Manufacturing industries contribute to the Gross Domestic Product of an economy, so it has to keep up with the latest trends and key emerging societal factors that are aligned with the cultural factors. The construction and manufacturing industry is helpful for a much-skilled labour force because it integrates high-value parts, design, research and development, and marketing. In Hungary, there are several global chains of multiple industries that are further comprised of millions of medium, small, and large manufacturers that are facing intense demand from consumers, and manufacturing innovating products. Today, global economies are ignited by macro-environmental trends. The report discusses a comprehensive scenario of the economy of Hungary as an emerging market. Key conditions in the local business environment, socio-economic and political factors and key entry strategies to enter in a new market are a part of this report. The research report elaborates the involvement of business in the economic growth of a country and key role played by industries to involve people under economies of scale.



Hungary is a part of central Europe that has transitioned from a planned economy to a market-based economy (Lane, 1995). Emerging technology is changing the direction of business and overall industry and further involving new strengths, capabilities, merchandisers, and professionals (Bae, S. Y., 2018). Aerospace, agriculture, and healthcare sectors are now specializing in better development aspects and have gained a strong position worldwide. This research report is going to discuss Hungary as an emerging market, in future it will be changing the economic patterns. The report will examine Hungary economy as an emerging market, and it will analyze the local, cultural, legal, and political factors that are shaping this overall economy.  In addition the following will also be discussed  key market entering strategies, the overall performance of the economy, trends, risks and challenges, entry and long term strategies to minimize risk as well as recommendations to businesses looking to enter this market.

The Local Business Environment


Under global strategy, Hungary’s economy has gained significant importance due to the marketing mix and segmenting the local market. It has been seen that this economy is an attractive destination for international business now, and it is going to be in the future. Business and service industries are considered a powerful segment of the economy that cannot only change the future of the labor market but also create more opportunities for business (Eszes, L., & Muhlemann, A. 1993).With the rapid expansion in transport, trade patterns, and communications, the international market has provided easy access to all businesses(Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018).

To fulfill consumer requirements, world is getting harmony in all its processes, such as technology, lifestyle, transportation, capital, and travel. Resurgence in global standardization at international level provides many motives to global firm’s decisions about trade. International marketers focus on right standard balance in global businesses so that performance can be optimized (Chan, E., 2019). Integration level is viewed at a global level due to global marketing strategy and role of marketing tactics. Technological advances have a significant role in the economy.

Global expansion caused the industry to push its product launch regarding automation, knowledge-based products, and biotechnology (Eszes, L., & Muhlemann, A. 1993). Economy can better explain the consumption perspectives of an industry when it comes to its specific features and products (Chaudhry, H. and Hodge, G., 2016). Value, when produced in commodities, undertake cultural and political-economic approaches to fulfill the historical trends. Marxist economists focused on linear commodity trends to discuss the concept of production and consumption. Individual production network tends to acquire vertical structure systems for the provision of consumer goods.

Approach of economy regarding the interaction of horizontal factors undertakes all political, socio-economical, and cultural factors, about consumables that move from one country to another. In Hungary, the automotive industry is advanced, and leading edge technology is implemented in biotechnology sector (Lane, S. 1995). A regulatory environment for the development of pharmaceutical products and biotech products is implemented. Through low cost and quick method of manufacturing, consumers engage in the ever-changing collection of affordable commodities; for instance, capital sources are involved in corporate development and spin-off activity. The rapid changes in trends and evolving lifestyle perspectives have shaped the industrial products (Cox, H. and Mowatt, S., 2012). On a broader culture, tremendous stress is placed on the system of production that can be labor-intensive. Hungary has a broader scope regarding fashion and footwear due to potentiality of factors; for instance, high-end fashion, products for the younger generation, and luxury brands are an important part of Hungary’s economy (Eszes, L., & Muhlemann, A. 1993).

Hungary’s economy focuses on broader business initiatives; for instance, construction industry is facing local regulation and strong price competition. The economic position of Hungary is based on GDP, and it’s per capita income is two-third of the average of EU-28, while in 2018, its GDP was $155.7 billion (Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018).Current markets are performing good and high competition is see in main global brands, their high quality of products, and performance is causing difficulty for new firms to enter(Lane, 1995).Opening of a fashion company in a new place is based on certain factors, some of which are difficult. In Hungary, supply of raw material and transportation is advanced level and moving towards sustainability and therefore making the competition intense (Eike, R. J., 2018). Hungary economy is performing a competitive role in the education and ICT segment of the industry. Socioeconomic and demographic factors and trends are likely to shape its future potential as an emerging market (Lengyel, B. and Cadil, V., 2009). For global trade supplier finance, capital is made available to the suppliers, who are engaged at the global level, to practice better policies. To open a business in Hungary, its cultural and social factors are important to consider; for example, if fashion textile industry decides to open its brand in Hungary, it will have to focus on its market, economy, and social aspects (Jarmuzek, M., Orlowski, L.T. and Radziwill, A., 2004). Consumer values, socio-cultural patterns, ethnicity, and perceptions of consumers are some key factors that will change the future market and its potential (Gardetti and Muthu, S., 2020).

PESTLE analysis


Industrial development is competitive in terms of the provision of quality and sustainability of products in Hungary. Segmentation, targeting, and promotion policies of different companies are conducive to increase sales and consumer spending (Lengyel, B. and Cadil, V., 2009). PESTLE analysis deals with all political, economic, technical, social, legal, and economic factors at a place. For instance, if Apple is planning to open in Hungary, it has to consider all the factors in the IT industry in Hungary regarding segmentation.New entrants in Hungary will face intense competition because stable socio-economicsystem.Political system is stable, yet some after-effects are due to the international worsening of global issues that will cause new incumbents to focus on their cost structure. Before 2019, Hungary’s fashion market has faced good performance, and its recorded revenue reached $75 billion, according to the National Fashion Chamber Hungary (Jacobs, and E., 2016).

Healthcare in Hungary is facing some global uncertainties, yet it is providing opportunities to British companies such as investment projects, management consultancies, supply of medical equipment, and hospital management services (szikinger, 1999). Economic situation in Hungary is much better due to the presence of many luxuries, lifestyles, and consumer goods in the Lombardy region (Kim, E.-D., 2000). A multi-party democracy of Hungary is divided into conservative right and opposition.

Legal system in Hungary is strict and composed of many regulations and rules. Fundamental law in Hungry is considered a parliamentary republic. For sustainability in the environment, the rule of law is established. Many implementations are faced with business networking (Mcgrath, P., 2013). The commercial communication system is established to know about products’ sustainability. Legal factors are persistent in following the rules and product’s life cycle as well as to reduce any impact on the environment. Specific manufacturing elements have to undertake to license regarding product’s packaging or supply chain and transportation (Lee, J. K., 2018). Legal system also provides confidence about state laws, product features, and fashion-based networking. Property laws and intellectual property elements prevail in the economy that is helpful for whole industry brands.

Economic factors such as inflation, employment level, and per capita income in Hungary are stable for businesses to make companies more productive, and industry can gain its sustainability. Social atmosphere and socio-cultural aspects undertake values and norms, societal characteristics, customs, ethics, and other peculiarities that work significantly for fashion as an emerging market. These factors are important to consider when a business company tries to launch a new product or bring innovation in existing products. For instance, in 2018, US merchandise exports to Hungary were $1.75 billion, and the main exporting items were automotive components, IT equipment, vehicles, electric machinery, electronics, and other manufacturing supplies. It is also working on the economies of scale rule to target consumer’s standards and fulfill their expectations (Mitterfellner, O., 2019).

The socio-cultural factors in Hungary are traditions, values, and norms that people love to see in their favorite brands. In Hungary, despite sustainable implementation, an adequate legal framework about environmental rules is implemented. Activities of involvement with rules & regulations customers will be fruitful to enter into the market. Difference in attitude and culture is a key factor that multiple brands have to focus on while entering in an emerging segment of society. Sustainability of products in Hungary is maintained under specific guidelines of commercial communication to make sure that traders are focusing on green claims (Mcgrath, P., 2013).  In Hungary, rapid industrialization has raised environmental concerns; therefore, product sustainability needs environmental protection policies.

Entry Strategy and General Business Strategy


Main driver of growth in Hungary is domestic demand; it was estimated in 2019 when rise in wages and high consumer confidence was observed. In same year, the foreign investment acted as a strong performing vehicle, and the electronic sector captured interest of global investors (Lengyel, B. and Cadil, V., 2009). Long term strategiesthat new business could adapt to mitigate risksarising from challengesare to be more competitive and revolutionized due to digital market ideas.In Hungary, there is a high wage rate, high profit margins and increased tax collection that can be an attractive entry point for new firms, so they can enhance a general balance of the economy. Due to business and industry growth, Hungary’s economy faced public debt going down, and International Monetary Fund anticipates that in 2020 this debt will be 65.1% and further will reduce to 62.9% in 2021 (Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018). There is a need for fiscal consolidation for the economy because its supply-side reforms need to maintain growth momentum so that global resilience can be built.

