Diabetic Protocol for Adolescent

Introduction

Type 1 diabetes needs lifelong self-care such as preset glucose control to prevent complications and optimize wellbeing. Relationships among metabolic control, coping, adjustment, and psychosocial stress influence an individual’s self-care ability, and as a result, affect clinical outcomes. Health and illness transitions include life transitions. Many strategies are employed to manage diabetes during transitions. For women with type I diabetes, transition to motherhood can be stressful because managing levels of blood glucose can be intense and challenging.

Management

  • Contraception must be sustained until optimal glycemic control is attained. Choice of contraception technique must be with discussed with health providers. Estrogen and progesterone pills should be avoided at al cost if there are vascular complications.
  • Educate women with childbearing age the need for tight glucose control prior to pregnancy and encourage them to take part in effective family planning.
  • Women with T1D Women who are considering pregnancy should be assessed and, if found, treated for diabetic neuropathy, retinopathy, nephropathy, cardiac diseases, hypertension, thyroid disease, and dyslipidemia (Kitzmiller, et al., 2008). Right from preconception care, a comprehensive medical assessment should be carried out to review patient’s history of physical activity, psychosocial problems, and eating patterns (Kitzmiller, et al., 2008). Besides apt obstetrical examination, clinicians should perform physical examination such as determination of blood pressure, thyroid palpation, and orthostatic heart rate.
  • Physical examination should be conducted to determine blood pressure, thyroid palpation, and orthostatic heart rate.
  • Use of medication use must be evaluated prior to conception, given that drugs typically used to diabetes complications can be contraindicated.
  • Regular visit follow-up visits are necessary for adjustment in the regimen plan associated with stage of pregnancy, blood pressure and glycemic control, individual patient needs, and weight gain.
  • Educate expectant mothers with T1D regarding the lifelong benefits of cardiovascular disease reduction, effective contraception with tight glycemic control prior to the next pregnancy. Pregnancy deeply affects diabetes management because growth factors, placental hormones and cytokines can wreak a progressive elevation in insulin resistance calling for intensive regulated insulin administration and medical nutrition therapy.

Lack of Family Structure and Financial Resources         

  • Health providers must conduct psychosocial screening that includes attitudes regarding diabetes, resources (social, emotional and financial), expectations for clinical management and outcomes, psychiatric history, and diabetes related quality of life (Kitzmiller, Block, Brown, et al., 2008).
  • Emphasize the significance of complying with the prescribed treatment regime. Also health providers should engage family members and discuss with them about the weightiness of the patient’s status.
  • Asses the financial status of the patient and discuss future financial cost of treatment. Patients with financial problems need assistance to get access to generic drugs or pharmaceutical companies concerning programs that give prescriptions at lower prices. Such patients can save some money by utilizing generic testing supplies.
  • Provide access to appropriate services and relevant, accurate information. Clinicians should pay attention to the attributes of childbearing women with T1D When seeking clarifications for changing blood glucose levels, choosing actions, and evaluating their decision and act appropriately

Suspected Medical Failure

Noncompliant with T1D treatment is caused by existing gap in the disease management in adolescents. Due to lack of knowledge about diabetes, many adolescents do not understand the disease process, related complications. Other challenges stem from the inability to manage T1D independently and health insurance status.

  • Discuss and educate young people on the disease process and its complications
  • Emphasize the importance of refilling medications regularly and complying with the therapy
  • Choices of medical prescription should be made available to enable adolescents make informed decisions about medications that fit their lifestyles. Choosing suitable regimen is desirable because some therapies are known to disrupt the personal and social life
  • Adolescents should be advised about the importance of scheduling appointments independently
  • Clinicians should reinforce written prescriptions with verbally cues
  • Prescription instruction should be a brief word with clear illustrations. Healthcare providers must take additional time to review prescription material, involve family member or friends to reinforce the medical prescription.

Reference

Kitzmiller, J. L. Block, J. M., Brown, F. M., et al. (2008). Managing Preexisting Diabetes for Pregnancy: Summary of evidence and consensus recommendations for care. Diabetes Care, 31 (5): 1060-1079

Hypertension in Hispanic population

Abstract

Purpose/Objective: The purpose of this paper is to develop a suitable medication and caring plan for the Hispanic population In USA. The study looks to encourage the hospitals and the medical agencies in the country to develop a suitable plan for the growing concerns of hypertension syndrome among the Hispanic population.

Background/ Rationale: Hypertension has been one of the most recurring diseases in the US and with careful analysis it has been found that most of it has been caused by unhealthy lifestyle. The National Medical Authorities have developed a general guideline for the treatment of hypertension but nothing has been done for the unique cultural groups residing in the country. Among the minority groups, it has been found that the Hispanic population is on the rise and the hypertension disease has been a significant impact on the population. Therefore, a suitable guideline should be developed for this cultural group at the earliest to arrest the development of the disease.

Description of the Project / Innovation: This project will take the help of JNC-7 and JNC-8 Guidelines that have been developed by the National Authorities. In addition to this the paper has taken the help of Watson’s Caring Model that have been analyzed to be best suited for the treatment of patients with unique backgrounds. It has to be noted that Hispanics are parts of a unique cultural group and thus they have to be treated in a different way than that of the other groups in the country.

Interpretation/ Conclusion: It has been found that with careful implications of the JNC-7 and JNC-8 Guidelines and with the development of the Caring Model, hypertension aspects in the Hispanic population can be curbed to some extent. It can be managed at an early stage with the development of communication and information aspect among the Hispanic population.

Implications: The study has underlined the fact that the Hispanic population is a unique part of the society and the culture and lifestyle of the race is unique to the other groups of USA. In addition to this, it has also been found that some parts of the Hispanic population are undocumented residents in the country and thus are not entitled to receive medicinal benefits of the Government. In this condition, it has been very difficult for the Government Authorities to develop a proper treatment plan for the Hispanic population.

The adulterated lifestyle of the Hispanic population and indiscipline in their daily life also make them vulnerable to the hypertension disease and thus it has been a big threat to the US population. Thus, it should be taken into account at the earliest and the Government and the medicinal authorities should make it a point to develop a proper treatment plan. Proper communication is necessary to curb the disease at an early stage and the treatment plan in terms with the JNC-7 and JNC-8 Guidelines should be communicated. The paper has found that for the development of a proper treatment plan for the hypertension disease, it is necessary for the general populace to follow Active Management of Diet and Exercise and Active Pharmacological Management. This will help the prospective patients to develop an immune system to the disease to a certain extent. In addition to this, it is also the responsibility of the Government and the medicinal authorities to communicate the benefits of the above to the populace. In addition to this, the medicinal authorities should develop a proper follow up care model that has been prescribed in the study. Modern day technologies can be used for the development of hypertension treatment and information regarding the treatment aspects can be available in the modern day gadgets. The medical facilities should be developed in the nooks and corners of the country so that the Hispanic population can avail them for their benefits. Still, effective and accessible education on hypertension is only the first step toward achieving positive health care outcomes in the Hispanic American population. There must be more active means of promoting lifestyle management among Hispanic Americans toward recognizing and preventing the dangers of hypertension. In this case, it has to be stated that the Hispanic population should be communicated about the dangers of hypertension as well as the benefits of leading a healthy lifestyle. The health officials should take the responsibility to communicate with the Hispanics at every level of society.

 

 

 

 

 

 

 

 

 

 

Purpose

Hypertension has been one of the most recurring diseases that have been affecting Americans in the present era. According to the Centers for Disease Control and Prevention (CDC), about 67 million Americans have been suffering from this disease and most of the affected have not been able to manage the conditions. (The Centers for Disease Control Website, 17th September, 2012). Though there have been a huge development in the educational and informatory resources in the present days, still there have been parts of population who are not aware of the things that are needed to be done in these conditions.

One of the most affected parts of the American population is the Hispanics. The Hispanic population has been one of the fastest growing ones in the US. (Guzman, 2012, p. 165). The Hispanic population consists of the immigrants from the countries like Mexico, Central America, and South America (Ennis, Rios-Vargas, & Albert, 2011, p. 2). In some of the states like California and Texas, the Hispanics consist of a major part of the total population. In fact, the Hispanic population of these two states consists of 47% of the total Hispanic population in the entire USA. (Ennis, Rios-Vargas, & Albert, 2011, p. 7).

It has to be noted in this regard, that the lifestyle of the Hispanics makes them vulnerable against the disease. Unhealthy lifestyle and indiscipline in their food habits make hypertension common among the Hispanic population. It is also quite interesting to note that despite being one of the most prominent races in the nation, the Government has done little to improve the situation of the Hispanics in terms of their health aspects. Despite this surge in the population of Hispanics, there are “currently no hypertension treatment guidelines that address the unique characteristics of this ethnic group” (Guzman, 2012, p. 165). Hypertension is a common and underlying risk factor for morbidity and mortality in the world today, and it is considered to be the most important and modifiable risk factor for coronary heart disease, stroke, congestive heart failure, end-stage renal disease, and peripheral vascular disease (Patronis-Jones, Ricard, Sefcik, & Miller, 2001, p. 36); as such, the lack of hypertension awareness and effective blood-pressure control techniques have led to an increase in diabetes, cardiovascular disease, and other diseases associated with hypertension (Aponte, 2009, Guzman, 2012, Zallman, et al., 2013).

The paper will thus look to find out the trends of the Hispanic population and the factors that make them vulnerable to hypertension aspects. It has to be noted that America on the whole has been affected to a certain extent by the disease and there have been certain measures taken by the Government and the health bodies to improve the situation. However, there have been no measures of such in terms of the Hispanic population and given their unique lifestyle, it is important that proper measures are taken in this aspect. The paper will investigate the aspects that can be taken into account in improving the situation particularly for the Hispanic population in the US. The paper will also look to implicate a nursing model that will be best suited for the situation. This will help the paper to move to certain conclusions that will help in the development of a roadmap to cure the problem for the Hispanic population.

Background of the study

As has been stated in the earlier part of the paper, hypertension has grown to be one of the most important health issues in the US today. It is a chronic illness that has been affecting 1 out of every 3 Americans today. It is a myth that hypertension affects old and elderly and results have shown that there are high chances that young people get affected with this disease. (Sheps, 2nd November, 2012).

A chronic condition is a human health condition or disease that is persistent or otherwise long-lasting in its effects. The term chronic is usually applied when the course of the disease lasts for more than three months. Chronic diseases have been affecting population worldwide and in the US, it has been responsible for most of the diseases and deaths. Hypertension is a common and underlying risk factor for morbidity and mortality in the world today, and it is considered to be the most important and modifiable risk factor for coronary heart disease, stroke, congestive heart failure, end-stage renal disease, and peripheral vascular disease (Patronis-Jones, Ricard, Sefcik, & Miller, 2001, p. 36); as such, the lack of hypertension awareness and effective blood-pressure control techniques have led to an increase in diabetes, cardiovascular disease, and other diseases associated with hypertension (Aponte, 2009, Guzman, 2012, Zallman, et al., 2013).

Thus, hypertension can be defined as a sustained level of elevated blood pressure which is asymptomatic in majority of the patients.

Classification of Blood pressure

Category                                SBP                                         DBP mmHg

Normal                                    <120                and                  <80

Prehypertension                      120-139           or                     80-89

Hypertension, Stage 1             140-159           or                     90-99

Hypertension, Stage 2             ≥160                or                     ≥100

Hypertension occurs in approximately 20% – 25% of general population.

It has been found that hypertension generally affects people with unhealthy and indiscipline lifestyles. In addition to this, lack of education, problems with diagnosis, communication problems etc also affects in developing hypertension. The risk with the Hispanic population lies in with the fact that they come from different cultures and from a different country. Their lifestyles are completely different from that of the American population and their activities in the social sphere make them unique propositions in the country.

It has been found that about 18% of the Hispanic population suffers from hypertension and the major reasons for this has been the lifestyle they tend to lead in the society. In addition to this, the lack of education and the communication problems have also been major issues that have been influenced the growth of this disease in the Hispanic race. The differences in language and socio-cultural traits in the Hispanic population with the other parts of the American society make it difficult for the measures put up by the Government and the health organizations to be implemented in them. Therefore, it has been seen that the Government and the health bodies of the country have not developed any specific policies for the Hispanic race in the US and this is the reason why the conditions have been deteriorating day by day. Therefore, it will be beneficial that the Government and the health bodies look to take control of the situation at the earliest and develop policies that will look to control the occurrence of this disease in the Hispanic population.

Description of the project

The project has taken note of the problems that have existed in the Hispanic population in the US and have tried to find the reasons behind it. It has to be noted here that these aspects are necessary as this in turn will help the paper to develop a viable conclusion and will also help the paper to develop a persistent road map to address the problem.

The section will look to find out the causes of hypertension and the salient features of the Hispanic population in the US. It will also look to find out the modes of treatment that can be provided to the population in accordance with the Health Guidelines of the country.

Hispanic lifestyle education and modifiable risk factors

Hypertension can be influenced by static factors like the sex, age and the genetic aspects of an individual. (Patronis-Jones, Ricard, Sefcik, & Miller, 2001, p. 36). These aspects cannot be modified and are exclusive of the positive health outcomes that can be followed to remove the occurrence of hypertension. However, lifestyle aspects have a major impact on the occurrence of hypertension and education plays an important role. In addition to this, modifiable risk factors include the weight of the individual, smoking and drinking habits, sodium intake etc. It has to be noted that these aspects can be modified to some extent by the individual and thus hypertension can be controlled to some extent.

One of the major reasons for the development of the hypertension aspects have been the obesity and the excessive body fat. These aspects are influenced by unhealthy lifestyles of the population. The obesity and body fats influence the blood pressure (BP) level to rise in the body which causes hypertension. According to The U.S. Department of Health and Human Services (HHS), 78% of the Hispanic women can be considered overweight and obese. (The Office of Minority Health Website, 2013). In contrast, 60.3% of the White women population in the US can be considered as overweight. The situation further worsens with the fact that 30% of the Hispanic adult population is less likely than that of the White population to participate in any physical activity. (The Office of Minority Health Website, 2013).

HHS also suggests that the Hispanic population has suffered due to the lack of lifestyle education. The Hispanic population is unaware of the various aspects that can improve their health and this has influenced the growing trends of obesity among the population. In some cases, they are unaware of the benefits of exercises and this has led to the prevalence of hypertension among them. (The Office of Minority Health Website, 2013). The study conducted by HHS underlined the fact that only 56.7% of the Hispanics were informed and advised medically about foods lower in fats and cholesterol. (The Office of Minority Health Website, 2013). The study underlines the fact that lack of education has affected the lifestyle of the Hispanic population to a certain extent and this has influenced their lack of knowledge about the quality of the foods they intake.

Sodium intake among Hispanics in America is also a notable risk factor for hypertension that can be modified by lifestyle; a 2012 study by the Centers for Disease Control (CDC) identified a correlation between high sodium intake and increased risks of hypertension particularly in Hispanic children and adolescents (The Centers for Disease Control Website, 17th September, 2012). Further, the study found that high sodium intakes and the risk for high blood pressure increased greater in overweight and obese children. In response, the CDC warned people that they should read food and health labels before consuming foods and to increase their intake of fresh fruits and vegetables in their diet; they also warned against eating too many processed foods and restaurant-styled foods, which are higher in sodium (The Centers for Disease Control Website, 17th September, 2012). They specifically recommended that children without diabetes and high blood pressure should limit intake of sodium to less than 2300 mg per day, while children with diabetes and high blood pressure should limit intake to 1500 mg per day. If the suggestions of the research by the HHS are valid, it would follow that addressing hypertension in Hispanic communities would require transferring these findings and recommendations on sodium intake into effective and accessible lifestyle education (The Office of Minority Health Website, 2013).

Smoking has been another factor that can affect the recurrence of hypertension. However, according to the American Lung Association (ALA) (2010), smoking is a modifiable lifestyle factor. According to ALA, occurrence of smoking is lesser in the Hispanic American population than that of the other minority groups. A research by ALA found that only 20.7% of the Hispanic men and 10.7% of the Hispanic women smoke. However, among the Hispanic women, the Puerto Rican Women had double the chances of smoking than that of the other Hispanic women. Thus, it can be stated that Hispanic population in general have lesser chances of hypertension caused by smoking but there may be higher chances in various subgroups of the Hispanic population. (The American Lung Association, 2010).

Another aspect that have affected the growth of hypertension in general has been the intake of alcohol. (Sheps, 2012). According to Dr. Sheldon Sheps of the Mayo Clinic, drinking excessively for an extended period of time can increase high blood pressure and increase the chances of long-term illness (Sheps, 2012). His suggestion is that adults under the age of 65 limit their drinking to 2 servings of alcohol per day and people over 65 to only one serving per day. However, it has been found that Hispanic men and women exceed this recommended serving of alcohol per day. A study by Alcohol Health and Research World in 1998 underlined the fact that the rate of alcohol intake may vary between the various sub groups of Hispanic population. It has been found that the Mexican men are more prone to drinking than that of the other groups of the Hispanic population. (Caetano, Clark, & Tam, 1998). Thus, taking cue from the study put forward by the HHS, it can be stated that the elimination of the alcohol risks can be developed with the help of proper lifestyle education.

The section has stated that hypertension can be caused by unhealthy lifestyle and the lack of education among the population. It has been seen that majority of the risks associated with the growth of hypertension aspects can be negated and modifiable. However, this will require education among the population and awareness about the health aspects. The health bodies and the Government should develop recurring policies that would affect all ages and levels of population and will inform them about the risks associated with unhealthy lifestyle. The Hispanic population has been affected by these aspects as they have been more prone to the unhealthy lifestyle as well as there has been a lack of general education among the group.

Problems of diagnosis

Till date there has been no specific guideline for the treatment of hypertension in the Hispanic population. However, there have been studies that took account of the health care efforts that have been pursued in the treatment of hypertension and it has been found that ineffective treatment and care has been one of the major reasons for the growth of the disease. (Guzman, 2012, p. 165).

In a 2001 study of the demographics of hypertension that appeared in the journal Hypertension and Holistic Care, people of Hispanic descent were compared with non-Hispanic people in southern Texas; it was found that reported incidents of high blood pressure among Mexican-Americans was comparable to the national average, but the number of Mexican-Americans who were actually aware of their hypertension was much lower than the national average (Patronis Jones, Ricard, Sefcik, & Miller, 2001). This suggests a notable absence of effective diagnosis. Unawareness of hypertension among Hispanics also varied by state; while 53% of those diagnosed in south Texas were previously aware of their condition, up to 71% of those diagnosed in New York were previously aware (Patronis Jones, Ricard, Sefcik, & Miller, 2001, p. 41).

In 2009, a study in North Carolina examined the idea of using culturally sensitive teaching interventions for Hispanics to decrease their chances of developing hypertension (del Pilar Rocha-Goldberg et al, 2010). The study focused on 64 participants who were gathered between healthcare provided referrals, direct contact, and print media. Of these participants, 17 completed the study and had their records available to scrutinize. The results were that the participants responded favorably to the teachings, and the participants strongly agreed that the group sessions gave them the tools and knowledge needed to achieve weight loss and control their blood pressure (del Pilar Rocha-Goldberg, et al., 2010).

It should be noted, however, that responses varied with the choice of interviewer in the study. During the study, the interviewer was initially a Spanish speaker of Hispanic descent, but was later changed to a Spanish speaker of non-Hispanic descent (del Pilar Rocha-Goldberg et al., 2010). It was found that more information was given to the Hispanic interviewer; when the non-Hispanic interviewer was later replaced by another Hispanic interviewer, information flowed freely again. This would suggest that Hispanics are more comfortable speaking with health care workers who share their ethnicity; as such, the presence of Hispanic health care professionals is likely to promote effective prevention, diagnosis and management of hypertension in Hispanic communities. This parallels Guzman’s finding that “patient trust is higher when healthcare providers are of the same ethnicity as the patient and when the physician and patient can communicate in the patient’s native language” (2012).

Together, these two studies have three potential implications. First, the number of Hispanics who are aware of the dangers of Hypertension falls below the national average in the United States, although the number of Hispanics who suffer from Hypertension is close to the national average. Second, Hispanics are more comfortable speaking of their health concerns with health care workers who are also Hispanic. Third, and perhaps the most important, is that studies show that Hispanics can be taught the dangers of high blood pressure and that carrying extra body weight is directly related to developing Hypertension.

Variations of socio economic status among Hispanic population

The variations in the statuses of the Hispanic population also affect the prevalence of hypertension among the same. There has been a key distinction between the statuses of the Hispanic population in terms of places of their birth. One group consists of the Hispanics born in the US and thus are naturalized Americans. The other group consists of immigrants coming from other countries and may be naturalized immigrants or undocumented immigrants. (Aponte, 2009). This key distinction is correlated to the access of Hispanics to health care measures to prevent, diagnose, or manage hypertension, where the foreign born, undocumented Hispanics are least likely to have access to measures and insurance (Aponte, 2009).   Those who are naturalized American citizens of Hispanic descent are more likely to have insurance and are more likely to have been tested for hypertension; naturalized citizens are still less likely to be tested than domestically born Hispanic Americans (Aponte, 2009). In light of these findings, it can be said that socioeconomic status affects the prevalence and impact of hypertension by varying the access of Hispanics to health care measures and insurance at large.

Pathogenesis and pathophysiology of hypertension 

Over 90% of cases have no identifiable cause, thus constituting the category of primary or essential hypertension. The remaining 10% of cases have the secondary causes such as: Renal, Endocrine, Vascular, and Chemical and medication induced causes. There are some predisposing factors such as; family history of hypertension, obesity, stress, sedentary lifestyle, alcohol consumption, male Gender, age over 30 years, excessive salt intake, medication, and drug use.

Remedies to be brought forward

The review of the literature has underlined the fact that there have been no measures taken by the health bodies and the Government of the country in the treatment of hypertension occurrence among the Hispanic population. However, there have been certain guidelines developed by the National Health Bodies in order to control the recurrence of hypertension. The most important among them are the JNC-7 and JNC-8 guidelines.

