that foreign companies need to bribe their way into markets (Bennett and Dixon, 1995), therefore impacting hugely on human development, hence its inclusion. Data for this variable would be sourced from Transparency International Corruption Perception Index from 2000 – 2009.

Domestic Savings (DSAV), and Foreign Direct Investments (FDIV): These are all independent control variables that are useful in explaining the eventual effect that economic growth has on the economy. Foo (2005) theorises that domestic savings is a side effect of the benefit of trade openness, which also promotes FDI, as financial intermediaries have more funds to lend to foreign investors who want to engage in domestic services. The availability of domestic savings also ensures that banks can choose the right investment opportunities with their clients, which subsequently improves investment productivity (Kolodko, 1999). Data for domestic savings would be gathered from The National Bank of Kazakhstan, whilst FDI data would be gathered from UNCTAD.org. The data would be gathered over a 10 year period from 2000 -2009, thus constituting 10 observations each.

The following table contains data has been gathered and analysed for the aim of testing each research hypothesis.

Table 1: Figures utilised for hypothesis testing

TLIB

HDEV

GDP growth (annual %)

CPI

Gross domestic savings (% of GDP)

FDI Net Inflow ($bn)

2000

51.8

0.758

1.098

3

25.64

1.28

2001

52.4

0.768

1.233

2.7

25.82

2.83

2002

52.3

0.779

1.331

2.3

27.24

2.59

2003

49.7

0.789

1.424

2.4

31.07

2.09

2004

53.9

0.800

1.52

2.2

34.85

4.16

2005

60.2

0.810

1.617

2.6

39.79

1.97

2006

59.6

0.821

1.724

2.6

44.61

6.28

2007

61.1

0.831

1.813

2.1

42.45

11.13

2008

60.1

0.842

1.845

2.2

54.58

14.65

2009

61

0.852

1.855

2.7

55.89

19.06

Data Sources

TLIB: Index of Economic Freedom, Heritage.org, 2010

HDEV: UN Human Development Index. www.undp.org, 2010

CPI: Corruption Perception Index, Transparency.org, 2010

GDP Growth, Gross Domestic Savings, and FDI Net Inflow: WorldBank.org, 2010

b. HYPOTHESIS TESTING

Hypotheses 1: Trade liberalisation has had a net positive effect on social wellbeing and quality of life of residents within Kazakhstan.

The UN Human Development Index has been utilised in measuring the social wellbeing and quality of life, according to the methodology through which it was measured (UN, 2010), and supporting arguments by Noorbakhsh (1998). Trade Liberalisation data has been obtained from Heritage.org as initially described. 10 year quantitative data have been obtained from their respective websites and plotted against each other in SPSS. Correlation analyses were then conducted on both variables in a bid to determine how they were related. Results would be outlined in a table, and positive or negative correlations, significant at the 0.05, and 0.01 levels, would verify of discredit the hypothesis. Lack of significant correlation would also disprove the hypothesis.

Hypotheses 2: Trade and market policies have positively influenced economic growth in terms of GDP; and reduced corruption within Kazakhstan.

This hypothesis would be tested with Economic Growth (EGRW) being the dependent variable, and Trade Liberalisation (TLIB) and Corruption (CRPT) as independent variables. Fries and Taci (2002) depict that trade liberalisation and corruption should have significant contributing influences on the level of economic growth within Kazakhstan. Linear regression analyses would thereby be conducted on all observations, with the aim of ascertaining the extent to which these variables influence one another. The regression analysis would be conducted by plotting the independent variables against the dependent variable, on a scatter diagram, and the results would be displayed on a Scatter Diagram, with a Linear Line showcasing the Coefficient of Determination. Regression results with a high coefficient of determination would illustrate a dependent variable (EGRW) that is highly influenced by its independent variables, and vice versa.

Hypotheses 3

Positive economic growth within Kazakhstan is beneficial to:

Domestic Savings
Foreign investment inflow

Correlation studies would be conducted on the level of economic growth, in terms of GDP Growth, and data on the level of domestic savings and FDI inflow within Kazakhstan. Results would be displayed as Tables within the Results chapter, and would be crucial in explaining the hypothesised relationship between all three variables.

c. RELIABILITY AND VALIDITY

Data for this study, as illustrated in Table 1, has been obtained from the statistical websites of multinational organisations such as the United Nations, World Bank, Transparency International and the Heritage Foundation, all of which gather data from macroeconomic indicators in individual countries, and utilise them in establishing indices and rankings. Due to the widely available nature of this data, and the manner in which they have been gathered, it could be concluded that the data gathered for this data is reliable. There has been no observer bias or error in gathering the data, as they have been derived and downloaded directly from their respective sources.

The manner in which the hypotheses have been tested are in accordance to statistical principles and previous studied conducted by Fries and Taci (2002), who then stated that correlation and regression studies were one of the most commonly utilised method of determining changes in macroeconomic data, and their effect on other variables. Therefore, based on our utilisation of regression and correlation statistical analyses in statistical analyses, we believe the results of this study are valid.

d. RESEARCH LIMITATIONS

The following are the limitations inherent in this research:

Inability to gather data on variables that extend more than 10 years, preferably 20 years, as most statistics website do not currently have much data on Kazakhstan.

Data on financial intermediaries and central bank independence in Kazakhstan, over the ten-year period, could not be easily derived from these statistical websites, or that of the National Bank of Kazakhstan, which then limited our ability to measure the impact of these factors on economic growth.

Policy makers within Kazakhstan could not be easily interviewed in order to have a qualitative point of view on the state of economic growth in Kazakhstan, as opposed to quantitative analyses on data easily obtainable from statistical websites.


4.RESULTS

This chapter is structured around the three hypotheses currently being tested. Tables or graphs would be utilised to show the results of analyses, while a commentary would follow on what these results actually mean, and whether or not they verify or discredit the initial hypothesis.

a. HYPOTHESIS 1

Figure 1 illustrates the growth in economic freedom that has occurred in Kazakhstan over the past 12 years, when data was first being gathered. In 1998, Kazakhstan had an Economic Freedom Index of 41.7, which has growth by 46.28% to 61 in 2010. Linear correlation analysis was conducted on the values of Trade Liberalisation in Kazakhstan, derived from the Index of Economic Freedom (heritage.org), and their Human Development Index value for the past 10 years (2000 – 2009). The results are illustrated in table 2.

Figure 1: Kazakhstan Index of Economic Freedom (1998 – 2010). Source: Heritage.org

Table 2: Correlation between Trade Liberalisation and HDI

Trade Liberalization: Index of Economic Freedom

Human Development Index

Index of Economic Freedom

Pearson Correlation

1

Sig. (2-tailed)

N

10

Human Development Index

Pearson Correlation

.874**

1

Sig. (2-tailed)

.001

N

10

10

**. Correlation is significant at the 0.01 level (2-tailed).

The results from the Pearson Correlation illustrate that the relationship between Trade Liberalisation, in the form of Economic Freedom within Kazakhstan, is directly proportional to their Human Development Index. This illustrates that growth in trade and increased economic freedom, has led improved human development. Thus confirming hypothesis 1.

b. HYPOTHESIS 2

The second hypothesis is centred on ascertaining the effect that Economic Growth, measured in terms of GDP Growth, and Trade Liberalisation has affected Corruption Perception within Kazakhstan. GDP growth is a percentage that fluctuates yearly depending on the level of economic activity within Kazakhstan, and is a nominal data, compared to ordinal data such as Corruption Perception and Trade Liberalisation Index. Therefore, the GDP growth rate measured in has been calculated against an initial value of 1.Therefore if the GDP growth for 2000 had been 9.8%, then the value plotted in this graph would have been 1.098, and if after that, it was 9%, then the value would have been 1.233% and so on. Those figures were plotted against the Index of Economic Freedom derived from heritage.org to give the scatter diagram shown below.

Figure 2: Scatter Diagram of GDP Growth and Trade Liberalisation

Figures from the Figure 2 illustrate a very steep linear regression diagram. The coefficient of determination (R2) shown in the diagram, has a value of 0.773, thus illustrating that up to 77.3% of the change in GDP Growth can be explained through increased trade openness within Kazakhstan. Thus confirming the first part of Hypothesis 2, which states that Trade and market policies have positively influenced economic growth in terms of GDP. Using the formula presented above y=0.052x – 1.3792, the likely growth in GDP could be determined based on the level of trade liberalisation alone. Where x = Level of Trade Liberalisation, and Y is GDP Growth.

For instance, if the Index of Economic Freedom were to enter reach 70 for Kazakhstan, then the likely GDP Growth would be 0.052 * 70 – 1.3792 = 2.2608. Obtaining the percentage difference between 2.2608 from the previous year’s figure (as calculated earlier), would give the GDP Growth. For instance in 2009, Kazakhstan had an Index of 61 for trade liberalisation and GDP Growth figure of 1.855 (based on my calculations). Therefore, if it were to rise to 70, then the country could experience a growth rate of 21.87% from its current rate.

Figure 3 represents the second part of Hypothesis 2, in which the Index of Economic Freedom (Trade Liberalisation) is plotted against the Corruption Perception Index, in a bid to determine how opening trade barriers could impact corruption.

Figure 3: Scatter diagram of Corruption Perception and Trade Liberalisation

The results from the scatter diagram shown illustrate that Trade Liberalisation and Corruption have a less steep linear relationship, with a coefficient of determination of only 3.75%. These figures show very low correlations between corruption figures and that of trade liberalisation, and thus show that trade liberalisation in now way proportional to the rate of corruption within Kazakhstan.

c. HYPOTHESIS 3

The third and final hypothesis is based on the relationship on the relationship between GDP Growth, Domestic Savings and FDI Net Inflow. It was hypothesised that as the economy grows, it would have a beneficial effect on domestic savings within Kazakhstan and the FDI inflow into the country by foreign investors. Correlations studies were conducted on all three figures initially shown in Table 1.

Table 4: Relationship between GDP Growth, Gross Domestic Savings and FDI Net Inflow

GDP Growth Rate

Gross Domestic Savings

FDI Net Inflow ($bn)

GDP Growth Rate

Pearson Correlation

1

Sig. (2-tailed)

N

10

Gross Domestic Savings

Pearson Correlation

.938**

1

Sig. (2-tailed)

.000

N

10

10

FDI Net Inflow ($bn)

Pearson Correlation

.805**

.892**

1

Sig. (2-tailed)

.005

.001

N

10

10

10

**. Correlation is significant at the 0.01 level (2-tailed).

Results from the correlation studies illustrate that GDP growth is indeed beneficial to Gross Domestic Savings and FDI Net Inflow, as all figures are highly proportional, being significant at the 0.01 level. This analysis confirms both sections of Hypothesis 3, thus illustrating that as the GDP grows within Kazakhstan, the domestic savings is likely to grow, and so is the FDI by international investors.


5.DISCUSSION AND CONCLUSION

a. STUDY AND RESEARCH QUESTION RATIONALE

The main objective of this study has been to ascertain how adopting multinational trade policies have guided economic and human development growth within Kazakhstan over the past decade that the country has transitioned from a socialist economy to a market economy. This research objective, in conjunction with the discussed literature review has led to the following research question: “To what extent is market liberalization beneficial or detrimental for economic and human development in Kazakhstan?” The decision to write on the effect of liberalisation on Kazakhstan was influenced by the writer’s experience with transitioning economies and vague understanding of Kazakhstan, its oil rich resources and the sudden upsurge in FDI recently.

Trade liberalisation has been described as a major facilitator of wealth in all countries, developed, developing or transitioning economies. Developing and transitioning countries could achieve economic growth by opening up their borders to international trade, and ensuring international companies can have unrivalled access to their markets and cheaper labour resources; whilst developed countries could benefit by exporting their products into more markets, or producing their products cheaper within these regions. It affects the workforce within developing countries by creating more specialised jobs that require highly skilled labour and pay higher, whilst also assisting small businesses by importing resources and increasing their competitive power. However, contradicting views exist on its effect on human development and social welfare within the developing and transitioning economies.

Based on the literature, it was found that globalisation has indeed been rapid and widespread amongst several countries, especially those that claimed independence right after the fall of communism in 1991. A wide number of these former soviet countries claimed independence and begun liberalising their markets, however, production output fell considerably, while the rate of economic growth was about 25% – 75% of what it was previously. There was a lack of financial intermediaries and entrepreneurship. Foreign investors were weary about investing in these previously unexplored markets, while state owned enterprises were ineffective, previously been given several lifelines by state owned banks. The onus in recent years has been on these countries including Kazakhstan to build their markets, set up a central bank, and encourage foreign investment. This has even been more rapid for Kazakhstan that is rich in mineral resources such as Oil and Gas, however, what effect has it had on economic growth, and most importantly, human development within Kazakhstan.

b. SAMPLING APPROACH

Due to the complex nature of data required to answer the research question and achieve its objectives, primary data could not be obtained for this study due to its unfeasibility. Gathering primary data would have entailed gathering individual data from Kazakhstan, some of which may have been difficult to obtain, then analysing these. However, the United Nations, World Bank and several other websites had a number of indices that could be utilised for accurate comparison of human development and economic growth data in all Kazakhstan, most notable of which were the Human Development Index, Corruption Perception Index and Index on Economic Freedom obtained from these websites.

Hypotheses were conceptualised from the literature review, variables to be measured were identified, and data on these variables were gathered from several websites. This study measured the effect of trade liberalisation on human development and economic growth, and thus compared the growth of indices such as those of economic freedom, corruption, GDP Growth and Investment Inflow, against each over, over a period of 10 years, to find an appropriate answer for the research question.

c. THE RESEARCH ANSWER

Answering the research question would entail a comparison of the literature review, and results derived from data analysis, all in a bid to reach a logical coherent conclusion on how trade liberalisation has affected economic growth and human development. The hypotheses being studied have been verified with the exception of one, the effect of trade liberalisation on corruption. Therefore, the structure of this subchapter would be in accordance with the research question, which is focused primarily on ascertaining the effect of trade on 1. Human Development, and 2. Economic Growth.

i.Trade Liberalisation and Human Development in Kazakhstan

The United Nations defines Human Development as being composed of three major factors. Firstly, it is calculated based on life expectancy at birth; secondly, it is measured based on the adult literacy rate, and lastly, the standard of living, as illustrated by the gross domestic per capita income. These figures are used jointly in calculating the human development index, and have been utilised in measuring the social wellbeing and quality of life in member countries (UN, 2010). Residents of countries with high human development index, usually have a better life expectancy, education and standard of living, and therefore can live comfortably without poverty worries. According to Cukierman et al (2000), the objective of market liberalisation in developing or transition economies is to improve social wellbeing and quality of life of its residents, in terms of education, social amenities, small business growth, and other human development factors, which could then join together in building a nation, with respect to its individual citizens.

Results obtained from the analysis of Hypothesis 1, show that trade has indeed grown in Kazakhstan by at least 46% over the past 12 years, which gives insight into the level of economic freedom the country has been witnessing. Correlation analysis between the changes to the Index of Economic Freedom and the Human Development Index from 2000 – 2009, show that these figures are directly proportional, illustrating that human development and trade within Kazakhstan has been growing at a directly proportional pace. These findings illustrate that for every measure through which Kazakhstan makes its market free, human development in terms of education, standard of living and life expectancy is also greatly improved, thus confirming Cukierman et al’s view on the benefits of market liberalisation. The findings also coheres with Foo (2005) who argues that the ability to maintain and generate wealth enables developing countries to acquire relevant infrastructure, grow and develop faster, thus resulting in a better socioeconomic environment for the population.

ii.Trade Liberalisation and Economic Growth

Economic growth can be calculated through a number of indices such as GDP, GNP, Production Output and Per Capita Income, but for the sake of simplicity and time constraints, this study adopted GDP Growth as the sole measurement of economic growth within Kazakhstan. Figures were obtained from the World Bank statistical website, and analysed against other indices in order to answer Hypothesis 2 and 3. Several studies found significant correlation between liberalisation and economic growth in developing countries (Kolodko, 1999; Fidrmuc, 2002), therefore this study decided to test this theory on Kazakhstan. Results derived from linear regression diagram in figure 2 show that GDP Growth and the Index of Economic Freedom are indeed highly related, as 77% of the change in GDP Growth could be explained through changes in Trade Liberalisation.

These results confirm previous empirical findings, and also answer another core question in this research, which is on the effect that market liberalisation, has on economic growth. From the analyses in Figure 2, it is obvious that for every increase in the economic freedom, there is a corresponding, equally steep increase in GDP Growth. Trade Liberalisation theoretically coincides with the development and liberalisation of financial institutions within the home market, therefore these findings confirm that of Rajan and Zingales (1998) who found a positive relationship between financial development and economic growth. It also confirms that of Kennedy (2002), who states that the manner in which a country pursues economic and political liberalisation determines its growth rate and development success. Kazakhstan has fully liberalised its market, whilst adopting democracy, and according to Salih (2005), democracies are effective in liberalising economies, whilst open markets are effective in expanding trade. Both of these working in harmony helps reduce protectionism, unfavourable foreign policies and ensures an influx of international trade.

These findings are also in accordance with those of Cukierman et al (2000), who found that countries that open up their markets to foreign trade, with little restrictions, witness positive economic growth. This is as a result of the multiplier effect that trade openness has on small businesses, employment and manufacturing output, all of which contribute towards GDP. However, Kolodko (1999) asserts that this is especially important for countries that have relevant infrastructure such as transitioning economies and industrialised nations, as they could more readily compete with other developing nations. For instance, Kazakhstan has developed relevant financial and manufacturing infrastructure over recent years, so even if foreign companies were to enter its market, its local industries would still be able to compete effectively. Also, Kazakhstan’s natural resource being natural gas attracts foreign oil companies the world over, to invest in infrastructure within its nation. These contribute significantly to the FDI growth, and GDP Growth, all of which are core economic growth parameters.

Therefore based on these findings, trade liberalisation in Kazakhstan has had a positive effect on human development and economic growth, especially over the past 10 years studied. These findings illustrate that transition economies that aim to expand trade within their borders, should open up their markets to international competition, allow the entry of foreign firms, and the subsequent export of domestic products, all of which could aid in promoting GDP growth and ensuring the country has more disposable revenue to fund capital expenditure projects. This scenario is similar to that of other countries such as India, China and some other countries in South East Asia, who liberalised their markets in recent years (especially China in 2001), and experienced astronomical GDP Growth as a result.

iii.Secondary Factors such as Corruption and FDI

If trade liberalisation in Kazakhstan has been beneficial for human development and economic growth, then what are the side effects it has had on secondary factors such as corruption, domestic savings and foreign direct investmentsAnswering this question entailed having a look through the literature and conducting analyses on data gathered. Results in Figure 3 in which the Corruption Perception Index of Kazakhstan was plotted against its Index of Economic Freedom, show that there is no significant relationship between both indices, therefore the corruption perception of a country is in no way influenced by its economic freedom, but more through internal controls and law enforcement as illustrated by Fries and Taci (2002). These findings contradict that of Foo (2005), who argued that as trade within a country opens to external parties, it gives government and custom officials less incentives to accept bribes, since import from other countries and entry by foreign companies are legalised.

Hypothesis 3 aimed to measure the impact that positive economic growth had on domestic savings and foreign investment flow, and the positive results derived, as shown in Table 4, illustrates that there is a directly proportional relationship between GDP Growth, Gross Domestic Savings and FDI Net Inflow. Thus illustrating that as Kazakhstan experiences more GDP growth, the domestic savings into financial institutions increases, whilst the amount of money received from foreign multinationals also increases. These findings confirm those of Fidrmuc (2002), who reported that in addition to pure economic growth, trade liberalisation also influences Investment Inflow, and Domestic Savings.

The impact on FDI Net Inflow and Domestic Savings has several benefits for the Kazakhstan citizen and economy as a whole. Firstly, an increase in FDI Net Inflow illustrates that more foreign companies are entering into the Kazakhstan market, which promotes competition within the market, lead to more employment and also introduce new goods and services. The introduction of competition would aid small and medium indigenous businesses to ramp up their operations and compete more effectively, thereby improving the business environment in Kazakhstan. These new companies would also employ more people, preferably skilled labour and pay them competitive salaries, thus increasing the average standard of living. The introduction of new products and services would improve the sorts of goods available to the average citizen, which could range from Broadband Services, to Private Banking facilities, all of which would promote better comfort amongst residents.

Secondly, an increase in Domestic Savings illustrates that more individuals and businesses have more expendable funds, which they want to deposit into banks as savings. An increase in domestic savings help commercial banks grow, enables them loan funds to businesses, and supports the investment industry within Kazakhstan by ensuring the average citizens have access to relevant investment vehicles. Commercial banks typically by accepting savings from individuals as a specified interest rate and lending them to other individuals and businesses at a higher interest rate, hence an increase in domestic savings, increases the interest gain to commercial banks, and their profit. Hence growth. It also enables them to loan funds to businesses, which allows these businesses to obtain capital to grow their businesses, thus supporting the entrepreneurial and commercial society within Kazakhstan, and lastly, disposable savings would create promote the stock market industry and other investment vehicles, as individuals have relevant funds to invest. All of these factors, are as a result of economic growth, and in turn support economic growth and human development further.

d. CONCLUSION

The main aim of this study has been to ascertain the effect of trade openness on economic growth and human development in Kazakhstan. Economic growth has been measured in terms of GDP growth, while Human Development has been depicted in the form of Human Development Index, calculated yearly by the United Nations. Results obtained from linear correlation and regression analysis have shown that trade liberalisation calculated in the form of Index of Economic Freedom is indeed directly proportional to GDP Growth, Human Development, FDI Net Inflow and Domestic Savings. However it has little or no relationship with the level of corruption within the country.

Based on these results, it could be concluded that trade liberalisation is indeed beneficial for transitioning economies as it positively influences human development and economic growth, this economic growth in turn promotes investment inflow and domestic savings within the country. Therefore transitioning economies intending to achieve these feats should deepen their liberalisation measures in order to gain considerable advantage in the international economy.


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7.APPENDIX

Appendix 1: Data utilised for statistical results

YEAR

TLIB

HDEV

GDP growth (annual %)

CPI

Gross domestic savings (% of GDP)

FDI Net Inflow ($bn)

2000

51.8

0.758

1.098

3

25.64

1.28

2001

52.4

0.768

1.233

2.7

25.82

2.83

2002

52.3

0.779

1.331

2.3

27.24

2.59

2003

49.7

0.789

1.424

2.4

31.07

2.09

2004

53.9

0.800

1.52

2.2

34.85

4.16

2005

60.2

0.810

1.617

2.6

39.79

1.97

2006

59.6

0.821

1.724

2.6

44.61

6.28

2007

61.1

0.831

1.813

2.1

42.45

11.13

2008

60.1

0.842

1.845

2.2

54.58

14.65

2009

61

0.852

1.855

2.7

55.892

19.06

Note: There is no appendix beyond the data provided in the table above, as most of the analyses were conducted from those figures.

Categories
Free Essays

Free Human Rights Dissertation

A critical analysis of the effect of Article 8 and Article 10 of the European Convention on Human Rights on newspapers in the UK with an emphasis on libel laws

Abstract

This dissertation is a critical analysis of the effect of both Article 8 and Article 10 of the European Convention of Human Rights on the media in the UK with a special emphasis on the press and libel which has absorbed most of the advances the Human Rights Act enshrined into UK law in 1998. The hypothesis of this study is that although both rights have been absorbed into the UK neither appeared into a vacuum and furthermore they have not been absorbed with the equality which the rhetoric of the judiciary would suggest. There is a ‘continental drift towards privacy’ clearly prevailing in the UK and the effects are being most sharply felt by the press who are so often at the vanguard of free speech for themselves and freedom of expression for all. In no area can this be demonstrated more clearly than in the area of libel which has sought to strike a balancing exercise between the two rights. The libel laws are heavily stacked towards the individual and act as an obstacle to freedom of expression. This dissertation will carry out extensive secondary case research to establish the effects of convention arguments in the courts in libel actions and attempt to divine the future direction and analyse the detailed recommendations of the Coalition Government in the Draft Defamation Bill of 2011.

Introduction

The Human Rights Act 1998, now woven into the fabric of the British legal landscape, represents a sea change in the endless dance of death between freedom of expression and the right to privacy between the state and the media, paparazzi and celebrities, journalists and editors and now even between social networking employees and employers. But just how far has the UK comeThat Britain, traditionally a country without any law of privacy[1], now has an anchor for the right to privacy and the freedom of expression in the European Convention on Human Rights can be partially attributed to a media which has, ironically, committed some of the gravest sins against privacy: for example taking pictures of the (then) retired actor Gordon Kaye in 1991 while he was recovering in hospital after sustaining severe head injuries[2]. The Court of Appeal ruled that there was no satisfactory legal remedy for what the judges admitted was a “monstrous invasion of privacy”:

“Any reasonable and fair-minded person hearing the facts which Glidewell L.J. has recited would in my judgment conclude that these defendants had wronged the plaintiff. I am therefore pleased to be persuaded that the plaintiff is able to establish, with sufficient strength to justify an interlocutory order, a cause of action against the defendants in malicious falsehood. Had he failed to establish any cause of action, we should of course have been powerless to act, however great our sympathy for the plaintiff and however strong our distaste for the defendants’ conduct. This case nonetheless highlights, yet again, the failure of both the common law of England and statute to protect in an effective way the personal privacy of individual citizens.”[3]

Bingham L.J uses the settled position in Germany to contrast the tortured reasoning that the British courts have had to apply to invasions of privacy for generations. The confusion of the court in Kaye is a good example of when overlap occurs between the various actions that UK law has developed to deal with issues of privacy. The plaintiff in Kaye argued four separate ways: Libel, malicious falsehood, trespass to the person and passing off. This can be contrasted against the position in France where strong privacy laws enshrined in the constitution inhibit free speech and allowed Francois Mitterand to conceal his illegitimate daughter until she reached the age of 19[4]. On the flipside of privacy, Britain has a very self congratulatory proud tradition of extolling the merits of free speech and the freedom of the press, a freedom, as Robertson forcefully argues, which was, prior to the Human Rights Act, a hollow concept that any government could detract from at whim[5]. As a corollary, privacy could be protected indirectly through the development of laws such as trespass and official secrets while freedom of speech could be eroded indiscriminately to bolster a state that was seeking to protect its own interests. Robertson observes on this paradox:

“’Freedom of the Press’ remained a potent phrase, but the fact that it was protected by unwritten convention rather than by a constitution meant that there was no external brake to stop Parliament and the courts moving to restrict it in particular ways, as the mood and temper of the times seemed to require. Britain remained a country where ‘everything is permitted which is not specifically prohibited’ but the specific prohibitions became much more numerous, because they never had to justify themselves against the standards set by Article 10.”[6]

The final sentence of Geoffrey Robertson’s observation suggests that article 10, now widely cited in the British courts and developed by an illustrious line of European jurisprudence from Strasbourg, is now a new standard and represents a paradigm shift. Although the Human Rights Act came into force in 1998 it is 1979 which marked the turning of the intellectual tide when the European Court of Human Rights delivered a devastating judgement against the British courts’ attempts to suppress the publication of a remarkable piece of investigative journalism which exposed the harmful effects of the drug Thalidomide.[7] Although, to a greater degree than article 8[8], article 10 is qualified[9] and subject to certain restrictions there is a further section in the Human Rights Act itself which demonstrates the importance of freedom of speech and which distinguishes the right from the right to privacy:

“(4) The court must have particular regard to the importance of the Convention right to freedom of expression”.[10]

It is crucial to note that s.12(4) does not give article 10 what is called “presumptive priority”[11] over other rights, most notably privacy, despite the judicial rhetoric and that individuals cannot currently bring a free-standing cause of action based on ECHR (newspapers are private bodies) but must instead “anchor” their claim to an existing common law action, such as breach of confidence: the Human Rights principle affect has been one of absorption of convention rights into existing common law actions rather than creating a new tort of privacy[12] . This dissertation will critically assess privacy in the UK and its’ interplay with freedom of expression both before and after the passing of the Human Rights Act in the UK in 1998 through the lens of the press: are they having to yield to privacy in article 8 and has the human rights act only had a modest impactOr are they able to report fearlessly in the knowledge that article 10 will reinforce their positionThe hypothesis of this study is that the Human Rights Act has had a huge impact on the competing rights although, considering the history and the development of breach of confidence, a framework for protecting privacy at common law already existed[13] and with regard to freedom of expression there is a long line of pre Human Rights Act judicial dicta which has emphasised the importance of this right[14] although notably Robertson pours scorn on what he insists is purely rhetoric which obscures the fact there has been no generalised right of free expression since the Magna Carta[15]. In short the Human Rights Act and articles 8 and 10 did not step into a vacuum and must be analysed accordingly though it is debatable to what extent freedom of expression was protected in the UK prior to 1998. In determining how to balance the competing rights, however, the HRA has been vindicated in providing a framework although we are still a long way from a situation where the media can speak freely and in some areas, such as libel for example, the right to privacy is winning to the detriment of us all; the “chilling” effect on free speech still very much evident and there is no prospect of a thaw even with the promising Draft Defamation Bill in 2011[16].

The tortured history of privacy and free speech in the UK in chapter 1 will be analysed before examining both of the fundamental rights at stake in chapter 2. Chapter 3 will address the law of libel in the UK and secondary case research will be conducted into libel cases involving newspapers and the mediafrom 2008 to 2011. This chapter will also provide an exhaustive look at the latest case law in relation to libel including the cases of Mr.Justice Eady up to his very latest in 2011[17] as well as case studies of important libel cases including the seminal Max Mosley and the News of the World trial[18] which was Mr.Eady’s most high profile case and triggered a barrage of criticism. This chapter will conclude by determining whether the claim by Paul Dacre of the Daily Mail, that Mr.Justice Eady is responsible for eroding free speech, is true[19]. Chapter 4 looks at the position in France in order to extract any useful lessons for privacy reform in the UK while chapter 5 draws all the strands of this study together to assess the impact of the Human Rights Act, in the shape of articles 8 and 10, on privacy and free speech in the UK. The striking case of Wikileaks will also be examined in this chapter alongside the growth of the so-called “super injunction” as well as the much welcomed reforms of the coalition government[20]. Finally chapter 6 will provide recommendations for the future based on conclusions drawn from the previous five chapters. With the historic multitude of laws enhancing privacy the role of the human rights act in promoting freedom of speech is remarkably important and Robertson makes an inspired case for article 10:

“The Human Rights Act 1998…provides what previous governments, and generations of judges, have never believed politic to entrench either in statute or common law, namely a guarantee of freedom of expression, a promise that “speech” will have a presumption made in its favour by any court invited to suppress it. This covenant – which enters British law by way of the incorporation of Article 10 of the ECHR – reflects the core belief of the eighteenth century republican revolutions in France and America, adopted as an article of faith in modern Human Rights instruments, that freedom of speech is a good in itself, an essential pillar of democratic order. This is the free speech principle, which assumes that liberty is best secured by a system that protects utterances irrespective of their merit, because in a free market of ideas and opinions the good will triumph over the bad”[21].

This study will focus on the press as their struggle for free speech is a front in the battle for freedom of expression: the two are often conflated and it is the press, with its resources, who is often in the courtroom arguing for publication[22]. Thus there is no better prism through which to evaluate the impact of articles 8 and 10 of the ECHR as private individuals do not have the vast resources, since legal aid is not available, to initiate libel claims or contend with the costs of victory or defeat[23].

Chapter 1: Background and overview

A. A right to Privacy in the UK prior to 1998?

Privacy in the United Kingdom has never enjoyed the protection of statute and has remained an enigma that is referred to by convention rather than constitution[24]. Countries such as France[25], Germany[26] and America[27] have a more defined right to privacy and are often seen as providing more constitutional protection than Britain, with its’ unwritten constitution, ever has despite the levelling of the European playing field in the 21st century. The Younger Committee on Privacy met in 1972 to address this very question but the introduction of such a right was abandoned despite the committee recommending that “privacy requires additional protection”[28]. The Report followed the introduction of a Private Member’s Bill in the House of Commons that ultimately was rejected[29] and indeed there have been a few privacy Bills that have foundered in the House amid ideological ruins[30]. The influence of the report was very profound and indeed, in the words of Bradley & Ewing, was to “structure the debate for a generation”[31]. Yet it is a fallacy to say that there have been no laws that have addressed privacy to a degree. In terms of civil law: in surveillance there has been the law of trespass[32] and the regulation of interference with property[33]; in the field of private information there has been legislation to protect individual’s data[34] and also legislation for the public to have access to sensitive data held about them[35]; in the protection of trademarks, patents and copyright ideas and sensitive information are restricted from dissemination[36] as well as a whole smorgasbord of criminal laws, some ancient and obsolete[37], some common law and some statute, which have restrained newspapers[38]. The suite of laws, both criminal and civil, which enhance privacy often overlap and can influence the press although often indirectly as the anchor for a Convention Rights argument[39] which the court as a public authority under the Human Rights Act 1998 must act compatibly with[40]. The most relevant action for privacy matters in relation to the media is breach of confidence which many commentators have defined as a virtual right to privacy in all but name[41]. This equitable doctrine developed out of the case of Prince Albert v Strange[42] where the Prince had supplied various members of his family with private drawings. An employee of the prince disseminated a copy of the etchings entrusted to him to a friend. The Prince then secured an injunction against the friend and it “was held that an injunction could lie in property, trust, confidence or contract”[43]. This case is very much in keeping with the use of breach of confidence in the early half of the 20th century as a restraint on the disclosure of trade secrets[44]. Prince Albert was followed by the two cases in the 1960s that sought to clarify and define the law of breach of confidence. In Argyll v Argyll[45] confidential secrets of marriage were successfully restrained and set the benchmark for the kind of information that can be restrained even absent of a contract or a property rights violation. The classic test of breach of confidence came two years later in Coco v A N Clark (Engineers) Ltd[46] which produced the classic test, in the words of Mackenzie[47], to establish a breach of confidence: firstly that the information was of a confidential nature, secondly that it was communicated in circumstances giving rise to an obligation of confidence and finally that the information was used in an unauthorised manner[48].

This test has been gradually eroded and stripped away over the years to reveal what Mackenzie argues is a virtual right to privacy[49]. The obligation of confidence has, in particular, been relaxed from the strong bonds that were required, such as marriage[50], to mere friendship[51] sufficing to satisfy this limb of the test. In 1990 the classic case on breach of confidence arrived in the form of Attorney General v Jonathan Cape[52] which demonstrated the scope for breach of confidence to be widened to material published by the media which is in the public interest. Lord Widgery made the following observations:

“…the Attorney General has a powerful reinforcement for his argument in the developing equitable doctrine that a man shall not profit from the wrongful publication of information received by him in confidence. This doctrine, said to have its origin in Prince Albert v Strange (1849) 1 H&T.1, has been frequently recognised as a ground for restraining the unfair use of commercial secrets transmitted in confidence”[53].

The developments in the Crossman diaries saga and the Spycatcher[54] case in 1990 explicitly recognised that breach of confidence was a right to privacy in all but name but these reforms by the judiciary were halted by the Kaye case mentioned above, however, which firmly “refused to widen breach of confidence any further and reaffirmed the position that there was no law of privacy in UK law.”[55] A further dilution of the obligation of confidence occurred in Shelley Films Ltd v Rex Features Ltd[56] where, following Spycatcher and not Kaye, the concept of a reasonable man test was introduced thus making it easier to argue that the photographer in question who supplied a picture of Robert de Niro to a newspaper should have known that photography was explicitly forbidden. Five years later Laws J felt confident enough, albeit obiter dicta, to again reassert that breach of confidence was effectively a right to privacy in all but name and this was perceived to be the first signs of an emergence of breach of confidence as a right to privacy[57] two years before the Human Rights Act in 1998 came into force.

The most important case on breach of confidence so far has been Douglas v Hello! Ltd[58] which was an appeal against the decision to grant an interim injunction preventing Hello! from publishing more photographs of the Douglas’ wedding after a photographer breached the extensive security surrounding the event. The action was brought under breach of confidence coupled with a breach of privacy under Article 8 of ECHR. Although this case dragged on to 2004[59] and the Douglases’ ultimately prevailed on a breach of confidence, it is the original successful appeal against an interim injunction that prompted many commentators to proclaim a new right to privacy in the UK[60] with three of the judges in the case discussing the changing nature of breach of confidence. Sedley LJ observed:

“English law will recognise, and, where appropriate, protect, a right of personal privacy, grounded in the equitable doctrine of breach of confidence, which accords recognition to the fact that the law has to protect not only those whose trust has been abused but those who find themselves subject to an unwanted intrusion into their personal lives. The law no longer needs to construct an artificial relationship of confidentiality between intruder and victim: it can recognise privacy itself as a legal principle drawn from the fundamental value of personal autonomy”.[61]

It should be pointed that Bridge L.J’s dictum[62] which effectively restricted the privacy rights of those who actively seek publicity has been distinguished recently[63] but remains a difficult authority which those seeking to establish a breach of confidence will have to hurdle if those seeking relief have themselves wanted favourable publicity Thus the almost total abandonment of the tight controls which distinguished breach of confidence is quite evident from a test which at first required a strong bond such as marriage to impart an obligation of confidence[64], then to lesser bonds sufficing such as friendship[65], to a reasonable man test[66] and finally to Sedley LJ’s observations that this limb of the test is effectively redundant[67] as the right of privacy emerges not as something which has never been recognised before like a phoenix from the flames but rather, as Mackenzie has astutely observed, recognition of the role breach of confidence has been playing since 1849[68]. Eadie J outlines the modern position:

“Although the law of “old-fashioned breach of confidence” has been well established for many years, and derives historically from equitable principles, these have been extended in recent years under the stimulus of the Human Rights Act 1998 and the content of the Convention itself. The law now affords protection to information in respect of which there is a reasonable expectation of privacy, even in circumstances where there is no pre-existing relationship giving rise of itself to an enforceable duty of confidence.”[69]

The complementary laws outlined above such as trespass and breach of copyright all serve to augment the pivotal role of breach of confidence. The Human Rights Act did not step into a vacuum but was absorbed into existing actions such as breach of confidence: and it crucially must be analysed as such.

B. Freedom of expression and UK newspapers: last chance saloon?

The reference to the press in the UK drinking “in the last chance saloon” is derived from Sir Andrew Calcutt’s Royal Commission into the Press in 1990[70] when the then National Heritage Secretary David Mellor claimed that some parts of the media had snapped the government’s patience after numerous scandals which intruded into private grief, arguing that the media’s “sacred cash cow” of free speech should be restricted as he introduced the Royal Commission to the House of Commons[71]. Ultimately of course Calcutt came out against a new law of privacy and instead laid the foundations for the Press Complaints Commission and a code of conduct through self-regulation[72] but David Mellor’s comments deserve analysis: what was he referring to when he explicitly stated that the Press should be reined inThere is a historical common law right to freedom of expression in the UK which Laws J described as being: “…as much a sinew of the common law as it is of the European Convention for the Protection of Human Rights and Fundamental Freedoms”[73]. Lord Bingham of Cornhill, an eloquent defender of free speech, produced this classic observation:

“Modern democratic government means government of the people by the people for the people. But there can be no government by the people if they are ignorant of the issues to be resolved, the arguments for and against different solutions and the facts underlying those arguments…Where abuses are exposed, they can be remedied. Even where abuses have already been remedied, the public may be entitled to know that they occurred. The role of the press in exposing abuses and miscarriages of justice has been a potent and honourable one…Despite the high value placed by the common law on freedom of expression, it was not until incorporation of the European Convention into our domestic law by the Human Rights Act 1998 that this fundamental right was underpinned by statute.”[74]

Thus like privacy, freedom of expression was recognised if not eulogised long before the Human Rights Act arrived. Robertson’s criticisms of a notion of British free speech stems from successive governments introducing indirect privacy laws to curb the worst excesses of the tabloid and broadsheet press in chequebook journalism, the reporting of political scandals, undercover surveillance and entrapment[75]. There are myriad ways to hedge in what is left of free speech and the debate against the press enjoying untrammelled expression took on a life of its own in the 90s. The privacy furore in the mid 1990s reached what has been called “fever pitch”[76] after pictures of Princess Diana in 1993 working out in a gym were splashed across the front pages of the Sunday Mirror and the Mirror; a Sunday Times investigation in July 1994 uncovered two MP’s accepting cash for questions and in October 1994 the Guardian’s own investigation into allegations of sleaze in the Conservative Government led to the Guardian editor Peter Preston resigning from the PCC[77]. Throughout all of the times of crisis under both the Thatcher and Major governments the press only survived by clinging to the last vestiges of self-regulation: the Press Complaints Commission. The Commission was memorably attacked as concerned only in looking after its own: “a pact between the great and the good and the newspaper industry”[78] and Robertson further comments on the implications of a PCC ruling: “its adjudications are short and usually over simple, reflecting only on editors, who do not appear discomfited by its statements that they have breached a code of practice”[79]. The PCC produces a Code of Conduct that has, in the human rights era, been elevated by section 12 of the Human Rights Act 1998 under (4)(b) to a code with “indirect legal effect”[80] which renders its contents more important and gives some credibility to the much ridiculed notion of self-regulation. It has been observed that it now has a role to play in court cases involving the press and article 10:

“with respect to section 12(4) it may actually be the case that the press has shot itself in the foot. The section elevates the Press Complaints Commission (‘PCC’) Code of Practice to a position it has not occupied previously. This is of particular relevance in respect for private life cases where it has been held that where the Code has been flouted and no public interest claim is asserted, a claim to freedom of expression is likely to be trumped by Article 10(2)”.[81]

Under the Code of Conduct “there is a public interest in freedom of expression itself”[82]. Thus the Human Rights Act could justifiably be argued to have given some indirect teeth to the Code of Conduct, although not the PCC itself which continues to be seen as toothless[83], but the important point remains that which Lord Bingham made in Shayler; that although freedom of expression existed before the Human Rights Act it is only through human rights that it has been given a renewed emphasis albeit stopping dramatically short of a presumptive priority[84]. As will be seen in the following chapter on the European jurisprudence, there is a balancing exercise to be carried out between article 8 and article 10 which underpins the modern approach[85]. Furthermore, there are those who are extremely sceptical of the existence of free speech in Britain such as Geoffrey Robertson QC who argues passionately against Amos’ assertions that UK freedom of expression was the most highly evolved of rights in place before the Human Rights Act 1998 was passed[86]. Robertson points out that freedom of speech is too easily trampled on by the various laws that the courts have developed and highlights James v Commonwealth of Australia[87] as being reflective of the courts historical interpretation of a qualified right of free speech prior to the Human Rights Act. It was observed in that case that “free speech does not mean free speech”[88] but actually speech that is subject to the laws of, inter alia, defamation, blasphemy and sedition. It is difficult to disagree with Robertson’s viewpoint as he undertakes a look at the right from the Magna Carta up to the Human Rights Act and he points out that the only free speech right to be found in British constitutional law is in fact in the 1689 Bill of Rights but “belongs only to M.Ps and to peers, giving them absolute privilege against libel actions over allegations they make in the course of parliamentary proceedings”[89]. He concludes that:

“Although the European Convention, incorporated into British law on October 2nd, 2000 by the Human Rights Act (HRA), had been promoted by the spin doctor’s slogan “rights brought home”, article 10 (which guarantees freedom of expression) never has been at home in Britain. Although many other sections of the Convention, guaranteeing free trial and Habeus Corpeus and due process, owe their providence to English law, and…the “open justice” principle and rule against prior restraint were first formulated here, no generalised right of free expression, however common in rhetoric, entrenched itself in law.”

A free press has often been at the heart of arguments for free speech and the two have often been confused as, understandably, most cases on freedom of expression involve the press in some capacity and the two notions are inextricably woven[90]. The watchdog role of the press, lionised by newspapers for centuries as their raison d’etre[91], has been incorporated into the jurisprudence of the European Court of Human Rights as pointed out by Longmore LJ[92] and is referred to in countless judgements. The House of Lords has very recently reaffirmed the Reynolds public interest defence for journalists[93] and the protection of freedom of expression for newspapers, and by extension all of us, is gathering pace despite some worrying inroads into privacy.

Chapter 2: Article 8 and Article 10

A. Article 8

Everyone has the right to respect for his private and family life, his home and his correspondence.
There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

As has been pointed out above there is a duty for the courts to act compatibly with Convention rights being as they are included under the list of public bodies under the Human Rights Act 1998: their actions would be unlawful if they did not comply with the ECHR[94]. The extension of Convention rights to private law cases was described by the court in Venables v News Group Newspapers[95] as being beyond doubt and that s.12(4), in the words of Sedley LJ in Douglas, “puts beyond question the direct applicability of at least one article of the Convention as between one private party to litigation and another—in the jargon, its horizontal effect”[96]. The content of the privacy right in article 8 is very broad and has been held to cover: “…a zone of interaction of a person with others, even in a public context, which may fall within the scope of ‘private life’”[97]. In reality this means private life in physical and psychological integrity[98] and even includesthe right to choose death[99] despite the memorable submissions of the Secretary of State in Pretty: “He submitted that the right to private life under Article 8 relates to the manner in which a person conducts his life, not the manner in which he departs from it.”[100] The court disagreed with the Secretary of State in this instance, holding that a blanket ban on assisted suicide could constitute an interference with article 8(1) but that the interference can be justified as safeguarding life and furthermore in accordance with the law[101].

The courts, in respect of article 8 and the media, have adopted a two stage test for article 8 which firstly asks whether there is a reasonable expectation of privacy and if there is to balance this against a countervailing public interest in interfering with the article 8 rights[102]. On the first limb of the test, which is objective[103], it needs to be established whether the activity reported on is in the public or private domains and there are several factors to be taken into account such as absence of consent and the nature of the intrusion. In Author of a Blog v Times Newspapers Ltd[104] the blogging of the detective was clearly a public activity while by contrast in Mosley v News Group Newspapers Ltd[105]the claimant did have such an expectation given the private nature of the sexual encounters. Regarding the second limb of the test the public interest, if the first limb is engaged, must be sufficient to outweigh the interference with the article 8 rights of the claimant. Again when looking at Author of a Blog the public interest is apparent in unmasking a senior police officer as the mysterious writer of a blog which had criticised the police while in Murray v Express Newspapers[106] the public interest element was very weak in taking pictures of the children of a celebrity and the fact that an ordinary, reasonable person would consider the publication of the pictures abhorrent was significant. The public interest has an explanatory definition in the PCC Editorial Code which has, in light of s.12(4)(a) of the Human Rights Act and the elevated status if the code, been approved by the courts in their attempts to capture the public interest and if the conduct complained of is disproportionate to the aim[107]. Eady J asked a simple question to demonstrate the concept:

“The question has to be asked whether it will always be an automatic defence to intrusive journalism that a crime was being committed on private property, however technical or trivial. Would it justify installing a camera in someone’s home, for example, in order to catch him or her smoking a spliffSurely not. There must be some limits and, even in more serious cases, any such intrusion should be no more than is proportionate.”[108]

B. Article 10

Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.
The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or the rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.

The content of the right to freedom of expression is also very broad and includes not only written and oral forms of communication but also videos and internet sites[109]. Thus in the context of the press online editions are clearly included under article 10 and indisputably all printed newspapers will fall easily under article 10 which has been described as “easily engaged”[110]. The next stage in the analysis is whether there has been an interference with article 10This is also easily proved and it has been held that injunctions[111], convictions under the Official Secrets Act 1989[112] and more gravely state censorship[113] all constitute an interference with article 10. As Merris points out the situation is not always so clear cut: in the case of copyright this is but a minor interference in light of the fact that a claim under copyright which does threaten publication is not an absolute bar to publication[114].

The real hurdle in article 10 is under (2): where such an interference as found in (1) must be justified under one of the extensive grounds since almost all cases so far have proceeded with recognisable laws at common law or by statute and are prescribed by law. There are two aspects of necessity which then need to be analysed: whether the interference was “necessary in a democratic society” and whether the interference is proportionate to the legitimate aim pursued. On the both it has been observed that:

“Lord Hope in Shayler held that the restriction on the disclosure of information cannot be said to be necessary in the interests of national security unless (a) relevant and sufficient reasons are given by the national authority to justify the restriction, (b) the restriction on disclosure corresponds to a pressing social need and (c) it is proportionate to the legitimate aim pursued.”

In determining proportionality the case law has developed certain general principles which the court will pay heed to: firstly s.12 of the Human Rights Act 1998 and the importance of freedom of expression as well as the PCC Code of Practice under s.12(4), secondly the importance of the freedom of the press, thirdly the public interest and finally deference to the decision maker[115].

C. The New Methodology: Von Hannover and Campbell

Von Hannover[116]

Under s.2 of the Human Rights Act 1998 courts in the UK must take into account decisions of the European courts when considering questions of convention rights. This case marked a watershed moment in striking the correct balance between article 8 and article 10 when Princess Caroline von hannover attempted to defend her right to privacy against paparazzi and tabloid intrusions. Germany was found to be in breach of the applicant’s right to privacy under the European Convention on Human Rights by denying her a remedy in their courts for intrusive pictures taken while she was shopping[117]. A key development in this case was that aspects of von hannover’s public life were held to be under the scope of article 8 as well as a limited sphere of interaction with others. Under article 8(2) the court crucially pointed out that the right to privacy is not absolute and that in having regard to the “rights of others” included the respect for the freedom of the press. The court observed:

“Although freedom of expression extended to the publication of photographs, this was an area where the protection of the rights and reputation of others took on particular importance. The present case did not concern the dissemination of ideas but of images containing very personal or even intimate information about an individual. Furthermore photographs appearing in the tabloid press were often taken in a climate of continual harassment which induced in the person concerned a very strong sense of intrusion into their private life or even of persecution.”[118]

Thus freedom of expression is, of course, itself qualified and regard must be had to the “respect of the reputation and rights of others”[119]. In applying these tests to the current case the court observed that Princess Caroline’s role was only symbolic and not political and consequently this was not a matter to which the press could fulfil their watchdog role legitimately in contributing to a public debate[120]. The court then went on to hold that in the absence of any legitimate public concern freedom of expression would be more narrowly construed[121]. The court upheld the applicant’s right to privacy.

Campbell[122]

This case has also been remarkably influential in the debate and has been recognised judicially as marking a turning point in the application of these rights and indeed embracing a so-called “new methodology” according to Lord Steyn in In Re s (A Child)[123]. On the facts of this case the supermodel Naomi Campbell, who openly courted publicity, had volunteered false information to the newspaper, insisting that she didn’t take drugs. The newspaper then disclosed details of her addiction and obtained photos of her therapy meetings. The claimant succeeded at first instance but then the Court of Appeal overturned the decision in favour of the newspaper, ruling that publication of the photos was in the public interest. There was then an appeal to the House of Lords where their lordships by a 3-2 decision upheld her right to privacy. Lord Hoffman (dissenting) made the following observation on the unique difficulties of this case:

“The facts are unusual because the plaintiff is a public figure who had made very public false statements about a matter in respect of which even a public figure would ordinarily be entitled to privacy, namely her use of drugs. It was these falsehoods which, as was conceded, made it justifiable, for a newspaper to report the fact that she was addicted. The division of opinion is whether in doing so the newspaper went too far in publishing associated facts about her private life”.[124]

Hoffman went on to point out that the House, although divided on the law, was united on the principles to be taken from the case. A number of factors spurred the House to reason that the claimant’s right to privacy had been breached: the nature of the drug addiction meetings were akin to medical records under the Data Protection Act 1998 and so required a particularly strong justification which was lacking, persons in her position with such difficulties may encounter setbacks if their struggles with drugs are disclosed and what Lord Hope christened as a “margin of appreciation” of journalists in deciding story content had been overriden by content which infringed the claimant’s right to privacy[125]. In In Re s (A Child) the new methodology of Campbell was summarised as thus:

“First, neither article has as such precedence over the other. Secondly, where the values under the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary. Thirdly, the justifications for interfering with or restricting each right must be taken into account. Finally, the proportionality test must be applied to each. For convenience I will call this the ultimate balancing test. This is how I will approach the present case.”[126]

Chapter 3: Libel in the UK

A. Libel and the Press: the landscape

The libel laws of the UK are so attractive to international litigants that a tourism industry has grown up around it which Parliament has now sought legislation to address[127]. But why are British libel laws so attractive to foreign companies and individualsThe simple answer is that the UK system is very heavily stacked against freedom of expression as has been very evident recently in the Trafigura affair where British newspapers and media, including the Guardian, the Independent and the BBC, were frightened off the story of Trafigura dumping illegal waste in the Cote-D’ivoire by legal threats made by the media lawyers Carter Ruck and forced to issue apologies and climb-downs[128]. Carter Ruck defends many clients’ private information and of the cases examined for the secondary research below Carter Ruck are prominent as defendants in a large number of cases[129]. Bearing in mind that Carter Ruck even threatened to gag Parliament it becomes clear that the libel laws in this country may be out of control[130] and that the Draft Defamation Bill is recognition of this.

The historical development of libel is traced by Geoffrey Robertson who asserts that the current form of libel can be traced from the Victorian Club: “The idea that large sums of money must be awarded to compensate people for words which ‘tend to lower them in the estimation of right-thinking members of society’ directly derives from an age when social, political and legal life was lived in gentlemen’s clubs in Pall Mall, an age when escutcheons could be blotted and society scandals resolved by writs and slander”[131]. Thus a system emerges which attempts to strike a balance between the right of free speech and the right of reputation with the balance leaning heavily towards the latter. From these humble beginnings the modern test of libel can be easily elicited from the dictum of Lord Atkin: “would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally?”[132].

Libel, as distinct from slander, is actionable without damage[133] and is one of the few surviving civil torts which, under the Supreme Court Act 1981[134], still has a presumption in favour of a jury should one of the parties request it[135] although this presumption will be abolished should the Draft Defamation Bill receive royal assent[136] . It was the president of the Supreme Court, Lord Philips of Worth Matravers who observed:

“Finally, and fundamentally, has not the time come to recognise that defamation is no longer a field in which trial by jury is desirableThe issues are often complex and jury trial simply invites expensive interlocutory battles, such as the one before this court, which attempt to pre-empt issues from going before the jury.”[137]

The consultation criticised the costs, simplification of complex legal concepts and the effect on settlements jury trials have in defamation cases[138]. Furthermore damage would have to be proved under the new draft Bill which would be an astounding departure from the past where up until now there has been a presumption that such defamatory words cause harm without the need for proof[139]. Returning to Lord Atkin’s dictum the construction of words is clearly very important in libel cases and many hearings are simply to decide precisely what words mean[140]. Subject to the claimant being identified as the object of the allegedly defamatory statement[141] and not being part of a group whose collective reputation cannot be protected[142] anyone who has been involved in the publication, from the author down to the distributor or even an Internet Service Provider[143], may be sued in libel. The Defamation Act 1996 put some of the law of libel on a statutory footing and enabled distributors who were unaware of the defamatory material to escape liability by the defence of innocent dissemination[144]. Two final but crucial points remain to be made: the multiple publication rule[145] firstly means that each “publication of a defamation gives rise to a separate cause of action”[146], being every copy of a newspaper or website hit, and secondly it is for the defendant, on a balance of probabilities, to prove one of the following defences[147]:

(a) Fair Comment: This defence actually protects what Robertson describes as “unfair comment”: an opinion, however unfair, that is honestly held on a matter of public interest. The defence only applies to comment and not to fact and is a distinction which led Eady J to err[148].

(b) Justification: If the defendant proves that the statement is true then there can be no action. The defendant need not show that the statement was in the public interest and it cannot be undone by the claimant proving malice[149]. Under the Defamation Act 1952 the defence do not have to prove the truth of each allegation[150].

(c) Absolute and qualified privilege: the Defamation Act 1996 sets out that fair and accurate reports of court proceedings and parliamentary proceedings attract absolute privilege; meaning that they comprise a complete defence regardless of any malice or truth. Qualified privilege, which can be defeated if malice is shown, attaches to all of the circumstances in schedule 1 of the 1996 Act which includes fair and accurate reports of legislatures or international organisations anywhere in the world[151].

(d) Offer of amends: S.2 of the 1996 Act contains this defence which contains three elements: a correction, an apology and compensation to the claimant. If the offer is accepted then the claimant can no longer bring an action of defamation[152] but if the offer is refused then this will form a statutory defence at the trial[153].

(e) The Reynolds duty-interest defence: This defence arose out of a case in the House of Lords[154] where their Lordships extended the defence of qualified privilege to protect the publication of material which the reporter was under a moral or social duty to publish and, as a corollary; the recipients have an interest in receiving. The House of Lords held in Reynolds that the Sunday Times could not benefit from the defence as they had acted unfairly in omitting the explanation of Albert Reynold, the ex-premier of Ireland, from their Irish edition after his resignation in 1994[155]. This defence is most relevant to the aims of this study as it strikes a balance between the protection of reputation and the freedom of expression as Lord Nicholls explains:

“My Lords, this appeal concerns the interaction between two fundamental rights: freedom of expression and protection of reputation. The context is newspaper discussion of a matter of political importance. Stated in its simplest form, the newspaper’s contention is that a libellous statement of fact made in the course of political discussion is free from liability if published in good faith. Liability arises only if the writer knew the statement was not true or if he made the statement recklessly, not caring whether it was true or false, or if he was actuated by personal spite or some other improper motive.”

Lord Nicholls goes on to set out ten factors which the court must have regard to in establishing this defence which include the gravity of the allegation, the nature of the information and its’ source, the urgency of the matter as well as any steps taken to verify the information among others[156]. There have been a lot of problems with this defence, however, and these ten factors were considered to potentially be ten obstacles by the House of Lords[157] with Lord Hoffman taking the unusual step in this case of criticising Eady J, at first instance, for his interpretation of the Reynolds privilege:

“In the hands of a judge hostile to the spirit of Reynolds , they can become ten hurdles at any of which the defence may fail. That is how Eady J treated them. The defence, he said, can be sustained only after “the closest and most rigorous scrutiny” by the application of what he called “Lord Nicholls’s ten tests”.”[158]

Commentators have also remarked on the judicial hostility to Reynolds and the uncertainty it created[159]. Clayton and Tomlinson argued that this uncertainty was a violation of article 10 in itself by restricting the use of the defence although this uncertainty has been approved as being article 10 compliant by the European Court of Human Rights in Strasbourg[160]. Thus the case of Jameel and Others v Wall Street Journal Europe Spr[161] was vital in reaffirming the Reynolds defence and this was followed by the Court of Appeal in Flood v Times Newspapers Ltd[162] where Lord Neuberger went through the classic test propounded by Lord Nicholls[163]. In the case of Jameel Lord Hoffman took the opportunity to highlight the importance of responsible journalism, a concept which Eady J had described as subjective but which Lord Hoffman defined as an objective standard all could relate to. The developments in Jameel were vital in resuscitating a defence which had been reeling in the wrong hands:

“The judgments of the Lords in Jameel strongly re-affirm the importance of Reynolds privilege – or as it may more accurately become known, Reynolds public interest defence – as a cornerstone to protect the press when responsibly informing the public on matters of public interest.”[164]

(f) Malice: As pointed out above, malice can defeat the defences of fair comment in the public interest and qualified privilege as described by Lord Diplock: “The commonest case is where the dominant motive which actuates the defendant is not a desire to perform the relevant duty or to protect the relevant interest, but to give vent to his personal spite or ill will towards the person he defames. If this be proved, then even positive belief in the truth of what is published will not enable the defamer to avail himself of the protection of the privilege to which he would have otherwise been entitled.”[165] Thus malice is “dishonest or reckless writing or reporting”[166].

B. Secondary case law research into British newspapers and libel

The “chilling effect” of libel on the media has been well documented[167] and as the authors of this study noted at the time in the introduction this is a “strangely neglected“ topic which deserves research to examine what Robertson has powerfully called “the greatest inhibition upon freedom of speech”[168] in light of recent developments with the ECHR. As noted above, it has been recognised judicially that the press have a unique watchdog role in society which legitimises a democracy and embodies a central pillar of freedom of expression in a democracy[169]. The seminal studies of Barendt et al were conducted in 1997 and research carried out for this dissertation revealed that there has not been its equal in the post human rights libel environment: their study was a one-off before courts were compelled to take into account Convention arguments[170]. Now, in 2011, the environment is especially ripe to undertake some secondary case research of libel actions, especially with the “chilling” effect of libel laws being recognised by the Justice Secretary of the Coalition Government Kenneth Clark and a Draft Defamation Bill in Parliament[171]. Taking into account accusations from the press of the judiciary creating a right to privacy via the back door crystallising in 2008[172] and the case against Dr.Singh brought by the British Chiropractic Association provoking widespread criticism in May 2009[173] it is apt to examine case law in the period from January 2008[174] up until January 2011[175]. A further reason for choosing this period is that Mr.Justice Eady stepped aside as the top libel judge in the UK on 1st October 2010 for Mr.Justice Tugendhat in a move which some commentators cautiously welcomed as being a positive one for freedom of expression[176].

