Tuesday, January 09, 2007

My Blog

Why the Jason Haseldine Blog?

a) To understand what blogging is
b) To share all my BComm assignments to those students in need of a heads up. Remember to quote me :)


Wednesday, November 01, 2006

Village Roadshow

Jason Haseldine October 2002

Background Information

Village Roadshow Limited (Roadshow) is being sued by an American company, Reading, for breach of the Trade Practices Act as highlighted in The Age, 20 March 2001, page 3.

A claim of “discriminatory and unfair manner” have been brought against Roadshow

The Australian Competition and Consumer Commission (ACCC) are currently investigating Roadshow’s cinema releases around Australia

Conciliator, Mr David Newton has stated in his confidential report obtained by The Age that “Roadshow’s action are inappropriate”


Reporting of information about liability in financial reports may be by way of recognition within the financial statements or disclosure within the notes of the financial report

SAC 4 states in paragraph 65 that a liability should be recognised in the financial statements when and only when:
It is probable that the future sacrifice of economic benefits will be required
The amount of the liability can be measured reliably.

Based on the above criteria there is currently no probability that future economic benefits will be sacrificed as Roadshow is not admitting liability and the claim is being defended in the Federal Court, further, the potential losses, if any, arising from the claim is not able to be reliably measured at reporting date.


AASB 1044 defines the requirements of a Contingent liability

Roadshow’s potential legal claim meets the definition in AASB 1004 3.1.4 (b) as it fails to meet the probable and reliable test

There is a present obligation under 4.1 (b) as the amount and timing of any claim is uncertain.

The potential claim fails the provision test 5.1 as again probability and reliability cannot be ascertained.

Claim is classified as contingent based on 7.1.5 (d) as Roadshow is defending a claim for unspecified damages and no amount of the claim can be measured reliably as at 30 June 2001.

Disclosure is required under 14.6 as the contingent liability is remote: refer 14.7 (a)


Based on the analysis in Slides 1 to 3, it is recommended to the Senior Partners that Village Roadshow disclose a contingent liability within their financial report as at 30 June 2001.

The disclosure should be narrated as follows:

Contingent Liability

AASB 1044 14.6 identifies the following information which must be disclosed in Roadshow’s financial report:

(a) A brief description of the contingent liability
(b) An indication of the amount or timing of any future sacrifice
(c) A statement that it is not practical to make an estimate as it can’t be measured at reporting date
(d) The existence and amount of any possible recovery.


United States company Reading sues Roadshow for breach of Trade Practices Act

Potential liability does not meet the definition under SAC 4

Contingent liability held under AASB 1044

Village Roadshow to disclose a note referring to the legal dispute within its financial report as at 30 June 2001.

Employee Share Options

Jason Haseldine October 2002


This paper identifies the current lack of international accounting standards within the use of employee share options. It highlights the debate amongst users and preparers of financial statements over the accounting treatment of the ‘cost’ associated with employee options.

An analysis of share options is provided. This analysis whilst brief, identifies what type of options are available and to what extent they are used within society.

The report then defines expense under SAC 4 and provides arguments both for and against, concluding that share options are an expense and should be treated as such.

The economic consequences associated with the adoption of accounting standards are addressed. It raises concerns that the industry (principally the technology industry) may be subject to adverse effects based on the elimination or reduction of employee share options. A decline in this industry could affect the economy on a larger scale. The report signifies the importance of neutrality when setting standards, whilst economic consequences are also important they need to be addressed by a body separate from the standard setter.


There has been considerable debate within the business community regarding the appropriate accounting treatment of employee share options within the General Purpose Financial Reports. The debate consists of whether the transaction associated with employee share options is an expense and how it should be recognised within the financial statements?

The International Accounting Standards Committee Foundation (IASCF) has raised concerns about the lack of an international standard, despite the increasing use of share-based payments.

Few countries have adopted an accounting standard on this topic, thus promulgating a Discussion Paper “Accounting for Share-Based Payment: G4+1 Proposals” released in July 2000. The Paper proposed “employee share options be recognised in an entity’s financial statements to reflect the receipt and consumption of employee services and the issue of equity instruments.”

The majority of responses to the Discussion Paper were from prepares of accounts within the USA who strongly opposed proposals set forth by G4+1. Preparers of accounts reacted negatively to the proposal on the basis that it would reduce their ability to recruit; it would raise their expenses and ultimately reduce economic growth.

Users of accounts unanimously agreed with the proposal, expressing concerns that the elimination of share options from the financial statements can impact a users economic decision.

The purpose of this paper is to identify the nature of share options and articulate this form of transaction as an expense according to the Statement of Accounting Concepts 4 (SAC 4): “Definition and Recognition of the Elements of Financial Statements”. This paper assesses the economic consequences and their role within accounting standards and identifies arguments both for and against the expensing of employee share options.

Share options were first used in the 1940s and 1950s as bonuses for key executives. Today they are a device principally used to induce and retain both employees and senior executives.

The nature of share options is articulated within the “Employee Share Scheme Guidelines” May 2000, as having a purpose, “Employee share schemes enhance and promote the achievement of common goals between employees, shareholders and the company. Participation in share ownership schemes provides major incentives for employees to increase productivity and share the rewards of the success of the company.”

Today there are a number of share options available within organisations. Two of the more common types, as stated in “Accounting for Share-Based Payment: G4+1 Proposals” are:

Plain vanilla:
These plans offer an employee the right to purchase a number of common shares at a fixed price for a specific period of time.

Performance vesting share options:
Options do not vest until some performance criteria are met e.g. share price increases or meeting specified share price targets.

According to the National Centre for Employee Ownership in the United States, between 7 to 10 million employees are in receipt of options as at June 2000, this has increased from 1 million employees since 1990. The technology industry are the greatest user of options at 100% and also grant the highest percentage of outstanding share as options being 5-8% compared to 1.25% within the non-technical industries.

Employee shares options do not incur a ‘cost’ to the company from a cash flow perspective, as they are a paper transaction issued from the company’s share reserve.

Currently there are no statutory requirements to expense the value of employee shares or options against profits in the company’s accounts. Companies within the US and Canada are also entitled to ignore the value of share options within their financial statements however there is a requirement to present the value of such benefits with the notes to the accounts.


Are employee share options an expense? To answer this question we must establish the definition of an expense according to the Statement of Accounting Concepts 4 (SAC 4): “Definition and Recognition of the Elements of Financial Statements”.

Paragraph 117 states, “Expenses are consumption or losses of future economic benefits in the form of reductions in assets or increases in liabilities of the entity, other than those relating to distributions to owners, that result in a decrease in equity during the reporting period.”

The issue of shares within a company would result in an inflow of resources based on the fair value of the shares at that time. As these shares are offered to staff in return for services there is a consumption of that resource, hence reducing the company’s assets (albeit immediately), which must be disclosed within the financial statements based on the definition above.

By not accounting for employee share options within the financial statements, assumes the employee’s services were offered for free. This lack of reporting distorts the running costs of the company, as users of this information would be misled about the true input costs necessary to generate the revenues recorded. This could lead to users making incorrect economic decisions.

