Proactive and Reactive Cyber Forensics Investigation Process

Proactive and Reactive Cyber Forensics Investigation Process PROACTIVE CYBER FORENSIC ANALYSIS Proactive And reactive cyber forensics investigation processes: A Systematic Literature Review(SLR) A multi-component framework of cyber forensics investigation Abstract—Digital Forensics can be defined as the ensemble of methods, tools and techniques used to collect, preserve and analyze digital data originating from any type of digital media involved in an incident with the purpose of extracting valid evidence for a court of law. In it investigations are usually performed as a response to a digital crime and, as such, they are termed Reactive Digital Forensic (RDF). This involves identifying, preserving, collecting, analyzing, and generating the final report. Although RDF investigations are effective, they are faced with many challenges, especially when dealing with anti-forensic incidents, volatile data and event reconstruction. To tackle these challenges, Proactive Digital Forensic (PDF) is required. By being proactive, DF is prepared for incidents. In fact, the PDF investigation has the ability to proactively collect data, preserve it, detect suspicious events, analyze evidence and report an incident as it occurs. Index Terms—Digital forensics, Digital Proactive Forensics, Digital reactive forensics, Digital device storage, digital crime, Anti forensics, multi component framework Introduction Computer crimes have increased tremendously and their degree of sophistication has also advanced, the volatility and dynamicity of the information that flows between devices require some proactive investigation. The reactive investigation is now becoming less practical since the increased sizes of the data that is being investigated and underlying technology of the devices that change tremendously make the tools made for digital reactive forensics useless In order to investigate anti-forensic attacks and to promote automation of the live investigation, a proactive and reactive functional process has been proposed.. The phases of the proposed proactive and reactive digital forensics investigation process have been mapped to existing investigation processes. The proactive component in the proposed process has been compared to the active component in the multi- component framework. All phases in the proactive component of the new process are meant to be automated. To this end, a theory for the proactive digital forensics is necessary to lay down a strong foundation for the implementation of a reliable proactive system. I. Anti-Forensics The term anti-forensics refers to methods that prevent forensic tools, investigations, and investigators from achieve- ing their goals. Two examples of anti-forensic methods are data overwriting and data hiding. From a digital investigation perspective, anti-forensics can do the following: Prevent evidence collection. Increase the investigation time. Provide misleading evidence that can jeopardize the whole investigation. Prevent detection of digital crime. To investigate crimes that rely on anti-forensic methods, more digital forensic investigation techniques and tools need to be developed, tested, and automated. Such techniques and tools are called proactive forensic processes. Proactive forensics has been suggested in. To date, however, the definition and the process of proactive forensics have not been explicated. II. Proactive digital forensics Proactive Digital Forensic Component has the ability to proactively collect data, preserve it, detect suspicious events, gather evidence, carry out the analysis and build a case against any questionable activities. In addition, an automated report is generated for later use in the reactive component. The evidence gathered in this component is the proactive evidence that relates to a specific event or incident as it occurs. As opposed to the reactive component, the collection phase in this component comes before preservation since no incident has been identified yet. Phases under the proactive component are defined as follows: Proactive Collection: automated live collection of predefined data in the order of volatility and priority, and related to a specific requirement of an organization or incident. Proactive Preservation: automated preservation, via hashing, of the evidence and the proactively collected data related to the suspicious event. Proactive Event Detection: detection of suspicious event via an intrusion detection system or a crime-prevention alert. Proactive Analysis: automated live analysis of the evidence, which might use forensics techniques such as data mining and outlier detection to sup- port and construct the initial hypothesis of the incident. Report: automated report generated from the proactive component analysis. This report is also important for the reactive component and can serve as the starting point of the reactive investigation.