The research is restricted to libel actions in Britain[177] in any court up from first instance Queen’s Division to the Supreme Court[178] and either the case or the appeal is within the period stated above: furthermore, only cases resolved in this period are covered and hearings for summary judgements (except where either party succeeds or the action is struck out) are excluded as often the case will proceed to trial which will be pending at a later date. The results are presented in graphical form and the following will be analysed: whether convention arguments were relevant or not, the frequency of libel actions and the identity of the defendants, the success or failure of the action (from the perspective of the newspaper), the effect of Mr.Justice Eady[179], the defences employed and success of interim injunctions as will be the anchoring action to which the Convention Rights are parasitic. Before embarking upon this research it is wise to recount the findings of Barendt et al:

“The law of libel exercises a chilling effect…because the defences of justification, fair comment, and privilege do not adequately safeguard the interest of the media (and the public) in freedom of expression. The media may, for instance, be unsure whether they could prove the truth of the allegations in court or…they may be concerned by the cost of defending an action bought by a wealthy and persistent litigant.”[180]

(a) Overview of the case law January 2008 – March 2011: victory and defeat

Within the specified period 35[181] libel cases against newspapers reached conclusion. Below is a graph of the cases split into the identity of the defendant along with the result for the defendant.

Comment: These seven main players in the newspaper industry account for 30 of the cases with a further five including various other newspapers as the defendants[182]. Associated Newspapers include the Daily Mail, the Mail on Sunday and the Metro[183]. News Group Newspapers includes the Sun and the News of the World[184]. Express newspapers include the Daily and Sunday Express[185]. The Guardian Media Group includes the Guardian and Observer titles[186] while the Times group owns The Times and the Sunday Times[187] under the control of News International along with the Sun and the News of the World. Finally the last two are self-explanatory: the Independent News & Media Ltd owns the Independent newspaper and the Independent on Sunday[188] and the Telegraph Media Group own the Telegraph and Sunday Telegraph[189].

News International: A possible reading of these results is that in the period above News International (which includes News Group and the Time Group) have been sued for libel the most (9 times) although this is perhaps not surprising given the huge circulations of the Sun, the News of the World, the Time and the Sunday Times together.

Financial Times: One conclusion from the study of Barendt et al[190] is that the Financial Times is very risk averse and was the only newspaper where the “chilling effect” was perceived to be most powerful: “On only one newspaper did a clear indication of the inhibiting effect of libel emerge. This was the Financial Times, one of whose senior editors stated flatly that, as a matter of policy, the paper did not want to get involved in libel actions”[191]. This research confirms the findings of Barendt et al and it is notable that the one case the Financial Times got involved in (and won) was one which went to the European Court of Human Right to fight an order against disclosure of sources in the UK[192].

Tabloids and broadsheets: As for the other newspapers in the UK they seem to be willing to be subject to libel in the inescapable push for stories. There does not seem to be any neat broadsheet/tabloid divide either which perhaps strengthens arguments of a blurring of the boundaries between the two[193] although clearly a paper such as the Express, which lost 100% of the libel claims against it, is more susceptible to losing libel writs with its cocktail of entertainment stories which included writing a story that Ozzy Osbourne’s wife was working him to death[194], intruding into the private grief of Matt Lucas following the death of his ex-partner[195] and reporting that Mohammed George of Eastenders was thrown out of an Eastenders party by security[196]. By way of contrast the Guardian and the Times, both considered upper market broadsheets, have a roughly equal success and loss ratio. There may be a blurring of the boundaries between tabloids and broadsheets but there is still a boundary.

Statements in open court: A striking statistic is that of all 35 cases the press was on the losing side in 20 of them. A common way of conceding defeat is via a statement in open court before trial coupled with an offer to retract, an apology and compensation[197]. Of the cases 16 of them (46%) were conceded in this fashion. Robertson points out, however, that these statements, made under considerable pressure to settle before a potentially crippling trial, “are sometimes more akin to public relations announcements than to records of truth”[198].

Pressure on early settlement: As stated above the costs of a libel action are enormous and conceding a case is often the wisest course of action. Geoffrey Robertson observes: “In the year 2001, a contested fortnight’ defamation trial – including all the applications which would proceed it – could easily cost each side ?750,000, and the loser would have to pay 75% of the winner’s costs, on top of damages which amount to six figures”[199]. So there is obviously a pressure to settle early and this is born out by the disproportionate amount of statements in open court made to settle actions as well as the somewhat traditional means of reaching an out of court settlement just before trial to make the settlement more lucrative[200].

Chilling effect: A further conclusion which might be drawn is that libel laws are stacked against newspapers who must: bear the burden of proof in rebutting the presumption that defamatory statements are false unless proved otherwise[201] and be open to libel writs without any averments of loss or damage to the claimant[202]. The onerous burden on newspapers of proving that a statement is true is one pillar of the “chilling” effect mentioned above and inhibits proper journalism.

(b) Use of convention rights in libel cases against newspapers January 2008 – March 2011

In order to properly establish whether Convention arguments are really influencing libel laws in the UK with respect to newspapers the graph below is a breakdown of cases within the period which have been determined by convention arguments:

Comment: It is fair to say that the cases in the period above, while determined by convention arguments, are not exhaustive in that many of the other cases will have featured convention arguments as a matter of course in litigation such as Lucas[203]where an article published about the claimant’s deceased ex-partner intruded into privacy in a stark manner which prompted the early settlement by statement to the court. With a statement to open court being protected by privilege[204] however, it is exceptionally difficult to divine arguments on Convention rights. As a proportion of the overall cases these numbers are very low, 6 in a total of 35, but the effects of these decisions are more profound and more far-reaching than otherwise[205]. In these cases freedom of expression under article 10 is clearly being favoured in a minority of cases isolated to their facts while the decisions of Mosley and Murray, taken together, have provoked furious criticism that article 8 is being extended in scope[206].

Mosley v News Group Newspapers Ltd[207] : This case was one of Judge Eady’s most high profile cases and ended in a judgement which held that the balance between freedom of expression and privacy lay in the protection of Mr.Mosley’s privacy where a newspaper story made allegations about his sex life[208]. He held that between consenting adults on private property sexual behaviour, however bizarre and unconventional, could attract a reasonable expectation of privacy[209]. The methods used to capture the alleged sordid activities were done by secret film which Eady said engaged the claimant’s article 8 rights: “The clandestine recording of sexual activity on private property engaged the rights protected by art.8 of the Convention, and serious reasons had to exist before interferences with it could be justified”[210]. Eady then made reference to the “ultimate balancing test” propounded by Sedley LJ in Douglas v Hello[211] and observed that: “The judge will often have to ask whether the intrusion, or perhaps the degree of the intrusion, into the claimant’s privacy was proportionate to the public interest supposedly being served by it.”[212] The public interest argument put forward by the newspaper was destroyed by the factual dispute over whether there was any Nazi theme at all. Ultimately Justice Eady was unconvinced by the public interest defence put forward and ruled in favour of the claimant. He was sensitive to point out that, despite ruling that article 8 prevailed in this case, “It is perhaps worth adding that there is nothing “landmark” about this decision. It is simply the application to rather unusual facts of recently developed but established principles. Nor can it seriously be suggested that the case is likely to inhibit serious investigative journalism into crime or wrongdoing, where the public interest is more genuinely engaged.”[213] There are some though who would strongly disagree and point that this decision, taken together with Murray below, is tantamount to a privacy shift towards the protection of the individual in extending the scope of article 8.[214]
Murray v Express Newspapers Plc[215]: This case was concerned with the child of J.K Rowling who appealed against the earlier decision in 2007 to strike out his claim for libel where photographs had been taken of him in a public place and published a national magazine. The judge at first instance, Patten J, had been reluctant to rule that extending article 8 rights to the case at hand would be “on the basis that there was an area of innocuous conduct in a public place that did not raise a reasonable expectation of privacy”[216]. However Sir Anthony Clarke M.R, along with Laws L.J and Thomas L.J, took the case into that area and went as far as to observe: “[A] child has a reasonable expectation that he or she will not be targeted in order to obtain photographs in a public place for publication which the person who took or procured the taking of the photographs knew would be objected to on behalf of the child.”[217] Thus commentators have decried the notion that a breach of privacy can occur in a public place and have observed that the extension of this rule to adults is perhaps only a matter of time given the ambiguity surrounding the fracture between Von Hannover and Campbell with the former giving an expansive interpretation to a reasonable expectation of privacy and the latter qualifying against it certain criteria[218].
Times Newspapers Ltd v United Kingdom[219]: This case was a judgement by the European Court of Human Rights who were asked to rule, in the words of Mora, “…whether the UK’s common law rule that a new cause of action in libel accrues each and every time that a defamatory article remains available on the internet constitutes an unjustifiable and disproportionate restriction on the right to freedom of expression guaranteed by art.10 of the European Convention on Human Rights (ECHR).[220] Thus the central issue was freedom of expression and whether articles retained on a large archive could be susceptible to separate libel actions even after the lapse of many years and even if a libel action had already been brought in respect of the same article in print form. This rule (internet publication) dictates that each time an article is downloaded a fresh cause in libel proceedings accrued. The Court ultimately rejected the complaint, refusing to consider what T had expressly alleged was a “chilling effect” on freedom of expression caused by this unduly onerous rule: “They argued that the internet publication rule breached art.10, pointing out that as a result of the rule newspapers which maintained internet archives were exposed to ceaseless liability for re-publication of the defamatory material. The defendants argued that this would inevitably have a chilling effect on the willingness of newspapers to provide internet archives and would thus limit their freedom of expression.”[221] A crumb of comfort from this case is that the judgement was argued closely to its facts and if an action were to be raised in the future regarding an article from the past stored on an archive which was unknown to the newspaper or archivers then this may well be disproportionate to the complainer’s article 10 rights[222].
Author of a Blog v Times Newspapers Ltd[223]: This case concerned a serving detective constable (the blogger) who wished his identity to be restrained from publication in the Times who had, by investigations, deduced his identity. He faced disciplinary action from the police and was keen to hold onto his anonymity but the Queen’s Bench ultimately held that firstly he had no reasonable expectation of privacy as blogging was a public activity and secondly the sources used by the newspaper did not have the necessary “quality of confidence”[224]. Thus the unmasking of “Night Jack”, as the blogger was known, did not even engage his article 8 rights although it is important again to note that this judgement is tied closely to the facts and the unusual fact that the blogger was a prominent member in the police force was the catalyst for a high degree of public interest: “Reports of the death of anonymous blogging may, however, have been exaggerated.”[225]
Financial Times Ltd v United Kingdom[226]: This case brought by the FT in the European Court of Human Rights concerned a high court order obtained by I, an international drinks company, that certain newspapers would disclose the identity of a source which had leaked the details of a takeover bid in which I would purchase a brewer, SAB. The newspapers appealed but were dismissed by the Court of Appeal and then refused leave to go to the House of Lords and ultimately came to the ECHR to argue that their article 10 rights had been breached by the order compelling them to disclose the identity of anonymous sources. The court went through the article 10 analysis, holding that despite the order did not actively restrain F the potential it had to do so interfered with F’s article 10 rights. On the question on whether the interference was justified under article 10(2) the court emphasised the watchdog role which journalism has in the UK and that disclosure of such sources might inhibit the public interest in exposing wrongdoing and corruption and the court held that: “Having regard to the importance of the protection of journalistic sources for press freedom in a democratic society and the potentially chilling effect that an order for disclosure of a source has on the exercise of that freedom, such a measure cannot be compatible with art.10 unless it is justified by an overriding requirement in the public interest.”[227] The European Court here did have regard to the “chilling” aspects which it had declined to do in Times Newspapers Ltd v United Kingdom[228].
In re Guardian News and Media Ltd and others[229]: This case, in the Supreme Court of the United Kingdom, involved, much like the blogging case above, the publication by a newspaper of a story about an individual whose identity was protected: he was a suspected terrorist and the subject of an anonymity order made by the House of Lords. As was stated: “More particularly, the court is being asked, on the one hand, to give effect to the right of the press to freedom of expression and, on the other, to ensure that the press respect M’s private and family life.”[230] Ultimately the court held that balancing the two rights favoured article 10 and a necessary interference with the claimant’s article 8 rights for, inter alia, the reason that the disclosure of the name would contribute to a “debate of general interest”[231].

Comment: In the period examined, from January 2008 – March 2011, it is clear to see just how much the European Convention on Human Rights, and in particular articles 10 and 8, have permeated the fabric of UK libel law. From a free speech perspective in the UK domestic courts it is clear that the right to privacy is favouring individuals and both Mosley and Murray are incontestable evidence for a broadening of the scope of article 8 potentially into the public sphere for all[232]. The two domestic case s which favoured article 10 over article 8 are tied closely to their facts and it is submitted that their scope is limited: anonymous publishers who are not in such prominent positions nor are discovered by purely public means will enjoy the protection of article 8 in due course[233] and whether the anonymity orders ruling applies to control orders was not discussed by the Supreme Court[234]. Regarding the European Court of Human Rights the message is mixed: in Times Newspapers Ltd v United Kingdom the court chose not to examine the “chilling effect” that the internet publication rule would have on freedom of expression and accordingly dismissed the complaint while in Financial Times Ltd v United Kingdom[235] the “chilling effect” was considered in an order which forced the disclosure of anonymous sources and judgement found in favour of the FT. The domestic courts are clearly favouring privacy and crucially so too is the jurisprudence from Strasbourg:

“It is indisputable that, over the last five or six years, the English courts have been applying the law in a way that has provided ever increasing protection for individuals’ rights to privacy. One only needs to contrast the decisions in Mosley and Murray with the Court of Appeal’s decision in A v B in 2002 to appreciate the extent of the shift in the law that has occurred. However, as Mr Dacre acknowledged in his testimony to the Select Committee,the real cause of this creep towards this “Continental” level of protection for privacy, has been the ever increasing level of protection that the ECtHR is affording to art.8 rights. Far from being an unsanctioned judicial crusade against the press (as Mr Dacre might have us believe), English judges have simply been developing English privacy law in step with the Strasbourg court, as, of course, they are bound to do under the HRA.”[236]

I will christen this shadowing of European jurisprudence, enshrined in s.2(1) of the Human Rights Act 1998, a ‘continental drift towards privacy’ whichBritain, as a signatory to the Convention, can only be swept along with.

(c) Judge Eady January 2008 – March 2011 on all media cases

Eady J has had to shoulder a lot of criticism as the judge previously in charge of the High Court’s libel actions[237]. A question which arises is whether this criticism is justified and whether it is right to single out one judge, as Paul Dacre did, and say that he is introducing a privacy law by the “back door”This research has looked at all of Eady J’s judgements on the media, whether in the UK or not, during the specified period above.

Comment: It is perhaps convenient to single out Eady J’s significant judgements which have been averse to journalists[238] or the scientific community[239] but on reflection of the cases he has handled in the last three years it is evident that it is a fallacy to generalise in saying that he is against the media or single-handedly responsible for judicial activism[240], conspiring to bring a law of privacy in through the back door although it is correct to say two key decisions were devastating to free speech:

Statements: In 32 cases the striking statistic is that 20 were conceded by statement in open court, unreported[241] and in light of Robertson’s comments to the effect that these are more like “public relations exercises” coupled with the privilege which attaches to them, it is difficult to say the real reasons why they were settled. The concession of these cases would at the very least indicate that the laws of libel do not operate in favour of the media and at the most that many were resigned to losing under Justice Eady.
Favourable to press: The most notable case in which the freedom of the press was protected by Eady J was Author of a Blog v Times Newspapers Ltd[242] , a case which protected the article 10 rights of journalists above the article 8 rights of an anonymous blogger by allowing them to publish the identity of the blogger. Given the unusual facts however, with “night jack” being a prominent detective and his identity being of a strong public interest, it has been argued that this decision does not advance the article 10 cause much but is instead an example of applying the iniquitous law meticulously[243]. Other favourable judgements are not remarkable: extending absolute privilege to the reporting of previous court events[244], refusing to grant an interim injunction where neither the interests of justice nor urgency required it[245], striking out a claim where the claimant in a libel action had no reputation to protect[246] and making use of the new offer to make amends procedure under the Defamation Act 1996 s.2 to reduce the compensation a publisher had to pay[247].
Unfavourable judgements: The Mosley case and the Singh case are inescapable in providing an analysis of Mr.Eady’s decision-making in the specified period but it is also inescapable to acknowledge that his legal career as a judge does not turn on two cases. The real scope of the Mosley decision alone, since Singh was overturned on appeal[248], will be known when Mosley is heard before the European Court of Human Rights and challenges the UK privacy laws as affording too little protection to individuals. A defence of prior notification may emerge as will be discussed later but that will be the decision of the European Court and not Justice Eadie. That Eadie was just applying the iniquitous law in the fashion of a legal positivist is a convincing argument and discredits Paul Dacre’s accusations to an extent:

“Lord Falconer, the former Lord Chancellor and one of the architects of the Human Rights Act 1998 (“HRA”), has said that Eady J.: “[I]s unquestionably applying the law as it comes from Parliament, as interpreted by the senior courts, the Court of Appeal and the House of Lords.” This is a view shared by four of the country’s most eminent media law Queen’s Counsel and a number of other senior media lawyers and commentators”.[249]

This argument has some force but the Court of Appeal in Singh certainly didn’t think that Eady J had mechanically applied the law and neither did Lord Hoffman in Jameel[250]. He had erred, in the opinion of Lord Judge in Singh, in two respects: firstly he conflated opinion with fact and secondly treated the former as something which needed to be proved by the defamer and thus placed an impossible burden upon him and by so doing extended libel laws irrationally:

“The opinion may be mistaken, but to allow the party which has been denounced on the basis of it to compel its author to prove in court what he has asserted by way of argument is to invite the court to become an Orwellian ministry of truth”.[251]

Chapter 4: France and privacy

A. Declaration of the Rights of Man and the tort of privacy

France’s privacy laws have a heritage which has grown to be formidable despite the blood spilled in the 1789 revolution and the enshrinement of free speech in the Declaration on the Rights of Man and the Citizen:

“No-one is to be disquieted because of his opinions …Free communication of ideas and opinions is one of the most precious rights of man”[252]

These bold proclamations did not stop France developing a law of privacy which, as Delany and Murphy point out, is traditionally seen as being at the opposite end of the spectrum from the UK which has no precise tort of privacy[253]. It soon emerged that France would not tolerate invasions of privacy on a scale that to a lesser extent Britain, and to a much larger extent America, would[254] with “causes of action to protect privacy rights”[255] common since the 19th Century. In terms of the modern position the law of 1970 amended both the Civil and Criminal codes with article 9 of the Civil Code being the cornerstone of a tort of privacy which states in no uncertain terms[256] that “Everyone has the right to respect for his private life.” A crucial distinction is made in France, as Helen Trouille points out, between a person’s private life and the more intimate aspects of a person’s private life with only the latter attracting the most severe sanctions such as the potential seizure of printing presses[257]. There is a certain sphere of protection for individuals which the law keeps sacrosanct[258] and the image of the individual is considered to be their own[259] and even an extension of property[260]. Trouille interestingly points out that Bill Clinton might well have been saved from the Kenneth Starr treatment had America a similar system of protecting privacy. The criminal code was also amended by the Act of 1970 and now provides under Chapter VI and Offences Against Personality:

“A penalty of one year’s imprisonment and a fine of ˆ45,000 is incurred for any wilful violation of the intimacy of the private life of other persons by resorting to any means of:

1° intercepting, recording or transmitting words uttered in confidential or private circumstances, without the consent of their speaker;

2° taking, recording or transmitting the picture of a person who is within a private place, without the consent of the person concerned.

Where the offences referred to by the present article were performed in the sight and with the knowledge of the persons concerned without their objection, although they were in a position to do so, their consent is presumed.”[261]

The inquisitorial procedure of France applies these laws strictly although as Troille observes there a certain element of discretion in the search for the truth[262]. The press are indeed mentioned throughout the criminal civil code in relation to a number of offences with the qualification that the law will punish only those responsible: in bringing certain recordings or documents to the knowledge of third parties[263], misuse of people’s images without their express consent[264], messages bearing a pornographic or violent nature which violates “human dignity” where the message may have been viewed by a child[265], incitement of endangering minors[266] and even incitement to rise up in arms against the state[267]. On top of all these laws is the adoption of the European Convention on Human Rights articles 8 and 10 upon ratification of the Convention in 1974[268] which, much unlike the UK courts their sudden conversion to adopting the balancing approach, have undergone a slow dance of death in which the right to privacy has been gradually eroded until in 2001 the Cour de Cassation found, in a case involving the publication of an image without consent, that the strict application of the image right and the absolutist approach were no longer appropriate in the 21st century where freedom of expression is recognised and the watchdog role of the press in a democracy is beyond dispute:

“this judgment probably marks the last stage in the transformation process which the right over one’s image has been undergoing for several years … and which is resulting in the gradual replacement of the absolutist concept of the right over one’s image by a more balanced approach, more commensurate with the need to keep citizens informed”.[269]

B. France and the UK: a comparison in Human Rights

It has been commented that Britain and France, traditionally so alienated towards each other regarding privacy, are currently evolving towards a common set of principles under the shadow of the ECHR[270]. In France, as noted above, the absolutist approach has been incrementally eroded to reveal a judiciary which has started to use language similar to the European Court of Human Rights in Strasbourg. In a famous case[271] brought by the current president of France, Nicholas Sarkozy, article 9 was invoked in alleging that the newspaper le matin had breached his privacy in publishing a whole series of reports of his apparent marital problems. Incredibly the court at first instance found there was no breach of privacy as there was a legitimate interest in the stories for the people of France. Some of the articles did breach the privacy laws but the difficult question the court faced was how to reconcile the absolutist privacy laws with a President who had clearly put himself in the public eye[272]. The judge in this case acknowledged the influence of Strasbourg jurisprudence on the decision:

“The judge, in assessing the invasion of privacy in that case, noted that the European Court of Human Rights requires a balancing of the privacy rights of the individual with the right to freedom of expression by determining whether the information in question contributes to a debate of public interest, or whether it solely concerns the private life of the individual in question”[273].

The balancing requirement has been transposed into UK law[274] who, in a miracle of adoption given that the Human Rights Act 1998 only came into force 13 years ago, now conduct the very exercise that France is starting to embrace in 30 years after they ratified the Convention. The omission of article 8 from the French cases on ECHR applicable law is striking however and it has been noted that they have not sought to distinguish it from Article 9 of the Civil Code although in truth the differences between the two are marginal. Delany and Murphy argue that it is in the concept of public interest where the UK and France differ markedly, with France being more closely aligned to Strasbourg than the UK: “The general right of the public to be informed is subject to the legitimacy of the information in question”[275].

They further comment that while the concept of reasonable expectation of privacy is used as a threshold test in the UK with caveats including what the person was actually doing etc it is used more expansively in Strasbourg. Whether Franceand the UKare evolving towards a point of common principle may depend upon the extent to which France, like the UKhas done in a continental drift towards privacy[276], will allow itself to be swept up in the full implications of von hannover[277]. Recent developments in France, which have included successfully taking Google to court over mistaken data gathering in order to establish Street View with a fine of 100,000 Euros[278] and introducing a tough new law on privacy in the digital age[279] only confirm that Britain and France remain polar opposites and that, as Berlins comments, although “the door has been left ajar for the French media to start behaving like their British counterparts,” [280] the more likely reality is that the door will be closed soon enough.

Chapter 5: The effect of Articles 8 and 10 and the future

A. Has the Human Rights Act changed the media law landscape?

Articles 8 and 10 of the ECHR, by virtue of the Human Rights Act 1998, which incorporated all of the articles of the ECHR into UK law, have undoubtedly changed the media law landscape. The question is, to what extentBy section 6 of the Act UK courts are, as we have seen, obliged to take into account Convention Rights as public bodies and furthermore obliged to take into account the jurisprudence of Strasbourg under section 2 whenever a question of Convention Rights arises in a UK court. This permeation of the courts by these articles has reinvigorated the right to privacy, unwritten and supplemented by a grotesque menagerie of laws both civil and criminal[281], and the right to freedom of expression, held up by centuries of rhetoric but little substance[282], although to varying and dramatic effects. With respect to libel law and the media the secondary case research conducted in chapter 3 revealed that there is a continental drift towards privacy[283] which, if left unchecked, will rein in what advances of freedom of expression[284] the courts have enabled in the 13 years since 1998. The cases looked at in 2008 – 2011 which advanced freedom of expression were confined to their facts[285] and, with respect, limited in their outlook while the cases on privacy and most notably Murray, could potentially broaden the scope of privacy to all individuals in public life even if taking an innocuous walk down the street. There is undoubtedly confusion over the application of these Convention rights which does not help when assessing their impact as the fracture between Campbell and von hannover demonstrates[286]. Bearing in mind that the law of breach of confidence has evolved into a right of privacy in all but name[287] then it is clear that the impact of articles 10 and 8 can only be analysed with this in mind.

It is the contention of this study that the impact of the two rights has been imbalanced: the continental drift towards privacy has taken the UK with it while leaving unchanged those aspects of UK libel law which render the system so stacked against individuals and curtail freedom of expression: such as the multiple publication rule and the burden of proof being on the defence to prove the truth of the claim. Both of these aspects have been challenged in Strasbourg and both have been dismissed[288] even under the shadow of the Human Rights Act. The influence of Justice Eady has been a factor in moving the goalposts towards privacy, most notably in Singh, but although he has not been applying law like a legal positivist, neither can it truly be said that he has been imposing his own moral judgements upon cases: it is the system which predominantly produces the iniquitous results not the judges. Furthermore, the absence of legal aid is surely an issue under article 6 in providing those involved in libel trials with an “equality of arms”[289] but this has also has been held to be ECHR compliant in McVicar. The British law of libel is a powerful restraint on the press and still exerts a chilling grip in 2011. From the case research conducted 46% of cases settled in 2008-2011 were conceded by statement to open court and under obvious pressure to settle early and avoid not only the crippling costs but also the onerous burden of proof. It wasn’t for nothing that the US Supreme Court recognised long ago that the UK system of libel was incompatible with the first amendment to the US constitution due to the placing of burden on the defender whereas in America the onus is on the defamed party to prove the falsity of the statement[290]

B. The Draft Defamation Bill 2011

Kenneth Clarke’s assertions upon the unveiling of this Bill, that the libel laws of the UK were damaging free debate, have been much welcomed by those seeking reform: “In recent years, though, the increased threat of costly libel actions has begun to have a chilling effect on scientific and academic debate and investigative journalism.”[291] Eight key proposals outline the draft bill which include the end of the presumption in favour of jury trials in libel cases[292], abolition of the presumption that a defamatory statement causes harm[293], attempts to limit libel tourism by giving the courts broad discretion to decide whether the courts of England and Wales are the most appropriate jurisdiction[294], abolition of the multiple publication rule and replacement with a single publication rule[295] as well as introducing new defences: “truth” will replace justification, “honest opinion” will replace fair comment and “responsible publication of a matter in the public interest” will codify the rule in Reynolds[296].

It is important to acknowledge that these proposals are exactly that at this stage and one needs only to reflect upon another cornerstone of the freedom of expression, the Freedom of Information Bill, being sabotaged by the Labour Government in their final draft by inserting the notoriously vague “formulation of government policy” to prevent real access and produce what the great liberal journalist Hugo Young described as “one catch-all annihilation of freedom of information”[297] Despite this the proposals have been attacked as not going far enough in reforming libel laws with one notable omission being a limitation on powerful corporate entities’ ability to sue individuals[298]. This is really another side of article 6 and the equality of arms debate, inspired by Mcdonalds suing two environmentalists in the 1990s[299].

C. The future: Max Mosley and prior notification

Max Mosley, emboldened by his triumph over the News of the World, has lodged a petition with the European Court of Human Rights at Strasbourg to challenge UK law regarding the lodging of interim injunctions. He argues that in the absence of a system of “prior notification”, there is no opportunity for those in the potentially defamatory story to restrain publication and thus this is a breach of his article 8 rights[300] under which the state is under a positive obligation to safeguard the private lives of its’ citizens. The proposed system would allow the individual at the heart of the story a grace period in which to reflect upon whether an interim injunction should be sought and if the story is deemed not to be permissible then publication should be restrained until trial[301]. The applicability of this is obvious to Mosley who ultimately had to resign from his position following the story which played on his father’s fascist roots and exploited them with some creative guesswork[302]. But would this justify a system which militates against the rule against prior restrain in UK law[303]The Mosley case is certainly extreme but does not justify such a curtailment in freedom of expression and surely such a system would be immediately upon to a counterattack based upon article 10The Supreme Court of America has said:

“Any system of prior restraint on expression comes to this court bearing a heavy presumption against its constitutional validity. The only effective restraint upon executive policy and power in the areas of national defence and international affairs may be an enlightened citizenry – informed and critical public opinion which alone can here protect the values of democratic government. For without an informed and free press there cannot be an enlightened people”.

Unfortunately Britain doesn’t have a constitution but effectively created this rule in the Duke of Wellington’ famous phrase “publish and be damned”[304] but have long recognised an exception in the form of an interim injunction in an action for breach of confidence which is now under the Human Rights Act: “No such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed.”[305] If Mosley were to win in Strasbourg, and this is quite unlikely, then one of Britain’s most telling contributions to free speech, taken up and adopted in America to an honourable extent, would be irrevocably lost and the freedom of speech tradition further undermined.

Chapter 6: Recommendations

A. The recommendations of Kenneth Clarke

All of the recommendations contained in the Draft Defamation Bill are welcome and no single clause should be dropped during the consultation. Of particular importance is the requirement to demonstrate harm which single-handedly dispatches of a rule which produced a ridiculous distinction between slander and libel where only the latter, where the statement complained of is in writing or in some permanent form, could sue even though they have suffered no financial loss while the former would have to be proved in monetary terms[306]. The extension of this to libel will prevent many needless actions and free up the courts. Another noteworthy advance is the abolition of the presumption for jury trials (though the judge will still retain a discretion) in libel cases which somewhat destroys Dicey’s age old adage that a jury trial is the guarantor of free speech[307]. Codifying the defences of fair comment, justification and the Reynolds defence is also welcome to avoid confusion given that the Times itself tried to challenge Reynolds’ itself in Strasbourg[308] and give a statutory footing to journalist’s often underused defences.

B. Reforming self-regulation

The Press Complaints Commission is widely recognised to be without teeth[309] in enforcing disputes against newspapers and self-regulation, although the better option than a law of privacy, needs to be reformed in light of it receiving several thousand complaints per year but only adjudicating on a select number[310] and even then only able to request corrections with no question of costs, expenses or compensation. The PCC is still seen as being in bed with the very journalists it purports, weakly, to hold to account. Although the PCC code has been given indirect legal effect by s.12(4) of the Human Rights Act, the regulation of the press should either go to OFCOM, whose objectivity would improve, or remain in the PCC albeit within a more independent framework that has the power to monitor compliance and enforce compensation: a quasi-judicial body. As such a body they would be, under s.6, compelled to take into account convention arguments as well under Article 8 and Article 10.

C. Article 6 and the equality of arms: legal aid and costs

It is perhaps stating the obvious that libel law is seen as a rich man’s preserve with the top QC’s costing around ?400 an hour and cases being well in excess of ?750,000 for each side regardless of victory or defeat. The level of legal fees deters all but wealthiest or principled and can only serve as a curb on free speech. As can be seen from the secondary research, 46% of cases against the press were conceded by statement to open court which demonstrates the inability of newspapers to fight for what they believe in. The inhibitive costs will be reduced by the presumption in favour of a jury trial being abolished but more could be done to provide access to justice: legal aid. If legal aid, perhaps unlikely in the current economic climate, were to be extended to certain individuals and organisations then perhaps the bankrupting of individuals and the closure of small businesses, such as happened to Living Marxism in 1999 when faced with a ?350,000 libel compensation[311], would be avoided and the principle behind article 6 would be reinforced. To prevent vexatious litigants from abusing this process there could be a simple test to establish the merits of the claim prior to the award of any legal aid. The complexities of the law are also contributing and any measures which reduce the amount of pre-trial hearings to deduce the minute meanings of words would be welcomed.

D. Switching the burden of proof

One matter which is not addressed at all in the Draft Bill is the burden of proof which rests on the defender. Quite simply this burden should be switched to the American system where it is up to the defamed person to prove the falsity of the alleged statement. By placing a burden on the defendant to prove what they are saying puts an onerous exercise of calling witnesses (which increases costs) onto the party which is least able to verify the exact truth of the matter: the knowledge of the statement is surely within the exclusive and undisputed mind of the claimant and accordingly the burden of proof should reflect this.

E. Lessons from France

France maintains an interesting distinction between two spheres of privacy which British libel law could learn a lot from. The inner sphere, intimate relations, attracts heavy punishment when breached and would cover many of the stories which developed the law so far including Mosley and which have been the subject of vociferous criticism. If the media knew that such intimate parts of a person’s life were out of bounds then perhaps the investigative journalism on real issues of public interest would return and the watchdog role of journalism would be further legitimised instead of being undermined by prurient sex scandals. Either way, a definition of what is private and what is not is vital after the decision of Murray and private inroads into public space.

Conclusion

In conclusion the effect that both Article 8 and Article 10 have had on the British legal landscape and the media has been profound but not as much as some would argue. Neither right stepped into a vacuum and it can be argued that the law of breach of confidence was already a right of privacy in all but name long before Britain adopted Convention Rights in the Human Rights Act 1998. Freedom of speech, on the other hand, was a powerful rhetorical tool which has had too much style and too little substance to be considered to be dominant even before the Human Rights Act came along. However, rather than redress this historical imbalance which has curiously been created by the lack of a constitution and a dizzying array of laws that encroach upon privacy, the HRA has swept Britain along with a continental drift towards privacy which has seen the private sphere enter the public and the role of investigative journalism undermined by the iniquitous libel laws which refuse to move on from a Victorian era when reputations were guarded fiercely. No one judge has undermined the system: it is the system itself which, when the Defamation Act of 2012 hopefully passes, will hopefully take a step towards true equality between Article 10 and Article 8 and compliant with Article 6 in reducing the horrendous costs and providing legal aid. Neither right deserves to be in the ascendant but the rhetoric up to now has been misleading us all: privacy is on the march across Europe and Britain must for now march in step. The press have committed the gravest sins of all but are also at the vanguard of free speech and have enriched the UK. It should always be remembered that one of the greatest moments in the history of investigative journalism, the Times investigation of thalidomide which won compensation through the law for endless victims for the parents and families of babies born with deformities after taking the drug, was obtained through “chequebook journalism”[312].

BIBLIOGRAPHY

I. Books



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III. Websites Visited


Associated Newspapers home page: available from http://www.associatednewspapers.com/ accessed on 5th April 2011
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Argyll v Argyll [1967] 1 QB 349

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Attorney General v Jonathan Cape [1976] 1 QB 752 [Crossman Diaries]

Attorney General v Guardian Newspapers Ltd (No.2) [1990] 1 AC 109

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Bari v BBC unreported 16th July 2009

Baturina v Times Newspapers [2011] EWCA Civ 308

Berezovky v Forbe Inc (No.2) [2001] EMLR 48, CA

Bowman v MGN Ltd [2010] EWHC 895 (QB)

British Chiropractic Association v Singh [2009] EWHC 1101 (QB)

Buxton v MGN Ltd unreported 10th December 2009,

Campbell v MGN Ltd [2004] UKHL 22

Coco v A N Clark (Engineers) Ltd[1969] RPC 31

Crossley v Newsquest (Midlands South) Ltd [2008] EWHC 3054 (QB)

Curran v Scottish Daily Record and Sunday Mail Ltd[2010] CSOH 44,

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Entick v Carrington (1765) 19 St Tr 1030

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Financial Times Ltd v United Kingdom (821/03) (2010) 50 E.H.R.R. 46

Financial Times Ltd v United Kingdom (821/03) [2010] E.M.L.R. 21 at p.1172

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33.Horrocks v Lowe [1975] AC 135 at 150

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35.Hulton v Jones [1910] AC 20

36.Imutran Ltd v Uncaged Campaigns Ltd [2001] E.C.D.R. 16

37.In re Guardian News and Media Ltd and others [2010] 2 A.C. 697

38.Ifedha v Archant Regional Ltd (sued as Kilburn Times North West London Newspapers) [2010] EWHC 2819 (QB),

39.Jeynes v News Magazines Ltd [2008] EWCA Civ 130

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Lord Ashcroft KCMG v Stephen Foley, Independent News & Media Limited, Roger Alton [2011] EWHC 292 (QB)

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Murat v Associated Newspapers Ltd unreported 16th July 2008,

Murray v Express Newspapers Plc [2008] EWCA Civ 446

Napier v Pressdram Ltd [2009] EWCA Civ 443, [2010] 1 W.L.R. 934

Nicolas S. v Journal Le Matin TGI Thonon des Bains, December 22, 2006.

Times Newspapers Ltd v United Kingdom (3002/03) [2009] E.M.L.R. 14

Williams v MGN Ltd [2009] EWHC 3150 (QB)

Osbourne v Express Newspapers Unreported 5th June 2008

Perry v UK (2004) 39 EHRR 76

Pretty v UK (2002) 35 EHRR 1

Prince Albert v Strange (1849) 1 Mac & G 25

65.R. (On the application of Telegraph Group plc) vs Sherwood [2001] 1 W.L.R. 1983

66.R. v. Shayler [2002] 2 W.L.R. 754.

67.Regina (Prolife Alliance) v British Broadcasting Corporation [2004] 1 A.C. 185

68.Regina v Shayler [2003] 1 A.C. 247 at p.266

69.Regina v Advertising Standards Authority Ltd Ex p.Vernons Organisation [1992] 1 W.L.R. 1289

70.Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127

71.Re s (A Child) [2004] UKHL 47 at para 23

72.Sim v Stretch [1936] 2 All ER 1237 at 1240

73. Sunday Times v United Kingdom (A/30) European Court of Human Rights, 26 April 1979

74.Times Newspapers Ltd v United Kingdom (23676/03) (Unreported, October 11, 2005) (ECHR)

75.Times Newspapers Ltd v United Kingdom (3002/03) [2009] E.M.L.R. 14

Shaffer v Associated Newspapers Ltd Unreported 13th February 2008

Shelley Films Ltd v Rex Features Ltd [1994] EMPLR 134

Stephens v Avery [1988] Ch 449

Tesco Stores Ltd v Guardian News &Media Ltd [2009] E.M.L.R. 5;

Raulynaitis v News Group Newspapers Ltd unreported 26th February 2009,

Venables v News Group Newspapers [2001] Fam 430

Von Hannover v Germany [2004] E.M.L.R. 21

X and Y v. Netherlands (1985) 8 E.H.R.R. 235

Zola v BBC unreported 12th May 2009

Zuma v Guardian News & Media Ltd unreported 30th July 2009, ,

V. Legislation

Human Rights Act 1998

Declaration of the Rights of Man and of the Citizen

Bill of Rights

Regulation of Investigatory Powers Act 2000

Data Protection Act 1998

Freedom of Information Act 2000

Obscene Publications Act 1959 and 1964

Official Secrets Act 1911 & 1989

Public Order Act 1986

European Convention on Human Rights

VI. Other materials

Dacre, Paul (2008-11-10). “The threat to our press”. The Guardian (Online) available from: http://www.guardian.co.uk/media/2008/nov/10/paul-dacre-press-threats Retrieved 2011.4.

Draft Defamation Bill 2011 accessed on 11th April 2011 and available from http://www.justice.gov.uk/docs/draft-defamation-bill-consultation.pdf

Press Complaints Commission (January 2011) Editors Code of Conduct public interests s.2 accessed on 1st April 2011 and available from: http://www.pcc.org.uk/cop/practice.html

Preston, Peter (2010) ‘Mr. Justice Tugendhat the libel judge of our dreamsLet’s wait and see’ in Guardian Media Online accessed on 2nd April 2011 and available from: http://www.guardian.co.uk/media/2010/sep/19/michael-tugendhat-libel-judge

Press standards, privacy and libel: second report of session 2009 Volume 2 By Great Britain: Parliament: House of Commons: Culture, Media and Sport Committee

Joyce, Andrew (2006) ‘The Reynolds Public Interest Defence’ The IT Law Community accessed on 1st April 2011 and available from: http://www.scl.org/site.aspx?i=ed920

Bentham, Martin (2011) ‘Ken Clarke unveils libel law reform to strengthen free speech’ in London Evening Standard online edition accessed on 1st April 2011 and available from: http://www.thisislondon.co.uk/standard/article-23932236-ken-clarke-unveils-libel-law-reform-to-strengthen-free-speech.do

Dacre, Paul (2008-11-10). “The threat to our press”. The Guardian (Online) Retrieved 2011.4.1 and available from: http://www.guardian.co.uk/media/2008/nov/10/paul-dacre-press-threats

Preston, Peter (2010) ‘Mr. Justice Tugendhat the libel judge of our dreamsLet’s wait and see’ in Guardian Media Online accessed on 2nd April 2011 and available from: http://www.guardian.co.uk/media/2010/sep/19/michael-tugendhat-libel-judge

English translation of the Civil Code of France]: http://195.83.177.9/upl/pdf/code_22.pdf

ARTICLE 226-1 (Ordinance No. 2000-916 of 19 September 2000 Article 3 Official Journal of 22 September into force 1 January 2002) retrieved on 3rd April 2011 and available from [English translation of the Criminal Code of France]: http://195.83.177.9/upl/pdf/code_33.pdf

BBC News 21st March 2011 ‘ France fines Google over Street View Data Blunder’ retrieved on 2nd April 2011 and accessed at: http://www.bbc.co.uk/news/technology-12809076

Berlins, Marcel (2008) ‘Publicity-mad Sarkozy leads fight for privacy’ in Guardian online accessed 9th April 2011 and available from: http://www.guardian.co.uk/world/2008/feb/04/france.comment

Plunkett, John (2011) ‘Government unveils libel law reforms’ from Guardian online retrieved 28th March 2011 and available from: http://www.guardian.co.uk/media/2011/mar/15/libel-law-reforms

Rozenberg, Joshua (2011) ‘The Libel Reforms are a Step in the Right Direction: But do they go far enough?’ Guardian online retrieved on 1st April 2011 and available from: http://www.guardian.co.uk/law/2011/mar/15/libel-reforms-step-campaigners-satisfied

APPENDIX A:

Every libel action involving a newspaper between January 2008 and March 2011. The analysis of cases was obtained from www.westlaw.co.uk

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1. Jeynes v News Magazines Ltd Court of Appeal (Civil Division) reported on 31 January 2008, [2008] EWCA Civ 130;

Case Analysis

An issue of “love it!” magazine had featured on its front cover a photograph of J together with the words “BB’s Lisa ‘The Geezer’ – My fake boobs fell out on date with James Hewitt!”. That was a trailer for an article within the magazine concerning J’s account of her date. A newspaper later carried an advertisement for the magazine showing its front cover. J issued a libel action against N, who were the publishers of the magazine and newspaper respectively. She contended that the words on the front cover bore the natural and ordinary, alternatively the inferential, meaning that she was either a man posing as a woman, or that she was a transgendered or transsexual person who had been born a man but had become a woman.(Unsuccessful appeal against claim being struck out at first instance).

Judge: Sir Anthony Clarke, M.R.; Tuckey, L.J.; Jacob, L.J.

Counsel: For the appellant: Adrian Davies, S Hastie. For the respondents: Andrew Caldecott QC, Alexandra Marzec.

Solicitor: For the appellant: Osmond & Osmond. For the respondents: Farrer & Co.

2. Shaffer v Associated Newspapers Ltd Unreported Queen’s Bench Division

13 February 2008

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article concerning the administration of the estate of the claimant’s brother.

Abstract: A statement in open court was made in a libel action brought by the claimant (S) against the defendant newspaper publisher (N). N had published an article wrongly alleging that S had thwarted his late brother’s testamentary wishes resulting in his nieces being improperly deprived of their inheritance. In fact, S had acted at all times on legal advice and in accordance with the provisions of his late brother’s will and had administered the estate properly. N acknowledged that the allegations were untrue and agreed to withdraw publicly the false allegations and apologise to S for the hurt and distress caused by the publication.

Judge: Eady, J.

Counsel: For the claimant: Hanna Basha. For the defendant: Nick Braithwaite.

3. Mosley v News Group Newspapers Ltd [Convention rights arguments]

Queen’s Bench Division [application for interim injunction] 09 April 2008

[2008] EWHC 687 (QB);

Case Analysis

Application refused Video footage of a known figure engaging in sexual activities with prostitutes had entered the public domain and therefore, although the material was intrusive and demeaning and there was no legitimate interest in its further publication, an injunction prohibiting its further publication on a newspaper website was not appropriate and would serve no practical purpose. [reasonable expectation of privacy]

Judge: Eady, J.

Counsel: For the applicant: James Price QC, David Sherborne. For the respondent: Gavin Millar QC, Anthony Hudson.

Solicitor: For the applicant: Steeles Law. For the respondent: Farrer & Co.

4. Curistan v Times Newspapers Ltd Court of Appeal (Civil Division) [appeal]

30 April 2008

Case Analysis

Summary: In the circumstances passages in a newspaper article, which were a fair and accurate report of proceedings in Parliament, were protected by qualified privilege and did not lose that privilege by reason of the comments added by the newspaper to those passages. The meaning that the newspaper had to defend was the meaning to be attached to those portions of the article that were additional to those protected by privilege, and that meaning was that there were grounds to suspect that the allegations made were true rather than that they were true. [appeal refused –

The appellant (C) appealed against a decision ( [2007] EWHC 926 (QB), [2008] 1 W.L.R. 126 ) on a trial of preliminary issues that passages in an allegedly defamatory article in the newspaper published by the respondent (T) were protected by qualified privilege, and T cross-appealed against the judge’s finding on the article’s defamatory meaning

Judge: Lord Philips, L.C.J.; Laws, L.J.; Arden, L.J.

Counsel: For the appellant: Richard Parkes QC, Matthew Nicklin. For the respondent: Victoria Sharp QC, Alexandra Marzec.

Solicitor: For the appellant: Schillings. For the respondent: In-house solicitor.

5. Murray v Express Newspapers Plc [Convention right argument] [appeal] Also known as: Murray v Big Pictures (UK) Ltd Court of Appeal (Civil Division)

07 May 2008 [2008] EWCA Civ 446; [2009] Ch. 481; [2008] 3 W.L.R. 1360;

Case Analysis

Summary: Subject to the facts of the case, the law should protect the children of parents who were in the public eye from intrusive media attention, at any rate to the extent of holding that the child had a reasonable expectation that he would not be targeted in order to obtain photographs in a public place for publication, where the taking of such photographs would be objected to on the child’s behalf.

Abstract: The appellant (M), acting through his parents, appealed against the striking out ( [2007] EWHC 1908 (Ch), [2007] E.C.D.R. 20 ) of his claim against the respondent photographic agency (B) for breach of his right to respect for his privacy under the European Convention on Human Rights 1950 art.8 . M, the infant son of a well-known author, had been photographed by B in the street with his parents but without their knowledge or consent. The photograph had then been published in a national magazine. The judge struck out M’s claim on the basis that there was an area of innocuous conduct in a public place that did not raise a reasonable expectation of privacy, and that even if the decision in Von Hannover v Germany (59320/00) [2004] E.M.L.R. 21 had extended the scope of protection into areas that conflicted with the principles and decision in Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 A.C. 457 , he was bound to follow Campbell in preference. The issue was whether the judge was right so to have concluded.

Appeal allowed. (1) In deciding whether there had been an infringement of art.8, the first question to be asked was whether there was a reasonable expectation of privacy. That was an objective question and took account of all the circumstances of the case, including the attributes of the claimant, the nature of the activity in which he was engaged, the place at which it happened, the nature and purpose of the intrusion, the absence of consent, the effect on the claimant and the circumstances in which, and the purposes for which, the information reached the hands of the publisher. If there was found to be a reasonable expectation of privacy, then the second question was how the balance should be struck as between the claimant’s right to privacy and the publisher’s right to publish. At that stage, the question of whether the publication of those private facts would be considered highly offensive to an objective, reasonable person might be relevant, Campbell followed and Von Hannover considered. (2) It was at least arguable that M had a reasonable expectation of privacy. The fact that he was a child had greater significance than had been attributed to it by the judge. Although the Press Complaints Commission had ruled that the mere publication of a child’s image could not breach its Editors’ Code of Practice when taken in a public place and unaccompanied by private details that might embarrass the child, everything depended on the circumstances. It was at least arguable that a child of parents who were not in the public eye could reasonably expect that the press would not target him and publish photographs of him, and the same was true of M, especially since the photograph would not have been taken or published had he not been the son of a well-known author. In reaching his decision, the judge had relied on the decision in Hosking v Runting [2005] 1 N.Z.L.R. 1 for a significant part of his reasoning. However, that decision was not a sufficient reason to hold that M could not show a reasonable expectation of privacy at trial, Hosking considered. (3) There may well be circumstances, even after Hannover , in which there would be no reasonable expectation of privacy. However, it all depended on the circumstances of the case. It was not possible to draw a distinction between activities that were part of a person’s private recreation time and publication of which would be intrusive, and other activities such as a walk down the street or a trip to the grocer’s to buy milk. Moreover, it was not necessarily the case that such routine activities should not attract any reasonable expectation of privacy; all depended on the circumstances. Subject to the facts of the case, the law should protect children from intrusive media attention, at any rate to the extent of holding that a child had a reasonable expectation that he would not be targeted in order to obtain photographs in a public place for publication, where the taking of such photographs would be objected to on his behalf. The judge had therefore been wrong to strike out M’s claim. M had an arguable case and his parents were to be permitted to take the claim to trial on his behalf.

Judge: Sir Anthony Clarke, M.R.; Laws, L.J.; Thomas, L.J.

Counsel: For the appellant: Richard Spearman QC, Godwin Busuttil. For the respondent: Mark Warby QC, Jonathan Barnes.

Solicitor: For the appellant: Schillings. For the respondent: Solomon Taylor & Shaw.

6. Osbourne v Express Newspapers Unreported Queen’s Bench Division

05 June 2008

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a newspaper article concerning a musician.

Abstract: A statement in open court was made in a libel action brought by the claimant musician (O) against the defendant newspaper publishers (E). O had hosted a prestigious music awards ceremony with his wife and two children. The following day, E published an article falsely alleging that O had thrown the ceremony into chaos after he suffered a health scare. The article falsely reported that as a result of his health scare, O had to be ferried around the ceremony in an electric buggy. The article was republished on E’s website, where it was also falsely claimed that O and his wife sat on thrones when they were not speaking as O insisted on having a place to sit in case he got tired. In fact, O was fit and well at the time of the awards and none of the allegations were true. E accepted that the allegations were untrue and ought never to have been published. E agreed to set the record straight publicly, retract the libels and undertake never to republish the libels. E agreed to publish an apology and pay O substantial undisclosed damages and his legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: John Kelly. For the defendant: Kate Wilson.

Solicitor: For the claimant: Schillings

7. Farage v Times Newspapers unreported Queen’s Bench Division

11 June 2008

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article concerning the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant politician (F) against the defendant newspapers (T). T had published an article wrongly alleging that F had employed his son (Y) to work as his assistant, paying him out of taxpayers’ money whilst Y was in full-time education. T accepted that there was in fact no foundation to the allegation and agreed to publish an apology in the Sunday Times. T undertook not to repeat the allegation and agreed to pay F damages and his legal costs.

Judge: Eady, J.

Counsel: For the claimant: Andrew Stephenson. For the defendant: Gillian Phillips.

Solicitor: For the claimant: Carter-Ruck. For the defendant: In-house solicitor.

8. Murat v Associated Newspapers Ltd Queen’s Bench Division

16 July 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a number of articles regarding the claimants.

Abstract: A statement in open court was made in a libel action brought by the claimants (R) a businessman, (M) a translator and (S) an IT consultant against the defendant publishers. The defendants had published numerous articles in their respective newspapers and websites covering the Madeleine McCann story, wrongly alleging that R, M and S all played a part in the abduction. In relation to R, the defendants wrongly suggested in numerous articles that not only had R abducted Madeleine, but that he had lied to the police, had obstructed their investigation and had paedophilic tendencies. The defendants wrongly alleged that M had been cast out of her church, that she had lied to the police about her whereabouts when Madeleine was abducted and that she was part of a paedophile ring. It was also alleged in some of the papers that S, along with R, had been involved in the abduction of Madeleine, that S had convictions for sex offences and was interested in child pornography. In fact, R had helped the police with their investigations by becoming a volunteer translator, M was never suspected or accused of any involvement with the abduction of Madeleine McCann and S was not guilty of any sexual misconduct and had no criminal convictions. The defendants accepted that none of the claimants had played any part whatsoever in Madeleine’s abduction, and that the allegations made were wholly false. They withdrew the statements from the newspapers’ websites. The defendants apologised for the false defamatory allegations published, agreed to publish apologies and paid substantial damages to the claimants as well as covering their legal costs.

Judge: Eady, J.

Solicitor: For the claimant: Simons Muirhead & Burton. For the defendants: Reynolds Porter Chamberlain LLP.

9. Ewing v News International Ltd Queen’s Bench Division 22 July 2008

[2008] EWHC 1390 (QB);

Case Analysis:

Vexatious litigant and s.42(3) of the Supreme court act 1981] Application refused. (1) The test under s.42(3) should be exercised with due care and caution or carefully and sparingly Becker v Teale [1971] 1 W.L.R. 1475 and Attorney General v Jones (Marcus David) [1990] 1 W.L.R. 859 applied. An applicant had to show that there were reasonable grounds for bringing a claim and, when considering whether there were reasonable grounds, the court normally had to consider whether or not that claim had a real prospect of success.

10. Tesco Stores Ltd v Guardian News & Media Ltd Queen’s Bench Division

29 July 2008 [2009] E.M.L.R. 5; (2008) 105(34) L.S.G. 24; (2008) 152(34) S.J.L.B. 29

Case Analysis:

Summary: It was not possible for a claimant indefinitely to elect neither to accept nor to reject an offer of amends made in defamation proceedings. To do so would undermine the statutory regime under the Defamation Act 1996 and make a nonsense of Parliament’s intention in introducing the offer of amends defence.

Abstract: The court was required to determine whether the claimant supermarket chain (T) was entitled neither to accept nor to reject an offer of amends proffered by the respondent newspaper (G) following G’s publication of defamatory statements. G had published allegations that T had engaged in a scheme designed to avoid corporation tax, and T instigated a libel action against G and a claim for malicious falsehood. G admitted the falsehood of its principal allegation, namely that the particular scheme in question did not involve the avoidance of corporation tax. G also admitted that the meanings pleaded by T were defamatory. G published a retraction of its principal allegation, stating that T had not been involved in the avoidance of corporation tax but rather an avoidance of stamp duty land tax. G served its defence 21 minutes after making an offer of amends pursuant to the Defamation Act 1996 s.2. T neither accepted nor rejected that offer. The issue for determination was whether T should be compelled to elect either to accept or to reject the offer of amends, and whether its malicious falsehood claim should be stayed as serving no useful purpose. G submitted that there was no head of damages recoverable in malicious falsehood that T could not recover in the defamation claim and that the malicious falsehood claim was only extant for tactical reasons. T argued that, even if it accepted the offer of amends and obtained an apology and damages under the statutory scheme, it could go on and obtain a decision on the malicious falsehood issue so as to have the court’s finding in relation to malice.

Judgment accordingly. (1) The philosophy underlying Parliament’s introduction of the offer of amends regime contained in the Defamation Act 1996 was to enable parties in defamation proceedings, or even prior to the issue of proceedings, to achieve a relatively speedy and inexpensive disposal of a complaint of injury of reputation where the defendant was prepared to acknowledge that it had published defamatory allegations that were essentially inaccurate. It would make a nonsense of that underlying policy if it were possible for a claimant to go ahead with proving malice whilst keeping an offer of amends available until the conclusion, or throughout the duration, of the trial, Express Newspapers Plc v News (UK) Ltd [1990] 1 W.L.R. 1320 applied. T had to accept the offer of amends or else take on the risk of overcoming the statutory defence by proving malice at trial. Furthermore, there was no legitimate reason why T should be allowed to pursue a claim for malicious falsehood. It would not afford any substantive remedy in respect of reputation, and any damages to which T might be entitled as a result of G’s publications could be recovered in defamation, Burstein v Times Newspapers Ltd [2001] 1 W.L.R. 579, Turner v News Group Newspapers Ltd [2006] EWCA Civ 540, [2006] 1 W.L.R. 3469 and Warren v Random House Group Ltd [2008] EWCA Civ 834, [2009] Q.B. 600 considered. Accordingly, the malicious falsehood claim would be stayed. (2) Finally, G would be allowed to amend its pleadings to include a proposal that T had been avoiding stamp duty land tax as opposed to corporation tax, Birchwood Homes Ltd v Robertson [2003] EWHC 293 (QB) considered.

Judge: Eady, J.

Counsel: For the claimant: A Page QC, J Rushbrooke. For the defendant: A Caldecott QC, C Evans.

11. John v Guardian News and Media Ltd Queen’s Bench Division

12 December 2008 [2008] EWHC 3066 (QB); Official Transcript

Case Analysis

Summary: In context, the words complained of in a libel action were not capable of bearing the meaning attached to them by the claimant. No reasonable reader of the publication would have understood the words complained of as containing serious allegations about the claimant and his charitable donations.

Abstract: The applicant media corporation (G) applied to strike out a libel claim brought against it by the respondent musician (J). G had published what purported to be an extract of J’s diary in a supplemental newspaper magazine called the “Weekend”. The extract included statements of purported fact and opinion that were attributed to J. In particular, the extract referred to an annual ball that was hosted by J for the purpose of raising money for a charity (C). The article stated that once the costs of hosting the event had been deducted from the proceeds, any remaining money was given to C. J issued a libel claim against G on the basis that (i) by their natural and ordinary meaning, the words complained of suggested that J was insincere about his commitment to C’s aims and objectives; (ii) by way of innuendo the same words also suggested that he dishonestly or falsely claimed that all money raised during the event went to C, when only the balance of money raised at the event, subtracting the costs of hosting the event, was made available to C. G submitted that no reasonable reader would have sensibly thought that the words complained of meant that the money raised by the ball was used to cover the costs of the event and that, thereafter, only a small proportion of the remaining money was made available for charitable objectives.

Appeal allowed. The designation of the supplement, in which the words complained of were contained, assisted in understanding the extent to which the words could be understood to be factual or not. On the basis that the “Weekend” supplement was not part of the news section of the paper, the words complained of would not have been understood by a reasonable reader as containing a serious allegation of fact. If such an allegation was being made, a reasonable reader would have expected it to have been made without humour and to have been written explicitly in the part of the newspaper devoted to news. Unless a reader was exceptionally suspicious or naive, he would be bound to understand that the words complained of were not to be understood as a factual statement as to how the money raised at the ball was spent. Thus, the words complained of were not capable of bearing the meanings attributed to them by J and consequently, his claim fell to be struck out. Furthermore, J’s associated plea of malice fell to be struck out since it was dependent on the court endorsing J’s view of the meaning behind the words complained of.

Judge: Tugendhat, J.

Counsel: For the claimant: William McCormick. For the defendant: Gavin Millar QC, Anthony Hudson.

Solicitor: For the claimant: Carter Ruck. For the defendant: Isobel Griffiths.

12. Osbourne v News Group Newspapers Ltd Queen’s Bench Division

15 January 2009 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (O), a successful music manager, promoter and television presenter, against the defendant newspaper publisher (N). N had published an article in its newspaper and on its website wrongly suggesting that the claimant had put her musician husband’s life at risk by working him too hard at the cost of his health. N also falsely suggested her motivation for doing so was to fund her exorbitant spending. The allegations were entirely without foundation. N apologised for publishing the false and defamatory allegations and offered to publish an apology. N also agreed to pay O substantial damages and her legal costs. Leave to withdraw the record was requested.

13. Marshall v Express Newspapers Queen’s Bench Division 29 January 2009

Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (M), an 18 year old student, against the defendant newspaper publisher (N). N had published articles falsely alleging that the day after the conviction of a man (B) for the murder of an 11 year old boy, M had publicly praised him in a television interview as a hero. The articles also wrongly alleged that M was B’s girlfriend, was a member of a criminal gang and that she had declared a pledge of loyalty to the gang following B’s conviction. In fact M did not make any public statement following B’s conviction, did not regard him as a hero and had not made such a claim or sought publicity for it in the aftermath of B’s conviction for such an appalling murder. M was not nor had ever been a member of a criminal gang and had never been B’s girlfriend. N agreed to pay M a substantial sum in damages which she intended to donate to the Rhys Jones Memorial Trust. Permission to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Helen Morris. For the defendant: Kate Wilson.

14. Raulynaitis v News Group Newspapers Ltd Queen’s Bench Division

26 February 2009 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a newspaper article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (R) against the defendant newspaper publishers (N). N had published an article in its newspaper and to its website wrongly alleging that R had ordered passengers off of his bus in order for him to pray. The article suggested that R was arrogant, unprofessional and contemptuous of the passengers. The article further alleged that the passengers later refused to re-board the bus as they spotted a rucksack and feared R was a fanatic. In fact, R had prayed on the bus during his statutory break and no passenger was inconvenienced. N accepted the allegations were false and published an apology. N paid R a sum in damages and covered his legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Stephen Loughrey. For the defendant: Patrick Callaghan.

Solicitor: For the claimant: Carter-Ruck.

