Apple Inc.

Team â€Å"Death Spiral† examined the stewardship and business performance of Apple Inc. by undertaking a strategic analysis of Apple Inc. ’s previous, present and potential future strategic and market performance. The internal workings of the firm were examined to reveal a culture of constant innovation and a drive to create easy to use, life improving products. A two tiered corporate structure with Steve Jobs and Tim Cook being at the apex of anagement and a horizontally flat structure of vice presidents the decision making process is not complicated by various vertical levels of command and decision making. Apple Inc. ’s internal structure has become flexible as divisions are specifically established to develop the latest product and maintain a competitive advantage. Apples industry segments were than explored and it was noted that it was not possible to absolutely define a market which Apple consistently performed in. Apple Inc. ’s multi-functional pro duct base gave a clearly indication of the underlying strategic management at play.It was accepted that Apple has defined its own market segment, that of ‘mobile electronic devices’. The four main strategic management themes of M. E. Porter (focus, differentiation and cost leadership), G. Hamel & C. K. Prahalad (structuralist), W. C. Kim and R. Mauborgne (reconstructionist) and J. Ridderstrale and K. Nordstrom (intellect, uniqueness and innovation) were examined in light of Apple Inc. ’s most recent performance. The Blue Ocean Strategy and the Funky Business Strategy models were found to be the most applicable and helped explained Apple Inc. s sustained and phenomenal rise in business performance. Finally, strategy recommendations for the future direction of Apple Inc were explored by the use of a Strategy Canvas. Possible pitfalls and hypothetical futuristic products were also explored. The single most strategic liability identified was the departure of the CEO Steve Jobs from Apple which could potentially be catastrophic if not fatal for the Apple brand. † ! ! Apple Inc. has transformed over its 30 year existence; there have been changes in leadership, product types, company logo and name.Apple Inc. experienced decline in the early to mid-nineteen nineties but has experienced unprecedented growth and success since the return of the founding father figure of Steve Jobs. Yoffie and Kim (2010) highlight the misdirected and turbulent time Apple experienced in the 1990’s until the turn around and change (1998) in ethos/philosophy of Apple as purported by Jobs. Job’s aim was to reduce the number of product models, change the mode of distribution to larger outlets and promote Apple as a ‘hip alternative to other computer brands’ (Yoffie & Kim, 2010, p. 4).Apple Inc. ’s current mission statement states ‘Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and pr ofessional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and Apps Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices’ (Apple Inc, 2010c). This mission statement highlights and gives a strong indication of where the strategic direction Apple Inc. ntends to progress; not only do they strive to have the best products but they intend to stretch vertically across product lines. To emphasis this, Ostdick (2010) comments on the personal drive of Steve Jobs and his belief that all product innovations can be recycled into other projects. The underlying guiding ethos is just because one piece of technology doesn’t work in one project, how we can potentially use it outside its intended use to produce something new and successful. Parallel to the financial success of Apple Inc. is the longevity and stabilit y of its board of directors and corporate structure of the firm.There are seven members on the board of directors from various professional backgrounds. The average tenure of these members is six years with more than half sitting for more than ten years (Apple Inc, 2009). Organisational structure is horizontal with Steve Jobs and Tim Cook acting as chief executive and operating officers respectively. Beneath this pinnacle are nine vice presidents who preside over areas such as retail, hardware engineering and marketing (see appendix 1 for the current executive structure of Apple Inc. ) (Apple Inc, 2010c).These vice presidents administer the day to day running of fourteen individual divisions (see appendix 2 for the current organisational chart of Apple Inc. ). In terms of strategy; Apple Inc. has dedicated divisions purely for further development of the iPhone and iPod. The flexibly of the firm is highlighted here; with † 0 research and development, Apple are prepared to speci fically develop these products. It would be logical to infer when their product life cycles reach their pinnacle; new divisions may be made to further develop the current products at th time. hat Apple Inc. ’s culture internally is a positive workplace where generous employee benefits are available. Employees are subjected however to a strict process of ethics and business processes outlined in e outline their document ‘Business Conduct: The Way We Do Business’ (Apple Inc, 2009). Externally Apple Business . Inc. is embracing the latest sustainable practices in various operational areas and hence attempting to improve their triple bottom line (economic, social and environmental) or Corporate Social Responsibility credentials (Esty & Winston, 2009).Apple provide educational programs for their staff Esty 2009 . and are engaging the community with educational programs and scholarships (Apple Inc, 2009 Over Apple 2009). the last five years a cultural change has occurr ed in relation to environmental responsibilities. Apple responsibilities. recycling programs have been established, carbon emissions saving have been implemented upstream and downstream of the supply chain; and a further commitment to produce environmentally safe products (Apple Inc, 2010b). ! † # !The first challenge in analysing the industry that Apple operates in is defining that industry. Apple has created its own industry of â€Å"Consumer Technology† by choosing to compete in, and redefine segments of more traditional industries. Apple operates in segments of the Computer, Consumer Electronics, Music, Movie/Video, and Telecommunications Industries. positioned itself in selected segments of the market. In each industry it has Although Apple has its roots in the Computer Industry it is no longer just focused on computers. st The change of name in January 2007 from Apple Computers to Apple Inc reflects this change of direction (Honan, 2007). . Despite this Apple gene rated almost 14 BN USD of sales from personal computers in 2009, its second highest † 1 level in history and 32% of the company’s total sales. Even in its traditional market segment Apple Inc. does not dominate the market with an estimated 4. 2% share of the global market in 2009 (Yoffie & Kim, 2010).Apple Inc. continues to gain ground, particularly in their home market, the USA. Apple PC sales are estimated to be only 10. % of the US market in the 3 quarter of 2010 (see Appendix 3) (Ash, 2010), up from 8% in 2009 (Yoffie & Kim, 2010), overtaking Acer to become a distant 3rd to Hewlett Packard and Dell Computers. The personal computer industry is a USD $425 BN industry dominated by companies producing what are still referred to as â€Å"IBM compatible† machines that predominantly use Microsoft Windows operating systems. Major industry leaders include Hewlett Packard (HP), Dell Computers, Acer, Lenovo is a Chinese company that purchased the loss making personal rd Toshiba and Lenovo. computer business of IBM in 2005. IBM no longer manufactures personal computers. The industry is can be characterised as being in a mature growth phase with rising sales and falling prices. Leading industry consultants the Gartner Group forecast sales growth in unit shipments of almost 20% in 2010 with significant falls in unit prices (Anonymous (The Australian), 2010). The industry is highly price competitive and fragmented with thousands of smaller companies competing with the major players using common commoditised components.Apple stands apart from the pack offering a highly differentiated product, with its own operating system and unique Apple design and style. It focuses on the personal usage market rather than the corporate market and commands premium prices for its products. Despite its small market share overall Apple commanded 91% of computers sales over USD $1,000 in 2009 (Yoffie & Kim, 2010). This allows them to maintain industry leading margins of 40 % in 2009. Apples margins have increased during recent years while their competitors have continued to decline (Yoffie & Kim, 2010).The global consumer electronics market is estimated to be in excess of USD $ 700 BN a year (Anonymous, 2010b). Consumer electronics includes entertainment, office productivity and communication equipment. The boundaries of this industry are loosely defined as product innovation and technology but convergence is blurring the edges. Leading Global companies include (by one industry definition) Sony, Toshiba, Panasonic, Samsung, LG, Microsoft, Apple, Intel, IBM and Nokia (The Engineer, 2010). The industry is characterized by product lifecycles which are getting shorter, † nd products more technologically advanced and complex. Your phone is a computer; your fridge can connect to the internet. You can watch TV on your computer or phone and watch U-tube on your television! The industry is competitive with many global players with established market pres ence being challenged for market share by both other established players and new emerging brands. Prices are being driven down by aggressive competition. Manufacturers are seeking to lower costs through mass production in low cost countries, notably China. In this environment, branding is critical.Products are too complex for many consumers to rationally compare features, functionality and price in an effective manner. Products are often purchased on the basis of the perceived price performance, with consumers associating with the product brand. Apple is well positioned in this regard with a strong brand associated with Style, Quality, Useability and â€Å"Cool† despite having only a limited range of products within this broader industry definition. $ The music industry is a well-established consumer industry, traditionally controlled by the recording companies.Major players Universal Music, Sony Music, EMI and Warner Music controlling in excess of 70% of the industry with a larger number of small â€Å"independents† making up the rest. Global sales are in order of USD $ 25 Billion in 2009 (International Federation of the Phonographic Industry, 2010b). The dominate trend in the industry is the rapid uptake of digital download of music as the consumer preferred method of distribution. This is undermining the power of the recording companies in favour of the internet based retailers and resulting in revenue contraction. Total recorded music sales evenue has been in decline for the past decade, declining by 7% in 2009. This is despite continued high growth in internet based digital music sales up 12% in 2009. Music sales through digital channels accounted for USD $4. 2 billion of music sales in 2009, representing 27% of global sales growing from a base of just USD $20 million in 2003 (International Federation of the Phonographic Industry, 2010a). Apples iTunes is a leading player in the digital sales channel revolution, arguably the industry leader in legal internet music sales. This is the segment of he industry that Apple chose to compete in and † redefine for its own purposes. Intellectual property issues remain a major challenge for this industry with internet based peer to peer file sharing significantly eroding industry sales. $ %& † The multibillion dollar movie industry is dominated by large movie studios with distribution traditionally handled by theatres, then a secondary market through video/DVD rentals or retail stores and a tertiary revenue stream through television rights. Apple is involved only in the distribution part of the business through film download for rent or sale.This challenges the traditional video store business, with a new model. To date, video downloading has promised more than it has delivered (Kane, 2007). The market is becoming increasingly crowded with an increasing number of companies entering the market including internet heavy weight Google which owns YouTube and retail heavy we ight WalMart (Ogg, 2010). Economies of scale make this an industry that favours natural monopolies or oligopolies. Multiple large scale players as well as a myriad of minor companies are jostling for critical mass.As with most internet based businesses price and convenience are the driving factors. Apples assault on the internet movie sale and rental market leverages their success in music with i-Store, their strength in video capable devices, iPods, iTouch and iPads and established leadership in video processing computers. !# The software industry has many segments including proprietary operating systems, business applications, personal applications and entertainment applications. Most providers focus on selected sectors where they can establish market leadership.Microsoft focuses on operating systems for PC (Windows) and business productivity tools that run on PCs. IBM focuses on large scale enterprise systems and predominantly business software and integration services. A plethor a of other companies large and small compete for leadership in all the gaps in between. Economies of scale are particularly important as the variable production costs are very low. Apple has maintained its own proprietary operating systems for its computing devices to preserve product differentiation and unique usability features. However this has been at significant evelopment cost. Application development has been left to third parties who compete to provide market leading solutions. With the advent of the Apps Store, Apple has entered the software distribution business with a 30% gross margin, leveraging the enterprise of thousands of independent † 2 software developers large and small. By tight integration with their systems the App Store provides a captive high margin marketplace for software. This is another niche segment that Apple has chosen to compete where there are synergies with the t existing businesses.By providing a distribution system Apple has been able to enc ourage more developers to create applications for their computing devices. More applications extend th the functionality and desirability of their products, driving sales. This is a profitable symbiotic relationship. Despite being a relatively small player in the industry segments, Apple is an undisputed financial success. It is now the third largest company in the world, as measured by market capitalisation, d behind only Exxon Mobil and Petro-China. At the close of trade on the 12th of November the Apple Inc shares were valued at USD $308. 