The economy of Hungary undertakes entry and long-term strategies that could mitigate risks arising from the challenges. The entry mode in international business segments adopts various policies such as product export, involvement in joint ventures, participation in the franchise sector, and making operational alliances or subsidiaries (Szent-Iványi, Végh & Lightfoot, 2018). IT, automotive, and construction sectors in Hungary can become more competitive by adopting growth features to get short and long terms success. Due to high competition at a global level, Hungary’s economy will focus on a continuum by nagging in low control to high control practice with resource commitment. Low control model needs more limited commitment of resources, so investment risk is reduced. However, in economy, some firms have little power in global operations that can result in declined financial outcomes (Sadachar and Manchiraju, 2016).

In this case, competitive business brands can enter in Hungary market by focusing on key cultural practices, norms, and involvement of values in the society. Foreign market expansion by any brand also has to focus on the skills and managerial expertise while entering into a new market (Mcgrath, P., 2013). Retail environment in the industry has to establish a competitive brand under specific format, assortment, and product offering. Retailer needs a specific kind of entry mode that matches with the global expertise and its international experience (Lane, 1995). This aspect is closely related to tackling foreign market challenges. The industry undertakes key cultural and market-related factors as competition because these factors are integral to understand economic and political stability. The company has to focus on supply chain management and distribution practices (Szent-Iványi, Végh & Lightfoot, 2018).

In Hungary, the government does not restrict foreign investment. Foreign direct investment is not limited and convenient to organize a large scale for specialized firms (Lengyel, B. and Cadil, V., 2009). Hungary’s industry is specialized in terms of multinational investment to cater to consumer demand. foreign firms win market share from incumbents by adopting different strategies like price wars, raising specific barriers, and making intense competition (Sweney, M., 2019). Competitive advantage in Hungary is considered complex due to the degree of internationalization. According to specialization of segments, the market diversifies and modify different areas of products to shift the market trends. Economy of Hungary is lucrative for global business firms because they can reap the benefits by acquiring a larger market share (Lengyel, B. and Cadil, V., 2009). New businesses can enter by analyzing their competitors’ profiles as well as researching the potential of the Hungary market (Eszes & Muhlemann, 1993). The pricing, product value, and advantages are important to consider. Consumer market has been focused on existing brands, division categorization, and product diversification is necessary to enter in the market because these aspects are inherently related to the economy.

Conclusions and recommendations


Economy of Hungary is set up on a competitive framework that incorporates the latest trends, expertise, and skilled labor force into the product portfolio. Countries engage cultural and social factors in their products because it is helpful for targeting better customers. Country-specific socio-economic & business factors must be considered by new businesses to gain a competitive advantage in Hungary’s market. Working in a foreign country requires a firm to consider its specific economic, political, legal, and environmental policies. New businesses have to focus on specific norms and values operating in Hungary regarding competition in industry because already present firms are operating in tough competition.

Some fashion and business brands have to undertake country risk uncertainty to survive in atmosphere and to ensure the profitability of the firm. In a foreign market, uncertainties like economic health, inflation, disposable income, and political stability and unemployment rates have a considerable impact on the company’s performance.

Key recommendations for new business, who want to enter in this market are research and development, flexibility, and a focus on high control models. They should be avoided to limit resource commitment. To be successful in the global market of Hungary, companies should select low control, entry models, because there will be a high country risk. New businesses have to consider government restrictions. It is recommended to maintain control in emerging market by complying with local rules.

Many competitive business attempt to start operations in Hungary, so they have to focus on political, economic, legal, and environmental factors in the Hungary market. IT, automotive, and fashion being sophisticated industries have to work on a diverse set of occupations. This research has highlighted the significance of certain institutional and cultural factors that play a significant role in the development of an economy and help elevate a firm’s business performance.




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Behavioural finance is considered as a secondary field of behavioural economics that investigates the irrational behavior and cognitive psychology of investors and financial practitioners,which affects the investment returns and explains many empirical patterns (Ritter, 2003).This essay discusses how the recent worldwide outbreak of the Corona Virus affects the confirmation bias among investors throughout the world, thus opening the scope for potential equity stock mispricing.The predominance of confirmation bias among investors results in their overreaction, which negatively affects the stock prices listed on the stock market. Some ways to counter the confirmation bias while investors make investments in the equities listed on the stock market will be discussed, as well as the trading strategy which can be exploited amid the Corona Virus outbreak to create a better opportunity of investment and maximize the returns of investors.

Confirmation Bias and FearAffecting Public Equity Prices

First, a brief description of Confirmation bias will be demonstrated.Confirmation Bias is defined as the interpretation of thecontent in a way to support the investor’s own beliefs or arguments(Nickerson, 1998). Confirmation bias is perhaps the most well-known behavioral finance bias, which “acts like a compulsive yes-man who echoes whatever he wants to believe”(Zweig, 2009). The significant existence of the confirmation bias is recently proved quantitatively by Hart in the meta-analysis(William Hart, 2009). It is based on the assumption that agents will tend to accept the information that will be in line with their arguments, ignoring othercontradicting signals and, hence, validatingpredictions already drawn.The existence of investorswho are prone to confirmation bias causes significant price anomaliesfor holdings in financial markets(Pouget, 2011).

When uncertainty hits the market, the previously held complacencyamong investors is shattered and market individuals start thinking that the worst is yet to come. This is amplified by rumors and “scary” news, causing multiple waves of fear in the market.In the fear of the unknown,market participants start paying more attention to the negative signs,henceshiftingtheir moods into panic mode. According to confirmation bias, when new information arrives non-Bayesian agents will update their economic expectations in a manner to support their initial negative or positiveimpressions(Charness G., 2015). In the case of coronavirus, investorsoverweight the prospect of future negative shocks, as it is an event with huge emotional impact, fueled by a plethora of dramatic news about its consequences. Overreaction of investors due to their confirmed fear is supported also by Jeremy Warner in the Telegraph, who states that “Globalization in combination with social media amplifies wider economic consequences. There is nothing more contagious than fear”(Ameinfo, 2020).

In the past two months, the threat of coronavirus spreading across the globe reverberates across the market, amplified by the media hysteria, leading to fear-based overreactions among investors.The recent closure of the car plant manufacturer and quarantine of 10 towns in Italy in the middle of the Corona Virus outbreak have further increased the concerns of the investors. These events have made many traders around the globe believe that the massive selling of stocks is knocking at the door. Most investors are overreacting to the news and selling stocks at a rapid pace due to widespread uncertainty which is fueled by the news.On the 28th of February 2020, the US stock market drop to its worst record since the 2008 recession(Amber, 2020). S&P 500 declined around 13% on and  FTSE 100 slumped by 3.5%and VIX index reacheda one-year pick at 25, making the last week of February the worst record of wealth shrinkage in the stock market(Wigglesworth R., 2020).This sentiment of investors will further decrease the value of stocks due to their confirmation bias as they extrapolate the consequences of Coronavirus more unfavorably than they are.However, the value of stocks is forward-looking, meaning that their value is determined by the value of economic activity in the long run and such a decline in major stock indexes should be verified by huge persistent losses in the long-term stream of corporate earnings.

The following chart reflects the equities slump on major worldwide indices.

Figure 1: S&P500 and MSCI Asia pacific presented in US dollars; Stoxx 600 in euros (Financial Times, 2020)


The recent outbreak of the Corona Virus has stumbled the worldwide stock markets amid its growing phase mainly driven by the rise in the tech stocks. Some of the investors have created a mindset that the outbreak will leave a long-lasting effect on the stock prices listed on the stock market. Investors lookout for the information that confirms their bias that the stock prices will decrease as the result of the worldwide outbreak of the Corona Virus.Furthermore, the regular media coverage of the disease and various reports add to the already created misconception of panic of the investors said, President Donald J. Trump.All this fear increases the panic of the general public and investors, who look out for further information that solidifies their already created belief of drowning global equity markets due to the impact of the newest type of Coronavirus. The constant increase in the panic and the easily available information through the media creates confirmation bias, which leads to an overreaction by investors in the markets, which have observed a massive dip in the recent two weeks. This will further decrease the prices of stocks due to the investor’s belief in the Corona Virus and its worldwide impact(NY Times, 2020).

On the other hand, several factors prove that the investor’s overblow corona Virus impacts. Historically, recent similar epidemics like SARS (813 deaths), MERS (36 deaths), Ebola(11.3K deaths), Swine flu (293K deaths) and Spanish Flu (50.0M deaths) had a temporary effect on markets, which were recovered soon after the breakout(Ameinfo, 2020).SARS outbreak in 2003 had a short term impact and markets had a 20.76% gain at the year-end, but still, many investors try to prove their point that Corona Virus will impact markets in more important terms which lead to thefrantic selling of stocks at lower prices(MarketWatch, 2020).Investors tend to overreact to the health threats due to which many of the investors leave the market, and the massive number of sellers decreases the share price of stocks. The experts believe that the impact of the Corona Virus will primarily affect worldwide traveling and spending patterns in Asia. Still, overall, the economic model will be short-lived, and markets will bounce back(Brush, 2020).