15.Hudson v Associated Newspapers Ltd Queen’s Bench Division

04 March 2009 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication and broadcast of articles which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (H) against the defendant newspaper publishers and broadcaster (N). N had published articles in their newspapers, on their websites and broadcast items that made various allegations relating to the 16th birthday party of H’s daughter at her home. The overall impression was that H allegedly had failed to exercise proper parental supervision over the party. In fact, all the allegations were false. There was no basis to accuse H of failing to exercise proper supervision. N apologised for publishing the false allegations and had published apologies in their respective newspapers or on their websites. N also agreed to pay H substantial damages and her legal costs. Leave to withdraw the record was requested.

Judge: Sir Charles Gray

16. Times Newspapers Ltd v United Kingdom (3002/03) Times Newspapers Ltd v United Kingdom (23676/03) European Court of Human Rights 10 March 2009 [2009] E.M.L.R. 14; Times, March 11, 2009;

Case Analysis:

Summary: Where a newspaper had published, in its print publication, an allegedly defamatory article which, during the libel action, was available to readers on the newspaper’s website, it was not a disproportionate interference with the right to freedom of expression to require that the newspaper publish an appropriate qualification to the internet version of the article. [convention arguments]

[multiple publication rule – each new reproduction was a fresh libel]

17. Author of a Blog v Times Newspapers Ltd Queen’s Bench Division

16 June 2009 [2009] EWHC 1358 (QB); [2009] E.M.L.R. 22; (2009) 106(26) L.S.G. 18; (2009) 159 N.L.J. 924; (2009) 153(24) S.J.L.B. 33;

Case Analysis:

The court declined to restrain a newspaper from revealing the identity of a blogger, which it had deduced from publicly available sources, because that information did not have about it the necessary quality of confidence, nor did it qualify as information in respect of which the blogger had a reasonable expectation of privacy, essentially because blogging was a public activity. [convention arguments]

18. Jones v Telegraph Media Group Ltd Queen’s Bench Division

23 June 2009 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (J) against the defendant newspaper publisher (T). J was the United Kingdom’s most senior intelligence expert on weapons of mass destruction in the period leading up to the Iraq war. T had published an article in its newspaper and on its website which falsely alleged that J had leaked information to the media before the Iraq war. In fact, J had been singled out by the Chairman of the House of Commons Select Committee investigating leaks in Whitehall as someone who did not, and would not, leak information. T accepted that the allegation was untrue and published an apology to J as well as agreeing to pay damages and J’s legal costs.

Judge: Eady, J.

Counsel: For the claimant: Luke Staiano.

Solicitor: For the claimant: Carter-Ruck.

19. Zuma v Guardian News & Media Ltd Queen’s Bench Division

30 July 2009 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article by a newspaper which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (Z) against the defendant newspaper publisher (G). Z was the President of South Africa. G had published an article in an edition of its newspaper and on its website which falsely alleged that Z was guilty of various crimes. Z issued libel proceedings and G subsequently published an apology accepting that Z was acquitted of one of the offences and the others were dropped by the South African National Prosecuting Authority. Z did not consider that the apology adequately dealt with his complaint. The apology was said to be published far less prominently in the newspaper and on the website than the article complained of. Additionally, the apology was initially unavailable online when a search was made using Z’s name. G then made an offer of amends. In light of the fact that G was willing to pay very substantial damages to Z and it had publically apologised to Z, Z considered his reputation in the matter had been entirely vindicated and he was prepared not to proceed any further in his action against G. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Jenny Afia.

Solicitor: For the claimant: Schillings.

20 .Ecclestone v Telegraph Media Group Ltd Queen’s Bench Division

06 November 2009 [2009] EWHC 2779 (QB);

Case Analysis:

Summary: An item in a newspaper diary column, which quoted the claimant as saying that she was not a vegetarian and “did not have much time for people like the McCartneys and Annie Lennox”, was not capable of bearing the defamatory meaning that she contended it did. The ordinary reasonable reader would see the words as nothing more than the expression of a permissible view.

Abstract: The applicant newspaper publisher (T) applied for a ruling that the words complained of by the respondent fashion designer (E) in her libel action were not capable of being defamatory. T published an item in a diary column about E, in which she was quoted as having said, “I am not a veggie and I don’t have much time for people like the McCartneys and Annie Lennox.” She denied saying that, and claimed that in their natural and ordinary or inferential meaning the words meant and were understood to mean that she was disrespectful and dismissive of the McCartneys and Annie Lennox to the point of being willing to disparage them publicly for promoting vegetarianism. T submitted that the real focus of E’s complaint, the phrase “haven’t much time for”, was commonly used and a perfectly acceptable way of expressing a difference of opinion or preference. If the opinion of the speaker was acceptable the phrase did not necessarily impute a dislike or disparagement of a person holding a contrary view. T submitted that even if the phrase connoted such an imputation, that in itself would not make the item defamatory. [action struck out]

21. Financial Times Ltd v United Kingdom (821/03) European Court of Human Rights 15 December 2009 [2010] E.M.L.R. 21; (2010) 50 E.H.R.R. 46; 28 B.H.R.C. 616; Times, December 16, 2009

Case Analysis:

Summary: An order requiring that certain newspapers disclose to a brewing company documents that could lead to the identification of journalistic sources who had leaked information about a takeover bid violated the European Convention on Human Rights 1950 art.10. The public interest in the protection of journalistic sources was not outweighed by the company’s arguments that the institution of proceedings against the sources would eliminate the threat of damage by any future dissemination of confidential information and would compensate it for past breaches of confidence.

[convention arguments] success of article 10 here

22. Guardian News & Media Ltd, Re Also known as: HM Treasury v Youssef

al-Ghabra v HM Treasury Ahmed v HM Treasury Supreme Court

27 January 2010 [2010] UKSC 1; [2010] 2 A.C. 697; [2010] 2 W.L.R. 325; [2010] 2 All E.R. 799; [2010] E.M.L.R. 15; [2010] H.R.L.R. 14; [2010] U.K.H.R.R. 181; (2010) 107(6) L.S.G. 18; (2010) 154(4) S.J.L.B. 29; [2010] N.P.C. 8; Times, January 28, 2010;

Case Analysis:

In the circumstances, there was a powerful general public interest in identifying M which justified curtailment of his art 8 rights. M’s argument really amounted to saying that the press should be prevented from printing what was true for fear that some of those reading the reports might misinterpret them and act inappropriately. [Convention arguments]

23. Ali v Associated Newspapers Ltd Queen’s Bench Division

27 January 2010 [2010] EWHC 100 (QB);

Case Analysis:

Summary: Summary judgment was granted to a defendant newspaper publisher in a claim for libel on the basis of justification.

Abstract: The applicant newspaper publisher (N) sought summary judgment on a libel claim brought by the respondent (X). X was a civil servant employed by the Treasury. N published the fact that X had been suspended from his employment following the posting of remarks on his personal blog. Passages from X’s blog were published by N. X pleaded that the publications had the defamatory meaning that X was a hardline Islamic extremist who supported the killing of British and American soldiers in Iraq by fellow Muslims as justified. N submitted that X’s claim was bound to fail as X’s observations on his blog advocated a form of jihad which could only be understood as justifying the killing of British and American troops in Iraq. N argued that a jury would be perverse not to hold that the blogs in question justified the inference against X. X submitted that he should be permitted to adduce evidence of his background and other blogs to demonstrate that he was not hardline or extremist.

Application granted. It was necessary to have in mind the role of a jury not only in coming to conclusions of primary fact but also in drawing any appropriate inferences, Bataille v Newland [2002] EWHC 1692 (QB) applied. On reflection, N’s submissions were correct on the very unusual facts in the instant case. X had taken the position that the killing of American and British troops in Iraq would be justified by his interpretation of jihad. As it was a matter of construing plain language in its overall context, it would be perverse to take a contrary view. In those circumstances the claim could legitimately be categorised as bound to fail. Nothing would be gained by investigating X’s other blogs or his background. Such an exercise could not change or qualify the plain meaning of the blog in question.

Judge: Eady, J.

24. Curran v Scottish Daily Record and Sunday Mail Ltd Court of Session (Outer House) 26 March 2010 [2010] CSOH 44; 2010 S.L.T. 377; 2010 G.W.D. 11-191; Official Transcript

Case Analysis:

Summary: A newspaper article did not amount to defamation where, having regard to its timing and context, its contents could be characterised as fair retort, and qualified privilege therefore attached.

Abstract: A member of the Scottish Parliament (C) sought damages from a newspaper company (D) in respect of alleged defamatory comments contained within articles based on interviews with another member of the Scottish Parliament (S) who had previously belonged to the same political party as C. C and other MSPs had released a press statement immediately following S’s success in a defamation action against a newspaper group, stating that S had lied during the court case. The articles complained of were published three days later, and referred to C as a “scab” or a “political scab” and included her photograph with the word superimposed upon it. D moved for dismissal, submitting that (1) criticism by one MSP of another did not amount to defamation because of the permitted latitude in criticising those who hold public office and the article had to be read as a whole, the test being whether the words used in it tended to lower the pursuer in the estimation of right thinking members of society generally; (2) in any event, the comments made in the article were protected by qualified privilege in the form of fair retort to the attack made upon S by C and her colleagues.

25. Dee v Telegraph Media Group Ltd Queen’s Bench Division

28 April 2010 [2010] EWHC 924 (QB); [2010] E.M.L.R. 20; (2010) 160 N.L.J. 653; Official Transcript

Case Analysis:

Summary: It was arguable that a professional sportsman could be libelled by suggestions that he lacked skill or was incompetent. However, on the facts of the instant case a newspaper article which highlighted a professional tennis player’s 54 consecutive defeats on the international tennis circuit was not defamatory as the publisher could rely on the defence of justification and/or fair comment.

Any application for summary judgment in a libel case is difficult – because any seriously disputed issues of fact or meaning have to be left to the jury – nevertheless, the case is a remarkable one and it is not surprising that an application was made.

26. Gascoigne v News Group Newspapers Ltd Queen’s Bench Division 07 May 2010 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of a newspaper article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (G) against the defendant newspaper publisher (N). N had published an article that reported on the reaction of G’s ex-husband, an ex-England footballer, to an interview given by G in relation to her autobiography. The article falsely alleged that G had lied in both her book and the interview about her ex-husband forcing himself upon her sexually and acting violently towards her. In fact, the allegations were entirely untrue. N apologised and agreed to pay G damages along with her legal costs.

Judge: Tugendhat, J.

Counsel: For the claimant: Roderick Chisholm-Batten. For the defendant: Patrick Callaghan.

27. Margolis v Independent News & Media Ltd Queen’s Bench Division 21 May 2010 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a headline which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (M), a writer and feminist, against the defendant newspaper publisher (N). N had published an article in its newspaper and on its website that was written by M, however the headline inserted by N falsely alleged that M had been a prostitute or had otherwise been involved in the sex industry. The allegations were completely untrue. N published an apology in the newspaper and online. N agreed to pay M damages along with legal costs. Permission to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Lucy Moorman. For the defendant: Victoria Shore

28. Lucas v Express Newspapers Queen’s Bench Division 25 May 2010

Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of articles which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (L) against the defendant newspaper publisher (E). E had published articles in its newspaper concerning L’s state of being following the death of his ex-partner. E did not provide L with any warning that it intended to publish the articles, or any indication of their contents. The statements were false and caused L considerable upset and distress. E accepted that the articles constituted an unlawful intrusion into L’s grief and suffering and that the statements therein were false and should not have been published. E retracted the allegations, agreed not to republish the articles and apologised to L. E also agreed to pay L substantial damages and his legal costs.

Judge: Tugendhat, J.

Counsel: For the claimant: John Kelly.

Solicitor: For the claimant: Schillings.

29. Thornton v Telegraph Media Group Ltd Queen’s Bench Division

16 June 2010 [2010] EWHC 1414 (QB); [2010] E.M.L.R. 25;

Case Analysis

Summary: In the context of defamation, the position of professional writers could be compared to the position of professional sportsmen in Dee v Telegraph Media Group Ltd [2010] EWHC 924 (QB), [2010] E.M.L.R. 20; writers were free to direct different products to different readerships or markets. As long as the true position was made clear by the writer to the prospective reading public, the standards to which a writer wrote were simply a matter of choice of one product over another and therefore to impute to a writer that they wrote to one standard rather than another could not of itself be defamatory.

Abstract: The applicant newspaper (X) applied for summary judgment of an action for libel commenced by the respondent book author (T). Whilst researching her book, T had conducted several interviews. X had published an unfavourable review of the book, in which it stated among other things that T had given her interviewees the right to read what she proposed to say about them and alter it, which was known by journalists as “copy approval” and very much disapproved of. T considered X’s statement to have a defamatory meaning. She maintained in her particulars of claim that the statement also suggested a second defamatory meaning, namely that she had shown herself to be untrustworthy and fatally lacking in integrity and credibility as a researcher and writer. The court was required to determine, for the purposes of both CPR r.24.2 and CPR PD 53 4.1(2) whether T had a real prospect of establishing that the relevant words were defamatory of her. X submitted that in order to be actionable as business defamation and defeat defences of justification and fair comment, words had to do more than injure a claimant in the way of their office, profession or trade. X contended that as copy approval was not illegal or contrary to any professional code, the allegation did not amount to business libel because it was not serious enough to pass the required threshold of seriousness. T argued that the allegation was business or professional libel because it undermined her integrity as a professional writer and that to impute incompetence in a claimant’s profession was sufficient to constitute defamation. (summary judgement granted for paper)

30. Flood v Times Newspapers Ltd Court of Appeal (Civil Division)

13 July 2010 [2010] EWCA Civ 804; [2011] 1 W.L.R. 153; [2010] E.M.L.R. 26; [2010] H.R.L.R. 30; Times, July 27, 2010;

Case Analysis:

Summary: The inquiry involved in deciding whether the Reynolds defence applied to a defamatory statement was a matter of judgment which raised a question of law to which there was only one right answer. It was not an exercise of discretion, and could therefore be a matter for an appellate court. [appeal allowed against newspaper]

31. George v Express Newspapers Queen’s Bench Division 19 July 2010

Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant actor and DJ (G) against the defendant publisher (E). E had published an article in one of its newspapers that falsely suggested that G had been drunk and intent on causing trouble at a party and that, as a result, he had been removed from the party by security guards. In fact, the allegations were entirely false. E accepted that the allegations were untrue and should not have been published. It apologised for the damage to G’s reputation and for the distress and embarrassment which the publication caused. E agreed to pay G damages and his legal costs. Leave to withdraw the record was requested.

Judge: Tugendhat, J.

Counsel: For the claimant: Lucy Moorman. For the defendant: Kate Wilson.

32. Hewitt v Express Newspapers Queen’s Bench Division 22 July 201 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimants.

Abstract: A statement in open court was made in a libel action brought by the claimant trustees (T) of a charity against the defendant newspaper publisher (E). E had published an article on its website about a terrorist attempt to blow up an aeroplane. The article falsely suggested that the Palestinian Relief and Development Fund, commonly known as Interpal, a charity registered in the United Kingdom of which T were trustees, was Hamas supporting, notwithstanding that Hamas was deemed a terrorist organisation under UK anti-terrorism legislation, and thereby wrongly suggested that T aided terrorism. E apologised for publishing the false and defamatory allegations and accepted that they should never have been published. E agreed to pay T substantial damages and their legal costs.

Judge: Eady, J.

Counsel: For the claimants: Luke Staiano.

Solicitor: For the claimants: Carter-Ruck.

33. Ronaldo v Telegraph Media Group Ltd Queen’s Bench Division

27 October 2010 [2010] EWHC 2710 (QB);

Case Analysis:

Summary: Whilst it was an abuse of process for defamation proceedings to be pursued that were not serving the legitimate purpose of protecting the claimant’s reputation, the claimant’s vindication in the settlement of his claim against one publisher did not mean that his continuing claim against a second publisher was an abuse.

Abstract: The applicant newspaper publisher (T) applied for a libel action by the respondent footballer (R) to be stayed as an abuse of the process of the court. R was claiming that an article published by T falsely stated he had drunk lots of champagne and danced at a nightclub shortly after an ankle operation, thereby suggesting he was unprofessional and reckless. In the meantime, another newspaper publisher (M) which had published a similar article had reached a settlement with R. In a statement in open court, it was said that M accepted the allegations it had published were untrue, R had been paid substantial damages and he considered himself to be fully vindicated. T submitted that following the vindication of R in his action against M, his instant claim no longer served the legitimate purpose of protecting his reputation.

Judge: Sharp, J.

Counsel: For the claimant: James Price QC, Adam Speker. For the defendant: David Price.

Solicitor: For the claimant: Schillings. For the defendant: David Price.

34. Ifedha v Archant Regional Ltd (sued as Kilburn Times North West London Newspapers) Queen’s Bench Division 08 November 2010 [2010] EWHC 2819 (QB);

Case Analysis:

Subject: Defamation Other related subjects: Media and entertainment; Civil procedure

Keywords: Libel; Newspapers; Nightclubs; Statements of case

Summary: Libel proceedings against a local newspaper publisher were struck out on the basis that the claimant’s fifth attempt to draft a statement of case was still deficient for the purposes of CPR r.3.4(2)(a) and (b).

Abstract: The applicant nightclub owner (X) applied to set aside an order staying libel proceedings brought against the respondent newspaper publisher (Y) and Y cross-applied to strike out the claim. X owned a nightclub that had had its alcohol licence revoked by the relevant local authority after the police discovered evidence of illegal activities on the premises. Y had published a series of articles that referred to the nightclub’s closure and the surrounding circumstances. X commenced libel proceedings against Y. The principle meaning complained of was that words used in the articles suggested that X had been involved in criminal activity. X’s statement of claim was deficient in a number of regards. A master determined that X had failed to provide necessary details to support his claim pursuant to CPR r.3.4(2)(a) and, so far as he was seeking general damages, the action was worth no more than a nominal amount, if anything at all. Consequently, the master determined that the case, as formulated, infringed r.3.4(2)(b). X’s final draft statement of case was his fifth attempt to comply with the CPR.

Application refused, cross-application granted. The master was entitled to form the view that X’s statement of case was deficient and contrary to r.3.4(2)(a) and (b). His claim for damages bore no relation whatever, either to the law or reality. The master was entitled to conclude that the action was in fact worth no more than a nominal amount if anything at all. X’s claim was without merit and his calculations of loss entirely imaginary. Even if X were given another opportunity to put his claim in proper form, and if he limited his claim to general damages, it would, on its merits, have no real prospect of success (see paras 32 -34 of judgment).

Judge: Tugendhat, J.

Counsel: For the applicant: In person. For the respondent: Richard Munden.

Solicitor: For the respondent: Reynolds Porter Chamberlain.

35. Lait v Evening Standard Ltd Queen’s Bench Division 09 December 2010

[2010] EWHC 3239 (QB);

Case Analysis:

Summary: A former member of Parliament was not entitled to summary judgment on her claim alleging defamation by a newspaper in respect of an article which bore the meaning that she had milked the Parliamentary expenses system and that her criticism of a proposed reform to the expenses regime was apt, rightly, to provoke public anger. The newspaper’s defence of fair comment was bound to succeed. [judgement for newspaper – references to pilot scheme?]

Judge: Eady, J.

Counsel: For the claimant: Richard Rampton QC, Ian Helme. For the defendant: Mark Warby QC, Victoria Jolliffe.

Solicitor: For the claimant: Carter-Ruck. For the defendant: Taylor Wessing LLP.

APPENDIX B

Every Libel Case Mr Justice Eady was involved in between February 2008 and March 2011.The analysis of cases was obtained from www.westlaw.co.uk

1. Shaffer v Associated Newspapers Ltd Queen’s Bench Division 13 February 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article concerning the administration of the estate of the claimant’s brother.

Abstract: A statement in open court was made in a libel action brought by the claimant (S) against the defendant newspaper publisher (N). N had published an article wrongly alleging that S had thwarted his late brother’s testamentary wishes resulting in his nieces being improperly deprived of their inheritance. In fact, S had acted at all times on legal advice and in accordance with the provisions of his late brother’s will and had administered the estate properly. N acknowledged that the allegations were untrue and agreed to withdraw publicly the false allegations and apologise to S for the hurt and distress caused by the publication.

Judge: Eady, J.

Counsel: For the claimant: Hanna Basha. For the defendant: Nick Braithwaite.

Solicitor: For the claimant: Carter-Ruck. For the defendant: In-house solicitor.

2. Smith v World Entertainment News Network Ltd Queen’s Bench Division

22 February 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article about the claimant actor.

Abstract: A statement in open court was made in a libel action brought by the claimant actor (S) against the defendant news network (W). W had published an article which falsely claimed that S had declared in an interview that Nazi dictator Adolf Hitler was a good person. The allegation was false and without any foundation. In fact, S believed that Hitler was a vile and heinous man. W agreed to apologise for the distress and embarrassment caused by the allegations, which it acknowledged were false. W also agreed to pay an amount of damages to S for the libel. S intended to donate the award of damages to charity. W agreed to pay S’s legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Rachel Atkins. For the defendant: Marvin Simons.

Solicitor: For the claimant: Schillings. For the defendant: Seddons.

3 .Osbourne v Express Newspapers Queen’s Bench Division 05 June 2008

Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a newspaper article concerning a musician.

Abstract: A statement in open court was made in a libel action brought by the claimant musician (O) against the defendant newspaper publishers (E). O had hosted a prestigious music awards ceremony with his wife and two children. The following day, E published an article falsely alleging that O had thrown the ceremony into chaos after he suffered a health scare. The article falsely reported that as a result of his health scare, O had to be ferried around the ceremony in an electric buggy. The article was republished on E’s website, where it was also falsely claimed that O and his wife sat on thrones when they were not speaking as O insisted on having a place to sit in case he got tired. In fact, O was fit and well at the time of the awards and none of the allegations were true. E accepted that the allegations were untrue and ought never to have been published. E agreed to set the record straight publicly, retract the libels and undertake never to republish the libels. E agreed to publish an apology and pay O substantial undisclosed damages and his legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: John Kelly. For the defendant: Kate Wilson.

Solicitor: For the claimant: Schillings.

4. Farage v Times Newspapers Queen’s Bench Division 11 June 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article concerning the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant politician (F) against the defendant newspapers (T). T had published an article wrongly alleging that F had employed his son (Y) to work as his assistant, paying him out of taxpayers’ money whilst Y was in full-time education. T accepted that there was in fact no foundation to the allegation and agreed to publish an apology in the Sunday Times. T undertook not to repeat the allegation and agreed to pay F damages and his legal costs.

Judge: Eady, J.

Counsel: For the claimant: Andrew Stephenson. For the defendant: Gillian Phillips.

Solicitor: For the claimant: Carter-Ruck. For the defendant: In-house solicitor.

5. Murat v Associated Newspapers Ltd Queen’s Bench Division 16 July 2008

Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a number of articles regarding the claimants.

Abstract: A statement in open court was made in a libel action brought by the claimants (R) a businessman, (M) a translator and (S) an IT consultant against the defendant publishers. The defendants had published numerous articles in their respective newspapers and websites covering the Madeleine McCann story, wrongly alleging that R, M and S all played a part in the abduction. In relation to R, the defendants wrongly suggested in numerous articles that not only had R abducted Madeleine, but that he had lied to the police, had obstructed their investigation and had paedophilic tendencies. The defendants wrongly alleged that M had been cast out of her church, that she had lied to the police about her whereabouts when Madeleine was abducted and that she was part of a paedophile ring. It was also alleged in some of the papers that S, along with R, had been involved in the abduction of Madeleine, that S had convictions for sex offences and was interested in child pornography. In fact, R had helped the police with their investigations by becoming a volunteer translator, M was never suspected or accused of any involvement with the abduction of Madeleine McCann and S was not guilty of any sexual misconduct and had no criminal convictions. The defendants accepted that none of the claimants had played any part whatsoever in Madeleine’s abduction, and that the allegations made were wholly false. They withdrew the statements from the newspapers’ websites. The defendants apologised for the false defamatory allegations published, agreed to publish apologies and paid substantial damages to the claimants as well as covering their legal costs.

Judge: Eady, J.

Solicitor: For the claimant: Simons Muirhead & Burton. For the defendants: Reynolds Porter Chamberlain LLP.

6. Mosley v News Group Newspapers Ltd Queen’s Bench Division, 24 July 2008

[2008] EWHC 1777 (QB); [2008] E.M.L.R. 20; (2008) 158 N.L.J. 1112; Times, July 30, 2008;

Case Analysis

Summary: There was a reasonable expectation of privacy in relation to sexual activities, albeit unconventional, carried on between consenting adults on private property. The exposure by a national newspaper of sado-masochistic and some sexual activities and role play between the claimant and other consenting adult participants could not be justified on grounds of public interest and had been in breach of confidence and the claimant’s rights under the European Convention on Human Rights 1950 art.8 .

Abstract: The claimant (M) sought damages from the defendant newspaper publisher (N) for breach of confidence and the unauthorised disclosure of personal information which infringed his rights of privacy as protected by the European Convention on Human Rights 1950 art.8 . M was the President of the FIA. One of N’s newspapers had published an article under the heading “F1 BOSS HAS SICK NAZI ORGY WITH 5 HOOKERS” , accompanied by a number of captioned images, which concerned an event attended by M and five women involving sado-masochistic and some sexual activities and role play. The same information and images were published on N’s website, which contained video footage relating to the same event. The articles alleged that the sessions had a Nazi theme and mocked the way that Holocaust victims had been treated in concentration camps. A “follow up” article was published a week later, headed “EXCLUSIVE: MOSLEY HOOKER TELLS ALL: MY NAZI ORGY WITH F1 BOSS”, which consisted of a purported interview with one of the women (E) who had been present at the event in question and had filmed what took place clandestinely with a hidden camera supplied by N. M contended that the content of the published material was inherently private in nature and that there had also been a pre-existing relationship of confidentiality between the participants as they had all known each other for some time and had taken part in their activities on the understanding that they would be private and that none of them would reveal what had taken place. M alleged that E had breached that trust. N contended that M had no reasonable expectation of privacy in relation to the information or images concerning the event, or alternatively that M’s right to privacy under art.8 of the Convention was outweighed by a greater public interest in the disclosure, such that its right to freedom of expression under art.10 of the Convention should, in the circumstances, be allowed to prevail. N submitted that, because of M’s role as president of the FIA, the public had a right to know about the nature of the sexual activities that he indulged in. M denied that the event had had any Nazi theme or anything to do with concentration camps.

Judgment for claimant. (1) The law now afforded protection to information in respect of which there was a reasonable expectation of privacy, even in circumstances where there was no pre-existing relationship giving rise of itself to an enforceable duty of confidence, Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 A.C. 457 considered. M had a reasonable expectation of privacy in relation to sexual activities, albeit unconventional, carried on between consenting adults on private property. The clandestine recording of sexual activity on private property engaged the rights protected by art.8 of the Convention, and serious reasons had to exist before interferences with it could be justified, Dudgeon v United Kingdom (A/45) (1982) 4 E.H.R.R. 149 considered. It had to be determined whether the degree of intrusion into a claimant’s privacy was proportionate to the public interest supposedly served by it, Douglas v Hello! Ltd (No.1) [2001] Q.B. 967 applied. Moreover, E had owed a duty of confidence to M and the other participants. Those who participated in sexual or personal relationships might be expected not to reveal private conversations or activities. It was highly questionable whether, in modern society, the concept that “there is no confidence in iniquity” could be applied to sexual activity, fetishist or otherwise, conducted between consenting adults in private. E had, therefore, committed a breach of confidence as well as a violation of the art.8 rights of all those involved. (2) There was no evidence that the event attended by M and the other participants was intended to be an enactment of Nazi behaviour or adoption of any of its attitudes, and nor had it been so in fact. There was no genuine basis at all for the suggestion that the participants had mocked the victims of the Holocaust. Whilst there had been bondage, beating and domination typical of sado-masochistic behaviour, there was no public interest or other justification for the clandestine recording, for the publication of the resulting information and still photographs, or for the placing of video extracts on the website, all of which had been done on a massive scale. Although such behaviour was viewed by some people with distaste and moral disapproval, in the light of modern rights-based jurisprudence that had not provided any justification for the intrusion on the personal privacy of M. (3) It was necessary to afford an adequate financial remedy for the purpose of acknowledging the infringement and compensating, to some extent, for the injury to feelings, the embarrassment and the distress caused. However, it was not right to extend the application of exemplary or punitive damages into the field of the right to privacy or to include an additional element specifically directed towards deterrence. That was not a legitimate exercise in awarding compensatory damages. No amount of damages could fully compensate M for the damage done to him and what could be achieved by a monetary award in the circumstances was limited. Any award had to be proportionate and avoid the appearance of arbitrariness. The right award, taking those considerations into account, was one of ?60,000.

Judge: Eady, J.

Counsel: For the claimant: James Price QC, David Sherborne. For the defendant: Mark Warby QC, Anthony Hudson.

Solicitor: For the claimant: Steeles. For the defendant: Farrer & Co.

7. McGill v 365 Media Group Plc Queen’s Bench Division 31 July 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant football agent (C) against the defendant publisher (D). D had published a story on its transfer gossip website alleging that C had invited a Celtic player to visit Villa Park to watch Aston Villa play, the implication of which was that C, in breach of the rules of football’s regulatory bodies, was trying to induce the player to break his contract and join Aston Villa without the permission of Celtic, thus making C guilty of “tapping up”. In fact, C had advised the player to sign his current contract and stay at Celtic. D also alleged that C had set up deals that took other Celtic players to the Midlands. D accepted that all of the allegations made were totally without foundation and should not have been published. D published an apology and withdrawal on its website, paid C substantial damages and covered his legal costs. Permission to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Paul Hackney.

Solicitor: For the claimant: Geldards LLP (Derby).

8. Mottley v IPC Media Ltd Queen’s Bench Division 07 October 2008 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of an article that referred to the claimant member of the Barbados Parliament.

Abstract: A statement in open court was made in a libel action brought by the claimant member of the Barbados Parliament (M) against the defendant publisher (P). P had published an article in one of its magazines in which reference was made to a Barbadian calypso song that suggested M had assaulted another woman. In fact, M had never assaulted anyone in the manner described in the article or at all. Further, the suggestion of assault in the song was based on a totally unfounded rumour. P apologised for publishing the article and agreed to cover M’s legal costs as well as paying a substantial sum in damages. Permission to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: David Price (Solicitor Advocate). For the defendant: Paul Fox.

9. Murat (Robert) v British Sky Broadcasting Ltd Queen’s Bench Division 14 November 2008 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article that referred to the claimant.

Abstract: A statement in open court was made in an action for libel brought by the claimant (M) against the defendant publishers (B). B had published an article to its website covering the Madeleine McCann story together with a video entitled “It reminded me of Soham”. Both the video and the article falsely alleged that there were strong grounds to believe that M, who was resident in the area when Madeleine disappeared, was guilty of abducting her. The article and video went further and likened M’s behaviour, in the days after Madeleine’s disappearance, to that of a notorious child murderer. They also falsely suggested that M deliberately tried to mislead journalists by pretending to be acting in an official capacity for the police. In fact, M was heavily involved in the search for Madeleine after her disappearance and was recruited by the police to act in an official capacity as an interpreter. B acknowledged that the allegations made were entirely false and that M played no part in the abduction of Madeleine. B also acknowledged that M did not behave like a child murderer nor did he try to mislead or lie to journalists. B agreed to publish an apology on its website for a period of 12 months and to pay substantial damages to M as well as covering his legal costs.

Judge: Eady, J.

Counsel: For the claimant: Louis Charalambous. For the defendant: Victoria Shore.

Solicitor: For the claimant: Simons Muirhead & Burton.

10. Crossley v Newsquest (Midlands South) Ltd Queen’s Bench Division

11 December 2008 [2008] EWHC 3054 (QB);

Case Analysis:

Summary: Absolute privilege under the Defamation Act 1996 s.14 extended to the reporting of previous court hearings, insofar as it was reasonably necessary to give context to a contemporaneous report of a court hearing.

Abstract: The appellants (C) appealed against a decision of a master to strike out their libel claim against the respondent newspaper publisher (N). Three days after a final county court hearing about a nuisance action brought against C by their neighbours, N had published an article about the hearing. The article also referred to court hearings that had taken place a few months previously. The nuisance action related to the effectiveness of a sewage system discharging sewage from C’s property. A photograph appeared in the article accompanied by a caption. C alleged that the caption contained an emotive phrase which was not an accurate representation of the findings of the county court judge. The master concluded that C’s claim was bound to fail because N could rely on the defences of privilege and that C’s plea of malice could not be supported. He also found that no reasonable jury could come to a finding other than the words were substantially true and the plea of justification was bound to succeed. Appeal dismissed. (1) The master was correct in concluding that absolute privilege would attach to parts of the article reporting on the county court hearing as that reporting would constitute a contemporaneous report of court proceedings for the purposes of the Defamation Act 1996 s.14 and there was little doubt that a report published three days after a court hearing would be so classified. Absolute privilege would also extend to the reporting of the earlier hearings at least insofar as it was reasonably necessary to give context to what took place at the county court hearing and to enable readers to understand the contemporaneous report of the court hearing. In other words, that coverage should be construed as forming an integral part of the contemporaneous report. The offending caption to the photograph would also be treated as part of the attempt to report, fairly and accurately, the outcome of the trial and would, therefore, attract qualified privilege. (2) The master was also correct in concluding that there was no realistic prospect of C establishing malice and there was nothing to support a plea of malice in the criticisms which were made of N’s phraseology. In particular, the caption to the photograph should be read in the context of the article as a whole; it was not appropriate to interpret headlines or captions as though they stood on their own, Charleston v News Group Newspapers Ltd [1995] 2 A.C. 65 applied. (3) N was also entitled to rely on the defence of fair comment and there was no reason to suppose that the opinions expressed by the commentator in the article were not honestly held by him, Tse Wai Chun Paul v Cheng [2001] E.M.L.R. 31 considered. (4) The conclusions reached by the master on privilege, malice and fair comment were such as to entitle N to the relief sought. It was therefore strictly not necessary for him to go on to address the matter of justification. However, he was entitled to reach the conclusion that the plea of justification was bound to succeed. (5) The master was also entitled to reach the conclusion that the libel proceedings were an obvious attempt to re-litigate issues which had already been determined in earlier hearings and therefore constituted an abuse of process, Johnson v Gore Wood & Co (No.1) [2002] 2 A.C. 1 and Hunter v Chief Constable of the West Midlands [1982] A.C. 529 considered. (6) The master was also right to refuse C’s application to amend to add causes of action founded upon privacy and confidentiality as the hearing had taken place in open court and anything said in open court could be reported, R. v Arundel Justices Ex p. Westminster Press [1986] 1 W.L.R. 676 considered.

Judge: Eady, J.

Counsel: For the appellants: In Person. For the respondent: Alexandra Marzec.

Solicitor: For the respondent: Farrer & Co.

11. Mardas v New York Times Co, Mardas v International Herald Tribune SAS

Queen’s Bench Division 17 December 2008 [2008] EWHC 3135 (QB); [2009] E.M.L.R. 8;

Case Analysis

Summary: A judge had erred in striking out a claim for libel as an abuse of process. He had wrongly made findings of fact which should have been left to trial after full disclosure had occurred.

Abstract: The appellant (M) appealed against a decision to strike out his claim for libel made against the defendant foreign newspapers (N and H) as an abuse of process. N and H had published an article which referred to M concerning events which had taken place approximately 40 years earlier. M had claimed that the article had been published in the jurisdiction of England and Wales and he issued libel proceedings. However, the parties disputed the extent and forms of publication that had allegedly occurred. N and H applied for the proceedings to be struck out. The judge found that M stood no real prospect of establishing that there had been a hard copy publication by H. In allowing the applications, he considered the costs, resources and time that would be involved in the claims going to trial, that the article concerned matters that had happened 40 years ago and found that there had been publication to, at the most, two hundred people. M submitted that it would only rarely be appropriate to strike out an action as an abuse because a claimant’s reputation had suffered only minimal damage or there had been no real and substantial tort within the jurisdiction. M further contended that the judge had been too ready to make findings of fact on contested evidence and to conclude that there had been no real or substantial tort.

Appeals allowed. It was inappropriate for a finding of fact to be made about the scale of publication on the basis of incomplete evidence. The finding of fact was a matter which should have been left to trial. Furthermore, even if there had been publication to the number of people N alleged, there was no basis for concluding that there was no real and substantial tort. M wished to have the benefit of full disclosure and such further information as might be appropriate to disprove H’s contention that the article had not been published anywhere in printed form. The court could not refuse that opportunity. The number of times the internet article had been looked at via H’s website also could not be resolved until at least disclosure had taken place. Investigating the scale of publication further could be very expensive. If that had to be carried out and yielded no evidence of a wider readership that N and H currently admitted, it might be that M would have to bear the cost of such investigations which would almost certainly exceed any sum awarded in damages. However, that was a risk that M would have to take. The allegations made could not be dismissed as trivial. Moreover, even if defamatory allegations related to events of long ago, that could not be a ground in itself for refusing access to justice, Polanski v Conde Nast Publications Ltd [2005] UKHL 10, [2005] 1 W.L.R. 637 considered. It was desirable that some sensible accommodation should be reached so as to avoid a time-consuming and expensive trial but that was for the parties to deal with, Aldi Stores Ltd v WSP Group Plc [2007] EWCA Civ 1260, [2008] 1 W.L.R. 748 considered. The circumstances could not be characterised as an abuse of process.

Judge: Eady, J.

12. Osbourne v News Group Newspapers Ltd Queen’s Bench Division

15 January 2009 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (O), a successful music manager, promoter and television presenter, against the defendant newspaper publisher (N). N had published an article in its newspaper and on its website wrongly suggesting that the claimant had put her musician husband’s life at risk by working him too hard at the cost of his health. N also falsely suggested her motivation for doing so was to fund her exorbitant spending. The allegations were entirely without foundation. N apologised for publishing the false and defamatory allegations and offered to publish an apology. N also agreed to pay O substantial damages and her legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: John Kelly.

13. Marshall v Express Newspapers Queen’s Bench Division 29 January 2009

Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (M), an 18 year old student, against the defendant newspaper publisher (N). N had published articles falsely alleging that the day after the conviction of a man (B) for the murder of an 11 year old boy, M had publicly praised him in a television interview as a hero. The articles also wrongly alleged that M was B’s girlfriend, was a member of a criminal gang and that she had declared a pledge of loyalty to the gang following B’s conviction. In fact M did not make any public statement following B’s conviction, did not regard him as a hero and had not made such a claim or sought publicity for it in the aftermath of B’s conviction for such an appalling murder. M was not nor had ever been a member of a criminal gang and had never been B’s girlfriend. N agreed to pay M a substantial sum in damages which she intended to donate to the Rhys Jones Memorial Trust. Permission to withdraw the record was requested.

Judge: Eady, J.

14. Raulynaitis v News Group Newspapers Ltd Queen’s Bench Division

26 February 2009 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a newspaper article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (R) against the defendant newspaper publishers (N). N had published an article in its newspaper and to its website wrongly alleging that R had ordered passengers off of his bus in order for him to pray. The article suggested that R was arrogant, unprofessional and contemptuous of the passengers. The article further alleged that the passengers later refused to re-board the bus as they spotted a rucksack and feared R was a fanatic. In fact, R had prayed on the bus during his statutory break and no passenger was inconvenienced. N accepted the allegations were false and published an apology. N paid R a sum in damages and covered his legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Stephen Loughrey. For the defendant: Patrick Callaghan.

Solicitor: For the claimant: Carter-Ruck.

15. Zola v BBC Queen’s Bench Division 12 May 2009 Unreported

Case Analysis

Summary: A joint statement in open court was made in proceedings for defamation following a radio broadcast that referred to the claimants.

Abstract: A joint statement in open court was made in a libel action brought by the claimant West Ham United Football Club manager (Z) and coach (C) against the defendant BBC. The BBC had broadcast a radio breakfast show that featured a contribution from a sports journalist (H). H wrongly alleged that Z and C had attended an interview for management positions at an alternative football club, which would have constituted a breach of their contracts of employment and, in the case of Z, breach of FA Premier League rules. In fact, the allegations were completely untrue. The BBC apologised for the false allegations and agreed to pay Z and C damages and their legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the applicants: James Quatermaine.

16. Jones v Telegraph Media Group Ltd Queen’s Bench Division 23 June 2009

Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (J) against the defendant newspaper publisher (T). J was the United Kingdom’s most senior intelligence expert on weapons of mass destruction in the period leading up to the Iraq war. T had published an article in its newspaper and on its website which falsely alleged that J had leaked information to the media before the Iraq war. In fact, J had been singled out by the Chairman of the House of Commons Select Committee investigating leaks in Whitehall as someone who did not, and would not, leak information. T accepted that the allegation was untrue and published an apology to J as well as agreeing to pay damages and J’s legal costs.

Judge: Eady, J.

Counsel: For the claimant: Luke Staiano.

17. Author of a Blog v Times Newspapers Ltd Queen’s Bench Division

16 June 2009

Case Analysis

Summary: The court declined to restrain a newspaper from revealing the identity of a blogger, which it had deduced from publicly available sources, because that information did not have about it the necessary quality of confidence, nor did it qualify as information in respect of which the blogger had a reasonable expectation of privacy, essentially because blogging was a public activity.

18. Bari v BBC Queen’s Bench Division 16 July 2009 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the broadcast of a programme which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (B) against the defendant BBC. The BBC had broadcast a programme in which a panellist alleged that the leadership of a Muslim organisation, of which B was leader and chief spokesperson, had failed to condemn the kidnapping and killing of British soldiers and thereby implicitly condoned such acts. The panellist further alleged that B believed the kidnapping and killing of British soldiers to be a good and Islamic thing. In fact, B did not condone the kidnapping and killing of British soldiers and did not believe this would be a good or Islamic thing to do, and in 2007 B had said publicly that the killing of British troops in Iraq was unacceptable. The BBC apologised for the false allegations. It also agreed to pay B substantial damages, which he would donate to a charity, and his legal costs.

Judge: Eady, J.

19. Zuma v Guardian News & Media Ltd Queen’s Bench Division 30 July 2009

Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article by a newspaper which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (Z) against the defendant newspaper publisher (G). Z was the President of South Africa. G had published an article in an edition of its newspaper and on its website which falsely alleged that Z was guilty of various crimes. Z issued libel proceedings and G subsequently published an apology accepting that Z was acquitted of one of the offences and the others were dropped by the South African National Prosecuting Authority. Z did not consider that the apology adequately dealt with his complaint. The apology was said to be published far less prominently in the newspaper and on the website than the article complained of. Additionally, the apology was initially unavailable online when a search was made using Z’s name. G then made an offer of amends. In light of the fact that G was willing to pay very substantial damages to Z and it had publically apologised to Z, Z considered his reputation in the matter had been entirely vindicated and he was prepared not to proceed any further in his action against G. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Jenny Afia.

Solicitor: For the claimant: Schillings.

20. Andre v MGN Ltd Queen’s Bench Division 31 July 2009 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article by a newspaper which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (P) against the defendant newspaper publisher (M). M had published an article in an edition of its newspaper and on its website which alleged that P had made inappropriate advances towards a woman in a night club whilst he was still together with his wife. In fact, as M accepted, the allegations were untrue. All that happened was that P was introduced to the woman and a photograph was taken of them together. P spoke to the woman very briefly. M apologised for the hurt and damage suffered by P as a result of the publication of the article. M agreed to pay a substantial sum by way of damages, together with P’s legal costs, and agreed not to repeat the allegations. Leave to withdraw the record was requested.

Judge: Eady, J.

21. Karim v Newsquest Media Group Ltd Queen’s Bench Division 27 October 2009

Case Analysis

Summary: A website article summarising a hearing in the Solicitors Disciplinary Tribunal was absolutely privileged, being a fair, accurate and contemporaneous report of legal proceedings. The Electronic Commerce (EC Directive) Regulations 2002 reg.19 also provided a defence in relation to comments published on the site from site users because N had no actual knowledge of unlawful activity and had removed the article and comments as soon as complaint was made.

Judge: Eady, J.

Counsel: For the applicant: Mr Vassall-Adams. For the respondent: No appearance or representation.

22. Martin v Channel Four Television Corp Queen’s Bench Division 06 November 2009

Case Analysis

Summary: The court had no jurisdiction to grant an interim injunction prior to the issue of proceedings to prevent the broadcast of a television documentary where the application was neither urgent nor in the interests of justice. The application could not be described as urgent where the broadcasters had already agreed not to show the documentary.

23. Williams v MGN Ltd Queen’s Bench Division 02 December 2009

Case Analysis

Subject: Defamation Other related subjects: Media and entertainment; Torts

Keywords: Abuse of process; Defamatory meaning; Libel; Newspapers; Reputation

Summary: Where the claimant in a libel action had a background of serious criminal convictions, he had no reputation capable of protection and his claim had to be struck out under CPR r.3.4(2)(b) as an abuse of the court’s process as it was clear that no real or substantial tort had been committed.

24. Buxton v MGN Ltd Queen’s Bench Division 10 December 2009

Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant property developer (B) against the defendant publisher (M). M had published an article in its newspaper and on its website that suggested that B had viciously attacked a female model (X) to such an extent that injuries to her face were so severe that her career as a model was almost certainly over. In fact, the allegations were entirely false. M apologised for publishing the false and defamatory allegations and accepted that B had neither attacked X nor caused any injuries to her face. M agreed not to republish the allegations, and agreed to pay B substantial damages and to pay his legal costs. Leave to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Mark Thomson. For the defendant: Lindsay Hodgkinson.

Solicitor: For the claimant: Atkins Thomson. For the defendant: Reynolds Porter Chamberlain.

25. Ali v Associated Newspapers Ltd Queen’s Bench Division 27 January 2010

Case Analysis

Summary: Summary judgment was granted to a defendant newspaper publisher in a claim for libel on the basis of justification.

Abstract: The applicant newspaper publisher (N) sought summary judgment on a libel claim brought by the respondent (X). X was a civil servant employed by the Treasury. N published the fact that X had been suspended from his employment following the posting of remarks on his personal blog. Passages from X’s blog were published by N. X pleaded that the publications had the defamatory meaning that X was a hardline Islamic extremist who supported the killing of British and American soldiers in Iraq by fellow Muslims as justified. N submitted that X’s claim was bound to fail as X’s observations on his blog advocated a form of jihad which could only be understood as justifying the killing of British and American troops in Iraq. N argued that a jury would be perverse not to hold that the blogs in question justified the inference against X. X submitted that he should be permitted to adduce evidence of his background and other blogs to demonstrate that he was not hardline or extremist.

Application granted. It was necessary to have in mind the role of a jury not only in coming to conclusions of primary fact but also in drawing any appropriate inferences, Bataille v Newland [2002] EWHC 1692 (QB) applied. On reflection, N’s submissions were correct on the very unusual facts in the instant case. X had taken the position that the killing of American and British troops in Iraq would be justified by his interpretation of jihad. As it was a matter of construing plain language in its overall context, it would be perverse to take a contrary view. In those circumstances the claim could legitimately be categorised as bound to fail. Nothing would be gained by investigating X’s other blogs or his background. Such an exercise could not change or qualify the plain meaning of the blog in question.

Judge: Eady, J.

Counsel: For the applicant: David Hirst. For the respondent: David Glen.

Solicitor: For the applicant: Farooq Bajwa & Co. For the respondent: Reynolds Porter Chamberlain LLP.

26. Berezovsky v Russian Television and Radio Broadcasting Co Also known as: Terluk v Berezovsky Queen’s Bench Division 10 March 2010

Case Analysis

Summary: The court awarded damages for defamation to a Russian businessman and politician who had been accused, in a television programme broadcast by a state-owned Russian television company, of involvement in the murder of the former Russian security agent, Alexander Litvinenko.

27. Abramovich v Gruppo Editoriale L’Espresso SPA Queen’s Bench Division

18 March 2010 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant businessman (R) against the defendant newspaper publisher (G). G had published in its newspaper and on its website false allegations about R that he had suffered a heavy loss in a poker game and had been forced to hand over a luxury yacht to cover his gambling debt. The article also falsely alleged that R’s gambling had caused problems in his relationship with his partner. G accepted that the allegations were wholly unfounded and untrue and apologised to R for the distress and embarrassment caused to him. G agreed to publish a correction and pay R substantial damages, which he intended to donate to charity, and his legal costs.

Judge: Eady, J.

Counsel: For the claimant: John Kelly. For the defendant: Sarah Toolan.

Solicitor: For the claimant: Schillings. For the defendant: Davenport Lyons

28. Bowman v MGN Ltd Queen’s Bench Division 26 April 2010 [2010] EWHC 895 (QB);

Case Analysis

Summary: Following the publication on a newspaper’s website of an article wrongly claiming that the claimant was romantically involved with an actress, the court assessed compensation for the defamation in the sum of ?4,250 having regard to the newspaper’s early apology, quick removal of the offending article and early use of the offer to amends procedure in the Defamation Act 1996 s.2.

Abstract: The court was required to determine the amount of compensation to be paid to the claimant actor (B) in respect of distress caused to him by a defamatory article published by the defendant (M). M had published an article on its website about B, suggesting that he had been romantically involved with an actress. B complained that the article was untrue and that he was in a serious relationship with another person. The article was removed from M’s website almost immediately, having remained on there for some 27 hours. M published an apology soon after. Prior to the issue of proceedings, M made an unqualified offer of amends pursuant to the Defamation Act 1996 s.2 to s.4, which B accepted.
Compensation assessed. When determining appropriate compensation the courts had adopted a two-stage process: first, to determine the figure which would have been awarded after trial and, second, to decide to what extent that figure should be discounted to give effect to any mitigation, Duncan & Neill on Defamation, 3rd edn (LexisNexis, 2009) para.19.12, Nail v News Group Newspapers Ltd [2004] EWCA Civ 1708, [2005] 1 All E.R. 1040 and Turner v News Group Newspapers Ltd [2006] EWCA Civ 540, [2006] 1 W.L.R. 3469 applied. There was no evidence about the number of readers who would have understood the article in a defamatory sense, but it was reasonable to assume that the scale of publication would be much lower than in the case of a natural and ordinary defamatory meaning published in a national newspaper, so it would be right to take a conservative approach. It was of fundamental importance that the article had been removed as soon as B’s complaint was received, and that it amounted to no more than a bit of celebrity gossip. As libel cases went, it was at the less serious end of the scale. The hurt that could be caused by a false allegation of adultery, however, should not be discounted, and there was no doubt that B had taken the suggestion seriously and incurred embarrassment and some genuine distress. Yet the libel was short-lived and the court had seen no hard evidence that his reputation had actually suffered. Choosing the right bracket or figure for compensation was largely a matter of impression and personal evaluation, although it was legitimate to take into account personal injury awards for pain, suffering and loss of amenity. Bearing in mind the temporary nature of M’s allegations and their impact, even on B, who was rather sensitive, it did not equate even closely to physical pain or long-term loss of amenity. An appropriate starting figure would be ?8,500. That then had to be discounted to recognise the deflationary or mitigating effect of M’s conduct, in particular its early resort to the offer of amends procedure. That would have signalled to B that he had effectively “won” from that moment onwards and his stress and anxiety should have been correspondingly reduced, Nail applied. Thus, because of the early apology, the willingness to remove the offending words immediately, and the very prompt reliance on the offer of amends regime, B’s award should be reduced by 50 per cent to ?4,250.

Judge: Eady, J.

Counsel: For the claimant: David Sherborne. For the defendant: Alexandra Marzec.

Solicitor: For the claimant: Schillings. For the defendant: In-house solicitor.

29. George v MGN Ltd Queen’s Bench Division 14 May 2010 Unreported

Case Analysis

Summary: A statement in open court was made in an action for defamation following the publication of articles which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (G) against the defendant newspaper publisher, newspaper editor and assistant editor (M). M had published articles in their newspapers and on their websites that falsely suggested that G had harassed and stalked a nurse; had become obsessed with a TV presenter and said that he loved her; had become obsessed with another TV presenter and threatened to pester and harass her; and had illegally attempted to obtain drugs from a hospital. In fact, the allegations were entirely false. M apologised for publishing the false allegations and agreed to withdraw them. M also agreed to pay G substantial damages and to pay his legal costs.

Judge: Eady, J.

Counsel: For the claimant: Gordon Bishop. For the defendant: Emily Barber.

30. Margolis v Independent News & Media Ltd Queen’s Bench Division 21 May 2010 Unreported

Case Analysis

Summary: A statement in open court was made in proceedings for defamation following the publication of a headline which referred to the claimant.

Abstract: A statement in open court was made in a libel action brought by the claimant (M), a writer and feminist, against the defendant newspaper publisher (N). N had published an article in its newspaper and on its website that was written by M, however the headline inserted by N falsely alleged that M had been a prostitute or had otherwise been involved in the sex industry. The allegations were completely untrue. N published an apology in the newspaper and online. N agreed to pay M damages along with legal costs. Permission to withdraw the record was requested.

Judge: Eady, J.

Counsel: For the claimant: Lucy Moorman. For the defendant: Victoria Shore

31. Hewitt v Express Newspapers Queen’s Bench Division 22 July 2010 Unreported

Case Analysis:

Summary: A statement in open court was made in an action for defamation following the publication of an article which referred to the claimants.

Abstract: A statement in open court was made in a libel action brought by the claimant trustees (T) of a charity against the defendant newspaper publisher (E). E had published an article on its website about a terrorist attempt to blow up an aeroplane. The article falsely suggested that the Palestinian Relief and Development Fund, commonly known as Interpal, a charity registered in the United Kingdom of which T were trustees, was Hamas supporting, notwithstanding that Hamas was deemed a terrorist organisation under UK anti-terrorism legislation, and thereby wrongly suggested that T aided terrorism. E apologised for publishing the false and defamatory allegations and accepted that they should never have been published. E agreed to pay T substantial damages and their legal costs.

Judge: Eady, J.

32. Lait v Evening Standard Ltd Queen’s Bench Division 09 December 2010

[2010] EWHC 3239 (QB);

Case Analysis:

Summary: A former member of Parliament was not entitled to summary judgment on her claim alleging defamation by a newspaper in respect of an article which bore the meaning that she had milked the Parliamentary expenses system and that her criticism of a proposed reform to the expenses regime was apt, rightly, to provoke public anger. The newspaper’s defence of fair comment was bound to succeed.

APPENDIX C

Libel claims determined by convention arguments.The analysis of cases was obtained from www.westlaw.co.uk


1. Mosley v News Group Newspapers Ltd [Convention rights arguments] Queen’s Bench Division [application for interim injunction] 09 April 2008

[2008] EWHC 687 (QB);

Case Analysis

Application refused Video footage of a known figure engaging in sexual activities with prostitutes had entered the public domain and therefore, although the material was intrusive and demeaning and there was no legitimate interest in its further publication, an injunction prohibiting its further publication on a newspaper website was not appropriate and would serve no practical purpose. [reasonable expectation of privacy]

Judge: Eady, J.

Counsel: For the applicant: James Price QC, David Sherborne. For the respondent: Gavin Millar QC, Anthony Hudson.

Solicitor: For the applicant: Steeles Law. For the respondent: Farrer & Co.

2. Murray v Express Newspapers Plc Also known as: Murray v Big Pictures (UK) Ltd Court of Appeal (Civil Division) 07 May 2008 [2008] EWCA Civ 446; [2009] Ch. 481; [2008] 3 W.L.R. 1360; [2008] E.C.D.R. 12; [2008] E.M.L.R. 12; [2008] 2 F.L.R. 599; [2008] 3 F.C.R. 661; [2008] H.R.L.R. 33; [2008] U.K.H.R.R. 736; [2008] Fam. Law 732; (2008) 105(20) L.S.G. 23; (2008) 158 N.L.J. 706; (2008) 152(19) S.J.L.B. 31;

Case Analysis

Summary: Subject to the facts of the case, the law should protect the children of parents who were in the public eye from intrusive media attention, at any rate to the extent of holding that the child had a reasonable expectation that he would not be targeted in order to obtain photographs in a public place for publication, where the taking of such photographs would be objected to on the child’s behalf.

Abstract: The appellant (M), acting through his parents, appealed against the striking out ( [2007] EWHC 1908 (Ch), [2007] E.C.D.R. 20 ) of his claim against the respondent photographic agency (B) for breach of his right to respect for his privacy under the European Convention on Human Rights 1950 art.8 . M, the infant son of a well-known author, had been photographed by B in the street with his parents but without their knowledge or consent. The photograph had then been published in a national magazine. The judge struck out M’s claim on the basis that there was an area of innocuous conduct in a public place that did not raise a reasonable expectation of privacy, and that even if the decision in Von Hannover v Germany (59320/00) [2004] E.M.L.R. 21 had extended the scope of protection into areas that conflicted with the principles and decision in Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 A.C. 457 , he was bound to follow Campbell in preference. The issue was whether the judge was right so to have concluded.

Appeal allowed.

3. Times Newspapers Ltd v United Kingdom (3002/03) Times Newspapers Ltd v United Kingdom (23676/03) European Court of Human Rights 10 March 2009[2009] E.M.L.R. 14; Times, March 11, 2009;

Case Analysis

Summary: Where a newspaper had published, in its print publication, an allegedly defamatory article which, during the libel action, was available to readers on the newspaper’s website, it was not a disproportionate interference with the right to freedom of expression to require that the newspaper publish an appropriate qualification to the internet version of the article. [convention arguments]

[multiple publication rule – each new reproduction was a fresh libel]

4. Author of a Blog v Times Newspapers Ltd Queen’s Bench Division 16 June 2009 [2009] EWHC 1358 (QB); [2009] E.M.L.R. 22; (2009) 106(26) L.S.G. 18; (2009) 159 N.L.J. 924; (2009) 153(24) S.J.L.B. 33;

Case Analysis

The court declined to restrain a newspaper from revealing the identity of a blogger, which it had deduced from publicly available sources, because that information did not have about it the necessary quality of confidence, nor did it qualify as information in respect of which the blogger had a reasonable expectation of privacy, essentially because blogging was a public activity. [convention arguments]

5. Financial Times Ltd v United Kingdom (821/03) European Court of Human Rights 15 December 2009 [2010] E.M.L.R. 21; (2010) 50 E.H.R.R. 46; 28 B.H.R.C. 616; Times, December 16, 2009

Case Analysis

Summary: An order requiring that certain newspapers disclose to a brewing company documents that could lead to the identification of journalistic sources who had leaked information about a takeover bid violated the European Convention on Human Rights 1950 art.10. The public interest in the protection of journalistic sources was not outweighed by the company’s arguments that the institution of proceedings against the sources would eliminate the threat of damage by any future dissemination of confidential information and would compensate it for past breaches of confidence.

[convention arguments] success of article 10 here

[1] Reed & Murdoch A Guide to Human Rights Law in Scotland Tottel: Edinburgh (2008); Barendt & Hitchens (2000) Media Law: Cases and Materials Longman: worldwide; Lustgarten et al (1997) Libel and the Media Oxford University Press: Oxford

[2] Kaye v Robertson [1991] F.S.R. 62

[3] Kaye v Robertson [1991] F.S.R. 62 at page 68 per Bingham L.J.

[4] Article 9 of the Civil code in France simply says: “Everyone has the right to privacy”.

[5] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 1

[6] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction xii

[7] Sunday Times v United Kingdom (A/30) European Court of Human Rights, 26 April 1979

[8] Article 8(2) provides: There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

[9] Article 10(2) provides: The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or the rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.”

[10] Human Rights Act s.12(4)

[11] Douglas v. Hello! Ltd [2001] 2 W.L.R. 992 at para. 135, per Sedley L.J. and para. 150, per Keene L.J.