3 (Refer to Figure 1. ) each, valuing the entire comp company at over USD $ 282 billion. During the past year the company’s shares have increased in value by over 50% increased (Yahoo Finance, 2010).The stock is trading on a Price to Earnings Multiple of 20. 42 times compared to an industry (Personal Computers) average of 15. 80 times (Stock Call, 2010). The company’s high valuation compared to its sales of 3. 5 times can be attrib uted to the high margin and high growth performance of the business. In the 3rd quarter of 2009 the company reported a net profit margin of 21. 8% compared to an industry average of 4. 53%. Total sales were 67% a year earlier (Stock Call, 2010). On these metrics the company share price does not seem excessive. . † 3 ! ! † Apple Inc. has been defined as being involved in the new technology industry. The products they deliver stretch across multiple industry boundaries; some products compete in established markets, others are market leaders in contemporary industries spanning product development and product delivery (Yoffie & Kim, 2010). This makes an analysis of Apple’s competitive strategy challenging and difficult.Singular theories may fit individual product lines, but not reflect the true direction that this multi-faceted company is taking as a whole. Porter’s (1980) generic theories are an example of this; the three strategies of focus, differentiation a nd cost leadership provide information on specific products such as computers and software; but fail to examine products like the iPad and iTunes (Porter, 1998 see Part 1). An analysis of iTunes best illustrates the timeliness and limitations of the application of the out-dated theory of Porter to Apple Inc. Tunes adopts both a differentiation strategy (by providing the download of music at various download qualities, the ability to download movies and tv shows; and combining it all into an easy to use product) and a cost leadership strategy (this is achieved by providing a competitive priced service for the customer, and a cost effective way for Apple to update firmware of its products). Consideration was given to the theories of Hamel & Prahalad (1994), however the structuralist approach does not encompass the true nature of Apple’s efforts over the last ten years.In contrast the reconstructive theories of Chan Kim and Mauborgne (2005) and their â€Å"Blue Ocean Strategyâ €  in particular allow a greater analysis of the strategic positioning instigated by Apple. The Reconstructionist’s view helps accommodate advances made by Apple Inc. in redefining and creating new technology. Utilising Chan Kim and Mauborgne’s six principles helps in assessing Apple Inc. ’s value chain matrix; and their innovation in product development (Chan Kim & Mauborgne, 2005), (Chan Kim & Mauborgne, 2009).To contrast explanations for Apple’s recent success and to provide analysis for their future; the theories of Ridderstrale and Nordstrom (2000) in their ground breaking book â€Å"Funky Business: Talent Makes Capital Dance† will contrast a different view of competitive strategy. The use of Funky Business as an ideology helps explain the rise of emotional buying and how important the utilisation of innovation is in the 21 century business environment. Furthermore, examples will be given to illustrate the synergies which exist between the Funky Business philosophies and the creation of Blue Oceans which ultimately coalesce into a strategic position. t † 4 Swimming in a Blue Ocean A broad definition of Chan Kim and Mauborgne’s Blue Ocean strategy is the ability for a company to move from a red ocean (an industry where competitors offer similar products or services with the aim to become a cost/market leader); to a blue ocean (an undefined and new industry that may incorporate industries, or create a new industry based on differentiation and lower operating cost) (Chan Kim & Mauborgne, 2005). Apple Inc. is in some respects a contradictory company when it comes to its strategic analysis for its expansive product mix delivers in more than one â€Å"ocean†.For the purpose of this strategic analysis (and recommendations for the future) specific example’s will be given where Apple Inc. has gained a competitive advantage by defining their own unique Blue Ocean. Chan Kim and Mauborgne (2005) provide a fundamental analytical tool to analyse Apple’s competitive strategies. This methodology comprises 5 formulation and execution principles to competitive advantage. They are as follows: †¢ †¢ †¢ †¢ †¢ Reconstructing Market Boundaries Focus on the Big Picture, not the Numbers Reach Beyond Existing Demand Get the Strategic Sequence Right Overcome Key Organisational HurdlesReconstructing Market Boundaries Apple’s current resurgence has its beginnings in one of its original blue oceans; i. e. the creation of iTunes changed how people downloaded and listened to music. iTunes was originally used to compete with the illegal download music market, the now defunct ‘ Napster' being an example. Apple’s aims were to provide a low cost option for customers, high quality downloads and a music player interface (Chan Kim & Mauborgne, 2005).From an administrative point of view iTunes gave Apple control of digital rights and with five major record labels contributing to the service gave them a distinct competitive advantage (Yoffie & Kim, 2010). Blue Oceans however are not constant and as good ideas make money the competitive advantage for iTunes would have eroded if it did not diversify. To compete with growing technology demands, movies and TV shows were introduced to the iTunes store for purchase and rental. This differentiation created a new Blue Ocean for Apple Inc. / â€Å"Currently iTunes is the market leader in visual media. Concurrently the iTunes store has the largest downloadable content on the internet . It provides a catalogue of eight million tracks, two thousand films (total downloads daily average are in excess of fifty thousand) and twenty thousand TV episodes (Anonymous, 2010c). Prime Facie analysis reveals that the popularity of iTunes cannot be solely attributed to the product delivery; but a concurrent innovation and integration with the portable products that Apple has created over the last decade.It co uld be argued that the iTunes blue ocean was strengthened by the continual improvement in storage size and screen resolution quality of it iPod and iPhone range. Apple Inc. can now be seen entering its next stage in differentiation. To do this Apple Inc. has introduced the iPad (Feb 2010); revolutionising tablet computing. Building on its iPhone operating system, Apple is attempting to reconnect with business people. Unlike iTunes, iPad services will not be the low price of music downloads.Apple will attempt to lure high profile media conglomerates to allow subscription through their iTunes service at a higher premium price (Yoffie & Kim, 2010). Even though news articles are sold at a premium price; the ability to distribute them via iTunes gives Apple Inc. a low internal cost. The most recent venture by Apple Inc. to create a unique user experience the creation of multiplayer online gaming on the iPhone; multiplayer gaming traditionally has been the domain of PC and console develop ers (Gametraders, 2010). With this venture Apple Inc. opes to refine how people play games with each other. iPhone customers will have the capability to game wherever they can take their iPhone (Apple Inc, 2010a). This strategic move can be seen as a blue ocean for Apple Inc. which will provide a service no other mobile phone provider offers with the quality of the gaming experience. In addition to this Apple Inc. are not actually investing in gaming; they are using their iPhone and OS4 operating system as a go between. With other companies vying to have their games on the popular iStore; Apple Inc. have created for them a low cost product. 1Focus on the Big Picture, not the Numbers Apple’s current focus is on being a lifestyle company. It integrates its products and makes them easy for the end user to operate. Steve Jobs openly states that his products start with an idea and a need to alleviate customer demands (Ostdick, 2010). This strategic thinking helps formulate new Blu e Oceans. It allows companies such as Apple to create products unrestricted by current industry 1 In February 2010, Apple announced that the iTunes store had recorded its 10 billionth song download (Johnny Cash’s â€Å"Guess Things Happen That Way†) (Ostdick, 2010). // standards and norms. Greg Joswiak the vice president builds on this philosophy stating they never let . vice-president technology go to waste. In an interview with Reena Jana from the Harvard Business Review blog he generalises on key points concerning the innovative strategies of Apple Inc. ‘Think of this strategy as s Think smart recycling of internal ideas and engineering, especially when cross-pollinated with other cross ollinated products’ (Jana, 2010). These comments were made in wake of the iPad release.Jana (2010) . demonstrates how the iPad is a hybridisation of the iPhone and a laptop; and how the iPhone was just hybridisation an update of the iPod. Reach Beyond Existing Demand The fundamental tenet of this principle is, ‘Instead of concentrating on customers they (companies) need to focus on non-customers. And instead of focusing on tead customer differences, they need to build on powerful commonalities in what buyers value’ ( (Chan Kim & Mauborgne, 2005). Apple do this well. It is important to ). ote that there would be a minority of people that do not inority own at least one Apple product. However their competitive strategy in reaching beyond existing demand would be to sell products to existing customers in industries they would not normally consider using an Apple product. As stated in â€Å"Focusing on the big picture† tated (above), the ability to build upon and reuse technology in an innovative way is allowing apple to reach new markets and potentially new customers. ! † # $% & † ‘ ( † / Get the Strategic Sequence Right Apple Inc. as excelled in their strategic sequencing when it comes to the redevelopment and innovation of their portable products. Chan Kim and Mauborgne (2005) stress the importance of price, cost and adoption. Figure 2 (Golijan, 2010) illustrates the chronology of the iPod and Apple Inc. ’s development of the product. The timeline highlights the quality of sales on the left hand side; over the ten year period models evolved and became more accessible at varying price points. The success of the products allowed Apple Inc. to diversify and continually improve the product.Within this industry no other competitor has been able to hold consistent sales growth and product innovation as the iPod. Overcome Key Organisational Hurdles Yoffie (2010) clearly highlights the trouble’s Apple has encountered with several changes in management in the 1990’s. Since the second coming of Steven Job’s Apple has been a stable entity and has not experienced the organisational problems of the past. Recent economic performance would indicate there has been no lead ership or structural change within Apple Inc. It is of interest to note that otentially when Steven Job’s rejoined Apple Computers as the CEO there was a tipping point and a push towards a new Apple Inc. He changed the name, the logo and the ethos of the company and personally pushed Apple Inc. into its current successful position (Jana, 2010). Let’s Get Funky As shown above Apple Inc. has exhibited clear Blue Ocean strategy elements during its history, and yet after the dramatic decline during the 90’s to the stellar success now being experienced, Apple Inc. has also displayed some new, contemporary strategic rudiments.Examining the quirky and mildly eccentric philosophy’s of Jonas Ridderstrale and Kjell Nordstrom as extolled in their manifesto â€Å"Funky Business: Talent Makes Capital Dance† (2000) it is apparent that much of the success of the ‘second life’ of Apple Inc. (circa 2000 to the present) can be attributed to a metamorpho sis in business thinking and to these ‘new’ strategic philosophy’s and ideas. As an example, central to the â€Å"Funky Business† strategic model are the three core elements of: Make Room for Grey Matter – in the ‘global village’, a company’s future depends on the intellect of its teams members.Consumers want, demand a dream, emotion, not products and services; Only the Best Rake in the Pot – In order to succeed a company must be number one in its field or even better – Unique; and Permanent Innovation – Creativity leads to the redefining of the company and its markets and yet the constantly changing † /0 environment of the market implies the constant search for innovation, with innovation being a state of the mind (Laville, 2000).Jobs and his cohorts, since the near fatal demise of Apple Computers in the mid 1990’s have reposition and focused the Apple brand with the global ‘lifestyle†™ village in mind (Yoffie ; Kim, 2010). Central to this theme is the enabling of consumers to engage in quasi-voyeurism, transporting their minds and bodies into ‘Mac/Apple World’, experience music, connecting to the internet and most importantly to each other in the Global community. Apple has been an industry leader in the enabling of the consumer to participate in the web world through a number of primary senses. Steve) Jobs’ ability to reinventing himself and redefine Apple (in its second incarnation) using ideologies akin to that of the Funky Business model resonant with the changing landscape brought about by the globalization phenomenon. Thus Jobs’ ability to connect with the community through technological change, institutional change and the evolution of values (Young ; Simon, 2005) allowed Apple to ride the crest of the wave through the first decade of the millennium harnessing the three underlying forces of excess: growth of markets (eg.China, India, Russia, etc. ), Ongoing overabundance of supply (which has exceeded demand since the 90’s and knows no bounds! ) and technological progress (lowers the cost of information, lower barriers and the world becomes a smaller more accessible environment) (Laville, 2000), (Yoffie ; Kim, 2010). Apples’ Funky Business strategy is exemplified by its innate ability to understand the dynamics of the world of competition and how it has changed.Accordingly, Apple is able to compete in this new environment by realize that the established and entrenched large scale structures of traditional companies don’t ‘hack it’ and that the single most important facet of this new age of business, is the intellectual capital to identify products and get them