Massive Dip in Equity Stock Prices
Coronavirus Spread

Figure 2…………………….

Meanwhile, constraints to arbitrage prevent rational traders and arbitrageurs to exploit the current market anomaly. Although there are behavioral traders, who trade on investor sentiment, it is controversial if they can force equity prices to their correct value(Dimitri Vayanos, 2010). Also, even if rational traders are aware of the undervalued stocks, they stay on the sidelines to “time the market” rather than correct them to their fundamentals, as a poor short-term performance leads to an outflow of funds(Schleifer Andrei, 1997). Mispricing in assets may persist for many months as arbitrageurs incur holding costs, “fundamental risk” and “synchronization risk” (Abreu Dilip, 2002). All the above factors cause rational traders to delay acting on the current information.


Trading Strategy

Investors need to look for all the favorable and unfavorable information for the particularclass of assets to make an impartial decision. Investors should double-check the data supporting their arguments to nullify the effect of confirmation bias. Detailed investment research helps investors make their position regarding the particular class of assets clear, and this process reduces the risk of confirmation bias to a significant level.The third-party suggestion could help investors to get confidence regarding their statements on their investments in equities(Mind Tools, 2018). Furthermore, investors can use the six thinking hats strategy while investing in the equities to minimize the risk of losing the money in investments due to the confirmation bias. Six thinking strategy involves analyzing and interpreting the situation from multiple perspectives to deal with the information regarding the equities in which the client has invested the money(Bono, 1985).

While majority of the investors are overreacting to the Corona Virus outbreak, leaving the stock markets by selling the stocks at significantly low prices, on the other hand, some investors can seize the opportunity available to them by purchasing the shares at the stock market at low prices and earn huge capital appreciations and dividends on the shares once the Corona Virus’s treatment is discovered and the disease is contained(Yahoo Finance, 2020). In a time of panic, a rational investor can devise an excellent trading strategy to earn huge profits by “buying the dip”. Investors need to think carefully regarding portfolio construction, which should be diversified rather than focusing on a single sector or single economy. A well-diversified, well researched and off course well-constructed portfolio by screening every stock carefully and then buying amid of Corona Virus outbreak when investors are leaving the markets by selling the shares at the rapid pace, can provide an enormous profit-making opportunity for any rationale investor to enter the market and earn huge returns in the long-term.


Incrux, it is generally believed that confirmation bias is very common among the investors which results in overreaction by the investors causing the major dip in the markets worldwide. As explained above, Corona Virus just like the previous diseases for example SARS has caused panic among investors. Media Hysteria has also contributed to the massive surge in the investor’s panic. Investors need to impartially confirm the news before taking investment decision and this uncertainty can act as the right time for new buyers to buy at a low price as the majority of the investors are selling stocks at below intrinsic prices.


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Biophilic architecture happens to be a holistic approach to utilizing the best nature-based systems, and the current applications of biophilia include landscape urbanism, green city movement, and ecological infrastructure which happens to be one of the best applications. Throughout history, biophilicdeisgn was used to designate an image of opulence, grandeur and power. The Alhambra is the most prominent example of howbiophilic design was used as a representation of power by the rulers of the Alhambra. Alhambra palatine is the most admired as well as famous examples of Islamic heritage and architecture in Europe. However, in the 21st century, Biophilic design is more than just a technical format for aesthetics. The biophilic framework is now considerd as an advanced methodology for sustainability for the built environment. Sustainability is bound to be an elusive target until states can shift the entire focus on building a fulfilling relationship between humans and their natural environment



Alhambra Palace is located at a strategic point within the city, offering views over the entire meadow and the city, which have aided the rulers inhabiting the castle to gain a vantage point (EggletonL. , 2012). The fortress is surrounded by irregular ramparts, with its eastern side facing the Cuesta del Rey Chico and its southern side facing the valley of al-Sabika (Rabbat, 1985). The palatine fortress, the Alhambra, is a palace perched upon Sabika hill located in the city of Granada.

There are three main areas of the Alhambra, Medina, the Generalife, and the Citadel. The citadel area is for protecting the site and the medina is an area which provides accommodation for the administrative staff as well as the artisans. The Generalife is the summer palace which consists of pavilions, colonnades, and gardens. Analysis of the Palace indicates that there is a spatial order underlying the design patterns. This is a quality closely associated with Medieval Islamic Art.


Alhambra palace was initiated by Muhammad 1 in 1232 who was the very first sultan in the Nasrid dynasty. The majority of the construction of the palace took place from thirteenth to the fourteenth century and was completed at the end of the reign of Muhammed V, Sultan of Granada from 1353 to 1391 and reflects the architectural style at the end of the Nasrid dynasty (Willmert, 2018). The well-preserved fortress complex became archetypal to the “Moorish” architecture of the Western scholars at the end of the Nasrid rule (Irwin, 2004). The architectural style, common at that time, was a mixture of exuberant Moorish and Christian influences which has been known as the Nasrid style (Eggleton E. , 2011). Despite many subsequent alterations, specifically under the many Catholic monarchs, the castle remains symbolic both as a war trophy of the “Reconquista” and as a symbol of the long-lost golden era of the al-Andalus(Eggleton L. , 2012).

The fortress owes as much to its modern-day location in Spain as it does to the European travelers of the eighteenth century who had a huge part to play in its “rediscovery”. After the conquest of Spain by the Catholic Monarchs in 1492 the Alhambra underwent changes in its design. The Palace of Charles V, a Renaissance building commenced by the Emperor in 1526 is located on the hill of Assabica inside the Alhambra fortress. The projected Palace is a specimen of Spanish architecture, designed by Pedro Machuca, and has been characterized by Washington Irving as “an arrogant intrusion” (Calvert, 1904). Charles V installed his royal emblem on every surface and the square plan encloses a two-story circular courtyard. Doric order pilasters and rustication is articulated on the façade on the first story of the Palace (Eggleton, 2012).

There are distinct parallels between the Moorish design and that of the Renaissance, broadly speaking, the formal design of the Palace expresses a Roman and Renaissance style architecture which does not have the incorporation of landscapes or natural elements. Charles V has often been criticized for introducing the incompatible architectural element of the renaissance art within the existing Moorish design of the Alhambra (Abdelaal, 2018). Historians point out towards the tenacity of the rulers who, during a time when political negotiations were intense and warfare an ex veto, managed to produce some of the most phenomenal architectural buildings and sophisticated poetry within the region. The surge of culture within the Nasrid rule managed to leave its impact on the walls of the palace (Barker, 2016).

Style of the Alhmabra Palace

The Alhambra is a medieval Islamic monument in Granada Spain (figure4) that has been in existence for an extended period. The style of the palace was meant for religious rulers and persons belonging to the affluent class. The situation is evident through multiple structural designs and artefacts that were common with rich people such as rulers. In 1894, UNESCO declared the monument as a world heritage site, which is open for the public. People visit the site to observe and learn about its history and design.

The city hosts a rich architectural and cultural history that has continuously changed to modern times. Eggleton (2011, 9) claims that the city qualifies to be a monument as it houses different histories and practices of people who occupied it during the early Christian and Islamic rules. The monument’s structural and architectural designs (figure 5) have a natural feeling that has been re-envisioned multiple times by its occupants to modern-day. Built on a hill, the feature observes a biophilic style, which is evident in its architectural designs. For example, it has gardens, water pools, fountains, and mimics of natural light in most of its palaces.

The Alhambra complex has two describable entities remaining today, the Court of the Lions and the Court of the Myrtles. Court of the Lions was built in the reign of Muhammad V during the time of 1354 to 1359 and has been paralleled with the Villa Rustica. The architectural style common at that time was a mixture of exuberant Moorish and Christian influences which has been known as the Nasrid style (Eggleton E. , 2011). A pavilion project into the courtyard and the light domed roof has filigree walls. The oblong court is thirty-five meters in length and twenty meters in width with white marble colonnade and colored tiles.

The Court is situated at the heart of the Palace, and the main living units surround the court and turn outside while receiving the sun, view, and light from the garden of the courtyard. When one moves through the space, physical involvement with water is induced due to the integration of small water channels and fountains which engage the human body with an element of water. The main technique for the decoration of the walls of the courtyards in the Palace is created through the dado tiling used to cover the bottom and upper part of the wall in the Court of the Golden Room. The stucco art which is covering the muqarnas in the Court of the Lions has different colours such as gold, green, blue, white and red. There is a consistency of the natural elements and themes in historic architecture which points towards the fact that biophilic design is a phenomenon contributing towards codification of history, neural sciences, and human intuition. This shows that contact with natural elements and nature itself is essential for a vibrant existence specifically for those living in urban areas (Jorge, 2018). The natural colour tones create a material connection with nature and reflect the local geology to create a sense of the place (al-Rhodesly, 2018).