[12] Philipson, Gavin (2003) ‘The Human Rights Act, ‘Horizontal Effect’ and the

Common Law: a Bang or a Whimper?’ in Modern Law Review vol.62 issue 6 pp 824-849

[13] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 pp 98-101 and see Mackey, Claire & McLean, Angus (2007) ‘Is There a New Law of Privacy in the UKA Consideration of Recent Legal Developments’ European Intellectual Property Review vol 29(9) pp 389-395

[14] Imutran Ltd v Uncaged Campaigns Ltd [2001] E.C.D.R. 16 per Sir Andrew Morritt VC at p.198

[15] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide p.2

[16] Merris, Amos (2002) ‘Can We Speak Freely NowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol.6 pp750-763 and see chapter 3

[17] Baturina v Times Newspapers [2011] EWCA Civ 308

[18] Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB)

[19] Dacre, Paul (2008-11-10). “The threat to our press”. The Guardian (Online) available from: http://www.guardian.co.uk/media/2008/nov/10/paul-dacre-press-threats Retrieved 2011.4.1

[20] Draft Defamation Bill 2011 accessed on 11th April 2011 and available from http://www.justice.gov.uk/docs/draft-defamation-bill-consultation.pdf

[21] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction xii

[22] Ibid

[23] Ibid p.76

[24] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide

Turpin & Tomkins (2009) British Government and the Constitution (6th ed) Cambridge: Cambridge, New York , Melbourne , Madrid

[25] Article 11 of the Declaration of the Rights of Man and of the Citizen

[26] Professor Markesinis (1990) The German Law of Torts 2nd ed

[27] Bill of Rights 1st, 3rd, 4th amendments

[28] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.513

[29] Keeble, Richard (2006) The Newspapers Handbook Routledge: London & New York (4th ed)

[30] HL Deb 06 June 1973 vol 343 cc104-78

[31] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.513

[32] Entick v Carrington (1765) 19 St Tr 1030

[33] Regulation of Investigatory Powers Act 2000 Parts I and II

[34] Data Protection Act 1998

[35] Freedom of Information Act 2000

[36] Intellectual property law

[37] Such as the common law offence of sedition: See Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.3

[38] Examples include the Obscene Publications Act 1959 and 1964, Official Secrets Act 1911 & 1989, the Public Order Act 1986 and trespass as demonstrated by Entick v Carrington

[39] Philipson, Gavin (2003) ‘The Human Rights Act, ‘Horizontal Effect’ and the

Common Law: a Bang or a Whimper?’ in Modern Law Review vol.62 issue 6 pp 824-849

[40] S.6(3)

[41] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 pp 98-101 and see Mackey, Claire & McLean, Angus (2007) ‘Is There a New Law of Privacy in the UKA Consideration of Recent Legal Developments’ European Intellectual Property Review vol 29(9) pp 389-395

[42] (1849) 1 Mac & G 25

[43] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.533

[44] Barendt & Hitchens (2000) Media Law: Cases and Materials Longman: worldwide p.389

[45] [1967] 1 QB 349

[46] [1969] RPC 31

[47] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 pp 99

[48] Ibid p. 99

[49] Ibid

[50] Argyll v Argyll [1967] 1 QB 349

[51] Stephens v Avery [1988] Ch 449

[52] [1976] 1 QB 752 [Crossman Diaries]

[53] Attorney General v Jonathan Cape [1976] 1 QB 752 at p.769-770

[54] Where the Government unsuccessfully attempted to restrain the memoirs of a retired secret service agent: Attorney General v Guardian Newspapers Ltd (No.2) [1990] 1 AC 109

[55] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 pp 99

[56] [1994] EMPLR 134

[57] Hellewell v Chief Constable of Derbyshire [1995] 1 WLR 804 at p.807 and see Loon, Wee (1996) ‘The Emergence of a right to privacy within the law of confidence?” in European Intellectual Property Review vol.18(5) at p.312

[58] (no.1) [2001] Q.B. 967 (CA (Civ Div)

[59] Douglas v Hello! (no.9) [2004] EWHC 63 (Ch)

[60] Kearns, Paul (2001) ‘Privacy and the Human Rights Act 1998’ in New Law Journal vol.151 p.377, Carey, Peter (2001) ‘Hello to Privacy?’ in Entertainment Law Review vol.12(4) pp120-123, Grundberg, Peter (2001) ‘The “new” Right to Privacy’ in Intellectual Property Lawyer vol 9 (Feb) pp12-13

[61] Douglas v Hello! (no.1) [2001] Q.B. 967 (CA (Civ Div) at p.1001

[62] “It seems to me that those who seek and welcome publicity of every kind bearing upon their private lives so long as it shows them in a favourable light are in no position to complain of the invasion of their privacy by publicity that shows them in an unfavourable light”. [1977] 1 W.L.R. 760 Per Bridge L.J at p.765

[63] Ash v Mckennit [2008] Q.B. 73

[64] Argyll v Argyll [1967] 1 QB 349

[65] Stephens v Avery [1988] Ch 449

[66] Shelley Films Ltd v Rex Features Ltd [1994] EMPLR 134

[67] Douglas v Hello! (no.1) [2001] Q.B. 967 (CA (Civ Div)

[68] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 p.100

[69] Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB) at p.686 per Eadie J

[70] (1990) Cm 1102

[71] O’Malley, Tom & Soley, Clive (2000) Regulating the Press Pluto Press: London

[72] Keeble, Richard (2006) The Newspapers Handbook Routledge: London & New York (4th ed)

[73] Regina v Advertising Standards Authority Ltd Ex p.Vernons Organisation [1992] 1 W.L.R. 1289 per Laws J at p.1292

[74] Regina v Shayler [2003] 1 A.C. 247 at p.266

[75] Keeble, Richard (2006) The Newspapers Handbook Routledge: London & New York (4th ed)

[76] Leigh, David & Vulliamy, Ed (1997) Sleaze: Corruption in Tory Britain Fourth Estate

[77] Keeble, Richard (2006) The Newspapers Handbook Routledge: London & New York (4th ed)

[78] Bromley, Michael & Stephenson (eds) (1998) Sex, Lies and Democracy: the press and the public Longman

[79] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.709

[80] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.547

[81] Merris, Amos (2002) ‘Can we speak freely nowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol. 6 at p.755

[82] Press Complaints Commission (January 2011) Editors Code of Conduct public interests s.2 accessed on 1st April 2011 and available from: http://www.pcc.org.uk/cop/practice.html

[83] Lord Ashcroft KCMG v Stephen Foley, Independent News & Media Limited, Roger Alton [2011] EWHC 292 (QB) per Justice Eady at para 69

[84] Mackey, Claire & McLean, Angus (2007) ‘Is There a New Law of Privacy in the UKA Consideration of Recent Legal Developments’ European Intellectual Property Review vol 29(9) pp 389-395

[85] A v B Plc [2002] EWCA Civ 337; [2003] Q.B. 195 (CA (Civ Div))

[86] Merris, Amos (2002) ‘Can we speak freely nowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol. 6 at p.755

[87] [1936] A.C. 578

[88] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.3

[89] ibid p.2

[90] Merris, Amos (2002) ‘Can we speak freely nowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol. 6 at p.755

[91] Moore, Roy.L & Murray, Michael.D (2007) Media Law and Ethics Taylor & Francis Group: New York

[92] R. (On the application of Telegraph Group plc) vs Sherwood [2001] 1 W.L.R. 1983 per Longmore LJ at p.1986

[93] Jameel and Others v Wall Street Journal Europe Sprl [2006] UKHL 44

[94] Human Rights Act 1998 s.6(1)

[95] [2001] Fam 430

[96] Douglas v Hello! (no.1) [2001] Q.B. 967 at para 133 per Sedley LJ

[97] Perry v UK (2004) 39 EHRR 76

[98] X and Y v. Netherlands (1985) 8 E.H.R.R. 235

[99] Pretty v UK (2002) 35 EHRR 1

[100] Ibid at p.14

[101] Article 8(2) of the ECHR

[102] Author of a Blog v Times Newspapers Ltd [2009] E.M.L.R. 22 and see Murray v Express Newspapers

Plc [2008] EWCA Civ 446

[103] Napier v Pressdram Ltd [2009] EWCA Civ 443, [2010] 1 W.L.R. 934

[104] [2009] E.M.L.R. 22

[105] [2008] EWHC 687 (QB)

[106] Plc [2008] EWCA Civ 446

[107] Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB) at para 110 per Eadie J

[108] Ibid at para 111

[109] Merris, Amos (2002) ‘Can We Speak Freely NowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol.6 pp750-763 and see chapter 3

[110] Ibid

[111] Sunday Times v United Kingdom (A/30) European Court of Human Rights, 26 April 1979

[112] R. v. Shayler [2002] 2 W.L.R. 754.

[113] Regina (Prolife Alliance) v British Broadcasting Corporation [2004] 1 A.C. 185

[114] Merris, Amos (2002) ‘Can We Speak Freely NowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol.6 pp750-763 and see chapter 3

[115] Merris, Amos (2002) ‘Can We Speak Freely NowFreedom of Expression under the Human Rights Act’ in European Human Rights Law Review vol.6 pp750-763 and see chapter 3

[116] Von Hannover v Germany [2004] E.M.L.R. 21

[117] Rudolf, Beate (2006) ‘Council of Europe: Von hannover v Germany’ in International Journal of Constitutional Law

[118] [2004] E.M.L.R. 21 at p.381

[119] Article 10(2)

[120] Rudolf, Beate (2006) ‘Council of Europe: Von hannover v Germany’ in International Journal of Constitutional Law

[121] Rudolf (2006) argues this is simply a matter of less weight.

[122] Campbell v MGN Ltd [2004] UKHL 22

[123] [2004] UKHL 47 at para 23

[124] Campbell v MGN Ltd [2004] UKHL 22 per Lord Hoffman at para 36

[125] Ibid per Lord Hope at para 112

[126] [2004] UKHL 47 per Lord Steyn at para 17

[127] Draft Defamation Bill 2011 accessed on 11th April 2011 and available from http://www.justice.gov.uk/docs/draft-defamation-bill-consultation.pdf clause 7

[128] Press standards, privacy and libel: second report of session 2009 Volume 2 By Great Britain: Parliament: House of Commons: Culture, Media and Sport Committee

[129] Farage v Times Newspapers unreported 11th June 2008, Raulynaitis v News Group Newspapers Ltd 26th February 2009, Jones v Telegraph Media Group Ltd 23rd June 2009, Hewitt v Express Newspapers unreported 22nd July 2010 , Lait v Evening Standard Ltd unreported 9th December 2010

[130] Fowler, Andrew (2011) The Most Dangerous Man in the World Melbourne University Press: Melbourne

[131] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.74

[132] Sim v Stretch [1936] 2 All ER 1237 at 1240

[133] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.563

[134] S.69

[135] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.562

[136] Draft Defamation Bill 2011 accessed on 11th April 2011 and available from http://www.justice.gov.uk/docs/draft-defamation-bill-consultation.pdf clause 8

[137] Ibid page 36

[138] Ibid

[139] Ibid clause 1

[140] Ecclestone v Telegraph Media Group Ltd [2009] EWHC 2779 (QB)

[141] Hulton v Jones [1910] AC 20

[142] For example “all lawyers” or “all politicians” and not “the lawyers from matrix chambers”.

[143] Godfrey v Demon Internet [1999] EMLR 542

[144] S.1 of the 1996 Act

[145] Duke of Brunswick v Harmer (1849) 14 Q.B. 185 (QB)

[146] Dunlop, Rory (2006) ‘Article 10, the Reynolds test and the rule in the Duke of Brunswick’s case – the decision in Times Newspapers Ltd v United Kingdom’ in European Human Rights Law Review 3, 327-339

[147] Barendt, Lustgarten, Norrie & Stephenson (1997) Libel and the Media: the Chilling Effect Oxford Uni Press: Oxford, New York p.9

[148] British Chiropractic Association v Singh [2009] EWHC 1101 (QB)

[149] Barendt & Hitchens (2000) Media Law: Cases and Materials Pearson Longman: worldwide

[150] S.5

[151] Bradley & Ewing (2007) Constitutional and Administrative Law (14th ed) Pearson Longman: Worldwide p.564

[152] Barendt & Hitchens (2000) Media Law: Cases and Materials Longman: worldwide p.375

[153] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.74

[154] Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127

[155] Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127

[156] Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127 per Lord Nicholls at p.205

[157] Jameel and Others v Wall Street Journal Europe Sprl [2006] UKHL 44

[158] Ibid at para 57 per Lord Hoffman

[159] R. Clayton and H. Tomlinson, The Law of Human Rights (Oxford University Press, 2000), para.15.249.

[160] Times Newspapers Ltd v United Kingdom (23676/03) (Unreported, October 11, 2005) (ECHR)

[161] [2006] UKHL 44

[162] [2010] EWCA Civ 804

[163] Ibid at paras 67 – 76

[164] Joyce, Andrew (2006) ‘The Reynolds Public Interest Defence’ The IT Law Community accessed on 1st April 2011 and available from: http://www.scl.org/site.aspx?i=ed920

[165] Horrocks v Lowe [1975] AC 135 at 150

[166] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.110

[167] Barendt, Lustgarten, Norrie & Stephenson (1997) Libel and the Media: the Chilling Effect Oxford Uni Press: Oxford, New York

[168] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.72

[169] R. (On the application of Telegraph Group plc) vs Sherwood [2001] 1 W.L.R. 1983 per Longmore LJ at p.1986

[170] Human Rights Act 1998 s.6

[171] Bentham, Martin (2011) ‘Ken Clarke unveils libel law reform to strengthen free speech’ in London Evening Standard online edition accessed on 1st April 2011 and available from: http://www.thisislondon.co.uk/standard/article-23932236-ken-clarke-unveils-libel-law-reform-to-strengthen-free-speech.do

[172] Dacre, Paul (2008-11-10). “The threat to our press”. The Guardian (Online) Retrieved 2011.4.1 and available from: http://www.guardian.co.uk/media/2008/nov/10/paul-dacre-press-threats

[173] [2009] EWHC 1101 (QB)

[174] Jeynes v News Magazines Ltd [2008] EWCA Civ 130

[175] Lait v Evening Standard Ltd [2010] EWHC 3239 (QB)

[176] Preston, Peter (2010) ‘Mr. Justice Tugendhat the libel judge of our dreamsLet’s wait and see’ in Guardian Media Online accessed on 2nd April 2011 and available from: http://www.guardian.co.uk/media/2010/sep/19/michael-tugendhat-libel-judge

[177] Against either British publishers or newspapers directly.

[178] Includes both reported and unreported cases.

[179] It is perhaps too early to analyse the impact Mr.Justice Tugendhat has had as the top libel judge given that he was appointed on 1st October 2010.

[180] Barendt, Lustgarten, Norrie & Stephenson (1997) Libel and the Media: the Chilling Effect Oxford Uni Press: Oxford, New York p.190

[181] See Appendix A for a full breakdown of all the cases within this period.

[182] Jeynes v News Magazines Ltd [2008] EWCA Civ 130, Curran v Scottish Daily Record and Sunday Mail Ltd

[2010] CSOH 44, Ifedha v Archant Regional Ltd (sued as Kilburn Times North West London Newspapers) [2010] EWHC 2819 (QB), Lait v Evening Standard Ltd [2010] EWHC 3239 (QB) Ewing v News International Ltd [2008] EWHC 1390 (QB)

[183] http://www.associatednewspapers.com/ accessed on 5th April 2011

[184] http://www.newsinternational.co.uk/ accessed on 5th April 2011

[185] http://www.express.co.uk/home accessed on 5th April 2011[under the ownership of Northern & Shell]

[186] http://www.gmgplc.co.uk/ accessed on 7th April 2011

[187] http://www.newsinternational.co.uk/ accessed on 8th April 2011

[188] http://www.inmplc.com/ accessed on 5th April 2011

[189] http://www.telegraph.co.uk/ accessed on 4th April 2011

[190] Barendt, Lustgarten, Norrie & Stephenson (1997) Libel and the Media: the Chilling Effect Oxford Uni Press: Oxford, New York .64

[191] Ibid

[192] Financial Times Ltd v United Kingdom (821/03) (2010) 50 E.H.R.R. 46

[193] Franklin, Bob (1999) Social Policy, the Media and Misrepresentation Routledge: London and New York

[194] Osbourne v Express Newspapers Unreported 5th June 2008

[195] Lucas v Express Newspapers unreported 25th May 2010

[196] George v Express Newspapers unreported 19th July 2010

[197] Shaffer v Associated Newspapers Ltd Unreported 13th February 2008, Osbourne v Express Newspapers Unreported 5th June 2008 , Farage v Times Newspapers unreported 11th June 2008, Murat v Associated Newspapers Ltd unreported 16th July 2008, Tesco Stores Ltd v Guardian News &Media Ltd [2009] E.M.L.R. 5; Osbourne v News Group Newspapers Ltd unreported 12th January 2009, Marshall v Express Newspapers unreported 29th January 2009, Raulynaitis v News Group Newspapers Ltd unreported 26th February 2009, Hudson v Associated Newspapers Ltd unreported 4th March 2009, Jones v Telegraph Media Group Ltd unreported 23rd June 2009, Zuma v Guardian News & Media Ltd unreported 30th July 2009, Gascoigne v News Group Newspapers Ltd unreported 7th May 2010 Margolis v Independent News & Media Ltd unreported 21st May 2010, Lucas v Express Newspapers unreported 25th May 2010, George v Express Newspapers unreported 19th July 2010, Hewitt v Express Newspapers unreported 22nd July 2010

[198] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 100

[199] Ibid p.76

[200] Ashley Cole is a recent example of this in relation to his extra-marital infidelities: see Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) at p.89

[201] Berezovky v Forbe Inc (No.2) [2001] EMLR 48, CA

[202] Draft Defamation Bill clause: 1 “Libel is currently actionable without proof of actual damage” accessed on 14th March 2011 and available from: http://www.justice.gov.uk/docs/draft-defamation-bill-consultation.pdf

[203] Lucas v Express Newspapers unreported 25th May 2010

[204] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 99

[205] Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB), Murray v Express Newspapers Plc [2008] EWCA Civ 446, Times Newspapers Ltd v United Kingdom (3002/03) [2009] E.M.L.R. 14, Author of a Blog v Times Newspapers Ltd [2009] E.M.L.R. 22, Financial Times Ltd v United Kingdom (821/03) [2010] E.M.L.R. 21, In re Guardian News and Media Ltd and others [2010] 2 A.C. 697

[206] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) pp78-89

[207] [2008] EWHC 687 (QB)

[208] “F1 BOSS HAS SICK NAZI ORGY WITH 5 HOOKERS”

[209] See chapter 2

[210] Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB) at p.681

[211] Douglas v Hello! Ltd (No.1) [2001] Q.B. 967 at para 137

[212] Mosley v News Group Newspapers Ltd [2008] EWHC 687 (QB) at p.681

[213] Ibid at p.737

[214] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) pp78-79

[215] [2008] EWCA Civ 446

[216] Murray v Express Newspapers Plc [2008] EWCA analysis of case

[217] Ibid para 57 per Sir Anthony Clarke MR

[218] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) at p.86

[219] (3002/03) [2009] E.M.L.R. 14

[220] Mora, David Paul (2009) ‘The compatibility with art.10 ECHR of the continued publication of a libel on the Internet: Times Newspapers Ltd (Nos 1 and 2) v The United Kingdom’ in Entertainment Law Review vol. 20(6) pp 226-228 at 226

[221] Times Newspapers Ltd v United Kingdom (3002/03) [2009] E.M.L.R. 14 at p.259

[222] Mora, David Paul (2009) ‘The compatibility with art.10 ECHR of the continued publication of a libel on the Internet: Times Newspapers Ltd (Nos 1 and 2) v The United Kingdom’ in Entertainment Law Review vol. 20(6) pp 226-228 at 228

[223] [2009] E.M.L.R. 22

[224] Author of a Blog v Times Newspapers Ltd [2009] E.M.L.R. 22 at p.412 per Eady J.

[225] Brimsted, Kate (2009) ‘Author of a Blog v Times Newspapers Ltd: privacy – blogging and anonymity’ in European Intellectual Property Review vol. 31(12) pp.86-87

[226] (821/03) [2010] E.M.L.R. 21

[227] Financial Times Ltd v United Kingdom (821/03) [2010] E.M.L.R. 21 at p.1172

[228] (3002/03) [2009] E.M.L.R. 14

[229] [2010] 2 A.C. 697

[230] In re Guardian News and Media Ltd and others [2010] 2 A.C. 697 para 43 per Lord Rodger

[231] Ibid para 75 per Lord Rodger

[232] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) pp78-79

[233] Brimsted, Kate (2009) ‘Author of a Blog v Times Newspapers Ltd: privacy – blogging and anonymity’ in European Intellectual Property Review vol. 31(12) pp.86-87

[234] In re Guardian News and Media Ltd and others [2010] 2 A.C. 697 para 78

[235] (821/03) [2010] E.M.L.R. 21

[236] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) p 86

[237] As of October 2010 the mantle has been taken by Tugendhat J see Preston, Peter (2010) ‘Mr. Justice Tugendhat the libel judge of our dreamsLet’s wait and see’ in Guardian Media Online accessed on 2nd April 2011 and available from: http://www.guardian.co.uk/media/2010/sep/19/michael-tugendhat-libel-judge

[238] Mosley v News Group Newspapers Ltd [2008] EWHC 687

[239] British Chiropractic Association v Singh [2009] EWHC 1101 (QB)

[240] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) p 86

[241] Shaffer v Associated Newspapers Ltd Unreported 13 February 2008, Smith v World Entertainment News Network Ltd unreported 22nd February 2008, Osbourne v Express Newspapers unreported 5th June 2008 [cont next page]

Farage v Times Newspapers unreported 11th June 2008, Murat v Associated Newspapers Ltd unreported 16th July 2008, McGill v 365 Media Group Plc unreported 31st July 2008, Mottley v IPC Media Ltd unreported 7th October 2008

Murat (Robert) v British Sky Broadcasting Ltd unreported 14th November 2008, Osbourne v News Group Newspapers Ltd unreported 15th January 2009, Marshall v Express Newspapers unreported 29th January 2009

Raulynaitis v News Group Newspapers Ltd unreported 26th February 2009, Zola v BBC unreported 12th May 2009

Jones v Telegraph Media Group Ltd unreported 23rd June 2009, Bari v BBC unreported 16th July 2009

Zuma v Guardian News & Media Ltd unreported 30th July 2009, Andre v MGN Ltd unreported 31st July 2009

Buxton v MGN Ltd unreported 10th December 2009, Abramovich v Gruppo Editoriale L’Espresso SPA unreported 18th March 2010, George v MGN Ltd unreported 14th May 2010, Margolis v Independent News & Media Ltd unreported 21st May 2010, Hewitt v Express Newspapers unreported 22nd July 2010

[242] [2009] E.M.L.R. 22

[243] Brimsted, Kate (2009) ‘Author of a Blog v Times Newspapers Ltd: privacy – blogging and anonymity’ in European Intellectual Property Review vol. 31(12) pp.86-87

[244] Crossley v Newsquest (Midlands South) Ltd [2008] EWHC 3054 (QB)

[245] Martin v Channel Four Television Corp [2009] EWHC 2788 (QB);

[246] Williams v MGN Ltd [2009] EWHC 3150 (QB)

[247] Bowman v MGN Ltd [2010] EWHC 895 (QB)

[248] British Chiropractic Association v Singh [2011] 1 W.L.R. 133

[249] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) p 86

[250] Jameel and Others v Wall Street Journal Europe Sprl [2006] UKHL 44 per Lord Hoffman at para 57 ; chapter 3A

[251] British Chiropractic Association v Singh [2011] 1 W.L.R. 133 para 23

[252] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 5

[253] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 p 568

[254] Trouille, Helen (2000) ‘Private Life and Public Image: Privacy Legislation in France’ in International & Comparative Law Quarterly vol 49(1) pp 199-208

[255] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 p 575

[256] (Act no 70-643 of 17 July 1970)

“Everyone has the right to respect for his private life. Without prejudice to compensation for injury suffered, the court may prescribe any measures, such as sequestration, seizure and others, appropriate to prevent or put an end to an invasion of personal privacy; in case of emergency those measures may be provided for by interim order” retrieved on 3rd April 2011 and available from [English translation of the Civil Code of France]: http://195.83.177.9/upl/pdf/code_22.pdf

[257] Trouille, Helen (2000) ‘Private Life and Public Image: Privacy Legislation in France’ in International & Comparative Law Quarterly vol 49(1) p 202

[258] “la sphere secrete ou l’individu aura le droit d’etre laisse tranquille”

[259] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 pp 575

[260] Trouille, Helen (2000) ‘Private Life and Public Image: Privacy Legislation in France’ in International & Comparative Law Quarterly vol 49(1) p 204

[261] “ARTICLE 226-1 (Ordinance No. 2000-916 of 19 September 2000 Article 3 Official Journal of 22 September into force 1 January 2002) retrieved on 3rd April 2011 and available from [English translation of the Criminal Code of France]: http://195.83.177.9/upl/pdf/code_33.pdf

[262] Trouille, Helen (2000) ‘Private Life and Public Image: Privacy Legislation in France’ in International & Comparative Law Quarterly vol 49(1) p 203

[263] ARTICLE 226-2 retrieved on 3rd April 2011 and available from [English translation of the Criminal Code of France]: http://195.83.177.9/upl/pdf/code_33.pdf

[264] Ibid ARTICLE 226-8

[265] Ibid ARTICLE 227-24

[266] Ibid ARTICLE 227-28

[267] Ibid ARTICLE 412-8

[268] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 pp 568 – 582

[269] Bigot, Dalloz (2002) quoted from Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 p 577

[270] Ibid

[271] Nicolas S. v Journal Le Matin TGI Thonon des Bains, December 22, 2006.

[272] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 p 577

[272] Ibid

[273] Ibid p.578

[274] A v B Plc [2002] EWCA Civ 337; [2003] Q.B. 195 (CA (Civ Div))

[275] Ibid p.578

[276] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) p 86

[277] Von Hannover v Germany [2004] E.M.L.R. 21

[278] BBC News 21st March 2011 ‘ France fines Google over Street View Data Blunder’ retrieved on 2nd April 2011 and accessed at: http://www.bbc.co.uk/news/technology-12809076

[279] Cousin & Sordet (2009) ‘France: Radical Thoughts on how to Enhance Right to Privacy’ in Privacy Laws & Business International Newsletter vol.101 pp 6-7

[280] Berlins, Marcel (2008) ‘Publicity-mad Sarkozy leads fight for privacy’ in Guardian online accessed 9th April 2011 and available from: http://www.guardian.co.uk/world/2008/feb/04/france.comment

[281] See chapter 2

[282] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 2

[283] Murray v Express Newspapers Plc [2008] EWCA; Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB)

[284] Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127

[285] Author of a Blog v Times Newspapers Ltd [2009] E.M.L.R. 22

[286] Delany, Hilary & Murphy, Cliodna (2007) ‘Towards Common Principles Relating to the Protection of Privacy RightsAn analysis of recent developments in England and France and before the European Court of Human Rights’ in European Human Rights Law Review volume 5 p 577

[287] Mackenzie, Andrew.P (2002) ‘Privacy – A New Right in UK Law?’ In Scots Law Times vol 12 pp 98-101 and see Mackey, Claire & McLean, Angus (2007) ‘Is There a New Law of Privacy in the UKA Consideration of Recent Legal Developments’ European Intellectual Property Review vol 29(9) pp 389-395

[288] McVicar v United Kingdom (46311/99) (2002) 35 E.H.R.R. 22 and Times Newspapers Ltd v United Kingdom (23676/03) (Unreported, October 11, 2005) (ECHR)

[289] Merrills, J.G (1993) The Development of International Law by the European Court of Human Rights Manchester Univerity Press: Manchester at p.185

[290] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide page 2

[291] Plunkett, John (2011) ‘Government unveils libel law reforms’ from Guardian online retrieved 28th March 2011 and available from: http://www.guardian.co.uk/media/2011/mar/15/libel-law-reforms

[292] Clause 8 of the Draft Defamation Bill

[293] Clause 1 Ibid

[294] Clause 7 Ibid

[295] Clause 6 Ibid

[296] Reynolds v Times Newspapers Ltd [2001] 2 A.C. 127

[297] Young, Hugo (2003) Supping with the Devils Atlantic Books: London

[298] Rozenberg, Joshua (2011) ‘The Libel Reforms are a Step in the Right Direction: But do they go far enough?’ Guardian online retrieved on 1st April 2011 and available from: http://www.guardian.co.uk/law/2011/mar/15/libel-reforms-step-campaigners-satisfied

[299] Ibid

[300] Phillipson, Gavin (2009) ‘Max Mosley Goes to Strasbourg: Article 8, claimant notification and interim injunctions’

[301] Mclean & Mackey (2010) ‘Mosley v News Group Newspapers Ltd: how sadomasochism changed the face of privacy law: a consideration of the Max Mosley case and other recent developments in privacy law in England and Wales’ in European Intellectual Property Review vol.32(2) at p.89

[302] Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB)

[303] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.19

[304] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.19

[305] S.12(3)

[306] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.87

[307] A.V.Dicey (1888) An Introduction to the Study of the Law of the Constitution (10th ed) Macmillan p246

[308] Times Newspapers Ltd v United Kingdom (23676/03) (Unreported, October 11, 2005) (ECHR)

[309] Lord Ashcroft KCMG v Stephen Foley, Independent News & Media Limited, Roger Alton [2011] EWHC 292 (QB) per Justice Eady at para 69

[310] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.682

[311] Robertson, Geoffrey & Nicol, Andrew (2003) Media Law Penguin Books: worldwide Introduction p.76

[312] Knightley, Phillip (1997) ‘The thalidomide Scandal: Where we went Wrong’ in Pilger, John (ed) Tell Me No Lies Jonathan Cape: London

Categories
Free Essays

Sample Dissertation: Effect of Music on Consumer Behaviour

The present study was carried out to ascertain the effect of music on consumer behaviour in UK’s most popular footwear retailer: Clarks. Due to intense competition in the footwear retailing market, the company has taken recent steps to broaden its target market by selling fashionable shoes to younger more fashion conscious shoppers. Store atmospherics, particularly music played, was proposed as a likely option for attracting these customers.

Existing literature was reviewed to ascertain the effects of these. Certain views exist that suggest music is essential in certain retail environments. It could influence consumers into staying longer in store, positively affect their mood, and even purchase more items within the store. While other views claim that its main relationship to purchasing behaviour is in its indirect effect on mood, which could in turn positively affect purchasing behaviour. Quantitative surveys were carried out with 50 customers in store to ascertain their music preference and the process through which music affects their choice of stores and their purchasing behaviour. This questionnaire was distributed to customers within a Clarks store. Data was collected and analysed using SPSS and Excel.

Results gathered form the quantitative study illustrated that a majority of customers venturing into the store (40.9%) are aged 25 – 34. Customers aged under 50 account for a majority of visitors to the store (78.6%), while those over 50, which are traditionally Clarks’ market segment, account for only 21.4% of visitors to the store. The music preferences of most visitors to the store were Pop/Alternative, R&B/Slow and HipHop. 64% of all respondents work within offices. Likert scale responses illustrate that most customers agreed that they notice the music playing in the background (72.8%) and liked the music playing in the background (52.6%). 68.9% also claimed that the sort of music played affects their mood within the store, while 46.6% would not mind staying longer in the store as long as the music being played is appropriate. The sort of music playing does not influence their choice to patronize, or purchase more shoes. However, 65.5% claim that it positively affects their mood. Customers aged 25 – 34 have a higher preference for Pop/Alternative, R&B and Hip Hop music.

Therefore if the segment of customers sought all indicate that they prefer Hip Hop, R&B and Pop/Alternative music, which could positively affect their purchasing behaviour by influencing their mood. Then it is possible that Clarks could better attract and retain this segment of customers by changing the sort of music being played within its stores. The company could also train staff in empathy, which could in turn positively affect customers’ moods.

1. INTRODUCTION

Kotler first described the concept of store atmospherics in 1973. Atmospherics are all the factors that go into making the atmosphere and general ‘feel’ of a retail store: the decor, the music, the temperature, humidity, and so forth. Atmospherics go a long way towards determining whether a customer remains in the store longer, spends more (or less) money and returns at a later date. In this dissertation, the researcher will examine the affects of background music on purchasing decisions with general reference to the UK footwear retailing industry, and with specific reference to the UK’s most popular footwear retailer, C & J Clarks Ltd.

a.The nature of the industry

According to information presented in Mintel (2008), the UK footwear retailing industry has been characterised as having low barriers to entry. This fact has resulted in a large amount of specialist and non-specialist retailers all competing for substantial market share. Specialist footwear retailers are those considered to generate more than 50% of sales from footwear, whilst non-specialist footwear retailers generate less than 50% of sales from footwear. The majority of specialist and non-specialist footwear retailers maintain strategies focused on product quality and price.

Recent trends show that the footwear industries low entry barriers have also resulted in several low-cost retailers now entering the market such as: Primark, Tesco, Zappos, and Amazon, just to name a few. These retailers focus on a secondary differentiation strategy based on customer need as well as price. Such retailers provide low-cost footwear, which has led to a shift in consumer purchasing behaviour. Some customers previously willing to pay a higher price for better quality footwear now prefer to buy low-cost footwear sold by these specific retailers.

Although the footwear retail industry has been recently flooded with new entrants, the market remains highly segmented. Keynote (2008) suggests that three main segments exist in the footwear retail market: upper (AB), middle (BC1), and lower (DEF). Whilst some retailers have been able to secure customer loyalty through effective brand positioning, others have not. The latter have either been forced to compete based on price, or go bankrupt.

When examining purchasing behaviour even further, it becomes evident that certain atmospheric conditions also contribute to the customer’s shopping experience. This therefore raises the issue of the sustainability of current positioning within the footwear retail industry. It is suggested that appropriate generic strategies coupled with atmospherics will aid in determining the purchasing behaviour of the footwear retail customers of today and tomorrow.

b.The organisation’s positioning within the industry

C&J Clarks Ltd., established in 1825, is a family owned business and the UK’s most popular footwear retailer. The company leads the industry in terms of sales with a market share of 9%, estimated sales of 45 million pairs of shoes, and a turnover of ?973 million in 2007 (Gemma, 2007). It operates as a specialist retailer, selling its own brand of footwear for men, women and children (Keynote, 2008).

Clarks is positioned as a middle market, comfort retailer characterised by its contemporary footwear designs and marketing. Its stores are well lit, clearly laid out and conservative. This marketing strategy is tailored to cater for its most loyal and profitable market segment of BC1 50+ population who were attracted to its brand name and comfortable, not necessarily fashionable shoes (Mintel, 2008). These product ranges are distributed through a range of outlets encompassing 552 UK stores, 1900 UK stockists, 210 outlets in the US and a myriad of wholesalers in Asia and the Middle East (Clarks, 2009).

c. Nature of the perceived issue

Clarks’ current consumers are mostly return customers who have a high level of brand loyalty. However there is a large untapped market that Clarks has been slow/failed to attract. This includes the segment of fashion-focused individuals who frequently buy shoes because of their design and would not mind paying a premium due to brand advantage (Gemma, 2007). There is also the segment of comfort-focused, under-50s who prefer to buy comfortable shoes for work and leisure. They represent a significant and promising portion of Clark’s customers.

In order to reach these untapped markets, Clarks has invested in improving its image by introducing some new fashion-end product designs that appeal to the current market trends. The company is also trying to find a synergy between its traditional comfortable designs and changing customer trends.

Despite these initiatives, certain customers that fit into this target segment proclaim dissatisfaction during store purchases, or fail to convert into customers after entering the store. Clark’s store design is currently suited and effectively delivered at its target segment. The stores are brightly coloured, with black leather seats in the middle of the store and Pop/Alternative music playing. However, the target customers are generally younger, usually more fashionable, have a different lifestyle with differing tastes in fashion, art, and music. Therefore, is Clarks’ current marketing strategy effective given their current positioning, brand perception and the potential market they are missing out on?

Whilst items such as cost and quality have generally been the focus at Clarks, the company is beginning to direct more of its attention to the concept of store atmospherics and their affect on consumer purchasing behaviour. When examining this concept, it is important to ask if Clarks’ store atmospherics are effective in attracting the younger generationShould Clarks’ work further on the general ‘feel’ of a retail store: the decor, the temperature and humidity, and most importantly on the choice of background musicWould a focus on the background music played in its stores help Clarks’ to strike a chord with the younger generation and influence their purchasing decisions?

Competing stores that sell the sort of shoes these younger consumers want usually have different store designs and adopt different styles of art and music. Aldo, for instance, plays hip hop and other music that is quite popular amongst younger people, and generally have a more “younger” store designs with mannequins and fashion shows displayed on TV. Top Man and River Island play rock music and have a more contemporary store design.

These stores have adopted different store design concepts and are therefore more successful in targeting the sort of customers that Clarks wants. Would Clarks therefore be more successful in attracting this new segment if they played background music that suits younger customers better and does not make them feel like they are in a store targeted at older people?

d.Research aim

The intent of this research dissertation is to examine the affects of different types of background music on purchasing decisions. The research will examine and suggest what type of background music Clarks should adopt in order to attract the younger generation and reach this untapped market.

The research objective is therefore to ascertain the effect of music on consumer behaviour within Clarks, by answering the following questions:

What is the impact of music on the volume of consumer purchases

What type of background music should Clarks adopt in order to attract younger customers


2. LITERATURE REVIEW

This study examines the role of background music in a retail environment.

a.Marketing Strategies

Marketing strategy is broadly defined by Baker (2008), as representing the communications process underlying an organisation’s effort to leverage its core resources on existing market opportunities in order to achieve sustainable competitive advantage. This definition has been supported by a number of theorists, who postulate that marketing strategy is the general procedure and underlying notion upon which the firm’s approach to the market depends (McDonald, 2008) as it illustrates the company’s best opinion as to how to profitably leverage its resources into the marketplace (McDonald, 2008).

A successful marketing strategy therefore involves a company selecting and analysing a profitable and sustainable market segment; developing an appropriate marketing mix to cater for this segment; marketing the right brand and retaining these customers through an effective use of its resources (Doyle, 1997). This view of relating the company’s resources to its marketing activities provides the basis for defining the major marketing capabilities which could be used to create sustainable competitive advantage – capabilities which all stem from the central processes within which marketing is concerned (Hooley et al, 2004).

However a marketing strategy built without an understanding of the changing organisational environment and how each of industrial force impacts on its value creation is bound to fail (Doyle, 1997). Therefore for a firm to build and sustain its competitive advantage in a highly competitive industry, it should acquire a thorough understanding of its organisational environment, and how each industry factor impacts on its business strategy (Porter, 2008). A knowledge base, which could be the foundation of a beneficial customer driven – business strategy.

b.Music and its affects

Music has become an important instrument in examining consumer behaviour and it motivates individuals to spend more time in stores. Since the 1970’s and Kotler’s (1974) pioneering work, the importance of atmospheric affects on consumer behaviour has gained popularity among academic researchers. A number of studies reveal the positives of musical congruity upon desired outcomes (Oakes & North, 2008). According to Dune and Morin (2001), variations in the intensity of pleasure induced by background music have an influence on the store assessment. The choice of music can have a positive or negative affect on consumers. It can be used to relive stress or to create a good atmosphere so as to increase business.

Music has a significant affect on consumer’s attitudes. A research on happy/sad music has been conducted and found that happy/sad music had a significant direct affect on shopping intention while the direct affect of like/dislike music was marginally significant. However, the combination of the two music dimensions investigated is perhaps most noteworthy. According to Broekemier and Gentry (2008), shopping intention was greatest when subjects were exposed to happy music.

Store image and mood of the customers can be changed with the music. In the case study by (Morrison, 2006), it was found that specifically programmed music can play a role in the total shopping experience and can be an important tool in creating a memorable identity for specific retail brands. If the music was specifically designed to fit a particular demographic and physiographic, then customers tended to relax and stayed longer in the store. In research conducted by Bailey and Areni (2006) found that, in the case of a respondent who waited idly and hence monitored the passage of time, familiar music reduced perceived duration compared to unfamiliar music. The study by Alpert and Alpert (1990) showed that when an evoked mood matched the mood of the purchase occasion, buying intention was higher than when the music and moods were inconsistent.

Garlin and Owen (2006) found that the mere presence of music had a positive effect on patronage as well as the feeling of pleasure. Tempo is an important structural component of music that directly relates to the arousal response (Day et al, 2009). Slower tempo, lower volume and familiar music resulted in the subject staying marginally longer at the venue than when the tempo or volume was high, or the music less familiar. The higher the volume and tempo of the music, the longer customers perceive time duration.

The study by Morin et. al., (2007) found that the presence of music operates at the perceptual level by contributing to the holistic quality of the service-scape and creating a greater contrast against which the provider stands out more powerfully. It therefore is reasonable to assume that other ambient factors might operate according to similar mechanism.

In other research by Cameron et. al., (2003), the study of low-cost waiting context, music was found to exhibit both cognitive (on wait-length evaluation) and affective (on mood) influence. However, music’s positive contribution to overall experience evaluation appears to be through mood and not through wait-length evaluation.

c.Music in other environments

Music has many affects on society as a whole. It can be used for relaxation, affection with others, to express emotion, and myriad of other affects. This also relates to business, in that those things that affect us in music can be used to influence us as consumers (Coloma & Kleiner, 2005). A research by Hallam and Price (1998) indicates the introduction of background music of a calming nature into the classroom significantly improved the performance of a group of emotionally and behaviourally disturbed children on a math task and led to a significant decrease in rule breaking behaviour over the period of study.

A study conducted by Milliman (1986) on the influence of background music on the behaviour of restaurant patrons isolated the background music as an atmospheric variable that could affect the atmosphere of a store (in this case a restaurant). With the slow tempo background music used in this study, patrons stayed longer, ate about the same amount of food, but consumed more alcoholic beverages. Evidently the slower, perhaps more soothing background music, created more relaxing environment (greater approach condition). It is also interesting to note that the number of customers that left the restaurant before being seated remained about the same whether slow or fast tempo music was played. This would tend to support the conclusion that the background music contributed to an approach environment regardless of its tempo.

It has been said that background music can communicate particular meanings or associations. A study conducted by Zhu and Meyers-Levy (2005) focused on distinguishing between the meanings of music. When background music affects product perceptions, Zhu and Meyers-Levy concluded that ad background music could confer either referential or embodied meanings. This means that people discern and use music when forming their product perceptions. This appears to depend on how intensively they process the advertisement and the resource demand imposed by the verbal and material input.

A more recent study by Edworthy and Waring (2006) has shown significant results about the loudness and tempo of background music on exercise performance. It has been shown that the speed of music directly affects performance and heart rate. The results of this study also show that both the volume and the tempo of the music, as well as the use of the music per se, has affects on performance itself, heart rate and some subjective parameters. It also shows that volume and tempo of music interact in an interesting way. Looking at the task performance, the study shows more than anything else the speed of the music affects the speed at which the participant runs. Faster music produces faster speeds, but louder volumes do not produce faster speeds. There is an interaction between treadmill speeds, music volume, and music tempo in that fast, loud music is particularly effective in increasing speed of running during the test period. It was also found that volume has an affect in the fast music condition but not in the slow music condition. Thus heart rate increases if the volume of fast music is increased but not if the volume of slow music increased. Thus it has been shown that the speed of the music directly affects performance and heart rate. The added benefit of playing music loudly only appears to apply when music is played fast.

The present results show that music can, like background speech, disrupt writing fluency. Writers apparently slow writing production to preserve quality when writing is accompanied by background music. It does not matter if the music is vocal or instrumental or both, despite some students’ anecdotes that instrumental music does not disrupt their writing as much as vocal (Gilroy & Ransdell, 2001).

A research conducted by Gotell et. al., (2002) confirmed observations in the music therapy and nursing literatures, to the positive influence of background music on patient communication, mood and compliance. These results suggest that background music and singing are useful interventions for late-stage dementia patients.

In a research conducted by Kallinen (2002), the results show that music tempo may have an impact on reading. There are several possible explanations why the reading rate and efficiency decreased when the tempo of the music was slowed down. The slow music may have produced a more relaxed feeling for reading. Women showed the most positive judgments on news in the no-music condition, whereas men showed the most positive judgments on news in the slow-music condition. Slow background music could be played for men and no music or fast music for women to create more positive attitudes to news. In this study, both subject driven (gender) and object based (music) differences in reading were found.

Brodsky (2001) found that the tempo of background music consistently affected both stimulated driving speed and perceived speed estimates. As the tempo of background music increased, so did both simulated driving speed and speed estimates. Without background music, subjects’ accelerated to moderately quick speeds while they perceived their velocity to be fairly slow. Another finding of the study is that the tempo of background music consistently affected the frequency of virtual traffic violations.

The results of the research conducted by Kellaris and Cox (1989) on the effects of background music in advertising cast doubt on the contention that product preferences can be conditioned reliably by a single exposure to appealing or unappealing music. However, this does not mean that affective conditioning never occurs.

Hallam et. al., (2002) conducted a research on the effects of background music on primary school and found that, where the type of background music played can be clearly defined by a group of listeners as calming and pleasant or arousing and unpleasant, it can have distinctive effects on task performance and the reporting of intended altruistic behaviour. The effects of music on task performance are mediated through its effects on arousal and mood. However, the research reported provides only a very small contribution to our understanding of the ways that music might affect behaviour and various forms of studying. The findings also show that some music can disrupt concentration and generate moods which may lead to less altruistic states of mind.

d.Music and Scent

The research conducted by Spangenberg et. al., (2005) found that consistency between an ambient scent and music in a retail setting leads to more favourable evaluations of the store, its merchandise and the store environment. Behavioural intentions to visit the store are also positively affected by consistency between ambient scent and music. Mattila and Wirtz (2001) examined in their study the notion that consumers perceive environmental cues in a holistic manner. They propose that consumer responses to a physical environment may depend on the ensemble effects, and they examined this proposition using two ambient cures, music and scent. In another case study by Michon (2005), it was found that slow tempo music influenced shopper’s positive affect, whilst fast tempo music and ambient odours mediate shopper’s perception of the mall environment.

In research conducted by McDonnell (2007) on music, scent and time preferences for waiting lines, it was found that music and scent can increase customer satisfaction among customers kept waiting in a line and reduce queue rage. This research also found that the need for time management indirectly influenced customer satisfaction when a customer is waiting for service by a negative affect on emotions that have a negative association with service evaluation. This offers a new perspective and opportunity for marketers.

e.Music and Retail

Klemz and Boshoff (2001) conducted research on environmental and emotional influences on willingness to buy in small and large retailers. In the retail industry, there is stiff competition between small retailers and big retail outlets. Klemz and Boshoff conducted research in a small town in mid-western USA and found that customer’s perceptions were different between the large and small retail districts. It was found that small retailers in the downtown retail district use empathy to influence customer’s willingness to buy, whereas large national chain retailers in the one stop district use assurance to influence a customer’s willingness to buy. It was also found that small retailers in the down town district manage empathy primarily by managing responsiveness whereas large retailers balance tangibility, reliability, and responsiveness to manage perception of assurance.

Music may be used to help create a distinctive image and position in the market. There are numerous examples of service providers who use music to help create atmospheres that are consistent with their service offerings (Herrington and Capella, 1996). In one study conducted in the USA in a supermarket, it was found that music does make a difference in the supermarkets and is seen as an established part of a supermarket experience. The researches said “it is music we like that gets us going rather than music per se”. The reason for selecting a supermarket environment was because most of the US households shop for groceries from supermarkets at least once a week (Progressive Grocer). Herrington and Capella (1996) also pointed out that restaurants often play appropriately ethnic music. For example; Asian restaurants play bangra music, Pizza houses play Neapolitan love songs, Greek bistros play Zorba’s dance, etc., but given the vast range of musical taste in the population at large, supermarkets face the challenge of selecting music that not only does not offend but makes a positive contribution to the store’s ambience.

According to a study by Sullivan (2002), it shows that in a restaurant setting, music can be used to affect the behaviour of individuals. It was examined that restaurant owners wishing to increase the level of expenditure on food and drinks should consider playing music at a relatively low volume. The study showed that the type of music is less important and tempo had no significant affects on expenditures. It suggested that it is not the presence of music that is important, but rather the perception of whether that music is typical for that particular environment. The findings of this study also indicate that the presence of any type of music in the waiting area can affect the perceptions of time of those waiting (passive activity) and may make the wait seem more bearable.

A research conducted by Yalch and Spangenberg (1990) found that music enhances a retail environment and thus results in increased store traffic, greater customer satisfaction and higher sales. The further finding of the initial research is the clear difference in perceptions of the amount of time spent shopping as a function of shoppers, age and type of music.

Popular music is no longer limited to low-income youth (Henderson, 2009). Music can influence the disposition of shoppers and manifest itself in choice of store, propensity to purchase, basket size and intent to repatronage (Soars, 2009). A study conducted in Greece by Daskalopoulou and Petrou (2005) indicates that the store size, product variety, location and belonging to a chain variable exert the largest positive effect upon the probability that a store experience will result in an above average performance. Miranda et. al., (2005), in their research regarding shoppers’ satisfaction, found that shoppers’ intention to remain loyal to their primary store was in fact influenced by several other contextual factors. A number of staff related factors are also linked to consumer’s subsequent loyalty intentions and constitute key components of the servicescape (Harris & Ezeh, 2008).

A research conducted by Chebat et. al., (2001) on background music and instore selling, found that retailers using background music in their stores favour the generation of some types of cognitive responses, which may negatively influence the attitude towards the employees and the store if the music does not fit in the sales encounter.

The findings of the research conducted by Eroglu et. al., (2005) show that, consistent with the schema incongruity theory, shoppers’ hedonic and utilitarian evaluations of the shopping experience are highest under conditions of slow music high density and fast music low density. Furthermore, significant main affects of music tempo were found for behavioural responses such as future approach avoidance tendency toward the store and extent of browsing behaviour.

Vida et. al., (2007) conducted research on background music on consumer responses in high-end supermarkets. The results show that shoppers linking of the music in the natural retail setting and the perceived music fit with the store image and positively affected the length of shopping time which indirectly influenced consumer expenditure. They also found that music valence does not influence shopper’s behaviour directly and had no affect on the money spent in the store, and only an indirect affect on the time spent in the store. The result of their research provides evidence that the background music not only induces positive feelings in shoppers but also plays an important role as an intrinsic element of the store atmospherics and retail branding.

The results of another research by Oakes & North (2008) on background music had wider implications for the retail and services environment. The findings from this study suggest that musical presence, tempo and linking can provide a much more cost-effective option for managers by reducing perceptions of wait duration. These findings are also likely to have implications for managers of organisations seeking to manage perceptions of the amount of time that telephone customers are placed ‘on-hold’. The results revealed perceived wait duration to be a positive function of background musical tempo, thus supporting the prediction of the storage-size model of perceived duration.

Jacob et. al., (2009) conducted research on background music and found that music exerted a positive affect on the amount of money spent by customers. They found that when romantic music was played, customers spent more money than when no music was played or when pop music was played. In this experiment, no difference was found in the amount of money spent by customers when pop music was used as background music and when no music was played. This study also shows the comparison between the three conditions that romantic music had a positive effect on the amount of money spent by customers. No difference was found between the amount of money spent in the pop music or no music control conditions. So it cannot be that customers spent less money in the flower shop when they heard pop music than when they heard romantic music because pop music had a negative effect on them. Since they also spent less money when no music was playing, it must be that romantic music influenced them. The results suggested that background music in itself does not encourage customers to spend more money but there has to be congruence between the music played and the products offered.

f. Music and Customers

A study by Oakes (2000) reveals a significant relationship between specific musical variables and desired customer behavioural outcomes. These can be displayed in a visual framework entitled the musicscape. It has been found that live music, for example classical or jazz music, played on the piano in a restaurant may create high expectations of service as compared to the recorded music. The type of music used in the services organisation can also affect the length of time customers stay in the premises and the amount he or she buys. The study also found that music could manage customer’s perception of time and time pass more quickly when consumers have enjoyable music to listen to. Areni (2003) also noted that time passes more slowly if customers dislike atmospheric music. Therefore it is important to play music that consumers enjoy.

Happy/sad music had a significant direct affect on shopping intentions while the direct effect of like/dislike music was marginally significant. However, the combination of the two music dimensions investigated is perhaps more noteworthy as shopping intentions were greatest when subjects were exposed to happy music (Broekemier et al, 2006).

Sweeney & Wyber (2002) have described the role of cognitions in music. They described that music is well known for its effectiveness in triggering moods. Music is the only thing that can affect people during their time shopping in the store. Retailers have also recognised the importance of music in stores and also the fact that music differentiates a store from its competitors. In the research, it has been found that most of people enjoy music. It has been found that when classical music was played, shoppers had a high perception of service quality and pleasure if the music was of a fast tempo. When slow music was played, it was found that everyone liked that music more than other music and it also had a very strong independent affect on consumer’s pleasure and their perception of service quality. Pleasure and service quality had a positive affect on consumers when they were in the store and most of the shoppers spent more time exploring the store.

In a research by Milliman (1982) in a supermarket, consumers were exposed to no music, slow tempo music or fast tempo music. It was found that, in regard to the affect on customer pace, slower music produced slower traffic flow than no music, and faster tempo showed faster flow than no music, but was not significant based on the statistical measures of the study. But there was a significant difference between slow and fast tempo.

In another case study by Areni & Kim (1993), on the influence of background music on shopping behaviour, it was found that classical music influenced shoppers to spend more money. Additional findings suggested that, rather than increasing the amount of wine purchased, customers selected more expensive merchandise when classical music was played in the background.

Research conducted by Minor et. al., (2004) on customer satisfaction with musical performance resulted in a model suggesting six factors underlying customer satisfaction with live musical performance. Many of these factors reflect attitudes towards the sound of the group and individuals’ performance sound, musical ability, musician’s appearance and audience. Other factors reflected elements of the servicescape facility and stage. These elements suggest implementable recommendations to those in charge of hiring bands, managing facilities and to the bands themselves. An easily remedied element affecting consumer satisfaction is sound volume. By making simple adjustments to the sound system and bands, engineers can optimise this element for consumers. Further providing better quality sound through purchase of better sound equipment appears justified by these results.

Mattila and Wirtz (2006) conducted another research to test a theoretical framework that explains arousal congruency affects on consumer perceptions of an intrinsically pleasant service environment. The results of their research suggest that an intrinsically pleasant service environment might not be enough to guarantee pleasure and satisfaction. Specifically the amount of pleasure and satisfaction derived from the service experience might be dependent on the degree of congruency between the consumer target arousal levels and the actual arousal level of the service environment. High arousal congruency would greatly enhance customers’ perceptions of pleasure and satisfaction, while low arousal in congruency would adversely affect the level of pleasure and satisfaction derived. The results from this study also showed that in the state of arousal congruency for both pleasure and satisfaction were maximised.

It is widely expected that consumers enter into a consumption experience with a set of expectations of what they would like to happen. Another research by Wirtz et. al., (2007) found that satisfaction in pleasant service environments is driven by arousal level expectations being met by the arousal quality of the service environment, while such matching affects are much weaker or even fail to influence satisfaction in unpleasant settings. However, consumers’ in-store behavioural responses to services environments do not necessarily mirror their satisfaction evaluations.

A research by Wilson (2003) on the effects of music on perceived atmosphere and purchase intention in restaurants reported that different styles of music, and the absence of music, influence patron’s perceptions of the restaurant environment. A positive relationship was also found between patron’s perceptions of the restaurant and their perception of music. A factor analysis of responses to the restaurant provided evidence that different styles of music and no music led to differences in the general perceived characteristics of the restaurant. Due to the fact that the number of people dining in the restaurant fluctuated considerably on the same day before, during and after the testing period it is difficult to assess the influence of music on the actual sale, however classical music was associated with relatively few people remaining in the restaurant after 11 pm and a greater number of people leaving the restaurant earlier in the evening.

Results from the structural analyses conducted separately for low and high pleasure-intensity conditions suggest that more intense pleasure, via its impact on attitude towards the servicescape, not only succeed in inducing a more positive attitude towards the sales personnel, but also strengthened the relationship between consumer’s attitudes towards the sales personnel and store evaluation (Dube & Morin, 2001).

A research conducted on the style of background music and consumption in a bar by Jacob (2006) found the style of background music had an effect on customers’ behaviour. Drinking songs were shown to increase the length of time and the amount of money spent by patrons. The combined results of these studies prove that music influences drinking behaviour. The original contribution of study is that it shows that the style of music not just its level also influences consumer behaviour.

A research conducted by Kallinen and Ravaja (2003) showed that there are consistent personality-related differences in people’s emotional and other responses to news messages with two quite distinct audio characteristics i.e., slow vs. fast speech rate and rising vs. falling background music melody. The findings were largely in agreement with the principle of similarity-attraction; that is, people may be attracted to computer-mediated messages with audio characteristics manifesting emotions or a personality similar to their own.

A research conducted by Furnham and Strbac (2002) showed that an introvert’s performance is significantly lower than an extrovert’s performance in the presence of background music and noise but not in silence. It was also predicted that there would be a main affect for background sound. That is, overall performance would be better in silence than in background music and office noise. On the reading comprehension, introverts performance was impaired further by the addition of vocals to the background music and for extroverts their performance was improved by this factor (Furnham et. al., 1999).

Caldwell and Hibbert (2002) conducted research on the influence of music tempo and musical performance on restaurant patron’s behaviour and found some interesting and occasionally unexpected comparisons to previous research into the affects of music in service settings. When analysed separately, both music tempo and preference were found to be significantly related to time spent in the restaurant. As concerns the affects of music on spending, in initial analyses (in which the affects of the independent variables were assessed separately) both music tempo and musical preference appeared to significantly influence total spending and the amount spent on food and drink in the restaurant. Spending on food and drink was higher under the slow music condition and for people who rated their liking of the music higher.

g. Music and Productivity

A number of surveys have been carried out, mainly in United State of America, as to whether background music actually proved to have a beneficial effect on production. In 1962, a management consultancy called Case and Company carried out a test of Muzak on productivity at the Brooklyn factory of American Machine and Foundry CO. The study discloses significant improvements in the production performance (Grayston, 1974).

h. Research Questions

Based on the reviewed literature, there seem to be conflicting theories on the particular effect that music has on consumer behaviour. A number of theories claim that they do drive the consumer to spend more money in store, while others claim that it reduces the perceived impact of time on their stay, and thereby makes them feel less time conscious, which could in turn lead them to check out more items and buy more products

The research objective is therefore to ascertain the affect of music on consumer behaviour within Clarks, by answering the following question:

To what extend does music impact the volume of consumer purchase


3. METHODOLOGY

a.Research Philosophy

Answering the research questions will entail adopting a positivist philosophy, in which the social world of firms and customers upon which this study is to be based exists externally and are not related to the researcher (Easterby-Smith, 2002). Therefore the data will be gathered objectively without being exposed to subjective interpretations of findings, which may vary amongst individuals. A deductive approach will also be adopted based on the positivist philosophy. Collis and Hussey (2003) imply that a deductive approach is a more effective method of carrying out positivist research as the methodology upon which the research is based is depicted from existing literature and theories, and not hypothesised by the researcher.

Easterby-Smith et al., (2008) states that an understanding of the research philosophy being adopted in management research is useful as it helps clarify research designs, showcases the best research approach and it also aids the researcher in identifying, creating and designing studies which may not be consistent with their past experiences.

b.Research Approach

The deductive approach is the dominant research approach in natural sciences, where laws present the basis of explanation (Collis and Hussey, 2003). This approach represents the most common view of the nature of the relationship between theory and research and results gotten from this approach are developed through logical reasoning (Bryman and Bell, 2007).

Triangulation, as proposed by Saunders et. al., (2008), will be utilized in the course of this dissertation project. Triangulation is essential when the study aims to capture data using different data collection techniques. Therefore this study will aim to collect data using structured quantitative methods and also secondary empirical studies.

Primary and secondary data gathering techniques will be used to analyse the research questions, which are aimed at finding the extent to which music influences the volume of consumer purchases. Secondary data will be gathered from market research sources regarding the retail environment and the affects of music on consumer behaviour. A vast majority of secondary data will be collected from previous research and empirical studies on what has already been written or observed in relation to music and consumers. Secondary data will also be gathered from market report sites such as Keynote and Mintel that may have reports on music and retail.

Primary data however will be gathered using quantitative surveys in Clarks stores asking customers questions on their purchasing behaviour and the extent to which music affects it. Questionnaires will be designed based on theories already depicted in the literature review, using a deductive approach. These questionnaires will be handed out to customers in the store where they will be briefed on the purpose of the research and asked for their help in filling out each individual question. The questionnaires will then be collected after each customer is done. Customers that failed to answer required questions will be omitted from the data analysis for the fear of incorrect or partial data.

c.Research Strategy

The study will be conducted on approximately 50 customers of Clarks store. Data will be collected through questionnaires distributed to customers within the store. Saunders et. al., (2007) suggests that questionnaires, or surveys, are an appropriate means for gathering information in answering the “who”, “what”, “where”, “how much”, and “how many” questions.

i.Explanatory Study

The goal of an explanatory study is to study the causal relationships between variables being measured during quantitative or qualitative studies (Saunders et. al., 2008). Explanatory studies aid in the identification of relationships contained within the data. The most common method used to conduct an explanatory study is that of variable correlation. Particular variables are analysed and correlated in order to find similarities between responses. This process is undertaken in order to provide any area of generalisability of the phenomena observed.

The focus of this research is to find the affects of background music on the volume of consumer purchasing. The explanatory method used in this research will be explained further in the analysis section of this dissertation.

ii.Quantitative Study

Two methods are commonly used when conducting research, quantitative and qualitative. Quantitative methods of research present data in a numerical fashion, whilst qualitative research methods focus on providing words. Due to the fact that this research study will utilise questionnaires, a multi-method approach to data collection will be used. A multi-method approach refers to the use and combination of more than one data collection method used during research analysis (Tashakkori and Teddlie, 2008). It has been suggested that a multi-method approach to data collection allows the researcher to better answer research questions.

This research study will utilise both questionnaires and secondary data in the collection and analysis of information gathered in order to answer the research question raised during the literature review. The dual approach will be used due to the fact that it is a more efficient way to analyse a different range of facts from different respondents (Easterby-Smith, 2002).

The multi-method approach to research is becoming increasingly popular in management studies where a combination of primary and secondary data may be used (Saunders et. al., 2007). The researcher’s decision to collect both quantitative and qualitative data through questionnaires but analyse the data using a statistical model results in the application of a multi-method approach. Tashakkori and Teddlie suggest that the multi-method approach is useful in helping researchers to answer questions. This approach is also said to allow for more efficient evaluations, which allows the findings to be more trusted.

iii.Access

The ability to gather primary data during this study was dependent on gaining access to an appropriate source within the organization. The level to which this source is appropriate relies on the research question, related objectives and research designs (Saunders et al, 2008). Therefore, the researcher, being close friends with an employee, was in a favorable position to get access within the organization.