The JNC-8 guidelines started to develop in 2009. (James, 2013). More than 400 nominees were selected from a pool of hypertension experts in primary care, nursing, and pharmacology. Of these nominees, 48 were selected to become the panel that would draft the JNC-8 recommendations on the treatment of hypertension, and this panel examined the recommendations for nearly four years. They released their recommendations to 20 reviewers and 16 federal agencies in January of 2013; the anonymous reviews were discussed by the panel for over three months, and the contents were incorporated into a revised document that was released in December of 2013 (James, 2013).

The guidelines took shape in 2014 and consist of 9 recommendations that can be followed in the management of hypertension. The recommendations have been developed specifically for the health professionals and they have been explained in detail. In addition to this, each of the recommendation has a grade attached to it that talks about the validity of it. The results of the recommendations are graded with a letter grade of A to E plus the letter N. A stands for a strong recommendation, with B and C standing for moderate and weak recommendations. D stands for a recommendation against, while E stands for an expert opinion that is lacking evidence to support the recommendation. The letter N stands for no recommendation for or against the suggestion (James, 2013, p. 208).

The JNC-7 guidelines were developed ten years before the JNC-8 guidelines and there were subsequent differences between the reports. This is quite natural given the fact that there were tremendous advancements in the medical field over the period and there were various researches done in the field. Thus, the way the hypertension has been defined and the way it can be managed varies between the two reports. (James, 2013). In the JNC-7 report, the definitions of both prehypertension and hypertension. However, in the JNC-8 report, a guideline has been specified about the threshold period about when the treatment should begin. The JNC-7 guidelines make recommendations about the changes that are to be brought in the lifestyles of the population to take care of hypertension. However, in the JNC-8 report, the recommendations provided by the Lifestyle Work Group have been endorsed. (Martin, 2008; James, 2013).

The JNC-8 guidelines have specifically stated about the treatment plans that are to be followed in the case of the recurrence of the disease. It does not talk about the life threatening issues and the chances of death with the disease. This is because the reports have been specifically prepared for the health professionals who are well educated and knowledgeable about this aspect.

Therefore, it can be stated that the health bodies have developed some recommendations and proposals for the development of a treatment plan for hypertension issues. However, it has been general and does not take into account the salient and unique features of the minority groups in consideration. Therefore, there have been difficulties in treating hypertension cases in the Hispanic population to a large extent. In addition to this, the majority of Hispanic population has not received specialized medical advice regarding the treatment of hypertension. It is important that the health professionals working in various areas of the society take note of the guidelines and communicate them to the Hispanic population in all rungs of the society. As the Hispanic population will get education about the various factors that curbs hypertension as also induces it, they will be more responsible in their way of life.

Therefore, it is important for the development of a specific nursing care model that can help in the treatment of the Hispanic patients. Given the uniqueness of the Hispanic patients and the uniqueness of the problems they face it is important that the nurses play an important role in their care taking note of their background. Watson’s caring model can be referred in this aspect.

Caring model has been one of the most important aspects of caring science. The model encompasses the humanitarian aspects, human science orientation, phenomena and experiences. Thus, the model takes note of both art and science. The caring science perspective is based on the relational ontology of being in relation and connectedness to other aspects of life. Therefore, the background of the patient and their cultural as well as mental aspects are to be taken note of in this model. Caring science also involves in moving on to new fields of patient’s mental health and involves inquisitiveness about “aesthetic, poetic, narrative, personal, intuitive, kinesthetic, evolving consciousness, intentionality, metaphysical – spiritual, as well as moral-ethical knowing.” (Watson Caring Science Institute, 2014). Therefore, the important aspects of the model can be stated as follows:

  • Caring for self and others that involves the analysis of the background of the patient
  • Transpersonal caring relationships
  • Developing caring moments
  • Multiple ways of knowing
  • Reflective approach that involves analysis of the self behavior as well as the analysis of the mental aspects of the patients (Wagner, 2010).

The model defined 10 caritas processes that can be stated as follows:

  • Practicing of loving and kindness
  • Instilling faith and hope and honoring others
  • Being sensitive to the background of others by honoring their beliefs
  • Help-trust-care relationships
  • Acceptance of positive and negative aspects while listening to others
  • Use of scientific caring methods for decision making
  • Develop teaching and learning that suits the varying needs of the individuals
  • Development of a healing and spiritual environment that respects the human dignity
  • Assistance of the patients with the basic emotional, spiritual and physical human needs
  • Openness to any new happenings and mystery in medical science (Watson Caring Science Institute, 2014).

It can thus be stated that caring of the individual has been one of the most important aspects of the model. However, caring in the terms of the model will encompass taking note of the spiritual, emotional and mental health of the individual and listening to them attentively. Communication and listening has been important parts of the model and this helps in finding out the problems of the patients in detail. Care should be taken not to hurt the feelings in any way and this increases the trust shown by the patients.

In the case of the Hispanic population, the fact that they are quite different in their backgrounds in relation to the other groups of population in the US makes it relevant to be treated by this model. There may be problems of communication which cannot be solved unless the nurses are equipped with capacity to listen. This will underline the real problem of the patients and will help the medics to perform their treatment in a better way. It is also important for the nurses to evolve a sense of trust among the patients and thus they will assist in their treatment.

Summary

The literature review has underlined the fact that there are various causes that gives impetus to the growth of hypertension. Some of them cannot be modified and are not parts of the review. However, there are some modifiable characteristics that can be taken into account. It has been found that lifestyle characteristics and education have been the major aspects that can play a vital role in the recurring bouts of hypertension. Smoking, drinking, lack of exercise etc have played an important role in developing unhealthy lifestyle and this in turn can play a vital role in the development of hypertension in the adults. The Hispanics have been found to be prone to this disease as they are unaware of the quality food habits as well as are prone to not exercising. The lifestyles they lead in the American society also play an important role in the development of the disease.

In addition to this, there have been problems of diagnosis among the Hispanic population due to the problems of language and communication. In addition to this, as the Hispanic population is unaware of the negative aspects of hypertension, they do not report to the medics in most cases. The social statuses of the Hispanic population vary depending on their legality of the naturalization to the American soil and this may affect the treatment of the disease to a large extent.

It has been found that the Government and the health bodies have not been able to develop a specific plan for the Hispanic population and it has to be done at the earliest to take care of the unique problems the race is facing at the moment. The treatment should be formulated in accordance with the JNC-8 guidelines and this has to be communicated to the Hispanics in every part of the society. In addition to this, the health authorities at lower level should play a vital role in communicating with the Hispanics and stating them about the unhealthy lifestyles and the negative aspects of hypertension. A specific nursing model on the lines of Watson’s caring model should be developed that take care of the background of the patients and honor their uniqueness in most aspects. It has to be noted that the Hispanic population is unique in some way or the other and special care should be taken not to hurt their feelings and practices during the treatment. This would help in the development of treatment aspects to a large extent.

Interpretation

The paper up to now has stated about the various aspects of hypertension and its influence on the Hispanic population. It cannot be denied that the Hispanic population occupies a significant place in the society of the US today and proper care has to be taken to ensure their proper health and development. However, it has also be taken in mind that the Hispanic population is unique in its background and social norms and practices and thus respect and honor should be given to them.

It has been found that the hypertension aspects have been influenced by unhealthy lifestyles and this has been seen in abundance in the Hispanic race. Thus, specific implementations to be discussed include managing diet and exercise regimens, thorough anti-hypertensive drug education, and follow-up care for clients and families, anti-hypertensive technologies, and clinical outreaches for those lacking access via insurance.

Active Management of Diet and Exercise

Non-pharmacological management of hypertension via diet and exercise should be prescribed by nurse practitioners and followed up by registered nurses. By adjusting the diet and exercise regimen of Hispanics, Nurse Practitioners can have a great impact over the life-long health care of their patients. Studies have shown that controlling the weight of the patient can decrease the chances of developing cardiovascular disease (Aponte, 2009, Patronis Jones, Ricard, Sefcik, & Miller, 2001, Guzman, 2012).

Active Pharmacological Management

Pharmacological management of hypertension can also be enhanced with efforts of active communication. A trend among Hispanics is personal cessation of prescribed medications in lieu of present symptoms, and so implementation of follow-up care may promote adherence (Guzman, 2012, Patronis-Jones, Ricard, Sefcik, & Miller, 2001, Sheps, 2012, The WebMD Website, 2013). Doctors and nurses need to make certain that the drugs that are prescribed are taken by the patients. If possible, nurses should also incorporate the client’s family into the education process; this benefits the entire family as well as the person with hypertension.

Follow-Up Care

Another benefit of active communication in follow-up care is limiting the progression of hypertension into other serious complications (Guzman, 2012, Patronis-Jones, Ricard, Sefcik, & Miller, 2001, Sheps, 2012, The WebMD Website, 2013). Doctors and nurse practitioners may ask patients with newly diagnosed hypertension to change their diet or to exercise more often in order to cut down on the ill-effects of hypertension. There are also more tests to take while visiting the Doctor or Nurse Practitioner after the diagnosis of hypertension. These tests include screening for damages to their eyes, the heart, the brain, and the kidneys (The WebMD Website, 2013). Lastly, follow-up care allows the opportunity for the practitioner to monitor hypertension and the need for dosage adjustments.

Technology

Nurse practitioners, doctors, and other health care professionals should also think about ways that they can effectively communicate with people who may not have health insurance. The Affordable Care Act of 2010 still leaves undocumented workers with less than five years of domesticity without access to health care via insurance. Therefore, ways must be discovered to reach those who are not covered by insurance in order to cut down and eliminate the disease of hypertension. One such way to do this is by using the smart phone technologies that are now becoming popular with Hispanic Americans.

Smart phones allow someone to place applications on the phone that can be customized towards what interests them. These applications can include informative, life-saving applications to the smart phone of someone in lieu of primary care access via insurance. Smart phone applications developed with doctors and nurses can help the undocumented Hispanics to independently manage hypertension and other cardiovascular ailments, self-regulate and control their dietary intake, recommend fun and exciting ways to get needed exercise, and increase in knowledge to manage hypertension. There are several applications for the smart phone user who wishes to stay on top of their high blood pressure problem or diabetes. For this technology to be maximally effective, Spanish language versions must be developed, and lifestyle recommendations for living with hypertension must be adjusted for the Hispanic user. One such application, although currently in English, is the Heart Blood Pressure Journal, Premium Edition. This application is only $4.99, and is available through the Withings website.

Clinical Outreaches

Lastly, nurses and doctors must be ready at all times to speak intelligently and passionately about hypertension, and about the risk of having high blood pressure undiagnosed in the lives of their patients. The nurse practitioner’s role in this scenario is more than just as a worker in the health field. Nurse practitioners should be proactive in their assessments of the lives of the patients. There are undocumented day laborers who do not have health care in the United States but still get ill and need a doctor. There should be investment into freely accessible clinical outreaches to screen for hypertension. In this setting, the doctor or nurse practitioner can engage clients toward effective management of hypertension. Without freely accessible communication between health care professionals and uninsured Hispanics, hypertension will remain as an undiagnosed epidemic.

Pathophysiology and spiritual, ethical, and cultural aspect

It has been stated in the earlier parts of the paper that some aspects of hypertension are related to Pathophysiology like family history of hypertension, obesity, stress, sedentary lifestyle, alcohol consumption etc. It is the duty of the medical professionals to analyze every aspect of this and make a case history of the patients. In this case to the caring model will be taken into account and proper means of communication will be useful.

The Hispanic population is unique in a way to the other social groups in USA and thus it is quite natural that they will have some unique features related to their society. It is the duty of the nurses to listen attentively to their cases and they should not hurt their feelings during the conversation. This will induce the trust of the patients among the health care. The treatment should be ethical and should take care of all the unique cultural needs of the patients. This will increase the awareness among the Hispanic population to a certain extent.

Implications

In the fight against coronary heart disease, stroke, and congestive heart failure, hypertension is primary modifiable risk factor in prevention (Patronis Jones, Ricard, Sefcik, & Miller, 2001, p. 36). Although several studies have explored obstacles to the knowledge, prevention, diagnosis, and management of hypertension Hispanics in America, other studies suggest that the teaching of Hispanics of the dangers of Hypertension is possible.

One of the most important aspects that have come forward with the help of the study is that the Hispanic population is a unique part of the culture and society of USA and thus they behave in a different manner than that of the other parts of the society. They are not as educated as that of the other parts of the society and are prone to unhealthy lifestyle. The fact that many of the Hispanics come to the country with the help of forged documents also minimize their chances of getting a better treatment. Therefore, all these aspects have to be taken into consideration to develop a proper plan in the treatment of hypertension.

Still, effective and accessible education on hypertension is only the first step toward achieving positive health care outcomes in the Hispanic American population. There must be more active means of promoting lifestyle management among Hispanic Americans toward recognizing and preventing the dangers of hypertension. In this case, it has to be stated that the Hispanic population should be communicated about the dangers of hypertension as well as the benefits of leading a healthy lifestyle. The health officials should take the responsibility to communicate with the Hispanics at every level of society. In addition to this, the medical facilities should also be able to take into consideration the uniqueness of the Hispanic race and treat them accordingly. The care model that has been stated as a part of the paper will be helpful in this as the crux of the model is based on listening and acknowledging the specific cases of the patients. The patients should be comfortable in the medical facilities and their cases should be heard with rapt attention. This will help in better treatment of the Hispanic population. This educational effort by nurse practitioners and other health care professionals can include print media and clinical outreaches, but it should also include smart phone technologies to increase access and promote positive change. As technology has been available to all and sundry in the country, the Hispanic population should feel comfortable to search for information regarding the disease. The Government should come forward and should make special efforts to reach the Hispanic population by arranging medical camps at Hispanic neighborhoods and providing information about the disease.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References:

Aponte, J. (2009, September/October). Diabetes risk factors in Mexican-Americans with diabetes. MEDSURG Nursing, 18(5), 265-272. Retrieved November 3, 2013

Caetano, R., Clark, C. L., & Tam, T. (1998). Alcohol consumption among racial/ethnic minorities. Alcohol Health and Research World, 22(4), 233-238. Retrieved November 3, 2013, from http://www.hawaii.edu/hivandaids/Alcohol%20Consumption%20Among%20RacialEthnic%20Minorities%20%20%20%20%20Theory%20and%20Research.pdf

del Pilar Rocha-Goldberg, M., Corsino, L., Batch, B., Voils, C. I., Thorpe, C. T., Bosworth, H. B., & Svetkey, L. P. (2010, June). Hypertension Improvement Project (HIP) Latino: results of a pilot study of lifestyle intervention for lowering blood pressure in Latino adults. Ethnicity & Health, 15(3). doi:10.1080/13557851003674997

Ennis, S. R., Rios-Vargas, M., & Albert, N. G. (2011). The hispanic population: 2010. Washington, D.C.: U.S. Census Beaurea. Retrieved November 5, 2013, from http://www.census.gov/prod/cen2010/briefs/c2010br-04.pdf

Guzman, N. J. (2012). Epidemiology and management of hypertension in the Hyspanic population. American Journal of Cardiovascular Drugs, 165 – 178. doi:1175-3277/12/0003-0165

James, P. A. (2013). 2014 Evidence-Based Guideline for the Management of High Blood Pressure in Adults: Report From the Panel Members Appointed to the Eighth Joint National Committee (JNC 8). The Journal of the American Medical Association, 507 – 520.

Martin, J. (Fall, 2008). Hypertension guidelines: Revisiting the JNC 7 recommendations. The Journal of Lancaster General Hospital, 3(3), 3-5. Retrieved February 14, 2014

Patronis Jones, R. A., Ricard, R., Sefcik, E., & Miller, M. (2001). The Health Risk of Hypertension in South Texas: A Demographic Profile. HYPERTENSION AND HOLISTIC CARE, 15(4), 35–44. Retrieved December 4, 2013

Patronis-Jones, R. A., Ricard, R., Sefcik, E., & Miller, M. (2001). The health risk of hypertension in south Texas: A demographic profile. Holisticc Nursing Practice, 35-44.

Sheps, S. (2012, November 2). High blood pressure (hypertension). Retrieved November 4, 2013, from The Mayo Clinic Website: http://www.mayoclinic.com/health/blood-pressure/AN00318

The American Lung Association. (2010, February). Key Facts About Smoking among Hispanics. Retrieved November 6, 2013, from The American Lung Association Website: http://www.lung.org/stop-smoking/about-smoking/facts-figures/hispanics-and-tobacco-use.html

The Centers for Disease Control Website. (2012, September 17). Highlites: Sodium intake and blood pressure among U.S. chilrent and adolescents. Retrieved from The Centers for Disease Control Website: http://www.cdc.gov/salt/pdfs/Sodium_Pediatrics_Highlights.pdf

The Office of Minority Health Website. (2013). Obesity and Hispanic Americans. Retrieved Novermber 5, 2013, from The Office of Minority Health Website: http://minorityhealth.hhs.gov/templates/content.aspx?ID=6459

The WebMD Website. (2013). Hypertension/high blood pressure health center. Retrieved November 4, 2013, from The WebMD Website: http://www.webmd.com/hypertension-high-blood-pressure/guide/hypertension-treatment-care

Wagner, A. (2010). Core concepts of Jean Watson’s theory of human caring/ caring science. Watson Caring Science Institute. Retrieved on November 3, 2014 from: http://watsoncaringscience.org/files/Cohort%206/watsons-theory-of-human-caring-core-concepts-and-evolution-to-caritas-processes-handout.pdf

Watson Caring Science Institute. (2014). Caring Science Defined. Retrieved November 3, 2014, from http://watsoncaringscience.org/about-us/caring-science-definitions-processes-theory/

Zallman, L., Himmelstein, D. H., Woolhandler, S., Bor, D. H., Ayanian, J. Z., Wilper, A. P., & McCormick, D. (2013). Undiagnosed and uncontrolled hypertension and hyperlipidemia amoung immigrants in the US. Journal of Immigrant and Minority Health, 858 – 865. doi:10.1007/s10903-012-9695-2

 

Uneven development is the hallmark of the geography of capitalism

Although there are many Marxist authors and supporters, have received considerable attention, most people still contend that capitalism is still the most applicable social, political and economic philosophy. The book Uneven Development, the author, Smith, has provided a concrete account against capitalism, especially the role of capitalism in creating uneven societies. Capitalism has enhanced competition for time and space for the production of as part of the geography of capitalism. Smith begins his exposition with an abstract discussion of the ideological treatment of the absolute space. In particular, Smith has focused on the unity between the space and the society. Within the bourgeois perception of the Marxist concept of production of nature and specie, Smith has sought to establish the relationship between society, nature and space. According to smith “nature and space are not an accident of mater, but is a direct result of material production” (Smith, 1984, pp78). This shift is through the evolution of physical and psychological thought that has been achieved through the process of capitalism. The book indicates that capitalism is driven by material conditions and nothing else.

Smith reports that, through capitalism, the world has moved from the developments of a global mode of circulation but the development of a global mode of production (Ekers & Loftus, 2013). the client understanding of this arguments is the central thesis of the book that argues that Mars was correct in his argument that surplus labor does not in any way guarantee surplus value and that cap[ital is not mercantile money (Ekers & Loftus, 2013). Smith is particularly concerned about the typical understanding of the uneven geographical expansion of capitalism. As a result, Smith has argued that the contradictions that have led to the uneven distribution of capital cannot be found in the exchange sphere, but in the ultimate promise of capitalism: differential capitalism expansion and tendencies for equalization.

The forces for globalization and equalization come about from the capitalism argument of accumulation for the sake of accumulation. This idea leads to social as well as spatial expansion of the paradigm of wage labor (Ekers & Loftus, 2013). As a consequence, the globalization of labor has led to labor freedom for the working class as well as the inherent ties with the virtual space. From the argument s of Smith, colonization was the pinnacle for setting the limits for geographical expansion of capitalism; the production space had to be increased by entering into new regions to explore the new resources. Smith notes that most drives for colonization were informed by the capitalist requirements for the increased production (Coe, 2013). Thus the new geographic regions were not consulted neither were they involved in the production process. Capitalism thus creates a culture of selfishness where each individual is on his own and the resources are competed for. T he competing ability is not only seen from the aggressiveness in the global businesses market, but also the ability to develop political and economic structures that facilitate some countries to dominate and take advantage of other regions in terms of the access and use of resources (Harvey, 1999).

In this regard, Smith has argued that capitalism results into uneven developments in the world. While Smith is conscious of the cat that there was uneven development in the pre-capitalist societies, he notes that the unevenness has been escalated by the modern capitalist society has created various patterns and processes spatial developments in various parts of the world (Prudham & Heynen, 2011). The author has criticized capitalism for being the main cause of the wide geographical gap of economic unevenness. Capitalism and inequity goes hand in hand. A society cannot be capitalist and remain socially just. Karl Marx had explained that uneven societies results from capitalism because capitalism results into the creation of the concept of surplus value (Prudham & Heynen, 2011). Indeed, surplus value is an inevitable consequence of capitalism. In this kind of a set up, societies have a small number of super-rich individuals and millions of others living in deprivation and poverty. As Smith indicates “capitalism is a function of the universal validity of the law of unequal and combined development; rather, it is uneven development that is a function of the contemporary universality of capitalism” (Smith, 1984: 98).

Smith has borrowed heavily from Marx’s philosophies and has also expounded on the work of other Marxists. Marxism has been seen as an ideology through which the modern man can prosper, such that every individual will be socially beneficial in all aspects of life (Pradella, 2013). Through his studies of the ideals laid down by other philosophers, he gained an in-depth perception of the contributing factors that are useful in the development of a new man (Marx, 199). Therefore, the purpose of Marx can be seen as revolutionary with the commitment of bringing justice to the socially challenged. From the Manifesto, it can be argued that Marx evolved and adopted Marxism as a tool for revolutionary expeditions. His immediate commitments may have been to liberate the world from the imperialist and the creation of a new man who is fully integrated into the community.

One of the most important contributions of Smith is the role of social classes in creating unevenness in the societies. Modern researchers have indicated that the high level of unevenness increase poverty (Lenn, 2012). In particular, economic unevenness appears to be closely related to poverty. Further, economic unevenness leads to an increase in social problems such as crime. In poor neighborhood, crime is the order of the day. Antisocial such as burglary, drug peddling, or robbery are most common in poor neighborhoods that in the neighborhoods were the rich lives. The common reason for this trend is the lack of employment opportunities for people living in poor neighborhood. Because of the poverty conditions in these kinds of neighborhoods, the children from poor families are not able to enough education to get them out of their poverty. They, therefore, become victims of the cycle of poverty.