The surface of the pool in the Court of the Myrtles serves the function of a mirror, reflecting the biophilic design in the architecture itself. This creates an admirable visual effect. There isarabesqueornamentationofthedifferentvarietyfoundwithinAlhambra.Theseincludegeometric starsandroseswhichrun intoeachotheranddevelopthedesign.Thebestexampleofbiomorphic designpatternsistheornamentalepigraphswhichareinterwoveninthesurfacedecorationsinthe porticos of the Court of the Myrtles because the ornamentalepigraph patterns are reminiscent of nature thus projecting the design element of naturally occurring shapes in nature  (al-Rhodesly, 2018).

Biophilic Design

The term ‘Biophilia’ was first coined by a professor at Yale University who defined the biophilic design as being affiliated with the inherent need of human beings to associate with natural designs within the built environment. Thus the goal of the biophilic design is that an environment is created which consists of elements that promote well-being and contact between human beings and nature. Over the years, architects, have published different works which include a unique form of approaches for realizing the transition of biophilic design from theory to application in building design. Biophilic design happens to be a holistic approach which utilizes the engineering principles, design cues, and nature-based systems to support well-being improved health and performance which can be measured through self-rated biometrics, personal mood as well as work quality.

Since the beginning, the hunting and gathering societies shared what humans today have, the need to connect with nature for obtaining necessities and for gaining mental peace. While analysing the existing literature one stumbles upon the idea that biophilia developed and has its origins within the understanding of the evolution of human beings (Söderlund, 2015). Human species developed biologically in adaptive response to the natural surroundings and not the artificially created forces. Thus, the human mind and body evolved with the bio-centric approach and not through technological advancement (Gullikson, 2010). The main hurdle which humans today have to experience between themselves and nature is the paradigm of development and design of the structures and artificially built environment (Söderlund, 2015). The biophilic design thus addresses not only the problems and deficiencies in modern landscape practice and building but also provides a new method for creating a positive experience for humans with nature (Kellert, 2018).

The term Biophilia has its roots in Greek literature means “love of life”. The Biophilia Hypothesis proposed by Wilson indicated that there is a need within people to connect with the complex geometrical forms in their surroundings just like they require air and nutrients (Price, 2018). Thus, sprang the Biophilic architecture, giving innovation to way architectural spaces are used and paved the way for the dialogue between the need for humans to connect with nature and the patterns as well as natural forms. There are geometrical features such as the scale-invariance and fractals which provide a notion of self-similarity as well as symmetry for people to indirectly connect with natural elements (Ramzy, 2015).

Principles of biophilic design can be seen in the architecture of the Islamic era, in cities such as Damascus, Aleppo, Bagdad, and Cairo. Pointed out that in contrast to the building being viewed as a sculptural element, the traditional madrasa has characteristics of well-arranged interior spaces and exterior patterns that are integrated harmoniously in an interplay with natural elements (Abdelaal, 2018). Moreover, themes connected with natural elements can be found in historical architecture such as that of the Egyptian sphinx with stylized animals, and that of the acanthus leaves on the Greek temples. Thus, this representation of elements and plants as ornamentation represents the tendency and need of human beings to connect with nature (Kellert S. R., 2012).

There is a consistency of the natural elements and themes in historic architecture which points towards the fact that biophilic design is a phenomenon which has contributed towards codification of history, neural sciences, and human intuition. This shows that contact with natural elements and nature itself is essential for a vibrant existence specifically for those living in urban areas (Ancona, 2017 ).


The Alhambra and the Biophilic Design

There is a consistency of the natural elements and themes in historic architecture which points towards the fact that biophilic design is a phenomenon which has contributed towards codification of history, neural sciences, and human intuition. This shows that contact with natural elements and nature itself is essential for a vibrant existence specifically for those living in urban areas. The Alhambra Palace is the perfect example of the historic structure with the biophilic design because the architecture has beauty and functionality which connects people with natural elements. The Alhambra palatine is the most admired as well as famous examples of Islamic heritage and architecture in Europe.  The biophilic design was achieved in the Alhambra palace through the architectural magnificence of the Generalife Palace, which is framed with a panoramic view of different landscapes that extend to different horizons.

Biophilic Design Patterns present in the architecture of Alhambra

Browning allocates the biophilic design into three main categories, the Natural Analogues, The Nature of the Space, and the Nature in the Space (Downton, 2017). There is a visual connection with nature in the design of the Alhambra palace, specifically in the Generalife Palace in which the panoramic views of the landscape is extended out to cover the horizon. The terraces, garden pavilion, and flowers, shrubs as well as plants cover the spaces (Browning, 2014).

Nature in the Space: Visual Connection with Nature

The visual connection creates a stimulating as well as calming experience for the viewers. This pattern is rooted in the idea of biodiversity as researchers claim that having visual access to various ecosystems and biodiversity is beneficial for the health of individuals. Kahn is of the view that viewing environmental elements in an office surrounding reduces the stress level (Ryan, 2014). The Alhambra observed visual connections with nature evident in the Generalife Palace. According to Amoeda et al. (2018, 376), the palace has panoramic views of the natural environment spanning to the horizon. The palace’s gardens are filled with flowers and shrubs, while plants cover its pathways as evident in (figure 6). The oblong pools are fitted with fountains and surrounded by shrubs, as evident in (figure 7) below.

Moreover, the Patio de la Acequia (The Court of the Water Channel (figure 8) and the Patio de la Sultan have are “magnificent” courtyards that enhance the palace’s biophilic design. Amoeda et al. (2018, 376) claim that visual connections with nature enhance positive emotions, reduce stress, and improve recovery rates and concentration. The presence of plants, shrubs, and flowers in the Generalife Palace made it possible for its architects to incorporate direct experience with nature into the Alhambra. The scenery may have served to reduce stress and increase mental engagement among dwellers of the palace.

Direct experience of nature

Direct experience of nature includes the actual contact with natural phenomena such as water, animals, plants, light, natural landscape, and weather. Indirect engagement comprises of natural colour, evoking nature, simulations of natural air and light, and images of nature (Kellert & Calabrese 2015, 11). Notably, people use colour to locate water, food, and other primary resources, making it an essential natural element. The use of natural colours in built environment consists of the utilization of pigments that consider earth tones such as rocks, soil, rainbow, sunset, animals, sunrise, and plants (Downtown, 2017). An evocation of nature includes the use of representations that do not occur literally in the environment but imply specific natural principles. A building can have shapes that evoke specific animal qualities. For instance, the Sydney Opera House has wings that imply the qualities of a bird.


Non-Visual Connection with Nature

This pattern involves auditory as well as olfactory sense simulation through sound patterns and the main objective is to provide environmental elements using scent, touch, and taste to some extent. The main design considerations include prioritizing natural sounds over the artificial urban sounds. The best example of Non-Visual Connection with Nature is that of Calat Alhambra in which these fourteen patterns can be seen.

The architecture of the Alhambra supports the nonvisual experience through the connection of indoor as well as outdoor spaces between natural landscape and buildings. There are solar heat penetrates, sounds of nature and myrtles along with fragrant plants within the palace which create the exquisite stimulation for senses. The non-rhythmic sensory stimuli is present in order to circulate the natural sensory stimuli and to attract the attention of the viewers by relieving their psychological stress.

Thermal & Airflow Variability

There is thermal as well as airflow variability within the palace which makes the spaces in the fortress invigorating, refreshing and alive. The Hall of Comares is the best example of the “Venturi effect” in which air is circulated rapidly throughout the space creating cross ventilation. The Alhambra observed direct contact with nature through the creation of thermal and airflow variability. According to Amoeda et al. (2018, 376), thermal and airflow variabilities are changes in airflow, relative humidity, and air and surface temperatures that imitate the natural surroundings. The aura created by design generates a refreshing, alive, active, comfortable, and invigorating feeling. In the monument, the wall height provided a natural cooling against the intense sun rays. The situation created an indirect illumination at the higher parts, which spread to the lower parts of the interior. The design prevented the influx of heat in the rooms by manipulating direct sunlight while still achieving the required level of ventilation and illumination (Amoeda et al 2018, 377).

Additionally, ventilation in the rooms was achieved by structural placement of the windows that created a stack effect and venture effect. Structural placement of the windows refers to the accurate position of windows. For example, the variation in air pressure and density between the lighter warm air and heavier cold air created a stack effect in the Tower of the Captive and the Tower of the Princess. The Hall of Comaress (Figure 9,10) achieved natural ventilation by rapid air circulation in spaces where cross-ventilation creating a venturi effect. The air ventilation was necessary to enhance human comfort and productivity. According to Kellert & Calabrese (2015, 12), natural ventilation can be achieved by operable windows and or complex engineering strategies. Therefore, by engineering the windows to allow cross ventilation in the Alhambra (figure 11), its architects achieved a biophilic design that allowed the circulation of natural air into the interiors of the buildings.

