Audit Syariah

Tiffy Tiffeny Edmund 62288211087 Audit 1 Audit Syariah Definition Audit is a process to investigate and verify an account, while Syariah is the rule of Islam (Hukum Islam). Therefore, Audit Syariah is the process to analyse, check, investigate and to make sure the operation and the management of Islamic Financial Institution (IFI) is accordance to the principal and the Syariah’s guidelines, mainly for the production of a product.Syarikah al-Rajhi al-Masrafiyyah LiL Istismar has define the Audit Syariah as â€Å"parties to determine the extent of Syariah compliant IFI based on decision made by the Syariah Advisory Council (SAC)† Objectives * Is there any specific mechanism to ensure the implement decision of SAC based on the Muamalat Islam? * How the implement of contracts, requirements, and operation being monitored by the IFI? The importance of Syariah compliance is to mitigate the operational risk of IFI and to strengthen the internal control of Islamic Banking system .Operation risks arise out because of failure in internal controls relating to processed, people, systems, or external event. The syariah non-compliance significant with this risk, which may result in voiding of contracts, loss of income, withdrawals, diminishes reputation and reduction in business. So, key challenge in managing operational risk in Islamic banking is by ensuring syariah compliance. Therefore, it is important to have syariah auditor to control activities according the Islamic rules which permissible and compliance with the principles of syariah About audit syariahThe different between statutorily IFI of different countries against actual scope and scale of what constitutes syariah audit might be bias towards the actual nature and scope of syariah audit. Auditor that practices the syariah system should be understood as a model that those countries adopt probably due to certain constraint within their financial system or infrastructure. Primary scope of syariah audit i s the audit of financial statement of the IFI.The audit will design to review the financial statement are drawn up according to the prevailing financial reporting disclosure standard of the country and wether the financial entries truly and accurately reflects the right and obligation arising from the various syariah contracts that the IFI enters into. If the requirement of IFIs in that country is to adopt the Accounting and Auditing Organization of Islamic Financial Institution (AAOIFI) standards then adherence to AAOIFI standards would be construed as the syariah compliant yardstick.The next area of a scope is the operational aspects of the IFI. This largely depends on the type of business the IFI is involved in and the key business activities undertaken by the IFI. This will involve an examination of the policies and procedures of the IFI on the key business activities, product manuals, operational process, contracts and agreements of products, memorandum and articles of associat ion of the organization and observation of reports issued by the management or syariah supervisor board and internal review unit.Third scope is the organizational structure and the people involved in executing key activities of each business area of the IFI. Audit on this scope will ensure that the organization structure is feasible to undertake the syariah compliant business activities and those they are qualified personnel in the area of ? fiqh al-muamalat to support the operations of the IFI. Islamic commercial jurisprudence or the rules of transacting in Islamic lawFinally, the scope should also cover the IT application systems that are in place to support the key business activities of the IFI. An audit into this area would look into whether the functionalities and features of the application system are sufficient and adequate to support an Islamic Banking Business by the IFI. Few things should be emphasized by auditor is avoiding every sinful activities such as the elements of riba, channeling received funds in a sinful way, and transactions that pay interest to depositor or investment in interest bearing stocks.The Syariah Advisory Council of Malaysia security commission (SAC) had resolved that riba is one of the main criteria causing the security of listed company to be excluded from SAC approved list. Islamic Instrument Study Group (IISG) at its fifth meeting on 23th August 1995 resolves that securities of a company whose operations and main activities are based on riba are not halal. Second thing is risk sharing. Islamic finance requires each party to a transaction to share the risks and rewards in an equitable manner.Islamic finance also doesn’t allow and forbid exploitation regarding right, liability and organization of the transaction leaving no room for ambiguities. Islamic law in finance is quite flexible where it allows the undertaking of any form of contractual relationship as long they avoid the clearly stated the prohibitions in the q uran and sunah. To ensure the audit progress runs smoothly, auditor must understand every decision maked by SAC. Auditor can ask the secretariat for help or by referring the manual of syariah, syariah checklist, syariah audit report from previous year, and so on.

Racc

Design and Development of Strategy Processes at RACC 1. What have been the goals of the strategic planning exercise at RACC over the years? What are the advantages and disadvantages of the RACC approach? Previously all the strategic planning exercises involved a wide management participation coupled with bottom-up approach. The aim was the development of a multi-product and multi-channel strategy. In 2000-02 the emphasis of the strategic plan was focused on geographical expansion.Which were formed by participative process by including 21 senior managers from level 1 and 2 who carried out and external analysis, followed by an internal feasibility analysis. As a result, five corporate strategic priorities were identified, with expansion to the rest of Spain as the highest priority. In 2003-06 the focus of the strategic exercise was to tackle the issue of how to capitalize on the successful expansion. The middle level was given more importance in terms of participation.Significant chang es in the market had occurred in 2005 and 2006 along with diversification of RACC’s core business had initiated a change in the approach to strategic planning process to bring the business back to its shape. From a broader participative approach, RACC started practicing a top-down approach. The goal went to being the development of a multi-product and multi-channel strategy while ensuring compatibility with the ongoing and revised strategy that had already begun to be implemented.The objective of the change was to increase the profitability and secure the survival of RACC in the insurance business keeping the multi-product and multi-channel strategy as the key strategy in order to increase cross-selling opportunities and to increase the sales revenue and market share. In 2005, unexpected stagnation of the insurance businesses proved difficult for RACC to function as a result the top management had to abandon the bottom-up approach in order to quickly react to the disturbance in the core business of RACC. 007-08, the senior management deemed it necessary to trigger an update of strategic planning exercise of RACC to incorporate the impact and needs of these ongoing projects and to identify additional initiatives. This was taken into consideration to establish overall strategic coherence and help revamp projects that would ensure future financial stability. The 2008-13 exercise was to be carried out by external consultants since they would have a more objective approach along with a team of 10 top managers. The exercise reinforced the concept of service to the car driver and established ambitious growth targets for RACC in the car insurance.With more emphasis on multi-product and multi-channel strategy to expand the services for car drivers and were designed with ambitious targets. Bottom-up approach/ broader participative approach * Advantages Commitment of the RACC people towards the strategy was formed which resulted in impressive growth in terms of pr ofit, number of members and geographical growth within Spain. * Disadvantages This approach could not foresee the market. The symptoms of stagnation could not be detected which led to an negative impact. Top-down approach * AdvantagesThe strategy allowed it to operate its different business in different ways whilst producing synergies between them. The strategy also provided better customer service and fostered cross-sales as it encouraged better relationships between the businesses. * Disadvantages The current cross-selling activities needed to be improved which proved as a significant challenge as it required updating the current customer information, analysis of competitors and market trends channel mix, geographical expansion, organizational restructuring, definition of commercial supervision redistribution systems and probably many other issues that could arise. . Should RACC go through a more conventional top down approach given that a participative approach did not seem to fo resee the changes in the market? Given that the previous participative and bottom-up approach could not foresee the changes in the market, the top-down approach proved more beneficial since it was more sensible to work with external consultants because of their objective approach.The symptoms of stagnation were unpredicted and to react to such unforeseen circumstances it was required lay emphasis on the top level managers because of their exclusivity towards the strategy and the lack of time to resolve the occurrence. However, the broad participation approach had proved beneficial for a significant time as well, since it involved the organization participation as a whole, which encouraged implementation due to the involvement. But due to the urgency to take remedial action it would not be feasible to initiate bottom-up approach. . Having faced market changes and having updated the corporate level strategy, should RACC go back to broader participation for the multi-channel strategy? In terms of reacting proactively and effectively to a sudden crisis, it is best for the strategic planning decisions to be carried on by the top level along for a more professional, objective and realistic approach. Regarding the implementation of the strategy, the top level can set directions and supervise the lower levels.However, to maintain a balance and motivate the lower levels a bottom-up approach can be considered once RACC obtains a more stable position. To facilitate multi-channel strategy the integration of broader participation can enhance cross-selling with the supervision of the top level managers. Core decisions should be in the authority of the higher levels. 4. Can a participative strategy making process increase the chances of future stable profits for RACC? Yes, as long as the core strategic decisions are under the authority of the CEO and top level.A broader participative approach can be initiated once again when RACC stabilizes itself in the market since this me thod had been adopted from prior times and had in fact double profits previously because of the commitment of RACC people towards the strategy. Although this can only be opted for enhancing multi-channel strategy, since RACC has diversified itself from a broker to having its own insurance products and services and it is difficult for the lower level to comprehend the wide array of multi-products being implemented. Concentration on cross-selling can prove more viable to sustain growth.

