Organization Behavior and Leadership Essay Example for Free

Organization Behavior and Leadership EssayThe foresight Theory of MotivationOne of the most widely accepted theories of motivation is Victor Vrooms expectancy Theory. Expectancy theory argues that the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual. (Robbins Judge, 2007, p.208) i In other words, employees will have the motivation to put forth a strong effort, if They believe the effort will give them positive recognition. (This is called the effort-performance relationship.)That positive recognition must consequently lead to some kind of desirable reward, such as more than money or an augment in status or power. (This is called the performance-reward relationship.) That reward must also be something that fulfills a personal coating for the employee. (This is called the rewards-personal goals relationship.) All three componen ts need to be present for an individual to exert the kind of effort compulsory to be considered an intense motivation for action and performance of a duty or task.Lets consider the future(a) exampleA company that produces a high quality audio products has recently introduced a youthful doing process in an effort to succor the employees meet a goal of high production standards. supervisor As team of employees are non doing well with the production process. well-nigh do non strive to master the process, those that have mastered it are not putting forth effort to slip away the goals, and even top-producers dont seem interested in achieving the goals. After speaking to some of Supervisor As team, Supervisor B has discovered that the following concerns are expressed by the team Some do not flavor they can be successful because they believe lack the dexterity call for to implement the process.Some feel that it is not worth the putting forth the extra effort to reach the goals because there is no difference in salary increase for those that meet the goals and those that do not. They believe that performance has to be very slow before it affects the rate of pay. They also say that when a bonus is given, after the withholdings are taken out, the bonus is so small that overtime actually is seen as better way to earn more money than trying to earn a bonus. This scenario lends itself to the perfect situation to implement the expectancy theory of motivation. The employees feel That there is no recognition for achieving the goal.That there is no reward for achieving the goal.Since there is no recognition or reward, there is no opportunity for employees to evaluated their personal goals to see if reaching the performance goal will help to fulfill a personal goal. The company could implement the expectancy theory by enacting the following steps Create a specific recognition for those that master process. For those that master the process bonuses can be impleme nt that exceed those monetary rewards that overtime would bring.Personally interview each employee to discover what their employment goals are and attain a personalized plan to reach those goals, make mastering the process one of those steps needed to reach the personal goal. This plan would address all three components of the expectancy theory. However the plan should not be created as one-time policy implementation. Rather it should be tested and evaluated to discover what rewards and recognitions created the most effective levels of motivation. i . Robbins, S. P., Judge, T. A. (2007). Organization behavior. (12 ed., p. 208). Upper Saddle River, NJ Pearson Education, Inc.

Physical Education Essays School Sports

sensible Education Essays School SportsIntroduction fleshly genteelness has been a central voice of the internal program line system since its first follow outation in public schools in the late social clubteenth century. Incorporation of bodily bodily process into schools is believed to offer a range of sensible, psychological and social benefits and the theme plancontains indemnity, ground on research by the British Heart Foundation and independent cultivation researchers, for forcible facts of life and sport promotion amongst the nations youth. This policy has generally been legal in helping students increase their sensual act levels and meet national guidelines. However, this policy is lacking in some ways and metrics for evaluating the success of the regions somatogenic education programme argon somewhat limited. The purpose of this essay is to go off existing evidence regarding somatogenetic education in schools. The benefits of corporeal legal action for children result first be considered, followed by a critical review of the field Curriculums policy on corporeal education. The efficacy of this policy will and so be discussed, foreground any evidence evaluating this relationship. Limitations to existing policy will then be presented, and recommendations for future research and employment will be provided. This essay concludes with a brief summary and outline of place points. Benefits of carnal action for Children The UK public education system had upheld a tradition of somatogenetic exercise promotion within its schools, as well as recognise the multiple benefits of regular exercise on educational outcomes. These beliefs ar base on empirical research, of which the benefits of animal(prenominal) activity for health and well-being have been widely documented (see Hills et al., 2011). These benefits come forth to impact three broad dimensions of well-being in youth, including bodily, psychological and social di mensions (Metcalf, Henley Wilkin, 2012). These three dimensions combine to square off an individuals Quality of Life (QoL), or an individuals subjective standard of happiness and general life satisfaction (Hills, Andersen Byrne, 2011). QoL has baffle an increasely siteed outcome variable in public health and medical interventions due to its strong correlation coefficient with sensual health (Hills et al., 2011). Numerous empirical studies (e.g., Marmot et al., 2012 Metcalf et al., 2012) have demonstrated that rectifyd QoL is associated with reduced disease and illness, as well as reduced healthcare costs associated with treating much(prenominal) conditions. Including personal education in schools has, therefore, been recognised as a productive means of promoting exercise and healthy lifestyle habits from a early term (Hills et al., 2011). A recent review of the health benefits of fleshly activity and fitness for school-aged youth demonstrated that counterbalance modera te amounts of daily exercise led to numerous positive outcomes amongst youth population members (Janssen Le Blanc, 2010). establish on a review of 86 papers yielding 113 intervention outcomes, this study demonstrated that corporeal activity was associated with moderate-to-strong positive effect on blood cholesterol, blood pressure, metabolic syndrome, obesity, bone density, psychological impression and physiologic injury (Janssen Le Blanc, 2010). Furtherto a greater extent, natural activity was associated with a dose-reaction effect, whereby children who received to a greater extent exercise experient greater benefit (Janssen Le Blanc, 2010). Finally, this study demonstrated that exercise of vigorous intensities yielded greater benefits, while aerobiotic activities were associated with the strongest effect on bone density. Based on these findings, it was recommended that children aged 5 to 17 years nonagenarian accumulate at least 60 minutes daily of moderate-to-vigorous strong-arm activity (Janssen LeBlanc, 2010). Furtherto a greater extent, Level 2 students are believed to benefit from even melloweder exercise intensities, while all children in this age company should persist in to include weight-bearing and resistance training activities that promote bone and muscular strength (Janssen Le Blanc, 2010). An increasing body of research has demonstrated the positive effects of more than vigorous exercise intensities, and health professionals and sports scientists too are incorporating high-intensity interval training into their program designs (Janssen Le Blanc, 2010). These findings confirm several previous studies (e.g., Craggs et al., 2011 Metcalf et al., 2012) regarding the positive visible effects of physical activity for physical outcomes, and Janssen and LeBlancs (2010) physical activity recommendations provide more rigorous guidelines than those of the National Health Service NHS (2013). animal(prenominal) activity is also associ ated with social benefits that can improve QoL in children (Hills et al., 2011). From an primeval age, physical activity tacticss a constitute role in the socialisation process of young students, who select in period of play activities as a means of understanding social dynamics such as observation, modelling, sharing, social reciprocity, social exchange, gender roles and more (Brockman et al., 2011). As children reach later stages of their academic careers, involvement in sports and non-competitive activities serve as a key social outlet for children to continue to understand social processes and progress social skills needed to function in some(prenominal) the academic and professional environment (Hills et al., 2011). Continuing to encourage the play aspect of physical activity appears to be an important means by whichto ensure continue participation and prevent the natural decline in physical activity that typically occurs around the ages of 10 to 11 (Brockman et al., 20 11). Finally, physical activity offers psychological benefits, both with respect to general affect and cognitive faculty (Craggs et al., 2011). A recent review of physical activity interventions for American children (i.e., Tomporowski, Lamnbourne Okumura, 2011) demonstrated that consistent exercise of moderate-to-vigorous intensities was effective for promoting emotional and intellectual development. Exercise is specially effective for enhancing executive functioning (Tomporowski et al., 2011). Biddle and Asare (2011) performed a similar review of physical activity studies with British children, demonstrating that physical activity had strong positive effects on bring down depression, with a small effect shown for reducing anxiety. However, interventions conducted specifically with children from the UK hang in somewhat limited, with authors finding just nine interventions that met comprehension criteria (Biddle Asare, 2011). Findings related to improved cognition within the se children as a result of physical activity are somewhat inconsistent, although there is some evidence (e.g., Craggs et al., 2011) of improved cognitive performance and academic movement resulting from physical activity of various modalities. Although the physiological route by which these benefits take place is not copiousy understood, the effects of exercise on cognitive functioning may result from the release of neurochemicals, such as serotonin and dopamine, that regulate mood and clarify cognitive processes (Craggs et al., 2011). These activities may also enhance self-efficacy for physical activity, an affective state that may transfer to cognitive activities as well (Best, 2010). As technology develops, research is pass judgment to match physical activity designs with benefits (Craggs et al., 2011). National Curriculums Policy on Physical Education Due to the vast documentation of the benefits of physical activity, the National Curriculum has implemented policy on physi cal education for more than one century (Bouchard, Blair Haskell, 2012. A new National Curriculum is currently being designed for UK schools that will allow for more flexibility in programme design and offers a slimmer framework (Association for Physical Education, 2014). However, concepts from the occasion policy will still be incorporated into the new framework, including basic outlines for educational principles at key stages of learning and development. The policy currently segregates physical activity needs for students in Key exemplifys 1 and 2 versus those in Key Stages 3 and 4 (Gov.UK, 2013). However, the policy recognises that high-quality physical education is needed to promote full psychological, social and physical development, and the National Curriculum encourages engagement in sports and physical activities byout all stages (Gov.UK, 2013). Furthermore, the syllabus assesses competency in physical activities, rather than just participation, in order to ensure tha t students know and habituate skills intimate within physical education courses and incorpo grade physical activity into their daily lives (Bouchard et al., 2012). At Key Stage 1, the National Curriculum recommends that students develop fundamental movement skills, become increasing competent and confident and irritate a broad range of opportunities to extend their agility, balance, and coordination, individually and with others (Gov.UK, 2013 p. 1). During this stage, pupils are further to engage in both competition and non-competitive activities and become involved in increasingly challenging activities (Gov.UK, 2013). Finally, pupils within this stage are encouraged to learn basic movement skills that promote coordination and development of general motor programs, participate in team up games, and perform activities that carry simpler movement patterns (Gov.UK, 2013). At Key Stage 2, the National Curriculum recommends that students continue to harbor and develop a broader range of skills, learning how to use them in different ways and to link them to stir actions and sequences of movement (Gov.UK, 2013, p. 1). The National Curriculum encourages students to participate in activities that promote communication, collaboration, and the development of self-monitoring and self-evaluation of skills (Gov.UK, 2013). Additionally, students at this stage are encouraged to increasingly participate in competitive activities, develop flexibility, strength, technique, control and balance and perform activities with more complex movement patterns (Gov.UK, 2013). Comparing performance against peers and national standards is also recommended at this stage (Gov.UK, 2013). Swimming and irrigate safety skills are introduced at Key Stage 1 or Key Stage 2. At Key Stage 3, the National Curriculum recommends that students build on and embed the physical development and skills learned in Key stages 1 and 2, become more competent, confident and expert in their techniques, and apply them crossways different sports and physical activities (Gov.UK, 2013, p. 1). During this stage, students are encouraged to use a range of different techniques and methods to compete against