Market Entry Strategies Essay Example

Market Entry Strategies Essay Example Market Entry Strategies Essay Market Entry Strategies Essay When an organisation has made a decision to enter an overseas market, there are a variety of options open to it. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or countertrade, in the case of the latter. More complex forms include truly global operations which may involve joint ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be made on the specific channels. Many agricultural products of a raw or commodity nature use agents, distributors or involve Government, whereas processed materials, whilst not excluding these, rely more heavily on more sophisticated forms of access. These will be expanded on later. Structure Of The Chapter The chapter begins by looking at the concept of market entry strategies within the control of a chosen marketing mix. It then goes on to describe the different forms of entry strategy, both direct and indirect exporting and foreign production, and the advantages and disadvantages connected with each method. The chapter gives specific details on countertrade, which is very prevalent in global marketing, and then concludes by looking at the special features of commodity trading with its close coupling between production and marketing. A sound market-entry strategy gives an operator greater control over its market introduction and launch expectations, thereby ensuring financial targets are met * A well-founded market-entry strategy minimises the uncertainties faced by new entrants * Analysys Mason has developed a systematic approach to market-entry strategies, allowing us to create well-supported and objective plans that extract maximum value from internal assets and investment, and ultimately increased competitiveness and secured revenue * We have used this approach to: decrease the financial uncertainty that derives from lack of comprehensive market analysis and a structured strategic plan * enable usiness plan collaboration and financial planning * initial business case assumptions need to be revisited to better correspond with market conditions and chosen market position * create launch efficiency by delivering a framework for subsequent planning of tactical launch activities, coordinating and prioritising task s for launch team * enable risk management and market perception control through contingency planning * Launch organisations face immense pressures on market entry, created by internal and external expectations: * some of these pressures can be eased by developing a clear and structured market-entry strategy and effective functional plans Pressures faced by new entrants Internal constraints and expectations Time constraints: rapid deployment is crucial to avoid rise in market share cost and to deliver predicted financial results Resource limitations: * core launch teams are often rapidly assembled, and specialist expansion is done gradually, creating a large resource gap during the implementation phase Financial pressure: * as financial targets and expectations have been set prior to launch, any unpredicted market activity and launch delays will disturb initial customer take-up and revenue generation External constraints and expectations Market data: * in many instances organisations lack in-depth understanding of market drivers or have limited access to market data Competition: competitors will plan pre-emptive, disruptive action to improve their own positions and secure their customer base prior to new entry Analysys Mason’s structured approach to developing an entry strategy begins with a comprehensive analysis of the market, based on market data or tailored research * Our app roach to developing a market-entry strategy follows a proven and structured process, based on extensive industry experience and in-depth understanding of all aspects that feed into a commercial launch * A comprehensive analysis, using market data and tailored market research, allows us to assess all areas affecting the operator’s strategic direction: * market dynamics: detailed consumer and business market segmentation and analysis of market drivers will be undertaken to identify the most valuable target segments and underlying reasons for market growth. Specific target areas are evaluated to provide key inputs: retail structures, financial transactions systems and Internet usage provide input to sales and distribution planning * competitive landscape: extensive competitive profiling in areas such as positioning, brand, target segments, value proposition, market offer, pricing, customer care, sales amp; distribution, coverage, network amp; support systems enable assessment of competitors’ strengths and weaknesses * macro-economic outlook: analysis of relevant macroeconomic data determine market and segment growth * legislation and regulatory framework: description of limitations or possibilities within the current regulatory environment that affect market and segment growth * internal assets/technology: analysis of all internal assets including technology, brand, partnerships will be done to clarify which sustainable competitive advantages the company holds * An internal SWOT highlight areas of valid advantages and disadvantag es, providing input to market entry positioning and value proposition * Identification of strategic risk areas at an early stage enables preparation of mitigating actions prior to market entry * Conclusions from the market analysis together with internal SWOT and identified strategic risk areas form the basis for describing the market opportunity Analysys Mason’s overall market entry strategy statement and market position clearly demonstrates which main directions are necessary to reach market objectives * A description of the company’s vision and mission statements as well as financial objectives form the starting point for the market entry strategy as they set the framework in which a new entrant will function * Short-term objectives, sales targets, market share and brand awareness, will be set against the market opportunity and supplied as input to the business planning team * Analysys Mason will develop an overall market entry strategy statement, clearly demonstrating which main directions are necessary to reach stated objectives * The positioning statement visibly escribes the company’s strategy in relation to competition and the value proposition captures the company’s differentiating advantages and their benefits to potential customers * The brand strategy explains which values are important to communicate in order to enhance the company’s relationship with its customers * Targeted customer segments that need be addressed in order to deliver desired objectives will be specified and prioritised * Strategic directions in all functional areas; products amp; services, pricing, brand amp; communication, sales amp; distribution and customer service further detail the overall entry strategy. Finally, the launch phasing section explores the various viable market entry options, their pro’s, con’s and pre-conditions Detailed tactical launch plans enable efficient and controlled implementation, leading to rapid market introduction * Strategic directions are further detailed into a tactical launch plan, covering all functional areas. This provides the launch team and vendors with necessary specifications for implementation and ensures that all launch activities support the overall market entry strategy * A product amp; service roadmap will be developed by matc hing technical capabilities and benefits with customer needs. The roadmap includes detailed set of individual services or product packages at and post-launch * Pricing launch packages and separate services includes development of complex price modelling and deployment of conjoint research to assist in the choice of, from customer perspective, the most valuable pricing option * Brand and communication plan for market entry includes development of brand wheel (attributes, benefits, values) and full launch campaign planning * The development of a sales and distribution channel plan involves creation of a tailor made sales and commission model, detailing of the company’s sales and distribution channel structure and analysis and recommendation on commission structure and levels * The customer service plan includes high level customer service processes and customer centre dimensioning * Clear contingency planning enables the company to pre-empt the occurrence of situations that affect the planned activities and prepare plans to remedy those, r esulting in shortened reaction time. Both internal and external factors will be analysed * Internal – e. g. technical and organisational issues * External – e. g. competitive market activities and regulatory actions Structured and comprehensive planning and interaction with business planning and technical teams enables coordinated effort, bringing market entry success * The commercial market entry strategy must work in unison with business planning and technical team to ensure a coordinated market entry approach Business planning unit requires market input when developing business plan and budgets * Positioning, price strategy, marketing investment and coverage (in relation to competition) affect potential market size and share * Segment uptake assumptions serve as input to market share calculations * Development and deployment of network and support systems need take commercial requirements into consideration and vice versa * Technical possibilities and limitations are taken into consideration when developing the market entry strategy * Market offer and customer approach produce requirements for support system configuration Market entry strategy and tactical launch plan Business plan and budget Technical roadmap and roll-out plan In addition to market entry strategy development, Analysys Mason can provide complete launch support and coordination of connected business functions Key issues| * The overall project management office (PMO) coordinates the roles of different teams to ensure that the management is fully updated of progress and potential bottlenecks for action * The ind ividual functions can be undertaken by the Analysys Mason consortium or by client entities, with the objective of handing over the running of the business to the client. Approach to overcome challenges * Launch support covers a range of activities that will enable the successful launch of the business in an aggressive timescale * Determining the exact role of different entities needs to be undertaken in an implementation planning phase that will balance the cost of external resources with the speed of launch, based on intensive, short-term external team effortCase study: Fourth entrant market entry strategy and detailed launch planBusiness challenge * Our client had acquired a mobile license for Afghanistan, entering as the fourth operator in an extremely difficult market with regards to economic and social structures, security issues, geographical accessibility and lack of reliable market information. Furthermore, our client did not have a separate Programme Management Office (PMO) to oversee launch implementation, increasing the demand for a clear and structured market entry strategy and subsequent tactical plans Analysys Mason was hired to underta ke development of a market entry strategy and detailed launch plan to steer the launch team and contracted suppliers towards a successful market introduction. In parallel, Analysys Mason developed a long-term business plan and detailed operating model / budget. Approach * Conducted a comprehensive market analysis * Developed a robust market entry strategy * Setting attainable sales objective, in liaison with the business plan * Determining durable positioning and value proposition * Developed detailed tactical plans for each functional area * Recommended segmented market offers for launch and post-launch, having evaluated various options * Build a comprehensive price model and initiated market research to evaluate tariff options * Developed complete sales and distribution channel structure including modelling of commission structure and levels * Created a brand adapted to local market conditions and developed a communication planBenefits and results * Analysys Mason produced a complete market entry strategy and detailed tactical launch plans, allowing our client to formulate a clear and differentiated market position with aligned market offering, pricing, communication, customer service and sales amp; distribution structure. This enabled co mplete stakeholder buy-in and efficient launch plan executionAnalysys Mason has assisted several new entrants worldwide in developing their market entry strategies Project focus| Client type| Key project results| Development of a mobile strategy (including UMTS, CDMA 2000 and WiMAX technologies)| North African alternative fixed and mobile operator| Analysys Mason developed a robust strategy for entering the mobile market by developing alternative service propositions and marketing strategies and analysing different technology options (UMTS, CDMA 2000 and WiMAX), roll-out approaches and handset strategies. Analysys Mason has also developed high level financials for the various options in order to make a detailed recommendation. Our conclusions were accepted by the Board and we were praised for our clear reasoning and innovative approach| Launch support| Asian wireless operator| Analysys Mason worked as part of a wider team to support the launch of a new mobile operator in a developing Asian country. The task consisted of business planning, international connectivity assessment and program management support| Assessment of a mobile entry strategy offering limited mobility services | North African fixed operator| Analysys Mason provided insight into successful market entry strategies employed by late mobile entrants and examined markets and operator performances where spectrum obtained initially or permanently constrained to offer limited mobility services| Development of a mobile business strategy for a new entrant| Western European fixed operator| Analysys Mason worked as part of a wider team which included the clients senior bid team, a technology vendor and other parties. The client recognised that coming late into the market as a 3G operator, and being one of numerous infrastructure-based operators in that country required an innovative approach to the market. Analysys Mason produced a credible bid, financial model as well as a solid mobile business strategy taking into account 3G technology, network planning, local planning and network build issues, the local mobile market, product propositions and channels to market| Development of a strategy for the smaller mobile operator in a market of four operators as part of an acquisition process| Investment bank| Analysys Mason carried out a comprehensive market and technical due diligence, covering all elements of the core business of the operator, including operations, technology, sales and marketing, information technology systems and human resources. Analysys Mason developed a growth strategy for the acquisition target, using the outputs of its due diligence, as well as those from the financial and legal ones. On this basis, Analysys Mason built a business plan and subsequently contributed to the preparation of the bid book| | BASIC ISSUES : An organization wishing to go international faces three major issues: i) Marketing which countries, which segments, how to manage and implement marketing effort, how to enter with intermediaries or directly, with what information? ii) Sourcing whether to obtain products, make or buy? iii) Investment and control joint venture, global partner, acquisition? Decisions in the marketing area focus on the value chain. The strategy or entry alternatives must ensure that the necessary value chain activities are performed and integrated. THE VALUE CHAIN s of elements included in the export marketing mix 1. Product support Product sourcing Match existing products to markets air, sea, rail, road, freight New products Product management Product testing Manufacturing specifications Labelling Packaging Production control Market information 2. Price support Establishment of prices Discounts Distribution and maintenance of pricelists Competitive information Training of agents/customers 3. Promotion/selling support Advertising Promotion literature Direct mail Exhibitions, trade shows Printing Selling (direct) Sales force Agents commissions Sale or returns . 4 Inventory support Inventory management Warehousing Distribution Parts supply Credit authorization 5. Distribution support Funds provision Raising of capital Order processing Export preparation and documentation Freight forwarding Insurance Arbitration Merchandising Sales reports, catalogues literature Customer care Budgets Data processing systems Insurance Tax services Legal services Translation 7. Financial support Billing, collecting invoices Hire, rentals Planning, scheduling budget data Auditing Details on the sourcing element have already been covered in the chapter on competitive analysis and strategy. Concerning investment and control, the question really is how far the company wishes to control its own fate. The degree of risk involved, attitudes and the ability to achieve objectives in the target markets are important facets in the decision on whether to license, joint venture or get involved in direct investment. Cunningham1 (1986) identified five strategies used by firms for entry into new foreign markets: i) Technical innovation strategy perceived and demonstrable superior products ii) Product adaptation strategy modifications to existing products iii) Availability and security strategy overcome transport risks by countering perceived risks iv) Low price strategy penetration price and, v) Total adaptation and conformity strategy foreign producer gives a straight copy. In marketing products from less developed countries to developed countries point iii) poses major problems. Buyers in the interested foreign country are usually very careful as they perceive transport, currency, quality and quantity problems. This is true, say, in the export of cotton and other commodities. Because, in most agricultural commodities, production and marketing are interlinked, the infrastructure, information and other resources required for building market entry can be enormous. Sometimes this is way beyond the scope of private organisations, so Government may get involved. It may get involved not just to support a specific commodity, but also to help the public good. Whilst the building of a new road may assist the speedy and expeditious transport of vegetables, for example, and thus aid in their marketing, the road can be put to other uses, in the drive for public good utilities. Moreover, entry strategies are often marked by lumpy investments. Huge investments may have to be undertaken, with the investor paying a high risk price, long before the full utilisation of the investment comes. Good examples of this include the building of port facilities or food processing or freezing facilities. Moreover, the equipment may not be able to be used for other processes, so the asset specific equipment, locked into a specific use, may make the owner very vulnerable to the bargaining power of raw material suppliers and product buyers who process alternative production or trading options. Zimfreeze, Zimbabwe is experiencing such problems. It built a large freezing plant for vegetables but found itself without a contract. It has been forced, at the moment, to accept sub optional volume product materials just in order to keep the plant ticking over. In building a market entry strategy, time is a crucial factor. The building of an intelligence system and creating an image through promotion takes time, effort and money. Brand names do not appear overnight. Large investments in promotion campaigns are needed. Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade. Costs include search and bargaining costs. Physical distance, language barriers, logistics costs and risk limit the direct monitoring of trade partners. Enforcement of contracts may be costly and weak legal integration between countries makes things difficult. Also, these factors are important when considering a market entry strategy. In fact these factors may be so costly and risky that Governments, rather than private individuals, often get involved in commodity systems. This can be seen in the case of the Citrus Marketing Board of Israel. With a monopoly export marketing board, the entire system can behave like a single firm, regulating the mix and quality of products going to different markets and negotiating with transporters and buyers. Whilst these Boards can experience economies of scale and absorb many of the risks listed above, they can shield producers from information about, and from. buyers. They can also become the fiefdoms of vested interests and become political in nature. They then result in giving reduced production incentives and cease to be demand or market orientated, which is detrimental to producers. Normal ways of expanding the markets are by expansion of product line, geographical development or both. It is important to note that the more the product line and/or the geographic area is expanded the greater will be the managerial complexity. New market opportunities may be made available by expansion but the risks may outweigh the advantages, in fact it may be better to concentrate on a few geographic areas and do things well. This is typical of the horticultural industry of Kenya and Zimbabwe. Traditionally these have concentrated on European markets where the markets are well known. Ways to concentrate include concentrating on geographic areas, reducing operational variety (more standard products) or making the organisational form more appropriate. In the latter the attempt is made to globalise the offering and the organisation to match it. This is true of organisations like Coca Cola and MacDonalds. Global strategies include country centred strategies (highly decentralised and limited international coordination), local market approaches (the marketing mix developed with the specific local (foreign) market in mind) or the lead market approach (develop a market which will be a best predictor of other markets). Global approaches give economies of scale and the sharing of costs and risks between markets. ENTRY STRATEGIES There are a variety of ways in which organisations can enter foreign markets. The three main ways are by direct or indirect export or production in a foreign country (see figure 7. 2). Exporting Exporting is the most traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another. Whilst no direct manufacturing is required in an overseas country, significant investments in marketing are required. The tendency may be not to obtain as much detailed marketing information as compared to manufacturing in marketing country; however, this does not negate the need for a detailed marketing strategy. Figure 7. 2 Methods of foreign market entry The advantages of exporting are: ? manufacturing is home based thus, it is less risky than overseas based ? gives an opportunity to learn overseas markets before investing in bricks and mortar ? reduces the potential risks of operating overseas. The disadvantage is mainly that one can be at the mercy of overseas agents and so the lack of control has to be weighed against the advantages. For example, in the exporting of African horticultural products, the agents and Dutch flower auctions are in a position to dictate to producers. A distinction has to be drawn between passive and aggressive exporting. A passive exporter awaits orders or comes across them by chance; an aggressive exporter develops marketing strategies which provide a broad and clear picture of what the firm intends to do in the foreign market. Pavord and Bogart2 (1975) found significant differences with regard to the severity of exporting problems in motivating pressures between seekers and non-seekers of export opportunities. They distinguished between firms whose marketing efforts were characterized by no activity, minor activity and aggressive activity. Those firms who are aggressive have clearly defined plans and strategy, including product, price, promotion, distribution and research elements. Passiveness versus aggressiveness depends on the motivation to export. In countries like Tanzania and Zambia, which have embarked on structural adjustment programmes, organisations are being encouraged to export, motivated by foreign exchange earnings potential, saturated domestic markets, growth and expansion objectives, and the need to repay debts incurred by the borrowings to finance the programmes. The type of export response is dependent on how the pressures are perceived by the decision maker. Piercy (1982)3 highlights the fact that the degree of involvement in foreign operations depends on endogenous versus exogenous motivating factors, that is, whether the motivations were as a result of active or aggressive behaviour based on the firms internal situation (endogenous) or as a result of reactive environmental changes (exogenous). If the firm achieves initial success at exporting quickly all to the good, but the risks of failure in the early stages are high. The learning effect in exporting is usually very quick. The key is to learn how to minimise risks associated with the initial stages of market entry and commitment this process of incremental involvement is called creeping commitment. Figure 7. 3 Aggressive and passive export paths Exporting methods include direct or indirect export. In direct exporting the organisation may use an agent, distributor, or overseas subsidiary, or act via a Government agency. In effect, the Grain Marketing Board in Zimbabwe, being commercialised but still having Government control, is a Government agency. The Government, via the Board, are the only permitted maize exporters. Bodies like the Horticultural Crops Development Authority (HCDA) in Kenya may be merely a promotional body, dealing with advertising, information flows and so on, or it may be active in exporting itself, particularly giving approval (like HCDA does) to all export documents. In direct exporting the major problem is that of market information. The exporters task is to choose a market, find a representative or agent, set up the physical distribution and documentation, promote and price the product. Control, or the lack of it, is a major problem which often results in decisions on pricing, certification and promotion being in the hands of others. Certainly, the phytosanitary requirements in Europe for horticultural produce sourced in Africa are getting very demanding. Similarly, exporters are price takers as produce is sourced also from the Caribbean and Eastern countries. In the months June to September, Europe is on season because it can grow its own produce, so prices are low. As such, producers are better supplying to local food processors. In the European winter prices are much better, but product competition remains. According to Collett4 (1991)) exporting requires a partnership between exporter, importer, government and transport. Without these four coordinating activities the risk of failure is increased. Contracts between buyer and seller are a must. Forwarders and agents can play a vital role in the logistics procedures such as booking air space and arranging documentation. A typical coordinated marketing channel for the export of Kenyan horticultural produce is given in figure 7. 4. In this case the exporters can also be growers and in the low season both these and other exporters may send produce to food processors which is also exported. Figure 7. 4 The export marketing channel for Kenyan horticultural products. Exporting can be very lucrative, especially if it is of high value added produce. For example in 1992/93 Zimbabwe exported 5 338,38 tonnes of flowers, 4 678,18 tonnes of horticultural produce and 12 000 tonnes of citrus at a total value of about US$ 22 016,56 million. In some cases a mixture of direct and indirect exporting may be achieved with mixed results. For example, the Grain Marketing Board of Zimbabwe may export grain directly to Zambia, or may sell it to a relief agency like the United Nations, for feeding the Mozambican refugees in Malawi. Payment arrangements may be different for the two transactions. Nali products of Malawi gives an interesting example of a passive to active exporting mode. CASE 7. 1 Nali Producers Malawi Nali group, has, since the early 1970s, been engaged in the growing and exporting of spices. Spices are also used in the production of a variety of sauces for both the local and export market. Its major success has been the growing and exporting of Birdseye chilies. In the early days knowledge of the market was scanty and thus the company was obtaining ridiculously low prices. Towards the end of 1978 Nali chilies were in great demand, yet still the company, in its passive mode, did not fully appreciate the competitive implications of the business until a number of firms, including Lonrho and Press Farming, started to grow and export. Again, due to the lack of information, a product of its passivity, the firm did not realise that Uganda, with their superior product, and Papua New Guinea were major exporters, However, the full potential of these countries was hampered by internal difficulties. Nali was able to grow into a successful commercial enterprise. However, with the end of the internal problems, Uganda in particular, began an aggressive exporting policy, using their overseas legations as commercial propagandists. Nali had to respond with a more formal and active marketing operation. However it is being now hampered by a number of important exogenous factors. The entry of a number of new Malawian growers, with inferior products, has damaged the Malawian chili reputation, so has the lack of a clear Government policy and the lack of financing for traders, growers and exporters. The latter only serves to emphasise the point made by Collett, not only do organisations need to be aggressive, they also need to enlist the support of Government and importers. It is interesting to note that Korey (1986) warns that direct modes of market entry may be less and less available in the future. Growing trading blocs like the EU or EFTA means that the establishing of subsidiaries may be one of the only means forward in future. It is interesting to note that Korey5 1986 warned that direct modes of market entry may be less and less available in the future. Growing trading blocks like the EU or EFTA means that the establishment of subsidiaries may be one of the only ways forward in future. Indirect methods of exporting include the use of trading companies (ve ry much used for commodities like cotton, soya, cocoa), export management companies, piggybacking and countertrade. Indirect methods offer a number of advantages including: ? Contracts in the operating market or worldwide ? Commission sates give high motivation (not necessarily loyalty) ? Manufacturer/exporter needs little expertise ? Credit acceptance takes burden from manufacturer. Piggybacking Piggybacking is an interesting development. The method means that organisations with little exporting skill may use the services of one that has. Another form is the consolidation of orders by a number of companies in order to take advantage of bulk buying. Normally these would be geographically adjacent or able to be served, say, on an air route. The fertilizer manufacturers of Zimbabwe, for example, could piggyback with the South Africans who both import potassium from outside their respective countries. Countertrade By far the largest indirect method of exporting is countertrade. Competitive intensity means more and more investment in marketing. In this situation the organisation may expand operations by operating in markets where competition is less intense but currency based exchange is not possible. Also, countries may wish to trade in spite of the degree of competition, but currency again is a problem. Countertrade can also be used to stimulate home industries or where raw materials are in short supply. It can, also, give a basis for reciprocal trade. Estimates vary, but countertrade accounts for about 20-30% of world trade, involving some 90 nations and between US $100-150 billion in value. The UN defines countertrade as commercial transactions in which provisions are made, in one of a series of related contracts, for payment by deliveries of goods and/or services in addition to, or in place of, financial settlement. Countertrade is the modem form of barter, except contracts are not legal and it is not covered by GATT. It can be used to circumvent import quotas. Countertrade can take many forms. Basically two separate contracts are involved, one for the delivery of and payment for the goods supplied and the other for the purchase of and payment for the goods imported. The performance of one contract is not contingent on the other although the seller is in effect accepting products and services from the importing country in partial or total settlement for his exports. There is a broad agreement that countertrade can take various forms of exchange like barter, counter purchase, switch trading and compensation (buyback). For example, in 1986 Albania began offering items like spring water, tomato juice and chrome ore in exchange for a contract to build a US $60 million fertilizer and methanol complex. Information on potential exchange can be obtained from embassies, trade missions or the EU trading desks. Barter is the direct exchange of one good for another, although valuation of respective commodities is difficult, so a currency is used to underpin the items value. Barter trade can take a number of formats. Simple barter is the least complex and oldest form of bilateral, non-monetarised trade. Often it is called straight, classical or pure barter. Barter is a direct exchange of goods and services between two parties. Shadow prices are approximated for products flowing in either direction. Generally no middlemen are involved. Usually contracts for no more than one year are concluded, however, if for longer life spans, provisions are included to handle exchange ratio fluctuations when world prices change. Closed end barter deals are modifications of straight barter in that a buyer is found for goods taken in barter before the contract is signed by the two trading parties. No money is involved and risks related to product quality are significantly reduced. Clearing account barter, also termed clearing agreements, clearing arrangements, bilateral clearing accounts or simply bilateral clearing, is where the principle is for the trades to balance without either party having to acquire hard currency. In this form of barter, each party agrees in a single contract to purchase a specified and usually equal value of goods and services. The duration of these transactions is commonly one year, although occasionally they may extend over a longer time period. The contracts value is expressed in non-convertible, clearing account units (also termed clearing dollars) that effectively represent a line of credit in the central bank of the country with no money involved. Clearing account units are universally accepted for the accounting of trade between countries and parties whose commercial relationships are based on bilateral agreements. The contract sets forth the goods to be exchanged, the rates of exchange, and the length of time for completing the transaction. Limited export or import surpluses may be accumulated by either party for short periods. Generally, after one years time, imbalances are settled by one of the following approaches: credit against the following year, acceptance of unwanted goods, payment of a previously specified penalty or payment of the difference in hard currency. Trading specialists have also initiated the practice of buying clearing dollars at a discount for the purpose of using them to purchase saleable products. In turn, the trader may forfeit a portion of the discount to sell these products for hard currency on the international market. Compared with simple barter, clearing accounts offer greater flexibility in the length of time for drawdown on the lines of credit and the types of products exchanged. Counter purchase, or buyback, is where the customer agrees to buy goods on condition that the seller buys some of the customers own products in return (compensatory products). Alternatively, if exchange is being organised at national government level then the seller agrees to purchase compensatory goods from an unrelated organisation up to a pre-specified value (offset deal). The difference between the two is that contractual obligations related to counter purchase can extend over a longer period of time and the contract requires each party to the deal to settle most or all of their account with currency or trade credits to an agreed currency value. Where the seller has no need for the item bought he may sell the produce on, usually at a discounted price, to a third party. This is called a switch deal. In the past a number of tractors have been brought into Zimbabwe from East European countries by switch deals. Compensation (buy-backs) is where the supplier agrees to take the output of the facility over a specified period of time or to a specified volume as payment. For example, an overseas company may agree to build a plant in Zambia, and output over an agreed period of time or agreed volume of produce is exported to the builder until the period has elapsed. The plant then becomes the property of Zambia. Khoury6 (1984) categorises countertrade as follows (see figure 7. 5): One problem is the marketability of products received in countertrade. This problem can be reduced by the use of specialised trading companies which, for a fee ranging between 1 and 5% of the value of the transaction, will provide trade related services like transportation, marketing, financing, credit extension, etc. These are ever growing in size. COUNTERTRADE HAS DISADVANTAGES: ? Not covered by GATT so dumping may occur ? Quality is not of international standard so costly to the customer and trader ? Variety is tow so marketing of wkat is limited ? Difficult to set prices and service quality ? Inconsistency of delivery and specification, ? Difficult to revert to currency trading so quality may decline further and therefore product is harder to market. Figure 7. 