The deal with the devil Essay Example | Topics and Well Written Essays - 1000 words

The deal with the devil - Essay Example Trying to remember what was on those hollow shelves that were attached in the wall up the sink. He went straight to the sink and washed his face in the faucet. After a few minutes, he got dressed casually and went out from his apartment for a walk. He entered a local bar that was only a couple of blocks away from his endangered abode. With only two bottle of beer, he felt his head becoming very heavy all of a sudden. While laying his head on the table, he felt something warm trickled down to his face. A tap in his back suddenly put a halt on this. He lifted his head up and saw that beside him a Chinese old man gazing at him to whom the hand that tapped him came from. He wiped the tears in his eyes and looked at the old man, his gaze questioning. "A chit-chat My wife left me, my dog left me, I lost my business, I owe the bank millions . . . I want to die, do you know that, and you're there for a chit-chat" he exasperated as if finding the old man's offer ridiculous. The old man brought out an old jar from his worn-out Chinese-designed travelling bag, an antique jar. It has embroideries and ash-like colors of blue and greens and shades of red in its body. The old man scanned hastily the room first as if making sure that their conversation will be secured. "This may help, but you will ha... "However, don't ever open this jar unless you are really desperate, miserable, and hopeless." David received the jar, intrigued. He was gazing at it intently for minutes; he was gazing too much that he didn't noticed the old man was not anymore in the seat when he looked at his direction. He picked up the jar, left some change in the table and stormed out in the bar despite of the rain pour. The Deal. Not more than 15 minutes, when he arrived at his apartment he opened the jar curiously. Ashes. Dull ashes. That's what the jar contains. He spilled them in the table and threw the jar heavily in the couch. He sat down and bowed his head. When he lifted his head he was stunned to what he saw. Standing in the table where the ashes before was a little creature that looked like a fetus. It is a scary looking creature that only measures a thumb, perhaps the scariest and the most bizarre thing he has seen in his life. He drew away from the table and run to the bathroom. When he attempted to locked the door of the bathroom he felt something moving at the top of his right shoulder - the creature seems sitting on it. Like attached or something. He remembered the old animation movie, which the talking cricket is always following the wooden boy. Feed me. With your blood. A drop every midnight. It is talking without even moving its mouth. No! David shouted. You have no choice. I'm yours now and you are mine. I will make your life better. Feed me! It said in low and hissing-like voice. Aware that it was nearly midnight the last time he checked the time, he hurriedly took his razor and slides his thumb on it. As it bleeds, the creature flew to his hand and sucked the trickling blood. David twitched and suddenly he fell. Riiiiiiiiing! David lifted his head, trying to

Hospitality Management Essay Example | Topics and Well Written Essays - 500 words - 9

Hospitality Management - Essay Example All the team members are always willing to participate and contribute ideas when setting goals, objectives, targets, policy and procedures of the team. They also rely on and trust one another such that a member can share and value different ideas of other members. The team encourages effective communication, consideration of other viewpoints, and tolerance to confusion. The motto of the team is to seek alternatives that all members can agree, support and implement the decision of the team. The team uses a democratic leadership style that includes and engages all members of the team. It also employs a blend of intuitive and rational decision making approaches to have effective decision making. The team encourages valuing of a diversity of background and experience in the team, and contributions of a diversity of viewpoints to enable it have sound decisions and better solutions. In the case of a conflict, the team handles it openly and transparently to prevent grudges from building up and destroy team morale. Responsibilities and roles are clearly defined to help the team members fathom what they are supposed to do. This creates members commitment to the team that supports it success. The bond among members of the team allows them faultlessly to coordinate their work to achieve effectiveness and efficiency. The culture of the team inspires members to be open, positive future-focused, and transparent. With all these, the team can create a positive atmosphere that helps i t deliver success (Schermerhorn. 170). However, members have gone through some team dynamics and challenges that try to demotivate and demoralise them. For instance, a year after the team started a new team member caused friction with the established members and as a result, they tended to oppose any changes the member tried to introduce. Later on the wrangle was cleared up through communication of roles and responsibilities of each member. Also, at the

SCRUM METHODS Assignment Example | Topics and Well Written Essays - 500 words

SCRUM METHODS - Assignment Example PMO members frequently view themselves as supporters and protectors of the practice. PMO, therefore, can help spread and implement flexible project management skills across the organization. The Scrum PMO scatters project management functions among team, the product owner, and the Scrum Master. 1a.There is a great deal to implementing Scrum that will be unfamiliar and new to many members of the team. The PMO, thus, can be of great assistance in designing a training program, picking outside instructors to offer the training, or providing the training themselves. Training is facilitated by the Program Officer. 1b.In most corporations with a PMO, there is commonly a weekly report or meeting on each project’s status with the head of department. Where a meeting is held, appropriate project personnel must attend it, for instance, the Scrum Master or product owner. In the case of a weekly, regular status report, the Project Management Office can help in organizing the report. The project manager is responsible for this function. The project manager also assists in controlling the rate upon which new projects stream into the development organization. As custodians of the process, PMO members work closely with the Scrum Masters of the organization to guarantee Scrum is executed over and above it can be. Scrum Master refers to a facilitator and coach for a team utilizing Scrum, helping the Scrum team to stay alert on the goals of the project and removing obstacles along the way. The work of a Scrum Master is to deliver utmost value to the consumer. A highly efficient Scrum Master accomplishes this by ascertaining that all concerned have the necessary resources; are protected from interruptions and distractions, and are communicating well. 2a.Scrum Masters work with Product Owners to provide a balance and check between maintaining efficiency and high quality, and getting more done. The

Week3 Ethical Decision Making Essay Example | Topics and Well Written Essays - 500 words

Week3 Ethical Decision Making - Essay Example They are victims of office gossip because they were being talked about behind their backs by their other co-workers. Their reputations have already been tarnished because of the gossip being spread by Sharkey. Sharkey does not gain anything in spreading the gossip because even if he has evidence to prove it, he should have gone to the HR and discussed the issue instead of talking to his co-workers about it. The HR will be in a better position to investigate the matter. HR should handle the problem because they can directly confront both Cypher and Sharpe without being subjective. They will be more objective in handling the case unlike Sharkey who has an ax to grind against Sharpe because she got the promotion he wants. Applying the second question of Professor Badaracco, one sees that the rights of Cypher and Sharpe have been violated. Sharkey’s right to question the promotion is something which he can exercise but he must go through the proper channels. The proper channel is to go to the HR department and raise his concern to them. He can also go to his immediate supervisor to ask the reasons why Sharpe was promoted instead of him. Assuming that Cypher and Sharpe has no relationship as construed by Sharkey and the HR is faced with a decision of whether to fire Sharkey as proposed by Sam, the HR should weigh the consequences of its decision. As Professor Badaracco suggested, it should be guided by the question of â€Å"what will work in the world as it is?† (2002). The HR should resolve the issue by taking into account its decision’s effect on the organization as a whole and how its decision will impact on all the concerned individuals. If the other office workers will find out that the promotion of Sharpe is due to her relationship with Cypher, then the morale of the other office workers will be affected. They will think negatively of management because of the questionable criteria for

PR & Corporate Communication Essay Example | Topics and Well Written Essays - 2500 words

PR & Corporate Communication - Essay Example There are various lines of thoughts that can be induced from this performance based on the views by the stakeholders. The communication of such information to the public and the perception of stakeholders have various implications on PISA, such as brand building, perception of the product, value of the program, trust and awareness of the program (Gehrt, Moffitt & Carlos 2010). This essay will focus on three frames that have been brought forward by education stakeholders in the UK. These are, first, the PISA results are contributed by the outstanding performance of UK in history. Secondly, the performance is viewed as dismal because of the continued average performance. Finally, the results are viewed as wrong and do not represent the actual state of education in the UK. Before addressing these frames, let us look at the objectives of this PR and corporate communication strategy. This PR and corporate communication strategy endeavours to facilitate the communication of information relating to the performance of United Kingdom in the global education quality ranking. The stakeholders in education have mixed reactions to such performance. The mode in which this information is communicated influences the response by these stakeholders. Therefore, a focus will be given to the opinions raised by the stakeholders. In particular, it shall focus on the influence of history on the current performance. Secondly, it will try to bring out results as a low stoop for the United Kingdom and lastly, it shall look at the results as flawed and does not represent the state off education in UK. The strategy also endeavours that information is passed to the audience in a clear and unbiased way. In addition, it will facilitate the incorporation of the concerns of stakeholders in the education sector such as the government, parents, students, and educators among others. Next, the role of the stakeholders has been put into

Planning Strategic Change Essay Example | Topics and Well Written Essays - 3000 words

Planning Strategic Change - Essay Example This paper illustrates that in every organization there is a need for change to be made to ensure continuous quality leadership. According to Kotter, change model can be created in steps; the first step is creating urgency. A change will only help when it is required with the organization as a whole. Creating urgency can help ignite motivation for things to move. Secondly, an organization needs to create a powerful coalition. In this step, the company has to show the necessity of change through leading by an example. The company needs to bring together a team or coalition of persons whose powers are derived from status, job title political importance and expertise. This will ensure a mix of personnel from different levels and departments in your organization. Another step for change model is creating changes in your vision. The company needs to create a vision that people can remember and understand easily. Hence, the company needs to ensure that the central values to change are dete rmined, the visual speech is practiced often and a brief summary is developed to capture the organizations future. The fourth step is frequent communication of the vision; the organization should talk about the vision every moment available. The vision should be used daily to solve problems and make decisions in order to refresh it in people’s minds. In addition, the organization needs to apply the vision in its operations in also to lead by example. In step five, the organization needs to remove the obstacles; removing obstacles empowers the individuals required to execute the vision and propel the change forward. The organization should, therefore, identify individuals resistant to change and brief them on what is required, check on the job description, performance, compensation system and organizational structure to ensure they tally with the vision. Lastly, an organization also needs to identify and reward those that are championing for change. Creation of short-term wins is another step that organizations need to look into.