opponents, continue to improve performance found on peers and national standards, take part in increasingly awkward and novel situations, and engage in non-school sport activities (Gov.UK, 2013). Additionally, educators are encouraged to continue to foster confidence through personal mastery of tasks and improvements in comparison with individual and national standards (Gov.UK, 2013). In Key Stage 4, the National Curriculum recommends that students tackle complex and demanding physical activities (Gov.UK, 2013, p. 1). At this stage, students have generally learned to become more independent and have ideally developed self-monitoring skills to continue to direct their own sport and interest physical activity participation (Gov.UK, 2013). During Key Stage 4, students are taught to de velop multiple tactics and strategies to use in competitive situations, continue to master techniques of chosen sports or activities, take part in adventurous activities that require complex decision-making, and take part in both school and non-school-related physical activities (Gov.UK, 2013). This computer programme has guided physical education pedagogy for several years, although recent reform has led to some structural changes that are discussed in more detail below. Efficacy of National Curriculum Policy The National Curriculums policy on physical education draws from contemporary development research and is believed to offer an efficacious guideline for individual schools to follow in their programme designs (Standage et al., 2012). As the 2013 policy has been submitted for revision, the 2014 framework is being implemented to provide even greater liberty and flexibility for schools in their physical education delivery and course of instruction model designs (Haerens et al. , 2011). According to the Association for Physical Education (2014), this increased flexibility will be even more evident in ancient schools, and places a higher level of responsibilityon teachers to be experts in their subject matter and pedagogical approach toward physical education (Association for Physical Education, 2014). Such a policy is hoped to place more power in the transfer of educators and schools to include programmes they believe will be beneficial for their student populous. though the National Curriculum is believed to be an efficacious and thorough policy that allows for individuality and creativityon the part of teachers to understand their own students needs, the effects of this policy remain to be seen. The former policy had previously been criticised for its limited evaluative efforts and sometimes ambiguous effects on key learning outcomes (Evans, 2004). According to a report by Evans (2004), the UKs former policy on physical education contained antiquated concepts regarding the development of physical abilities, and argued that the policy promoted exclusive practices for students less apt toward exercise in some respects. In a 2005 study related to the former UK physical education policy, Fairclough and Stratton (2005) found that physical education for students aged 11 to 14 was effective for increasing physical activity in students who were of high academic powerfulness, while students of low- to moderate- academic ability did not increase their physical activity levels in response to physical education programmes. Thorburn, Jess and Atencio (2011) challenged the common conception that physical education programmes contribute to the well-being of students. Based on a review of Scottish physical education programmes, these authors concluded that individual curriculums often produced contrasting effects in student such as those found in Fairclough and Strattons (2005) research. While high-achieving students appear to benefit from th is curriculum, such policy may promote exclusiveness in students of differing academic abilities (Thorburn et al., 2011). As a result, physical education may actually detract from the well-being of marginalised student groups. While studies (e.g., Janssen LeBlanc, 2010 Standage et al., 2012) have demonstrated that increased physical activity has been associated with reduced obesity and increased educational outcomes, the precise relationship between physical education policy and these benefits is less clear. Geyer (2012) criticised former education policy for its strong centralist nature and auditing approach toward education improvements. Therefore, allowing for greater flexibility amongst individual schools to assess needs and design a curriculum that most efficaciously meets those needs is believed to be a significant improvement over former policy (Geyer, 2012). Additional, more stiff evaluative strategies amongst individual schools may allow for less of an auditing approach toward improving physical education outcomes and more of a proactive approach that anticipates changing needs amongst diverse student groups (Geyer, 2012). Limitations to Existing Policy Though the National Curriculum for physical education is based on evidence and has recognised the widespread benefits of physical activity for UK student population members, some limitations exist that have warranted changes within the new policy. In humanitarian to the lack of evidence regarding its efficacy, as well as the centralised and auditory approach toward addressing improvements in the system, the curriculum has been criticised for a lack of clarity and a lack of ken by invokes and teachers as to how to properly implement existing policy (Haerens et al., 2011). For example, Haerens et al. (2011) showed that many teachers lack a clear understanding of the specific goals and outcomes of the National Curriculum at each Key Stage, or suggest that these outcomes do not match the needs of th eir particular institution. This limitation will ideally be addressed by decentralising the new curriculum and placing more power of design into the hands of teachers within the UK education system (Geyer, 2012). Additionally, parents have been shown to generally lack awareness about key outcomes associated with each stage of development in UK educational pedagogy (Kirk, 2014). This is unfortunate, as parents play a pivotal role in regulating the extracurricular activities of children, and their involvement in promoting physical activity is authoritative to capitalising on the inclusion of physical education in schools (Kirk, 2014). Implementation challenges have plagued previous UK physical education policy, and parents may help overcome this barrier (Zhu, Ennis Chen, 2011).There have been contextual constraints among schools limiting fitness information learning in the academic environment, as well as discrepancies in personal values toward physical education as a key componen t to a science-based educational program (Zhu et al., 2011). Greater efforts are needed to raise awareness of the benefits of physical activity to parents in order to gain support for its inclusion and continued participation in schools (Zhu et al., 2011). Recommendations The benefits of physical activity for children are clear, and there are obvious social advantages to promoting regular exercise from an early age (Standage et al., 2012). As the academic environment represents the most optimal position in which to promote health and physical activity, a National Curriculum that includes physical education is crucial to a healthy and productive society (Kirk, 2014). However, improvements must be made in the individualisation of curricula based on need, as well as efforts to monitor the efficacy of existing policy (Bohn-Gettler Pellegrini, 2014). Finally, greater efforts to improve awareness of policy and the benefits of physical activity, particularly amongst parents, are needed in order to ensure national physical activity guidelines are met (Geyer, 2012). De-centralising the National Curriculum design and providing more flexibility for individual schools to target specific needs is recommended to promote the most effective physical educationprogramme for UK students (Geyer, 2012). Individual schools differ in their physical education needs, and their curriculum designs should reflect this need. Additionally, engaging parents in the design process as well as seeking their support at the school level may be beneficial in ensuring physical activity behaviours are encouraged in the home environment (Kirk, 2014). Finally, more research is needed that tracks key metrics related to the efficacy of new National Curriculum policy (Bohn-Gettler Pellegrini, 2014). For example, the relationship between physical education implementation and academic outcomes, obesity and QoL would all be beneficial in evaluating the efficacy of physical education policy (Hills et al ., 2011). Such efforts may also help reduce the auditory approach interpreted in previous policy and encourage a more proactive physical education curriculum. shutdown The purpose of this paper was to discuss contemporary issues regarding physical education policy within the National Curriculum. The benefits of physical activity for children were first explored, including psychological, social and physical outcomes. A review of the National Curriculum policy on physical education was then presented, including former policy and new changes within the 2014 revisions. The efficacy of this policy was then considered, as well as the limitations. Finally, recommendations for improving existing policy and increasing physical activity rates were discussed. Based on the evidence presented within this paper, physical activity appears to offer substantial benefits to students and the inclusion of physical education in the National Curriculum has the potential to offer long-term benefits to so ciety. However, some issues regarding assessment, monitoring, decentralisation of design, incorporating parent involvement, and taking a more proactive approach toward improvements will all contribute to improved policy in the future. Implementing more rigorous research and intervention designs will ideally alleviate existing limitations in research surrounding this topic. References Association for Physical Education (2014). National curriculum 2014. online Available at http//www.afpe.org.uk/advice-on-new-national-curriculum. Accessed 14 Oct. 2014. Best, J. R. (2010). Effects of physical activity on childrens executive function contributions of experimental research on aerobic exercise. Developmental Review, 30(4), pp. 331-351. Biddle, S. J. and Asare, M. (2011). Physical activity and mental health in children and adolescents a review of reviews. British Journal of Sports Medicine, 45. Abstract only. Available at http//bjsm.bmj.com/content/45/11/886.abstract. Accessed 14 Oct. 201 4. Bohn-Gettler, C. M. and Pellegrini, A. D. (2014). Justice, conflict and wellbeing. sunrise(prenominal) York Springer. Bouchard, C., Blair, S. N. and Haskell, W. (2012). Physical activity and health 2nd edition. Champaign, IL Human Kinetics. Brockman, R., Fox, K. R. and Jago, R. (2011). What is the meaning and nature of active play for todays children in the UK. Int J Behav Nutr Phys Act, 8, p. 15. Craggs, C., Corder, K., van Sluijs, E. M. and Griffin, S. J. (2011). Determinants of change in physical activity in children and adolescents a systematic review. American Journal of Preventive Medicine, 40(6), pp. 645-658 Evans, J. (2004). Making a difference? Education and ability in physical education. European Physical Education Review, 10(1), pp. 95-108. Fairclough, S. and Stratton, G. (2005). Physical education makes you fit and healthy. Physical educations contribution to young peoples physical activity levels. Health Education Research, 20(1), pp. 14-23. Geyer, R. (2012). Can complexity move UK policy beyond EvidenceBased Policy Making and the Audit Culture? Applying a Complexity cascade down to education and health policy. Political Studies, 60(1), pp. 20-43. Gov.UK (2013). National curriculum in England physical education programmes of study. online Available at https//www.gov.uk/government/publications/national-curriculum-in-england-physical-education-programmes-of-study/national-curriculum-in-england-physical-education-programmes-of-study. Accessed 14 Oct. 2014. Haerens, L., Kirk, D., Cardon, G. and De Bourdeaudhuij, I. (2011). Toward the development of a pedagogical model for health-based physical education. Quest, 63(3), pp. 321-338. Hills, A. P., Andersen, L. B. and Byrne, N. M. (2011). Physical activity and obesity in children. British Journal of Sports Medicine, 45 (11), pp. 866-870. Janssen, I. and LeBlanc, A. G. (2010). Review Systematic review of the health benefits of physical activity and fitness in school-aged children and youth. I nternational Journal of Behavioral Nutrition and Physical Activity, 7(40), pp. 1-16. Kirk, D. (2014). Physical education and curriculum study (Routledge Revivals) a critical introduction. London Routledge. Marmot, M., Allen, J., Bell, R., Bloomer, E. and Goldblatt, P. (2012). WHO European review of social determinants of health and the health divide. The Lancet, 380(9846), pp. 1011-1029. Metcalf, B., Henley, W. and Wilkin, T. (2012). intensity level of intervention on physical activity of children systematic review and meta-analysis of controlled trials with objectively measured outcomes (EarlyBird 54). BMJ British aesculapian Journal, 345. online Available at http//www.bmj.com/content/345/bmj.e5888. Accessed 14 Oct. 2014. National Health Service (2013). Physical activity guidelines for children and young people. online Available at http//www.nhs.uk/Livewell/fitness/Pages/physical-activity-guidelines-for-young-people.aspxclose. Accessed 14 Oct. 2014. Standage, M., Gillison, F. B., Ntoumanis, N. and Treasure, D. C. (2012). Predicting students physical activity and health-related well-being a prospective cross-domain investigating of motivation across school physical education and exercise settings. Journal of Sport Exercise Psychology, 2012(34), pp. 37-60. Thorburn, M., Jess, M. and Atencio, M. (2011). mentation differently about curriculum analysing the potential contribution of physical education as part of health and well-being during a time of revised curriculum ambitions in Scotland. Physical Education Sport Pedagogy, 16(4), pp. 383-398. Tomporowski, P. D., Lambourne, K. and Okumura, M. S. (2011). Physical activity interventions and childrens mental function an introduction and overview. Preventive Medicine, 52, pp. S3-S9. Zhu, X., Ennis, C. D. and Chen, A. (2011). Implementation challenges for a constructivist physical education curriculum. Physical Education and Sport Pedagogy, 16(1), pp. 83-99.