[1] III Reactive Digital Forensics It the traditional or post-mortem approach of investigating a digital crime after an incident has occurred. This involves identifying, preserving, collecting, analyzing, and generating the final report. Two types of evidence are gathered under this component: Active: Active evidence refers to collecting all live (dynamic) evidence that exists after an incident. An example of such evidence is processes running in memory. Reactive : refers to collecting all the static evidence remaining, such as an image of a hard drive. Previous Work Proactive Vs Reactive Forensics Investigation framework Complexity of Digital Forensics investigation Digital attacks are so complex that it is hard to investigate them forensically. The elements involved in a digital crime are located in a large multidimensional space and cannot be easily identified. With the increase of storage size and memory sizes, and the use of parallelism, virtualization and cloud, the parameters to take into account during an investigation can even become unmanageable. Five fundamental principles The five fundamental principles are stated below: Principle 1 Consider the entire system. This includes the user space as well as the entire kernel space, file system, network stack, and other related subsystems. Principle 2 Assumptions about expected failures, attacks, and attackers should not control what is logged. Trust no user and trust no policy, as we may not know what we want in advance. Principle 3 Consider the effects of events, not just the actions that caused them, and how those effects may be altered by context and environment. Principle 4 Context assists in interpreting and understanding the meaning of an event. Principle 5 Every action and every result must be processed and presented in a way that can be analyzed and understood by a human forensic analyst. These five are for reactive analysis , for proactive there must be some new principles. Soltan Abed Albari proposed the following two : Principle 6 Preserve the entire history of the system. Principle 7 Perform the analysis and report the results in real time. By preserving the entire history of the system, we can go back in time and reconstruct what has happened and answer reliably all the necessary questions about an event or incident. The reconstructed timeline is based on the actual states of the system before and after the event or incident. In addition and due to the large amount of data, events and actions involved, performing a proactive analysis and reporting require real time techniques that use high-performance computing. The analysis phase should be automated and have the necessary intelligence to investigate the suspicious events in real time and across multiple platforms. Figure 1 Relation between action ,target events[1] In addition to the actions and events that the seven principles listed above emphasize, we introduce the notion of targets. A target is any resource or object related to the system under investigation e.g., a file, memory, register, etc. We will use an element of DF investigation to refer to a target, an action or an event. At a time t and as shown in Figure 3.1, the system is in the process of executing an action that reacts to some targets and events, and produces new targets and events or modifies the existing ones. A model for Proactive digital forensics The model below has two major parts Forward system Feedback system Forward system is the one upon which investigation is performed. Both systems the forward and the feedback can be modelled as a tuple (T,E,A), where T is a set of targets, E is a set of events, and A is a set of possible actions each of which is viewed as a transfer function of targets and events. To clarify this, each target f ∈ T is associated with a set S(f) representing the possible states in which it can be. The Cartesian product of S(f) for all targets f defines the state space of the system’s targets and we denote it by T . We do the same for every event e but we consider S(e) to contain two and only two elements, namely ↑ (triggered event) and ↓ (not triggered event). The Cartesian product of all the system’s events (S(e) for every event e) is denoted by E (status space). An action a is therefore a function from Γ Ãâ€" T Ãâ€" E to T Ãâ€" E, where Γ represents the time dimension. The evolution function ψ is defined from Γ Æ" (T Ãâ€" E) Ãâ€" A to T Ãâ€" E by ψ(t,(~r,~e),a) = a(t,~r,~e)3. At a time t ∈ Γ, an event e is triggered if its status at time t is ↑, and not triggered ↓ otherwise. The notation ↑t e will be used to denote that the event e is triggered at time t Figure 2 proactive model[1] The forward system has three things that are linked. Target, event and action A. Target A target is any resource or object related to the system under investigation (e.g., a file, memory, register, etc.. We will use an element of DF investigation to refer to a target, an action or an event. At a time t system is in the process of executing an action that reacts to some targets and events, and produces new targets and events or modifies the existing ones. Therefore to describe the dynamics of the system at a single instant t, one needs to know at least the states of the targets, the events generated and the actions executed at t. For a full description of the dynamics, these elements of investigation need to be specified at every instant of time; and the complete analysis of the dynamics of