Corporate Taxation Essay Example for Free

Corporate Taxation Essay 1. The definition of property as it relates to a section 351 transaction includes money. (TRUE) 2. A taxpayer always will have a tax basis in boot received in a section 351 transaction equal to its fair market value. (TRUE) 3. Mandel transferred property to his new corporation in a section 351 transaction. One of the properties transferred was land with a fair market value of $200,000 and a tax basis of $250,000. The corporation will always take a tax basis in the land of $200,000 to prevent the â€Å"built-in loss† from being transferred from Mandel to the corporation. (FALSE) 4. Han transferred land to his corporation in a section 351 transaction. Han had held the land for two years prior to the transfer. The corporation will tack Han’s holding period for the land. (TRUE) 5. Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange? ($500) 6. Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine’s tax basis in the stock received in the exchange? ($450) 7. Carlos transfers property with a tax basis of $500 and a fair market value of $800 to a corporation in exchange for stock with a fair market value of $650 and $50 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 on the property transferred. What is the corporation’s tax basis in the property received in the exchange? ($550) 8. Tristan transfers property with a tax basis of $900 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $900 and $200 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $100 of the property transferred. What is the corporation’s tax basis in the property received in the exchange? ($1,100) 9. Ashley transfers property with a tax basis of $5,000 and a fair market value $3,000 to a corporation in exchange for stock with a fair market value of $2,000 and $500 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $500 on the property transferred. What is Ashley’s tax basis in the stock received in the exchange? ($4,000) 10. Which of the following statements best describes the concept of control as it applies to a section 351 transaction? Control is defined as the ownership of 80 percent of more of a corporations voting stock and 80 percent or more of the total number of shares of each class of nonvoting stock.