While socialism might have its fair share of problems, it ensures that social classes are not created in a society and that unevenness does not occur. On the other hand, capitalism encourages greed and the greediest individuals in the society become successful. In such as situation, where greed is the order of the day, unevenness can easily occur because people will use all means available to them to become successful (Taylor, 2007). In this regard, exploitation of the poor, deceit, and manipulation of government policies to favor the rich becomes widespread. Further, the plight of the poor becomes ignores and rich organizations and their shareholders determines how things are run. If this state of affairs is left unchecked, the rich would most certainly become richer and the poor will become poorer.

Smith has also re-examined the divisions of labor and the division of capital as a means of production and also production as a means of subsistence. In light of the various modifications of capitalism, smith believes that labor and capital divisions are in four scales where the divisions of labor follows the general divisions in the society, the capital division, and the division of social capital in various areas. Although there are various reasons for the division of labor, Smith has examined the geographical implications of the labor divisions. From the outset, the detailed division of labor in the workplace is important in explaining the concept of labor division from the perspective of labor productivity (Coe, 2013). The second perspective is that of the social classes described by Karl Marx. One of the most important contributions of Marx is the discussions on the social classes and the creation of inequality in the society. Modern researchers have indicated that the high level of unevenness increase poverty. In particular, economic unevenness appears to be closely related to poverty. Further, economic unevenness leads to an increase in social problems such as crime. In poor neighborhood, crime is the order of the day.

In creating a socially just society, Smith, like Marx, has argued that there is need for the elimination of capitalism. Societies need to come up with alternative economies that are based mutualism, public provisions and active involvement of the private sector. There is need for the understanding that the involvement of the private sector does not necessarily results into capitalism. In a socially just society, there will be plenty of room for social and private enterprises that do not necessarily result into capitalism. All that is need is to ensure that capitalist corporations are not provided with room to prosper. Marx maintained that all humans are considered equal just by virtue of being human beings. He therefore claimed that no man has more rights than the other despite the many differences existing between them (Coe, 2013). That no man should be a slave to the other, whether black or white or red, all men are created equal and all deserve the respect for humanity. This is a vital perspective that capitalism appears to ignore. Capitalism provides space for certain individuals to prosper, while at the same giving the prosperous individuals the ability to limit the ability of other members of the society to become prosperous.

One major concern of social unevenness is that if it is not corrected, it can result to more imbalances. As the rich becomes richer, they may acquire political influence and get into position of influencing political decision making. In his arguments against social classes, Marx blamed capitalism for being the main cause of the wide economic gap between the rich and the poor. Capitalism and social imbalance goes together. Marx argues that a society cannot be capitalist and still be able to be socially balanced. Karl Marx had explicated that economical and social unevenness results from capitalism because capitalism results into the development of the concept of surplus value (Coe, 2013). There is no question that surplus value is a fateful aftermath of capitalism. This situation results into a remarkably unbalanced society in which some few individuals are very rich while the majority of the society is poor. The middle class is also made up of relatively socially unstable proportion of the society.

The limits of capital intimately lead to increasing severity of social struggles. Looked at from the theory of crisis, it can be said that   capitalism creates a society where social struggles are the only means through which the disadvantaged seek to correct the social unevenness. The main aim of social struggles is to shape the perception of the society into accepting a disagreeing pint of view. The basic ideology of social struggles is to use nonviolence to induce authorities or the public to accept an alternative view point. Social resistance has been used for centuries and has proved to be important in influencing public opinions and bring changes in the society (Bond, 1999). While many people have hailed social resistance in causing change, others have had a contrary opinion. Some people have argued that social resistance is not the best ways of causing democratic changes because sometimes take illegal street protests or result into violence.

In sum, the book Uneven Development, ha provide a good account against capitalism and provided a convincing account of the role of capitalism in enhancing unevenness in societies. The book has shaped the Marxist perspective and has provided a great account in the debate against capitalism. The author has clearly indicated that capitalist development has resulted into spatial and geographic differences in development, hence unevenness in the society.

References

Bond, P, 1999, What is ‗uneven development‘? The Encyclopedia of Political Economy, London: Routledge.

Coe, NM 2013, ‘Geographies of production III: Making space for labour’, Progress In Human Geography, vol. 37, no. 2, pp. 271-284

Ekers, M, & Loftus, A 2013, ‘Revitalizing the production of nature thesis: A Gramscian turn?’, Progress In Human Geography, vol. 37, no. 2, pp. 234-252

Harvey, D, 1999, The Limits to Capital, London: Verso.

Lenn, J 2012, ‘Uneven and combined development: a fusion of Marxism and structural realism’, Cambridge Review Of International Affairs, vol. 25, no. 1, pp. 75-95

Marx, K, 1992, Capital: A Critique of Political Economy, New York: International Publishers.

Pradella, L 2013, ‘Imperialism and Capitalist Development in Marx’s Capital’, Historical Materialism, vol. 21, no. 2, pp. 117-147

Prudham, S, & Heynen, N 2011, ‘Introduction: Uneven Development 25 Years On: Space, Nature and the Geographies of Capitalism’, New Political Economy, vol. 16, no. 2, pp. 223-232,

Smith, N, 1984, Uneven Development: Nature, Capital and the Production of Space, Oxford: Basil Blackwell

Taylor, M 2007, Rethinking the Global Production of Uneven Development. Globalizations, vol. 4, no. 4, pp. 529-542.

Constructing a literature review

Constructing a Literature Review

Name:

Professor:

Institution:

 

Literature Review                                              

There are different interventions that can be applied in the counselling world. The counselling field is merged from three distinct movements. These movements; vocational/career guidance, psychological measurement and personality development play a good part in the everyday growth of human beings. The three distinct fields help wrap up the foundation of the counselling profession. In different parts of the world, psychological measurement as well as personality development form the bulk of the different works and practices in the counselling profession. The field on vocational/career guidance has not been given the attention it deserves. There are few counsellors who give their time to look into issues related to career guidance (Kasomo, 2010). This literature review assesses the different career development interventions that could be used.

According to Herr, there is the link between career and health. Herr discusses how the two correlate noting that high levels of dissatisfaction and uncertainty that is experienced in the career world most of the times results in reasonable high levels of psychological as well as physical distress. It is also worth noting that career plays a bigger part in the daily normal lives that we live. Herr notes out that different health occasions such as interpersonal violence observed in many parts, criminal as well as gang related activities and admissions to psychiatric health facilities are attributed to high levels of unemployment and the frequent occupational dissatisfaction (Kasomo, 2010). Suicides have been on the rise and are mostly attributed to career related issues.

Decision making plays a big role in the career world. According to a poll done by the National Careers Development Association of America, a large percentage (69%) of Americans do not know how to make informed decisions. The decisions are key as to how people will behave in relation to the different careers they are in. Counselling should help the people make these decisions so as to reduce the problems that arise from leaving the career problems unattended. In addition to this, another 39% of the people lack a career plan. This was according to the same survey group. The absence of a career plan means that a person will not keep track of the changes that take place in his career life and that he will not have a goal whereby he keeps track of the developments that have taken place in his career life.

According to an article written by Magnusson on Career Efficacy, the works of research on understanding how the career services are effective has declined. He continues to note that there are different reasons that have been attributed to the same. In his report, he managed to employ both quantitative analysis as well as mixed method designs. The research design that was used employed the pre-test and post-test to the experimental group as well as the control group so as to find out the best findings. The research outlines the need for particular change in how different things are worked out in relation to the career development interventions. Since the goals of the interventions is to be able to help the students who are still in school, there is the need to revise how the same policies would be passed on to the students.

A rich investment in the career development intervention policies on the students means that future problems related to careers will be minimized. There are other researchers who are of the idea that the different levels for career development interventions that occur in the secondary schools should be classified. The classifications allows the tracking of the results and monitor the change involved. According to Dykeman et al, practitioners and researchers find it a rough time to follow the career development interventions that have been administered on the secondary school students. Professional counsellors need to know how the students fair in the interventions so that they may use the data in the process of counselling their clients. According to the research, the development of the taxonomy of the interventions will help in the evolution of the counselling procedures.

There are several aspects of the career development intervention that dictate that people ought to change different aspects in their everyday lives for successful careers. For instance, people should be able to learn different new skills, create rapports with other workers, be able to use technology, acquire different information as well as be able to cope with change (Patton, & McMahon, 2006). The directions given give a guarantee that the cases related to career development will be solved and that counsellors will have easier moments with their clients.

The wake of high levels of education, there have been suggestions to include the career development interventions into different school curriculums. The inclusion of the same would help the students in the decision making processes as well as improved career choices. The development of career interventions is tied to the growth of the career guidance counselling. The counsellors always have rough times in dealing with the same. The main reason of the same is that the interventions cannot be monitored so as to record the changes over time. The career guidance in general helps the professional counsellors know how to deal with the career related problems that arise in the employment world.

However, there are problems that have been documented that are related to the career development interventions. The researchers have written down the different problems that they feel will not put the interventions into full impact. For instance, Magnusson records that the impact of the career interventions remains virtually unknown.

References

Kasomo, D. W. (2010). Advanced Career Counselling and Development for University Students: Career, Development and Training. Saarbrucken, Germany: LAMBERT Academic Publishing.

Niles, S. G. (2001). Using Super’s Career Development Assessment and Counselling (C-DAC) Model to Link Theory to Practice. International Journal for Educational and Vocational Guidance. doi:10.1023/A:1016981000319

Niles, S. G. (2001). Using Super’s Career Development Assessment and Counselling (C-DAC) Model to Link Theory to Practice. International Journal for Educational and Vocational Guidance. doi:10.1023/A:1016981000319

Patton, W., & McMahon, M. (2006). Career Development and Systems Theory: Connecting Theory and Practice. Career Development Series. Sense Publishers.

Walsh, W. B. (2001). Career counseling for African Americans. Mahwah, NJ: Lawrence Erlbaum Associates.

Constructing a literature review

Constructing a Literature Review

Name:

Professor:

Institution:

 

Literature Review                                              

There are different interventions that can be applied in the counselling world. The counselling field is merged from three distinct movements. These movements; vocational/career guidance, psychological measurement and personality development play a good part in the everyday growth of human beings. The three distinct fields help wrap up the foundation of the counselling profession. In different parts of the world, psychological measurement as well as personality development form the bulk of the different works and practices in the counselling profession. The field on vocational/career guidance has not been given the attention it deserves. There are few counsellors who give their time to look into issues related to career guidance (Kasomo, 2010). This literature review assesses the different career development interventions that could be used.

According to Herr, there is the link between career and health. Herr discusses how the two correlate noting that high levels of dissatisfaction and uncertainty that is experienced in the career world most of the times results in reasonable high levels of psychological as well as physical distress. It is also worth noting that career plays a bigger part in the daily normal lives that we live. Herr notes out that different health occasions such as interpersonal violence observed in many parts, criminal as well as gang related activities and admissions to psychiatric health facilities are attributed to high levels of unemployment and the frequent occupational dissatisfaction (Kasomo, 2010). Suicides have been on the rise and are mostly attributed to career related issues.

Decision making plays a big role in the career world. According to a poll done by the National Careers Development Association of America, a large percentage (69%) of Americans do not know how to make informed decisions. The decisions are key as to how people will behave in relation to the different careers they are in. Counselling should help the people make these decisions so as to reduce the problems that arise from leaving the career problems unattended. In addition to this, another 39% of the people lack a career plan. This was according to the same survey group. The absence of a career plan means that a person will not keep track of the changes that take place in his career life and that he will not have a goal whereby he keeps track of the developments that have taken place in his career life.

According to an article written by Magnusson on Career Efficacy, the works of research on understanding how the career services are effective has declined. He continues to note that there are different reasons that have been attributed to the same. In his report, he managed to employ both quantitative analysis as well as mixed method designs. The research design that was used employed the pre-test and post-test to the experimental group as well as the control group so as to find out the best findings. The research outlines the need for particular change in how different things are worked out in relation to the career development interventions. Since the goals of the interventions is to be able to help the students who are still in school, there is the need to revise how the same policies would be passed on to the students.

A rich investment in the career development intervention policies on the students means that future problems related to careers will be minimized. There are other researchers who are of the idea that the different levels for career development interventions that occur in the secondary schools should be classified. The classifications allows the tracking of the results and monitor the change involved. According to Dykeman et al, practitioners and researchers find it a rough time to follow the career development interventions that have been administered on the secondary school students. Professional counsellors need to know how the students fair in the interventions so that they may use the data in the process of counselling their clients. According to the research, the development of the taxonomy of the interventions will help in the evolution of the counselling procedures.

There are several aspects of the career development intervention that dictate that people ought to change different aspects in their everyday lives for successful careers. For instance, people should be able to learn different new skills, create rapports with other workers, be able to use technology, acquire different information as well as be able to cope with change (Patton, & McMahon, 2006). The directions given give a guarantee that the cases related to career development will be solved and that counsellors will have easier moments with their clients.

The wake of high levels of education, there have been suggestions to include the career development interventions into different school curriculums. The inclusion of the same would help the students in the decision making processes as well as improved career choices. The development of career interventions is tied to the growth of the career guidance counselling. The counsellors always have rough times in dealing with the same. The main reason of the same is that the interventions cannot be monitored so as to record the changes over time. The career guidance in general helps the professional counsellors know how to deal with the career related problems that arise in the employment world.

However, there are problems that have been documented that are related to the career development interventions. The researchers have written down the different problems that they feel will not put the interventions into full impact. For instance, Magnusson records that the impact of the career interventions remains virtually unknown.

References

Kasomo, D. W. (2010). Advanced Career Counselling and Development for University Students: Career, Development and Training. Saarbrucken, Germany: LAMBERT Academic Publishing.

Niles, S. G. (2001). Using Super’s Career Development Assessment and Counselling (C-DAC) Model to Link Theory to Practice. International Journal for Educational and Vocational Guidance. doi:10.1023/A:1016981000319

Niles, S. G. (2001). Using Super’s Career Development Assessment and Counselling (C-DAC) Model to Link Theory to Practice. International Journal for Educational and Vocational Guidance. doi:10.1023/A:1016981000319

Patton, W., & McMahon, M. (2006). Career Development and Systems Theory: Connecting Theory and Practice. Career Development Series. Sense Publishers.

Walsh, W. B. (2001). Career counseling for African Americans. Mahwah, NJ: Lawrence Erlbaum Associates.

FINANCIAL ANALYSIS: TESCO VS DEBENHAMS

FINANCIAL ANALYSIS: TESCO VS DEBENHAMS

By (Name)

Presented to;

Course

Instructor

Institution

Date

Table of Contents

1.0 Introduction. 3

2.0 Objective. 3

3.0 Background information. 3

3.1 Tesco Plc. 3

3.2 Debenhams Plc. 4

4.0 Financial ratio analysis. 5

4.1 Profitability ratios. 5

4.1.1 Gross profit margin. 5

4.1.2 Operating profit margin. 6

4.1.3 Net profit margin. 8

4.2 Liquidity ratios. 9

4.2.1 Current ratio. 9

4.2.2 Acid-test ratio. 10

4.3 Efficiency ratios. 12

4.3.1 Asset turnover. 12

4.3.2 Receivable collection period. 13

4.3.3 Payables payment period. 13

4.3.4 Inventory turnover period. 14

4.4 Gearing ratio. 14

4.4.1 Interest coverage. 14

4.4.2 Financial leverage. 15

4.4.3 Equity gearing. 16

5.0 Recommendations and conclusions. 17

References. 18

Appendices. 20

 

1.0 Introduction

Most significantly, financial analysis involves selection, assessment, and interpretation of financial data, together with other relevant information, to help in making financial and investment decisions (Fabozz 2009, p. 193). Financial analysis may be undertaken to evaluate the efficiency of operations, potential investments, creditworthiness, credit policies, and financial leverage of the company. Furthermore, the primary source of data for financial analysis includes balance sheet and income statement. Financial analysis employs various ratios to evaluate the performance of a given company in comparison to its competitors (Khan & Jain 2007, p. 6). The financial ratios employed include profitability ratios, liquidity ratios, operational ratios, and leverage ratios.

2.0 Objective

The main goal of this paper is to evaluate and compare the financial performance of Tesco plc and Debenhams plc through financial ratio analysis encompassing three-year period from 2012 to 2014.

3.0 Background information

3.1 Tesco Plc

Tesco Plc’s history of development can be traced back in 1919 during the time when Jack Cohen began selling surplus groceries via a stall in London, where he made a profit of one pound from sales of four pounds on the first day (Zentes,  Morschett & Schramm-Klein 2011, p. 311). However, the Tesco Brand appeared in the market in 1924 when Cohen purchased a tea shipment from T.E Stockwell. Therefore, the initials of names, T.E Stockwell and Cohen were combined to Tes-co and in 1929, Jack Cohen started to operate a flagship Tesco store that was located in Burnt Oak. As the brand kept on growing, Tesco was incorporated as a private limited company in 1932 and became enlisted in LSE (London Stock Exchange) market in 1947 with a 25 p share price. Furthermore, Tesco exhibited its expansionary zeal by acquiring rival shops and buy 1960, the company had acquired 200 Harrow stores and 70 Williams stores, as well as the Victor Value chain and 97 Charles Philips stores (Fernie & Sparks 2009, p. 162). In 1961, the company entered into the Guinness Book of Records as the Europe’s largest store and in seven years, it opened its fits “Superstore’ in West Sussex, Crawley. In 1987, the company completed a successful hostile takeover of its competitor, Hilards Supermarket for £ 220 m. In an effort to overtake Sainsbury, the company launched the Tesco Clubcard scheme in around 1995 and Tescom.com in 2000 (Palmer, Meek, Parkinson & Meek 2012, p. 204). Unfortunately, the company started declining in 2013 where it reported the first decline in profits in its 20-year history. In 2014, Tesco exhibited worst performance in a 20 –year history, with a 3.7 % decline in sales. In 2014, Sept 22, the company shocked the market where it overstated its semi-annual profit projection by £ 250 m.

3.2 Debenhams Plc

Debenhams Plc is among the largest clothing and goods retailers in the United Kingdom (Varley 2014, p. 33). The company’s origin can be traced back to 1778 When William Clark opened a drapers store in London to sell expensive fabrics, parasols, bonnets, and gloves. In 1813, the business becomes Clark & Debenham when William Debenham invested in this business and established the first store away from London City in Cheltenham (Francis, Terry & Steven 2013, p. 281). From 1818, the company started to prosper years later due to Victorian fashion for mourning where the windows and female relatives followed a stringent code of etiquette and clothing. Since then, the company continued to operate as an independent company up to 1980s, when the Bruton Group succeeded it hostile takeover. In 1998, the company regained its autonomous when it “demerged” from the Burton Group and Debenhams changed its company name to Arcadia Group plc. After this de-merger, Debenhams was enlisted into LSE until 2003, but became re-enlisted in 2006. In 2007 and 2009, the company managed to acquire 9 stores from Roches (Ireland) and acquired Magasin du Nord (Denmark).

4.0 Financial ratio analysis

4.1 Profitability ratios

Essentially, all business ventures cannot exist in the life long without making profit (Duska 2007, p. 167). Therefore, evaluation of profitability levels of a company is very important to management, investors, creditors, and obligors. However, there is no direct formula for determining a firm’s level of profitability. For this reason, several ratios such as gross profit margin, operating profit margin, and net profit margin can be used to evaluate the company’s level of profitability.

4.1.1 Gross profit margin

Gross profit margin can be viewed as gross profit expressed as a component percentage of total revenues (Pinson 2008, p. 115). In other words, gross profit margin is the percentage of revenues that is available to meet operating expenses. Therefore, a high gross profit margin is an indication of increased levels of profitability. The gross profit margin of Tesco plc for the year 2012, 2013, and 2013 are 8.44 %, 7.79 % and 6.62 %, respectively; and for the Debenhams plc for 2012, 2013, and 2014 are 13.59 %, 13.13 % and 12.8 %, respectively. These gross profit margins for Tesco imply that the company was able to generate £0.084, £ 0.076, and £ 0.066 of gross profit from every pound of revenues generated by the company in the financial year that ended at 2012, 2013, and 2014 respectively. For Debenhams plc, its gross profit margins imply that it was able to generate £0.135, £ 0.131, and £ 0.121 of gross profit from every pound of revenues generated by the company in the financial year that ended at2012, 2013, and 2014 respectively. From graph 1 below, The Debenhams’ gross profit margin level is higher than that of Tesco, but both companies exhibit a declining growth.

Graph 1: Gross profit margin

Reliability of grow profit margin

No matter how high gross profit margin ratio of company, this metric is still perilous to depend upon due to misconceptions surrounding gross profit margin. Therefore, full complementary of other ratios can be employed to provide a more detailed snapshot of a company’s financial stability and success (Tracy 2012, p. 13).

4.1.2 Operating profit margin

Operating profit margin is the operating margin expressed as a component percentage of sales revenue (Graham, Smart,  & Megginson 2012, p. 45). In other words, operating profit margin indicates the percentage of sales revenues that remains after cost of sales and operating expenses are deducted from total sales revenues. Therefore, a high operating profit margin is an indication of increased level of profitability. The operating profit margin of Tesco plc for the year 2012, 2013, and 2013 are 5.95%, 5.13 % and 4.73 %, respectively; and for the Debenhams plc ‘s operating profit margin 2012, 2013, and 2014 are 7.85 %, 6.70 % and 5.53 %, respectively. These operating profit margins for Tesco imply that the company was able to generate £0.060, £ 0.051, and £ 0.047 of operating profit from every pound of sales revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. In the case of Debenhams plc, its operating profit margins imply that it was able to generate £0.078 £ 0.067, and £ 0.055 of operating profit from every pound of revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. From graph 2 below, The Debenhams’ operating profit margin level is higher than that of Tesco, but both companies exhibit a declining growth in profitability.