The user ought to know for example that Microsoft had $US 60 billion in outstanding employee stock options in 1999 and that it’s reported profits would have reduced some 18% in 1996 had these options been expenses in their financial statements.

SAC 4 identifies the criteria for recognition of revenues under paragraph 125. Using this definition “For a revenue to qualify for recognition, it must be probable that the inflow or other enhancement or saving in outflows of future economic benefits has occurred.” (emphasis added) supports the adoption of reporting the cost of employee share options. The revenue from the issue has been forgone for ‘another enhancement’ being employee’s salaries.

Certain members of the community believe that an employee share option is not an expense as defined by SAC 4, hence there is no requirement to report this ‘cost’ within a company’s financial statements.

Those that are against expensing include President George Bush and the New York Stock Exchange as mentioned in “AAR: Publication: Focus: Employees Share & Options Plans” July 2002, believe that this form of remuneration should not be expensed as this is a capital transaction resulting in a change of proprietorship, rather than an expense. It is the shareholders who pay the employee, not the company.

As stated in “AAR: Publication: Focus: Employees Share & Options Plans” July 2002, a “High Court decision Pilmer v Duke Group Limited 2001, held that a company suffers no loss when it issues shares as consideration for an acquisition where the shares have a market value greater than the value of the asset acquired”.

This case identifies from a legal perspective that a company’s economic value has not been reduced because of the options issued, the profitability is unaffected and there is no depletion of assets.

The National President of the Group of 100 Inc, Mr Tom Pockett, states in a letter to the IASB dated 15 December 2000,“that from an entity concept point of view the issue of shares and options does not constitute a cost to the entity on the grounds that the effect is to dilute the equity of existing shareholders.”

Their argument is that there is neither a reduction in the assets or an increase in the company’s liabilities, which is a requirement of an expense as defined by SAC4 above.


Economic consequences are a pertinent issue when discussing employee share options. Leo and Hoggett (1998) state “the consequences that an accounting standard may have on an industry, or the economy, as a result of those decisions being made.”

The anti expense lobby group raise a number of concerns over the expensing of options within the financial statements. Some of the concerns are based on the economic consequences that will be sustained as a result of expensing.

Mr Andrew Green Chief Executive of the Australian Venture Capital Association Limited highlights how expensing could result in the elimination or reduction of employee share schemes, thus reducing the capacity for start-up companies to attract and motivate high quality entrepreneurs. Moreover, expensing could potentially create an additional layer of contingent liabilities, thus placing companies on a more stringent solvency test.

The arguments against expensing within Australia can be derived from the Australian Conceptual Framework, as this Framework does not consider economic consequences when creating or revising accounting standards.

This conclusion is based on the comments from Malcolm Miller (AASB member 1991-1995) who did not believe the AASB took economic consequences into consideration. Further, Leo and Hoggett (1998) review SAC 2,3 and 4, review the international standard-setting bodies and analyse CLERP 1 to conclude that no clear guidance is provided as to whether the standard-setters need to consider economic consequences.

With recent corporate collapses both internationally (Enron, WorldCom) and nationally (HIH, Harris Scarfe) corporate governance is at the fore.

As the shareholder community continues to grow via privatization of government utilities, flexible superannuation structures and through employee share options, users are demanding transparency in employee remuneration and greater accuracy and consistency in reported earnings.

If users are suggesting that improvements are required to ensure reported earnings are true, then by not expensing employee share options results in a lack of neutrality. General purpose financial reports should be reliable and free from bias.

The exclusion of employee share options can mislead users about the true input costs necessary to achieve the revenue and reported earnings. This could increase the risk of users investing in that company and possibly lead to the excessive issue of shares. This argument enforces the concept of neutrality; the economic consequences are aligned by the market investing where true earnings are reported.

Contrary to this argument, is the ability of start-up companies (specifically technology company’s) to flourish by not expensing employee share options. Clearly there are economic consequences at play within the technology industry and the economy as a whole. The technology boom has carried the economy over the past 10 years and created vast job opportunities in its wake. An analysis of the economic consequences within this industry would be vital prior to the commencement of an expense standard.


SAC 3 Qualitative Characteristics of Financial Information preside over the debate to expense or not to expense employee share options.

SAC 3 analysises terms such as relevance, reliability and understandability. These terms are described in detail for a particular purpose and that purpose is to protect the user.

The user ought to know for example that Microsoft had $US 60 billion in outstanding employee stock options in 1999 and that it’s reported profits would have reduced some 18% in 1996.

Employee share options should be expensed. Companies don’t generate vast revenues and profits without paying vast salaries. The expense standard needs to be neutral and the economic consequences need to be assessed by a body independent of the standard setter.


Allens Arthur Robinson (October, 2002) “Employee Share & Option Plans – October 2002”, Publications: Capital Markets, Accessed 19 October 2002, Web:

Allens Arthur Robinson (October, 2002) “Employee Share & Option Plans – October 2002”, Publications: Tax, Accessed 19 October 2002, Web:

Allens Arthur Robinson (July, 2002) “Employee Share & Option Plans – July 2002”, Publications: Capital Markets, Accessed 19 October 2002, Web:

Australian Broadcasting Corporation (October, 2000) “TV Program Transcript”, Lateline, Accessed 19 October 2002, Web:

Australian Institute of Company Directors (May, 2000) “Employee Share Scheme Guidelines”, Accessed 19 October 2002, Web:

Institute of Chartered Accountants and CPA Australia, “Accounting Handbook 2002”, Victoria, Pearson Education Australia Pty Ltd.

Leo K and Hoggett J 1999, “Company Accounting in Australia 4th edition revised”, Milton QLD, Jacaranda Wiley.

McGowan S and Rivett D 2002, “Assignment Readings: Issues in Accounting Theory 2002”, Adelaide, University of South Australia

National Commission on Entrepreneurship 2000, “Employee Stock Options: Their Use and Policy Implications”, Washington, DC.

The Securities Institute of Australia (July, 2002) “Overwhelming support to expense employee options”, Accessed 20 October 2002, Web:

Southwick, A. and Wake, B. (1997), “Writing Readable Reports”

ACL Surgery

Jason Haseldine December 2002


This paper discusses the recent literature on anterior cruciate ligament (ACL) surgery and rehabilitation.

The ACL is one of four major knee ligaments. The ACL and posterior cruciate ligaments reside deep within the knee joint. The other two ligaments are located on each side of the knee.

Dr Greg Keene states in Common Knee Complaints: Anterior Cruciate Ligament (ACL) Injuries that “ACL injuries are extremely common in athletically active young people especially in sports with a lot of high pressure twisting and jumping such as netball, basketball and football.”

The human body cannot heal a torn ACL. The treatment for a torn ACL is via reconstructive surgery. A patient can elect against surgery and hence cease playing physically demanding sports.

The two common methods of reconstruction are the patellar tendon and hamstring tendon technique. These methods are described in more detail within this paper.