the system requires a large multidimensional space Equations B. Events and Actions Keeping track of all events and targets is expensive. To reduce them, a few classifications using preorder and equivalence relations. To illustrate the idea behind these classifications, imagine a botnet writing into a file. This event will trigger other events including checking the permission on the file, updating the access time of the file, and writing the data to the actual disk. The idea behind our formalization is to be able to know which events are important (maximal) and which ones can be ignored. The same thing holds for the targets .This will optimize the cost and time . Short Theory on Events Let e1 and e2 be two events in E. We defined the relation ≠¤E on E as follows: e1 ≠¤E e2 if and only if ( ⇠Ã¢â€¡â€™ ) whenever the event e1 happens at a time t, the event e2 must also happen at a time t0 greater than or equal to t. Formally, this can be expressed as: e1 ≠¤E e2 ⇠Ã¢â€¡â€™ (∀t ↑t e1 ⇒ âˆÆ't0 ≠¥ t ↑t0 e2) Subsequent events are those which are less than e . Short theory on targets Let ÃŽ ¨ be the mapping from T to E (Figure 3.10) that associates each target with its change of status event. The mapping ÃŽ ¨ and ≠¤E induces a preorder relation ≠¤T defined by T1 ≠¤T T2 ⇠Ã¢â€¡â€™ ÃŽ ¨(T1) ≠¤E ÃŽ ¨(T2) Informally, this means that whenever target T1 changes at time t the target T2 must change at t0 ≠¥ t. Short Theory on Actions The set of actions A is extended to  ¯ A using the following operators: An associative binary operator called sequential operator and denoted by ;. Given two actions a1 and a2, the action a1;a2 is semantically equivalent to carrying out a1 and then a2 (the two transfer functions are in series). Note that ∅A is a neutral element of A with respect to ; (i.e., a;∅A = ∅A;a = a for every action a). A commutative binary operator called parallel operator and denoted by ||. In this case a1||a2 is equivalent to carrying a1 and a2 simultaneously (the two transfer functions are in parallel). The action ∅A is also a neutral element of A with respect to ||. A conditional operator defined as follows. Given two conditions ci and ce in C, and an action a, the operator ciace represents the action of iteratively carrying out a only when ci is true and stopping when ce is false. That is denoted by a ce. Note that if both are true, then ci a ce is a. Zone Base Classification of Investigation Space To address the limitation of the classification described previously and address the undesirability issue , classify the event and target state into a set of priority zones. These zones can be represented with different colors: green, yellow, and red; starting from a lower priority to a higher one. When important events/targets with high-priority levels are triggered, a more thorough analysis is expected. Moreover, the zones can be used as a quantifying matrix that provides numbers reà ¯Ã‚ ¬Ã¢â‚¬Å¡ecting the certainty level for the occurrence of an incident. In our case, this number is an important piece of information in the final report. The high-priority events can involve one of the following: IDS, Antivirus, Firewall off and changing the windows system32 folder. On the other hand, the high-priority targets are the system32 folder, registry, network traà ¯Ã‚ ¬Ã†â€™c and memory dump. Given that the number of targets and events are large, this classification is not enough, especially during the analysis phase. As such, we need to reduce the forensic space. Similar to the principal component analysis technique [59], we suggest restrict- ing the analysis to â€Å"important† targets and events based on a specific organization policy. This can be seen as projecting the full forensic space F onto a sub-space F0 in which the evidence is most probably located. Figure 3 Zone base classification [1] Conclusion In this paper we proposed a new approach to resolve cybercrime using Proactive forensics with focusing on the Investigation space for proactive investigation. This paper reviews literature on Proactive forensic approaches and their processes. It has a method for proactive investigation to be carried out significantly. In order to investigate anti-forensics methods and to promote automation of the live investigation, a proactive functional process has been proposed. The proposed process came as result of SLR of all the processes that exist in literature. The phases of the proposed proactive digital forensics investigation process have been mapped to existing investigation processes. For future work , the investigation space profiling is to be done on events and targets in the space. References Proactive System for Digital Forensic Investigation, Soltan Abed Alharbi, 2014 University of Victoria Mapping Process of Digital Forensic Investigation Framework A new approach for resolving cybercrime in network forensics based on generic process model. Mohammad Rasmi1, Aman Jantan2, Hani Al-MimiY. Yorozu, M. Hirano, K. Oka, and Y. Tagawa, A System for the Proactive, Continuous, and Eà ¯Ã‚ ¬Ã†â€™cient Collection of Digital Forensic Evidence Towards Proactive Computer-System Forensics Requirements-Driven Adaptive Digital Forensics Multi-Perspective Cybercrime Investigation Process Modeling A Forensic Traceability Index in Digital Forensic Investigation Network/Cyber Forensics Smartphone Forensics: A Proactive Investigation Scheme for Evidence Acquisition

