A note on social criticism of novel Joseph Andrews Essay

Q Write a note on social criticism as presented in book I and book II of this novel. This novel is basically a satire on mode of living of the social classes of 18th century. The most promising and solid features (as a means of social criticism) that one might extract from the novel, in the light of book I and book II are highlighted as below: Artificiality of love Here the example of lady booby explains the point clearly. She loved Joseph as claimed by herself, but she wanted to keep their relation hidden from people, thus depicting the point of artificiality. She intended to seduce him just for the sake to gratify her sexual appetite. She, by no means portrayed any signs of true love. This factor, fielding critised by employing the character of lady booby as discussed above. Moral degradation Another social evil of that time, certainly was that the people look down upon morality with an eye of contempt. They degrade it in all possible ways. Here the example of Joseph can be taken into consideration. His inner goodness was ridiculed in the very society. Lady Booby once mocked him of his being maintain an ally of morality, when she herself as of superior stature had discarded her own conscience for him. Sympathy within the same class Sympathy is a factor that prevails only within the same class. As the example of postillion who provided Joseph with his coat when he had nothing to cover himself and was in a very miserable condition, states very well the fact. Indeed, both belonged to the lower class. Lack of charity Charity, a quality not so common in common man. When parson Adams consulted Parson Trulliber as his Christian brethren, with the aim of expecting some charity to pay off his bills of the inn they stayed at, got nothing but rejected in the face is just a demonstration of the fact of lack of charity. Duality in nature Parson Barnabas presents himself as a character with duality in nature. A glutton and drunkard, yet a parson by profession, indeed a presenter of dual  sides. Such characters as this do exist in our society and are tainting the fabric of world with their paint. Lack of knowledge The world also has people who claim the professions they have no thorough knowledge of. They are professionally incompetent, yet roam around in the society like foolish quacks with pride. The surgeon and parson Barnabas are such examples. Lust of ladies Lady Booby and Mrs.Slipslop had amorous disposition. And to gratify their sexual apetite they look upon Joseph with an eye of lust. Consequently, because of their intentions they lay Joseph open in the jaws of chastity. Such people as these should be placed infront of mirror, to render them with the realization that what creature have they become. Height of jealousy Jealousy, a trait found very well-groomed in society. Fielding has portrayed this social-ill as one of the core aspect in his novel. Mrs.Slipslop out of extreme jealousy blamed Joseph of being an ill-character and of amorous inclinations. Indeed, a very dangerous trait. Hypocrisy can also be attributed to the consequence of height of jealousy. The higher class in the novel is portrayed as highly submerged in hypocrisy. False promises A trend common in that society was to make promises and then break them. While Joseph, Fanny and Adams are on their way, they encountered one such fellow and fell for his promises. A trend that ought be condemned with solemn attitude. Corruption People like the surgeon and Parson Barnabas are perfect examples of tainting the society with corruption and morally ill-standard behaviour. Such follies and vices of society depict very well a social criticism, in the light of book I and book II.

Information Management

In the current market, most companies use ERP system to solve most of their management issues and also assist an organization in running efficiently. The ERP system is also well- known to be really simple and easy to work with for many organizations. In the following sections, this essay will discuss about the process and pitfalls of using an ERP system, the advantages and disadvantages of it and with these, it will conclude on the ERR system.What is an Enterprise Resource Planning (ERP) System The Enterprise Resource Planning System or simply known as an ERP system, is primarily a professional application software that carries out standardized methods to streamline information among each and every division within an organization (Leonie, 2012). The ERP system coordinates information reliably all around whatever is left of the organization. ERP system incorporates a range of modules including financial, accounting, HARM, sales, distribution, manufacturing and logistics (Deer ret al, 2005).This range of modules each has its own System which often possessed compatibility issues with each other. This is when an ERP system comes in handy whereby it joins all this incompatible modules together so as to be able them to communicate, share and impart information effectively. With the ERP system establishing communication among these incompatible oodles, there will not be a need to stir information from diverse framework, doing additional computations or interface with the sales results from a few months back or handling flow.In conjunction with this framework, each person inside the organization would be able to retrieve the relevant information he/she require in order to perform their task effectively and efficiently. Table 1 below are some modules that use an ERR system (Leonie, 201 2): Table 1: Organizational Modules that utilizes ERP System Organizational Modules which Utilizes ERP System Account & Finance Sales & DistributionLogistics Human Resource Production Gen eral Ledger Accounts Payable & Receivable Fixed Asset Sales Queries (Inquires & Quotations) Sales Orders Delivery / Shipment Invoice / Billing Purchasing, Tracking & Sales Shipment of Inventory Items Tracking of Product Lots & Serial Numbers Tracking of Product Quality Test Results Warehouse Capacity Management personnel management Organizational management Payroll Time management Personnel development Tracking the change of unrefined materials into finished items Track Labor, Overhead and other amassing costs Stipulate the full cost of creationThe Process and Pitfalls of Switching to ERP system With the ERP system being setup correctly, the whole system will become very sophisticated, incorporating decreases in administration procedures; enhanced benefits; less demanding expenses; and performance that is more dependable. Below are some points on the process and pitfalls of switching to an ERP system (Suddenly, 2011 Reduces Unnecessary Paperwork: An ERP system reduces majority of th e paperwork, as all correspondence between departments are able to experience the same framework.Using a sales department and production department for illustration purposes, whenever the Sales Department input a sales order into the ERP system, the Production Department personnel would be notified of the sales requests within a very short period and they can begin processing the sales request and issues preparation requests to the production team. In the event that there is a need to, workers can get a printout Of the processed sales request.From the point where the Production Department began processing the sales request and eventually issuing the preparation request, no unnecessary paperwork were incurred but yet task could still be effectively performed in an efficient manner. Enhanced Productivity: Productivity will be enhanced if ERP system is applied correctly, as it will greatly improve on time and material usage. Intelligence and rules can also be programmed accordingly and applied. For example, similar production orders can be combined and produced concurrently, as this will allow more proficient utilization of staffs, machines, and resources.Easier Costs: Less demanding expenditure (imparted as a rate of the revenue earned) might be fulfilled with the usage of an ERP system. For instance in the event whereby suppliers have gotten a full collaboration, the ERP system makes it keel to execute the buying arrangement without a moment to spare. This can cut down the expenses of final product stock keeping and set free capital for other purposes. Solid Performance: ERR system can often provides businesses with flawless and efficient operations, however this useful advantage is often neglected as it could not be justified as a source of income to the organization.However, it is still important to note that this strong performance of ERR can provides organizations with flawless and efficient operation when information can be relayed to various departments i n a fast, little or no error manner, using the name example mentioned earlier for reducing unnecessary paperwork. With the process being discussed, the ERP framework also contains a few pitfalls and they would be discussed below. Incorrect Rationale for using an ERP: A generally committed error, particularly when ERP-like frameworks initially showed up, is the decision for ERP with the incorrect rationale.There had been numerous organizations who settled on ERP to massive clean-up on their chaotic operation methods, unfortunately this move practically ends up in a catastrophe. The old yet famous proverb suggested ‘garbage in – refuse UT' always stands and should never be forgotten by any organizations. To keep away from these traps, it is highly important for organizations to enhance their methodology with more sensible requirement before establishing an ERP system. Underestimating the Time: Often, companies are too engrossed in implementing the ERP system such that the y underestimated the time spent.Arrangement of the usage requires much unforeseen and excess work and time spent. Understatement of the obliged attempts could deliver extreme results. Underestimating the Cost: Quite often, certain ERP system provider gives a proposition that are easily understandable by clients, yet in reality this proposition may possessed unseen problems once the system finished development, that can result in significant clashes between the client and ERR system provider. Organizations must ensure that they had considered all expense segments and how specific situations may influence the system development cost.One of the common problem faced by organization is their failure to conduct feasibility study when deciding to have the ERP system or not. Failure to do feasibility study will lead to painful results at the end of the day whereby the real cost of eating up the ERP (e. G. Agreement, permit, upkeep, expenses of execution) could cost a lot more than the reven ue they could earn when the ERP is up and running. Incorrect ERP Selection A small or medium organization ought to abstain from purchasing an enormous framework, and rather actualities one that is more proper to their prerequisites and plan (with some room to develop).Another similar issue is picking the incorrect kind of ERP system – many varieties of ERP systems are readily available in the market, some that are task arranged Reps and some that are handling line situated Reps. It is important to verify the type of framework an organization pick that adjusts to the sort of business they operate. The Advantages & Disadvantages of using an ERP System Essentially, ERP system which is correctly outlined, properly setup and accurately completed ERP results could give huge profits to any organization regardless of their volume or development.The capacity to immediately run status reports with no physical information entrance in databases can give organizations significant data on business operations and consider all the more opportune responses to changing business situations. Farsighted corporations have started to take a gander at their professional frameworks as a very vital component of their general business speculation system and operate similar monetary measurements to professional programming that are highly utilized when procuring another plant or new gear.In the quick moving universe of business, a progressed, present day ERP framework is no more simply a key to business achievement, however a centre component of survival. If any organization experiences issues running reports continuously, or their workers spent unnecessary time inputting the same piece of information repeatedly into other frameworks, or vital business measurements that needs to be ascertained by hands on worksheets, this organization will definitely reap the benefits of when they have an advanced ERR business bundle (Leer-lie, 2012).However, on the other end some disadvantages of using an ERP system would be the huge cost, its long journey, its data length, and the time spent on implementing the programmer. The implementation process can take up to several months for the system to be full up and running. Complexity is also one of the factor that organization faces when it comes to implementing the yester. Overall, ERP frameworks do not really seem appropriate for Small or Medium-sized Enterprises, or simply known as Seems whereby they essentially have difficulty in defending the starting cost of their enterprise (LOL, 2011).Some other disadvantages of using an ERP system would be discussed below (LOL, 2011). Impacting on Business Processes: ERR structures are often an immediate progression to the processes or procedures of business organizations, and this often leads to entanglement rather than actualities. In order to ensure that each one some piece of the equines fits into the ERP structure, it is unrealistic that individual procedures and arrangements co uld be kept up, so the execution of an ERP structural engineering has a tendency to take the state of a much more extensive business change venture.This is all the time an iterative methodology. At the point when characterizing the extent of the ERP at an early stage, huge numbers of such contemplations are often remains unknown. ERR executions possessed the possibility of being viewed as tasks that â€Å"constrain† unwanted reforms on the business organizations' operation. Thus once the ERP usage is underway, the only solution for any change is to change business formats without preparing the whole system from scratch.ERP Systems that lacks Flexibility and Adaptability: ERP system building design gives itself well to build organizations that possessed characterized procedures and methods. With the ERP system being set up, the system would succeed for those organizations, yet for other organizations that wish to perform major fundamental reforms, the ERP system could turn out to be exceptionally rigid. Because of the path in which the structural engineering is situated up, even generally little changes might e immoderate and entangled to execute.Dynamic organizations, continually looking to roll out improvements in course would not be able to enjoy the profit brought about by having an ERP, as the ERP would never be synchronized with what the business actually does. Problems Created through Ongoing Supports: External vendors often uphold ERP frameworks. This can result in many issues created when these external vendors are required to adhere to administration level understandings, thus the time to react to abnormalities and the nature of essential help could not keep up with business requisites.Permitting and support charges could be incurred heavily into the already thriving expenses of the ERR system. The greatest fear of any organizations are the security of their confidential information held within the ERP, as the system are mostly maintained by ex ternal vendors, the organizations feel that they do not have ‘true' control of these confidential information. Risk of Efficiency being Dissolved by Businesses A compelling ERP depends on the correct type of business procedures to help and keep up with structural planning.For instances, Organizations that do not UT resources into further skills upgrading of staffs will never be able to see the profits through ERP execution. Whenever organizations are working in an extremely conservative way, these organizations can never truly understand and appreciates the ability of an ERP framework. Structural engineering relies heavily on an exceptionally incorporated plan of action and disappointment to impart information between offices will restrain viable living up to expectations. Fundamentally, to completely profit using ERP framework, the business will be required to be executed in a certain manner readily.A few organizations have acknowledged robust benefits from the usage of the E RP system, though majority of the people believes that the results did not advocate the start-up cost of the ERP. As these ERP systems are often very costly, organizations must think thoroughly of whether does this ERP truly benefit the business, and at the same time whether business really needs to have an ERP. Conclusion An ERP system may be an exceptionally important device for each undertaking in which centre methodology could be supported by programming.

