Impacts of Databases and ERPs on the Industry/Military

When computers were invented they were first restricted to the military but as time moved on other institutions realized that computers can be used to enhance their productivity. Computers use software programs to perform their duties such as managing payroll services among others. The applications have incorporated data from various sources to enable them execute their functions.Advertising We will write a custom essay sample on Impacts of Databases and ERPs on the Industry/Military specifically for you for only $16.05 $11/page Learn More The systems are called enterprise resource management planning. According to Ocasio (2007), they make work easier because they are able to receive information from the customers and then process that same data for the required services. In brief they make service delivery to be quicker. The ERPs as they are called have both negative and positive impacts on the military and the industry in general and this paper is mean t to review some of those effects. First and foremost, for these systems to be developed both the companies and the military have to employ highly qualified personnel to manage these systems. At this point companies have an upper hand because they can hire experts from overseas or simply outsource their personnel from developing nations such as India which has the most appropriate man power in this field. On the other hand the military hands are tied up because it is unethical to employ someone who is from another country or who is not in the military. This implies that budgetary allocations of the affected bodies, that is, the military and the enterprises will have to swell. This is because both the armies and the enterprises will spend more money in training their staff. When military and organizations are automating their operations they have to evaluate the available software to determine the ones that are compatible with their needs. Inappropriate software could fail the instit ution concerned. In military operations automation includes the way materials are obtained from the suppliers, from request orders to invoicing the suppliers. For such transactions to be efficient the institutions involved must ensure that security of their transactions is not compromised. This means that they have to employ high tech security tools to ensure that unauthorized persons do not access the data involved in transactions. Leon (2008) explains that automated systems have enhanced the performance of the above mentioned entities compared to when tasks were handled manually. For instance, the US air force is able to deploy jets that are not operated by any human being over the skies of the enemy and at the same time stage an attack on the target. This has helped the US forces to minimize casualties on their side because if the unmanned jet is attacked no one will be injured or killed.Advertising Looking for essay on computer science? Let's see if we can help you! Get you r first paper with 15% OFF Learn More Moreover, data or information obtained from the satellite can be used to monitor the events on the whole world. Many countries such as China are investing in high-tech technologies because they have realized that in today’s world winning in wars is not determined by the number of military men and women in a country but the intelligence of the military in launching attacks. ERPs enhance the performance of the military because data is centrally stored in databases and can be recalled instantly hence when decisions are being made they take shorter durations to be implemented because their systems are intertwined, unlike when each system was running separately. The same applies to other enterprises especially in business world. ERPs are quite useful for institutions that have various branches within a country and internationally (Grant, 2003). In the military, the various bases and units in different locations have a uniform way of e xecuting their duties because the available information is placed on the system where the relevant personnel can access it. For ERPs to be more efficient they have to be incorporated with the internet to allow the provision of information to be in real time. If the information is not conveyed in real time the actions taken may not be effective. Most of the transactions involving the military and their suppliers are paperless because they normally have a dedicated website that is linked to those of their suppliers. When the military is looking for suppliers it places the tenders on its website and the suppliers who are interested in those tenders are requested to submit their applications in the website. The tendering process is also automated because the system has its own customized criteria of selecting successful bidders (Cook Graser, 2001). This means that there is minimal human interaction in this process hence there are no chances of impunity. If the tenders were awarded manu ally there would be a lot of impunity ranging from nepotism to racism. Banks (2007) points out that most institutions have not been able to embrace ERPs because they don not have adequate funding from the relevant bodies. For instance, the military is usually funded by the government but if the money allocated to it is not enough ERPs cannot be introduced.Advertising We will write a custom essay sample on Impacts of Databases and ERPs on the Industry/Military specifically for you for only $16.05 $11/page Learn More ERPs meant for the military and other institutions have restrictions on their access because the information they hold can be manipulated without a trace if everyone was allowed to enter into the system as they wished. In the military user passwords are issued to people who hold higher ranks. This is because there have been so many cases of canvassing in the recent past. There are instances when ERPs are not used effectively because the insti tution may have ignored the option of training their staff on the new system. If the system is not performing as it should, the institution has to configure it to meet its specifications. There are some reasons as to why some ERPs in the military and other institutions failed. The first blame falls on the administrators for being negligent. One expects the senior administrators to spearhead the development and implementation of the ERP but on the contrary the same leaders are the ones who don not engage in the implementation procedures which in return demoralize the other officers. The senior officers must be active in the whole process of rolling out the ERP. Their absence will induce the other juniors to play around (Cook Graser, 2001). When new systems are being introduced there are some tasks that should be carried out manually especially, if they include redundant data, until the system has been configured thoroughly to enable a smooth transition. If this issue is ignored the ERP may not function properly. It is therefore advisable to roll out a new system gradually so that the users can get used to it. Additionally, some institutions have very high expectations because they think that the changes will be realized overnight. ERP requires a lot of patience because the positive impacts cannot be felt within the first few months because during this time users will be familiarizing themselves with the system. During this orientation period there are users who will be reluctant in embracing the new system. Lack of patience drives some military administrators back to the old system because they assume that the newer ERP did not meet their expectations. Staff training concerning how an ERP functions should be thorough and should include all the people that are likely to use the system. If the other members of staff and the customers don not know what to expect, executing the ERP will be a difficult task.Advertising Looking for essay on computer science? Let's see if we can help you! Get your first paper with 15% OFF Learn More During training sessions the administrators should ensure that all the stakeholders are comfortable with the new system and if any problems are noticed like those that affect people with special needs such as poor eyesight, the administrators should request the developer of the ERP to make some changes so that everyone is at ease with the system. During the training period potential users should be allowed to express their opinions concerning the new system. Resistance to change is another problem because there are people who see the new system as a threat to their positions. Chang (2007) explains that this is common in an institution where some people have been engaging in dubious deals for their own gains. They tremble when