The Boston Beer Company Essay Example for Free

The Boston Beer Company Essay Jim Koch began selling Sam Adams beer from bar to bar out of a brief case in April 1985. He sold unlabeled bottles kept cold with chill packs from his briefcase. His sales tactic was the following simply 10-second pitch: â€Å"Try this new beer. It’s handcrafted in small batches. You’ll like the taste. † (Hyatt, 2010) At the time, the craft beer industry in America was virtually non-existent. By 1989, sales of Sam Adams had grown to 63,000 barrels. In 1996, Sam Adams sales had reached 1. 2 million barrels. (Wikipedia, 2012). The success of the brand served as the catalyst for what many call the microbrew revolution. By 1995, there were approximately 600 small, local and regional breweries throughout the United States. Today, the Boston Beer Company (producer of Sam Adams) employs over 800 workers and brews over 2 million barrels of Sam Adams beer annually. It is the largest of the craft breweries in the United States. (Boston Beer Company) The craft brew industry accounts for about 1 percent of the domestic beer market, which is dominated by giants MillerCoors and Anheuser-Busch InBev. This is has required a remarkable level of growth since the early 1990s. In 2011, the industry grew 13 percent by volume (barrels) and 15 percent by retail dollars. Domestic craft beer sales reached 11,468,152 barrels in 2011, up from 10,133,571 in 2010. This growth has occurred despite the overall $96 billion domestic beer market contracting in the past few years (down 1 percent in 2011 to 199,937,239 barrels). (Brewers Association, 2012) The craft brew industry is comprised of several types of breweries which range in annual production from a few barrels up to 6 million barrels. The Brewers Association recently revised the upper limit from a previous point of 2 million barrels in 2011. (Nason, 2011). The industry classifications are the following: * Nanobreweries: Breweries which produce less than 30 barrels per year. * Microbreweries: Breweries classified by their annual production volume, which is up to 15,000 barrels per year. In addition, 75 percent of the beer produced is sold outside of the brewery. There are no set guidelines on the inputs or techniques used to produce the beer in order to be classified as a microbrewery. (Kleban Nickerson, 2011) While the term is often used interchangeably with the term ‘craft beer,’ they are actually not synonyms. A craft beer must contain at least 50 percent traditional malt. (Brown, 2012) * Brewpubs: Restaurant-based breweries in which more than 25 percent of the beer produced is sold onsite, often directly from the brewery’s storage tanks. A majority of these are located in the northeast. * Contract brewing company: Breweries which outsource their production to other breweries subject to exact brewing specifications. The contract brewing company handles all marketing, distribution, and selling responsibilities. (Brewers Association, 2012) Boston Beer Company used to be classified as a contract brewing company. However, from 2007 to 2009 the company’s production at company-owned breweries increased from approximately 35 percent to over 95 percent. (Datamonitor, 2011) * Regional craft brewery: Brewers which produce from 15,000 to 6 million barrels of beer per year. Less than 25 percent of the brewery is owned or controlled by a non-craft alcoholic beverage industry member. In addition, at least 50 percent of its production volume must be in all-malt beers. (Brewers Association, 2012) The Boston Beer Company is now a regional craft brewery. The total number of U. S.craft breweries passed 2,000 in 2012, with significant growth since 2009: Breweries (#)| 2009| 2010| 2011| Regional Craft Bwr. | 71| 81| 88| Microbreweries| 505| 615| 789| Brew Pubs| 1,020| 1,053| 1,063| Total| 1,596| 1,749| 1,938| (Brewers Association, 2012) The industry is based on a three-tiered system of distribution in which the producers partner with wholesale distributors who provide transportation and refrigerated storage to retailers. There are hundreds of distributors in the industry, and over 630,000 retailers. There are over 220 million potential customers (over the age of 21 yrs.) domestically. (Beaudette, 2011). States control the regulation of the industry, and typically collect taxes through the distributors, rather than attempting to work with hundreds of thousands of retail outlets. (Beer Distributors of Oklahoma, 2010) Company’s Dominant Features The Sam Adams brand was named for the Boston revolutionary who was also a brewer. Samuel Adams Boston Lager made its debut in April 1985, when it was served in approximately 25 Boston bars and restaurants. At this point, the company had two employees: Jim Koch (founder) and his partner Rhonda Kallman. Sales reached 500 barrels by the end of the year, and the company expanded rapidly from there. (Samuel Adams, 2012) The company went public as the Boston Beer Company in 1995, selling shares of Class A common stock on the New York Stock Exchange using the ticker symbol SAM. Jim Koch owns 100 percent of the company’s class B stock, which grants him control over all decision-making responsibilities of Boston Beer Company. They have three breweries located in Cincinnati, Boston and Breinigsville (Pennsylvania), and produce over 30 styles of beer. (Boston Beer Company) This includes its seasonal brands: Alpine Spring (January-March), Summer Ale (April-August), Octoberfest (August-October), and Winter Lager (November-January). (Wikipedia, 2012) The company currently produces over 2 million barrels of beer annually, and is the largest craft brewery in the industry. It is the second largest American brewery by sales volume (to D. G. Yuengling and Son). The company has been a pioneer within a growing differentiated niche market within the alcohol beverage industry. The Boston Beer company builds its competitive advantage by focusing on innovation and quality (freshness). The company (and craft beer industry as a whole) cannot compete with Anheuser-Busch InBev and MillerCoors based on price due to lack of scale (though Sam Adams is more widely distributed than any of its craft industry members). The company began freshness dating back in 1987. It soon followed this with an amnesty program for its wholesalers which allowed beer that was three months past its expiration date to be returned for a partial refund. In more recent years, the company has enacted its Freshest Beer in Town initiative. This is a just-in-time distribution model in which wholesale partners will keep only one week of inventory (down from 3-4 weeks’ worth before), and the Boston Beer Co. will replenish supply based on consumer demand. The company also has begun the Draft Quality Audit Program, in which trained employees make in-market visits to test the freshness of the company’s product on tap at various retailers. Over 20,000 such audits are now conducted on an annual basis. The company also plans to continue pursuit of joint collaborations with other breweries and expansion of its own operations. It currently has an agreement with Moosehead Brewery for distribution of Sam Adams products in Canada. It has also teamed with Germany’s Weihenstephan Brewery to create Infinium, the first new beer style created under the Reinheitsgebot principle of beer purity (only four allowed ingredients: water, malt, hops and yeast). The Weihenstephan Brewery has a credible claim as being the world’s oldest brewery, and enjoys a strong reputation among beer enthusiasts. (Zegler, 2012) Regarding potential future growth, founder Jim Koch is excited for both his company and the craft beer industry. In 2011, he stated the following: I do believe that craft beer has a solid foundation for continued growth. Because in 2011, craft beer has become the new wine and the 20-somethings are adopting craft beer in the same way that their boomer parents adopted wine. When that happened in the 80s it led to decades of steady, healthy growth, and I’m optimistic that craft beer can have many years of steady, health growth†¦. I also believe that we (Boston Beer Co. ) have a really bright future. We’re also very small. Sam Adams can double. We can maybe even triple [in size] in the next 20 years. (Zegler, 2012). Places where it competes As stated above, the Boston Beer Company operates three breweries in Cincinnati, Boston and Lehigh Valley of Pennsylvania. Over 95 percent of the company’s products are now produced in its own breweries. It is distributed throughout the United States, in parts of Europe including Germany, and now in Canada through an agreement with the Canadian brewery Moosehead. Standing in the Industry (Rivals) Boston Beer Co. has been the craft brewing industry leader since its beginning. It was the number one craft brewer in 2011 based on beer sales volume. It was followed by Sierra Nevada Brewing Co.and New Belgium Brewing Co. In the overall industry, Boston Beer Co. is number five in beer sales volume, behind Anheuser-Busch InBev, MillerCoors, Pabst Brewing Co. and D. G. Yuengling and Son Inc. The craft beer segment accounts for approximately one percent of the overall alcoholic beverage category (includes wine and spirits, imported beer, craft and large breweries). (Brewers Association, 2012) Anheuser-Busch InBev and MillerCoors dominate the industry, though business dipped last year. Interestingly, there seems to be a great amount of cooperation and collaboration amongst the members of the craft brewing segment. Building the segment is a common concern with many of the regional craft breweries. For example, in 2008 Boston Beer Co. responded to an industry-wide hops shortage by sharing 20,000 pounds of its own hops at cost with 108 selected craft breweries. (Samuel Adams, 2008) There are many other notable craft breweries that have emerged as industry leaders in the past decade, including the following: * Sierra Nevada Brewing Co. : The nation’s second largest craft brewer, they are based Chico, California. The company was founded by Ken Grossman and Paul Camusi in 1980. Production is approaching 1 million barrels annually. The most popular product is the Sierra Nevada Pale Ale. * New Belgium Brewing Co. : Headquartered in Ft. Collins, Colorado and founded in 1991 by Jeff Lebesch. The company’s flagship beer is the popular Fat Tire. It is the nation’s third largest craft brewery. The company’s distribution network had reached 19 states by 2009, and is growing. * Deschutes Brewery: Based in Bend, Oregon. The company’s products include its Black Butte Porter, Mirror Pond Pale Ale and the award-winning The Abyss (11% alcohol by volume; released in 2007). * Harpoon Brewery: Headquartered in Boston, Mass. Products include its India Pale Ale, Munich Dark, 1636 Brew and four seasonal varieties. * Boulevard Brewing Co. : Located in Kansas City, Missouri. The company’s products are available in over twenty states in the Midwest region. (CNBC, 2012) * Dogfish Heah Craft Brewery: Founded by Sam Calagione and based out of Delaware. Calagione is known for pushing the boundaries of brewing varieties, and actually collaborating with Jim Koch in creating 2009’s SAVOR Flowers brew (it was a one-time experiment). Competitive Capabilities Boston Beer is the craft beer industry leader by production and sales volume. Its focus is on freshness and innovation (variety). The company started early with its freshness dating, followed by its amnesty program for its distributors, and now the Freshest Beer in Town and Draft Quality Audit Program. Regarding his company’s emphasis on beer freshness, Koch stated the following: If my beer isn’t fresh, I want the consumer to buy something else. And I want to make it as easy as possible for them to know because if they have a bad experience with my beer, they may not buy it again. To me, it’s not about trying to get consumers that are trying one beer after another and they never buy again. I’m very focused on giving consumers a great taste in every bottle so I can build brand loyalty based on a reliably rewarding experience. (Zegler, 2012) Boston Beer innovation is manifest in its wide variety of seasonal and specialty brews, as well as its recent notable collaborations. It teamed with Weihenstephan Brewery to create Infinium, which sold out domestically within a few weeks, and apparently had similar success in Germany. The company added Noble Pils in 2010 (winner of its 2009 Beer Lover’s Choice election; brewed with all five Noble hops). Latitude 48 is an India pale ale with hops from producers along the 48-degree latitude sources. The company also released its Samuel Adams Revolutionary Rye Ale in 2011 (winner of 2010 Beer Lover’s Choice election). The company also intends to expand its Barrel Room collection of beers, which until recently were only distributed in Denver and Boston. The Barrel Room beers are aged in the Boston Beer Company’s brewery supply of barrels, and include American Kriek, New World Tripel, and Stony Brook Red varieties. Jim Koch stated the following concerning his company’s push for new varieties: We’re not the new kid on the block. We’re not the newest beer out there. We’re not the most local. We don’t have the best marketing or a cute brand name. People have tried Sam Adams, it’s not a new experience†¦ the reason that we’ve become the leading craft brewery is because we have always given the consumer the best possible experience and they have rewarded us with their loyalty. That’s why we keep pushing on those things. . (Zegler, 2012) Forces Driving Industry Change. Aside from the continued expansion efforts of many industry’s regional craft breweries, there has also been a current lobbying push on behalf of the craft beer industry for the passage of Congressional bills H. R. 1236 and S. 534, which would reduce federal excise taxes applicable to the craft breweries. Specifically, if passed the bill would reduce the small brewer rate on the first 60,000 barrels by 50 percent, from $7. 00 to $3. 50 per barrel. The rate on production between 60,000 and 2 million barrels would also be reduced from $18. 00 to $16. 00 per barrel. The two bills were introduced in March 2011. (Brewers Association, 2012) (Buchman Law Firm, LLP) Sources of Competitive Advantage Arenas Boston Beer Company operates in the craft brewing industry, which accounts for approximately 1 percent of the overall beer industry, which is dominated by Anheuser-Busch InBev and MillerCoors. Sam Adams and the company’s other products are distributed throughout the United States and Canada (via the recent agreement with Moosehead Brewery of Canada). The company’s target customer is one who is willing to pay a premium price for a quality beer, and will display brand loyalty. The company’s standing as a catalyst for the microbrew revolution has given it considerable brand recognition among beer enthusiasts. Vehicles The company has grown considerably in twenty years, employing over 800 employees with three breweries which now produce 95 percent of the company’s products. Jim Koch plans to continue company expansion, with visions of tripling in size in the next twenty years. Based on the company’s history, expansion will most likely occur through internal development rather than via any mergers or acquisitions. Each beer style must registered by requests for certificates of label approval (COLA). State registration usually requires a state application coupled with the federal COLA for a given label. (Buchman Law Firm, LLP) Excise taxes are typically collected through a company’s wholesalers. Boston Beer Co. has embarked on some notable recent joint ventures, including its creation of Infinium in collaboration with the Weihenstephan Brewery and its Canadian distribution agreement with Moosehead Brewery. On the supply side, the company must continually replenish its inventory of barley and hops. Monthly barley prices from February 2007 to January 2012 had a standard deviation of $37. 