into production quickly (Musatov, 2001), examples include Apples industry benchmarking and leadership products: iMac (1998), iPod (2001), iTunes (2003), iPhone (2007) and the iPad (2010) (Yoffie ; Kim, 2010).Thus, i t is not the production facility that is the most important, per se, but the minds who operate it. In interviews with Jonas Ridderstrale and Kjell Nordstrom (Anonymous, 2010a) (Anonymous, 2010e), it is clear that one economic model for the 21 century that conceptualize a Funky Business strategy can be illustrated by the strategic direction of Apple over the last decade plus, understanding of st † /1 market forces, individual choice (or knowledge of the individual), freedom to choose and the ability to re-invent or innovate regularly and expediently. † Apple Inc. trategy for the iPad (launched in January 2010) echo with the core elements of creating a new Blue Ocean and Funky Business principles, as described above. These (as expressed by industry commentators) were Apple' core strategic elements for the iPad launch: â€Å"consideration of s future applications of current products as they are developed† (innovate), â€Å"crowd-source hype and ideas around pricingà ¢â‚¬  (sell the dream, the emotion, not so much the device) and of course the core Funky Business principle of, â€Å"Don’t focus on being first; focus on being the best† (Uniqueness) (Jana, 2010).Coincidently, as this new ‘Tablet’ Blue Ocean gathers depth and breadth for Apple, the competition are not far behind with the announcement of Samsungs new ‘Galaxy Tab’ in November 2010 (Anonymous, 2010d), the time between launch, maturity and loss of competitive advantage shrinks with each new development and innovation. â€Å"The Age of Paradox† written by Charles Handy (1995) points out that the Sigmoid Growth Curve can be used to plot out, the life of any organism, life cycle of a product or the life of an organisation.Every new life, organisation, project, or initiative, commences with some faltering at the start, grows, matures, declines and ultimately perishes. If this was the only underlying concept to this ideological graph it would not be of any use, but rather, the positive and encouraging use of this model is that a firm can proactively start its own new sigmoid curve in any new area it wants rather than watching the old curve maximise, then decline.During any new development phase an organisation will experience what is known as a â€Å"dip† or a setback; this can be due to a lack of resources, loss of direction, ineffectiveness, poor productivity and/or loss of a competitive advantage. This is completely normal and team morale must remain high through this temporary stage known as ‘ dipping' Every time there is a new growth curve (new idea, . change in goals, new product, etc. ), it intercepts with the old Sigmoid Curve, and either climbs or descends but ultimately the cycle of a major dip will commence associated with ccompanying anxiety and setbacks. † / The dip can represent a significant challenge for any organisation, as it was for Apple Inc. with a loss of direction between 1985 un til December 1997 with several changes of CEO’s at the helm (Scully, 1985 – 1993) and the (Spindler and Amelio years 1993 – 1997) (Yoffie & Kim, 2010). Apple management, you could say, went through a case of ‘ Paradigm Block' ‘the inability or refusal to see ; beyond the current models of thinking’ (JCU, Competitive strategy course notes, session two slide 11). † † † * & + † , † – † & † & * There are different eras of product interests and management change that Apple has gone experienced its inception in the 1980’s when they launched the Apple 1. Mapping the most recent period of Apples growth on a strategic canvas, from the launch of the iMac in 1998 through to the iPad launch (2010) we can visualize a series of interconnected sigmoidial curves gradually increasing with each new innovation and product launch, as shown in Figure 3.In fact, the gradual treadline † / ncreasing to the right in Figure 3 reflects a buoyant and productive company with clear growth from strategic product development, delivery and acceptance (depending on the market KPI used). Presently, given the rapid development by other competitors in the tablet market, Apple Inc. would need to accelerate innovation and product delivery within the next 6 – 12 months to avoid another dip and loss of competitive advantage. This may require a change or transition in new management and of course a new updated product e. g. pdated iphone from 4 to 5 with more capabilities and apps (See Figure 4 Strategy canvas). . * &/ ! &0 1 & Future strategy scenarios which Apple may need to engage in order to reinvent itself in the ensuing post 2010 era are many and varied. Given Apples’ history to date and without climbing the walls of the Apple head office and being a fly on the wall it is unwise to predict what Apple may come up with next. They will however need to improve their product range or in novate around their range of iPhone, iPod, iTunes and iPad etc. o maintain market capital. They need to be constantly innovative and invest in their R&D department to have any chance of keeping the current Blue Oceans, ‘Blue’, and require time (which is no luxury in the Funky Business world of the 21st century), to develop new Blue Oceans. Potentially Apple could develop a strategy to have a lifestyle package called Apple â€Å"iHome† that would be able to accommodate the current avant garde movement of the new ‘energy gurus’ that are environmentally friendly and the ‘tech heads’ that enjoy the Apple brand.The iHome could be similar to the CBus system, Smart system or Building system as they are commonly known, they could † /2 incorporate their existing range and facilitate new ideas such as an iPhone that has a de novo chip which instead of using an security access card or conventional key you just swipe your iPhone to unlock your car, house front door or office. The CBus system can work in conjunction with, home appliances such as air-conditioning, automated windows, lights, security video and irrigation, effectively generating a ‘smart home or â€Å"iHome†.You can remotely set up your home with the use of your iPhone through the net, and be able to monitor your home when you are away. The innovative potential of the â€Å"iHome† package is endless but the pitfalls may include, acceptance by the market, technological maturity of the appliances in question and the competitive advantage or market acceptance of these new ‘out there’ products. In essences, it would be foolhardy to recommend a strategy for Apple post 2010, in that Jobs and his self-proclaimed â€Å"mobile-devices† company are still delivering, still leading industry segments they Apple Inc. A. Company Industry Position Apple is the iconic company behind the mouse-driven Macintosh computer, the phenomenal iPod music-player and the recently launched iPhone. The company’s marked inventiveness keeps it in the lead (Economist. com website) and secures its place in the industry. Apple’s relentless efforts and continual investments in research and development are seen to usher in more innovative breakthroughs that will further fuel the company’s further growth and market expansion. B. Industry Characteristics. With its founder, Steven Jobs, at its helm, Apple creatively designs personal computers, portable digital music players and mobile communication devices and proceeds to manufacture and market them. The company as well offers to sell and to service related software, peripherals and networking solutions. (Google Finance website) Apple has such an immense following that is made up of the individual consumers, the small and mid-sized business (SMB) enterprises, the education sector, the government agencies and the â€Å"creative consumers. † (Apple Inc. 008 10-K) The latter pertains to Apple’s special niche market composed of young and trendy people who can afford to discard relatively new gadgets for want of more updated versions of the same products. The more recent ventures of the company include the selling of a myriad of products manufactured by other companies specifically to cater to such special market niche. These products include application software, printers, storage devices, speakers, headphones, accessories and peripherals of all sorts, and digital content that are all tailored for the Mac, iPod and iPhone. Apple Inc. 2008 10-K) Apple has an established market all around the world. It has set up a dynamic marketing network through its â€Å"online stores, retail stores, direct sales force, and third-party wholesalers, resellers, and value-added resellers. † (Apple Inc. 2008 10-K) It should not come as a surprise to know that Apple puts up with a lot of aggressive competition in all the markets it caters to – markets for computers, digital music devices, mobile communication gadgets, all the related paraphernalia and for the services attached to these products. Apple Inc. 2008 10-K) But no matter how stiff competition can be, Apple has emerged as an undisputed market leader. In fact, Apple has reaped increased earnings this economically difficult year (2008) while most of other companies incurred huge losses. In the same tune, Apple offered last Black Friday only 8% off its new MacBook, 4% off a 20-inch iMac, 5- 8% off iPods and none off iPhones while analysts predicted discounts to reach 15% (Frommer, Yahoo! Finance webpage). Apple is obviously no t keen on competing based on prices. As the company behind such signature products as iMac, iPod and iPhone, Apple can well afford to price its products higher without having to worry about losing the market to competitors offering cheaper products. Technology and its optimization are among the factors behind Apple’s success. Its products are deemed â€Å"new technology† and the technological aspects of its products are optimized for exclusivity. Thus, users of any one of Apple’s products are bound to be captured clients for the others in the company’s menu. The technological inter- relatedness of Apple’s products presents a distinct advantage that it is wisely making the most of. Apple’s products are theoretically homogeneous; the market is awash with all kinds of computers, music-players and mobile phones. But then, such products are more considered as rather unique. Author McNees has written that â€Å"in a mature market with highly homogeneous products, well-executed small differences can make [a given product] unique and [sought after]. Indeed, the leverage brought on by Apple’s industrial-design machine makes its product stand out in the market. This constitutes another major advantage enjoyed by the company. Meanwhile, there are also serious disadvantages that Apple is saddled with. For one, the company is highly susceptible to the adverse effects of a prevailing bad economic condition which both causes the market value of the company’s shares to take a dive and substantially reduces the earning and sp ending capacity of its market. Apple also happens to be in the middle of a litigation arising from its past stock option granting malpractices. Adverse findings of the Securities and Exchange Commission (SEC) at the conclusion of the investigation that it is conducting will materially damage the company’s name, financial condition and operating results. (Apple Inc. 2008 10-K) (Please see II to IX and a portion of X in the Excel document) X. Based on the foregoing, I do not recommend that the 10,000 shares of Apple be purchased now. I would recommend keeping it as cash and then buying the Apple shares when the macro-economic factors affecting the finance world and especially the stock markets have begun to improve. At this point, the market can generally do worse and Apple might just go with such downturn with no sufficient ammunition – like significant good news – available. Works Cited â€Å"Innovation Lessons from Apple.†Ã‚   Economist.com.   7 June 2007.   The Economist Newspaper Limited.   26 November 2008 .   â€Å"U.S. SEC Form 10-K of Apple Inc. for Fiscal Year ending September 2008.†Ã‚   Apple Inc.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  26 November 2008 < http://www.apple.com/pr/library/2008/10/21results.html>. Frommer, Dan.   â€Å"Apple’s Black Friday Sale:   No 15 Percent Discout.†Ã‚   Yahoo! Finance. 28 November, 2008.   Yahoo! 30 November 2008 < http://finance.yahoo.com/tech-ticker/article/136179/Apples-Black-Friday-Sale%3A-No-15-Percent-Discount>. â€Å"Apple Inc.†Ã‚   Google Finance.   29 November 2008 . McNees, Donald.   â€Å"Hat trick:   retaining customers, finding growth and achieving attractive returns are not easy in today’s mature financial markets, but a handful of companies are doing all three.†   The Free Library by Farlex. 29 November 2008 < http://www.the freelibrary.com/Hat+trick%3a+retaining+ customers%2c+ finding+growth+and+ achieving†¦-a0158908311>. White, Gerald, Ashwinpaul Sondhi and Dov Fried.   The Analysis and Use of Financial Statements.   New York:   John Wiley & Sons, Inc., 1998. Brigham, Eugene and Joel Houston.   Fundamentals of Financial Management.   Orlando, FL:   The Dryden Press, 1998. Apple Inc. Apple Inc. is an American multinational corporation with a focus on designing and manufacturing consumer electronics and software products. It was established in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne, and incorporated on January 3, 1977. The company's hardware products include the Macintosh line of personal computers, the iPod line of portable media players,the iPad line of tablets, and the iPhone line of mobile phones. Apple's software products include the OS X operating system, the iTunes media browser, and the iLife suite of multimedia and creativity software.As of 2008, Apple Inc had acquired twenty-one companies, purchased a stake in two companies, and made five divestments; most of them were software companies. Apple had not released the financial details for most of these mergers and acquisitions. Apple's business philosophy is to acquire small companies that can be easily integrated into existing company projects. [4] For example , Apple acquired Emagic and its professional music software, Logic Pro, in 2002. The acquisition led to the creation of the digital audio workstation software, GarageBand, now part of the iLife software suite.The company made its first acquisition on March 2, 1988 when it purchased Network Innovations. It has also made five divestments, all in the 1990s, in which parts of the company are sold to another company. The company's largest acquisition was the purchase of NeXT in 1996 for US$400 million. In the 2000s, Apple made the most acquisitions in a single year in 2002, with six. In the 2010s, so far the most acquisitions in a single year is 2013, with 10. Of the companies that Apple has acquired, 37 were based in the US.