Trying to rehabilitate offenders is a waste of time and money Essay

Trying to rehabilitate offenders is a waste of time and money - Essay Example These high rates of behaviour of falling back into crime have driven the prison population to rapidly increase and have caused a widespread overcrowding, slowing down a number of opportunities for rehabilitation and education, and have lowered the level of motivation for both the staff and the prisoners. To address this issue, the government of the United Kingdom has been spending on new prison places which have been merely designed for control security instead of being focused on the education and rehabilitation that their increasing number of prisoners need. Most of these British prisoners are young men under 30 who do not have proper education; therefore without the correct education and skills, only a small number of these prisoners will be capable of building meaningful lives that will turn away from crime, regardless of how long or how often they have been in prison (Ogloff 1999). Community sentences are also handled by the probation service and staff who work with the prisoners, their victims and partners who closely work with criminal justice agencies such as the police and the prisons. These three agencies are required by the law to work together in managing and supervising the community. The primary goals of the penal system as well as the individuals who facilitate it are to protect the public and implement the proper punishment for the offenders of the community. This system of punishment is also used to make sure that the offenders are aware of their crimes and its effects on their victims and communities; therefore, these individuals should undergo proper analysis and rehabilitation. Rehabilitation programmes have been created as part of the penal system to implement transformation on prisoners for them to change and become better and productive citizens. However, this will entail support from concerned agencies and more importantly, the

Do state assessments truly measure a disabled students' intellectual Research Paper

Do state assessments truly measure a disabled students' intellectual abilities - Research Paper Example Testing to Students with Disabilities Students with disabilities should be afforded the same kinds of opportunities to do well in high-stakes testing. This is proven in a document released by The University of the State of New York?and The State Education Department?Office of Vocational and Education Services ?for Individuals with Disabilities (VESID). It states: According to Test Access and Accommodations for Students with Disabilities (2006), â€Å"All students, including students with disabilities, are expected to learn and achieve high standards.   To meet this goal, students with disabilities must have access to general education curriculum courses, electives and required assessments.   This was affirmed in 1997 when the Individuals with Disabilities Education Act (IDEA) was amended to require that students with disabilities, including students with severe cognitive disabilities through the development of a State alternate assessment, participate in State and districtwide a ssessments† (pgh. 1). Further, it has been noted that appropriate testing accommodations can and shall have been made in order to take into account the fact that there are several different types of differently-abled learners. What should matter is that these students are given the same types of opportunities as students in regular and Honors courses to achieve their best, at whatever level of schooling they are at—but especially in high school so they are adequately prepared to move on to higher education beyond the secondary level. According to Test Access and Accommodations for Students with Disabilities (2006), â€Å"IDEA 2004 further strengthened this requirement by adding several new provisions that will ensure that students have access to State tests and that test results are valid and... The research paper tells that students with disabilities should be afforded the same kinds of opportunities to do well in high-stakes testing. This is proven in a document released by The University of the State of New York and The State Education Department Office of Vocational and Education Services for Individuals with Disabilities (VESID). Further, it has been noted that appropriate testing accommodations can and shall have been made in order to take into account the fact that there are several different types of differently-abled learners. What should matter is that these students are given the same types of opportunities as students in regular and Honors courses to achieve their best, at whatever level of schooling they are at—but especially in high school so they are adequately prepared to move on to higher education beyond the secondary level. These accommodations that are called for routinely help assess students’ true intellectual abilities by helping students demonstrate how they have attained a mastery of certain skill sets. According to Test Access and Accommodations for Students with Disabilities, â€Å"Many students with disabilities will require testing accommodations in order to participate in testing programs on an equal basis with their nondisabled peers. Such accommodations provide students with the ability to demonstrate mastery of skills and attainment of knowledge without being limited or unfairly restricted due to [having] a disability†.

Attitudes of nursing towards euthanasia Essay Example | Topics and Well Written Essays - 5000 words

Attitudes of nursing towards euthanasia - Essay Example This topic is relevant to many as it addresses the truth that euthanasia is a reality for everyone. The widely publicised case of Terri Shiavo in the U.S. caused many to consider their own end-of-life care, should the time ever come, as well as that of their loved ones. The Shiavo case made discussion even more complex by introducing such concepts as passive versus active euthanasia, omission versus commission, and ordinary versus extraordinary means to prolong a patient's life. Many issues surrounding euthanasia are currently being debated, such as its place in traditional monotheistic religious perspectives, as well as futuristic abuses and discriminatory practises. Ultimately, the position that many nurses will find themselves in may be one of conflict, as many current laws regarding euthanasia and assisted suicide are unclear about the participation of nurses. Furthermore, religious nurses will find themselves in a position of having to choose between supporting the patient and adhering to their religious beliefs. Eventually, all nurses will be forced to determine definitively what their position on euthanasia is and whether they will be able to support it ideologically as well as physically. This could possibly mean administering the lethal drugs themselves, which will force many to consider their philosophical position on euthanasia carefully and thoughtfully. Traditional Perspectives In 1997, the state of Oregon in the U.S. passed the Oregon Death with Dignity Act, which legalised physician-assisted suicide (Miller, et al. 2004). In a study published by Palliative Medicine in 2004, questionnaires were mailed out to all of the hospice nurses and social workers in Oregon in 2001 regarding their responses to patients who request assisted suicide or discuss assisted suicide as a possible option in end-of-life care. The researchers received 573 responses and found 306 to be relevant to their study. The researchers asked the nurses and social workers to rate the importance of religion and spirituality in their lives and professions on a scale of 0 to 10, with 0 being "not at all important," and 10 being "very important." Both groups rated spirituality as being very important (Miller, et al. 2004). But while social workers rated the importance of religion at 5, nurses rated its importance at 6.6 (Miller, et al. 2004). The role of religion thusly acts as an influential factor in the approach that many nurses take towards their profession and, subsequently, towards assisted suicide and potential requests. Of the respondents questioned, two-thirds reported having discussed assisted suicide with a patient within the previous year (Miller, et al. 2004). 22% reported being uncomfortable with discussing assisted suicide (Miller, et al. 2004). The researchers found that the nurses who rated the importance of religion highly had a less supportive view of assisted suicide, while nurses who rated religion's importance lower demonstrated a more positive attitude towards assisted suicide (Miller, et al. 2004). Of the nurses who responded to the questionnaire, 13% were Catholic, 1% were Jewish, 28% were Protestant, 28% were Christian Other, and 9% were Other non-Christian (Miller, et al. 2004). To understand religious perspectives of euthanasia, we must first define euthanasia. There are two basic

Income inequality Essay Example | Topics and Well Written Essays - 750 words

Income inequality - Essay Example In simplest terms, because moral inequality causes harm, and has little to no mitigating positive effects to society, then it is morally wrong (Krugman). This is the same reasoning used by Frank, framed another way, by pointing out that in fact income inequality is a moral issue because in fact economics was the child of moral philosophy, being born into existence by moral philosophers. Income inequality being a subject that falls within the discipline of economics, it makes sense that at its very root income inequality is a moral issue (Frank). The social Darwinist position on income inequality is that it is in essence the way nature operates, revealed in the workings of the economic system of human beings in society. This being so, the social Darwinists argue that the best course is to essentially leave things as they are, and to let people do as they please and according to what they see as working to their best interest, and see how things go. The government making attempts to ad dress social inequalities, such as inequalities in income, does not work for the best interest of society, because it would go against the working of nature. In the area of income inequality, Frank and Krugman each in their own way point out the natural practical consequences of the Darwinist position. Where a few manage to get a substantial portion of the economic pie, that few can begin to exert considerable influence on the various political and economic processes in the country, twisting the processes for their own gain. These are the modern lobbies. Frank points out that it is this strong influence of the few and the rich that has led to the Darwinist position yielding reduced tax rates for those who are already wealthy, in turn further increasing inequality in income. Krugman has his own examples of the impact of the Darwinist position and the chronically strong power of moneyed interests in corrupting the political process, mirroring the example of Frank. One such case cited by Krugman is with regard to the awarding of tax breaks to hedge funds by the legislative branch, even if such tax breaks resulted in revenue losses for the government. The hedge funds were big contributors to the political campaigns of the lawmakers who voted in favor of the tax breaks. It is essentially the working out of the Darwinist position in real life. The powerful hedge funds, working for their own interests, have been able to bend the political and legislative process to favor them (Frank; Krugman). The gist of the arguments against income inequality on the other hand, are those that speak of the many harms that income inequality pose on society, on various levels, as itemized and discussed in some depth by Krugman. The first is that income inequality fosters social inequality, and social inequality in turn breeds its own ills. Including that it forces families across all economic groups to be part of a treadmill of trying to keep up with each other economically, with disa strous socially negative consequences in turn. The rat race has resulted in more bankruptcies as parents try to fight for space in neighborhoods that can give their children a leg up in the race too, by being able to go into good schools in good school districts, as an example. Elsewhere data suggests that parent status correlates with the educational outcomes of children too, further elevating the pressure on parents to compete and win the rat race, for their children's sake.