they hear about the new system because they fear that the new system will unmask their activities. Besides, there are people who feel that the new system will throw them out of the business or the institution because they know they have not been adhering to the laid out ethics. Moreover, there are people who fear that the system will crush at some point hence they have negative attitude towards it. Others feel that there efforts will no longer be appreciated because most of their duties will be carried out by the new system. There are instances when failure of the ERP is owed to the clash between the features of the software and the nature of institutional operations. Institutions should consider ERPs that are relevant to them and not adopt an ERP for the sake of having one because having an ERP and its efficiency are two different things. Another issue that contributes to failure of ERPs in the military and other institutions is the correctness of data held in the database of the system. Incorrect data can result in errors which in return causes the confidence of the users towards the system to decline hence they will revert to the previous system. Therefore, the military and other institutions must address all the issues mentioned above before rolling out an ERP. For the case of other institutions rather than the military, experts can be outsourced from service providers because it is cheaper compared to hiring new personnel. References Banks, J. (2007). RFID Applied. Hoboken, NJ: John Wiley Sons. Chang, Y.W. (2007). Network-Centric Service Oriented Enterprise. Dordrecht: Springer Cook, R.C. Graser, C.J. (2001). Military Airframe Acquisition Costs: The Effects of Lean Manufacturing. Santa Monica, CA: Rand. Grant, G. (2003). ERP Data Warehousing in Organizations: Issues and Challenges, London: IRM Press. Leon, A. (2008). ERP Demystified. (2nd Ed.). New Delhi: Tata McGraw-Hill. Ocasio, A. (2007). Enterprise Resource Planning: The final (Automated logistics) Frontier. Army Logistician. Michigan: Thomson Gale. 39(4): 52(2) This essay on Impacts of Databases and ERPs on the Industry/Military was written and submitted by user Santiago N. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Globalization of Korean Popular Culture in Asia Essay Example

Globalization of Korean Popular Culture in Asia Essay Example Globalization of Korean Popular Culture in Asia Paper Globalization of Korean Popular Culture in Asia Paper S. E. S, Wonder Girls, Tohoshinki and Super Junior. Music companies selecte members with different specialties, such as proficiency in Japanese, Mandarin or English, in order to attract more supporters from different places. Two of the members of S. E. S were selected because of their fluency of Japanese and English while the Chinese member of Wonder Girls helps the group to gain popularity in China, Taiwan and Hong Kong. The strategies of music companies lead to the increasing popularity of Korean Pop(K-Pop) which further intensified the Korean Wave in Asia. 3. Subjective Factor: Attitude of Koreans towards Korean Entertaining Industries Superficially, Korean entertaining industries can sustainably developed and expanded is because of the good strategies of the companies, whereas, fundamentally, it is because of the attitude of Koreans towards entertaining industries. Unlike other regions or countries, Koreans consider popular culture as an important factor in improving their lives. As mentioned before, the influence of Korean Wave is currently spreading across Asia, covering areas include China, Japan and Taiwan, even Hong Kong’s popular culture is undergoing revolutionary changes. Influence brought by the Korean Wave is powerful that it seems unstoppable. However, before the existence of the Korean Wave, the situation is totally different. Japanese popular culture was in fashion and had a great influence to Korea as well as in Asia. Korean popular culture can never compare with Japanese popular culture, and at the same time, Koreans are inferior to Japanese. When Japanese government implemented the San Francisco peace treaty in 1952, the Japanese government one-sidedly deprived the Japanese nationality from those Koreans who had stayed in Japan, and Koreans are even subjected to the rigid control of alien registration law. Koreans can either choose to return to Korea or naturalize to be Japanese(Kim 134). The induction of such policy had brought an identity crisis to Koreans. However, when Korean popular culture rise suddenly and gain immense popularity in Asia, Koreans start to be proud of being a Korean, which has greatly increased their self-recognition and of his country(Kim 136). They believe that the Korean Wave would help in improving their images in Japan and other places in Asia. Therefore, they hold an optimistic view towards Korean entertaining industries. As Koreans recognize the Korean Wave is a possible way of improving their images, they become more willing to enter the entertaining industries. Their entry provides resources, talents, technology and creativity to Korean entertaining industries. TV dramas no longer have to be with the traditional values, but with new themes, and pop songs are not restricted to be suited with dancing only. After the participation of these new comers, more creative works can be found. Yet, without appropriate actors and singers, the newly composed movie scripts and songs cannot shine with its soul. The young generation is also affected by the Korean Wave that they desire to become pop stars as their idols. According to a research conducted by Choi, A predominate number of youths express their preference in service sector or entertainment industries(Choi 269). Their parents also support their decisions of being trainees because they think it is their honor to have a pop stars in their families. Therefore, children are sent to the entertaining or music companies for training when they are still receiving secondary education. Although the training period is long, which usually take at least four years to up to ten years, they can still keep their faith and endure the brutal trainings. They believe that they can shine on stage one day. After years of training, their singing, dancing and acting skills are guaranteed before putting on stage. As a result, there are sufficient supply of creative scripts and songs, together with artists and singers, the Korean Wave can be sustainably developed and continue to spread to Asia, leading to an important trend in Asia. 4. Objective Factor: Globalization The Korean entertaining industries grow stronger with the good strategies of entertaining companies and the participation of new comers. Yet, Korean popular culture cannot turn to the Korean Wave and spread through Asia without the factor of globalization. There are different definitions of globalization from various scholars, but in general terms, globalization can be understood as a multi-dimensional and complex process of profound transformations in all spheres, including technological, economic, political, social, cultural, intimate and personal. With the improvement of communication technology, worldwide social relations and consciousness of world society are intensified. In other words, globalization suggests the expanding scale, speeding up and deepening impact of interregional flows and patterns of social interaction(Held and McGrew 3). The Korean Wave is a result of the globalization of technology and the media, as Sung said(vii). With the improvement of communication technology and transportation, the Korean Wave can affect the whole Asia within a short period of time. Firstly, the advancement of communication technology, also including TV broadcasting and the Internet, play an important role in intensification of the Korean Wave. With the invention and popularization of television, products, as well as TV dramas and pop songs can be promoted more easily and effectively. The latest information about Korean popular culture can be known immediately. Korean TV dramas and music videos are also shown on TV frequently. Some of the TV stations even establish a new channel for broadcasting Korean programs, such as J2 in Hong Kong and Channel V in Taiwan. The former broadcasts Korean TV dramas and entertaining programs while the latter featured Korean pop music videos and both of them have created a base for Korean popular culture in Asia. The invention of internet further facilitates the exchange of information within Korea and other places. One of the advantages of using the Internet is that there is no time difference. People in other places can follow the latest information of Korea through the internet. Besides, the internet also provides an effective platform for promotion. Youtube is a platform for Korean music companies to promote their artists and singers. In July 2006, more than 1. 