The access was granted by the researcher going through a chain of command, first from the branch manager, to the head of marketing and finally to the head of market research. The researcher’s point of call was his friend’s immediate store manager, who immediately passed him on through to the most appropriate entity within the organization that was most suited to offer assistance. Easterby-Smith (2002) suggests that the best way to gain access into an organization is through known contacts.

d.Data Collection Methods

i.Sample Selection

Saunders et. al., (2008) suggest that a sample population is suitable for research whereby sampling the entire population is not possible, too expensive, time constrained, or when results are quickly needed. The majority of these factors apply to this research study; therefore the researcher has chosen to use a sample from the population in question. A sample size of 50 customers has been chosen for questioning.

Oppenheim (2005) describes a non-probability sample as a sample in which the probability of each case being selected from the total population is unknown. It is also suggested that in a non-probability sample it is impossible to answer research questions or to address objectives that require statistical inferences about the characteristics of the population. Therefore a non-probability sample would be the best use when describing the research undertaken for this dissertation.

The main reason for the choice to use a non-probability sample lies in the fact that Clarks store are located throughout the world and therefore it would be nearly impossible to use the entire sample population for this study. In this way, the researcher can focus on a few locations and distribute questionnaires to a variety of different customers. Saunders et. al., (2008) suggests that this type of non-probability sampling can be used to gain information regarding customer’s attitudes and behaviours. It is also for these reasons that the researcher has chosen to employ the non-probability sampling method.

Saunders et al (2008) states that though the non-probability sample may still be used to generalise some assumptions, these would not be based on statistical grounds. However, it could still be used to answer other forms of research questions that deal with the attributes and behaviour of the respondents.

Though it may still be argued that customers who entered the store may be representative of customers in that city or region, the different demographical characteristics of different regions makes it fairly impossible for this study to conclude on the assumption of a probability sample.

ii.Primary Data Collection

It is suggested that both primary and secondary data can be analysed using quantitative means. The fact that the researcher has chosen to collect his own data allows for more control over the structure of the sample and the data obtained. This method will also afford the researcher more confidence in gathering information pertinent to answering the research question. As a result, the researcher has chosen to distribute and collect questionnaires from 50 Clarks’ customers. This questionnaire method is described by Saunders et. al., (2008) as the delivery and collection questionnaire method. Respondents will receive the questionnaire whilst engaging in the retail experience and will be given able time in which to complete the questionnaire. The questionnaires will then be collected and analysed for any errors. Customers will then be asked follow-on questions if the need arises.

iii.Questionnaires

Prior to the distribution of the questionnaires, guidance was sought regarding the development of the questionnaire and which questions should be included. A pilot questionnaire was also tested on a sample of 7 individuals and subsequently revised based on feedback. Saunders et al (2008) suggests that the validity and reliability of data collected in the course of a research study, depends on to a large extent on the design of the questions, structure of the questionnaire and the rigour of pilot testing.

This study was therefore designed on the premise that an authentic questionnaire could only be achieved by appropriately designing a questionnaire to tackle all the research questions using the right quantitative methods. The questionnaire was divided into different cross sections depending on the level of analysis inherent and the type of information sought.

Questionnaires will be used in order to obtain valuable information from customers. The questionnaires will follow a standard structure and help will be given to any customers needing assistance with the questions. Questions contained in the questionnaire will centre on the customer’s overall shopping experience and any factors that may have enhanced or inhibited the experience. Questions will also be asked in regards to waiting times and how the process could be enhanced. The questionnaire will also contain questions centred on atmospherics and background music.

These questions will aim to gather information regarding customer’s moods and feelings about specific music. Comments will be solicited in regard to what type of background music could best enhance the customer’s retail experience and if any type of music could result in longer time in the store, or an increased volume in purchase. After the initial question phase, questionnaires will be gathered and collated. The excel tool will be used to aid in the process of collating data. The SPSS tool will then be used to analyse the information contained in the questionnaires.

iv.Data Analysis

Raw data in and of itself if useless, therefore it is necessary to employ data analysis tools in order to provide meaningful information. This section describes how the researcher analysed the data collected and the tools that were used to aid in the analysis process.

The excel tool and SPSS tool were both used when analysing the data collected. Univariates, which are total sample distributions of one variable at a time (Oppenheim, 2005) was utilised in analysing the frequency and percentage occurrence of each variable; including both ordinal and nominal, category and rating scale questions. Since the aim of this study was to focus on a more complex, analytical research, the real interest of the researcher was in the interrelatedness between certain variables. Frequency tables, bar charts and pie charts were therefore employed in the expression of the univariates.

Bivariate analysis, which was employed in the 2nd part of the data analysis, involved the analysis of interrelatedness between different variables. This analysis was carried out mostly using correlation and graphical analyses. Every effort was taken in order to group variables during the questionnaire design. This therefore aided in the correlation of the data.

v.Reliability, Validity, and Generalisability

Reliability refers to whether or not the data collected during research when analysed yield consistent findings (Saunders et. al., 2008). As the researcher has chosen the positivist approach, this result in issues surrounding whether or not the same results would be yielded on different occasions. Another issue concerning reliability as described by Robson (2002) is the possibility of bias on the part of the researcher.

Because the sample size is relatively small, it may be suggested that this study has issues concerning the generalisability of the information presented. Due to this fact the researcher is not entirely confident that the information gathered is the greatest representation of the general customer population.

vi.Ethical Issues

Specific ethical issues that may arise during the course of this research include the following:

The data gathered from customers may pose a threat to the organisation under study, if unfavourable research findings got out to competitors.

Customers would be worried about their data being gathered and used for illicit emails asking for further information.

vii.Limitations of Research

The following limitations were identified for this study:

The time frame given for the dissertation is quite short and may hinder extensive research.

The number of customers being questioned does not represent a probable sample of all customers patronising Clarks stores nationwide. Thereby affecting the generalisability and reliability of the research findings.

A quota sampling method could have been more appropriate as it would enable the researcher to get representative samples from all age groups in Clarks. Though the researcher did get a representative of all age groups in this study, the number of respondents gotten may not have been totally representative of the demographics of Clarks’ customers.

Some questions in the questionnaire turned out to be irrelevant, these could have been used to find more relevant data about the customers.

Data analysis was done basically through frequency and correlation analysis. A more in-depth analysis with a large array of data may have been more easily interpreted using advanced multivariate analysis. This could have enabled the researcher to find other hidden assumptions about the consumers’ behaviour.


4. RESULTS

a.Age Range

The age of all respondents who participated in this survey are summarised in figure 5. A total of 44 respondents filled in the section. 40.9% of the respondents were aged 25 – 34; 20.5% of the respondents were aged between 35 – 44 and 45 – 54.

Figure 1: Age range of respondents

b.Music Preference

A total of 45 respondents answered questions related to their musical genre preference. The highest portion of individuals (27%) chose Pop/Alternative music as their most preferred genre. Followed by R&B/Slow music, Hip Hop music (18%) and Rock (17%). 14% of respondents chose traditional music as their most preferred genre. The genre distribution is illustrated in Figure 2 below.

Figure 2: Music preference of respondents

c.Income Range

A total of 37 respondents filled this section. 24.3% (n = 9) had an income range between ?20,000 – 30,000, 21.6% (n = 8) had income ranges well below ?15,000 and 18.9% of respondents (n = 7) were between ?30 – 40,000. Respondents whose income ranges were below ?30,000 made up 59.5% of all respondents (n = 21). The income range of all respondents who participated in this survey is shown in appendix 8.3.1.

Figure 3: Occupational environment of respondents

The occupational environment of respondents is summarised in the pie chart illustrated in figure 6. A total of 42 (84%) respondents answered this section. 33% (n = 14) claimed to work in a formal office environment, 31% (n = 13) in an informal office environment and 16.7% (n = 7) in educational institutions; mostly as teachers. Collectively 64.3% of all respondents work in an office environment be it Formal or Informal. A number of respondents also claimed to work in medical facilities (4.8%) and retail environment (7.1%) amongst others.


d.LIKERT SCALE RESPONSE

Figure 4: Likert scale response from Q1-Q4

The line chart illustrated in figure 4 showcases the respondents’ responses to four of the eight Likert scale questions asked regarding their preference for shopping and music. The following is a description of the responses gotten for each question asked.

In Question 1: “I notice the music playing in the background”, 31.1% of respondents strongly agree that they notice the music playing in the background, while 41.7% somewhat agree. Altogether 72.8% of all respondents agree that they notice the background music playing. 14.7% of respondents are undecided on whether they noticed the music playing before the questionnaire was distributed, while 12.4% disagree to noticing background music within the store.

In Question 2: “I like the music playing in the background”, 13.7% strongly agree that they like the music playing in the background, while 38.9% somewhat agree that they like the music playing in the background. Altogether 52.6% of all respondents claimed that they liked the sort of music playing inside Clarks as the questionnaire was being taken. 11.9% of respondents were undecided on whether or not they liked the background music, while 35.5% dislike the background music playing.

In Question 3: “The sort of music played affects my mood within the store”, 42.2% of all respondents strongly agreed to the statement, while 26.7% somewhat agreed. Altogether, 68.9% of all respondents agree that the sort of music played within the store affects their mood. Be it positively or negatively. 17.8% of respondents were indecisive, while 13.3% disagreed to the statement.

In Question 4: “Because of the music playing, I do not mind staying longer in the store”, only 10.9% strongly agree that they do not mind staying longer in the store. 35.7% somewhat agree, totally 46.6% of respondents that agree not to mind staying in stores longer if the music being played is favourable. 24.4% are undecided, while 26.7% somewhat disagree, and 2.2% strongly disagree.

Figure 5 below contains the remainder four questions for the general Likert scale questions regarding music preference and purchasing attitude. In Question 5: “I frequently lose track of time when suitable music is played in store”, only 25.6% of respondents agree to the statements. 23.3% are indecisive, and 30.2% of all respondents disagree. Altogether, 51.1% of respondents disagree to losing track of time when suitable music is played in store.

Figure 5: Likert scale response from Q5-Q8

In Question 6: “The sort of music played influences my choice of stores to patronize”, only 6.2% of respondents strongly agree to the statement. 11.4% somewhat agree, bringing the figure of respondents that agree to 17.6%. 13.7% are undecided, while 37.6% somewhat disagree, and 31.1% strongly disagree. Altogether 68.7% of all respondents disagree that the sort of music played influences their choice of stores.

In Question 7: “I would buy more shoes if the sort of music played suited my taste”, 2% of respondents strongly agreed, while 4.9% somewhat agreed. Together, only 6.9% of respondents agreed that their volume of purchase is affected by the music played. 29.5% are undecided, while 36% disagree, and 27.6% strongly disagree. Altogether 63.6% of all respondents disagree that music influences their purchase volume.

In Question 8: “The mood I am in affects my footwear purchasing behaviour”, 28% of respondents strongly agree, while 37.5% somewhat agree. Altogether 65.5% of respondents agree that their mood affects their purchasing behaviour. 20% are undecided, while only 14.5% of respondents disagree to the statement.

Figure 6: Music preference amongst respondents

Figure 6 above highlights the major footwear preference of all respondents. The genres with the highest preference amongst all respondents are Pop/Alternative (48.9%), R&B/Slows (42.2%), Hip Hop (22.2%), Rock (13%), and other genres not listed (18.6%). A higher portion of individuals had a more positive preference for Pop/Alternative music, R&B/Slows, Rock and Hip Hop. However, only Pop/Alternative and R&B had the lowest negative vote.

Ratings on Rock music illustrated that most respondents were stuck in the middle on their preference for the genre. 36.3% positively rate it as a preferred music choice, while 32.6% negatively rate it as a preferred music choice.

Ratings on Pop/Alternative music illustrated that most respondents rate it positively (62.2%) as a preferred form of music in their everyday life and during shopping activities. Respondents also rated R&B/Slows highly as a preferred genre with 68.8% positive votes, while Hip Hop got 48.9% positive votes.

Bivariate analyses on the distribution between age groups and their preference for music yielded different results. 40% of all 15 – 24 respondents had R&B/Slows as their preferred form of music, while 30% liked rock, 20% liked hip-hop and 10% preferred Pop/Alternative music.

25 – 34 year olds yielded differing results. A higher portion 31.3% still preferred R&B/Slows. 24.5% chose Pop/Alternative, Hip Hop (24.6%) and Rock (7.8%). None of the respondents under 34 chose traditional music of any sort as their preferred form of music.

Respondents aged 35 – 44 also chose R&B/Slows music as their most preferred form of music to be played in stores, as a higher percentage (41.3%) of respondents chose that alternative. 20% chose Pop/Alternative, 7.8% chose Rock music, Hip Hop (13.3%), while 6.4% had no preference whatsoever.

Respondents aged 45 – 54 chose Pop/Alternative as their most preferred genre of music, with 34.5% choosing this option. 20.3% chose traditional music, 13.3% like hip hop music, while 16.4% had no preference for music whatsoever. 19.5% of respondents aged 55+ had no preference for any genre of music, while 30.1% preferred R&B, and 25% had a preference for traditional music.

e.CORRELATION BETWEEN MUSIC PREFERENCES

Table 1: Correlation between Music Preferences

RockPop/AltR&B/SlowsTraditionalHip-HopNo Pref.
Rock1
Pop/Alt.372*1
R&B/Slows.289.661**1
Traditional.154.165.1231
HipHop.649**.439**.324*.2781
No Pref.187.023.13.404**.0031

Correlation studies between respondent music preferences highlighted a number of factors. Consumers that preferred Rock music were also more likely to prefer Hip Hop music and Pop/Alternative music. Those that preferred R&B music were also likely to prefer Pop/Alternative and Hip Hop music. Those that preferred Pop/Alternative music are also more likely to prefer Rock music, Hip Hop music and R&B music. However, those that preferred traditional music also correlated with those that had no preference whatsoever for music. Pop/Alternative music preference correlated strongly with R&B Slows and Hip Hop music. While traditional music preference correlated strongly with individuals with no music preference whatsoever.

f. QUALITATIVE STATEMENTS

The following are major points that have been added by a few respondents with reference to additional information sought regarding their music and purchasing behaviour preference. The questions were included as an additional option in the questionnaire, where only 10 respondents opted to include information.

Female (25 – 35): “I like music a lot, but I do not think that really affects how I choose to purchase items in store”

Female (15 – 25): “The sort of music played within stores should be good…., unless I would feel like the store isn’t meant for me”

Female (45 – 55): “How is music meant to affect the way I buy my shoes. Its good for the atmosphere to be conducive, but buying a shoe is based on a number of factors and not just the music in the background. I think it is not that important a factor.”

Female (45 – 55): “I like traditional music. When I walk into some stores, it makes me feel happy and I want to dance. That makes me feel good and happy and more lively. But it does not make me want to buy more shoes. No it does not.
Female (35 – 45): “Music is good, and it is good when appropriate music is playing, but that does not really make me want to buy more shoes.”

Female (25 – 35): “I think music is important. For instance when I walk into a store like Aldo, I feel good, because they play appropriate music and that makes me want to dance, move a bit, and through that I feel happier and am more receptive of the customer assistants. I may even chuckle and buy an accessory because I am feeling happy. I believe music should be appropriate”.

Female (25 – 35): “Hmm… music and shoe sales. I think if Clarks wants to attract younger customers, then maybe the sort of music played should be appropriate to fit with their needs. However, Clarks has been known as a store for grannies and older people. I even feel old being in this store, so it makes it hard to envision what they could do. But yes, I think appropriate music could be used to lure in younger people and make them feel at home. But I really do not feel that it could enable them buy more items in store. No I do not think so. Sorry.

Female (35 – 45): “I do not understand how music can affect my choice of store or the amount of shoes I buy. I really do not understand it”

Female (15 – 24): “Music and Retail. I do not think it has that much importance, like for instance, music and a bar or something. Most people choose to go to bars and clubs because of the sort of music playing.

Female (15 – 24): “I really do not come here (Clarks) that much because I feel it is a brand mostly for older people. But they sell comfortable shoes that is why I like it. If I were to choose a place where I like shopping, I’d choose Aldo, Kurt Geiger or Faith. They have a cooler feel and much better music. Music is not really the reason I go to these places, but it is one of the factors that makes me feel comfortable and at ease whenever I get there. I hope you understand.”


5. DISCUSSION

a.THE RESEARCH QUESTION

The present study was carried out to answer the following research question: To what extent does music impact the volume of consumer purchaseThe research question was based on customer observation within a retail store, Clarks. The company is seeking to attract a unique group of younger individuals that are more impulsive shoppers and could drive sales growth. The store’s idea was to introduce new fashionable designs and use that in attracting this segment of customers. However the company was unsuccessful in its feat as a vast majority of the customers that still patronized the store still fit into its ABC1 50+ customer segment.

Store atmospherics is one of several factors that are believed to attract desired customer segments into particular retail and relaxation locations. For instance, particular customers may choose to go to a traditional restaurant as opposed to a chain or franchise because of the store atmospherics like music played, restaurant design and the general culture they are trying to protrude (Morrison, 2006). This ideology was therefore transferred to the retail environment to ascertain whether store atmospherics just like the sort of music played in the background does have an effect on the perception of customers within the store and their purchasing behaviour.

The initial hypothesis postulated prior to review of existing literature was that if the customer liked the music playing within the store, they might feel more at home, and thereby stay more in the store, be more receptive to sales assistant, and also purchase more products. If this were the case, then Clarks should be able to attract more customers of the required market segment by slightly altering their cultural environment and seeing how this positively communicates to their target market segment.

The review of the literature portrayed a number of factors. There is a wide amount of literature regarding the effects of music on customer behaviour and perception. Music on its own is widely acclaimed as a mood changer, especially when a happy music that the customer seems to like is playing. It has a significant affect on consumer attitude that can drive the consumer’s decision. Several theorists have found that specially designed or selected music can positively affect a consumer’s perception of a store and its products, while several other theorists believe that the effect of music lies solely in its mood changing behaviour and its effect on purchasing behaviour is based on how the mood change would affect a consumers decision to purchase items.

The literature also postulates that background music can communicate particular meanings to customers. The loudness and tempo can positively affect performance. Large music can affect the speed of performances, while slow music can induce thoughtful intellectual processes. It can also positively affect patient communication, mood and compliance in a hospital environment and has been known to be particularly helpful in treating certain ailments. Music in addition to the right scent is known to induce favourable evaluations of the store, its merchandise and store environment. Intentions to visit certain stores could be affected by the sort of music playing in the background.

Judging by the literature review, it was confirmed that there is indeed potential to attract the required segment of customers by playing the appropriate music and having an enticing cultural environment. Therefore, a quantitative survey was proposed in order to ascertain customer preference and attitude regarding music within Clarks stores. The survey method was chosen, as it was more appropriate for ascertaining customer perception, especially within a fast paced retail environment. Questionnaires were handed over to 50 customers within the store, which they answered within a span of 5 – 10 minutes and returned back to the researcher. The results from the questionnaire were collated into SPSS and Excel and analysed appropriately.

b.Sample

The sampling method employed in this research was intended as a probability sample of Clarks’ total customers. However, due to the limitations of this research, it was performed in only one location, even though Clarks’ customers are scattered all around the world. It is therefore safe to assume that the demographics in figures 1 – 3 may only be a fair estimate of Clarks’ customers. Since the choice of respondents was unbiased; there may be a fair similarity between the demographics of this study and that of Clarks as a whole; however this can only be proved with further research.

The demographics of the sample were not necessarily an issue in this study as the main aim was to uncover the attitude and behaviour of the respondents and not the demographical characteristics. Therefore a non-probability sample was deemed equally effective (Saunders et al, 2008).

The age range of respondents, who patronise the store in London, may well be different from the age range of customers in other cities. However, irrespective of the region, the demographical findings still give an idea about the musical preference of customers that patronize Clarks.

c.THE RESEARCH ANSWER

Considering the research question: To what extent does music impact the volume of consumer purchaseIt is safe to assume that we could answer the question more appropriately by considering the following dimensions:

Customer demographics and music preference in comparison to that of Clarks

Customer perception on the effect of music on their purchasing behaviour.

i.Consumer Demographics VS Clarks

The age range of customer surveyed, as illustrated in Figure 1 show that a vast majority of customers (40.9%) visiting the Clarks store surveyed are of the age range 25 – 34. This survey is unbiased, therefore for the organization to explicitly state that they target 50+ individuals, and for individuals actually visiting the stores to be much younger than that, illustrating that there may be a gap between the company’s perception of their customer segment, and the customer’s expectations of service (Zeithaml, 1988). It may also indicate that there may be another reason that attracts younger customers into the store apart from the widely held assumption that the company sells its products to over 50s.

The musical preference of all visiting customers illustrated that the majority of them (27%) preferred Pop/Alternative, while 24% liked R&B/Slows and the other Hip Hop. Rating scale results from figure 6 illustrates that respondents felt more strongly about Pop/Alternative music, R&B/Slows and Hip Hop music. Correlation coefficients also illustrated that customers that preferred Pop/Alternative were also more likely to prefer R&B/Slows and Hip Hop music. These results indicate that most customers visiting the Clarks stores have these three genres as their preferred genres for music. According to Garlin and Owen (2006), customers are likely to respond well when these genres are played within the store.

However, Clarks only plays Pop/Alternative music, which in itself only satisfies 27% of customers visiting the store (Figure 2). On an average day with 1,000 visitors, the form of music playing will positively affect only 270. Since there is a strong positive correlation between consumer preferences for the three major genres of music, there is likelihood that if these forms of music were alternated, then the store would be able to satisfy customers that want Pop, R&B and Hip Hop, literally satisfying 69% of all customers within the store. Attaining this feat would, as indicated by Morin et al (2007), positively affect the mood of customers within the store. They are listening to music they like and comprehend with. They would be more likely to sing along, dance a bit, and hang around more within the store.

Combining both age and music preference, as illustrated in figure 7, respondents aged 15 – 24 are more likely to prefer R&B music, while those aged 25 – 34 have a considerable mutual preference between R&B, Pop/Alternative and Rock music. While customers aged 35 – 44 have a high preference for R&B music. Surprisingly, those aged 45+ have a higher preference for Pop/Alternative music that most other genres. It is therefore explanatory that Clarks decides to play a majority of Pop/Alternative music as most customers aged within their target segment, prefer this music, thereby confirming Hooley et al’s (2004) view that the main aim of customer segmentation is for the company to target their preferred customers with the appropriate tools.

Therefore Clarks plays Pop/Alternative music mostly because their target customers prefer it. However, this segmentation is flawed. According to the data in Figure 1, 40.9% of all respondents are aged 25 – 34, and since the questionnaires were offered mutually, without prejudice, to all customers entering the store. The questionnaires being distributed over a 4 hour period from 2 – 6pm, was done to account for any variations that may occur in intraday store customer demographics. Based on that notion, it is safe to assume that 4 out of 10 customers entering Clarks, a majority, are aged 25 – 34. The widely held assumption of demographic, which is 50+ only accounts for about 21.4% of all customers within the store.

Based on this argument, it seems that Clark’s target customers, in reality only account for 21.4% of all visitors to its stores. Though this segment of customers do appear to be loyal and properly accounted for, what happens to the 80% or so other customers that are much younger than the target segment. They prefer a different sort of music and cultural environment. They are motivated by different brands, objectives, and taste in art and music genres. The findings that Clarks cannot target a vast majority of its preferred customer segment with the most adequate cultural environment indicates that there is indeed a large gap between managerial perception and customer expectations (Zeithaml, 1988).

This gap, according to Hooley et al (2004) is a huge reason why several companies are unable to target desired market segments that could drive profitability. If Clarks appropriately catered for all significant segments, such as those below 50, they may not be having the same issues they are currently having with respect to attracting the required segment of people into its stores. In accordance to theories by McDonald (2008), more customers entering within the store would be more at ease and feel comfortable with the cultural environment, and be more likely to spend more time within the store without any cause for discomfort.

Analysing consumer age and music preference further, respondents aged 45 and below have a higher preference for R&B, and Hip Hop music compared to other genres. Since this positively correlates with preference for Pop/Alternative, and all been rating highly by respondents, we could safely assume that these three music genres should be made compulsory in Clarks, as opposed to the one just being used now. They could satisfy more customers by utilizing a variety of songs from different genres as most customers would naturally stay more than 10 minutes within the store, enough to hear at least 2/3 different sorts of music, one of which may just be capable of changing their mood in a positive light, according to theories postulated by Milliman (1986).

The income range and occupational environment of all respondents show that majority of them are average income earners and work within offices (whether formal or informal). Though not a major objective of this dissertation, the occupational environment and income range indicate the segment of customers that are most attracted to Clarks’ shoes. These are mostly 25 – 34 year old individuals that work within offices and earn average salaries. Their most preferred forms of music are Pop/Alternative, R&B and Hip Hop. As most Clarks shoes are known to be comfortable, it could be safe to assume that their major reasons for patronizing the store is based on the functionality of the products sold, and not necessarily based on its brand image and target demographic.

ii.Music and Purchasing Behaviour

By analysing Clarks intended and realised customer demographic, we have established that there is a major gap between the company’s defined target segment, and the customers that actually patronise the store, especially within the region that was surveyed. This realisation illustrates that the company may not be adequately positioning its products and branding to target the required market segment. It may also illustrate that the company’s customers are attracted the brand for reasons other than its store atmospherics.

The Likert scale questions were designed to ascertain what the respondents felt regarding the background music, and were meant to be the main factors either confirming or discrediting existing theories on the effect that music has on consumer behaviour. The generally positive responses to the first question on whether the respondent noticed the music playing in the background, indicate that music is indeed an integral part of store atmospherics and is recognized and noticed by all visiting parties. Most customers entering into the store notice the music playing and that opens up the opportunity for it to influence their consumer behaviour if possible.

The second question on whether the respondents either liked or disliked the music playing in the background also indicated that a majority of them did like the music playing. 38.9% of respondents agreed that they liked the music. However, an increasing portion (26.7%) disagreed to liking the background music. These respondents may belong to the age group of individuals that prefer another form of music, for instance R&B, Hip Hop, Rock or even Traditional, and may not be thoroughly receptive of the sort of music playing in the background. The realisation that a majority of store visitors do witness the music playing in the background, while a significant portion do not like it, may indicate some form of discomfort amongst some visitors to Clarks, as expatiated by Edworthy and Waring (2006). In this instance, these visitors may be less responsive to sales assistants and get bored more easily as they wait to be served within the stores.

If 35.5% of respondents disagree to liking the music playing within the stores, it would indicate that 35 out of 100 customers generally feel discomfort within the stores as a result of the music playing in the background. This figure would greatly reduce the chances of the store in selling more than usual during high sales period, and even during less busy periods, customers may slip out of short queues because of pre-existing moods, or probably because the store assistants have failed to convince them more appropriately about the products on offer. This large figure of respondents could have been avoided if more appropriate music was being played to all customers within the store.

This argument is compounded by responses to the third major question, which is on how the music played within the store affects customer mood. Theories by Gilroy and Ransdell (2001) and Kallinen (2002), had previously indicated that music that consumers recognise and like can positively affect consumer’s mood. This theory has been corroborated by these research findings, which indicate that 68.9% of all respondents claim that the sort of music being played in the background can affect their mood. Though it was not indicated whether it affects their mood positively or negatively, it could be concluded, based on Kallinen 92002), that music that respondents like have a more positive, than negative effect on customer mood, except in instances whereby the music played invokes a bad memory.

If the sort of music played affects consumer mood within the store, then it could be assumed theoretically that based on previous figures, the 52.6% of store customers that do like the music being played in the background at Clarks, have had a positive mood change as a result of the music playing. Because of the sort of music playing within the background, 46.6% of respondents would not mind staying longer in the stores, also illustrated in Figure 4. These findings are in accordance with theories expressed by Hallam et al (2002), who also stated that customers often lose track of time when appropriate music is being played in store backgrounds.

If customers frequently lose track of time whenever music is being played in the background, it gives store attendants more time to serve as many customers as possible, it also reduces the perception of time wasted amongst customers, who may feel more at ease with spending more time within the store. The 28.9% of respondents that disagree may be as a result of respondents who do not believe that music or store atmospherics is a proper determinant of the reason they stay within the stores. They may not consider its direct effect. For instance customers having a generally good mood may wish to stay longer within the stores. When asked whether it is as a result of the music, they may disagree. But the music may have been instrumental in giving them a good mood in the first place, as pointed out previously, which could then have an indirect effect on the customer, as indicated by Hallam et al (2002).

When ascertaining the more direct and explicit effects that music could have on consumer behaviour, the results did not indicate that many positive agreements. For instance respondents generally disagreed or were more undecided about questions pertaining to the effect of music on their choice of particular stores, or on their decisions to purchase footwear within the store. These questions were drafted as direct effects to ascertain the conscious belief of respondents regarding their awareness of the effect that music does have on their consumer behaviour. These questions were drafted based on theories developed by Klemz and Boshoff (2001). They argue extensively that the sort of music played within stores has a positive effect on purchases within stores. However, this argument is contradicted by Herrington and Capella (1996), who state that music has a more profound effect in entertainment stores and locations, where music forms a significant portion of the stores service offering, and not in retail locations.

For instance they claim that in a store selling musical instruments or records, the sort of music played could create awareness for particular instruments, artists, brands or genres, which could in turn influence customers to purchase them. While particular restaurants and bars, where visitors usually go to have a good time and dance would positively affect investor mood if they played appropriate music. However, in retail locations where music is not a major part of the service offering, it really does not matter what form of music is played as long as the products sought by customers are available. It seems these theories have been confirmed in our empirical findings in which, 68.7% of respondents disagree that the sort of music played influences their choice of stores, while 63.6% also claim that music does not affect their decision to patronise stores, neither does it affect their volume of purchase within stores.

These findings are representative of the fact that music has no direct influence on consumer behaviour within retail stores that do not sell anything affiliated to music. However, in terms of indirect effect, the final question from the Likert scale: “The mood I am in affects my footwear purchasing behaviour”, may open up channels for further discussion. Though the sort of mood is not expatiated in the questionnaire, the responses to the question, in which 65.5% of respondents agree, indicate that there may be a way to link music to consumer purchasing behaviour. Question 3 from the Likert scale in which most respondents agreed that their mood positively affects purchasing behaviour within the store, could be linked to Question 8, in which most respondents also agreed that their food affects footwear purchasing behaviour.

Therefore if the store played more appropriate music, it could affect the consumer’s mood in such a way that they are more likely to purchase more products within the store. Likable and recognisable music being played could make the consumer more jovial, and consumers that are more jovial, according to responses in question 8, are more likely to influence consumers towards purchasing more items within the store. These findings are indicative of Jacob et al’s (2009) theory which states that music may not have a direct effect on consumer behaviour, but indirectly, it influences them.

iii.Combining both Factors

Based on previous discussions, we can now safely deduce that Clarks is focusing its marketing strategies on the wrong customer segment. They are known to explicitly target 50+ individuals who make up only 21.4% of their visitors. However, the vast majority of their visitors are of a different segment. They are mostly younger than 50, work in offices and like different sorts of music. These results indicate that Clarks may not be appropriately focusing on its real customers, and therefore be losing out on potential customers in the process. The realisation also indicates that there is an existing gap between managerial perception and customer expectation.

The true segment of customers, which are mostly 25 – 34 like Hip Hop, R&B and Pop/Alternative music, while Clarks only, plays Pop/Alternative music. Based on the Likert scale responses, these customers come into the store and notice the music playing in the background, however only a few of them actually like the music. Since a majority of these respondents have claimed to have a mood change if appropriate music is playing, and stay longer in stores as a result. If this segment of customers could also lose track of time within stores and have a positive mood change, then it is highly possible that music could be a significant contributor to new efforts to target this customer segment.

If the store atmosphere was adapted in such a way that R&B and Hip Hop music was played in addition to the Pop/Alternative music already playing, and the store design was also adapted to suit them more appropriately, it is possible then that the store would be able to attract and keep more customers in store, even during sales season where customer service is low. In having this done, the store could improve turnover and visits from desired customer segments. This could also go a long way in changing the store’s current brand perception.

6. CONCLUSION AND RECOMMENDATIONS

The demographics of customers surveyed in this dissertation are mostly of the age range 25 – 34. They work mostly in the office environment and have a preference for different forms of music. The Likert scale answers also indicate that customers notice and like the music playing in the background. They also indicate that the sort of music played affects their mood within the store and that they do not mind staying longer in the store while music is playing. However, the sort of music played does not influence customers’ choice of stores, or their purchasing behaviour within stores. Indirectly, music could affect consumer mood, which could in turn affect consumer-purchasing behaviour.

a.RECOMMENDATIONS TO CLARKS

It is thereby recommended that Clarks do the following in order to ensure that they can attract and keep their pursued market segment:

Mix the store playlist with more popular Hip Hop and R&B music that could entice younger and more fashion focused customers into visiting Clarks more often.

Introduce certain marketing strategies aimed at curbing the existing brand image of Clarks that links it strongly to the 50+ market segment. If appropriate branding strategies were adopted, then consumers may begin seeing the company in a new light.

If feasible, an effort should be made to redesign existing stores in such a way that it attracts and retains younger customers within the store, long enough for them to find appropriate footwear and purchase them.

Music in itself cannot induce purchasing behaviour, however, a good mood can. Therefore efforts should be made to provide staff with adequate training in fields such as empathy. These could go a long way in providing customers with the level of service that would induce positive moods within customers.

b.Market Research

A nationwide survey using the same research methods employed in this study should be carried out. The sample should be a probability sample of not less than 1000 customers encompassing all major regions. This would enable the company to get a thorough overview of what their customers want across regions. It would also assist in verifying the findings of this data.

In-depth focus group sessions could be carried out post-research in order to verify the findings of the research. This could also enable the research department to find out the underlying factors that motivates the customers to have different preferences irrespective or their age groups.

This study should be repeated in different seasons in order to ascertain the difference in consumer preference. Leisure activities may influence their choice of footwear in summer, while the weather could be a better determinant of behaviour in the winter. Walking may constitute a major leisure activity in summer, and this may be different in winter.


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8. APPENDIX

Table 1: Consumer responses to Likert Scale questions

Q1Q2Q3Q4Q5Q6Q7Q8
Strongly Disagree4.48.82.22.220.931.127.62.0
Somewhat Disagree8.026.711.126.730.237.636.012.5
Undecided14.711.917.824.423.313.729.520.0
Somewhat Agree41.738.926.735.77.011.44.937.5
Strongly Agree31.113.742.210.918.66.22.028.0

Table 2: Consumer responses to their Music preferences

RockPop/AltR&B/SlowsHip HopOthers
Not at all15.62.22.22.220.9
Barely17.08.911.124.430.2
Somewhat31.126.717.824.423.3
Much23.313.326.726.77.0
Totally13.048.942.222.218.6

Table 3: Bivariate analysis of Respondent Age and Music Preference.

RockPop/AltR&B/SlowTraditionalHipHopNo Pref
AGE15-2420104030
25-347.824.531.311.824.6
35-447.820.041.311.213.36.4
45-544.434.511.120.313.316.4
55+25.430.125.019.5

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Free Essays

Sample Islamic Banking Dissertation

The impact of risk management on profitability in Islamic banks against conventional banks

Introduction

1.1) Background of the study

Since 1970s Islamic banks is developing on the feet and leg. The number of Islamic financial institutions has risen to over three hundred institutions in more than seventy five country all over the world. One fundamental aspect of this fast growth is that most of Muslims who are a quarter of the population on earth want to follow Sharia principles. Another fundamental aspect is the growth of oil wealth with high demand for appropriate investments in the Gulf region.

The aim of Islamic financial products is investors who want to follow Sharia (Islamic low). Sharia put forward the guiding principles for all aspects of human being in order to spread the concept of justice in society. Therefore, this includes the economic aspect. Sharia banned Riba which is the interest that comes from loan money and Gharar which is contractual ambiguity. Furthermore, Sharia also banned investing in business that providing services and goods which is forbidden like selling alcohol and gambling.

1.2) Financial Products in Islamic banks

Economists who are interested in Islamic banking started to suggest changes in contracts in order to be suitable for the Islamic financial system. These changes in contracts can be classified into four broad types: first, transactional contracts which deal with sale, exchange and trade of services and goods. Second, financing contracts which suggest different ways due to create and extend credit, smooth the progress of financing the transactional contract, and afford channels between investors and entrepreneurs for capital formation and resource recruitment. Third, intermediation contracts which offer agents with group of tools to perform financial intermediation besides providing fee-based services for economics activities. Finally, social welfare contracts which promote the welfare for less advantaged people by contracts between society and individuals.

Transactional contracts

Simply, there are two exchange contracts, one is sale of an asset and another is sale of rights to utilise an asset. First of all, contracts of exchange and sale apprehensive with trading besides selling and buying activities considering all their derivatives such as sale on order and deferred payment sale. Exchange contracts contain a variety of contracts which are similar to each other in terms of the outcome but are different from one another in terms of the exact legal requirements, obligations, rights and liabilities involved in or associated to them. Here the most popular contracts used by Islamic banks:

Bay’ al-Muajjil is a contract that allows for sale a product on the basis of deferred payment in instalments or in lump sum payment. The two parties; sellers and buyers agreed about the price of the product at the sale time and cannot contain any charges for deferring payments[1].

Bay’ al-Salam is a contract between two parties where agreed that buyers have to pay the sellers full negotiated price for specific product that the sellers promise to deliver at particular date in the future.

Ijarah means leasing and this contract is similar to sale contract but the different is that Ijarah is more sale of the usufruct for particular period of time rather than sale of a tangible asset.

Istisna is a contract that has two parties; one is the manufacturer and another buyer who request manufacturing or construction of an asset or property with specific features and they should agree on fixing price. The transaction of Istisna begins once the manufacturer takes on manufacturing the asset for the buyer.

Financing contracts

In the world of commercial financing and more particularly, project financing, certain methods are more commonly encountered than others such as Murabaha, Mudaraba and Musharaka. The Murabaha is a contract between the bank and its customer for the sale of goods at a price that includes an agreed profit margin, either a percentage of the purchase price or a lump sum. The bank will purchase the goods as requested by its customer and will sell them to the customer with fixed profit gain usually be over time by instalments.

The Mudaraba is a profit-loss sharing contract, with one party providing the capital and the other party providing its expertise to invest the capital and manage the investment project. Profits percentage is agreed and fixed at the beginning and is a way of paying the work of people that did not invest in the project. In case of losses, there is a loss of time from the part that brought their expertise and a loss of capital for the bank.

The Musharaka involves a partnership between two parties who both provide capital towards the financing of new or established projects. Both parties share the profits on a pre-agreed ratio, allowing managerial skills to be remunerated, with losses being shared on the basis of equity participation. One or both parties can undertake management of the project.

However, financial products can be provided by conventional banks using specific distribution channels such as window, branch, and subsidiary. Window is operating and accounting that separated from the conventional operations such as HSBC amanah, and Lloyds. Whereas, branch similar to the window but using separate branches instead of the conventional branch network. Subsidiary, normally prepare separate annual reports and reports such as Citi Islamic Investment Bank.

1.3)Risk Management

Risk management is recognising and evaluating the risks then managing the sources economically in order to minimise, observe and control the probability or effect of the unpredictable events or maximise the realisation of opportunities. Efficient risk management capability is important to allow banks to be in good position in the market by using their capital professionally. This paper discusses the way that Islamic banks faced and managed the risks different from conventional banks. The specific risks analyzed include market risk, credit risk, operational risk, liquidity risk, Sharia low risk, concentration risk and reputation risk.

1.4)Problem Statement

Interest is prohibited in Islamic Sharia low which obliged Islamic banks to take part in the business and decide on sharing profits as well as losses. Furthermore, Islamic banks might seem faced more risk in view of the fact that Islamic banks can not charge a fixed return not linked with their customer’s operations. Given that Islamic banks will have more unstable returns on their assets since they have to be the owner of the asset before lease or sale it to the customers. This paper investigates whether Islamic banks are riskier than conventional banks or not and that by looking at the profit compatibility in Islamic banks compared with conventional banks and this relationship is evaluated with respect to the risk management procedures.

Gulf Cooperation Council


3.1)Background

The Gulf Cooperation Council (GCC) was established in 1981 and located in middle east. GCC contains six member states with total population of 34 million and these countries are Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman. The objective of GCC is to coordinate policies of various political, economic and social matters among its member countries in order to have similar regulations (Faisal 2005).

GCC countries are wealthy due to the large oil reserve which is the largest in the world. In addition to, these countries economy structure rely on oil trading and governments also supporting the local investments in order to reduce the importance role of oil.

3.2)Banking in GCC and Financial Market

GCC countries established their central banks between 1950’s and 1970’s and linked them to the USD. GCC countries do not have requirement of local ownership in the foreign banks accept Saudi banking system which lets a maximum of 40% ownership. However, foreign banks have to follow the central banks policy and regulations.

Compared to developed countries, the financial market are new in GCC and foreign investments have just been allowed to trade in the stock market in recent years. Moreover, it is common to finance GCC governments projects by providing government bonds and T-bills.

Research Methodology

4.1) The Aim

This paper introduces the definite risk management procedures of Islamic banks and investigates empirical data to observe whether these procedures are sufficient or not. There will be special focus in this paper profitability ratio in the Gulf banks. The data has been collected to estimate the profitability ratio is the return on equity ROE and the return on asset ROA for Islamic and conventional banks.

4.2) The Data

There are 100 banks have been collected from bankScope. The study of profitability compares 37 Islamic banks to 63 conventional banks in the Gulf between 2002 and 2008. However, the number of banks is not the same in the whole period due to the fact that the banks have established in different time during the period.

4.3) The Model

ROE and ROA have been used as dependent variables in two models; one model to distinguish among years and another to distinguish among the countries in the Gulf. Each model includes a dummy to distinguish between the Islamic and conventional banks. The dummy gives the value one if the bank is Islamic and gives zero if it is conventional.

The model which is for the year has seven dummies, one for each year. For example, if the ROE or ROA is in 2008 then the dummy which is for the year 2008 gives the value one and the other dummies give zero and the same for all the other dummies. This model helps to observe the changes during the period from 2002 until 2008.

Where is the coefficient of the year 2002 but it has been used as constant in order to compare it to all the other year to see whether there is an increase or decrease in following years or not.

However, there are six dummies in the model which distinguish among the countries; there is one for each country. So, the dummy of Saudi gives only Saudi banks the value one and the other dummies give zero and the same in all the dummies.

4.4) The Dependents Variable

4.4.1) Return on Equity

Return on equity (ROE) specifies the profit that the bank earns from investing shareholders money. Additionally, it shows the efficient of the bank management using shareholders investment. ROE calculated by net income divided by equity shareholders.

4.4.2) Return on Assets

Return on Assets (ROA) is useful indicator of the bank efficient management on create profits from each monetary unit of investment. ROA is calculated by net income divided by total assets.

4.5) Hypothesis Testing

The aim of the hypothesis is to test the efficiency of risk management procedures result in commercial viability of banking activities. Therefore, ROE and ROA for Islamic and conventional banks have been collected in order to see what is the different between the Islamic and conventional banks in the profitability. Then, calculating the variance for ROE and ROA of each bank in order to see whether Islamic banks have the same risk that conventional banks have or different.

Findings and Results

There is two steps to analyse the differences between the Islamic and conventional banks. The first step is to analyse the profitability for Islamic and conventional banks using ROE and ROA in the period between 2002 and 2008. Then, look at the differences among the Gulf countries in the same period. The second step is to analyse the risk for Islamic and conventional banks by calculating the variance of ROE and ROA in the period between 2002 and 2008 for each of the 100 banks then observe the differences among the Gulf countries.

6.1)The Different in the Profitability:

First, the ROE model for the years:

Table 1

Prob.

(t-test)

constant

15.07338

(1.351064)

0

Islamic

-2.70161

(0.953205)

0.0041

Year08

-0.6461

(1.734848)

0.0166

Year07

5.252066

(1.71731)

0.3614

Year06

4.803732

(1.743603)

0.0115

Year05

6.359871

(1.774068)

0.0365

Year04

1.837861

(1.848711)

0

Year03

-0.58218

(1.868266)

0.0041

R-squared

0.07971

Mean dependent var

16.85381

Adjusted R-squared

0.067439

S.D. dependent var

10.63519

Sum squared resid

55376.72

Prob(F-statistic)

0.000097

The coefficient of the Islamic dummy gives negative sign and t-test shows that the Islamic dummy is significant which means that the ROE in the conventional banks are higher than in the Islamic banks by 2.70%. The relationship between deposits and the ROE explained by Bashir and Hassan (2004) and Faisel (2005), helps demonstrate the results above, which is positive for conventional banks and negative for Islamic banks. Additionally, Islamic banks do not have variety of financial instruments in the short term like the conventional banks which force them to have high liquidity.

The constant coefficient representing the year 2002 where the ROE was 15.07%. By making the coefficient of the year 2002 constant we can just concentrating on the changes during the period from 2003 to 2008. The coefficients of the year 2003 show that ROE in most of Islamic and conventional banks decreased by 0.58% and one possible explanation for this fall is that banks were cautious of the war in Iraq. Then, started to recover in 2004 – after the war has finished – with 1.83% and this is due to the increase in the oil price and the stock markets in the Gulf. The coefficients of the year 2005 and 2006 show that there were high increase in the ROE (6.35% in 2005 and 4.80% in 2006) and they are significant statistically under t-test. This is refer to the increase in the governments spending in the Gulf due to the increase in the oil price which is reflect in ROE of the banks and the stock markets in the Gulf.

The coefficients of the year 2007 shows that there was an increase by 5.25% in ROE but this coefficient is insignificant under t-test and this gives an idea about the changes in the income of banks which appear clearly in 2008. The coefficients of the year 2008 show the decrease in the ROE due to the fact that Gulf banks activities have been affected by the financial crisis in 2008. This also gives an idea about the banks investments outside the Gulf.

The period has been separated to two sub-periods in order to examine the robustness of the Islamic dummy and to check whether the results would be the same or not. One of the sub-periods starts from 2002 to 2005 and another from 2006 to 2008:

Table 2

Prob.

(t-test)

constant

18.25633

(0.737579)

0

Islamic

-2.788691

(0.967584)

0.0041

Year05

3.20889

(1.335078)

0.0166

Year04

-1.319631

(1.444487)

0.3614

Year03

-3.744061

(1.475989)

0.0115

Year02

-3.165236

(1.509765)

0.0365

R-squared

0.047673

Mean dependent var

16.85381

Adjusted R-squared

0.038637

S.D. dependent var

10.63519

Sum squared resid

57304.5

Prob(F-statistic)

0.000097

Table 3

Prob.

(t-test)

constant

17.1756

(0.696724)

0

Islamic

-2.31887

(0.964229)

0.0165

Year08

-2.90314

(1.283861)

0.0241

Year07

3.005798

(1.260971)

0.0175

Year06

2.559091

(1.297937)

0.0492

R-squared

0.044414

Mean dependent var

16.85381

Adjusted R-squared

0.037174

S.D. dependent var

10.63519

Sum squared resid

57500.59

Prob(F-statistic)

0.000079

The tables above proved that the coefficients of Islamic dummy in sub-periods are almost the same as in whole period which means it is robust. Furthermore, the other coefficients in the sub-periods give the same result as in whole periods and there is no changes in R-squared and adjusted R- squared or in the tests.

Second, the ROE model for the countries[2]:

The test results are similar to the one for years and the coefficient of the Islamic dummy almost the same. The range of ROE of Gulf banks is between 14.70% and 19.34%. Kuwaiti banks had the highest ROE (19.34%) followed by Qatari banks with 19.16% Then Saudi banks with 18.33%. Afterwards, Emirates banks had 16.91% and we can see clearly the gap between Saudi and Emirates banks in ROE. Bahrain came next with 15.37% then Omani banks which got the lowest ROE in the Gulf by 14.70%. The t-test shows that all coefficient are significant.

Table 4

Prob.

(t-test)

Islamic

-2.47002

(1.052489)

0.0193

Saudi

18.33551

(1.254086)

0

Oman

14.70265

(1.874979)

0

Qatar

19.16886

(1.441722)

0

Kuwait

19.34724

(1.445981)

0

Emirates

16.91736

(0.917708)

0

Bahrain

15.37403

(1.039737)

0

R-squared

-0.04485

Mean dependent var

16.85381

Adjusted R-squared

-0.05677

S.D. dependent var

10.63519

Sum squared resid

62872.03

Durbin-Watson stat

1.562729

This differences between the Gulf countries is due to the different policy they have used. For example, we can see that Saudi banks did not affected by the financial crisis like Emirates and Bahraini banks. This because of the close economy policy that Saudi central bank use whereas Emirates and Bahraini central bank use open economy policy. Furthermore, the Saudi government spending was very high comparing with the other Gulf countries.

Third, the ROA model for years:

Table 5

Prob.

(t-test)

constant

1.983087

(0.548057)

0.0003

Islamic

2.241809

(0.389)

0

Year08

-0.92146

(0.699029)

0.188

Year07

1.788613

(0.695931)

0.0104

Year06

1.894682

(0.715132)

0.0083

Year05

2.062882

(0.723348)

0.0045

Year04

0.922792

(0.745526)

0.2163

Year03

0.148001

(0.750172)

0.8437

R-squared

0.121093

Mean dependent var

3.588051

Adjusted R-squared

0.109825

S.D. dependent var

4.492388

Sum squared resid

9808.95

Prob(F-statistic)

0

The coefficient of the Islamic dummy gives positive sign and t-test shows that the Islamic dummy is significant which means that the ROA in the Islamic banks are higher than in the conventional banks by 2.24%. This is can be explained by the relation between total asset and profitability, the relation between total equity and profitability, and the relation between total expenses and profitability in the Gulf banks that figured by Faisal (2005) which is negative for conventional banks and positive for Islamic banks. So, when total expenses, capitalisation, and size of a bank increase the profitability increase in if it is an Islamic bank and decrease if it is conventional bank. In other words, Islamic instruments such as Istisna, Ijarah, Mudaraba and Musharaka accounted as assets which means the increase in these types of financing lead to higher ROA.

The year 2002 used as constant coefficients in order to compare 2002 among the whole period and focusing on the changes in the ROA. The coefficients of the year 2003 and 2004 show slight increase in the ROA in the Gulf by 0.14% and 0.92 respectively, but they are insignificant. Then, ROA increased rapidly in 2005, 2006 and 2007 by 2.06%, 1.89 and 1.78% and became statistically significant. This increase due to the rise in the oil prices. However, the coefficient of the year 2008 shows decrease in ROA by -0.92% in the Gulf banks because of the financial crisis.

The same technique of separating to two sub-periods has been used in order to examine the robustness of the Islamic dummy. One of the sub-periods starts from 2002 to 2005 and another from 2006 to 2008:

Table 6

Prob.

(t-test)

constant

2.874444

(0.300776)

0

Islamic

2.242753

(0.397574)

0

Year05

1.171183

(0.549906)

0.0336

Year04

0.031175

(0.584339)

0.9575

Year03

-0.74357

(0.593025)

0.2104

Year02

-0.891543

(0.616993)

0.149

R-squared

0.078455

Mean dependent var

3.588051

Adjusted R-squared

0.070047

S.D. dependent var

4.492388

Sum squared resid

10284.8

Prob(F-statistic)

0

Table 7

Prob.

(t-test)

constant

2.81072

(0.277333)

0

Islamic

2.366673

(0.389844)

0

Year08

-1.79641

(0.509244)

0.0005

Year07

0.914638

(0.505101)

0.0707

Year06

1.018571

(0.531234)

0.0557

R-squared

0.103778

Mean dependent var

3.588051

Adjusted R-squared

0.097249

S.D. dependent var

4.492388

Sum squared resid

10002.19

Prob(F-statistic)

0

The tables above proved that the coefficients of Islamic dummy in sub-periods are approximately the same as in whole period which means it is robust. Furthermore, the other coefficients in the sub-periods give the same result as in whole periods and there is no changes in R-squared and adjusted R- squared or in the tests.

Fourth, the ROE model for the countries:

the coefficient of the Islamic dummy almost the same. The range of ROE of Gulf banks is between 3.86% and 2.04%. Bahraini banks had the highest ROA (3.86%) followed by Qatari banks with 3.02% Then Kuwaiti banks with 2.73%. Afterwards, Emirates banks had 2.60% then Saudi came next with 2.33%. Omani banks had the lowest ROA in the Gulf by 2.04%. The t-test shows that all coefficient are significant.

Table 8

Prob.

(t-test)

Islamic

2.029741

(0.415863)

0

Saudi

2.33044

(0.500783)

0

Oman

2.044595

(0.712912)

0.0043

Qatar

3.022825

(0.566836)

0

Kuwait

2.73999

(0.556167)

0

Emirates

2.601632

(0.357261)

0

Bahrain

3.862964

(0.409867)

0

R-squared

0.078317

Mean dependent var

3.588051

Adjusted R-squared

0.068207

S.D. dependent var

4.492388

Sum squared resid

10286.34

Durbin-Watson stat

0.976295

The table above shows that there are no significant differences between the banks in Gulf countries in ROA. Moreover, the different between Bahraini banks which were the highest and Omani banks which were the lowest is less than 2%.

4.2.The Different in the Risk

Analysing the profitability is not enough to say whether the Islamic or the conventional banks have effective risk management procedures or not without analysing the risk. The variance for each bank during the period have been calculated in order to see the whether Islamic and conventional banks have the same or different risk.

First: calculating the variance of ROE for Islamic and conventional banks:

Table 9

Prob.

(t-test)

Islamic

-42.4969

(17.63172)

0.018

Saudi

93.67778

(23.59077)

0.0001

Oman

34.00545

(32.77482)

0.3022

Qatar

65.8434

(26.34869)

0.0143

Kuwait

99.83715

(23.19668)

0

Emirates

67.42153

(16.44457)

0.0001

Bahrain

81.53135

(16.80893)

0

R-squared

0.08429

Mean dependent var

62.20235

Adjusted R-squared

0.023913

S.D. dependent var

81.25905

Sum squared resid

586507.1

Durbin-Watson stat

2.087805

The sign of the coefficient of Islamic dummy is negative which means that Islamic banks have less risk in ROE than conventional banks in the Gulf. This is because of the PLS system that Islamic banks use which allow them to share the profit and losses with the depositors which decrease the risk Islamic bank taking. This findings agree with the relation between deposits to assets and ROE that explained by Bashir and Hassan (2004), and Faisel (2005) which is positive in conventional banks and negative in Islamic banks. Moreover, the findings illustrated why conventional banks receive higher ROE than Islamic banks in the Gulf.

From the table above it is observed, Kuwaiti banks were the most risky banks in the Gulf followed by Saudi, then Bahraini banks. The banks, however, had high risk due to the massive changes in the ROE that they received every year during the period. This indicates that their ROE was instable and more risky during the period. Comparatively, Emirates and Qatari banks faced less risk then the banks in the previously mentioned banks. Among all the banks, mentioned in the above table, Omani banks were the most stable banks and, thus, faced the least risk. However, the t-test result, found for Oman is not statistically significant.

Second: calculating the variance of ROA for Islamic and conventional banks:

The positive sign of the coefficient of Islamic dummy show that Islamic banks have higher risk in ROA than conventional banks in the Gulf. This is due to the fact that Istisna, Ijarah, Mudaraba and Musharaka finance have high risk because banks are in ownership and they share the risk as well as the profit and these types of finance appear as assets in the balance sheet.

The table below shows that Kuwaiti banks were the most risky banks in the Gulf then Bahraini banks came next. After that, Emirates and Omani banks came next with much less risk then the previously mentioned banks. The gap between Bahraini and Emirates is enormous which gives us an idea about the instability in the ROA that Kuwaiti and Bahraini banks received. In contrast, Among all the countries, mentioned in the above table, Saudi and Qatari banks faced the least risk due to the stability they have in the ROA. However, the results of all previously mentioned banks are insignificant.

Table 10

Prob.

(t-test)

Islamic

21.57855

(10.44977)

0.0417

Saudi

-3.97466

(14.14604)

0.7794

Oman

1.989429

(19.66142)

0.9196

Qatar

-6.86578

(15.79286)

0.6648

Kuwait

24.89889

(13.62678)

0.0709

Emirates

2.439974

(9.855151)

0.805

Bahrain

15.46982

(10.01932)

0.126

R-squared

0.109403

Mean dependent var

16.10476

Adjusted R-squared

0.051945

S.D. dependent var

49.46225

Sum squared resid

215706.9

Durbin-Watson stat

1.759712

The reason behind the high risk in Bahraini banks is due to the fact that Bahrain is the fastest growing financial centre in 2008 according to the City of London’s Global Financial Centres Index. The high increase means that there is great changes every year in the ROE and ROA. However, most of Kuwaiti banks are international and have presences in many countries, such as the national banks of Kuwait who has more than 12 presence all over the world, which effected by the financial crisis.

Emirates attract the investors all over the world by the open economy policy. Therefore, Emirates banks have been effected by financial crisis but less than Kuwait due to that Emirates banks focusing more in financing investments rather than housing. In contrast, Saudi, Qatar and Oman are less free market and open economy than previously mentioned countries. Consequently, Saudi, Qatar and Oman are much less effected by the international economy than Bahrain, Kuwait and Emirates.

Conclusion

5.1) The different between Islamic and conventional risk management procedures

This paper concentrating on studying efficiency of the risk management procedures for conventional and Islamic banks result in commercial viability of banking activities in the Gulf. The paper started by analysing the profitability for conventional and Islamic banks using ROA and ROE in the Gulf between 2002 and 2008. Then, analyse the risk in conventional and Islamic banks by calculating the variance for ROA and ROE between 2002 and 2008.

The results show that Islamic banks have higher profit in ROA than the conventional banks and by calculating the variance for ROA it has been noticed that Islamic banks have higher risk in ROA than conventional banks. This is due to the fact that Istisna, Ijarah, Mudaraba and Musharaka accounted as assets which gives positive relation between total asset and profitability. Moreover, that Istisna, Ijarah, Mudaraba and Musharaka finance have high risk because banks are sharing the risk as well as the profit and Islamic banks have to balance the management and control rights in order to be in save.

However, Islamic banks have lower profit in ROE than the conventional banks. This is due to the relationship between deposits and the ROE which is positive for conventional banks and negative for Islamic banks. Additionally, Islamic banks do not have variety of financial instruments in the short term like the conventional banks which force them to have high liquidity. On the other hand, is Islamic banks have less risk in ROE than conventional banks because of the PLS system that Islamic banks use which.

The findings shows that both Islamic and conventional banks in the Gulf have adequate risk management procedures. Furthermore, both Islamic and conventional banks are profitable, however, the ROA and ROE is different Islamic and conventional banks. This different is due to the different risk they face.

5.2)The different between the Gulf countries

Qatari banks seems to had the best economic environment because they were the most profitable and the least risky. Then, Saudi and Emirates banks came next. Saudi banks had higher profitability in ROE and less risk in ROA than Emirates banks. Whereas, Emirates banks have higher profitability in ROA and less risk in ROE than Saudi banks. Bahraini and Kuwaiti banks had very high profitability and risk in both ROA and ROE comparing with banks from other countries. However, Omani banks have very low risk and profitability comparing with banks from other countries.

The reason behind the difference between the Gulf countries is due to the difference policies they are using, whether they have international banks and if they effected by the financial crisis or not.

5.3)The different between the year

The profitability had the highest increase in the year 2005 and this is due to the increase in the financial market in the Gulf, oil prices and government spending. In contrast, profitability had increased two times; one in the year 2003 because of the war in Iraq and another in the year 2008 due to the financial crisis.

[1] Iqbal Z. & Mirakhor A., (2007), “An introduction to Islamic finance”, John Wiley & Sons, Asia.

[2] There is no Islamic banks in Oman but it has been included because it is one of the Gulf countries.

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Free Strategic Management Dissertation

1. INTRODUCTION

a.INDUSTRY BACKGROUND

Information Technology is increasingly moving to the center of national competitiveness strategies around the world, due to its ground-breaking power as a significant enabler of growth and development. Economic history has shown that, as developed countries approach the technological frontier, Information technology is crucial for them to continue innovating in their processes and products in order to maintain their competitive advantage. On the other side IT has also proven crucial and important for enabling developing economies to leapfrog to higher stages of development and fostering economic and social transformation. . In recent years there has been a global boom in IT consulting and services which has resulted in the development of IT industry and has also revolutionized its practice. IT consulting deals with getting business sectors to utilize information technology in their day to day business needs and in meeting various business objectives. According to the Datamonitor (2009) the global IT services industry grew by 6.7% in 2008 to reach a value of $1,057 billion with compound annual growth rate of 9.4% in the period of 2004 -2008 as shown in figure 1.

Figure 1: Global IT services industry value. Source: Business Source Premier

UK being the financial hub of the world, has seen its IT industry growing immensely over the period of time as result of which , many IT consulting companies have come into existence. According to the prospects, (2009) IT industry nearly employs 5% of UK workers and use of IT is particularly important for over 90% of managers, professionals, associate professionals, and administrative staff and most importantly in the financial service markets. According to the Datamonitor, (2002), UK is the largest source of IT expenditure in Europe mainly because of its dominance in the financial markets sector, particularly in investment banking and asset management. The UK IT Expenditure in Financial Services market grew by 0.6% in 2000, to reach a value of $7.03 billion with compound annual growth rate of 3.3% in the period 1999-2001 as shown in figure 2.