System Information System Planning & Management Essay

System Information System Planning & Management - Essay Example The methodology section entails different mechanisms through which the company will employ to achieve the info for success. The report findings will provide the actual issues for analysis. There will be discussion of the issues and conclusion basing on the rationale. Finally, the recommendations will be suggested to allow for the actual specifications of the report stipulations and measures for improvements. Introduction GLM is a company that deals with the production of a large range of small products made from plastics and their customization. The business has managed to hire competent personnel who have in turn availed viable ideas that have seen the business navigate challenges and manifest excellent performance. The Greens Lime Mouldings (GLM is a business that began as a single entity, but has experienced significant economic revolution through better service offerings to the clients. The business deals in the production of plastic products through the involvement of an appropr iate technology. The systems incorporate persons, technology and data. The information systems are essential in the in provision of options for decision-making. The business targets full satisfaction of the workers through provision of best services on time. The objectives of the report an the business; i. To provide excellent services to the customers ii. To lead in innovation of products iii. To operate in the global scope iv. To utilize best technologies in its operations The Mission Statement To provide the best production and information system services in the globe. The vision statement To provide the best products with a commitment to competence and life- changing services which are critical whole the world through the application of appropriate technology. Even though the company has strategized and formulated the procedures, the company requires clear understanding on the impacts of deviations from its stipulations. The company cannot attain its objectives without strict fo llow up of the set policies. Nonetheless, there are other factors that have to be regarded to as being potential and without their considerations there cannot be significant improvements, instead, there can be decline in the business performance. Considering the role of IS/IT in the enterprise The information technology and the information systems fit in all departments of the company. The information systems help in the improvement of management. For instance, information management systems assist in the decision making process of the business after a critical evaluation of the prevailing situation. The transaction processing systems assist the company’s billing systems in obtaining and disbursing payment to different individuals or companies. The negotiation support systems involve in he exchange of direct information and from the company and into the business. The information technology provides efficiency to individual and improves the accuracy of the operations in the bu siness. A description of your choice of the 3 most important areas of technology for GLM’s business and the benefits and opportunities provided by each of the technologies in relation to GLM’s information systems strategy and aligned business strategy Mobile Technologies Mobile technologies refers to variant types of cell communication know -how. The mobile technology has transformed rapidly in the past few years. The GPS connection device has also enable the connection has

Which factors affect one's chances of experiencing poverty during Essay

Which factors affect one's chances of experiencing poverty during one's lifetime - Essay Example Furthermore, statistics and studies have shown that unfortunately the children that grow up with parents who are married, working, and religious, are also more likely to face experiencing poverty as adults. Obviously this is a very important and critical matter, and this is why it is so important to make sure that every issue within this matter is discussed thoroughly and properly. There are many different perspectives that will be taken on this issue as well, and that includes New Right, Liberal, and Feminist, as each of these is incredibly important in its own right and thus needs to be included in the standpoint in regards to this subject matter. This is what will be dissertated in the following. Poverty is a very serious issue, and in order to be able to find out how it applies itself, we truly must determine as to where it actually begins, and the quite obvious answer to that would be in childhood. After all, things that take place during childhood tend to carry on throughout a person’s life, and so this explains quite well as to why issues that took place during one’s childhood would highly affect their chances of experiencing poverty later on in their life. One of the most apparent factors of all is the living environment for children, as when children are living in an unstable environment the family is that much less likely to have stable income of money, and thus the children are more susceptible to living in poverty. Using data from the U.S. Department of Education’s National Education Longitudinal Study (NELS) of 1988, we see that â€Å"eighth graders who were living apart from their biological fathers had an expected poverty rate of 16.6 percen t when they were twenty-five. In contrast, the poverty rate for eighth graders who were living with their fathers was 9.9 percent† (The Future of Children, 2007). Therefore, we can quite clearly see from this that there is an incredibly powerful