6 million US visitors watched 21 million video streams per day, which means each people watched about 13 video streams every day(Browne 184). The internet and Youtube are, therefore, used as a useful tool for updating the recent status of artists and publicizing their masterpieces. Apart from the advancement of communication technology, the development of transportation also eliminates the geographical constraints, which encourage Korean artists and singers to travel around Asia and promote their works. As travelling time is shortened between destinations, most of Korea’s topnotch singers take their concerts to Beijing, Shanghai, Hong Kong and Tokyo. They bring along with their albums, having songs in local languages of the places, to publicize their works and maximize the local support. For instance, Wonder Girls recomposed the lyrics of their song â€Å"Nobody† from Korean to Mandarin before holding their concert in Taiwan. And when they go to places where the concerts are held, they take part in the recording of local entertaining programs. As a result, in the journey of holding concerts, they would appear on the entertaining programs, entertainment news and, of course, in the concert, the effect of their visiting and the influence of Korean Wave can easily be imagined With the improvement of communication technology and popularization of television and internet, the world became flat, as Friedman suggests(4), which means exchange of information is easy. 5. Objective Factor: Hybridity The simplest definition of hybridity refers to mixture. In the contemporary world, hybridity are used to describe popular culture, racial mixing, cuisine and anything which is combined by two or more elements. In terms of popular culture, hybridity refers to the combination of more than one culture. There can be two meanings in the case of Korean popular culture, one is that Korean popular culture itself is a hybrid that forms by numerous cultures, so Korean popular culture is more special and can easily to fit in other culture. Another is that cultures nowadays are hybrids; therefore, Korean popular culture is easy to be accepted. For Korean popular culture itself, it combined Japanese, Chinese and also American culture together, and formed its Korean popular culture. Korea had become colony of China and Japan, therefore greatly influenced by these two cultures. From Sui Dynasty, Korea was a vassal state under the protection of China. Korea sent students to Changan, the capital of Tang Dyansty, to learn Chinese culture. Korea is under the influence of Chinese culture from long time ago. The traditional values of Chinese cultures, such as filial piety, respect for elderly and loyalty, also deeply rooted in the Korean culture. When China was defeated by Japan in the Sino-Japanese War, Korea was given to Japan and start to be influence by Japan. Although Korea was freed after the Second World War, it was still under great influence of Japanese culture. At that time, Japan was receiving post-war assistance from the United States and American culture started to mix with Japanese culture. As a result, Korean popular culture has absorbed foreign elements, such as Chinese, Japanese and American, while still keeping its own traditions and values(Kim 292). This underlying dynamic help put the Korean Wave forward. On the other hand, people usually think that hybrid is stronger and more beautiful than the pure, both historically and biologically(Kim 292). As Korean popular culture involves Chinese, Japanese and American elements, it can fulfill audiences’ desire. Hence, the Korean Wave is formed and intensified within a short period of time. Moreover, because of globalization, information can be transmitted quickly. To keep the own culture without any foreign influence is hard to achieve. People generally have a greater acceptance and tolerance towards foreign culture. In this era of hybridity, it is understandable that why Korean popular culture can give a big hit to Asia. With these two definitions together, the reasons why Korean popular culture can affect Asia is obvious, including the rich content of Korean popular culture and the high acceptance of people in Asia. 6. Impact: Cultural Imperialism Korean popular culture rise and receive strong reaction within a short period of time, it seems only an exchange of culture in different places. Yet, the Korean Wave actually has resulted in cultural imperialism. Imperialism is defined as a function of the inequalities of size, power, wealth, and national resources that are built into the international system as it is a cause of those inequalities(Ninkovich 7). And cultural imperialism, which is also translated into â€Å"media imperialism† by some theorists, can take the form of an active, formal policy or a general attitude(Tomlinson 6). That means the spread of Korean popular culture generally exploited other’s local culture. Korean films, TV dramas, pop songs and entertaining programs continue to gain popularity in Asia. As the Korean TV dramas are cheaper than the Japanese one, the Japanese TV dramas are soon replaced by the Korean one. Chinese TV stations also stopped to produce TV dramas because the cost of purchasing a Korean TV drama is lower than producing a new one. Thus, Korean TV dramas, such as Stairway to Heaven, Coffee Prince, He’s Beautiful, continued to attract people’s attention. Meanwhile, K-pop floods the market of popular music. Music companies in Asia purchase the copyright of Korean pop songs and rewrite the lyrics in their local language for their artists to perform. In Hong Kong, the lyrics of â€Å"Mister† from KARA is recomposed into Cantonese, which also named â€Å"Mister† perform by Miyoko Lau and Renee Lee. In Taiwan, the lyrics of â€Å"T. O. P. † by Shinhwa is rewritten in Mandrin, which became â€Å"Remember† performed by S. H. E. Besides recomposing lyrics, Korean popular songs are also performed by other singers in different occasions. For instance, Show Luo, a male artist from Taiwan, performed â€Å"Nobody† from Wonder Girls in an entertaining program. These can show that the growth of Korean popular culture influence the entertaining industries in Asia. As Tomlinson suggests, cultural imperialism can be seen as the dominance of one culture’s media(text, practices) over another or as the global spread of â€Å"mass-mediated culture†(22). Although the immense popularity of Korean Wave helps spread of Korean popular culture, at the same time, destroyed the original and local culture in other places. Before the Korean Wave, composers and artists creates their own works, yet, with the Korean Wave, their creativity and originality are affected by the Korean style. If this continues to happen, the unique culture of each place would diminish and gradually disappeared. This will bring serious consequences, and is possible to occur. 7. Conclusion It is an undeniable and unstoppable truth that the Korean Wave has brought Asia a big hit. By considering the factors that lead to globalization of Korean popular culture, we can understand why the Korean Wave happens so much, and the answer of whether the Korean Wave still has such a strong effect on Asia is also predictable. First of all, the Korean entertaining industries and pop stars provide enough support for the continuous development of Korean popular culture. There are impressive films, TV dramas and entertaining programs, with the associated artists, which have already laid down the foundation of the Korean Wave. TV programs are seriously produced with technical expects and professional performers, together with the catchy theme songs, it is difficult to not catch the hearts of people in Asia. The strength of Korean pop stars and artists can also attract people who are tired of their local but weak ones. Moreover, as the attitude of Koreans towards popular culture do not change, Korean popular culture is possible to further develop. There is sufficient supply reserve for entertaining industries. They facilitate the growth of the Korean Wave and, at the same time, also support the expansion of the influence of Korean popular culture. Adding the factors such as globalization and hybridity, Korean popular culture spread through Asia quickly and effectively. As the communication technology has been improved, information flow becomes more convenient. The invention of internet, wireless technology and satellite also facilitate information exchange, people can receive Korean latest information easily. The influence of the Korean Wave then becomes stronger and