Figure 2: United Kingdom IT expenditure in Financial Services. Source: Business Source Premier

As the use of IT becomes increasingly important as a key driver of business competitiveness, increasing emphasis is placed upon the development of skills such as relationship management, business process analysis and design and project management.

b. ORGANISATION/COMPANY BACKGROUND:

Nasim Consulting is a UK based premier IT consulting and Development Company, dedicated to helping candidates and clients achieve peak performances with professional services. The company was established in 2002 and is based in ‘Cardiff’ with its head office in ‘Ebbw Vale’. Its founders have a long and established record in the Business Intelligence Industry.

The company aims at supplying efficient consulting solutions to its clients across UK and Europe. The company provides different information technology services to its clients such as, Portal initiative, Integration services, Custom Application Development, Web services, Content Management, Dual shore development (about us, 2009). The company has business associations with a varied number of prestigious clients and companies including BEA systems, British Telecom, Sky Digital and Alliance Value Proposition (about us, 2009).

Nasim Consulting also delivers high end service at reduced expenditure to its clients with the implementation of latest software technology and commitment. As a company, Nasim Consulting strives to keep strong ties with its partners and clients by building business relationships and enhancing technology. The long term objectives and aim of the company is to make the Nasim Consultancy a global organization. However given the current market condition there is an immense competition and challenge for organizations in order to sustain in the market.

c.NATURE OF THE PROBLEM:

The IT service industry is immensely competitive in nature with the giant market players enjoying the significant economies of scale (in their ability to handle large volumes of transactions more economically) and also economies of scope which makes it difficult for small IT consulting firms like Nasim consulting to survive and increase their market share. On the other hand due to the current market scenario established companies, relying on an existing business image, may be unwilling to trust smaller, less established companies, which offer larger market players an advantage.

This financial meltdown and also the growing competition in IT consulting is has resulted in Nasim consulting, facing a huge challenge to survive, grow and maintain its positioning in the current market and at the same time achieve its corporate objectives of increasing the market share, customer base and service range.

As customer spending is slowing down to its worst, the company is experiencing huge decline in its sales and profit and also on the other hand, the company is facing a huge challenge of satisfying its clients and partners who are more interested in service quality, than in quantity.

Given the necessity for growth it’s important for the company to develop the effective strategy to achieve long term sustainability and establish its market position. Nasim consulting being a small firm in a fairly fragmented market, targets and serves the needs of local and regional small business, as well as small companies that target clients in specific industry.

Because of the economic slowdown small business are spending less on IT development, new technology and innovation. A recent survey according by Mintel reports, (2009) shows that 42% of the small businesses are expected to spend less on new technology and development and 19% of the small businesses have already stopped spending on new technology and innovation making it more difficult for IT consulting firms to survive in the market. According to the Vavra, (1992) due to low customer spending and considering the decline in attracting new customers, the only way to make profit is to increase the life time spending of the existing customers.

Therefore the main problem and challenge that Nasim Consulting is currently facing is customer retention.

d. RESEARCH AIM:

The aim of this research is to identify the resource based or market based factors which are responsible for Nasim’s poor performance in customer retention. De wit and Meyer, (2004) states that for organizations to be successful in today’s intense competition, it’s important that they find right alignment between its external environment and internal operations.

Therefore, this research will focus on identifying the strategy development of ‘Nasim Consulting’ in context of both market based and resource based views.

Taking into account MBV the research will focus on following issues;

Corporate strategy
Marketing strategy.
Sales and Marketing
Service quality.
Customer retention.

Taking into account RBV following issues will be analyzed;

Recruitment process.
Employee relationship and motivation.
Employee training and development
Development of firm- owned resources.

e.RESEARCH PROCESS

This study would commence with the analysis of the literature review in chapter 2. Then the methodology with which the study was carried out is outlined in chapter 3. The methodology includes semi-structured interviews with 4 senior managers at Nasim Consulting, it also includes 2 focus groups in which 4 support staff and 3 highly skilled staff working for the organization was interviewed.

The findings from the results are outlined in chapter 4. They are analyzed using a deductive approach in which they are categorized according the to theory in the literature review. The discussion in chapter 5 however is not arranged according to the literature review, but it aims to adopt a coherent approach to answering the research question. The research conclusion is expatiated in Chapter 6 and the recommendations in Chapter 7.


2. LITERATURE REVIEW

a.MARKET BASED VIEW:

Market based view has certainly been the earliest and most primitive viewpoint in the field of strategic management for organizations to gain competitive advantage and sustainable growth. De wit and Meyer (2004) claims that to achieve sustainable growth and competitive advantage firms should take outside-in approach by taking external environment as its core and starting point in order to formulate and build effective strategy. Panagiotou (2008) goes on to state that firms who adapt MBV perspective are objective and rational and are driven by external market with their focus on planning and positioning. In addition to that Day, (1994) states that it can be argued the successful companies are externally oriented and market driven as they focus on exploiting the particular segment of the market by targeting the price sensitive consumers. Jaworski and Kohli, (1993) states that for successful companies markets are leading and resources are following. He goes on to say that market driven company’s strategy begins with the analysis of the environment to identify attractive market opportunities and target potential customers. However he argues that it’s also important that once these customers have been won over and market position has been established, the firm must build on its position by adapting itself to changes in the environment. On the other hand, Mintzberg, et al., (1998) refers MBV approach as the “positioning approach” because this perspective of strategy focuses on market positioning and responds to external developments.

Porter, (1979) suggests that companies that focus on a particular niche and companies that strongly differentiate their product offering can achieve strong and profitable market share. Buzzell and Gale, (1987) emphasizes that the position of being a market leader is particularly important, as companies with the high market share benefit from economies of scale. Porter, (1979) argues that there are two important factors that firm must underline in order to choose a competitive strategy. Porter proposes five-force framework in order to compete and determine the attractiveness of an industry by analyzing the power of the different factors as shown in the fig (2.1.1). These five forces impinging on the firms profit potential are

Threat of new entrants.
Threat of substitutes.
Bargaining power of suppliers.
Bargaining power of buyers.
Rivalry among the existing customer

Figure (2.1.1): porter’s five forces

Source: Framework adapted from Porter, M.E. (1979)

On the other hand Panagiotou, (2009) proposes the modified integrated framework to analyse industrial structure. Apart from Porters five-force, he highlights the importance of further three more forces, which firms need to take consideration to gain and sustain competitive advantage which are as following;

Cooperative Engagements
Complementary Products and Services
Distribution Channel

He goes on to further suggest that a good spread of alliances and other partnerships provide the company with diversity and reinforcement. Figure (2.1.2): Modified framework

Source: Adapted from Panagiotou, (2009)

Porter, (1979) suggests that after the firm identifies its capability and strength by assessing these five forces, they must then choose defensible positions by selecting one of the three generic strategies. On the basis of the main competitive advantage of a firm in relation to its competitors Porter (1980 and 1985) has defined three generic strategies as shown in the fig. (2.1.3) which are as following;

A) Cost leadership: The first generic strategy is cost leadership, Porter, (1980) states that low cost leadership helps the firm above average returns in the industry despite strong competitive forces. This type of strategy can be chosen by a firm capable to produce and commercialize at a lower cost than its competitors. Both the profitability and the market shares controlled by these firms are significant, because low cost leaders are able to match the prices of their most efficient competitors and these firms will usually target groups of consumers that have basic, needs, requiring low quality products and services. However, porter, (1996) emphasizes on the need of consistency and says that lack of consistency dilutes the positioning of the company. So if the goal of the firm is to be a low cost provider, then costs of each activity should be kept to a minimum, while still maintaining the threshold features that are required to Stay in the market .Porter argues that strategic positions are not sustainable if there are no tradeoffs with other positions. Also ,Miller and Dess,(1993) argue that in order to achieve cost leadership, the firm has to obtain a high relative market share, which requires capital investment in product R&D and manufacturing, as well as aggressive pricing.

Figure (2.1.3): Porter Generic

Source: Adapted from Porter, (1980)

B) Differentiation: The second generic strategy is differentiation. In a differentiation strategy firm seeks to be unique in its industry by differentiating its product or service offering and along with some dimensions that are widely valued by buyers (Porter, 1980). It can be design or brand image, technology, features, customer service, dealer network or other dimensions Differentiation can be achieved on the grounds of any specific organizational skill or competence that represents a competitive advantage in contrast to other firms. However it can be argued that cost leadership strategy can also represent version of the Differentiation strategy, but in this strategy the focus is rather on differentiation through superior quality and service, in order to develop a distinctive market proposition. A firm that can achieve and sustain differentiation will be an above average performer in the industry if its price premium exceeds the extra cost incurred in being unique. Therefore it’s important that the firm must seek the ways of differentiating the lead to a price premium greater than the cost of differentiating. Porter, (1980) goes on to state that although the Cost Leadership strategy is characterized by a successive reduction of the selling price, but through a differentiation approach the firm is capable to use a premium price, with higher profit margins. In these conditions, the main aim of the organization is to create price loyalty and price inelasticity, which can create entry barriers for direct competitors, and mitigate the power of buyers, who lack comparable substitutes.

C) Focus strategy: The third generic strategy advocated by Porter is focus strategy. This strategy is quite different from the others because it is based on the choice of a narrow competitive scope within an entire industry. Companies pursuing this strategy focus on the selected segment or a group of segment, particular buyer group or geographic market in the industry by tailoring its strategy to serving them to exclusion of others (Porter, 1980). Porter states that a company can achieve and sustain focus strategy if it is capable of developing a highly specialized expertise in satisfying a clearly defined group of customers, with specific needs and demands and by optimizing its strategy for target segment a firm can achieve a competitive advantage even though if it does not possess a competitive advantage over hall. Like differentiation strategy, focus strategy can take many forms; it has two variants which are “Cost and Differentiation”. In cost focus a firm seeks cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in target segment. However it can be argued that focus strategy or the Market Niche Leadership is usually followed by small firms, which lack the level of resources to develop a cost leadership or a differentiating advantage at overall market scale.

Porter, (1980) states that Effective implementation of any of these generic strategies usually requires total commitment and supporting organizational arrangements that are diluted if there is more than one primary target. Porter outlines that the worst position for a firm is to be ‘stuck in the middle” in other words, if a firm is trying to pursue simultaneously more than one competitive strategy. He considers that each type of competitive advantage is independent and specific, and any attempt to combine low cost leadership and differentiation skills leads the firm’s management in conflicting directions. However, it can be argued that this argument has lost its appeal given the current market environment where the competitive pressures have multiplied substantially. These days some highly differentiated firms are forced to reduce prices to sell their merchandise, because of the fierce competition developed within their strategic group (Panagiotou, 2006)

Despite the significant contribution of porter’s generic strategy, his research has received its share of academic criticism. Stonehouse et al., (2000) argues that low cost leadership alone does not lead to competitive advantage unless there is an element of differentiation. Johnson and Scholes,(1999) argued that a strategy combining elements of low cost, price and leadership is known as hybrid strategy and Mintzberg et al., (1998) advocated the hybrid strategy for it combines both elements of low cost leadership with differentiation. On the other hand, Chrisman et al., (1988) argue that porter’s generic strategies are too general and are not considered in the context of different market environments (Boyacigiller and Adler 1991). Day and Wensley (1988) argued that generic strategies have limited practical application because of their simplicity and rigidity while as Rubach and McGee, (1998) argued that the strategic framework is different in the highly fragmented markets of the retailing sector. On the other hand Dawes and Sharp (1996) in their analysis of various Generic Strategies clusters argue that Porter’s model “does not describe/fit empirical reality, and provides no support for the notion that these generic strategies are routes to superior profit” (Dawes and Sharp 1996, p. 36)

Despite its criticism, Porter’s models are still important and valuable tools for business managers in order to analyze the market environment and formulate effective strategies. Boulding et al. (2005) state that the main advantages of Porter’s work is the incorporation of market fundamentals in the strategic framework of the business enterprise which has shifted the priorities of the firm from production to marketing and customer relations, by highlighting the importance of satisfying the needs of customers in order to achieve long-term profitability and sustainability.

Given the nature of business of ‘Nasim Consulting’ that is providing IT services, it’s important for them develop a strong marketing strategy with the focus on particular market segment to exploit the market opportunities. As the customer is the main focus in MBV, it also highlights the importance of the service quality in order to win these customers.

a.MARKETING STRATEGY:

Kotler and Armstrong state that marketing strategy is a marketing logic by which a business unit expects to achieve its marketing objective. Marketing strategy consists of making decisions on business’s marketing expenditure, marketing mix and marketing allocations in relation to expected environmental and competitive conditions. According to the Palmer, (2000) corporate mission statement provides a focal point for the marketing planning process. It’s important for organizations to integrate market orientation into their strategy in order to obtain competitive advantages over their rivals as company creates value through the configuration and co-ordination of its multi-market activities (Collis & Montgomery, 2005). On the other hand McDaniel, et al., (2006) states that developing a marketing strategy is important in creating and maintaing a fit between the organisation’s objectives and resources and evolving market opportunities. Drucker, (1973) claims that the successful strategy depends on understanding and identifying customer needs and offering the product or services that satisfies their needs. McDaniel, et al., (2006) addresses that for firms to discover the marketing opportunity; it must also know how to find the alternatives.

Ansoff, (1989) proposed strategic opportunity matrix also called as “Ansoff Matrix” as shown in the fig, (2.1.1.1) that can be used to develop strategic alternatives. Ansoff Matrix is an effective and a good basic tool for analyzing and planning where an organization may go, and assessing the risk. In order for firms to match products with the market, they need to explore four options which are “Market Penetration”, “Market Development”, “Product Development” and Diversification. McDaniel, et al., (2006) addresses that through market penetration the firms can try to increase market share among existing customers. Through Market Development firms can attract new customers to existing products. On the other side product Development strategy entails the creation of new products for current customers and Diversification helps in increasing sales by introducing new products into new markets. In addition this Lynch, (2006) proposes a modified framework of “Ansoff Matrix” called as Market Option Matrix which identifies the product and market option available to the organisation, including the possibility of withdrawal and movement into unrelated markets. He states that “Market Option Matrix” examines the options available to the firm from broader strategic perspective than the simple market matrix, which only doesn’t consider the possibility of introducing new product but also explores the possibility of withdrawing from the markets and moving into unrelated markets.

Figure (2.1.1.1): Ansoffs’s Matrix- Strategy Development Directions:

Source: Adapted from Ansoff, (1988)

On the other hand Palmer, (2000) states that “Marketing Mix” framework as shown in the fig,(2.1.1.2) highlights the principal decisions to management in configuring the offerings to suit customers needs and can be important to develop long term marketing strategies. In addition to this McDaniel, et al., (2006) states that “Marketing Strategy” involves the activities of selecting one or more target markets and developing and maintain a marketing mix that will produce mutually satisfying exchanges with target markets. Zeithaml, et al., (2006) defines “Marketing Mix” as a unique blend of product, place, promotion, pricing, people, process and physical evidence which are designed to produce satisfying exchanges with a target market. McDaniel, et al.,(2006) states that ‘Product’ is the heart of marketing mix and the starting point is the product offering and strategy, which in IT consulting is service as well, therefore quality of the service or product is important to gain competitive advantage. ‘Place’ strategies are concerned with making product available when and where customers want them (Palmer, 2000). ‘Promotional’ strategies are concerned with bringing out mutually satisfying exchanges with target market by informing, by informing, educating and reminding them the benefits of the company or the product (McDaniel, et al., 2006. P.52). Pricing is “a critical element of most companies’ marketing mix, as it determines the revenue that will be generated” (Palmer, 2000, p. 22). It also determines the generic strategy of an organization, if a firm is pursuing low cost strategy to gain competitive advantage and to attract price sensitive customers. (Palmer, 2000) states that ‘people’ are important part of the marketing mix and to the marketing of the services. Effectiveness of the marketing is likely to be affected my employees who interact with customers. ‘Process’ is also important but more important in the service sector and can be of critical concern to the consumer of high contact service. This highlights the importance of proper training of the staff in the service sector (McDaniel, et al., 2006). ‘Physical evidence’ is also important in order to guide buyers of intangible service through choice available to them (Palmer, 2000, p. 23). However within the marketing mix, important customer-focused issues such as quality of service can become a lost, scholars argue that more holistic approach should be taken to approach customer needs (Gronroos, 1994).

Figure (2.1.1.2): Marketing Mix.

Source: Adapted from Panagiotou, (2009)

b. SERVICE QUALITY:

Quality of service has båån studied in the area of business management for years because the market is more competitive and marketing management has transferred its focus from internal performance such as production to åxtårnal interests such as satisfaction and customers’ perception of service quality (Zithaml & Bitner 1996). Now, the major ålåmånt in world market competition is quality. McDaniel, et al., (2006) states that “service is the result of applying human or mechanical efforts to people or objects which involve a deed, a performance, or an effort that cannot be physically possessed. McDaniel, et al., (2006) argues that although a comparison of goods and service marketing can be valuable but it’s hard to differentiate between manufacturing and service firms and many firms can point to service as a main factor in their service. On the other hand Kotler, et al., (1996) defines service as a benefit that one party can offer to another which is intangible and doesn’t result in ownership of anything. McDaniel, et al., (2006) also addresses that services have unique characters that differentiate them from goods and is also important that marketing strategies need to be adjusted for these characteristics. Those characteristics are ‘Intangible’, ‘Inseparable’, ‘Heterogeneous’ and ‘perishable’.

Levitt, (1981) argues that “there is no such things as service industries, as there are only industries where service components are greater or less than other industries”. McDaniel, et al., (2006) states that service quality is difficult to define because of its characteristics, but research has shown that customers evaluate service quality on the basis of five components. ‘Reliability’, ‘Responsiveness’, ‘Assurance’, ‘Empathy’, and ‘Tangibles’. Reliability has been found one of the most important components to the consumers. It is the ability to perform the service dependably and consistently. It’s important to provide reliability in order to achieve sustainable growth and build customer relationship (Zeithaml, et al., 1996). ‘Responsiveness’ is an ability to prompt service (McDaniel, et al., (2006). ‘Assurance’ is the knowledge of the skilled employees who treat customers with the trust and make them feel that they can trust the firm (McDaniel, et al., 2006, p.365). ‘Empathy’ on the other hand is the care and attention shown by the firm towards loyal customers, it’s also important for the retention of the customers for long period of time ((Palmer, 2000). And Tangibles is the physical element which is included in the service. The overall service quality can be measured by analyzing the customer response to all of the five components. However, given the service organisations need to focus on the customer and to use knowledge about the customer in order to drive business strategy. Zeithaml, et al., (2006) proposes a ‘Gap Model of Service Quality’ as shown fig, (2.1.2.1) in order to improve quality service and service marketing. The model identifies five gaps that can cause problems in service delivery and influence customer evaluation of service quality.

GAP 1: Th³s gap is båtwåån consumår åxpåctation ànd management pårcåption. Th³s gap occurs whån management ³s not aware îf cårtain critical consumårs åxpåctations. Àt th³s stagå, thå management doås not know how thå service should bå dåsignåd. Thåy also don’t know what thå right quality is for the customer. (McDaniel, et al., 2006) argues that firm that does little customer satisfaction research is likely to experience this gap.

GAP 2: Th³s is the diffåråncå båtwåån Thå Company’s quality spåcifications ànd management pårcåptions îf consumår åxpåctations îf thå service ànd its quality. Management was awarå îf critical consumår åxpåctations but à variåty îf factors such às råsourcå constraints, markåt conditions, ànd/îr management indiffåråncå might pråvånt thåm from såtting spåcifications tî mååt thoså åxpåctations.

GAP 3: This is the gap between the service quality specification and the service that actually is provided. (McDaniel, et al., 2006) states that if both gap 1 and 2 have been closed then this gap is due to poor trained employees. This gap can be closed by training the employees and encouraging them.

GAP 4: Th³s is the diffåråncå båtwåån thå quality îf thå service dålivåry ànd quality promisåd ³n markåting. À potåntial råason fîr poor pårcåptions îf service quality by consumårs ³s that thåir åxpåctations arå booståd by mådia advårtising, salås pråsåntations ànd othår communications tî låvåls beyond à company’s capabilities.

GAP 5: It is the most crucial gap às ³t indicates thå diffåråncå båtwåån åxpåctåd ànd pårcåivåd service quality. ²t ³s à gap båtwåån the customers’ åxpåctations îf thå service ànd thå service thåy actually råcåivå. Gap 5 ³s thå function îf the other four gaps.

Zeithaml, et al., (2006) states that the ‘Gap Model’ positions the key strategies and decisions in service marketing to begin with customers and build the organizational task around what’s needed to close these gaps between customer and management perception.

Figure, (2.1.2.1): Gap Model

Source: Adapted from Zeithaml, et al., (2006)

2.1.3 CUSTOMER RETENTION:

Hoffman, (2006) states that “customer retention refers to the focusing the firm’s marketing effort towards the existing customer base”. In contrast to seeking new customers, firms engaged in customer retention work to satisfy customers with the intent of developing long term relationship. Due to the several changes in marketing environment and increase in the competition customer retention has become increasing important. Customer retention is a key strategy in today’s leading-edge services firms, as the competition is intense and services and goods differentiation among competitors is minimal (Vavra, 1992). Despite its potential benefits, customer retention did not obtain much attention in strategic or marketing planning processes. Grant’s (1995, p. 122) classification of resources, for example, ignored customers as an important resource or asset and, hence, his recommended strategic planning process did not consider the value of relationships with existing customers. Dawkins and Reichheld (1990) brought the substantial advantages of retaining customers into importance. Based on their consulting experience, they claimed that a 5% increase in retention rate led to an increase in the net present value of customers of between 25% and 85% in a wide range of industries.

On the other hand, Berry and Parasuraman, (1991) state that any firms end goal and objective of marketing activities in profit sector is to make profit, irrespective of the way sales are made, whether by transactional encounters or relationships. Therefore from Relationship management perspective, successful organizations are those who manage to turn their customers into clients and from prospects into partners (Christopher et al., 1991). In addition this Vandermerwe, (1996) have pointed out that successful firms are those that `Own’ their customers and pursue ongoing values for them. Fornell and Wernerfelt (1987) suggest that based on the assumption that existing customers are profitable and cost less than to replace them, firms should therefore emphasize on spending marketing resources on the existing customers than acquiring new ones and should be aware of the profitability of not only their products but also their customers. This argument is also supported by Vavra, (1992) who goes on to state that considering the cost of wining new customers, the only way to make profit is to increase the life time spending of the existing customers. Customer retention is therefore far important than customer service. Ahmad and Buttle, (2001) state that benefits of customer retention can be both qualitative and quantitative or more specially it addresses economic and non –economic benefits. Reichheld (1996) identified six economic benefits of retaining existing customers which are as follows;

Saving on customer acquisition or replacement cost.
Guaranteed base profit.
Increase in per-customer revenue.
Low operating costs.
Free of charge referrals of new customers from existing customers.
price premiums as existing customers do not usually wait for promotions or price reductions before deciding to purchase

Now over the period of time, relationship management has emerged as an important tool in order to retain the existing customers. Levitt in 1960 already highlighted the importance of market relationships in the area of business-to-business and business-to customer’s transactions. indicated that firms should not focus on selling products, but rather on fulfilling needs by arguing that the customer is attracted by the entire buying and consumption experience, and not only by the core product. With the development of new information technology applications has opened the way to an increased personalization of marketing activities with the techniques like CRM being considered as new source of competitive advantage for modern business organizations.

Customer relationship management has emerged as a new trend in marketing that focuses on understanding customers as individuals instead of as part of a group. McDaniel, et al., (2006) defines ‘CRM’ as a “company–wide business strategy which is designed to optimize profitability, revenue and customer satisfaction by focusing on highly defined and precise customer groups”. Dyche, (2002, P.4) states that ‘CRM’is the infrastructure that enables the delineation of an increase in customer value, and the correct means by which to motivate valuable customers to remain loyal – indeed, to buy again”. However, on the other hand, Technological innovation and information liquidity have changed competitive landscapes. Fewer and fewer companies can exploit propriety, one-of-a-kind technology and exclusive supply or distribution channels to maintain competitive advantage (Chew, 2000). For the vast majority of businesses, the ability to acquire, retain and enhance customer relationships is the last place left to find advantage. CRM and its accompanying measurement potential, is then a key technique for understanding customers and managing ongoing customer activity. CRM can be used to understand past and future customer behavior, the ability for companies to convert that knowledge into business results can be a significant form of competitive advantage.

The challenge for traditional, product-oriented companies is in pulling together customer data from across the different product silos so that customer behavior can be researched more comprehensively. Pine, et al., (1995) argues that many managers continue to look at business through “the twin lenses of mass marketing and mass production” rather than with the “twin logic of mass customization and one-to-one marketing. But McDaniel, et al., (2006) argues that ‘CRM’ is a much broader approach to understand and serve customer needs than is one-to-one marketing. Hair, et al.,(2002) addresses that ‘CRM’ is a closed- loop system which helps to build relationship with customers and it is continuous and circular with no predefined starting or end point. McDaniel, et al., (2006) suggests that in order to initiate ‘CRM’ management cycle or closed –loop system, a company must identify the customer relationships by learning who the customers are and where they are located. The company must understand the interactions with current customers and using that knowledge of interaction they must capture relevant customer data. After capturing the data, the company must store the data (By efficient ‘CRM’ technology and tools) in order to identify the best customer and then leverage the customer information. The key point in ‘CRM is that customer should take centre stage in any organisation Companies that implement ‘CRM’ system follow a customer-centric focus (Zeithaml, et al., 2006). McDaniel, et al., (2006) defines customer-centric focus as an internal management philosophy, to customize the product offering based on the data collected through customer interaction. By collecting the feedback on products and services the customer-centric learn to enhance the product offering. ‘CRM’ is an important tool to build up the strategy and differentiating the product offering which is important in order to achieve competitive advantage. It is important that the companies implement efficient ‘CRM’ system to enhance the customer relationship, although some people argue that implementing ‘CRM’ is a complex process.

It’s important to conclude that customer retention should be the important business goal as customer retention management has the potential for delivering substantial profits to firms in term of long-term profitability. However, the choice of appropriate strategies may be influenced by the nature of the product, the stage of the product in the life cycle, and customers’ buying behaviours (Ahmad and Buttle, 2001).

Although MBV focuses on external environment and highlights the importance of exploiting the opportunities with the industry to achieve competitive advantage but it overlooks the internal functioning of organization which are important to even achieve external market opportunities. Also Porters framework even though outlines the main drivers of competitive advantage; it does not provide any guidance regarding their operationalization. Also the framework doesn’t include some key variables like quantity dimension which is crucial to explain the success of a cost leadership strategy where profits are not driven by high margins but rather by large quantities. Hungenberg, (2004) argues that MBV frameworks emphasizes more on the importance of profitability while as there are also other approaches that take a much broader view of strategy. Most importantly, these perspectives also include other stakeholders such as employees or the external Community surrounding a company.

b. RESOURCE BASED VIEW:

Resource based view also called inside-out perspective of strategy has a long antecedent; with research stretching back to Edith Penrose (1959). However, since early 1990, the RBV view of the firm has increasingly come to dominate the field of strategic management. According to the De wit and Meyer (2004), RBV deals with the competitive environment facing the organization but takes an inside-out perspective by formulating strategy around company’s strengths, i.e. its starting point is the organizations internal environment. As such, it is often seen as an alternative perspective to porters (1980) five forces frame work, which takes the industry structure (outside-in) as it’s starting point. Resource- Based View of firm focuses and emphasizes on the internal capabilities of an organization to evaluate and formulate strategy in order to achieve competitive advantage in their respective markets and industries. It draws upon the resources and capabilities that reside within the organization in order gain competitive advantage. Ormanidhi and Stringa, (2008) state that firms are considered to differ in competitive advantage and in operational efficiency as a result of their capable and acquired internal resources.According to Johnson and scholes, (2002) it is the distinctiveness of organizations strategic capabilities that provides them an edge to achieve extraordinary profits compared to others in the market where the strategic capability is the sufficiency and suitability of the resources and competences that organization possesses in order to be successful. Resources can be thought of the inputs that enable organization to carry out its activities and can be categorized as tangible and intangible where tangible are the physical assets that organization posses such as plant & machinery, finance and human resources while as in tangible resources are the resources that are developed by the organization over the period of time such as knowledge, culture and brands. Johnson and Scholes, (2002) state that whilst possessing of resources is important but it’s the way the firm uses its resource or in other words it’s the efficient configuration and arrangement of the resources that provides an organization with competencies.

Prahalad and Hamel, (1990) states that taking an inside-out perspective tends to emphasize the importance of a firm’s competences over its tangible resources by arguing that the critical task of management is to create an organization capable of creating products which customers need but not yet even imagined and with the collective learning of individuals within the organization itself and their ability to work across organizational boundaries, firms can achieve core competencies. Prahalad and Hamel, (1990, p.82) argue that;

“The skills that together constitute core competence must coalesce around individuals whose efforts are not so narrowly focused that they recognize the opportunities for blending their functional expertise with those of others in new and interesting ways.

However, on the other hand Kay, (1993) argues it is the distinctive capabalities of an organisations resource that are important in provididing it with competitive advantage ,i.e.reputation and product innovation. Although possessing distinctive capability or characteristic is important but it doesn’t not guarantee success fit is not sustainable and suitable which could be assessed over a period of time and if it primarily benefits the organization itself.

Johnson and Scholes, (2002) state that core competencies or distinctive capabilities provide an organization a basis to outperform its competitors, therefore it is important for organization to identify and develop the unique resources and core competencies to achieve competitive advantage as shown in the fig,(2.2.1).

Figure, (2.2.1): Core Competencies.

Easy to imitateDifficult to imitate
RESOURCESNecessaryResourcesUniqueResources
COMPETENCIESThresholdCompetenciesCore CompetenciesOrDistinctive Capabilities

Source: Adapted from Johnson and Scholes, (2002).

On the other hand ,Grant,(1991) distinguishes resources and capabalities. He goes on to state that resources are the sources of organisations capabilities and its capabilities that are the main source of its competitive advantage. The greater the rate of change in a firm’s external environment, the more likely internal resources and capabilities are to provide a secure foundation for long-term strategy (Grant, 2000, p.108). Grant proposes a framework as shown in the fig, (2.2.2) for strategy formulation comprising of five steps which are as follows

Identify and classify the organisations resources. Appraise strengths and weaknesses relative to those of your competitors and identify oppurtunities for bettre resource utilization.

Identify the organisations capabalities, i.e. what it can do better than its rivals and identify the resource and complexity of input to each capabalities

Appraise the profit-generating potential of resources and capabalities of organistion.

Select an appropiate strategy to expliot organisation resources in relation to the oppurtunities that exist in the external enviroment.

Identify the resource gaps which need to be filled,i.e. by investing in improving organistion resource base.

Figure, (2.2.2): Grant’s Resource-Based View of Strategy Analysis.

Source: Adapted from Grant, (1991).

Johnson and Scholes, (2002) state that it’s important that firm’s develop long lasting and durable strategic capabilities that provide advantage for long time in order to achieve sustained competitive advantage. They should also develop effective knowledge management and must be able to adapt and innovate in rapidly changing environment.

On the other hand, Barney, (1991) argues that all the resources that firm have access to may not be strategically significant, since some may prevent the organisation from conceiving valuable strategy. He states that a sustained competitive advantage occurs when an organisation is implementing value- creating strategy that is not implemented by potential competitors. He proposed that organization’s resource must have four attributes to provide potential sustainable competitive advantages which are as;

Valuable resources.
Rare resources.
Resource difficult to imitate.
No strategic substitute.

Although RBV provides broad insight about formulating strategy of an organization to gain competitiveness. However, it can be said that it says very little of how resource can develop and change over time. Priem and Butler, (2001) argues that resource based view of strategy lacks detail and is difficult for organization to implement. A more detailed road map is required if it is to be more useful to organizations.

a.EMPLOYEE RELATIONSHIP AND MOTIVATION:

According to the Armstrong, (1999) “employee relationships are the relationships that exist between the employers and employees in the work place”. Maund, (2001) states that relationship with employer and employees are very crucial for organization to be successful. It’s important for the senior managers to find out what employees are actually thinking. Armstrong, (1999) states that it’s important for management deal with the issues of sensitivity and demotion in order to gain the loyalty and trust from the employees. It also about getting that bit extra from the employees; that is the willingness to act beyond the job role. However Palmer, (2000) defines employment relationship as a relationship based on an (implicit) reciprocal agreement in which employees provide physical and labour in exchange for (economic and social) rewards supplied by employers. According to Kessler and undy, 1996(cited in Maund, 2001.p.324) relationship of employment consists of four dimensions, each which interrelate to form a comprehensive whole. These components are; Parties, Operation, Structure and Substance. However, Rouseau and Wade-Benzoni distinguish the relationship of employment between two types of contract; transactional and relational (Rouseau and Wade-Benzoni, 1994, cited in Maund, 2001.p.324). Building a trustworthy relationship with the employees is important in achieving the objective of an organization and sustaining growth which highlights the importance of HR strategy of the organization as well. On the other hand, Maund, (2001) states that employment development is another important factor in order to be successful. Ignoring people development and training is not an option for any organization, in order to get the best out of them it is important to invest in them as well. Armstrong, (1999) states that “employment development policy should express the organizations commitment to the continuous development of the skills and abilities of employees in order to maximize their contribution”. Maund, (2001) addresses that because of changing environment which places a unique demand on the skills and knowledge of people. It’s important for the management to provide training programmes and education in order to cope with these demands. Rewards and bonus programmes are also important in order to keep the employees motivated.

In the current economic scenario the motivation of staff is important and it is lifeline of an organization, however still on a business perspective it is an ignored area. Motivation should feature as one of the focal points when thinking about the functioning of an organization and should be given paramount importance by taking a clear and coherent approach. Mostly organizations turn a deaf-ear to motivation until its functioning is affected due to motivation. Orlando, (2002) states that motivation is a seminal element of peak performance and improving both internal and external facts of motivation is undeniably prerequisite for success.

Theories of motivation are largely grounded in the field of psychology however psychologists in turn rely on the philosophical tradition of theory building efforts. Two categories of motivation theories evolve from this starting point are content theories and process theories.

Content theories provide a link between individual needs and work rewards and offer perspective based upon the relative value people place on various rewards. Maslow’s Hierarchy of needs (theory of human motivation, 1943) is one of the earliest theories about motivation and comes into the category of content theories. The theory assumes that human beings always seek to satisfy needs both in social and working life. Maslow developed the concept of pyramid of requirements’ or hierarchy of needs and highlighted five hierarchical levels of human needs and discussed how the satisfaction of the basic need leads to the desire of acquiring and satisfying higher needs. Maslow’s theory states that humans can only progress through the five levels of needs as shown in the fig, (2.2.1.1) by satisfying each one in turn with the self actualization being the highest level in hierarchy, until ones safety and security needs are not satisfied, status based needs will have little effect. McClelland, (1961) theory of acquired needs also falls in to the category of content theories; his theory focused on needs similar to the higher order needs identified by Maslow. He specifically argued that individuals have needs for achievement, affiliation and power. Other theory which falls into the category of content theory is Motivation- Hygiene theory of Fredrick Herzberg( 1950), which says that there are two types of motivators, one type which results in the satisfaction with the job called ( motivators) and other one which merely prevents dissatisfaction called (hygiene factors) which include company policy and administration, supervision, status, salary. According to Herzberg, et al., (1959), Hygiene factors are those factors which do not lead to the higher motivation but without them there is dissatisfaction. Despite the huge significance of Maslow’s and Herzberg theories, they have received fair academic criticism. Maslow’s theory has been criticized as being static and descriptive and like Herzberg; it cannot predict behavior by analyzing needs.

Figure,(2.2.1.1): Maslow’s hierarchy of needs

Source: adapted from Maslow,(1943)

On the other hand, process theories take much dynamic approach by trying to analyze the thought process of individuals which affect their behavior. The two process theories which offer significant amount of implication for motivation in work places are expectancy theory and equity theory. According to Vroom’s theory of expectancy, (1964)the performance is a multiplicative function of motivation and ability. This theory is based on the belief that employee effort will lead to performance and performance will lead to rewards. Rewards may be either positive or negative. The more positive the reward the more likely the employee will be highly motivated. Conversely, the more negative the reward the less likely the employee will be motivated. Also this feedback from the company in form of rewards has a decisive effect on motivation (Van-Dijk and Avraham, 2004).

On the other hand Adam’s Equity theory (1963) defines that in an organization When people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation (Bussinessballs, 2009). According to the equity theory which is considered as one of the justice theories, he asserted that employees seek and pursue the balance between the inputs they bring to the job and the outputs against the perceived inputs and outputs of others. So the basis of equity theory lies in the process of individual comparison. The benefits of being treated fairly by the company, in terms of the feedbacks and rewards for the hard work and dedication you have put in has a positive effect on your motivation (Harvey et al., 2003). The relevance of equity theory to motivation is that it explains a rationale for human behavior which is not tied into the hierarchies or to specific kind of individual drives. On the positive side, equity theory helps in explaining a potential list of factors which can lead to motivation. On the negative side, its basis as a theory of motivation places emphasis upon the managers whose task becomes that of changing the levels of reward to create the balance. This also takes into consideration the inputs (time, effort, loyalty, hard work, skill) you put into the job and the outputs (salary, employee benefit, recognition, esteem, achievements) you get from it but this theory goes on to say that these two factors alone decide the level of motivation of an individual as it also takes into consideration the comparison with an individual, who is in a similar scenario and of whom you think is quite relevant to you (referent). Similarly, such efforts by the organization improve performance and productivity of its human assets which in turn benefits the organization itself (Dawn et al., 2000). However, with the Equity theory it varies from person to person and also varies with the referent one has in mind as with this theory an individual only keeps comparison with other people in mind and completely neglects the amount of contribution the two have made and this leads to demotivation of the individual towards his job.

Motivation is therefore a driving force in every front of life and it pretty much decides your approach to a given task. According to the various theories given on motivation it is highlighted in every theory that the level of motivation of employees has a paramount impact on the organization. As Likert, (1967) has put forward in his Management Systems and Styles theory that for an organization to achieve maximum profitability, good labor relations and high productivity, every organization must make optimum use of their human assets.

b. RECRUITMENT PROCESS:

Maund, (2001) defines recruitment as a process of finding and employing individuals to carry out the tasks that need to be done within the organization. Dowling and Schuler, (1990) state that recruitment is a process of ‘searching and obtaining potential job candidates in sufficient numbers and quality so that the organization can select the most appropriate people to fill its job needs’. For organizations to be successful it’s important that they have effective and efficient members of workforce, as employees are the force of organization (Maund, 2001). Effective organizations use a strategic approach to recruitment and development of their staff with their recruitment strategy linked to their overall strategy in order to utilize their people as a sustained source of growth and competitive advantage (Hill, 2008). Fombrun and Devanna argue that organizations would find it hard to implement strategy if they were not intertwined with the appropriate HRM policy (Fombrun and Devanna, 1984. Cited in Maund, 2001). Maund, (2001) states that organization with the effective recruitment strategies have to key assets; they ensure that the potential of the employees is identified, developed and utilized and they use finance on its people who directly contribute towards achieving the goals of the organizations. It is suggested that recruitment procedure is to be based on a system approach which is necessary to carry out analysis of inputs, output, and environmental context of recruitment. Maund, (2001) suggests that the aim of the recruitment is to maximize certain critical concepts which are Validity, Reliability and Utility analysis. Hill, (2008) states that recruitment process is usually divided into three distinct stages.

Definition of requirements of staffing.
Attracting candidates.
Selecting the employee’s candidates.

Selection is the last part of recruitment; it’s when the organization decides who to employees. However, selecting is the most important part of the recruitment process. As Maund, (2001) states that at the end it’s about employing the right people for the right job. With IT industry demanding high knowledge and skilled consultants. It’s important that selecting process meets all the criteria’s; Qualification, skills, knowledge, abilities and personal qualities. Without the efficient workforce it’s hard for organizations to be successful as people are the most valuable resource for organizations to gain competitive advantage.


1. RESEARCH METHODOLOGY:

The aim of this research is to find out the main reasons for Nasim Consulting’s lackluster performance in the IT consulting industry. The initial hypothesis was that this inefficiency could be attributed to inability to efficiently retain customers. The following subchapters would outline the methodology used in testing this hypothesis.

Research philosophy:

The epistemological stance being adopted in this study is Interpretivism. According to the Saunders et al., (2007) “Interpretivism is an epistemology that advocates that it is necessary for the researcher to understand differences between humans in our role as social actors”. Easterby-Smith et al (2008) asserts that an understanding of the research philosophy being adopted in management research is useful as it helps clarify research designs, showcases the best research approach and it also aids the researcher in identifying, creating and designing studies which may not be consistent with their past experiences.

The heritage of this strand of ‘Interpretivism’ comes from the intellectual tradition of phenomenology. Phenomenology refers to the way people make sense of the world (Collis and Hussey, 2003). The positivist perspective, which focuses on observing and generalizing social reality, is not being utilized in this study. The reasons being that a positivist perspective would not help explain the inner feelings and attitudes of the staff within the organization. It would also not aim to understand or identify the actual point of view and concerns of individuals in the study. These reasons thereby make the positivist view an unviable approach in answering the aforementioned research question.

This Interpretivist’ view is synonymous with the Social Constructionist view expressed by Easterby-Smith et al (2008), in that the focus of research should be on people, individually or collectively. Research should be concerned on how people think or feel about certain occurrences. He further asserts that human action arises from their perception of different situations.

A major limitation of the Interpretivist view is that the researcher would have to adopt an empathetic stance by entering into the world of research and understanding the issues from the participants’ point of view (Saunders et al, 2007). Easterby-Smith et al (2008) also asserts that a non-positivist research is not objective, therefore qualitative results gathered could be interpreted falsely based on the reader’s point of view. This research stance brings into question, the issue of reliability, validity and generalisability of subjective methods of research. These issues have been addressed in this research and are illustrated in following chapters.

One method of securing the reliability and validity of a subjective research, as postulated by Collis and Hussey (2003), would be to adopt a befitting approach to research. Also as Saunders et al., (2007) argues, the Interpretivist’ perspective of epistemology highly suits the area of business and management research particularly in marketing and HR management. Therefore this study, which is centered around issues concerning management, marketing and HR would adopt a social Interpretivist perspective.

c.Research Approach:

Collis and Hussey (2003) state that any research method adopting an Interpretivist perspective should be inductive, as it represents the most appropriate approach to social science research. By adopting an inductive approach, Bryman and Bell (2007) postulate that the study would aim to answer the research question by generating alternate hypothesis that would focus on the importance of informal social relationships.

However, in as much as this study is based on an Interpretivist epistemological stance, there is still evidence of deduction. The deductive approach is the dominant research approach in natural sciences, where laws present the basis of explanation (Collis and Hussey, 2003). The deductive approach represents the most common view of the nature of the relationship between theory and research and results gotten from this approach are developed through logical reasoning (Bryman and Bell, 2007).

The purpose of this research is to discover why an occurrence is evident in a particular institution, and also to compare these occurences with already existent theory. This comparison is done so as to ascertain which theory has the most influence on their performance; therefore a mixed method approach has to be instigated.

Saunders et al (2007) therefore argues that a mixed approach could be instigated, whereby a deductive approach would be used initially to compare findings with relevant theories, and in instances whereby there is no relevant theory available to explain the findings observed, then an inductive approach would be used in order to explain these occurrences.

Based on these arguments, this study would adopt a mixed method approach. A deductive approach would be utilized in the formulation of a viable research question, and analysis of the findings. In the event that there is no apparent explanation for a finding, then an inductive approach would be utilized in formulating a hypothesis. As illustrated by Collis and Hussey (2003), the most distinctive feature of qualitative analysis is its emphasis on the interpretation that can result in confrontation of multiple realities.

d. Research Strategy:

This study involves the empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence; therefore, the most befitting strategy, as postulated by Robson (2002) is a case study strategy.

Robson (2002) asserts that the case study strategy would be useful if the aim of the study is to gain a rich understanding of the research perspective and the process being endorsed. Therefore as this study aims to understand the business process within Nasim Consulting and also the reason for their lackluster performance, then based on this argument, a case study would be most effective.

The case study approach has been attacked for its lack of generalisability and for the fact that they produce huge amounts of data, which allow researchers to make any interpretation they want (Easterby-Smith et al, 2008). Therefore Oppenheim (2000) argues that the case study lacks the ability to generate objective answers to questions asked. Robson (2002) in response to these criticisms, suggests that case studies should have a clear design, which is be tailored specifically to the research question.

Easterby-Smith et al (2008) further asserts that the case study strategy should be less concerned with issues of validity and generalisability, but more on uncovering rich data that could best explain the life and behavior in organizations and groups. These assumptions illustrate why the case study approach was chosen as a suitable strategy for this research.

Triangulation, as proposed by Saunders et al (2007), would be utilized in the course of this study. Triangulation is essential when the study aims to capture data using different data collection techniques. Therefore this study would aim to collect data using semi-structured qualitative methods and also focus group qualitative studies.

e.Time Horizons:

Saunders et al (2008) defines a cross sectional study, as a study that aims to research a particular phenomenon at a particular time. Whereas a longitudinal study, as defined by Adams and Schvaneveldt (1991), is a study that allows the research to observe people and events over a period of time.

Therefore since the aim of this research is to discover the effects of some organizational factors, within a time frame of 3 months, a cross-sectional study has been chosen. This is due to the nature of the case-study research strategy and also the time limit of this research. Saunders et al., (2007) states that research taken for academic reasons are likely to be time constrained and don’t not allow sufficient time for longitudinal study.

Easterby-Smith et al (2008) asserts that a cross sectional study, is mostly useful in survey strategies and also comparative researchers. However they may also be used for qualitative case studies. Saunders et al (2007) therefore concludes that case studies that are based on interviews, which are intended to be studied over a short period of time, should adopt a cross sectional study.

f. Data Collection:

i.Sampling Method

Based on the research objectives and the issues to be investigated, it would have been most appropriate if all population of staff within the organization were interviewed. However, due to the time constraints and resource limitations inherent in this study, a non-probability sample of the population was selected.

Saunders et al (2007) asserts that a non-probability sample is most often used when adopting a case study strategy. A non-probability sample, as described by (Oppenheim, 2000), is a sample in which the probability of each case being selected from the total population is not known. it is impossible to answer research questions or to address objectives that require statistical inferences about the characteristics of the population (Oppenheim, 2000). A non-probability sample is being adopted as opposed to a probability sample, in which the probability of each case being selected from the population is known and equal in all cases (Saunders et al, 2007).

Robson (2002) further asserts that non-probability sampling could still be used to generalize findings, but these generalizations would not be based on statistical grounds. Due to the qualitative nature of this study, a non-probability study would suffice (Easterby-Smith et al, 2008).

The population samples interviewed are in 3 different categories.

Firstly, 4 members of top management were interviewed regarding the corporate strategy, sales and marketing of the firm, client relations and also human resources. All these interviews were carried using a semi-structured format.
Secondly, focus group sessions were carried out with 4 members of support staff, while 3 another focus group was carried out with 3 highly skilled support staff

A purposive sampling method, as described by Saunders et al (2008), was utilized in the sampling of participants. This method requires the use of the researcher’s discretion in selecting cases that would be most suited to answer the questions raised. This form of sampling is often used when working with small samples such as in case studies (Neuman, 2000). Collis and Hussey (2003) further assert that the logic unto which the purposive sampling should be selected should be dependent on the research question and objectives.

The top management staff were chosen in this research because of their knowledge of the areas being investigated. The support staff and highly skilled staff were also chosen because they were also believed to have an opinion regarding the organization.

S/NParticipantsA.K.AInterview formatTOPIC OF DISCUSSION
1Head of Corporate strategyHOCSSemi-Structured interviewCorporate strategy, marketing strategy, sales and marketing and human resources
2Head of client operationsHOCOSemi-structured interviewClient operations
3Head of SalesHOSSemi-structured interviewSales and marketing
4Head of Human ResourcesHOHRSemi-structured interviewsEmployee recruitment, retention, motivation, training, development
54 Support StaffFGSSFocus GroupEmployee motivation, retention, training, development
63 Highly skilled staffFGHSFocus GroupCorporate strategy, employee motivation, retention, recruitment.

ii.Interviews

Semi – Structured Interviews

A semi-structured interview is a qualitative interview that is defined by a pre-set question guide. It aims to provide in-depth findings through informal discussions with participants (Collis and Hussey, 2003). This interview method was chosen over unstructured or structured interviews, because this study intends to answer the research questions by asking specific questions, but not so much (unstructured) that it generates useless data, and not so less (structured) so as not to miss out on any unanticipated information.

Easterby-Smith et al, (2008) states that in less structured interviews, the researcher is encouraged to make choices and ask further questions regarding which line of questioning they should explore further, and which lines of enquiry to discard. Saunders et al (2007) also advises that in semi-structured interviews, specific questions could be omitted during the course of the interviews, while in others; additional questions could be added if they are deemed relevant.

The interview themes in the semi-structured interview are in appendix. The themes utilized in this study were derived from the literature review, knowledge of the organization and its industry, discussion with workers at the organization and the dissertation supervisor. The themes are not a set of questions per se, but general discussions that the researcher intended to focus on, in a bid to find answers to the research question.

The meeting environment and atmosphere of the interview area were not so formal. Saunders et al (2007) asserts that semi-structured interviews that are not so formal are usually more favorable amongst senior management, as the reply usually tends to be confidential in nature. Also, an informal environment could act as an ‘ice breaker’, which would allowed the researcher to bypass the initial confidentially issues of the organization. This was helpful in discovering the underlying factors responsible for the firm’s lackluster performance.

The semi-structured approach also provided the researcher with the ability to probe answers. Answer probing was particularly useful in responses whereby more explanation was needed in order to fully understand the occurrences. This was very important especially during the interviews with top management, whereby some respondents were initially wary about voicing their opinions. Answer probing and an informal environment were tools that were utilized in forgoing these barriers.

Focus Group Interviews

Focus group refers to group interviews in which the topic is clearly defined and the focus is on enabling and recording interactive discussion between participants (Saunders et al, 2007). He further asserts that the main aim of the focus group is to focus on a particular issue, product, service or topic and create an environment of interactive discussions amongst participants.

Focus group sessions were used in this study. There were used to record the perception of highly skilled and support staff to issues such as customer retention and employee recruitment, training and motivation. Saunders et al (2007) states that focus groups typically involve up to 8 participants, depending on the information sought.

A non-probability sampling method was used in the selection of respondents. The interview method was non-standardized, as in the case of the semi-structured interview, but instead of having just one recipient, the focus groups had a number of recipients. 3 highly skilled staff and 4 support staff.

Easterby-Smith et al (2008) asserts that in cases whereby a focus group would be the most appropriate form of data collection, the role of a researcher would shift from the interviewer to the role of a moderator and facilitator. The researcher therefore had little input in the course of the focus studies, except for the occasional insertion of new areas to discuss. The aim of the focus groups was to ask the support staff and highly skilled staff for their opinion about the firm, its performance and their motivation to progress within the organization, if given the opportunity.

g. ANALYSIS OF RESEARCH FINDINGS

Quantitative and Qualitative methods are two methods mainly used in the data collection process of research. The former involves data that is either in the form of, or expressed as numbers while the latter involves collecting data in the form of words (Easterby-Smith et al, 2008). This study gathered only qualitative data, therefore the analysis of findings were based solely on qualitative methods of data analysis

Saunders et al (2008) states that it is possible to approach a research approach and analysis using either a deductive or inductive position. And the choice of analysis should be greatly determined by the research approach adopted. This study adopted a mixed method research approach, therefore in the analysis of findings, a decision had to be made as to whether to adopt a deductive or inductive data analysis stance.

Yin (2002) suggests that in studies whereby the research question has been formulated based on the literature review; these theories that have been used in the postulation of the research question could also be used in analyzing the findings. Thereby suggesting that a deductive approach to data analysis would be essential for theoretical driven studies. He also believes that an inductive approach to data analysis may be a difficult strategy to follow. Easterby- Smith et al (2008) further asserts that though a research might commence from an inductive standpoint, a deductive method of analysis does have its advantages. A deductive approach would link the existing body of knowledge in the subject area, it would also assist in getting the research started and providing the initial analytical framework.

Based on these arguments, this study analyzed its findings using deductive methods. The findings were analyzed according to the literature review topics discussed. In the instance whereby different respondents had something to say about a particular issue, all their opinions were recorded and taking into consideration in the analysis of findings. A fact sheet of all findings according to the theory is illustrated in chapter 4. Full transcripts of the interview are in the appendix.

The pattern matching procedure, as postulated by Saunders et al, (2007), would be utilized in this deductive analysis. It involves predicting a pattern of outcomes based on theoretical propositions. These propositions are thereby analyzed in the data analysis process. This procedure involves the development of an analytical framework, utilizing existing theory, and then testing the adequacies of the framework as a means of explaining the findings (Saunders et al, 2007). In the instance where a pattern is found as initially predicated, it would be evidence that suggests that there is indeed an explanation for findings.

This pattern only strengthens the previous deduction approach proposed. This study has built a pattern whereby it hypothesis that the main reason for the company’s poor performance is customer retention. Therefore the findings and literature review would shed light on whether this approach is viable or not.

h. CREDIBILITY OF RESEARCH FINDINGS:

i.Reliability:

According to the Easterby-Smith et al. (1991) reliability refers to the extent to which data collection techniques or analysis will yield consistent findings. There may be four threats to reliability which are ‘participant error’, ‘participant biases, ‘observer error’ and ‘observer bias’ (Robson, 2002). During the interview apart from the audio-recording, key notes were taken as well in order to maintain the richness of the data. To increase the reliability, interviews will be conducted in a professional manner by proper and effective communication in order to avoid any loss of data. However there is also an informal air in the environment, which allowed the researcher’s to feel more relaxed about voicing their opinions on corporate strategy or employee motivation.

ii.Validity:

Saunders et al., (2007) states, “Validity is concerned with whether the findings are really about what they appear to be about”. Robson (2002) further states that there are many threats to the validity of the research which are; testing, mortality maturation and casual direction. The research will be based on effective research design in order to avoid the threats to the validity. Interviews and questionnaire will be effectively and appropriately designed to examine and identify the appropriate findings. Multiple methods will be used in this research to provide better opportunities to answer research question and to evaluate the extent to which findings may be trusted. Also the researcher will be informed about any change in the strategy of the organization that might affect the area of investigation. Finally researcher is fully desired and committed to complete the research project within the given period of time.

iii.Ethics:

Blumberg, et al., (2005) states that ethics refers to the appropriateness of your behavior in relation to the rights of those who become the subject of your work. This research will be strictly conducted within the “Research Ethics Policy” of the ‘London metropolitan university’. The research will be designed in way that it is both methodologically sound and morally defensible to all those who are involved. Questionnaire and interviews will be designed in way that it doesn’t offend, harm or provoke anxiety or stress in participants. At the same time the objectives and academic expectations of the research will be fulfilled.

A number of other ethical issues have been raised with regard to this study

The top management of the organization were worried about their information getting into the hands of competitors who are equally lobbying for support contracts.
Other managers, support staff and highly skilled staff were particular about not being identified in the study, because of the sensitivity of the discussions.

Therefore based on these issues, this dissertation has been classified CONFIDENTIAL.

iv.Accessibility:

The researcher has been granted the right to access and publish the research finding from ‘MR. BASHARAT MALIK’ who is the managing director/owner of the Nasim Consulting.

This full access was used in arranging the semi-structured interviews with management and also the focus group interviews with support staff and highly skilled staff.

v.Limitations of Research

The following limitations were observed during this research.

The non-probability sampling utilized in the semi-structured interviews could have been expanded to include all staff within the organization. This approach would have further strengthened the reliability and validity of the findings. It would also have taken into account the perception of all staff within the organization. Thus resulting in indisputable data.
The participants which were interviewed could have been expanded to include some clients of the firm. Areas such as client retention could have been expatiated further if the opinions of the clients were put into consideration as well.
The data collection method could have been expanded to include quantitative questionnaires as well. If these questionnaires were included, it would have been possible for this study to quantify its findings, thereby making it objective and irrefutable.


3. RESEARCH FINDINGS

The results chapter has adopted a deductive analytical approach, therefore the findings of this study would be collated according to the research questions asked and theories read. The transcript from the semi-structured interviews and focus groups are shown in appendix.

The results are categorized according to the section under study and also according to the perception of recipients towards particular questions. All questions asked are also shown in appendix.

a.Market Based Factors

i.Brief overview of corporate strategy

Head of Corporate Strategy (HOCS)

The company’s main strength is in support services and these services are dependent on return customers. Therefore Nasim’s main strategy is focused on acquiring those resources that could help in retaining and servicing these customers. The HOCS also believes that due to the economic climate, it may be seemingly impossible to attract new customers. Based on this assumption, 80% of Nasim’s marketing budget is currently being diverted towards customer retention.

The generic strategy currently being adopted by Nasim is a low-cost focus strategy. The cost of Nasim’s services to its limited range of customers is lower than that of most competitors. Nasim’s immediate future strategy is to invest in customer retention. They intend to do this by lowering the cost of support services even further, especially for multi-year contracts.

A merger with another firm, or being acquired by a larger firm, are the only feasible strategies with which Nasim could diversify into the outsourcing market.

Focus Group – Highly Skilled Staff (FGHS)

Outsourcing is being supported as a viable diversification strategy, which Nasim could look into. Outsourcing commits clients to multi-year contracts and also increases clients’ switching cost.

New customer acquisition is also a recommended approach. Respondents from the focus group assert that old customers would not need to continue signing support services, if the installation process was very successful. Therefore Nasim should focus on the acquisition of new customers, as it is seemingly more profitable.

ii.Nasim’s marketing strategy

Head of Corporate Strategy (HOCS)

Nasim Consulting does not specifically target any customer segment. They provide broad range IT consulting services to any client that is interested in their products. Most of their previous customers are competing in the energy and telecommunications industry.

Strategy of focusing on support services was profitable prior to the economic downturn. Clients were able to order new installation services and signed yearly contracts that secured Nasim’s income. However this has changed, sales of new installations has dropped by 60% and some old customers are refusing to renew support contracts, citing a lack of need for it.

Head of Sales (HOS)

Marketing effort for acquisition of new customers is not so good. 20% of turnover comes from new customers and only 20% of the marketing budget is for the acquisition of new customers. Most of Nasim’s effort is bent on the retention of previous customers.

iii.Sales

Head of Corporate Strategy (HOCS)

Nasim currently provides outsourcing, installation and support services. 80% of turnover is from support services being offered to previous installation clients. 10% comes from installation services to new and old customers while the 10% left comes from outsourcing services. Sales of new installation services have reduced by up to 60%.

Head of Sales (HOS)

Sales of services are primarily done through the Internet. An online presence has been designed in which all the services being offered is listed. Therefore interested clients are advised to call.

Meetings are also set up with prospective clients through telephone, and consultants are sent out to outline the client’s problem and how Nasim could solve it. Brochures are also occasionally sent out to prospective clients.

However, the performance of the sales team is low. The sales team comprises of 4 staff that are equally responsible for customer relationship management. There are no training facilities that teach the sales team how to sell IT infrastructure, neither are there any added incentives apart from a little commission paid out for every sales made. Only 20% of the sales and marketing budget is currently being used for the main sales activities. The other 80% is used in retaining previous clients.

Proposals for sales and marketing campaigns have been previously dismissed. The company’s main focus is on ensuring repeat customers.

‘I would advise my company not to ignore sales and marketing completely; in as much as they are trying to attract the big firms and hook them up with support contracts, I think there are bigger fishes out there that have not been touched yet. These bigger fishes could attract more income through larger installation.’

Clients only need IT infrastructure when they have a budget or when they have a dire need for it. Clients can easily forgo installation and support services if they are cash trapped and need to focus on core business activities.

‘Therefore if senior management believes that their main bread lies with support services, then I beg to differ.’

If sales department received appropriate funding, investments could be made in acquiring competent sales and marketing staff, and also in the conceptualization of a new marketing strategy that aims to attract new staff and ensure their loyalty.

‘One main focus point I have is the need to build a brand. We have no strong brand, therefore we can easily be swept under the rug by bigger competitors who have a better name.’

iv.Customer retention

Head of Corporate Strategy (HOCS)

Most of Nasim’s corporate strategy is focused on satisfying the customer so that they invite the company again for the next job. Installation and support services being offered makes it easier for Nasim to satisfy return customers. However, customer retention is believed to be a major problem. The new strategy is therefore to get customers to sign multi-year contracts that could secure Nasim’s future.

Most of the corporate marketing budget is being utilized in the delivery of occasional free support, follow-up visitations and also in the recruitment and training of support staff.

Head of Client Operations (HOCO)

Nasim provides support services, and these services are based mostly on customer retention. However, to retain customers, these customers must need the services that they are being retained for. Not all IT solutions that Nasim provides actually need support services. Therefore, there is a better opportunity in new customer acquisition, than in customer retention.

b. Resource based factors

i.Acquisition of firm owned resources

Head of Corporate Strategy (HOCS)

Nasim has a long-standing alliance with larger IT companies who provide the infrastructure being installed to client sites.