Against Euthanasia Essay Example for Free

Against Euthanasia Essay Freedom is defined as the power to determine action without restraint . Given this definition, is the practice of euthanasia morally justifiable or wrong? The debate of freedom arises. Euthanasia is acknowledged as a mercy killing. It is the act of putting to death painlessly or allowing to die, as by withholding extreme medical measures, a person or animal suffering from an incurable, esp. a painful, disease or condition. This begs the question: does an individual have the right to decide to take another individuals life? Religious groups would ultimately argue euthanasia is a crime against life. (Citation?)The issue of morality and ethnics are proposed. Is it moral to kill someone to take them out of their pain, as opposed to letting them live suffering? This is when spirituality comes into opposition with human rights. Euthanasia is a controversial issue that compares ones quality of life to ethics. It can be viewed as a form of suicide or a form of being merciful. Even so, does humanity have the right to determine if someone should die or not? Those who are governed by a faithful belief may see euthanasia as practiced against gods will. However, others may believe mankind has the choice over their own lives (Remove comma) and that the belief of god is a theory. Economic costs and human resources are legitimate arguments as to why euthanasia may be an acceptable option. Yet, could financial problems cause one to consent under pressure? Euthanasia denotes good death in Greek. This begs the question: does a good death exist? Despite it being acknowledged as painless, arguably it is still murderous. Society is forbidden to commit murder, making euthanasia contradictive, since it is allowing one to take the life of another. (Perhaps it may be helpful here to define murder.) Medically, euthanasia is the norm and portrayed as a gracious practice. Morally, it is dissipated and seen as an immoral exercise. Even though euthanasia is a merciful killing, it does not change the fact that it is murder. This practice is unethical and unrighteous. It should be internationally forbidden and prohibited. In 1999, Dr. Jack Kevorkian was sentenced to a 10-25 year prison term for giving a lethal injection to Thomas Youk, a man who was in the final stages of amyotrophic . (Perhaps here you can explain a little bit about the disease, i.e. what it does, what this mans life was like, what kind of pain he was in, what his future (if any) would hold.) Kevorkian saw his actions as a deed. Kevorkian stated that he has helped more than 130 people since 1990. The defense party focused on the issues surrounding euthanasia, while the prosecution concentrated on Dr.Kevorkians actions associated with Michigans laws. The prosecutor stated, This case is about what Jack Kevorkian did, and what he did under the law under the state of Michigan is commit murder. This trail did not touch base on the political aspect of euthanasia, but on the ethnical side. Thomas Youk videotaped himself consenting Dr. Kevokian to take his life, yet Dr. Kevokian was still charged with committing a crime. This is proof euthan asia is wrongful. There is no difference between Dr. Kevorkian and a medical surgeon when it comes to taking a life; the practice is still murderous. The court found him guilty since his actions were unlawful; meaning in general euthanasia can arguably be found a crime. A similar case in Saskatchewan occurred when Robert Latimer murdered his severely disabled daughter, Tracy, on October 24th, 2008. The reasoning for Latimers immoral act was he could not bear to witness his daughter suffering from a severe form of cerebral palsy. He killed her by placing her in the back of his Chevy pickup, ran a hose from the exhaust to the cab, and watched her die. Latimer was convicted on November 4, 1993 of first-degree murder. The following year he was convicted of second-degree murder. This begs a question: what is the difference between Latimers actions, killing his daughter who suffers  from excruciating pain, and a doctor who was given permission from a loved one to kill an individual who is also suffering from a brutal pain? A doctor must receive authorization to kill a patient who is overly sick. Doesnt Latimer have the right to take his own daughters life, since a doctor would have had to ask him anyways to have the right to kill Tracy? Latimer supposedly saved his daughter from being in pain, which is the same reason why many individuals chose to give permission for those who are not physically in good health to undergo euthanasia. His methods were the same as a person with a medical degree. He watched an innocent individual die. Latimer was punished since his act was seen as wrongful. So why it is that euthanasia is seen as merciful killing? Many thought Latimers behavior could be compared to the act of euthanasia, since it’s perceived as a compassionate homicide. How could a man who watches his daughter die is seen as a merciful killing? Obviously it was not, which is why he was sentenced for second degree murder. Are you suggesting that these decisions be taken out of the hands of qualified medical personnel? You could make reference to the qualifications of docto rs in these situations; it could contribute to your essay. John Pearson, born in June 1980 in Derby City Hospital, was diagnosed with Downs syndrome (http:// http://news.bbc.co.uk/2/hi/health/2600923.stm.) and was left in the care of a specialized consulting pediatrician, Dr. Arthur. Three days later, Pearson was found dead. Dr. Arthur was later charged with the babys murder. He was allegedly asked by the parents to take the life of this child, whom he killed by starvation. In November 1981, Dr. Arthur was acquitted of murder (http://news.bbc.co.uk/2/hi/health/2600923. stm), due to him taking the life of a child with the parents’ consent. (If he was acquitted of murder, you cannot call him a murderer. You can refer to him as an alleged murderer, but because he was not convicted, anything else would be inappropriate.) This is proof that the practice of euthanasia is causing other individuals to believe they have the right to take the life of someone in their family whom is suffering from a disease or disability. (Are you suggesting thi s newborn was able to make their own decision as to whether or not they wanted to live with this disability? If so, why do we not allow children to make more decisions at a younger age? Why not let elementary students vote, for instance, or enter into their own legal contracts? Make sure your stances are logical and well thought out. The more times you allow an opposing view to poke holes in your statements the more difficult it will be for you to stay credible.) John Pearson may have not been as privileged (Remove comma) as others in society due to his disability, but he did not deserve to die. It can be argued that euthanasia is form of suicide. This outrages religious groups who see this practice as immoral (Remove comma) and against the word of god. Suicide denotes the killing of one self.(Citation?) Euthanasia, a majority of the time, occurs when individuals decide to medically kill someone who is undergoing crucial agony. This practice can be perceived rather as murder. Murder means to cause to die; put to death, usually intentionally or knowingly (http://www.thefreedictionary.com/commit/suicide). (This statement and the one previous should be placed earlier on in the essay. You can then make reference to it here if necessary.) Either or, euthanasia is condemned by many religious laws. The Jewish perspective states that instances of euthanasia should be dealt with as such: any form of active euthanasia is strictly prohibited and condemned as plain murder(http://www.aisha.com/societywork/science /Doctor-Assisted_Suicide.asp). Talmudic and Rabbinic sources state, One who is in a dying condition is regarded as a living person in all respect (Talmud Smachot 1:1). The Jewish religion also believes: One may not close the eyes of a dying person (Talmud Smachot 1:1). Rabbi Merri interprets this saying as, It is to be compared to a sputtering candle which is extinguished as soon a person touches it so too, whoever closes the eyes of a dying person is compared to have taken the soul (http://www.aisha.com/societywork/ science /Doctor-Assisted_Suicide.asp). Islam also criticizes euthanasia. Muslims see life as being sacred, since Allah provided it to them. Allah decides how long each human being will live, not a doctor. It states in the Quran 5:32, If anyone kills a person unless it be for murder or spreading mischief in the land it would be as if he killed the whole people (http://www.bbc.co.uk/religion/religions/islam/islamethnics/ euthanasia. shtml). The Quran 3:145 clearly establishes, And no person can ever die except by Allahs leave and at an appointed term (http://www.bbc.co.uk/religion/religions/islam/islamethnics/euthanasia. shtml). This rule also applies to Christianity. The Catechism of the Catholic Church (2003) states: All forms of suicide and euthanasia remain strictly prohibited, but questions of moral culpability and eternal salvation are left open (http://www.acu-cell.com/suicide.html). In the Orthodox Church decisively is in opposition of euthanasia and considers it as, as form of suicide on the part of the individual, and a form of murder on a part of others who assist in this practice, both of which are seen as sins. The Church does not expect that excessive and heroic means must be used at all costs to prolong dying, as has now become possible through technical medical advances (http://www.acu-cell.com/suicide.html). Depending on your citation style requirements, this quote should probably be in block format since it is longer than 40 words.) Internationally, there are over 3.3 billion Christians, Muslims, and Jews who are opposed to euthanasia (http://www.spaceandmotion.com/Theology-World-Religions.htm) . However, Secular/Nonreligious/Agnostic/Atheist groups make up 850 million of the worlds population (http://www.atheistempire.com/reference/stats/index.php). Atheists question the truth in religion; therefore they do not recognize euthanasia as a sin, or as a form of suicide. (Are you suggesting that all of these people believe euthanasia is a positive thing?) Even though theology is governed by powerful messages, it’s still not a reliable source. Religion is still seen as just a theory, since it is just a belief. Humanity has not yet seen or conversed with a higher power, so the religious information provided to mankind has not been proven. On January 11, 2003 Dr. David Jerrrey wrote a letter to the editor of the newspaper the Financial Times. In the letter he stated, Terminally ill patients often fear being a burden to others and may feel they ought to request euthanasia to relieve their relatives from distress (cite). Given economic situations, many patients and families of the patients feel pressured by medical figures to turn to euthanasia. Michael Prowse wrote in the newspaper the Financial Times, published January 4th 2003, If euthanasia became socially acceptable, the sick would no longer be able to trust either doctors or their relatives: many of those earnestly counseling a painless, dignified death would be doing so mainly on financial grounds. Euthanasia would become a euphemism for assisted murder (Michael Prowse). Many feel psychologically pressured to consent to voluntary euthanasia because they maybe a financial burden to their loved ones. However, those who do personally require euthanasia without being forced will allow this practice to continue. Humanity has the choice of fundamental principles, being they believe they should be allowed to make the decision if they want to die, since it’s their own life. There is a shortage of hospital space, so those who have slim chances of living may feel that by them dying another who has a greater chance of life can have more attention by medical care (Michael Prowse). These arguments can be seen as a valid, which may overrule the fact that euthanasia is murderous. Individuals may sympathize with those who are in great pain, and feel they cannot continue on with life. Despite these intellectual reasons, euthanasia is a form of murder, and a practice that should be banned. Euthanasia is a deliberate act of killing. Since the beginning of mankind our world has been exposed to laws that forbid murder. In the Ten Commandments, thou shall not murder, (Citation?) has influenced recent laws. This ethnical issue must be solved, but with the help of communities (Remove comma) and countries. There are two forms of euthanasia that must be focussed on: active euthanasia, or inducing or assisting in the death of a person, who is undergoing intense suffering and who has no practical hope of recovery (cite), and passive euthanasia, which is withholding life-saving equipment or treatment, by medical equipment I mean surgeries, chemotherapy and other treatments beyond basic food, water, warmth, care and personal attention (cite). Each form must be individually looked at. Passive euthanasia is what society must accept. Active euthanasia contradicts the law (Remove comma) and commandments. The money that is being put into cloning and other scientific practices should be put towards cures that can stop the diseases which cause individuals to turn euthanasia. The truth is mankind continues to play the role of god. Our world is presently exposed to cloning; organ transplants, etc. (If this is a strictly formal essay, refrain from using etc. Rewrite your sentence to something like Our world is presently exposed to such morally compromising issues such as cloning and organ transplants.) This allows one to think that euthanasia will become a dominant practice internationally. More will rely on it (Remove comma) and see it as a consideration in their decision whether or not they want to live or die. Religion does contain truth. Only nature should have the power to decide when it is our time to go, but as technology continues to advance it provides mankind with the choice to determine one’s life or death. Illnesses do cause families grief and to suffering, but if humanity started to believe in faith again, maybe euthanasia would have to significance, (This is not a logical sentence; please clarify.) since we just lack hope. A doctor diagnoses a patient with cancer and automatically the patient senses death. What happened to believing in miracles and fate? Maybe mankind no longer believes in miracles simply because our world continues to destruct by war, poverty, and violence. We now turn to an easy way out, since the fight seems too long. Euthanasia is just a way to control our population and economy. It is a homicidal act that should be immediately stopped internationally. Dr. Jack Kevorkian, Robert Latimer, and Dr. Arthur (Remove comma) were all charged with murder because they chose to practice euthanasia without medical consent. These three men were charged with murder, which proves this operation is murderous (Remove semi colon) despite it having the word medical behind it. If a doctor performs euthanasia on a normal individual it should be equally weighed because it is a deliberate act of murder. Theology condemns euthanasia simply due to it being considered a form of suicide or murder. Individuals are pressured into euthanasia because they are sick and their life becomes less important than one that is healthy.