5 Classification of countertrade Shipley and Neale7 (1988) therefore suggest the following: Ensure the benefits outweigh the disadvantages ? Try to minimise the ratio of compensation goods to cash if possible inspect the goods for specifications ? Include all transactions and other costs inv olved in countertrade in the nominal value specified for the goods being sold ? Avoid the possibility of error of exploitation by first gaining a thorough understanding of the customers buying systems, regulations and politics, ? Ensure that any compensation goods received as payment are not subject to import controls. Despite these problems countertrade is likely to grow as a major indirect entry method, especially in developing countries. Foreign production Besides exporting, other market entry strategies include licensing, joint ventures, contract manufacture, ownership and participation in export processing zones or free trade zones. Licensing: Licensing is defined as the method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, know-how or some other skill provided by the licensor. It is quite similar to the franchise operation. Coca Cola is an excellent example of licensing. In Zimbabwe, United Bottlers have the licence to make Coke. Licensing involves little expense and involvement. The only cost is signing the agreement and policing its implementation. Licensing gives the following advantages: Good way to start in foreign operations and open the door to low risk manufacturing relationships ? Linkage of parent and receiving partner interests means both get most out of marketing effort ? Capital not tied up in foreign operation and ? Optio ns to buy into partner exist or provision to take royalties in stock. The disadvantages are: ? Limited form of participation to length of agreement, specific product, process or trademark ? Potential returns from marketing and manufacturing may be lost ? Partner develops know-how and so licence is short ? Licensees become competitors overcome by having cross technology transfer deals and ? Requires considerable fact finding, planning, investigation and interpretation. Those who decide to license ought to keep the options open for extending market participation. This can be done through joint ventures with the licensee. Joint ventures Joint ventures can be defined as an enterprise in which two or more investors share ownership and control over property rights and operation. Joint ventures are a more extensive form of participation than either exporting or licensing. In Zimbabwe, Olivine industries has a joint venture agreement with HJ Heinz in food processing. Joint ventures give the following advantages: ? Sharing of risk and ability to combine the local in-depth knowledge with a foreign partner with know-how in technology or process ? Joint financial strength ? May be only means of entry and May be the source of supply for a third country. They also have disadvantages: ? Partners do not have full control of management ? May be impossible to recover capital if need be ? Disagreement on third party markets to serve and ? Partners may have different views on expected benefits. If the partners carefully map out in advance what they expect to achieve and how, then many problems can be overcome. Ownership: The most extensive form of participation is 100% ownership and this involves the greatest commitment in capital and managerial effort. The ability to communicate and control 100% may outweigh any of the disadvantages of joint ventures and licensing. However, as mentioned earlier, repatriation of earnings and capital has to be carefully monitored. The more unstable the environment the less likely is the ownership pathway an option. These forms of participation: exporting, licensing, joint ventures or ownership, are on a continuum rather than discrete and can take many formats. Anderson and Coughlan8 (1987) summarise the entry mode as a choice between company owned or controlled methods integrated channels or independent channels. Integrated channels offer the advantages of planning and control of resources, flow of information, and faster market penetration, and are a visible sign of commitment. The disadvantages are that they incur many costs (especially marketing), the risks are high, some may be more effective than others (due to culture) and in some cases their credibility amongst locals may be lower than that of controlled independents. Independent channels offer lower performance costs, risks, less capital, high local knowledge and credibility. Disadvantages include less market information flow, greater coordinating and control difficulties and motivational difficulties. In addition they may not be willing to spend money on market development and selection of good intermediaries may be difficult as good ones are usually taken up anyway. Once in a market, companies have to decide on a strategy for expansion. One may be to concentrate on a few segments in a few countries typical are cashewnuts from Tanzania and horticultural exports from Zimbabwe and Kenya or concentrate on one country and diversify into segments. Other activities include country and market segment concentration typical of Coca Cola or Gerber baby foods, and finally country and segment diversification. Another way of looking at it is by identifying three basic business strategies: stage one international, stage two multinational (strategies correspond to ethnocentric and polycentric orientations respectively) and stage three global strategy (corresponds with geocentric orientation). The basic philosophy behind stage one is extension of programmes and products, behind stage two is decentralisation as far as possible to local operators and behind stage three is an integration which seeks to synthesize inputs from world and regional headquarters and the country organisation. Whilst most developing countries are hardly in stage one, they have within them organisations which are in stage three. This has often led to a rebellion against the operations of multinationals, often unfounded. Export processing zones (EPZ) Whilst not strictly speaking an entry-strategy, EPZs serve as an entry into a market. They are primarily an investment incentive for would be investors but can also provide employment for the host country and the transfer of skills as well as provide a base for the flow of goods in and out of the country. One of the best examples is the Mauritian EPZ12, founded in the 1970s. CASE 7. 2 The Mauritian Export Processing Zone Since its inception over 400 firms have established themselves in sectors as diverse as textiles, food, watches. And plastics. In job employment the results have been startling, as at 1987, 78,000 were employed in the EPZ. Export earnings have tripled from 1981 to 1986 and the added value has been significant- The roots of success can be seen on the supply, demand and institutional sides. On the supply side the most critical factor has been the generous financial and other incentives, on the demand side, access to the EU, France, India and Hong Kong was very tempting to investors. On the institutional side positive schemes were put in place, including finance from the Development Bank and the cutting of red tape. In setting up the export processing zone the Mauritian government displayed a number of characteristics which in hindsight, were crucial to its success. ? The government intelligently sought a development strategy in an apolitical manner ? It stuck to its strategy in the long run rather than reverse course at the first sign of trouble ? It encouraged market incentives rather than undermined them ? It showed a good deal of adaptability, meeting each challenge with creative solutions rather than maintaining the status quo ? It adjusted the general export promotion programme to suit its own particular needs and characteristics. ? It consciously guarded against the creation of an unwieldy bureaucratic structure. | Organisations are faced with a number of strategy alternatives when deciding to enter foreign markets. Each one has to be carefully weighed in order to make the most appropriate choice. Every approach requires careful attention to marketing, risk, matters of control and management. A systematic assessment of the different entry methods can be achieved through the use of a matrix (see table 7. 2). Table 7. 2 Matrix for comparing alternative methods of market entry Entry mode| Evaluation criteria| Indirect export| Direct export| Marketing subsidiary| Counter trade| Licensing| Joint venture| Wholly owned operation| EPZ| a) Company goals| | | | | | | | | b) Size of company| | | | | | | | | c) Resources| | | | | | | | | d) Product| | | | | | | | | e) Remittance| | | | | | | | | f) Competition| | | | | | | | | g) Middlemen characteristics| | | | | | | | | h) Environmental characteristics| | | | | | | | | i) Number of markets| | | | | | | | | j) Market| | | | | | | | | k) Market feedback| | | | | | | | | l) International market learning| | | | | | | | | m) Control| | | | | | | | | n) Marketing costs| | | | | | | | | o) Profits| | | | | | | | | p) Investment| | | | | | | | | q) Administration personnel| | | | | | | | | ) Foreign problems| | | | | | | | | s) Flexibility| | | | | | | | | t) Risk| | | | | | | | | Details of channel management will appear in a later chapter. Special features of commodity trade As has been pointed out time and again in this text, the international marketing of agricultural products is a close coupled affair between production and marketing and end user. Certain characteristics can be identified in market entry strategies which are different from the marketing of say cars or television sets. These refer specifically to the institutional arrangements linking producers and processors/exporters and those between exporters and foreign buyers/agents. Institutional links between producers and processors/exporters One of the most important factors is contract coordination. Whilst many of the details vary, most contracts contain the supply of credit/production inputs, specifications regarding quantity, quality and timing of producer deliveries and a formula or price mechanism. Such arrangements have improved the flow of money, information and technologies, and very importantly, shared the risk between producers and exporters. Most arrangements include some form of vertical integration between producers and downstream activities. Often processors enter into contracted outgrower arrangements or supply raw inputs. This institutional arrangement has now, incidentally, spilled over into the domestic market where firms are wishing to target higher quality, higher priced segments. Producer trade associations, boards or cooperatives have played a significant part in the entry strategies of many exporting countries. They act as a contact point between suppliers and buyers, obtain vital market information, liaise with Governments over quotas etc. and provide information, or even get involved in quality standards. Some are very active, witness the Horticultural Crops Development Authority (HCDA) of Kenya and the Citrus Marketing Board (CMD) of Israel, the latter being a Government agency which specifically got involved in supply quotas. An example of the institutional arrangements13 involved is given in table 7. 3. Table 7. 3 Institutional arrangements linking producers with processors/exporters Commodity| Market co-ordination| Contract co-ordination| Ownership interaction| Association co-ordination| Government co-ordination| Marketing risk reduction| Kenya vegetables| X| X| X| | | X| Zimbabwe horticulture| X| | | X| X| X| Israel fresh fruits| | | | | | | Thailand tuna| | XX| | X| X| X| Argentina beef| | X| | X| | X| XX = Dominant linkage Institutional links between exporters and foreign buyers/agents Linkages between exporters and foreign buyers are often dominated by open market trade or spot market sales or sales on consignment. The physical distances involved are also very significant. Most contracts are of a seasonal, annual or other nature. Some products are handled by multinationals, others by formal integration by processors, building up import/distribution firms. In the case of Kenyan fresh vegetables familial ties are very important between exporters and importers. These linkages have been very important in maintaining market excess, penetrating expanding markets and in obtaining market and product change information, thus reducing considerably the risks of doing business. In some cases, Government gets involved in negotiating deals with foreign countries, either through trade agreements or other mechanisms. Zimbabwes imports of Namibian mackerel were the result of such a Government negotiated deal. Table 7. 413 gives examples of linkages between exporters and foreign buyers/agents. Table 7. 4 Linkages between exporters and foreign buyers/agents. Commodity| Market co-ordination| Contract co-ordination| Ownership interaction| Association co-ordination| Government co-ordination| Marketing risk reduction| Kenya vegetables| X| X| X| | | X| Zimbabwe horticulture| | X| | X| X| X| Israel fresh fruits| X| X| | | | X| Thailand tuna| X| XX| XX| X| | X| Argentina beef| XX| X| XX| X| X| X| XX = Dominant linkage Once again, it can not be over-emphasized that the smooth flow between producers, marketers and end users is essential. However it must also be noted that unless strong relationships or contracts are built up and product qualities maintained, the smooth flow can be interrupted should a more competitive supplier enter the market. This also can occur by Government decree, or by the erection of non-tariff barriers to trade. By improving strict hygiene standards a marketing chain can be broken, however strong the link, by say, Government. This, however, should not occur, if the link involves the close monitoring and action by the various players in the system, who are aware, through market intelligence, of any possible changes. Chapter Summary Having done all the preparatory planning work (no mean task in itself! , the prospective global marketer has then to decide on a market entry strategy and a marketing mix. These are two main ways of foreign market entryeither by entering from a home market base, via direct or indirect exporting, or by foreign based production. Within these two possibilities, markete rs can adopt an aggressive or passive export path. Entry from the home base (direct) includes the use of agents, distributors, Government and overseas subsidiaries and (indirect) includes the use of trading companies, export management companies, piggybacking or countertrade. Entry from a foreign base includes licensing, joint ventures, contract manufacture, ownership and export processing zones. Each method has its peculiar advantages and disadvantages which the marketer must carefully consider before making a choice. Key Terms Aggressive exporter| Exporting| Licensing| Barter| Export processing zones| Market entry| Countertrade| Joint ventures| Passive exporter| Review Questions 1. Review the general problems encountered when building market entry strategies for agricultural commodities. Give examples. 2. Describe briefly the different methods of foreign market entry. 3. What are the advantages and disadvantages of barter, countertrade, licensing, joint venture and export processing zones as market entry strategies? Review Question Answers 1. General problems: ) Interlinking of production and marketing means private investment alone may not be possible, so Government intervention may be needed also e. g. to build infrastructure e. g. Israeli fresh fruit. ii) Licensing Definition: Method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, knowhow or some other skill by the licensor. ii) Lumpy investment building capacity long before it may be currently utilised e. g. port facilities Advantages: ? entry point with risk reduction, ? benefits to both parties, ? capital not tied up, ? opportunities to buy into partner or royalties on the stock. iii) Time processing, transport and storage so credit is needed e. g. Argentina beef. v) Transaction costs logistics, market information, regulatory enforcement. Disadvantages: ? limited form or participation, ? potential returns from marketing and manufacturing may be lost, ? partner develops knowhow and so license is short, ? partner becomes competitor, ? requires a lot of planning beforehand. v) Risk business, non-business iv) Joint ventures Definition: An enterprise in which two or more investors share ownership and control over property rights and operation. vi) Building of relationships and infrastructural developments correct formats 2. Different methods These are either direct, indirect or foreign based. Advantages: ? sharing of risk and knowhow, ? may be only means of entry, may be source of supply for third country. Direct Agent, distributor, Government, overseas subsidiary Disadvantages: ? partners do not have full control or management, ? may be impossible to recover capital, ? disagreement between purchasers or third party served markets, ? partners hav e different views on exported benefits. Indirect Trading company, export management company, piggyback, countertrade v) Export processing zones Definition: A zone within a country, exempt from tax and duties, for the processing or reprocessing of goods for export Foreign Licensing, joint venture, contract manufacture, ownership, export processing zone. Students should give a definition and expand on each of these methods. Advantages: ? host country obtains knowhow, ? capital, technology, employment opportunities; ? foreign exchange earnings; ? reputation, internationalisation. 3i) Barter- Definition: Direct exchange of one good for another. (may be straight or closed or clearing account method) Disadvantages: ? short term investments, ? capital movements, ? employment movements, ? transaction costs and benefits, ? not part of economy so alienisation, ? labour laws may be different, ? bureaucracy creation. Advantages: ? simple to administer, ? no currency, ? commodity based valuation or currency based valuation. Disadvantages: risk of non delivery, ? poor quality, ? technological obsolescence, ? unfulfilled quantities, ? risk of commodity price rise thus losing out on an increased valuation, ? depressed valuation, ? marketability of products. ii) Countertrade – Definition: Customer agrees to buy goods on condition that the se ller buys some of the customers own products in return (may be time, method of financing, balance of compensation or pertinence of compensating product based) Advantages: ? method of obtaining sales by seller and getting a slice of the order, ? method of breaking into a closed market. Disadvantages: ? not covered by GATT, ? so dumping may occur,