76 per metric ton. This low amount of variation has led many breweries to simply purchase the crop on an annual basis. Conversely, many breweries will contract to acquire hops years into the future. The Boston Beer Company has over $33 million in hops contract commitments through 2015. (Craft Beer Analytics, 2011) Differentiators Boston Beer Company has significant brand equity within the craft beer industry due to its significant role in creating it. They attempt to further differentiate their products based on freshness and product innovation. Its Freshest Beer in Town initiative is a just-in-time supply arrangement with the company’s wholesalers (it was intended to include 50 percent of Boston Beer’s distributors by the end of 2011). (Craft Beer Restaurant Times, 2011) The program reduced suppliers’ inventories of Sam Adams down from an average of 3-4 weeks to just one week (which is to be kept chilled). Boston Beer ships more based on what the distributors have sold as opposed to advance orders. According to Koch: â€Å"Refrigeration of the beer virtually eliminates all of the product degradation that happens through the supply chain. The temperature control also makes it as if the retail account is getting its beer straight from the brewery. † The Draft Quality Audit Program is one in which company salespeople have been trained to taste the defects and track the cause of low quality Sam Adams on tap at various retailers. Boston Beer Co. now conducts approximately 20,000 audits each year, which has resulted in a drop in the incidence of low quality company beer from 15 to just 3 percent, according to Koch. (Zegler, 2012) The company has also continued to expand its beer varieties. From its seasonal brews and collaborations with breweries such as Dogfish Head and Weihenstephan, to its Barrel Room collection and updates such as Noble Pils, Latitude 48 and Revolutionary Rye Ale, the company is always looking to test the boundaries of craft brewing. Corporate Strategies Boston Beer Company has successfully built on Sam Adams’ strong brand equity, differentiating its products based on quality, variety, and freshness. The company has continued to expand its operations with no plans to discontinue such efforts. It has also hedged against future increases in hops prices with over $33 million in hops contracts already signed covering the company through December of 2015. Economic Logic The craft beer industry is based on the idea that consumers will pay a premium price for a quality beer which is different from the industry norms offered by companies such as Anheuser-Busch InBev and MillerCoors. Sam Adams also benefits from considerable brand equity. Staging and Pacing. Jim Koch has stated that he believes that the craft beer industry will continue to trend upward in sales relative the rest of the alcoholic beverage industry, and that the Boston Beer Company could triple in size within the next 20 years. His opinion on this matter is important, because Koch owns all of the company’s Class B common stock and with it, retains all decision-making authority for the company. Financial Analysis Current Financial Standing The 2011 fiscal year provided the Boston Beer Company with multiple opportunities to raise their glasses. Undoubtedly, the major achievement of 2011 was officially obtaining just over 1% of the United States beer market. This increased market share enabled the company to release some very impressive numbers in their recent 10-K. Earnings Snapshot| Revenue| $558. 282M| Net income| $66. 059M| Return on assets| 24. 24%| Return on equity| 35. 76%| Profit margin| 11. 83%| Current ratio| 1. 88| Quick ratio| 1. 37| Quite possibly the most staggering ratios from the 2011 filing are the company’s return on assets (investment) and return on equity. These tools measure how profitable a firm is relative to their total assets and total equity, respectively. In 2011, the Boston Beer Company reported a return on assets of 24. 24% and a return on equity of 35. 76%. Both of these ratios have a high level of volatility depending on the industry. These measures are remarkable within the alcoholic beverage industry, as well as the general beverage industry. In comparison, Coca-Cola (KO) posted a return on assets of 10. 72% and a return on equity of 27. 10% in 2011, while the winemaking company Constellation Brands (STZ) posted a return on assets of 6. 25% and a return on equity of 16. 75%. Furthermore, the company performed well regarding profit margin. Differing from other measures, profit margin should rarely be used to compare different firms. The reasoning behind this is that firms have varying levels of setups, so comparing profit margins could lead to confusion and misdiagnosis. The best way to use profit margin is against prior years. When weighed against its prior years, the company has seen a constant uptick over the past several years, signifying it is doing a good job of controlling costs and setting pricing at a reasonable level. The Boston Beer Company excelled in their liquidity and leverage ratios as well, not just in the three major profitability ratios: return on assets, return on equity, and profit margin. The most common ratios for measuring liquidity are the current ratio, quick ratio, and cash ratio. The current ratio (liquidity ratio) is an easy way to measure whether a firm is able to pay its short-term debts. A ratio of 1. 0 or above is likely and expected, and the Boston Beer Company’s 2011 current ratio of 1. 88 leaves it with plenty of leeway to pay all of its short-term obligations. Much like the current ratio, the quick ratio is a slightly more conservative measure that takes into account current levels of inventory, which can be difficult to liquidate. The company’s quick ratio is 1. 37, after taking out inventories. This still leaves plenty of room for the company to repay its short-term obligations. The last liquidity ratio is the cash ratio, which is the least commonly used of the three measures mentioned previously. The cash ratio is the ultimate ratio of liquidity because it only compares cash and marketable securities to current liabilities. An extremely high cash ratio could signify that a firm is stockpiling cash and not investing its assets wisely. The company’s cash ratio of 0. 74 is less than 1. 0 but still reasonable considering the other amounts of short-term assets. While the company does not have the ability to pay its short-term obligations with cash, it is still operating within a secure level of liquidity. The last group of ratios is the leverage ratios. These ratios measure how much debt a company is carrying. The total debt ratio divides total liabilities by total assets, giving an estimation of how leveraged a company is at a given time. In 2011, the Boston Beer Company’s total debt ratio was 0. 32, which would signify a generally low level of risk to potential investors. Much like the total debt ratio, the debt to equity ratio is a leverage ratio that has total debt in the numerator. The difference is the debt to equity ratio divides the total debt by stockholders equity. This ratio shows how a company finances its activities, whether through debt or equity. The Boston Beer Company’s debt to equity ratio of 0. 47 indicates it has very little debt compared to its equity. This shows how the company has been conservative in using debt to finance its operations. The last leverage ratio is interest coverage, a tool used to see how easily a company can pay its interest expenses. Since the company has interest income instead of interest expense, the interest coverage ratio is not valuable when evaluating the company’s 2011 financials. Recent Financial Trends During the past three years, the Boston Beer Company has seen steady gains from almost all of their major financial indicators. The company, undoubtedly, has improved on their prior year results across the board since 2009. When the financial crisis struck the United States and the world in late 2008, most firms encountered decreased earnings and in many instances, losses. Many of these companies are just now returning to their pre-recession profitability. The majority of the damage was incurred to these companies in the fourth quarter of 2008 and well into 2009. As seen by their year-over-year net income growth of 284. 74% in 2009, the recession did little to hurt the company’s financial situation. One potential explanation for its recession success comes from the â€Å"relationship between economic recession and [increased] consumption of alcohol and that heavy drinking behavior is unambiguously associated with unhappy feelings or dissatisfaction† (Anderson Moro, 2008). The widespread theory is that a sudden decrease in income has little affect or possibly a negative correlation with beer consumption. Quite possibly, this could explain why most vice companies trade with a beta less than 1. 0, indicating a negative relationship with the market. The Boston Beer Company is currently trading with a beta of 0. 85. In their most recent 10K, the company posted a year-over-year net income growth of 31. 74%. While this number appears very positive on the surface, it does not fully take into account a settlement the company received from its glass bottle supplier when the company had to issue a recall after routine inspections found glass particles in certain bottles. The recall affected approximately 25% of the company’s bottles and was completed by the fourth quarter. Nevertheless, the end result was the company â€Å"received a cash payment of $20. 5 million, which was recorded as an offset to operating expenses, and all parties have released each other of any claims as they relate to this matter† (The Boston Beer Company, Inc. , 2011). Comparison with Market Leaders While the Boston Beer Company has been experienced significant gains the past few years, it is still a minor player in the beer industry compared to the two leaders: Anheuser-Busch InBev and MillerCoors. These two companies combine for a total market share of just over 35%. The Boston Beer Company’s 2011 revenue of $558. 282 million is 1. 43% and 10. 80% of Anheuser-Busch InBev’s $39. 046 billion and SABMiller’s $5. 170 billion, respectively. While it cannot compete on revenue, the company can compete on productivity. The productivity ratio is computed as employees divided by revenue. The company’s productivity ratio of $664,620 per employee tops Anheuser-Busch InBev’s $336,600 per employee and MillerCoors’ $277,260 per employee. The company has repeatedly stated that its goal has never been to be on the same level as the market leaders. Instead, its goal is to be the leader in the better beer category, which includes Yuengling, Corona, and Heineken. In 2011, D. G. Yuengling and Son passed the company as the largest American beer-maker in sales, a title long held by Anheuser-Busch. The Boston Beer Company’s objective is to regain that title and grow with the better beer category. Stock Trends The Boston Beer Company has a very unique setup for their common stock. The company has 8,714,931 shares of Class A Common Stock outstanding and 4,107,355 shares of Class B Common Stock outstanding. Where the setup gets unique is that the Class A Common Stock only have voting power to approve certain mergers and elect a minority to the board of directors. The Class B Common Stock is held entirely by C. James Koch, Chairman of the Board of Directors, who has control over the majority of the board of directors and most other matters regarding shareholder approval. This gives Mr. Koch substantial control over his company and takes a large amount of power from the remaining shareholders. After reaching its lowest point in close to a decade at $19. 02 in May 2009, the Boston Beer Company (SAM) has rebounded to new levels. In fact, the stock reached its all time high of $119. 84 on June 19, 2012. Except for a decline of close to 25% of the stock’s value in early 2011, the increase has been steady and balanced since the low in 2009. One interesting note is the volume of shares traded in late 2007. Traders saw the stock rising quickly from $30 to $50 and felt it had a lot of volatility. This led to a sharp increase in trading activity that pushed the volume over 1. 5 million shares. Stock Performance Outlook As of late, stock analysts have conveyed mixed feelings about the company’s future stock outlook. According to Morningstar’s survey of four analysts, one rates the stock a buy, one rates it underperform, and two rate it a hold. This shows exactly how divided analysts are on the future of the stock. Since 2008, earnings per share has increased from $0. 56 to $4. 81, although the $4. 81 does take into account the settlement. Excluding the settlement, earnings per share in 2011 was $3. 73, still a 5. 97% increase over 2010. For 2012, analysts are â€Å"looking for full-year earnings of $4. 14, a projected 10% increase from last year. The next-year estimate is pegged at $4. 80, a solid 16% earnings growth projection† (Vodicka, 2012). If the company meets or exceeds these earnings projections, there is little doubt that it could continue climbing. Traders who are bullish on the stock believe it should continue growing with the craft brewery sector. They point toward the company’s recent run of hitting estimates, its healthy price to earnings ratio of 22. 57, and its recent investment in their brewing facilities to keep up with increased demand. On the other hand, bearish traders point toward the company’s high valuation premiums that are incorporated into the prices. If the company were to miss their upcoming quarterly earnings, it could ignite some traders to short the stock, potentially sending it spiraling. Key Success Factors. For firms to be successful over a long period of time, they must be aware of the key success factors that drive profitability in their industries. Key success factors are a set of issues that all companies operating in the industry must pay attention to in order to be successful. Quite simply, key success factors are something each company must have to accomplish long-term success. In his 2004 journal article, Richard A. Caralli explains that â€Å"every organization inherits a particular set of operating conditions and challenges that are inherent to the industry (or a segment of the industry) in which it chooses to do business. This results in a unique set of [key success factors] that organizations in a particular industry must achieve to maintain or increase their competitive positions, achieve their goals, and accomplish their missions† (Caralli, 2004). The beer industry in particular has three main key success factors. First, firms must have an advertising campaign that effectively reaches their target audience. For years, Anheuser-Busch has been the market leader by segmenting the way it advertises its different brands. Budweiser is marketed as the â€Å"King of Beers† and is known for its signature Clydesdale horses and vintage bottle design. On the other hand, Bud Light is marketed as â€Å"The Sure Sign of a Good Time. † Its commercials are designed for a much younger audience and are regularly voted as some of the most humorous on television. The other major beer makers seem to follow the same strategy of marketing their core brand as legendary and historic, while marketing the light varieties in a more humorous tone. A second key success factor in the beer industry is obtaining and maintaining a network of wholesale distributors. These distributors act as middlemen to transport the beer from brewers and importers to stores, bars, and restaurants. The approximately 3,300 distributors in the United States allow companies to focus more on brewing and marketing and less on delivery to the end user. The beer wholesaler industry is a very large industry in itself. The largest distributor, Reyes Beverage Group, delivers 93 million cases per year and has revenues of $1. 9 billion. Firms must keep in constant contact with these distributors to ensure timely and cost-effective delivery. The last major key success factor affecting the beer industry is knowledge of the consumer. To be able to effectively advertise for their brands, firms must have deep knowledge of their target audience. The beer industry is segmented into a variety of different divisions. Marketing a specific product incorrectly could be extremely costly. Miller is effectively targeting their target audiences with Miller 64 and Miller High Life. Miller 64, with only 64 calories, is intended for males and females age 35 and under, while Miller High Life is intende.