Investment Avenues in India Essay Example for Free

Investment Avenues in India Essay ABSTRACT:Each investment alternative has its own strengths and weaknesses. Some options seek to achieve superior returns (like equity), but with corresponding higher risk. Other provide safety (like PPF) but at the expense of liquidity and growth. Other options such as FDs offer safety and liquidity, but at the cost of return. Mutual funds seek to combine the advantages of investing in arch of these alternatives while dispensing with the shortcomings.Indian stock market is semi-efficient by nature and, is considered as one of the most respected stock markets, where information is quickly and widely disseminated, thereby allowing each securitys price to adjust rapidly in an unbiased manner to new information so that, it reflects the nearest investment value. And mainly after the introduction of electronic trading system, the information flow has become much faster. But sometimes, in developing countries like India, sentiments play major role in price movements, or say, fluctuations, where investors find it difficult to predict the future with certainty. Some of the events affect economy as a whole, while some events are sector specific. Even in one particular sector, some companies or major market player are more sensitive to the event. So, the new investors taking exposure in the market should be well aware about the maximum potential loss, i.e. Value at risk.It would be good to diversify ones portfolio to include equity mutual funds and stocks. The benefit of diversification are that while risk exposure from a particular asset may not be very high, it would also give the opportunity of participating in the party in the equity markets- which may have just begun- in a relatively safe manner(than investing directly into stock markets). Mutual funds are one of the best options for investors to choose from. It must be realized that the performance of different funds varies time to time. Evaluation of a fund performance is meaningful when a fund has access to an array of investment products in market. An investor can choose from a variety of funds to suit his risk tolerance, investment horizon and objective. Direct investment in equity offers capital growth but at high risk and without the benefit of diversification by professional management offered by mutual funds.INTRODUCTION:Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. Banks are considered as the safest of all options, banks have been the roots of the financial systems in India. Promoted as the means to social development, banks in India have indeed played an important role in the rural upliftment. For an ordinary person though, they have acted as the safest investment avenue wherein a person deposits money and earns interest on it. The two main modes of investment in banks, savings accounts and fixed deposits have been effectively used by one and all.However, today the interest rate structure in the country is headed southwards, keeping in line with global trends. With the banks offering little above 9 percent in their fixed deposits for one year, the yields have come down substantially in recent times. Add to this, the inflationary pressures in economy and one has a position where the savings are not earning. The inflation is creeping up, to almost 8 percent at times, and this means that the value of money saved goes down instead of going up. This effectively mars any chance of gaining from the investments in banks. Just like banks, post offices in India have a wide network. Spread across the nation, they offer financial assistance as well as serving the basic requirements of communication. Among all saving options, Post office schemes have been offering the highest rates. Added to it is the fact that the investments are safe with the department being a Government of India entity. So, the two basic and most sought after features, such as return safety and quantum of returns was being handsomely taken care of. Though certainly not the most efficient systems in terms of service standards and liquidity, these have still managed to attract the attention of small, retail investors. However, with the government announcing its intention of reducing the interest rates in small savings options, this avenue is expected to lose some of the investors.Public Provident Funds act as options to save for the post retirement period for most people and have been considered good option largely due to the fact that returns were higher than most other options and also helped people gain from tax benefits under various sections. This option too is likely to lose some of its sheen on account of reduction in the rates offered. Another often-used route to invest has been the f ixed deposit schemes floated by companies. Companies have used fixed deposit schemes as a means of mobilizing funds for their operations and have paid interest on them. The safer a company is rated, the lesser the return offered has been the thumb rule. However, there are several potential roadblocks in these. First of all, the danger of financial position of the company not being understood by the investor lurks. The investors rely on intermediaries who more often than not, dont reveal the entire truth. Secondly, liquidity is a major problem with the amount being received months after the due dates. Premature redemption is generally not entertained without cuts in the returns offered and though they present a reasonable option to counter interest rate risk (especially when the economy is headed for a low interest regime), the safety of principal amount has been found lacking. Many cases like the Kuber Group and DCM Group fiascoes have resulted in low confidence in this option. The options discussed above are essentially for the risk-averse, people who think of safety and then quantum of return, in that order. For the brave, it is dabbling in the stock market.Stock markets provide an option to invest in a high risk, high return game. While the potential return is much more than 10-11 percent any of the options discussed above can generally generate, the risk is undoubtedly of the highest order. But then, the general principle of encountering greater risks and uncertainty when one seeks higher returns holds true. However, as enticing as it might appear, people generally are clueless as to how the stock market functions and in the process can endanger the hard-earned money.For those who are not adept at understanding the stock market, the task of generating superior returns at similar levels of risk is arduous to say the least. This is where Mutual Funds come into picture.Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly. Each unit of any scheme represents the proportion of pool owned by the unit holder (investor). Appreciation or reduction in value of investments is reflected in net asset value (NAV) of the concerned scheme, which is declared by the fund from time to time. Mutual fund schemes are managed by respective Asset Management Companies (AMC). Different business groups/ financial institutions/ banks have sponsored these AMCs, either alone or in collaboration with reputed international firms.Several international funds like Alliance and Templeton are also operating independently in India. Many more international Mutual Fund giants are expected to come into Indian markets in the near future.Investment alternatives in India * Non marketable financial assets: These are such financial assets which gives moderately high return but can not be traded in market.* Bank Deposits * Post Office Schemes * Company FDs * PPF * Equity shares: These are shares of company and can be traded in secondary market. Investors get benefit by change in price of share and dividend given by companies. Equity shares represent ownership capital. As an equity shareholder, a person has an ownership stake in the company. This essentially means that the person has a residual interest in income and wealth of the company. These can be classified into following broad categories as per stock market:* Blue chip shares * Growth shares * Income shares * Cyclic shares * Speculative shares * Bonds: Bonds are the instruments that are considered as a relatively safer investment avenues.* G sec bonds * GOI relief funds * Govt. agency funds * PSU Bonds * RBI BOND * Debenture of private sector co. * Money market instrument: By convention, the term money market refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year.* T-Bills * Certificate of Deposit * Commercial Paper * Mutual Funds- A mutual fund is a trust that pools together the savings of a number of investors who share a common financial goal. The fund manager invests this pool of money in securities, ranging from shares, debentures to money market instruments or in a mixture of equity and debt, depending upon the objective of the scheme. The different types of schemes are* Balanced Funds * Index Funds * Sector Fund * Equity Oriented Funds * Life insurance: Now-a-days life insurance is also being considered as an investment avenue. Insurance premiums represent the sacrifice and the assured sum the benefit. Under it different schemes are:* Endowment assurance policy * Money back policy * Whole life policy * Term assurance policy * Real estate: One of the most important assets in portfolio of investors is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following types of real estate:* Agricultural land * Semi urban land * Farm House * Precious objects: Investors can also invest in the objects which have value. These comprises of:* Gold * Silver * Precious stones * Art objects * Financial Derivatives: These are such instruments which derive their value from some other underlying assets. It may be viewed as a side bet on the asset. The most important financial derivatives from the point of view of investors are:* Options * FuturesDirect equity vs. mutual funds1) Equity share/Direct investment 2) Mutual funds, a brief introduction 3) Equity Fund 4) Difference between direct equity and mutual fundEquity share/Direct investmentEquity shares: These are shares of company and can be traded in secondary market. Investors get benefit by change in price of share or dividend given by companies. Equity shares represent ownership capital. As an equity shareholder, a person has an ownership stake in the company. This essentially means that the person has a residual interest in income and wealth of the company. These can be classified into following broad categories as per stock market:* Blue chip shares- Shares of large, well established, financially strong companies with an impressive record of earnings and dividends.* Growth shares-Shares of companies that have fairly entrenched positions in a growing market and which enjoy an above average rate of growth as well as profitability. * Income shares-Share of companies that have fairly stable operations, relative limited growth opportunities, and high dividend payout ratios.* Cyclic shares – Share of companies that have a pronounced cyclicality in their operations.* Defensive shares- Shares of companies that are relatively unaffected by the ups and downs in general business conditions.* Speculative shares- Shares of companies that tend to fluctuate widely because there is a lot of speculative trading in them.Mutual Funds: A brief introductionA Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the schemes are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.INCEPTION OF MUTUAL FUNDS IN INDIAThe history of mutual funds in India can be divided into 5 important phases:1963-1987The Unit Trust of India was the sole player in the industry. Created by an Act of Parliament in 1963, UTI launched its first product, the Unit Scheme 1964, which is even today the single lar gest mutual fund scheme. UTI created a number of products such as monthly income plans, children plans, equity-oriented schemes and off shore funds during this period. UTI managed assets of Rs.6,700 crores at the end of this phase.1987-1993In 1987 public sector banks and financial institutions entered the mutual fund industry. SBI mutual fund was the first non- UTI fund to be set up in 1987. Significant shift of investors from deposits to mutual fund industry happened during this period. Most funds were growth-oriented closed-ended funds. By the end of this period, assets under UTIs management grew to Rs.38,247 crores and public sector funds managed Rs.8,750 crores.1993-1996In 1993, the mutual fund industry was open to private sector players, both Indian and foreign. SEBIs first set of regulations for the industry were formulated in 1993, and substantially revised in 1996.Signifficant innovations in servicing, product design and information disclosure happened in this phase, mostly initiated by private players.1996-1999The implementation of the new SEBI regulations and the restructuring of the mutual fund industry led to rapid asset growth. Bank mutual funds were recast according to the SEBI recommended structure, and the UTI came under voluntary SEBI supervision.1999-2002This phase was marked by the rapid growth in the industry, and significant increase in market shares of private sector players. Assets crossed Rs.1,00,000 crore .The tax break offered to mutual fund in 1999 created arbitrage opportunities for a number of institutional players. Bond funds and Liquid funds registered the highest growth in this period, accounting for nearly 60% of the assets. UTIs share of the industry dropped to nearly 50%.Types of mutual funds:Open ended schemesAn open-end fund is one that is available for subscription all through the year. This type of Mutual funds does not have a predefined maturity period. The key feature is liquidity. Direct dealing is another noticeable feature. One can easily buy and sell units at Net Asset Value related prices.Close ended schemesHere maturity period is predefined usually ranging from 2 to 15 years. Investment can be done directly in the scheme at the time of the initial issue and units can be brought and sold whenever units are listed in the stock exchanges.Types of Schemes1. Equity/growth oriented Funds: Equity schemes are those that invest predominantly in equity shares of companies. An equity scheme seeks to provide returns by way of capital appreciation. As a class of assets, equities are subject to greater fluctuations. Hence, the NAVs of these schemes will also fluctuate frequently. Equity schemes are more volatile, but offer better returns.2. Balanced Funds: The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. 