Finally, this paper discusses the rehabilitation process required to achieve the following four protocols as identified by the Orthopaedic Associates of Portland in their paper “Anterior Cruciate Ligament Reconstruction Rehabilitation Protocol 2001”, being;

1. “Regain normal motion in the knee as soon as possible
2. Increase weight bearing to minimize limping as early as possible.
3. Early recognition and treatment of any problems i.e. pain, stiffness, swelling or sever muscle weakness.
4. Return to normal activities as soon as possible.”


ACL reconstruction surgery is a replacement of the torn ligaments. The damaged ends of the ligament are removed and a new ligament is obtained from a remote site, usually by removal of either a hamstring tendon or part of the patella ligament. The new ligament is anchored to the femur and tibia bone with a secure fixation device.

Graham and Parker state in their journal publication Anterior Cruciate Ligament Reconstruction using Hamstring Tendon Grafts that the “Replacement tissues to reconstruct the ACL can be categorized as:

1. Autograft
2. Allograft
3. Xenograft and
4. Artificial replacements.

Historically, xenograft and artifical replacements have failed dismally. As a result, autograft and allograft tissues commonly are used to reconstruct the ACL. Autograft tissue currently is the most common source for grafts used worldwide. The two most common autograft tissues are the Patellar and Hamstring tendons.”

There are many published articles associated with the practices of both Patellar and Hamstring tendon grafts. Fox et al. in their journal publication “ACL Reconstruction with Patella Autograft Tendon” highlight the differences between the two methods as “subtle, except for the consistent finding of an increased activity level in the Patellar tendon group.”

Further, Beynnon et al undertook a clinical trial on 56 patients. 28 underwent Patellar grafts and the other 28 underwent Hamstring grafts. The results published in their article titled “ACL Replacement: Comparison of Bone-Patellar Tendon-Bone Grafts with Two-Strand Hamstring Grafts” identifies the “Patellar graft as superior to those of the Hamstring Graft based on knee laxity, pivot-shift grade, and strength of the knee flexor muscles. However the two groups had comparable results in terms of patient satisfaction, activity level and knee function.”

Dr Greg Keene states in Common Knee Complaints: Anterior Cruciate Ligament (ACL) Injuries that “the patella tendon technique is far superior to the alternative hamstring tendon technique in maintaining tightness of the new ligament and in rates of successful return to high level sport.”


An accelerated rehabilitaion program commences following surgery to regain normal motion and a return to high level sporting activity.

A number of published articles were reviewed which identified rehabilition programmes lasting on average 6 months. Beynnon et al identify in their article “The Science of ACL Rehabilitation” that “After ACL replacement, immobilization of the knee, or restricted motion without muscle contraction, leads to undesired outcomes for the ligaments and muscular structures that surround the joint.”

From my personal experience, having had a knee reconstruction performed by Dr Greg Keene in 1997, the two most important rehabilition goals was to ensure straightness of the leg and to gain a range of motion (ROM) to 130o.

The rehabilitation programe is very active and taxing to the patient. A series of exercises are sequentially introduced to increase muscle strengthening via exercise bikes introduced after 3 weeks, hydrotherapy after 6 weeks then weights and light jogging.

Dr Keene states “Full strengthening and maturing of the graft for a safe return to sport will take a minium 6-12 months. The success rate is high and in the 90% category if measured in terms of a successful and safe return to sport with a stable knee.”


Injury to the ACL is a common but severe injury to the knee. ACL reconstruction surgery is a replacement of the torn ligaments.


Allens Arthur Robinson (October, 2002) “Employee Share & Option Plans – October 2002”, Publications: Capital Markets, Accessed 19 October 2002, Web:

Allens Arthur Robinson (October, 2002) “Employee Share & Option Plans – October 2002”, Publications: Tax, Accessed 19 October 2002, Web:

Allens Arthur Robinson (July, 2002) “Employee Share & Option Plans – July 2002”, Publications: Capital Markets, Accessed 19 October 2002, Web:

Australian Broadcasting Corporation (October, 2000) “TV Program Transcript”, Lateline, Accessed 19 October 2002, Web:

Australian Institute of Company Directors (May, 2000) “Employee Share Scheme Guidelines”, Accessed 19 October 2002, Web:

Southwick, A. and Wake, B. (1997), “Writing Readable Reports”


Jason Haseldine August 2003


This report researches the various definitions of the term globalisation. With over 1.7 million web pages associated with globalisation, there is little collective agreement as to its true definition. This paper identifies a series of definitions from organisations and individuals to form a basis of understanding.

In conclusion to the research undertaken, I have defined globalisation as the connectedness of economics, politics and culture though increased trade and financial flows, intertwined with the use of technology.

The second part of this report considers some of the arguments both for and against globalisation. The debates are strong and the quality of statistical data is high for both the “environmentalists” on the left and the “neoliberal capitalists” on the right.

Research has been conducted on a wide variety of sources to cover the globalisation debate. These views provide a balanced discussion of the various arguments to date. In conclusion, I believe globalisation must continue to ensure openness via reduced barriers and tariffs resulting in greater competition, better quality goods and services and a stronger economic climate. The growth in globalisation must be balanced to ensure protection of the environment and to take into consideration cultural sensitivities.


A search on www.google.com for the word globalization reveals in excess of 1.7 million pages associated with this term, as at 16 August 2003, yet there seems little collective agreement as to its true definition.

The term globalisation remains undefined in the most current print of the Oxford Thesaurus of English (2000). www.dictionary.com provides a basic macro definition of globalization via The American Heritage Dictionary of the English Language as: “to make global or worldwide in scope or application”. Held and McGrew (2000, p.3) state “No single universally agreed definition of globalization exists. As with all core concepts in the social sciences its precise meaning remains contested.”

Reich further supports the lack of definition of the term globalisation in his working paper, What is Globalization? Four Possible Answers, Reich (1998, p.4) states, “Despite the breadth with which the term has been applied, the meaning of globalization remains so elusive as to defy definition”. Reich recognizes four distinct approaches to globalisation: historical, economic, sociological and technological.

www.globalisationguide.org is a website constructed by a unit of the Monash University named the Australian APEC Study Centre. Here they describe globalisation as “a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows. However, one can also point to a rapid increase in cross-border social, cultural and technological exchange as part of the phenomenon of globalisation”.

The International Chamber of Commerce (2000) state, “Globalization is about worldwide economic activity - about open markets, competition and the free flow of goods, services, capital and knowledge.”

www.globalization.com (2003) defines globalisation at two levels: Firstly globalisation at the political and economic level refers to “the process of denationalisation of markets, politics and legal systems, i.e., the rise of the so-called global economy”. Secondly at a business level, “globalisation is whereby companies decide to take part in the emerging global economy and establish themselves in foreign markets”.

www.globalization.about.com (2003) discusses globalisation as the increased flow of information, money and travel and highlights the term globalisation being the preferred term of describing the current times.

Guillen (2001) quotes several authors when establishing what is globalisation: “globalization is a process leading to a greater interdependence and mutual awareness (reflexivity) among economic, political and social units in the world, and among actors in general”.

Based on my research identified above, I identify globalisation as the connectedness of economics, politics and culture though increased trade and financial flows, intertwined with the use of technology. Globalisation is about change, and people’s acceptance of change within today’s society.