Afro-Caribbean Poetry Essay

In this essay I will be studying the various items of poetry from manyAfro-Caribbean poets. One of the poets is Langston Hughes who was  born in Joplin, Missouri on the first of February 1902. He started  writing poetry after moving to Lincoln, Illinois. The poems I will be  studying are â€Å"Mulatto† and â€Å"I, Too†.  The next poet I will be looking at is Grace Nichols. Nichols was born  in Guyana in 1950, she came to England in 1977 this is when she  developed her fiction and verse writing. The poem I will be studying is  Ã¢â‚¬Å"Praise song for my mother†. The next poet I will look at will be Dr Benjamin Obadiah lqual  Zephaniah, he was born in Birmingham, but he spent most of his  time in Jamaica. After he spent some time in prison he decided to use  his energy for good and educate himself. The poem I will study â€Å"I love  me mudder†.  The last poet work I will be looking at will be John Agard. Agard was  born in Guyana in 1949, the country was still a British colony until  1966. In 1977 Agard moved to England. This is where he became the  light of the new West Indian British dawn of various bardic  compositions. Agard is a poet whom blends calypso styled language  with unique sounding spoken word. The work I will be studying is  Ã¢â‚¬Å"Half-caste†Ã‚  I have paired the poems up. The pairs either share the same topic,  tone or language. One of the pairs is â€Å"Half-caste† by John Agard and  Ã¢â‚¬Å"Mulatto† by Langston Hughes, because they have the same type of  topic and also tone.  Ã¢â‚¬Å"Half caste† is about weather: the term half-caste can be applied to  any thing else apart from people. John Agard has written a very good  poem witch makes you think about the words we use every day with  out knowing the proper meanings and whether it makes any sense  when you break the word down. I think that many words we use now  are â€Å"out of date† and should be changed for politically correct terms  and alternatives. Agard also uses some stunning references to get you  thinking. The other half of this pair â€Å"Mulatto† tells us about the harsh  treatment black women faced at the hands of their white bosses in  the slave era and how the women were only used as play things, this  is shown in the part â€Å"What’s a body but a toy?†. The word â€Å"mulatto†Ã‚  means the same as â€Å"half caste† but not as many people use it  nowadays. The boy in the story has a trouble fitting in with black  people and white people and does not have that sense of belonging if  he had been born to parents of the same race. The next pair is â€Å"Praise song for my mother† by Grace Nichols and â€Å"I  love me mudder† by Benjamin Zephaniah. I’ve paired these poems  because they share the same topics which is their mothers.  Ã¢â‚¬Å"Praise song for my mother† is about how Grace Nichols loved her  mother and how she inspired to do the best she could. It’s also how  she looked up to her, and how her mother was all the things she likes  such as the sunrise and the fried plantain smell. The poem is set in a  past tense which seems to tell us the readers that her mother has  died. The second half of my pair is â€Å"I love me mudder†. This poem is about  how Benjamin Zephaniah’s mother came from Jamaica on a boat  called Windrush. Many people came from Jamaica because they  thought they would have a better life than the one they all ready had.  In black family family (need to delete this) life the figure of the  mother is very strong and is the main rule maker in the house, and  this poem shows how she works so hard just to make sure her familydon’t go without. The last pair of poems is â€Å"taint† by Grace Nichols and â€Å"I, Too† by  Langston Hughes these two poems have been joined together because  they both have kind of the same topic which shows the pain black  people have overcome but still yet we are strong.  Ã¢â‚¬Å"taint† is about the treachery that this person has had cast upon  them while they where a slave, the fact that they where stolen by men  the colour of their own skin. This reminds me of the black on black  gang warfare and killings. This person who trusted the people of their  same skin colour was betrayed. This work also shows how these  people where traded like they where animals. The poem has a  message to everyone: to stop fighting and live peacefully together.  The second half of the pair is â€Å"I, Too† which shows how black people  had to eat in a kitchen when company came but they ate well and  became strong. So when company comes no one will dare tell me to  eat in the kitchen and now you are ashamed about what you did to  me when I was mentally weak. This poem has a promise of hope for  Ã‚  change. Hughes suggests that â€Å"Tomorrow† things will be different and  people will see that beauty and equality of all peoples.