3. Index Funds: An Index Fund is a mutual fund that tries to mirror a market index, like Nifty or BSE Sensex , as closely as possible by investing in all the stocks that comprise that index in proportions equal to the weight age of those stocks in the index.4. Income/debt oriented Funds: These schemes invest mainly in income-bearing instruments like bonds, debentures, government securities, commercial paper, etc. These instruments are much less volatile than equity schemes. Their volatility depends essentially on the health of the economy e.g., rupee depreciation, fiscal deficit, inflationary pressure. Performance of such schemes also depends on bond ratings.1) Equity FundsAs explained earlier, such funds invest only in stocks, the riskiest of asset classes. With share prices fluctuating daily, such funds show volatile performance, even losses. However, these funds can yield great capital appreciation as, historically, equities have outperformed all asset classes. At present, there are four types of equity funds available in the market. In the increasing order of risk, these are:a) Index fundsThese funds track a key stock market index, like the BSE (Bombay Stock Exchange) Sensex or the NSE (National Stock Exchange) SP CNX Nifty. Hence, their portfolio mirrors the index they track, both in terms of composition and the individual stock weightages. For instance, an index fund that tracks the Sensex will invest only in the Sensex stocks. The idea is to replicate the performance of the benchmarked index to near accuracy. Index funds dont need fund managers, as there is no stock selection involved.Investing through index funds is a passive investment strategy, as a funds performance will invariably mimic the index concerned, barring a minor tracking error. Usually, theres a difference between the total returns given by a stock index and those given by index funds benchmarked to it. Termed as tracking error, it arises because the index fund charges m anagement fees, marketing expenses and transaction costs (impact cost and brokerage) to its unit holders. So, if the Sensex appreciates 10 per cent during a particular period while an index fund mirroring the Sensex rises 9 per cent, the fund is said to have a tracking error of 1 per cent.To illustrate with an example, assume you invested Rs 1,000 in an index fund based on the Sensex on 1 April 1978, when the index was launched (base: 100). In August, when the Sensex was at 3.457, your investment would be worth Rs 34,570, which works out to an annualised return of 17.2 per cent. A tracking error of 1 per cent would bring down your annualised return to 16.2 per cent. Obviously, lower the tracking error, the better are the index funds.b) Diversified fundsSuch funds have the mandate to invest in the entire universe of stocks. Although by definition, such funds are meant to have a diversified portfolio (spread across industries and companies), the stock selection is entirely the prerogative of the fund manager. This discretionary power in the hands of the fund manager can work both ways for an equity fund. On the one hand, astute stock-picking by a fund manager can enable the fund to deliver market-beating returns; on the other hand, if the fund managers picks languish, the returns will be far lower. Returns from a diversified fund depend a lot on the fund managers capabilities to make the right investment decisions. A portfolio concentrated in a few sectors or companies is a high risk, high return proposition.c) Tax-saving fundsAlso known as ELSS or equity-linked savings schemes, these funds offer benefits under Section 88 of the Income-Tax Act. So, on an investment of up to Rs 10,000 a year in an ELSS, one can claim a tax exemption of 20 per cent from his taxable income. One can invest more than Rs 10,000, but then he wont get the Section 88 benefits for the amount in excess of Rs 10,000. The only drawback to ELSS is that one has to lock into the scheme for three years.In terms of investment profile, tax-saving funds are like diversified funds. The one difference is that because of the three year lock-in clause, tax-saving funds get more time to reap the benefits from their stock picks, unlike plain diversified funds, whose portfolios sometimes tend to get dictated by redemption compulsions.d) Sector fundsThe riskiest among equity funds, sector funds invest only in stocks of a specific industry, say IT or FMCG. A sector funds NAV will zoom if the sector performs well; however, if the sector languishes, the schemes NAV too will stay depressed. Barring a few defensive, evergreen sectors like FMCG and pharma, most other industries alternate between periods of strong growth and bouts of slowdowns. The way to make money from sector funds is to catch these cycles–get in when the sector is poised for an upswing and exit before it slips back.2) Difference between direct equity and mutual fundsA mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and o ther fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.Investing in Mutual Fund is convenient because of two basic reasons. All investment carry risks, especially equity investment that bears larger risks, their returns are more volatile and uneven. To cut down the risk one needs to put money in several instruments rather than in one or two products. A Mutual Fund can effectively spread its investments across various sectors of the economy and amongst several products. Risk diversification is the Key. Secondly where to invest and where not to, is a specialized business. One may not have the expertise, time and resources of a well-managed fund.ADVANTAGES OF A MUTUAL FUND1. Professional ManagementQualified professionals manage money, but they are not alone. They have a research team that continuously analyses the performance and prospects of companies. They also select suitable investments to achieve the objectives of the scheme, so you see that it is a continuous process that takes time and expertise that will add value to investment. These fund managers are in a better position to manage investments and get higher returns.2. DiversificationThe clichà ©, dont put all eggs in one basket really applies to the concept of intelligent investing. Diversification lowers risk of loss by spreading money across various industries. It is a rare occasion when all stocks decline at the same time and in the same proportion. Sector funds will spread investment across only one industry and it would not be wise for portfolio to be skewed towards these types of funds for obvious reasons.3. Choice of SchemesMutual funds offer a variety of schemes that will suit investors needs over a lifetime. When they enter a new stage in life, all needed to do is sit down with investment advisor who will help to rearrange portfolio to suit altered lifestyle. 4. AffordabilityA small investor may find that it is not possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes that allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements. One can invest with a minimum of Rs. 500 in a Systematic Investment Plan on a regular basis.5. Tax BenefitsInvestments held by investors for a period of 12 months or more qualify for Capital gains and will be taxed accordingly (10% of the amount by which the investment appreciated, or 20% after factoring in the benefit of cost indexation, whichever is lower). These investments also get the benefit of indexation.6. LiquidityWith open-end funds, you can redeem all or part of investment any time you wish and receive the current value of the shares or the NAV related price. Funds are more liquid than most investments in shares, deposits and bonds and the process is standardized, making it quick and efficient so that you can get cash in hand as soon as possible. 7. Rupee Cost AveragingThrough using this concept of investing the same amount regularly, mutual funds give investor the advantage of getting the average unit price over the long-term. This reduces risk and also allows you to discipline self by actually investing every month or quarterly and not making sporadic investments.8. The Transparency of Mutual FundsThe performance of a mutual fund is reviewed by various publications and rating agencies, making it easy for investors to compare one to the other. Once you are part of a mutual fund scheme, you are provided with regular updates, for example daily NAVs, as well as information on the specific investments made and the fund managers strategy and outlook of the scheme.9. Easy To AdministerMutual funds units in modern times are not issued in the form of certificates, with a minimum denomination rather they are issued as account statement switch a facility to hold units in fraction upto 4 decimal points.10. Highly RegulatedThe governing of mutual funds by SEBI ensures that the fund activities are carried out in the best interest of the investors. DISADVANTAGES OF MUTUAL FUNDSThe following are some of the reasons which are deterrent to mutual fund investment: * Costs despite Negative Returns — Investors must pay sales charges, annual fees, and other expenses regardless of how the fund performs. And, depending on the timing of their investment, investors may also have to pay taxes on any capital gains distribution they receive — even if the fund went on to perform poorly after they bought shares. * Lack of Control — Investors typically cannot ascertain the exact make-up of a funds portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. * Price Uncertainty — with an individual stock, you can obtain real-time (or close to real-time) pricing information with relative ease by checking financial websites or by calling your broker. You can also monitor how a stocks price changes from hour to hour — or even second to second. By contrast, with a mutual fund, the price at which you purchase or redeem shares will typically depend on the funds NAV, which the fund might not calculate until many hours after youve placed your order. In general, mutual funds must calculate their NAV at least once every business day, typically after the major U.S. exchanges close.Some mutual fund schemes with the point of attractiveness to investors -Comparison of best performing mutual funds with index Equity schemes:Equity schemes are those that invest predominantly in equity shares of companies. An equity scheme seeks to provide returns by way of capital appreciation. As a class of assets, equities are subject to greater fluctuations. Hence, the NAVs of these schemes will also fluctuate frequently. Equity schemes are more volatile, but offer better returns. These can be further classified into three types:1. Diversified Equity schemes:The aim of diversified equity funds is to provide the investor with capital appreciation over a medium to long period (generally 2 – 5 years). The fund invests in equity shares of companies from a diverse array of industries and balances (or tries to) the portfolio so as to prevent any adverse impact on returns due to a downturn in one or two sectors.2. Equity Linked Saving Schemes (ELSS):These schemes generally offer tax rebates to the investor under section 88 of the Income Tax law. These schemes generally diversify the equity risk by investing in a wider array of stocks across sectors. ELSS is usually considered a variant of diversified equity scheme but with a tax friendly offer3. Sectoral Fund/ Industry Specific schemes:Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc. These are ideal for investors who have already decided to invest in particular sector or segment. Sectoral Funds tend to have a very high risk-reward ratio and investors should be careful of putting all their eggs in one basket.CONCLUSION:In the current scenario, investing is very important and investing in stock markets is a major challenge ever for professionals. The young people should start investing earlier so that they can reap the benefits of investing in future. People should keep their eye open and keep updating themselves about various investment avenues so that they can get safe returns. BIBILIOGRAPHY: 1. Anjan Chakrabarti and Harsh Rungta, 2000, Mutual Funds Industry in India :An in-depth look into the problems of credibility, Risk and Brand ,The ICFAI Journal of Applied Finance, Vol.6, No.2, April, 27-45. 2. Bhalla V.K., Investment Management, S.Chand Company Ltd., Eleventh Edition, 2004 3. Bodie, Kane, Marcus Security Analysis and Portfolio Management, 5th edition Tata Mc Graw hill publications. 4. Customer Orientation in Designing Mutual Fund Products, -An Analytical Approach to Indian Market Preferences, Dr Tapan K Panda, Faculty Member, Indian Institute of Management, Lucknow. 5. FISHER AND JORDEN (2000): Security analysis and portfolio management, Prentice hall. 6. L.M.BHOLE (2005) : Financial institutions and market, Tata Mcgraw – hill. 7. Preparatory Books For AMFI Exam ;NJ Investment India Pvt. Ltd. Edition June 09 8. Review Of Marketing Research, Volume 5: K. Naresh Malhotra: 9. V.A.AVADHANI (2006): Security analysis and portfolio management, Himalaya publishing house. 6thEdition. |