stronger. However, can the Korean Wave further affected people’s minds and deep-rooted in the market of popular culture is still questionable. The Korean Wave rose suddenly and swept through Asia in about 10 years, from the late 1990s to present. Would the Korean Wave leave as fast as it comes? There are some issues that should be paid attention to if the Korean popular culture still aims at maintaining its influence or further expand. Firstly, as one of the reasons that the Korean wave can be so successful that is the hybridity of its popular culture. Then what if there is another popular culture growing with more foreign elements which arouse the curiosity of people. What if Korean popular culture has no great breakthrough which made people lost interests. The Korean Wave will surely decline if these come true. Secondly, as mentioned in the above paragraphs, the Korean Wave caused cultural imperialism that destroyed the local cultures. What should Korea respond to the decreasing demand of Korean TV dramas, so as to protect the development of Korean popular culture? The Korean Wave is definitely strong in the early 2000s, but it seems starting to decline these years. There is a Chinese saying â€Å"it is easy to open a shop but hard to keep it always open†, which Korean popular culture is now facing this issue. In what ways that the Korean popular culture can sustainably grow, both Korean entertaining industries and Koreans should think this issue deeply. Bibliography Beng Huat, Chua Iwabuchi, Koichi. East Asian Pop Culture: Analysing the Korean Wave. Hong Kong: University of Hong Kong Press, 2008. Print. Browne, Ray Broadus. Popular Culture Values and the Arts: Essays on Elitism Versus Democratization. Jefferson: McFarland. 2009. Print. Choi, Jung Ah. New Generation’s Career Aspirations and New Ways of Marginalization in a Postindustrial Economy. British Journal of Sociology of Education. London: Routledge, (2010). P. 269-283 Diffrient, David Scott. â€Å"Shiri†. Film Quarterly 54. 3 (2001): 40-46. Print. Faiola, Anthony. â€Å"Japanese Women Catch the Korean Wave†. The Washington Post. 006: 1. Web. 10 May 2011. Friedman, Thomas L. The World Is Flat. London, England: Penguin Books. 2005. Print. Held, David. and McGrew, Anthony. The Global Transformations. Cambridge: Polity. 2003. Print. Kim, Youna. Media Consumption and Everyday Life in Asia. Routledge Advances in Internationalizing Media Studies. New York: Taylor Francis Group, 2008. Kin, Joong Keun. Koreas Changing Roles in South East Asia. Singapore: Institute of South East Asian studies, 2010, Print. Ninkovich, Frank A. The United States and Imperialism. Oxford: Blackwell Publishers Inc, 2001. Print. Segers, Frank. â€Å"Korea Movies†. Hollywood Reporter, April 19, 2000, 14-16. Shin, Hyunjoon. â€Å"Have you ever seen the Rain? And wholl stop the Rain? : the globalizing project of Korean pop (K-pop)†, Inter-Asia Cultural Studies 10: 4 (2009), 507 -523. Print. Sung, Sang Yeon. Globalization and the Regional Flow of Popular Music: the Role of the Korean Wave(Hanliu) in the Construction of Taiwanese Identities and Asian Values. 2008. Tomlinson, John. Cultural Imperialism: A Critical Introduction. Baltimore: Johns Hopkins University Press, 1991. Print.

A Microeconomic Analysis of Indian Retail Industry

In the course of the report, we try to find out – how the retail sector works, major regulations that affect its functioning and the challenges that await the sector and summarize with our analysis and recommendations. Note: We have used where we’ve analyzed the situation from a micro-economic point of view. INTRODUCTION The retail sector in India can broadly be classified as organized and unorganized where the share of unorganized sector is more than 93% of the total and includes the kirana stores, mom and pop stores and the ilk. The organized or modern retail sector on the other hand captures a mere 7% of the total market share. Modern retail is defined as a form of retailing whereby consumers can buy goods from a similar purchase environment across more than one physical location and operates under three levels: Specialist stores catering to some particular category of product such as footwear, pharma beauty, food and grocery etc. classified under level I. Departmental stores that cater to a few categories of retail put under level II, and malls where we find an agglomeration of many departmental stores, hypermarkets etc – classified under level III retail. The figure 1 below shows the various players at different levels of retail. Retail stores can also be classified under ‘lifestyl e’, ‘value’ and ‘luxury’ formats based upon the consumer income segment they target. Figure : Players operating at different levels Figure: Organized Retail Although, the sector boasts of covering almost all the verticals, a look at the markets under different verticals shows that Organized Retail Penetration is extremely low – 2. 4 percent – for the food and grocery, which in contrast makes up for the biggest part of the total retail market. The apparels, foot wear and home decor are the major contributors under organized retail and have been prospering at a rapid pace. The figures below depict the market share and Organized Retail Penetration in different verticals. Figure: Market Share of Different Verticals in Organized Retail Source: CRISIL Figure: Organized retail penetration (%) in different verticals Source: CRISIL Retail almost accounts for around 15% of India’s GDP and thus plays an important role in determining the Indian economic indicators. Organized retail became the apple of everyone’s eye when Vishal Mega Mart profited from its operations in different parts of India. Soon, other players started with their own retail chains such as V-Mart, Big Bazaar, Subhiksha, Pantaloons et al and the market turned into a very competitive market, probably lowering the economic profits of the retailers, and consequently the situation now is that Vishal, Subhiksha and others stand nowhere compared to the biggies such as Reliance, Big Bazaar and others. The major reasons for this are the marketing mix of these brands and benefits from economies of scale. However, because a number of factors go into determining business profitability, it would not be correct to give all credit to the above mentioned factors. Let’s now look at the major player in organized retail in India. MAJOR PLAYERS The organized retail sector of India has many domestic corporate houses competing with their ventures such as Tata’s Chroma, Reliance Trends, Reliance Fresh, Futures Pantaloons, RPG so on. Other than these, fascinated by the Indian demographics and potential market, international players have entered through joint ventures with national players and are planning to compete for the share through such strategies. Major players along with their brands are shown below. * Landmark (books and music) * Croma(multi-brand electronics) * World of Titan (watches) * Tanishq (jewellery) * Titan Eye+ (eye wear) * Westside (lifestyle retail store) * Star Bazaar (hypermarket chain) * Fashion Yatra(family fashion store) * Central (shopping mall) * Big Bazaar (hypermarket) * Pantaloons (fashion outlet) * Blue Sky (sunglasses) * Brand Factory (multi-brand readymade garments) * KB’s Fair Price (essential products) * Navaras(jewellery) Planet Store (multi-brand sports and lifestyle speciality retail) * aLL(fashion garments) * Ethnicity (Indian ethnic wear) * Home Town (home needs), * eZone(electronics), * Furniture Bazaar (home furniture), * Electronics Bazaar(under Big Bazaar, electronics stores) * Home Bazaar (satellite version of Home Town) * Collection I (lifestyle furniture) * Gen M ; One Mobile (mobile phones) * M-Port (electronics) * Shoe Factory (footwear) * Depot (books and music) * Reliance Fre sh (neighbourhood store) * Reliance Mart (supermarket) * Reliance Super (mini-mart) Reliance Digital (consumer durables and information technology) * Reliance Trends (apparel and accessories) * Reliance Wellness (health, wellness and beauty) * iStore(Apple products) * Reliance Footprint (footwear) * Reliance Jewels (jewellery) * Reliance TimeOut(books, music and entertainment) * Reliance AutoZone (automotive products and services) * Reliance Living (home ware, furniture, modular kitchens and furnishings) * Music World (music and home video store) * Books ; Beyond (book store) * Spencers (multi-format retail store) K RAHEJA Shoppers Stop (clothing, accessories, fragrances, cosmetics, footwear and home furnishing store) * Crossword (book store) * Inorbit Mall (fashion, lifestyle, food and entertainment) and Hyper City (hypermarket) As we can see that all major groups in India have opened up their retail stores catering to