The Evolution of Indian Accounting Standards: Its History and Current Status with Regard to International Financial Reporting Standards

1. Introduction Propelled by globalization, world attention today is centered on two emerging market economies, India and China. China's managed liberalization has allowed it to achieve more rapid growth and has attracted a larger portion of direct foreign investment. India, with its messy democracy and nod to individualism in recent times promises a more exciting market environment with greater potential for future growth. The liberalization of the Indian economy since 1991 has exposed Indian firms to foreign competition and foreign investment. As a result, the information needs required by both managers and investors have changed. A first step in this process is the demand for transparency in the financial reporting. This transparency is rapidly occurring in India as the country catapults into becoming a major economic power propelled on by the combined forces of the technological revolution, the opening up of its borders and the privatization of many infrastructure industries such as transportation and communication. This paper addresses the adoption and applicability of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) to India. 3 Specifically, the paper highlights some major areas where the country lacked harmonization with IAS in 1993 and the rapid congruence with IAS in the decade that followed. The attempt to achieve congruence with IAS appears to be more a by-product of the country's rapid economic growth rather than its catalyst. However, continued growth and the attraction of foreign capital to domestic ventures will depend on the transparency of the financial dealings. The Institute of the Chartered Accountants of India, (ICAI), India's standard setting body, is increasingly attempting to provide this transparency by revisions and additions to accounting standards, and by Exposure Drafts which aim to bring India more in line with International Financial Reporting Standards. The focus of this paper is on the evolution of these Indian Accounting Standards. 2. Literature review In order to effectively review the literature with regards to harmonization of accounting standards in general, it is deemed appropriate to first examine the International Accounting Standards Board's (IASB) position, reasons for harmonization, and recent efforts towards this goal. Epstein and Mirza (1997) define the IASB's goals as first, to promote the acceptance of proposed accounting standards across the world; and second, to continue improvement in the harmonization of accounting standards, regulations, and procedures. As of 1990, sixteen countries had achieved 100% conformance with the thirty IAS that existed at the time, and seven developing countries such as Pakistan and Malaysia had adopted IAS fully as their own national standards (Gernon, Purvis, & Diamond, 1990). As of October 2007, a total of seventy-three countries have made IFRS a requirement for reporting for domestic listed companies. Despite this seemingly widespread acceptance, some research suspects the irrelevance or inapplicability of common standards in certain national environments ([Larson and Kenny, 1996], [Larson and Kenny, 1995, Summer] and [Fechner and Kilgore, 1994]). Based on their research, Larson and Kenny (1996) conclude that the adoption of IAS depend on a country's economic development theory, and its proposed level of adoption of the IAS. They also find no support for the hypothesis that there is a positive correlation between adoption of IAS and level of economic growth, and between adoption of IAS and level of equity market development (Larson & Kenny, 1995). In a panel discussion of policy setters concerning harmonization of accounting standards in 1990, several panel members noted that harmonization of accounting standards may not be appropriate or cost effective. They suggested large, multinational companies around the globe had the abilities and the funds to cope with lack of harmonization. As a result, they perceived a lack of incentive for preparers and users to harmonize accounting standards (Gernon et al. , 1990). The largest obstacle hindering the harmonization of accounting standards is national culture, especially in developing countries. Riahi-Belkaoui (1995) researched the required accounting standards across thirty-three national stock exchanges and found that accounting disclosure is significantly affected by the cultural dimensions of power distance, individualism, and uncertainty avoidance studied by Geert Hofstede. In particular, Riahi-Belkaoui (1995) found that in â€Å"societies in which people accept a hierarchical order in which everyone occupies a place that needs no justification†¦Ã¢â‚¬  people are â€Å"expected to take care of themselves and their immediate families only†¦. As a result, these societies are â€Å"tolerant of ambiguity and have strong conditions for extended disclosure requirements of stock exchanges† (p. 124). Hence, disclosure requirements of stock exchanges of certain developing nations were more extensive than that nation's general financial reporting standards. This is a major point in the case of India, whose stock exchange, for example, required a statement of c ash flows long before its general standard – setting body did in 2000. Also, since 2002, consolidated financial statements have been required by the Securities Exchange Board of India, while the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) only provides some loose guidelines to date (Deloitte, 2007). Along this same vein, other researchers suggest the influence of many external factors on the development of accounting standards such as cultural factors, the external environment, and the institutional structure ([Fechner and Kilgore, 1994] and [Doupnik and Salter, 1995]). According to this research, these varying effects on accounting standard – setting are significant, and along with varying legal systems, are found to be major determinants which cause conflict in setting accounting standards (Doupnik & Salter, 1995). Fechner and Kilgore (1994) have proposed a modified general framework to assess the extent to which economic factors, cultural factors, and the accounting subculture (uniformity, professionalism, conservatism, and secrecy), directly or indirectly affect accounting practice. In spite of opinions, conflicts and hindrances to the contrary, there is abundant support in favor of international accounting harmonization and for the adoption of IAS in the literature ([Epstein and Mirza, 1997], [Graham and Wang, 1995], [Wyatt, 1992, Spring] and [Gernon et al. , 1990]). For example, Gernon et al. (1990) point out that the benefits of harmonization range from better decision making within a firm with respect to asset allocation, to improving the efficiency of capital markets, and increasing competitiveness among firms within and across national boundaries irrespective of a country's stage of development. Complementing this argument, Riahi-Belkaoui (1994), notes that accounting standard harmonization is crucial to a developing country which needs outside capital or foreign loans as potential investors and creditors often rely on these financial statements in making decisions such as allocation of capital. Furthermore, he points out that harmonization is often mistaken for â€Å"complete standardization† (1994) whereas harmonization recognizes the specific needs of each country. Therefore, he suggests the first step in harmonization should be to recognize certain country – specific issues, and to reconcile them with the objectives of other countries. The second step should be then to â€Å"correct or eliminate some of these barriers in order to achieve an acceptable degree of harmonization. † As a starting point, the evolution of the Indian accounting system is investigated and the various domestic influences, such as economic, political, legal, socio-cultural and academic factors, are considered along with international influences that may have had an impact. Secondly, the bare essentials of the Indian accounting system are juxtaposed with the international standards and a compare and contrast approach is adopted for the purpose of analysis. Thirdly, the major differences with respect to accounting treatment – statutory requirements for certain items and altogether absence of these requirements for other items – are highlighted, along with the degree of disclosure of information in financial reports. Finally, an attempt is made to identify various causes and effects of such differences and variations. 3. The historical development of Indian accounting standards The evolution of India's present day accounting system can be traced back to as early as the sixteenth century with India's trade links to Europe and central Asia through the historic silk route. The subsequent entry of the East India Company had widespread influence on Indian trade and commerce, and soon the economy was virtually taken over by the company's owners. The British government, realizing immense potential by way of business opportunities, natural resources and manpower, decided to colonize India by taking over the East India Company. The British Raj (rule) explains the almost identical pattern of accounting and financial reporting practices between India and England (Marston, 1986). However, since 1947, when India regained independence, some changes have taken place to accommodate the special needs of the Indian economy. Indian accounting practices reflect its diversity as India has eighteen official languages and scores of dialects spread over twenty – eight states and seven union territories. Each state has its own distinct culture and general trade practices. Furthermore, the accounting practices of the unorganized rural/agricultural sector and the small-scale–urban–industrial sector vary considerably from one region to another. The establishment of a certain uniformity in the accounting and trade practices for these sectors is, therefore, nearly impossible. Moreover, a large number of businesses are controlled by tightly knit conservative families and the management of such businesses is usually very reluctant to disclose any financial information for reasons of privacy and fear of competitors. 4 A vast majority of the Indian population lives in the rural area, with very low levels of education and economic development. The primary source of income for this majority is through agriculture, although virtually no agricultural accounting system exists. Due to the linguistic and intra-cultural differences, it is also not possible to bring about a standardization in rural accounting practices. Changes to this scenario began to occur with the introduction of the Panchayati system or the grass roots level of administration by the late Prime Minister, Rajiv Gandhi. This program empowers the Village Chief with political and financial administration within the boundaries of the Indian Constitution, and has been fairly successful in that it has made a substantial dent on the existing sluggishness in the underground economy. In sharp contrast, India is one of the world's largest industrial nations in the world, a military superpower in its own right, and a world leader in space research and satellite technology. A jolt to the Indian economy occurred in 1991, when India strained for foreign reserves and pressure from the International Monetary Fund, (IMF) introduced major changes in economic policy. The net result was a substantial reduction in government interference and in taxes on the business sector, long favored by then Finance Minister (now Prime Minister) Manmohan Singh. Markets were opened up to foreign collaboration and investment. Segments of the public sector were privatized (Anderson & Lanen, 1999). As a result, India has emerged as a major player in exporting software technology, industrial and consumer goods, and financial services through a large number of multinational corporations. The presence of such global conglomerates also means increased interaction with international organizations such as the World Bank, International Monetary Fund, United Nations, and the Organization for Economic Cooperation and Development, just to name a few. However, the public sector still continues to play a major role in the Indian economy since all industries that are relevant to national defense and security are owned by the Indian government and account for a major portion of the nation's industrial economy. The accounting practices of this public sector, along with that of the organized private sector, fall into the realm of The Companies Act, 1956, and are similar in many respects to International Accounting Standards. The involvement of international institutions and businesses in financial matters makes it even more imperative that the Indian accounting system be compatible with its international counterpart. The Indian accounting system, which is based on the Companies Act of 1956, is basically a copy from its counterpart in the U. K. The Act has been amended several times to suit Indian conditions. More notable amongst the amendments are the ones in 1965 and 1969, which introduced regulations relating to maintenance of cost accounts and requirements for a cost audit. Also relevant are the two notifications issued in 1971 and 1973, which extended disclosure rules considerably (Marston, 1986). Research efforts at several Indian universities and other organizations have been commendable and have exerted influence on the accounting system in that they have focused on the changing needs of accounting with respect to the rapidly changing economic and technological environment. Such organizations include: the Indian Council of Social Science Research, which organizes research surveys in the areas of accounting and financial management; the Indian Accounting Association, which has made significant contributions through independent accounting research; and the Institute of the Chartered Accountants of India, (ICAI), which promulgates accounting standards for use by Indian companies. 5 Other international bodies, of which India is an active member, have also contributed towards bringing the Indian accounting system to par with International Accounting Standards. Examples of such bodies are: the Confederation of Asian and Pacific Accountants; and the Ad hoc Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (Marston, 1986). In addition, the Financial Stability Forum organized by Finance Ministers and Central Bank Governors of the G7 has helped to promote standards for global best practices (Echeverri-Gent, 2001). As a result of all these forces, an amendment to the Companies Act was enacted in October 1998 which established a new National Advisory Committee on Accounting Standards (Deloitte, 2007). However, cultural and political dimensions continue to influence India's accounting practices. 4. Comparative analysis of the international accounting standards and the accounting standards and practices of India Our analysis of the differences in International Accounting Standards (IAS) and the accounting standards and practices of India is presented in this section. Gernon et al. (1990) note six ways of evaluating national standards in conjunction with the IAS, which they extracted from an IASC survey entitled Survey of the Use and Application of IAS 1988. The six categories are as follows: 1. IAS adopted as national standard, 2. IAS used as the basis for a national requirement, 3. National requirements conform ‘in all material respects, with IAS’, 4. National practice ‘generally conforms with IAS’, 5. National requirements do ‘not conform with IAS’, and 6. National practice does ‘not generally conform with IAS’. Differences between accounting standards issued in India and accounting standards issued by the IASB fall under items five and six – either national requirements do not conform, or national practice does not conform. Using these criteria, Gernon et al. (1990) found India's conformity index with IAS to be 56%, in the decade before the 90s. It was the fifth lowest among the countries represented. Since Gernon et al. ‘s study in 1990, the IASB revised many of its standards, which became effective in 1995 (Epstein & Mirza, 1997). This â€Å"Comparability/Improvements Project† attempted to narrow the alternatives available to adopting countries. 6 Ten IAS were revised under this project and are included in IAS 1997: Interpretation and Application of IAS 1997. The standards affected include: inventories; errors and changes; research and development; construction contracts; property, plant and equipment; revenue recognition; retirement benefits; foreign exchange rates; business combinations; and borrowing costs (Epstein & Mirza, 1997). Our research and analysis of IAS includes these revisions. For purposes of our research, accounting standards used in India were extracted from the International Accounting Summaries of 1993 (Coopers & Lybrand (International), 1993) and from the Accounting Standards Updates by Jurisdiction (Deloitte, 2007). This includes accounting standards and guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the Companies Act of 1956. The ICAI had issued twelve standards as of 1993, seven of which were mandatory. These 12 standards are contrasted against the IAS. 7 Appearing in descending order of IAS, the major differences in accounting standards are outlined below according to the same format used by Graham and Wang (1995). 