Benefits and problems concerning traditional approach to budgeting

Benefits and problems concerning traditional approach to budgeting In order to advise two different businesses about the benefits and problems associated with traditional approach to budgeting and budgetary control, i have collected and compiled the information regarding budgeting and divided it into different parts so that the reader may easily understand . 1.INTRODUCTION : A budget is a planning and controlling tool for an oraganisation.This tool can work effectively only when it is used with due care.It is not only the a cost monitoring mechanism but also an integral part of an organisations planning and control activities.It aims at achieving organisational objectives and motivating the personnel concerned.For the success of budgetary system gathering the essential informationand choosing an appropriate budgetary system etc.are necessary. The ideal budegting system is one that encourages goal congruence(i.e. a situation where the personal goals of the employees match the oraganisational goals).Ensuring the greater participation of the supervisory level in the management process can ensure goal congruence. Budgets may be of different types to suit the different practices followed by different organisations.An organisation using a conventional systemof budgeting may somtimes need to switch over to another to suit its requirements.Changing a budegtary system is not a simple task.An oraganisation has to face certain difficultiesin the form of resistance to change by the personnel of the organisation,changes required in the existing support systems etc., inorder to change its budgetary system.The Success of a budget is also largely dependant on the level of accuracy in estimating the revenues and costs for the budget period.There are several statistical techniques which may prove useful in forecasting the figures to be incorporated in budgets. 2. TRADITIONAL BUDGETING: 2.1. Introduction: First of all we begin this topic with the simple definition of budget.In short budget can be defined as Quantitative economic plan made with regard to time. Therefore, for something to be characterised as a budget it must comprise the quantities of economic resources to be allocated and used, it has to be expressed in economic i.e. monetary terms, it has to be a plan not a hope or a forecast but an authoritative intention, and it must be made within a certain period of time (Harper, 1995, p. 318). Only a plan that has such characteristics can be called a budget. However, if a budget is looked upon in its wider context, it can be defined as a management tool that puts executives in control of the financial health of their company. It is an objective measure of the financial structure of companys operation and a tool that forces management to be accountable in a structured and objective way. Budgets as management tools by themselves are neither good nor bad. How managers administer budgets is the key to their value. When administered wisely, budgets facilitate planning and resource allocation and help to enumerate, itemize, dissect and examine all of the products and services that a company offers to customers (Seer, 2000, p. 187). In short and taken at its simplest level, a budget is a mathematical exercise, but in reality it is much, much more than numbers on spreadsheets, which is what following text will definitely show. The purpose of budgeting is that it gives management an idea of how well a company is meeting their income goals, whether or not expenses are in line with predicted levels, and how well controls are working. Properly used, budgeting can and should increase profits, reduce unnecessary spending, and clearly define how immediate steps can be taken to expand markets (Thomsett, 1988, p. 5). In order to achieve this, management needs to build a budgeting system, the major objectives of which are to (Viscione, 1984, p. 42): Set acceptable targets for revenues and expenses. Increase the likelihood that targets will be reached. Provide time and opportunity to formulate and evaluate options should obstacles arise. Since budgeting as a process is very complex, it comes as no surprise that budgets are trying to fulfil numerous functions such as (Harper, 1995, p. 321, and Churchill, 1984, p. 162): Planning a budget establishes a plan of action that enables management to know in advance the amounts and timing of the production factors required to meet desired level of sales. Controlling a budget can be used to help an organization reach its objectives by ensuring that each of the individual steps are taken as planned. Coordinating a budget is where all the financial components of an organization Individual units, divisions, and departments are assembled into a coherent master picture that expresses the organizations overall operational objectives and strategic goals. Communicating by publishing the budget, management explicitly informs its subordinates as to what exactly they must be doing and what other parts of the organization will be doing. A budget is designed to give managers a clear understanding of the companys financial goals, from expected cost savings to targeted revenues. Instructing a budget is often as much an executive order as an organizational plan since it lays down what must be done. It may, therefore, be regarded by subordinates as a management instruction. Authorising if a budget is a management instruction then conversely it is an authorisation to take budgeted action. Motivating in that a budget sets a target for the different members of the organization so that it can act to motivate them to try and attain their budgeted targets. Performance measuring by providing a benchmark against which actual performance can be measured, a budget clearly plays a crucial role in the important task of performance measurement. Decision-making it should never be assumed that a budget is set in concrete and when changing course a well-designed budget is a very useful tool in evaluating the consequences of a proposed alternative since the effect of any change can be traced throughout the entire organization. Delegating budgets delegate responsibility to the managers who assume authority for a specified set of resources and activities. In this way budgets emphasise even more the existing organizational structure within the company. Educating the educating effect of a budget is perhaps most evident when the process is introduced in a company. Operating managers learn not only the technical aspects of budgeting but also how the company functions and how their business units interact with others. Better management of subordinates a budget enhances the skills of operating managers not only by educating them about how the company functions, but also by giving them the opportunity to manage their subordinates in a more professional manner. The requirements that all these functions impose upon a budget make it difficult for one system to meet them all. It is precisely because these requirements differ, that role conflicts in budgeting system arise. These need to be appropriately dealt with so that dysfunctional behaviour like budget padding or other damaging budget games for the company do not appear. Since there are three major roles for any budgeting system, at least three conflicts may arise (Barrett, Fraser, 1977, p. 141): Planning versus motivation For a budget to be most effective in the planning role, it should be based on a realistic assessment of the companys operating capabilities and on managements judgment about what is most likely to happen in the future. Yet this kind of budget runs the risk of setting targets so low that motivation is adversely affected since to motivate properly, budget objectives should be set higher than those for planning and be difficult yet attainable. On the other hand, these difficult yet attainable objectives lead to an overly optimistic budget and run the risk of falling short and under using company resources. Motivation versus evaluation There is a widely held belief that budget objectives should be set as fixed standards against which performance can be judged. Managers are also likely to be more committed to achieving this kind of objective since they know that the performance standards by which they are evaluated are not constantly changing. On the other hand, managers motivation can be impaired by rigid application of a fixed standard philosophy which doesnt consider the impacts of uncontrollable or unforeseeable events and doesnt allow for their removal from budget standards. Planning versus evaluation The planning roles requirement of providing realistic assessment of future prospects can conflict with the need to eliminate the effects of uncontrollable or unforeseeable environmental variables from the budget used for evaluation purposes. Yet, because they are separated in time, the conflict between these requirements is considered a minor one since it can be considerably reduced if appropriate adjustments are done at the end of the budget period. As can be seen in the previous paragraph, functions that typical budgets want to cover are very wide. It comes then as no surprise that those budgets are being used today in practice for many purposes. Bunce, Fraser and Woodcocks (1995) survey showed that general uses of budgets can be divided into financial and operational type of uses. Figure 2 clearly indicates that, of the various uses of budgeting for management, the most important are those financially oriented like the use of budgets for financial forecast, cost control, cash flow management, and capital expenditure supervision. The operational management uses of budgeting have been less common but the interviewed companies have concluded that, in todays business environment, they are of growing importance. The need to improve performance is intensifying to the point that it is no longer enough just to control costs, but That company must also pay attention to things like strategy, communication, and employee evaluation. These are purposes for which budgets have not been used so much in the past. As stated in the opening definition, budgets are plans set for a certain period of time, such as a month, quarter, and year and so on. This time period is then usually broken into smaller sub periods. The most frequently used budgets are annual budgets that are subdivided by months for the first quarter and by quarters for the remainder of the year. Of course, actual time periods for which budgets are made depend mostly on their purpose and use, and it is solely the decision of individual companies as to what time periods will be utilized for their budgeting process. 2.2. History of budgets: The English word budget stems from the French word bougette and the Latin word bulga which was a leather bag or a large-sized purse which travellers in medieval times hung on the saddle of their horse. The treasurers bougette was the predecessor to the small leather case from which finance ministries even today in countries like Great Britain and Holland present their yearly financial plan for the state. So after being used to describe the word wallet and then state finances, the meaning of the word budget in 19th century slowly shifted to the financial plan itself, initially only for governments and then later for private and legal entities (Hofstede, 1968, p. 19). It was only then that budgets started to be considered as financial plans and not just as money bags. The use of budgets as financial planning and control tools for business enterprises is historically a rather young phenomenon. In the US, early budgetary principles in companies were mostly derived from the budget techniques in government. The other source of budgetary principles for business in the US was the Scientific Management Movement, which in the years between 1911 and 1935 conquered the US industry. Many historians agree that early budgeting systems can be seen as a logical extension of Taylors Scientific Management from the shop floor to the total enterprise. However, it was not until the depression years after 1930 that budget control in US companies started to be implemented on a large-scale.Budgets with their focus on cost control simply became a perfect management tool for that period of time (ibid., p. 20). In Europe the idea of using budgets for business was firstly formulated by the French organization pioneer Henri Fayol (1841-1925). There was, however, little appli cation in practice. Another practical stimulus came from the ideas of the Czech entrepreneur Thomas Bata (1876-1925) who introduced the so-called departmental profit-and-loss-control as a tool for decentralizing his international shoe company into a federation of independently run small businesses. Nevertheless, the main inducement for the development of budgets and their implementation in European companies came from across the Atlantic in the years following the Second World War (ibid., p. 21). Companies like Du Pont and General Motors in the U.S., Siemens in Germany, and Saint Gobain and Elà ©ctricità © de France in France, which pioneered the M-form (multidivisional) organizational structure in the 1920s, first started to use budgets to support their rapid growth as they expanded into new products and markets. This was to help them to reduce the complexity of managing multiple strategies (Hope, Fraser, 1997, p. 20). The enormous diversity in the product markets served by these vertically integrated corporations required new systems and measures to coordinate dispersed and decentralized activities. In this kind of environment, budgets and ROI measure rightly played a key role in permitting central management to coordinate, motivate and evaluate the performance of their divisional managers, and perform a proper allocation of internal capital and resources (Johnson, Kaplan,1991, p. 11). However, it is was only in the 1960s that accountants started adding to budgets other functions (like management performance evaluation and motivation) in addition to those functions for which they had originally been devised planning and control (Hope, Fraser,1999b, p. 50). In that period, budgets became the central and most important activity within management accounting or in the words of Horngren, Foster and Datar: the most widely used accounting tool for planning and controlling organizations (2000, p. 178). This is exactly how budgets have remained to this day. The only thing that has changed in the meantime is the competitive environment in which todays companies operate and which has provoked many discussions about budgets disadvantages and their alternatives, some of which will be presented in later parts of this assessment. 