Sony Financial Analysis’09

Acknowledgement We also extend our gratitude to the writers and publishers and of the books from which parts have been included in my report. Lastly, we would like to acknowledge the Almighty God for his guidance and wisdom throughout the process. | |Table of Contents |Page No. |1 |Introduction |3 | |2 |Profitability ratio analysis |5 | |3 |Efficiency ratio analysis |7 | |4 |Financial stability of short and long run |9 | |5 |Liquidity ratio analysis |10 | |6 |Investment ratio analysis |11 | |7 |Cash Flow analysis |12 | |8 |Accounting Policy |13 | |9 |Outlook for next financial year |14 | |10 |Stock Market analysis |15 | |11 |References |16 | |12 |Conclusion |17 | |13 |Appendices |18 | OVERVIEW OF SONY CORPORATION Sony Corporation is a multinational conglomerate corporation headquartered in Minato, Tokyo, Japan, and one of the world’s largest media conglomerates with revenue exceeding 77. 30 billion Yen (as of 2009).

Sony Corporation is the electronics business unit and the parent company of the Sony Group, which is engaged in business through its five operating segments—electronics, games, entertainment (motion pictures and music), financial services and other. These make Sony one of the most comprehensive entertainment companies in the world. Sony’s principal business operations include Sony Corporation (Sony Electronics in the U. S. ), Sony Pictures Entertainment, Sony Computer Entertainment, Sony BMG, Sony Ericsson, and Sony Financial Holdings. As a semiconductor maker, Sony is among the Worldwide Top 20 Semiconductor Sales Leaders. [pic] Sony is uniquely positioned to be the leading electronics and entertainment company in the world. Sales and operating revenue (sales) decreased 12. % compared to the previous fiscal year and losses were recorded due to such factors as the slowdown of the global economy, the appreciation of the yen and the decline of the Japanese stock market. Proportion of sales by business segment and electronics sales by product category [pic] | |Sales /Revenue |Operating income/loss | |Electronics |? 5,488 billion |? (168. 1) billion | |Game |? 1053. 1 billion |? (58. 5) billion (imp of ? 66. 1 billion) | |Pictures |? 717. 5 billion |? 29. 9 billion (-48. %) | |Financial Services |? 538. 2 billion |? (31. 2) billion | |All Other |? 539. 6 billion |? 30. 4 billion (-50. 1%) | Profitability Ratios Profitability ratios are concerned primarily with income statement and stock performance and provide clues as to how well the company’s managers are able to turn each dollar in sales into profit and support the price of the company’s stock. [pic] Sales Sales for the financial year ended March 31, 2009 decreased by 565. 7 or 12. percent billion yen to 7729. 9 billion yen compared with the previous financial year. The electronics, financial services and game segments incurred operating loss when compared to pictures segment that made an operating profit, though the operating income fell 48. 9%, to ? 29. 9 billion. Sales Ratio Cost of sales for the financial year ended March 31, 2009 decreased by 629. 5 billion yen to 5,660. 0 billion yen compared with the 2008 financial year, and sales ratio increased from 70. 9 percent to 73. 2 percent as a percentage of sales. Gross Profit Margin Gross Profit for the financial year ended March 31, 2009 decreased by 511. 9 billion yen to 2,581. billion yen as compared to the previous year though the cost of sales decreased in the same period. Net Profit For the financial year ended March 31, 2009 Sony incurred a net loss 202. 6 billion yen as compared to the previous year. As a percentage of sales, there was a net loss of 1. 28 percent as compared to the previous year profit of 4. 16 percent. Efficiency Ratios [pic] Asset Turnover Ratio This ratio is useful to determine the amount of sales that are generated from each dollar of assets. As per the Horizontal Balance sheet the total assets of Sony have decreased by 5% in the financial yr 2009 due to which Sony was able to generate sales of 0. 4 yen for every 1 yen of assets it owned with comparison to 0. 71 yen for the previous financial year. Stock Turnover: stock control In principle, the lower the investment in stocks the better it is. Apart from buffer stocks that businesses sometimes need in case of shortages of supply and strategic stocks in case of war, sudden changes in demand and so on, modern stock control theory tells us to minimize our investment in stocks. With a result of 38 days, we can imagine that we bought our 813068 yen worth stocks of raw materials or whatever they were on the beginning of the financial year in 2009. We then know that we ran out of those raw materials on 38 days.

Similarly with the result of 42 days, if we bought our 1021595 yen worth of raw materials on the beginning of the financial year 2008, we would run out and have to buy some more on after 42 days. This ratio has fallen from 42 days to 38 days over the two years and that is probably a good thing. If there’s less stocks to worry about, lower investment in stocks meaning that the money they used to have tied up in the stock room is now free to spend somewhere else. Debtors Turnover Days Debtors’ control is a vital aspect of working capital management. Many businesses need to sell their goods on credit, otherwise they might find it difficult to survive if their competitors provide such credit facilities; this could mean losing customers to the opposition. Nevertheless, since the ompany provides credit, they must do so as optimally as possible. Why is credit control so important? For Sony, the total amount owing by debtors was 1074220 Yen at the end of the current financial year. On an average, Sony’s creditors are taking 51 days to pay their accounts. Creditors Turnover Days Creditors are the businesses or people who provide goods and services in credit terms. That is, they allow Sony time to pay rather than paying in cash. There are good reasons to allow people to pay on credit even though literally it doesn’t make sense! If people are given time to pay their bills, they are more likely to buy from your business than from another business that doesn’t give credit.

The length of credit period allowed is also a factor that can help a potential customer deciding whether to buy from your business or not: the longer the better, of course. For Sony, the total amount owing to suppliers was 1597625 Yen at the end of the current financial year. Having found that debtors are taking somewhere 50 days on average to pay their accounts, notice that the business is taking over 74 days credit on average for financial year 2008 and 2009. FINANCIAL STABILITY OF SHORT AND LONG RUN GEARING RATIOS [pic] Debt Ratio The Debt to Equity Ratio measures how much money a company should safely be able to borrow over long periods of time. When the debt ratio of the company is higher, it has greater chance of paying off his debt.

The debt ratio for the accounting year ended March 31, 2009 increased by 3 percent from the previous year. This is because of the decrease in total liability by 16% in the 2009. Interest Cover Ratio The interest coverage ratio is a measurement of the number of times a company can make its interest payments with its earnings before interest and taxes. The interest cover ratio of the company became negative as the company made net loss for the financial year ended March 31, 2009. Return on Capital Employed It is commonly used as a measure for comparing the performance between businesses and for assessing whether a business generates enough returns to pay for its cost of capital.

The ROCE for the financial year end March 31, 2009 had a negative of 1. 31 from the previous year. This decrease was as a result of reduction in the amount of capital employed for the year 2009 as compared to the previous year. Liquidity Ratios [pic] Current Ratio: The current ratio measures the relationship between an organization’s current assets and its current liabilities. The current ratio of the company is 1. 32 in the financial year 07-08, and 1. 03 in the financial year 08-09. The company is having current assets of 1. 32 yen for every 1Yen of current liabilities in the financial year of 07- 08 and in the current year the company has current assets of 1. 03 yen for every 1 yen of current liabilities.

As the ideal ratio is 2:1 and the current ratio has decreased as compared to the last financial year, the current liabilities are almost equal to the current assets of the firm indicating. Quick Ratio: The quick ratio measures a company’s liquidity and ability to meet its obligations. Quick ratio, often referred to as acid-test ratio, is obtained by subtracting inventories from current assets and then dividing by current liabilities. Since we subtracted current inventory from current assets, it means that for every yen of current liabilities there are 1. 07 yen of easily convertible assets in the financial year 07-08. Further in this financial year for every yen of current liabilities there is only 0. 2 yen of current assets available which are sign of company’s financial weakness. Sony has an unsatisfactory liquidity situation. There are less liquid current assets available to pay the more immediate payable liabilities. In general, a quick ratio of 1 or more is accepted by most creditors. INVESTMENT RATIO Earnings per Share The portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company’s profitability. The earnings per share for the financial year ended March 31, 2009 would yield a loss of ? 98. 59 as the company was making net loss. In the previous year it was making a profit of ? 368. 33. P/E Ratio

The P/E ratio (price-to-earnings ratio) of a stock (also called its “P/E”, “PER”, “earnings multiple,” or simply “multiple”) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn’t tell us the whole story by itself. The PE Ratio for the financial year 2009 had a negative balance of 20 compared PE ratio for the previous year was 10. CASH FLOW ANALYSIS: Operating Activities: During the financial year ended March 31, 2009, Sony generated 407. 1 billion yen of net cash from operating activities, a decrease of 350. billion yen, or decrease of 46 percent compared with the previous financial year. During the financial year, a variety of factors had a negative impact on operating cash flow, including the contribution of net income from the Electronics segment. There was also big decrease in the inventories compared to last year. It had a change of -214percent in inventories. Compared with the previous financial year, net cash provided by operating activities decreased during the financial year mainly as a result of the decrease in net income by -468 billion yen i. e. a -126 percent change. Investing Activities: During the financial year, Sony used 910. 4 billion yen of net cash in investing activities, an increase of 170. billion yen, or 18. 7 percent, compared with the previous financial year. Compared with the previous financial year, net cash used in investing activities decreased significantly within all segments excluding the Financial Services segment, primarily due to the sale of a portion of SFH shares. On the other hand, net cash used in investing activities within the Financial Services segment increased significantly compared to the previous financial year primarily because the increase in payments for investments and advances. Financing Activities: During the financial year ended March 31, 2009, 267. 4 billion yen of net cash was provided by financing activities.

Accounting for all these factors and the effect of exchange rate changes, the total outstanding balance of cash and cash equivalents at the end of the financial year decreased by 425. 6 billion yen, or 39. 2 percent, to billion 660. 8 yen, compared with the end of the previous financial year. The total outstanding balance of cash and cash equivalents of all segments, excluding the Financial Services segment, decreased by 712 billion yen, or 248. 5 percent, to -425. 6 billion yen, and for the Financial Services segment, decreased by 139. 3 billion yen, or 47 percent, to 267. 5 billion yen, compared with the end of the previous financial year. ACCOUNTING POLICY Sony evaluates its estimates which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions. Investments Sony’s investments are comprised of debt and equity securities accounted for under both the cost and equity method of accounting. Goodwill Goodwill and certain other intangible assets that are determined to have an indefinite life are not amortized and are tested annually for impairment during the fourth quarter of each fiscal year, and the assets are also tested between the annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of these assets below their carrying amount. Equity in net income of affiliated companies

Sony periodically reviews the presentation of its financial information to ensure that it is consistent with the way management views the consolidated operations. Stock-based compensation Sony accounts for stock-based compensation using the fair value based method. Fair value is measured on the date of grant using the Black-Sholes option-pricing model. Future insurance policy benefits Employee pension benefit costs and obligations are dependent on certain assumptions including discount rates, retirement rates and mortality rates, which are based upon current statistical data, as well as expected long-term rates of return on plan assets and other factors. OUTLOOK FOR NEXT FINANCIAL YEAR

To strengthen the core businesses through improving profitability in our Television and Game businesses, strategically money has to be invested for future growth and revamping our R&D efforts, as well as continuing to focus on operating performance. Sony Corporation has announced a series of measures designed to improve its profitability and drive future growth in response to the deterioration of the global economy. These initiatives are as follows: • Structurally reform Sony’s core electronics operations to better compete with its best in class peers in terms of speed to market and profitability. • Continue margin improvement activities to lessen the impact of the weak economic profile of key markets. • Accelerate the integration between products and network services by leveraging the combined strengths of Sony’s electronics and computer entertainment operations. Aggressive cost-cutting, particularly in personnel, eliminating 16,000 jobs and reducing its network of 57 factories. • Close down three plants in Japan and six more factories around the world. STOCK MARKET ANALYSIS The share value of the Sony Corporation share decreased further by 49. 7% from the previous year-end. Even the Nikkei 225 Stock Average declined below 10,000 in Tokyo. The number of shareholders for the financial year ended March 31, 2009 had reduced by half the amount compared to the previous year of 124. Sony Corporation has announced that it will cut its planned year-end dividend payout to shareholders following the recent downwards forecast revision. The year-end dividend is now expected to be JPY 12. (13 cents) per share, compared to the previous figure of JPY 20 (20 cents), although this could yet change further pending a final decision by the board in May. “On January 22, 2009, the Company announced a downward revision of the Company’s consolidated results forecast for the fiscal year ending March 31, 2009, in light of the deterioration of the global business environment,” read a statement. “As a result, the Company has decided to reduce the planned amount of the year-end dividend for the fiscal year ending March 31, 2009 to JPY 12. 5 per share, the same amount paid in the previous fiscal year, from JPY 20 per share, the originally planned amount. ” The annual dividend has also been reduced therefore, from the previously envisaged JPY 50 (51 cents) to JPY 42. 5 (43 cents).

CONCLUSION Thus the financial analysis of Sony has been carried out and the operating performance of the company has been measured using the various profitability ratios and efficiency ratios. The current financial stability of the firm and its long term impact were also analyzed during the two financial years March 2008 and March 2009. Brief changes in the accounting policy have been identified; the outlook for next financial year and the Changes in the market prices with respect to the firm’s competitors were analyzed. Sony’s first annual loss in 14 years mainly due to the prolonged economic slump and a strong yen dashed hope for a quick recovery.