4. 1. IAS 2 – Inventories Based upon the Comparability / Improvements Project, the base stock method for costing of inventories is now prohibited, while the last-in, first-out (LIFO) method, has been reduced to an â€Å"allowed alternative† (Epstein and Mirza, p. 11). The Indian Accounting Standard, AS 2, revised in 1999, is generally in line with the IAS now with FIFO being the popular method among public limited companies. However, there are many firms still using the LIFO method, which is the allowed alternative under IAS, (Shankaraiah and Rao). This practice contrasts with the earlier period when under accounting standards issued by the ICAI, the base stock method could be used in â€Å"exceptional circumstances†, and the LIFO method was normally accepted (Coopers & Lybrand (International), 1993). Yet the fact that different procedures are still allowed make it difficult to compare performances across firms. 4. 2. IAS 7 – Cash flow statements Epstein and Mirza (1997) note that national and international accounting standard setters view the statement of cash flows as a â€Å"necessary component of complete financial reporting†. Thus, the statement of cash flows is a required component of a set of financial statements to be prepared under IAS. Under standards issued by the ICAI, AS 3, revised in 1997, either a funds flow statement or a statement of cash flows is acceptable. In practice, the majority of firms provide a funds flow statement with their annual reports. This is a significant change from the earlier period when the statement of changes in financial position (funds flow statement) was recommended but was not common practice (Coopers & Lybrand (International), 1993). However, under Clause 32 of the listing agreements for stock exchanges, a cash flow statement in similar conformance with the corresponding IAS was required for Indian companies at the time. An example could be found in the1995-6 Annual Report of Tata Iron & Steel, now Tata Steel (Tata Iron & Steel, 1996). 4. 3. IAS 8 – Net profit or loss for period, fundamental errors and changes in accounting policies Effective in 1995, IAS 8 allows as an alternative, inclusion the effects of errors in current period income, while the ICAI standards (AS 5) permit this approach as the only accounting treatment. However, AS 5 requires only the disclosure of prior period items but not its effect on current income (Shankaraiah and Rao). AS 5 was revised in 1997 and an exposure draft was issued in 2001 proposing limited revisions. 4. 4. IAS 11 – Construction contracts Based upon the IASB's Comparability/Improvements Project, the percentage-of-completion method for accounting for construction contracts is required, and the completed contract method is no longer allowed. The ICAI standard, AS 7, revised in 2002, allows for both the percentage-of-completion method and completed contract method but recommends the percentage-of-completion method if a reliable estimate of the outcome is possible. Also, under the umbrella of construction contracts is IAS 23 – Borrowing Costs. Under IAS, interest incurred on a construction contract should be expensed. This is the benchmark treatment. Capitalization of interest costs is an allowed alternative. The ICAI standards, AS 16, allow capitalization of interest if it is incurred during the period of construction. 4. 5. IAS 12 – Accounting for taxes on income IAS 12 permits the use of the tax deferral method or the tax liability method, in accounting for income taxes. The ICAI permits use of the tax payable method or the tax liability method. Also, the IAS prescribe a three year reversal period before timing differences can be excluded, while under tax laws in India the reversal period is five years. Also, under tax laws in India, a tax loss is permitted to be carried forward for eight years, while IAS 12 does not specifically prescribe a time period. 4. 6. IAS 14 – Reporting financial information by segment IAS 14 requires disclosure of segmental information if the firm has public subsidiaries, or if national standards require such treatment. AS 17, issued in 2000, is broadly in line with IAS 14. No such requirement existed earlier, but there were extensive disclosure requirements when reporting by product. As of October 2007, IAS 14 has been superseded by IFRS 8 – Operating segments. 4. 7. IAS 16 – Property, plant and equipment Under the Comparability/Improvements Project, IAS 16 now suggests historical cost as the benchmark in valuing property, plant and equipment. Revaluation is the allowed alternative. Under the ICAI's standards, AS 10, the appraisal method is preferred, and the most common in practice. 4. 8. IAS 17 – Accounting for leases Accounting standards issued by the ICAI did not include leases in 1993. In practice, no distinction was made between financial and operating leases. Under IAS 17, provisions for accounting for leases include both capital and operating leases. Accounting standards for leases were issued by ICAI in 2001, AS 19. These standards are broadly in line with IAS. 4. 9. IAS 19 – Retirement benefit cost IAS 19 requires actuarial valuations to be allocated to income on a systematic basis. Also, new under the Comparability / Improvements Project the accrued benefit valuation method is the benchmark in accounting for pensions, and the projected benefit method is the allowed alternative. Standards issued in India, AS 15, had no language concerning valuation methods, and no specific reference on how to account for actuarial valuations. However, the standards that were revised in 2005 and became effective in 2006, require that enterprises â€Å"actuarially determine and provide for such liability based on the ‘Projected Unit Credit Method’†(Deloitte, 2007). 4. 10. IAS 21 – The effects of changes in foreign exchange rate Since accounting standards issued by the ICAI do not require consolidation, the effect of changes in foreign exchange rates are reflected in the financial statements of the foreign branches of the â€Å"parent† company. The benchmark under IAS 21 is to recognize the effect of fluctuations in exchange rates as differences in income or expense in the period incurred. The allowed alternative is to include the difference in the carrying value of the related asset. Under the ICAI's standards, revised in 1994 and 2000, exchange rate differences are accounted for in the carrying value of the asset only for fixed assets. For all other accounts, differences are recognized as income or expense in the period incurred. For foreign entities not integral to operations, the IAS prescribe accounting for all assets and liabilities at the closing rate. Assuming foreign branches outside of India to be non-integral, non-monetary items are accounted for at the rate prevalent on the date of transaction under India's accounting standards. Clearly, the issue of accounting for changes in foreign exchange rates is in a state of flux in India, and a hotly debated item, as the rupee continues to strengthen. It has moved upwards relative to the dollar by 15% since 2004 with most of it occurring in the period 2006–2007. 4. 11. IAS 22 (superseded by IFRS 3) – Business combinations The Companies Act of India had no requirement for consolidation until April 2001. In turn, there was no requirement to write off goodwill, or to use the equity method. Subsidiaries normally accounted for in consolidation were accounted for as investments. AS 21 requires a parent company preparing financial statements to provide financial information about the economic activities, resources, obligations and results of its group. It is not mandatory to prepare consolidated financial statements. However, the Securities Exchange Board requires listed companies to prepare consolidated statements as of 2002. 4. 12. IAS 24 – Related party disclosure Although there was no prescribed accounting treatment by the ICAI or the Companies Act concerning related party transactions or disclosures, the Act did specifically define related parties. AS 18, issued in 2000, is now broadly in line with IAS 24. 4. 13. IAS 31 – Financial reporting of interests in joint ventures Accounting standards issued by ICAI had no standard concerning the different forms of joint ventures until 2002. Jointly controlled entities were accounted for as long term investments. AS 27, reporting of interests in Joint Ventures lays out principles and procedures for accounting for Joint Ventures for both venture partners and investors. The standards still differ from IAS. In accounting for jointly controlled entities, IAS 31 prescribes proportionate consolidation as the benchmark; and the equity method as the allowed alternative. The above analysis indicates that there are many critical issues that need to be dealt with by India's standard setting body, the ICAI. An important consideration in analyzing the differences between IAS and standards issued in India is the absence of mandatory requirements for consolidated financial statements. Fischer, Taylor, and Leer (1993) suggest that the presentation of consolidated financial statements is of great importance to the parent company's stockholders. Firms in India account for their subsidiaries as investments under the cost method of accounting for investments. This is perhaps a grave misinterpretation of the parent company's economic substance. The use of the cost method in accounting for subsidiaries in contrast to consolidation accounting represents the legal form of the companies, but does not represent the more important economic substance. In addition, the lack of consolidated financial statements in a developing country such as India impedes the progress towards comparability of multinational financial statements. Many large Indian companies have numerous subsidiary companies whose selected financial figures are presented separately in the annual reports as opposed to being consolidated with the â€Å"parent† companies. This makes it increasingly difficult for potential investors and financial analysts worldwide to make knowledgeable decisions. As recent as March 2007, the Press Trust of India quoted the ICAI president, Sunil H. Talati, as saying that Indian accountants face problems in accounting for mergers and acquisitions. However, as Indian companies opt to get listed on exchanges at home, the Securities Exchange Board of India requires consolidated financial statements. 5. Conclusions In recent years, India, one of the fastest growing economies has captured the attention of investors worldwide. Since the early nineties, following the opening up of the economy with more liberal policies, technical and financial collaborations have increased multifold and so has foreign direct investment and portfolio investment (Anderson & Lanen, 1999). Nevertheless, certain archaic accounting practices still continue. In their study on managerial accounting practices in India, Anderson and Lanen, 1999 S. W. Anderson and W. N. Lanen, Economic transition, strategy and the evolution of management accounting practices: The case of India, Accounting, Organizations and Society 24 (1999), pp. 379–412. Abstract | PDF (297 K) | View Record in Scopus | Cited By in Scopus (21)Anderson and Lanen (1999) report little involvement by investors and owners in the development of strategy which still is to a large extent controlled by the government. The Company's Act restricts â€Å"takeovers† and blocks transactions that the government may view as prejudicial to the interests of the company or the public. It is not surprising therefore to find that financial accounting practices mirror this policy by the lack of consolidation of parent and subsidiary financial statements, a major divergence from the IAS. Fischer et al. (1993) note that â€Å"stockholders are interested in the total financial position of the corporation, regardless of how diversified the operations have become† (p. 64). They also report that unconsolidated subsidiaries are very rare in businesses today. The push for changes in accounting practices appears to come from the equity markets. Change has come more rapidly to the equity markets because reform in these markets â€Å"have not aroused as much political opposition† (Echeverri-Gent, 2001). However the banking and business sectors are still steeped in tradition and political agendas of national and state parties affect their evolution. Besides, it is also important to consider the strong cultural element present in India. This could impede the process somewhat even though over the last few years many Indian standards have sought conformance with the International Accounting Standards (Narayanaswamy, 1992). Nevertheless, in March 2007, the Press Trust of India reported that India had adopted only 21 IAS in comparison to the 47 IAS adopted by several developed countries. Press Trust of India, 2007). In July 2007, the council of the ICAI announced a plan to converge the Indian Accounting Standards with the International Financial Reporting Standards (formerly IAS). However, it retained the stipulation that any modifications will still have to reflect â€Å"Indian conditions. † (Deloitte, 2007). The new standards will be effective on or after April 1, 2011. Our study of the Indian accounting system in conjunction with the International Accounting Standards indicates the importance of developing comparable financial statements in emerging economies with those of the developed world. In India, the political and social impediments need to be tackled in order to improve comparability for financial statement users. On the Business Competitiveness Index, India is ranked 48th among industrial countries. By conforming to international standards, India would be taking the necessary steps to improve its competitive position in world markets. References Anderson and Lanen, 1999 S. W. Anderson and W. N. Lanen, Economic transition, strategy and the evolution of management accounting practices: The case of India, Accounting, Organizations and Society 24 (1999), pp. 79–412. Abstract | PDF (297 K) | View Record in Scopus | Cited By in Scopus (21) Coopers and Lybrand (International), 1993 Coopers and Lybrand (International), International accounting summaries, John Wiley & Sons, Inc. , New York, NY (1993). Deloitte, 2007 Deloitte, Accounting standards updates by jurisdiction (2007). Doupnik and Salter, 1995 Timothy S. Doupnik and Stephen B. Salter, External environment, culture, and accounting practice: A preliminary test of a general model of international accounting development, The International Journal of Accounting 30 (1995), pp. 189–207. Echeverri-Gent, 2001, August John Echeverri-Gent, Political economy of India's fiscal and financial reform, Center for Research on Economic Development and Policy Reform (2001, August). Epstein and Mirza, 1997 Barry J. Epstein and Abbas Ali Mirza, IAS 97: Interpretation and application of International Accounting Standards, John Wiley & Sons, Inc. , New York, NY (1997). Fechner and Kilgore, 1994 Harry H. E. Fechner and Alan Kilgore, The influence of cultural factors on accounting practice, The International Journal of Accounting 29 (1994), pp. 265–277. Fischer et al. , 1993 Paul M. Fischer, William J. Taylor and J. Arthur Leer, Advanced accounting (5th Edition), College Division, South-Western Publishing Co. , Cincinnati, OH (1993). Gernon et al. , 1990 Helen Gernon, S. E. C. Purvis and Micheal A. Diamond, An analysis of the implications of the IASC's Comparability Project, School of Accounting, University of Southern California: SEC and Financial Reporting Institute (1990). Graham and Wang, 1995 Roger C. Graham and Chin-hsin Coco Wang, Taiwan and International Accounting Standards: A comparison, The International Journal of Accounting 30 (1995), pp. 49–167. Larson and Kenny, 1995, Summer Robert K. Larson and Sara York Kenny, An empirical analysis of international accounting standards, equity markets, and economic growth in developing countries, Journal of International Financial Management and Accounting 6 (1995, Summer), pp. 130–157. Full Text via CrossRef Larson and Kenny, 1996 Robert K. Larson and Sara York Kenny, Accounting standard-setting s trategies and theories of economic development: Implications for the adoption of international accounting standards, Advances in International Accounting 9 (1996), pp. 1–20. Marston, 1986 Claire Marston, Financial reporting in India, Croom Helm, London, UK (1986). Narayanaswamy, 1992 R. Narayanaswamy, Accounting for leases by lessees in India: Some evidence of economic impact, The International Journal of Accounting 27 (1992), pp. 255–261. Press Trust of India, 2007 Press Trust of India, ICAI sets up taskforce on accounting standards, PTI-The Press Trust of India (2007). Riahi-Belkaoui, 1994 Ahmed Riahi-Belkaoui, Accounting in the developing countries, Quorum Books, Westport, CT (1994). Riahi-Belkaoui, 1995 Ahmed Riahi-Belkaoui, The cultural shaping of accounting, Quorum Books, Westport, CT (1995). Shankaraiah and Rao Shankaraiah, K. , & Rao, D. N. Corporate governance and accounting standards in India. An empirical study on practices. Working Paper. (February 10, 2004). Available at SSRN: http://ssm. com/abstract=501242. The Tata Iron and Steel Company Limited, 1996 The Tata Iron and Steel Company Limited, Eighty-Ninth Annual Report, 1995–6 (1996) Tata Steel, Fort Mumbai, INDIA. Wyatt, 1992, Spring Arthur R. Wyatt, An era of harmonization, Journal of International Financial Management and Accounting 4 (1992, Spring), pp. 63–68. Full Text via CrossRef