Age of Discovery Events Before the Industrial Revolution

Age of Discovery Events Before the Industrial Revolution Age of discovery-events leading up to the Industrial Revolution, commenting on the following: currency, colonialism, recession, globilism, financial market, management theories and approaches, relationship between the past and present, economy, technology, revolution and people that contributed to the revolution. This paper presents an overview of the factors within the so-called ‘Age of Discovery’ which engendered the industrial revolution in Britain. Although the industrial ‘revolution’ itself is usually periodised in the period 1750-1850, this is by no means a universally agreed principle. Some authorities, such as Berg, propose that what she terms the age of ‘manufactures’ in fact ranged from 1700-1820. (1) As Berg herself explains, ‘†¦industrial growth took place over the whole of the eighteenth century, not just the last quarter of it. There was a substantial growth in the whole range of traditional industries as well as the most obviously exciting cases of cotton and iron.’ (2) If this position is accepted, the age of discovery was contemporaneous with the industrial revolution. Whatever its precise chronological context, it is argued here that the provenance of the industrialization in Britain lays in a diffuse range of developm ents, many of which are far outside the timeframe of industrialization itself. The ideological framework was shaped during the Reformation and early modern period, which also saw the necessary financial and commercial developments take place. This in turn led to colonial expansion, technological growth, and was re-negotiated after foreign revolutions and cyclical recessions, all of which helped drive Britain’s impetus towards industrial expansion and self-sufficiency. The ideological and economic framework was arguably created by successive developments in sociology and financial infrastructure: the so called ‘elective’ or protestant affinity with the idea of capitalism, and the financial ‘revolution’ which followed on the Glorious Revolution of 1688. The supposed pre-disposition of early modern English society towards particular forms of commercial development was proposed by figures such as R.H.Tawney and Max Weber as an ‘elective affinity’ between the protestant ‘asceticism’ and the spirit of capitalism. (3). Although this remains little more than a much-discussed theory, the economic individualism which became institutionalized in Britain during the late seventeenth century is much more tangible. It is also, arguably, profoundly constructive of the industrial revolution. The foundation of the Bank of England, the East India Company, and the proliferation of other large joint-stock ventures su ch as the South Sea Company, gave Britain both the incentive and the financial power to push out into expanding markets, looking for new commodities and raw materials. As Carruthers explains, ‘Improvements in the system of public borrowing were important in explaining the growing financial strength of the English state†¦dramatic enough to be called a â€Å"Financial Revolution.† England was able to borrow more money†¦at lower rates of interest. The borrowing was mostly from domestic sources†¦thanks to the development of trade and commerce, there was in England a growing pool of available capital.’ (4) The setting up of a large sinking fund was partly justified on the grounds of the continuing need to fund military conflict with European and imperial rivals: ‘†¦improvements in revenues allowed for increased borrowing, and together they underwrote higher expenditures and a successful war effort.’ (5) Unfortunately, the British reali zed that even victorious campaigns were ruinously expensive, as Colley relates: ‘†¦the Seven Years War was the most dramatically successful war the British ever fought. They conquered Canada†¦they assumed for themselves the reputation of being the most aggressive, the most affluent, and the most swiftly expanding power in the world†¦yet the euphoria soon soured†¦there was the hard, unpleasant fact of the National Debt which led inexorably to the rise in taxation.’ (6) However, fiscal control by the British government was itself to be a factor in industrialisation. Britain’s overseas military successes factored in the related developments of colonialism and slavery: both had prominent roles in the capital formation which financed the industrial revolution. Simply put, capital generated in the colonies had been steadily accumulating in Britain since the late seventeenth century, and much of it went into joint-stock companies, investment houses, or often directly into the enterprise and fixed capital itself. Much of it also went back overseas: however, when it did so, it often did so to finance orders for British-manufactured goods which further fanned domestic industrialization. The ‘triangular trade’ in British manufacturing output, African slaves, and West Indian produce ultimately concluded in the accretion of private capital reserves back in the UK, all seeking dividends through land or other investment. As Williams points out, ‘†¦the industrial expansion required finance. What man in the first three-quarters o f the eighteenth century was better able to afford the ready capital than a West Indian sugar planter or a Liverpool slave trader?’ (7) Many of the best known names of Britain’s industrial and commercial scene were the net beneficiaries of capital generated overseas, from either colonial or plantation sources. As Williams again indicates, ‘†¦It was the capital accumulated from the West Indian trade that financed James Watt and the steam engine.’ Engineering luminaries such as Boulton and Watt received advances from established plantation interests, as did the architects of the Great Western Railway: one of the leading banking families to transfer capital from their slave owning activities directly into financial services were the Barclays, precursors to the modern day Barclays bank. (8.) The American War of Independence, the eventual abolition of British slavery, and increased competition form South America eventually meant that these forms of revenue fell into decline. However, as Bayly reports, they were soon replaced, not only by new forms of income from other territories, but by massive n ew markets for raw materials and Britain’s industrial output: ‘†¦by 1815 the nation could celebrate an astonishing, indeed providential, recovery of fortunes.’ (9) It has to be recognised however that the capital accumulating in Britain’s investment houses and stock market did not find its way into a managerially static or vernacular economic arena. The eighteenth century also saw the emergence of a range of management theories and theories of the firm, which were implicit in the rationalization of the commercial and manufacturing enterprise. As Williams puts it, ‘†¦laissez-faire became a practice in the new industry long before it penetrated the text books as orthodox economic theory.’ (10) Adam Smith, Thomas Malthus , Robert Torrens and others fashioned the discipline of economics from the remnants of the former ideas of political arithmetic, producing a technical and predictive framework which combined with new technology to give the UK a new form of economic staple. Classical economics has continued to be re-worked and refined ever since. As Cohen and Cyert point out, ‘For the purposes of the classical theory, the profit maximization assumption may be perfectly adequate. It is clear however, that as one asks a different set of questionsthe profit maximization assumption is neither necessary nor sufficient’ (11) It nevertheless continues to pervade contemporary economic thought. New ideas about the economy were not the only intellectual developments creating change in the age of discovery and industrialisation: they were accompanied by new political ideas with profound implications for British expansion. In Marxist parlance, England’s own ‘bourgeois revolution’ – the middle classes wresting power from monarchical or aristocratic control – had already passed in the form of the English Civil War. In the eighteenth century the American and French Revolutions helped determine the character of British growth by shaping domestic political institutions and providing a further impetus for overseas expansion. There was a sense in which the social, economic and political processes bound up with industrialisation had to break down the protocols associated with monarchical and aristocratic control before the transformation could really be achieved. Capitalism had to supplant mercantilism, tariffs and protectionism had to be removed, mar kets had to be open to competition, and the vested interests who opposed it had to be pushed aside. As Williams expresses it, Adam Smith’s economic tour de force in the Wealth of Nations was ‘ †¦the philosophical antecedent of the American Revolution. Both were twin products of the same cause, the brake applied by the mercantile system on the development of the productive power of England and her colonies.’ Consequently, he adds, ‘Adam Smith’s role was to berate intellectually â€Å"the mean and malignant expedients† of a system which the armies of George Washington dealt a mortal wound on the battlefields of America.’ (12) After the loss of the American colonies, the British government seized upon the idea that, in future, administration needed to be more focused on the needs of the market a the necessary accompaniment to industrial expansion. British goods needed markets, and British government needed expertise to obtain and reta in those markets. As Bayly observes, ‘The disasters of the American Civil War had produced an interlocking network of parliamentary committees with their own experts; so administrations also had to know more and be better prepared.’ (13) Britain’s industrial progress was, however, not uniform or linear in nature. As Bayly reports, ‘†¦deepened by cyclical depressions operating in a more integrated world economy and by the continuing splutter of local wars which often marked the advance of settler capitalism into indigenous societies.’ (14) Britain’s technological and managerial expertise could not insulate it from seemingly inevitable financial crises and recession which, as Hilton reports, plagued it throughout its period of supposed industrial might. ‘There had been monetary and commercial disorders in the eighteenth century†¦1788, 1793, 1797†¦but nothing to compare with the crises of 1825-6, 1837-9, 1847-8, 1857, and 1866.’ Perhaps more important than the empirical details of these crises was their impact upon economic and social thinking, and in particular the way in which blame was apportioned for such disasters. A Hilton again explains, ‘†¦contemp orary analysis concentrated on two†¦types of explanation†¦.monetary mismanagement by government or Bank of England, and human avarice and greed.’ (15) The deep and pernicious nature of these crises eventually prompted the creation of the economic governance which still prevails today. In the 1770’s, the Bank of England note replaced the private bank notes which had circulated previously. (16). However, a more unified financial system meant that financial crises were themselves more pervasive and all-embracing. Limited liability legislation, as well as regulation of monopolies, mergers, and competition, helped protect individuals from the worst effects of economic downturns. What the industrial revolution and associated market creation implied for the UK business community was a increasingly close relationship with a globalizing economy. The enormous wealth created by this – for some individuals – meant that the economy was now vulnerable to uphe avals far beyond the control of the London stock market or government. This, arguably, encapsulates the single clearest link between the society which shaped the industrial revolution and contemporary social conditions: i.e., the individuals whose contributions are most important to industrialization were those with the least stake in its benefits. Academic debates as to whether or not a genuine ‘class consciousness’ was engendered by the industrial revolution are, ultimately, inconclusive. Few can realistically deny, however, that industrialisation demanded a massive influx of skilled, semi-skilled, but overwhelmingly unskilled labour, whom technological production could deprive of a skilled wage. As Gray points out, ‘Industrial change was associated with crises of gender and class relations, and struggles over factory regulation can be seen in the context of a gendered class consciousness.’ (17). In other words, both men and women realized that their livelihoods and earning power in an industrial context depended upon whether or not their work was defined as skilled. De-skilling was, it may be argued, the necessary precursor to the enormous industrial profits generated in the factory system: significant surplus value, the disparity between the amount spent to produce an item, and the amount it sold for – could only be maintained at a realistic level if costs were low and margins were wide. It was therefore no accident that unskilled female and child labour were highly significant in populating the new factory system which remains the emblematic representation of the industrial revolution in Britain. The same processes of de-skilling, and an essentially exploitative relationship, arguably feature in the new globalization taking place in the contemporary economy. It is interesting to speculate on whether these common relations of production, the taproot of collectivized and organized labour movements, will produce a new variant on the trade unionism thrown up by the domestic British industrial revo lution. The same may be asked of official intervention in the manufacturing process. As Gray points out, ‘Attempts to regulate factory employment can be traced back, almost to the beginnings of factory production itself. The restructuring of labour markets and employment relations during†¦.indutrialisation was accompanied by a series of overlapping debates about protective labour laws, the poor laws and statutory or customary controls over wages, prices, and commercial practice.’ (18) This historical process is arguably on-going, as successive waves of de-skilled labour are moved around the globalizing economy to meet fluctuating demand, often in uncontrolled conditions. The practices of child and female labour may have stopped in the domestic economy, but they have by no means been eliminated from the global arena. This is notwithstanding the appearance of ‘Third Way’ economics, and the supposed elimination of class difference. Footnotes 1.) Berg, M., (1994), The Age of Manufactures, 1700-1820, Routledge, London, p.2. 2.) Ibid., p.281. 3.) Robertson, H.M., (1933), Aspects of the Rise of Economic Liberalism: A Criticism of Max Weber and His School, Cambridge University Press, Cambridge, p.208. 4.) Carruthers, B.G., (1996), City of Capital: Politics and Markets in the English Financial Revolution, Princeton University Press, NJ, p.71. 5.) Ibid., p.69. 6.) Colley, L., (1992), Britons: Forging the Nation, 1707-1837, Pimlico, London.  p.101 7.) Williams, E., (1964), Capitalism and Slavery, Andre Deutsch, London. p.98. 8.) Ibid., pp.101-105. 9.) Bayly, C.A., (1989), Imperial Meridian: The British Empire and the World, 1780-1830, Longman, London, p.3. 10.) Williams, op.cit., p.106. 11.) Cohen, K.J., and Cyert, R.M., (1965), Theory of the Firm: Resource Allocation in a Market Economy , Prentice Hall, Englewood Cliffs, N.J. 12.) Williams, op.cit., p.107. 13.) Bayly, op.cit., p.161. 14. ) Bayly, C.A., (1989), Imperial Meridian: The British Empire and the World, 1780-1830, Longman, London, p.238. 15.) Hilton, B., (1988), The Age of Atonement: the influence of Evangelicalism on Social and Economic Thought, 1783-1865, Clarendon Press, Oxford, p.125. 16.) Bayly, op.cit., p.116. 17.) Gray, R.Q., (1996), The Factory Question and Industrial England, 1830-1860, Cambridge University Press, Canbridge, p.24. 18.) ibid., p.21. Bibliography Bayly, C.A., (1989), Imperial Meridian: The British Empire and the World, 1780-1830, Longman, London. Berg, M., (1994), The Age of Manufactures, 1700-1820, Routledge, London. Carruthers, B.G., (1996), City of Capital: Politics and Markets in the English Financial Revolution, Princeton University Press, NJ. Cohen, K.J., and Cyert, R.M., (1965), Theory of the Firm: Resource Allocation in a Market Economy , Prentice Hall, Englewood Cliffs, N.J. Colley, L., (1992), Britons: Forging the Nation, 1707-1837, Pimlico, London. Gray, R.Q., (1996), The Factory Question and Industrial England, 1830-1860, Cambridge University Press, Canbridge. Hilton, B., (1988), The Age of Atonement: the influence of Evangelicalism on Social and Economic Thought, 1783-1865, Clarendon Press, Oxford. Jennings, H., (1985), Pandemonium: the Coming of the Machine as Seen by Contemporary Observers, Picador, London. Robertson, H.M., (1933), Aspects of the Rise of Economic Liberalism: A Criticism of Max Weber and His School, Cambridge University Press, Cambridge. Williams, E., (1964), Capitalism and Slavery, Andre Deutsch, London.