Organic Foods: America is Making Healthier Food Choices Essay -- Nutri

Many people in America believe that we should eat healthier foods. However, a large portion of the advertising created for food in America is focused on unhealthy foods and products, many of which are nutritionally poor and easily accessible to much of the population. This results in a contradictory ideal towards improvement of health, where individuals will constantly eat unhealthy foods and struggle to lose the weight that they will knowingly gain. If people in the modern American society were to focus more on consuming organic foods and products, people would be healthier, reducing high medical costs and improving the overall well-being of Americans. The benefits of organic foods should also be introduced to children in schools so they will be given the choice to shape their own eating habits for the future. The use of harsh chemicals in large-scale crop production is a common issue with non-organic crops. Intended to prevent pests and insects from destroying crops, pesticides and insecticides are often absorbed by the crops and are ingested by humans. Paige Parvin, a writer for Emory Magazine, addresses this issue in her article â€Å"Poison Apples†. In a study done by Chensheng Lu, assistant professor of Environmental and Occupational Health at Emory University’s Rollins School of Public Health, focused on suburban children being exposed to organophosphate pesticides in food, a chemical linked to nerve gas that is used in farming (Parvin). Lu states, â€Å"What really surprised us is that the outcome reflects the hypothesis that by switching to organic produce, there would be no exposure to pesticides,† he says. With a simple change from eating nonorganic products and gradually introducing organic foods into the diets, similar to th... ...issued by nations on GMO’s and any possible need for their use in mainstream food markets, due to lack of testing and the assurance of any negative side effects associated with consumption of these modified foods. Spears, J.F, Klaenhammer, T.R, and Petters, R.M. Genetic Engineering of Food, Feed, and Fiber: Understanding Genetic Engineering. North Carolina Cooperative Connection Service. N.d. Web. 5 Mar 2011. This article was chosen for the positive outlook towards genetic engineering of crops, which help create more crop yields, longer lasting crops and specific variants of a crop resistant to pests and diseases. Though beneficial to the Earth, the lasting complications of ingesting genetically modified foods are a highly contestable topic in America, leading to the holistic and organic food movements.

Juliet’s speech in Act 4, Scene 3 Essay

Juliet’s speech in Act 4, Scene 3, filled with much classic Shakesperean imagery, is a turning point in the play for Juliet in which she wrestles with the conflicts in her life and then ultimately comes to a decision. It encompasses all the major themes in the play and many ideas all come together for the first time in this passage. First of all, this soliloquy deals with fear, of what will happen if she takes the potion and of what will happen if she doesn’t. Secondly, it concerns time, specifically the recurring night and darkness motif. Thirdly, it discusses love and death, the two major contrasting themes. Lastly, it introduces or reintroduces other opposites, such as reality versus appearance, which was the major metaphor in Juliet’s earlier speech. If one had to summarize this speech in just a few words, one would say it was an inner monologue about fear, in which Juliet worries about all the possible problems that could befall her. When she says â€Å"I have a faint cold fear thrills through my veins, that almost freezes up the heat of life†, she is saying that she has a bad feeling something unfortunate is going to happen that may result in death. She even says, â€Å"God knows when we shall meet again† which shows that she isn’t sure what terrible consequences there may be from drinking the potion. Initially she worries â€Å"What if it do not work at all?† and that she’ll have to â€Å"be married then to-morrow morning† with Paris. Then, she becomes afraid that it’s a poison, which the friar â€Å"subtly hath minister’d to have me dead† so that he should not be punished for marrying her to Romeo. Next, she fears that she should awaken before Romeo arrives. Here, she imagines herself â€Å"stifled in the vault†, in other words that she dies suffocated because there is no â€Å"healthsome air†, or scared to death because of â€Å"the terror of the place†, and being â€Å"packed† amidst â€Å"the bones of all my buried ancestors†, including Tybalt. After that, she envisions the spirits she has heard stories about coming out to haunt her at the graveyard. Lastly, she worries she’s going to go crazy and, in her madness, kill herself. This is obviously foreshadowing, particularly in the lines â€Å"if I wake, shall I not be distraught†, since when she does wake, she finds Romeo’s dead body, and in the lines