Political Conventions Day-by-Day

Political Conventions Day-by-Day The United States presidential nominating conventions are held during the spring or summer of each quadrennial presidential election year by most political parties fielding nominees in the November presidential election. Along with selecting the party’s nominee for president, delegates to the conventions adopt the party’s platform- the party’s principals and goals for its candidates presidential administration. Most delegates to the conventions are selected through the presidential primary elections and caucus process and are pledged to vote for a specific presidential candidate during the nominating process. Other delegates, called â€Å"unpledged delegates† are seated automatically due to their status in the political party and are free to vote for the nominee of their choice. The cities hosting the conventions are selected by the national party organizations based on factors including availability of meeting space, lodging facilities, entertainment opportunities, and economic incentives. As they have grown into major, highly-publicized events drawing intense media coverage, the conventions offer significant economic benefits to the host cities. Although the U.S. presidential nominations have largely been settled during the primary/caucus cycle in recent elections, the national political party conventions continue to be an important part of the American political system. As you watch the conventions, heres whats happening on each of the four days. Day 1: The Keynote Address Coming on the first evening of the convention, the keynote address is the first of many, many speeches to follow. Typically delivered by one of the partys most influential leaders and speakers, the keynote address is designed to rally the delegates and stir their enthusiasm. Almost without exception, the keynote speaker will emphasize the accomplishments of his or her party, while listing and harshly criticizing the shortcomings of the other party and its candidates. Should the party have more than one candidate seriously vying for nomination at the convention, the keynote speaker will conclude by urging all party members to make peace and support the successful candidate in the upcoming campaign. Sometimes, it even works. Day 2: Credentials and Platforms On the conventions second day, the partys Credentials Committee will determine the eligibility of each delegate to be seated and vote for nominees.  Delegates and alternates from each state are typically chosen well before the convention, through the presidential primary and caucus system. The Credential Committee basically confirms the identity of the delegates and their authority to vote at the convention. Day-two of the convention also features the adoption of the partys platform the stance their candidates will take on key domestic and foreign policy issues. Typically, these stances, also called planks, have been decided well before the conventions. The platform of the incumbent party is usually created by sitting president or the White House staff. The opposition party seeks guidance in creating its platform from its leading candidates, as well as from leaders of business and industry, and a wide range of advocacy groups. The partys final platform must be approved by a majority of the delegates in a public roll-call vote. Day 3: The Nomination At last, what we came for, the nomination of candidates. To win the nomination, a candidate must get a majority more than half of the votes of all delegates. When the nominating roll call begins, each states delegate chairman, from Alabama to Wyoming, may either nominate a candidate or yield the floor to another state. A candidates name is officially placed into nomination through a nominating speech, delivered by the state chairman. At least one seconding speech will be delivered for each candidate and the roll call will continue until all candidates have been nominated. At last, the speeches and demonstrations end and the real voting begins. The states vote again in alphabetical order. A delegate from each state will take the microphone and announce something very similar to, Mr. (or Madame) Chairman, the great state of Texas casts all of its XX votes for the next president of the United States, Joe Doaks. The states may also split the votes of their delegations between more than one candidate. The roll call vote continues until one candidate has won the magic majority of the votes and is officially nominated as the partys presidential candidate. Should no single candidate win a majority, there will be more speeches, a lot more politics on the convention floor and more roll calls, until one candidate wins. Due mainly to the influence of the primary/caucus system, neither party has required more than one roll call vote since 1952. Day 4: Picking a Vice Presidential Candidate Just before everybody packs up and heads home, the delegates will confirm the vice presidential candidate named in advance by the presidential candidate. The delegates are not obligated to nominate the presidential candidates choice for vice president, but they always do. Even though the outcome is a foregone conclusion, the convention will go through ​the  same cycle of nominations, speeches, and voting. As the convention closes, the presidential and vice presidential candidates deliver acceptance speeches and the unsuccessful candidates give rousing speeches urging everyone in the party to pull together to support the partys candidates. The lights go out, the delegates go home, and the losers start running for the next election.