Presence of Water

The presence of water created compelling as well as captivating presence. The best example is that of Alhambra pools as there is the presence of water in the Court of the Lions design and the Water Stairway which is one of the most breathtaking designs of the Generalife. The presence of water (figure 12) encouraged the connection of nature with the Alhambra’s design. Amoeda et al. (2018, 379) claim that water promotes the experience of a place through touching, hearing, and seeing. People develop a captivating and compelling feeling. The Alhambra has multiple watercourses comprising of canals, water stairs, bannisters, basins, and fountains created in different geometric forms. For example the Court of Myrtles has a reflective pool with pools that gurgle water, creating a calm relaxing, and quiet sound that generates a wonderful sense (Amoeda 2018, 379).


Dynamic & Diffuse Light

Dynamic light effect creates the experience of intrigue and drama within the viewers and buffers a sense of calm.

Connection with Natural Systems

These are the interactive designs such as the integrative educational curriculum, community gardens, horticulture designs in which the use of materials is that which engages the viewer. This form of connection with nature can be seen in the Alhambra palace as well in the ceilings of the Throne Room and in the roof of the Balcony of Dar Aisha.

Natural Analogues

Natural Analogues in the Alhambra

The natural analogs of the Biophilic design are the non-living, organic vocations of nature that are indirect. These include the colors, shapes, patterns as well as materials which manifest natural elements in the form of artwork. These biomorphic forms and patterns can be seen throughout Islamic ornaments which were used for decorative purposes and are present in the architectural decorations in the palace as well. There is arabesque ornamentation of the different variety found within Alhambra. These include geometric stars and roses which run into each other and develop the design. The best example of biomorphic design patterns in Alhambra is the Balcony of Dar Aisha which is considered as one of the most enchanting corners of the palace. Moreover, ornamental epigraphs are also present on the perforated screens and panels (al-Rhodesly, 2018).

Indirect Experiences with Nature

The Alhambra also achieved a biophilic design by incorporating natural analogues into its structural designs. The above elements are incorporated into structures designs creating a mimicry of the natural environment.

Biomorphic Forms & Patterns

The Alhambra has multiple biomorphic forms and patterns that enhance individuals’ connection with the cosmic world through imagination (Gonzalez 2003, 262). In relation to the Islamic decorative ornaments (figure16,17), the cosmic world is made up of three dimensions that include nature, the universe, and human beings. (Amoeda et al. 2018, 381). The Alhambra represents the cosmic beauty through epigraphic and geometric decorations throughout the palace. According to Amoeda et al. (2018, 382), natural geometries are evident through geometric flower decorations and patterns that fill the walls of the monument. For instance, the Balcony of Dar Aisha (figure 18) presents one of the most spectacular epigraphic compositions and spectacular decorations. In this case, walls are filled with geometric representations of flowers, star wheels, and puzzles.

On the other hand, the epigraphs are interwoven with other surfaces(figure19), making the Alhambra rich in information. According to Kellert and Calabrese (2015, 12), people develop a positive feeling towards diverse and information-rich environments. For example, tourists are fascinated by reading ancient writings on monument walls provided they are legible and comprehensible (Garcia, 2017). The epigraphs in most of the Alhambra’s walls are placed above the tile decorations on the lower part of the walls, which make them more visible for visitors. Today, most of the structures have been renovated after abandonment for a considerable period since the 1700s. The palace has been termed as a world heritage monument by the United Nations Educational, Scientific, and Cultural Organization (UNESCO).

Biophilic Design Throughout History

The sense of attachment of human beings with their built landscapes happens to be the promise of biophilic design and the distortion of an individual’s values with that of nature in the digital age has only occurred because of conventional design. Furthermore, the distortion in the values also occurred because of the growing alienation and environmental degradation within the world. Thus sustainability is bound to remain a goal rather elusive until there is a shift in the ethical values with the natural world. Sustainability is bound to be an elusive target until we can shift the entire focus on building a fulfilling relationship between humans and their natural environment. This relationship is depicted in biophilic design, which can be seen in the Alhambra. Thus the successful application of the biophilic design relies solely on recognizing how one can remain productive, healthy, and maintain a meaningful connection with nature.

Angkor Wat present within Cambodia happens to be one of the largest religious monument which happens to be 162.6 hectares. The temple was built in the 12th century by Khmer King, and it was not dedicated to Vishnu which was the previous tradition but was rather the mausoleum for Khmer Empire. Angkor Wat uses the Khmer architecture and uses sandstone as the main building stone and has redented towers which have been shaped to look like lotus buds. The complexity and order pattern, which is a sensory element of the biophilic design that adheres to the special hierarchy matching that of natural surroundings (Hartley, 2014). The main design associated with complexity and order pattern, the fractal pattern can be identified in the vernacular as well as classical architecture from the column capitals of the art of Ancient Mayans, ancient Egypt, and Greece, the Hindu Temples, etc. The fractal pattern can also be seen in the Angkor Wat as there is high dimensional fractal artwork such as that of narrative scenes, extensive garlands, bas reliefs, decorative elements like pediments and devatas.

The madrasa and bimaristan design during the 11th century valued biophilic elements which can be seen in the Qubbat&-Bimaristan al-Sultan Qalawun of the 1283 A.D. In contradiction to the western conception of sculptural element of the biophilic design, the madrasa feature uses patterns that are well-arranged within the interior as well as exterior spaces that interplay as well as integrate the natural elements. The biophilic elements included within madrasa architecture includes water elements, daylight, clever manipulation, patterns, wood, and stone (Abdelaal, 2018). These features happen to be essential elements present within the biophilic architecture. The pattern, also known as the complex order happens to use a different form of strategies such as the scaling factor with the fractal geometries, hierarchical symmetry, bio-geometry, universal scaling, and connective symmetries. These patterns can be seen in the Muqarnas dome, which happens to be an Iranian architecture that can be seen in Erzurum Yakutia Madrasa that was built in 1310.

Biophelia in Modern Day

Biophilia started as a display of power and opulence as it was designed as not just a castle but like a mini city with the royal family being the center of attraction. The impressively large castle was constructed with a powerful exterior containing fortified structures that were meant to fend off attackers. The castle was built as a symbol of power and strengthened at a time when the Christian expansionism was at its peak in the 13th century as it threatened to overrun the Muslim rule in the state of al-Andalus.

Alhambra was not only considered as the priced jewel of the Granda but it was also the center of political power within the kingdom and Nasrid Palace was located at its core. The Alhambra Palace, during the Nasrid rule was meant to designate opulence as well as power. The palace was constructed to impress and it worked its charisma on most of the visitors from all over the world, particularly the Catholic Monarchs, Isabella and Ferdinand. Palace of Charles V within the Alhambra exudes majesty and power because of its impression of size, weight, symmetry and ornamentation which suggest authority and dignity. The opulent Moorish styled reception halls, royal quarters and reception halls part of the Nasrid Palace in the heart of Alhambra are a perfect blend of splendor and power. This is because the dazzling ornamentation of the columns and walls dazzles the eyes of the visitors. However, opulence alone is not sufficient to suffice for being the source of power (Eggleton E. , 2011). The other means through which the palace displays power include the disproportion and uncertainty of the layout of the Nasrid Palace communicates a sense of mystery regarding the ruler of the palace. Thus the visitors or the potential assassins will be disoriented by the narrow passages, blind alleys and rooms at odd angles.

Eggleton states that multiple generations of Christian monarchs chose to occupy the Alhambra palace demonstrates that it was considered as a site of immense power and opulence. This shows that the biophilic design implemented at Alhambra represents the ruler just like beauty, architecture, ornament, and the surrounding landscape represents power (Eggleton E. , 2011). However today, architects utilize technology to enhance people’s contact with nature. According to Lin, Egerer, &Ossola (2018), urban gardens provide urban dwellers with diverse animals, plants, and soils. The situation influences an in-depth comprehension of natural processes, such as pollination, climate processes, and pest control, which affect food production. The gardens also allow individuals to interact and engage in physical activity, reducing the risk of some lifestyle disorders such as obesity. Modern designs also infuse biophilic elements by creating plant walls, which enhance positive health among employees in urban places (Lin et al. 2018). For instance, the Pasona Group’s Office in Tokyo utilizes hydroponic technology to grow plants along the interiors and exteriors of its walls (figure 24,25).

Integration of shapes and patterns, such as water ripples, which mimic natural forms, have also gained popularity in giving building a wavy appearance. Glass walls and windows are used to incorporating space and light in most buildings. The materials allow buildings to utilize natural light as they reflect sun rays around spaces. For instance, Genzyme building in Cambridge incorporates natural light and space in its design. The above cases reveal that technology can be utilized to enhance biophilia as opposed to hindering its integration in the built environment.