cloning Essay -- essays research papers

Cloning Can cloning be beneficial to us? Or is cloning a waste of time and dollars? Cloning as of recent years, has become a very controversial issue. Society is firmly divided on the uses and ethics of cloning. Cloning can range from copies of plants and animals to clones of humans and human organs. Should we clone humans and human organs? Why clone human embryos? There are many legitimate reasons for investigating cloning. Embryologists believe that the research could help improve the lives of further generations. "Cancer research is possibly the most important reason for embryo cloning. Oncologists believe that embryonic study will advance the understanding of rapid growth of cancer cells. Cancer cells develop at approximately the same phenomenal rate as the embryonic cells do. By studying the embryonic cell growth, scientist may be able to determine how to stop it, and also stop cancer growth in return." Another use for cloning is growing organs and / or tissues for humans. Cells can be manipulated to revert their embryonic stage and then these cells will have potential to grow into other tissues, cells, etc. This is done through chemical signals called fibroblast growth factors. These signals "tell" the cells what to do. These same chemical signals are also used on embryos. The fibroblast growth factors tell the cells what to become. Hans Spemann found the organizer effect, which is how the embryonic cells are aligned... cloning Essay -- essays research papers Cloning Can cloning be beneficial to us? Or is cloning a waste of time and dollars? Cloning as of recent years, has become a very controversial issue. Society is firmly divided on the uses and ethics of cloning. Cloning can range from copies of plants and animals to clones of humans and human organs. Should we clone humans and human organs? Why clone human embryos? There are many legitimate reasons for investigating cloning. Embryologists believe that the research could help improve the lives of further generations. "Cancer research is possibly the most important reason for embryo cloning. Oncologists believe that embryonic study will advance the understanding of rapid growth of cancer cells. Cancer cells develop at approximately the same phenomenal rate as the embryonic cells do. By studying the embryonic cell growth, scientist may be able to determine how to stop it, and also stop cancer growth in return." Another use for cloning is growing organs and / or tissues for humans. Cells can be manipulated to revert their embryonic stage and then these cells will have potential to grow into other tissues, cells, etc. This is done through chemical signals called fibroblast growth factors. These signals "tell" the cells what to do. These same chemical signals are also used on embryos. The fibroblast growth factors tell the cells what to become. Hans Spemann found the organizer effect, which is how the embryonic cells are aligned... cloning Essay -- essays research papers Cloning Can cloning be beneficial to us? Or is cloning a waste of time and dollars? Cloning as of recent years, has become a very controversial issue. Society is firmly divided on the uses and ethics of cloning. Cloning can range from copies of plants and animals to clones of humans and human organs. Should we clone humans and human organs? Why clone human embryos? There are many legitimate reasons for investigating cloning. Embryologists believe that the research could help improve the lives of further generations. "Cancer research is possibly the most important reason for embryo cloning. Oncologists believe that embryonic study will advance the understanding of rapid growth of cancer cells. Cancer cells develop at approximately the same phenomenal rate as the embryonic cells do. By studying the embryonic cell growth, scientist may be able to determine how to stop it, and also stop cancer growth in return." Another use for cloning is growing organs and / or tissues for humans. Cells can be manipulated to revert their embryonic stage and then these cells will have potential to grow into other tissues, cells, etc. This is done through chemical signals called fibroblast growth factors. These signals "tell" the cells what to do. These same chemical signals are also used on embryos. The fibroblast growth factors tell the cells what to become. Hans Spemann found the organizer effect, which is how the embryonic cells are aligned...

Standing Alone Against the World in Ayn Rands The Fountainhead Essay

Standing Alone Against the World in Ayn Rand's The Fountainhead Conformity is a basic human characteristic that man spends a life time either fighting or accepting, but few can escape.   Parents, churches, schools, and communities teach that the path Peter Keating follows is the assured road to security and happiness.   Humans crave companionship and are willing to sacrifice their values, beliefs, and very souls for the satisfaction of superficial love.   Howard Roark demonstrates that true happiness comes from within, at the end of a wearisome road.   He confirms this ideal through exhaustible determination struggling from burdensome beginnings to almost unattainable goals without relenting to pressures from society.   This concept of non-conformity is exemplified throughout the novel.   It is most clearly defined in Howard's resolution to work for Henry Cameron, his rejection of the A.G.A., and the Cortlandt Housing project.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Howard Roark elucidates from the very beginning that he is going to work for Henry Cameron, a revolution considering Cameron's present state, or lack thereof.   Roark is laughed at for having such a fatuous goal but hardly notices the acrimonious criticism that follows him. Even Henry Cameron himself rebukes Howard Roarks efforts to study under him, and only relents to Howard's wishes after he feels that he can no longer bear to reject such talent.   The demonstration of drive and determination as well as defiance of basic rules of social structure make it difficult to not admire this aspiring architect.   It is clear at this point that Howard Roark is going to get what he wants, and he has no concern for what anyone else thinks of it. Roark establishes his own practice and has a conversatio... ...y and non-conformity is highlighted in the exchange between Peter Keating and Howard Roark on the A.G.A, as Howard has no intent of entertaining any such invitation and Peter can think of nothing sweeter.   Finally, Howard Roark reaches a pinnacle of non-conformity as he destroys the only hold society ever had on him, the Cortlandt Housing Project.   Howard Roark is a standard that one can strive towards, realistically, however, it would be almost impossible to follow in his footsteps.   Even in striving to reach his level one conforms to a set of idea, in a sense one conforms to non-conformity.   This novel illustrates in an effective manner that happiness must be reached through holding fast to one's own values.   Perhaps defying society is not the path many would choose, but Ayn Rand certainly presents a challenge to all in her message of   misery and happiness.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  