5ELW Employment Law Assignment Example | Topics and Well Written Essays - 3000 words

5ELW Employment Law - Assignment Example sation should have taken to comply with UK law and procedure as well as recommend the most appropriate course of action that can be taken after the dismissal. According to UK Employment Law, the circumstances surrounding a dismissal will determine whether is fair or unfair and the procedure employers must follow when dismissing employees depends on the date of the dismissal (BIS, 2013). To comply with the UK law, the employer should follow the procedures stipulated by the Advisory, Conciliation and Arbitration Service (Acas) Code of Practice on disciplinary and grievance procedures. In Paul’s case, although the employer may have had justified grounds to dismiss him, the procedures were not followed from various perspectives. Most significantly, he was not given notice or allowed a disciplinary hearing. The requirements for fair dismissal include the capability (or lack of) the employee to work, their conduct, redundancy and circumstances that prevent them from conducting their job legally, such as the loss of a driving license by a driver. To comply with the UK law and specifically the Acas Code, the employer and the employee must have acted consistently whereby necessary investigations needed to be carried out to establish the case’s facts. Legally, he could have been dismissed without notice if he was in his first month of employment, if his contract indicated so or if he had conducted himself in a manner that undermined the confidence and trust of the employer. However, Paul had worked at the department store for four years on a full-time basis yet he was instantaneously dismissed, which means the employer did not comply with UK law. It is necessary that the dismissal decision and procedure are fair even in cases where the employer has a justifiable reason for the dismissal. To comply, the first step should have been sending a letter that pointed out the problem and an indication of the consideration for dismissal or disciplinary action (Citizens Advice,

The end of Lehman Brothers Essay Example | Topics and Well Written Essays - 1000 words

The end of Lehman Brothers - Essay Example The scandal that brought the Lehman brothers to their knees was one that involved financial and accounting fraud, which was no new case for the firm since its inception. Following the release of reports following the bankruptcy of Lehman, scandals are cropping up showing that the Lehmans have been cooking their books, also known as creative accounting since before the financial crisis hit the world in the last years of the previous decade. The precise time would be around the year 2007, when things began to go downhill for them. The scandal goes by the name â€Å"Repo 105† following the textbook application of previously used antics to bring about a scandal (Sharp). The scandal begins with deals involving banks in the Cayman Islands relating to repurchase agreements. In this case, Lehman planned to dispense toxic assets to the banks that got into the deal, on the condition that, after a given short period, Lehman would repurchase them. This deal made the Lehmans appear to be an honest organization dealing as per the law. However, the whole issue was only on paper, while the actual organization of the firm revolved around dirty dealings and fraud (Sharp). All the above was in an attempt to pull a fast one on investors and credit rating agencies to maintain their prestigious position. In the meantime, the Lehmans brothers were quite busy embezzling funds and finances from their organization on a colossal scale to a pint of no return. In their creative accounting, the Lehmans went beyond themselves in defrauding the public and investors by using the toxic assets as leverage. This is by balancing their books with the said assets as sales and not as loans, as is common practice in the financial world. The implication was that the firm reflected having more liquid cash in their books, as opposed to having more assets in mortgages as would be expected. This marked a calculated move to defraud every one off their keenness and trust in the firm by

My opinion about Catherine Hayles’ book Essay Example for Free

My opinion about Catherine Hayles’ book Essay My opinion about Catherine Hayles’ book Introduction   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   I disagree with the conclusion of Catherine hayles book and her latest advice.The picture that Catherine Hayles frames is that human being fear to be post human .In her argument She puts information as the core that only requires a conveying media and that media can be machines or human being. She shows how post human is necessary by giving it a positive outlook than human. Hayles argues that human being will be replaced by post human and the human race will face extinction. In her conclusion she states that post human are superior than human being and goes further to feeble the human being by saying that they are not autonomous in thinking . In a further extent Hayles in her book says that computers machines and programs will wipe away the human race.There are many things I don’t agree with Catherine Hayles I will lay down my argument disagreeing with her argument.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Human being are superior over all creation and they cannot be replaced by any other creation.Catherine Hayles argues that human being will morph into something else, something like a cyborg where machines will be overall and incharge and commernder of the other creation.This view is far away from truth, human being cannot be replaced by a creation that has been made by Him. Human being were created to subdue the earth and all the other creations are inferior to Human. It’s not possible to create something and be inferior to it. God is superior to us and so we are superior to machines. Catherine Hayles needs to elaborate and explain why can we create something and it turns to our god.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Posthuman cann’t think as human being does. Hayles lays down her argument saying that post human do think as human being . This she tries to argue that the deeds and actions that can be done by a human being due to thinking can also be done by robot because it thinks too. Do posthuman have self will like human being does? This is a question not answered in her book. Human being thinks in a natural way and posthuman thinks as a result of radio frequency identification (RFID). There is a big gap between posthuman and human being and nothing can bridge this gap.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Looking at the contribution she made the last in her book , her ambition are much higher. The first chapter she read the book of Hans Moravec’s Mind Children:The future of robot and human intelligence and she got a shock. The thing that captured her mind was Moravec’s assertion which stated that near future the consciousness of human being will be transferred to that of computer.There are two prepositions that are implicated here; (1) That existence of information is not reliable to a particular substrate. (2) The consciousness of human being is information. These two preposition are the one that Hayles through her narrative contests three devoted topics; The cyborg emerged as a result of cultural artifacts, how the body was lost by information and the construction that resulted the emergency of post human.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Hayles goes further in defining post human using two other ways, first was that posthuman are susceptible, coordinating and self organizing its self in a larger system. She argues that we are dictated by the environment we live in and thus integrated into that environment. She says that human being needed posthuman and thus the technology is the one that pushes for it. The innovation is the one that created posthuman and human being now depends on posthuman. She alludes posthuman in a manner above it’s definition, she says that the information from body is tranferrable from body to machines.It’s very clear is literature and has no facts in it human and posthuman mutually require each other to survive but posthuman requires human to live.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Hayles opposes the formulation of the second definition of post human and endorsing the definition of the first one. She argues that we think of apocalyptic visions where machines will be equal and become our superior. Hayles didn’t see the danger to obviate the stated machines and the repercussion of changing definition. Hayles argument doesn’t give any hope for survival of human being, that’s very pathetic.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Another argument she grounds herself with is that there will be full integration of one’s self with a machine and that the content that evolution excluded. She says that body has a sediment history and it do have an architecture in it, a physical structure whose constraints and possibilities have been formed by an evolutionary history that intelligent machines do not share. ( C. H ayles,284, 2009.) In my views, human being cannot be fully identified with machines.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Hayles did mention about Joseph Weizenbaum’s statement that making a judgement and the capacity to make is a matter that should be left as an ethical principle, to the human alone. I don’t agree. What are the impacts of feeding more and more information and functions to technology and computers? How is it possible for us to lose our humanity for we resign the skill to practice the decision of of a particular nature?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   If we take machine and look at themselves, the analysis of Hayles shows that posthuman have the same consciousness as human and they help in our thinking and they do perform the functions that we don’t need to but quiet want to.Infact they do function and perform better than human being .But we should not forget where they originated from. All machines and their relatives they came from the effort of human mind production. Human being has created them to aid in maximizing his own efficiency and he have, with no doubt accomplished his motive. Without human being machines would not be in existence and thus for them to exist human being has to exist first and the cognition ability would not be there . Ayn Rand character has one that we can link to this art and says in Atlas Shrugged: â€Å"I thoughtof the men who claim that machines condition their brains. Well there was the motor to condition them, and there it remained as just exact ly what it is without man’s mind-as a pile of metal scraps and wires, going to rust.† (page 745, Atlas Shrugged) This statement show sense in Hayles and I agree on: Human is conditioned by machine and we appreciate them in our lives and enhance them but I differ in that human being is still dorminant . Machines without the human being they would go extinction and get to rust.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   If the cyborg and the cyborg varieties were to exist as put by the Hayles they would still require human skills and characteristics for their ‘brain’ to function, to have conscious and to think like human being. Hyles didn’t explain this and how if human being were to go to extinction the post human would survive, else she have a task to do.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Hayles the premises that she posits as another cause of fear of post human is the liberal humanist opinion of the human kind matters autonomy. Human being are able to see all the possibilities which are open to choose and they have the will and they can synthesize these sources. Schopenhauer’s there is an outline in THE WORLD AS WILL AND REPRESENTATION(BOOKIII). Human being are able to think, they are able to process data , they are able to create it and pull judgements built on their feelings. This Information comes from several sources in machine but in human being they come purely on them. Machines they are devoid of thinking and they have no conscious like ours. Hayles in her argument doesn’t have the real world instances , and those that she uses are not very clear they are not specifically illuminating. In her early books she says that she finds saying that â€Å"Well my sleep agent wants to rest, but my food agent say s I should go to the store†( Hayles 2009,6).This is certainly an odd approach of talking and She draws a very significant deductions from it. â€Å" Each person ,† She claims, â€Å"who thinks this way begins to envision herself or himself as a posthuman collectivity, an ‘I’ transformed into the ‘we’ of autonomous agents operating together to make self† (Catherine. H, pg 6 2009) There are questions that rises about personal disorders of the multitude. The example of ability of multiple to celebrate and creatively dissociate leads to rejection of therapy that tries to integrate their adjusts. People definitely will be talking around themselves in a fresh ways. But moral agents asks what thinking together about themselves meant. Hayles put it that â€Å"serious consideration needs to be given to how certain characteristics associated with liberal subject, especially agency and choice, can be articulated with in posthuman context† (C atherine.Hayles, pg5, 2009) and she left it like that . She didn’t show any alternative of her implications.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In conclusion Hayles argument is lacking enough facts and is based in prepositions that she lays to win the heart of literature, and in my views she didn’t succed. If you consider streams with standing waves, which visibly forms the front side of the rocks which projects superficial above the water. They retain their normal shape and their normal integrity despite being changed by the molecules of water .I still find the machines being continuously changing their integrity but can’t replace human being and they can’t lead extinction of human kind. References Harrison, Ariane Lourie. Architectural theories of the environment: posthuman territory. New York, NY: Routledge, Taylor Francis Group, 2013. Print. Hayles, N. Katherine. How we became posthuman: virtual bodies in cybernetics, literature, and informatics. Chicago, Ill.: University of Chicago Press, 1999. Print. Leithauser, Brad. Penchants places: essays and criticism. New York: A.A. Knopf :, 1995. Print. Younkins, Edward W.. Ayn Rands Atlas shrugged a philosophical and literary companion. Aldershot, England: Ashgate, 2007. Print. Bateson, Catherine. Being Bee. New York: Holiday House, 2007. Print. Gronebaum, Melissa. Arthur schopenhauers die welt als wille und vorstellung. S.l.: Grin Verlag Gmbh, 2014. Print. Harrison, Ariane Lourie. Architectural theories of the environment: posthuman territory. New York, NY: Routledge, Taylor Francis Group, 2013. Print. Hayles, N. Katherine. How we became posthuman: virtual bodies in cybernetics, literature, and informatics. Chicago, Ill.: University of Chicago Press, 1999. Print. Leithauser, Brad. Penchants places: essays and criticism. New York: A.A. Knopf :, 1995. Print. Younkins, Edward W.. Ayn Rands Atlas shrugged a philosophical and literary companion. Aldershot, England: Ashgate, 2007. Print. Source document