different sections of the society providing for different needs of the customers. This has resulted in a sort of monopolistic competition in organized retail market in metro and Tier 1cities owing to the large number of variants being offered to the customers. However, in Tier 2 and 3 cities there are fewer of such modern retail stores and the market situation can be compared to oligopoly, but however because of local players and unorganized retail the effects of oligopoly generally don’t show up. The presence of competitors thus affects not only the player, but the industry and the nation as whole. Let’s discuss in brief the effects of competition. COMPETITION AND RIVALRY Competition is one of the means to achieve economic efficiency. It restrains prices and encourages companies to innovate ; provide better quality of products. In the retail sector competition is driven by many factors, including variety, products, price, quality, service, location, reputation, credit and availability of retail space etc. It can broadly be classified under: 1. Competition because of Internal Factors The large number of groups in multibrand retail such as TATA, Raheja et al and also single brand established foreign players such as Adidas, Nike etc pose a threat to speedy expansion of Indian Retail. . Competition because of External Factors The organized retail industry in India is facing immense competition from the unorganized sector. Traditionally, retailing has been established in India for centuries. It is a low cost structure, mostly owner operated, has negligible real estate and labor costs and little or no taxes to pay. The unorganized retail sector constitutes over 93% of India’s total retail sector and thus, poses a serious hurdle for organized retailers. Because of the largely unorganized nature of Indian retail, inefficiencies have crept in and large number of intermediaries exists, reducing the functional and productive efficiency of the retail industry. The government in power has thus been keen to promote FDI in retail in India. Hundred percent FDI in single brand retail invited global companies for competition in the Indian retail sector. With this the companies are working with a strategy so as to be able to cater to the needs of the consumers and grow volumes by ensuring footfalls, while being able to reduce costs, withstand downturns, and face competition. Here we also see a common practise to prevent other companies from affecting the economic status quo of a country, by imposing barriers and caps on FDI, for example what has been done in multibrand retail. As of now, FDI in multibrand retail cannot exceed the specified cap which has kept global retailers such as Walmart, Carrefour et al from entering the Indian market, although they still do exist in whole sale cash and carry segment. The market structure of the modern retail is that of monopolistic competition in metros ; tier I cities which usually have hundreds of shopping alternatives including multi-brand retail outlets, single brand outlets in the shopping malls and nation-wide chains. Whereas in the tier II ; tier III cities the market structure is oligopoly in nature as they have fewer stores and somewhere only a single super centre or shopping mall. Also if we look at prices of different products in various retail outlets, we find that there is not much difference between the prices, except during periods or seasons of sale. This shows that because of the very competitive nature of modern retail, which now also includes online retail, the players are almost operating at zero economic profit, and thus don’t have much scope to offer different prices for similar products. Moreover almost all use similar technologies and processing techniques to provide the final product and thus the prices cannot be increased significantly, for fear of loss of market share. For example, Pantaloons and Westside have almost the similar brands in offering for the customer, leaving little scope for differentiation or price discrimination. Price discrimination can however happen when we compare lifestyle or luxury and value format stores, value stores charging lesser price for the same product sold at a higher price in lifestyle stores. To gain advantage in such a competitive environment major retailers have started to distinguish themselves by providing products under ‘private labels’. In India, fresh produce purchases are made more often from cart vendors who buy their stock from wholesalers. Retailers have tried to bridge the gap with direct farm procurement  eliminating middlemen and introducing  Ã¢â‚¬Ëœ private labels’. They are coming up with new ideas to grab a major share of the market which is prospering (see figure below) because of the following factors: The average income of the middle class population has been increasing at a rate of around 12%, which will result in increased expenditure Increasing proportion of working women in the country Increasing population of employed youth Increasing desire for better standards of living and trends in consumer expenditure Increase in the use of plastic money Emerging markets in Tier II and Tier III cities Figure: Sales (in million Rs. ) plotted against the financial year Source: Company official website These factors may cause a shift in the demand curve, but more number of retailers will be willing to enter and eventually the price would not be impacted much. There would, infact a gradual shift from unorganized to the organized retail. All these and a huge untapped market potential that’s locked in the unorganized retail has motivated modern retailers to invest heavily in marketing and advertising, to grab customer attention and retain them. ADVERTISING Promoting the modern retail brand is very important – especially in metro and Tier I cities. The retailer must strive hard to communicate the USP of the brand and help the end-users know to which brand a particular product belongs influencing the buying behavior of the customer. Not only in India, retail industry all over the world spends large amount of funds on advertising. The figure below shows comparison of expenditure by the retail sector with others on online advertising in the United States Figure 5: US Online Ad Spending The growth of online video ads among the brand marketers and Social networking are primary contributors to the growing market share of the retail sector. Advertising in modern retail is broadly done under the following three categories: Traditional Advertising Traditional advertising means advertising using traditional media such as TV, newspaper, radio, circulars, hoardings etc. For eg. we frequently see advertisements from major retail players such as Big Bazaar, Chroma etc in newspapers. Digital Advertising This form uses advertising using digital media. Video advertising, Mobile advertising etc are some of its examples. Alternative Offers Under this we may have guerilla marketing where the marketer may use graffiti, fliers, deal of the day type offers, groupon etc to promote or advertise the product. Website Communication or on-site communication evaluates how well retailers currently collect the kind of information that helps them localize their own communications with consumers. For this category, we evaluate two criteria: whether the retailer offers localized information about their own stores on their eCommerce site, and whether they solicit customer information – email address and mobile number, prominently on their site. The expansion of the retail sector and the creation of meta-mediaries has provided with increasing job opportunities. JOB CREATION With a CAGR of around 14. 