Antonius Werink Margaret Jefferson Case

Contrariwise, training and developing Hart, if even possible, could turn out to be costly as well. Therefore, I recommend Margaret Jefferson to find a better fit for this crucial position, meaning letting him go. At the moment Hart is still in his probationary period, making it less costly to let him go. Furthermore, I suggest to replace Hart by the administrative manager for the short term. For the long term, the administrative manager could train the intern and prepare him for the job and the specific tasks.Question 2 Three recommendations Margaret Jefferson should follow: 1) Straight to the point. 2) Offer help. ) Be professional. When meeting with Hart, Jefferson should immediately make clear what the purpose of the meeting is. She should know what she wants to say and communicate this directly with Hart. There's no need to go into detail about the reasons for the termination. The reasons should be clear, since Hart was constantly informed about his performance and had enough tim e and possibilities to improve it; There shouldn't be an argument or discussion.Furthermore, Jefferson should make clear all the details of the separation, meaning all the steps they have to take (e. G. Clearing out their workspace, signing legally binding agreements, etc. ). Moreover, Jefferson is not firing Hart because she doesn't like him. In fact, Jefferson is actually convinced of his interpersonal capabilities. Therefore, she might want to help Hart in finding a job, which would fit him and his capabilities better. Jefferson could maybe recommend him to some other companies.Finally, Jefferson should be aware Of the fact that she's acting in the best interest Of the company. The lay-off is not personal, but just business. Jefferson is responsible for the performance of the company and the employees, thus if those are failing, so is she. Question 3 The failure of hiring Hart and its particular hiring process, exposes some inaccuracies in the hiring protocol Jefferson used. Firs tly, there was too little emphasis on the administrative skills of Hart, although this is extremely important for the position.Secondly, the decision about hiring Hart was made too fast. Thirdly, the communication and cooperation between Jefferson and the administrative manager was deficient. In order to improve these three points recommend the following: 1) Align the hiring protocol with the specific job. Different jobs require different capabilities. The emphasis in the ease of Hart should have been more on administrative skills and interpersonal skills, rather than only on interpersonal skills. 2) Don't rush the hiring process.Although the need of hiring a Special Events Manager was urgent, they never should have rushed the process. If Jefferson would have followed all the steps of her hiring protocol she may have discovered Hart Was lacking vital administrative skills at an earlier Stage. 3) Include the administrative manager more in the hiring process. Including the administrat ive manager more in the hiring process, could have prevented Jefferson from hiring an incapable Special Events Manager. The administrative manager is better aware of the specific administrative capabilities needed for the specific job.