Sony is reeling from a decline in sales overseas as well as in Japan, which is mired in its worst recession in decades. A stronger yen, which erodes overseas revenue and inflates production costs at home, has also weighed heavily on its bottom line. Once an electronics powerhouse and stylish innovator, Sony’s dominance has been usurped in almost everything it makes by rivals with sharper marketing and less expensive products that are easier to use. There are forecasts of another grim year ahead for Sony. REFERENCES • http://www. sony. com • http://www. businessweek. com • http://www. hoovers. com • http://www. nytimes. com/2009/05/15/business/global/15sony. html • http://www. guardian. co. k/technology/2009/jul/30/sony-games • Trotman, Ken & Gibbins, Micheal(2009), Financial Accounting an Integrated Approach. • John Wild, KR Subramanian, Robert Halsey(2003), Financial Statement Analysis APPENDIX RATIO ANALYSIS Profitability Ratios | | |2009 |2008 | |Cost of Sales to Sales |(B/A)*100 |73. 2 |70. 90 | |Gross Profit Margin |(A-B)/A |0. 27 |0. 9 | |Operating Expenses to Sales |(C/A)*100 |102. 6 |95. 78 | |Operating Profit to Sales |(D/A)*100 |-2. 62 |4. 2 | |Profit Before Tax to Sales |(G/A)*100 |-1. 94 |5. 26 | |PAT to Sales |(J/A)*100 |-1. 28 |4. 16 | |Net profit to margin |(G/A) |-0. 2 |0. 05 | Gearing Ratios | | |2009 |2008 | |Debt Ratio |(T/O)*100 |0. 73 |0. 7 | |Equity Ratio |(U/O)*100 |24. 6 |27. 60 | |Debt Equity Ratio |(T/U)*100 |2. 96 |2. 4 | |Interest cover |(D+E)/F |-2. 25 |9. 09 | Liquidity Ratios | | |2009 |2008 | |Current Assets Ratio |N/R |1. 03 |1. 32 | |Quick Ratio |(N-M)/R |0. 82 |1. 07 | Efficiency Ratios   |  |2009 |2008 | |Total Assets turnover |(A/O) |0. 64 |0. 71 | |Creditors Turnover days Ratio |(P+Q/A)*365 |75. 44 |74. 78 | |Debtors Turnover days Ratio |(K+L /A)*365 |50. 72 |52. 54 | |Stock Turnover days |(M/A)*365 |38. 39 |42. 03 | HORIZONTAL ANALYSIS OF INCOME STATEMENT | | | | | | |  |  | Yen in |Millions | | | |  |  |2009 |2008 |Change |% Change | |Sales and Operating Revenue : |  |  |  |  |  | |Net Sales |  |7110053 |8201839 |-1091786 |(13. 31) | |Financial Service Revenue |  |523307 |553216 |-29909 |(5. 41) | |Other Operating Revenue |  |96633 |116359 |-19726 |(16. 95) | |Total Revenue |A |7729993 |8871414 |-1141421 |(12. 7) | |  |  |  |  |  |  | |Costs and Expenses : |  |  |  |  |  | |Cost Of Sales |B |5660504 |6290022 |-629518 |(10. 01) | |Selling, general and administrative |  |1686030 |1714445 |-28415 |(1. 66) | |Financial service expenses |  |547825 |530306 |17519 |3. 0 | |(Gain) loss on sale, disposal or impairment of assets, net |  |38308 |-37841 |76149 |(201. 23) | |  |C |7932667 |8496932 |-564265 |(6. 64) | |  |  |  |  |  |  | |Operating income (loss) |D |-202674 |374482 |-577156 |(154. 2) | | | | | | | | |Other Income : |  |  |  |  |  | |Interest and dividends |  |22317 |34272 |-11955 |(34. 88) | |Foreign exchange gain, net |  |48568 |5571 |42997 |771. 80 | |Gain on sale of securities investments, net |  |1281 |5504 |-4223 |(76. 73) | |Gain on change in interest in subsidiaries and equity investors |  |1882 |82055 |-80173 |(97. 1) | |Other |  |24777 |22045 |2732 |12. 39 | |  |E |98825 |149447 |-50622 |(33. 87) | |Other expenses : |  |  |  |  |  | |Interest |  |24376 |22931 |1445 |6. 0 | |Loss on devaluation of securities and investments |  |4427 |13087 |-8660 |(66. 17) | |Other |  |17194 |21594 |-4400 |(20. 38) | |  |F |45997 |57612 |-11615 |(20. 16) | |Income (loss) before income taxes and minority interest |G |-149846 |466317 |-616163 |(132. 3) | |Income taxes : |  |  |  |  |  | |Current |  |80521 |5671334 |-5590813 |(98. 58) | |Deferred |  |-153262 |183438 |-336700 |(183. 55) | |Total Taxes |I |-72741 |203478 |-276219 |(135. 5) | |Income (loss) before minority interest and income from companies |  |-77105 |262839 |-339944 |(129. 34) | |Minority interest in income (loss) of consolidated subsidiaries |  |3276 |-5779 |9055 |(156. 69) | |Equity in net income(loss) of affiliated companies |  |-25109 |100817 |-125926 |(124. 91) | | | | | | | | |Net Income (loss) |J |-98938 |369435 |-468373 |(126. 8) | | | | | | | | | | | | | | | |VERTICAL ANALYSIS OF INCOME STATEMENT | | | | | | |  | | | | | | |  | |2009 |2009 |2008 |2008 | |Sales and Operating Revenue : | | | | | | |Net Sales | |7110053. 00 |100. 00 |8201839. 00 |100. 00 | |Financial Service Revenue | |523307. 00 |7. 36 |553216. 00 |6. 75 | |Other Operating Revenue | |96633. 00 |1. 36 |116359. 00 |1. 42 | |  |A |7729993. 00 |108. 72 |8871414. 00 |108. 6 | |  | | | | | | |Costs and Expenses : | | | | | | |Cost Of Sales |B |5660504. 00 |79. 61 |6290022. 00 |76. 69 | |Selling, general and administrative | |1686030. 00 |23. 71 |1714445. 00 |20. 0 | |Financial service expenses | |547825. 00 |7. 70 |530306. 00 |6. 47 | |(Gain) loss on sale, disposal or impairment of assets, net | |38308. 00 |0. 54 |(37841. 00) |(0. 46) | |  |C |7932667. 00 |111. 57 |8496932. 00 |103. 60 | |Operating income (loss) |D |(202674. 00) |374482. 00 |(577156. 00) |(154. 2) | |Other Income : | | | | | | |Interest and dividends | |22317. 00 |0. 31 |34272. 00 |0. 42 | |Foreign exchange gain, net | |48568. 00 |0. 68 |5571. 00 |0. 07 | |Gain on sale of securities investments, net | |1281. 00 |0. 02 |5504. 00 |0. 07 | |Gain on change in interest in subsidiaries and equity investors | |1882. 00 |0. 03 |82055. 00 |1. 0 | |Other | |24777. 00 |0. 35 |22045. 00 |0. 27 | |  |E |98825. 00 |1. 39 |149447. 00 |1. 82 | |Other expenses : | | | | | | |Interest | |24376. 00 |0. 34 |22931. 00 |0. 8 | |Loss on devaluation of securities and investments | |4427. 00 |0. 06 |13087. 00 |0. 16 | |Other | |17194. 00 |0. 24 |21594. 00 |0. 70 | |  |F |45997. 00 |0. 65 |57612. 00 |1. 87 | |Income (loss) before income taxes and minority interest |G |(174955. 00) |(2. 46) |567134. 00 |18. 5 | |Income taxes : | | | | | | |Current | |80521. 00 |1. 13 |5671334. 00 |69. 15 | |Deferred | |(153262. 00) |(2. 16) |183438. 00 |2. 24 | |  |I |(72741. 00) |(1. 02) |203478. 00 |2. 8 | |Income (loss) before minority interest | |(102214. 00) |(1. 44) |363656. 00 |4. 43 | |Minority interest in income (loss) of consolidated subsidiaries | |3276. 00 |0. 05 |(5779. 00) |(0. 07) | |Equity in net income(loss) of affiliated companies | |(25109. 00) |(0. 35) |100817. 00 |1. 23 | |Net Income (loss) |J |(98938. 00) |(1. 39) |369435. 00 |4. 50 |  Horizontal Analysis of Balance Sheet |  |2009 |Yen change |% change |2008 | |Assets |  | | | | | |  |  | | | | | |Current Assets : |  | | | | | |Cash and cash equivalents |  |660789 |-425642 |-39. 18% |1086431 | |Call loan in banking business |  |49909 |-302660 |-85. 80% |352569 | |Marketable securities |  |466912 |39203 |9. 16% |427709 | |Notes and Accounts receivable, trade |K |963837 |-219783 |-18. 0% |1183620 | |Allowance for doubtful debts and sales returns |L |110383 |17048 |18. 26% |93335 | |Inventories |M |813068 |-208527 |-20. 40% |1021595 | |Deferred income taxes |  |189703 |-47370 |-19. 98% |237073 | |Prepaid expenses and other current assets |  |586800 |-207201 |-26. 0% |794001 | |Film costs |  |306877 |2634 |0. 87% |304243 | |Total current assets |N |3927512 |-1386394 |-26. 10% |5313906 | |Investment and Advances: |  | | | | | |Affiliated companies |  |236779 |-144409 |-37. 8% |381188 | |Securities investment and other |  |4561651 |607191 |15. 35% |3954460 | |Total investments and advances |  |4798430 |462782 |10. 67% |4335648 | |Property, plant and equipment: |  | | | | | |Land |  |155665 |-2624 |-16. 7% |158289 | |Building |  |911269 |8153 |0. 90% |903116 | |Machinery and equipment |  |2343839 |-139177 |-5. 60% |2483016 | |Construction in progress |  |100027 |44287 |79. 45% |55740 | |Less Accumulated depreciation |  |2334937 |-21875 |-0. 93% |2356812 | |Total long term assets |  |1175863 |-67486 |-5. 3% |1243349 | |Other Assets: |  | | | | | |Intangible, net |  |396348 |132858 |50. 42% |263490 | |Goodwill |  |443958 |139535 |45. 83% |304423 | |Deferred insurance acquisition costs |  |400412 |3593 |0. 1% |396819 | |Deferred income taxes |  |359050 |160384 |80. 73% |198666 | |Other |  |511938 |15500 |3. 12% |496438 | |Total other assets |  |2111706 |451870 |27. 20% |1659836 | |Total Assets |O |12013511 |-539228 |-4. 30% |12552739 | Liabilities | |2009 |Yen change |% change |2008 | |  | | | | | | |LIABILITY AND STOCK HOLDERS EQUITY | | | | | | |  | | | | | | |Current Liabilities: | | | | | | |Short-term borrowings | |303615 |240391 |380% |63224 | |Current position of long term debt |P |147540 |-144339 |-49. 50% |291879 | |Notes and Accounts payable, trade |Q |560795 |-360125 |-39. 10% |920920 | |Accounts payable, other and accrued expenses | |1036830 |140232 |15. 64% |896598 | |Accrued incomes and other taxes | |46683 |-154120 |-76. 5% |200803 | |Deposits from the customers | |1326360 |181961 |15. 90% |1144399 | |Other | |389077 |-116467 |-23. 04% |505544 | |Total Current Liability |R |3810900 |-212467 |-5. 28% |4023367 | |Long-term debt | |660147 |-68912 |-9. 5% |729059 | |Accrued pension and severance cost | |365706 |134469 |58. 15% |231237 | |Deferred income taxes | |188359 |-80241 |-29. 87% |268600 | |Future insurance policy benefits and other | |3521060 |222554 |6. 75% |3298506 | |Other | |250737 |-9295 |-3. 7% |260032 | |Total Long Term Liabilities |S |4986009 |198575 |4. 15% |4787434 | |Total Liability |T |8796909 |-13892 |-0. 16% |8810801 | |Minority interest in consolidated subsidiaries |U |251949 |-24900 |-8. 99% |276849 | |Stockholder’s Equity | | | | | |Common stock, no par value | | | | | | |2008 – shares issued 1,004,443,364 | | | | |630576 | |2009 – Shares issued 1,004,535,364 |UV |630765 | | | | |Additional paid-up capital | |1155034 |3587 |0. 31% |1151447 | |Retained earnings | |1916951 |-142410 |-6. 91% |2059361 | |Accumulated other income | | | | | | |Unrealized gains on securities, net | |30070 |-40859 |-57. 0% |70929 | |Unrealized losses on derivative instrument, net | |-1584 |-4955 | |-3371 | |Common stock (2008 – 1,015,596 shares) | | | | |-4768 | |Common stock (2009 – 1,013,287 shares) | |-4654 | | | | |  |V |2964653 |-500436 |-14. 40% |3465089 | |Total liability and stockholders’ equity |W |12013511 |-539228 |-4. 0% |12552739 | |Vertical Analysis of Balance Sheet | |Liabilities |2009 |2008 |2009% |2008% | |LIABILITY AND STOCK HOLDERS EQUITY | | | | | |  | | | | | |Current Liabilities: | | | | |Short-term borrowings |303615 |63224 |3% |1% | |Current position of long term debt |147540 |291879 |1. 23% |2. 33% | |Notes and Accounts payable, trade |560795 |920920 |4. 67% |7. 34% | |Accounts payable, other and accrued expenses |1036830 |896598 |8. 63% |7. 4% | |Accrued incomes and other taxes |46683 |200803 |0. 39% |1. 60% | |Deposits from the customers |1326360 |1144399 |11. 04% |9. 12% | |Other |389077 |505544 |3. 24% |4. 03% | |Total Current Liability |3810900 |4023367 |31. 72% |32. 5% | |Long Term Liabilities : | | | | | |Long-term debt |660147 |729059 |5. 50% |5. 81% | |Accrued pension and severance cost |365706 |231237 |3. 04% |1. 84% | |Deferred income taxes |188359 |268600 |1. 57% |2. 14% | |Future insurance policy benefits and other |3521060 |3298506 |29. 3% |26. 28% | |Other |250737 |260032 |2. 09% |2. 07% | |Total Long Term Liabilities |4986009 |4787434 |41. 50% |38. 14% | |Total Liability |8796909 |4787434. 321 |73. 23% |70. 20% | |Minority interest in consolidated subsidiaries |251949 |276849 |2. 30% |2. 1% | |Stockholder’s Equity | | | | | |Common stock, no par value | | | | | |2008 – shares issued 1,004,443,364 | |630576 | |5. 02% | |2009 – Shares issued 1,004,535,364 |630765 | |5. 25% | | |Additional paid-up capital |1155034 |1151447 |9. 61% |9. 17% | |Retained earnings |1916951 |2059361 |15. 96% |16. 1% | |Accumulated other income | | | | | |Unrealized gains on securities, net |30070 |70929 |0. 25% |0. 57% | |Unrealized losses on derivative instrument, net |-1584 |-3371 |-0. 01% |-0. 03% | |Pension liability adjustment |-172709 |-97562 |-1. 44% |-0. 77% | |Foreign currency translation adjustment |-589220 |-341523 |-4. 99% |-2. 2% | |  | | | | | |Treasury stock, at cost | | | | | |Common stock (2008 – 1,015,596 shares) | |-4768 | |-0. 04% | |Common stock (2009 – 1,013,287 shares) |-4654 | |-0. 04% | | | |2964653 |3465089 |24. 68% |27. 60% | |Total liability and stockholders’ equity |12013511 |12552739 |100. 00% |100% |   | | | | | |Assets |2009 |2008 |2009% |2008% | |  | | | | | |Current Assets : | | | | | |Cash and cash equivalents |660789 |1086431 |5. 50% |8. 65% | |Call loan in banking business |49909 |352569 |0. 42% |2. 81% | |Marketable securities |466912 |427709 |3. 89% |3. 41% | |Notes and Accounts receivable, trade |963837 |1183620 |8. 02% |9. 3% | |Allowance for doubtful debts and sales returns |110383 |93335 |0. 92% |0. 74% | |Inventories |813068 |1021595 |6. 77% |8. 14% | |Deferred income taxes |189703 |237073 |1. 58% |1. 89% | |Prepaid expenses and other current assets |586800 |794001 |4. 88% |6. 3% | |Film costs |306877 |304243 |2. 55% |2. 42% | |Total current assets |3927512 |5313906 |32. 69% |42. 33% | |Investment and Advances: | | | | | |Affiliated companies |236779 |381188 |1. 97% |3. 04% | |Securities investment and other |4561651 |3954460 |37. 7% |31. 50% | |Total investments and advances |4798430 |4335648 |39. 94% |34. 53% | |Property, plant and equipment: | | | | | |Land |155665 |158289 |1. 30% |1. 26% | |Building |911269 |903116 |7. 9% |7. 19% | |Machinery and equipment |2343839 |2483016 |19. 51% |19. 78% | |Construction in progress |100027 |55740 |0. 83% |0. 44% | |Less Accumulated depreciation |2334937 |2356812 |19. 44% |18. 78% | |Total long term assets |1175863 |1243349 |9. 9% |9. 91% | |Other Assets: | | | | | |Intangible, net |396348 |263490 |3. 30% |2. 10% | |Goodwill |443958 |304423 |3. 70% |2. 43% | |Deferred insurance acquisition costs |400412 |396819 |3. 3% |3. 16 | |Deferred income taxes |359050 |198666 |2. 99% |1. 58% | |Other |511938 |496438 |4. 26% |3. 95% | |Total other assets |2111706 |1659836 |17. 58% |13. 22% | |Total Assets |12013511 |12552739 |100. 0% |100% | Cash Flow Analysis | |Yen in millions | | | | |2008 |2009 |Change in $ |Change in % | |Cash flows from operating activities: | | | | | |Net income(loss) |369435 |(98938) |-468373 |-126. 81 | |Adjustments to reconcile net income to net cash provided by operating | | | | | |activities | | | | | |Depreciation and amortization, including amortization of deferred |428010 |405443 |-22567 |-5. 27254 | |insurance acquisition costs | | | | | |Amortization of film costs |305468 |255713 |-49755 |-16. 881 | |Stock- based compensation expense |4130 |3446 |-684 |-16. 5617 | |Accrual for pension and severance costs, less payments |-17589 |16654 |34243 |-194. 684 | | | | | | |(Gain) loss on sale, disposal or impairments of assets, net |-37841 |38303 |76144 |-201. 221 | |(Gain) loss on sale or devaluation of securities investments, net |7583 |3146 |-4437 |-58. 125 | |(Gain) loss on revaluation of marketable securities held in the |56543 |77952 |21409 |37. 86322 | |financial service business for trading purpose, net | | | | | |Gain on change in interest in subsidiaries and equity investees |-82055 |-1882 |80173 |-97. 7064 | |Deferred income taxes |20040 |-153262 |-173302 |-864. 8 | |Equity in net (income) losses of affiliated companies, net of dividends |-13527 | |13527 |-100 | |Change in assets and liabilities: | |65470 |65470 | | |Increase (decrease) in notes and accounts receivable, trade |185651 |218168 |32517 |17. 51512 | |Increase in inventories |-140725 |160432 |301157 |-214. 004 | |Increase in film costs |-353343 |-264412 |88931 |-25. 685 | |Increase (decrease) in notes and accounts payable, trade |-235459 |-375842 |-140383 |59. 621 | |Increase (decrease) in accrued income and other taxes |138872 |-163200 |-302072 |-217. 518 | |Increase in future insurance policy benefits and other |166356 |174549 |8193 |4. 92498 | |Increase in deferred insurance acquisition costs |-62951 |-68666 |-5715 |9. 07849 | |(Increase) decrease in marketable securities held in the financial |-57271 |-26088 |31183 |-54. 482 | |service business for trading purpose | | | | | |Increase in other current assets |-24312 |134175 |158487 |-651. 888 | |Increase in other current liabilities |51838 |-105155 |-156993 |-302. 853 | |Other |-11276 |10028 |21304 |-188. 932 | |Net cash provided by operating activities |757,684. 00 |407153. 00 |-350531 |-46. 635 | | |Yen in millions | | | | |2008 |2009 |Change in Yen |Change in % | | Cash flow from investing activities | | | | | |Payments for purchases of fixed assets |? -474,552. 00 |-496125. 00 |-21573 | | |Proceeds from sales of fixed assets |144741 |153439 |8698 |6. 009355