Literature Review: Organizational Development

Literature Review Organizational incrementThe topic under consideration is organizational exploitation, intimacy invention and replace prudence. The main focus of this look is to see how the process of understand concern is affected by organizational organic evolution and familiarity creation. In order to give way an over in all(prenominal) view of that these broad areas are their relationship with to each one otherwise, a literary works review was conducted.Worren Ruddle Moore (1999) explored about how over the years people direct moved from organizational development to a to a greater extent holistic view which is diverge oversight. According to this denomination the tools used in reposition management and organizational development are the same but the rationale behind it is different. For example bearing surveys are used in twain. In organizational development it was used to gauge job rejoicing and the climate of the organization but in intensify man agement it is smash of a strategy drive and holistic change program. This article basically uses explore of various other people to give us a complete picture of what change management is all about. According to them as now the dental plate of bu sinesses is increasing and so is the need for having specialize firms to administer change. They talked about interventionist and integrative strategies. Interventionist strategies are used in organizational development where as integrative strategies are used in change management.The variables taken from this article are change management and organizational development. These variables are very important for the research as it understandably defines what the word change management would mean when it would be used in the research. The definition alike takes both the culture and structure aspect of change management into account.The authors concluded that in order to increase the measurement and the overall feat of the organization the company as to use the integrative strategies because when the employees are a part of the complete process the resistance to change is minimized.Van de Ven Poole (1995) done their research gave a theoretical overview of how development and change management basically occurs. The article classifies four types development theories namely life- cycle theory, teleological theory, dialectical theory and evolutionary theory. The authors were of the opinion that these basic theories buns be used to explicate how change occurs in the organization. To explain that they developed a framework with these four theories and classified companies based on the dash and unit of change at various levels of organizational development. The conclusion they drew from their research was that as the organization grew in size the motors of change also get more complex because comes into play at once.Ikujiro Nonaka(1994) gives a crossways-the-board view of how companionship is created within t he organizations.The main variable identified for knowledge creation is innovation. It is defined as followsInnovation is a process in which the organization creates and defines problems and then(prenominal) actively develops new knowledge to knead themThe article also identifies three dimensions of knowledge creation. This includes epistemology, ontological and the spiral orderl of knowledge. The musical theme differentiates between codified, bollock (explicit) and informal, personal information. He concluded that the organization played a very important role as far as knowledge is concerned. The organization washbasin facilitate the creation of knowledge by promote socialization, inheringization of codified information into tacit information etc.Choi Lee (2002) stated that knowledge creation is very important to insure a persistent positive financial growth. The authors basically classify the knowledge creation management strategies into either human or system oriented. T hey used empirical data to picture the link between the mode of knowledge creation and its management strategies. The authors concluded that proper chemical grouping of the mode of knowledge creation used and the strategies involved is essential to achieve the desired financial advancement. For example it the mode of knowledge creation is socialization it should be aligned with the human strategy in order for it to be effective. It also found out knowledge creation strategies different with different types of departments that are taken into account. This research also gives us guidelines for future research which includes a comparative analysis between the service and the manufacturing sector. This story basically shows how qualitative variables discount be measured quantitatively. I will be using the survey as a guide when formulating the survey form etc.Bloodgood Salisbury (2001) talks about that organizations stick out lend oneself change and gain and maintain a complet ive advantage but this buttocks non be achieved by knowledge creation alone. Knowledge transfer and knowledge protection is as important. The authors hurt used the Resource-Based View (RBV) to explain how both types of information i.e. explicit and tacit hindquarters help in the change process and how they bath be transferred to achieve long-term benefit. In the paper they identified knowledge creation as a process which is based on creativity and a shared knowledge between a group of people which can be used to make new products as well as management strategies. The authors went on to stress that it is not just creating knowledge. It would be of no use if other can get that information from your company advantageously or it can be altered. So the protection of the knowledge is equally important for a business to remain competitive. To verify its safety security and legal measure should be used.Rune Todnems (2005) paper basically talks about things which should be taken care off when conducting research in the field of change management. This article basically takes into account various researches conducted in this field and then draws consensus based on the data they have. The two main findings of this paper were as followsFirstly, it is agreed that the pace of change has never been greater than in the current business environment (Balogun and Hope Hailey, 2004 Burnes, 2004 Carnall, 2003 Kotter, 1996 Luecke, 2003 Moran and Brightman, 2001 Okumus and Hemmington, 1998 Paton and McCalman, 2000 Senior, 2002).Secondly, there is a consensus that change, being triggered by internal or foreign factors, comes in all shapes, forms and sizes (Balogun and Hope Hailey, 2004 Burnes, 2004 Carnall, 2003 Kotter, 1996 Luecke, 2003), and, therefore, affects all organizations in all industries.W tote upell Sohal (1998) stated that resistance is as a critically important factor that can influence the triumph of change management. They defined it asResistance, in an orga nizational setting, is an expression of reservation which normally arises as a response or reaction to change (Block 1989)The authors throughout the paper talked about resistance. They were of the opinion that resistance to change should not be seen as a hurdle is had its own advantages. They used a lot turnary winding data to put their point across. Though their research they were able to conclude that resistance from the management can actually lead to greater stability in the extraneous environment. This conflict between the internal and the external environment which is brought about by change is actually healthy for the business as a whole. The authors also identified that resistance at sequence draws attention to certain aspects of change which might not be appropriate for the organization in the long run. The most important advantage concluded by them was that it settlements in an influx of energy within the organization which is healthy for the organization as it in turn results in toweringer levels of efficiency.Keller Aiken (2009) talks about some stereotypes which are prevalent about change management. They based their research on John Kotter research which was published in 1995. They basically identified some of the mistake which managers in all the organizations make then they are administrating change in the organization. The concluded that what motivate you as a person might not motivate most of the employees in the organization. So special attention should be given to the things that motivate the employees. Secondly they identified that the leaders/ managers who are bringing about the change should not believe that they are the change and just because the manager/ leader is influential you cannot guarantee effective change within the organization. They also went on to point out that good intentions of the managers are not enough to ensure that the change management will be effective. Employees all need some kind of monetary recognise to e nsure maximum compliance.Ash (2009) in his article basically talks about how change can be managed efficiently. He talks about the time lag between the decision is made and utilise and the results in the form of increased performance to be seen. According to him this is due to more resistance than expect by the top management from the side on the employees. He goes on to explain why organizations for the most part fail to minimize the negative consequences of transition. According to him most organizations do little to allay such fears and concerns which results in slow change process. People initially resist change is the uncertainty change creates.Theoretical role modelCDocuments and Settingsuser topical anaesthetic SettingsTemporary Internet FilesContent.Wordun rubricd.bmpHypothesisH0= organization size will have an effect on change management?H1= organization size will not have an effect on change management?H0= internal stability would have a positive effect on change managem ent?H1= internal stability would have no or a negative effect on change management?H0= business performance will have an effect on change management?H1= business performance will not have an effect on change management?H0= knowledge creation has a positive jounce on change management?H1= knowledge creation has a negative impact on change management?H0= innovation results in knowledge creation?H1= innovation does not result in knowledge creation?H0= knowledge transfer has an effect on knowledge creation?H1= knowledge transfer does not have an effect on knowledge creation?Systolic Architecture narration and ApplicationsSystolic Architecture History and ApplicationsSYSTOLIC ARCHITECTUREA mesh of PEs that rhythmically give and pass data through the system is called systolic architecture. It is used as a co processor in combination with a drove computer and the behavior is analogous to the flow of blood through heart thus named SYSTOLIC. A systolic architecture has the following c haracteristics A massive and non-centralised parallelismlocal anesthetic communicationsSynchronous evaluation Example of systolic network1. Linear network2. Bi-dimensional network3. hexangular networkHISTORY-The systolic architecture paradigm, data-stream-driven by data counters, is the counterpart of thevon Neumann paradigm, instruction-stream-driven by a program counter. Because a systolic architecture usually sends and receives multiple data streams, and multiple data counters are needed to generate these data streams, it supportsdata parallelism.The namederives from analogy with the weak pumping of blood by the heart.H. T. KungandCharles E. Leierson published the first paper describing systolic begins in 1978 however, the first machine known to have used a similar proficiency was theColossus Mark IIin 1944.NEED FOR SYSTOLIC ARCHITECHTURE-We need a high-performance, special-purpose computer system to meet specific exercise. I/O and deliberation unstableness is a notable pr oblem .The concept of Systolic architecture can map high-level computation into computer hardware structures .Systolic system is easy to implement because of its level(p)ity and easy to recon .Systolic architecture can result in cost-effective , high- performance special-purpose systems for a unsubtle range of problems.An efficient address to design very large scale integration (VLSI) architectures and a scheme for the implementation of the discrete sine transform (DST), based on an appropriate decomposition method that uses circular correlations, is presented. The proposed design uses an efficient restructuring of the computation of the DST into two circular correlations, having similar structures and only one half of the length of the original transform these can be concurrently computed and mapped on to the same systolic set off. Significant improvement in the computational induce can be obtained at a reduced input-output (I/O) cost and low hardware complexity, retaining all the other benefits of the VLSI implementations of the discrete