Electronic Fetal Monitoring :: Technology Pregnancy Essays

Electronic Fetal Monitoring Technology has had a very prominent influence on electronic fetal monitoring since its appearance in the 1960’s and 1970’s. For many years, fetal monitoring was simply done by listening to a fetal heartbeat through a stethoscope. Dramatic changes in the heartbeat, such as a long period or a drop in the rate or intensity, could be detected,. Now, not only is the electronic fetal monitor used on the outside of the womb by strapping electrodes to the mother’s abdomen but electrodes can also be inserted during the first stage of labor and placed directly on the baby’s head. With advanced technologies such as this the acidity of the infant’s blood as well as the heart rate can be measured. New technologies are being developed every day. The latest advance in fetal monitoring is the fetal oxygen monitor: â€Å"A device that directly measures fetal oxygen saturation during labor and delivery is now available and has the potential to reduce the number of Cesarean sections performed for non-reassuring heart rates.† (Mechcatie) The article by Mechcatie describes the monitor extremely well: â€Å"The device’s sensor, located at the end of a flexible tube, is made of pliable plastic and is inserted through the cervical os until it lies along the fetal cheek, where the pressure of the uterine wall keeps it in place during labor. The sensor shines light into the fetal skin and computes the oxygen saturation by measuring the color of the reflected light coming through the blood cells.† There is also a high-resolution ultrasound scanning that can detect chromosomal and physical abnormalities in the first trimester as opposed to the second trimester. A technology such as this can create many ethical problems. Mcfadyen describes the biggest problem as being informed consent. â€Å"They may believe that it will provide information only about gestational age and be unaware of the range of abnormalities that can be detected. Recent research suggests that many women are not told beforehand of the first scan’s potential to detect fetal anomalies.† Another technology that has been around for a while is the general ultrasound. In the article by Jennifer Wang she states, â€Å"The risk of a patient having a fetus with Down syndrome can be assessed non-invasively using fetal markers seen on ultrasound. Electronic Fetal Monitoring :: Technology Pregnancy Essays Electronic Fetal Monitoring Technology has had a very prominent influence on electronic fetal monitoring since its appearance in the 1960’s and 1970’s. For many years, fetal monitoring was simply done by listening to a fetal heartbeat through a stethoscope. Dramatic changes in the heartbeat, such as a long period or a drop in the rate or intensity, could be detected,. Now, not only is the electronic fetal monitor used on the outside of the womb by strapping electrodes to the mother’s abdomen but electrodes can also be inserted during the first stage of labor and placed directly on the baby’s head. With advanced technologies such as this the acidity of the infant’s blood as well as the heart rate can be measured. New technologies are being developed every day. The latest advance in fetal monitoring is the fetal oxygen monitor: â€Å"A device that directly measures fetal oxygen saturation during labor and delivery is now available and has the potential to reduce the number of Cesarean sections performed for non-reassuring heart rates.† (Mechcatie) The article by Mechcatie describes the monitor extremely well: â€Å"The device’s sensor, located at the end of a flexible tube, is made of pliable plastic and is inserted through the cervical os until it lies along the fetal cheek, where the pressure of the uterine wall keeps it in place during labor. The sensor shines light into the fetal skin and computes the oxygen saturation by measuring the color of the reflected light coming through the blood cells.† There is also a high-resolution ultrasound scanning that can detect chromosomal and physical abnormalities in the first trimester as opposed to the second trimester. A technology such as this can create many ethical problems. Mcfadyen describes the biggest problem as being informed consent. â€Å"They may believe that it will provide information only about gestational age and be unaware of the range of abnormalities that can be detected. Recent research suggests that many women are not told beforehand of the first scan’s potential to detect fetal anomalies.† Another technology that has been around for a while is the general ultrasound. In the article by Jennifer Wang she states, â€Å"The risk of a patient having a fetus with Down syndrome can be assessed non-invasively using fetal markers seen on ultrasound.

Public Policy Essay

Public Administration always needs funding for various aspects throughout many realms.   From grants to sidewalk repair to going green in residential homes to starting up a business and educational grants.   There are also, as we are currently seeing,   monies coming from the federal government for stimulus payments to US citizens and as proposed by our new President Elect Obama there are policies in the making for a permanent stimulus or tax rebate due to excessive oil prices and changes in healthcare.   The one thing with the majority of the monies being spoken of is that so much comes from the federal government.   This precludes any monies the states may have or have already spent, as in the end they also receive monies from federal agencies. So here we see a vicious circle of all these people needing money for one reason or another, they spend what they have, apply for grants from the federal government, the federal government says hey ok but in the end, what do we do when the federal government runs out of money?   What do states do when there is no money left to be tapped?   Do they droll at another department because that department may have the monies to continue further? Let us start with the liquor tax.   Currently the taxation goes like this; the federal government gets approximately 10% of each gallon depending on the proof or volume manufactured (each state seems to vary) of the alcohol.   The higher the proof, the more the taxes they receive.   The state on the other hand receives a much higher revenue from the tax (State Liquor Tax Rates-2008).   Each state has different programs in which the taxes collected helps finance.   The federal government should take only a specified amount, a flat tax from each state for both alcohol and tobacco and keep tally on which states they obtain these taxes from and how  much.   When these individual states run out of their own taxed revenue then when they apply for a grant, the grant acceptance and money distribution is then taken from the coffers of the federal government based upon the taxes already received into the hands of the federal government.   This keeps those federal tax dollars fo cused in one area instead of spread all over the board.   If states run out of money from the federal government through this specified mean then the balloting of measures asking for the public in general to vote on a new tax for this reason, should be implemented. Some states have public lottery games or gambling which is allowed in public places, of course with age allowances in place.   The federal government has their hands in this pie as well.   I believe that the federal government should step away and not collect taxes on this except maybe through an individual tax return, and allow the states to keep and maintain this taxation as sole entities with a fiscal report as to where these tax dollars are spent.   In addition, taxes collected on gambling should be distributed to the same entities each yr without prevail or each year change their entities of who these taxes go to, to help finance.   This would be akin to alternating weekends of work in the general public forum. Let us go a bit more local.   Each county has their county has their own form of taxation and ways to obtain revenue.   These counties should work together more as a team than what they currently do.   Instead of them allocating their funds to only the departments within (i.e. city tax on water only for water line improvement) they should all pool their monies together.   There  should be a strict fiscal plan in place that determines how much money goes where and for what.   Each department of the county should be made each year to make an honest analysis of what they will need to further any improvements that are necessary and not frivolous and based upon that information, this will determine what departments get what.   Maybe the courthouse has an upcoming need to repair a bathroom where as the dump wants a wall around their facility to improve aesthic purposes.   Which is more important?   This should be obvious.   What if the county sheriff’s department needs to have additional law enforcement but has a lack of cars?   Instead of being allowed to buy the new cars each year, cut the rate of cars bought in half and put two people to each car.   This may only mean the savings from not buying 2 or 3 cars but each dollar helps. In the end, the county has a complete record of where all the money goes to and they have all worked together as a team and not against each other due to politics and there may also be more money left over at the end of each year which will definitely lessen the amount of money asked for from the federal government. Healthcare is a big issue.   Public policy should simply enforce specific financial capping rules as to what the healthcare industry can charge for their costs, this is to include doctors and providers of insurance alike.  Ã‚   If these two entities can work together as a team regarding services, payments and insurance under more strict federal guidelines of what can be charged for these instances, then this would make these two entities work more closely together. All in all, each department of each state, county and city that implements a tax, part of each department should also allocate a small percentage of the tax revenue to a general fund for emergencies or unseen departments that may suddenly need additional fund.   This General fund should also be exhausted before applying for federal grants. Some may consider this a socialistic view regarding public administration and maybe it is, but if so then take a look into Canada’s or Europes socialization and compare these two to the country of America.   Which one is better off in the long run.   If you can determine that (and it isn’t the USA) then you can determine that they are doing something more correct.