Among the best practices architecture these days, there happens to be immense demand to reduce the number of carbon emissions which is a concern for developed countries where complex regulations, energy demand, and thermal studies have provided solutions for architectural designs. Thus developing countries these days are also opting towards architectural designs that lower the energy consumptions in buildings (Garcia, 2017).  For example, the thermal condition of the desert in UAE is reduced using high technology design walls that happen to be built by Norman Foster in the Masdar Institute in Abu Dhabi UAE. Biophilic design can also be observed in the ceramic coating overlaying the structure made up of concrete of the Sydney Opera House which has been created by JornUtzon.

Furthermore, the handmade bricks building system at Turpan, China happens to allow moisture release as well as natural cross ventilation because of the clay, dry vegetation and earth mixed together in the bricks (Garcia, 2017). Furthermore, a building in Rio de Janeiro, Brazil known as the GuilhermeWeinschenck happens to compensate for heat through local vegetation which is used for lowering the temperature as well as release the built-up of moisture through balancing the levels of humidity inside the building.  The Dockside Green community in Canada happens to be an example of biophilic design as it represents the non-rhythmic stimuli. The goal of the non-rhythmic sensory stimuli is to enforce the use of natural stimulus which can attract the attention and enhance the ability of the individual to connect with nature which can often be replenished from psychological and mental fatigue. The Dockside Green community design is responsible for rainwater management as well as habitat restoration which can lead to noises and buzz of insects, grass noise through swaying and noise of falling water as well as that of nearby animals that can be visible through windows, porches, and walkways.


The main objective of the biophilic design is to build an environment based on the positive natural aspect. The restorative environment design focuses on the relationship between humanity and nature within a world that is increasingly marred because of the psychological, social as well as environmental alienation. The sustainable designs tend to combine the efficiencies of biophilic design, which makes enhanced connections to complement nature with restorative environmental design. Implementation of Biophilic design at the Alhmabra represented grandeur, opulence, aesthetics and natural connection with nature. However,due to urbanization and development in modern times, this relationship has translated from a personal to a collective level (from houses / dwellings / palaces) to public parks through a transition of power and an increased densification of urban areas which would not allow for “wasted personal space”. Today, the construction industry utilizes technology to promote the design by the use of nature, space and light. Notably, further studies can be conducted to investigate how natural aspects can be integrated into building design from an early stage, where space and resources are limited to enhance human contact with nature. It is incumbent on architects to incorporate nature into the built environment to optimize its benefits in the future.

The aspects of biophilic design such as energy-saving concept, human health, enhancement of microclimates, and green building elements are in favor of making the biophilic design as sustainable. These aspects are now being implemented by states who wish to create sustainable environment and living.The energy-efficient concept in biophilic architecture asserts that passive biophilic design tends to have an elaborate system of insulations, which means that there is a low loss of energy and increased thermal comfort. The biophilic design embraces the green building elements that lower the damage on the ecosystem, whether it is the biophilic design within a city or a building.











  • Growing urban middle class, increasing trend of after-school education, and improving overall economics of Chinese people will lead the local education sector to further growth.
  • One Smart Education is an attractive buy at current level with a target price of $21.
  • In recent quarters, profits margins have shrunk because of increasing marketing, selling, and administrative expense as One Smart is currently focusing on expansion. We believe margins will improve over time which will result in positive upside in net income.


With 430 learning centers across 43 cities in China, One Smart International Education Group Ltd is an innovative and leading educational company which provides K-12 after-school education. One Smart Education caters kindergarten and primary, middle, and high schools (K12) segments of education industry and offers them tutoring services. By revenue of 2016 and 2017, One Smart Education is the largest K-12 after-school education service provider in China.

One Smart Education’s vision is to become the best and most trusted “Third Class” outside home and school by utilizing motivation, capability and perseverance of each and every student and bring the best learning power out of him. With customer focus, execution, innovation, and teamwork as their core values, One Smart Education aims to thrive further in the competitive environment of China and take the full benefit of opportunities provided by growing industry of education.

One Smart Education (One) raised $179 million by issuing 16.3 million shares on New York Stock Exchange on 27th March, 2018.


One Smart Education was founded by Xi Zhang in 2008 in Shanghai, China. Xi Zhang did his master in business administration from Harvard Business School and had an experience of working with big multi nationals like Johnson & Johnson and Wrigley. Zhang was also recognized as a “Top 10 Most Innovative Entrepreneurs in China in 2012” by Global Times.

Honggang (Greg) Zuo is the Chief Financial Officer of One Smart Education. He completed his MBA from MIT Sloan School of Management in 2004. He has a vast experience of working in both, China and USA. Previously, he was engaged with Asian Special Situations Group of Goldman Sachs, MasterCard, General Electric, and PricewaterhouseCoopers.

XiaoqiangMeng serves at the senior vice president of One Smart Education and looks after the sales division. He has an experience of working in sales department of PepsicoLimited, Philip Morris, and Colgate Palmolive.

On the research and development side, Muyuan Ma uses his technical expertise to keep bringing latest updates to software of One Smart Education. He has a master degree from Warwick Business School.

One Smart Education currently employs 9023 employees. All of the top executives and employees of One Smart Education are well educated, experienced, and professionals in their respective fields.

Market Dynamics:

Business Outlook:

China’s economy is improving; poverty is on the decline and the overall living standard is rising. People are spending more money than ever on their kids’ education. China’s education market is poised to touch a mark of RMB3.36 trillion by 2020, increasing from a market of RMB2.68 trillion in 2018. (Source: Deloitte) The main triggers for this vibrant growth in the education sector are changing dynamics of Chinese demographics, increase in the governmental spending on education, and availability of capital to education sector through IPOs and VCs.

China is witnessing massive growth in its middle class population. With a middle class population larger than the total population of USA, it is estimated that there will 120 million applications for pre-school admissions by 2022, taking the pre-school school education market to RMB800 billion by2020. Moreover, these stats are also supported by the fact that the people born is 80s and 90s are becoming parents and they are more cautious regarding their kids’ pre and after-school education, including tutoring, as compared to their earlier generations. (Source: Deloitte)

The Chinese government has shown keen intention towards improving the educational standards in the country and making it more inclusive. In the budget of 2018, the government allocated RMB171.122 billion towards to educational sector, up by RMB10.501 billion, increasing by a growth rate of 6.5% as compared to last year. Preschool and high schooleducation received the most attention among all the other segments of education, getting a funding from government of RMB803million (increased by 35.6% from 2017’s actual spending) and RMB2.064 billion (increased by 21.5% from 2017’s actual spending). (Source: Ministry of Finance, China)

The capital markets and financial strategists also see a huge potential in Chinese educational sector. Eight educational companies proceeded towards IPOs in 2018 and deals worth of USD2.57 billion took place in the education sector in just the first six months of 2018, surpassing the number of total deals happened in 2017. (Source: Deloitte)

Industry-related risks:

This industry has no barriers to entry and this has started to trouble older players. With new players entering the market like Gogokid who are backed by big tech firms like ByteDance, the problems for One Smart Education will increase and this might result in shrinkage of profit margins and market share.

Another risk associated with this industry is very high customer acquisition cost. The firms in this industry typically spend a lot of money in trial classes, commission to sales employees and referral bonuses to teachers and parents. Sometimes the costs spent on acquiring customers exceed the profits which results in shrinking profit margins.

Corporate Strategy:

Going forward One Smart Education will eye following key strategies in order to retain its number one spot in China’s after-school education market and thrive further to grow its revenues.

For the next phase of growth, management of One Smart Education has made following strategies:

Reach national coverage and then scale:

One smart education wants to increase their coverage, open more class rooms and cater more students. From having 117 study centers in 2015 to 430 study centers in 2019, One Smart Education has executed this strategy fairly well. However, in order to boast its coverage to national level, it might have to face shrinkage in its margins. One Smart Education believes that once it has attained national coverage, it will scale and improve its margins.

Particular focus on “Premium tutoring services”

Although being number one in after-school education in China, One Smart Education only have 2.4% share of the Premium tutoring services market. The segment “Premium tutoring services” includes 1-1 class sessions or classes of very small groups; hence, increased instructor’s attention and better learning environment result in personalized and highly effective outcomes, leading to outstanding study results.

This particular segment of after-school education in China is poised to grow at a CAGR of 16% from the period of 2017 to 2022, faster than the overall tutoring market (9%). The key strategy of One Smart Education is to focus more on this segment and capture a bigger chunk of total market size. The aim of One Smart Education is to grow its share from 2.4% to 25% in the total market of Premium tutoring series, worth RMB433 billion.

Particular focus on key regions:

One Smart Education has strategized to focus on key regions and scale up the operations in the top 20 cities in order to increase revenue and improve profit margins.

Strengthening operational Excellency:

Work on core competencies in order to excel further towards being the market leader, drive continued product and services innovation through new technologies and revamp the incentive system to increase productivity.

Financial Analysis:

One Smart Education generates the largest revenue as compared to its peers.

According to our analysis, the stock of One Smart Education is an attractive buy at the current level of $7.26, with an estimated target price of $21. The main reason behind this projected upside is the increase in the net revenue because of the increasing of study centers and consumed class units. As per our forecast, the revenue will increase by 11.58%, 10.91%, and 10.50% in up-coming three quarters.