My majer is Safety mangmant Research Paper Example | Topics and Well Written Essays - 1750 words

My majer is Safety mangmant - Research Paper Example This paper explores the practice of I/O psychology aimed at understanding how it can improve human welfare in workplaces. The paper offers goes from outlining a brief history of I/O psychology to exploring how it has been applied in improving HRM and effect it has on workers welfare and hence organization productivity. To this end, the paper offers an account of the existing literature and links the literature to improving human welfare at workplaces. Introduction The history of Industrial Organizational psychology is rooted in a confluence of precursors from philosophy, science and psychology (Koppes&Pickren, 2007). It is a branch involving the practice of theories and practices of psychology to industrial and organizational environments. Levy (2013) says that the I/O psychology serves to access, measure, and offer workforce motivation as well as enhance leadership, employee-employer relations, and job attitudes. Rogeelberg (2007) similarly notes that the goal of I/O psychology is t o better understand and ensure the effectiveness, well being, and health of both the workers and organizations. Industrial-organization psychology may be defined as the psychology of scientific study of human behavior at workplace or simply the study of behavior at work (Vuulen, 2010). Industrial-Organizational psychology has been a focus of study for many since it emerged in the 1900s. The real essence of the emergence of the I/O psychology was an attempt to improve job productivity and the quality of lives at workplaces. The new branch of Psychology aimed at solving practical problems at workplaces (Vuulen, 2010). Industrial- Organizational psychology is a double faceted principle aimed at enhancing organizational performance by addressing effective workers performance at contributing to human welfare at workplaces. Relevance of Industrial-Organizational Psychology at work place Most employed people spend a substantial amount of his time at workplaces and therefore the work enviro nment should consider the welfare of the workers, which greatly affects their quality of life. The realization of this fact has led to a rapid of I/O specialty in North America as well as throughout the industrialized world at large (Spector, 2003). Organizations are seeking the services of specialists who can comprehend and assess the human resource behavior to improve the job satisfaction of their workers and thus productivity. Since its inception the Industrial and Organizational psychology has continued to transform the way organization are run and the values that are important in a work environment. The I/O psychology itself has undergone some metamorphism to what it is today under the influence of scientific management, ergonomics and human relations. Human relations is a management approach that has evolved more recently which stresses on the workers and managers’ psychological characteristics underlining the importance of factors such as humane treatment of workers, m orale, attitude and values (Cameron 2007, quoted in Cengage Learning, n.d.). Traditionally work was viewed primarily as a means to cover one’s economic needs, a perception that has changed with the human relation management approach that demands workplaces to be run as a social system. Positive interpersonal

Max Weber Research Paper Example | Topics and Well Written Essays - 4000 words

Max Weber - Research Paper Example The major thesis of concern was the Protestant and the Spirit of Capitalism where he discussed economical sociology and sociology of religion. This thesis dealt with ascetic Protestantism as one of the main â€Å"elective affinities† which relates the rise of Western market which was driven by capitalism and rational-legal national-state. Weber emphasized on cultural influences as the bedrock of capitalism (Kalberg, 2002). In search for religion insight, Weber’s publication of protestant ethics, he was able to identify the non-development of capitalism in the societies: ancient Judaism, religion of China and religion of India and was able to analyze the social stratification of such societies. Weber’s methodological works were influential in launching the self-identity in modern social science as a field of inquiry. Empirical positivists and hermeneutic detractors got their inspiration from Weber. The most important of Weber’s work are the â€Å"Protestant Ethic thesis† which was about a non-Marxist genealogy of present capitalism and â€Å"Rationalization thesis† which talked about the analysis of the dominance of west in the present times. On top of these two works, his contribution to politics is only comparable to that of Machiavelli and Hobbes. Weber entered politics after the World War 1 and ran for a seat in parliament which he failed to capture. He served as an advisor to the ill-fated democratic draft of 1919 that is Weimar Constitution. His work was cut shot by the untimely death which occurred at a tender age of 56 in 1920. He contacted a Spanish flu and died of pneumonia. Weber was the eldest of the Max Weber Sr. born in 1884 in Erfurt, Thuringia. Weber sr. was a prominent civil servant and wealthy. He was the National Liberal Party member and married to Helene who was from French Huguenot and had strong ethical absolutist

Importance of employee performance management in retail Industry Essay

Importance of employee performance management in retail Industry - Essay Example Moreover, by evaluating and analyzing the performances of the organizations as well as the performance of the individuals working in the organizations, the management is able to formulate strategies that could further help in improving the productivity of the organization. Therefore it can be said that the performance management tools and performance management of employees help in improving productivity as well as in helping firms to gain competitive advantage. According to Armstrong (2006), employee performance management is the process in which employees are provided with significant opportunities to develop and nurture their skills and knowledge for the achievement of organizational goals and objectives. Having mutual understanding between the manager and the employees is quite essential in the employee performance management as the employees tend to maximize their efforts for the accomplishment of organizational goals (Leopold et al, 2005). Therefore, establishing employee perfo rmance management is quite essential for the organization to increase its overall productivity along with the level of performance in the market. Performance management is a process that ensures improvement in both quantity and quality of work and activities taken into consideration by the organization. In addition, the process helps the organization in aligning all the activities with the organizational goals and objectives (Leopold et al, 2005). By identifying the areas of improvements and areas where the organization has its strengths, the organization is in a better position to make important strategic decisions and help in achieving competitive advantage particularly when the organization is operating in a highly competitive industry such as retail industry. The level of competition in the retail environment has significantly risen and the organization has to deal with variety of employees, due to which the implementation of performance management has become a necessity to achi eve the organizational goals while sustaining the business for long-run in the market (Jones et al, 2005). The purpose of this study is to evaluate the process of employee performance management. In order to do so, the importance and benefits associated with the employee performance management have been taken into consideration. Moreover, the retail industry within UK’s competitive environment has also been taken into consideration. For the effective evaluation of employee performance management, a case study of the UK retail industry has been presented in the study. Lastly, recommendations have been provided with an aim to help the organizations operating in retail industry to enhance the level of performance along with the overall productivity within the competitive retail landscape. EMPLOYEE PERFORMANCE MANAGEMENT Employee performance management, in simpler words is the process that allows the establishment of shared workforce understanding by motivating the managers and e mployees to have mutual understanding regarding the attainment of organizational goals and objectives. Employee performance management ensures that the employees would work towards the attainment of desired organizational goals rather than just the personal goals. With the help of this process, the objectives of the

How techolgy changed our life Essay Example | Topics and Well Written Essays - 500 words

How techolgy changed our life - Essay Example The car changed the history of mankind forever. This paper discusses the effect the car had when it was invented and its impact on society today. People prior to the invention of the car were not able to transport themselves at will to any location at fast distances. The trains were a mass transportation system that allowed fast travel but the travelers were limited to traveling to the routes the train covered. The car changed that because each vehicle was independently owned by the person. The job sector in American society increased because the car provided workers with the ability to travel from the rural area to the urban sectors. Family life became more enjoyable as adults could take their kids to different leisure locations such as beaches, parks, and circuses in short amounts of times without any human effort since the car provide all the force needed to travel. Three American companies led the industry during the early part of the 20th century. The Big Three are Ford, General Motors, and Chrysler. These companies built many luxury, economic, and sports car models for users in America and worldwide. In the latter half of the 20th century Japanese companies such as Toyoda and Honda dominated the industry. In the 20th century cars become a basic necessity of all adults. The banking industry made money by financing the purchases of cars. Cars in the 20th century became more sophisticated and attractive for buyers. Even though cars provide great benefits for society they also have cons. The emissions released by combustion engines polluted the environment. The production of cars consumes natural resources such as aluminum. The fuel that powers cars is gasoline which is derived from the natural resource petroleum. In 2005 the US consumption of gasoline was 22.16 barrels per day (Greencarcongress, 2006). The invention of the car changes the lives of

Word-of-Mouth to Marketing Essay Example | Topics and Well Written Essays - 2000 words

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Sports Scandals in America Essay Example | Topics and Well Written Essays - 250 words

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British decolonisation in Africa Essay Example for Free