Graph 2: Operating profit margin

Reliability of operating profit margin

Operating profit margin is beneficial as it shows the percentage of profit generated by the operating activities. However, the operating profit margin does not take account other important items such as financial obligations, tax income, and income from non-operating activities which may have substantial impact on financial performance of a company. Therefore, operating profit alone cannot be relied upon when concluding the profitability level and other profitability ratios are needed for complementary and comparability (Robinson,  Henry, Pirie & Broihahn 2015, p. 330).

4.1.3 Net profit margin

Net profit margin is often defined as the net profit expressed as a component of sales revenues (Baker & Powell 2005, 62). In other words, it is the residual sales revenues that remain as the bottom-line item of income statement after cost of sales, all expenses, and preference share dividends are deducted from total sales revenue. It is the amount of money that can be attributed to the shareholders and retained earnings. Therefore, a high net profit margin is an indication of increased level of profitability. The net profit margin of Tesco plc for the year 2012, 2013, and 2013 are 4.39%, 0.04 % and 1.54 %, respectively; and for the Debenhams plc ‘s net profit margin 2012, 2013, and 2014 are 5.62 %, 5.08 % and 3.77 %, respectively. These operating profit margins for Tesco imply that the company was able to generate £0.044, £ 0.0004, and £ 0.015 of net profit from every pound of sales revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. In the case of Debenhams plc, its net profit margins imply that it was able to generate £0.056 £ 0.051, and £ 0.038 of net profit from every pound of revenues generated by the company in the financial year that ended in 2012, 2013, and 2014, respectively. From graph 3 below, The Debenhams’ net profit margin level is higher than that of Tesco, but Debenhams’ exhibits a declining growth in profitability; whereas Tesco’s decreases in 2013 and then increases 2014.

Graph 3: Net profit margin

Reliability of net profit margin

One of the usefulness of net profit margin is price control where a company can use net profit margin to establish the direct correlation between price and profit on a per-unit basis. Unfortunately, profit margin does not assist in determining sales volume and uncovering of true cost efficiency of generating sales revenues.

4.2 Liquidity ratios

The liquidity level refers to the extent to which a firm can meet its short-term financial obligations such as trade payable and interest burden at the disposal of total current assets. Liquidity level is often evaluated using current and acid-test ratio.

4.2.1 Current ratio

As a measure of liquidity level, current ratio is often used to determine the degree to which a given company can cover up its short-term financial debt using all of its current assets (Graham,  Smart & Megginson 2012, p. 41). Therefore, a current ratio greater than or equal to 1 show that the current assets of a company are sufficient enough to cover up current liabilities. The vice versa is true. However, the current ratios for Tesco plc for the year 2012, 2013 and 2014 are 0.67, 0.69, and 0.73, respectively; whereas Debenhams’ current ratios are 0.63, 0.63 and 0.64 in the same order of years. It is evident that the current assets of the two companies are not sufficient enough to settle current liabilities for the three-year period as depicted in Graph 3 below. However, the ability to settle current liabilities tends to increase for the two companies.

Graph 3: Current ratio

 Reliability of current ratio

Most notably, current ratio indicates the cash richness and short-term strength of a firm, as well as the status of the operating cycle. However, current ratio involves illiquid inventory that results in overestimation of company’s liquidity position. Inventory is vulnerable to obsolete and damage (through fire, floods, and accidents).

4.2.2 Acid-test ratio

As a measure of liquidity level, acid-test ratio is often used to determine the degree to which a given company can cover up its short-term financial debt using all of its liquid assets in cases where inventory become obsolete or damage (Graham,  Smart & Megginson 2012, p. 41). Therefore, an acid-test ratio greater than or equal to 1 show that the liquid assets of a company are sufficient enough to cover up current liabilities. The vice versa is true. However, the acid-test ratios for Tesco plc for the year 2012, 2013 and 2014 are 0.48, 0.49, and 0.56, respectively; whereas Debenhams’ currents ratios are 0.17, 0.15 and 0.19 in the same order of years. It is evident that the liquid assets of the two companies are not sufficient to settle current liabilities for the three-year period as depicted in Graph 4 below. However, the ability to settle current liabilities tends to increase for the two companies.

Graph 4: Acid-test ratio

Reliability of Acid-test ratio

Most importantly, acid-test ratio eliminates the illiquid components (inventory) from the equation giving the better snapshot of the company’s liquidity position. Collapsing companies have high level of inventory and acid-test can be much of help in uncovering such situations. However, acid-test ratio ignores the timing of cash flows and this alone cannot be used to assess liquidity of the company.

4.3 Efficiency ratios

Efficiency ratios are used to evaluate the company’s efficiency in management of assets such as inventory, account receivables and total assets. Therefore, company’s efficiency can be evaluated using efficiency ratios such as asset turnover, account receivable turnover, and inventory turnover.

4.3.1 Asset turnover

Asset turnover ratio is used to indicate the amount of sales revenues in pounds generated by one pound of assets acquired by the company (Ryan 2004, p. 218). A high asset turnover implies that the company is using fewer assets to generate more sales, which is a sign of efficiency. The asset turnover of Tesco plc for the year 2012, 2013, and 2013 are 1.26, 1.26 and 1.26 times, respectively; and for the Debenhams plc ‘s asset turnover 2012, 2013, and 2014 are 1.07, 1.07 and 1.08 times, respectively. These asset turnovers for Tesco imply that the company was able to generate £1.26, £ 1.26, and £ 1.26 of sales revenue from every pound of assets acquired by the company in the financial year that ended at 2012, 2013, and 2014 respectively. In the case of Debenhams plc, its asset turnovers imply that it was able to generate £1.07, £ 1.07 and £ 1.08 of sales revenues from every pound of assets acquired in the financial year that ended at 2012, 2013, and 2014 respectively. Graph 5 below indicates that the assets turnovers for the two companies remained relatively stable during the three-year period, but Tesco’s are higher.

Graph 5: Asset turnover

4.3.2 Receivable collection period

Receivable collection period is used to indicate the number of days through which the company is able to collect cash its debtors. Fewer days indicate that the company’s management is efficient in managing account receivables. Account receivable period is calculated from account receivable turnover. The Tesco’s account receivable periods are 12.81 days, 12.19 days, and 10. 89 days in 2012, 2013 and 2014 respectively; whereas Debenhams’s receivable collection periods are 3.8 days, 3.34 days and 4.32 days in the same order of years. As can be noticed, Tesco has higher receivable collection period.

4.3.3 Payables payment period

Payables payment period is the number of days taken by the company to settle its account payable (Ryan 2004, p. 219). High number of days indicate inefficiency of company’s management in managing the accounts payable. Furthermore, the payables payment period is determined from payable turnover. The Tesco’s Payables periods are 37.46 days, 35.53 days, and 34.34 days in 2012, 2013 and 2014, respectively; whereas Debenhams’s payables payment periods are 51.41 days, 53.80 days and 50.05 days in the same order of years. As can be noticed, Debenhams plc has higher payables payment period.

4.3.4 Inventory turnover period

Inventory turnover period shows the number of days in which inventory stays on store shelves before turned into cost of sales or sales revenues (Ryan 2004, p. 219). Less number of days indicates management efficiency in converting inventory into cost of goods sold. Inventory turnover period is determined from inventory turnover. The Tesco’s inventory periods are 22.44 days, 23.32 days, and 22.26 days in 2012, 2013 and 2014 respectively; whereas Debenhams’s inventory periods are 62.93 days, 65.89 days and 62.05 days in the same order of years. As can be noticed, Debenhams plc has higher inventory turnover period.

4.4 Gearing ratio

The gearing ratio determines the proportion of borrowed money (debt) to its equity. The gearing depicts the financial obligation to which a company y is subjected, since beyond debt can result in financial difficulties. A very high gearing ratio implies a high debt proportion to equity. Examples of gearing ratio include Interest cover, financial gearing and equity gearing.

4.4.1 Interest coverage

Interest coverage is a ratio that indicates the extent to which EBIT is capable of covering interest obligations for short-term and long-term debts (Glynn 2008, p. 410). The interest coverage ratios of Tesco plc are12.80, 10.53 and 9.46 times in 2012, 2013 and 2014 respectively, and Debenhams’ interest coverage ratios are 11.99, 12.97, and 9.01 times in order of the same years. Interest coverage ratios for the two companies tend to decrease indicating an increasing debt burden as indicated by Graph 6.

Graph 6: Interest coverage ratio

4.4.2 Financial leverage

It is also known as debt ratio. Financial leverage is used to indicate the proportion of debt financing the company’s assets. When financial leverage is high, the risk of the business also goes high since the company has more debt burdens that may increase chances of default (Glynn 2008, p. 410). Financial leverage is determined by dividing total debt by total assets. According to Graph 7 below, the financial leverage of Tesco plc is increasing while that of Debenhams is decreasing. This implies that the Tesco’s business is more risky than Debenhams’.

4.4.3 Equity gearing

Equity gearing is also known as debt-to-equity ratio. This ratio is used to indicate how the company’s capital is structured. A high equity gearing ratio indicates that the company’s debt is more than the equity and depicts a high risk of the business. Graph 8 indicates that Tesco’s equity gearing is increasing while Debenhams’s equity gearing is tending to decrease (Glynn 2008, p. 410). This indicates that Tesco’s debt is increasing more than equity making its business more risky when compared to that of Debenhams’.

Graph 9: Equity Gearing

5.0 Recommendations and conclusions

As indicated by the current and acid-test ratio, Tesco’s and Debenhams’ liquidity level is too low, implying that the two have no ability to meet their short-term financial obligations. The companies are likely to experience financial difficulties as creditors and obligors will not be willing to supplier goods on credit and finances due to fear of default. To avoid these circumstances, it is advisable for the two companies to increase their current assets such as cash and cash equivalent through issuance of equity. Furthermore, Debenhams plc has higher profitability level than Tesco plc as indicated by gross profit margin, operating profit margin, and net profit margin. However, the profitability levels of the two companies are decreasing gradually. Tesco plc is more efficient in managing total assets to generate sales revenues when compared to Debenhams. Tesco plc is also efficient in paying due to its creditors as it takes less time to settle payables payment than Debenhams.  Additionally, Debenhams is more efficient in debt collection from its customers than Tesco as it has less receivable collection period. Besides, Tesco is more efficient in inventory management as it has low inventory turnover period. On the other hand, as far as gearing ratios are concerned, Tesco’s business is more risky due to decreasing ability to cover its interest obligations, assets are increasingly becoming acquired by debt, and high debt in its capital structure when compared to that of Debenhams. Therefore, the company should try its best to reduce the debt proportion to achieve a balanced capital structured that is stable. High debt proportion increases debt burden, increasing the chance of default and running into bankruptcy.

List of References

Baker, H. K., & Powell, G. E 2005. Understanding Financial Management: A Practical Guide. Oxford: Blackwell Pub.

Duska, R. F 2007. Contemporary reflections on business ethics. Dordrecht, the Netherlands: Springer.

Fabozz, F 2009. Institutional Investment Management: Equity and Bond Portfolio Strategies and Applications. London: John Wiley & Sons.

Fernie, J., & Sparks, L. (2009). Logistics & retail management: Emerging issues and new challenges in the retail supply chain. London: Kogan Page Ltd.

Francis, G., Terry, G., & Steven, T 2013.  International Bibliography of Business History. London: Routledge.

Glynn, J. J 2008. Accounting for managers. London: Cengage Learning.

Graham, J. R., Smart, S. B., & Megginson, W. L 2012. Introduction to corporate finance. Australia: South-Western/Cengage Learning.

Graham, J. R., Smart, S. B., & Megginson, W. L. (2012). Introduction to corporate finance. Australia: South-Western/Cengage Learning.

Khan, M. Y., & Jain, P. K 2007. Management accounting: Text, problems and cases. New Delhi: Tata McGraw-Hill.

Palmer, R., Meek, R., Parkinson, L., & Meek, H 2012. CIM Coursebook 06/07 Managing Marketing Performance. London: Routledge.

Pinson, L 2008. Anatomy of a business plan: A step-by-step guide to building the business and securing your company’s future. Tustin, CA: Out of Your Mind & into the Marketplace.

Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial statement analysis. Hoboken : Wiley

Ryan, B 2004. Finance and accounting for business. London: Thomson Learning.

Tracy, A 2012. Ratio Analysis Fundamentals: How 17 Financial Ratios Can Allow You to Analyse Any Business on the Planet. New Jeysey: RatioAnalysis.net.

Varley, R 2014. Retail Product Management: Buying and Merchandising. London: Routledge.

Zentes, J., Morschett, D., & Schramm-Klein, 2011. Strategic retail management: Text and international cases. Wiesbaden: Gabler.

Appendices

FINANCIAL STATEMENTS

INCOME STATEMENTS

TESCO

Currency in As of: 25-Feb 23-Feb 22-Feb
Millions of British Pounds   2012 2013 2014
    Restated Restated Reclassified
    GBP GBP GBP
Revenues 63,916.00 63,406.00 62,554.00
TOTAL REVENUES   63,916.00 63,406.00 63,050.00
Cost Of Goods Sold 58,519.00 58,596.00 58,635.00
GROSS PROFIT   5,397.00 4,810.00 4,174.00
Selling General & Admin Expenses, Total 1,594.00 1,555.00
1,193.00
OTHER OPERATING EXPENSES, TOTAL   1,594.00 1,555.00 1,193.00
OPERATING INCOME   3,803.00 3,255.00 2,981.00
Interest Expense -411 -429 -447
Interest And Investment Income 114 120 132
NET INTEREST EXPENSE   -297 -309 -315
Income (Loss) On Equity Investments 91 72 60
Other Non-Operating Income (Expenses) 44 -15 -11
EBT, EXCLUDING UNUSUAL ITEMS   3,641.00 3,003.00 2,715.00
Merger & Restructuring Charges
Impairment Of Goodwill -495
Gain (Loss) On Sale Of Assets 397 -290 180
Other Unusual Items, Total -161 -636
Other Unusual Items -94 -27
EBT, INCLUDING UNUSUAL ITEMS   4,038.00 2,057.00 2,259.00
Income Tax Expense 874 529 347
Minority Interest In Earnings -8 4 4
Earnings From Continuing Operations 3,164.00 1,528.00 1,912.00
EARNINGS FROM DISCOUNTINUED OPERATIONS   -350 -1,504.00 -942
NET INCOME   2,806.00 28 974
NET INCOME TO COMMON INCLUDING EXTRA ITEMS   2,806.00 28 974
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS   3,156.00 1,532.00 1,916.00

 

DEBENHAMS

Currency in As of: 1-Sep 31-Aug 30-Aug
Millions of British Pounds   2012 2013 2014
    GBP Restated GBP
    GBP
Revenues 2,229.80 2,282.20 2,312.70
TOTAL REVENUES   2,229.80 2,282.20 2,312.70
Cost Of Goods Sold 1,927.50 1,982.60 2,033.40
GROSS PROFIT   302.3 299.6
279.3
Selling General & Admin Expenses, Total 127.3 146.6 151.3
OTHER OPERATING EXPENSES, TOTAL   127.3 146.6 151.3
OPERATING INCOME   175 153 128
Interest Expense -14.7 -12.2 -14.4
Interest And Investment Income 0.1 0.4 0.2
NET INTEREST EXPENSE   -14.6 -11.8 -14.2
Other Non-Operating Income (Expenses) -2.1 -2.2 -3.5
EBT, EXCLUDING UNUSUAL ITEMS   158.3 139 110.3
Other Unusual Items, Total -4.5
Other Unusual Items -4.5
EBT, INCLUDING UNUSUAL ITEMS   158.3 139 105.8
Income Tax Expense 33 23.1 18.6
Earnings From Continuing Operations 125.3 115.9 87.2
NET INCOME   125.3 115.9 87.2
NET INCOME TO COMMON INCLUDING EXTRA ITEMS   125.3 115.9 87.2
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS   125.3 115.9 87.2

 

BALANCE SHEET

TESCO

Currency in As of: 25-Feb 23-Feb 22-Feb
Millions of British Pounds   2012 2013 2014
    Restated Restated Reclassified
    GBP GBP GBP
Assets
Cash And Equivalents 1,725.00 1,457.00 2,021.00
Short-Term Investments 1,243.00 522 1,016.00
TOTAL CASH AND SHORT TERM INVESTMENTS   2,968.00 1,979.00 3,037.00
Accounts Receivable 389 472
274
Other Receivables 1,855.00 1,646.00 1,607.00
TOTAL RECEIVABLES   2,244.00 2,118.00 1,881.00
Inventory 3,598.00 3,744.00 3,576.00
Prepaid Expenses 420 417 321
Finance Division Loans And Leases, Current 2,502.00 3,094.00 3,705.00
Finance Division Other Current Assets 580 1,055.00 485
Other Current Assets 551 689 2,567.00
TOTAL CURRENT ASSETS   12,863.00 13,096.00 15,572.00
Gross Property Plant And Equipment 34,772.00 35,643.00 36,585.00
Accumulated Depreciation -9,062.00 -10,773.00 -12,095.00
NET PROPERTY PLANT AND EQUIPMENT   25,710.00 24,870.00 24,490.00
Goodwill 3,449.00 2,954.00 2,286.00
Long-Term Investments 423 1,312.00 1,301.00
Finance Division Loans And Leases, Long Term 1,901.00 2,465.00 3,210.00
Finance Division Other Long-Term Assets 1,526.00
Deferred Tax Assets, Long Term 23 58 73
Deferred Charges, Long Term 677 739 885
Other Intangibles 492 669 624
Other Long-Term Assets 3,717.00 3,966.00 1,723.00
TOTAL ASSETS   50,781.00 50,129.00 50,164.00
LIABILITIES & EQUITY
Accounts Payable 6,375.00 6,069.00 5,853.00
Accrued Expenses 2,208.00 2,275.00 1,942.00
Short-Term Borrowings 415 746 846
Current Portion Of Long-Term Debt/Capital Lease 1,423.00 20 1,064.00
Current Portion Of Capital Lease Obligations 32 6 6
Finance Division Other Current Liabilities 5,465.00 6,015.00 6,858.00
Current Income Taxes Payable 416 519 494
Other Current Liabilities, Total 2,947.00 3,341.00 4,342.00
TOTAL CURRENT LIABILITIES   19,249.00 18,985.00 21,399.00
Long-Term Debt 9,978.00 9,946.00 9,188.00
Capital Leases 134 122 115
Minority Interest 26 18 7
Pension & Other Post-Retirement Benefits 1,872.00 2,378.00 3,193.00
Deferred Tax Liability Non-Current 1,160.00 1,006.00 594
Other Non-Current Liabilities 587 1,031.00 953
TOTAL LIABILITIES   32,980.00 33,468.00 35,442.00
Common Stock 402 403 405
Additional Paid In Capital 4,964.00 5,020.00 5,080.00
Retained Earnings 12,164.00 10,535.00 9,728.00
Treasury Stock -18 -9 -20
Comprehensive Income And Other 263 694 -478
TOTAL COMMON EQUITY   17,775.00 16,643.00 14,715.00
TOTAL EQUITY   17,801.00 16,661.00 14,722.00
TOTAL LIABILITIES AND EQUITY   50,781.00 50,129.00 50,164.00

 

DEBENHAMS

Currency in As of: 1-Sep 31-Aug 30-Aug
Millions of British Pounds   2012 2013 2014
    GBP Restated GBP
    GBP
Assets
Cash And Equivalents 44 27 64.4
TOTAL CASH AND SHORT TERM INVESTMENTS   44 27 64.4
Accounts Receivable 20.9 19.8
25.3
Other Receivables 2.3 1.1 2.1
TOTAL RECEIVABLES   23.2 20.9 27.4
Inventory 332.3 357.9 345.7
Prepaid Expenses 52.2 57.4 47.3
Other Current Assets 7.8 7.3 1.5
TOTAL CURRENT ASSETS   459.5 470.5 486.3
Gross Property Plant And Equipment 1,243.40 1,301.10 1,347.20
Accumulated Depreciation -581.8 -609 -658
NET PROPERTY PLANT AND EQUIPMENT   661.6 692.1 689.2
Goodwill 818.5 819 818.5
Long-Term Investments 1.9 1.8 4.2
Deferred Tax Assets, Long Term 83.2 69.3 51
Other Intangibles 46.4 57.5 74.3
Other Long-Term Assets 20.1 22.6 24.9
TOTAL ASSETS   2,091.20 2,132.80 2,148.40
LIABILITIES & EQUITY
Accounts Payable 318.3 345 326.2
Accrued Expenses 119.8 109.2 104.6
Short-Term Borrowings 161.2 161.3 196.9
Current Portion Of Long-Term Debt/Capital Lease 2.2 2.3 5.4
Current Portion Of Capital Lease Obligations 2.2 1.8 3.3
Current Income Taxes Payable 55.7 49.7 42.8
Other Current Liabilities, Total 67.7 69.6 78.2
Unearned Revenue, Current 2.1 4.8 3.9
TOTAL CURRENT LIABILITIES   727 741.9 758
Long-Term Debt 253.1 236.2 221.8
Capital Leases 4.5 3.1 3.2
Pension & Other Post-Retirement Benefits 57.3 24.6 9.3
Deferred Tax Liability Non-Current 64.7 59.1 53.4
Other Non-Current Liabilities 323.6 323.5 335.3
TOTAL LIABILITIES   1,430.20 1,388.40 1,381.00
Common Stock 0.1 0.1 0.1
Additional Paid In Capital 682.9 682.9 682.9
Retained Earnings -9.9 64.9 100.7
Comprehensive Income And Other -12.1 -3.5 -16.3
TOTAL COMMON EQUITY   661 744.4 767.4
TOTAL EQUITY   661 744.4 767.4
TOTAL LIABILITIES AND EQUITY   2,091.20 2,132.80 2,148.40

 

CALCULATIONS AND FORMULAS

Gross Profit Margin

Formula:

Gross Profit margin 2012′ 2013′ 2014′
Tesco plc 8.44% 7.59% 6.62%
Debenhams plc 13.56% 13.13% 12.08%

Operating Profit Margin

Formula:

Operating Profit margin 2012′ 2013′ 2014′
Tesco plc 5.95% 5.13% 4.73%
Debenhams plc 7.85% 6.70% 5.53%

Net profit margin

Formula:

Net profit margin 2012′ 2013′ 2014′
Tesco plc 4.39% 0.04% 1.54%
Debenhams plc 5.62% 5.08% 3.77%

Current ratio

Formula:

Current ratio 2012′ 2013′ 2014′
Tesco plc 0.67 0.69 0.73
Debenhams plc 0.63 0.63 0.64

Acid-test ratio

Formula:

Acid-test ratio 2012′ 2013′ 2014′
Tesco plc 0.48 0.49 0.56
Debenhams plc 0.17 0.15 0.19

Asset turnover

Formula:

Asset turnover 2012′ 2013′ 2014′
Tesco plc 1.26 1.26 1.26
Debenhams plc 1.07 1.07 1.08

Receivable collection period

Formula:

Account receivable turnover 2012′ 2013′ 2014′
Tesco plc 28.48 29.94 33.52
Debenhams plc 96.11 109.20 84.41
Receivable collection period 2012′ 2013′ 2014′
Tesco plc 12.81 12.19 10.89
Debenhams plc 3.80 3.34 4.32

Payables payment period

Formula:

Payable turnover 2012′ 2013′ 2014′
Tesco plc 9.74 10.27 10.63
Debenhams plc 7.10 6.78 7.29
payable turnover period 2012′ 2013′ 2014′
Tesco plc 37.46 35.53 34.34
Debenhams plc 51.41 53.80 50.05

Inventory turnover period

Formula:

Inventory turnover 2012′ 2013′ 2014′
Tesco plc 16.26 15.65 16.40
Debenhams plc 5.80 5.54 5.88
Inventory turnover period 2012′ 2013′ 2014′
Tesco plc 22.44 23.32 22.26
Debenhams plc 62.93 65.89 62.05

Interest coverage

Formula:

Interest coverage 2012′ 2013′ 2014′
Tesco plc 12.80 10.53 9.46
Debenhams plc 11.99 12.97 9.01

Financial leverage

Formula:

Financial leverage 2012′ 2013′ 2014′
Tesco plc 0.65 0.67 0.71
Debenhams plc 0.68 0.65 0.64

FINANCIAL ANALYSIS: TESCO VS DEBENHAMS

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Table of Contents

1.0 Introduction. 3

2.0 Objective. 3

3.0 Background information. 3

3.1 Tesco Plc. 3

3.2 Debenhams Plc. 4

4.0 Financial ratio analysis. 5

4.1 Profitability ratios. 5

4.1.1 Gross profit margin. 5

4.1.2 Operating profit margin. 6

4.1.3 Net profit margin. 8

4.2 Liquidity ratios. 9

4.2.1 Current ratio. 9

4.2.2 Acid-test ratio. 10

4.3 Efficiency ratios. 12

4.3.1 Asset turnover. 12

4.3.2 Receivable collection period. 13

4.3.3 Payables payment period. 13

4.3.4 Inventory turnover period. 14

4.4 Gearing ratio. 14

4.4.1 Interest coverage. 14

4.4.2 Financial leverage. 15

4.4.3 Equity gearing. 16

5.0 Recommendations and conclusions. 17

References. 18

Appendices. 20

 

1.0 Introduction

Most significantly, financial analysis involves selection, assessment, and interpretation of financial data, together with other relevant information, to help in making financial and investment decisions (Fabozz 2009, p. 193). Financial analysis may be undertaken to evaluate the efficiency of operations, potential investments, creditworthiness, credit policies, and financial leverage of the company. Furthermore, the primary source of data for financial analysis includes balance sheet and income statement. Financial analysis employs various ratios to evaluate the performance of a given company in comparison to its competitors (Khan & Jain 2007, p. 6). The financial ratios employed include profitability ratios, liquidity ratios, operational ratios, and leverage ratios.

2.0 Objective

The main goal of this paper is to evaluate and compare the financial performance of Tesco plc and Debenhams plc through financial ratio analysis encompassing three-year period from 2012 to 2014.

3.0 Background information

3.1 Tesco Plc

Tesco Plc’s history of development can be traced back in 1919 during the time when Jack Cohen began selling surplus groceries via a stall in London, where he made a profit of one pound from sales of four pounds on the first day (Zentes,  Morschett & Schramm-Klein 2011, p. 311). However, the Tesco Brand appeared in the market in 1924 when Cohen purchased a tea shipment from T.E Stockwell. Therefore, the initials of names, T.E Stockwell and Cohen were combined to Tes-co and in 1929, Jack Cohen started to operate a flagship Tesco store that was located in Burnt Oak. As the brand kept on growing, Tesco was incorporated as a private limited company in 1932 and became enlisted in LSE (London Stock Exchange) market in 1947 with a 25 p share price. Furthermore, Tesco exhibited its expansionary zeal by acquiring rival shops and buy 1960, the company had acquired 200 Harrow stores and 70 Williams stores, as well as the Victor Value chain and 97 Charles Philips stores (Fernie & Sparks 2009, p. 162). In 1961, the company entered into the Guinness Book of Records as the Europe’s largest store and in seven years, it opened its fits “Superstore’ in West Sussex, Crawley. In 1987, the company completed a successful hostile takeover of its competitor, Hilards Supermarket for £ 220 m. In an effort to overtake Sainsbury, the company launched the Tesco Clubcard scheme in around 1995 and Tescom.com in 2000 (Palmer, Meek, Parkinson & Meek 2012, p. 204). Unfortunately, the company started declining in 2013 where it reported the first decline in profits in its 20-year history. In 2014, Tesco exhibited worst performance in a 20 –year history, with a 3.7 % decline in sales. In 2014, Sept 22, the company shocked the market where it overstated its semi-annual profit projection by £ 250 m.

3.2 Debenhams Plc

Debenhams Plc is among the largest clothing and goods retailers in the United Kingdom (Varley 2014, p. 33). The company’s origin can be traced back to 1778 When William Clark opened a drapers store in London to sell expensive fabrics, parasols, bonnets, and gloves. In 1813, the business becomes Clark & Debenham when William Debenham invested in this business and established the first store away from London City in Cheltenham (Francis, Terry & Steven 2013, p. 281). From 1818, the company started to prosper years later due to Victorian fashion for mourning where the windows and female relatives followed a stringent code of etiquette and clothing. Since then, the company continued to operate as an independent company up to 1980s, when the Bruton Group succeeded it hostile takeover. In 1998, the company regained its autonomous when it “demerged” from the Burton Group and Debenhams changed its company name to Arcadia Group plc. After this de-merger, Debenhams was enlisted into LSE until 2003, but became re-enlisted in 2006. In 2007 and 2009, the company managed to acquire 9 stores from Roches (Ireland) and acquired Magasin du Nord (Denmark).

4.0 Financial ratio analysis

4.1 Profitability ratios

Essentially, all business ventures cannot exist in the life long without making profit (Duska 2007, p. 167). Therefore, evaluation of profitability levels of a company is very important to management, investors, creditors, and obligors. However, there is no direct formula for determining a firm’s level of profitability. For this reason, several ratios such as gross profit margin, operating profit margin, and net profit margin can be used to evaluate the company’s level of profitability.

4.1.1 Gross profit margin

Gross profit margin can be viewed as gross profit expressed as a component percentage of total revenues (Pinson 2008, p. 115). In other words, gross profit margin is the percentage of revenues that is available to meet operating expenses. Therefore, a high gross profit margin is an indication of increased levels of profitability. The gross profit margin of Tesco plc for the year 2012, 2013, and 2013 are 8.44 %, 7.79 % and 6.62 %, respectively; and for the Debenhams plc for 2012, 2013, and 2014 are 13.59 %, 13.13 % and 12.8 %, respectively. These gross profit margins for Tesco imply that the company was able to generate £0.084, £ 0.076, and £ 0.066 of gross profit from every pound of revenues generated by the company in the financial year that ended at 2012, 2013, and 2014 respectively. For Debenhams plc, its gross profit margins imply that it was able to generate £0.135, £ 0.131, and £ 0.121 of gross profit from every pound of revenues generated by the company in the financial year that ended at2012, 2013, and 2014 respectively. From graph 1 below, The Debenhams’ gross profit margin level is higher than that of Tesco, but both companies exhibit a declining growth.

Graph 1: Gross profit margin

Reliability of grow profit margin

No matter how high gross profit margin ratio of company, this metric is still perilous to depend upon due to misconceptions surrounding gross profit margin. Therefore, full complementary of other ratios can be employed to provide a more detailed snapshot of a company’s financial stability and success (Tracy 2012, p. 13).

4.1.2 Operating profit margin

Operating profit margin is the operating margin expressed as a component percentage of sales revenue (Graham, Smart,  & Megginson 2012, p. 45). In other words, operating profit margin indicates the percentage of sales revenues that remains after cost of sales and operating expenses are deducted from total sales revenues. Therefore, a high operating profit margin is an indication of increased level of profitability. The operating profit margin of Tesco plc for the year 2012, 2013, and 2013 are 5.95%, 5.13 % and 4.73 %, respectively; and for the Debenhams plc ‘s operating profit margin 2012, 2013, and 2014 are 7.85 %, 6.70 % and 5.53 %, respectively. These operating profit margins for Tesco imply that the company was able to generate £0.060, £ 0.051, and £ 0.047 of operating profit from every pound of sales revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. In the case of Debenhams plc, its operating profit margins imply that it was able to generate £0.078 £ 0.067, and £ 0.055 of operating profit from every pound of revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. From graph 2 below, The Debenhams’ operating profit margin level is higher than that of Tesco, but both companies exhibit a declining growth in profitability.

Graph 2: Operating profit margin

Reliability of operating profit margin

Operating profit margin is beneficial as it shows the percentage of profit generated by the operating activities. However, the operating profit margin does not take account other important items such as financial obligations, tax income, and income from non-operating activities which may have substantial impact on financial performance of a company. Therefore, operating profit alone cannot be relied upon when concluding the profitability level and other profitability ratios are needed for complementary and comparability (Robinson,  Henry, Pirie & Broihahn 2015, p. 330).

4.1.3 Net profit margin

Net profit margin is often defined as the net profit expressed as a component of sales revenues (Baker & Powell 2005, 62). In other words, it is the residual sales revenues that remain as the bottom-line item of income statement after cost of sales, all expenses, and preference share dividends are deducted from total sales revenue. It is the amount of money that can be attributed to the shareholders and retained earnings. Therefore, a high net profit margin is an indication of increased level of profitability. The net profit margin of Tesco plc for the year 2012, 2013, and 2013 are 4.39%, 0.04 % and 1.54 %, respectively; and for the Debenhams plc ‘s net profit margin 2012, 2013, and 2014 are 5.62 %, 5.08 % and 3.77 %, respectively. These operating profit margins for Tesco imply that the company was able to generate £0.044, £ 0.0004, and £ 0.015 of net profit from every pound of sales revenues generated by the company in the financial year that ended at 2012, 2013, and 2014, respectively. In the case of Debenhams plc, its net profit margins imply that it was able to generate £0.056 £ 0.051, and £ 0.038 of net profit from every pound of revenues generated by the company in the financial year that ended in 2012, 2013, and 2014, respectively. From graph 3 below, The Debenhams’ net profit margin level is higher than that of Tesco, but Debenhams’ exhibits a declining growth in profitability; whereas Tesco’s decreases in 2013 and then increases 2014.

Graph 3: Net profit margin

Reliability of net profit margin

One of the usefulness of net profit margin is price control where a company can use net profit margin to establish the direct correlation between price and profit on a per-unit basis. Unfortunately, profit margin does not assist in determining sales volume and uncovering of true cost efficiency of generating sales revenues.

4.2 Liquidity ratios

The liquidity level refers to the extent to which a firm can meet its short-term financial obligations such as trade payable and interest burden at the disposal of total current assets. Liquidity level is often evaluated using current and acid-test ratio.

4.2.1 Current ratio

As a measure of liquidity level, current ratio is often used to determine the degree to which a given company can cover up its short-term financial debt using all of its current assets (Graham,  Smart & Megginson 2012, p. 41). Therefore, a current ratio greater than or equal to 1 show that the current assets of a company are sufficient enough to cover up current liabilities. The vice versa is true. However, the current ratios for Tesco plc for the year 2012, 2013 and 2014 are 0.67, 0.69, and 0.73, respectively; whereas Debenhams’ current ratios are 0.63, 0.63 and 0.64 in the same order of years. It is evident that the current assets of the two companies are not sufficient enough to settle current liabilities for the three-year period as depicted in Graph 3 below. However, the ability to settle current liabilities tends to increase for the two companies.

Graph 3: Current ratio

 Reliability of current ratio

Most notably, current ratio indicates the cash richness and short-term strength of a firm, as well as the status of the operating cycle. However, current ratio involves illiquid inventory that results in overestimation of company’s liquidity position. Inventory is vulnerable to obsolete and damage (through fire, floods, and accidents).

4.2.2 Acid-test ratio

As a measure of liquidity level, acid-test ratio is often used to determine the degree to which a given company can cover up its short-term financial debt using all of its liquid assets in cases where inventory become obsolete or damage (Graham,  Smart & Megginson 2012, p. 41). Therefore, an acid-test ratio greater than or equal to 1 show that the liquid assets of a company are sufficient enough to cover up current liabilities. The vice versa is true. However, the acid-test ratios for Tesco plc for the year 2012, 2013 and 2014 are 0.48, 0.49, and 0.56, respectively; whereas Debenhams’ currents ratios are 0.17, 0.15 and 0.19 in the same order of years. It is evident that the liquid assets of the two companies are not sufficient to settle current liabilities for the three-year period as depicted in Graph 4 below. However, the ability to settle current liabilities tends to increase for the two companies.

Graph 4: Acid-test ratio

Reliability of Acid-test ratio

Most importantly, acid-test ratio eliminates the illiquid components (inventory) from the equation giving the better snapshot of the company’s liquidity position. Collapsing companies have high level of inventory and acid-test can be much of help in uncovering such situations. However, acid-test ratio ignores the timing of cash flows and this alone cannot be used to assess liquidity of the company.

4.3 Efficiency ratios

Efficiency ratios are used to evaluate the company’s efficiency in management of assets such as inventory, account receivables and total assets. Therefore, company’s efficiency can be evaluated using efficiency ratios such as asset turnover, account receivable turnover, and inventory turnover.

4.3.1 Asset turnover

Asset turnover ratio is used to indicate the amount of sales revenues in pounds generated by one pound of assets acquired by the company (Ryan 2004, p. 218). A high asset turnover implies that the company is using fewer assets to generate more sales, which is a sign of efficiency. The asset turnover of Tesco plc for the year 2012, 2013, and 2013 are 1.26, 1.26 and 1.26 times, respectively; and for the Debenhams plc ‘s asset turnover 2012, 2013, and 2014 are 1.07, 1.07 and 1.08 times, respectively. These asset turnovers for Tesco imply that the company was able to generate £1.26, £ 1.26, and £ 1.26 of sales revenue from every pound of assets acquired by the company in the financial year that ended at 2012, 2013, and 2014 respectively. In the case of Debenhams plc, its asset turnovers imply that it was able to generate £1.07, £ 1.07 and £ 1.08 of sales revenues from every pound of assets acquired in the financial year that ended at 2012, 2013, and 2014 respectively. Graph 5 below indicates that the assets turnovers for the two companies remained relatively stable during the three-year period, but Tesco’s are higher.

Graph 5: Asset turnover

4.3.2 Receivable collection period

Receivable collection period is used to indicate the number of days through which the company is able to collect cash its debtors. Fewer days indicate that the company’s management is efficient in managing account receivables. Account receivable period is calculated from account receivable turnover. The Tesco’s account receivable periods are 12.81 days, 12.19 days, and 10. 89 days in 2012, 2013 and 2014 respectively; whereas Debenhams’s receivable collection periods are 3.8 days, 3.34 days and 4.32 days in the same order of years. As can be noticed, Tesco has higher receivable collection period.

4.3.3 Payables payment period

Payables payment period is the number of days taken by the company to settle its account payable (Ryan 2004, p. 219). High number of days indicate inefficiency of company’s management in managing the accounts payable. Furthermore, the payables payment period is determined from payable turnover. The Tesco’s Payables periods are 37.46 days, 35.53 days, and 34.34 days in 2012, 2013 and 2014, respectively; whereas Debenhams’s payables payment periods are 51.41 days, 53.80 days and 50.05 days in the same order of years. As can be noticed, Debenhams plc has higher payables payment period.

4.3.4 Inventory turnover period

Inventory turnover period shows the number of days in which inventory stays on store shelves before turned into cost of sales or sales revenues (Ryan 2004, p. 219). Less number of days indicates management efficiency in converting inventory into cost of goods sold. Inventory turnover period is determined from inventory turnover. The Tesco’s inventory periods are 22.44 days, 23.32 days, and 22.26 days in 2012, 2013 and 2014 respectively; whereas Debenhams’s inventory periods are 62.93 days, 65.89 days and 62.05 days in the same order of years. As can be noticed, Debenhams plc has higher inventory turnover period.

4.4 Gearing ratio

The gearing ratio determines the proportion of borrowed money (debt) to its equity. The gearing depicts the financial obligation to which a company y is subjected, since beyond debt can result in financial difficulties. A very high gearing ratio implies a high debt proportion to equity. Examples of gearing ratio include Interest cover, financial gearing and equity gearing.

4.4.1 Interest coverage

Interest coverage is a ratio that indicates the extent to which EBIT is capable of covering interest obligations for short-term and long-term debts (Glynn 2008, p. 410). The interest coverage ratios of Tesco plc are12.80, 10.53 and 9.46 times in 2012, 2013 and 2014 respectively, and Debenhams’ interest coverage ratios are 11.99, 12.97, and 9.01 times in order of the same years. Interest coverage ratios for the two companies tend to decrease indicating an increasing debt burden as indicated by Graph 6.

Graph 6: Interest coverage ratio

4.4.2 Financial leverage

It is also known as debt ratio. Financial leverage is used to indicate the proportion of debt financing the company’s assets. When financial leverage is high, the risk of the business also goes high since the company has more debt burdens that may increase chances of default (Glynn 2008, p. 410). Financial leverage is determined by dividing total debt by total assets. According to Graph 7 below, the financial leverage of Tesco plc is increasing while that of Debenhams is decreasing. This implies that the Tesco’s business is more risky than Debenhams’.

4.4.3 Equity gearing

Equity gearing is also known as debt-to-equity ratio. This ratio is used to indicate how the company’s capital is structured. A high equity gearing ratio indicates that the company’s debt is more than the equity and depicts a high risk of the business. Graph 8 indicates that Tesco’s equity gearing is increasing while Debenhams’s equity gearing is tending to decrease (Glynn 2008, p. 410). This indicates that Tesco’s debt is increasing more than equity making its business more risky when compared to that of Debenhams’.

Graph 9: Equity Gearing

5.0 Recommendations and conclusions

As indicated by the current and acid-test ratio, Tesco’s and Debenhams’ liquidity level is too low, implying that the two have no ability to meet their short-term financial obligations. The companies are likely to experience financial difficulties as creditors and obligors will not be willing to supplier goods on credit and finances due to fear of default. To avoid these circumstances, it is advisable for the two companies to increase their current assets such as cash and cash equivalent through issuance of equity. Furthermore, Debenhams plc has higher profitability level than Tesco plc as indicated by gross profit margin, operating profit margin, and net profit margin. However, the profitability levels of the two companies are decreasing gradually. Tesco plc is more efficient in managing total assets to generate sales revenues when compared to Debenhams. Tesco plc is also efficient in paying due to its creditors as it takes less time to settle payables payment than Debenhams.  Additionally, Debenhams is more efficient in debt collection from its customers than Tesco as it has less receivable collection period. Besides, Tesco is more efficient in inventory management as it has low inventory turnover period. On the other hand, as far as gearing ratios are concerned, Tesco’s business is more risky due to decreasing ability to cover its interest obligations, assets are increasingly becoming acquired by debt, and high debt in its capital structure when compared to that of Debenhams. Therefore, the company should try its best to reduce the debt proportion to achieve a balanced capital structured that is stable. High debt proportion increases debt burden, increasing the chance of default and running into bankruptcy.

List of References

Baker, H. K., & Powell, G. E 2005. Understanding Financial Management: A Practical Guide. Oxford: Blackwell Pub.

Duska, R. F 2007. Contemporary reflections on business ethics. Dordrecht, the Netherlands: Springer.

Fabozz, F 2009. Institutional Investment Management: Equity and Bond Portfolio Strategies and Applications. London: John Wiley & Sons.

Fernie, J., & Sparks, L. (2009). Logistics & retail management: Emerging issues and new challenges in the retail supply chain. London: Kogan Page Ltd.

Francis, G., Terry, G., & Steven, T 2013.  International Bibliography of Business History. London: Routledge.

Glynn, J. J 2008. Accounting for managers. London: Cengage Learning.

Graham, J. R., Smart, S. B., & Megginson, W. L 2012. Introduction to corporate finance. Australia: South-Western/Cengage Learning.

Graham, J. R., Smart, S. B., & Megginson, W. L. (2012). Introduction to corporate finance. Australia: South-Western/Cengage Learning.

Khan, M. Y., & Jain, P. K 2007. Management accounting: Text, problems and cases. New Delhi: Tata McGraw-Hill.

Palmer, R., Meek, R., Parkinson, L., & Meek, H 2012. CIM Coursebook 06/07 Managing Marketing Performance. London: Routledge.

Pinson, L 2008. Anatomy of a business plan: A step-by-step guide to building the business and securing your company’s future. Tustin, CA: Out of Your Mind & into the Marketplace.

Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial statement analysis. Hoboken : Wiley

Ryan, B 2004. Finance and accounting for business. London: Thomson Learning.

Tracy, A 2012. Ratio Analysis Fundamentals: How 17 Financial Ratios Can Allow You to Analyse Any Business on the Planet. New Jeysey: RatioAnalysis.net.

Varley, R 2014. Retail Product Management: Buying and Merchandising. London: Routledge.

Zentes, J., Morschett, D., & Schramm-Klein, 2011. Strategic retail management: Text and international cases. Wiesbaden: Gabler.