Assessment of the Caucasus Region

SUBJECT: Assessment of the Caucasus Region 1. ISSUE: Provide USEUCOM Commander an Overview of Azerbaijan’s approach to the situation in the Caucasus Region. 2. FACTS: The Republic of Azerbaijan gained independence from the Soviet Union in 1991. This country has a republic government with a president, prime minister, and unicameral parliament. However, the presidential system dominates a historically weak parliament. Azerbaijan has strong ties with Turkey. Turkey supports Azerbaijan in the Nagorno-Karabakh dispute.

Unrest in the region stems from ongoing conflict in the Nagorno-Karabakh region with Armenia. Azerbaijan’s key exports remain oil, gas, textiles, and agricultural products of cotton, grain, and rice. Azerbaijan is located amid European to Central Asian trade routes on the Caspian Sea. a. Primary National Interest: Protection of independence and territorial integrity, as well as ensuring the safety of the internationally-recognized borders of Azerbaijan remains the primary interest. Azerbaijan has had ongoing regional conflicts with Armenia regarding the Nagorno-Karabakh area for over 15 years. . Objectives in pursuit of primary national interest: (1) A confirmed framework for resolution of the Nagorno-Karabakh region. (2) Maintain strong economic and financial ties to Turkey. (3) Foster confidence with bordering countries by decreasing excessive weaponry in conjunction with the ratified Treaty on Conventional Armed Forces in Europe. c. Azerbaijan’s likely actions: (1) Diplomatic: Azerbaijan will conduct resolution talks with Armenia to have occupied territories around Nagorno-Karabakh returned to Azerbaijan control. 2) Informational: Promoting positive media to Nagornoa-Karabakh. (3) Military: Military action by Azerbaijan is doubtful. Any type of military action would jeopardize inroads made over past several years and result in loss of economic and humanitarian assistance. (4) Economic: Azerbaijan could use oil and gas pipelines as leverage for resolution of the NK dispute. d. Top three U. S. programs: (1) The Department of State’s new humanitarian initiative to improve living conditions with the development of schools, clinics, orphanages, and homes for the elderly is a top U.

S. program promoting improved standards of living. (2) The U. S. Department of Agriculture’s funding of childhood vaccinations via grants for wheat totaling $3. 4 million continues to improve living conditions. (3) The Freedom Support Act provides $39 million for democracy, humanitarianism, and reform assistance combined with favored nation status seeks to improve the government within Azerbaijan. 3. IMPACT: How does the above info affect EUCOM. “so what” of above info. Brief synopsis of what this means to EUCOM and u. s.

Economy is a dominant role in the development of Azerbaijan. Continued humanitarian assistance and economy stimulus for the region will promote Azerbaijan’s status as a nation and assist in the continued strengthening of the government. These U. S. programs can potentially be used as leverage to encourage Azerbaijan to resume resolutions talks with Armenia regarding Nagorno-Karabakh. Conversely, Azerbaijan’s future growth in the global economy of gas and oil exports requires a softer, political approach to conflict resolution. Azerbaijan

Ecological Succession and Natural Selection

A primary succession occurs when the change in species composition than in a previous uninhabited environment. This means no soil exists when the primary succession starts. An example of a primary succession is recently formed lava from a volcano or bare rock surfaces. Therefore, in the ecosystem animation it, is a secondary succession. I say this because a secondary succession happens after a disturbance of some sort.

An example of a secondary succession would be an abandoned farmland, a forest fire, or even a place that has human activity. After the disturbance occurs, it destroys the vegetation and the soil is still intact. Question from Chapter 6- Critical and Creative Thinking: Although most salamanders have four legs, the aquatic salamander shown below resembles an eel. It lacks hind limbs and has very tiny forelimbs.

Propose a hypothesis to explain how limbless salamanders evolved according to Darwin’s theory of natural selection. According to Darwin there needs to be four characteristics for animals and plants to evolve. Number one is they need to be isolated. Number two is that reproduction needs to be involved, so there needs to be more than one, a boy and a girl. Number three is that natural selection needs to occur, meaning that animal does whatever it is that they need to do to survive, even if they have no limbs.

And Number four is they need to be fit sexually meaning that there should be no missing parts that will not be able to let them reproduce. So in this particular case, it seems that a salamander eventually become isolated by water resulting in them not using any of his limbs. After that these salamanders kept reproducing, and those with the longer legs could survive predators in that area. http://en. wikipedia. org/wiki/On_the_Origin_of_Species http://www. spaceandmotion. com/Charles-Darwin-Theory-Evolution. htm

Grizzly Bears

A subspecies of the larger coastal brown bear, the grizzly bear gets its name from the grayish, or grizzled, tips of its fur. Type: Mammal Diet: Omnivore Average lifespan in the wild: 25 years Size: 5 to 8 ft (1. 5 to 2. 5 m) Weight: 800 lbs (363 kg) Protection status: Threatened Size relative to a 6-ft (2-m) man: Fast Facts: Grizzly bear Species name:Ursus arctos horribilus Average weight:250 – 350 kg (male) 125 – 175 kg (female) Life expectancy:15 – 20 years The grizzly bear is a North American subspecies of the brown bear.

These awe-inspiring giants tend to be solitary animals—with the exception of females and their cubs—but at times they do congregate. Dramatic gatherings of grizzly bears can be seen at prime Alaskan fishing spots when the salmon run upstream for summer spawning. In this season, dozens of bears may gather to feast on the fish, craving fats that will sustain them through the long winter ahead. Brown bears dig dens for winter hibernation, often holing up in a suitable-looking hillside. Females give birth during this winter rest and their offspring are often twins.

Grizzly bears are powerful, top-of-the-food-chain predators, yet much of their diet consists of nuts, berries, fruit, leaves, and roots. Bears also eat other animals, from rodents to moose. Grizzlies are typically brown, though their fur can appear to be white-tipped, or grizzled, lending them their traditional name. Despite their impressive size, grizzlies are quite fast and have been clocked at 30 miles (48 kilometers) an hour. They can be dangerous to humans, particularly if surprised or if humans come between a mother and her cubs. Grizzlies once lived in much of western North America and even roamed the Great Plains.

European settlement gradually eliminated the bears from much of this range, and today only about 1,000 grizzlies remain in the continental U. S. , where they are protected by law. Many grizzlies still roam the wilds of Canada and Alaska, where hunters pursue them as big game trophies. http://animals. nationalgeographic. com/animals/mammals/grizzly-bear. html Did you know? The grizzly bear is the second largest land carnivore in North America. Physiology The grizzly bear is the second largest land carnivore in North America. It has a strong, heavy body with an average length of 1. metres from nose to tail. It is distinguished from other bears by the large shoulder hump that supports its massive front legs, its extremely long front claws and the concave facial profile of its large head. The grizzly bear’s fur is usually darkish brown, but can vary from ivory yellow to black. It has long hairs on its head and shoulders that often have white tips and give the bear the “grizzled” appearance from which it derives its name. Its legs and feet tend to be even darker in colour. Despite its large size, the grizzly bear has been known to run at speeds of 55 kilometres per hour.

It has well developed senses of smell and hearing that compensates for its poor eyesight. Habitats/Behaviours The grizzly bear is a solitary animal. Individual bears have a home range, but these may overlap and are not fiercely defended. The grizzly’s habitat can range from dense forest to alpine meadow or arctic tundra. It has no predators, other than humans. Contrary to popular belief, the grizzly bear is not a true hibernator. In the winter its body temperature may drop a few degrees and its respiration may slow slightly, but it can remain active all winter.

Although it is considered a meat-eater, the grizzly bear is actually omnivorous, which means it eats both meat and vegetation. It eats mammals and spawning salmon, when they are available, but relies mainly on vegetation for food. Plants make up 80 to 90 percent of the grizzly’s diet! It eats a variety of berries to gain fat deposits that helps it survive the winter months. The grizzly bear will also take advantage of food and garbage that is left by humans, particularly at campsites and dumps. Range The grizzly bear has the widest distribution of any species of bear because it occupies a wide range of habitats.