â€Å"dash out my desperate brains†, which represents that she is going to commit suicide. Clearly, fear is present throughout the entire speech until she gets carried away enough  to dare to drink the potion. Another recurring theme in this speech, which comes up again and again in the play, is night. The line â€Å"the horrible conceit of death and night† is very important as it ties together for the first time the two principal antitheses in the play, life and death and day and night. Here she is saying that if it is completely dark, she will be scared to death and therefore to lie there in the darkness of the vault is to be as good as dead. Before, darkness meant Romeo could be hidden by the night so he could go see Juliet and was therefore ironically associated with good things while light and the day brought them separation and troubles and was therefore associated with bad things. However, now the night represents for Juliet what it usually does for us, which is darkness, misery and death. Later, Shakespeare returns to the ironic implications of night as brighter times as it is during the night that Juliet is safe and things go according to plan, whereas the minute dawn breaks, confusion reigns again and the lovers take their lives. The night-related imagery is used here to paint a dark and gloomy picture of the tomb to make Juliet seem even more courageous and thus for the audience to sympathize with her. Love and death are two of the major themes throughout the play, which in a way contrast one another and in a way are dependent on one another. The entire speech is about Juliet questioning her love for Romeo and whether she is willing to sacrifice her life to remain true to her love. She contrasts what will happen if she doesn’t drink the potion and has to marry Paris, with the prospect of death if she does drink it. After listing all the possible disasters that could befall her as a result of drinking the liquor, she ends with â€Å"Romeo, Romeo, Romeo, here’s drink! I drink to thee!†. This tells us that to Juliet, marrying Paris is a fate worse than death and that she is willing to risk her life for Romeo. So, her love toward him is both a savior as that is what motivated her to drink the potion and escape her doom but it is also her ruin as their adoration for each other is what kills them both in the end. Another way to say this is that risking death will bring her love but death itself will take him away. Throughout this entire passage, there is this ominous threat of death, foreshadowing the outcome of  the play. Specifically, the phrases â€Å"God knows when we shall meet again†, â€Å"freezes up the heat of life†, â€Å"if I wake, shall I not be distraught† and â€Å"dash out my desperate brains† all hint at what will happen and tell us that Juliet had made up her mind and is willing to die for Romeo. This speech incorporates many opposites or antitheses that Shakespeare employs constantly in this drama. Some of these are in the concrete language such as the contrast at the beginning of this speech between hot and cold. The simile â€Å"I have a faint cold fear†¦that almost freezes up the heat of life† is very poetic and clever because life represents the warmth and passion between the two lovers, their â€Å"heat† and her fear is of death, which turns a body cold. Another example of opposites is when Juliet questions whether the potion is a poison or an antidote to her troubles. There are also metaphorical opposites, below the surface of the text, such as reality versus appearance. The main subject of this extract is the false death, which makes her seem dead but she is really alive. Later, the word â€Å"act† on line 19 also ties in to this symbol as it relates to theatricality and pretending to be someone or something that you are not. Clearly, opposites are very important in this passage because during the entire speech, Juliet is weighing her possibilities and asking herself what will happen if she does drink it and what will happen if she doesn’t. Inside, she is comparing what her life will be like with Paris and what her life will be like with Romeo. This speech is, I believe, an extremely important one in the play. It is truly the moment where what has happened and what will happen come together in Juliet’s decision that she would sacrifice herself out of love for Romeo. Parallel to that coming together in the plot is an assemblage of many images that have been used previously. It is also important because it is in my opinion the moment that Juliet enters into adulthood. In the lines â€Å"I needs must act alone†, Juliet is finally ready to leave the comfort of being a child and make her own choices in life. Her fears are natural; everyone fears change, the unfamiliar, and so, part of Juliet’s worries in this speech are those of having to move on and make her own way for herself in a world full of hardships and obstacles. In the end, she takes comfort in  Romeo, whom she expects to be there when she awakens, and drinks to him. Throughout the speech, beautiful imagery is used and the five senses are incorpo rated to make the scene come to life in order for the audience to sympathize with the lovers before their tragic deaths.

