Different Strategic Types Operating in the Same Industry: Method

Different Strategic Types Operating in the Same Industry: MethodThe method used in this paper is a multiple case study which is based on the literature which suggested that a well structured case study has the potential to add knowledge to a specific field of inquiry such as strategic management accounting practices.
Case studies offer the opportunity to validate alternatives particularly industry specific practices. The industry specific performance measures add substance to the case study approach. The inclusion of established methods of performance evaluation, in the analysis process, provides enhanced validity for the findings. The data sources for this paper were drawn from general insurance companies operating in Australia. The three companies were the Union Insurance Company Ltd (referred to as Company A) representing the defender, the Fire and All Risks Insurance Company Ltd (referred to as Company B) representing the prospector, and the Royal Insurance Company Ltd (referred to as Company C) representing the analyser.
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Different Strategic Types Operating in the Same Industry: Literature Review

The strategy that an organization adopts may be influenced by the internal environment it will be specifically relative to the external environment. This forms the basic premise upon which the generic strategic classifications of prospector, defender and analyser were proposed by Miles and Snow and later extended by Snow and Hrebiniak to include a fourth classification of the reactor. According to Gordon and Narayanan the external environment will have a strong influence in determining the type of strategy this leads to the concept of there being a continuum upon which the external environment may be explained as moving from a stable existence through an intermediary phase of neither stable nor unstable and through to an unstable existence. Gordon and Narayanan reported that that the defender favoured a stable external environment, the prospector an unstable one and the analyser one which was in between. In addition the research identified an additional continuum related to adapting or reacting to change. Accordingly, the Analyser was at the extreme end of this continuum relying on the innovation of others while the reactor merely responds to pressure with little or no concern for the innovation of others.

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Different Strategic Types Operating in the Same Industry: Introduction

Different Strategic Types Operating in the Same Industry: IntroductionThe general insurance industry has a major role in the finance sector and in particular provides security against financial losses for businesses and the general public. The general insurance industry has faced many challenges because of the advent of the global financial crisis as well as major disasters such as floods and storms. Not only is it important to satisfy the shareholders concern for profits it is essential to have sound business practices that provide continued liquidity. Since 1960 some 23 general insurance companies have gone into liquidation in Australia placing greater concern over the approach to strategic planning in the general insurance industry. Payday Loans Online

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Private Returns to Education in Urban Cameroon – Conclusion

Private Returns to Education in Urban Cameroon - ConclusionIn the Cameroon economy where the formal sector of the labour market is unable to grow at a fast enough pace to absorb the ever rising labour force, competition for the limited formal sector jobs is keen and people tend to invest more in education in order to get degrees that will enable them to get better paid jobs. As one can observe on table 3, highest marginal rate of return to additional certificates are obtained in the formal private sector. Graduating from the first level of the secondary education entails a marginal return of 2.54% for civil servants, 4.70% for formal private workers, and 5.53% for informal workers. Schooling two additional years after the GCE-AL increases wages by 6.6.54% in the public sector and by 32.96% in the formal private sector; the increase is not statistically significant in the informal sector. It is worth mentioning that in the formal sector (public and private), returns to an additional year of tertiary education once the BTS certificate is obtained are lower than returns to an additional year after the GCE-AL. This result comes as an indication that holders of this vocational certificate are worse-off working with a Bachelor degree. It may also be interpreted as a result of the quadratic form of returns to additional years of schooling. The return to two additional years of tertiary education once the Bachelor degree is obtained tends to be relatively high in the formal private sector (42.80%) followed by the public sector (14.23%).
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Private Returns to Education in Urban Cameroon – Discussion

In line with findings in the literature, our results show that earnings rise with higher levels of education. Taking the first specification and irrespective of the labour market sector, returns to education are convex and the statistical significance becomes stronger with higher levels of schooling. The profile of the convexity of the returns to education are close in magnitude to what was estimated for Turkey in the informal sector, for Cameroon private sector, and for Ghanaian male workers (Sackey, 2008). As Benhayoun and Bazen observed in Morocco, the returns to the level of education are overestimated when omitting the highest degree obtained by the individual. For instance, returns to the tertiary level of education are lowered and become non significant in all the labour market sectors. This result evidences the existence the of a sheepkin effect in the Cameroon urban labour market, that is the fact that part of the returns to education is due to the influence of degrees on wages. This may be interpreted as a confirmation of Arrow’s “filter theory’ according to which the main function of education is not to increase people’s productivity, as postulated in the human capital theory, but to filter candidates with the most impressive characteristics.
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Private Returns to Education in Urban Cameroon – Results

Private Returns to Education in Urban Cameroon - ResultsTable 2 provides the results from estimating earnings functions for the public, formal private and informal sectors in Cameroon for the two specifications under consideration. Globally, all the wage equations are statistically significant with an R-squared which is around 34% in the public sector, 40% in the formal private sector around 25% the informal sector; these statistics means that the model is better fitted to explain wages of public and formal private sectors workers. A first noteworthy result is that a large part of the variance of earnings reflects unobservable factors that are not captured in the regression equations. Unlike Ewoudou and Vencatachellum who got a significant selection term only in the public sector, the sample selection correction terms are significant and negative for all the labour market sectors, meaning that it is important in the case of Cameroon to explicitly model selection into employment when estimating earning functions. If we hypothesize that people choose their status of employment in a way which maximizes their earnings potential, then we should observe positive selection. One interpretation of the negative selection into employee status is therefore that there exist some unobserved factors that increase one’s probability to be employed but also contribute to the likelihood that a person will earn a below average wage.