The grizzly is found in western Canada as far as the eastern boundary of Manitoba. It is also found in Alaska, Wyoming, Idaho and Washington. The grizzly bear’s range has shrunk as human populations grow and occupy its territory. Grizzly Bear (Urus arctos horribilis) Grizzly Bears are one of the biggest land mammals in North America. It was estimated in the 1800’s that as many as 50,000 grizzly bears ranged between the Great Plains and the Pacific Ocean in the lower 48 states. Today the grizzly bear is found in about 2 % of its previous range in the lower 48 states where around 1,300 grizzly bears remain in the wild.

Alaska however has a large population of grizzlies numbering over 30,000 animals. Grizzly Bear Facts: •The average male grizzly bear is about 7 feet tall and weighs between 400 to 600 pounds. They generally live around 25 years. •Grizzly bears are omnivores and eat both plants and other animals. Around 85% of their diet is green vegetation, nuts, berries, insects and roots. They do eat some meat mainly elk, moose or deer. In Alaska, Salmon is a big part of their diet. •Female Grizzlies have 1 to 3 cubs every 3 years or so. The cubs will stay with the mother for 2 to 3 years. Grizzly bears hibernate in the winter usually 5 to 6 months. They live off their accumulated fat and don’t eat during hibernation. Best National Parks for Grizzly Bear Viewing Katmai National Park, Alaska Yellowstone National Park, Wyoming Glacier National Park, Montana Denali National Park, Alaska National Park Service The Grizzly Bear in the lower 48 states was listed as Threatened in 1967. The grizzly bear recovery around Yellowstone National Park has been a great success. In 1975 it was estimated there were only 136 grizzly bears in and around Yellowstone.

Today there are more than 580 animals and the USFWS is looking to take grizzlies in the Yellowstone Region off the threatened list soon. http://www. eparks. org/wild_alaska/alaskas_wildlife/grizzly. asp Grizzly Bear Facts Grizzly Bear Bryan Harry, courtesy of National Park Service There are lots of fun facts about Grizzly Bears. Did you know that: •Grizzly bears, Ursus arctos horribilis, are a subspecies of the brown bear. •The grizzly gets its name from its white-tipped or grizzled fur. •The grizzly bear once roamed North America from the Pacific Ocean to the Great Plains. Today, grizzlies are found in only 5 U. S. tates (Montana, Idaho, Wyoming, Washington, and Alaska) and 4 Canadian provinces (British Colombia, Alberta, Yukon and the Northwest Territories). •Grizzlies are omnivores meaning they eat both plants and animals. Grizzly bears prey on large animals such as moose, sheep, deer and elk. They feed on fish including salmon and trout. And grizzlies eat roots, tubers, berries and nuts. •Grizzly bears are the second largest member of the bear family. Male grizzlies can stand 10 ft (3m) tall and weigh more than 1,000 lbs (454 kg). •Grizzlies are easily identified by their long, curved claws, shoulder hump and concave or dish-shaped face. Grizzly bears can run up to 35 mph (56 km/h) but they can only do so for short distances. Grizzlies are sprinters not marathon runners. •Grizzlies, like all other bears, retreat to their den in winter. Yet grizzly bears are not true hibernators. Their body temperature drops only a few degrees and breathing rate slows just slightly. What’s more, grizzlies sleep lightly and are easily awakened from their winter slumber. http://www. kidscantravel. com/familyattractions/pelicanvalley/funstuffkids/index. html Did You Know? Grizzly bears may gain as much as three pounds of weight a day as they prepare for hibernation.

Defenders at Work Since the species was first listed as threatened in 1975, Defenders of Wildlife has worked to promote grizzly bear recovery throughout the northern Rockies. And our efforts are not without reward: grizzly numbers have nearly tripled in the greater Yellowstone area in the past three decades, and 48% of the bears in the Northern Continental Divide Ecosystem now call Glacier National Park home. Reasons For Hope Defenders of Wildlife created the Defenders of Wildlife Grizzly Compensation Trust in 1997 to compensate ranchers for livestock losses to grizzlies.

In 1999 Defenders of Wildlife went a step further by starting a fund to promote proactive initiatives to prevent conflicts between bears and humans, like installing bear-resistant garbage dumpsters and electric fences. By focusing on conservation efforts that keep bears alive and encourage habitat sustainability, Defenders is working to achieve a healthy, resilient grizzly population throughout the West. Legal Status/Protection ?Endangered Species Act (ESA): In 1975, The U. S. Fish and Wildlife Service listed the grizzly bear as a threatened species in the Lower 48 states, under the Endangered Species Act.

In Alaska, where there are estimated to be over 30,000 grizzly bears, they are classified as a game animal with regionally established regulations. The Yellowstone population of grizzly bears was declared recovered and removed from the threatened species list in April of 2007. ?CITES: Brown bears are listed in Appendices I and II, depending on the population. More plentiful populations are listed in Appendix II, while certain low populations are listed in Appendix I. How You Can Help ?Help Grizzly bears and other wildlife by adopting one today at a Wildlife Adoption Center. ?Take Action for Wildlife at a Wildlife Action Center

Grizzly Bear Facts Posted By Zoe Delphy On October 2, 2008 Did you know that the grizzly bear (Ursus horribilis)A can weigh up to 800lbs andA reach heights of up to 8 foot when standing on its rear legs. With such mass andA size you would expect it to be extremely slowA but despiteA such size it can sprint at speeds as high as 40km/h which is faster than an olympic athlete. In terms of behaviour and temperament the grizzly bear is a solitary animal sticking toA itselfA except during mating season. Its reputation of being extremely aggresive is a little exaggerated as in most cases it won’t go out of its way to hunt humans or cause trouble.

A So why do people fear the grizzly so much ? Well much of itsA aggressive reputation stems from the fact that it can’t climb treesA very well, which is what mostA bears do to avert danger. A ThisA ultimatelyA means that a threatened grizzly is more likely toA stand its ground and attack an oncoming threat rather than running and hiding. A So despite theA stories and the movies,A the grizzly in most cases is unlikely toA go on aggressive hunting sprees. A More so they’re omnivores soA will just asA happily consume berries, fruits, pine nuts and roots.

Kkv Review Quantitative and Qualitative Research

When comparing the KKV article with article two, there are several similarities’ and differences that stand out. The differences stand out because they are so extreme. However it’s the similarities that are fascinating. This is because they unit the gap between quantitative and qualitative research practices. Both articles seem to agree that weak designs can not be saved with statistical manipulation. They also agree about the nature of qualitative research, the definition of falsification, and the importance of design social inquiry.

How ever, they seem to disagree greatly on the validity of quasi-experimental analysis. Regarding the issue of weak designs, both articles seem to agree that weak designs can not be saved or be deemed usable by manipulating the statistics. “ Research that is structurally defective in the sense that there is no variation in explanatory variables (or more explanations then observations) is doomed to fail, no matter how insightful the analyst. Without an appropriate organizing structure, additional data, even the most sophisticated analysis can tell us little. (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 1) What the above quote means simply is that if a research question is poorly developed, no amount of statistical manipulation is going to make the research useable. If the researcher has not taken into account all the variables and other central issues, then that research case study is doomed to fail. Personally I find this idea very encouraging. The fact that multiple professionals in the field of research place so much emphasis on conducting good research is a good thing.

This means that researchers are making sure that all the information is supported by scientific proof. This helps to ensure more accurate results. Another issue that both articles agree on is the nature of qualitative research. Both articles seem to think that …”qualitative research [is] based on in-kind rather then in-degrees differences. ” (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 2) “Measurement theory, qualities are represented as nominal variables, and quantities, as ordinal, interval, and ratio measures.

Qualitative variation is not variation in magnitude, quantifiable variation is. This characterization shows that it is the issue of magnitude versus quality. (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 2) What this is basically means is that both articles seem to place less importance on numbers, and more importance on other variables being measured. Both articles seem to agree that this is the more appropriate way to measure qualitative research. With the issue of falsification, both authorities seem to disagree “that testing our theories in alternative settings is a good idea. (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 3) “Carrying out the same test in the same settings provides little additional support for the theory. The same test in a different setting expands the slope of a theory and may add confirmation weight if additional factors thought to influence the outcome is taken into account. ” (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 3) All this means is that the authors disagree on how to test these research questions.

Some think that in order to get an accurate test, the test needs to be as controlled as possible. However, some think that the testing of those research questions can not be fully accurate unless different variables are involved. Probably the biggest similarity between the two articles is the fact that both support the opinion of “Design Social Inquiry. ” “By outlining a research strategy applicable in both descriptive and causal settings and relevant to qualitative and quantitative research, KKV hold the promise of unifying previously fragmented parts of our discipline.

At the the very least, “Design Social Inquiry” encourages us to talk to one another and learn more precisely where our differences lie. ” (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 5) What this means is that Design Social Inquiry would be a good thing to help us speak a more “common language” in terms of research. “Design Social Inquiry” would help to bride the rather large gap between qualitative and quantitative research techniques.

The only big difference that I noticed while reading these two articles was the difference of opinion regarding “quasi-experimental analysis. ” In the KKV article, they say that “we reject the concept” of quasi-experimental analysis. , or at the very least the word “quasi-experimentation. ” (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 4) Furthermore, the KKV article argues that it is operator control of the different variables that determine the findings [results] in an experiment.

The other article argues otherwise. The authors of this article think that researcher control over independent variables is simply not enough to define an experiment. “Without manipulation of the independent variables, we can not be sure that hypothesized effects will have a chance to occur. ” (Research Design, Falsification and the Qualitative-Quantitative Divide. Pg, 4) So in conclusion, when comparing the KKV article with article two, there are several similarities’ and differences that stand out.

The biggest difference lays in the difference of opinion regarding quasi-experimental analysis. The respective authors disagree on the importance of controlling variables while testing a research question. The similarities are encouraging however, because they help to bridge the gap between both qualitative and quantitative research techniques. The authors seem to agree of the fundamentals of falsification, the nature of qualitative research, and making sure that research questions are not weak; and can be supported.

While the authors do disagree on a major issue in research design, the similarities are encouraging because it could help to create a more “common language” for our case studies to follow. References King, Gary. , Robert Keohane O. , Robert. , Verba Sidney (1995). “Designing Social Inquiry: Scientific inference in Qualitative Research. ” Retrieved 10/22/2009. from Access My Library database. King, Gary. , Robert Keohane O. , Robert. , Verba Sidney (1995). “The Importance of Research Design in Political Sciences. ” Retrieved 10/22/2009. from Access My Library database.

The 1988 Gin Dbq

The 1988 Gin DBQ During the mid to late 18th century, England went through many difficult times one of which revolved about the English Parliaments decision to pass the Gin Act of 1751 that restricted the sale of gin. This act did this in three ways, first by not letting distillers sell to unlicensed merchants, second by restricting the retailers by only those with a significant amount of land sell gin, and thirdly by charging high fees to all those still able to sell gin.

This reasonable decision about the restriction on gin was the philosophy of many who choose to side either for or against the sale of gin based on either their back round or experiences. This way of how the people chose sides was very realistic because everyone had a different familiarity with gin so their decision on whether being for or against the gin act will reflect their own personal experiences. To the people who were for the Gin Act of 1751 they had their reasons. Although most revolved around the fact that gin was an evil drink that turned good men evil and devastated the morals of all that drank it.

Our first individual that was for the Gin Act is an anonymous writer. His reason for being against the Gin Act is that he states that when he walks through the once great city of London and he looks in to the more credible bars only to see drunken men cursing and passing out right where they sit or fall. This anonymous writer has a good point here to show the fact that once respectable places that now serve gin have rapidly deteriorated because of the way men are addicted to gin(3). Our next personage that is for the passing of the Gin Act of 1751 is a group of County Magistrates from Middlesex England.

Their reason for their opinion on the Gin Act is that they say that the now increasing consumption of gin in England has destroyed the middle working class making them unfit for labor, declining the morals of the common man and having gin lead them into a life of evil and crime. These County Magistrates may have a good point here because the can see firsthand on how the gin affects the workings of the people and how the morals of these same people have gone down and along with that leading them into crime(7). This next citizen, Lord Lonsdale, expresses his opinion of being pro on the debate of the Gin act by giving a speech to Parliament in 743. In his speech he says that he is against the sale of gin because of the fact that the liquor invades the drinkers mind and poisons the body as well, and that it is the root of the problem to why the jails are full the streets are filled with madness and the child survival rate is so low. His testimony to what gin does to people may be a little over exaggerated, this is because he has no real facts to back up what he claiming although just reading this excerpt may show that he meant what he said and Parliament may have considered his opinion because of his tone(9). Our next gentleman that is for the Gin Act of 1751 is John Wesley.

His reason for being against it is that he has a major bias when coming to this sort of thing because of the fact that he is the founder of the Methodist religion. For this reason, his morals go against drinking so he would never be for anything that has to do with not being sober no matter what it deals with gin or beer. Here you can see how John Wesley’s biasness interferes with his argument on the sale of gin (10). To the artist of our next two photos those of being Gin Lane and Beer Street are by William Hogarth. His paintings reveal his ideology of the Gin Act of 1751.

He takes the side of being pro gin act, which is clear if you look at both photos. In his Gin Lane, the people are drunk, falling down everywhere, dropping kids, and performing evil acts. If you compare this to his Beer Street then you can see the clear difference because in this photo you can see a more relaxed environment no doubt due to the beer (11+12). The last supplied article being for the Gin Act of 1751 is an excerpt from The London Tradesman. In the excerpt, it states the increased popularity and sale of gin in the last ten years, which can be proven by document number ones’ chart. (1).

It also goes on to say that if this rate of popularity and sale continue to increase at the same rate of the last ten years then manual labor will no longer be around, sobriety will be a thing of the past and children will only witness and be a part of a drunken world. This also feels over exaggerated because of the fact that the article takes it too far when it is written that ne next generation children if gin continues on its upward streak will never observe sobriety(13). All that wrote or talked about being for the Gin Act of 1751 included good points and some had points that they could not back up.