ECONOMIC CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY Essay

While discussing the topics of trade, development and political economy, globalization is often discussed. In general, globalization means a process in which world economies become highly integrated, leading to a global economy and highly global economic policymaking, through international agencies such as the World Trade Organization (Todaro & Smith, 2006). Since late 1980s, the increasing globalization in the manufacturing sector and service sector has also globalized the telecommunication industry. A large number of telecom companies are expanding rapidly from their home countries to other countries in order to increase their customer base and their sales, off course. Globalization has with it many challenges and economic benefits too. For many economists, globalization can cause serious troubles in the whole world, such as inequality is accentuated, environmental degradation, and dominance of rich countries etc. But at the same time proponents of globalization are of the view tha t globalization leads to the rapid growth of knowledge and innovation and improved living standards. ECONOMIC ANALYSIS OF GLOBALIZATION How globalization occurred or which forces gave birth to this phenomenon? The three chief economic and financial indicators that led to globalization are:  The international trade of goods and services, the widening and freeing of trade has led to globalization to increase at a rapid pace. The greater flow of capital because of growth of global capital markets. Globalization of financial sector is the most influential aspect of economic globalization. The greater movement of people around the globe has also contributed to rapidly growing globalization, breaking down cultural barriers. Globalization means integration of different markets in the global economy. Globalization may occur in different markets such as financial markets, commodity markets and even in the service sector (Scholte, 2000). Producers and consumers and national economies as a whole benefit from the process of globalization. For example, economies may benefit from specializing themselves in particular products in which they have comparative advantage. Firms may become cost competitive through globalization by accessing to cheap raw materials from other countries. Similarly, benefit of economies of scale is achieved through access to large markets and higher demand for products, thus reducing average production cost of the firm. Large multinationals are the main carriers of economic globalization. They are globally aligning their production and resources according to the principle of profit maximization. GLOBALIZATION OF TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE Initially telecommunication industry was owned and controlled by state-owned national telecommunication companies. But with the passage of time, innovation in technology and globalization has transformed the nature of telecommunication industry. Globalization has opened up markets and brought competition in this sector. National telecommunication companies were being privatized and the industry deregulated to make it competitive. All over the world, the multinational companies have become the main vehicle for accelerating globalization. Vodafone, a British multinational telecommunication company, is the world’s leading telecommunication having significant existence in Europe, United States, Middle East, Asia Pacific and Africa. It is one of the most rapidly flourishing global companies, which started as a holder of one of the first two mobile communications licenses in the UK and now it’s a dominant global brand. (Ibbott, 2007) provides a view that Vodafone created a social network that was involved in mergers and acquisitions and  deployment of a global network of mobile technology that serves a proportionate mobile customer base of 198.6 million in 2006. Ibbott (2007) explained what really globalization means as â€Å"A global company is one that permits its local operations to act in the image of the market locally and yet can act in a truly homogeneous way with respect to the supply and provision of its core products and services† Vodafone is a global company as its sourcing and supply chain activities are transferred to be entirely global for the major part of its investment, while services remain local (Ibbott, 2007). Globalization does not mean to open operations and branches in other countries but to make its operations global, not directed by the head office located in the parent country. CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE Globalization has become a vital aspect of the global economy and strongly influences the comparative advantage of economies. (Salvatore, 2004) examined the effect of globalization on the comparative advantage of Europe for several goods and concluded that Europe has a comparative disadvantage in telecommunication with respect to Japan, United States and Dynamic Asian countries. The degree of globalization is a significant element in examining the international competitiveness of economies. Large multinational corporations are enjoying the benefits of globalization, the most. Almost 50 percent of total profits of Vodafone came from foreign sales, i.e. Asia Pacific and Middle East region. The CEO of UK-based Vodafone Group talking about global leadership said (Yunker, 2008), â€Å"Less than 5 percent of our profits comes from UK. We have had to fundamentally redesign this company as a global company. We are a highly consumer-centric company. In Germany, we feel German. In Italy, we feel Italian. In Spain, we feel Spanish. In India, we feel Indians.† Vodafone has experienced fall-out in Japan in 2005. It released â€Å"Converged-Handset† mobile phones in December 2005 in 13 countries concurrently, including Japan. Being, one of the world’s largest global companies, it did so without taking into account the domestic environment of each country. In this way they incurred great loss in both, number of  subscribers and profits. The company lost 200,000 subscribers in the first few months of the year and profits declined by 15.4 percent (Fackler & Belson, 2005). Customers also got many troubles like; lack of functions, the expensive bills and bad signals. Thus it failed to introduce same technologies in different countries. In order to regain its position in the market, they offered such services which are being provided by their competitors such as; low prices, flat monthly bills for calls and emails. Hence market competition forced Vodafone to survive in the market by competing with the same products at same rates as its competitors are offering. Due to globalization, consumer became more aware of their decisions. They take their decisions by taking into account their ethical and environmental concerns. This new dimension poses pressure on industries to improve their business through new public initiatives and laws. Likewise, increased global competition put serious pressure on Vodafone to evaluate its CSR policy and ethical stance. When globalization reached its pace and mergers and acquisitions among firms take place, multinational companies get authority to hire and fire their workers (Carlson, 2002). This was happened in Motorola, when they fired their 3000 workers on 2000 by shutting down their plant in Scotland. Similarly, in 2009, Vodafone restructured its business model, in order to save costs and to accommodate more customers-facing roles. Around 400 workers were made jobless from its headquarters or being deployed to some other places. Hence, it is being proven over the years that in large multinational organizations, large number of workers have been made jobless, thus, creating a sense of insecurity among workers. Taking into account the fact that globalization may also have adverse impact on workers; The European Globalization Adjustment Fund (EGF) has been established. The EGF aimed to support redundant workers, mainly in the areas where globalization has adversely affected the workers. The European Globalization Adjustment Fund has been established under Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 20 December 2006. It has an annual budget of EUR 500 million to assist worker for their employment. EVALUATION AND CONCLUSION The growing integration of the economies has been a heated debate all around the world over the last two decades. The consequences of globalization and its various dimensions have been widely debated and examined by academics, politicians, policymakers, and even the private sector. According to the United Nations Development Program, Human Development Report, 1999 â€Å"Globalization is shaping a new era of interaction among economies and people. It is increasing the interaction between people across national boundaries, in economy, technology, in culture and in governance. But it is also splitting production processes, labor markets, political entities and societies. So, while globalization has positive and dynamic aspects, it has also negative, disruptive, marginalizing aspects.† Critics of globalization argue that globalization is detrimental to economic growth, such as it increases income inequality among nations, economic instability may arise, workers are being exploited and governments become unable to raise taxes, on the other hand, the advocates of globalization are of the view that it brings higher rate of sustainable economic growth and improved living standards. In a study from the Centre of Economic Policy Research by European Policy Advisors, while analyzing the economic impact of globalization, it was found that the true benefits of globalization overweigh the costs associated with it. Similarly globalization has been affecting the telecommunication sector too. Due to increasing globalization, the telecommunication policy all around the world has widened their cross-border implications as compared to the past. According to the analysis of (Siochru, 2004), media and telecommunication sectors are the leading sectors in facilitating globalization. The globalization of financial transactions and manufacturing products is due to globalization of media and telecommunication sectors. REFERENCES 1.Carlson, B. A., 2002. Job Losses, Multinational and Globalization: The Anatomy of Disempowerment. Santiago: United Nations Publications. 2.Fackler, M. & Belson, K., 2005. A Major Backfire in Japan Deflates Vodafone’s One-Size-Fits-All Strategy. [Online] Available at:

Comparing America’s Economy in the 1920s and the Current Economic Situation Essay

Few periods in America have influenced the current government structure, size, and economy rather than the â€Å"Roaring Twenties† and the â€Å"Great Depression†. At the beginning of the 1920s, the United States was converting from wartime to peace time economy at the time weapons for World War I were no longer useful. In this decade, America became the richest nation in the world and a culture of consumerism was born. People spent money for better roads, tourism, and holiday resorts. Real estates booms sent land prices soaring (DeLong, 1997). Looking at technology, it played a vital role in delivering the economic and cultural good times that most of America enjoyed during the 1920s. The automobile’s popularity, construction of roads and highways, poured fresh public funds into the economy. This resulted to tremendous economic prosperity. Technology enhanced communication with the first public station being established, KDKA, the year 1922 introduced the first movie made with sound- The Jazz singer. It is in this time that the United States became a modern middle-class economy of radios, consumer appliances, automobiles and suburbs. Mass production had made the United States the richest society the world had ever seen (DeLong, 1997). The economy today seems to negate the glory it received in the 1920s. According to Leonhardt (2010), it produced $ 15 trillion worth of goods and services in 2008 in estimates, making it the largest in the world. The US economy however has shown a downward trend since in 2007, it began to slow significantly mainly because of a real-estate slump and other financial problems that has led the economy into a recession. The recession continued up to early 2009, making it the longest one in decades. August 2009 came with some hope with the Federal Reserve Bank’s policy-making committee saying that they believed the recession was ending. The bank cautioned that the recovery would be slow and there was a possibility that unemployment was to remain high for another year. The year 2010 is seen as the year of severe economic contraction. According to Whitney (2010), reports in the financial media believe that the effects of ongoing credit contraction and the massive injection of the central bank liquidity have prevented the collapse of financial markets. A lot is still to be done in order to leverage households and stimulate the general economic activity. The financial crisis has stripped the economy $ 13 trillion in equity and Americans have grown gloomier about the economy and the nation’s direction over the past few months, although it shows signs of moving to recovery. The country is persistent with high unemployment with ordinary working people continuing to fight to keep their jobs and maintain their standard of living. This is a contrast on what was happening in the 1920s. US had transformed in less than a decade to become the richest Nation in the world. High pay of $5 a day showed the low unemployment rate that existed. Industries were booming with high profits and numerous companies opened their doors to start operations. The US might be the world’s leading economy, but the current unemployment rates, the number of businesses closing their doors as a result of inability to pay their debts and the constraints the government face in order to fully fund the budget requirements are overwhelming. The government, the Fed and the whole economy need to work towards alleviating bottlenecks that cause the economy harm. They need to uphold policies that will see to it that economy does not run to the stagflation condition of the 1970s.