The debate over globalisation exists between the “environmentalists” on the left and the “neoliberal capitalists” on the right. The International Monetary Fund (2002) state how “Some view it as a process that is beneficial—a key to future world economic development—and also inevitable and irreversible. Others regard it with hostility, even fear, believing that it increases inequality within and between nations, threatens employment and living standards and thwarts social progress”.

The Globalisation Guide.org (2002) states, “The WTO argues that the growth of trade between countries increases the wealth of everyone. Trade allows the production of goods and services by those who are most efficient, thus maximising their availability at the best price…The growth of trade is helped by the lowering of barriers, such as tariffs and import quotas.”

In contrast to the WTO, a recent study (The Centre for Economic and Policy Research 2001) identified a very clear decline in progress over the past 20 years compared with the previous two decades, further, they maintain there is no evidence in the data associated with globalization to indicate improved outcomes for the low to middle-income countries.

A study (International Chamber of Commerce 2000) identifies how globalization has increased the living standards of the world’s poorest people and lowered the level of world population living in poverty over the past 10 years. New research has also suggested that income inequality between rich and poor countries is diminishing.

Jorquera (2000) states, “Neo-liberal, market-first economic policies have spread to governments in every corner of the world. But the means by which these policies have been forced on the south…have generated economic stagnation, poverty and inequality. Sub-Saharan Africa, for example, spends more on servicing its $300 billion debt than it does on health and education for its children.”

Thomas Friedman is a three times Pulitzer Prize winner and international affairs columnist for the New York Times, his book the Lexus and the Olive Tree is a pro-globalisation text, he states “the driving idea behind globalization is free-market capitalism--the more you let market forces rule and the more you open your economy to free trade and competition, the more efficient and flourishing your economy will be.”

Alternatively Mark Rupert a political scientist at Syracuse University has created the Anti Thomas Friedman web page and says “For starters, Friedman's book avoids contact with evidence or analysis as if these carried the Ebola virus. Readers may search in vain for a footnote, table, or chart; and there is no engagement with the vibrant scholarly literature on globalization. Instead, facile metaphors and platitudes are piled relentlessly one on top of the other, illustrated with anecdotes from Friedman's travels amongst the world's rich and powerful and (no kidding) corporate commercial advertisements.”

A report by (Herman 1999) identifies how globalization has been engineered by the corporate elites for their own interests and that globalization has been marked by substantial declines in rates of output, productivity, and investment growth.

The International Monetary Fund (2002) states “Countries that have been able to integrate are seeing faster growth and reduced poverty. Outward-oriented policies brought dynamism and greater prosperity to much of East Asia, transforming it from one of the poorest areas of the world 40 years ago. And as living standards rose, it became possible to make progress on democracy and economic issues such as the environment and work standards.”

The debate over the advantages and disadvantages of globalisation continues to flourish. The volumes of data, graphs and specialists reports can persuade either supporter to justify their position. Based on my research identified above, I believe globalisation must continue to ensure openness via reduced barriers and tariffs resulting in greater competition, better quality goods and services and a stronger economic climate. The growth in globalisation must be balanced to ensure protection of the environment and to take into consideration cultural sensitivities.

Centre for Economic and Policy Research (2001), ‘The Scorecard on Globalization 1980-2000: Twenty Years of Diminished Progress’ viewed 18 Aug. 2003,

Friedman, Thomas (2000). ‘Chapter 1: Tourist with an attitude’, viewed 18 Aug. 2003, http://www.lexusandtheolivetree.com/globalization.htm

Globalization.about.com (2003), ‘Globalization: What is it?’ viewed 16 Aug. 2003,

Globalization.com (2003), ‘Introduction to globalization’, viewed 17 Aug. 2003,

Globalisation Guide.org (2002), ‘What is Globalisation?’ viewed 16 Aug. 2003, http://www.globalisationguide.org/01.html

Guillen, Mauro (2001). ‘Is globalization civilizing, destructive or feeble? A critique of five key debates in the social science literature’. Annual Review of Sociology, volume 27, forthcoming, June 2000 version, pages 1-40.

Held, David and McGrew, Anthony (2000), ‘The great globalization debate: an introduction’. In The global transformations reader; an introduction to the globalisation debate. Edited by David Held and Anthony McGrew. Malden Mass: Polity Press, pages 1-45.

Herman, Edward (1999). ‘The threat of globalization’, viewed 19 Aug. 2003, http://www.globalpolicy.org/globaliz/define/hermantk.htm

International Chamber of Commerce (2000), ‘ICC brief on globalization’, viewed 17 Aug. 2003,

International Monetary Fund (2002). ‘Globalization: Threat or opportunity?’ viewed 18 Aug. 2003,

Jorquera, Jorge (2000), ‘The Choice is Clear: Globalization for Capital, or for People’, viewed 17 Aug. 2003, http://www.globalpolicy.org/socecon/movement/jorquera.htm

Reich, Simon (1998), ‘What is Globalisation? Four possible answers’. In The Helen Kellogg Institute for International Studies Working Paper Series. Edited by Caroline Domingo, viewed 18 Aug. 2003, http://www.nd.edu/~kellogg/WPS/261.pdf

Rupert, Mark (2002), ‘The anti Thomas Friedman page’, viewed 16 Aug. 2003,

Search Engine (2003), viewed 16 Aug. 2003, http://www.google.com.au/

Southwick, A. and Wake, B. (1997), Writing Readable Reports

The American Heritage Dictionary of the English Language, Fourth Edition 2000, Houghton Mifflin Company, viewed 16 Aug. 2003, http://www.dictionary.com/

The New Oxford Thesaurus of English 2000, ed. P Hanks, Oxford University Press, New York.

Thorne, Kym and Turner, Geoff (2001). Global business regulations: some research perspectives. Melbourne: Pearson Education. ISBN 1740096827

Functional Conflict

Jason Haseldine January 2004

Functional conflict is not a contradiction in terms. Several writers have been identified in this paper to highlight the importance of conflict as a managerial tool used to maximise benefits within the workplace.

Conflict has been defined from the Oxford dictionary and several readings to provide a broad outline of what it means within the workplace. Sociologists and theorists dating back to the late 1800’s have documented conflict and the employer/employee relationship that still remains current today.

To assist us in our approach or attitude towards actions within an organisation, four frames of reference on conflict have been identified. The unitarist, pluralist, interactionist and radical frames identify different understandings as to how organisations are operated.

The frames of reference introduce the terms functional and dysfunctional conflict. Functional conflict is derived from the pluralist and interactionist frames of reference, the former accepting that conflict is inevitable whilst the latter perceives conflict as a positive and necessary action within any organisation.

Several sources of conflict have been identified to provide an understanding as to why functional or dysfunctional conflict arises within the workplace.

Conflict is defined in The Oxford Dictionary (2000) as the ‘opposition of incompatible wishes.’ McShane and Travaglione (2003, p.434) and Huczynski and Buchanan (2001, p.770) both identify perception as the key to conflict. The former identifying one party as perceiving its interests as being opposed and the latter identifying conflicts as a state of mind, which has to be perceived, by the parties involved. Van Gramberg (2002, p.208) identifies conflict as the struggle between two parties over resources.
Conflict within the workplace has been documented as far back as the late 1800’s. The development of the classical organisation theories by Taylor, Fayol and Weber identified formal regulation and authority, which articulates control and the employee/employer relationship.