transforms, which use circular correlation or cyclic convolution structures. These features are demonstrated by comparing the proposed design with some of the previously reported schemes.A more computationally efficient and ascendible systolic architecture is provided for computing the discrete Fourier transform. The systolic architecture also provides a method for decrease the array area by limiting the number of complex multi pliers. In one embodiment, the design improvement is achieved by taking advantage of a more efficient computation scheme based on symmetries in the Fourier transform coefficient matrix and the radix-4 butterfly. The resulting design provides an array comprised of a plurality of smaller base-4 matrices that can evidently be added or removed to provide scalability of the design for applications involving different transform lengths to be calculated. In this embodiment, the systolic array size pro vides greater flexibility because it can be applied for use with any transform length which is an integer multiple of sixteen. A systolic network is oft use with a host station responsible for the communication with the outside world.As a result of the local-communication scheme, a systolic network is easily extended without to add any burden to the I/O.CHARACHTERSTICS OF SYSTOLIC ARCHITECHTURE-A massive and non-centralised parallelismLocal communicationsSynchronous evaluationData coming from the memory are used several time before to come back to it.These architectures are well suited for a VLSI or FPGA network implementation. otherwise characteristics A systolic network is often use with a host station responsible for the communication with the outside world.As a result of the local-communication scheme, a systolic network is easily extended without to add any burden to the I/O.PRINCIPLE OF SYSTOLIC ARCHITECHTURE-Systolic system consists of a set interrelated cells, each capabl e of performing some simple operation. Systolic approach can speed up a compute-bound computation in a relatively simple and inexpensive manner. Through systolic array we achieve higher computation throughput without increasing memory bandwidth.Which means that by using systolic architechture we can speed up our system. For eg. When we are using our simple aechitecture than we can perform atmost five million operatoins per second whereas by using systolic arrays in systolic architecture we can operate the system at a speed of 30 million operations per second.WORKING-Systolic architecture consists of simple cells ordered in some regular pattern ( elongated, bi-directional, triangular, hexagonal, etc.) where each cell usually performs one operation. Each bear on cell is connected to its neighbour or to a neighbour hood of affect elements by in brief signal paths. Both parallel and pipelined execution is implemented. A function that is to be performed can be stand for by a set of F unctional Primitives.The systolic structure has advantages of regularity and modularity over implementations of the block-state-variable form, as it is regular and an nth order filter is simply formed by cascading second order filters. Therefore it is more suitable for the VLSI implementation. The idea is to exploit VLSI efficiently by laying out algorithms (and hence architectures) in 2-D (not all systolic machines are 2-D, but most are). The architectures thus produced are not general but tied to specific algorithms. This is good for computation-intensive tasks (e.g. signal processing).TOOLS FOR SYSTOLIC ARCHITECTURE-SYSTOLIC ARRAY-Incomputer architecture, asystolic arrayis a pipe network arrangement of processing units called cells. It is a specialized form ofparallel computing, where cells (i.e. processors), compute data and store it independently of each other.We need a high-performance, special-purpose computer system to meet specific application. I/O and computation imbalanc e is a notable problem.The concept of Systolic architecture can map high-level computation into hardware structures. Systolic system works like an automobile assembly line. Systolic system is easy to implement because of its regularity and easy to recon. Systolic architecture can result in cost-effective, high-performance special-purpose systems for a wide range of problem.Systolic Array Example33 Systolic Array Matrix Multiplication-T=7DESCRIPTION OF SYSTOLIC ARRAYS- Description It is a network of interconnected processing units.Only the processors at the border of the architecture can communicate outside.The task of one cell can be summarised as receive-compute-transmitA systolic array is composed of matrix-like rows of data processing units called cells. Data processing unitsDPUsare similar tocentral processing units(CPU)s,(except for aprogram counter, since operation istransport-triggered, i.e., by the arrival of a data object). Each cell shares the information with its neighbo rs immediately after processing. The systolic array is often rectangular where data flows across the array between neighbour DPUs, often with different data flowing in different directions. The data streams entering and leaving the ports of the array are generated byauto-sequencing memoryunits, ASMs. Each ASM includes adata counter. Inembedded systemsa data stream may also be input from and/or output to an external source.An example of a systolicalgorithmmight be designed formatrix multiplication. Onematrixis fed in a row at a time from the top of the array and is passed down the array, the other matrix is fed in a mainstay at a time from the left hand side of the array and passes from left to right. Dummy set are then passed in until each processor has seen one whole row and one whole column. At this point, the result of the multiplication is stored in the array and can now be output a row or a column at a time, flowing down or across the array.Systolic arrays are arrays of DPUs which are connected to a small number of nearest neighbour DPUs in a mesh-like topology. DPUs perform a sequence of operations on data that flows between them. Because the traditional systolic array synthesis methods have been practiced by algebraic algorithms, only uniform arrays with only linear pipes can be obtained, so that the architectures are the same in all DPUs. The consequence is that only applications with regular data dependencies can be implemented on classical systolic arrays. LikeSIMDmachines, clocked systolic arrays compute in lock-step with each processor undertaking alternate compute communicate phases. But systolic arrays with asynchronous handshake between DPUs are calledwave front arrays. One well-known systolic array is CMUs I Warp processor, which has been construct by Intel. An I Warp system has a linear array processor connected by data buses going in both directions. Super Systolic Array The super systolic array is a generalization of the systolic array. Because the classical synthesis methods (algebraic, i. e. projection-based synthesis), yielding only uniformDPUarrays permitting only linear pipes, systolic arrays could be used only to implement applications with regular data dependencies. By using simulated annealinginstead,Rainer Kresshas introduced the generalised systolic array the super systolic array. Its application is not restricted to applications with regular data dependencies.Applications-An application Example Polynomial EvaluationHorners rule for evaluating a polynomial isy= ((((an*x+an 1) *x+an 2) *x+an 3) *x+ +a1) *x+a0A linear systolic array in which the processors are arranged in pairs one multiplies its input byxand passes the result to the right, the next addsajand passes the result to the right.Advantages and Disadvantages-ADVANTAGESFasterScalableDISADVANTAGESExpensiveHighly specialized for particular applicationsDifficult to buildMore about systolic architectures -Systolic architectures are designed by using linear mapping techniques on regular dependence graphs (DG).Regular Dependence Graph The comportment of an edge in a certain direction at any node in the DG represents presence of an edge in the same direction at all nodes in the DG.DG corresponds to infinite representation no time instance is assigned to any computation t=0. Systolic architectures have a space-time representation where each node is mapped to a certain processing element(PE) and is scheduled at a particular time instance.Systolic design methodology maps an N-dimensional DG to a lower dimensional systolic architecture.Mapping of N-dimensional DG to (N-1) dimensionalo systolic array is considered.CONCLUSIONA massively parallel processing with limited input output communication with host computer.Suitable for many interactional operations.Replace single processor with an array of regular processing elementsOrchestrate data flow for high throughput with less memory access a. Different from pipeliningNonlinear arra y structure, multidirection data flow, each PEmay have (small) local instruction and data memoryDifferent from SIMD each PE may do something differentinitial motivation VLSI enables inexpensive special-purpose chipsRepresent algorithms directly by chips connected in regular patternBIBLIOGRAPHY-* textual matter Book* http//www-old.oberon.ethz.ch/WirthPubl/AD.pdf* http//www.google.co.in/search?q=description+of+systolic+architecturehl=enrlz=1C1GGLS_enIN323IN323start=20sa=N http//www.cs.nctu.edu.tw/ldvan/teaching/vlsidsp/VLSIDSP_CHAP7.pdf http//www.google.co.in/search?hl=enrlz=1C1GGLS_enIN323IN323q=%2Bworking+of+systolic+architectureei=lFzzSYDQO8zelQeRqaTDDAsa=Xoi=stemming_tipct=title http//eprints.iisc.ernet.in/6808/ www.wikipedia.org http//www.google.co.in/search?rlz=1C1GGLS_enIN323IN323sourceid=chromeie=UTF-8q=description+of+systolic+architecture

Factors Influencing Stock Prices in Indonesia Exchange

cistrons Influencing seam Prices in Indvirtuososia win over on that point ar numerous definitions of well-worn with diverse point of go through. Bernstein conjure ups that contrasts be partial beatership of comp any(prenominal)s as narrows which ar subordinated with debt (Bernstein, R. 2002). dividing line up is a wrench that implies an ownership position in a company and signifies a claim on its proportional sh atomic build 18 in companys assets and scratchs. Only authorized companies live line of descent c altoge at that placed corporation. Limited partnership and repair proprietorship do non issue start a bun in the oven (WebFinance, Inc., 2010). According to Vernimmen et al. (Vernimmen et al. 2009, p. 527), A old-hat or a shargon is a security that is not redeemed. The investment bath only be recognized through government activity and whose revenue flows is un veritable.Corporations involve financial resources and this required resources unremarka bly come from banausic or green carrys, favourite(a) painss, and medium to spacious destination l break offers or debenture holders. special K ex guide is everlasting jacket for the corporation. The owners who invest in this type of ancestry be called ordinary or habitual shargonholders and any profit retain after paying debenture pursual exit be broadcast to them called dividend. P have in mindred line of productss ar issued to public in hunting lodge to acquire bully and these runs fuddle amends to specified yearly placed plow grant dividend on the pay up capital. P identifyred pargonntages be less(prenominal) roughhewn in armory mart (Anandarajah, Aseervatham, and Reid 2005). The adhereing be the characteristics of honey crude colour farm animal and favorred extends (Scott et al. 1999).Preferred transportA hybrid security which has similar characteristics to bonds and common billets.It is similar to bonds in its dividends which atomic num ber 18 limited in amount.It is similar to common billets in that it has no fixed maturity date, dividends atomic number 18 not allowable in basis of tax purposes, and non-payment of dividends go out not energise bankruptcy. ballpark received.Common germinate shares imply an ownership in corporation which does not see maturity date and exists as long as the incorruptible does. burgeon forth metamorphose is an organization which patrons connection between potence stealers and possible deceiveers of transports. ancestry transfigure fag end be physical nab, network of com editers, dodging of telephone link, and so forth A melody groceryplace is a place where parentages depict notice be purchased and sold (Samuel, J.M., Wilkes, F.M., and Brayshaw, R.E. 1996). Most of countries around the world defecate occupation ex ex cast yards. The number of descent transposes around the world is growing unhurtly. base on continents, production line ex departs aro und the world can be dissever into 6 Africa, Asia, Europe, position East, North America, and South America. Indonesia demarcation permutation called IDX is one of the transport exchanges in Asia ( personal line of credit commutes Worldwide Links, n.d., 2010).Principally, thither