Appendices

FINANCIAL STATEMENTS

INCOME STATEMENTS

TESCO

Currency in As of: 25-Feb 23-Feb 22-Feb
Millions of British Pounds   2012 2013 2014
    Restated Restated Reclassified
    GBP GBP GBP
Revenues 63,916.00 63,406.00 62,554.00
TOTAL REVENUES   63,916.00 63,406.00 63,050.00
Cost Of Goods Sold 58,519.00 58,596.00 58,635.00
GROSS PROFIT   5,397.00 4,810.00 4,174.00
Selling General & Admin Expenses, Total 1,594.00 1,555.00
1,193.00
OTHER OPERATING EXPENSES, TOTAL   1,594.00 1,555.00 1,193.00
OPERATING INCOME   3,803.00 3,255.00 2,981.00
Interest Expense -411 -429 -447
Interest And Investment Income 114 120 132
NET INTEREST EXPENSE   -297 -309 -315
Income (Loss) On Equity Investments 91 72 60
Other Non-Operating Income (Expenses) 44 -15 -11
EBT, EXCLUDING UNUSUAL ITEMS   3,641.00 3,003.00 2,715.00
Merger & Restructuring Charges
Impairment Of Goodwill -495
Gain (Loss) On Sale Of Assets 397 -290 180
Other Unusual Items, Total -161 -636
Other Unusual Items -94 -27
EBT, INCLUDING UNUSUAL ITEMS   4,038.00 2,057.00 2,259.00
Income Tax Expense 874 529 347
Minority Interest In Earnings -8 4 4
Earnings From Continuing Operations 3,164.00 1,528.00 1,912.00
EARNINGS FROM DISCOUNTINUED OPERATIONS   -350 -1,504.00 -942
NET INCOME   2,806.00 28 974
NET INCOME TO COMMON INCLUDING EXTRA ITEMS   2,806.00 28 974
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS   3,156.00 1,532.00 1,916.00

 

DEBENHAMS

Currency in As of: 1-Sep 31-Aug 30-Aug
Millions of British Pounds   2012 2013 2014
    GBP Restated GBP
    GBP
Revenues 2,229.80 2,282.20 2,312.70
TOTAL REVENUES   2,229.80 2,282.20 2,312.70
Cost Of Goods Sold 1,927.50 1,982.60 2,033.40
GROSS PROFIT   302.3 299.6
279.3
Selling General & Admin Expenses, Total 127.3 146.6 151.3
OTHER OPERATING EXPENSES, TOTAL   127.3 146.6 151.3
OPERATING INCOME   175 153 128
Interest Expense -14.7 -12.2 -14.4
Interest And Investment Income 0.1 0.4 0.2
NET INTEREST EXPENSE   -14.6 -11.8 -14.2
Other Non-Operating Income (Expenses) -2.1 -2.2 -3.5
EBT, EXCLUDING UNUSUAL ITEMS   158.3 139 110.3
Other Unusual Items, Total -4.5
Other Unusual Items -4.5
EBT, INCLUDING UNUSUAL ITEMS   158.3 139 105.8
Income Tax Expense 33 23.1 18.6
Earnings From Continuing Operations 125.3 115.9 87.2
NET INCOME   125.3 115.9 87.2
NET INCOME TO COMMON INCLUDING EXTRA ITEMS   125.3 115.9 87.2
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS   125.3 115.9 87.2

 

BALANCE SHEET

TESCO

Currency in As of: 25-Feb 23-Feb 22-Feb
Millions of British Pounds   2012 2013 2014
    Restated Restated Reclassified
    GBP GBP GBP
Assets
Cash And Equivalents 1,725.00 1,457.00 2,021.00
Short-Term Investments 1,243.00 522 1,016.00
TOTAL CASH AND SHORT TERM INVESTMENTS   2,968.00 1,979.00 3,037.00
Accounts Receivable 389 472
274
Other Receivables 1,855.00 1,646.00 1,607.00
TOTAL RECEIVABLES   2,244.00 2,118.00 1,881.00
Inventory 3,598.00 3,744.00 3,576.00
Prepaid Expenses 420 417 321
Finance Division Loans And Leases, Current 2,502.00 3,094.00 3,705.00
Finance Division Other Current Assets 580 1,055.00 485
Other Current Assets 551 689 2,567.00
TOTAL CURRENT ASSETS   12,863.00 13,096.00 15,572.00
Gross Property Plant And Equipment 34,772.00 35,643.00 36,585.00
Accumulated Depreciation -9,062.00 -10,773.00 -12,095.00
NET PROPERTY PLANT AND EQUIPMENT   25,710.00 24,870.00 24,490.00
Goodwill 3,449.00 2,954.00 2,286.00
Long-Term Investments 423 1,312.00 1,301.00
Finance Division Loans And Leases, Long Term 1,901.00 2,465.00 3,210.00
Finance Division Other Long-Term Assets 1,526.00
Deferred Tax Assets, Long Term 23 58 73
Deferred Charges, Long Term 677 739 885
Other Intangibles 492 669 624
Other Long-Term Assets 3,717.00 3,966.00 1,723.00
TOTAL ASSETS   50,781.00 50,129.00 50,164.00
LIABILITIES & EQUITY
Accounts Payable 6,375.00 6,069.00 5,853.00
Accrued Expenses 2,208.00 2,275.00 1,942.00
Short-Term Borrowings 415 746 846
Current Portion Of Long-Term Debt/Capital Lease 1,423.00 20 1,064.00
Current Portion Of Capital Lease Obligations 32 6 6
Finance Division Other Current Liabilities 5,465.00 6,015.00 6,858.00
Current Income Taxes Payable 416 519 494
Other Current Liabilities, Total 2,947.00 3,341.00 4,342.00
TOTAL CURRENT LIABILITIES   19,249.00 18,985.00 21,399.00
Long-Term Debt 9,978.00 9,946.00 9,188.00
Capital Leases 134 122 115
Minority Interest 26 18 7
Pension & Other Post-Retirement Benefits 1,872.00 2,378.00 3,193.00
Deferred Tax Liability Non-Current 1,160.00 1,006.00 594
Other Non-Current Liabilities 587 1,031.00 953
TOTAL LIABILITIES   32,980.00 33,468.00 35,442.00
Common Stock 402 403 405
Additional Paid In Capital 4,964.00 5,020.00 5,080.00
Retained Earnings 12,164.00 10,535.00 9,728.00
Treasury Stock -18 -9 -20
Comprehensive Income And Other 263 694 -478
TOTAL COMMON EQUITY   17,775.00 16,643.00 14,715.00
TOTAL EQUITY   17,801.00 16,661.00 14,722.00
TOTAL LIABILITIES AND EQUITY   50,781.00 50,129.00 50,164.00

 

DEBENHAMS

Currency in As of: 1-Sep 31-Aug 30-Aug
Millions of British Pounds   2012 2013 2014
    GBP Restated GBP
    GBP
Assets
Cash And Equivalents 44 27 64.4
TOTAL CASH AND SHORT TERM INVESTMENTS   44 27 64.4
Accounts Receivable 20.9 19.8
25.3
Other Receivables 2.3 1.1 2.1
TOTAL RECEIVABLES   23.2 20.9 27.4
Inventory 332.3 357.9 345.7
Prepaid Expenses 52.2 57.4 47.3
Other Current Assets 7.8 7.3 1.5
TOTAL CURRENT ASSETS   459.5 470.5 486.3
Gross Property Plant And Equipment 1,243.40 1,301.10 1,347.20
Accumulated Depreciation -581.8 -609 -658
NET PROPERTY PLANT AND EQUIPMENT   661.6 692.1 689.2
Goodwill 818.5 819 818.5
Long-Term Investments 1.9 1.8 4.2
Deferred Tax Assets, Long Term 83.2 69.3 51
Other Intangibles 46.4 57.5 74.3
Other Long-Term Assets 20.1 22.6 24.9
TOTAL ASSETS   2,091.20 2,132.80 2,148.40
LIABILITIES & EQUITY
Accounts Payable 318.3 345 326.2
Accrued Expenses 119.8 109.2 104.6
Short-Term Borrowings 161.2 161.3 196.9
Current Portion Of Long-Term Debt/Capital Lease 2.2 2.3 5.4
Current Portion Of Capital Lease Obligations 2.2 1.8 3.3
Current Income Taxes Payable 55.7 49.7 42.8
Other Current Liabilities, Total 67.7 69.6 78.2
Unearned Revenue, Current 2.1 4.8 3.9
TOTAL CURRENT LIABILITIES   727 741.9 758
Long-Term Debt 253.1 236.2 221.8
Capital Leases 4.5 3.1 3.2
Pension & Other Post-Retirement Benefits 57.3 24.6 9.3
Deferred Tax Liability Non-Current 64.7 59.1 53.4
Other Non-Current Liabilities 323.6 323.5 335.3
TOTAL LIABILITIES   1,430.20 1,388.40 1,381.00
Common Stock 0.1 0.1 0.1
Additional Paid In Capital 682.9 682.9 682.9
Retained Earnings -9.9 64.9 100.7
Comprehensive Income And Other -12.1 -3.5 -16.3
TOTAL COMMON EQUITY   661 744.4 767.4
TOTAL EQUITY   661 744.4 767.4
TOTAL LIABILITIES AND EQUITY   2,091.20 2,132.80 2,148.40

 

CALCULATIONS AND FORMULAS

Gross Profit Margin

Formula:

Gross Profit margin 2012′ 2013′ 2014′
Tesco plc 8.44% 7.59% 6.62%
Debenhams plc 13.56% 13.13% 12.08%

Operating Profit Margin

Formula:

Operating Profit margin 2012′ 2013′ 2014′
Tesco plc 5.95% 5.13% 4.73%
Debenhams plc 7.85% 6.70% 5.53%

Net profit margin

Formula:

Net profit margin 2012′ 2013′ 2014′
Tesco plc 4.39% 0.04% 1.54%
Debenhams plc 5.62% 5.08% 3.77%

Current ratio

Formula:

Current ratio 2012′ 2013′ 2014′
Tesco plc 0.67 0.69 0.73
Debenhams plc 0.63 0.63 0.64

Acid-test ratio

Formula:

Acid-test ratio 2012′ 2013′ 2014′
Tesco plc 0.48 0.49 0.56
Debenhams plc 0.17 0.15 0.19

Asset turnover

Formula:

Asset turnover 2012′ 2013′ 2014′
Tesco plc 1.26 1.26 1.26
Debenhams plc 1.07 1.07 1.08

Receivable collection period

Formula:

Account receivable turnover 2012′ 2013′ 2014′
Tesco plc 28.48 29.94 33.52
Debenhams plc 96.11 109.20 84.41
Receivable collection period 2012′ 2013′ 2014′
Tesco plc 12.81 12.19 10.89
Debenhams plc 3.80 3.34 4.32

Payables payment period

Formula:

Payable turnover 2012′ 2013′ 2014′
Tesco plc 9.74 10.27 10.63
Debenhams plc 7.10 6.78 7.29
payable turnover period 2012′ 2013′ 2014′
Tesco plc 37.46 35.53 34.34
Debenhams plc 51.41 53.80 50.05

Inventory turnover period

Formula:

Inventory turnover 2012′ 2013′ 2014′
Tesco plc 16.26 15.65 16.40
Debenhams plc 5.80 5.54 5.88
Inventory turnover period 2012′ 2013′ 2014′
Tesco plc 22.44 23.32 22.26
Debenhams plc 62.93 65.89 62.05

Interest coverage

Formula:

Interest coverage 2012′ 2013′ 2014′
Tesco plc 12.80 10.53 9.46
Debenhams plc 11.99 12.97 9.01

Financial leverage

Formula:

Financial leverage 2012′ 2013′ 2014′
Tesco plc 0.65 0.67 0.71
Debenhams plc 0.68 0.65 0.64

Business Economics: The petrol exporting nations

Name:

University:

Course:

Instructor:

Date:

Business Economics: The petrol exporting nations

Introduction

The global oil prices have dropped sharply in the last one year. This has led to major revenue shortfalls in majority of the universal energy exporting nations. Consequently, the consumers in most of the importing countries will be affected either positively or negatively and therefore they are likely to have to pay less or more in order to heat their homes, drive their cars or carry out their daily businesses that require the use of petroleum (Ashay 2015).

In terms of the global petroleum trade being carried out, the aggregate supply and the aggregate demand (AD and AS) are referred to as macroeconomic models which have been structured in order to explain the various levels of oil prices and the output. Therefore, it is considered as a primary and simplified representation that is used in the current modern field of microeconomics in relation to calculations of oil prices and the business economics related to global petroleum trade (The World Bank Group 2015).

The aggregate demand and the aggregate supply model have therefore been accepted and hence used by a large number of economists to carry out relevant predictions in relation to the oil price levels. In addition, the model can also be connected to other necessary models in the formulation of other variables and in the determination of factors such as global unemployment and global price inflation that affects the various economies.

The two models directly or indirectly affect the business economics by limiting the flow of related factors such as the capital investments, consumer level of spending, the exports, and the imports of other goods and many other connected factors, which end up impacting either negatively or positively on the country. Majority of the oil-exporting countries are found in North Africa and the Middle East. Other nations include Afghanistan and Pakistan while other are located in Central Asia and Caucasus.

The Effect of Oil Prices on The petrol exporting nations

Normally, when the universal economic growth is considered strong, the existing higher levels of oil demand will subject the oil prices to go up. The consistent fluctuation of the oil prices implies that the different types of economies in the petrol exporting nations will be affected differently. These economies will definitely be impacted negatively because of the instability in the oil prices. Falling in the prices of oil means that the exporting nations will have to receive less for production because of the great redistribution of wealth that will be associated with the fluctuation (Tim 2015).

A close analysis dictates that the lower prices of petroleum will definitely challenge the exporters and more profits will end up being directed to the economies of the importers. This implies that the exporters ought to effectively adjust their consistent levels of spending over time. They also have to reform their subsidies in order to create an effective trade and boost their profits.

It is clear that the sharp drop in the prices of petroleum that is being observed in the exporters has had a major impact in the world economy. It is obvious that such effects end up affecting almost everyone in different ways that are relevant to their daily lives. The importance of the exportation of crude oil directly affects the global financial crisis making the crisis to be more severe and extensive. The global economic growth rate has gone down and the process of picking up is becoming stressful (Heinz-Peter & Hamad 2014).

There are several existing fundamentals of the demand and supply logistics, which widely affect the fluctuations in the prices of oil affecting the petrol exporting nations. The financialization of commodities affects the large numbers of existing investors. This is mostly characterized by the other businesses that are present in the world. The commodity prices that are present and the regulatory changes that keep differing, has also had an impact on the exporters (The Canadian Press 2014)

The Organization of the Petroleum Exporting Countries (OPEC) tends to regulate the petroleum oil prices. This is done through the regulations of the mining process and the global distribution of the commodity depending on the economies that are present and their requirements. The consumption patterns are also relevant because they dictate the equality in terms of the distribution of the products. All countries can never be equal and therefore such factors will have to be identified and corrected to avoid exportation mistakes coming out of the global petroleum exporting countries (Felix 2015).

There are two factors, which are said to be directly affecting the petroleum exporting countries. These factors include the oil prices and the level of demand. Definitely, demand and supply are key factors because the increase in demand will affect the supply and decrease in the demand of oil, will also affect the supply significantly. Currently, the reduction in the oil prices seems to be responsible for the declining market power that the Petroleum Exporting Countries are experiencing (Republic of Turkey Ministry of Foreign Affairs 2011).

The petroleum exporting countries are said to be affected differently by these oil prices. The effects revolve around the environmental policy priorities, the social, economic and political factors of all the nations in the world that are part of the consumption groups in the modern world. Considering the universal context, the process of oil distribution, the transactions of the resources of oil and the general exploitation of oil commodities, the exportation of oil will directly affect the connections or interrelationships existing between the countries. Presently, it is considered that the production of petroleum has ended up creating different forms of interdependencies especially in the global market. All these interdependencies are usually uneven. Other relevant factors include the consistent security of demand and supply affecting the exportation process, and then there are other financial and informational structures, which have also played different roles in the fall of the global oil prices (Eckbo 1976).

The petrol exporting nations have been affected with conflicts because of the changes in the global oil prices. This has largely contributed to geopolitics, which directly affects these exporters’ economies. The level of growth and development becomes low mostly because these exporters are suffering from a consistent lack of necessary, accurate, and timely information that is significant in the determination of the global oil prices. The oil cartels find it difficult to effectively manage this relevant information and create the necessary changes that will later be consideredimportant to the economy (Rosie 2015).

Globally, there are also different organizations of the oil producing countries. It is therefore obvious that any simple shift in the oil prices will create conflicts between these organizations. Irrespective of the fact that OPEC is the global association of exporters, the other organizations also determine the global aggregate demand and the aggregate supply model and the related forms of business economics that are associated with the exportation of petroleum (Organization of Petroleum Exporting Countries 2015).

It is considered that the weaker oil prices will greatly affect the economic revenues and consequently the relative power that some global oil exporters have. As a powerful organization that carries out the exportation of oil, OPEC’s activity of pricing oil will end up having a major impact on the global prices, the universal output and also the exchange rates more especially in the industrialized nations that largely depend on oil for various activities (International Monetary Fund 2015; Timothy 2015).

There are many countries, which have been largely affected by economic factors such as inflation due to the mismanagement of the natural resources such as petroleum. Such countries include Venezuela where the effect of global oil prices is considered to be extensive and the country is almost testing the feelings of recession. There is some oil producing countries whose economies are still oil dependent. The battles in some countries also end up affecting the economies. The daily black market sales that some oil producing countries make ends up impacting negatively on the economies. The money acquired from such sales turns out to be irrelevant and insignificant to the nation and that is how this oil exporting countries end up losing most of the government revenues through the exports (Dennis & Jeffrey 2000; Clifton 2015).

Some nations are part of the largest oil exporters but are still dependent on the revenue that comes from the exportation of oil commodities. This implies that the economies of such countries are constantly falling. Globally, the Organization of Petroleum Exporting Countries has a direct effect on the world trade hence the need for an improvement in the world trade. The impact of oil in the world economy also calls for some form of economic business stability, which will be based on factors such as justice, members promoting full mutual understanding, and ensuring there is a genuine concern more especially in relation to the well-being of all the people in the world. Universally, many of the world’s developing countries will end up benefiting from the lowering oil prices but the oil exporting countries will have a negative impact on the lowering oil prices (Adelman 1982; Jackie 2014).

Conclusion

The production of crude oil by the Organization of the Petroleum Exporting Countries is considered as a very significant factor that directly impacts on the global oil prices. As the leading exporter, OPEC tries to find out the possible ways that will be used in the management process of the production of oil and the exporting. This can be achieved through setting of targets that will effectively manage the whole process. The global characteristics of these oil prices are not only determined by the current fundamentals of the demand and the supply of oil. The future of the global oil prices is also determined by the projected future demand and supply based on the flow of the commodity. There are expectations of the future demand and supply as projected by the aggregate supply and aggregate demand leading to creation of a balance in the whole process that will end up shaping the market conditions and the global oil prices. The improved target adjustments will also develop the business economy extensively. The existing market conditions might also end up creating more pressure on the global oil prices

Bibliography

Adelman, MA 1982. “OPEC as a Cartel,” in James M. Griffin and David J. Teece, eds., OPEC Behavior and World Oil Price, George Allen &Unwin, London.

Ashay, A, 2015, Oil Prices, OPEC and Oil Crisis: Collateral Damage in a Greater Game, Creative Commons License

Clifton, B,P, 2015, The global oil price drop may last for the next couple decades, Stanford

Congressional Budget Office, the Effect of OPEC Oil Pricing on Output, Prices and Exchange Rates in the United States and other Industrialized Countries, United States

Dennis, WC & Jeffrey, MP, 2000, Organization of Petroleum Exporting Countries (OPEC), Pearson Education

Eckbo, PL 1976,The Future of World Oil, Ballinger, Cambridge, Mass.

Felix, A, 2015, Oil price fluctuations and the Nigerian economy, Texas Southern University

Heinz-Peter, B & Hamad, IM, 2014, Global economy will benefit from oil price decline, Autonomous Nonprofit Organization

International Monetary Fund, 2015, Falling Oil Prices Hurt Exporters across Mideast, Central Asia

Jackie, N, 2014, For World’s Oil Exporters, Falling Prices Have A Domino Effect, NPR Parallels

Organization of Petroleum Exporting Countries, 2015, Monthly Oil Market Report,Organization of the Petroleum Exporting Countries

Organization of the Petroleum Exporting Countries, 2000, Organization of the Petroleum Exporting Countries, OPEC, Vienna, Australia

Republic of Turkey Ministry of Foreign Affairs, 2011, Turkey’s relations with the Organization of the Petroleum Exporting Countries (OPEC), Turkey

Rosie, M,W, 2015, Oil prices and the impact on the economy since 1945, Telegraph Media Group Limited 2015

Timothy, L, 2015, Drilling Down – Understanding Oil Prices and Their Economic Impact, Madison International Trade Association (MITA), Madison, Wisconsin

The Canadian Press, 2014, Oil price falls below $70 US as OPEC leaves output unchanged, Canada

The World Bank Group, 2015, Most Developing Countries Will Benefit from Oil Price Slump,World Bank Group

Tim, B, 2015, Falling oil prices: Who are the winners and losers? BBC News

Does Defamation Law Hinder the Media’s Role as A Public Watchdog or Not?

Does Defamation Law Hinder the Media’s Role as A Public Watchdog or Not?