A Character Analysis

One of the most significant characters within Shakespeare’s Julius Caesar is that of Brutus, a very complex individual whose actions have significant impact upon the events on the play. This paper examines the character of Brutus and assesses both the good and bad elements of his character. A critique of how these qualities present inner conflict within Brutus is offered together with an explanation of the ways in which these conflicts manifest themselves.It is the intention of this paper to prove that despite the fact that Brutus was able to murder his closest friends, he is essentially a moral man who maintained his honor to the end. One of the most significant elements of Brutus’ character is his strict ideals. He is a nobleman, â€Å"the noblest of Romans† (V. v. 75) who is strongly guided and influenced by matters of honor. He demonstrates a continual obsession with acting in a way that is right and just and speaks regularly of the need to create a republic in Rome that is ruled by the votes of the senate as opposed to a single dictator.This creates a problem in his relationship with Caesar. Despite their close friendship, Brutus is concerned that Caesar will rise to power and then commit an act of betrayal by enforcing a dictatorship on the people of Rome, â€Å"climber-upward†¦ He then unto the ladder turns his back†¦ † (II. ii. 24,26). It is clear that, for Brutus, his moral and ethical ideals are of higher importance than his friendship and love for Caesar and thus he is able to commit the inhumane act of murder.However, whilst the murder itself is wrong, the fact that Brutus himself believes so strongly in the fact that his actions are for the good of Rome, entails that he does, to an extent, maintain his honor. Brutus’ single minded obsession with morality entails that he can be easily persuaded by others to carry out their will, provided it is presented as being for the good of Rome. This reveals a furthe r, negative, element to his character; he is naive. Cassius is able to manipulate Brutus’ obsession with honor in order to persuade him to murder Caesar, an ironic turn of events that on face value is anything but honorable.Brutus fails to recognize that he is being used by Cassius and Antony and seems to accept everything on face value, failing to question facts or consider the possibility that he could be deceived. This can be seen in the way he blindly accepts the letters from Cassius as being sent from the people of Rome and thus demonstrative of their will for Cesar to be removed. His nativity entails that he allows others to play upon his ideals in order to convince him to perform the act of murder. Despite the fact this murder causes him anguish, â€Å"Our hearts you see not; they are pitiful; and pity to the general wrong of Rome†¦Ã¢â‚¬  (III, i, 185-186), he allows Cassius and Anthony to convince him that committing such acts will win the hearts of the people of Rome, â€Å"If then that friend demand why Brutus rose against Caesar, this is my answer: not that I loved Caesar less, but that I loved Rome more. † (III. ii. 21-24). Brutus’ gullibility is something that he carries with him to the grave, even on his deathbed he believes that he has shared his life with true and honorable men, â€Å"My heart doth joy that yet in all my life I found no man but he was true to me† (V. v. 38-39). Such a naive and trusting nature allows the audience to perceive Brutus as honorable.He is innocent and trusting and truly believes that he is acting on behalf of the people of Rome. A further negative element of Brutus’ character is his poor judgment. He believes that he will win the support of the people of Rome because he acts in their interests. This is evident when he addresses the Roman citizens in the forum and in his general treatment of the Roman crowds. He incorrectly perceives them as intelligent individuals who will b e able to understand his reasoned approach to the murder of Caesar. However, the reality is that the crowd is not able to understand his intellect and is thus left vulnerable to the words of Antony.Here, despite Cassius’ advice to the contrary, he allows Antony to have the last word at the funeral and is thus once again betrayed as a direct result of his naivety. Antony is able to utilize Brutus’ words and actions against him and generate hatred and animosity in the crowd. The same crowd that Brutus judged to be reasonable and intellectual. A further significant component of Brutus’ character is that of his philosophical nature. He is a believer in Stoicism, a philosophy that dictates living side by side with nature and existing in a carefree and indifferent manner. Such a philosophy manifests itself in an unemotional manner.This can be observed when Brutus hears of the death of his beloved wife and simply replies, â€Å"Why farewell Portia, We must die, Messal a† (IV. iii. 218). His stoic nature can be seen as a possible explanation for the way in which he is able to restrict his focus to the political and ethical reasons for his murder of Caesar. Brutus’ stoic nature is further enhanced by the fact that he is able to put the good of the public before his own personal feelings. He does not think of Caesar as a man or a friend, but as a political entity, a future dictator, who threatens the good of Rome.This is one possible explanation for why he appears to show no grief for the acts he has committed or for his dead friend; he is too entrenched in his political objectives. The political focus of Brutus’ character proves to be a further flaw that allows others to use him to their advantage. His apparent lack of emotion is something that Cassius is able to utilize when he addresses the crowd and convinces them that Brutus is inherently bad. As readers though we have an insight into Brutus’ actions and understand th e causes for his lack of emotion.He is so intent on doing what he believes to be right that, in our eyes, he maintains an honorable image. One of Brutus’ biggest faults is his inflexible nature. His stubbornness and inability to adapt to the events that occur ultimately leads to his downfall. Despite the fact that he is so politically focused, he fails to play the game of politics himself and thus leaves himself open to manipulation. Unlike Antony and Cassius, he is unable to strategically plan the best means of achieving his intentions, instead acting upon his blind faith that what he is doing is what the people want.However, although this is a flaw, it is something that maintains his honor; he is not a cheat or a conspirator at heart. This paper has discussed a number of Brutus’ character traits, both good and bad. A number of his qualities both serve in his favor and lead to his downfall. Whilst he is trusting, true to his beliefs and resolute, his naivety, poor jud gment and single mindedness entail that he leaves himself vulnerable to the dishonest actions of those around him.However, it is such naivety that allows the readers to maintain an image of Brutus as an honorable man, who tries to act in the best interests of his people. The last word on the character of Brutus is expressed extremely well by the words of Mark Antony: â€Å"This was the noblest Roman of them all:? All the conspirators, save only he? Did that they did in envy of great Caesar,? He, only in a general honest thought? And common good to all, made one of them† (V,V, 68-72) For the characters in the play, and for the reader, Brutus maintains an element of honorability that even his most disgraceful acts cannot eradicate.

Week 3 team assignment outline Essay Example | Topics and Well Written Essays - 750 words

Week 3 team assignment outline - Essay Example ICQ, or an internal control questionnaire, has been filled out by the auditors, based on information provided by the internal audit department of Apollo Shoes. That information was pertaining to Revenue Cycle and processing of sales transactions. However, the information was not capable of assessment as a part of Revenue Cycle of Apollos shoes, and the applicability of internal control procedures designed for sales transactions processing, on those transactions, could not be identified. It was necessary for that all Sales transactions would be identified accurately and processed according to the established procedure in order to be capable of going through the process of risk assessment of internal controls. There was another risk of understated revenue and fraud. It is very important that number of sequences should be present on all invoices, shipping documents and processing checks. There was missing information as to the number sequence used for invoices, processing checks and shipping documents in order to ensure completeness. In case of missing invoices, shipping documents and processing checks, it will be difficult to identify and may lead to financial loss, inappropriate quality of relation with suppliers/customers and even Fraud. The above two issues can materially misstate the amount of revenue and receivables, and the quality of work will be affected. These two issues can possibly be an indication of Fraud, and auditors may need to be withdrawn from the audit altogether. It is very necessary for the management to pay close attention to our audit finding and investigate the reasons of any deviations from established control procedures. In case of absence of any related control procedure, management should consult auditors on establishing new internal controls or finding any substitute methods to mitigate the identified

Ethics In The Society In The Brothers Keeper Film Movie Review

Ethics In The Society In The Brothers Keeper Film - Movie Review Example From what we can see it is very unethical for one to kill anyone for any reason other than self-defense or other reasons that are lawful. However, we find that even when the suspect confesses to his crime, people still think that he is not capable of committing such a crime. They even rise together to defend him. For the brothers, they found it merciful to have one of the brother’s death to relieve him of his ailment and other pain. It is very acceptable to show mercy to those in need. However, it is good to be very watchful so as not to go beyond what is morally accepted.  (Weiss, Jeffrey, and Craig Weiss 1998)  However, now that the community can come together to aid one of their own, it is a very positive thing, and other community should do the same if one of them is somewhere very sensitive. The unity of a community shows strength and love (Weiss, Jeffrey, and Craig Weiss 1998).  The film shows the difference between two groups of people; the one group is made up of people from the larger city while the other group is made up of people from rural areas. We find that the movie reveals two contradicting views about the Ward brothers. Some hold that the brothers are simple country folk and, on the other hand, the press have stereotypes for the two brothers as people who are not educated. The film has managed in a very successful way displayed how unity can help bring down a monstrous problem despite the level of literacy.  (Weiss, Jeffrey, and Craig Weiss 1998)

Develop an ethical framework for the assessment of the country's Assignment

Develop an ethical framework for the assessment of the country's foreign poilcy - Assignment Example It further suggests changes to the U.S international system as such (Amstutz, C6) First element, is the sovereignty, and independence, of the nation if necessary, by forceful self-defense. A state is obliged, among other things, not to associate, in way of military attack, pollution, unauthorized invasion that will undermine the residents. In such an event a nations ethics are put in question. For instance, the international criminal court is always ethical, by avoiding arrest of criminals unless permitted by the government (Shapcott, C6) Secondly, the element is the scale of adherence to international agreements made with other nations. Although limited by the available systems, a state is able to perform critical legal functions that ensure its survival as a legal entity in interstate relations and therefore acting contrary to the agreement and treaties by states. For instance, Iran was sanctioned for illicit nuclear activity by the U.S (Valls, C1). Third, element is the grade and stage of decentralization of governance by a state. This is in respect to international states political and trade blocks. In ethical association among states parties, the respective foreign policies should be designed with enduring feature in the international decentralization system and stick to the central institutions of legislative standards while ensuring they are implemented (Amstutz, C2). China, for instance, has avoided interfering with local politics whenever they do a project in Kenya. This is thought to be ethical In conclusion, ethical behavior is key in our social lives. A nation’s foreign policy will determine its ethical behavior. For instance, it is important to mention that, the U.S should cease political, military, legislative and economic prejudice and abide to the sets standards for the conduct of governments international system (Valls

Compare and Contrast between Islamic and Conventional Banking Term Paper

Compare and Contrast between Islamic and Conventional Banking - Term Paper Example Yet, riba or interest is not precisely defined in the Quran at the time of its prohibition. The prohibition of interest is generally understood to refer to any increment over and above the principal. It represents the return on transactions involving exchange of money for money, or an addition, because of delay in payment, to the agreed price on sale debts/debts. From an Islamic point of view under some concept of fairness, there are two dimensions: the supplier of capital possesses a right to reward, but this reward should be commensurate with the risk and effort involved and should be determined by the return realized on the individual project for which funds are supplied (Abdi, 2010, p 80). One of the primary rationales espoused by Muslim scholars is that the existence of riba (interest) in the economy is a form of economic exploitation, which violates the core Islamic teaching of social justice. Therefore, the elimination of interest from the economic system would be more â€Å" fair† and ethically and morally more appropriate economic behavior. The prohibition of interest (riba) and permission of trade drive the financial activities in an economy towards asset-backed businesses and transactions. This implies that all financial transactions must be representative of real transactions for the sale of goods, services or benefits (Abdi, 2010, p 81). Interest-free loans (alternative for usury) Islamic financial institutions must not only focusing on maximizing profit, but they should also play a vital role in addressing socio-economic issues such as poverty reduction and improvements in important aspects of human welfare (like education, illiteracy, reducing child mortality, youth insecurity and...Generally, equity financing under non-Islamic finance, savers would provide funds to enterprises in return for a share in its prospective net returns as well as a share in its management. However, in contrast, profit sharing funding of projects under Islamic fin ance is not for the whole life of the financed enterprise, but for a shorter period, as in the case of providing working capital. Profit sharing finance may be provided with and without sharing in management, Linked with profit sharing is the notion of risk sharing. This is based on the principle of liability, which states that profit is justified based on one’s obligation to take a loss. This legal maxim is said to be derived from a saying of the Prophet Mohammed that â€Å"profit comes with liability† implying that Shari’a distinguishes lawful profit from all other forms of gain. One becomes entitled to profit only after one bears the liability, or risk, of loss. Tax in Islamic banking (Zakat) Zakat- This is the requirement to benefit society through the collection of alms, which is known as Zakat Benefits Zakat For society, fractional reserve system allows banks to act as intermediaries that facilitate the movement of funds from savers to investors in a society. There are also significant economies-of-scale in banks making investment and lending decisions, as they have access to knowledge and expertise which individual investors or lenders generally do not.