To the people being against the Gin Act of 1751, they also had their side of the argument. Our first person to be against the Gin Act of 1751 is Daniel Defoe who was an author. His reason for being against the Gin Act is that he states that grain is in a surplus and the distillation process for gin uses this excess of grain that would otherwise waste away. His argument for the gin is very true in the fact that gin used the excess grain during this time of plenty (2). This next individual, William Pulteney, was a landowner that gave a speech to Parliament.

His speech contains the facts that many new taverns or bars have opened up and have been doing well because of their high sale in gin (4). The next person for the Gin Act of 1751 is an anonymous member of parliament that offers his take of the crisis. He says that if parliament were to pass this Gin Act then England would be out 70’000? because that is the money they make off the taxation of gin. To recuperate from this loss the government would be force to raise taxes on other goods even higher to the point where no one would be able to pay them.

This is a very good argument to consider when making the decision on being for or against this act because of the questions that it raises about more taxation 6). Our last anti Gin Act of 1751 supporter is Lord Bathurst. His reason for being against the act is that in this distraught economy one must enjoy a drink now and then to relax oneself. Although this may be true, he forgets to look at the people that abuse their drinking privileges by getting way past drunkenness (8).

This side to argument has much less to go on but they do make a fighting effort in all that they do have. In the Preamble of the Gin Act of 1751, it is very clear that the people for the gin act have won. To show this an excerpt reads, “Whereas the immoderate drinking of distilled liquors by persons of the meanest and lowest sort, hath in late years increase, to the great detriment of the health and morals…” This says that in short only the meanest people and peasantry drink and it has undercut the society, including the wellbeing and ethical bounds, of Great Britain.

To say this must have of been true because it got the attention of Parliament enough to make them side with the Gin Act of 1751. Both sides of this debate had very good points that they made. The decisions of each individual on either side were backed up with evidence to support their side of the argument, which made for a good battle between having gin and not having gin. In the end, though the Gin Act was passed and this shows that to parliament it must have been necessary because of the rapid decline in health and morals.

‘Henry Ford and the Motor Car Had a Huge Social and Economic Impact Upon America.’ to What Extent Do You Agree with This View?

I agree that Henry Ford and the motor car industry had a huge social and economic impact upon America to a certain extent. Henry Ford was the only individual to revolutionize the motor vehicle industry, he had introduced the method of mass production before the 1920s and the ‘Model T’ vehicle had been made affordable not only to the wealthy but to the middle class as well. The car industry expanded and was the main market for produce i. e. steel and rubber, and cars had ultimately become the most wanted product amongst many consumers.

Economically, Ford’s techniques were being copied and exceeded by his competitors thus leading to the development of better, modern and unique designs in car industries, demonstrating how Henry Ford and the car industry had an enormous impact in the USA. Henry Ford employed seven percent of workers and paid them nine percent of all the wages, the motor vehicle stimulated many other industries and when it closed momentarily it was shown to be one of the causal factors of the recession.

Wages rose as well due to the assembly lines which made cars cheaper, whereby wages rose steadily of twenty six percent between 1920 and 1929, which enabled credit to be available on the cheapest terms. Furthermore, laissez-faire policy was bent leading to road building in the 1920s, also established the Federal Highway Act of 1921. Cars enabled the creation of new industries such as garages, motels, petrol stations and used car salesrooms. It allowed goods to be easily transported.

Mass production led to the development of labor-saving devices, such as vacuum cleaners and washing machines. In 1920, 1905500 million cars were produced and by 1929, it rose to 4455100 cars being produced. Therefore, economically America was highly affected by Ford and the rising motor car industry. On the other hand, Henry Ford was limited in his creativity because not only were his cars only available in one color but he also saw it as intensifying what he saw as traditional American values.

However, the car enabled families to bond when they were able to go for outings and made it easier for ‘breadwinners’ to look for jobs elsewhere easily, but didn’t realize it was to be used for courting couples and to attend church, as well as the fact that there were to be road deaths at 20000 per year, and that industrial organization would increase trade unionism which he despised. The car had also begun to eliminate divisions between urban and country living, prosperous middle classes were able to travel and discover the countryside.

This paved the way for the founding of motels and wayside restaurants. Cars also enabled the working class to search for jobs elsewhere and were not as limited in occupation choices as before. Poor rural individuals could now use the car to depart mainly to the West or to the cities and so another one of America’s great migrations followed. It is evident that Henry Ford and the car industry had a huge impact on America, allowing Americans many ways to perceive their country and to discover new sights and sounds as well as gain a new and unexpected life experience.

The various migrations and travels which took place due to the introduction of the automobile created a whole new blueprint of living probable, suburbs were beginning to spread over America to the advantage of immense profit of the building industry. Living in cramped quarters near railroad stations were a thing of the past, and there wasn’t the need to go to crowded resorts any longer, because they could now travel where planners such as Robert Moses had prepared parks and beaches for their enjoyment.

Due to the car industry it had stimulated American industry to new accomplishments such as the cinema, and the Hollywood lifestyle expanded whereby alcohol was increased by prohibition and the rich lived luxuriously, surrounded by parties, yachts, furs and cosmetics. Without Ford’s inspiration and the growth of the motor car industry such developments and new creations of luxury items and new consumer goods would not have been possible, showing their importance and affect they had on America.

Henceforth, I do agree to a large extent that Henry Ford and the motor car had a huge social and economic impact upon America. It led to the increase in wages, unemployment decreased, the wealthy became wealthier and the poor were able to search for jobs elsewhere. Consumer goods developed and American family values were reinforced, not only did the car allow many trends to surface but led to the growth of new discoveries and possibilities for expansion for American industry and America as a country itself.

Marks and Spencer

MARKS & SPENCER (Individual Analysis) Words Count:2064(excluding tables) [pic] Introduction: Marks and Spencer plc is a UK-based company. The business is known best as a retailer. There are over 622 Marks & Spencer stores throughout the UK that sell clothing, food and household goods. The core of its retailing business is clothing, particularly women’s. What market segments do the three different product ranges serve? Assume that the Perfect and Classic ranges serve essentially the same segment. |Perfect and Classic ranges |Autograph range |Per Una range | |Logo |[pic] |[pic] |[pic] | |Target Customer Age | | | | |Range |Women of all ages |35 years and above |25-35 years | |Estimated Clothing | | | | |Size |UK 8-24 |UK 8 – 22 |UK 8 – 18 | |Main requirement |Simple and basic pieces. |Elegant and timely pieces. |Special and detail design to make it a | | | | |unique piece of clothes. | Being the largest clothing retailer in the United Kingdom, as well as being the 43rd largest retailer in the world with over 21 million people visiting their stores each week, Marks and Spencer (M) had made a name in the

British culture just as much as the Beatles and Fish & Chips. When people talk about M, people use to think of the ranges of quality clothing they offered that would last for as long as they can imagine. However, in this cutting edge era M had been lost out in the fashion conscious market especially in the ladies department. Fashion savvy women nowadays opt more on rare and unique design clothing where they can be totally different from others, they does not want something that is instantly recognisable as M. Therefore, M had been losing out its market share to the younger generations as M had been consider as a place where its clothes are out of fashion and only older people shops.

The Classic and Perfect clothing is mainly aim at women of all ages. They are the core customers of M; it can therefore be M new customers or returning customers. These two ranges are more to the simple and basic pieces which include plain shirt, sweaters, t-shirts and jeans ranging from size UK8 – UK 24. The Classic and Perfect ranges is mostly aim at customers with a hectic lifestyle where they are looking for quality and reasonable price clothing which is mostly machine washable and tumble-dry friendly and most of all iron free. The Classic and Perfect ranges are also known as the timeless essentials where customers can purchase and wear it throughout the four different seasons. (See Appendix 1)

The Autograph range is aim to provide women mostly at the age of 35 and above with a touch of top designer style at high street price. The Autograph range mostly consists of elegant and timely pieces using only the luxury fabrics such as silks and cashmere. Every piece in this range is perfectly cut which are flexible for women of all lifestyles. With the clothing size ranging from UK 8- UK 22, there is not a chance where women can’t find a suitable piece. The Autograph range is suitable for women who are willing to pay a high price in exchange for a product that look smart and can last long. The Autograph mostly comes in styles which are more formal looking and colours that are more stable. See Appendix 2) In September 28, 2001 M introduce a new range of clothing line under the name Per Una which means For One (Woman) in Italian. Per Una is then set to aim on women in the age group of 25-35 years and within the size of UK8 – UK 18 which had the most buying power and is fashion conscious. With Per Una been translate into For One show that M is prepared to offered this new target group with special and detail style to make it a unique piece of clothes. Customers in this range wanted a sense of style which is value for their money and with a reasonable quality which meets the basic quality such as colour fading or shrinkage after washing.

Per Una is targeted at the young and sophisticated women are not afraid to put colours into their wardrobe. Therefore, the Per Una is nothing like the Autograph or Classic range as there are more colour choices in the range. (See Appendix 3) What are the order winners and qualifiers for these different ranges? Order-winning factors are those things which directly and significantly contribute to winning business. They are regarded by customers as key reasons for purchasing the product or service. Raising performance in an order-winning factor will either result in more business or improve the chances of gaining more business. (N Slack, S Chambers and R Johnston, Operation Management, p. 2) These criteria win orders and they differentiate a product or service from those of the competition by offering product or service features that are superior to those competition. As in the M case, the three different range of clothing line have its own order winners to make it sustain till today. Lets start with the first line, which is the Perfect and Classic ranges, in my opinion these two ranges order winners will be the size availability. These two ranges are the only line in M which provide clothing sizes up to UK 24. Therefore women which fall under this size category will then opt to buy clothing from these ranges from M as most of the clothing brand out the in the market only have sizes up to UK 18.

Take another famous clothing brand for example, like the River Island which only caters women within size UK6-UK18. (See Appendix 4) As for M Autograph range, I felt that the order winners would be the quality and the range of products. The Autograph range had been categorised as the most reliable and trustworthy line as this range only uses the best and quality fabric ever. Customers buying from this range are always satisfied with their purchases and felt worth the money they are paying for. In addition, when a customer wanted to buy clothing with cashmere, they will then look into the Autograph range, as only the Autograph range come with clothing in cashmere. A simple piece of cashmere cardigan can cost up to ? 59 per piece. (See Appendix 5)

Lastly would be the Per Una range, this range order winners would be the product characteristic. As mention earlier, the Per Una range is the most colourful range among all. Its product characteristic is different from Classic and Autograph that is why make it so special and targeted to the younger market. With style ranging from spaghetti strip dresses to big bold colourful print. (See Appendix 6) Other than the order winners, order qualifier is another factor which influences customers to purchase a certain product or services. Order qualifying factors may not be the major competitive determinants of success, but are important in another way.

They are those aspects of competitiveness where the operation’s performance has to be above a particular level just to be considered by the customers. Performance below this ‘qualifying’ level of performance will possibly disqualify the company from being considered by many customers. (N Slack, S Chambers and R Johnston, Operation Management, p. 72) When walking into any M stores, one would find that the stocks may be vary from different locations and different stores. For example, certain M store do not offer the Autograph range, as the Autograph is consider as a high street brand. However, for the Classic and Perfect ranges, one can get hold of it in just any M stores.

This is because the Classic and Perfect range is the core line of M and this leads it to be an order qualifier where customers can buy it’s range of product from just any M stores. As for the Autograph range, its order qualifiers will be it fast turnover in style and design. Customers do expect to see something new and fresh every time they visit the store and this lead to a very major challenge for any retailer. However, at M its team of expert had come up with a new plan where they had adopted a phased approach to introducing new stock, which means that 25% of their women’s wear will be new in every five to six weeks. As for the Autograph range, M will get its product from their supplier in Turkey in eight weeks ahead of time.

Lastly will be the Per Una range, the Per Una range is in its seventh year of success. This shows that the Per Una range is highly likeable and a massive success among women of its target group. With a very unique style and design, Per Una comes along with a very reasonable price tag. The reasonable price tag makes it to be its order qualifying factor. Women nowadays not only want style, but they are also looking for an affordable looks from the catwalk especially during the credit crunch period where customers are carefully choosing what they buy. Figure 3. 6 shows the different between order –winning, qualifying and less important factors in terms of their utility or worth to the competitiveness of the organisation.

The curves illustrate the relative amount of competitiveness or attractiveness to customers as the operation’s performance at the factor varies. Order winning factors show a steady and significant increase in their contribution to competitiveness as the operation gets better at providing them. Qualifying factors are ‘givens’; they are expected by customers and can severely disadvantage the competitiveness position of the operation if it cannot raise performance above the qualifying level. Less important objectives have little impact on customers no matter how well the operation performs in them. (N Slack, S Chambers and R Johnston, Operation Management, p. 73-74) [pic] What are the different operations performance objectives for the different product groups? |Perfect and Classic ranges |Autograph range |Per Una range | |Product |Women’s wear |Women’s wear |Women’s wear | | |Women’s slippers |Women’s shoes |Women’s shoes | | | |Women’s accessories |Women’s accessories | | | |Women’s beauty and cosmetic |Women’s beauty and cosmetic | |Customers |Women of all ages |Women at the age range of 35 years |Women at the age range of 25-35 years | | | |and above | | |Product range |Classic Women’s wear |Autograph Essentials |Per Una Women’s wear | | |Classic Nightwear and Lingerie |Autograph Exclusive |Per Una Accessories | | |Classic Slipper Shop |Autograph Occasion wear |Per Una Lingerie | | | |Autograph Weekend |Per Una Beauty | | | |Autograph Lingerie |Per Una Slippers | | | |Autograph Beauty | | | | |Autograph Nightwear | | |Design changes |Continual |Continual |Continual | |Price |Women’s wear range: ? 7. 50 – ? 69. 00 |Women’s wear range: ? 12 – ? 99. 99 |Women’s wear range: ? 15 – ? 99. 99 | | |Nightwear and Lingerie range: ? 9. 50 -|Shoes range: ? 25 – ? 9 |Shoes range: ? 25 – ? 45 | | |? 25. 00 |Accessories range: ? 5 – ? 149 |Accessories range: ? 7. 50 – ? 29. 50 | | |Slipper shop range: ? 10. 00 |Beauty and Cosmetic range: ? 3. 50 – |Beauty and Cosmetic range: ? 5 – ? 12 | | | |? 15 | | |Quality |Medium, Comfort |High , Durability |Medium, Appearance | | |E. g.