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Private Returns to Education in Urban Cameroon – Data Source

The data used in this study are drawn from the 2005 Employment and Informal Sector Survey (EISS) which is a nationally representative and comprehensive survey providing information over 8,540 households and 38,599 individuals around the country. Information covers socioeconomic characteristics, employment status and characteristics, and some family background indicators. Of particular interest is information on variables, which might permit meaningful separations of the data by type-of-employment and labour market sector. The survey also includes information on the industry of employment and occupation and on a variety of income sources, including weekly earnings and wages analyzed in this study. The analysis of returns to education concentrates only of salaried workers. The rationale is that, revenues generated from self-employed individuals’ activities do not simply remunerate labour, but also capital. Considering the fact that there’s no information on how to dissociate these components, it is better to exclude these individuals from the analysis. The sample used in this study included only individuals in the working age group 15 to 65 years, who were full-time employees, and lived in Cameroon urban areas. It consisted of 13,104 observations covering individuals both in the public, private formal, informal sectors, as well as unemployed ones. Sample modal numbers of years are 6, 9 and 16 respectively for those who have the primary, the secondary and the tertiary levels of educationv. While considering the highest degree obtained, we have 6 for the Primary school certificate (FLSC), 10 for the first level secondary school diploma (GCE-OL), 12 for the PROBATION degree, 13 for the GCE-AL, 15 for the BTS degree, 16 BACHELOR degree, 18 for the MASTER and upper degrees (Master/PhD).
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Private Returns to Education in Urban Cameroon – Methodology

Private Returns to Education in Urban Cameroon - MethodologyTo ascertain the returns to education, we use the standard and widely applied earnings function proposed by Mincer.
Returns to education being dependent of the proportion of qualified individuals that are applying for a job on the labour market, the increasing production of high skilled individuals in Cameroon is likely to have induced a filtering down process in which low paying job attract overqualified individuals. In such a context and for a given labour market experience, education may loose its explanatory power on the wages. Hypothesizing the existence of a “parchment effect’ on the Cameroon urban labour market, we include dummy variables representing the highest degree obtained by an individual and obtain the following second equation.
Due to the fact that wages are unobserved for individuals whose market pay is lower than their reservation wage, the analysis of earnings is potentially affected by a non-random selection of individuals into the labour market. In such a setting, earnings are jointly determined with labour force participation and any analysis that ignores the process of labour force participation is potentially subject to selection bias. To correct for such a bias, the two-step estimation method developed by Lee and Trost and Lee is adopted. In the first stage, the selection into the labour market is estimated. As far as the Cameroon labour market is concerned, individuals face four mutually exclusive labour market outcomes: unemployed (l=0) the reference group; employed in the public (including parastatal companies) sector (l=1), in the private formal sector (l=2), and in the informal sector (l=3).  The choice of or selection into one of these sectors is thought to depend on a vector of explanatory variables (Z) capturing an individual’s perceived net differentials in wages between them, tastes and preferences, as well as human capital and other characteristics; r represents a vector of associated unknown parameters to estimate. From these estimates, we construct the selection term (Mills’ ratio) for the alternative l as Xt =4>(fiZi)/ Z); being the normal density function and O the normal distribution function.

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Private Returns to Education in Urban Cameroon – Literature

According to the human capital theory, an individual’s optimal investment in human capital calls for a consideration of both human and financial capacities, and the prospective utilization of the capital that is being accumulated. Consequently, the expectations regarding future family and market activities of individuals play an important role in the determination of the levels and forms of human capital investment. To the extent that labour market earnings are determined by the stock of human capital accumulated by individuals, a sequence of positive net investments results in an earning power that grows over the life cycle. Consequently, educational attainments are thought to be a plausible cause of earnings differential between individuals. These ideas have given foundation to a huge number of studies on returns to schooling around the world.
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Private Returns to Education in Urban Cameroon – Context

Private Returns to Education in Urban Cameroon - ContextFollowing independence in 1960, Cameroon recorded tremendous economic growth. The yearly average growth rate of per capita Gross Domestic Product (GDP) amounted to 4 percent during the period 1965-1976, 13 percent from 1977 to 1981, and 8 percent from 1982 to 1985. By 1985, Cameroon was ranked among the middle-income countries, according to the World Bank taxonomy. During this “20-year golden age”, the Government created many schools (primary and secondary) and instituted a partially free primary and secondary education in order to ensure access to education. As one of the crucial problems faced by Cameroon was the need for trained national cadres (especially for senior positions in the civil service), policy-makers held the view that the panacea would be for Government to create and run institutions of higher learning and thus make provision for the acquisition of skills necessary for national development. Cameroon created a variety of higher education institutions, among which one university and diverse state-owned professional schoolsi. During this period, unemployment was not a big issue, thanks to an ambitious development program of employment creation in the public sector, recruitments in state-owned enterprises, and development projects. Graduates of professional schools were assured of jobs in the public sector once admitted into the school; a practice that skewed the Cameroon labour market towards the public sector.
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