‘Without these alliances, we would not have anything to install or support’

Nasim has gained experience in the field of installing IT solutions and providing support services. They have developed notable client relationships with the firms that develop the solutions, that Nasim implements and installs for clients.

Brand development is not currently a major priority for Nasim.

‘We believe a brand is more useful when targeting end-users and not necessarily business-to-business sales.’

ii.Recruitment process

Head of Corporate Strategy (HOCS)

Staff recruitment process is basically centered on staff that can maintain installation services.

Head of Human Resources (HOHR)

Nasim consulting basically recruits for middle management positions, highly skilled positions and also support staff positions. The basic recruitment strategy in Nasim is to fill the basic need. The basic need is for support staff that can maintain client installations. These staffs usually have the knowledge of the installation being supported, but do not necessarily have any higher IT skills.

Most highly skilled staffs are employed on temporary contractual basis. Installation services that come in for highly skilled staff do not come in as often as services for support staff.

‘Therefore it would be unfeasible to hire full-time highly skilled staff where the frequency of finding work for them is not yet secured and where their pay is very high.’

When new contracts come in, vacancies are put out to agencies so they could find candidates that meet the skills requirement required for the installation. This strategy is deemed to be effective and saves the company from monthly salaries, benefit packages and training and development.

Once projects are done, temporary contracts are not renewed if there are no further pending contracts.

There is currently no laid out career path where junior staff can easily advance in their career. All staffs (temp and permanent) are encouraged to apply, in the advent that a senior or middle management role does become available. Competent applications are given the opportunity of an interview. This process has been utilized in recruiting a number of middle managers.

iii.Employee relationship and motivation

Head of Human Resources (HOHR)

High turnovers of employees are witnessed in the firm. Most of these staff are recruited on temporary basis and are not needed after a project has been completed. Permanent roles do not witness that much turnover. However, a number of middle managers and support staff have left to work for competitors.

There is currently no profit sharing scheme available to middle managers, highly skilled staff or support staff. The only income gotten from the organization is yearly income, and commission paid to sales staff.

A profit sharing scheme, initially proposed as a tool required to increase motivation and reduce staff turnover, was dismissed.

Focus Group, Support Staff (FGSS)

Most support staffs are working in the organization because of scarcity of other jobs in the market.

‘The truth is, given the current job climate; we are either working here in support, or out there looking for a job. I am happy I have a job.’

Focus Group, Highly Skilled Staff (FGHS)

Most highly skilled staffs see the job as a stepping-stone. Focus is not on job satisfaction, but on getting the job done, getting paid and finding the next job.

Temporary work in a small IT consultancy is not seen as a career move. There is no perceived career path. The aim is usually to complete the job and look for further opportunities.

‘…Due to the fact that I have a broad range of IT skills, I believe I would be wasting my potential by staying in a small firm like this. I would be more suited to a firm that has a long portfolio of clients which everyday challenges. I would be more suited in an organization where there is a larger work to do, and immediate resources with which to perform these tasks.’ – Participant 1.

The lack of organizational, marketing and sales strategy is cited as a reason why some highly skilled staff would not be interested in taking up full time offer. The lack of an explicit career path is also cited as a reason why highly skilled staff would not be interested in working in Nasim for full time roles.

iv.Employee training and development

Head of Human Resources (HOHR)

There is no official policy on the training and development of staff. Support staff once recruited, are trained further based on the specificity of the infrastructure being supported. Highly skilled staffs on temp work are usually given the adequate support they require to complete their projects.

‘All temp staff are primarily recruited based on their suitability for the role, therefore there is hardly ever any need to re-train them.’

Focus Group, Support Staff (FGSS)

Support work provides little opportunity for promotion. Staff turnover within the organization, does not permit them to stay long enough to be considered for promotion. Permanent vacancies advertised are often given off to applicants from bigger firms.

Nasim is a small organization and the only service being offered is installation and support; therefore opportunity for progression within, is low. In order to progress, most participants believe that a move would have to be made , out of the organization, into a larger firm.

Support staffs do not believe they are being provided with adequate training and development. The only training being offered is how to support client installations and how to act in client sites.

Participant 4 – ‘I once asked human resources for a sponsorship to study my CCNA examination and it was declined. They said that I had not worked with the organization for up to a year and that the company does not currently have available resources to sponsor individual education forays’

v.Service quality

Head of Client Operations (HOCO)

‘Officially, I would state that service quality represents a core of our marketing strategy and that we intend to provide the best of services to all our clients. But realistically, I would confess that our service quality is archaic.’

‘Our main point of contact with these clients is through skilled temporary staff who want to get through with the job so they can start looking for another job and also through partially qualified support staff who are under trained and unmotivated. Therefore how exactly is service quality supposed to progress?’

There is currently budget for service quality. The only related budget is for the training of support staff. This training includes sessions where the staffs are advised on ways to deal with clients and adhere to client rules when at client sites.

‘They focus on retaining customers and selling support services but they do not teach the support staff how to cross-sell other installation services, neither are these support staffs motivated with any form of incentives incase they make a sale. Therefore what is the motivation to deliver service quality?’

The clients demand a high level of service. They expect to get value for money if they are to be committed to a one-year support contract. Support staffs are not adequately trained in the delivery of premium customer service to clients.


4. DISCUSSION

a.Research Aim

The aim of this study was initially to ascertain what resource based or market based factors were responsible for the poor performance in Nasim Consulting. The introduction and literature review pointed towards the fact that the performance may be as a result of the customer retention strategies the company was currently focusing on.

The following research question was therefore drafted, in order to ascertain the nature of this issue: ‘what resource based or market based factors are responsible for the success, or lack thereof, of business strategies in small IT consultancy firms. How can these factors be exploited in the development of sustainable competitive strategies?’

The main factors, based on the literature review, were therefore researched. These were the core factors on which the questions asked in the semi-structured and focus group interviews were based. The findings of the interviews, and also its relationship to existing theories would therefore be discussed in the following subchapters. A deductive analytical approach, as stated in the methodology chapter, would be utilized in the analysis. Analyzing the findings, based on their context in the literature review, would do this. The resource based and market based factors would first be analyzed, in a coherent way, and then possible ways in which Nasim could exploit these factors would be discussed afterwards.

b. Research discussion

i.Corporate strategy

Nasim’s low cost focus strategy has been described by the HOCS, as Nasim’s way of curbing the issue of customer retention. The intention is to target all available customers with low cost services. Their initial belief was that with low cost installation and support services, they would be able to attract a number of companies that are in dire need of IT solutions at affordable prices. However this strategy does not seem to be paying off, as they are not acquiring that many new customers and the customers they have served, are not repeating business as Nasim expects them to. This puts into question, the reliability of Nasim’s low cost focus strategy as a method of securing customers in IT consulting.

Porter (1996) asserts that for a company intending to be a low cost provider, the cost of each activity should be kept to a minimum, while still maintaining the threshold features that are required to compete effectively in the market. Miller and Dess (1993) also argue that in order to achieve cost leadership, firms must have achieved a relatively high market share, which requires capital investments in product R&D, manufacturing as well as aggressive marketing. Nasim does not currently have a large market share; neither does it have the resources to invest in product R&D or in aggressive marketing.

The competitive scope of the low cost focus strategy requires that any company pursuing such a strategy should focus on selected segments, group of segments, particular buyer groups or geographic market in the industry, by tailoring its strategy to serve them, thereby excluding others. Porter (2008) further asserts that a company can achieve and sustain focus strategies if it is able to develop a highly specialized expertise in satisfying a clearly defined group of customers. However, these arguments may not hold with respect to the current economic climate. Nasim’s high-end indirect competitors may be forced into price rivalry and therefore start competing on the same cost level as Nasim. Because of the economies of scale that these firms possess, they would be able to better service Nasim’s customers. Stonehouse et al, (2000) therefore argues that the low cost focus strategy does not lead to competitive advantage unless there is some form of differentiation.

A Possible strategy, which could be beneficial in retaining customers in such an industry, as discussed by the HOCS and FGHS, is outsourcing. Outsourcing involves multi-year contracts in which a large company outsources some or its entire IT department to an IT services firm, either locally or internationally. Outsourcing contracts involves the outsourced being reputable for delivering premium services; it also involves the outsourced acquiring all the required resources in order to emulate the services of the outsourcer.

Collis and Montgomery (2008) assert that good corporate strategy requires the continual assessment of the company’s scope, continuously evaluating how the company’s valuable resources may be upgraded or leveraged across changing markets. However the inability to upgrade or leverage core resources are two reasons why growth and diversification strategies are usually poor or unsuccessful in small companies.

Nasim may not be able to acquire the relevant resources, neither would it be able to leverage current resources. These limitations are due to its low-cost focus strategy, which is incompatible with the outsourcing industry. A change of generic strategy to achieve a ‘value focus’ status would require Nasim to employ competent staff, purchase required infrastructure and become a larger company. McGahan (2006) asserts that a merger with a similar firm, or acquisition by a larger firm, may be the most appropriate approach for a small firm trying to enter a larger market, provided it does not already have the resources to compete effectively in that market.

A value focus strategy would also be beneficial in the acquisition of new customers and retention of previous customers. By building value, through an effective marketing strategy and also through the acquisition of firm-owned resources, new customers would be attracted to an already established brand with an indigenous IT solution. Old customers would have a huge switching cost because the IT solution being provided to them is indigenous to Nasim consulting alone.

This customer driven strategy would therefore be concerned with meeting the needs of the Nasim’s actual and potential customers, and could result in delivering its major objectives, be it an increased customer base or profit (Hooley et al, 2004). Sustainable competitive advantage and long term profits could therefore only be achieved by attracting and retaining the right kind of customers (Doyle, 1997)

ii.Marketing strategy

A successful marketing strategy, as illustrated by Doyle (1997), involves the selection and analysis of a profitable and sustainable market segment, the development of an appropriate marketing mix, marketing the right brand and retaining these customers through an effective use company resources. This marketing strategy should be built on an understanding of the changing organizational environment, and how each industrial force impacts value creation (Porter, 2008)

Nasim’s marketing strategy, as expressed by the HOCS and HOS, is based on the assumption that the major issue facing Nasim is customer retention. This explains why most of their marketing budget is currently being diverted towards the alienation of that perceived problem.

Nasim’s marketing strategy is not specifically targeted at any one market. They have a broad based segmentation that is designed to attract all those who wish to patronize Nasim. Levitt (2008) postulates that the importance of defining customers lies in developing strategies that target them correctly and in ensuring that competitors have been properly identified. An inability to accurately define this segment would lead to competitors stealing customers without the company realizing it until its too late. Therefore, in order to attract customers, Nasim needs to understand the market segment in which they intend to compete, and then modify their marketing strategy and competitive positioning to fully exploit the market opportunity (Weinclaw, 2008)

The inability to identify a customer segment and target it specifically can explain why Nasim has problems with the retention of old customers and also with the acquisition of new customers. They aim to please a broad market segment, but end up with just a few customers who are with them because of the low cost of their services. Market segmentation and positioning are strategic capabilities that give the organization the ability to identify alternative opportunities in appropriate market segments. Segments where the firm’s core competencies could be most efficiently utilized (McDonald, 2008)

A firm focusing on a particular generic strategy should know who their intended customer is (Porter, 2008). Therefore Nasim, intending to focus on its low cost strategy, should have a customer segment in mind. If they intend to concentrate on low cost services, then they should identify the forms of businesses that may prefer low cost services, acquire the necessarily resources to specifically target them, then build a brand image around installation and support of those services.

iii.Customer retention

Hoffman (2006) asserts that firms engaged in customer retention work to satisfy customers with the intent of developing long-term relationships. Firms that mainly provide services to clients, are characterized by intense rivalry and minimal differentiation amongst competitors, therefore customer retention should be a leading strategy (Vavra, 1992). Dawkins and Reichheld (1990) also assert that increasing retention rate by 5% could increase the net present value of customers by up to 85%. However for the effectiveness of this strategy to be concentrated on, it must first be understood whether the customers are likely to be profitable return customers. Ahmed and Buttle (2001) assert that customer retention should be a very important business goal, as it has the potential for delivering substantial profits to firms in the long term. However, the choice of adapting a customer retention strategy is highly based on the product/service life cycle and customer’s buying behavior (Hooley et al, 2004).

The installation and support services industry has a low life cycle of one year for support services, and may not necessarily profit that much from customer retention, especially when the firm focuses on a low-cost focus strategy without any form of differentiation. The lack of viable efforts to attract new customers may result in Nasim losing income every time a customer’s contract terminates.

The HOCO believes that instead of focusing on customers who do not necessarily wish to be retained, a more suitable approach would be to focus on the acquisition of new customers. This notion has also been supported by the HOS. Berry and Parasuraman, (1991) support this notion, by arguing that the role of any firm’s marketing activities in the private sector, is to make profit, irrespective of how the sales are made. Therefore, an effective organization is one that is able to retain its customers and also acquire new customers. Fornell and Wernerfelt (1987) therefore assert that firms should emphasize their marketing resources on the retention of its most profitable customers, and also on the acquisition of new customers.

If Nasim generates 80% of its income from support services, which is not that profitable a service, then it illustrates that they may not necessarily be running a profitable business. More profitability lies in installation services that could provide increased cash flow and potential for growth. McDaniel (2006) therefore suggests that in order to initiate a CRM cycle, the company must learn who the customers are and where they are located. This information must be understood and used in the formulation of marketing strategies.

iv.Acquisition of firm owned resources

Collis and Montgomery (2008) state that a firm seeking to develop a sustainable competitive advantage could do so by investing in new resources, upgrading existing firm resources or leveraging existing resources in order to capture new markets.

Nasim, according to the HOCS, claims that apart from the long standing alliances with large IT companies that provide infrastructure, the firm does not currently own any indigenous firm based resources. A number of theorists (Prahalad and Hamel, 1994; Collis and Montgomery, 2008), suggest that for a firm to be able to compete effectively in any said market, the resources, upon which it intends to compete must be inimitable, durable, lack any direct threatening substitutes, have competitive superiority, have innovative capability, build on existing strengths of the organization and finally, it must be owned by the company and not the buyers, suppliers, distributors or any one particular employee.

The inability of Nasim to acquire indigenous firm owned resources, increases the threat posed by suppliers in that industry. McKiernan (2006) postulates that the supplier strength of an industry determines to a large extent the price and quality of the end product. It also defines the level at which a firm can differentiate its products from that of competitors (McGahan, 2000). Collis and Montgomery (2008) state that one of the main conditions for firms seeking to sustain competitive advantage in their industries is to have full ownership over their core competence. This would ensure that they maintain their competitive stance in the market. It also makes it harder for them to lose such a core competence through the transfer of relevant assets.

A major disadvantage is that if Nasim is totally dependent on its suppliers to provide IT infrastructure to install for clients, then this increases the switching cost for Nasim, as they cannot easily shift IT suppliers, however it reduces the shifting cost significantly for the buyers. The buyers can go to any other retailer offering a better price or deal and get the same infrastructure, as Nasim does not own it. And since the only reason for conducting business with Nasim initially, was mostly based on price, Nasim’s clients do not stand to lose anything by shifting.

This assumption has been expatiated by Collis and Montgomery (2008) who argued that the presence of an overwhelming buyer power in an industry could shift the value creation considerable towards the consumers and away from the industry players. Porter (2008) further asserts that the buyers could force down prices, demand better quality of products or services and could generally play industry participants against each other, all at the expense of industry profitability.

Firms should therefore aim to create value by designing corporate strategies in a way that it attracts and keeps these customers (McKiernan, 2006), thereby ensuring their brand loyalty and establishing a huge switching cost between the firm and its competitors (Porter, 2008).

The intensity of competitive rivalry in that industry could be calculated by ascertaining whether Nasim’s direct competitors are equally adapting a low cost strategy, investing in increasing their capacity (low cost differentiation) or increasing their value through branding and marketing (value differentiation). This would help quantify Nasim’s competitive stance, to see whether they could compete effectively by either increasing capacity or increasing value.

A company adopting a low-cost strategy should be able to protect its positioning with an effective low cost advantage (McKiernan, 2006). Low cost advantages are usually in the form of economies of scale in which the company can produce large amounts of products or services at reduced cost (McGahan, 2000). This advantage is essential in industries whereby there is intense price rivalry and the key factor for success is on being the provider of the cheapest services.

If Nasim were to only compete based on price without having a low cost advantage, then that reduces the switching cost for buyers and increases the intensive rivalry with its competitors. Bigger companies with more pronounced economy of scale, may attract Nasim’s customers because of a reputable brand, or an even lower cost.

Branding, as argued by Kotler (1997), is a very effective marketing tool, that could shift the competitive pressure of a company’s service away from price. The importance of branding in a firm’s marketing strategy is important in services that are indistinguishable from those of competitors (Zeithaml, 1988). Branding thus serves as the only factor which could help distinguish between services in a market, as the client would usually makes purchase decisions based on what they perceive about one product in relation to another (Kotler and Keller, 2009).

The lack of a recognizable brand image, though stated by the HOCS as not being a major priority, poses the greatest risk to Nasim’s future. The inability to compete on other factors apart from price is a huge threat that needs to be curbed before Nasim loses all its customers to competitors.

v.Sales

All results gathered with regards to the sales effort of the organization coheres with the fact that the company is currently neglecting efforts to acquire new customers, just so they could retain previous customers.

This strategy may be the reason why the sales of new installations has dropped to 60%, and 80% of turnover is as a result of support services being offered to previous clients. The 60% drop in sales could also be explained by Nasim’s mediocre marketing strategy in which most of the sales is primarily done through the Internet. Do large firms who intend to have installations go to the Internet to find low cost small IT firms to install for themOr do they seek firms with reputable dealings who can offer premium services at a moderate price?

This strategy may have worked out well in the past, maybe before the economic downturn. However, Ansoff (1984) warns that firms learning from successful models of its past could be a major obstacle in adapting to the changing organizational environment. Piercy (1997) also illustrates that detrimental effects could arise when firms continuously revisit outdated strategies as a method of developing responses to changing market situations. These arguments help emphasize the need for companies to respond to market change by continuously revising its strategies, thereby adopting a proactive approach to market opportunities and threats while still practicing reactive operational approaches to inevitable changes in its macro-environment and industry (Lynch, 2009).

Though Nasim specifically aims to maintain its customers, a marketing strategy, as defined earlier, with a defined positioning, brand image and dedicated sales staff would be sufficient enough to acquire new customers and also retain previous customers. The main point of the HOC, which was that clients only need IT infrastructure when they have the budget, or when a dire need has been aroused, should not be neglected. It may not be profitable to keep trying to retain customers who do not need the services being provided. The HOS is confident that with appropriate funding, a sales and marketing campaign could be devised. A campaign that focuses on the identification of Nasim’s true customers, retention of profitable customers, and also the development of a reputable brand.

A viable future approach may be that instead of focusing on support services for previous customers, efforts could be made to provide installation services to new customers.

vi.Service quality

This campaign, if formulated, should also take into account the service quality currently being delivered to clients. A reason why a low cost strategy may be unattractive to firms may be because of the quality of service received. Findings from the interview with the HOCO, illustrate that Nasim’s service quality is poor. There is a GAP between the customer’s service expectation and Nasim’s service delivery. This, according to Zeithaml et al, (2006) represents a GAP 2, in which management may be aware of critical customer expectations, however a variety of factors such as resource constraints, market conditions, management indifferent may prevent them from setting specifications or training relevant staff to meet those recommendations.

The main point of service delivery is through support staffs that have not been trained to deliver professional customer service to high-end firms. The lack of an appropriate level of service quality is unacceptable for most firms who outsource their IT infrastructure and also firms who bring in consultants to perform work on their systems. This could also be deemed a contributing factor to Nasim’s lackluster customer retention effort.

Another reason for the poor service quality lies in Nasim overpromising the clients of the service they can offer, especially when they do not have the resources to perform these tasks effectively. Zeithaml et al (2006) asserts that a GAP 4 is a situation whereby there is a difference between service quality promised, and service delivered. The inability of Nasim to deliver on perceived service expectations and also service promised, may also be attributed to its low cost focus strategy. This generic strategy, and the lack of a viable supporting differentiation, puts Nasim as a disadvantage when trying to acquire the resources required to deliver on promised quality.

vii.Recruitment process

Maund (2001) defines recruitment as a process of finding and employing individuals to carry out tasks that need to be done within the organization. Nasim’s recruitment strategy, as argued in prior subchapters, is aimed at satisfying its corporate strategy. So its recruitment strategy of hiring temporary highly skilled staff and permanent, low skilled support staff does correlate with its corporate strategy.

The recruitment of highly skilled staff might be considered by some to be an acquisition of firm owned resources. These staff could lend to the firm’s credibility and also strengthen their knowledge base. However, since they are only recruited on a temporary basis, then they are in no way owned by the organization.

Nasim’s strategy on employee recruitment does seem to be effective as it saves them a lot of cost. Hill (2008) postulates that an effective organization uses a strategic approach to recruitment and development of staff. The recruitment strategy is often linked to the overall corporate strategy in order to utilize staff as a sustained source of growth and competitive advantage. Fombrun and Devanna (1984) argue that organizations would find it difficult to implement strategy if they were not intertwined with an appropriate HRM policy.

However, Nasim’s strategy of employing staff mostly on temporary contracts has the side effect of de-motivating staff. Most of the FGSS claim to be at the job, because of the economy, in which they cannot get better jobs. The FGHS, also expatiated this stating explicitly that they would not like to take up full time offers, even if they were given the opportunity to.

A primary step, which the organization could use in the attainment of its organization goals, may be to start recruiting permanent highly skilled staff. This staffs are expensive, and therefore risky to the company’s cash flow. However, if this effort was combined with the marketing effort of targeting a niche market with specific indigenous services, then it could assist in enhancing Nasim’s reputation and eligibility to customers.

viii.Employee relationship and motivation

Armstrong (1999) defines employee relationships, as those relationships that exist between employers and employees in the work place. Maund (2001) further asserts that relationships between employers and employees are very crucial for organizations to be successful. Management should treat issues such as sensitivity and motivation in order to gain the loyalty and trust of employees (Armstrong, 1999)

According to the HOHR, there is low motivation amongst staff in Nasim; the lack of an organizational career path or recruitment strategy, like the other big IT consulting companies, may be possible reasons.

The high staff turnover could be easily related to the temporary contracts that most of incoming staffs sign up to. However Nasim has been unable to retain competent staff neither has it made any explicit effort to retain managers who leave to competitors. Is Nasim therefore focusing on retaining its customers, without putting that much effort on retaining its own staffIn organizations, especially start-ups and relatively small organizations, motivation of staff, though ignored in most cases, is important and represents the lifeline of the organization (Palmer, 2000); Companies usually ignore motivation, until one or more corporate functions are affected. Orlando, (2002) states that motivation is a seminal element of peak performance and improving both internal and external facts of motivation is an undeniably prerequisite for success.

The lack of appropriate motivational schemes within Nasim could also be a reason why this organization has failed to retain important staff. Palmer (2000) defines employee relationship as a relationship based on an implicit reciprocal agreement in which employees provide physical and labour in exchange for rewards supplied by employers.

According to Kessler and Undy, (1996), building a trustworthy relationship with the employees is important in achieving the objective of an organization and sustaining growth. Inexistent reward schemes in Nasim have resulted in a situation whereby most staffs working at Nasim, are only there because they cannot find a better job yet. This was uncovered with the FGSS. The FGHS also illustrated that they are only interested in working for Nasim because of the installation services they are providing and the added experience it gives them.

Most of the FGHS even professed to not being interested in full time job offers at Nasim if they were given the opportunity. That not only demonstrates how de-motivated these people are, it also expresses their attitude to Nasim as a business entity.

Motivation, as expressed by Maslow (1954), is therefore a driving force in every front of life, and it pretty much decides an employee’s approach to any given task. The level of an employee’s motivation therefore has a paramount impact on the organization (Maund, 2001). Likert (1967) therefore states that for an organization to achieve maximum profitability, they must make optimum use of their human assets. A strategy that Nasim has failed to develop and exploit.

ix.Employee training and development

Employee development and training has been deemed as an important factor that could facilitate the success of any organization (Armstrong, 1999). Accommodating this process of human asset development is essential, as it would aid organizations in getting the best of out their staff. Nasim does not currently offer any sort of training and development activities for staff, except those that are directly related to any project at hand. Therefore the likelihood of staff within Nasim being indebted to the company, after the company has paid for their learning, is therefore inexistent.

Maund (2001) also postulates that changing environments demand that employees within organizations be up to data on the skills and knowledge required to compete effectively in their industry. It is therefore important for management to provide adequate training programs and education to cater for these developments. The inability of Nasim to support, train and retain staff; also coheres with their inability to acquire resources that are indigenous to the firm alone. Therefore the threat of buyers, suppliers and competitive rivalry is therefore very high for Nasim.


5. CONCLUSION

In summary, all these factors do have a huge influence on the performance at Nasim. The most important being its low cost focus strategy. Relevant theories dictate that any firm pursuing a low-cost strategy should do so if it has an element of differentiation or if it has a low cost advantage. Both of which are inexistent at Nasim. Possible ways in which Nasim could exploit this shortcoming could by through the acquisition of firm based resources, which have the ability to shift its positioning into a narrow range, value strategy.

Nasim’s marketing strategy is based solely on customer retention. This marketing strategy, though understandable, is aiming for the right thing in the wrong market. Customer retention is not as profitable as customer acquisition in the IT consulting industry. Consulting companies get paid more for the installation of new services, than for single year support contracts. Therefore focusing solely on customer retention in this industry puts Nasim at risk of losing its potential customers to competitors. If Nasim therefore has no resources, focuses on customer retention of a few customers, competes on just price and only employs highly skilled staff for temporary jobs, then what is their competitive advantage?

Ways in which Nasim could effectively target a new customer segment and also aim to retain these customers are through effective brand marketing, acquisition of indigenous resources, improved service quality, a defined marketing strategy, and an improved human resource policy.

The motivation of staff within Nasim is perceived to be low. This was found out during the semi-structured and focus group interviews. The low motivation level is caused primarily by the lack of a viable career path, Nasim’s inability to provide training and development, the generic strategy being pursued by Nasim, and the firm’s recruitment strategy that focuses solely on temporary staff. This low motivation level results in the delivery of inferior service quality to customers, the lack of willingness for highly skilled staff to join the organization and also, the loss of important staff to competitors. Competitors that could provide all the services that Nasim currently fails to.

However, focusing on all these shortcomings, may be impossible as they require the investments of a huge amount of time and resources, therefore the following chapter would outline the most feasible and realistic recommendations, based on Nasim’s positioning, which could be exploited in the development of a sustainable competitive advantage within the industry.


6. RECOMMENDATIONS

Based on the discussions in the preceding chapter, the following recommendations have therefore been postulated for Nasim as a business entity and to Nasim, with reference to market research.

These recommendations would build up on the strength of the discussion in the prior chapter, and therefore aim to utilize the important factors, in the conceptualization of a sustainable competitive strategy for Nasim Consulting.

FINDINGS FROM INTERVIEWS

LITERATURE REVIEW EXTRACT

DEDUCTIONS

1

Nasim is currently adopting a low-cost focus strategy.

A company can achieve and sustain a focus strategy if it can develop a specialized expertise in satisfying a clearly defined group of customers (Porter, 2008)

A low cost focus strategy is not a viable strategy, given the intense rivalry and buying power in the industry. The creation of value may be a more effective approach.

2

Corporate strategy and marketing strategy currently emphasize customer retention

The choice of adopting a customer retention strategy is highly based on the product/service life cycle and customer’s buying behavior (Hooley et al, 2004)

There is more opportunity in acquisition of new customers, than there is in customer retention.

3

The only basis of competition and customer attraction is price

Firms should therefore aim to create value by designing corporate strategies in a way that it attracts and keeps these customers (McKiernan, 2006), thereby ensuring their brand loyalty and establishing a huge switching cost between the firm and its competitors (Porter, 2008).

Competing solely on price, in such an industry poses a great risk. Buyers can easily switch to competitors who have a cost advantage.

4

Support services generate 80% of all income. New installation and outsourcing get 10% each

Ansoff (1984) warns that firms learning from successful models of its past could be a major obstacle in adapting to the changing organizational environment. Piercy (1997) also illustrates that detrimental effects could arise when firms continuously revisit outdated strategies as a method of developing responses to changing market situations.

Prior to the economic downturn, there might have been success in the support sector, however the economic crisis showcases the need for the company to spread its market segment.

5

Nasim does not currently own any indigenous resource. IT solutions are owned by suppliers

Collis and Montgomery (2008) state that one of the main conditions for firms seeking to sustain competitive advantage in their industries is to have full ownership over their core competence. This would ensure that they maintain their competitive stance in the market

The acquisition of firm based resources would reduce the supplier strength and also increase switching cost for buyers. Thus increasing Nasim’s competitive stance.

6

Most employees are not motivated. High turnover rate and no clear career path

Orlando, (2002) states that motivation is a seminal element of peak performance. Improving both internal and external facts of motivation is an undeniable prerequisite for success.

There is a need for a change in HRM policy.

7

Brand development is not a priority. Marketing budget is for customer retention

Branding, as argued by Kotler (1997), is a very effective marketing tool, that could shift the competitive pressure of a company’s service away from price. The importance of branding in a firm’s marketing strategy is important in services that are indistinguishable from those of competitors (Zeithaml, 1988)

If Nasim intends to differentiate itself from competitors and make itself more attractive to prospective customers, then efforts should be made to build the brand image of Nasim, just so it communicates to everyone and attracts the desired market segment.

8

Staff trained only for support purposes. No training for staff development.

Employee development and training has been deemed as an important factor that could facilitate the success of any organization (Armstrong, 1999). Accommodating this process of human asset development is essential, as it would aid organizations in getting the best of out their staff

Training of staff is crucial to staff development. It provides motivation and also enhances the knowledge and ability of the staff.

a.NASIM

Based on the literature review, research findings and the deductions in table *. These are my recommendations:

A new campaign, nicknamed Shift (for the purpose of this study), should be set into motion for the attainment of a narrow range value strategy. This entails the definition of a suitable market segment, the positioning and re-alignment of the firm’s resources to fit into that segment, and then the formulation of a marketing strategy to specifically communicate Nasim’s abilities to that market segment.
Once Shift is in motion and a viable customer segment has been identified, all the resources within the organization should be evaluated against the requirements for that industry (ies). Resources that are not needed, or whose specifications do not closely match should be discarded, while new resources could be acquired that could specifically target that segment.
Emphasis should be placed on the acquisition of new customers, in as much as the retention of old customers. This should be done by commissioning dedicated sales and marketing task force, this task force would be part of the Shift campaign, and would be dedicated to the acquisition of new customers.
Once the Shift campaign has identified its customer segment and also set up a sales task force, efforts should be made to develop bespoke services that specifically match the requirements of these customers. Bespoke services would result in the clients being dependent on Nasim, thereby increasing their shifting cost. It would also reduce the threat of suppliers within the industry.
Impetus should be placed on service quality. An effort should be made to train staff on Nasim’s attitude towards customers; this should be communicated to all support staff and highly skilled temporary staff working over at client installation sites.
Brand development should be a corporate priority. Without it, price is the only factor on which Nasim’s services would be judged.
A dedicated HR policy that focuses on employee motivation, reward systems, training and development should be put into action. Its major objective may be to recruit a number of competent highly skilled and support staff that would participate in the Shift campaign.

b. MARKET RESEARCH

Surveys should be carried out with all of Nasim’s staff, this should be done so as to confirm whether the lack of motivation amongst staff is truly common amongst all support staff and high skilled staff. The findings could assist Nasim in drafting human resource procedures to help tackle this issue.
Semi-structured interviews could be carried out with Nasim’s customers, both recent and former. In order to know why the present customers are staying, and why the former ones left. It would also be useful to ascertain the perception of customers to Nasim’s service delivery.
If Nasim intends to concentrate on its Shift campaign, then a survey should be carried out on a probability sample of all businesses in which Nasim could efficiently tailor its resources. A survey of this magnitude would put into account the needs of these customers and how Nasim could specifically target that need.


c.REFERENCES


7. APPENDIX

Categories
Free Essays

Free HR Dissertation: Online Recruitment

EXECUTIVE SUMMARY

The present study was carried out to ascertain the benefits of online recruitment, and ways in which it could be improved, at a leading UK technology firm – with respect to graduate, experienced and executive employees. Review of existing literature pointed out that Innovations in technology have revolutionized recruitment processes. Several theorists also claimed that online recruitment leads to an improved quality and quantity of applications, an enhanced platform for information sharing, more operational effectiveness, cost effectiveness and a lack of boundaries. In order to verify or discredit these assertions, quantitative surveys and semi-structured interviews were carried out on 14 students & graduates, and four members of Google Inc. graduate recruitment team respectively. The results obtained from graduates suggested that they were highly influenced by the corporate brand, presence of the organisation on the web and online job boards. Results from Google Inc.’s recruitment department suggested that they achieved a number of efficiencies such as reduced cost, overhead and faster response rate. They have also generally increased their number of applicants by a six fold since adopting online recruitment. However the quality of candidates received is said to be low compared to the quantity, and the company has difficulties in meeting their diversity and disability quotas. These results suggest that the company is not being effective in leveraging their brand, and other means available to them, in attracting the required quality of candidates. Numerous graduates also chose agency as a preferred form of finding a job, thereby illustrating that traditional methods should not be totally abolished. A synergy between agency, job board, branding, and online recruitment is therefore proposed, as an effective method of meeting quantity and quality employment targets for the organisation.

1. Introduction

An organisation’s human resource has been defined as it is most important and effective asset, in terms of building and sustaining competitive advantage (Singh and Finn, 2003). The recruitment and selection of this very important resource is therefore very crucial in any organisation looking to build organisational competencies through its people.

a.Online Recruitment

Job searches and recruitment had been predominantly done through newspaper postings, word-of-mouth and agency recruitment before the advent of the Internet (Singh and Finn, 2003). Recruiting companies then went through daunting tasks of sorting, filing and choosing through a vast list of paper based job applications, which usually involved a lot of resources in terms of human capital and costs.

However, the penetration of the Internet, and the near 100% adoption of Internet job applications, has seen this trend change drastically. Younger (2007) reports that 100% of all Fortune 500 companies in the US and FTSE 100 companies in the UK utilize the Internet predominantly for their job postings and for receiving applications, as opposed to just one-third of Fortune 500 companies in 1999. This trend has become so widespread that a vast majority of job applicants (96%) in a study conducted by the Society for Human Resource Management in 2006 reported using the Internet for job search and applications (Younger, 2007). Some companies are also known to utilize Internet virtual worlds, such as Second Life, in holding recruitment fairs, and having career session with prospective students (Riley, 2007). The archaic use of newspaper publishing and other sources has diminished greatly, as the UK newspaper industry has suffered a 20% year on year fall in ad revenue, in recent years (Guardian, 2009).

b.Organisation under study

Google Inc. is one of the biggest technology firm in the UK, with a global presence in several countries and employees exceeding 23,331, possesses a fully functional online recruitment website (http://www.google.com/intl/en/jobs/index.html). The website provides information regarding available vacancies, and steps that prospective applicants should take in order to fill an application. It also provides relevant information about the organization and the vacancy position.

Google Inc.’s online recruitment procedure (see appendix) has undergone major changes when compared to traditional recruitment process it practised, which only required candidates to send in their application forms when the firm makes a visit to the university campus or through referral system. The university students are then invited to take first round of technical tests if their CVs and Cover letters were deemed suitable. Candidates living miles away from the test centre would have their accommodation and transportation catered for, only to partake in a 1-hour technical test, where their likelihood of success is uncertain (Times Online, 2005). Now with the advent of technology, there’s the possibility that these processes may have been made more efficient and effective.

c.Research Objective

The research objective is therefore to ascertain the benefits – when related to Google Inc. – of adopting a wholly Internet centred focus to candidate recruitment (graduate or experienced hires). This research would aim to ascertain the improved efficiencies and effectiveness that Google has gained through the adoption of an Internet based approach to recruitment.

The following research question would be expatiated further in the literature review chapter, after relevant literatures have been reviewed. This research topic has been chosen because of the researcher’s previous experience with online recruitment. Google Inc. was chosen because of the researcher’s relationship with a member of the firm’s recruitment team. It would therefore reduce barriers associated with gaining access to the organization for primary interviews and secondary information.

As described further in the Methodology chapter, this research would be based on a quantitative study with students and graduates; and semi-structured interviews with members of Google Inc.’s graduate recruitment team. Analysis of the existing literature would be carried out in Chapter 2, while the research methodology, results and ensuing discussion would be outlined in Chapters 3 – 5 respectively. Chapter 6 concludes.


2. Literature Review

Rynes (1991, p 429) defines recruitment in organizations as “all practices and decisions that affect either the number or types of individuals who are willing to apply for or to accept a given vacancy”. It includes organizational actions carried out with the intent of identifying and attracting prospective employees (Breaugh and Starke, 2000). Attracting high quality employees is a source of true competitive advantage, especially in periods of fierce competition (Birgelen et al, 2008). Recruitment is therefore regarded as an important constituent of Human Resources, as its main function is to attract and grow human capital – an important resource, within the organization (Barber, 1998).

Shortages in the labour market, and difficulties in finding the right talent, especially in technological and knowledge based organizations, have led to a more competitive recruitment industry in recent years (HRL, 2006; Parry and Wilson, 2006). The emphasis for HR professionals is now on attracting competent talent that have specialties in important skills (Jones et al, 2002), as research has shown that recruitment constitutes the second most important priority for HR (Parry and Tyson, 2008).

The increasing priority being attributed to recruitment has also been corroborated by a research report by CIPD (2009) reporting that 84% of all organizations experience difficulties in recruitment. Recruitment techniques could therefore be facilitated further through an efficient application of technologies, such as online recruitment (Parry and Tyson, 2008)

a.Recruitment, HR and Technology

Technology utilization in HRM has grown at an exponential rate in recent years, as a survey by CIPD (2009) showed that 77% of all organizations adopt efficient HR practices through Information System Technologies. Internet technology is increasingly being used in sophisticated functions such as talent recruitment, training and development as opposed to basic functions such as payroll, benefits or absent management (Martinsons, 1994). HRL (2006) also states that technology plays an important role in the ‘growing sophistication and effectiveness of talent attraction and management.’

Traditional forms of recruitment, which had been through internal labour markets, world of mouth, newspaper adverts and agencies (Ford et al, 1986) has been modernized through the adoption of the Internet, as organizations are increasingly reviewing or changing their perspectives on talent attraction and selection (Othman and Musa, 2006). The Internet has been acclaimed as the future of talent attraction and selection in coming years, and is increasingly becoming a preferred method in organizations (Parry, 2009). This adoption has led to a consistent decline in newspaper job adverts in recent years (HRL, 2006).

However, these technological improvements though compelling, do not necessarily warrant a complete abolishment of traditional recruitment procedures. Though technology would continue to be an important tool in the recruitment process, Younger (2007) asserts that online recruitment should be regarded as one of the tools available to meet the organization’s goals of talent attraction. HRL (2006) therefore recommends a blended approach, in which both internal and external recruitment is utilized. They also advocate that technology should constitute a platform, rather than a process driver, thereby confirming Younger’s views.

b.Traditional recruitment methods

Though technology may constitute an increasing proportion of recruitment method in recent years, it was never the predominant method in which employees were usually hired. The most common traditional recruitment methods – based on existing theories (Harris et al, 2003; Van Rooy et al, 2003; and Othman and Musa, 2006) – has been outlined in a cognitive diagram displayed in figure 1. Existing literatures on traditional recruitment methods are discussed in appendix.

c.Online Recruitment

Recruitment over the Internet first started between 1990 and 2000, and was regarded then as a revolution in recruitment due to the enormous benefits it presented to employers and prospective job applications (Boydell, 2002). It is no surprise then that its use has grown substantially in recent years, fuelled mainly by a ‘headlong rush’ by large organizations to utilize technology and adopt competitive practices in their recruitment processes (Anderson, 2003). This has also been facilitated by new forms of media and innovations in psychometric procedures that have significantly changed the recruitment processes within organizations, and made it more engaging and appealing for prospective applications (Highhouse and Hoffman, 2001; Searle, 2004).

The Electronic Recruiting Index of 2000 has shown that there is a dramatic increase in the spending on online recruiting. The research conducted shows that majority of the visitors (71%) to the job sites are not actively interested in changing jobs. Only 15% actually think of changing work while only 10% are actively looking for a job. Of 5% of the visitors are unemployed.

Online recruitment is now a very popular recruitment portal for employees and job seekers in most developed countries (Highhouse et al, 2004). A study of US companies in 2006 showed that 50% of all new hires were from the Internet (Cober and Brown, 2006); with a larger portion being recruited from the company’s own Internet site (Birgelen et al, 2008). Crispin and Mehler (2006) also reported that 20% of external hires were hired through company websites, while 13% were through online job boards. CIPD (2009) also reported that 67% of UK companies used online recruitment; thus confirming earlier views regarding the growth prospects of the Internet as an important recruitment tool (Parry and Tyson, 2009). Recruitment websites, in the forms of job boards, corporate websites, and agency websites are increasing in numbers, while expenditures on the Internet recruiting totalled $7 billion in 2005 and are also forecasted to increase continuously in coming years (Birgelen et al, 2008).

The main drivers facilitating this growth has been the need for organizations to streamline and automate recruitment processes in order to make them more efficient, in such a way that applicant details were entered by themselves, and communications processes are sped up (Parry et al, 2007). Younger (2007) also reports that innovative recruitment technologies such as online numerical, verbal, logical or psychometric tests could be administered immediately to applicants over the Internet, and results could be derived almost instantaneously; thereby removing previously daunting tasks of coding answers and marking tests scripts. The soaring growth of recruitment job boards and various websites that offer a variety of functions to job seekers and employers, has also facilitated the continued growth in this field (Searle, 2004)

The diagram in figure 2, is also based on existing theories (Searle, 2004; Othman and Musa, 2006; Parry et al, 2007), and outlines the online recruitment procedure for job applications seeking to apply for jobs through online methods, as opposed to traditional methods (Figure 1).

d.Online Recruitment Success Factors

The following factors define the necessary steps that need to be taken for organizations seeking to recruit quality candidates. They determine how an online recruitment campaign can be effective.

i.Web Appearance

An organization’s career website is described by Birgelen et al (2008) as “an important precursor to organizational attraction”. First impressions formed on interaction with career websites have the potential to shape an individual’s attitude towards the organization, and their choice to apply for a job vacancy (Zusman and Landis, 2002).

Cober et al (2004) found that a prospective employee’s decision to apply for a job position is influenced indirectly by their overall view regarding the ease of use, view and information relevancy of the corporate careers website. Searle (2004) also asserts that the website bandwidth speed, its user friendliness and ease of use, have an impact on applicants’ perception, especially those who have limited Internet experience. A survey carried out by Williams (2008) also found that 50% of employees who partook stated that they believed that improving their corporate websites and using job boards were successful ways of increasing the number of job applications and diversity within organizations. Parry and Tyson (2008) therefore concludes based on interview data, that functionalities of corporate websites could be improved in such a way that limitations are surmounted and the Internet becomes a more successful medium for attracting candidates across all industry sectors and demographics.

However, several theorists have refuted the sole importance of corporate websites as a key determinant of the number of job applications received. Birgelen et al (2008) argues that the potential of a corporate website to attract employees seeking job positions is facilitated by the employee’s attraction to the company, and not necessarily by appearance of its website. The reputation, brand and attractiveness of the organization are the main factors that mediate web appearance and job applications. Parry and Tyson (2008) also state that perceived success of corporate websites was related mainly to the size of the organization.

Though the promoting argument does seem valid, it would be safe to conclude the benefits of web appearance as a recruitment attractant are only evident in large organizations that already have a wide known brand and reputation. Smaller companies are at a severe disadvantage with regards to using web appearance as a main success factor when promoting online recruitment

ii.Advertisement and Information availability

Barber (1998) identified that job applicants usually go through two stages when pursuing prospective companies to apply to:

Broad search to identify as many recruiting organizations as possible,
Sorting, selection and research on a short list of potential employers where applications would be made.

The need to drive traffic to a corporate website using effective external advertisement such as job boards, search engine adverts and newspaper clips is therefore essential in communicating a company’s suitable as an organization of choice (Parry and Tyson, 2008). If a company were not readily available through such advertisement portals, it would be highly unlikely that a job applicant would consider sending in applications to such companies (Birgelen et al, 2008). The web therefore plays a huge role in the gathering research on potential employers, and Rozelle and Landis (2002) states that it is perceived as more realistic than other sources for company information. It enables students to make informed decisions about which companies to apply to and how to write their applications (Searle, 2004).

The provision of accurate corporate information, through the most appropriate online medium is advised by Birgelen et al (2008) as an effective way of attracting new employees. Williamson et al (2003) also illustrated that differences in the ways in which recruitment websites orient themselves with regards to availability of information online, influences perception of organizational attractiveness. He further asserts that application decisions and their attraction to organizations are as a result of the amount and quality of information they are able to gather about potential employers, as well as their perception about the organization.

iii.Corporate brand

The brand of an organization is very crucial in attracting the right kind of employee (Wilson, 2008). Potential job employees are usually attracted to a more developed corporate brand, as they believe that an established brand would constitute a more stable and growing organization (Crispin and Mehler, 2006). Big brands also offer better opportunities for job seekers, as opposed to smaller companies (Younger, 2007), which is probably why they have been successful at online recruitment.

Wilson (2008) also asserts that on-going corporate processes that positively impact on the company’s reputation should be communicated in such a way that it has a positive impact on people’s intentions to seek a career in the company. Williamson et al (2003) also states that companies unable to leverage existing brands, or do not possess the relevant reputable brand, usually face recruitment problems, especially in highly competitive sectors. The methods in which brands are being delivered and represented are very crucial in attracting talent globally. Wilson (2008) asserts that a global brand could be leveraged in attracting talent resources in several parts of the world. Inversely, Othman and Musa (2006) also theorises that online recruitment can increase the image of an organization, especially with regards to dedicated recruitment websites. It imposes an image of innovation and flexibility on the organization (Fister, 1999)

However, job applications derived through an effective use of corporate branding, recruitment website and online information do not necessarily impact on the quality of candidates received, just the quantity (Fister, 1999). A study carried out by Williams (2008), illustrated that a majority of companies still believe that the use of employment agencies is still one of the best ways to improve quality of job applicants received. Miller and Weckert (2000) also found that some undergraduates applying for jobs had privacy concerns and were unwillingness to submit personal details.

e. Impact and Effectiveness of online recruitment

i.Better quality candidates

Candidates usually attracted and recruited off the Internet are usually young, educated, computer literate, and have some understanding of the processes and functions of the recruiting company (Ganalaki, 2002). Othman and Musa (2006) also assert that the Internet helps attract better quality candidates as Internet users tend to be more educated and computer literature than non-users.

Younger (2007) states that the evolution of technology in online recruitment has allowed employers to extend their search to the broad network so as to attract potential candidates. This search extension has allowed organizations to broaden the geographic and demographic scope of their search, helping them attract high quality candidates from a variety of sources (Searle, 2004). Elgin and Clapham (2000) also conforms to this by illustrating that the use of online recruitment has demolished predominant geographical, cultural or time constraints that had once narrowed job applications from prospective candidates.

Online recruitment technology also allows companies to filter, deter and weed out unsuitable candidates through the administration of organizational fit tests and application screening, whilst still maintaining a positive view of the firm (Searle, 2004). Thus by extending recruitment advertisement over the web in order to attract the broadest selection of applicants possible, and then removing unsuitable candidates through the use of filters, online recruitment helps the company attract the best quality candidates from the broadest net possible.

Parry (2009) thereby concludes that these benefits are well suited to today’s workplace where diversity is appreciated and proclaimed as a source of competitive advantage, especially in global companies.

ii.Improved platform for information sharing

Another main advantage of online recruitment, as depicted by Birgelen et al (2008) is the nearly infinite space for companies to communicate information about themselves, opportunities and benefits offered to prospective candidates. Websites are a very effective platform for portraying an organization’s achievements. They can also provide information regarding current and future vacancies (Searle, 2004)

Information can also be customised to suit potential new employees, if there preference has already been known. Lin and Stasinskaya (2002) discuss other advantages such as improved accuracy and verifiability of information gathered through Internet sources. Cober et al (2004) also depicted that ease of use and interactivity of corporate websites, and the information contained in those portals, are powerful factors that make online recruitment far better than traditional methods.

Highhouse et al (2004) confirms these arguments by stating that the web provides interactive possibilities for organizations to present candidates with realistic job previews, as this could create positive reactions towards the organization. Information shared through these portals also more valuable in the longer term, as they convey the organization’s value and help shape the psychological contracts of new employees (Searle, 2004)

iii.Efficiency

Rozell and Landis (2002) suggest that recruitment through online channels offers the organization a quick and efficient method of identifying and classifying a virtually unlimited number of job applicants. Younger (2007) also states that the most immediate benefit of online recruitment, as opposed traditional recruitment processes, is the greatly improved degree of recruitment process management being offered. He further explains that every phase of the recruitment process is facilitated by a more streamlined online system. Previous daunting tasks such as coding, sorting, filing and routing application materials are now processed automatically with the use of technology. Parry (2009) confirms these attestations and also adds that the average recruitment cycle is now about a third of what it was before the emergence of Internet recruitment, and that online recruitment offers quick, effective and cost efficient means of accessing potentially suitable workers. It also encourages quicker response and reduces turnaround and communication procedures.

iv.Cost Effectiveness

This improved operational efficiency associated with online recruitment also contributes significantly to its cost effectiveness. Younger (2007) explains that the costs associated with developing and implementing complete corporate recruitment platforms is mostly inconsiderable and often a small fraction of traditional recruitment costs. This is because publishing a company’s vacancies through their own corporate website, and also advertising through job boards, costs so much less than traditional approaches such as the newspaper (Othman and Musa, 2006). This arguments are supported by a CIPD (2009) survey in which 71% of employers claim to adopt online recruitment as a method of reducing recruitments costs, while 60% use it to broaden the candidate pool and 47% use it to reduce recruitment cycles.

The cost savings inherent in online recruitment, are reported to be as high as 90% of traditional recruitment costs (Othman and Musa, 2006) and these cost savings can be achieved in the following areas:

Reduced direct costs associated with newspaper adverts
Abolishment or reduction in job fairs and head-hunter fees
Reducing costs associated with mailing letters to prospective candidates
Reduced workload and overtime required for the HR department.

It also results in time saving and can help achieve faster recruitment cycles (Othman and Musa, 2006). Searle (2004) also reports that the early deterrence of unsuitable applicants represent a significant cost saving, as companies would not need to accommodate or interview candidates who may eventually not pass traditional paper based psychometric tests. Now that these can be done online, only suitable candidates are invited for interviews and catered for.

v.Lack of Boundaries

A study by Parry and Tyson (2008) reports that organizations with a strong brand and geographical presence are better able to attract more applicants through their corporate websites. Also, Ganalaki (2002) states that corporate websites are very good tools for reaching global targets as the Internet does not necessarily have any boundaries.

Though the effectiveness of online recruitment has been widely acclaimed as a crusher to traditional recruitment, it is still unclear as to whether online recruitment can totally wipe out traditional recruitment methods (Rozell and Landis, 2002). Parry and Tyson (2008) report that some organizations are still not willing to fully accept online recruitment, while some are not prepared to discard more traditional methods such as print media and employment agencies. There is also a large portion of UK businesses, especially small and medium scale businesses, who are still yet to adopt online recruitment in any capacity, while there are those who still use a larger portion of traditional recruitment methods (Parry and Wilson, 2009). The following subchapter therefore critically analyses the cons associated with online recruitment, based on existing theories.

f. Limitations of online recruitment

i.Candidates without Internet access

In as much as there are widely acclaimed efficiencies and cost effectiveness that have been attained through the use of online recruitment, several theorists also attest to the fact that it does bring out a few shortfalls. One such shortfall, as demonstrated by Van Rooy et al (2003) is the exclusion of candidates without Internet access, who are now therefore at a competitive disadvantage to their counterparts. This seclusion is also said to have a discriminating impact on certain ethnic or demographic minorities and people who lack access to computers, or do not have the skills necessary to use the Internet (Parry, 2009). Therefore Othman and Musa (2006) assert that organizations need to remember that although the Internet does seem to increase the geographic scope, it reaches still remains limited to a demographic scope.

ii.Candidate filtering

The limitation of online recruitment to particular demographics have also been raised by Younger (2007), who acclaims that the Internet seems to attract a different demographic to those usually recruited using traditional means. Zusman and Landis (2002) further asserts that this limited pool seems to be ‘younger white males, more highly educated, more frequent job changers an already in employment within the sector’. Widespread access to the organization by the general population, and the workforce diversity could therefore be affected (Searle, 2004).

These drawbacks as envisaged by Van Rooy et al (2002) make it difficult for organizations to achieve diversity goals and could pose a potential legal threat. Predominant use of online recruitment could also result in discrimination issues (Flynn, 2000).

iii.Unsuitable Candidates

Several theorists such as Parry and Tyson (2008) have also raised questions regarding the enormous number of applications from unsuitable applicants that online recruitment permits. Younger (2007) illustrates that while some organizations and theorists may fear the growing popularity of online recruitment may exclude candidates who are used to traditional methods, others state that these recruitment methods are not exclusive enough now that anyone can submit an application with just a few clicks. Othman and Musa (2006) also argue that online-based vacancies yield high quantities of applications, but with a low quality fit.

However, Parry (2009) claims that these factors do not necessarily pose that much of a significant limitation as most organizations can manage unsuitable applications and do not necessarily result in decreased efficiency or increased costs. Younger (2007) also asserts that it is a small price to pay for the overall efficiency and cost effectiveness gains that they have realized through online recruitment. In addition, as the use of automated screening processes, such as online tests and organizational fit questionnaires, becomes predominant the negative effect associated with unsuitable applications becomes reduced to an insignificant portion (CIPD, 2009)

iv.Difficulties in recruiting experienced and executive hires

Othman and Musa (2006) also discuss the difficulties faced in recruiting and attracting executive level candidates over the Internet. Whilst some job vacancies are too important to be left in the hands of automated online systems (Parry, 2009), some other executive level applicants just prefer personal contact (Searle, 2004).

Fister (1999) asserts that online recruitment trends to be more useful when looking for junior positions and entry level graduates within organizations, as it is not suitable for recruiting top management (Othman and Musa, 2006) CIPD (2009) also affirms that many organizations still prefer to use traditional recruitment methods, such as agency, head-hunters and newspaper adverts to hire certain types of employees.

v.More effective for known companies

Several theorists (Ganalaki, 2002; Searle, 2004; Othman and Musa, 2006) have also identified another shortfall with regards to online recruitment. They proclaim that online recruitment proves more effective for companies already known, and companies that have an established brand. Establish brands are more successful at attracting applications through online recruitment methods, as they are able to leverage their competencies in such a way that potential candidates are eager to join them (Searle, 2004).

However, Galanaki (2002) argues that the reputation of a company is critical in all recruitment methods, and not just online recruitment, therefore it is not that much of a limitation to online recruitment, but to all companies without an established brand that are seeking qualified candidates.

In conclusion to these limitations, Parry and Tyson (2008) argue that the mixed success that organizations have experienced with regards to online recruitment may be the reason why it has failed to dominate and overthrow traditional recruitment methods as predicted. They also argue that labour constraints may encourage organizations to continue with traditional methods, while also using online recruitment as a supplement.

However, Younger (2007), and Parry (2009) object to limitations associated with ‘candidate filtering’ and ‘candidates without Internet access’, as Internet usage amongst the general public has skyrocketed in recent years, with Internet penetration being a widespread sensation amongst UK residents. Thus making it very likely that the right candidates will connect with their desired companies either through corporate websites or online job boards in order to find desired jobs. The use of traditional methods should however, never be completely abolished (Searle, 2004)

g.Retention and Motivation

Apart from recruitment, retaining and motivating the existing employees are also critical to organisations especially in the field of information systems. Employee retention can be defined as “the effort by an employer to keep desirable workers in order to meet business objectives” (Frank, Finnegan, & Taylor, 2006) .Turnover is usually to consider the “unplanned loss of workers” who decides to leave on their own. In the study by Hiltrop (1999), it is argued that hiring the best employees alone “does not guarantee organisational capability”. It is necessary to hire competent employees and then develop the competencies using a variety of strategies in human resources.

Lack of programmers and analysts at the right time can lead to loss of business for many software firms (Maka & Sockel, 1999). Also, management of employee turnover is critical as many IS projects suffer if the best employees are among the ones who chose to quit the company during the major phases of the project. Thus retaining employees is a significant aspect for a firm to maintain a corporate strategic advantage.

A number of studies have been conducted on the relationship between “job satisfaction and employee turnover” even though this one of the least understood relationships (Spencer, 1986). Some researchers suggest that the two major factors are the alternatives for employees and non-work related influences (March & Simon, 1958), (Price, 1977). Spencer (1986) has concluded that if an organisation provides the employee the options to voice dissatisfaction on their work, there are more chances of them staying with the organisation.

Employee motivation is another issue that is closely linked to employee retention. It is important to ensure employees work towards the goals of the organization. Three major theories are commonly used to explain this: (1) Maslow’s Hierarchy of Needs Theory [36], (2) Herzberg’s Dual Factor Theory [18] and (3) Hackman Oldham’s Job Characteristic Theory [27]. These theories share the concept that the fulfilment of needs is central to motivating employees, with motivators that increase satisfaction needing to be part of the job.”

Tampoe (1993) suggested that the model for motivation is based on the proposal by Peter and Lawler which is given below.

This model suggested that different rewards led to motivated behaviour and the presence of certain instrumental factors led to performance. This performance ultimately led to rewards which satisfied the motivated employees.

Even during 1980s, Peter Drucker predicted that new management styles were necessary to manage the knowledge workers which are quite different from the styles adopted in the manufacturing industry (Tampoe, 1993).

As discussed in the previous sections, recruiting employees through internet has its advantages and disadvantages. The internet indeed is a cost-effective manner to recruit the best employees for any project. The power of the internet can be leveraged effectively to retain and motivate the best employees in an organisation. Apart from corporate sites, other third party websites are becoming significant currently. These act as mediators or “work-force-exchange” and manage the supply and demand for high-profile IT professionals (Baloh & Trkman, 2003). Also, these firms also offer additional resources for candidates such as CV writing, motivational articles etc. which can help the potential employees.

Ferratt et al. (1999) has conducted a detailed research on the methods of retaining employees in the workforce. They have compiled 35 practices of retention of which nearly half were considered quite important. In this flexible work and timing arrangements were considered to be an important factor. Internet plays a significant role in enabling the IS professionals to work from remote locations and manage their work in a flexible manner.

In a research conducted on strategies for motivating employees, 67% of the industries were of the opinion that providing the worker a freedom to plan work was significant.

Other factors have been proposed by researchers which need to be considered while retaining and motivating knowledge workers. These include providing a challenging work, relatively autonomous work culture and instilling in a sense of purpose in the employees. The “challenge of work experience” is indeed one of the most important factors in employee development. This further improves employee loyalty and commitment to the organisation (Steers, 1977). On similar lines, Hiltrop (1995) argue that tasks and activities should be designed which would give a “sense of accomplishment” to highly talented employees and thus they can improve their skills in decision making. All these steps can lead to deeper employee commitment in the firm.

Also sharing gains and using efficient communication tools are other significant factors (Horwitz, Heng, & Quazi, 2003). Development of Internet and other technology has profound implications on motivating and retaining employees. Information and communication technology has provided “a whole range of new possibilities for performing work and structuring organisations”. Access to top management did motivate employees. However, it is seen that having access to cutting-edge technology and internet was seen to motivate the knowledge workers to a great extent.

i.Teleworking

Teleworking is one of the popular ways which has revolutionised the ways in which employees work, especially in IS projects. Johnston & Nolan (2001) has defined teleworking which involves “the use of computers and telecommunications to change the accepted geography of work”. Niles (1998) opines that the concept of tele-working moves “the work to workers instead of moving the workers”.

There are three views to advantages of tele-working as summarised in the research article by Baloh & Trkman(2003) – “individual, organisational and macro-societal”. Tele-working leads to increased productivity from the employees and also decreases the absenteeism in the organisation. This is turn boosts the morale of the employees and there is lesser tendency to search for other jobs. Hence, tele-working helps in retaining employees and thus reducing employee turnover in an organisation. The fluctuation in the employees decreases by 50-80% as a result of introducing tele-working in organisations (Dash, 1999).

ii.The Virtual Organisation

The power of internet and ICT helps to bring together people with common interests for short term or long term projects. This does not involve the employee to be an actual part of the company (Horwitz, Heng, & Quazi, 2003). Information Technology allows IT allows the “firm’s boundaries to become blurred, even to the point of the much-vaunted “virtual organisation”; while its functions are increasingly desegregated into complex mixtures of Influence of Internet and Information Technology profit centres, franchises, small firms and subcontractors” (Warhurst, 1998).

Baloh & Trkman (2003) predicts that there will be an increase in the number of “portfolio people” who are not bound to any company. They offer the best skills to top clients either as individuals or through other agencies. As per Drucker (2001), an increasingly large amount of people working for the company are not full-timers, rather they are part-timers. In fact these are most “knowledgeable and valuable workers” of the organisation.

iii.Internet for Employee Development

Latest knowledge and advanced skills in technology are quite important for the success of any information system project. Employees who have access to cutting-edge technology and skills stay highly motivated. These employees have a greater tendency to stay with the organisation than those who do not have access to latest technology.