Long lasting fabric and |E. g. Luxury fabrics such as silks and|E. g. Quality fabric with chic design | | |comfortable design |cashmere which is expected to last | | | | |long. | | |Sales Volume SKU |High inventory |Low inventory |Low inventory | |Profit Margins |Medium profit |High profit |Medium to High profit | |Competitive factors | Order Winners |Size availability |Range of products |Product characteristic | | | |Quality of products | | |Order Qualifiers |Stock availability |Fast design and style turnover |Price | |Operations Priorities |Customers satisfaction |Customers satisfaction |Customers satisfaction | |Internal performance |Cost |Quality |Design | |objectives | | | | Polar Diagram |0 |5 | |Cost |High price |Low Price | |Dependability |Proportion of goods out of stock low |Proportion of goods out of stock high | |Flexibility |Low range of goods |Wide range of goods | |Quality |Very basic |Superb quality | |Speed |Long waiting time for stocks |Immediate availability of stocks | |Perfect and Classic ranges |Autograph range |Per Una range | |Cost |3 |1 |2 | |Dependability |1 |5 |5 | |Flexibility |3 |5 |5 | |Quality |3 |5 |4 | |Speed |3 |4 |3 | [pic] Keys: The cost in the polar diagram can be differentiate as the staff cost, technology and facility cost or even the cost of brought in material.

I have rated the Autograph range as the highest among the 3 ranges as the Autograph range has the highest cost among them all. Due to the high quality and durability level of the Autograph range, the cost will therefore be much higher than the other 2 ranges. Per Una is rated as the second highest cost, as that range is only slightly below the quality standard of the Autograph range with medium range of quality. Lastly will be the Classic and Perfect range, which is rated at point 3. These range main value is value and comfortable styles. Next will be the dependability factor which rates the ranges according to the proportions of goods out of stock low at 0 and proportions of goods out of stock high at 5.

Both the Autograph and Per Una range is rated at 5 as the design of this 2 ranges are seasonal, which means M changes the style every season to suit UK’s 4 season weather. So when the style or design runs out for that season, there will be no stocks replacement. However, as for the Perfect and Classic range, it is rated as point 1 as the styles are more basic and will suits every season, therefore M will only need to add on more range or to get more of the same stock from its supplier. Flexibility will be to rate how wide is the range of product offers for the 3 ranges. Point 0 will be low range of goods and point 5 will be high range of goods. And again, the Autograph and Per Una range are rated at point 5.

This is due to the wide product range this two lines offer. Autograph and Per Una offers customers with styles to suit different occasion with either high or low budget, customers for sure to find something they needed. Perfect and Classic range is rated at point 3, the flexibility of this range is not too low therefore it is rated in the middle as this 2 lines still offers basic goods from women’s wear to slippers and nightwear. Quality here will be the quality of the products it offers. When customer’s pays for a high price, their expectation towards the quality of the products such as the fabrics and the product life spend will be expected to be longer.

Taking the lead at quality will be the Autograph range, offering luxury fabrics such as cashmere and silks. Down the line will be the Per Una range follow by the Perfect and Classic ranges, these 2 ranges might not offers luxury fabrics but it still offers quality fabrics which live up to the M core values which is ‘Quality, Value, Service, Innovation and Trust’ Last on the polar diagram will be speed, which is rated at point 0 with long waiting time for stocks arrival and point 5 with immediate availability of stocks. Autograph is rated at point 4 as M responsible group for this range had come up with a new supplier term which they will order the stocks from its supplier in 8 weeks ahead.

This allows the team to work more efficiently with the supplier to ensure no stocks shortage problems happen. As for the Per Una, Classic and Perfect ranges, 25% of women’s wear will be new in every 5-6 weeks or 3 weeks cycle. Appendix 1: [pic][pic] [pic] Appendix 2: [pic][pic] [pic] Appendix 3: [pic] [pic] [pic] Appendix 4: River Island available sizes from UK 6- UK 18 only. [pic] Marks and Spencer available sizes from UK 8- UK 24. [pic] Appendix 5: [pic] Appendix 6: [pic] Reference www. marksandspencer. com Slack N. , Chambers S. , Johnston R. , (2004) Operations Management, Prentice Hall Lecture Notes Workshop exercise ———————– Perfect and Classic Range Autograph Range Per Una Range

Colombia Regional Integration for and Against Articles

COLOMBIA REGIONAL INTEGRATION FOR AGAINST ARTICLES Colombia Regional Integration for and Against Articles Stephen Aguayo University of Phoenix MGT 448: Global Business Strategies Group: PA09BSM11 Professor Matthew Mulyanto; MBA; BSEE December 15, 2009 Colombia Globalization has brought unbelievable advantages to the humanity. There is modest disbelief that globalization can be an influential tool for extended financial growth.

By combining the economy together of diverse nations from Central America, for example Colombia, have trying to expand competitive developments in order to create lucrative businesses that are connected with the liberated trade agreements. Colombia as well as other nations from Central America is representing their pledge to increase and produce the financial prospects that will sustain a better way of livelihood for everybody in Central America. Economic development and Free trade have assisted Colombia to develop.

Colombia’s economy is gradually rising due to their incapability to hold a forceful unwilling poverty program. The populace of Colombia is not capable to distribute the economy equally. Other disagreements have risen that are most important to income loss and the modification of urban jobs. These issues have been brought up when CAFTA was created along with the execution of the Multi-Fiber Agreement supplementary challenges that CAFTA faced where harmonization of taxation, customs integration, fiscal conditions, ecological and sanitary procedures.

In order to attain benefits from future global trade opportunities and CAFTA, Colombia along with the Mexican governments have had to advance their method they contend by reducing procedure expenses across their boundaries; balancing national commercial, tariffs, labor and environmental policies and laws. The natural resources that come from Columbia are useful in aiding them to expand. Exporting coffee, flowers, gold, and petroleum have been an exceptional method to elevate the economy. The government of Colombia is projected to create sensible monetary choices for the use and help agriculture farms.

The people of Colombia, through remarkable economic gains, will be capable to obtain a better standard of livelihood along with enhanced domestic commerce. The disadvantage for Colombia is their diminutive volume of the wealth. Their domestic resources are restricted, which do not permit for increasing to the economic activities. The elevated reliance of goods for export put down Colombia’s financial system vulnerable. Opportunities for economic growth are rather limited and dependent on external factors, which create a rise of economic unsteadiness. In Colombia, the thought of globalization is being in use slowly by the populace.

The citizens of Colombia have slowly retorted by voting in opposition to certain concerns and some people have protested in the streets. The public, due to this type of reaction, have lifted the apprehension about CAFTA. The government wants the people of Colombia to comprehend that the growth of the market is necessary in order to multiply and to create the economy. Local integration has become a very important benefit to global business, and will succeed in creating various opportunities between Colombia and neighboring nations to promote free trade and to unlock their borders.

The contradictory way of life of Colombia makes it difficult for everyone to move toward with an agreement on specific issues. Unfortunately, there is constantly going to be concern and controversy in conformity particularly if one or more country stands to profit while another struggles. However the countries will keep experiencing a better economic development resulting from the quality of life and the regional integration among these nations thus improving as an outcome. Reference Colombia. 2008). Columbia. Retrieved on December 15, 2009, from http://www. usaid. gov/policy/budget/cbj2006/lac/car. html Central American Free Trade Agreement (2005). Colombia. Retrieved on December 15, 2009 from http://www. washingtonpost. com/wp-dyn/content/article/2005/07/10/AR2005071000995. html Hill, C. W. (2009). International business. Competing in the global marketplace (7th ed. ). Boston: McGraw-Hill. Retrieved December 15, 2009, from https://ecampus. phoenix. edu/content/eBookLibrary2/content/

Bioreactor Design for Tissue Engineering

JOURNAL OF BIOSCIENCE AND BIOENGINEERING Vol. 100, No. 3, 235–245. 2005 DOI: 10. 1263/jbb. 100. 235 © 2005, The Society for Biotechnology, Japan REVIEW Bioreactor Design for Tissue Engineering Ralf Portner,1* Stephanie Nagel-Heyer,1 Christiane Goepfert,1 Peter Adamietz,2 and Norbert M. Meenen3 Technische Universitat Hamburg-Harburg, Bioprozess- und Bioverfahrenstechnik, Denickestr. 15, 21071 Hamburg, Germany,1 Universitatsklinikum Eppendorf, Institut fur Biochemie und Molekularbiologie II, Martinistr. 52, 20246 Hamburg, Germany,2 and Universitatsklinikum Eppendorf, Unfall-, Hand- und Wiederherstellungschirurgie, Martinistr. 2, 20246 Hamburg, Germany3 Received 7 March 2005/Accepted 31 May 2005 Bioreactor systems play an important role in tissue engineering, as they enable reproducible and controlled changes in specific environmental factors. They can provide technical means to perform controlled studies aimed at understanding specific biological, chemical or physical effects. Furthermore, bioreactors allow for a safe and reproducible production of tissue constructs. For later clinical applications, the bioreactor system should be an advantageous method in terms of low contamination risk, ease of handling and scalability.

To date the goals and expectations of bioreactor development have been fulfilled only to some extent, as bioreactor design in tissue engineering is very complex and still at an early stage of development. In this review we summarize important aspects for bioreactor design and provide an overview on existing concepts. The generation of three dimensional cartilage-carrier constructs is described to demonstrate how the properties of engineered tissues can be improved significantly by combining biological and engineering knowledge.

In the future, a very intimate collaboration between engineers and biologists will lead to an increased fundamental understanding of complex issues that can have an impact on tissue formation in bioreactors. [Key words: tissue engineering, bioreactor, design considerations, cartilage] The loss and damage of tissues cause serious health problems (1). In the US, almost one-half of the costs for medical treatments are spent on implant devices annually (2). Worldwide, 350 billion USD are expended for substitute of organs (3).

The substitution of tissues (such as bone or cartilage) or joints with allograft materials includes the risk of infections by viruses (such as HIV, hepatitis C) or a graft rejection. Artificial implants such as those used in knee or hip replacement, have limitations due to their limited lifespan, insufficient bonding to the bone, and allergic reactions caused by material abrasion. New therapy concepts for practical medical applications are required. To this end, tissue engineered substitutes generated in vitro could open new strategies for the restoration of damaged tissues.

The goal of tissue engineering can be defined as the development of cell-based substitutes to restore, maintain or improve tissue function. These substitutes should have organ-specific properties with respect to biochemical activity, microstructure, mechanical integrity and biostability (2). Cell-based concepts include the (i) direct transplantation of isolated cells, (ii) implantation of a bioactive scaffold for the stimulation of cell growth within the original tissue and (iii) implantation of a three di* Corresponding author. -mail: [email protected] de phone: +49-40-42878-2886 fax: +49-40-42878-2909 235 mensional (3D) biohybrid structure of a scaffold and cultured cells or tissue. Furthermore, non implantable tissue structures can be applied as external support devices (e. g. , an extracorporal liver support when a compatible donor organ is not readily available [4, 5]) or engineered tissues can be used as in vitro physiological models for studying disease pathogenesis and developing new molecular therapeutics (e. g. , drug screening [5, 6]).

The generation of 3D tissue substitutes in vitro requires not only a biological model (e. g. , an adequate source for proliferable cells with appropriate biological functions, a protocol for proliferating cells while maintaining the tissuespecific phenotype), but also the further development of new culture strategies including bioreactor concepts (5, 7, 8). Bioreactors are well established for the cultivation of microbes or mammalian cells under monitored and controlled environmental and operational conditions (e. g. pH, temperature, oxygen tension, and nutrient supply) up to an industrial scale. However, as individual cells are mostly applied, these concepts are inapplicable to 3D tissue constructs. Furthermore, each type of tissue construct (e. g. , skin, bone, blood vessel, and cartilage) will likely require an individualized bioreactor design (7). Therefore, tissue-specific bioreactors should be designed on the basis of comprehensive understanding of biological and engineering aspects. Addi- 236 PORTNER ET AL. J. BIOSCI. BIOENG. , ionally, typical engineering aspects such as reliability, reproducibility, scalability and safety should be addressed (5, 8). Several bioreactor systems have been developed and usually the expectations are very high (5, 6). The question is, however, whether bioreactors can indeed fulfil these expectations. In this review, key technical challenges are identified and an overview of existing culture systems and bioreactors used for tissue engineering is provided. These topics have been addressed to some extent by several authors (4, 5, 7–16). Therefore, they will be discussed only briefly.

Particular focus will be given to the interaction between biological and engineering aspects. Using cartilage tissue formation as an example, it will be shown how an increased fundamental understanding of biological, biochemical, and engineering aspects can significantly improve the properties of 3D tissue constructs. IMPORTANT ASPECTS FOR BIOREACTOR DESIGN With respect to tissue engineering, bioreactors are used for different purposes such as (i) cell proliferation on a small scale (e. g. , for individual patients) and on a large scale (e. g. for allogenic therapy concepts), (ii) generation of 3D tissue constructs from isolated and proliferated cells in vitro and (iii) direct organ support devices (15). These bioreactors should enable the control of environmental conditions such as oxygen tension, pH, temperature, and shear stress and allow aseptic operation (e. g. , feeding and sampling). Furthermore, a bioreactor system should allow for automated processing steps. This is essential not only for controlled, reproducible, statistically relevant basic studies but also for the future routine manufacturing of tissues for clinical application (5, 17).

Besides these global requirements, specific key criteria for 3D tissue constructs based on cells and scaffolds have to be met, including the proliferation of cells, seeding of cells on macroporous scaffolds, nutrient (particularly oxygen) supply within the resulting tissue, and mechanical stimulation of the developing tissues (5). Proliferation of cells is the first step in establishing a tissue culture. Usually, only a small number of cells can be obtained from a biopsy specimen and expansion up to several orders of magnitude is required. The proliferation of cells is quite often accompanied by the dedifferentiation of cells.