2.3. Budgeting Process: The process of budgeting generally involves an iterative cycle which moves between targets of desirable performance and estimates of feasible performance until there is, hopefully, convergence to a plan which is both feasible and acceptable (Emmanuel, Otley, Merchant,1990, p. 31). Alternatively, if we look beyond many details and iterations of the usual budgeting process we can see that there is a simple universally applicable budgeting process, the phases of which can be described in the following manner (Finney, 1994, p. 16): Budget forms and instructions are distributed to all managers. The budget forms are filled out and submitted. The individual budgets are transformed into appropriate budgeting/accounting terms and consolidated into one overall company budget. The budget is reviewed, modified as necessary, and approved. The final budget is then used throughout the year to control and measure the organization. The inevitable dependence of individual budgets on one another requires that budgets be prepared in a hierarchical manner. Figure 3 indicates a common hierarchical form of the budgeting process together with the necessary data flow between particular budgets and phases of their making. This picture shows that despite having only a few general phases, the budgeting process, due to its linearity and iteration loop, is in fact a very complex and time consuming process. Since it is so complex and important, the budgeting process requires lots of decision making on the particular choices that developers of budgets have at their disposal. Churchill (1984, p.151) has provided a list of eight budget choices that managers have to be concerned with when setting up the budgeting system. Thereby, these concerns vary according to whether the company intends to use its budgets primarily for planning or for control. These budget choices are: Whether it is to be prepared from the bottom-up or top-down, How it is to be implemented, How the budget process is linked to the strategic planning process, Whether it should be a rolling budget and how often it should be revised, Whether performance should be evaluated against the original budget or the one relating to the actual activity level of the organization, Whether compensation/bonuses should be based on budgeted performance, What budget evaluation criteria should be used, and What degree of stretch should be incorporated into the budget. In general, accounting theory suggests that large companies should be concerned more with operational efficiency and emphasize coordination and control aspects of budgets, while smaller innovative firms should concentrate more on the planning aspects of their budgets. 2.4. Types Of Budgets: A budget is not a unitary concept but varies from organization to organization. The basic concept of budgeting involves estimating future performance, comparing actual results with the estimate, and analyzing the differences between them. Factors that are relevant in determining the type or style of an organizations budget and its effects include: the type of organization, the leadership style, personalities of people affected by the budget, the method of preparation, and the desired results of the budgeting process (Cherrington, Cherrington, 1973, p. 226). In general, budgets can be classified into two primary categories (Cohen, Robbins, Young,1994, p. 171): Operating budgets: Operating budgets consist of plans for all those activities that make up the normal operations of the firm. The main components of the firms operating budget include sales, production, inventory, materials, labour, overheads and RD budgets. Financial budgets: Financial budgets are used to control the financial aspects of the business. In effect, these budgets reveal the influence of the operating budgets on the firms financial position and earnings potential. They include a cash budget, capital expenditures budget and pro forma balance sheet and income statement. In figure 4, all major budgets that can be used in a typical company and how they are linked and interconnected within the larger system of the master budget can be seen. This confirms what has already been said about the budgeting process that individual budgets are dependent on one another which requires that they be prepared in a hierarchical manner. Except for the usual division of companies budgets into operational and financial, budgets can also be differentiated based on expenditure authority. Using this approach, two major groups of budgets can be defined (Kemp, Dunbar, 2003, p. 3): Line-item budgets These are budgets where the name of each line is set, as is the amount of money that can be spent on each item. If one works within a line-item budget, one can not overspend a specific line item and then compensate this with savings on other line (or vice versa). The authority to move money from one line item to another must be granted at a higher level. Block budgets These are the opposites of line-item budgets. Here a block of money is given. The details of the budget are presented but, later on, if one wants to spend more money on one item and less on another, one is free to do so. As long as the block of money is not overspent before the end of the year, the budget remains under control. 2.5. Budgets as planning tools: Welsch, Hilton, Gordon (1988, p. 73) have defined the budgeting process as a profit planning and control process and in that way not only have identified the two most important functions of budgets in organizations, but have also presented budgeting process in a wider context than it is usually depicted. Figure 5 clearly shows that the budgeting process is more than just a process of combining quantitative financial plans. It is a tool with which top management cascades strategy goals to operating levels. Budgets are ideal for this purpose since they are in essence the detailed quantification of targets for short-term choices of actions. Before continuing, it must be emphasised here that budgeting is not planning it is just the quantification of planning. Since the budget is fundamentally a plan, planning is the first important element of budgeting work. Planning is one of the elementary functions of management. It is the process of developing enterprise objectives and selecting a future course of action to accomplish them. It includes establishing enterprise objectives, developing premises about the environment in which they are to be accomplished, selecting a course of action for accomplishing the objectives, initiating activities necessary to translate plans into action and current replanning to correct deficiencies (Welsch, Hilton, Gordon, 1988, p. 3). It is a phase that involves the interpretation of the broader strategic policies derived during the formulation of strategy and their translation into more specific shorter-range plans. Once these short-term plans are quantified, they become budgets. That is why in many instances short-term planning and budgetary planning are used as synonyms. However, as figure 6 will show, connect ion between planning and budgeting is not isolated from influences of other elements that constitute corporate planning system and it is precisely the coherent functioning of the complete system that allows corporate planning to be implemented, period by period, through the budgetary process and its two elementary phases budgetary planning and budgetary Control (Lucey, 1996, p. 104). Apart from the purposes of setting desired objectives and goals and linking them with strategic long-range and tactical short-range plans, the fundamental objective of management planning within budgeting system is to provide a feedforward process for operations and control. It is this feedforward process that renders the planning phase of the budgeting system vitally important since it allows control and corrections of plans before they are even implemented. The difference between feedback and feedforward concepts is that feedback monitors past results to detect and correct disturbances to the plan, while feedforward reacts to immediate or forthcoming dangers by making adjustments to the system in advance in order to cope with the problem on time, i.e. feedback monitors, feedforward warns (Lucey,1996, p. 144). Since in any organizations it is unlikely that pure feedforward or pure feedback control could operate in isolation because feedback control is too slow, while feedforward control is too risky, these two concepts usually function within a single budgeting system as can be seen in figure 7. 2.6. Budgets as control devices : At the beginning of the period, the budget is a plan. At the end of the period, the budget is a control device to measure performance against expectations so that future performance may be improved. Control is achieved through continuous reporting of actual progress and expenditures relative to plans i.e. budgets (Shim, Siegel, 1994, p. 15). The aim of budgetary control is to provide a formal basis for monitoring the progress of the organization as a whole and of its component parts towards achievement of the objectives specified in budgets (Lucey, 1996, p. 147). Budgetary control process usually functions in a closed loop. This loop, which is illustrated in figure 8, starts with the planning phase, then records actual transactions, and finally reports against the plan and generates management response. In accounting literature, budgeting is also known as responsibility accounting. This means that plans and the resulting information on the performance of the plans are expressed in terms of human responsibilities because it is people, not reports that control operations. We can define responsibility accounting as a system of accounting in which costs and revenues are analysed in accordance with areas of personal responsibilities so that the performance of the budget holders can be monitored in financial terms (Lucey, 1996, p. 147). So the crucial thing for profit control is the division of authority and responsibility to managers. This means that managers should accept responsibility only over those figures that they have control. However, in practice, controllability1 is difficult to pinpoint for at least two reasons (Horngren, Foster, Datar, 2000, p. 195): Few costs are clearly under the sole influence of one manager. Over a long enough time span, all costs will come under somebodys control. For this reason, companies, alongside traditional responsibility centres2, also usually set up budget centres. These can be defined as a part of an organization for which a given manager has responsibility and authority and to which profit control data can be assigned (Harper,1995, p. 320). For budgeting control purposes, a special type of budget is prepared called the flexible budget. In order to understand why only those budgets can be used for the accurate measurement of performance, firstly the difference between them and fixed budgets must be explained. The fixed budget is based on the level of output planned at the start of the budget period. On the other hand, the flexible budget is developed using budgeted revenues or cost amounts based on the level of output actually achieved in the budget period (Horngren, Foster, Datar, 2000, p. 220). For this reason, from a control viewpoint, the fixed budget is likely to be inappropriate (unless by pure chance the actual level of activity turns out to be the same as the planned level which is highly unlikely) and should not be used for control purposes. It is with respect to this sort of budget that the old saying the budget is out of date before the budget period even begins is often a correct one (Harper, 1995, p. 336). 2.7. Benefits and problems associated with traditional budgeting: It is claimed that today as many as 99 percent of European and US companies are using budgets and have no intention of abandoning them (Better Budgeting: A report, 2004, p. 2). However, on the same page, it is stated that as many as 60 percent of those companies claim that they are not completely satisfied with their current budgeting systems and are continuously trying to improve them (ibid., p. 3). From this evidence, it is obvious that budgets carry with them many benefits and problems. Here is a list of some of the benefits that traditional budgeting can bring into organization if properly implemented and administered (Lucey, 1996, p. 161): It is a major formal way by which the organizational objectives are translated into specific plans, tasks and objectives related to individual managers and supervisors. It is an important medium for communication of organizational plans and objectives and of the progress made towards meeting those objectives. The development of budgets helps achieve coordination between the various departments and functions of the organization. The involvement of all levels of management in setting budgets, the acceptance of defined targets, the two way flow of information and other features of a properly organized budgeting system all help to promote a coalition of interest and to increase motivation. Managements time can be saved and attention directed to areas of greatest concern by the exception principle which is at the heart of budgetary control. Performance at all levels is systematically reported and monitored thus aiding the control of current activities. The investigation of operations and procedures, which is part of budgetary planning and the subsequent monitoring of expenditure, may lead to reduced costs and greater efficiency. The regular systematic monitoring of results compared to the plan (i.e. the budget) provides information upon which current operations are adjusted to bring them into line with the previous plan or, adjustments are made to the plan itself where this becomes necessary. The integration of budgets makes it possible to better manage cash and working capital and makes stock and buying policies more realistic. Nobody has better summarized in one sentence all the advantages of traditional budgeting as did Umapathy in his major work on budgeting practices in U.S. industry from 1987.Umapathy stated: There is no other managerial process that translates qualitative mission statements and corporate strategies into action plans, links the short-term with the long-term, brings together managers from different hierarchical levels and from different functional areas, and at the same time provides continuity by the sheer regularity of the process (Umapathy, 1987, p. xxii). It is exactly because of this that budgets will soon celebrate their century long existence. Since budgets encompass so many different functions and are used for so many things in organizations, it is obvious to expect them to have certain weaknesses. A group of authors at the Cranfield School of Management made an extensive review of budgeting literature. As part of their research, they identified 12 significant weaknesses of traditional planning and budgeting practices. These factors fall into three principal categories and can be listed as follows (Neely, Bourne, Adams, 2003, p. 23): Competitive strategy Budgets are rarely strategically focused and are often contradictory. Budgets concentrate on cost reduction and not value creation. Budgets constrain responsiveness and flexibility, and are often a barrier to change. Budgets add little value since they tend to be bureaucratic and discourage creative thinking. Business process Budgets are time consuming and costly to put together. Budgets are developed and updated too infrequently, usually annually. Budgets are based on unsupported assumptions and guesswork. Budgets encourage gaming and dysfunctional behaviour. Organizational capacity Budgets strengthen vertical command and control. Budgets do not re ¬Ã¢â‚¬Å¡ect the emerging network structures that organizations are adopting. Budgets reinforce departmental barriers rather than encourage knowledge sharing. Budgets make people feel undervalued. Furthermore, one of the biggest problems with budgets is that they tend to promote an inward-looking, short-term culture that focuses on achieving a budget figure, rather than on implementing business strategy and creating shareholder value over the medium to long term. For all these reasons, it is believed that these weaknesses lead collectively towards business underperformance and should therefore be dealt with (ibid). The above listed benefits and disadvantages of budgeting system have been present since the first d