iacocca essays

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Parietal Lobes Function and Brain Anatomy

Parietal Lobes Function and Brain Anatomy The parietal lobes are one of the four main lobes or regions of the cerebral cortex. The parietal lobes are positioned behind the frontal lobes and above the temporal lobes. These lobes are important to the function and processing of sensory information, understanding spatial orientation and body awareness. Location Directionally, the parietal lobes are superior to the occipital lobes and posterior to the central sulcus and frontal lobes. The central sulcus is the large deep groove or indentation that separates the parietal and frontal lobes. Function The parietal lobes are involved in a number of important functions in the body. One of the main functions is to receive and process sensory information from all over the body. The somatosensory cortex is found within the parietal lobes and is essential for processing touch sensations. For instance, the somatosensory cortex helps us to identify the location of a touch sensation and to discriminate between sensations such as temperature and pain. Neurons in the parietal lobes receive touch, visual and other sensory information from a part of the brain called the thalamus. The thalamus relays nerve signals and sensory information between the peripheral nervous system and the cerebral cortex. The parietal lobes process the information and help us to identify objects by touch. The parietal lobes work in concert with other areas of the brain,  such as the motor cortex and visual cortex, to perform certain tasks. Opening a door, combing your hair, and placing your lips and tongue in the proper position to speak all involve the parietal lobes. These lobes are also important for understanding spatial orientation and for proper navigation. Being able to identify the position, location and movement of the body and its parts is an important function of the parietal lobes. Parietal lobe functions include: CognitionInformation ProcessingTouch Sensation (Pain, Temperature, etc.)Understanding Spatial OrientationMovement CoordinationSpeechVisual PerceptionReading and WritingMathematical Computation Damage Damage or injury to the parietal lobe can cause a number of difficulties. Some of the difficulties as it relates to language include the inability to recall the correct names of everyday items, inability to write or spell, impaired reading, and the inability to position the lips or tongue properly in order to speak. Other problems that may result from damage to the parietal lobes include difficulty in performing goal-directed tasks, difficulty in drawing and performing math calculations, difficulty in identifying objects by touch or distinguishing between different types of touch, inability to distinguish left from right, lack of hand-eye coordination, difficulty in understanding direction, lack of body awareness, difficulty in making exact movements, inability to perform complex tasks in the proper order, difficulty in localizing touch and deficits in attention.​ Certain types of problems are associated with damage caused to either the left or right hemispheres of the cerebral cortex. Damage to the left parietal lobe typically results in difficulties in understanding language and writing. Damage to the right parietal lobe results in difficulties with understanding spatial orientation and navigation. Cerebral Cortex Lobes The cerebral cortex is the thin layer of tissue that covers the cerebrum. The cerebrum is the largest component of the brain and is divided into two hemispheres with each hemisphere being divided into four lobes. Each brain lobe has a specific function. Functions of the cerebral cortex lobes involve everything from interpreting and processing sensory information to decision-making and problem-solving capabilities. In addition to the parietal lobes, the lobes of the brain consist of the frontal lobes, temporal lobes, and occipital lobes. The frontal lobes are involved in reasoning and the expression of personality. The temporal lobes assist in organizing sensory input and memory formation. The occipital lobes are involved in visual processing.