For example, proliferating chondrocytes show a decreased expression level of collagen type II and an increased expression level of collagen type I (18, 19). Small culture dishes (e. g. , petri dishes, 12-well plates, and T-flasks) are generally used for cell expansion. As these devices allow only an increase in cell number by a factor of approximately 10, several subcultivations are required. These are considered as a major cause for the dedifferentiation of cells. Recent studies have shown that microcarrier cultures performed in wellmixed bioreactor systems can significantly improve cell expansion (20–22).

The cell seeding of scaffolds is an important step in establishing a 3D culture in a macroporous scaffold. Not only seeding at high cell densities, but also a homogenious distribution of cells within the scaffold is essential. High initial cell densities have been associated with an enhanced tissue formation including cartilage matrix production, bone mineralization and cardiac tissue structure formation (23–25). On the other hand, an inhomogeneous distribution of cells within the scaffold can significantly affect the tissue properties. Several techniques for cell seeding were discussed by Martin et al. 5). Critical issues of all bioreactor concepts involve mass transfer problems (e. g. , oxygen and nutrient supply, and removal of toxic metabolites). The size of most engineered tissues is limited as they do not have their own blood system and the cells are only supplied by diffusion (6, 26). Oxygen supply is particularly critical, as only cell layers of 100–200 µm can be supplied by diffusion (27). However, as tissue constructs should have larger dimensions, mass-transfer limitations represent one of the greatest engineering challenges.

Various studies showed that mechanical stimulation (e. g. , mechanical compression, hydrodynamic pressure, and fluid flow), which are important modulators of cell physiology, can have a positive impact on tissue formation (28), particularly in the context of musculoskeletal tissue engineering, cartilage formation, and cardiovascular tissues among others (11, 29–34). Despite accumulating evidence that mechanical stimulation can improve the properties of engineered tissues, only little is known about specific mechanical forces or the ranges of application (i. . , magnitude, frequency, continuous or intermittent, and duty cycle [5, 9]). Further studies of these factors have to be coupled with quantitative and computational analyses of physical forces experienced by cells and changes in mass transport induced by the method used. Bioreactors allow for different process strategies including the batch, fed-batch or continuous cultivation. In particular, continuous perfusion enables cultivation under constant and controlled environmental conditions (35–38). Martin et al. 5) summarized some of the effects of direct perfusion on tissue-specific properties such as growth, differentiation and mineralized matrix deposition by bone cells, proliferation of human oral keratinocytes, rates of albumin synthesis by hepatocytes, expression of cardiac-specific markers by cardiomyocytes, and GAG synthesis and accumulation by chondrocytes. On the other hand, a bioreactor system becomes more complex as additional features such as feeding pumps, vessels for fresh and spent medium, and control strategies are required (Fig. ), particularly in the case of mechanical stimulation. The bioreactor system has to be integrated into the entire cultivation scheme including biopsy, proliferation, cell seeding, tissue formation and delivery to the site of application (e. g. , hospital). In many cases, the bioreactor itself is only used for tissue formation. However, for a wholistic approach from biopsy to the implantation of tissue, the intire procedure should be coordinated to decrease the number of steps, risk of contamination, and labor costs among others.

This is particularly important with respect to the manufacture of engineered tissue constructs for clinical applications, in which good manufacturing practice (GMP) requirements have to be met (7, 8). VOL. 100, 2005 BIOREACTOR DESIGN FOR TISSUE ENGINEERING 237 FIG. 1. Set-up of flow-chamber-bioreactor system consisting of flow chamber with inserts for tissue constructs, conditioning vessel, peristaltic pump, humidifier, exhaust flask, and medium exchange bottle. CULTURE SYSTEMS AND BIOREACTORS USED IN TISSUE ENGINEERING The engineering of 3D tissue constructs include cell maintenance, proliferation and tissue formation.

An overview of culture systems and bioreactors used for these purposes is shown in Fig. 2. Cell maintenance and proliferation is usually performed in culture systems developed for the monolayer culture of adherent cells (T-flasks, petri dishes, multi well plates). These systems enable sterile handling procedures and are easy to use, disposable and low-cost (39). Moreover, they require individual handling as for example in medium exchange and cell seeding; their usefulness is limited when large quantities are required (7).

This can be overcome to some extent using sophisticated robotics (5). Furthermore, controlling environmental parameters including pH, pO2, and temperature is generally impossible. A further drawback is the limited increase in cell number (approximately 10–20 times during cultivation). The generation of a large number of cells requires several enzymatic subcultivation steps accompanied by an increase in passage number and cell dedifferentiation. In recent studies, small well-mixed bioreactors (e. g. shake flasks, stirred vessels, and super spinner) have been suggested for cell proliferation, in which the cells are grown on microcarriers (20–22). These systems were used in the cultivation of encapsulated cells (18, 19) or neural stem cells in single-cell suspension culture (40). In fixed bed and fluidized bed bioreactors, cells are immobilized in macroporous carriers. The carriers are arranged in a column either packed (fixed bed) or floating (fluidized bed). The column is permanently perfused with a conditioned medium from a medium reservoir, mostly in a circulation oop. These types of reactor are very efficient for the long-term cultivation of mammalian cells for the production of biopharmaceuticals (e. g. , monoclonal antibodies, recom- binant drugs including tPA, and EPO) or recombinant retroviruses for gene therapy (41–43). With respect to tissue engineering they have been investigated for several applications including the cultivation of liver cells as an extracorporal liver device (4, 10, 37), proliferation of stem cells (44–46), cultivation of cardiovascular cells (11) and cartilage cells (9).

As most of the scaffolds have large, interconnected pores, during seeding, cells are distributed quite uniformly. During cultivation, medium flow through a construct enhances the mass transfer of substrates, particularly oxygen to immobilized cells when interconnected cell free pores are available. In membrane bioreactors including hollow-fiber reactors (47), the miniPerm system (48) or the tecnomouse (49), cells are cultivated at tissuelike densities in a compartment, which contains one or several types of membrane for nutrient and oxygen supply and removal of toxic metabolites.

Hollow-fiber systems are widely used in the production of biopharmaceuticals including monoclonal antibodies. Several examples of modified membrane bioreactors exist for the 3D culture of tissue cells including hepatocytes (4, 50–54), skin cells (55) or other human cells (49, 56). Most of the culture systems and bioreactors discussed so far were first developed for the cultivation of mammalian cells and adapted to the engineering of 3D tissue constructs. However, besides some exceptions, they can hardly be used in the generation of implantable tissue constructs.

Each type of tissue intended for implantation (e. g. , skin, heart valve, blood vessel, and cartilage) requires a different geometric structure and a specific bioreactor design, particularly when mechanical stimulation has to be provided. Finally, engineered constructs have to be transferred from the culture system to the patient after cultivation. Therefore, several tissue-specific culture systems and bioreactors have been suggested. One of the most prominent culture systems is the rotat- 238 PORTNER ET AL. J. BIOSCI. BIOENG. , FIG. 2. Cell culture systems used in tissue engineering. ng-wall vessel (23), in which a construct remains in a state of free-fall through the medium with a low shear stress and a high mass transfer rate. This system has a wide range of practical applications (5, 7). A multipurpose culture system was introduced by Minuth et al. (35) for perfusion cultures under organotypic conditions. Several tissue carriers can be placed inside a perfusion container. Depending on the type of tissue-specific cell supports can be selected. A perfused flow-chamber bioreactor with a new concept for aeration has been introduced recently (20), in which tissue-specific inserts for various types of tissue (e. . , cartilage, skin, and bone) can be applied. Besides these examples of multipurpose bioreactors, numerous of tissue-specific culture systems have been suggested. These are well reviewed with respect to specific tissues (5, 6, 8–11, 14, 15, 26, 50, 57–59). Most of them are custom-made; only very few have been commercialized. MODELLING OF BIOREACTOR SYSTEMS FOR TISSUE ENGINEERING The appropriate molecular and macroscopic architecture of 3D tissue constructs is essential to producing a phenotypically appropriate tissue (6). However, in many cases this is not realized.

The solution may lie in providing appropriate physiological conditions during cultivation. In many cases, the culture systems and bioreactors were not optimized in this respect. Parameters such as perfusion rate, flow conditions, shear stress, and compression magnitude were varied, quite often by a trial-and-error approach. Furthermore, different conditions have to be examined accurately with regard to their effect. For example, hydrostatic pressure applied during cartilage culture can lead to an improved mass transfer of small and large molecules into the cartilage matrix, but can also induce a mechanical stimulation of embedded cells.

These two effects have to be examined separately. Particularly, when if forces (e. g. , hydrostatic pressure, shear stress induced by perfusion, shear stress or gliding forces induced by mechanical impact, and pulsation flow) are applied, the exact local conditions experienced by the cells have to be determined. Therefore, experimental studies should be supported by simulation methods such as the computational fluid dynamics (CFD) or finite-element approach. Several examples underline the potential of an integrated study of mechanical and biomechanical factors that control the functional development of tissue engineered constructs (60–66).

This approach will significantly improve bioreactor design in the near future. As an attempt to evaluate and compare different tissue engineering reactors, Omasa et al. (67) applied the analytic hierarchy process (AHP). For evaluating a reactor for a bioartificial liver (BAL) support system, five criteria were identified (namely, safety, scalability, cell growth environment, mimicking native liver functions and handling). On the basis of these criteria, six different types of BAL systems were successfully ranked using AHP.

The process is a valuable tool for decision making in tissue engineering, not only for BAL systems but for tissue engineering reactors in general. INTERACTION BETWEEN BIOLOGICAL AND ENGINEERING ASPECTS IN GENERATION OF ARTIFICIAL CARTILAGE The following considerations are intended to demonstrate how the interdisciplinary application of biological and engineering knowledge can significantly improve the properties of tissue engineered 3D cartilage constructs. Severe health problems can arise from a lack or damage of hyaline cartilage in joints, particularly in knee joints (68).

The methods of tissue engineering enable the generation of cartilage tissue in vitro and provide new strategies to restoring damaged cartilage (9, 36, 58, 69). Whereas many approaches to generating tissue-engineered cartilage are based on either alginate encapsulation or the use of bioresorbable scaffolds (9, VOL. 100, 2005 BIOREACTOR DESIGN FOR TISSUE ENGINEERING 239 19, 58, 59, 69, 70), recently, a new concept involving the use of a bone substitute carrier covered with a layer of tissue-engineered cartilage ithout scaffolds has been presented (17). This concept consists of four steps: (i) explanted articular chondrocytes are expanded in a monolayer culture and then seeded on a solid carrier to form a primer layer; (ii) simultaneously, chondrocytes are suspended in alginate gel and cultivated for two weeks to allow the formation of a pericellular matrix; (iii) redifferentiated chondrocytes are then eluted out of the alginate gel and sedimented on the primer layer; (iv) the biphasic constructs are further cultivated for three weeks.

Below, mainly different aspects of step iv are addressed. A similar concept was suggested by Waldman et al. (71). A critical parameter during the cultivation of cartilage tissue is oxygen supply. The effect of oxygen during the in vitro cultivation of chondrocytes is poorly understood, and therefore it is presently a controversial issue (72). In several studies, chondrocytes were immobilized in alginate beads and cultivated under different oxygen concentrations in the gas phase (for review see Ref. 72).

O’Driscoll et al. (73) observed a limited collagen type II production at very high (90% O2) and very low (1–5% O2) oxygen concentrations. Domm et al. (19) showed a stimulatory effect of a decreased oxygen tension (5% O2) on matrix production. In a recent study of Malda et al. (18), the pellets of chondrocytes were suspended in a stirred bioreactor under different oxygen concentrations. They observed an increased production of glycosaminoglycan at 5% and 1% O2 (v/v) in comparison with aeration at 21% O2 (air).

The increased glycosaminoglycan production is accompanied by a decrease in collagen type I level. On the other hand, several studies of chondrocytes embedded in a 3D matrix or a scaffold have demonstrated an enhanced matrix formation, particularly proteoglycan synthesis under more aerobic conditions (74, 75). The main difference between the applied methodologies (alginate and pellet culture vs. cartilage generation in 3D scaffolds) can be observed in oxygen gradients in the vicinity and within the formed cartilage (38, 76).

In the case of alginate and pellet culture, oxygen gradients at the surface of constructs can be neglected, and only oxygen limitations within the constructs are likely. For the cultivation of 3D scaffolds, even more significant oxygen gradients within the formed matrix are expected. Another attempt to improve tissue-engineered cartilage is the application of mechanical force during the cultivation to produce a phenotypically appropriate tissue. Four main types of force are currently used in cartilage cultivation: hydrostatic pressure, direct compression, and high- and low-shear fluid environments.

All these forces have been integrated into culturing devices used as bioreactors for articular cartilage. The individual effects have been reviewed by Darling and Athansiou (9). Our work started from an engineering view point, that is, we invastigated the oxygen transport in culture systems for the generation of cartilage pellets and within the pellet itself theoretically. Two culture strategies were modelled, a static culture system with the supply of oxygen through the medium by diffusion and a perfused culture system with an xygen-enriched medium. For a static culture system, the oxygen supply of a cartilage pellet from the medium, which is not flowing (static medium layer, Fig. 3A) was calculated with the following assumptions: (i) the medium is in contact with the atmosphere via a gas-liquid interface and the oxygen concentration at the surface is in equilibrium with the atmosphere. (ii) The oxygen concentration cR in the static medium layer can be described by one-dimensional diffusion (D= diffusion coefficient in the medium). ?cR ? cR (1) ———- = D ? ———–? x2 ? t (iii) The oxygen concentration cP within a pellet can be described by Eq. 2. X ? qmax cP dcP d2cP (2) ———- = Deff ? ———– – ——————- ? —————V dt ks + cP dx2 where X is the cell density, qmax the maximal cell-specific oxygen uptake rate, V the volume of the cartilage and kS the Monod constant. (iv) The mass transfer of oxygen from the medium to the pellet is only by diffusion. At the interface, oxygen concentration and slope are identical on both sides.