In recent quarters, the profit margins has shrunk slightly because of the increasing marketing, and advertising expense; we expect that profit margins will further deteriorate as One Smart will focus on expending and launching new study centers nationwide.

The decreasing profit margin is because One Smart Education is currently focusing on growth instead sustainability and retention. In order to increase the number of enrollments and to cater growing number of students, One Smart Education is spending much of its sales revenue on marketing and commissions.

We believe that profit margins will improve with time which will result in healthy growth in net income in future.

Lower SG&A Expenses:

SG&A expense of One Smart has declined in last two quarters and is lower than other of its peers.

Liquidity Management:

So far, One Smart Education has not been able to maintain a current ratio of above 1 which may not be a sign of risk as much of current liability consists of “Prepayments from customers”. However, the average current ratio of One Smart Education, since its IPO, is below than the industry average Current Ratio. (MRQ)

On the risk side, One Smart Education is highly leveraged and its net income has struggled in recent quarters due to high interest payments. We expect the interest expense to increase further in coming quarters as One Smart is focusing on expanding its operations right now; hence, further distress on net income is anticipated.

Price to book ratio of One Smart Education is in line with the industry trend with the exception of Puxin, which is slightly over valued as per the P/B ratio.

Valuation Methodology:

For the purpose of valuating One Smart Education, the analyst has used the “Discounted Cash Flow” methodology. After discounting the estimated “Earning before Income and Taxes” of next 3 quarters by an appropriate discount rate, the analyst has arrived at the target price of $21.


One Smart Education caters kindergarten and primary, middle, and high schools (K12) segments of education industry and offers them tutoring services. One Smart Education is currently trading at $7.26, below its IPO price of $11, as recently net income has declined because of increasing expenses on advertisement and administration. But with key dominating factors like rapidly growing Chinese middle class population with increasing focus on children after school education, hike in government’s spending on education, and increasing influx of capital in education sector of China, we believe the stock of One Smart Education has the potential of reaching the a price of $21 in coming quarters.

Moreover, One Smart Education has funding from strong financial players like GoldmanSachs and Black Rock which shows further credibility and strength of this stock.




We’ve talked a lot this semester about the idea of “fate,” comparing it to religious determinism (God has a plan) and to the rationalist’s or humanist’s notion of free will (Oedipus “deserved” his fate, because . . .) Write an essay on the differences between the various concepts of fate (including classical Greek [or Roman], Christian, Hindu and Buddhist fate) we’ve encountered in our readings here. You must use characters from at least 4 (four) of the “heroic” readings to illustrate your point(s) regarding FATE.  


The classical tragedians including classical Greek, Christian, Hindu and Buddhist fate happened to appreciate the conflict between free will as well as fate. Amidst every tragedy their lay the struggle between the inclination of a human being to accomplish more and the desire to be the master of his or her fate and the inevitable truth as well as inclination to accept the relativity of fate in the most absolute sense. Virgil, Shakespeare and Sophocles as well as other classical writers would agree that the power of choice and the force of destiny tend to control the human life continually.

For the tragedian writer, Sophocles, fate tends to take over the will of a human being as the harder someone tries to avoid the inevitability of fate; the more difficult it gets for the individual to resist his or her fate. This is why almost all the characters in Sophocles’ plays tend to signify pride of changing destiny through human will as the downfall of an individual. The themes of resistance, recognition and reversal can be seen in the characters within classical plays. For example, Hamlet, remains aware of his own weaknesses as well as shortcomings and feels powerless in making those shortcomings and weaknesses right which he feels are the main aspects wrong in his life. Through intellectual maneuvering, Hamlet aims to alter his fate and sees clearly the consequences his choices will have. Hamlet is considered to be a Shakespearean hero who is bound within himself, as he has been born to high status but not power. The idea of fate is depicted in Hamlet as that of conflict in which God asks Hamlet one thing while he wants to peruse something else.

Oedipus, however, is one character among the long list of characters in classical tragic literature who stands on the mercy of gods and learns from the oracle about his faith. By knowing about his faith, Oedipus has fallen prey to his win fate and the irony is that his destiny prevails despite his efforts. This is because he feels proud after people choose him as their leader which is why he blindly fulfills the fate and prophecy by choosing to be the king and marrying Jocasta. Oedipus accepts his fate at the end and states that, “Oh God! It has come true. Light let this be the last time I see you.” This means that he accepted his destiny unlike Christian heroes in tragedy who have numerous other things motivating them.

When it comes to Greek tragedy, it can be seen that the characters who are influenced by fate happen to have a necessity of action surrounding them. For example, Oedipus displays no individuality but the whole point of the play is to uncover the hidden motivations of Oedipus while witnessing the power of fate. Furthermore, Fate as well as the concept of destiny in the Odyssey and the Aeneid is centered on the idea of duty. This is because Odysseus and Aeneus find themselves torn between duty and fate. This is because a single question revolves around Odysseus and Aeneus which is: if fate is already written and set within stone then should Odysseus and Aeneus fulfill their duty to their destiny or hope to create a fate of their own? Odysseus and Aeneus. However, it is noticeable that Odysseus and Aeneus have certain cultural as well as philosophical differences which places huge emphasis on how they reacted to the idea of fate in the play. The Greeks placed emphasis more on the worldly pleasures and pursuits which is why Odysseus naturally a war hero will have to return home eventually.

The Romans, on the other hand, emphasized heavily on Roman values which is why Aeneus is dutiful to the core as the god’s interfere in his journey for either fulfilment of fate or for personal gain. Odysseus wants to return home, however is a subjected to ill fate by the gods and Aeneus wants to fulfill his obligation which is a driving force behind Aeneus realizing his fate. The role and cultural differences of different tribes offer clear representation of people. As in the case of Odysseus and Aeneus, the idea of morality forms the basis of behavior and attitude in Greeks that has shown a clear example of worldly pleasure. The Greek disaster illustrates the role of Odysseus when it appears as moving on the way of God and how the fate is affected by destined events and a need of activity has encompassed them.






  1. How can the business activity of the company be best described? Is the market risk implied by these business activities expected to be above or below average?

Business Activity:

Vossloh is a global firm which operates in around 20 countries and primarily deals with products and services pertaining to railway infrastructure. The products of Vossloh include track fastening systems, concrete ties, switch systems and the innovative services associated with the life cycle of rail tracks. With over 30 production sites, Vossloh segregates itself into four basic divisions.

  • Core Components: This division of Vossloh manufactures standard and common products for railway infrastructures on an industrial level. The products of this division include railway fasting, screw-fastened and maintenance-free elastic systems which are applicable and required for all kind of railway tracks ballasted and slab tracks, mainline and conventional lines, high-speed lines, heavy haul and local transport.
  • Customized Modules: This division manufactures products which are customized to different clientele needs. Products of this division includes turnouts and crossings, manganese frogs, switch blade, switch actuators and locking devices, signaling products and rail monitoring systems; such products are unique and different for every other project.
  • Lifecycle Management: This divisions incorporates providing railway track services in order to increase the life of the tracks and keep them well maintained. Services of this division includes welding and transportation of long rails, the corrective milling and the preventative care of tracks and switches and reconditioning and recycling of old rails.



Market risk of “Vossloh”:

Market risk is the uncertainty which arises from external factors and which impact the whole financial system as a whole, also known as “Systematic Risk”. Market risk includes events and incidents like recessions, political turmoil, changes in interest rates, natural disasters and terrorist attacks etc.

Vossloh’s market exposure and risk are above average as compared to firms operating in other sectors for the following reasons:

  • Companies operating in infrastructure industry highly depends on the performance of governments of countries where they operate. Government only invests in infrastructure projects when they have budget surplus or enough room from lending so to invest in projects like railways which are not considered as important as providing the basic necessities like food, education, and health. So a recession, regional or global, can really hamper the business and financial performance of Vossloh.
  • The other external factor which can impact negatively the financials of Vossloh is increment in the interest rate. Operating in construction and infrastructure industry, sometimes require accumulating huge debts, which can result in higher finance cost. Vossloh’s net interest expense increased from £12.5 million in 2017 to £13.4 million in 2018 which tells that Vossloh has a significant amount of debt in its balance sheet and any hike in interest rate can shrink the net profit. However, this risk can be mitigated as Vossloh enjoys a fine reputation in the industry which can result in negotiated, better and fixed markup rate.
  • As Vossloh operates in 20 different countries and has supplied its products to more than 65 countries, fluctuations in foreign exchange rates can also impact the final profits if not hedged properly.

Above mentioned aspects show that the market exposure of Vossloh is slightly higher than the average but as with higher risks come higher profits, Vossloh has been mitigating such risks pretty well since its inception and we expect the same to continue. (Vossloh , 2018)

  1. What is the cost of debt of the company? Describe the critical issues you are facingand propose a well-founded solution.