British decolonisation in Africa Essay Within the context of 1880-1980, to what extent did British actions accelerate British decolonisation in Africa? In the later years of the 19th century the scramble for the African continent by Western imperialist powers was reaching its climax. It appeared that the dark continent was to be no longer dark, but to be the product of Western colonial expansion with several European countries dividing up the land. No where was this more apparent than with Britain whose Empire was at its height at the turn of the century. Egypt, for instance, was a colony for 40 years (1882-1922) with its pinnacle at the turn of the century; however the decolonisation of the country as early as this is an anomaly in itself as only South Africa had previously been granted independence by the British, albeit as a self-governing dominion. In a bizarre turn of events which historians still debate today, the Empire crumbled and by the 1970s only two African states remained British colonies: Rhodesia and South West Africa. The Empire had taken the best part of a century to amalgamate, yet was mostly swept away in just over a decade. Many reasons have been proposed for the vast acceleration of decolonisation including economic difficulties at the metropole (Cain and Hopkins)1 and the rise of local nationalist movements (Hodgkin)2. More recently the actions of the British have been cited as a possible factor for the acceleration of decolonisation in Africa, marking a change in the historiography of the period. Turner3 and Lapping4 are promoters of this theory, which is gaining credence in the academic world. The 1945 election of the Labour party is a watershed in decolonisation acceleration. WW2 had recently ended which marked a shift in British culture and society, including a changed attitude to Empire. Interestingly, whilst many of the new Cabinet were anti-imperialists, the new government did not have a direct plan to fully decolonise. It was more a case of the Empire having to take a backseat to far more pressing matters: imperialism, in effect, slipped through the cracks of government. The party was elected on the mandate of and closely focused upon British welfare; the African colonies were working and therefore the governments attention was deviated, however it was one of the actions directed at the metropole which accelerated independence for many colonies. The introduction of the Welfare State in 1948 led many Britons to consider the priority and indeed the importance of the Empire when compared to home-grown issues. WW2 brought increased globalisation and it is possible that through this many British citizens saw their needs ahead of the colonies: an archaic and out-of-date segment of British foreign policy. If the colonies had representation in the British Parliament and were a province of, rather than simply a colony of Great Britain, this attitude may have been different: French Algeria, for instance, was certainly more respected at the metropole then any of Britains African colonies. There is a debate however, as to whether the British public had undergone a liberal revolution or were simply acting with self-interest. White has theorised that the latter is true, citing that the reason as to why the colonies were ditched was to release resources for domestic welfare spending5. Moreover, the fact National Service was revoked in 1960 reduced Britains ability to defend its colonies against uprising nationalist movements: conscription was ended through self-interest, as the majority of British youths didnt want to have to fight in the far off terrains of Sub-Saharan Africa. This further implies that the average British citizen was becoming disinterested by the Empire or, at the very least, impartial to its future. I will cover nationalism in greater depth below, but with such a lack of metropole interest, the Empire could not be expected to last long. The British action of electing a Labour government effectively, in an indirect form, accelerated decolonisation for ma ny of the African colonies. WW1 expanded the Empire both geographically and as a world power, with Britain gaining several new mandates from the Ottoman Empire. The geographical expansion of the Empire post-WW1 and the reluctance of the metropole to grant these new mandates independence6, imply that attitudes had not changed and many (both in government and in society) saw the Empire as a credible and useful segment of British politics: therefore, with the exception of the more economically advanced Egypt, African decolonisation by the British did not occur between the wars. Rather, many African colonies developed and became more stable societies. Take the Gold Coast for instance: between the wars its economy, communications and education became, to a certain extent, Westernised and the country flourished. Admittedly this led to the acceleration of nationalist movements in the area which, in turn, accelerated decolonisation, but the country was undeniably prospering due to the British-led government of the time.7 Many citizens of the African colonies (including Egypt and the Gold Coast) fought alongside British soldiers in WW1 and the respect and prestige for the peoples increased because of it. Indeed, the 1914-1939 era can be seen as one of the strongest periods of the British African Empire. This implies that a post-1945 factor (e.g. the Suez Crisis, see below) accelerated decolonisation. In comparison, World War 2 accelerated decolonisation at a far greater rate than many could have imagined just a few years prior. Effectively, the war established rather paradoxically that imperialism (both British and otherwise) was both positive and negative. Ferguson has noted that the British Empire sacrificed itself to stop the spread of the evil empire of Nazi Germany: indeed, the British Empire had never had a finer hour8 than when it was self-sacrificing. During the war it was inevitable that Britain would have to, to a certain extent, neglect the colonies to focus on defeating the enemy. Through this the colonies became more independent having to, for example, source resources and engage in trade without the aid of the metropole. Moreover, the colonial peoples had a greater influence on the running of their societies; in effect, many became informal dominions. This, combined with the policies of the 1945 Labour government, further fuelled nationalism which accelerated decolonisation; in a way similar to how the two World Wars improved womens rights in Britain, the wars seemed to suggest that many colonies could govern effectively on their own. Previously, only the more economically and politically stable societies had been granted independence (e.g. South Africa, 1910) and several colonies (e.g. the Gold Coast) seemed to show similar traits during the war. The Second World War didnt lead directly to decolonisation, but it is this British action which occurred because of the conflict that accelerated decolonisation in British Africa. The end of WW2 bought increased globalisation and a new world order, where the enemy didnt appear to be Nazism or Fascism, but rather the expansion of the Soviet Bloc and the spread of communism: the Cold War was just beginning to ignite. Along with the notion of changed attitudes of the British people, there is also the argument that the Empire really didnt fit into the new world. Now, the split between East and West had never been more apparent and British Africa looked like an oddity: along with the passing of new welfare legislation at the metropole and the changing attitudes of the British people, Britain needed to abolish the Empire for two reasons directly related to the Cold War: to concentrate efforts on halting the spread of communism and to appease the anti-imperialist US, who Britain now required as an ally more than ever before. Moreover, the world order was now unclear and Britain had far greater problems to worry about than what their small African colonies were up to: put bluntly, the new threat of nuclear inhalation seemed more important than the political shortcomings of, say, Somalia. While WW2 does spell out more crucial factors for the acceleration of decolonisation, the Cold War is another smaller factor which just added to the need to decolonise. The post-WW2 economy is a further crucial factor in the acceleration of decolonisation. Britain was no longer able to withstand the fiscal costs of Empire; this was coupled with a lack of substantial profit coming into the metropole from the African colonies. Economically, WW2 was a great strain on Britain with the country coming out of the war in great debt; she required a loan of à ¯Ã‚ ¿Ã‚ ½145million from the US alone9. Britain was exhausted and worn down, both figuratively and physically. Many cities required money to rebuild, some from scratch, plus food badly needed to be imported following years of intense rationing. Moreover, the introduction of the welfare state (see above) required significant funding. As said, attitudes to Empire were changing which, combined with the need for intense spending on the homeland, led to many seeing the African colonies simply as a drain on Britains already scarce resources. Britain made the situation worse: during the war she had understanda bly concentrated on producing munitions for her troops, resulting in fewer exports to the colonies. Many turned away from the metropole and looked to alternate suppliers, including their own land which inevitably fuelled nationalism further. Moreover, two acts (The Colonial Development and Welfare Acts of 1940 and 1945) were passed during wartime which forced the British government to further invest in the colonial economies10, therefore making an already problematic economic situation worse. It is possible that the government felt it was backed into a corner and simply did not have the patience or money to rebuild the colonies and the metropole: they had become, or at least had the potential to become, a major rupture on the British economy a rupture Britain could not afford to fix, but only to cut out completely. In the early 20th century when British imperialism was at its height, Hobson11 saw the expansion of Britain in Africa as purely economic and an underhand method to help capitalists at the metropole this opinion was endorsed by Lenin in 191612 and, in an albeit modified form, by the historian Darwin in 1984: more completely than ever before, economics and empire had come together13. More recently, Cain and Hopkins14 have suggested that imperialism in Africa was established by gentleman capitalists15 who were simply aiming to make profit out of the African land. Of course, if this is the case, then with the post-war debt experienced in 1945 it would have been difficult to make money from these colonies, leading to decolonisation. The decolonisation of African colonies would effectively make Britain a richer country, therefore agreeing with the views expressed by Cain and Hopkins and others: the Empire had served its purpose of aiding Britains wealth but now it was draining it and, as such, it was time for it to go. The Suez Crisis of 1956 was one of the most decisive British actions in the 20th century to accelerate decolonisation in Africa. Former Prime Minister Harold MacMillan once remarked that it is events, dear boy, events16 which determine the success of a premiership. The term event is almost too light of a phrase to use when considering the Suez Crisis: not only did it annihilate Anthony Edens administration, but it was also the launching pad for many factors which saw British decolonisation vastly accelerated. There are two key elements of the crisis which paved the way to said factors: the deception employed by the imperialist powers of Britain and France, plus the apparent overreaction to a simple act of nationalisation by a head of state. Both these factors led to the reputations of the countries involved and international relations been damaged, as well as a decrease in trade. Britain was the driving force behind the attack hence she was particularly wounded with the political and economic fallout: for one, the special relationship with the United States was harmed (Secretary of State John Foster Dulles claimed the British government had explicitly lied to [him]17) and, more critically for this inquiry, her reputation within the African continent was damaged. Britain looked small and corrupt, a mere shadow of her former colonial self; she was attempting to throw her imperialist weight around in a world which it didnt seem to fit. Nasser had successfully stood up to the Western powers and won, thus undermining Britain and France, plus providing inspiration to the many oppressed colonies. However, it