John Stuart Mill Essay

The Indian Tax Structure is quite elaborate, with clear distinction in authority between Central, State and local governments. The taxes levied by the Central government are on income (other than tax on agriculture income which would be levied by the state government), customs duties, central excise and service tax. The State government levies Value Added Tax (VAT), sales tax in states where VAT is not applied, stamp duty, state excise, land revenue and tax on professions. Local bodies levy tax on property, octroi and for utilities like water supply, drainage etc. In the last 10 to 15 years, tax system in India has been subjected to significant reforms. The tax rates have been revised and tax laws have been modified. Since April 1, 2005 many State Governments in India have replaced the sales tax with VAT. Indian Tax Structure After Independence The period after Independence was quite challenging for the tax planners. A huge black economy set in both due to Second World War and the increase in economic activity after independence. Savings and investment were encouraged through the various taxation laws by the way of incentives. There was a need for generating huge amount of revenues to fund the economic growth of the country. The tax department took great care to plan the tax structure not only with the aspect to widen the income tax base, but also to look for alternate taxes and to eradicate tax avoidance . The department was severely tested due to the high volumes of work. Some of the prominent taxes that came into existence were: †¢ †¢ †¢ †¢ †¢ †¢ Business Profits Tax (1947) Capital Gains (1946-48 to 1956) Estate Duty (1953) Wealth Tax (1957) Expenditure Tax (1957) Gift Tax (1958). To check the growth of black money, high denomination notes were demonetized in 1946. The Income tax Act was re modified in 1961, replacing the outdated law of 1922. Income Tax Structure Post Liberalization The wave of tax reforms which started across the world in the second half of 1980’s found its way into India. As part of its policy of liberalization, India introduced tax reforms in the 1990’s. The reforms introduced in the Indian tax structure are different in comparison to other countries. The tax reforms in India took place independent of interference from any external multilateral agency unlike some other countries. But the tax reforms took place in such a way as to ensure its adherence to the prevailing International trends. During the initial stages of reforms, the restructuring of the tax structure took place with a view to increase savings and use the increased savings towards investment, to bring in equitable distribution of income and to rectify the disparities due to oligopolistic market that existed due to co existence of both private and public sector. The tax structure reform in India can be used as an example for many developing countries that are in the same path of development, due to the large size of the country and the disproportion in the socio economic condition across the country. Direct Tax Direct tax is the tax which is charged directly on the tax payer. For e. g. property tax and income tax. In other words direct tax is that tax that is deducted from one’s salary. Direct Taxation in India Direct taxation in India is taken care by the Central Board of Direct Taxes (CBDT); it is a division of Department of revenue under Ministry of Finance. CBDT is governed by the revenue act 1963. CBDT is given the authority to create and control direct taxes in India. The most important function of CBDT is to manage direct tax law followed by Income Tax department. In India the tax structure is divided amongst the central government and state government. The central government levies taxes on income, custom duties, central excise and service tax. While the state government levies tax like state excise, stamp duty, VAT (Value Added Tax), land revenue and professional tax. Local civic bodies levy tax on properties, octroi etc. Capital gains tax, personal income tax, tax on corporate income and tax incentives all come under the purview of direct tax. Direct taxes are charged on the basis of residential status and not on the basis of citizenship. The assessee are charged based upon the following factors †¢ †¢ †¢ Resident Resident but not ordinary resident. Nonresident. Direct Taxes Before Reform They had a major impact on economic policies, creation of savings and the trend of investment. There was no proportion in terms of the impact of direct taxes on the economy and there relative share in total tax revenues. The system of direct taxes was very much complex and inefficient because of the combination of high marginal rates of personal income and wealth taxation and high rates of corporate profits. The corporate tax was pretty high. It leads to large scale evasion. Members Of Parliament and Central Government Ministers get comparatively low salaries, but they are given a sitting allowance which is not taxable. Ministers, MP’s and other high ranking government officials get government allocated accommodation, where the charges are pretty less in comparison to the prevailing market rate. Growth in Direct Tax collection during the Financial Year 2008-09 Net direct tax collection during the fiscal 2008-09 stands at Rs. 338, 212 crore, up from Rs. 312, 202 crore during 2007-08, registering a growth of 8. 33 percent. Growth in Corporate Taxes was 10. 84 per cent, while Personal Income Tax (including FBT, STT and BCTT) grew at 9. 09%. Despite economic slow-down and substantial relief to noncorporate taxpayers, direct tax collections exceeded the previous year’s collection by about Rs. 26, 000 crore. Growth In Direct Tax Collection During The Financial Year 2009-2010. The net direct tax collections grew by 5. 77 per cent during the first two months of the current fiscal (2009-2010). It was Rs 24,158 crore compared to Rs 22,840 crore at the same time last year. Corporate tax grew at5. 56 per cent (Rs 8578 crore against Rs 8126 crore), while personal income tax (including FBT, STT and BCTT) grew at 5. 92 per cent (Rs 15,559 crore as against Rs 14,690 crore0. Overall refund outgo during the period increased by 26. 19 per cent (Rs 11,375 crore as against Rs 9014 crore)while refunds to non corporate taxpayers grew by 61. 7 per cent (Rs 2,149 crore against Rs 1,329 crore). Corporate Tax A company has been defined as a juristic person having an independent and separate legal entity from its shareholders. Income of the company is computed and assessed separately in the hands of the company. However the income of the company which is distributed to its shareholders as dividend is assessed in their individual hands. Such distribution of income is not treated as expenditure in the hands of company, the income so distributed is an appropriation of the profits of the company. Taxable Corporate Income The tax levied on a company’s income is based on its legal residence. Companies of Indian origin are levied tax in India, while International companies are levied tax on earnings from their Indian operations. For International companies’ royalty, interest, gains from sale of capital assets within India, dividends from Indian companies and fees for technical services are all treated as income arising in India. Tax On Distributed Profits Till 1997, a company was not required to pay any income tax on the amount of dividends declared, distributed or paid by such company. But such dividend was included in the income of the shareholders under the head â€Å"income from other sources†. The finance act 1997 brought about changes to the rule. A) Tax On Distributed Profits Of The Domestic Company The domestic company would be required to pay additional income tax on any amount declared, distributed or paid by such company by way of dividend (be it interim or otherwise) on or after 1-06-1997,be it from current or accumulated profits. Such additional income tax shall be payable @ 10 per cent of the amount so distributed. Even if no income tax is payable by the company on it total income, the additional tax would have to be paid. B) Exemption Of Dividend In The Hands Of Shareholders In view of the income tax now payable by the domestic company, any dividends declared, distributed or paid by such company, on or after 01-06-1997 shall be exempt in the hands of the shareholders. Time limit for deposit of additional income tax: Such additional tax will have to be paid by the principal officer of the domestic company within 14 days from the date of: a) Declaration of any dividend. b) Distribution of any dividend. c) Payment of any dividend, whichever is earlier. Additional income-tax is not allowed as deduction: The company shall not be allowed any deduction on account of such additional income tax under any provisions of the income tax act. Indian Budget 2008 Indian Corporate Taxation Minimum Alternate Tax To wipe out the ambiguity on adjustments relating to tax entries in the profit and loss account, it is proposed that the â€Å"book profits† be increased by an amount of DDT paid, amount of deferred tax paid and deferred tax provision debited to Profit and Loss Account. Dividend Distributing Tax In order to overcome the domino effect of DDT, it has been suggested that any dividend received by a domestic company (C1) during any financial year from its subsidiary (C2) shall be allowed to be deducted from dividend to be declared/distributed/paid by C1, to calculate DDT, if the dividends so received by C1 had been scrutinized to payment of DDT by C2. At the same time C1 must not be a subsidiary of any other company. Business Income The Budget 2008 has proposed have a weighted deduction of 125% with respect to any sum paid for scientific research to a domestic company doing scientific research and development. To remove multiple deductions, it has been proposed some Indian companies incurring the expenses would not be able to use the weighted deduction of 150 per cent as prescribed under the provisions of the Act. Income Tax In India Income tax in India is levied by the Central government and is monitored and controlled by Central Board OF Direct Taxes under Ministry of Finance in allay with the provisions of the Income Tax Act. Income earned in a given financial year is subject to tax as per the rates prescribed for that year. A financial calendar is from April 1 to March 31 of the following year. India has adopted the residential form of tax system. It means tax payers will be divided into residents or non residents. A tax payer can also be classified as ordinary residents. Residential Status An individual is resident in India if he is in India in the tax year for: †¢ †¢ †¢ 182 days or more; or 60 days or more (the period of 60 days stands changed to 182 days or more for Indian citizens or persons of Indian origins on a visit to India; and also for citizens of India who leave India for employment abroad as member of a crew of an Indian ship) during the tax year, and an aggregate of 365 days or more during the four years preceding the tax year. An individual who does not satisfy the above conditions is a non-resident. A resident is â€Å"not ordinarily resident† in India in any tax year if he: †¢ †¢ †¢. Has been â€Å"non-resident† in India in nine out of the 10 previous years preceding that year: or Has during the previous seven years, preceding that year, been in India for a total period of 729 days or less. Taxability based on status Taxability Based On Status Residential Status Indian Sourced Income Foreign Sourced Income Resident Taxable In India Taxable In India Resident but not ordinarily resident Taxable In India Not Taxable In India Non resident Taxable In India Not Taxable In India Heads Of Income Income can be divided into five categories. The income that falls within the tax component is disclosed in line with rules for a particular head and then cumulated to determine the aggregate income to be taxed. But losses under certain categories cannot be cumulated with income gained under other categories. Salaries: It covers those monetary gains that are obtained for services performed and would include wages, pension, fees and commission . Standard deduction is taken from the salary and the amount of deduction depends upon the income received. Income From House property: It involves income earned by renting residential and commercial property. Only two authorized deductions are allowed while calculating income. Profits And Gains From Business Or Profession: It covers monetary benefits gained from business or profession minus the permissible deductions, against the revenue earned. Capital Gains: It deals with gains due to transfer of assets. The duration of holding determines the classification of the asset, which then decides the method of taxation. Capital assets held for 36 months (12 months in case of shares/securities) are taken as short term assets, while all other capital assets are taken as long term capital assets. Long term assets have the advantage of lower rate of tax. Income From Other Sources: It is the remaining category of income and takes care of all income not covered by any category. Foreign Nationals The tax law in India allows for exemption of income earned by foreign nationals for services provided in India, under certain condition: †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Remuneration from a foreign enterprise not conducting any business in India, provided the individual’s stay in India does not exceed 90 days and the payment made is not deducted in computing the income of the employer; Remuneration received by a person employed on a foreign ship provided his stay in India does not exceed 90 days; Remuneration of foreign diplomats, consular staff, trade officials and their staff and family; and Income of an employee or consultant of a government approved foreign charitable institutions. Payment from an International unit not having any business in India on condition that the individual does not reside in India for more than 90 days and the remuneration made is not subtracted in calculating the income of the employer. Payment obtained by a person working on an International ship under condition he does not reside in India for more than 9 days. Payment for foreign diplomats, consular staff, trade officials and their staff and family and Earnings of an employee or consultant of a government approved foreign charitable institutions. India Budget 2008 Personal Taxation Basic Tax Rates Income (INR) Up to 150,0000 150,001-300,000 300,001-500,000 Above Tax Rate Nil 10% 20% 30% *Basic exemption for women and senior citizens will be INR 180,000 and INR 225,000 respectively. Wealth Taxation In India The wealth taxation in India is known as the wealth tax act, 1957. It applies to all the citizens of the country. It is one of the most important direct taxes. It is paid on the property ownership benefits. Till a person retains the ownership of a property, he or she has to pay wealth tax based on the prevailing market rate. Even if the property is not yielding any income, Wealth tax would have to be paid. Payment Procedures Of The Wealth Tax In India An Assessee is one who pays the wealth tax. An assessee can belong to any of the following categories: †¢ †¢ †¢ †¢ †¢ †¢ A Company. A Hindu undivided family. An Association of Persons or a Body of Individuals. Non corporative taxpayers. A dead person’s legal representative, the executor or administrator. A non resident’s agent. For a Hindu Undivided Family the tax is considered on the income derived from joint family collections. But for a non-corporative taxpayers, whose account is audited they have to pay the wealth tax according to the existing tax rate. Chargeability To Wealth Tax In India One of the main factors for a person to pay the wealth tax in India is the persons domicile status. According to the act, the domicile status of the assessee and the domicile status of the same needed for payment of the Income Tax must remain similar. Another factor based on which wealth tax is computed is the status of the assessee, whether he