Control is an important factor within conflict. Child (The Study Guide 2003) stated that control ensures that a predictable level of performance is attained yet unfortunately not everyone within an organisation shares the same goals. Thompson and McHugh (2002, p.103) identify labour process theory and the works of Marx in transforming labour power into labour. This refers to capitalists having control over labour and seeking a maximum return of production, whilst the workers pursue their own interests for job security, higher rewards and satisfying work. This theory results in the employment relationship being inherently conflictive.

Edwards’s study in 1979 (cited in Deery et al, 1997, p.301) highlights how the interests of employees and employers generally collide for ‘what is good for one is frequently costly for the other.’

There are four different frames of reference on conflict; they are unitarism, pluralism, interactionism and the radical or Marxist approach. The frames of reference assist the individual in their approach or attitude towards certain actions within an organisation.

The unitarist expects a harmonious workplace, comprising committed and loyal employees. Conflict is considered a threat and must be eliminated. Further, unions are perceived as unnecessary as they are disruptive and divide employee loyalty. Some key features of the unitarist frame of reference include a commonality of interests between owners and workers, acceptance of the political, social and economic culture and focuses more on resolving conflicts than the actual cause itself. (Van Gramberg, 2002, p.208; Huczynski and Buchanan, 2001, pp.772-773)

Huczynski and Buchanan (2001, pp.773-774) identify the pluralist as one who rejects the unitarist belief that employees have the same interests as management, for the pluralist believes many parties within an organisation will have different goals to that of the organisation. Conflict is inherent; it is an inevitable course of action within the organisation and can be resolved through compromise to the benefit of all. Unions have a legitimate role in the workplace.

Huczynski and Buchanan (2001, p.774) state ‘The interactionist frame of reference on conflict views it as a positive and necessary force within organisations that is necessary for effective performance.’ This frame of reference introduces functional and dysfunctional conflict within the organisation. The interactionist perceives an optimal level of conflict will be advantages to the company. Groups or departments that are not engaging in some level of conflict could be considered lethargic and not responsive.

The final frame of reference is the radical or Marxist approach. This notion rejects the pluralist frame of reference for Van Gramberg (2002, p.209) states ‘the Marxist view is to achieve annihilation of the suppressive social order…unions are seen as vehicles of this social revolution.’

The frames of reference introduced functional and dysfunctional conflict. Huczynski and Buchanan (2001, p.774) define ‘functional conflict is a form of conflict which supports organisational goals and improves performance.’ It derives from both the pluralist and interactionist frame of reference, the former accepting that conflict is inevitable whilst the latter not only accepts it, it also perceives conflict as being a positive and necessary force within organisations. Dysfunctional conflict however hinders organisational performance and can result in either overt (open or visible) or covert (hidden or concealed) forms of action.

Hatch’s study in 1997 (cited in Huczynski and Buchanan, 2001, p.775) developed a contingency model of conflict, which identifies the level of organisation performance based on the level of conflict on a bell-shaped curve. The curve identifies that an optimal level of conflict will result in a high level of performance within the company.

Conflict can be used as a functional tool of management to improve performance by exposing weaknesses and prompting changes. (Huczynski and Buchanan, 2001, p.775). The Study Guide (2003) identifies additional advantages for conflict as: enabling resistance to change to be overcome, promoting group adhesiveness, exposing problems, increasing competition and questioning outdated values and attitudes.

Conflict can develop trust and establish authentic relationships. When conflict is well managed it can increase energy and productivity. Managing conflict constructively can assist supervisors and staff to recognise their mutual interests and work cooperatively. (Diversity@work, 2004)

This view is further supported by Eisenhardt et al study in 1997 (cited in Huczynski and Buchanan, 2001, p.793) who declares ‘the absence of conflict is not harmony, its apathy’ further she highlights that conflict develops an enhanced understanding of choices, allowing better options thus enhancing decision making.

McShane and Travaglione (2003, p.434) identify conflict as either task-related (functional) or socioemotional. Task-related conflict occurs over disagreement with goals, key decision areas or procedures as opposed to socioemotional, which is personal for example personality clashes at work. Task-related conflict helps people recognise problems, identify various solutions and better understand issues.

Thus functional conflict is not a contradiction in terms. Management or departments within an organisation can use conflict as a tool to maximise benefits.

Conversely too much conflict can result in dysfunctional conflict. Dysfunctional conflict from a collective can be overt and covert from an individual aspect. Overt actions include strikes, work bans and go slows to name a few as opposed to covert actions which may entail absenteeism, sabotage, shrinkage and labour turnover. Dysfunctional conflict affects organisational performance and productivity.

Dysfunctional conflict can act as a cancer within an organisation, it can waste time and resources, de-motivate staff, reduce moral, it can lead to financial loss through unproductive labour costs and possible lack of customer satisfaction.
Conflict may take many forms, whilst overt are the most visible; absenteeism (covert) is considerably more costly than overt actions. Inverson’s study in 2000 (cited in Deery et al 1997, p.310) identifies that absenteeism in Australia in 1998 cost industry $2.56 billion.

Sociologists have identified various incidents that will give way to conflict within an organisation. Common examples include: incompatible goals, different values and beliefs, task interdependence, scarce resources, ambiguous roles and communication problems. Additional sources of conflict include self-image and stereotypes, gender, culture, ethics and perception to name a few. (McShane and Travaglione, 2003, page 438; Huczynski and Buchanan, 2001, p.777).

By identifying the source of conflict within an organisation, management can then exercise appropriate mechanisms to either reduce or eliminate this conflict or conversely stimulate functional conflict to maximise performance and productivity.

A recent example of functional conflict within my workplace was based on communication, ambiguity and perception, all of which have been identified as a source of conflict above.

Being a company developing educational resources on the Internet, email is a vital element of the company’s success. Email has grown so rapidly that it is now the most widely accepted form of communication with customers and suppliers and a necessary tool for internal correspondence. Problems existed due to the lack of policy and procedures associated with email. Conflicts have arisen amongst staff due to people misreading or not providing sufficient information within an email. The use of capitals signifies shouting within an email, which some staff were unaware of and the readers had taken offence. Further, lack of greetings and sign off also contributed to frustrations amongst staff.

This conflict has been harnessed through the development of a collaborative team from members representing each department. To avoid any socioemotional conflict a facilitator utilised de Bono’s six hats to brainstorm the issues into functional outcomes. The team have now developed a policy and deployed training sessions for all staff resulting in improved performance in the entire suite of functions within Microsoft Outlook, not just email.

Functional conflict is not a contradiction in terms, as it refers to the deliberate method of controlling the level of conflict by management to ensure an optimal level of performance and exposing any possible weaknesses within an organisation.

Four different frames of reference assist us to understand the approach and attitude towards actions within organisations. The frames of reference bring about functional and dysfunctional conflict.

Functional conflict is a tool that can be used by management to maximise productivity and performance. Dysfunctional conflict is the opposite; it can lead to either overt or covert actions by employees possibly affecting company performance and financial loss.