is possible that the reaction did not provoke the level of international condemnation that is contemporarily considered, showing a difference in historiography. To the African colonies, former British dominions that had experienced colonialism and anti-imperialist powers such as the USA, then yes, it is likely that Britains reputation was damaged. However, to other imperialists it is possible that the government simply appeared to be standing firm with a tyrant. World War 2 had been won only 11 years prior, hence the memory of what tyrannical dictators can achieve was still fresh in most leaders minds. Eden may have appeared noble and selfless, destroying not just his own political career but a carefully-crafted reputation built up over more than 20 years18 for the greater good of a safer world, or at least a more economically stable Great Britain. White has proposed that there [were] a number of lacklustre continuities, rather than dramatic discontinuities19 in imperialist policy following Edens departure: a government memorandum circulated in the immediate aftermath of the crisis, for instance, made no mention of impending decolonisation20. Suez was not so much a watershed, but a temporary setback in Britains imperial decline, indicating other factors are responsible. Economically, the Egyptian nationalisation of the canal posed a significant danger to Britain as 2/3 of the countrys oil utilised the waterway. The chief reason as to why Britain intervened in the first place (and, indeed, retained the Canal Zone in 1922) was that the government simply did not trust the Egyptians to efficiently control the windpipe21 of the British economy. Post-crisis, Britains humiliation resulted in a trade decrease and a catastrophic22 run on the pound, resulting in her appearing not only politically and militarily weak but also financially weak. This situation, which was caused by the Suez Crisis, meant that Britain could no longer afford to support the African colonies, implying that the British action of invading the Suez Canal Zone led to one of the factors which brought about the Empires collapse. Combined, these factors inspired nationalist movements within the colonies and general condemnation of imperialism, which also accelerated decolonisation. The crisis is unique as not only did it, to a certain extent accelerate decolonisation, but it is also one of the very few examples of where a British action greatly damages the standing of the Empire. Prior to Suez, Britain was surprisingly cautious with decolonisation (with regard to Africa, only 4 of her 24 colonies had been decolonised at this point); arguably this was to retain an Empire, but also to ensure that the new societies were ready to govern. It was only following the Suez debacle that decolonisation accelerated, implying that previously Britain had took great care over the handovers of power. South Africa was a stable society when decolonised in 1910 and, looking further afield, so were Australia, Canada and India. To many other countries and colonies, Britain appeared now unable to continue to be the metropole of a successful Empire. After all, if the dictator of a former colony could cause a country such ridicule, how could they be expected to carry on maintaining a successful Empire? Comparatively with White23, Turner has called the crisis a military failure and political disaster24, whilst Lapping has referred to it as the imperial cataclysm25 in decolonisation acceleration. The crisis was highly influential in the eventual collapse of the British Empire in Africa but it did not lead directly to decolonisation, rather greatly accelerated it. The rise of nationalism within the African colonies inevitably accelerated decolonisation; advocates of this theory argue that for decolonisation to occur there needs to be an opposition force to the status quo government (in this case, colonial British rule), thereby giving the people a choice. Looking throughout history at the Empire as a whole gives this theory credibility: look at the violent independence battles of the 13 North American colonies in 1783 or India in 1947, and compare that to the peaceful colony of the Falkland Islands which still exists today. The previous decolonisation record of the British government, plus the 1947 granting of independence to India, no doubt sent the message that it was only a matter of time before the African colonies were decolonised. India specifically was the jewel in the crown of the British Empire and as such its decolonisation will have led many, both in the colonies and abroad, to see the Empire as deteriorating. This accelerated nationalist movements within the African colonies, with India referencing the beginning of the end. After all, if India could be granted independence through a powerful and violent nationalist movement, then why couldnt the other far less prestigious colonies? Indian independence inspired others to rise up and attempt to take back control of their lands, accelerating the decolonisation process for British Africa. Similarly, plus to reiterate an earlier point, the Suez Crisis accelerated nationalism: Nasser appeared to be the David who had managed to annihilate the imperialist Goliath. This inspired nationalism in other colonies to grow and attempt to take back control of their lands: after all, if Nasser could manage it then why couldnt they? Harold MacMillans Winds of Change speech four years later further inspired this nationalism as, for the first time, the government officially acknowledged the inevitability of decolonisation. The speech sent the message to many colonial peoples that nationalism was acceptable: for the first time in almost 100 hundred years, power was given to the Africans. MacMillan was acknowledging that the British government could no longer afford to sustain an Empire and would be willing to pass power to the local peoples if they should so wish. The speech had a great effect as over the next ten years 88% of Britains remaining African colonies were granted independence; by 1968, only two remained. Nationalism was suddenly acceptable which encouraged those who may have been content to be a colony to rise up against imperialism. This speech, combined with Britains poor economic situation and damaged credibility following Suez, vastly accelerated decolonisation. Moreover, the vast majority of British colonies were underdeveloped both economically and socially which further advanced nationalism. Take Nigeria for instance: the peoples were so against colonial oppression many began to strike from work a surprisingly Western phenomenon implying the people were more integrated than they may have wished to believe. It is estimated that from 1945-50, over 100,000 working days were lost in Nigeria to strike action against colonial rule26. Even the Gold Coast (the very model27 of a colony) was not free of such demonstrations against imperialism: February 1948 witnessed a violent protest, resulting in the deaths of two British servicemen28. One only has to look at Kenya and the Mau Mau rebellions to see further evidence of increasing dissent with British imperialism. It had, to use the words of one modern historian, turned into a rapid scuttle29 of local nationalism. The Gold Coast was decolonized in 1957 but had been allowed to gradually master the art of modern government over many years, leading to a much more stable society post-independence, making it the very model of decolonisation30. In comparison, when Nigeria was swiftly decolonised in 1960 the government was a weak coalition with limited power two army coups followed in 1964 and 1966. Britains damaged reputation in the continent prevented stable governments from being created, resulting in far more fragile states today. French Algeria (despite been a province of the metropole) saw terrible violence between the FLN and colons: to use a term of warfare, the Algerian nationalists utilised violent guerrilla tactics to spread their cause, resulting in a great amount of destruction and loss of life. Algeria bullied itself into independence in 1962 further showing that imperial metropoles were not as powerful as they once were. It is an exaggeration perhaps, but it can be said that the Suez Crisis was the first instance which led to these new states political and economic troubles which still exist today. Look at Egypt and South Africa today or, from a more international perspective, India and Australia, all of which were granted independence pre-1956 and compare them to the troubled states of Nigeria, Kenya (1963) and Somalia (1960). The acceleration of British decolonisation in the latter half of the 20th century is the opposite of what the government and imperialists like the legendary Cecil Rhodes would have imagined just 60-70 years previously. They had fought sometimes bloody battles for the expansion of the British Empire into the less civilised areas of the world, yet now the government was seemingly trying to get rid of the Empire in as rapid and inefficient way as possible. Multiple factors account for the sudden acceleration of decolonisation, but most come back to the actions of the British: if Britain had, for instance, provided more support and direct governance in a Westernised style (as seen in the Gold Coast), her colonies would have developed at a greater rate leading to a greater level of content from the colonial peoples. However her neglect and exploitation of her own people led to dissent within the colonies, leading many to want out before they were politically ready. The most pivotal British action which is continually referred back to is the 1956 Suez Crisis: for the first time in the Empires history, the British appeared militarily, politically and economically weak, causing many in the African colonies to quite fairly believe they could run their countries better. Nationalism was inevitable, and the international conflicts of the Cold War and the two World Wars couldnt be stopped, implying that Britain herself was responsible for the downfall of her own Empire. If the crisis hadnt occurred then the Empire would have faded away through gradual decolonisation as each territory became more economically, politically and socially developed; instead, the Crisis turned decolonisation of Africa into a rapid scuttle31, with Britain almost retreating into a corner trying to distance herself as far as possible from the embarrassment of 1956. Today, it is easy to see that decolonisation was inevitable; the Suez Crisis just accelerated that inevitability. One of the worlds greatest Empires was established by one of the most powerful countries in the world, so it is only fitting that it was destroyed by one of the most disgraced it is just unfortunate they were both Great Britain. 1 Cain, P. J. Hopkins, A. J., 1993, British Imperialism: Crisis and Deconstruction, 1914-1990 2 Hodgkin, T., 1956, Nationalism in Colonial Africa 3 Turner, B., 2006, Suez 1956: The Inside Story of the First Oil War 4 Lapping, B., 1985, End of Empire 5 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 32 6 Thorn, G., 2008, End of Empires: European Decolonisation 1919-80, Pg 16 7 McLaughlin, J. L., 1994, The Colonial Era: British Rule of the Gold Coast 8 Ferguson, N., 2004, Empire: How Britain Made the Modern World 9 Rohrer, F., 10/05/2006, BBC News [Online] [http://news.bbc.co.uk/1/hi/magazine/4757181.stm] [Accessed 25/04/2010] 10 Chamberlain, M.E., 1985, Decolonisation: The Fall of the European Empires, Pg 35 11 Hobson, J.A., 1902, Imperialism: A Study 12 Lenin, V., 1916, Imperialism: The Highest Stage of Capitalism 13 Darwin, J., 1984, British Decolonization since 1945: A Pattern or a Puzzle?, Pg 197 14 Cain, P. J. Hopkins, A. J., 1993, British Imperialism: Crisis and Deconstruction, 1914-1990 15 Cain, P. J. Hopkins, A. J., 1993, British Imperialism: Innovation and Expansion, 1688-1914 16 Beckett, F., 2006, MacMillan, Pg 97 17 Wilby, P., 2006, Eden, Pg 79 18 Wilby, P., 2006, Eden, Pg 128 19 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 85 20 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 128 21 Wilby, P., 2006, Eden, Pg 96 22 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 84 23 White, N. J., 1999, Decolonisation: The British Experience Since 1945 24 Turner, B., 2006, Suez 1956: The Inside Story of the First Oil War 25 Lapping, B., 1985, End of Empire 26 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 48 27 Thorn, G., 2008, End of Empires: European Decolonisation 1919-80, Pg 50 28 White, N. J., 1999, Decolonisation: The British Experience Since 1945, Pg 49 29 Lapping, B., 1985, End of Empire, Pg 227 30 Thorn, G., 2008, End of Empires: European Decolonisation 1919-80, Pg 50 31 Lapping, B., 1985, End of Empire, Pg 227