is a citizen or a non citizen. For citizens the wealth of the person within India is taxed, while for non citizens the wealth of the person within India is taxed, while the wealth located outside India is not taxed. Assets On Which Wealth Tax Is Charged The assets on which wealth tax is chargeable in India are: †¢ †¢ †¢ †¢ †¢ †¢ Residence like guesthouse, residential house, urban farmhouse and commercial property. Automobile for personal use. Precious items like jewelry, bullion, furniture, utensils. Yachts, boats and aircrafts used for non commercial purposes. Urban land under the authority of municipality or cantonment board having a population of, 10,000 and more. If the cash in hand is more than Rs 50000 for individuals and Hindu Undivided Families. Indirect tax Charge levied by the State on consumption, expenditure, privilege, or right but not on income or property. Customs duties levied on imports, excise duties on production, sales tax or value added tax (VAT) at some stage in production-distribution process, are examples of indirect taxes because they are not levied directly on the income of the consumer or earner. Since they are less obvious than income tax (because they don’t show up on the wage slip) politicians are tempted to increase them to generate more state revenue. Also called consumption taxes, they are regressive measures because they are not based on the ability to pay principle. Indirect Tax System India Indirect Taxes Pre Reforms The indirect tax structure was extremely irrational between the reforms. The Constitution gives the permission to levy a multitude of indirect taxes. But the most important ones are customs and excise duties charged by the Central government and sales tax excepting inter state sales tax to be charged by the state government. The indirect taxes levied by the centre like customs, excise and central sales tax and the major indirect taxes levied by the states and civic bodies like passenger and goods tax, electricity duty and octroi when taken together did not present a rational system. Indirect Taxes Post Reforms †¢ †¢ †¢ Even post reforms, the indirect tax regime in India is still in the early stages of growth. Both the Central and State governments charge a multitude of indirect taxes. The central government charges tax on goods at the point of import (Customs duty), manufacture (Excise duty), inter state sales (Central sales tax or CST) and on provision of services (Service tax). The state governments charge tax on goods sold within the state (Sales tax/Value Added Tax or VAT), and on the goods that enter the state (Entry tax). In the present scenario corporate would have to analyze the tax cost involved in a transaction, have enough backup documentation to support their tax positions and keep looking for ways for tax maximization. India Budget 2008 Indirect Taxes As per the Ministry Of Finance there has been significant development in planning for introducing the goods and services tax (GST) from April 1 2010. As a first step the rate of central sales tax (CST) is under proposal to be decreased to 2 per cent from April1 2008. The general rate of central value added tax (CENVAT) has been decreased from 16 per cent to 14 per cent across all goods. Custom Duties Customs regulation in India is through the Customs act. The Customs act came into existence in 1962 at a time when the â€Å"License Quota Permit Raj† system existed in the country. It came into existence to check illegal imports and exports of goods. All imports into the country would be charged a duty, to give protection to the Indian industries and to check the amount of imports with a view to secure the exchange rate of the country. Customs duty on goods imported or exported from India are levied according to the Tariff Act 1975. To monitor imports and exports, the Central government has the authority to inform the ports and airports for the unloading of the imported goods and loading of the exported goods, the location for clearance of goods imported or exported, the routes by which above goods may pass by land or inland water into or out of Indian ports. According to the custom laws, the following are the various types of duties which can be charged. Basic Duty As the name suggests, it is the normal duty charged under the Customs Act. Additional Duty This duty is levied under section 3(1) of the Customs Tariff Act and is equal to excise duty levied on a like product manufactured or produced in India. Anti Dumping Duty International sellers may at times export goods into India at prices which would be less than the prices they would be charging in their domestic market. The reason for this is to capture the Indian markets, which is against the interest of the Indian industry. This economic phenomenon is called dumping. To avoid dumping the Central government may charge additional duty equal to the margin of dumping on such articles provided the goods have been sold at less than normal price. Countries which are signatories to the GATT or countries with â€Å"Most Favored Nation Status† cannot be charged dumping duty. India Budget 2008 Custom Duty †¢ †¢ †¢ The peak rate of basic customs duty (BCD) on all agricultural products is 10 per cent. For certain industries, customs duty has been reduced. For project imports the duty has been reduced from 7. 5 per cent to 5 per cent. In place of sales tax/value added tax (VAT) the additional duty of customs at 4 per cent has been induced on power generation projects. A Countervailing Duty (CVD) of 1 per cent has been charged on mobile phones. Double Taxation Relief A condition in which two or more taxes may need to be paid for the same asset, financial transaction or income is known as double taxation. It generally takes place due to the overlapping of the tax laws and regulations of different countries. Thus, double taxation occurs when a taxpayer is charged income tax, both at his country of residence as well as in the country where the income is generated. Taking into account the laws of income tax in India, a non-resident becomes liable to tax payment in India, given that it is the place where the income is generated. Moreover, he has to additionally bear the burden of tax payment in his own country, by virtue of the inclusion of the same income in the ‘total world income’, which forms the tax base of the country where he resides. To effectively deal with the problems related to double taxation, Central Government, under Section 90 of the Income Tax Act of1961, has been certified to enter into Double Tax Avoidance Agreements (DTAA) with other countries. These agreements are meant to alleviate various problems related with double taxation. So far, India has entered into Double Taxation Avoidance Agreements with 65 countries, including U. S. A, Canada, U. K, Japan, Germany, Australia, Singapore, U. A. E and Switzerland. The tax treatises offers relaxation from double taxation, by providing release or by providing credits for taxes paid in one of the countries. Under Section 90 and 91 of the Income Tax Act, relief against double taxation in India is provided in two ways: Double Taxation Relief In India Double taxation relief in India is of two type’s Unilateral relief and Bilateral relief. Unilateral Relief Under Section 91, Indian government can relieve an individual from burden of double taxation, irrespective of whether there is a DTAA between India and the other country concerned or not, under certain conditions. Cases where a person enjoys double taxation relief as per the unilateral relief scheme are: †¢ †¢ †¢ †¢ If the person or company has been a resident of India in the previous year. If the person or company has paid income tax under the laws of the foreign country. The same income should be gained and received by the tax payer outside India in the previous year. The income should have been taxed in India and in a country with which India has no tax treaty Bilateral Relief Under Section 90, Indian government provides protection against double taxation by entering into a mutually agreed tax treaty (DTAA) with another country. Under bilateral relief, protection against double taxation is provided either by completely avoidance of overlapping tax or waiving a certain amount of the tax payable in India. Excise Duty Central excise duty is an indirect tax which is charged on such goods that are manufactured in India and are meant for domestic consumption. The taxable fact is â€Å"manufacture† and the liability of central excise duty arises as soon as the goods are manufactured. The tax is on manufacturing, it is paid by a manufacturer, which is then passed on to the customer. The term â€Å"excisable goods† means the goods which are specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act 1985. The term â€Å"manufacture† refers to any process †¢ †¢ †¢ Related or supplementary to the combination of a manufactured product. Which is specified in relation to any goods in the Section or Chapter Notes of the First Schedule to the Central Excise Tariff Act 1985 as amounting to manufacture or Which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. Three different types of Central Excise Duties exist in India. They are listed below: Basic Excise Duty In India Excise Duty, imposed under section 3 of the ‘Central Excises and Salt Act’ of1944 on all excisable goods other than salt produced or manufactured in India, at the rates set forth in the schedule to the Central Excise tariff Act, 1985, falls under the category of Basic Excise Duty In India. Additional Duty of Excise Section 3 of the ‘Additional Duties of Excise Act’ of 1957 permits the charge and collection of excise duty in respect of the goods as listed in the Schedule of this Act. This tax is shared between the Central and State Governments and charged instead of Sales Tax. Special Excise Duty According to Section 37 of the Finance Act, 1978, Special Excise Duty is levied on all excisable goods that come under taxation, in line with the Basic Excise Duty under the Central Excises and Salt Act of 1944. Therefore, each year the Finance Act spells out that whether the Special Excise Duty shall or shall not be charged, and eventually collected during the relevant financial year. India Budget 2008 Excise Duty †¢ †¢ †¢ †¢ †¢ The general rate of CENVAT has been brought down from 16 per cent to 14 per cent. The CENVAT on many goods like cars, writing paper, printing paper and packing paper, drugs and pharmaceuticals, water filtration and purification devices, pan masala not containing tobacco etc have been decreased. For goods like anti AIDS drugs and bulk drugs, packaged tender coconut water, tea and coffee mixes, specified refrigeration equipment, etc have been exempt from excise duty. For packaged software the duty has been increased from 8 per cent to 12 per cent. The duty of 1 per cent on National Calamity and Contingent Duty has been imposed on mobile phones. Permanent Account Number (PAN) Permanent Account Number or PAN is issued by the Income Tax Office of India, to all those who are required to pay income tax in the country. Thus, taxpayers whose income is taxable are issued a Permanent Account Number, which is similar to the Social Security Number issued in United States to citizens and other legal residents. So, PAN in India is nothing, but a national identification number. The main purpose of allotting PAN card is to outline the monetary transactions of individuals and to avert any sort of tax evasion by tax payers. Apart from keeping a track on the various financial dealings of a person, a PAN is also required for many other important activities. As every individual is assigned a unique, national and permanent number as his/her PAN, the number is required while opening an account, applying for a phone line, receiving salary or other professional fees. Thus, it becomes an authentic document, proving the identity of the individual. The PAN of a person remains the same even if there is residential change of address from one state to another. Each individual entitled to a Permanent Account Number receives a PAN card, wherein the number is mentioned. The PAN follows the following structure – XXXXX1111X. The first five characters are letters; the next 4 are numerals, and the last character is again a letter. A Permanent Account Number that doesn’t follow this pattern is deemed as invalid. Moreover, the fourth character of the PAN is one of the following, depending on the type of assessee who is allotted the number. †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ C – Company P – Person H – Hindu Undivided Family (HUF) F – Firm A – Association of Persons (AOP) T – AOP (Trust) B – Body of Individuals (BOI) L – Local Authority J – Artificial Juridical Person G – Government In addition, the fifth character of the PAN is the first character in the surname of the assessee. Though PAN is generally issued to individuals to keep track of the tax payment, it can however also be issued to non-taxpayers in India. Sales Tax In India Sales Tax in India is a form of tax that is imposed by the government on the sale or purchase of a particular commodity within the country. Sales Tax is imposed under both, Central Government (Central Sales Tax) and State Government (Sales Tax) Legislation. Generally, each state follows its own sales tax act and levies tax at various rates. Apart from sales tax, certain states also imposes additional charges like works contracts tax, turnover tax and purchaser tax. Thus, sales tax acts as a major revenuegenerator for the various State Governments. Sales tax is an indirect form of tax, wherein it is the responsibility of the seller of the commodity to collect and recover the tax from the purchaser. Generally, sale of imported items and sales by way of export are not included in the range of commodities which requires payment of sales tax. Moreover, luxury items (like cosmetics) are levied heavier sales tax rates. Central Sales Tax (CST) Act that falls under the direction of the Central Government takes into account all the interstate sales of commodities. Thus, sales tax is to be paid by every dealer on the sale of any commodity, made by him during inter-state trade or commerce, irrespective of the fact that no liability to pay tax on the sale of goods arises under the tax laws of the appropriate state. He is to pay sales tax to the sales tax authority of the state from which the movement of the commodities commences. However, from April 01, 2005, most of the states in India have supplemented sales tax with a new Value Added Tax (VAT). The practice of VAT executed by State Governments is applied on each stage of sale, with a particular apparatus of credit for the input VAT paid. VAT in India can be classified under the following tax slabs: †¢ †¢ †¢ †¢ †¢ 0% for essential commodities 1% on gold ingots and expensive stones 4% on industrial inputs, capital merchandise and commodities of mass consumption 12. 5% on other items Variable rates (state-dependent) are applicable for petroleum products, tobacco, liquor etc. Service Tax in India Constitutional Provision Article 265 of the Constitution stresses that no service tax in India shall be charged or collected other than by the concerned authority. Schedule VII divides this subject into three different sections †¢ Union list (only Central government has power of legislation). †¢ †¢ State list (only State government has power of legislation). Concurrent list (both central and state government can pass legislation). An amendment (95th amendment) in 2003 was made to enable the Central government to decide the method of charging service tax and the means of collection of proceeds by the central government and state government. Subsequently a new article 268 A has been introduced for levy of service tax by Central government. Creation Of DGST The department of Director General (Service Tax) was created in 1997 to handle the huge workload resulting due to the increasing importance of service tax. The Director General (Service Tax) is in charge of the department and his role and authority are: †¢ †¢ †¢ †¢ .