5% in the last five years and the bright prospects of expansion , the the no of jobs in this sector are expected to grow at a fast pace. The existing players will have to face competition from the new players and this would also lead to opening up of new stores and thereby increasing the job opportunities in the country. Shift in consumers preference from traditional stores and shops to departmental stores and hypermarkets is definitely going to put pressure on retailers to provide for adequate staff and services, thereby increasing the number of people employed and thus creating job opportunities. The rural market is home to the 46% of the rich and prosperous people of the country. Besides, these people stay in 17% of the villages of the country. The infrastructure costs in setting up retail outlets in these places are going to be lower compared to the cities. This will encourage the emergence of regional players and would again lead to creation of jobs in many regions. However, some more prospering regions or cities which have shown good growth rates will have an edge over others, even in the same state. Whatever is the case, the supply has to be met with the demand, especially when there is no dearth of labor in India and job creation is highly likely, an event when it comes to the retail sector expansion and penetration. FDI in multi-brand retail is going to be a deciding factor in creation of jobs as well. Once permitted, this will lead to aggressive competition. The entry of new players would balance the supply chain and farmers will be benefitted. If this happens, more people will be attracted towards farming, also contract farming would lead to creation of rural jobs. Moreover, entry of foreign investors is likely to shift the production possibility frontier outwards(see figure below), because they are more likely to invest in storage, supply chain and other capital goods. Retail sector is expected to expand by leaps and bounds in the near future and this would create a lot of jobs. The advancement of technology though can also reduce the manpower required in the long run and the jobs created over a period of time may get killed. The entry of multi brand retailers may also adversely impact the local kirana walas, because they will be able to recover there fixed cost easily and gain from economies of scale. Further, because all food and grocery require very similar capital investment, they also stand to gain from economies of scope. Figure: Expansion of Production Possibility frontier (not by reducing consumption but with introduction of new technology) RECENT TRENDS Growth of Modern Retail India moved from being 10th largest economy in 1990 to 4th largest in 2010 according to Purchasing Power Parity (PPP). The growing economy has driven the growth in per capita income of Indian consumers. Indian retail sector (organized and unorganized) has grown by 14. 5% from 2006-07 to 2011-12 and is valued at $396 billion out of which 5-6% is the share of organized retail. Organized retail has had growth more than double of total retail. With the overall rise the penetration of organized retail sector has increased and is expected to grow its share to 10% by the year 2016. Changing shopping behavior Shopping behavior has changed over time, with growing urbanization there has been rise in affluence and growing attraction towards branded goods. The parameters over which modern retail has been faring better than traditional retail are product assortment and range, quality, everything under single roof model. FDI in retail FDI in Single Brand: In 2006, FDI in single brand retail was permitted to the extent of 51% which has recently been increased to 100% in Jan, 2012. There is also a mandate of sourcing of goods from local SMEs and local dealers. FDI in multi-brand sector: International retailers are allowed 100% ownership in cash ; carry wholesale trade stores. But similar initiative in multi-brand retail stores, i. e. allowing 51% FDI has been met by widespread rejection and has been put on hold. Online Retailing Online retailing is gaining popularity in India with growing penetration of internet. It is expected that online retail will triple in size by 2014-15. It will be dominated by branded, low ticket size, easily transportable, lifestyle products and books. Flipkart and Yebhi. com have already established themselves as major players in this segment in the Indian market. Challenges posed by recent developments Indian government intended to bring 51% FDI in multi-retail sector but due to its widespread opposition, it has not been approved yet. This has put entry of world’s leading retail chain in Indian market. A lot has been said about possible loss of potential job and infrastructure development due to this. Besides that the suggested provision of sourcing from local SMEs is also proving to be a deterrent. INDIA AND THE INTERNATIONAL MARKET The graph below shows India’s status wiz a wiz status of organized retail in other countries. It can be observed that India still has a long way to go if it wants to increase the share of organized retail in the retail market. Figure: Organized retail as a percentage of total retail in different countries Source: CRISIL In the second half of the 20th century, many countries opened up there markets for Organized Retail and some also opened for multi-brand retail. There were some countries who felt a positive impact of the same, China is one such example; while there were others such as Uk which were adversely affected. India should also proceed with implementing FDI in multi-brand retail in phases, looking for any drawbacks, before it opens up fully. REFERENCES CRISIL Research, http://crisil. com/research/list-of-industries. html# Dun and BradStreet, http://www. dnb. co. in/IndianRetailIndustry/overview. asp Indian retail News, http://www. indiaretailnews. com/ Tata group official website, http://www. tata. com/company/profile. aspx? ectid=oH90Rc8X7Dg= Croma retail, http://www. cromaretail. com/ FDI in Retail, http://cci. gov. in/images/media/ResearchReports/FDI%20in%20Indian%20Retail%20Sector%20Analysis%20of%20Competition%20in%20Agri-Food%20Sector. pdf Futures group Official website, http://futuresgroup. com/ BIBLIOGAPHY Economics by Samuelson and Nordhaus ——————————â€⠀Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€œ [ 1 ]. Lifestyle formats include departmental stores and specialty stores [ 2 ]. Value formats include supermarkets and hypermarkets [ 3 ]. Retailers can use price differentiation to gain from the consumer surplus [ 4 ]. Private  labels or private  brands  Ã‚  are the brands that are owned and sold by  Ã‚  retailers at their stores   and are typically  priced lower  (5-15 percent)   as compared to  the existing  brands. [ 5 ]. These factors will result in a shift of demand curve to the right [ 6 ]. Source: CRISIL [ 7 ]. Organised retail penetration expected to cross 10 per cent by 2016-17 [ 8 ]. In such cities, the number of market players is very large forming a monopolistic market, brand positioning thus becomes very important to create great brand recall value. [ 9 ]. Unique Selling Proposition [ 10 ]. Opened up multi brand retail in phases. A Microeconomic Analysis of Indian Retail Industry In the course of the report, we try to find out – how the retail sector works, major regulations that affect its functioning and the challenges that await the sector and summarize with our analysis and recommendations. Note: We have used where we’ve analyzed the situation from a micro-economic point of view. INTRODUCTION The retail sector in India can broadly be classified as organized and unorganized where the share of unorganized sector is more than 93% of the total and includes the kirana stores, mom and pop stores and the ilk. The organized or modern retail sector on the other hand captures a mere 7% of the total market share. Modern retail is defined as a form of retailing whereby consumers can buy goods from a similar purchase environment across more than one physical location and operates under three levels: Specialist stores catering to some particular category of product such as footwear, pharma beauty, food and grocery etc. classified under level I. Departmental stores that cater to a few categories of retail put under level II, and malls where we find an agglomeration of many departmental stores, hypermarkets etc – classified under level III retail. The figure 1 below shows the various players at different levels of retail. Retail stores can also be classified under ‘lifestyl e’, ‘value’ and ‘luxury’ formats based upon the consumer income segment they target. Figure : Players operating at different levels Figure: Organized Retail Although, the sector boasts of covering almost all the verticals, a look at the markets under different verticals shows that Organized Retail Penetration is extremely low – 2. 