A Sense of Sin Essay Example for Free

A Sense of Sin Essay No one doubts the presence of evil in the world. We experience it in a variety of ways: national and international conflict; domestic and street violence; political and corporate corruption; and a host of manifestations of sexism, clericalism, racism, ageism, and other violations of justice. All such forms of brutality, disorder and discrimination, seem from a theological perspective, are rooted in sin. But do we ever recognize the sin and name it as such? 1 Retrieving a Sense of Sin For some reason, sin seems to have lost its hold on us as a way of accounting for and naming so much of the evil we know. Among the many other reasons, the eclipse of the religious world view through the rise of the secular spirit accounts significantly for the loss of the sense of sin. In fact, in his post-synodal exhortation, Reconciliatio et Penitentia (1984), Pope John Paul II credits â€Å"secularism† above all with contributing to a loss of a sense of sin.2 The secular spirit questions the relevance and meaning of all Christian symbols, and even of religion itself. One effect of this secular spirit on the meaning of sin, for example, has been to reduce sin to some form of psychological or social disorder. The therapeutic perspective which pervades the secular spirit looks on behavior as either healthily adaptive-problem-solving behavior, or as unhealthy, nonadaptive, and problem-creating behavior.3 It does not call the latter sin. For a survey at major attempts in the past twenty years to explore the mystery of sin, see James A. O’Donohue, Toward a Theology of Sin: A Look at the Last Twenty Years,† Church 2 (Spring 1986): 48-54. 2 The other factors of a non-ecclesial nature which John Paul II lists as errors made in evaluating certain findings of the human sciences, deriving systems of ethics from historical relativism, and identifying sin with neurotic guilt. Within the thought and life of the Church, certain trends have also contributed to the loss of the sense of sin. Among these he lists the movement from seeing sin everywhere to not recognizing it anywhere; from an emphasis on fear of external punishment to preaching a love of God that excludes punishment; from correcting erroneous consciences to respecting consciences but excluding the duty to tell the truth. Two other ecclesial factors are the plurality of opinions existing in the church on questions of morality and the deficiencies in the practice of penance. To restore a healthy sense of sin, the pope advocates â€Å"a sound catechetics, illuminated by the biblical theology of the covenant, by an attentive listening and trustful openness to the magisterium of the church, which never ceases to enlighten consciences, and by an ever more careful practice of the sacrament of penance.† See Origins 14 (December 20, 1984): 443-444, quotation at p. 444. 3 The research of the team headed by sociologist Robert Bellah which has produced Habits of the Heart (Berkeley: University of California Press, 1985), a study of the American beliefs and practices which give shape to our character and form our social order, shows that the therapist is the newest character forming American culture. See Chapter Two â€Å"Culture and Character: The Historical Conversation,† pp. 27-51, especially pp. 47-48. 2 Moreover, the secular, therapeutic perspective tends to look on persons more as victims of unconscious or socio-cultural influences than as agents of free actions. Psychiatrists Karl Menninger in Whatever Happened to Sin4 and M. Scott Peck in People of the Lie5 want to make full allowance for those conditions which cause people to do evil. Yet both insist on a strip of responsibility which cannot be negotiated away to these determining influences. While the behavioral sciences provide us with helpful explanations of human behavior, they do not give a full account. Sin is real, and we need a fresh way to get at it and call it what it is. What do we need to grasp in order to retrieve a sense of sin in an adult manner? Contemporary moral theology says a â€Å"sense of responsibility.† Christian theologians find in â€Å"responsibility† the essential theme of Christian faith and the central characteristic of the moral life. A leading Protestant theologian of this century, H. Richard Niebuhr, has done much to give impetus to the â€Å"responsibility† motif in Christian morality. 6 He summarizes the constituents of responsibility by describing the agent’s actions as a response to an action upon him in accordance with his interpretation of the latter action and with his expectation of response to his response; and all of this is in a continuing community of agents. (The Responsible Self, 65) Since God is present to us in and through all that makes up our lives so that we are never not in the presence of God, our responses to all our actions upon us include our response to God. As Niebuhr asserts, â€Å"Responsibility affirms: God is acting in all our actions upon you. So respond to all actions upon you as to respond to his action† (The Responsible Self, 126). If â€Å"being responsible† sums up the quality of character and action marking Christian moral living, sin will mark the failure to be fully responsible. â€Å"Responsibility† as a motif for the moral life has found its way into Catholic moral thinking with the strong support of the biblical renewal in the Catholic Church. Bernard Hà ¤ring, who has been instrumental in renewing Catholic moral thinking, has used this notion of â€Å"responsibility† with great success in reconstructing Catholic moral thought. Along with other Catholic theologians, Hà ¤ring has found in the biblical renewal a fresh theological framework and an orientation for understanding the moral life.7 We turn, then, to the biblical perspective on sin. Menninger, Whatever Happened to Sin? (New York: Hawthorn Books, Inc., 1973). Peck, People of the Lie (New York: Simon and Shuster, 1983). 6 See especially Niebuhr, The Responsible Self (New York: Harper Row, 1963), pp. 61-65. 7 Bernard Hà ¤ring’s writings are vast and wide-ranging. His early three-volume work, The Law of Christ (Westminster: Newman Press, 1961, 1963, 1966), was one of the first major works by a Catholic moral theologian to rethink morality in light of the biblical renewal. His most recent three-volume work, Free and Faithful in Christ (New York: Seabury Press, 1978, 1979, 1981), is an expression of Hà ¤ring’s more mature thought. This work is not a revision of The Law of Christ, but a completely new work. Charles E. Curran, a student of Hà ¤ring, has followed his teacher’s lead in making efforts at renewing moral theology in light of the biblical renewal. Some of Curran’s pertinent articles are â€Å"The Relevancy of the Ethical Teaching of Jesus† and â€Å"Conversion: The Central Message of Jesus† in A New Look at Christian Morality (Notre Dame: Fides Publishers, Inc., 1968), pp. 1-23 and 25-71. Sin: The Biblical Perspective From the Bible we see that Christian morality is primarily a â€Å"vocation.† This means that our life is a response to the word of God spoken to us preeminently in Jesus, but also in and through the people and events of our lives. From the perspective of vocation, wherein God calls and we respond, responsibility replaces obligation as the primary characteristic of the moral life. Also, the relationship that we establish with God in and through our responses to all things becomes the focal point of the moral life. From this point of view, practicing the presence of God becomes essential for Christian responsibility, Christian moral growth, and our awareness of sin. A consistent theme of contemporary theology has been that we cannot have a proper understanding of sin unless we have a proper understanding of the nature and implications of the covenant God has established with us. â€Å"Covenant† and â€Å"heart† are the dominant metaphors of biblical faith for understanding the moral life. They provide the biblical horizon against which to recognize sin. Covenant The two frequently used terms for sin in the Old Testament point to violations of relationships. Hattah is the most common term. Its meaning, â€Å"to miss the mark† or â€Å"to offend,† points to a purposeful action oriented toward an existing relationship. The existence of the relationship makes the offence or failure possible. Pesa, meaning â€Å"rebellion,† is a legal term denoting a deliberate action violating a relationship in community. The New Testament term for sin is hamartia. It connotes a deliberate action rooted in the heart and missing the intended mark. 8 These terms acquire theological significance when used in the context of the covenant which expresses the most personal kind of relationship between God and us. The primary aim of the covenant is that God loves us without our having done anything to attract God’s attention or to win that love. God’s covenant is a bond of completely gratuitous love, pure grace. But God’s initiative of love (grace) does not destroy our freedom. Unlike the Godfather, God makes an offer we can refuse. God’s offer of love awaits our acceptance. Once we accept the offer of love we commit ourselves to living as the covenant requires. The covenant context lifts the notion of sin out of a legalistic framework to set it on a level of a personal relationship with God. In worshipping the golden calf (Ex 32), Israel missed the mark of covenant love, or sinned, not so much because Israel broke one of the laws of the covenant, but because Israel broke the personal bond of love of which the law was an external expression. The law was not to be the final object of Israel’s fidelity. God was. Sin in the Bible is not merely breaking a law. Sin is breaking or weakening the God-given bond of love. The law was an aid to Israel’s fidelity and pointed to the responsibilities of being in relationship to God.