Finally sociologists have identified various sources of conflict that assist management in understanding why conflict has arisen and how best to manage it accordingly.

Deery SJ, Plowman D & Walsh J 1997, Industrial Relations: A Contemporary Analysis. Sydney: McGraw Hill.

Diversity@work 2004, Workplace conflict: threat or opportunity? viewed 23 Jan. 2004,

Huczynski, A. and Buchanan, D. 2001, Organisational behaviour: an introductory text. 4th edition. Hemel Hempstead UK: Prentice Hall Europe.

McShane, S., and Travaglione, T 2003, Organisational Behaviour on the Pacific Rim.
McGraw Hill Australia.

The Oxford Dictionary 2000, ed. P Hanks, Oxford University Press, New York.

The University of South Australia 2003, Study Guide - Work and Organisation (11337 ver4). Written by L Faulkner. Adelaide.

Thompson, P and McHugh, D. 2002, Work Organisations 3rd edition, Palgrave, New York.

Van Gramberg, Bernadine 2002, employee relations management. Prentice Hall, Sydney.

The Process of Learning

Jason Haseldine February 2004

Learning is a change in behaviour through the acquisition of some skill, knowledge or experience. There are four activities associated with the process of learning; they are reinforcement, feedback, observation and direct experience.

Learning is a critical component within work and organisations for it can increase efficiency and performance. In today’s information age learning contributes to a company’s intellectual property and knowledge capital.

Company Boards will look to assess employee skills and the training that has been undertaken to ensure the future competitiveness within the market. Long-term investors are beginning to realise the importance of learning in organisations and will seek information to ensure responsible ownership resulting in long-term value to the company.

Learning is presented in terms of two theories, behavioural and cognitive. Behaviourism is based on the observable changes in behaviour and focuses on a response to some type of stimuli. Cognition or cognitive behaviour focuses on individuals thought processes to determine his or her emotions and behaviours.

Other distinctions between the two theories include: behaviourists are interested in applying laboratory findings to explain the functioning of human beings. Cognitivists seek to explain how the brain processes and stores new information. Further, behaviourists problem solving occurs via trial and error compared to cognitive problem solving which involves insight and understanding.

Learning is often defined by the terms cognitive or behavioural. A search on www.google.com for the term ‘learning’ provides over 50 definitions. These include definitions such as ‘the cognitive process of acquiring skill or knowledge’, ‘changes in an individual's behaviour arising from experience’, ‘changes in a person's behaviour caused by information and experience’ and ‘a relatively permanent change in cognition, resulting from experience and directly influencing behaviour.’

Delbridge et al. study in 1995 (cited in Athanasou 2003, p.1) identifies learning in both a traditional and psychological manner. ‘The act or process of acquiring knowledge or skill’ and as ‘the modification of behaviour through interaction with the environment.”

Huczynski and Buchanan (2001, p.110) define learning as ‘the process of acquiring knowledge through experience which leads to an enduring change in behaviour.’

Finally McShane and Travaglione (2003, p.44) identify learning as a behavioural tendency and that interaction within an environment can permanently change a person’s behaviour.

Whilst there is no precise definition of the term learning, the basic premise from the definitions provided above is that of a change in behaviour via the acquisition of some skill, knowledge or experience.

From these definitions we can articulate the process of learning.

McShane and Travaglione (2003, p.45) identify the process of learning as: reinforcement, feedback, observation and direct experience. These activities are now articulated to capture the explanation of the process of learning;

Reinforcement: is the strengthening of behaviour or behaviour that is more likely to occur in the future. Reinforcement is the effect of operant conditioning posited by Skinner. (Durell 2001).

Operant conditioning demonstrates how new behaviours become established through association with particular stimuli. Skinner identified that any behaviour that is rewarded or reinforced will tend to be repeated; he proved this via reinforcement techniques to teach pigeons to dance and bowl a ball in a mini-alley. This is opposed to Pavlov’s theory, respondent conditioning or classic conditioning, which occurs when a natural reflex responds to a stimulus. The most popular example is Pavlov's observation that dogs salivate when they eat or even see food. (Huczynski and Buchanan 2001, p.115; McShane and Travaglione 2003, pp.45-46; On Purpose Associates 2001)

Research has found that reinforcement or operant conditioning significantly improves learning in a work setting. An example of this is the reduction of absenteeism, by rewarding staff with a perfect attendance record each month a chance to win a $1,000. (McShane and Travaglione 2003, p.49)

Feedback: is defined by McShane and Travaglione (2003, p.51) as ‘any information that people receive about the consequences of their behaviour.’ Feedback influences behaviour, hence learning, and increases performance as it clarifies roles, improves the individual’s ability and helps motivate them.

A recent example of feedback that I received was through a 360-degree feedback model. My employer was undertaking a realignment and in need of a Chief Financial Officer. A performance assessment was undertaken on myself, whereby feedback was sought from my colleagues, subordinates and the Chief Executive Officer. Feedback was obtained via an electronic questionnaire and personal interviewing. The results were positive and I currently reside in the position. I learnt a considerable amount about myself and the organisation through this exercise, including my strengths and weaknesses, which have enabled me to undertake specific courses to build my knowledge and improve as a leader.

Observation: is a process of learning, people learn by observing the behaviours of others. People will model the behaviour that leads to a favourable outcome as opposed to a behaviour that leads to punishing consequences. Observation can increase a persons ability and motivation by witnessing others succeed and identifying themselves within that position. (McShane and Travaglione 2003, p.56)
Direct experience: McShane and Travaglione (2003, p.58) identify that the majority of what is leant within organisations today occurs through experience. The authors make reference to Kolb’s four-stage experiential learning model: concrete experience, reflective observation, abstract conceptualisation and active experimentation.

This is further sported by Dale’s study in 1991 (cited in Barron 2002) who asserted that ‘learners could make valuable use of more abstract instructional activities drawing on reservoirs of their more concrete experiences.’ Dale created the ‘Cone of Experience’ (cited in Kuykendall 1991) refer Appendix A, which identifies that people remember 10% of what they read, 20% of what they hear, 30% of what they see, 50% of what they hear and see, 70% of what they say or write and 90% of what they say as they are experiencing it.

These four activities identifying the process of learning is further supported by Nonaka’s work in 1994 (cited in Hawryszkiewycz 2000). Nonaka defines the learning process in four phases also, being: socialization, externalisation, combination and internalisation. The first phase, socialisation, is where people share their experiences and elaborate on existing knowledge. This can result in new concepts and ideas that can be followed through in later steps. Secondly externalisation is where current knowledge or expertise is captured to develop a better understanding by generating focused discussion. Thirdly ideas are combined with existing information to make use of previous experiences and finally internalisation is whereby the knowledge developed is then carried out and evaluated.

Learning within work and organisations is a critical component of success. The development of employee learning enhances the knowledge capital within an organisation. The world has progressed from the industrial age to the information age, intellectual property, knowledge capital and its management are crucial ingredients in the success of today’s organisation.