[AUTHOR’S NAME]

[DATE eg December 2014]

A DISSERTATION

Submitted to the Law Department

Supervised by

[Name]

 

 

 

 

 

Research Plan/Literature Review

Background to the Study

In England, defamation cases are not only notoriously complicated but also very restrictive.[1] Defamation laws in England trace their origin to the judges on the Queen’s Bench. Keen to see gentlemen defending their reputations without recourse to violence, they came up with libel laws as alternatives.[2] As such, defamation is a kind of civil law.[3] Though very old, defamation laws are riddled with problems. The main problem is lack of development.[4] Development of laws is mainly achieved through legislation and common law. While the former is dependent on political goodwill, the latter depends on precedent set by courts (common law).[5]

The problem that has faced defamation law in England is that there have been very few cases that have actually made it to the trial stage for different reasons. These reasons include the extremely high costs of such defamation cases as well as their complicated and unpredictable nature. Furthermore, only three judges can hear such cases both in England and Wales. As such, there are very few opportunities available for the relevant common law to develop.[6]

As though that was not enough, only a very small number of rulings have actually had disproportionately large influences on the shape of the law. In essence, it has been extremely hard for court rulings to influence the course of the law on defamation. This state of affairs has increased the problem of existence of outdated defamation laws.[7]

The Research Problem

English defamation law is one of the oldest in the world. Therefore, it has been quite of being retrogressive and favouring claimants over defendants.[8] This has led to an increase in liberal tourism.[9] Furthermore, requiring the defendant (not the claimant) to prove the alleged defamation makes the law quite favourable to claimants.[10]Therefore, English defamation law has been regarded as a major impediment to free speech throughout the West.

The Defamation Act of 2013 was in fact enacted to specifically address these impediments.[11]            Unfortunately, the new law has only managed to address some of the controversial clauses of the law such as the one mentioned above (putting the burden of proof of defamatory remarks on the defendant rather than the plaintiff). This has left several other issues still unaddressed. A notable expectation of the new law was that it would essentially bring together into one unified law all issues pertaining to defamation whether it is slander or libel. However, it has left some fundamental issues found in the old English defamation law in place.[12]

As such, several weaknesses of the English defamation law still exist. Furthermore, the new law only applies to defamation cases that have happened after its enactment. All cases of defamation that happened before the enactment data of the Defamation Act of 2013 will still use the English defamation law.[13] The problem of this research, therefore, is that many weaknesses still remain in English law pertaining to defamation.

Among the notable weaknesses is that in protecting the reputations, this law makes it extremely hard for rights to free speech of the kind given to a free press to be effectively exercised because of the risk of being sued for defamation.[14] In essence, even with the new Defamation Act, freedom of expression is still threatened by the risk of committing libel. This is unlike the situation in countries like the US where there are very clear provisions for the expression of free speech by the free press without necessarily committing libel.[15]

Rationale for the Study

This study is particularly important and therefore worth carrying out because of the following reasons:

  1. It helps bring about an understanding of the extent to which English defamation law – while protecting reputations – interferes with or undermines free speech especially by the free press.
  2. It uncovers the extent to which the media’s role as a public watchdog has been hindered by English defamation law.

Aim and Objectives of the Study

AIM: To determine whether or not English defamation law hinders the media’s role as a public watchdog.

Objectives:

  1. To determine the strengths and weaknesses of the Defamation Act of 2013 with respect to protection of reputations.
  2. To point out the hindrances to free speech that still exist in English defamation law even after the enactment of the Defamation Act of 2013.
  3. To critically analyse defamation laws in England and the US with a view to determining the suitability of each one of them when it comes to guarding against defamation while at the same time ensuring that the media’s rights as a public watchdog are not violated.
  4. To make recommendations for improving English defamation law to make it less of a hindrance to the media in its role as the public watchdog.

Research Questions

  1. What are the strengths and weaknesses of the Defamation Act of 2013 with respect to protection of reputations?
  2. Which hindrances to free speech still exist in English defamation law?
  3. In which ways is defamation law in the US better than defamation law in England in terms of guarding against defamation while at the same time ensuring that the media’s rights as a public watchdog are not violated?
  4. Which amendments are necessary to modernize English defamation law to minimize or eliminate its hindrances to the media in its role as the public watchdog?

Null Hypothesis

English law of defamation – while very effective in protecting reputations – hinders the media in its role as the public watchdog.

This hypothesis is tested by examining the strengths and weaknesses of English defamation law especially as it affects free speech.

Methodology

The study uses desk (secondary) research to collect data. Data collected from journal articles and books. Content/thematic analysis is used to derive information from the data.

Structure of the Dissertation

  • Research Plan/Literature Review
  • Introduction
  • Chapter One: Analysis of Defamation law in England
  • Chapter Two: Reynolds’s Public Defence as Affirmed in Jameel v Wall Street Europe
  • Chapter Three: A Critical Analysis of the Defamation law in the US
  • Chapter Four: A Critical Analysis of the Effectiveness of Defamation Law in England
  • Conclusion
  • Reflective Summary

 

 

Literature Review

Both Gurney[16] and Wilmshurst[17] argue that defamation cases are very costly compared to most other cases. They add that although different countries and legal systems cap the damages awarded in defamation cases at different levels, these caps do not help lower the costs. This is especially so given that the loser in the case has to pay all the costs incurred together with damages.

Agreeing with Gurney as well as Wilmshurst, Friend[18] notes that the high costs of defamation cases pose a great risk to not just individuals but also organizations. The greatest risk is that of bankruptcy especially if they take on defamation cases and lose. The ultimate result is that few cases of defamation will actually come before court because parties involved would rather settle their differences outside the court. This in turn means that it is difficult for common law concerning defamation to develop.

I agree with the arguments of all three scholars that high costs of defamation cases have become an impediment to justice. This is because plaintiffs and the defendants are at a risk of being bankrupted if they engage in defamation cases. Up until the time the ruling is made, both parties to the case are never sure what could happen; and they are concerned about the costs. As such, many individuals and organizations would rather settle their differences outside of court instead of risking getting bankrupted by defamation cases.[19]

According to Bates, whatever remnants of defamation law which are now in place cannot guarantee individuals and organizations of sufficient protection from defamers. The media is especially blamed for going too far to defame as a result of having far more and better protection from the constitution to be able to be challenged successfully.[20]

Disagreeing with Bates, McLean argues that libel and slander laws have generally been restrictive.[21] For her, free speech is a fundamental human right unlike protection of reputations which is basically a matter of personal preference. Supporting Bates, Wilmshurst notes that UK is notorious for having very restrictive defamation laws that are largely friendly to the claimants while the US’s free speech laws are so restrictive that it almost impossible for anyone to successfully bring defamation charges against anyone – least of al the media.[22]

Those opposed to the excessive protection granted to the media in the US argue that after many years of undergoing reform, American defamation law in general and libel law in particular has become so diluted that it cannot protect people and organizations from libel. They believe that actual malice rule – based on the case between New York Times and Sullivan – fails to offer the press sufficient protection.[23] Reynolds agrees, adding that a result of this courts have gone out of their way to impose several other constitutional limitations on actions of libel. According to him, has in turn made it quite hard – almost impossible – for anyone suing for defamation to get the reward.[24]

I agree that there have been disagreement over how to balance between the need for free speech and protection from defamation.[25] The media is supposed to report unhindered; but this predisposes it to committing defamation.[26] Therefore, I believe it is right to have sufficient protections for the media against libel.

Other than the media, it is argued that libel law could be affecting the entire public especially in terms of their confidence in the legal system.[27] As a result of long, difficult, complex, and costly litigation processes which offer neither the claimants nor the defendants an assurance of victory, many are left wondering whether or not the law actually favours truth over falsehood.[28]

Most defamation claims made in both the US and the UK are more often than not judicially foreclosed, argue Mullis and Scott. They argue further that the fact that this happens after very costly litigation leaves the concerned parties poorer and more drained emotionally and physically than when they first began the litigation process. This is why defendants have had nightmares of not only very protracted but also intrusive litigation while plaintiffs have tended to have delusions of large windfalls. They also argue that since honesty and efficiency are prized virtues in the modern society – and such costly and protracted litigation surrounding defamation cases takes both of them away – it follows that the law of defamation needs to be either re-examined or even abolished.[29]

While I support the proposal of amending defamation law to make it less tedious and costly in order to restore public confidence in the legal system and the law, I do not agree with the view that defamation law ought to be done away with. This is because in spite of its weaknesses, defamation law has helped people and organization to protect their reputations; and the world cannot possibly do with such laws.

Ciolli brings a new angle to the debate by analysing defamation on the internet. He argues that defamation occurs at the place where the exact damage to reputation (caused by the defamatory material) actually happens. On the Internet, this is point where the defamatory content is made public in a comprehensive form (where the material is downloaded from the internet. Therefore, the higher the amount of defamatory content that is downloaded the more the defendant can be held liable the defamation.[30]

Although the arguments here underscore what has generally been adopted, I believe that this is one other area in need of reforming. In essence, while I agree that this argument represents the reasoning in most jurisdictions when it comes to defamation conducted online, it is not fair to the media.

From this review of the literature, it is clear that there is significant research on the subject of defamation law and its impacts on the media. However, the current study still makes significant contributions to research because it approaches the subject from a different perspective. It specifically uses a comparative analysis of English and US defamation law with a view to establishing the extent to which the former restricts the media.

           

 

 

 

 

 

 

 

 

 

Bibliography

Articles

Barendt E, “Jurisdiction in Internet Libel Cases” (2005) 110 Penn St L Rev 727

Bates S, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

Bates S, “More SPEECH: Preempting Privacy Tourism” (2010) 33 Hastings Comm & Ent LJ 379

Bosland J, “Republication of Defamation under the Doctrine of Reportage—The Evolution of Common Law Qualified Privilege in England and Wales” (2011) 31 Oxford Journal of Legal Studies 89

Ciolli A, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

Garnett R, and Richardson M, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

Godlee F, “Keep libel laws out of science” [2009] BMJ 339

Gurney K, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

Hartley T, “‘LIBEL TOURISM’AND CONFLICT OF LAWS” (2010) 59 International and comparative law quarterly 25

Jobb D, “Responsible Communication on Matters of Public Interest: A New Defense Updates Canada’s Defamation Laws” (2010) 3 Journal of International Media & Entertainment Law 195

Jordan B, “The Modernization of English Libel Laws and Online Publication” (2011) 7 J INT’N L 3

Kenyon A, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

Kenyon A, and Leng H, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

Maly H, “Publish at Your Own Risk or Don’t Publish at All: Forum Shopping Trends in Libel Litigation Leave the First Amendment Unguaranteed” (2006) 14 JL & Pol’y 883

McLean S, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

Mullis A, and Scott A, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173

Reynolds G, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

Weaver R, and Partlett D, “Defamation, Free Speech, and Democratic Governance” (2005) 50 NYL Sch L Rev 57

Wilmshurst P, “English libel laws and scientific research” (2012) 9 Significance 37

Wilmshurst P, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

 

 

 

 

 

 

Books

Friend C, and Singer J, Online journalism ethics: Traditions and transitions (Routledge, 2015)

Nielsen R, Public Support for the Media (Oxford, UK: Reuters Institute for the Study of Journalism, 2011)

Cases

Dow Jones and Company Inc v Gutnick (2002) HCA 56; 210 CLR 575

[1] David Ardia, “Reputation in a Networked World: Revisiting the Social Foundations of Defamation Law” (2010) 45 Harvard Civil Rights-Civil Liberties Law Review 261

[2] Richard Parkes, Alastair Mullis, Godwin Busuttil, Adam Speker, and Andrew Scott, Gatley on libel and slander (Sweet & Maxwell Ltd, 2013), 31

[3] David Rolph, Reputation, celebrity and defamation law (Ashgate Publishing, Ltd, 2013), 3

[4] Russell Weaver, Andrew Kenyon, David Partlett, and Clive Walker, “Defamation law and free speech: Reynolds v Times Newspapers and the English media” (2004) 37 Vand J Transnat’l L 1255

[5] David Ardia, “Reputation in a Networked World: Revisiting the Social Foundations of Defamation Law” (2010) 45 Harvard Civil Rights-Civil Liberties Law Review 261

[6] Andrew Kenyon, Defamation: Comparative law and practice (CRC Press, 2013), 17

[7] Peter Humphreys, “Media Freedom and Pluralism in the United Kingdom UK” [2009] Press Freedom and Pluralism in Europe, Intellect 197

[8] Andrew Nicol, Gavin Millar, and Andrew Sharland, Media law and human rights (Oxford University Press, 2009), 16

[9] Tara Sturtevant, “Can the United States Talk the Talk & (and) Walk the Walk When It Comes to Libel Tourism: How the Freedom to Sue Abroad Can Kill the Freedom of Speech at Home” (2010) 22 Pace Int’l L Rev 269; Doug Rendleman, “Collecting a Libel Tourist’s Defamation Judgment” (2010) 67 Wash & Lee L Rev 467; Sarah Staveley-O’Carroll, “Libel Tourism Laws: Spoiling the Holiday and Saving the First Amendment” (2009) 4 NYUJL & Liberty 252; Kyu Ho Youm, “Actual Malice” in US Defamation Law: The Minority of One Doctrine in the World?” (2011) 4 J INT’L MEDIA & ENT L, 4 1

[10] Marin Roger Scordato, “The International Legal Environment for Serious Political Reporting Has Fundamentally Changed: Understanding the Revolutionary New Era of English Defamation Law” (2007) 40 Connecticut Law Review 1

[11] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[12] Lee Salter, “Independent Media Centres and the Law: Some problems for citizen journalism” (2009) 175

[13] Andrew Nicol, Gavin Millar, and Andrew Sharland, Media law and human rights (Oxford University Press, 2009), 19

[14] Peter Humphreys, “Media Freedom and Pluralism in the United Kingdom UK” [2009] Press Freedom and Pluralism in Europe, Intellect  197

[15] Wayne Overbeck, and Genelle Belmas, Major principles of media law (Cengage Learning, 2012), 54

[16] Kaitlin Gurney, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

[17] Peter Wilmshurst, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

[18] Cecilia Friend, and Jane Singer, Online journalism ethics: Traditions and transitions (Routledge, 2015), 43

[19] Richard Garnett, and Megan Richardson, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

[20] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[21] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[22] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[23] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[24] Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[25] Andrew Kenyon, and Hean Leng, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

[26] Id.

[27] See Fiona Godlee, “Keep libel laws out of science” [2009] BMJ 339; Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[28] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[29] Alastair Mullis, and Andrew Scott, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173; Andrew  Kenyon, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

[30] Anthony Ciolli, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

Research Plan/Literature Review

Research Plan/Literature Review

Background to the Study

In England, defamation cases are not only notoriously complicated but also very restrictive.[1] Defamation laws in England trace their origin to the judges on the Queen’s Bench. Keen to see gentlemen defending their reputations without recourse to violence, they came up with libel laws as alternatives.[2] As such, defamation is a kind of civil law.[3] Though very old, defamation laws are riddled with problems. The main problem is lack of development.[4] Development of laws is mainly achieved through legislation and common law. While the former is dependent on political goodwill, the latter depends on precedent set by courts (common law).[5]

The problem that has faced defamation law in England is that there have been very few cases that have actually made it to the trial stage for different reasons. These reasons include the extremely high costs of such defamation cases as well as their complicated and unpredictable nature. Furthermore, only three judges can hear such cases both in England and Wales. As such, there are very few opportunities available for the relevant common law to develop.[6]

As though that was not enough, only a very small number of rulings have actually had disproportionately large influences on the shape of the law. In essence, it has been extremely hard for court rulings to influence the course of the law on defamation. This state of affairs has increased the problem of existence of outdated defamation laws.[7]

The Research Problem

English defamation law is one of the oldest in the world. Therefore, it has been quite of being retrogressive and favouring claimants over defendants.[8] This has led to an increase in liberal tourism.[9] Furthermore, requiring the defendant (not the claimant) to prove the alleged defamation makes the law quite favourable to claimants.[10]Therefore, English defamation law has been regarded as a major impediment to free speech throughout the West.

The Defamation Act of 2013 was in fact enacted to specifically address these impediments.[11]            Unfortunately, the new law has only managed to address some of the controversial clauses of the law such as the one mentioned above (putting the burden of proof of defamatory remarks on the defendant rather than the plaintiff). This has left several other issues still unaddressed. A notable expectation of the new law was that it would essentially bring together into one unified law all issues pertaining to defamation whether it is slander or libel. However, it has left some fundamental issues found in the old English defamation law in place.[12]

As such, several weaknesses of the English defamation law still exist. Furthermore, the new law only applies to defamation cases that have happened after its enactment. All cases of defamation that happened before the enactment data of the Defamation Act of 2013 will still use the English defamation law.[13] The problem of this research, therefore, is that many weaknesses still remain in English law pertaining to defamation.

Among the notable weaknesses is the fact that it is still extremely hard for rights to free speech of the kind given to a free press to be effectively exercised because of the risk of being sued for defamation.[14] In essence, even with the new Defamation Act, freedom of expression is still threatened by the risk of committing libel. This is unlike the situation in countries like the US where there are very clear provisions for the expression of free speech by the free press without necessarily committing libel.[15]

Rationale for the Study

This study is particularly important and therefore worth carrying out because of the following reasons:

  1. It helps bring about an understanding of the extent to which English law makes appropriate provisions to safeguard free speech especially by the free press.
  2. It uncovers the extent to which the media’s role as a public watchdog has been hindered by English defamation law.

Aim and Objectives of the Study

AIM: To determine whether or not the law of defamation in England is effectively protecting the media’s role as the public watchdog.

Objectives:

  1. To determine the strengths and weaknesses of the Defamation Act of 2013 with respect to protection of free speech.
  2. To point out the hindrances to free speech that still exist in English defamation law even after the enactment of the Defamation Act of 2013.
  3. To critically analyse defamation laws in England and the US with a view to determining the suitability of each one of them when it comes to guarding against defamation while at the same time ensuring that the media’s rights as a public watchdog are not violated.
  4. To make recommendations for improving English defamation law to make it more effective in protecting the media in its role as the public watchdog.

Research Questions

  1. What are the strengths and weaknesses of the Defamation Act of 2013 with respect to protection of free speech?
  2. Which hindrances to free speech still exist in English defamation law?
  3. In which ways if defamation law in the US better than defamation law England?
  4. Which amendments are necessary to modernize English defamation law?

Null Hypothesis

English law of defamation does not effectively protect the media as the public watchdog

This hypothesis is tested by examining the strengths and weaknesses of English defamation law especially as it affects free speech.

Methodology

The study uses desk (secondary) research to collect data. Data collected from journal articles and books. Content/thematic analysis is used to derive information from the data.

Structure of the Dissertation

  • Research Plan/Literature Review
  • Introduction
  • Chapter One: Analysis of Defamation law in England
  • Chapter Two: Reynolds’s Public Defence as Affirmed in Jameel v Wall Street Europe
  • Chapter Three: A Critical Analysis of the Defamation law in the US
  • Chapter Four: A Critical Analysis of the Effectiveness of Defamation Law in England
  • Conclusion
  • Reflective Summary

 

 

Literature Review

Both Gurney[16] and Wilmshurst[17] argue that defamation cases are very costly compared to most other cases. They add that although different countries and legal systems cap the damages awarded in defamation cases at different levels, these caps do not help lower the costs. This is especially so given that the loser in the case has to pay all the costs incurred together with damages.

Agreeing with Gurney as well as Wilmshurst, Friend[18] notes that the high costs of defamation cases pose a great risk to not just individuals but also organizations. The greatest risk is that of bankruptcy especially if they take on defamation cases and lose. The ultimate result is that few cases of defamation will actually come before court because parties involved would rather settle their differences outside the court. This in turn means that it is difficult for common law concerning defamation to develop.

I agree with the arguments of all three scholars that high costs of defamation cases have become an impediment to justice. This is because plaintiffs and the defendants are at a risk of being bankrupted if they engage in defamation cases. Up until the time the ruling is made, both parties to the case are never sure what could happen; and they are concerned about the costs. As such, many individuals and organizations would rather settle their differences outside of court instead of risking getting bankrupted by defamation cases.[19]

According to Bates, whatever remnants of defamation law which are now in place cannot guarantee individuals and organizations of sufficient protection from defamers. The media is especially blamed for going too far to defame as a result of having far more and better protection from the constitution to be able to be challenged successfully.[20]

Disagreeing with Bates, McLean argues that libel and slander laws have generally been restrictive.[21] For her, free speech is a fundamental human right unlike protection of reputations which is basically a matter of personal preference. Supporting Bates, Wilmshurst notes that UK is notorious for having very restrictive defamation laws that are largely friendly to the claimants while the US’s free speech laws are so restrictive that it almost impossible for anyone to successfully bring defamation charges against anyone – least of al the media.[22]

Those opposed to the excessive protection granted to the media in the US argue that after many years of undergoing reform, American defamation law in general and libel law in particular has become so diluted that it cannot protect people and organizations from libel. They believe that actual malice rule – based on the case between New York Times and Sullivan – fails to offer the press sufficient protection.[23] Reynolds agrees, adding that a result of this courts have gone out of their way to impose several other constitutional limitations on actions of libel. According to him, has in turn made it quite hard – almost impossible – for anyone suing for defamation to get the reward.[24]

I agree that there have been disagreement over how to balance between the need for free speech and protection from defamation.[25] The media is supposed to report unhindered; but this predisposes it to committing defamation.[26] Therefore, I believe it is right to have sufficient protections for the media against libel.

Other than the media, it is argued that libel law could be affecting the entire public especially in terms of their confidence in the legal system.[27] As a result of long, difficult, complex, and costly litigation processes which offer neither the claimants nor the defendants an assurance of victory, many are left wondering whether or not the law actually favours truth over falsehood.[28]

Most defamation claims made in both the US and the UK are more often than not judicially foreclosed, argue Mullis and Scott. They argue further that the fact that this happens after very costly litigation leaves the concerned parties poorer and more drained emotionally and physically than when they first began the litigation process. This is why defendants have had nightmares of not only very protracted but also intrusive litigation while plaintiffs have tended to have delusions of large windfalls. They also argue that since honesty and efficiency are prized virtues in the modern society – and such costly and protracted litigation surrounding defamation cases takes both of them away – it follows that the law of defamation needs to be either re-examined or even abolished.[29]

While I support the proposal of amending defamation law to make it less tedious and costly in order to restore public confidence in the legal system and the law, I do not agree with the view that defamation law ought to be done away with. This is because in spite of its weaknesses, defamation law has helped people and organization to protect their reputations; and the world cannot possibly do with such laws.