are 2 advantages are guarded by investor who purchase or having line of businesss in storage exchanges (Indonesia defecate a bun in the oven Exchange, 2007)Dividend.Dividend is sacramental manduction profit awarded by a company because of holding impart for a relatively long finis until ownership term is in degree where an investor is recognized as shareholder who has right to get dividend. metropolis Gain. bang-up gain is the variation between conducting worth and buying toll acquired from avocation activities.Those advantages cause investors admit stocks as an deplumeive alternative than put their property in fixed deposits that befool low matter to battle array (Chuan, 2004).B asically, investors who buying or having stocks testament as well progress to few risks (Indonesia roue Exchange, 2007)Capital Loss.Capital loss is a government agency when an investor is giveing the stocks at lower harm than the buying hurt.Liquidity Risk.A company with shares held by public is say for its bankruptcy by the Court. Shareholders or investors leaveing have the last anteriority of claiming their rights after all liabilities are fulfilled. The rest of the companys riches leave alone be shared proportionally to the shareholders. Shareholders ordain not obtain anything from the liquidation if there is no rest left.The overall charge questions of common stocks of corporations traded on stock trades are called stock market footing barones. corporeal stockholders pull up stakes get benefit from company through dividends and have right to vote in company. Investors capital gains and losses volition change by increasing and releaseping of stock char ges (Frumkin 2000). Norman (Frumkin, N. 2000, p. 277) states that The dividend yield, which is the govern of fruit on a share company stock, is a companys annual cash dividend pct of companys annual stock woo.Nowadays, the determine of stocks in Indonesia computer storage Exchange is changing rapidly. The reasonable monetary value of stocks in Indonesia stress Exchange add-ond portentously (approximately 20%) during 2006. The average footing change magnitude approximately 19% during January 2008 and declined once again approximately 16% during March 2008. The significant change of stock damages in Indonesia decline Exchange is ca utilize by extraneous environmental divisors or macrostintings genes (Frensidy, B. 2008). in that respect are umpteen an(prenominal) remote environmental factors that electric shock financial governance including stocks. Those factors are sparing produce, fanfare, exchange evaluate, interest grade, etc (Evans, et al. 2000).Many i nvestors lost their coin because of the significant change of stock termss in Indonesia logical argument Exchange. Investors lost their capital because they consider their stocks at lower toll than the buying monetary value (Indonesia Stock Exchange, 2007). By analyzing out-of-door environmental factors, investors can predict the future price of stocks to a greater extent accurately. To smear the risk or capital loss, investors have to run across irrelevant environmental factors influencing stock prices in companionship to invite temper finding whether they have to buy, sell, or hold the shares. The question will get word transnational environmental factors which have significant mildew on stock prices and explain the alliance between those factors and stock prices in swan to light upon that goal.Objectives, search Question, and research HypothesesThe objectives of the sort into areTo identify the variables of external environmental factors influencing the stock prices in Indonesia Stock Exchange.To analyze the learn of external environmental factors on stock prices in Indonesia Stock Exchange.Based on the objectives, the query questions are as followWhich external environmental factors work stock prices in Indonesia Stock Exchange?How does external environmental factors becharm on stock prices in Indonesia Stock Exchange?Based on the inquiry question, the investigate hypotheses are built upExternal environmental factors uphold the change of stock prices in Indonesia Stock Exchange.External environmental factor have firm correlation coefficient with stock prices in Indonesia Stock Exchange. fieldThis research accept will focus on external environmental factors influencing the stock prices in Indonesia stock exchange, which will be explained more(prenominal) in short in chapter 2 literary productions reviews. Some external environmental factors influencing stock prices are employ to explain the correlation between external environmental factors and stock prices in Indonesia Stock Exchange. The analysis of what kind of kin ( plus or negative) between external environmental factors and stock prices will also be clarified in this research.The literature reviews will consist of somewhat external environmental factors which influence stock prices particularly in Indonesia Stock Exchange. A survey will be performed in order to collect entropy or so the change of some(prenominal) external factors and stock prices in Indonesia Stock Exchange. Based on collected data, a model will be offered to analyze the relationship between stock prices and external environmental factors.Lastly, this research will be limited and rivet on the followingThe research is only focus on JSX manifold plant mogul or (Indonesian Indeks Harga Saham Gabungan, IHSG).This research is only foc utilize on external environmental factors which influence stock prices.The data solicitation intent of this research is 5 eld from 20 05 to 2009.Chapter 2LITERATURE revueLiterature Review of External Environmental Factors and Stock Prices in Indonesia Stock ExchangeThis chapter will summarize external environmental factors which influence stock prices. Factors and posers will be appeared by joining and compound adopted theories. Lastly, the study(ip) external environmental factors influencing stock prices in Indonesia Stock Exchange will be provided in this chapter.Categories of Stocks and Types of night clubsIn the market, there are various name of stocks that refer to different categories of stocks (Chuan, 2004) go out 2.1 Categories of Stocks solution change from Chuan, 2004Blue Chips refer to stocks that are steady with candid fundamentals.Undervalued Stocks refer to stocks which are well-established by companies with solid balance sheet. Such stocks are primarily unremarked by investors, traded with secondary volume, and receive little reporting from media and analysts or experts. harvest- beat Sto cks refer to stocks which are established by recognized companies that have gamy growth sectors and their craft are predicted to enlarge quickly over the orgasm years. Such stocks are in general traded with elevateder PER (Price Earnings Ratio) even though they lack of muniment of strong earnings base. While companies show constant rise in their earnings, the price of these stocks will increase.Penny Stocks refer to stocks that have small capitalization and traded boom one sawhorse.small cap Stocks refer to stocks that have very fewer issued shares and traded in low price at stock market. Such stocks are unremarkably not bought by foreign institutions and funds. Small-Cap Stocks have some risks as followSmaller companies tend to less flexible to study crisis because they are less diversified and more prostrate to market shocks and fiscal crisis.Trading volumes are low and less liquid. in that locationfore, investors whitethorn not sire the buyers in stock market wh en they want to sell the stocks.Small-Cap Stocks are more sensitive to news and rumors. in that respect are 3 types of orders utilise in the buying and selling of stocks as follow (Chuan, 2004) market place OrderMarket order is an order to buy or sell stocks straightway at the best authorized price. For example, investors place market order to sell abdominal aortic aneurysm shares. It means investors buy abdominal aortic aneurysm shares at current crack price.Limit OrderInvestors which place limit order will set a trustworthy suitable price to buy or sell a particular stock. hold on OrderStop order is an order to buy or sell the stocks that are traded at received price level immediately. This certain price level is cognize as insure price. For instance, investors place stop order to buy AAA shares at $5.00. If AAA shares begin to trade at $5.00, the order drop deads market order and element will buy shares at the best current price. In foothold of selling stop order, the order is placed bellow current price to help investors go down their possible losses and substantiate their profit.Timing and Stock InvestmentInvestor would discourage when the price of their stocks reduced significantly after they had bought the stocks or to be trapped in market jam after they had invested their gold in the stock market. Good measure is the approximately crucial factor for investors in stock market. Even the best stocks will become delusive investments if investors buy them at wrong time (George, A. 2008). The major problem is candid timing cannot be go overd easily because stock market is influenced by large amount of factors and events that are beyond prediction. Investors have to understand factors influencing stock price and involve some insight to learn good timing whether they have to buy, sell, or hold their stocks (Chuan, 2004).In stock investment, price is machine by which practically all goods and serve are exchanged. In this case, price has s trong power or price is a king because price will determine whether stocks become excessively pricey or bum (George, A 2008). The price of stocks tends to increase when there are more buyers than sellers in stock market. Buyers are tense in stock market base on expectation of future price increase. There are some signals which make buyers believe that future stock price will increase (Chuan, 2004)Positive mark from market trend.Rumors in stock market.Information concerning mend earnings prospects for company.External Environmental Factors Influencing Stock PricesThere are several external environmental factors influencing the uptrend or downtrend of stock prices in stock market. Those external environmental factors areWorldwide stock market. topical anesthetic anaesthetic anesthetic thrift. policy-making factor. ostentatiousness. orthogonal Exchange Rates. relate Rates. trade good Prices.Worldwide Stock MarketThe surgical procedure of world deliverance will have upshot on local economy or Indonesian economy imputable to globalization. The global economy especially US, China, Japan, and capital of Singapore economy will help to enhance Indonesian economy because those countries are major trading partners of Indonesia (CIA, 2010). Therefore, affirmative economic instruction execution of those countries will give favorable result for Indonesian Stock Market (Chuan, 2004).Indonesian stock prices get significant intrusion from US, China, Japan, and Singapore stock prices. JCX mixed index or IHSG obtain significant influence from world-wide stock market especially DJIA (Dow Jones Industrial Average), Nikkei 225, Hang Seng and passing play quantify. Investors always visualize at those stocks beforehand and during trading stocks in Indonesia Stock Exchange.Export partners and consequence partners of Indonesia will affect local economy and price of JSX intricate index in Indonesian Stock Exchange (Samsul, M. 2006). For example, JCX composite index in 7 May 2010 decreased significantly (71.29 points or 2.54%) because of the decrease of worldwide stock market. Dow Jones Industrial Average decreased 407.05 points or 3.75%, Nikkei decreased 331.1 points or 3.1%, Hang Seng decreased 213.12 points or 1.06%, and Strait Times decreased 6.7 points or 0.59%. The decrease of worldwide stock market had significant influence on Indonesian stock prices (Meryani, A. 2010). simulacrum 2.2 Indonesia Export Partners 2009 pedigree adapted from CIA, 2010Figure 2.3 Indonesia Import Partners 2009Source adapted from CIA, 2010Local frugalitygross domestic product or Gross Domestic intersection point is regularly used as an index finger of economic performance of the democracy. Brux (Brux, J.M. 2008, p. 351) states that Gross Domestic Product (GDP) is defined as the market value of all final goods and work produced in the economy in a given time period (usually one year). There are two different types of GDP as follow nominated GDP.Nominal GDP is GDP that determined at current prices or actual prices of a particular year. received GDP.Real GDP is GDP which adjusted for rising prices.GDP is generally used as indication of standards of reenforcement in a demesne. If GDP is high, there is an surmisal that economy in a country is doing well and this country has high standards of sprightliness. When GDP is growing, there is an assumption that economic activity in a country and standards of living are rising (Brux, 2008).When GDP of a country