A critical component of organisational behaviour is the exploration of individual’s emotions and behaviour. Organisations are concerned with the pursuit of the company mission or strategy, through the successful performance of its individuals. Learning can positively influence individual behaviour and performance by increasing their knowledge to perform tasks more effectively. Learning can clarify role perceptions, hence develop a better understanding of their tasks and finally learning can motivate employees. (McShane and Travaglione 2003, pp.44-45).

From an organisational perspective a highly learned staff results in people being more effective at accomplishing what they want. (Society for Organizational Learning n.d.)

An individual’s behaviour is comprised of: learning, personality, communication, perception and motivation. (Huczynski and Buchanan 2001, p.6).

The establishment of the Accounting for People Task Force in January 2003 within the United Kingdom (UK) has recently highlighted the advancement of learning within organisations. This task force has identified ways in which organisations can measure the quality and effectiveness of their human capital management (HCM). The task force states:
Human Capital Management (HCM) relates to the management of the recruitment, retention, training and development of employees, viewing them in positive terms as a business asset, rather than just a cost. HCM is a key source of competitive advantage and, ultimately, profitability. Any business that wants to compete successfully needs to ensure that its workforce has the right mix of people, with their skills and experiences, to fit the needs of its business. (Accounting for People 2003).

The task force undertook an analysis of over 200 individuals and organisations within the UK, this then resulted in five recommendations, the first being a strategic focus for company Boards to receive communication on the size and composition of the organisations workforce via the retention and motivation of employees and the skills and competencies necessary for business success, and the training required to achieve this.

Learning is an imperative component within work and organisation, not only does it contribute to the success of an organisation through increased efficiency and performance, the Accounting for People Task Force has identified that investors who take an interest in the longer term are beginning to recognise HCM as a factor to observe. They see that responsible ownership can have an impact on long-term value creation.

Learning is presented in terms of two theories, behavioural and cognitive. Huczynski and Buchanan (2001, p.112) state that ‘these approaches are based on the same empirical data, but their interpretations of those data are radically different.’

Huczynski and Buchanan (2001, p.112) identify these two theories as contradictory but they can be viewed as complimentary. My analysis based on the research undertaken in this paper is that the two theories are not contradictory, for cognitive perspectives are built on behavioural techniques.

Behaviourist Theory
The primary theorists involved with behaviourism were Pavlov, Watson and Skinner. Behaviourism is based on observable changes in behaviour and focuses on a response to some type of stimulus.

Huczynski and Buchanan (2001, p.109) identify the process of behavioural psychology and its association with the study of rats. The authors identify that humans act similarly to animals and that we can learn about ourselves through studying other creatures.

Durell (2001) states that ‘behavioural psychology attempts to deal only with relationships between observable behaviour and observable conditions in the environment.’ Behaviourists are interested in applying laboratory findings to explaining the functioning of human beings.

Watson introduced behaviourism as a scientific technique in 1913, he took the notion of conditioned reflexes developed by Ivan Pavlov and applied it to the study of behaviour. In 1920 Watson provided an example of classical conditional by experimenting with a nine month old boy named Albert. He conditioned the boy to become frightened of a rat by clanging metal with a hammer behind the head of Albert when confronted with the rat.

Cognitive Theory
Behaviourism was important to the research of cognitivism. There were many limitations to behaviourism and it’s relation to learning. One primary opposition of behaviourism was Gestalt psychology. Behaviourism focused on the response to a stimulus and the change in observable behaviour. Cognitivism focused on the ‘brain’. How human’s process and store information was very important in the process of learning. This became the focus of the cognitive theorists. (Walker 2003)

The primary theorists involved with cognitivism were Weiner, Piaget and Vygotsky. Cognitive psychology looks at behaviour as an expression of the thoughts and ideas in the mind. Cognitive learning theories seek to explain how the brain processes and stores new information.

Cognitive theory is focused on an individual's thoughts to determine his or her emotions and behaviours. Many cognitive theorists believe that without these thought processes, we would be without emotion and behaviour and would thus not function.

By changing our thoughts we can change our mood, decrease our anxiety, or improve our motivation. We can quit smoking, make more friends, and enjoy our work more. AllPsych (2003) state ‘The basic premise: If we perceive the glass as half full rather than half empty, the world will look much brighter; In a brighter world, we are happier individuals.’

In 1947 Weiner posited cybernetic analogy, being the notion of the control of system performance through feedback whereby the inputs to the system are external stimuli which are measured by the senses, the output is behaviour and a feedback control loop delivers the experience to the inputs. (Huczynski and Buchanan 2001, p.117)

The feedback can take four forms being: intrinsic feedback, that which comes from within our body such as muscles or joints, extrinsic feedback comes from the environment such as smell or visual information, concurrent feedback arrives during our behaviour such as entering a phone number on a mobile phone and lastly delayed feedback which is information received after a task has been completed. (Huczynski and Buchanan 2001, p.118)
Behaviourists construct an understanding of learning on the basis of observable behaviour as opposed to cognitive psychologists who use conjecture about the processing that goes on in our minds. Cognitive learning looks at behaviour as an expression of the thoughts and ideas in the mind; it is concerned with mental processing as an explanation of behaviour. (Durell 2001)

Huczynski and Buchanan (2001, p.112) present a table that summarises pertinent differences between the behaviourist and cognitive perspectives. They note that behaviourists study only observable behaviour and that behaviour is determined by learned sequences of muscle movements, further problem solving occurs by trial and error. This is compared to cognitivism which studies mental processes, identifies behaviour as being determined by mental processes and expectations and that problem solving involves insight and understanding.

Learning is an imperative component within work and organisation in today’s society. Not only does it contribute to the success of an organisation through increased efficiency and performance in can increase the long-term value of the organisation.

Learning is the change in behaviour through the acquisition of skill, knowledge or experience. The learning process involves four activities: they are reinforcement, feedback, observation and direct experience.

Several distinctions have been made between behaviourist and cognitive perspectives on learning, the most significant being behaviourism is based on the observable changes in behaviour and focuses on a response to some type of stimuli. Cognitive however focuses on individuals thought to determine his or her emotions and behaviours.

Dale’s ‘Cone of Experience’ (cited in Kuykendall 1991).
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AllPsych Online, 2003, ‘Personality Synopsis’, viewed 1 Feb. 2004,

Athanasou, J. 2003, ‘A Judgement Based Model of Workplace Learning’ in the 12th National Vocational Education and Training Research Conference, Perth, p.1.

Barron, D. 2002, ‘A Refresher Course in Ed Psy 301’, The School of Library and Information Science (SLIS) at the University of South Carolina, viewed 5 Feb. 2004,

Durell, B. 2001, ‘Psychological Foundations of Learning and Development 2000-2001’, Ontario Institute for Studies in Education of the University of Toronto, viewed 1 Feb. 2004,

Hawryszkiewycz, I. 2000, ‘Supporting Integrated Learning Processes’, Southern Cross University, viewed 7 Feb. 2004,

Huczynski, A. and Buchanan, D. 2001, Organisational behaviour: an introductory text. 4th edition. Hemel Hempstead UK: Prentice Hall Europe.