4 percent – for the food and grocery, which in contrast makes up for the biggest part of the total retail market. The apparels, foot wear and home decor are the major contributors under organized retail and have been prospering at a rapid pace. The figures below depict the market share and Organized Retail Penetration in different verticals. Figure: Market Share of Different Verticals in Organized Retail Source: CRISIL Figure: Organized retail penetration (%) in different verticals Source: CRISIL Retail almost accounts for around 15% of India’s GDP and thus plays an important role in determining the Indian economic indicators. Organized retail became the apple of everyone’s eye when Vishal Mega Mart profited from its operations in different parts of India. Soon, other players started with their own retail chains such as V-Mart, Big Bazaar, Subhiksha, Pantaloons et al and the market turned into a very competitive market, probably lowering the economic profits of the retailers, and consequently the situation now is that Vishal, Subhiksha and others stand nowhere compared to the biggies such as Reliance, Big Bazaar and others. The major reasons for this are the marketing mix of these brands and benefits from economies of scale. However, because a number of factors go into determining business profitability, it would not be correct to give all credit to the above mentioned factors. Let’s now look at the major player in organized retail in India. MAJOR PLAYERS The organized retail sector of India has many domestic corporate houses competing with their ventures such as Tata’s Chroma, Reliance Trends, Reliance Fresh, Futures Pantaloons, RPG so on. Other than these, fascinated by the Indian demographics and potential market, international players have entered through joint ventures with national players and are planning to compete for the share through such strategies. Major players along with their brands are shown below. * Landmark (books and music) * Croma(multi-brand electronics) * World of Titan (watches) * Tanishq (jewellery) * Titan Eye+ (eye wear) * Westside (lifestyle retail store) * Star Bazaar (hypermarket chain) * Fashion Yatra(family fashion store) * Central (shopping mall) * Big Bazaar (hypermarket) * Pantaloons (fashion outlet) * Blue Sky (sunglasses) * Brand Factory (multi-brand readymade garments) * KB’s Fair Price (essential products) * Navaras(jewellery) Planet Store (multi-brand sports and lifestyle speciality retail) * aLL(fashion garments) * Ethnicity (Indian ethnic wear) * Home Town (home needs), * eZone(electronics), * Furniture Bazaar (home furniture), * Electronics Bazaar(under Big Bazaar, electronics stores) * Home Bazaar (satellite version of Home Town) * Collection I (lifestyle furniture) * Gen M ; One Mobile (mobile phones) * M-Port (electronics) * Shoe Factory (footwear) * Depot (books and music) * Reliance Fre sh (neighbourhood store) * Reliance Mart (supermarket) * Reliance Super (mini-mart) Reliance Digital (consumer durables and information technology) * Reliance Trends (apparel and accessories) * Reliance Wellness (health, wellness and beauty) * iStore(Apple products) * Reliance Footprint (footwear) * Reliance Jewels (jewellery) * Reliance TimeOut(books, music and entertainment) * Reliance AutoZone (automotive products and services) * Reliance Living (home ware, furniture, modular kitchens and furnishings) * Music World (music and home video store) * Books ; Beyond (book store) * Spencers (multi-format retail store) K RAHEJA Shoppers Stop (clothing, accessories, fragrances, cosmetics, footwear and home furnishing store) * Crossword (book store) * Inorbit Mall (fashion, lifestyle, food and entertainment) and Hyper City (hypermarket) As we can see that all major groups in India have opened up their retail stores catering to different sections of the society providing for different needs of the customers. This has resulted in a sort of monopolistic competition in organized retail market in metro and Tier 1cities owing to the large number of variants being offered to the customers. However, in Tier 2 and 3 cities there are fewer of such modern retail stores and the market situation can be compared to oligopoly, but however because of local players and unorganized retail the effects of oligopoly generally don’t show up. The presence of competitors thus affects not only the player, but the industry and the nation as whole. Let’s discuss in brief the effects of competition. COMPETITION AND RIVALRY Competition is one of the means to achieve economic efficiency. It restrains prices and encourages companies to innovate ; provide better quality of products. In the retail sector competition is driven by many factors, including variety, products, price, quality, service, location, reputation, credit and availability of retail space etc. It can broadly be classified under: 1. Competition because of Internal Factors The large number of groups in multibrand retail such as TATA, Raheja et al and also single brand established foreign players such as Adidas, Nike etc pose a threat to speedy expansion of Indian Retail. . Competition because of External Factors The organized retail industry in India is facing immense competition from the unorganized sector. Traditionally, retailing has been established in India for centuries. It is a low cost structure, mostly owner operated, has negligible real estate and labor costs and little or no taxes to pay. The unorganized retail sector constitutes over 93% of India’s total retail sector and thus, poses a serious hurdle for organized retailers. Because of the largely unorganized nature of Indian retail, inefficiencies have crept in and large number of intermediaries exists, reducing the functional and productive efficiency of the retail industry. The government in power has thus been keen to promote FDI in retail in India. Hundred percent FDI in single brand retail invited global companies for competition in the Indian retail sector. With this the companies are working with a strategy so as to be able to cater to the needs of the consumers and grow volumes by ensuring footfalls, while being able to reduce costs, withstand downturns, and face competition. Here we also see a common practise to prevent other companies from affecting the economic status quo of a country, by imposing barriers and caps on FDI, for example what has been done in multibrand retail. As of now, FDI in multibrand retail cannot exceed the specified cap which has kept global retailers such as Walmart, Carrefour et al from entering the Indian market, although they still do exist in whole sale cash and carry segment. The market structure of the modern retail is that of monopolistic competition in metros ; tier I cities which usually have hundreds of shopping alternatives including multi-brand retail outlets, single brand outlets in the shopping malls and nation-wide chains. Whereas in the tier II ; tier III cities the market structure is oligopoly in nature as they have fewer stores and somewhere only a single super centre or shopping mall. Also if we look at prices of different products in various retail outlets, we find that there is not much difference between the prices, except during periods or seasons of sale. This shows that because of the very competitive nature of modern retail, which now also includes online retail, the players are almost operating at zero economic profit, and thus don’t have much scope to offer different prices for similar products. Moreover almost all use similar technologies and processing techniques to provide the final product and thus the prices cannot be increased significantly, for fear of loss of market share. For example, Pantaloons and Westside have almost the similar brands in offering for the customer, leaving little scope for differentiation or price discrimination. Price discrimination can however happen when we compare lifestyle or luxury and value format stores, value stores charging lesser price for the same product sold at a higher price in lifestyle stores. To gain advantage in such a competitive environment major retailers have started to distinguish themselves by providing products under ‘private labels’. In India, fresh produce purchases are made more often from cart vendors who buy their stock from wholesalers. Retailers have tried to bridge the gap with direct farm procurement  eliminating middlemen and introducing  Ã¢â‚¬Ëœ private labels’. They are coming up with new ideas to grab a major share of the market which is prospering (see figure below) because of the following factors: The average income of the middle class population has been increasing at a rate of around 12%, which will result in increased expenditure Increasing proportion of working women in the country Increasing population of employed youth Increasing desire for better standards of living and trends in consumer expenditure Increase in the use of plastic money Emerging markets in Tier II and Tier III cities Figure: Sales (in million Rs. ) plotted against the financial year Source: Company official website These factors may cause a shift in the demand curve, but more number of retailers will be willing to enter and eventually the price would not be impacted much. There would, infact a gradual shift from unorganized to the organized retail. All these and a huge untapped market potential that’s locked in the unorganized retail has motivated modern retailers to invest heavily in marketing and advertising, to grab customer attention and retain them. ADVERTISING Promoting the modern retail brand is very important – especially in metro and Tier