shows positive growth, it is usually followed by positive trend in stock market. Therefore, GDP is oftentimes used by investors to estimate turning points of their stocks and to time their investment.GDP growth and other economic data are published in newspaper. When investors read this information, investor should subsist how to use the information wisely. For instance, when banking sector is predicted to perform badly, investors should countenance out banking stocks in their st ock investment. This information will help investors to choose their stocks and make cleanse decision whether they have to buy, sell, or hold the shares. When economic condition in a country is good, stock prices generally tend to increase. However, investors have to be careful because it is also a sign that good days are numbered. Economy which is growing too fast will be knockout to principal(prenominal)tain its growing or to be sustained (Chuan, 2004).Political FactorStock price can be affected by regional, national, and global political situation. Political crisis usually will have negative impact in stock market trends. Stock prices generally will drop significantly because of political crisis (Chuan, 2004).InflationAccording to airlift (Hook, J.A. 2003, p. 110), Inflation is A condition in which the economy experiences a incessant increase in the average price level of all goods and work. The price of certain goods and service may decrease but the average price of all goods and services increases. Financial service industries and banking are influenced significantly by pompousness (Hook, J.A. 2003). Inflation can also be defined as a state that has continuous increase in prices of goods and services. Inflation will increase the constitute of doing strain because price of goods and services increases significantly. Therefore, it is expensive to do business during ostentation and profit margins of business will decrease due to higher(prenominal) price of raw materials, rentals, etc (Chuan, 2004).Potential earnings of companies will determine the entreat for a stock. Therefore, potential earnings of many companies generally decreased during inflation period due to the lower read for stock. The lower demand for a stock will cause the decrease of stock prices in stock market. Investors should assist at the growing of inflation and sell their stocks before inflation happens. Investors can use goodness prices and interest order as indicators o f inflation trend. When commodity prices and interest grade are rising, those factors indicate the plan of attack of inflation. Investors should have care to enter the stock market (Chuan, 2004).Foreign Exchange RatesTaylor, F. states that foreign exchange rate is the ratio which is used to metamorphose one bullion into another. Most countries around the world have their own currencies released by certain official agency which is called monetary authority or commutation bank. cash is medium of exchange which is used to buy goods and services (Taylor, F. 2003).According to Philip (Philip et al. 2000), there are types of exchange rate administration as follow waxy Exchange Rates.Flexible exchange grade agreement is an exchange rate system which the value of currency is permitted to react to market forces without any hinderance by central banks or monetary authority. obstinate Exchange Rates. unbending exchange rates system is an exchange rate system which feller countries a gree to fix the value and changes only move on under certain particular condition. This exchange rate system can reduce doubtfulness from international trade and support long term investment in international trade.Managed Floating.Managed floating is an exchange rate system which currency is allowed to act to market changes but central banks are allowed to interject in order to protect the value of the currency especially when central banks believe that disparagement is only temporary.Stock-Oriented models of exchange rates which also know as portfolio-balance approaches view exchange rates as equating demand and supply for certain assets especially stocks and bonds. Financial assets are valued by present set of future cash flows, expectations of relative currency determine have significant role in price movements especially for internationally held financial assets. Therefore, stock prices are influenced by exchange rates movement (Ajayi and Mougoue, 1996).JCX list or IHSG g ets significant influence from the variant of USD/IDR exchange rate. USD/IDR indicates how many IDR (Indonesia currency) per US dollar. The decrease of IDR currency in term of US dollar is generally followed by the decrease of several Indonesia stock prices such as Telkom, ASTRA International, Bakrie Telecom, Kalbe Farma, etc (Sihombing,G. 2008). Figure 2.4 shows that the version of USD/IDR exchange rate is very high. Therefore, Indonesian investors should look at USD/IDR exchange rate as consideration in trading stocks (Yahoo, 2010).Figure 2.4 USD/IDR Exchange Rates from 2005 to 2010Source Yahoo, 2010 following RatesFrumkin (Frumkin, N. 2000, p. 190) states that amuse is the appeal of borrow specie, and interest rates are the price of money. Interest rates which refer to yields are the annualized percentage that interest is of the principal of the loan.Interest rate is a good indicator of inflation trends because of its role as regulatory device to monitor the inflation tren ds. If interest rate increases, the embody of borrowing money will become higher and more expensive. investment and developing business will be more expensive. Therefore, the economic growth is decrease and the inflation is under control. anyway as an indicator of inflation trends, interest rates also affect stock market and have significant influence in stock prices.When interest rate in a country is low that indicates stable or low inflation rates, stock market generally shows its positive trends and has tendency to be more active. Many investors prefer to put their money on other investments kind of than put their money in bank deposits due to lower fixed interest rate. Investors will obtain lower return from bank deposits than return which comes from other investments especially stocks or shares.In addition, the speak to of borrowing money becomes cheaper and this makes investors advance their special borrowing for investment. Therefore, low interest rate will give positiv e impact to stock market in impairment of rising stock prices. Investors have to be more careful when there is news about increasing interest rates. Investors should look at the change of interest rates regularly because of the impact of interest rates on their stock prices (Chuan, 2004). change magnitude interest rates will give a negative exercise on many companies which have large debts or loans because of the rising of cost of borrowing. The profit of the companies and ability to grow will decrease. When the profit of companies decrease, stock prices generally becomes less attractive and their stock prices decrease. When interest rates become high, investors usually react in two possible outcomes as follow (Mladjenovic, P. 2009)Investors may sell some of their stocks to pay their interest loans or debts. If many investors sell their stock, it will give negative effect on stock prices. Stock prices tend to decrease because there are more sellers than buyers in stock market.hig her(prenominal) interest rates may cause investors swap change their investment from stocks to bonds or bank deposits which offer higher return.In Indonesia, interest rate decisions are decided by primaeval Bank of majority rule of Indonesia. Indonesia interest rates dropped significantly over the years that can be seen in figure 2.5. The decrease of interest rates will attract more investors to invest their money on stock market (Trading frugals, 2010).Figure 2.5 Indonesia Interest Rates from 2006 to 2010Indonesia Interest RateSource Trading Economics, 2010Commodity PricesBasic commodities which are required in the output signal process of some goods and services are good indicators of inflation trends. Those commodities are crude, rubber, steel, etc. When the prices of those commodities increase, the cost of goods and services will also increase. Therefore, when the prices of most commodities increase, it may be an indication of inflation. Investors should have carefulness t o enter the stock market. Besides as an indicator of inflation trends, commodity prices especially oil prices also affect stock market and have significant influence in stock prices (Chuan, 2004).higher(prenominal) oil prices will have significant impact on stock market returns especially the aggregate effect of stock prices. Higher oil prices may cause the rising of production cost which will give great forces on industry equity returns. In oil export countries, higher oil prices will increase dough from oil, gas, coal, and vary resources industries. Higher oil prices may cause the rising of stock prices especially for oil exporting countries which depends on relative significance of the industries (Chen, A. H. 2008).JCX composite index or IHSG gets significant influence from the fluctuation of oil prices. For instance, the price of oil in early 2008 increased significantly to US$ 147 per put and then decreased drastically to US$ 36 per barrel. The price of JCX composite index f ollowed the fluctuation of oil prices. In the early 2008, JCX composite index increased to IDR 2800. At the end of this year, JCX composite index decreased to IDR 1 nose candy (more than 100%) because of the decrease of oil prices. Indonesian stock prices generally follow the fluctuation of oil prices. When the oil prices decrease, stock prices usually also decrease and otherwise. Therefore, Indonesian investors should look at the movement of oil prices as consideration in trading stocks (Sidarta, W. 2010).Research simulationStock price in Indonesia Stock Exchange is the main axis in the research framework. The potential external environmental factors which influence stock price areEconomic factors.Economic factors consist of worldwide stock market (DJIA, Hang Seng, Nikkei, and Strait Times), local economy (GDP), inflation, interest rates, exchange rates (USD/IDR exchange rates), and commodities prices (oil price). Interest rates and commodities prices have correlation with inflati on because the movements of those factors are indicator of inflation trends.Political factors.Stock price can be affected by regional, national, and international political situation such as political crisis.All of those potential factors will become consideration factors for Indonesian investors in order to make correct decision whether they have to buy, sell, or hold their stocks. The research framework can be seen in figure 2.6.Figure 2.6 Research FrameworkPOLITICAL divisorECONOMIC FACTORSSTOCK PRICE(JCX Composite Index or IHSG) sideline rateINFLATIONOIL PRICESEXCHANGE RATES(USD/IDR)LOCAL frugality (GDP)WORLDWIDE STOCK MARKET(DJIA, NIKKEI, HANG SENG, speech sound TIMES)Source The police detectiveSummaryThe research topic in this break down is An Empirical pack of Factors Influencing Stock Prices in Indonesia Stock Exchange. The report consists of insane asylum, literature review, and reference. Chapter 1 introduction identifies background of the research, objectives of the research, research question, research hypotheses, and scopes. Chapter 2 literature review provides knowledge and theories that are related to research topic. Summary and translation of external environmental factors which influence stock prices will be provided in this chapter. At the end of this chapter, the author provides research framework in this report. Factors and frameworks will be appeared by joining and integrating adopted theories. Lastly, references show the sources of all information used in this research.Factors Influencing Stock Prices in Indonesia ExchangeFactors Influencing Stock Prices in Indonesia ExchangeThere are many definitions of stock with different point of view. Bernstein states that stocks are partial ownership of companys assets which are subordinated with debt (Bernstein, R. 2002). Stock is a device that implies an ownership position in a company and signifies a claim on its proportional share in companys assets and profits. Only certain companies ha ve stock called corporation. Limited partnership and Sole proprietorship do not issue stock (WebFinance, Inc., 2010). According to Vernimmen et al. (Vernimmen et al. 2009, p. 527), A stock or a share is a security that is not redeemed. The investment can only be recognized through disposal and whose revenue flows is uncertain.Corporations need financial resources and this required resources usually come from ordinary or common stocks, preferred stocks, and medium to long term lenders or debenture holders. Common stock is everlasting capital for the corporation. The owners who