The Internet provides the firm access to latest scientific and technological innovations of other companies and research institutions (Jerman Blazic, 1996). Moreover, the employee has access to the vast database of projects, newsgroups and mailing lists. Online courses are now quite common and easily accessible to employees. These allow the employees to take online certifications which add value to the individual and the organisation as a whole (Baloh & Trkman, 2003).

Drucker (2001) argues that the internet has affected the organisation as a whole by transforming it into a “social universe”. He opines that the new age managers need to recognise this factor and take necessary steps to adapt to them accordingly.

iv.Internet in the Personnel function

The internet has had profound impact in the personnel department of organisations. This has direct impact on the practices for retaining and motivating employees. Personnel function can use the internet to monitor the “supply-side of work market”. As per Dave Ulrich (1997), HR Managers have become ‘business partners’. This is made possible by developing 4 major roles – “management of strategic resources; management of personnel policies and administration; management of employee distribution; and management of transformation and change.”

The HR managers align the HR management systems along with business strategy of the organisation business strategy. This can lead to major cost savings and thus maintain high business contributions. Thus HR managers provide value addition to the firm through “strategy execution administrative efficiency, employee commitment and cultural change.”

On the other hand some researchers like Blaoh & Trkman (2003) have argued that the prevalence of the internet could lead to a rapid revamping of the personnel function as a whole. Tasks which are wholly part of the personnel function would be performed in collaboration with external or third-party agencies. These agencies would have access to huge amount of knowledge using ICT. Also they are capable of supplying the HR managers with list of resources which are not possible by normal HR processes. Thus the internet facilitates the recruitment of the best-fit employees with the best skills. Research has proved that the employee can be retained well, if he or she is recruited for the right role which he is passionate about. The third-party agencies thus play the role of “manager-consultants” in this situation.

v.Impact on Employee-Control

The advent of ICT and internet technologies led to the fact that traditional control over employees is not possible in organisations. For example, as discussed above, the number of tele-workers is increasing in many of the organisations. It is quite difficult to exercise control over the employees who are working from home over the internet. Also controlling and micro-managing the new-generation employees will lead to de-motivation and can indirectly lead to employee turnover (Baloh & Trkman, 2003). Drucker (2001) has suggested the use of objectives and self-control as two solutions to this issue. Managing by objectives has been made effective with the use of internet and ICT. Access to state-of-the-art technology helps organisations to gather, analyse and retrieve information. The employee can collaborate over the internet with the senior management and line managers to set the objectives and this motivates them to work in a highly focussed manner. Also the manager herself “needs to control her own performance” (Drucker, 2001).

Also, the specialists in multiple geographical locations can collaborate over the internet and work on issues together. This allows large globally distributed teams to work efficiently. It is advised that the managers should monitor the end result of each goal in a project (which have been set previously) rather than a continuous monitoring. This is on the assumption that the employees are motivated intrinsically throughout the project.

vi.Knowledge Management

Managing and exploiting the knowledge in the firm is quite essential to attain competitive advantage in the industry. As per Gopal (1995), only 20% of employee is being utilised by the employees. Two major systems are intranets and corporate blogs.

vii.Intranets

The use of the intranet has wide felt impact in managing the employee knowledge. Intranets are relatively inexpensive, easy to setup and maintain in any information systems company. These provide the platform for effectively managing the information within the organisation. An important factor to consider is that of the security issue, wherein the intranet should be secured from the outside world and hackers. Lack of isolating the internal information from the outside world can lead to serious adverse impacts on the success of the organisation. Intranets provide exhaustive source of information to employees about the organisation. These systems help the employee to understand more about the organisation and also maintain their professional data. Some intranets also provide access to training platforms and opportunity to take certifications. Intranets have evolved to become the spine of any organisation. They allow a simple means of disseminating important information to all employees. Also, employees can participate in providing important feedback and recommendations regarding processes within the organisation. These help the firm to refine its business process (Baloh & Trkman, 2003). Thus, employees get the opportunity to participate in the organisation change which provides them with a sense of belonging which increases employee motivation and retention.

Apart from intranets, there are other contemporary hardware-cum-software solutions which can be used for knowledge management such as data warehouses, expert systems etc. These provide the advanced solution to share, store and transfer organisation wide information with the help of IT and internet.

viii.Employee Blogs

The recent development in employee blogging has had dramatic improvement in the employee communication. The blog has emerged as a dynamic medium for employees to express themselves to a variety of internal and external audiences (Wright & Hinson, 2006). Winer (2005) opines that the employee blogging “is nothing less than revolutionary”.

Employees are a vast source of knowledge. As mentioned earlier only 20% of actual employee knowledge is shared within the firm. Corporate blogging provides a platform for employees to share information, increase dialogue, and open-up two way channels of communication. As per a CEO survey, 59% of CEOs consider blogs to be an efficient medium for corporate communications to internal audience. Employees blog to build communities, publish their thoughts and ideas and to promote leadership thoughts.

An important aspect to consider in blogging is that of lack of control the employers have with respect to misuse of information, sharing negative information or confidential information. This leads to development of corporate blogging policies which demonstrate the “best way to balance open communication and legal protection”.

Thus even though blogging can help in voicing employee opinion and disseminating knowledge, having corporate blogging policies help maintain order and some control.

h.International employees

In a highly globalised world of today the role Human Resources becomes highly crucial. It becomes essential to develop effective International HR policies which would be aligned with the organisation’s international business strategy. Expatriate management has become a significant challenge in International HR management. International HR practices are critical to a help firms build competitive advantage by providing a differentiated set of products and services (Capelli and Crocker,1996). Mergers between firms are quite common these days and thus there is limited freedom in managing business which includes a highly culturally diverse environment with new challenges.

Expatriate recruitment of employees requires many complex considerations along with the normal requirements in domestic requirements. Gender plays a major role in international placements as women face some challenges of their own in global work scenarios (Harris, 1993). Expatriate HR management success requires constant planning, preparation and continuous support.

i. Literature Review Summary

Recruitment has been described as the practices and decisions that affect the quantity and quality of job seekers that are willing to apply to an organization.

Innovations in technology have revolutionized the way recruitment processes are handled today, and there has been a significant shift towards web-based methods of recruitment, especially for medium and large companies.

In order for online recruitment to have the predicted impact on the recruitment industry that has been envisioned, it must offer considerable advantages over traditional recruitment processes such as newspaper job advertisement. These advantages can be achieved if these companies have a thorough and effective web presence, a widely recognized brand, advertise properly and make sure there is ample amount of information present regarding the organization on the web. Online recruitment is said to produce better quality candidates, provide an improved platform for information sharing, more operational efficiency and cost effectiveness, and also provides a lack of boundaries thus making it available on a global scale.

Though the effectiveness of online recruitment does seem to outweigh traditional methods in a number of core factors, its use is being criticised as it excludes candidates without Internet access, filters candidates based on their demographic, attracts a huge number of unsuitable candidates, and is more effective for known companies and records difficulties in recruiting experienced or executive level hires. Several theorists have therefore proposed a synergy on the different ways in which online and traditional methods can be combined in order to attain effectiveness in online recruitment.

The capability to motivate and retain talent is increasingly becoming one of the core competences of top performing firms in global organisations. Improving this competence will be important in the future as “demographic, social and economic developments strengthen the connection between human talent and sustainable pro?tability”.

It will be quite difficult to find a complete supply of talented professionals in the next couple of years. The study suggests that the organisations need to arm themselves with a number of new generation strategies and practices to retain and motivate the best of professionals in their firm to gain competitive advantage in this highly globalised world.

j.Research Question

Based on the literature review, and the purpose of the study as discussed in the introduction, the following research question has been coined:

– Is online recruitment a more effective and efficient method of attracting, selecting and recruiting prospective graduate, experienced and executive hires in a large technology firmIf it were not, then what forms of recruitment practices would be most suitable to each category of applications, and if it is, then how could current practices be improved in order to attract and recruit an increased number of better-qualified candidates?


3. Methodology

a.Research Philosophy:

This study will adopt a positivist approach to interrogate the social existence of technology firms and graduates. These are independent from the researcher and thus, need to be assessed through objective methods such as reflection, sensation or intuition (Easterby-Smith, 2002). Reliable information can be established by an investigation of observed occurrences (Saunders et al, 2007). This study will not use social interpretivism philosophy, which investigates internalized emotion, because the research question looks to determine the efficiency of online recruitment at an organization. Objective methods are used to evaluate this efficiency (such as increase in candidate application and reduction in costs), thereby warranting a positivist approach.

b.Research approach

This study will assume a deductive method because of its positivist quality (Saunders et al, 2007). This is popular method demonstrates the affiliation between theory and research. Logical reasoning is then used to develop the results of this study (Bryman and Bell, 2007). The data findings would be compared against existing literature to ascertain if they concur with what has already been published in the field of online recruitment.

c.Access

Getting granted access to a suitable resource within a business is vital in attaining primary information. The investigation questions, designs and related objectives determine how suitable the source will be (Saunders et al, 2007). As the researcher is a friend of an employee within the organization, he was able to get access. I contacted a friend of mine who currently works within graduate recruitment at Google Inc., and discussed the prospects of my dissertation. She spoke to several of her colleagues on my behalf and they agreed for me to conduct telephone interviews with 4 members of the graduate recruitment team, some of which had been there for an average of 5 – 10 years (reasons expatiated further in this chapter). The organisation and participants did not oppose or object to my enquiry, nor to the questions I asked.

d.Research Strategy

I will use a case study strategy for the purpose of this investigation and for my research. If it is necessary to attain a thorough comprehension of the research perspective, the case study strategy is particularly valuable (Robson, 2002). Therefore as this study aims to understand the recruitment process within Google Inc. and also any benefits associated with online recruitment, a case study would be most effective.

As can be viewed in table 1 below, dual approaches will be employed to complete this study:

Table 1: Research Strategy

STRATEGYAIMSSAMPLETYPES OF QUESTIONSMETHODS OF ASSESMENT
1. Quantitative questionnaireCalculate graduates’ understanding of what comprises an efficient recruitment platform10 graduates who have applied to one or more organizations through their online system.Closed rating scale questions, little information.Descriptive investigation using pie, line and bar charts.
2. Qualitative semi-structuredThis was done to ascertain the advantages linked to online recruitment.4 members of the recruitment staff within Google Inc., who have been in the organization for more than 5 yearsOrdered questionnaires with broad, open questionsSubject assessment

i. Quantitative Questionnaire

To attain research data in the shape of, or articulated as, numbers, quantitative methods are primarily utilized (Easterby-Smith et al, 2008). Questionnaires issued to 10 graduates and undergraduates, used a rating scale system which asked participants to use a scale from 1 – 5 to indicate the strength of their answer for each question. Secondary information was determined by the participant’s application activity, partiality and status (the full questionnaire is outlined in the appendix).

ii.Qualitative Semi Structured Interviews

Four members of the recruitment team were permitted to perform 20 minute telephone interviews because of the access granted within the organisation. These telephone interviews were semi-structured as they relied upon a series of pre-determined questions. These qualitative interviews look to determine data via informal talks (Collis and Hussey, 2003). The semi-structured system is preferred because unstructured modes are felt to generate insignificant data, whilst structured systems overlook unanticipated results. Thus, the more specific nature of the semi-structured system, as well as its potential for probing answers, was better suited to the study’s aims and objective. Questioning a participant’s answer was shown to be helpful in situations where further description was needed. The questions used in the study were based on a series of themes that came from the literature review. Because of the adaptation of online recruitment recently, the semi structured interviews was targeted at members of the team who had witnessed or orchestrated the shift towards online recruitment, that way these respondents would be better able to answer questions that relate to the comparison of both methods.

Also, members of the online recruitment team being interviewed had different positions within recruitment and handled separate tasks. The questionnaires were given to them beforehand, when the approval was first sought, and each respondent chose the questions that they were more qualified to respond to. Therefore the research was such that all respondents answered some questions, while some others were answered by a particular individual because of their knowledge of that process. Table 2 outlines the respondent details and their interview theme.

Table 2: Interview Respondents and Questions asked

RespondentFictionalNameRoleYears in Google Inc.Subjects Covered
R1AliceGraduate Events Manager2Effectiveness, Disadvantages
R2MarthaApplication Review7Background, Adoption, Effectiveness, Disadvantages
R3NickFinance and Budgeting9Adoption, Effectiveness, Efficiency
R4ChloeMedia Advertisement3Effectiveness, Advertisement

Participants were asked for consent before being interviewed and were told that their names would be withheld to prevent the results of the interview being distributed. Fictional names have therefore been used.

e. Data Collection

i.Sampling Method

For the purpose of this study, results would have been more accurate if all the recruitment staff within the organization had been subjected to the interview. Unfortunately, because of the time and resource restraints, non-probability sample was assumed: in this sample the likelihood of each case is chosen from an unknown total population (Oppenheim, 2000). These samples are commonly deployed when using case studies strategy.

Unfortunately, the samples taken from the technology firms and graduates are too small to represent the larger populations; the small sample of graduates used in this study cannot reflect the probability sample of those within London or the United Kingdom, and the Google Inc. participants are not high enough to represent the entire recruitment department. Consequently, the study specialised in quantitative certainties: of the understanding of recruitment within Google Inc., and what graduates perceived of Internet employment.

ii.Primary Data Collection

Easterby-Smith et al (2008) argues that primary and secondary data can be gathered using quantitative methods. Whilst there are advantages and disadvantages to each of these methods, the assimilation of independent data provides reassurance that the data suits the research objectives, and also offers a greater influence over the organization of the sample.

Thus, the researcher attained primary data by distributing-in-person questionnaires to 20 graduates. This distribution was done amongst friends and colleagues within the university who have utilized online recruitment systems. A tape recorder was used so that the data from the semi-structured interview and from the conversations with the Google Inc. employees could be recorded and transcribed. The ability to record and re-listen to interviews was particularly useful because it permitted the researcher to locate patterns in words and emotions in the various responses.

f. Analysis of Research Findings

i.Quantitative Data

Whilst the information remains unprocessed, results do not convey significant information (Saunders et al, 2007). Universities investigate the regularity of the variables, one at a time, including ordinal and nominal (Oppenheim, 2005). But due to the few graduate participants and the study of the organization perspective, it was not possible for a bivariate assessment. Microsoft Excel was used to analyse the results, and graphs were used to compare the results against the qualitative study.

ii.Qualitative Data

In studies whose investigation has relied upon the literature review, it has been shown that the theories used can be deployed to assess the results (Yin, 2002). Therefore, such studies could use a deductive approach for data analysis.

The deductive approach was applied to this study and used to investigate the qualitative data; with the results being assessed in accordance to the literature review themes. Where responses varied on a particular question, all participants’ answers were documented and considered for analysis. Please see the appendix for more information.

The pattern matching process can be used in deductive assessment and involves calculating a model of results based on theoretical propositions (Saunders et al, 2007). When this is analysed by data analysis processes, it highlights the existence of analytical structures. Through the trialling of adequacies of the structure, the process can be used to explain the results (Saunders et al, 2007). If a predicted pattern is located, it would imply that the results have an explanation.

g.Ethics

Numerous ethical issues have risen out of this study. Ethics refers to an individual’s treatment as subject of a research project. Situations that arose are listed below alongside the steps that were taken to resolve them:

– The organisation may be guarded about its online recruitment. For example, the quantity of graduates and marketing techniques to attract graduates, which it may not like its competitors to know about.

– Employees participating in semi-structured systems did not want to disclose an individual expression of the firm’s recruitment system, or the quality of graduates received through their channels, in case their response does not really conform to the brand and reputation that the organization is trying to build (for instance, the firm may pose as an equal opportunity organization that employs people from diverse backgrounds, whereas they mostly only recruit students from top Oxbridge universities with a certain background). Information such as this could pose difficulties if the firm eventually decides to broaden its pool of candidates and employ people from varying backgrounds.

To resolve these issues the questionnaire and interviews relied on a structure that looked to negate causing offence, harm, or to provoke the participants. The questions would be non-intrusive; for example the participants would not be asked to disclose their names, age or position in the organization; the demographics of the recruitment data would not be recorded.

With the graduate questionnaires, some candidates may think that answering these questions and including personal details may impede or even benefit them when applying to said organizations. Therefore the questionnaires would be designed to explicitly outline that it is an academic research document, and therefore does not constitute an organization study.

h.Limitations

– The major limitation of this research would be gaining access to graduates who have gone through online recruitment systems and applied specifically to Google Inc. Graduates that have applied to the firm are diverse both in culture and geography. Therefore this study would be limited in not being able to survey a probability sample of graduates who have either used online recruitment or specifically applied to Google Inc. in the past.

– The willingness and capacity of staff to answer questions with relation to graduate recruitment is also impeded. Some staff may not be willing to discuss sensitive issues such as their views; some may be unwilling to discuss online recruitment in any capacity to an external researcher such as myself, while some may not have the relevant experience necessary to answer most of the questions posed in this study. Therefore the list of participants has been limited to 4, which in no way represents a probability sample of the recruitment workforce within the organization.

– There is also a secondary limitation with regards to the experience of those staffs who participated in the interviews. The ideal participants would typically have been working in recruitment for over 10 years, and would have witnessed and participated in the transition from traditional to online recruitment within the organization. However, only two of the participants answering this questionnaire are ‘ideal candidates’, the other 2 have been working within recruitment over the past 2 – 3 years and were in no capacity to discuss the transition between traditional and online recruitment. However, their views were still helpful and contributed significantly to the findings of this study.

– This study did not incorporate recent events such as the merger between Google Inc. and Like.com. However, including this information would have extended the limits of the study, beyond the word count and capacity currently accepted.


4. Results

The results chapter has adopted a deductive analytical approach, therefore the findings of this study would be collated according to the research questions asked and theories read. The transcript from the semi-structured interviews and data from questionnaires are shown in appendix.

The results are categorized according to the section under study and also according to the perception of recipients towards particular questions. All questions asked are also shown in appendix.

a.Graduate Questionnaire

Figure 3: Answers to Graduate Questionnaire (Q1 – Q5)

The responses to the graduate questionnaire are outlined in figures 3 – 5. Information illustrated in figure 3 illustrates that the 15 graduate applicants surveyed believe that the Corporate Brand is one of the major determinants of their choice to apply to an organization. The second most important factors are the organization’s online web presence and their utilisation of online job boards (figure 4). All three top factors that mode figures of 5 (Corporate Brand and Job Boards) and 4 (Online Web Presence). Respondents who answered to Graduate events had an average rating of 3.47; however the majority of them chose a rating of 5. The lowest rating however, as illustrated in figure 4, is the graduate’s perceived fit with the organisation. The average rating was 2.33, with most of the respondents choosing the lowest rating of 1.

Figure 4: Answers to Graduate Questionnaire (Q6 – Q10)

Figure 5 below illustrates graduates’ job application preference. A majority of them (40%) chose the Internet as the preferred mode of job application, while 26.67% of them chose to apply through agencies. A minority of applications (6.67%) chose to apply through Newspaper Ads and Word of Mouth from friends and colleagues.

Figure 5: Graduate application preference

b.Semi-Structured Interviews

i. Internet Recruitment Background

The organization started utilizing online recruitment system fully in 2003. Prior to its adoption, online recruitment had primarily been through traditional means such as word of mouth and executive search agencies

Temporary roles were filled through agencies. Executive hires were recruited through executive search agencies.

ii. Adoption

The major drive towards online recruitment has been the need to increase efficiency. Nick believes ‘the availability of technology makes everything easier’ and Martha states Google’s major reason for adopting online recruitment. The respondent also believes that they can recruit a better diversity and quality of candidates using online processes.

Graduate recruitment has received the highest priority (5) with respect to the use of online recruitment, as opposed to a mid-level priority for experienced hires (3) and for Executive hires, Martha states that it is given ‘Lowest priority, but not abolished totally. Let’s say 2.’

iii.Effectiveness

Figure 6: Estimate of employees hired through each recruitment channel

According to estimates gotten from Nick, the company hires a higher portion of its graduates (92 – 95%) from online recruitment systems as opposed to traditional recruitment that account for about 5 – 8%. Recruitment for experienced hires is somewhat evenly split between online recruitment and agency hire and other traditional recruitment methods. Executive hires however are hired less often (0 – 10%) from online recruitment channels, than from agencies and executive search agents.

According to Martha, graduates receive a higher priority because the company believes they are ‘better users and more frequent on the Internet. We receive a higher traffic from graduate applicants than any other job applicant category; it is therefore logical that we choose to adopt a majority Internet based approach to their recruitment.’

Alice also asserts that the company ‘believes it is a better approach to their recruitment since a majority of their application process – such as the online tests can be conducted online.

The company also set up a specific graduate website because of online job boards that directs graduates to the online recruitment site. Previous research conducted by the organization also illustrates that they believe graduates are more likely to look for companies to apply to through online websites. A smaller portion of experienced hires is through online recruitment, but better quality candidates are derived through agencies, thereby prompting the smaller priority.

Rating of 4 – 5 given to job boards in their effectiveness in attracting and generating traffic and applications for the company’s recruitment website. High traffic job boards are expensive to advertise in, but effective in directing traffic. They contain detailed information about job positions open at recruiting companies.

According to Chloe, Job boards represent the following benefits:

– Effective in directing traffic to recruitment website

– Applicants are able to get some details about the vacancies on offer

– Much cheaper than newspaper adverts

– Most effective way in reaching a large number of graduates

Other forms of advertisement include

– Career websites of universities

– Host a number of open events and evenings at university locations and London head office

– Attend career fairs organized by external parties

iv.Effectiveness of advertisement methods

Vacancies on career sections in university websites help in attracting students from particular targeted institutions.

Open events and evenings is to ‘give aspiring applicants much more information regarding the organization, and information that could assist during their applications’

Open evenings at London office help in reaching out to aspiring applications who are graduates but not in university anymore.

‘Career fairs are used to raise awareness and also discuss career prospects with prospective students and graduates.’ – Chloe

v.Traditional recruitment for graduates

‘… All our graduates are recruited primarily through our graduate channels. We do not accept agency referrals for graduate admissions because of the number of tests that would be conducted.’ – Martha


vi.Effectiveness of traditional methods in meeting recruitment agenda

Figure 7: Effectiveness of Traditional Channels

According to information represented in Figure 7, traditional channels are most effective for Temporary, Experienced and Executive Hires, and not so for graduates who received the lowest rating. Temporary hires are mostly recruited through Agencies, while Google Inc. exercises all channels in recruiting experienced hires. Executive hires however are recruited more through executive channels than through agencies or word of mouth.

vii.Quantity or Quality Candidates

Alice: ‘From my personal point of view, I think we get a mix of both. We receive applications from people who are not just qualified for the job, while we also receive applications from qualified candidates. So yes, I believe it is a mix.’

Martha: ‘: I believe we receive more of quantity and a reasonable number of quality candidates. If we did not receive quality, then our recruitment efforts would be futile.’ Respondent asserts that it’s the advertisement and awareness programs are the main determinant of quality.

Nick: ‘Uhm, We receive more quantity than quality to be honest’. Number of applications from quality candidates received is usually not enough to fill all available vacancies.

Chloe: Believes they receive more quantity than quality. ‘But that’s acceptable considering the nature of online recruitment and how open it is’. The available recruitment steps however help shortlist candidates up to a certain number.

viii.Efficiency

Overhead cost

Most recruitment procedures are now handled automatically, as opposed to traditional procedures that entailed hiring a number of external interviewers and taking managers out of their daily jobs. Success rate of applicants have now improved because only candidates who have passed initial online screening are invited for interviews.

Data Accuracy

‘All applicants enter their information directly into the system; therefore it is much easier for us to sort and process data effectively’ (Martha). No more problems recorded with interpreting and coding application information, except those that are made specifically by each applicant.

Printing costs

No more costs associated with printing application forms, letters or correspondence to applicants. Database handles all applicant correspondence.

Cost effectiveness

No more costs associated with printing, newspaper advertisements or extra overhead costs associated with graduate recruitment. These costs have been replaced by costs associated with online adverts, designing and maintaining websites and posting ads on job boards. These costs are much lower than those of traditional recruitment.

ix.Other efficiencies

– Reduce costs and staff in recruitment activities

– Print less paper

– Communicated much faster to applicants seeking employment

x.Possible Disadvantages

Unsuitable candidates

Applicants from inexperienced candidates are received but manageable due to online screening processes.

Ratio of applications received to jobs granted

Traditional Recruitment: 600 – 800 applications; 300 – 400 first round interviews; 60 – 80 jobs.

Online Recruitment: 3,200 – 4000 applications, 500 – 600 interviews, about 100 get the job.

Diversity and disability quotas

‘I believe we are lucky enough to achieve diversity goals most times, however whenever we do not, we outsource our recruitment to agencies for help in seeking candidates from particular backgrounds’ – Martha.

100% adoption

‘Well, like before the online recruitment era, we still receive a number of applications, but it’s the level of fit that has reduced. Therefore if we adopt a 100% approach to online recruitment, I believe we would be able to recruit a considerable percentage of candidates to meet our goals.’ – Martha

‘I think we may be shorthand when it comes to very skilled candidates who are being recruited directly by other firms. In this case, agencies and direct hires are much more effective. In general online recruitment does help satisfy a vast majority of our recruitment objectives.’ – Chloe


5. Discussion

a.The Research Question

The present study was carried out to answer the following research question: ‘Is online recruitment a more effective and efficient method of attracting, selecting and recruiting prospective graduate, experienced and executive hires into a large technology firmsIf it were not, then what forms of recruitment practices would be most suitable to each category of applications, and if it is, then how could current practices be improved in order to attract and recruit an increased number of better-qualified candidates?’

This was done so as to ascertain the benefits attributable to online recruitment, as opposed to traditional recruitment when it came to these different forms of employees. The initial assumption based on existing literature was that online recruitment increased the quantity of graduates that the organization received, and also helped reduce costs. But did it improve the quality of candidates received, result in a ton of unsuitable candidates and also exclude disabled and disadvantaged candidates?

Answering the research question entailed a quantitative and semi-structured questionnaire carried out on 15 students & graduates, and 4 employees at Google Inc. graduate recruitment respectively. Information gathered from all sources has been analysed in the results section, and would be discussed in the following subchapter. The research did not incorporate current events at Google Inc. such as its merger with Like.com. That would have stretched the limits of this research, and constitutes a totally different research perspective.

b.The Research Answer

Based on the research question, the research answer and ensuing discussion could be divided into the following sub-questions, and these are:

– ‘Is online recruitment a more effective and efficient method of attracting, selecting and recruiting prospective graduate, experienced and executive hires in a large technology firm?

– … If it were not, then what forms of recruitment practices would be most suitable to each category of applications?

– … And if it is, then how current practices could be improved in order to attract and recruit an increased number of better-qualified candidates?

An attempt would be made to answer the research question by answering each sub-question using results gathered during data analysis.

i. Is online recruitment more effective and efficient?

Based on information gathered from all four interview respondents, and also through online sources (Martinsons, 1997; CIPD, 2009; Parry and Tyson, 2008), it is irrefutable that technology and the Internet has changed the way recruitment processes work. Google Inc. very much believes that online recruitment is the future, and that is why they have given it a huge priority with respect to some recruitment processes. This conforms to Boyell’s (2002) description of online technology as a potential revolution in recruitment.

Based on information gathered from all four respondents, online recruitment has led to the following benefits:

– Reduced overhead costs

– Improved data accuracy

– Abolished printing costs

– Cost effectiveness

– Reduced costs and staff in recruitment activities

– Communicated much faster to applicants seeking employment.

These benefits are easily quantifiable and have been confirmed by several theorists (Searle, 2004; Younger, 2007; Lin and Stasinskaya, 2002), who attest to the benefits attributable to this revolution.

Based on the results derived in Chapter 4, the number of applicants has also increased about six fold, while those recruited have nearly doubled. Thereby confirming that online recruitment has indeed been successful in increasing the number of applicants who apply through online processes. The increase in application numbers may be as a result of the lack of boundaries that the Internet has brought about (Ganalaki, 2002), or as a result of the increase in budget for new hires. All of which are not readily quantifiable.

However what was more noticeable was the reduction in the number of interviewed candidates per job application (50% for traditional methods, and 15% for online recruitment), and success rate of each new applicant (10% for traditional recruitment, and 3.125% for online recruitment). These figures illustrate that online recruitment may indeed be truly useful when it comes to improving the efficiencies of the recruitment process, as supported by theories of several researchers (Othman and Musa, 2006; Parry and Wilson, 2008). However, none of the respondents were able to firmly support other benefits examined in the literature such as better quality candidates, and improved platform for information sharing that were proposed by Searle (2004) and Younger (2007).

Data gathered from the graduate survey illustrates that they are not highly influenced by information availability on corporate websites (mode of 4, and Mean of 3.53), when compared to other influencing factors. Thereby questioning Birgelen et al’s (2008) assertions that the infinite space for companies to communicate their information is highly beneficial for graduates. They may be important, but not as important as the influence of corporate brand, online web presence and information on job boards.

Also, when asked about the quality of candidates received through online methods, all respondents (Alice, Martha, Nick and Chloe) confirmed the fact that they received much more quantity of candidates than quality. According to Martha, the company does get much more quantity of candidates, when compared to quality, however they still receive a considerable amount of quality candidates. While Nick also asserts that they do not necessarily receive enough applications in order to fill positions. However, the ease of online application process does seem to make it a lot more manageable, due to the presence of online test. These tests help to cut down on the number of unsuitable candidates, and helps reduce the recruitment timeline for each applicant, as discussed by Chloe, and also verified by Parry and Wilson (2008).

In terms of the form of the recruitment ratios, graduate recruitment has received the highest priority, followed by experienced hires and executive hires, but is this warrantedMartha believes that graduates are better users and more frequent on the Internet, and therefore warrant a higher priority to online recruitment. Alice also supported a higher priority as tests could be conducted online. This view has been confirmed by Ganalaki (2002) and Othman and Musa (2006) who assert that candidates who are attracted and recruited off the Internet are usually young, educated, computer literate and have some understanding and functions of the recruiting company. The lower priorities given to experienced and executive recruitment illustrate the non-effectiveness of those methods in attracting the required candidates. These hires may not be so young and computer literature, and therefore not necessarily attracted to using online processes in applying for jobs, according to views expressed by Parry (2009).

As initially predicted by CIPD (2009), results gathered also point to the fact that applications from unsuitable candidates are manageable due to online screening processes, which has also reduced the number of interviewees. However the company experiences mild diversity and disability difficulties, as envisioned by Van Rooy et al (2003), thereby prompting the use of traditional recruitment methods in filling those spaces.

Therefore, based on the following discussion, online recruitment does seem efficient in terms of reducing costs and workload associated with recruitment processes; however the only effectiveness noticeable is in the quantity of graduates received. The number of graduates recruited, does seem to have increased, but it cannot be said if it is whether the recruitment budget has increased, or whether the lack of boundaries does attract much more people. Also, online recruitment does not seem suitable for experienced and executive hires based on priority information derived for those demographics.

ii.What form would be most suitable to each category of applicants?

Based on discussions in the previous sub question and views expressed by Parry (2009), it can be concluded that for graduates, online recruitment does seem to be effective in attracting a high number of applicants, but not really in that much quality. Information gathered from the respondents also point out that temporary, experienced and executive employees are better recruited through traditional recruitment methods such as word of mouth and executive search agencies, but not so much so for graduates because they received the lowest priority. The following sub chapter therefore outlines the most effective form of attracting graduates online, since they form the main basis of the organization’s online recruitment campaigns.

iii.How could current practices be improved?

Based on information gathered from the graduate survey, as outlined in figure 7, graduates received the lowest effectiveness rating when it came to traditional recruitment. This further supports the opinion that these recruitment methods are more effective for executive and experienced hires, as opposed to graduates.

Current practices in graduate recruitment, as outlined in figure 2, illustrate that graduate recruitment processes follow a specific guideline. Results outlined in figures 3 – 5, also illustrate that graduates are specifically more attracted to apply to companies if they have a more effective corporate brand, wider online presence and use job boards more effectively. The use of job boards in particular were corroborated by Chloe, one of the respondents who outlined the benefits of job boards to include directing traffic, information provision, cost effectiveness, and most effective way to reach a large array of graduates. Therefore if graduates believe job boards highly influences them, and organizations believe they are really useful, then it does illustrate that they are truly effective.

However, the other two major influencing factors to graduates such as the proper utilization of the corporate brand and online web presence have not been discussed by the organization. Chloe outlined that they utilized the career websites of target universities, and that they also hosted and attended a number of career events, but this in no way helps the organization to build its brand or online web presence amongst prospective graduates. Their actions seem to contradict Wilson’s (2008) view the brand of an organization is very crucial in attracting the right kind of employee.

The brand effect could also be one of the major reasons why the organization receives more quantity, as opposed to quality candidates. Because based on theories presented by Othman and Musa (2004), this should not be the scenario. Online recruitment should recruit and attract a wide variety of young and highly capable employees. However, the reasons could be explained by Crispin and Mehler (2006) who proposed that potential employees are usually attracted to a more developed corporate brand, as they believes that an established brand would constitute a more stable and growing organization. The graduate team within Google Inc. is therefore not capitalizing on their brand well enough in recruiting the required form of quality candidates that would be well motivated in applying for job positions.

Graduates also rated against the importance of web appearance as a better precursor of online recruitment success, thereby refuting Cober et al’s (2004) view, and confirming that of Birgelen et al (2008), in which he argued that the potential of a corporate website to attract employees seeking job positions, is facilitated by the employee’s attraction to the company, and not necessarily by appearance to its website. However it still does carry some weight, illustrating that it may be important to some extent.

The least important influence (perceived fit within the organisation) is quite interesting as one would typically believe that employees applying to organizations would perceive themselves as a cultural fit to the organization. However, this is not the case, as a vast majority of respondents chose that perceived fit with the organisation is their least influencing factor when it came to applying for jobs, thereby reflecting the reasons why these organisations have more quantity – probably because applicants are more bothered about getting a job, than in selecting an organization where they would make a better fit.

Graduate events also showed some distorted data, as most respondents chose a rating of 5, and the overall mean was 3.47. Thereby illustrating that though some may have thought it was very influential, some others did not believes so. Those that went to graduate events probably chose a 5, while those who did not, would have chosen 1 or 2, not understanding the importance of such events. Thereby illustrating that these events could be useful, if they were more widespread and more graduates visited.

In figure 5, 40% of graduates respectively reported a higher preference to apply for jobs through Internet, confirming Searle’s (2004) view that online recruitment should not be totally abolished. A new application preference (Employee Referral), which had not been previously thought about, but just included in the graduate questionnaire, is also a good source of graduate application preference. Besides, Parry and Tyson (2008) have already argued that the mixed success that organizations have experienced with regards to online recruitment may be the reason why it has failed to dominate and overthrow traditional recruitment methods as predicted.

Therefore based on the following arguments, the best way to improve the attractiveness of Google Inc.’s recruitment campaign would be outlined and discussed in the Recommendations chapter that ensues.

c.Discussion Summary

In summary, graduates receive the most priority for online recruitment, followed by experienced and executive hires. The high priority given to graduates is as a result of the demographical characteristics constituting the group, and also as a result of the size of applicants and ease of application process. According to the respondents within the organization, job boards are the most effective method of attracting graduates. A view that is seconded by graduates who believe that job boards have the most influence of their choice of an organization to apply to. The graduates also identified the influence of corporate brand, and online web presence, which were not identified by the recruitment team. Most graduates would prefer to apply for jobs through the Internet, agencies and Employee Referral.

Several theorists support the importance of corporate brand in attracting the right quality, and online web presence in improving the quantity of applicants. Branding and advertisement should therefore be the basis of attracting fresh new qualified graduates that are able to lead the organization from where it is, to where it needs to be.


6. Recommendations

a.Google Inc. Graduate Recruitment

Based on the discovery of the means of attracting fresh graduates, it is therefore in Google Inc.’s best interest to incorporate several other factors in its online recruitment approach so as to improve the quality of candidates received and make recruitment processes much more effective.

A new branding campaign should be embarked which should properly promote the brand that Google Inc. stands for. The particular emphasis should be on appealing to a broad range of desired job seekers, such that they seek to inquire more about the company’s current operations and vacancies.

A proper integration of the online recruitment system with popular job boards is recommended, such that they are better able to refer prospective candidates to the firm’s website. The graduate recruitment team should also endeavour to provide more information and engage in additional advertisement especially through these job boards, such that they are hard to miss by prospective candidates.

A wider internet presence should also be maintained with respect to graduate recruitment, so that graduates can find relevant information about the organization in search engines, career websites, and students’ forums. The recruitment team could also endeavour to provide more graduates with useful tips which students could use while applying through the graduate recruitment websites.

Steps should be taken by the firm to increase its awareness by attending more recruitment fairs, and also organizing more events such that prospective applicants can talk to members of recruitment team in order to get more information about the recruitment process of the firm, and also the steps they could take to improve their application. Such information should be available so as to reduce the number of unsuitable applications received from applicants who could have otherwise made better applications, if only they had access to more information.

Finally, Agency and Employee referral should be incorporated more readily into recruitment processes, such that agencies could be tasked to refer disadvantaged candidates to the recruitment process, and also put them through necessary steps, whilst employees would be tasked to refer friends or former school colleagues who they feel would make excellent candidates for posts within the organization. Incentives could be handed out so as to improve the effectiveness of these processes.

b.Literature Research

– Another major limitation and shortcoming of this research is that it failed to identify the major influencing factors on experienced and executive hires in seeking job employment. Therefore research should be carried out on the factors that influence their choice of applying to an organization, and also the factors that influence their usage of online recruitment platforms.

– Research should be conducted on the quantifiable figure by which online recruitment has contributed in improving the quality of candidates applying. Most research studies point out that it does improve the quantity of candidates, however none of these studies highlight the distinction between the quantity and quality increase.

– The proliferation of online recruitment in particular industries could also be studied so as to find out if some companies are more effective in utilising their recruitment websites, than others, and what are their main success factors, when compared to others.


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8. Appendix

a.Google Inc. Graduate Recruitment Steps

Google Inc.’s online graduate recruitment system involves four main steps. First the applicants fill an application form online, which contains their basic details, CV and cover letter. Then the applicant is invited for one telephonic interview of 40 minutes, which measures the candidate’s communication skills. If the interviewer is not satisfied then the candidate might be called for another round of telephonic interview of the same duration. After clearing the initial round of telephonic interviews, the candidate is called for 4 rounds of interviews on a single day. Each of these interviews lasts for a minimum of 45 minutes. Lots of situation based questions which tests candidates problem solving skills are asked in these interviews. Candidates need to solve these questions in real time. The main focus is given on the process followed by the candidate to arrive at the solution. If the candidate successfully clears all the rounds of interviews then he would be offered a job in couple of weeks’ time.

b.Traditional recruitment methods

Though technology may constitute an increasing proportion of recruitment method in recent years, it was never the predominant method in which employees were usually hired. Previous methods of attracting and selecting job candidates were through ‘traditional methods’, such as paper based brochures, adverts in trade journals or other print media, and recruitment fairs and talks, all of which were designed to create a positive brand for the firm (Highhouse et al, 1999; Galanaki, 2002).

These approaches were aimed at specific groups, therefore companies seeking graduates could advertise in media that specifically target this demographic, while those seeking executive level positions would advertise in national media which have a broader distribution and are normally read by the social class sought (Searie, 2004). Less direct approaches are also common such as media publicity, family open days and work previews (Zusman and Landis, 2002).

Traditional recruitment methods were the predominant (and sometimes only) way in which large, medium or small scale organizations could communicate their job vacancies to prospective employees (Van Rooy et al, 2003). However nowadays, traditional recruitment methods are usually predominant in smaller companies, and also companies seeking to fill executive level positions (Harris et al, 2003).


c.Graduate Questionnaire

Hello, my name is Aigerim, I am writing my dissertation on the effectiveness and efficiency of the online recruitment system at a leading UK technology firm, and I would really appreciate it if you could answer the following questions. This is an academic research and is in no way affiliated with any organization, except to compare graduate perception, with that of recruiting managers

Could you kindly rate the extent to which the following factors influence your choice of applying to a particular organization using their online recruitment website. (1 = no influence, 5 = very influential)

FACTORS12345
1Availability of an open job vacancy
2Website Appearance
3Online web presence through adverts, blogs or web postings
4Information availability about organization and position on the company’s website
5Corporate Branding / Prestige of the organization
6Previous knowledge of company and its operations
7Availability of information on online job boards such as Milkround
8Graduate events such as career fairs or open evening
9Word of mouth from friends, employees and fellow students.
10Ease of application, online tests, feedback and recruitment process
11Perceived fit between the applicant and organization.

Could you also provide the following information about yourselfNo personal information would be required.

Are you a graduate(YES / NO)
What year did you graduate______
Could you give a rough estimate of the number of organizations have you applied to, using online recruitment systems_____
If you were given a choice, please underline which one of the following way(s) you would prefer to apply for a job: AGENCY, NEWSPAPER ADS, WORD OF MOUTH, EMPLOYEE REFERRAL, ONLINE.
What would you change in Online Recruitment?
________________________________________________________________________________________________________________

d.HR Semi Structured Interview

BACKGROUND

– How long has your company been utilizing the online recruitment system in recruiting employees?

– To what extent does your company utilize online recruitment with respect to the following candidates (%)?

Graduates,
Experienced Hires
Executive hires

– Could you give a brief explanation of how recruitment for the following candidates – Graduates, Experienced Hires and Executive hires – had been prior to online recruitment?

ADOPTION

– What would you say is the motivating factor behind your organization’s drive for online recruitment?

– What priority has your organization given to the use of online recruitment in recruiting the following talent (Scale of 1 – 5; 1 = no priority, 5 = high priority)

Graduates,
Experienced Hires
Executive hires

EFFECTIVENESS

– Could you give a rough estimate of the portion of new hires that your company has recruited through online recruitment, with respect to the following roles

Graduate
Experienced Hires
Executive Hires.

If Graduate has received higher percentage as opposed to other hires

– Could you give an explanation as to why your organization adopted a full/more online recruitment approach for graduates, as opposed to the other forms of hires?

– How effective (scale 1 – 5) has online job boards such as milkround, efinancialcareers, graduatejobs – been in attracting and generating adequate traffic and applications on your recruitment website.

Could you kindly outline some of the benefits that have resulted in the adoption of these online job boards

What role do they play in the success of your online recruitment campaigns

– What other forms of advertisement has your organization utilized in promoting your online recruitment campaign.

How effective would you say these have been

– Does your company still utilize any form of traditional recruitment method in attracting and recruiting graduates?

If yes, could you kindly outline these methods
How effective (Scale 1 – 5) do you think these methods have been in meeting your recruitment agenda

– From your personal point of view as an employee, which of the following do you believe your online recruitment campaign has been more successful at achieving?

Quantity or Quality of candidates

EFFICIENCY

– To what extent has your organization achieved efficiencies with regard to the following factors, since the adoption of online recruitment?

Overhead cost
Data accuracy
Printing costs
Cost effectiveness

– Could you also discuss any other efficiency that your organization has achieved with respect to online recruitment?

POSSIBLE DISADVANTAGES

– To what extent does application from inappropriate candidates disturb your recruitment process. Do they result in wasted time, effort, and resources?

– Could you give a rough description of the ratio of hires you get per application from online sources, as opposed to traditional recruitment methods?

To what extent to they differ

– How effective has your online recruitment process been in achieving diversity and disability quotasHave you achieved more or less as opposed to the traditional recruitment?

– If you adopt a wholly 100% approach to graduate recruitment, do you believe that it is indeed sufficient in attracting all the required candidates into your organization?

If it does not, then how does your company manage to overcome these shortcomings

e. Hr Semi Structured Interview Transcript

RespondentFictionalNameRoleYears in GoogleSubjects Covered
R1AliceGraduate Events Manager2Effectiveness, Disadvantages
R2MarthaApplication Review7Background, Adoption, Effectiveness, Disadvantages
R3NickFinance and Budgeting9Adoption, Effectiveness, Efficiency
R4ChloeMedia Advertisement3Effectiveness, Advertisement

BACKGROUND

– How long has your company been utilizing the online recruitment system in recruiting employees?

R2: Google Inc. has been utilizing online recruitment systems since I think 2003. That was when we really decided to go all out and accept applications through the system

– Could you give a brief explanation of how recruitment for the following candidates – Graduates, Experienced Hires and Executive hires – had been prior to online recruitment?

R2: I think back then we used to recruit mainly through campus hiring and referrals. Campus hiring was mostly conducted for students who are about to graduate while referrals are mainly for people with some years of experience.

For students, first round of interviews were conducted in the campus after which they were called for further round of interviews, after which successful applicants were offered employment.

Experienced hires were employed primarily through referrals. We pass on our vacancy list to our employees who assisted in searching for candidates who met our minimum criteria. Fit candidates were then invited for interviews with the firm, and successful ones were offered the jobs.

ADOPTION

– What would you say is the motivating factor behind your organization’s drive for online recruitment?

R3: I think the most motivating factor behind our adoption of online recruitment has been the need to make everything more efficient. Technology also makes things easier.

R2: I think IT has been a blessing. It makes the whole process much faster and easier is a powerful motivational factor for the organization. We find that we can recruit a better diversity and quality of candidates by adopting online processes.

– What priority has your organization given to the use of online recruitment in recruiting the following talent (Scale of 1 – 5; 1 = no priority, 5 = high priority)

Graduates – R2: I would give that a five, highest priority,
Experienced Hires. R2: Uhm… maybe a 3
Executive hires – R2: Lowest priority, but not abolished totally. Let’s say 2.

EFFECTIVENESS

– Could you give a rough estimate of the portion of new hires that your company has recruited through online recruitment, with respect to the following roles

R3: Graduates (92 – 95%) Other 5 – 8% is recruited through agencies that refer graduates to entry-level roles that are not part of our graduate scheme.
R3: Experienced Hires (50 – 60%) A majority of experienced hires, for lower roles are recruited through our online recruitment systems. They send their CVs and answer a few questions. If they match our criteria, they are called in for interviews. The other 40 – 50% is hired through referrals where we give referral bonuses to find candidates for us. Most of the candidates gotten through referrals are usually experienced because of the level of detail we give to the agencies finding jobs for us.
R3: Executive hires: Only a slight and often negligible minority of our executives are recruited through our online recruitment channels. They are mostly recruited through executive search channels because a vast majority of them already have positions in other companies and are therefore not looking for jobs.

If Graduate has received higher percentage as opposed to other hires

– Could you give an explanation as to why your organization adopted a full/more online recruitment approach for graduates, as opposed to the other forms of hires?

R2: Well, based on our experience, it is the younger graduates who are better users and more frequent on the Internet. We receive a higher traffic from graduate applicants than any other job applicant category; it is therefore logical that we choose to adopt a majority Internet based approach to their recruitment.

R1: We believe it is a better approach to their recruitment since a majority of their application process – such as the online tests can be conducted online.

R4: Graduates are increasingly resorting to online job boards in their search for jobs, and these job boards refer them to website where they could make applications. Previous research has also pointed to the fact that these graduates believe that online recruitment constitutes a better approach to their recruitment, since they prefer the ease of feedback.

– How effective (scale 1 – 5) has online job boards such as milkround, efinancialcareers, graduatejobs – been in attracting and generating adequate traffic and applications on your recruitment website.

R4: In terms of attracting and generating traffic, I would give the job boards a 4 – 5, depending on which job board is being referred to.

R3: We mostly use LinkedIn to direct traffic to the site, which is quite effective but are quite expensive to advertise on. Whenever our job positions are open, we contact them and they advertise the positions and details for us. Candidates are usually redirected from their websites, to ours, where they inquire more about the position and submit their applications.

Could you kindly outline some of the benefits that have resulted in the adoption of these online job boards

R4: Well, as the questionnaire asked earlier, the job boards are very effective in directing traffic to our sites. A vast majority of applicants are directed through them and are able to get some details about the vacancies we offer.

R3: They are much cheaper than newspaper adverts. A number of graduates seeking jobs go to these sites in order to gain access to companies that have graduate vacancies; therefore it is very effective for us to utilize them as they are the most effective way of reaching a wide number of graduates.

What role do they play in the success of your online recruitment campaigns

R4: They play an important role in the success of our online platform as they direct the necessary traffic to our websites, and also inform job seekers about our vacancies, timelines and recruitment processes. It is also a means to build brand awareness, as a vast majority of applicants have no idea about the company before they start their applications.

– What other forms of advertisement has your organization utilized in promoting your online recruitment campaign.

R4: Well, we primarily advertise our vacancies in the career sites of universities’ website. We also host a number of open events and evenings at either university locations and also at our London office. We attend career fairs for university graduates that have been organized by external parties in order to advertise our brand.

How effective would you say these have been

R4: Well, we believe each advertisement serves a separate purpose. For instance, vacancies that are advertised on the career sections of universities help in attracting students from particular targeted institutions to our websites.

R1: Open events and evenings, help give aspiring applicants much more information regarding the organization, and information that could assist them during their applications.

R1: Those open evenings at the London office help us reach out to aspiring applicants who are graduates but not in university anymore. They get the chance to come over to our head office and discuss with members of staff about the prospects of joining the organization.

While career fairs are used to raise awareness and also discuss career prospects with prospective students and graduates.

– Does your company still utilize any form of traditional recruitment method in attracting and recruiting graduates?

If yes, could you kindly outline these methods

R2: Well, not really. All our graduates are recruited primarily through our graduate channels. We do accept employee referrals for graduate admissions also.

R4: We still use traditional recruitment methods in the form of executive search agencies, word of mouth and employee referral. These forms of recruitment are primarily used for higher level experienced hires and executive hires. They are the main recruitment strategies for these posts.

How effective (Scale 1 – 5) do you think these methods have been in meeting your recruitment agenda

R4:

Word of Mouth and Employee Referral: Temporary Hires – 1; Experience Hires – 5; Executive Hires – 3

Executive Search: Temporary Hires – 1, Experienced Hires – 3, Executive Hires – 5.

– From your personal point of view as an employee, which of the following do you believe your online recruitment campaign has been more successful at achieving?

Quantity or Quality of candidates

R1: From my personal point of view, I think we get a mix of both. We receive applications from people who are not just qualified for the job, while we also receive applications from qualified candidates. So yes, I believe it is a mix.

R2: I believe we receive more of quantity and a reasonable number of quality candidates. If we did not receive quality, then our recruitment efforts would be futile. I believe it is our advertisement and awareness program that help drive quality into the mix, otherwise we would have a bunch of people who apply just because they stumbled upon the website.

R3: Uhm, We receive more quantity than quality to be honest. However the numbers of quality candidates we receive are not always enough to fill our employment target. For instance we may have vacancies for 20 people in a particular role and we could only recruit between 10 – 15 people in that year because we do not have enough candidates who have applied to the system.

R4: I think we receive more quantity than quality, but that’s acceptable considering the nature of online recruitment and how open it is. But due to various steps and procedures, we are able to shortlist these candidates to an acceptable number that we could interview personally and assess.

EFFICIENCY

– To what extent has your organization achieved efficiencies with regard to the following factors, since the adoption of online recruitment?

Overhead cost

R3: I cannot give a definite figure, but I know that before we started online recruitment, we spent a lot of cash and resources in administrative duties such as sorting, and reading each application. We hired a higher number of external interviewers and took managers out of their daily duties so they could interview a huge number of applicants. The success rate of these applicants was usually low because they had not taken any tests and there was no indication as to whether they were a good fit within the organization. However with online recruitment, most of these procedures are now handled automatically. Applicants answer application forms and their information is automatically entered into the database. They are then invited to partake in telephonic interview if we think their initial credentials match what we want. It’s a technology ride that reduces our overhead cost significantly

Data accuracy

R2: All applicants enter their information directly into the system; therefore it is much easier for us to sort and process data effectively. We no longer have any problems with interpreting and coding what applicants have written in their application form. The accuracy of data has therefore improved significantly since we started this process.

Printing costs

R3: Well, now the Internet recruitment process handles everything. During the traditional recruitment era, we usually had to print out several documents such as application forms, letters advising applicants on each level of the process, and also documents regarding or relating to the whole application process. Now, all we have to do is update our database on the applicant’s progress, and automatic emails are dispatched to each applicant informing them of their status. Application forms are now online with no need whatsoever to print anything regarding the applicant. Thereby saving the company money on those expenses.

Cost effectiveness

R4: In terms of effectiveness, I believe the cost we previously incurred in printing, newspaper advertisement and overhead costs, have now been replaced by costs associated with online adverts, designing and maintaining our websites, and also posting ads on job boards. However, these costs in no way come close to the cost of overhead and advertisement that we previously incurred when adopting traditional measures for graduates.

R3: The only traditional costs we incur now are those related to agency payments for executive and experienced hires, and also payments related to organization or attending events for graduates.

– Could you also discuss any other efficiency that your organization has achieved with respect to online recruitment?

R3: effectiveness and efficiencies anyway. We have been able to reduce cost, reduce staffs in recruitment, print less paper and communicated much faster to applicants seeking employment.

POSSIBLE DISADVANTAGES

– To what extent does application from inappropriate candidates disrupt your recruitment process. Do they result in wasted time, effort, and resources?

R2: Well we do get a number of applications from applicants that are very unsuitable for the roles, either because they are unqualified or they do not answer the recruitment questions appropriately. However the recruitment system enables the people reviewing these applicants to be able to spot these unsuitable applicants without investing too much effort or time in them. Though the number of these appears to be high they are very manageable.

– Could you give a rough description of the ratio of hires you get per application from online sources, as opposed to traditional recruitment methods?

R2: Well for Graduate Recruitment, I would give you a rough overview. Prior to the applicant, let’s say we normally got about 600 – 800 applicants, and we conducted up to 100 first and second round interviews, after which about 5 – 10% of applicants would get the job.

Now that we have online recruitment, we get about 1,500 applications, interview just about 150 – 200 applicants, out of which only about 20 get the job.

– How effective has your online recruitment process been in achieving diversity and disability quotasHave you achieved more or less as opposed to the traditional recruitment?

R1: I believe we are lucky enough to achieve diversity goals most times, however whenever we do not, we outsource our recruitment to agencies for help in seeking candidates from particular backgrounds. However it is also possible to achieve disability quotas form online recruitment. Sometimes we do not, and if we do not, we outsource to disability agencies or centres that would refer us potentially suitable candidates.

– If you adopt a wholly 100% approach to graduate recruitment, do you believe that it is indeed sufficient in attracting all the required candidates into your organization?

R2: Well, like before the online recruitment era, we still receive a number of applications, but it’s the level of fit that has reduced. Therefore if we adopt a 100% approach to online recruitment, I believe we would be able to recruit a considerable percentage of candidates to meet our goals.

R4: I think we may be shorthand when it comes to very skilled candidates who are being recruited directly by other firms. In this case, direct hires are much more effective. In general online recruitment does help satisfy a vast majority of our recruitment objectives.

f. Graduate Questionnaire Response

RAW DATA FROM RESPONDENTS

RespondentJob AvailabilityWebsite AppearanceOnline Web PresenceInformation AvailabilityCorporate BrandPrevious Company KnowledgeJob BoardsGraduate EventsWord of MouthEase of ApplicationPerceived FitGraduate?Preferred Form of Recruitment
13343435532111
24252535543225
34443524434115
43554435555314
55254524343214
65143333254325
74354544142115
85343435153325
94233545334224
103344424135121
114453535423415
124344543544522
133454414355221
144355525523121
155344435542415

DESCRIPTIVE STATISTICS OF DATA RECEIVED

Web AppearanceOnline Web PresenceInformation about JobCorporate BrandPrevious Organization KnowledgeJob BoardsGraduate EventsWord of MouthEase of ApplicationPerceived Fit
Mean3.004.403.534.472.804.403.473.733.472.33
Mode34.0045355431
Median3.004.004.005.003.005.004.004.003.002.00

PREFERRED MODE OF APPLICATION

FrequencyPercent
Valid
Word of Mouth19.80%
Employee Referral352.12%
Internet638.08%

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Free Essays

Free Tourism Dissertation: African Tourism Industry

A Strategic Analysis of the African Tourism Industry

Abstract

The study looks at the African Tourism Industry in terms of strategy for development over the coming decade, with particular reference to the differences between East and West African Tourism. A number of business models including SWOT and Porter’s Five Forces are applied to generate a strategic analysis and overall framework for implementation.A key aspect in the analysis is a small conceptual model using regression analysis to forecast the future evolution of the industry over the next 10 years.

1. Introduction

1.1 Study Rationale

This study looks at the African Tourism Industry in terms of strategy for development over the coming decade, with reference to the differences between East and West African Tourism. A number of business models including SWOT and Porter’s Five Forces will be applied to generate a strategic analysis and overall framework for implementing strategy.A key aspect in this analysis will be a small conceptual model using regression analysis to forecast the future evolution of the industry over the next 10 years.

It is useful to investigate this area as the tourism industry is currently small in Africa, but has great potential in terms of development with a large number of unique attractions. In addition, regional tourism currently dominates, and the proportion of international visitors, who tend to spend more money, is low. With African countries starting to work together to develop cross-border tourism offerings, the potential for increasing visitor numbers and wider awareness of Africa as a tourism destination is enhanced(Euromonitor International 2010). Intra-African tourism is currently a strong growth area, although advertising focus remains fixed upon attracting non-African visitors (New African 2010). In addition, tourism offers the chance to increase economic growth of individual countries in the region.Currently a rate of just over 5% growth is forecast annually between 1995 and 2020.

1.2 Background to Study

There is good potential for growth in the African tourism industry. However, any growth in tourism needs to take into account the need for sustainability. Over the last 30 years there has been an increasing demand that tourism be ‘green’ and think about the environmental impact of its activities. Sustainability is a complex area covering a number of related but distinct areas. These include understanding the consequences of climate change, and how unmanaged tourism can contribute to these; the impact upon local economies and the local people of unchecked resort development; and the need to ensure resources such as energy and water are conserved. Indeed, sustainable tourism has been already suggested as a way to shape forecasting strategy for African Tourism.

In addition, tourism is, compared to other industries, less influenced by the ‘stakeholder’ model in which the interest of other parties are taken into account when making business decisions; profitability is still the main driver (Shitundu 2003).Given the need for incorporating sustainability, there is a strong argument for turning to a stakeholder perspective. This would turn the focus away from the demands of shareholders and profits to incorporate views from all other interested parties including local businesses, chambers of commerce and other organisations, local government, community organisations and residents. All who have a legitimate interest in the way tourism develops should be consulted equally, and this should be done at the same time as representatives from commercial organisations are consulted (Budruk 2010)

In order that African tourism can provide the best outcomes for both sustainability and for all stakeholders, it is vital that it is managed within a strategic framework.Such a framework can help to develop a perspective upon the way tourism can develop, but also provide a structure whereby the developed policy can be both evaluated and improved in the future (Dumont and Teller 2005). A number of different models for strategic frameworking exist. Certain models centre on problem identification and solving. Others look at the objectives of the organisation as central. In the case of Africa, an argument could be made for basing the strategic framework around problem solving, as a central issue concerns the best way to develop tourism in a sustainable way. On the other hand, if objectives of both organisation and stakeholders are taken into account, an objective based perspective might be used.

A strategic framework in this instance can be based upon a review of resources. This resource-based perspective allows the capacity of tourism in Africa to be seen in terms of valuable resources including physical locations, cultures and traditions. In this study a framework developed by Crouch and Ritchie (1999) will be used to shape strategic analysis. Their framework both sets out resources in broad categories and traces the relationships between them. In addition, Yoon (2002)’s development of the model allows the addition of stakeholders perspectives. One useful tool for quantifying the strategic framework is by developing a forecasting model to set out the evolution of the industry. Such a model can both maximise benefits and play down the negative impacts. Forecasts assume a continuity from past to present, and use data from the past to project into the future.

1.3 Dissertation Structure

The literature review will develop key ideas in more detail, including different theories of strategic development, and forecasting models, including limitations of such models, and justification for the model selected for this study. The current African tourism industry will also be discussed in depth, although there is relatively little study of the industry in the continent, and particularly few primary research studies. The literature review will also discuss the distinction between tourism in East and West Africa. East African perspectives emphasise sustainability, and it is gaining importance in West Africa as well. There are, however, key differences between the areas which will be elucidated. The literature review was developed on the basis of academic and industry electronic databases through key word searches.

Further sections will set out the hypotheses to be tested, which will emerge from the literature review. The methodology of the study will be set out including how data was gathered, sampling techniques, statistical modelling used and types of analysis carried out.

The results will be discussed in terms of the overall aims of the study.Any limitations of the study will be pointed out, implications for future study will be highlighted, and ways in which the study results can inform the African tourist industry will be set out.

1.4 Research Objectives / Questions

The study will address the question of ‘what is the best strategy for a coherent plan to develop tourism in Africa, taking into account the need for any such strategy to be sustainable?’. The difference between strategy for East and West Africa will be taken into account. The study aims to clarify best strategy by identifying key variables, which impact upon the likely future development of tourism in the region.

1.5 Summary

This section has given an overview of the area under investigation, the African tourist industry, which is currently underdeveloped and yet has potential to become a key destination. The structure of the following is set out