At the pellet wall, the slope of oxygen concentration is zero. Figure 3 shows the calculated oxygen concentration profile as a function of length scale and time with the following parameters: a cell density of 2 ? 106 cells per pellet, a maximal cell specific oxygen uptake rate of qmax = 10–13 mol cell–1 h–1, kS = 1075 ? 10–5 mol l–1 and Deff = 2. 16 ? 10–5 cm2 s–1, which is 80% of the diffusion coefficient in the medium (38). As shown in Fig. 3A, oxygen concentration in the vicinity of the pellet decreases very rapidly to zero within a very short time.

This effect is mainly due to the very low diffusive transport of oxygen through the boundary layer between the cartilage pellet and the medium. Alternatively, a perfused system was modelled, in which an oxygen enriched medium flows over the cartilage and the thickness of the boundary layer over the cartilage should be significantly decreased (Fig. 3B). The oxygen concentration cm in the flowing medium as a function of time and length xm can be described by Eq. 3. dcm d2cm 4 (3) ———– = D ? ———— + u ? ————– ? (c0 – cm) dt dxm2 dP ? where U is the flow velocity, dP the pellet diameter, and c0 the oxygen concentration at xm = 0. The results of these simulations are summarised in Fig. 3B for a flow rate of 3 ml min–1. These calculations show that the mass transfer resistance in the boundary layer between the cartilage and the medium can be significantly decreased, but still oxygen concentration within the pellet decreases very rapidly. For both systems, a severe oxygen limitation has to be expected within the tissue matrix. The main reason for this limitation is the very low rate of transport by diffusion.

Similar conclusions have been drawn elsewhere (38, 76). A flow with an enriched medium, as in the perfused culture system, can overcome this problem only to some extent by decreasing the thckness of the boundary layer between the tissue matrix and the medium. These findings lead to the question of whether it is possible to predict the properties of cartilage generated in these bioreactor systems on the basis 240 PORTNER ET AL. J. BIOSCI. BIOENG. , FIG. 3. Modelling of oxygen profiles within tissue-engineered cartilage. A) Calculated oxygen profile in static culture system for cultivation of artificial cartilage pellets. (B) Calculated oxygen profile in perfusion culture system for cultivation of artificial cartilage pellets. of the above conclusions. This will be addressed below by comparing experimental results from different cultivation systems. The methods will be introduced only briefly. For details, see Ref. 17. Threedimensional cartilage-carrier constructs were produced according to the protocol described above from chondrocytes of an adult mini pig.

The final step of this protocol was performed either in bioreactors (in a flow-chamber or under intermittent hydrostatic pressure) or in 12-well plates as the control (Fig. 4). The flow-chamber bioreactor was specially designed for the generation of three-dimensional cartilagecarrier constructs. A specific feature of the flow chamber is a very thin medium layer for improved oxygen supply and a counter current flow of the medium and gas (20). Another bioreactor system was designed in which an intermittent hydrostatic pressure is applied during the cultivation.

It enables the cultivation of seven cartilage-carrier constructs in parallel. The main results of the experiments are summarized in Table 1. Experiments at different oxygen concentrations (21% and 10% v/v O2) were performed in 12-well plates as the control and the constructs were compared qualitatively and quantitatively. The appearance of the cartilage obtained under decreased oxygen tension seemed to be closer to the native cartilage with respect to the shape of cells, distribution of cells within the matrix, and smoothness of the surface among others.

The thickness of the cartilage formed by free swelling was always in the same range as that of the native cartilage (approximately 1 mm). For both oxygen concentrations the content of glycosaminoglycan (GAG) was similar, but still significantly lower than that in the native cartilage (data not shown). Qualitatively, the most stable attachment of the cartilage on top of the carrier was found for 10% O2 (v/v). Furthermore, the cultivated cartilage contained a large content of collagen type II (data not shown). From these observations, a lower oxygen concentration in the gas phase is recommended.

Experiments in the flow-chamber bioreactor showed a significantly higher matrix thickness but a lower content of GAG then cultures in 12-well plates as the control. The appearance of the cartilage obtained in the bioreactor seemed to be closer to the native cartilage with respect to the shape of cells, distribution of cells within the matrix, and smoothness of the surface among others. The cartilage obtained from 12-well plates showed an inhomogeneous distribution of cells, a more uneven surface and holes within the matrix.

Another important requirement for a successful implantation is the consistency of the cartilage. In the case of bioreactor cultures, the compaction of the cartilage and the attachment between the cartilage and carrier were very good, indicating that the construct is appropriate for implantation. In contrast, the cartilage-carrier constructs cultivated in 12-well plates were soft and the attachment between the cartilage and carrier was not sufficient. In this case, the cartilage tended to slip off the carrier with only a slight mechanical impact.

Furthermore, the cultivated cartilage should VOL. 100, 2005 BIOREACTOR DESIGN FOR TISSUE ENGINEERING 241 FIG. 4. Culture systems used for generation of three-dimensional cartilage carrier constructs. contain a significant content of collagen type II. This was confirmed qualitatively by immunohistological analysis. In the third set of experiments cartilage-carrier constructs were cultivated in a bioreactor, in which intermittent hydrostatic pressure was applied during the last week of cultivation (total time, 5 weeks).

A total pressure of 3 ? 105 Pa was applied eight times per hour for 2. 5 min during this week. Constructs cultivated under an intermittent hydrostatic pressure load and a decreased oxygen tension (10% O2 v/v) showed a significantly higher matrix thickness and a higher GAG content than those cultivated in 12-well plates as the control (Table 1). The compaction of matrix as well as attachment between the cartilage and carrier was evaluated qualitatively and found to be much better in the bioreactor ultures with intermittent hydrostatic pressure loading than in constructs cultivated without loading in 12-well plates. In a small animal trial, constructs were implanted into mini pigs. One pig recieved constructs cultivated with pressure loading and at 21% O2 v/v and anotther pig received constructs cutlivated with pressure loading and at 10% O2 v/v. After surgery, none of the animals showed restrictions in movement. In both pigs, the cultivated cartilage integrated into the surrounding native cartilage without the formation of gaps.

The immunohistological analysis revealed that explants cultivated at 10% O2 v/v showed a higher collagen type II content than those cultivated at 21% v/v O2 (Fig. 5). The explants cultivated at 10% O2 v/v indicated a hyaline like cartilage, whereas those cultivated at 21% O2 TABLE 1. Biochemical data of cartilage-carrier constructs cultivated in 12-well plates, in flow-chamber bioreactor, under intermittent hydrostatic pressure, and for native cartilage (glycosaminoglycane, GAG) Matrix GAG thickness (µg) (mm) 12-well plate 4 1. 2 ± 0. 7 162± 103. 12-well plate 4 1. 3 ± 0. 6 155. 9 ± 74. 4 Flow-chamber bioreactor 6 1. 6 ± 0. 2 142. 7 ± 9. 7 12-well plate (control) 6 1. 1 ± 0. 1 238. 9 ± 22. 1 Static culture under intermittent hydrostatic pressure 3 1. 1 ± 0. 7 466. 53 ± 7. 1 12-well plate (control) 3 0. 7 ± 0. 0 268. 8 ± 74 Native cartilage 1. 0 ± 0. 0 1680. 1 ± 211. 8 The cultivation principle consists of the following steps (17): (i) chondrocytes are isolated from the articular cartilage of an adult mini-pig, expanded in a monolayer culture and then seeded on a solid ceramic carrier (diameter 4. mm) to form a primer layer; (ii) simultaneously, chondrocytes are suspended in alginate gel and cultivated for two weeks to allow the formation of a pericellular matrix; (iii) redifferentiated chondrocytes are then recovered from the alginate gel and sedimented on the primer layer; (iv) the biphasic constructs are further cultivated for three weeks to allow free-swelling of the cartilage matrix. This step was performed either in a 12-well plate, a flow-chamber bioreactor (flow rate, 0. 5 ml/min) or under intermittent hydrostatic pressure (total pressure of 3 ? 105 Pa, 8? 2. min per hour, applied hourly during the last week of cultivation). Three sets of experiments were performed: (i) cultivation of cells in passage 4 in 12-well plates at 21% and 10% oxygen tensions in the headspace; (ii) cultivation of cells in passage 6 in a flow-chamber bioreactor and in 12-well plates (control) at 21% oxygen tension; (iii) cultivation of cells in passage 3 in a bioreactor under intermittent hydrostatic pressure and in 12-well plates (control) at 10 % oxygen tension. Native cartilage from an adult mini-pig; diameter, 4. 5 mm; average of five samples. Culture system Passage no.

O2-tension in the gas phase (%) 21 10 21 21 10 10 242 PORTNER ET AL. J. BIOSCI. BIOENG. , further investigations showed that due to the very low mass transfer between the static culture medium and the gas phase, oxygen concentration in the culture medium did not increase during intervals with a higher pressure. Therefore, other factors that explain the significantly improved matrix properties of constructs cultivated under intermittend hydrostatic pressure compared with static cultures in 12-well plates should be identified. Probably, the mechanical stimulation of chondrocytes is the main effect.

However, to clarify this, further biochemical and cell biological studies are required to determine, which cell biological effects are responsible for the observed phenomena. CONCLUSIONS Bioreactors for the generation of 3D tissue constructs can provide a better process control by taking into account different demands of cells during cultivation. Furthermore, they can provide the technical means to perform controlled studies aimed at understanding specific biological, chemical or physical effects. Moreover, bioreactors enable a safe and reproducible production of tissue constructs.

An overall comparison of different culture methods shows clearly the advantages of bioreactor culture. Not only can the properties of cultivated 3D tissue constructs be improved, aspects such as safety of operation argue for the use of bioreactor systems. Furthermore, the bioreactor can be used to study effects such as shear flow and/or hydrostatic pressure on the generation of tissues. For future clinical applications, the bioreactor system should be an advantageous method in terms of low contamination risk, ease of handling and scalability.

To date the goals and expectations of bioreactor development have been fulfilled only to some extent, as bioreactor design in tissue engineering is very complex and still at an early stage of development. In the future, a very intimate collaboration between engineers and biologists will lead to an increased fundamental understanding of complex issues that can have an impact on tissue formation in bioreactors. On one hand, devices are required with a well-described microenvironment of cells for fundamental studies. On the other hand, a ransition from a laboratory scale to an industrial scale will require a high adaptability of specialized bioreactors in a standardized production process. These advances will aid in ensuring that tissue engineering fulfil the expectations for revolutionizing medical care. ACKNOWLEDGMENTS We would like to thank Drs. Klaus Baumbach, Frank Feyerabend, Jan-Philipp Petersen and Jens Schroder for scientific input and help in animal trials, Sven Cammerer and Katja Schmid for modelling the cartilage reactor as well as Katharina Braun, Ditte Siemesgeluss and Richard Getto for technical support.

The financial support of Biomet Deutschland GmbH, Berlin under the BMBF grant no. 03N4012 and the city of Hamburg within the “Qualtitatsoffensive Tissue Engineering” is gratefully acknowledged. FIG. 5. Images of immunohistological staining for collagen type II of implanted cartilage-carrier construct (mini-pig) after explanation and decalcification of carrier. Cartilage-carrier constructs were cultivated prior to implantation under loading with intermittent hydrostatic pressure in a bioreactor aerated with 21% O2 (a, b) and 10% O2 (c, d). Time of observation for the animals: 8 weeks.

Bars indicate 500 µm. 1, Native cartilage; 2, newly formed cartilage; 3, bone; 4, extracted carrier after decalcification. The protocol for the generation of cartilagecarrier constructs is described in Table 1. v/v showed unsatisfactory results. The above considerations underline the idea that engineering knowledge can help improve cultivation systems and applied strategies for tissue engineering. On the other hand, it becomes obvious, that both engineering and fundamental studies on cell biology are required to further clarify the observed effects.

The theoretical simulations indicate that even under ideal conditions (no mass transfer limitation in the fluid phase) a severe oxygen limitation within the engineered tissue should be expected. If oxygen supply would be the limiting factor during cartilage formation, a bioreactor system (flow chamber) with an improved oxygen supply should lead to a better quality of the engineered cartilage. On the other hand, lower oxygen concentrations in the gas phase seem to improve some matrix properties.

From the results discussed above, these discrepancies can be solved only to some extent. With respect to important biochemical properties, particularly the content of GAG, the constructs from the flow chamber bioreactor showed significantly lower values than those from the 12-well plates, probably due to a higher, detrimental oxygen concentration in the matrix. On the other hand, other matrix properties, particularly the attachment between the cartilage and carrier was better for constructs from the flow chamber than for those from 12well plates.

This can be due to a better oxygen supply within the matrix close to the surface of the carrier. The best results were obtained from constructs cultivated under intermittent hydrostatic pressure and a decreased oxygen concentration in the gas phase. Initially, this phenomenon is difficult to understand. As the partial pressure of oxygen in the gas phase depends on total pressure, a higher pressure should even increase oxygen concentration significantly, leading to even worse matrix properties. However, VOL. 100, 2005 BIOREACTOR DESIGN FOR TISSUE ENGINEERING 243

NOMENCLATURE c0 : oxygen concentration in the flowing medium layer at xm = 0 m, mol l–1 cm : oxygen concentration in flowing medium layer, mol l–1 cR : oxygen concentration in static medium layer, mol l–1 cP : oxygen concentration in cartilage matrix, mol l–1 D : diffusion coefficient in medium, m2 s–1 Deff : diffusion coefficient in cartilage matrix, m2 s–1 dP : pellet diameter, m kS : Monod constant, mol l–1 qmax : maximal cell-specific oxygen uptake rate, mol cell–1 h–1 u : flow velocity, m2 s–1 V : volume of cartilage, l X : cell density, cells l–1 x : length, m xm : length in medium, m REFERENCES 1.

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