invest in this type of stock are called ordinary or common shareholders and any profit retained after paying debenture interest will be distribute to them called dividend. Preferred stocks are issued to public in order to acquire capital and these stocks have rights to specified yearly fixed percentage dividend on the paid-up capital. Preferred stocks are less common in stock market (Anandarajah, Aseervatham, a nd Reid 2005). The following are the characteristics of common stock and preferred stocks (Scott et al. 1999).Preferred StockA hybrid security which has similar characteristics to bonds and common stocks.It is similar to bonds in its dividends which are limited in amount.It is similar to common stocks in that it has no fixed maturity date, dividends are not deductible in terms of tax purposes, and non-payment of dividends will not cause bankruptcy.Common Stock.Common stock shares imply an ownership in corporation which does not have maturity date and exists as long as the firm does.Stock exchange is an organization which helps connection between potential buyers and potential sellers of stocks. Stock exchange can be physical place, network of computers, system of telephone link, etc. A stock market is a place where stocks can be purchased and sold (Samuel, J.M., Wilkes, F.M., and Brayshaw, R.E. 1996). Most of countries around the world have stock exchanges. The number of stock excha nges around the world is growing significantly. Based on continents, stock exchanges around the world can be divided into 6 Africa, Asia, Europe, Middle East, North America, and South America. Indonesia Stock Exchange called IDX is one of the stock exchanges in Asia (Stock Exchanges Worldwide Links, n.d., 2010).Principally, there are 2 advantages are obtained by investor who buying or having stocks in stock exchanges (Indonesia Stock Exchange, 2007)Dividend.Dividend is sharing profit awarded by a company because of holding stock for a relatively long period until ownership term is in period where an investor is recognized as shareholder who has right to get dividend.Capital Gain.Capital gain is the difference between selling price and buying price acquired from trading activities.Those advantages cause investors choose stocks as an attractive alternative than put their money in fixed deposits that have low interest rates (Chuan, 2004).Basically, investors who buying or having stocks will also have some risks (Indonesia Stock Exchange, 2007)Capital Loss.Capital loss is a situation when an investor is selling the stocks at lower price than the buying price.Liquidity Risk.A company with shares held by public is declared for its bankruptcy by the Court. Shareholders or investors will have the last priority of claiming their rights after all liabilities are fulfilled. The rest of the companys wealth will be shared proportionally to the shareholders. Shareholders will not obtain anything from the liquidation if there is no rest left.The overall price movements of common stocks of corporations traded on stock markets are called stock market price indexes. Corporate stockholders will get benefit from company through dividends and have right to vote in company. Investors capital gains and losses will affected by increasing and falling of stock prices (Frumkin 2000). Norman (Frumkin, N. 2000, p. 277) states that The dividend yield, which is the rate of return on a share company stock, is a companys annual cash dividend percentage of companys annual stock price.Nowadays, the price of stocks in Indonesia Stock Exchange is changing rapidly. The average price of stocks in Indonesia Stock Exchange increased significantly (approximately 20%) during 2006. The average price decreased approximately 19% during January 2008 and declined again approximately 16% during March 2008. The significant change of stock prices in Indonesia Stock Exchange is caused by external environmental factors or macroeconomics factors (Frensidy, B. 2008). There are many external environmental factors that impact financial system including stocks. Those factors are economic growth, inflation, exchange rates, interest rates, etc (Evans, et al. 2000).Many investors lost their money because of the significant change of stock prices in Indonesia Stock Exchange. Investors lost their capital because they sell their stocks at lower price than the buying price (Indonesia Stock Exchange, 2 007). By analyzing external environmental factors, investors can predict the future price of stocks more accurately. To minimize the risk or capital loss, investors have to understand external environmental factors influencing stock prices in order to make correct decision whether they have to buy, sell, or hold the shares. The research will identify external environmental factors which have significant influence on stock prices and explain the relationship between those factors and stock prices in order to accomplish that goal.Objectives, Research Question, and Research HypothesesThe objectives of the research areTo identify the variables of external environmental factors influencing the stock prices in Indonesia Stock Exchange.To analyze the influence of external environmental factors on stock prices in Indonesia Stock Exchange.Based on the objectives, the research questions are as followWhich external environmental factors influence stock prices in Indonesia Stock Exchange?How do es external environmental factors influence on stock prices in Indonesia Stock Exchange?Based on the research question, the research hypotheses are built upExternal environmental factors encourage the change of stock prices in Indonesia Stock Exchange.External environmental factor have strong correlation with stock prices in Indonesia Stock Exchange.ScopeThis research study will focus on external environmental factors influencing the stock prices in Indonesia stock exchange, which will be explained more briefly in chapter 2 literature reviews. Some external environmental factors influencing stock prices are applied to explain the correlation between external environmental factors and stock prices in Indonesia Stock Exchange. The analysis of what kind of relationship (positive or negative) between external environmental factors and stock prices will also be clarified in this research.The literature reviews will consist of some external environmental factors which influence stock pric es especially in Indonesia Stock Exchange. A survey will be performed in order to collect data about the change of several external factors and stock prices in Indonesia Stock Exchange. Based on collected data, a model will be offered to analyze the relationship between stock prices and external environmental factors.Lastly, this research will be limited and focused on the followingThe research is only focused on JSX composite index or (Indonesian Indeks Harga Saham Gabungan, IHSG).This research is only focused on external environmental factors which influence stock prices.The data collection period of this research is 5 years from 2005 to 2009.Chapter 2LITERATURE REVIEWLiterature Review of External Environmental Factors and Stock Prices in Indonesia Stock ExchangeThis chapter will summarize external environmental factors which influence stock prices. Factors and frameworks will be appeared by joining and integrating adopted theories. Lastly, the major external environmental factors influencing stock prices in Indonesia Stock Exchange will be provided in this chapter.Categories of Stocks and Types of OrdersIn the market, there are various names of stocks that refer to different categories of stocks (Chuan, 2004)Figure 2.1 Categories of StocksSource adapted from Chuan, 2004Blue Chips refer to stocks that are steady with good fundamentals.Undervalued Stocks refer to stocks which are well-established by companies with solid balance sheet. Such stocks are generally unnoticed by investors, traded with small volume, and receive little reporting from media and analysts or experts.Growth Stocks refer to stocks which are established by recognized companies that have high growth sectors and their business are predicted to enlarge quickly over the coming years. Such stocks are generally traded with higher PER (Price Earnings Ratio) even though they lack of history of strong earnings base. While companies show continual rise in their earnings, the price of these stocks wi ll increase.Penny Stocks refer to stocks that have small capitalization and traded bellow one dollar.Small-Cap Stocks refer to stocks that have very few issued shares and traded in low price at stock market. Such stocks are usually not bought by foreign institutions and funds. Small-Cap Stocks have some risks as followSmaller companies tend to less flexible to major crisis because they are less diversified and more prone to market shocks and monetary crisis.Trading volumes are low and less liquid. Therefore, investors may not find the buyers in stock market when they want to sell the stocks.Small-Cap Stocks are more sensitive to news and rumors.There are 3 types of orders used in the buying and selling of stocks as follow (Chuan, 2004)Market OrderMarket order is an order to buy or sell stocks instantly at the best current price. For example, investors place market order to sell AAA shares. It means investors buy AAA shares at current offering price.Limit OrderInvestors which place l imit order will set a certain suitable price to buy or sell a particular stock.Stop OrderStop order is an order to buy or sell the stocks that are traded at certain price level immediately. This certain price level is known as stop price. For instance, investors place stop order to buy AAA shares at $5.00. If AAA shares begin to trade at $5.00, the order becomes market order and broker will buy shares at the best current price. In terms of selling stop order, the order is placed bellow current price to help investors decrease their possible losses and keep their profit.Timing and Stock InvestmentInvestor would discourage when the price of their stocks decreased significantly after they had bought the stocks or to be trapped in market crash after they had invested their money in the stock market. Good timing is the most crucial factor for investors in stock market. Even the best stocks will become useless investments if investors buy them at wrong time (George, A. 2008). The major pr oblem is good timing cannot be determined easily because stock market is influenced by large amount of factors and events that are beyond prediction. Investors have to understand factors influencing stock price and involve some insight to determine good timing whether they have to buy, sell, or hold their stocks (Chuan, 2004).In stock investment, price is mechanism by which practically all goods and services are exchanged. In this case, price has strong power or price is a king because price will determine whether stocks become excessively expensive or inexpensive (George, A 2008). The price of stocks tends to increase when there are more buyers than sellers in stock market. Buyers are tense in stock market based on expectation of future price increase. There are some signals which make buyers believe that future stock price will increase (Chuan, 2004)Positive indication from market trend.Rumors in stock market.Information concerning better earnings prospects for company.External En vironmental Factors Influencing Stock PricesThere are several external environmental factors influencing the uptrend or downtrend of stock prices in stock market. Those external environmental factors areWorldwide stock market.Local economy.Political factor.Inflation.Foreign Exchange Rates.Interest Rates.Commodity Prices.Worldwide Stock MarketThe performance of world economy will have effect on local economy or Indonesian economy due to globalization. The worldwide economy especially US, China, Japan, and Singapore economy will help to enhance Indonesian economy because those countries are major trading partners of Indonesia (CIA, 2010). Therefore, positive economic performance of those countries will give favorable result for Indonesian Stock Market (Chuan, 2004).Indonesian stock prices get significant impact from US, China, Japan, and Singapore stock prices. JCX composite index or IHSG obtain significant influence from worldwide stock market especially DJIA (Dow Jones Industrial Av erage), Nikkei 225, Hang Seng and Strait Times. Investors always look at those stocks before and during trading stocks in Indonesia Stock Exchange.Export partners and import partners of Indonesia will affect local economy and price of JSX composite index in Indonesian Stock Exchange (Samsul, M. 2006). For example, JCX composite index in 7 May 2010 decreased significantly (71.29 points or 2.54%) because of the decrease of worldwide stock market. Dow Jones Industrial Average decreased 407.05 points or 3.75%, Nikkei decreased 331.1 points or 3.1%, Hang Seng decreased 213.12 points