The Origins of World War I Essay Example | Topics and Well Written Essays - 2500 words

The Origins of World War I - Essay Example The causes are better understood within a broader historical context than in instances of contextual isolation (Hamilton & Herwig, 2004). There were many contributing causes, exerting varying degrees of influence, at different periods leading up to the conflict. Had Germany remained fragmented and un-unified, for instance, there is a possibility that the larger scope of the war might have been avoided. This essay, therefore, proceeds on the assumption that there were many mutually reinforcing causal factors rather than a more particular cause per se. A final complication involves the reality underlying certain alleged causal factors, and the ways in which the involved parties varied in their perceptions of these realities. There were, to be sure, underestimations and overestimations. There were fears fanned by imperfect knowledge regarding the intentions and the capabilities of other countries and alliances. As this essay will argue, the ultimate participants seemed always to be preparing for a worst-case scenario, and perhaps created their own self-fulfilling prophecy. There were moments when crises could have been averted, moments when falsehoods could have been cured through the introduction of facts, but the competitive momentum of the historical period in which the participants existed seemed to tolerate no such notions of tolerance or sharing. The Balance of Power was jealously guarded by some, envied by others, and conflict exploded with assassination of Archduke Francis Ferdinand. This essay will set forth a number of causal factors. The greatest contributing causal factors were the ideological tilts toward nationalism, a number of structural and systemic alterations to the Balance of Power in Europe, and a number of smaller crises which sharpened the competitive conflicts of major European countries. These causal factors occurred over many years and it took time for the Great War to come to fruition. When it did, the power of the combatants was fearful. 1.1 Ideological Causes As a preliminary matter, it is of fundamental importance to understand what ideologies motivated politicians and countries to act in this historical period; indeed, competitive drives, both offensive and defensive, were in many ways the product of particular types of thinking. What we take for granted today, the sovereignty of nation-states, was not so well-established in the period leading up to World War One; to be sure, the Westphalian system, conceived of and developed by Europe in the mid-seventeenth century, was in many ways incomplete and embryonic. There were stronger nation-states, such as Great Britain and France, and weaker amalgamations of peoples such as in Germany and Italy. The drive was to become a fully-functioning and unified nation-state. It is here that ideology intruded into the conduct of European affairs. Ideology intruded because ideology was deemed necessary to mobilize peoples into larger nation-states and also as a form of political legitimacy for the ultimate rulers. This ideological growth was most commonly expressed in terms of nationalism and patriotism. People, to varying degrees, were encouraged to embrace their own unique culture and ethnicity. Dangerously, and of particular relevance to this essay,

Presbyterian Church in the US Essay Example | Topics and Well Written Essays - 1250 words

Presbyterian Church in the US - Essay Example The Presbyterian Church of the United States, or PCUS, separated from the Old School Presbyterianism, or the Presbyterian Church in the United States of America, or PCUSA, during the beginning of the Civil War in the United States in May 1861. This is because the Old School Presbyterian Church declared that loyalty to the United States should be a national duty. The PCUS, however, retained its â€Å"Old School† heritage despite the split, and only changed in the 20th century as a response to the demands of the changing south. Prior to this change and especially during the war, it was known as the Presbyterian Church of the Confederate States of America (â€Å"A Brief History†). All throughout the early 20th century, the issues surrounding the PCUS included talks of unity with the Northern Presbyterians or the PCUSA and the denomination that succeeded it, namely the United Presbyterian Church in the USA, or the UPCUSA. However, the only moment that the PCUS and the UPCUSA worked together was during the Consultation on Church Union in 1962. During this time, the PCUS joined the UPCUSA, the United Church of Christ, the United Methodists and the Episcopalians in carrying out the endeavor (â€Å"A Brief History†). The PCUS further split into three factions during the civil rights movement. The liberal group wanted the church to be directly involved in the promotion of racial desegregation and voting in society. The moderates wanted a church consensus on the matter first. The conservatives, on the other hand, did not want the PCUS to be involved in social issues since the 19th century theologian James Henley Thornwell once stated in the doctrines of the Church that the church courts of the Presbyterian Church should not get involved with social reform issues (â€Å"A Brief History†). The conservatives of the Presbyterian Church then began the institution of the Presbyterian Church in

The Impact of Global Economic Crisis on the organizations in oil Essay

The Impact of Global Economic Crisis on the organizations in oil producing countries - Essay Example The economies in Middle East, which were then among the fastest growing in the world; primarily driven by the soaring crude oil prices, were first considered immune, but by 2009 it began affecting the region including Gulf Cooperation Council (GCC) States. Most of the economies including UAE, Qatar, Bahrain, and Kuwait suffered significantly, due to the steep decline in their housing markets, which formed the crux of economic development in these countries. Saudi Arabia Economy: Saudi Arabia, which is the largest economy in the region, too suffered dearly due to its heavy dependent on crude oil, whose prices had retreated at record pace in 2009 (Berkmen et al., 2009). The impact of economic crisis was felt by the firms not only because of the dependence on oil, but also, as a result of numerous government controls over the main economic activities in the economy. The country has at least 25% market share of the world’s petroleum reserves, is regarded as the largest petroleum exporter in the world and plays a very crucial in OPEC deliberations and decision makings. The petroleum sector takes up to at least 55% of the GDP, 90% of export earnings and 45% of all budget revenue. 40% of this GDP is from the private sector. At least, 5.2 million workers play a vital role in the Economy of Saudi and especially in the service and oil sector. In order to reduce the dependence on oil, the government of Saudi Arabia had been encouraging the private sectors to increase the employment opportunities for the fast growing population. It has also begun to allow the participation of foreign investors and private sectors in the Telecom and power generation sectors of the economy. It was expected that the move will motivate other countries in the region to also embrace the concept in their economies. Strategies to diversify the economy and attract foreign investment into the country were given a boost when the government succeeded in joining the WTO in 2005, after many years of negotiation. This success and the high revenues from the oil, then further enabled it to build a very large budget surplus and easily facilitated expenditures on education, infrastructural development, increase government salaries, and make investments in job trainings and other timely and critical developmental projects. This no doubt lay the foundation for the economy to develop in a balanced way, as foreign companies were able to earn significant prof its, and in the process transfer hundreds of job skills to local employees, even as the country continue to earn billions of dollars from the sale of oil. The purpose of this proposed research consequently, is to critically examine the impact of global economic crisis on the financial performance and financial position of Saudi Basic Industries Corporation (SABIC), which is the largest listed company in Middle East region. This will entail the strategies used to obtain the results that the financial ratios and other statistical and analytical tools generated, during the study. The financial

Organising a Discursive Essay about Car Use Essay Example for Free

Organising a Discursive Essay about Car Use Essay

Ordering System Essay Example for Free

Ordering System Essay Introduction In recent years, technology is evolving rapidly. The use of computers is mostly needed for business day-to-day operations, evidently in most institutions like grocery stores. Grocery stores are familiar to most people and located throughout the country, although their sizes and range of goods and services often vary. Stores in the grocery store industry primarily sell a range of food items, but may also sell some nonfood goods. Most grocery store employees work in a clean, well-lighted, and climate-controlled environment. However, work at times can become hectic, and dealing with customers can be stressful with the use of manual process. In this study, we want to develop a new system for Jewel and Nickel Grocery Store Order System that will help them to minimize the time in taking the orders of their costumers, minimize the time in computing the total amount of each transactions, and to lessen the errors and problems in taking the costumers order for more efficient and time effective process. JEWEL AND NICKEL GROCERY STORE starts in 1990 with a capital of one thousand pesos only. The owner starts their grocery store on their own. The name of the store comes from the owner`s siblings Jewel their son and Nickel their daughter. Jewel and Nickel Store is located at PritilBinangonan Rizal and they are open at eight in the morning until six in the evening. After 22 years of selling quality goods, their store is now much bigger and now they have their own passenger boat and a lotto outlet. MISSION †¢To sell quality goods and to earn at least 3% profit. VISSION †¢To satisfy their costumer and to make sure that our goods are all in good quality.