For the US Gov. Exam Essay Example | Topics and Well Written Essays - 1750 words

For the US Gov. Exam - Essay Example g laws, can neither of them consist with the ends of society and government, which men would not quit the freedom of the state of nature for, and tie themselves up under, were it not to preserve their lives, liberties and fortunes; and by stated rules of right and property to secure their peace and quiet.† Thomas Paine (1997, 6), another figure whose influence on early American thinkers cannot be understated, warned in his pamphlet Common Sense â€Å"the king is not to be trusted without being looked after, or in other words, a thirst for absolute power is the natural disease of the monarchy.† With anti-monarchist influences like Locke and Paine, it’s not wonders that the architects of the American constitution constructed a political system that significantly limited the powers of the executive branch and instituted a number of difficult-to-navigate checks and balances. Much debate surrounded the exact role of the President during the early constitutional debates that followed the American Revolution. However, it was universally agreed upon that a strong separation of powers was needed. Much of the debate surrounded exactly how powerful, or how weak, the executive branch, headed by the President, was to be. The founders of the American constitution agreed (MacDonald, 1994, 126) â€Å"that safety and ordered liberty cannot exist without competent government and that government without an executive authority is no government at all.† Ultimately, the founders agreed on a concept that would create a natural and permanent tension between the President, the chief executive, and the members of Congress who were responsible for the legislation of the nation’s laws. They did this be ensuring that the new constitution contained (Thach, 1969, 70)â€Å"no constitutional legal barrier which Congress could not at pleasure cross.† This intuit ional strength that the founders granted Congress would significantly diminish the powers of the American executive, especially when

Thesis comments Essay Example | Topics and Well Written Essays - 1000 words

Thesis comments - Essay Example Instead Coase focused on factors within the organization which impacted economic activity. Coasian theory later became the foundation for what is today called internalization theory, one of the most significant theories to emerge in the study of multinational enterprises (Rugman & Verbecke, 2008). This theory suggests that foreign production and sales of a multinational business take place in response to imperfections in the goods and services markets. Buckley and Casson (1976) established the modern conception of this theory by suggesting three premises: 1) firms maximize profit in a world of imperfect markets, 2) the imperfect nature of the markets for intermediate products motivates firms to bypass them by creating internal markets, and 3) internalization of markets across national boundaries generates multinational enterprises. Thus, the multinational organization is seen as a device for raising efficiency by replacing external markets with an internal market within the company . Caves (2007) suggests that the establishment of a subsidiary by a multinational enterprise amounts to the entry into one national market based on needs created by another market. One type of entry is horizontal expansion whereby a subsidiary produces the same product (or product line) as the parent company. Another is vertical expansion or integration across national borders either backwards in order to obtain raw materials or other intermediate products needed by its main operations, or forwards to provide a distribution channel for its exports. Consequently there are three types of organizations potentially relevant to multinational enterprises. The first is a horizontally integrated firm, meaning a firm which produces essentially the same product line for each of the geographic markets where it has a presence. The second is a vertically integrated firm, meaning a firm that produces outputs in some of its plants which serve as inputs to others of its plants. The third is a diver sified company, whose plant outputs are neither horizontally nor vertically related to one another (Caves, 2007). Hymer’s (1976) theory of international operations highlighted two major motivators of international operations, namely the exploitation of oligopolistic advantages and the removal of conflict between firms to strengthen market power by means of collusion. He states, It frequently happens that enterprises in different countries compete with each other because they sell in the same market or because some of the firms sell to other firms. If the markets are imperfect, that is, if there is horizontal or bilateral monopoly or oligopoly, some form of collusion will be profitable. One form of collusion is to have the various enterprises owned and controlled by one firm. This is one motivation for firms to control enterprises in foreign countries. (Hymer, 1976, p. 25). Hymer emphasizes that direct foreign investment is not motivated by interest rates but rather by potenti al profits which can be derived by controlling a foreign enterprise. Vernon’s product cycle model (1966) is an important macroeconomic approach to understanding international business. This theory describes the product cycle as consisting of three primary phases: innovation, growth, and maturation. During the last, maturation stage of the product, the