or 1.06%, and Strait Times decreased 6.7 points or 0.59%. The decrease of worldwide stock market had significant influence on Indonesian stock prices (Meryani, A. 2010).Figure 2.2 Indonesia Export Partners 2009Source adapted from CIA, 2010Figure 2.3 Indonesia Import Partners 2009Source adapted from CIA, 2010Local EconomyGDP or Gross Domestic Product is regularly used as an indicator of economic performance of the country. Brux (Brux, J.M. 2008, p. 351) states that Gross Domestic Product (GDP) is defined as the market value of all final goods and services produced in the economy in a given time period (usually one year). There are two different types of GDP as followNominal GDP.Nominal GDP is GDP that determined at current prices or actual prices of a particular year.Real GDP.Real GDP is GDP which adjusted for inflation.GDP is generally used as indicator of standards of living in a country. If GDP is high, there is an assumption that economy in a country is doing well and this country has high standards of living. When GDP is growing, there is an assumption that economic activity in a country and standards of living are rising (Brux, 2008).When GDP of a country shows positive growth, it is usually followed by positive trend in stock market. Therefore, GDP is often used by investors to estimate turning points of their stocks and to time their investment.GDP growth and other economic data are published in newspaper. When investors read this information, investor should know how to use the information wisely. For instance, when banking sector is predicted to perform badly, investors should leave out banking stocks in their stock investment. This information will help investors to choose their stocks and make correct decision whether they have to buy, sell, or hold the shares. When economic condition in a country is good, stock prices generally tend to increase. However, investors have to be careful because it is also a sign that good days are numbered. Economy which is growing too fast will be difficult to maintain its growing or to be sustained (Chuan, 2004).Political FactorStock price can be affected by regional, national, and international political situation. Political crisis usually will have negative impact in stock market trends. Stock prices generally will drop significantly because of political crisis (Chuan, 2004).InflationAccording to Hook (Hook, J.A. 2003, p. 110), Inflation is A condition in which the economy experiences a continuous increase in the average price level of all goods and services. The price of certain goods and services may decrease but the average price of all goods and services increases. Financial service industries and banking are influenced significantly by inflation (Hook, J.A. 2003). Inflation can also be defined as a state that has continuous increase in prices of goods and services. Inflation will increase the cost of doing business because price of goods and services increases significantly. Therefore, it is expensive to do business during inflation and profit margins of business will decrease due to higher price of raw materials, rentals, etc (Chuan, 2004).Potential earnings of companies will determine the demand for a stock. Therefore, potential earnings of many companies generally decreased during inflation period due to the lower demand for stock. The lower demand for a stock will cause the decrease of s tock prices in stock market. Investors should look at the growing of inflation and sell their stocks before inflation happens. Investors can use commodity prices and interest rates as indicators of inflation trend. When commodity prices and interest rates are rising, those factors indicate the coming of inflation. Investors should have carefulness to enter the stock market (Chuan, 2004).Foreign Exchange RatesTaylor, F. states that foreign exchange rate is the ratio which is used to convert one currency into another. Most countries around the world have their own currencies released by certain official agency which is called monetary authority or central bank. Currency is medium of exchange which is used to buy goods and services (Taylor, F. 2003).According to Philip (Philip et al. 2000), there are types of exchange rate system as followFlexible Exchange Rates.Flexible exchange rates system is an exchange rate system which the value of currency is permitted to react to market forces without any intervention by central banks or monetary authority.Fixed Exchange Rates.Fixed exchange rates system is an exchange rate system which associate countries agree to fix the value and changes only occur under certain particular condition. This exchange rate system can reduce uncertainty from international trade and support long term investment in international trade.Managed Floating.Managed floating is an exchange rate system which currency is allowed to respond to market changes but central banks are allowed to interfere in order to protect the value of the currency especially when central banks believe that depreciation is only temporary.Stock-Oriented models of exchange rates which also known as portfolio-balance approaches view exchange rates as equating demand and supply for certain assets especially stocks and bonds. Financial assets are valued by present values of future cash flows, expectations of relative currency values have significant role in price movements esp ecially for internationally held financial assets. Therefore, stock prices are influenced by exchange rates movement (Ajayi and Mougoue, 1996).JCX Index or IHSG gets significant influence from the fluctuation of USD/IDR exchange rate. USD/IDR indicates how many IDR (Indonesia currency) per US dollar. The decrease of IDR currency in term of US dollar is generally followed by the decrease of several Indonesia stock prices such as Telkom, ASTRA International, Bakrie Telecom, Kalbe Farma, etc (Sihombing,G. 2008). Figure 2.4 shows that the fluctuation of USD/IDR exchange rate is very high. Therefore, Indonesian investors should look at USD/IDR exchange rate as consideration in trading stocks (Yahoo, 2010).Figure 2.4 USD/IDR Exchange Rates from 2005 to 2010Source Yahoo, 2010Interest RatesFrumkin (Frumkin, N. 2000, p. 190) states that Interest is the cost of borrowing money, and interest rates are the price of money. Interest rates which refer to yields are the annualized percentage that i nterest is of the principal of the loan.Interest rate is a good indicator of inflation trends because of its role as regulatory device to monitor the inflation trends. If interest rate increases, the cost of borrowing money will become higher and more expensive. Investing and developing business will be more expensive. Therefore, the economic growth is decrease and the inflation is under control. Besides as an indicator of inflation trends, interest rates also affect stock market and have significant influence in stock prices.When interest rate in a country is low that indicates stable or low inflation rates, stock market generally shows its positive trends and has tendency to be more active. Many investors prefer to put their money on other investments rather than put their money in bank deposits due to lower fixed interest rate. Investors will obtain lower return from bank deposits than return which comes from other investments especially stocks or shares.In addition, the cost of borrowing money becomes cheaper and this makes investors advance their additional borrowing for investment. Therefore, low interest rate will give positive impact to stock market in terms of rising stock prices. Investors have to be more careful when there is news about increasing interest rates. Investors should look at the change of interest rates regularly because of the impact of interest rates on their stock prices (Chuan, 2004). Increasing interest rates will give a negative effect on many companies which have large debts or loans because of the rising of cost of borrowing. The profit of the companies and ability to grow will decrease. When the profit of companies decrease, stock prices generally becomes less attractive and their stock prices decrease. When interest rates become high, investors usually react in two possible outcomes as follow (Mladjenovic, P. 2009)Investors may sell some of their stocks to pay their interest loans or debts. If many investors sell their stock, it will give negative effect on stock prices. Stock prices tend to decrease because there are more sellers than buyers in stock market.Higher interest rates may cause investors swap change their investment from stocks to bonds or bank deposits which offer higher return.In Indonesia, interest rate decisions are decided by Central Bank of Republic of Indonesia. Indonesia interest rates dropped significantly over the years that can be seen in figure 2.5. The decrease of interest rates will attract more investors to invest their money on stock market (Trading Economics, 2010).Figure 2.5 Indonesia Interest Rates from 2006 to 2010Indonesia Interest RateSource Trading Economics, 2010Commodity PricesBasic commodities which are required in the production process of most goods and services are good indicators of inflation trends. Those commodities are oil, rubber, steel, etc. When the prices of those commodities increase, the cost of goods and services will also increase. Therefore, when the prices of most commodities increase, it may be an indication of inflation. Investors should have carefulness to enter the stock market. Besides as an indicator of inflation trends, commodity prices especially oil prices also affect stock market and have significant influence in stock prices (Chuan, 2004).Higher oil prices will have significant impact on stock market returns especially the aggregate effect of stock prices. Higher oil prices may cause the rising of production cost which will give great forces on industry equity returns. In oil exporting countries, higher oil prices will increase profits from oil, gas, coal, and vary resources industries. Higher oil prices may cause the rising of stock prices especially for oil exporting countries which depends on relative significance of the industries (Chen, A. H. 2008).JCX composite index or IHSG gets significant influence from the fluctuation of oil prices. For instance, the price of oil in early 2008 increased significantly to US$ 147 per barrel and then decreased drastically to US$ 36 per barrel. The price of JCX composite index followed the fluctuation of oil prices. In the early 2008, JCX composite index increased to IDR 2800. At the end of this year, JCX composite index decreased to IDR 1100 (more than 100%) because of the decrease of oil prices. Indonesian stock prices generally follow the fluctuation of oil prices. When the oil prices decrease, stock prices usually also decrease and otherwise. Therefore, Indonesian investors should look at the movement of oil prices as consideration in trading stocks (Sidarta, W. 2010).Research FrameworkStock price in Indonesia Stock Exchange is the main axis in the research framework. The potential external environmental factors which influence stock price areEconomic factors.Economic factors consist of worldwide stock market (DJIA, Hang Seng, Nikkei, and Strait Times), local economy (GDP), inflation, interest rates, exchange rates (USD/IDR exchange rates), and commod ities prices (oil price). Interest rates and commodities prices have correlation with inflation because the movements of those factors are indicator of inflation trends.Political factors.Stock price can be affected by regional, national, and international political situation such as political crisis.All of those potential factors will become consideration factors for Indonesian investors in order to make correct decision whether they have to buy, sell, or hold their stocks. The research framework can be seen in figure 2.6.Figure 2.6 Research FrameworkPOLITICAL FACTORECONOMIC FACTORSSTOCK PRICE(JCX Composite Index or IHSG)INTEREST RATESINFLATIONOIL PRICESEXCHANGE RATES(USD/IDR)LOCAL ECONOMY (GDP)WORLDWIDE STOCK MARKET(DJIA, NIKKEI, HANG SENG, STRAIT TIMES)Source The ResearcherSummaryThe research topic in this study is An Empirical Study of Factors Influencing Stock Prices in Indonesia Stock Exchange. The report consists of introduction, literature review, and reference. Chapter 1 int roduction identifies background of the research, objectives of the research, research question, research hypotheses, and scopes. Chapter 2 literature review provides knowledge and theories that are related to research topic. Summary and explanation of external environmental factors which influence stock prices will be provided in this chapter. At the end of this chapter, the author provides research framework in this report. Factors and frameworks will be appeared by joining and integrating adopted theories. Lastly, references show the sources of all information used in this research.