Issues faced in Working Capital Management

Issues faced in Working Capital Management Working capital management holds an important place in the theory of finance. A large number of tools and techniques have been developed in the past to ensure optimal allocation of funds. Various authors have approached the study of working capital management in different ways. A large number of models, theories and techniques (Baumol 1952, Beranek 1963, Haskel Benishay 1965, Haley and Higgins 1973, Walker 1974) have been developed in the past towards the optimal allocation of funds. Efficient use of working capital has a direct bearing on profitability of an enterprise. it increase the productivity of in fixed assets. Basic Survival of a firm may be stake if adequate working capital is not available in time. It is essential to maintain constant supply of working capital for healthy growth of an enterprise. Working capital management concerned with current asset and current liabilities. Profitability and liquidity of a company directly affects current asset and current liabilities. So working capital management is considered as most important component of corporate finance. To show the relevance of working capital there are many factors. As far as a typical manufacturing firm is concerned, it accommodates half of its total assets as current assets. More current asset enhances more return on investment. A firm with fewer holdings of current assets would face immense difficulty to carry on the day to day operations of the company (Horne and Wachowicz, 2000). Efficient working capital management involves planning and controlling current assets and current liabilities in a manner that eliminates the risk of inability to meet due short term obligations on the one hand and avoid excessive investment in these assets on the other hand (Eljelly, 2004). Many surveys have indicated that managers spend considerable time on day-to-day problems that involve working capital decisions. One reason for this is that current assets are short-lived investments that are continually being converted into other asset types (Rao 1989). With regard to current liabilities, the firm is responsible for paying these obligations on a timely basis. Liquidity for the ongoing firm is not reliant on the liquidation value of its assets, but rather on the operating cash flows generated by those assets (Soenen, 1993). Taken together, decisions on the level of different working capital components become frequent, repetitive, and time consuming. Working Capital Management is a very sensitive area in the field of financial management (Joshi, 1994). It involves the decision of the amount and composition of current assets and the financing of these assets. Current assets include all those assets that in the normal course of business return to the form of cash within a short period of time, ordinarily within a year and such temporary investment as may be readily converted into cash upon need. The Working Capital Management of a firm in part affects its profitability. The ultimate objective of any firm is to maximize the profit. But, preserving liquidity of the firm is an important objective too. The problem is that increasing profits at the cost of liquidity can bring serious problems to the firm. Therefore, there must be a tradeoff between these two objectives of the firms. One objective should not be at cost of the other because both have their importance. If we do not care about profit, we cannot survive for a longer period. On the other hand, if we do not care about liquidity, we may face the problem of insolvency or bankruptcy. For these reasons working capital management should be given proper consideration and will ultimately affect the profitability of the firm. Firms should keep an optimal level of working capital that maximizes their total value. Larger inventory preservation might reduce the risk of a stock-out. Keeping large level of inventory and a generous trade credit policy would cause to high sales. Allowing trade credit is most strategic move to stimulate sales. Trade credit would give a chance to customers to assess quality attributes of product before making payments completely or partly (Long, Maltiz and Ravid 1993, and Deloof and Jegers, 1996). Accounts payable is another most important component of working capital. Investing in account payable or delaying payments to suppliers allow a firm to assess the quality of acquired product before it making its full payments. Investing in accounts payable is treated as inexpensive and flexible source of financing working capital. Bad effect of investing accounts payable is that, it would become loss if the firm offered discount for early or on time payment. Measurement of working capital is most important function of management. A popular measure of Working Capital Management (WCM) is the working capital cycle or operating cycle. This is the time lag between the expenditure for the purchases of raw materials and collecting cash from the debtors. With the reducing of cash conversion period that will be more beneficial to the working capital and it will lead to high level of current asset. As it increases the cash conversion period it will lead to low level of working capital maintena nce. Providing a proper and sound framework for total asset management is most important aspect in financial management practices. Investment in fixed asset would require great level of research activity. Recently, working capital management has been given little attention by researchers relatively. This approach causes great problem for many business firms. Because neglecting of working capital or lazy approach on working capital management would cause utter failure and becomes problematic. Recent corporate history and literature shows that more concerns for working capital management will result in more efficiency. Recent corporate history has got rich set of history for the collapse of firms due to their neglects in working capital management. Altman provided a model called multivariate predictor model based on US companies in the year 1968. In his model he includes working capital as one of the model components. Taffler developed a four-variable model for failure prediction using data drawn from the UK companies in the year 1977. (Eljelly, 2004) explains that liquidity management involves planning and controlling of current asset and current liabilities in a manner that reduce risk maximum. Major risk in these involves incapability to meet short term obligation as and when it dues. It should also concerns with avoiding excessive investment in current assets. The measurement of relation between profitability and liquidity is most important. To measure this relationship there are many techniques are being used such as ratios and cash conversion cycle. Some companies as in Soudi Arabia was under study as sample. Researchers used correlation and regression technique to study the relationship between profitability and liquidity of certain companies. The study showed that, rather than the ratios such as current ratio and liquidity ratio cash conversion cycle has more relevance to project out the relationship. Another point revealed that size of the companies showed major affect on profitability of various industrie s. The study revealed certain implications in Soudi Arabian companies. First is that there is negative relationship between liquidity and profitability indicators like current ratio and cash conversion period. Second is that there is variation among companies in terms of measure of liquidity. In spite of all the overall study revealed stable result. (Ghosh and Maji, 2003) Under this, they take Indian cement companies in to consideration to study in details. They examined and studied the efficiency of working capital management of certain Indian cement companies during the financial period 1992 1993 to 2001- 2002. Instead of using the working capital ratios they have used performance, utilization and efficiency indices calculations. Each individual firm has got target efficiency level on the basis of industry norms. And each firms speed level of achieving efficiency target is tested under study. Overall study concluded that during particular study period, Indian cement companies did not performed as the targeted as well. (Deloof, 2003) He explains that, the way that a firm is managing its working capital has significant impact on ultimate profitability of any firms. This is because of the great amount cash investment done by most firms in current assets. He made study by using correlation and regression tools in Belgian firms. During his study he found that there is negative relationship between gross operating income and number of days allowed in account payable, account receivables and inventories of firms. Based on the study he conducted, he concluded that management can reduce the number of days in account receivables and inventory storage reasonably. It will create more value for its shareholders and owners. He also concluded that negative relationship between profitability and accounts payable is due to the reason that less profitable firms take more times to make payment on their bills. (Shin and Soenen, 1998) To create certain value to owners or shareholders it is important that to mange working capital most significantly and with utter cares. Profitability and liquidity impacted or affected by the way which the working capital management of any firm. There was found a negative relationship between profitability and firms Net Trade Cycle by studying the relationship between lengths of Net Trade Cycle. Shorter Net Trade Cycle indicates higher risk associated with stock return. (Smith and Begemann 1997) emphasized that those who promoted working capital theory shared that profitability and liquidity comprised the salient goals of working capital management. The problem arose because the maximization of the firms returns could seriously threaten its liquidity, and the pursuit of liquidity had a tendency to dilute returns. This article evaluated the association between traditional and alternative working capital measures and return on investment (ROI), specifically in industrial firms listed on the Johannesburg Stock Exchange (JSE). The problem under investigation was to establish whether the more recently developed alternative working capital concepts showed improved association with return on investment to that of traditional working capital ratios or not. Results indicated that there were no significant differences amongst the years with respect to the independent variables. The results of their stepwise regression corroborated that total current liabiliti es divided by funds flow accounted for most of the variability in Return on Investment (ROI). The statistical test results showed that a traditional working capital leverage ratio, current liabilities divided by funds flow, displayed the greatest associations with return on investment. Well-known liquidity concepts such as the current and quick ratios registered insignificant associations whilst only one of the newer working capital concepts, the comprehensive liquidity index, indicated significant associations with return on investment. Satish B. Mathur (2007), Working capital management contains the proper management and control of the gross current assets. Current asset involves cash, sundry debtors or Account Receivable and inventories. Thus the working capital management relates with the management of all among components not only individually but also collectively, too. Effective management and control of the various components of working capital is one of the most important and vital functions of financial management in any kind of the industrial and business units, based on varied parameters, like flexibility, level of investments in various components of current assets, criticality, quantum of efforts and time. With the help of a method called operating cycle let estimate the duration of one operating cycle. This means time taken by a firm for completing a full cycle of process starting from purchase of raw materials to conversion of finished goods even after sales that, sundry creditors if it is credit sale s. The completion of operating cycle has major influence over the profitability of any business concern. So its proper control and management needed to maintain proper working capital. Vijay Kumar (2001), Funds needed for any business organization for carrying day to day operations. Working capital considered as lifeblood of the business concern. Even though a firm can exist without profit, it cannot survive without working capital fund. A firm which without having working capital fund may cause bankruptcy. The working capital management is the most critical problem in financial management. Most of the time financial executives are devoted towards managing the current assets and current liabilities which are the main constituents of working capital. Importance of working capital management stems from two reasons viz., (i) A substantial portion of total investment is invested in current assets and (ii) level of current asset and current liabilities will change quickly with the variation in sales. Hence, this study makes an attempt to analyze the size, composition, circulation of working capital and whether such an investment has increased or declined over a period o f time. Mr. Knight pointed out that not only working capital components are inter dependent on each other but also on net sales and profit. Hence, this study also makes an attempt to evaluate some of the linkage between the different components of working capital and their relationships with the variables like sales, value of output, earnings, cash flow, etc. One most important area in working capital management is to understand the feature of short run behavior of the demand for working capitals ant its various elements. This study not only includes the cash but also includes the study of demand for receivables, inventories, gross working capital and net working capital. The concept of working capital, still have some controversies among various financial experts. Working capital has two concepts. They are: the total of current asset and the excess of current assets over current liability. These are called gross concept and net concept respectively. Gross concept is use full when the objective is to measure the size and extent to which current assets are using. Net concept becomes useful when the objective is to evaluate the liquidity position of the concern. As soon as a firm operate and start to grows it have to make various decisions regarding where to invest and how to invest its various funds, quantity of cash and inventory to be maintained, amount of financing to customers, how to obtain required funds and how much debts can be acquired from outside etc. all those among factors have vital influence in total cash flow and overall profitability of business unit. Working capital management is a crucial decision of how to make structure and finance the operating investment of a business. Nrendar Kumar Jain (2004), Working capital management has major place in the theory of finance. Optimal allocation of fund is most important face in working capital management. Various tools and techniques have been developed for optimal allocation of fund. Some of them are Baumol 1952, Beranek 1963, Haskel Benishy 1965, Haley and Higgins 1973, Walker 1964. Efficient use of working capital is very much deals with profitability of any business unit. It augments the total productivity of investment in fixed assets. The total survival of a firm will be