Ciolli brings a new angle to the debate by analysing defamation on the internet. He argues that defamation occurs at the place where the exact damage to reputation (caused by the defamatory material) actually happens. On the Internet, this is point where the defamatory content is made public in a comprehensive form (where the material is downloaded from the internet. Therefore, the higher the amount of defamatory content that is downloaded the more the defendant can be held liable the defamation.[30]

Although the arguments here underscore what has generally been adopted, I believe that this is one other area in need of reforming. In essence, while I agree that this argument represents the reasoning in most jurisdictions when it comes to defamation conducted online, it is not fair to the media.

From this review of the literature, it is clear that there is significant research on the subject of defamation law and its impacts on the media. However, the current study still makes significant contributions to research because it approaches the subject from a different perspective. It specifically uses a comparative analysis of English and US defamation law with a view to establishing the extent to which the former restricts the media.

           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bibliography

Articles

Barendt E, “Jurisdiction in Internet Libel Cases” (2005) 110 Penn St L Rev 727

Bates S, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

Bates S, “More SPEECH: Preempting Privacy Tourism” (2010) 33 Hastings Comm & Ent LJ 379

Bosland J, “Republication of Defamation under the Doctrine of Reportage—The Evolution of Common Law Qualified Privilege in England and Wales” (2011) 31 Oxford Journal of Legal Studies 89

Ciolli A, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

Garnett R, and Richardson M, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

Godlee F, “Keep libel laws out of science” [2009] BMJ 339

Gurney K, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

Hartley T, “‘LIBEL TOURISM’AND CONFLICT OF LAWS” (2010) 59 International and comparative law quarterly 25

Jobb D, “Responsible Communication on Matters of Public Interest: A New Defense Updates Canada’s Defamation Laws” (2010) 3 Journal of International Media & Entertainment Law 195

Jordan B, “The Modernization of English Libel Laws and Online Publication” (2011) 7 J INT’N L 3

Kenyon A, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

Kenyon A, and Leng H, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

Maly H, “Publish at Your Own Risk or Don’t Publish at All: Forum Shopping Trends in Libel Litigation Leave the First Amendment Unguaranteed” (2006) 14 JL & Pol’y 883

McLean S, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

Mullis A, and Scott A, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173

Reynolds G, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

Weaver R, and Partlett D, “Defamation, Free Speech, and Democratic Governance” (2005) 50 NYL Sch L Rev 57

Wilmshurst P, “English libel laws and scientific research” (2012) 9 Significance 37

Wilmshurst P, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

 

 

 

 

 

 

Books

Friend C, and Singer J, Online journalism ethics: Traditions and transitions (Routledge, 2015)

Nielsen R, Public Support for the Media (Oxford, UK: Reuters Institute for the Study of Journalism, 2011)

Cases

Dow Jones and Company Inc v Gutnick (2002) HCA 56; 210 CLR 575

[1] David Ardia, “Reputation in a Networked World: Revisiting the Social Foundations of Defamation Law” (2010) 45 Harvard Civil Rights-Civil Liberties Law Review 261

[2] Richard Parkes, Alastair Mullis, Godwin Busuttil, Adam Speker, and Andrew Scott, Gatley on libel and slander (Sweet & Maxwell Ltd, 2013), 31

[3] David Rolph, Reputation, celebrity and defamation law (Ashgate Publishing, Ltd, 2013), 3

[4] Russell Weaver, Andrew Kenyon, David Partlett, and Clive Walker, “Defamation law and free speech: Reynolds v Times Newspapers and the English media” (2004) 37 Vand J Transnat’l L 1255

[5] David Ardia, “Reputation in a Networked World: Revisiting the Social Foundations of Defamation Law” (2010) 45 Harvard Civil Rights-Civil Liberties Law Review 261

[6] Andrew Kenyon, Defamation: Comparative law and practice (CRC Press, 2013), 17

[7] Peter Humphreys, “Media Freedom and Pluralism in the United Kingdom UK” [2009] Press Freedom and Pluralism in Europe, Intellect 197

[8] Andrew Nicol, Gavin Millar, and Andrew Sharland, Media law and human rights (Oxford University Press, 2009), 16

[9] Tara Sturtevant, “Can the United States Talk the Talk & (and) Walk the Walk When It Comes to Libel Tourism: How the Freedom to Sue Abroad Can Kill the Freedom of Speech at Home” (2010) 22 Pace Int’l L Rev 269; Doug Rendleman, “Collecting a Libel Tourist’s Defamation Judgment” (2010) 67 Wash & Lee L Rev 467; Sarah Staveley-O’Carroll, “Libel Tourism Laws: Spoiling the Holiday and Saving the First Amendment” (2009) 4 NYUJL & Liberty 252; Kyu Ho Youm, “Actual Malice” in US Defamation Law: The Minority of One Doctrine in the World?” (2011) 4 J INT’L MEDIA & ENT L, 4 1

[10] Marin Roger Scordato, “The International Legal Environment for Serious Political Reporting Has Fundamentally Changed: Understanding the Revolutionary New Era of English Defamation Law” (2007) 40 Connecticut Law Review 1

[11] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[12] Lee Salter, “Independent Media Centres and the Law: Some problems for citizen journalism” (2009) 175

[13] Andrew Nicol, Gavin Millar, and Andrew Sharland, Media law and human rights (Oxford University Press, 2009), 19

[14] Peter Humphreys, “Media Freedom and Pluralism in the United Kingdom UK” [2009] Press Freedom and Pluralism in Europe, Intellect  197

[15] Wayne Overbeck, and Genelle Belmas, Major principles of media law (Cengage Learning, 2012), 54

[16] Kaitlin Gurney, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

[17] Peter Wilmshurst, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

[18] Cecilia Friend, and Jane Singer, Online journalism ethics: Traditions and transitions (Routledge, 2015), 43

[19] Richard Garnett, and Megan Richardson, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

[20] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[21] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[22] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[23] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[24] Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[25] Andrew Kenyon, and Hean Leng, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

[26] Id.

[27] See Fiona Godlee, “Keep libel laws out of science” [2009] BMJ 339; Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[28] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[29] Alastair Mullis, and Andrew Scott, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173; Andrew  Kenyon, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

[30] Anthony Ciolli, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

Literature Review

Literature Review

This chapter undertakes a critical review of the literature on the subject of defamation law and its impacts on freedom of the media. The chapter seeks to locate the study in the body of knowledge by pointing out what has been researched and the areas that need further research (gaps). The chapter reviews the literature on the basis of the themes that emerge.

Prohibitively High Costs of Defamation Cases

One of the areas covered in the literature to a significant extent is the cost of defamation cases. Generally, these cases are very costly compared to most other cases. Different countries and legal systems cap the damages awarded in defamation cases at different levels. However, even these caps do not help lower the costs incurred. This is especially so given that the loser in the case has to pay all the costs incurred. In essence, the loser has to pay not just the damages but also his own costs and the costs of the winner.[1]

In fact the very fact that caps have to placed on the damages awarded in defamation cases shows that these cases are very costly. Otherwise there would be no need for capping the damages awarded. In England and Wales, the damages that can be awarded in libel cases are capped at 200,000 Sterling pounds.[2]

The high costs of defamation cases, therefore, pose a great risk to not just individuals but also organizations. The greatest risk is that of bankruptcy especially if they take on defamation cases and lose. The ultimate result is that few cases of defamation will actually come before court because parties involved would rather settle their differences outside the court. This in turn means that it is difficult for common law in the area of defamation to develop.[3]

I agree with the view that high costs of defamation cases have become an impediment to justice in the area of defamation. Both the plaintiffs and the defendants are at a risk of being bankrupted if they engage in defamation cases. Up until the time the ruling is made, both parties to the case are never sure what could happen; and they are concerned about the costs. As such, many individuals and organizations would rather settle their differences outside of court instead of risking getting bankrupted by defamation cases.[4]

Having noted that, there is something worth adding that has not been mentioned in the above research. This has to do with the complicated nature of defamation cases. Since the stakes are usually very high and rules of evidence often equally complicated, defamation cases almost always get protracted.[5]

Basically, complicated defamation has made such cases to be just as complicated. The end result is that these cases can drag in the legal systems for many years – sometimes up to five years. This not only delays justice but also pushes legal costs even higher. The longer the cases last the higher the costs that are incurred and the higher the chances that the losers of the case would become bankrupted by the case.[6]

Free Speech versus Defamation

An interesting issue which is found in the literature is the near-consensus among scholars that there is either too much protection for defamers or too much protection for the press.[7] On the other hand, there are those who are of the view that defamation law has become too overwhelmed by constitutional protection to be of any help to people and organizations that are genuinely defamed.[8]

Those in support of this view have contended that whatever remnants of defamation law which are now in place cannot guarantee individuals and organizations of sufficient protection from defamers. The media is especially blamed for going too far to defame as a result of having far more and better protection from the constitution to be able to be challenged successfully.[9]

On the other hand, those who argue in favour of free speech contend that libel and slander laws have generally been restrictive.[10] They argue that free speech is a fundamental human right unlike protection of reputations which is basically a matter of personal preference. With respect to countries, the UK and the US are known to be at two extreme ends of the law on defamation in general and when it comes to protection of free speech and protection of individuals and organizations from defamation in particular.[11]

The UK is notorious for having very restrictive defamation laws that are largely friendly to the claimants.[12] On the other hand, the US’s free speech laws are so restrictive that it almost impossible for anyone to successfully bring defamation charges against anyone – least of al the media.[13]

Those opposed to the excessive protection granted to the media in the US argue that after many years of undergoing reform, American defamation law in general and libel law in particular has become so diluted that it cannot protect people and organizations from libel. They believe that actual malice rule – based on the case between New York Times and Sullivan – fails to offer the press sufficient protection.[14]

As a result, courts have gone out of their way to impose several other constitutional limitations on actions of libel.[15] This has in turn made it quite hard – almost impossible – for anyone suing for defamation to get the reward. This is mainly because it has become very hard for victims of defamation to meet the actual malice requirements set in place by the law. Furthermore, the few victims who manage to meet these requirements are most likely to be confronted by other constitutional provisions.[16]

The arguments above represent the real situation on the ground. Indeed there have arisen controversies regarding just how to balance between rights to free speech and misuse of free speech (defamation).[17] While this applies to all people and organizations, it is especially a key issue where the media is concerned. The media is supposed to report what is true and valid; and in doing so there can be no denying that some information could easily pass as libel or slander.[18]

As such, I believe it is right to have sufficient protections for the media against libel. This ensures that the media has the confidence to report about critical events without fear. Unfortunately, many jurisdictions have tended to give defamation laws priority over free speech laws. This has seen libel exacting a price from speech. In essence, many people have been able to sue the media for defamation in spite of the available protections.[19] This means, then, that the law needs to be changed to protect the media from defamation suits as a way of enhancing freedom of speech.

Without encouraging the media to defame, the law has to take into consideration issues such as the likelihood of defamation cases actually returning a verdict and the costs involved. As it stands, the real issue that the media fears – and therefore stops it from reporting freely and fearlessly – is the costs of litigation if sued for defamation. Rather than risk being bankrupted by the high costs without any possibility of a fair settlement, the media has been forced to only report what is deemed to be non-controversial and verifiable.[20]

Yet, by all standards, this is not what media is normally supposed to do. Among other roles, the media has to be investigative and as such use and publish information that is not necessarily agreeable by all parties mentioned.[21] In view of these shortcomings, reform of defamation law is the only way out of this standoff.

Other than the media, it is argued that libel law could be affecting the entire public especially in terms of their confidence in the legal system.[22] As a result of long, difficult, complex, and costly litigation processes which offer neither the claimants nor the defendants an assurance of victory, many are left wondering whether or not the law actually favours truth over falsehood.[23]

It has also been argued that the current system – both in the UK and the US – is such that most of the claims made are more often than not judicially foreclosed.[24] The fact that this happens after very costly litigation leaves the concerned parties poorer and more drained emotionally and physically than when they first began the litigation process. This is why defendants have had nightmares of not only very protracted but also intrusive litigation while plaintiffs have tended to have delusions of large windfalls.[25]

The public, as mentioned earlier, is left without any more confidence in the law and the legal system as it is not able to convincingly determine whether the law is in favour of falsehood or truth. Since honesty and efficiency are prized virtues in the modern society – and such costly and protracted litigation surrounding defamation cases takes both of them away[26] – it follows that the law of defamation needs to be either re-examined or even abolished.

While I support the proposal of amending defamation law to make it less tedious and less costly in order to restore public confidence in the legal system and the law, I do not agree with the view that defamation law ought to be done away with. For its weaknesses, defamation law has helped people and organization to protect their reputations. Just like the modern world is in need of efficiency and honesty, it is also in need of tolerance and respect. Without the appropriate defamation law, malicious people will go out of their way to injure the reputations of their enemies whether in social or commercial circles.[27]

The world cannot possibly be freed from malice. As such, defamation law needs to protect people and organization from those keen to maliciously damage reputations. Unless and until there can be assurances to the public that malice is not present in people, then defamation law ought to remain in place. Otherwise character assassination and other forms of defamation will become the new norm in society.

Defamation and the Internet

Studies investigating the place of defamation in the age of the internet have also increased significantly over the last decade. The major argument has centred on the issue of the place and who is supposed to be held culpable in case of libel.[28]

With regard to place, defamation is determined to have occurred at the place where the exact damage to reputation (caused by the defamatory material) actually takes place.[29] In the case of the internet, this place is the location or point on the internet where the defamatory content is made public in a comprehensive form. This is basically the point where the material is downloaded from the internet. As such, the more content alleged to be defamatory is downloaded the more the defendant can be held culpable for repeating the defamatory remarks.[30]

Although the arguments here underscore what has generally been adopted, I believe that this one other area in need of reforming. In essence, while I agree that this argument represents the reasoning in most jurisdictions when it comes to defamation conducted online, it is not fair to the media.

Media organizations usually have very huge following and as such any material they publish online is likely to receive a lot of attention. If defamation is deemed to be committed every time the content is seen or downloaded, then this places the originator of the content in very serious trouble. As such, there ought to be more ways of ensuring that the publisher of content online is protected from defamation claims if free speech is to be exercised on the internet as it is in other forms of media.

Media and the Development of the Legal System

The role of the media in the development of the legal system is also an issue given significant attention in the literature. All over the world – including in some of the countries notorious for media censuring – the media has emerged to become the most influential actor when it comes to providing information to the public.[31] A combination of media commercialization, increased editorial discretion, and growing attention to legal and social problems has ensured that there is incentive for the media to greatly expand its role as the mouthpiece of the public. This has made the media at least one of the most important and effective avenues through which citizens can find redress.[32]

Unfortunately, this expanded role has brought the media in direct conflict with the legal system.[33] The media has been criticized not for defamation per se but for being a major influencer of the decisions reached by courts especially in high-profile cases. Depending on the country concerned and the level of freedom accorded the media, it is possible for the media to influence the outcome of a case.[34] This takes place largely by virtue of the fact that the media can reflect and create public opinion. Essentially, this raises issues of conflict of interest where the media itself could be the defendant in a case as it happens so often in libel cases.[35]

The argument here is mostly true especially with regard to the growing role of the media as the mouthpiece of the public. What is not agreeable to me, however, is that the media’s powers need to be checked just because the media is alleged to have capacity to influence court decisions (including cases pertaining to the media itself). I differ with this argument because freedom of expression is a fundamental right enshrined in international law.[36] As such, the media – which is the mouthpiece of the public – ought not to be unnecessarily censored for playing its role.

The media simply makes public what is happening in courts regardless of the parties to the specific cases. As such, it is not for the court to make decisions based on what the media says but based on the merits of each case. The issue of conflict of interest ought not to arise here at all either. This is because the media itself has been unfairly targeted especially in libel cases; and as such it has the right to use whatever means it has at its disposal (in this case informing the public about the case’s progress) to its advantage. If anything, I believe that in the age where libel against the media has increased significantly,[37] the media ought to be given more rights to freely express itself.

Conclusion

From the literature review, it can be concluded that there is significant literature already published on the subject of defamation law and its impacts on the media. However, the current study still makes significant contributions to the body of knowledge by researching the subject not generally but from the perspective of two major nations in the world – England. A comparative approach to the issue has also not been undertaken in the literature. As such, the current study – by comparing English and US defamation laws – makes valuable contributions to this subject matter.

           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bibliography

Articles

Barendt E, “Jurisdiction in Internet Libel Cases” (2005) 110 Penn St L Rev 727

Bates S, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

Bates S, “More SPEECH: Preempting Privacy Tourism” (2010) 33 Hastings Comm & Ent LJ 379

Bosland J, “Republication of Defamation under the Doctrine of Reportage—The Evolution of Common Law Qualified Privilege in England and Wales” (2011) 31 Oxford Journal of Legal Studies 89

Ciolli A, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

Garnett R, and Richardson M, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

Godlee F, “Keep libel laws out of science” [2009] BMJ 339

Gurney K, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

Hartley T, “‘LIBEL TOURISM’AND CONFLICT OF LAWS” (2010) 59 International and comparative law quarterly 25

Jobb D, “Responsible Communication on Matters of Public Interest: A New Defense Updates Canada’s Defamation Laws” (2010) 3 Journal of International Media & Entertainment Law 195

Jordan B, “The Modernization of English Libel Laws and Online Publication” (2011) 7 J INT’N L 3

Kenyon A, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

Kenyon A, and Leng H, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

Maly H, “Publish at Your Own Risk or Don’t Publish at All: Forum Shopping Trends in Libel Litigation Leave the First Amendment Unguaranteed” (2006) 14 JL & Pol’y 883

McLean S, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

Mullis A, and Scott A, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173

Reynolds G, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

Weaver R, and Partlett D, “Defamation, Free Speech, and Democratic Governance” (2005) 50 NYL Sch L Rev 57

Wilmshurst P, “English libel laws and scientific research” (2012) 9 Significance 37

Wilmshurst P, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

 

 

 

 

 

 

Books

Friend C, and Singer J, Online journalism ethics: Traditions and transitions (Routledge, 2015)

Nielsen R, Public Support for the Media (Oxford, UK: Reuters Institute for the Study of Journalism, 2011)

Cases

Dow Jones and Company Inc v Gutnick (2002) HCA 56; 210 CLR 575

[1] Kaitlin Gurney, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

[2] Peter Wilmshurst, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

[3] Cecilia Friend, and Jane Singer, Online journalism ethics: Traditions and transitions (Routledge, 2015), 43

[4] Richard Garnett, and Megan Richardson, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

[5] Heather Maly, “Publish at Your Own Risk or Don’t Publish at All: Forum Shopping Trends in Libel Litigation Leave the First Amendment Unguaranteed” (2006) 14 JL & Pol’y 883

[6] Russell Weaver, and David Partlett, “Defamation, Free Speech, and Democratic Governance” (2005) 50 NYL Sch L Rev 57

[7] See for instance Jason Bosland, “Republication of Defamation under the Doctrine of Reportage—The Evolution of Common Law Qualified Privilege in England and Wales” (2011) 31 Oxford Journal of Legal Studies 89; Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[8] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[9] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[10] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[11] Brid Jordan, “The Modernization of English Libel Laws and Online Publication” (2011) 7 J INT’N L 3

[12] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[13] Kaitlin Gurney, “Myspace, Your Reputation: A Call to Change Libel Laws of Juveniles Using Social Networking Sites” (2009) 82 Temp L Rev 241

[14] Peter Wilmshurst, “English libel laws and scientific research” (2012) 9 Significance 37

[15] Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[16] Trevor Hartley, “‘LIBEL TOURISM’AND CONFLICT OF LAWS” (2010) 59 International and comparative law quarterly 25

[17] Andrew Kenyon, and Hean Leng, “Reynolds Privilege, common law defamation and Malaysia” [2010] Sing J Legal Stud 256

[18] Id.

[19] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[20] Stephen Bates, “Libel Capital No More-Reforming British Defamation Law” (2011) 34 Hastings Comm & Ent LJ 233

[21] Russell Weaver, and David Partlett, “Defamation, Free Speech, and Democratic Governance” (2005) 50 NYL Sch L Rev 57

[22] See Fiona Godlee, “Keep libel laws out of science” [2009] BMJ 339; Glenn Harlan Reynolds, “Libel in the Blogosphere: Some Preliminary Thoughts” (2006) 84 Wash UL Rev 1157

[23][23] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[24] See Alastair Mullis, and Andrew Scott, “Something rotten in the state of English libel law?: a rejoinder to the clamour for reform of defamation”(2009) 14 Communications Law 173; Andrew  Kenyon, “What conversation? Free speech and defamation law” (2010) 73 The Modern Law Review 697

[25] Peter Wilmshurst, “The effects of the libel laws on science-a personal experience” (2011) 104 Rad Stats 1

[26] Richard Garnett, and Megan Richardson, “Libel Tourism or Just Redress? Reconciling the (English) Right to Reputation with the (American) Right to Free Speech in Cross-Border Libel Cases”(2009) 5 Journal of Private International Law 471

[27] Stephen Bates, “More SPEECH: Preempting Privacy Tourism” (2010) 33 Hastings Comm & Ent LJ 379

[28] Anthony Ciolli, “Defamatory Internet Speech: A Defense of the Status Quo” (2006) 25 QLR 853

[29] Ibid.

[30] See Dow Jones and Company Inc v Gutnick (2002) HCA 56; 210 CLR 575

[31] Stephen Bates, “More SPEECH: Preempting Privacy Tourism” (2010) 33 Hastings Comm & Ent LJ 379

[32] Eric Barendt, “Jurisdiction in Internet Libel Cases” (2005) 110 Penn St L Rev 727

[33] Rasmus Kleis Nielsen, Public Support for the Media (Oxford, UK: Reuters Institute for the Study of Journalism, 2011), 24

[34] Trevor Hartley, “‘LIBEL TOURISM’ AND CONFLICT OF LAWS” (2010) 59 International and comparative law quarterly 25

[35] Dean Jobb, “Responsible Communication on Matters of Public Interest: A New Defense Updates Canada’s Defamation Laws” (2010) 3 Journal of International Media & Entertainment Law 195

[36] Susan McLean, “Overseas Website Operators Beware? ―The International Reach of the UK Defamation Laws: Status quo and potential changes by pending Defamation Bill” (2012) 5 Computer law review international 141

[37] Rasmus Kleis Nielsen, Public Support for the Media (Oxford, UK: Reuters Institute for the Study of Journalism, 2011), 36