Strategic Development Study of Caterpillar Inc

Strategic Development Study of Caterpillar Inc INTRODUCTION This report presents the Strategic Development Study of Caterpillar Inc. Caterpillar Inc. founded on 15th April, 1925 in California, United Stated. Caterpillar is involved in designing, manufacturing, marketing and selling heavy equipments, machinery and engines and it is also involved in selling financial services to the customers all over the world. Caterpillar is the worlds largest manufacturer of manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The organization is serving worldwide and is providing employment to around 104,490 employees. Its products includes Bulldozer, Excavator, Wheel Loader, Haul Truck, Diesel Engine etc. and its services includes Financing, Insurance, Maintenance and Training. The developmental strategies used in the past, present strategies and the strategic planning for the future development of the Caterpillar, are discussed further in this report. Strategic Planning is about the finding the best solution for future problems to be faced by the organizations that not only solves the problems but should also proves to be beneficial to the organization. Caterpillar value statement is We have the people, processes, tools and investments to deliver the quality, reliability and durability customers expect from Caterpillar in each new product introduction. This strategic planning report focuses on three major tasks: Describe the strategies deployed by the organization in the past and their resulting outcomes i.e. the strategic development history of the company. Undertake the evaluation and appraisal of the companys current strategic situation with reference to the companys strategic macro industry and competitive environment and companys endowment of its resources and capabilities. Explore, evaluate and access the strategic choices available and recommend the best strategic plan available for the organization. STRATEGIC DEVELOPMENT HISTORY OF CATERPILLAR It has been more than 85 years that Caterpillar is serving its customers and hence ranked worlds number one in its own industry. The company has been developing every year and has maintained its position into the market. In 1980s, Caterpillar came very close to bankruptcy but still it manages to come back as a high tech globally competitive growth company. The company has now proved itself as the worlds largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. Companys Establishment In April 1925, the financially strong C. L. Best merged with the market leader Holt Caterpillar to form Caterpillar Tractor Co. Caterpillar is involved in manufacturing of heavy equipments used in construction and mining that are recognizable with CAT logo. Because of the intensive competition over the market share, in 1963, Caterpillar forms the joint venture with Mitsubishi Heavy Industries Ltd. which is ranked 2nd in Japan for manufacturing construction and mining equipments. Caterpillar agreement with Shanghai Diesel in China was helpful in improving the market share of Caterpillar as it was a technology sharing alliance. Come back of Caterpillar from Recession In the year 1981, Caterpillar faced huge economy downtown and was very close to bankruptcy. For 3 consecutive years, the recession costs around $1 million a day to the company which further forces the company to reduce the employment. There were three reasons for this crisis i.e. global recession, strikes and unfavorable currency exchange rates. Company faced many competitors that time including Komatsu Ltd. as the prime competitor. To overcome this recession, the company CEOs introduced various strategic measures like cutting costs, employee reduction, out sourcing of machinery, parts and their components, introduction of modernization, diversification of product line and reorganization of companys structure. These measures were very important that time to save the organization to become bankrupt. Later on the organization worked really well and managed to generate the highest revenues. George Schaefers encouraged the executives to respond to recession. Caterpillar outsources 80% of its parts and components and further they used their brand names for selling the outsourced products keeping the quality control of the products. They doubled their product line in just 4 years from 150 to 300 equipments with an introduction of small and light weighted products along with the customer diversification as well. Caterpillar also focused on repairing its relationship with the labour as they experienced many strikes because of the cost cutting the company successfully achieved the target of an healthy employee and employer relationship. Also employee involvement program was launched by Schaefer in 1986 that involves employee satisfaction, quality improvement and increasing efficiency level. This program was termed as Employee satisfaction Progress i.e. EPS. EPS helps in reducing the rate of absenteeism, decline in labour grievances, saving in costs of upto $10 million and increases employees loyalty. Plant with the future (PWTF) is launched a s a modernization program. Shift from batch production to flexible work cells proved to be good for the organization. The technological improvements and PWTF program resulted in high quality of products, increased efficiency level and high productivity. As a result of all these efforts put by the organization, the Caterpillars 30 worldwide plants managed to cut the inventory level by 50% and manufacturing space by 21% in just 3 years. Also Caterpillars world market share goes up to 50% and its revenues increased by 66% from the year 1985 to 1990. Caterpillar beat the Komatsu by having total sales of over $11 billion in the year 1989, which were nearly twice the sales of Komatsu. The company takes the advantage of the growth in global demand for heavy construction industry at a steady rate of 4.5% in the 1990s and was successful in making its way towards the top most position. Schaefer proves to be the best manager of any manufacturing company of heavy construction equipments. After five year tenure of Schaefer as CEO, Donald Fites becomes the next CEO of Caterpillar Inc. Donald brought leadership style to the organization. He further focuses on reorganization plan that involves the customer needs on priority basis. Research and Development In 1904, Benjamin Holt solved the problem of driving tractors smoothly in moist soil faced by farmers in California by manufacturing a tractor with gasoline engine instead of steam engines that are much lighter in weight and that tractor was nicknamed as Caterpillar. By 1915, the Holt tractors were sold in around 20 countries. Further they formed a company named Caterpillar by merging with best company in tractors. Caterpillar was the first company that introduces diesel engines on a moving vehicle. In 1931, the company created separate engine sales group for the marketing of diesel engines to other equipment manufacturers and they further replaced it with sales and marketing division for serving better range of customers. The company was highly involved in manufacturing replacement parts as well because it generates over a quarter of the total revenue because of two main reasons i.e. sale of replacement parts is more profitable than the whole machines and the replacement parts marke t was less cyclical than that of original equipment. After World War 2, the demand for Caterpillar products increased to reconstruct the disaster happened in Europe because of the 2nd world war. Finally in 1960s, Caterpillar becomes the leader of the heavy construction equipment industry. Further in 1965, Caterpillar expanded its operations to Britain, Canada, France, Brazil, Australia, India and Japan. In 1983, the company starts providing financial services as well. There has been huge diversification in the product line to overcome the recession in the year 1985 to more than 300 products. As the company was developing and diversifying in its operations, it changes its name to Caterpillar Inc. In 2001, Caterpillar was the first company that launches 6 Sigma that helps the organization in improving its quality to the best level. Caterpillar starts sustainable development in the year 2005 as it responded to the Asian tsunami disaster and earthquakes in South Asia. CURRENT STRATEGIES OF CATERPILLAR Caterpillar Inc. is the worlds number one manufacturer of construction and mining equipments, diesel and gas engines and natural gas turbines. The organization is developing day by day and continuously expanding their business. Its market is not only limited to Europe but Caterpillar is selling its products all over the world like China, India, America, Russia etc. Caterpillar serves its customers with the highest quality product at a very reasonable price and also involved in good customer relations. Caterpillar is manufacturing its products at 110 plants worldwide and is selling its products in nearly 200 countries. Caterpillar made its sales through independent dealers that contribute around 66% of the total sales. Caterpillar uses many business strategies for its development and to compete effectively with its competitors. For the evaluation and appraisal of companys current strategies, various strategic tools are used like PESTEL Analysis for analyzing the macro environment, SWOT Analysis for analyzing the capabilities efficiency of resources as well and Porters Five Force Analysis is used to analyze the market, customers, competitors, suppliers etc. PESTEL Analysis For evaluating and analyzing the macro environment of the organization, the PESTEL Analysis tool is used. There are various macro environmental factors that affect the workings of an organization like Political factors, Economical factors, Social factors, Technological factors, Environmental factors and Legal factors. Let us now discuss in detail that how these factors affect the working of Caterpillar Inc. Political Factors Political factors are one of the main factors that affect the operations of the organization. Every country has its own governments with different laws and legislations, rules and regulations, import and export policies etc. As Caterpillar is operating and serving the customers worldwide, it should be aware of the political factors. Economical Factors The economic factors includes the recession, inflation, growth in GDP, growth in population etc. In 1980s, the recession hits Caterpillar badly as it was very close to bankruptcy but somehow it manages to overcome that economic downtown. The rise in the prices of raw material, diesel, petrol, import and export costs etc. is big problems for the organizations. A rise in raw material prices increases the manufacturing costs in Caterpillar and to maintain a balance, the organization has to increase its prices. Social Factors Caterpillar is operating in many diversified countries. Hence it becomes essential to consider the social factors while framing the business strategies. Each and every country has different societies with different values, culture, religions, attitudes etc. the company has to maintain a balance to avoid any kind of discrimination into the organization. Technological Factors A manufacturing organization like Caterpillar needs ongoing technological advancements. It should be updated with all the latest technologies to compete in a better way and maintain its position into the market. Caterpillar is always using the best technologies for manufacturing its construction equipments. Moreover it has invented many new products with the best quality and price range among the whole market. Environmental factors The Caterpillar has moved towards the sustainable development i.e. they are focusing on new technologies and innovations to increase the efficiency and productivity of the organization by not impacting the environment and also providing guidelines to the customers for doing the same. Their mission is to enable economic growth through infrastructure and energy development, and to provide solutions that protect people and preserve the planet. Legal Factors The various laws and legislations of the country in which the company is operating cannot be ignored. The laws related to import and export, employment laws, labour laws, should be taken care of. A lawful and legal organization can effectively survives in long run. SWOT Analysis The SWOT Analysis shows the Strengths, Weaknesses, Opportunities and Threats available with the organization and provides an opportunity to the organization to use its Strengths and Opportunities for the betterment of the organization and keep the organization safe from its weaknesses and outside threats. Let us discuss the SWOT Analysis of Caterpillar. Strengths The main strength of Caterpillar is that it is a global leader in its own industry as it is worlds largest manufacturer the construction and mining equipment, diesel and gas engines and natural gas turbines. It is ranked as number 44 among all the organization in 2009 by Fortune 500. It has the highest revenue generation and highest share value in the market as well. It has a strong financial condition as it can grab the worldwide opportunities available. Caterpillar has 110 plants worldwide and is serving around 200 countries which show its huge customer diversification. It has a strong dealers worldwide network which contains over 200 full line dealers that helps the organization in capturing about 60% of the market. Weaknesses In recent years the company has faced many downtowns. The sales volume of the company is decreasing since 2003 which results in less revenue. Also the long term debts of the company have been increasing. The company does most of its sales through its independent dealers. Dealers show a very less confidence towards the Caterpillars new forecasting system. Opportunities Caterpillar has good opportunities of growth in developing countries like India and China. These countries demand lot of construction equipments and engines as well. Again the growth in the population demands more construction. Entering into joint ventures and acquisitions provides good opportunities for the companys development. In 2004, the company formed Caterpillar Power Generation Systems in association with Solar Turbines Incorporates to market the products of both the companies which further reduces the manufacturing costs of the firm and makes the organization more competitive. Threats The outside threats cannot be ignored as they affect the organization adversely. The recent threats faced by Caterpillar include the rise in the prices of raw material especially metal prices. This increases the manufacturing cost and further decrease the organizations profits. The demand of the mining equipments depends on the population growth and Gross Domestic Product growth which is very uncertain. The deal between Caterpillar and United Auto Workers finishes in 2004 which enable strikes and disruptions in work. Hence such contract expuration are great threat to the organizations. Porters Five Forces Porters Five Forces is a business strategy that is formed by Michael E. Porter. He points out the five forces available in the macro environment that affects the abilities and capabilities of an organization. These five forces are threat of new entrants, intensity of competitive rivalry, threat of substitutes, bargaining power of customers and finally bargaining power of suppliers. This helps an organization to be aware of the outside environment and make their business strategies accordingly. The further discussion on Caterpillars Porters Five Forces is as follows: Threat of New Entrants The threat of the new entrants in very low for Caterpillar. Caterpillar is into manufacturing the construction equipments which requires a huge capital and resources. It is difficult for any new entrant to invest that much into this industry when it knows that there are already highly competitive firms available. Caterpillar should compete continuously with its competitors to maintain its position into the market. Intensity of Competitive Rivalry Caterpillar faces a high competition into the market and the other competitors can overcome Caterpillar anytime if they lose focus or using bad business strategy. Caterpillar has around 50 competitors worldwide that controls around 80% of the market. Threat of Substitutes There is nearly no threat of substitutes for Caterpillar as it is involved into the manufacturing of such unique construction and mining equipments. Bargaining Power of Customers The customers have a moderate bargaining power as most of the sales are done through independent dealers and pricing is done according to the markets. Bargaining Power of Suppliers Again the suppliers also have a moderate bargaining power. For manufacturing construction equipments, there is a need of steel or other heavy raw materials which are difficult to transport and also costs very high. Hence an increase in the prices of raw material is a big issue for the organization. FUTURE STRATEGIC PLANNING OF CATERPILLAR Caterpillar has set various targets for future and is seriously involved into the achievement of those targets. The organization has set its strategy as Vision 2020. This strategy sets the stage for the next phase of the companys leadership and growth in the global industries it serves. The visions and missions set by Caterpillar are very practical and will provide further development to the organization. In the past 80 years, Caterpillar has proved itself to be a well established business with effective management and business strategies that helps the organization to maintain its profits and position into the market even at the time of recession. The organization knows the ways of beating the recession and wins back its position into the market. Caterpillars future strategic visions are like becoming a recognized leader in its own industry everywhere, the products, services and solutions provided will helps the customers to succeed, making use of the organizations distributions system as their competitive advantage, maintaining good labour relations and acquiring highly talented people. The organization has set various targets for its next five years i.e. providing the best return to its shareholders, hiring and maintaining the best talented people into the organization and becoming a global leader everywhere they do business. These targets are already achieved by Caterpillar to great extent. The 100% achievement of these targets needs more efforts. Caterpillar is now focusing towards more sustainable development i.e. making the efficient and effective use of the resources available without impacting the environment and also works for the society as a whole. Caterpillar has named as one of the top 10 industrial supply chains in 2010 on Gartners Inc. top 10 list. Also the Caterpillars Chairman and CEO, Doug Oberhelman named into the top 50 people in business according to Fortunes 2010. Hence Caterpillar is actively involved in the development of its business and competing at its best into the environment. Future Recommendations Caterpillar should be opening new markets all over the world as an expansion of its business mostly into the developing countries as around 80% of the population lives there and they demand for such construction equipments on high basis. Also the diversification into the product line and customers is important for further growth. Lack of diversification reduces the sale which has already suffered by the organization. The diversification of the products done by the organization in the past proved to be very profitable. Marketing has become an essential part of any organization. Successful marketing plays an important role in gaining competitive advantage. A wide spread distribution service network is important is essential in competing with heavy construction equipment industry. Joint ventures are important to expand the new markets and diversify into new products. This is important for the growth and development of the organization and to cover a large number of customers. Recently the global economy downturn decreases 25% of the Caterpillar sales. The ability to rebound the economy plays a significant role in the profitability maintenance of the organization. The other critical issues for the organization like changes in the prices of raw material, changes in the government monetary and fiscal policies, the credit risk involves into the financial services provided by Caterpillar etc. should be given special attention as their affect on the organization can proven to be the worst. Continuous growth and development initiatives are important for the maintenance of the topmost position into the market. Like entering into the new markets, diversification of products and services, customer diversification, sustainable development, new distribution channels etc. The full usage of its Strengths like companys strong reputation, dominating among the industry, good financial condition for upto date technology and beating any competition and diversified business competencies, will provide a competitive advantage to the organization.