Kuykendall, C. 1991, ‘Improving Black Student Achievement By Enhancing Student's Self Image’ Northwest Regional Educational Laboratory, viewed 7 Feb. 2004,

McShane, S., and Travaglione, T 2003, Organisational Behaviour on the Pacific Rim.
McGraw Hill Australia.

On Purpose Associates, 2001, ‘Behaviorism’, Funderstanding, viewed 1 Feb. 2004,

Society for Organizational Learning, n.d, ‘An Overview of Organizational Learning’, viewed 1 Feb. 2004,

Walker, C. 2003, ‘Cognitivism Theories’, Syracuse University, viewed 5 Feb. 2004,

Learning Management Systems

Jason Haseldine March 2006

This document describes the findings of a survey undertaken on a number of Australian and International Learning Management Systems (LMS). The scope of the survey focuses on three products being; WebCT, Moodle and Nuvvo. The research defines what an LMS is, their key characteristics including features and use of different platform models in proprietary, open source and on-demand services.

This report represents a snapshot of a very active LMS market as of March 2006. A year from this date there would certainly be improvement and additional vendors in this space.

LMS: A Learning Management System is a software application or Web-based technology designed to enable the management, delivery and assessment of blended learning in education, government and industry.

The Engineering Education Centre (cited in Millea, Green and Putland 2005, p.33) identify an LMS is a software product that can ‘track student registration, track learner progress, record test scores and indicate course completions.’ TechTarget (2006) identify how an ‘LMS may also provide students with the ability to use interactive features such as threaded discussions, video conferencing, and discussion forums.’

Blended Learning: is a combination of learning techniques via technology such as DVD, podcasting, learning objects, online services, mobile services, collaborative tools and traditional print materials.

Podcasting: is a recent emerging technology arisen from the phenomenon of Apple’s Ipod music player. Educators have identified how technology in a music player can be utilised as a learning tool via the delivery of podcasts. Wikipedia (2006) states, ‘A podcast is a web feed of audio or video files placed on the Internet for anyone to download or subscribe to, and also the content of that feed.’

Learning Objects: Are individual software applications comprising graphics, text, audio, animation and interactive tools that have been designed to engage and motivate student learning (The Learning Federation 2006).

Open Source: Moyle (2003, p.3) states ‘Open source software uses software source code that is open, unrestricted and available by downloading it from the Internet.’ Open source means that the software is available under licence and can be modified; further this manipulated software can then be distributed back to the open community for additional enhancement. Moyle (2003, p.3) continues,
…the ‘open’ in open source software is intended in the philosophical sense of ‘open or free speech’ rather than as a free (ie no cost) product. The code in open source software is available and viewable.

Learning Management Systems first entered the market almost ten years ago. The three largest LMS vendors; Saba, SumTotal Systems and Plateau comprise some 29% of all LMS licence revenue (LTI Newsline 2006).

LMS are not restricted to industry, for these systems are also adopted in education and government enterprises. Bersin-LTI Research Center (2006) identified that ‘LMS systems are widely adopted, with 66% of large enterprises reporting a system in place.’

There is an extensive array of LMS products currently on the market. The very size of the industry has created an industry within itself being that of LMS selection consultants. This survey identifies three LMS products operating within the commercial, open source and on-demand model. It highlights their key features and the differences in their platform models.
LMS’s provide an extensive volume of functionality; the following is a condensed list of features identified within WebCT and Moodle as reported in EduTools (2006);

Internal email Calendar
Student tracking Customized look and feel
Groupwork Online grading
Bookmarks Online journal/notes
Hosted Services Real-time chat
Student portfolios Searching within Course
Help Self assessment
Course management Student community building
File Exchange Video Services
Discussion forums Whiteboard

Whilst WebCT and Moodle have similar features, their licensing models are different due to the nature of their ownership. The following information highlights these differences;

WebCT is a privately held company backed by a group of investors, hence they sell their product via a proprietary license for maximum return to their investors. The nature of proprietary software is that it is restricted in its use and distribution and rarely grants the end-user any rights.

WebCT have a pricing model based on the number of full-time equivalent students which is licensed on an annual subscription basis.

Richard Stallman is the founder of the Open Source movement. Stallman developed the famous GNU Public License that grants recipients freedom over running, distributing and improving the program (openknowledge.org 2000).

Open source has since made major inroads into developing its own market share. In 2005 the Open Source Industry Australia was created to further the cause of both Free and Open Source Software (FOSS) in Australia (OSIA 2006).

Moodle is an open source community. Moodle.com is a company launched in 2003 that sponsors Moodle development and provides commercial support, hosting, and custom development and consulting. The software is free and distributed under the GNU Public License (EduTools 2006).

Whilst the software is ‘free’ it will require modifications and enhancements to suit each particular organisation, hence there will be application development and support costs.

Nuvvo is a new service launched in January 2006. Green (2006) states,
It is a fully hosted, on-demand LMS designed… to address the needs of individual instructors who are either unaffiliated with an e-learning-enabled institution, or are unhappy with the enterprise software used at their institution.

This is a completely different model to existing LMS’s on the market and is bleeding edge. Nuvvo is not a software package; hence licensing models such as proprietary and open source do not exist. It is a hosted service that runs on the Internet and is free. Thus saving internal IT costs.

Nuvvo makes money from ads and by taking 8% of any course fees set by the educator. Nuvvo effectively allows educators to create courses, tests and grades on-line.

The LMS market is extremely large and growing. Both proprietary and open source solutions provide similar functionalities and add-value to the consumer. Open source is gaining wider acceptance within industry and the Australian Government have Open Source as a first consideration point prior to acceptance of a software solution.

The addition of Nuvvo presents a different direction for the LMS market. On-demand services are likely to gain a stronger appreciation via Web 2.0 technologies such as Ajax.

Masie (2006) identifies future trends within the LMS space via integration with PDA and mobile devices, connectedness with document management and knowledge management systems, peer reviews of content, multi-language learning and more.

Bersin and Associates, Learning Management Systems 2006: Industry Study Vendor Profiles, and Benchmarks, viewed 21 March 2006,

EduTools 2006, CMS: Product Comparison System, viewed 22 March 2006,

Green J 2006, Moodle vs. Nuvvo, viewed 22 March 2006,

LTI Newsline 2006, LMS Market Grows 28 Percent, viewed 21 March 2006,

Masie, E 2006, Learning Trends: 18 Wishes for an LMS, viewed 22 March 2006,

Millea, J, Green, I & Putland, G 2005, Emerging Technologies, A framework for thinking, ACT Department of Education and Training, education.au limited, viewed 21 March 2006,

Moyle, K 2003, Open Source Software and Australian School Education, viewed 18 March 2006,

Openknowledge.org 2000, A Brief History of Free/Open Source Software Movement, viewed 23 March 2006,

Open Source Industry Australia, About OSIA, viewed 23 March 2006,

SearchCIO.com Definitions 2006, learning management system, viewed 22 March 2006,

The Learning Federation 2006, viewed 18 March 2006,

Wikipedia 2006, Podcasting, viewed 15 March 2006,

Tuesday, October 31, 2006


Its easy sitting an exam, its getting the results thats hard!