Cost of Debt of Vossloh:

Total Outstanding Debt:

Net Interest Paid:

Source: Vossloh Annual Report 2018

The cost of debt of Vossloh should be (14.9/267.9 = 0.055), 5.5%.

Issues in calculating cost of debt:

One issue we faced in calculating the cost of debt of Vossloh is that Vossloh hasn’t provided the breakdown of its “Other interest expense” so we can’t be so sure that this amount only includes interest paid for its debt as companies also tend to pay interest on its outstanding account payables and other trade debts. In order to deal with this issue, we will add a caveat regarding this. However, this issue is not severe as the probable amount of interest paid for trade debts are not usually so high.

So, the cost of debt of Vossloh is 5.5%.


  1. What is the cost of equity of the company? Please identify a Beta-factor based onyour own calculations. For that purpose collect the appropriate stock quotes (e.g. and explain your approach. Moreover, discuss the problems in identifyingthe risk-free rate and the market risk premium and explain your solution.

Cost of Equity:

In order to calculate the cost of equity, we will take a step by step approach, which is the following:

Step 1: Calculate the risk free rate:

We are taking the rate of USA Treasury Bill – 10 years as our risk free rate which is currently 2.21%. (Source: US Department of Treasury)

A risk free rate is one which guarantees a certain rate of return and doesn’t have any uncertainty. US Treasury Bill – 10 Year offers the qualities of risk free rate as it is free from all kinds of risks including default risk, liquidity risk, and time horizon risk.

Step 2: Calculate the Beta.
In order to calculate the beta, we need to extract the closing stock price of Vossloh and the closing index value of the stock market where Vossloh trades. The data should at least be of last 4 years as having data of a shorter span may not truly portray the risk of the stock as it might not be enough to take into account all the ups and downs the company has went through.

After collecting the data, we will use the following formula to calculate the beta.

With the above mentioned formula, the beta of Vossloh is calculated as 0.50. We took the data from December 2015 to December 2019.

Step 3: Calculate the market premium.

Market premium is the extra return Xetra has provided over the risk free rate.Xetra’s last 1 year return has been taken as taking a return of longer horizon, i.e. 10 years, may take into account financial crisis period of 2008/09 which may distort the return the market has provided recently. Also, as per industry practices, market premium should reflect the current scenario rather than historical years.

Step 4: Using the equation of CAPM to calculate cost of equity:

CAPM equation is, Cost of equity = risk free rate + (Beta*Market Premium)

CE of Vossloh = 2.21% + (0.50 * 22%) = 13.21%

So, the cost of equity of Vossloh as per the CAPM model is 13.21%.


  1. How do you determine the weight of equity and the weight of debt? Again, describethe problems you are facing and propose a solution.


In order to calculate the weight of equity and debt, we first need to determine the total amount of funding Vossloh has acquired in form of both, debt and equity. After calculating the amount, we will calculate the share and weightage of each, debt and equity, in that amount.

Total Funding:

Hence, the total amount of funding for Vossloh is 512.5+267.9 = £780.4 million

Weightage of debt:

= 267.9/780.4 = 0.343

Weightage of Equity:

= 512.5/780.4 = 0.656

  1. What is the WACC of the company? Discuss your result in terms of robustness andreliability.

WACC of Vossloh:

WACC = (13.21% * 0.656) + (5.5% * 0.343 * (1-0.15))

WACC = 10.26%

As per our calculations, the WACC of Vossloh is 10.26%. We believe this is accurate and reliable as we have extracted all the data from relevant sources and used methodologies which are used by professionals. 


Vossloh , 2018. Annual Report , s.l.: s.n.



Different methods of assessment get used in educational systems
Different methods of assessment get used in educational systems

Different methods of assessment get used in educational systems all around the world. The question that arises, however, is whether the means of assessing students employed in schools are the right measure of their intelligence or not.

Assessments are kept in an educational system to promote student learning. That might not always be the case. Increasingly, assessments have become a rat race for gaining more marks, whether they get scored justly or not. Students often cheat or get their work done by someone else entirely, to score a better grade.

This makes us question the entire notion of assessments and their types. The purpose of this paper is to discuss the different forms of assessments and their pros and cons with regard to reliability and validity.

The first and perhaps the most common type of assessment are “fill in the blank,” multiple-choice questions with four answer choices, and true and false queries. All of these methods are targeted at checking whether the student has the basic factual knowledge regarding a concept. Over here, students do not have much space for writing long answers or to make something up. They are either right or wrong, so unless they very accurately understand the subject, they are more likely to give wrong answers.

So, the overall advantages are that they are easier to check for the teacher; students can get tested on broad concepts in a precise manner; the level of understanding of the students can get determined. On the other hand, the disadvantages are that there isn’t much space for the student to think aloud about the concepts getting taught in class, there is no margin for human error, the students could get the answers right by luck or via unfair means. In the case of the latter, this assessment type doesn’t seem to be the correct way of telling where an individual student’s level of understanding lies (Weimer, 2015)

A “Matching” test, as the name suggests, gives two lists of items to students where they have to match an item from the first list with an element of the other list. Such tests are usually done when the examiner is testing a course that includes a lot of dates, names, places, and events.

The advantages of this testing method are that it isn’t time-consuming to construct a paper on it, the results are very reliable, and there is less chance for error in marking the paper, which shows the students’ objective skills and knowledge.

While the disadvantages are as follows: this testing method is not appropriate to test knowledge that requires a deeper analytical understanding of concepts. Students might not apply their knowledge but just intuition and guesswork to match the answers.

So, guesswork may lead to the correct answers in which case; the method is not an accurate measure of the students’ scope of knowledge about a particular subject. It can be said, perhaps, that this testing method is only efficient with regards to the nature of the course getting taught (Stecher, 1997).

A portfolio is a very objective type of assessment. It includes different forms of works compiled by the students, which may consist of written work or presentations. It cumulatively shows a student’s performance. Portfolios are considered to be relevant even out of the education system as they represent how much an individual has achieved in his professional life. Individuals have a way to present their achievements and skills via a portfolio creatively.

From the perspective of an education system, portfolios allow a more diverse form of assessment. They will enable the teacher to understand the student’s personal creative and analytical skills, and also his knowledge over the subject getting taught. Since portfolios are also long-term, the gradual progress of the student throughout the semester can get analyzed. Portfolio assignments may also require group work or consistent guidance from the instructor, so this assessment type also encourages healthy interactions amongst students and teachers. The drawbacks of portfolios are that they are time-consuming and often cumbersome to create for the student and equally more difficult for the teacher to check and mark. They require comprehensive grading criteria (Wright, 2015).

One-to-one discussion is a type of oral assessment. It is used to test the students’ confidence and command on a particular topic. How much he can answer face to face based on his deep understanding regarding the subject getting taught. The advantages of this assessment are that they don’t require the time taking tasks of writing down a paper or checking it.

Everything gets done on the spot. It helps build the confidence of students and allows them to showcase their knowledge and intelligence in front of an audience. There is no chance of cheating to get the right answer. Disadvantages are that some students who suffer from stage fright are likely to score poorly when in fact, they could’ve scored well if the assessment was on paper. So in this way, the method becomes unreliable to judge every single student accurately (Iqbal, 2010).

All of the different assessment types vary in reliability and validity in judging the students’ knowledge level accurately. It can be said that both these factors also vary with the nature of the subjects getting taught. For example, multiple papers will not be the best assessment type for a subject like literature, which requires a lengthier display of the themes discussed. Validity is a measure for accuracy in the answers given, and reliability intends to show the consistent performance of the students. Assessment types such as multiple choices, fill-in-the-blanks, true and false have more “valid” results but are not “reliable” methods as they do not show consistent performance. On the other hand, Portfolios may not be as valid because their grading criteria are more extensive and subjective. 

But they are more reliable because they show the consistent performance of the students. Overall, from the information shared in this essay, it can be concluded that portfolios are the best assessment type relative to the rest(Iqbal, 2010).


Iqbal, I.Z., Naqvi, S., Abeysundara, L. and Narula, A.A., 2010. The value of oral assessments: a review. The Bulletin of the Royal College of Surgeons of England92(7), pp.1-6.

Weimer, M., 2015. Advantages and disadvantages of different types of test questions. Retrieved from FACULTY FOCUS: https://www. facultyfocus. com/articles/educationalassessment/advantages-and-disadvantages-of-different-types-of-testquestions.

Stecher, B.M., Rahn, M.L., Ruby, A., Alt, M.N., Robyn, A. and Ward, B., 1997. Using alternative assessments in vocational education. RAND-PUBLICATIONS-MR-ALL SERIES-.

Barbara D. Wright. 2015. Advantages and Disadvantages of Assessment Techniques. Retrieved from:

Pellegrino, J.W., Chudowsky, N. and Glaser, R., 2001. Knowing what students know: The science and design of educational assessment. National Academy Press, 2102 Constitutions Avenue, NW, Lockbox 285, Washington, DC 20055.



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