stuck if working capital not available at time. So it is very essential that to maintain constant and adequate supply of working capital for smooth running and growth of organization. The term Working capital is represented by current assets. Management of working capital has added significance in the context of any pattern of business weather it is small-scale or medium sized industries in the country. Most of them would have weak financial base and less availability of finance source. If their risk bearing capacity very low there would have an effort to reduce its size releases funds and improves profitability. Working capital management deals with management of current asset such a way that it maximizes the value of firm Both shortage of fund for working capital and uncontrolled over-expansion may cause failure in many business concerns. Especially in small firms, efficiency in working capital management has significant impact in firms risk, return and share price. The financial sector has major role in any economy in mobilization of fund and allocation of savings. Financial sector acts as conduit for transferring financial resources from saver to borrower. Generally banks act as an integral part of financial sector. Working capital management can be say as a process of planning and controlling the level and proper mix of the current asset of the firm. It includes financing of these assets in the organization. Here financial manager has to decide what quantities of cash, liquid assets, bills receivable and inventories have to be hold at various times. Financing of current asset is next important decision to be taken by a finance manager. Choice for financing these assets includes mix of current as well as long term liabilities. There are two important implications for the management of working capital. First to choose management, working capital can be acquired to meet immediate needs when they arise. A hand-to-mouth policy like this has an advantage of reducing the average investment in working capital. So they can minimize interest charge, insurance expense and storage fees necessary to carry the investment. In spite of this, hand-to-mouth policy has certain disadvantages also. There will be increased ordering cost associated with greater likelihood that the firm may experience storage in working capital. The reason behind this is that, there is no buffer stock to absorb unexpected functions. Management of working capital is faced by two basic questions. First is that the level of sales and relevant cost, what quantity of cash, receivables and inventories a firm should keep in optimal. Second is that the most economical way to finance these working capital investments. To have best return on investment firm should not keep unproductive assets and it should finance in cheep source of fund. Literally, it is always better that to invest with short term asset and with short term liabilities. Eugene F. Brigham,  Joel F. Houston (2009), Working capital management involves search the optimal level of cash, bills receivable, marketable securities and inventories. It includes financing the working capital with least cost. Since most of the buyers using credit cards that neither in-store cash nor bills receivables, best buy are working capital policy focuses on its inventories as well. To keep non interrupt sales its store must be stuffed with adequate materials. Whenever the customers needed the goods they should able to supply it. This relates with deciding what product is more latest and trendy and obtaining hot product with cheep cost and supply to stores. Miraculous development in the field of technology and communication has been changed the entire scenario. The way of managing its inventories is in best way now. Now, real time data is collecting from various stores and departments. Whenever there is a need for inventories and need for outsourcing of inventories, the computer system places the order automatically. In short, incoming and outgoing of inventories are done by the computer packages. If sale of an item is slipping, prices are lowered to reduce stock of that item before the case getting worst. Eugene F. Brigham,  Michael C. Ehrhardt  (2008), Working capital is excess of current asset over current liabilities. Firms are using different kind of policies to manage its working capital as well. Some firm uses relaxed working capital policies and some sues restricted policies. A relaxed working capital policy is that firm keeping large amount of cash and inventories relatively. Here sales are stimulated by the use of credit policy that providing finance to customers very liberally. And the company doesnt take advantage of credit provided by bill payables and accruals. In restricted working capital policy cash, inventories and receivables kept in very low quantity relatively. Here accruals and payables are maximum and NOWC is turned over more frequently. Optimal and moderated working capital policy is between these two extremes. Under the certainty condition, firms keep minimum level of working capital because, sales, cost and payment periods are certain. A large amount will increase the need for external funding without a corresponding increase in profit. Under the situation of uncertainty the picture is completely different. Here the firm must have to maintain a minimum level of cash, inventory. Here the quantity of keeping of working capital would be based on expected sales, expected profit, expected time and so on. Account receivables are determined by credit terms of the business as well. Shashi K. Gupta, Neeti Gupta (2008), Working capital in general practice refers to the excess of current asset over current liabilities. Management of working capital therefore, is concerned with the problems that arise in attempting to manage the current asset, the current liabilities and their inter relationship that exist between them. In other words it refers to all aspect of administration of both current assets and current liabilities. The basic goal of working capital management is to manage current asset and current liabilities of a firm in such a way that satisfactory level of working capital is maintained. That means it is neither inadequate nor excessive. This is so because both inadequacy and excessive position are bad in any kind of organization. Inadequacy of working capital will lead to insolvency and excessive working capital will lead to idle fund which earn no profit for the business. Working capital management policy has important impact in success of a business. In the word of Shubin, working capital is the amount of funds necessary to cover the cost of operating the enterprise. According to Genestenberg, circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another, as for example, from cash to inventories, inventories to receivables, receivables to cash WORKING CAPITAL 2.1 MEANING OF WORKING CAPITAL    Working capital refers to short term fund to meat operating expenses. To quote great Indian financial analyst and scholar Mr. Ramamoorthy, it refers to the funds, which a company must possess to finance its day to day operations. It is concerned with the management of the firms current asset and current liabilities. It relates to with the problems that arise in attempting to manage current assets, current liabilities and their inter relationship that exist between them. If a firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy.    Working capital refers to that part of a firms capital which is required for financing  Ã‚   short-term or current assets such as cash, marketable securities, debtors and inventories. Funds, thus, invested in current assets keep revolving fast and are being constantly converted into cash and these cash flows out again in exchange for other current assets.   Hence, it is also known as revolving or circulating capital or short-term capital.   In the words of Shubin, Working capital is the amount of funds necessary to cover the cost of operating the enterprise. Types of working capital Working capital Time base Concept base Net working capital or qualitative Net working capital or qualitative Temporary or variable working capital Gross working capital or quantitative Gross Working Capital According to this concept, the total current assets are termed as the gross working capital or circulating capital. Total current asset include; cash, marketable securities, account receivables, inventory, prepaid expenses, advanced payment of tax. This concept also called as quantitative or broad approach. To quote Weston and Brigham, Gross Working Capital refers to firms investment in short term assets such as, cash, short term securities, account receivables and inventories . The concept helps in making optimum investment in current assets and in their financing. According to Walker, use of this concept is helpful in providing for the current amount of working capital at the right time so that the firm is able to realize the greatest return on investment. Significance Gross working capital concept focuses attention on the two aspect of current asset management. They are: 1). Optimum investment in current assets: Investment in current asset must be just adequate to the needs of the firm. On the other hand excessive investment in current asset should be avoided. 2). Financing of current asset: Need for working capital arise due to the increasing level of business activity. Therefore, there is a need to provide it quickly. If there is surplus fund arise that should be invested in short term securities. Net Working Capital Concept As per this concept the excess of current asst over current liabilities represents net working capital. Similar view is expressed by Guttmann, Gerstenberg, and Goel Etc. Net Working Capital represents the amount of current asset which remain after all the current liabilities were paid. It may be either positive or negative. It will be positive if current asset exceed current liabilities and vice versa. To quote Roy Chowdry, Net Working Capital indicates the liquidity of the liquidity of business whilst gross working capital denotes the quantum of working capital with which business has to operate. Significance Net Working Capital Concept focuses on two aspects. They are: 1). Maintaining liquidity position: Excess current assets help in meeting its financial obligation within the operating cycle of the firm. Negative and excess working capitals both are bad to the firm. 2). to decide upon the extent of long term capital in financing current asset: Net working capital means the portion of current asst that should be financed by long term funds. This concept helps to decide the extent of long term fund required in finance current assets. Permanent Working Capital This is the minimum investment kept in the form of inventory of raw materials, work in process, finished goods, stores and spares and book debt to facilitate uninterrupted operation in a firm. Though this investment is stable in short run, it certainly varies in long run depending upon the expansion programs undertaken by the firm. It may increase or decrease over a period of time. Temporary Working Capital Any additional working capital apart from permanent working capital required to support the changing production and sales activities is referred to as temporary working capital. A firm required to maintain an additional amount current asset temporarily over and above permanent working capital. PRINCIPLES OF WORKING CAPITAL MANAGEMENT / POLICY The following are the general principles of a sound working capital management policy: Principle of Risk Variation Risk here refers to the inability of a firm to meet its obligation as and when they become due for payment. Larger investment in current assets with less dependence on short-term borrowing increases liquidity reduces risk and thereby decreases the opportunity for gain or loss. In other words, there is a definite inverse relationship between the degree of risk and profitability. A conservative management prefers to minimize risk by maintaining a higher level of current assets or working capital while a liberal management assumes greater risk by reducing working capital. However, the goal of the management should be to establish a suitable tradeoff between profitability and risk. Principle of Cost of Capital The various sources of raising working capital finance have different cost of capital and the degree of risk involved. Generally, higher the risk lower is the cost and lower the risk higher is the cost. A sound working capital management should always try to achieve a proper balance between these two. Principle of Equity Position The principle is concerned with planning the total investment in current assets. According to this principle, the amount of working capital invested in each component should be adequately justified by a firms equity position. Principle of Maturity of Payment This principle concerned with planning the sources of finance for working capital according to this principle, a firm should make every effort to relate maturities of payment to its flow of internally generated funds. Maturity patterns of various obligations are an important factor in risk assumptions and risk assessments. Importance of working capital management: To maintain sound working capital position is critical and important function for any management. Because the success of business is very much depends on how they manage its working capital. It should keep preserve a sound working capital position by avoiding excessive investment and keeping adequate working capital to meet daily operations. . As pointed out by Ralph Kennedy and Stewart MC Muller, the inadequacy or mismanagement of working capital is one of a few leading causes of business failure. Current assets, in fact, account for a very large portion of the total investment of the firm. Determinants of Working Capital: Working capital requirements of different firms are different. Each firm has own manner to operate with. They would require current asset and current liability as per their type of operation and way of operation. So it is main function of working capital management to determine the level of working capital required. Even though there are no specific set of determinants to decide about working capital, there are some determinants which have been using commonly by the management. They are discussed under: 1). Size of business operation: Size of the business is varying business to business. Size is another most important factor to be considered while determining working capital requirements. Here the size of the business is measured in terms of operation doing by business and not on physical evidence. The amount required as working capital is direct proportion with size. That is if the size of business is large it would require more working capital and it is small it would require less amount of working capital to invest. 2). Nature of business activity: There are some firms which requires very short amount to be invested in fixed asset and more in current asset. Likewise, some firms would require more investment in fixed asset and less in current asset. This is why the nature of business comes more significant while determining the working capital. Trading and financial type of companies would require to invest more in current assets. So while determining the level of working capital investment it should be based on nature or type of business. 3). Business Fluctuations: Demand for the products of each business is fluctuating season to season. So each business has to be made financial planning in advance to have seasonal working capita