I cities. The retailer must strive hard to communicate the USP of the brand and help the end-users know to which brand a particular product belongs influencing the buying behavior of the customer. Not only in India, retail industry all over the world spends large amount of funds on advertising. The figure below shows comparison of expenditure by the retail sector with others on online advertising in the United States Figure 5: US Online Ad Spending The growth of online video ads among the brand marketers and Social networking are primary contributors to the growing market share of the retail sector. Advertising in modern retail is broadly done under the following three categories: Traditional Advertising Traditional advertising means advertising using traditional media such as TV, newspaper, radio, circulars, hoardings etc. For eg. we frequently see advertisements from major retail players such as Big Bazaar, Chroma etc in newspapers. Digital Advertising This form uses advertising using digital media. Video advertising, Mobile advertising etc are some of its examples. Alternative Offers Under this we may have guerilla marketing where the marketer may use graffiti, fliers, deal of the day type offers, groupon etc to promote or advertise the product. Website Communication or on-site communication evaluates how well retailers currently collect the kind of information that helps them localize their own communications with consumers. For this category, we evaluate two criteria: whether the retailer offers localized information about their own stores on their eCommerce site, and whether they solicit customer information – email address and mobile number, prominently on their site. The expansion of the retail sector and the creation of meta-mediaries has provided with increasing job opportunities. JOB CREATION With a CAGR of around 14. 5% in the last five years and the bright prospects of expansion , the the no of jobs in this sector are expected to grow at a fast pace. The existing players will have to face competition from the new players and this would also lead to opening up of new stores and thereby increasing the job opportunities in the country. Shift in consumers preference from traditional stores and shops to departmental stores and hypermarkets is definitely going to put pressure on retailers to provide for adequate staff and services, thereby increasing the number of people employed and thus creating job opportunities. The rural market is home to the 46% of the rich and prosperous people of the country. Besides, these people stay in 17% of the villages of the country. The infrastructure costs in setting up retail outlets in these places are going to be lower compared to the cities. This will encourage the emergence of regional players and would again lead to creation of jobs in many regions. However, some more prospering regions or cities which have shown good growth rates will have an edge over others, even in the same state. Whatever is the case, the supply has to be met with the demand, especially when there is no dearth of labor in India and job creation is highly likely, an event when it comes to the retail sector expansion and penetration. FDI in multi-brand retail is going to be a deciding factor in creation of jobs as well. Once permitted, this will lead to aggressive competition. The entry of new players would balance the supply chain and farmers will be benefitted. If this happens, more people will be attracted towards farming, also contract farming would lead to creation of rural jobs. Moreover, entry of foreign investors is likely to shift the production possibility frontier outwards(see figure below), because they are more likely to invest in storage, supply chain and other capital goods. Retail sector is expected to expand by leaps and bounds in the near future and this would create a lot of jobs. The advancement of technology though can also reduce the manpower required in the long run and the jobs created over a period of time may get killed. The entry of multi brand retailers may also adversely impact the local kirana walas, because they will be able to recover there fixed cost easily and gain from economies of scale. Further, because all food and grocery require very similar capital investment, they also stand to gain from economies of scope. Figure: Expansion of Production Possibility frontier (not by reducing consumption but with introduction of new technology) RECENT TRENDS Growth of Modern Retail India moved from being 10th largest economy in 1990 to 4th largest in 2010 according to Purchasing Power Parity (PPP). The growing economy has driven the growth in per capita income of Indian consumers. Indian retail sector (organized and unorganized) has grown by 14. 5% from 2006-07 to 2011-12 and is valued at $396 billion out of which 5-6% is the share of organized retail. Organized retail has had growth more than double of total retail. With the overall rise the penetration of organized retail sector has increased and is expected to grow its share to 10% by the year 2016. Changing shopping behavior Shopping behavior has changed over time, with growing urbanization there has been rise in affluence and growing attraction towards branded goods. The parameters over which modern retail has been faring better than traditional retail are product assortment and range, quality, everything under single roof model. FDI in retail FDI in Single Brand: In 2006, FDI in single brand retail was permitted to the extent of 51% which has recently been increased to 100% in Jan, 2012. There is also a mandate of sourcing of goods from local SMEs and local dealers. FDI in multi-brand sector: International retailers are allowed 100% ownership in cash ; carry wholesale trade stores. But similar initiative in multi-brand retail stores, i. e. allowing 51% FDI has been met by widespread rejection and has been put on hold. Online Retailing Online retailing is gaining popularity in India with growing penetration of internet. It is expected that online retail will triple in size by 2014-15. It will be dominated by branded, low ticket size, easily transportable, lifestyle products and books. Flipkart and Yebhi. com have already established themselves as major players in this segment in the Indian market. Challenges posed by recent developments Indian government intended to bring 51% FDI in multi-retail sector but due to its widespread opposition, it has not been approved yet. This has put entry of world’s leading retail chain in Indian market. A lot has been said about possible loss of potential job and infrastructure development due to this. Besides that the suggested provision of sourcing from local SMEs is also proving to be a deterrent. INDIA AND THE INTERNATIONAL MARKET The graph below shows India’s status wiz a wiz status of organized retail in other countries. It can be observed that India still has a long way to go if it wants to increase the share of organized retail in the retail market. Figure: Organized retail as a percentage of total retail in different countries Source: CRISIL In the second half of the 20th century, many countries opened up there markets for Organized Retail and some also opened for multi-brand retail. There were some countries who felt a positive impact of the same, China is one such example; while there were others such as Uk which were adversely affected. India should also proceed with implementing FDI in multi-brand retail in phases, looking for any drawbacks, before it opens up fully. REFERENCES CRISIL Research, http://crisil. com/research/list-of-industries. html# Dun and BradStreet, http://www. dnb. co. in/IndianRetailIndustry/overview. asp Indian retail News, http://www. indiaretailnews. com/ Tata group official website, http://www. tata. com/company/profile. aspx? ectid=oH90Rc8X7Dg= Croma retail, http://www. cromaretail. com/ FDI in Retail, http://cci. gov. in/images/media/ResearchReports/FDI%20in%20Indian%20Retail%20Sector%20Analysis%20of%20Competition%20in%20Agri-Food%20Sector. pdf Futures group Official website, http://futuresgroup. com/ BIBLIOGAPHY Economics by Samuelson and Nordhaus ——————————â€⠀Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€œ [ 1 ]. Lifestyle formats include departmental stores and specialty stores [ 2 ]. Value formats include supermarkets and hypermarkets [ 3 ]. Retailers can use price differentiation to gain from the consumer surplus [ 4 ]. Private  labels or private  brands  Ã‚  are the brands that are owned and sold by  Ã‚  retailers at their stores   and are typically  priced lower  (5-15 percent)   as compared to  the existing  brands. [ 5 ]. These factors will result in a shift of demand curve to the right [ 6 ]. Source: CRISIL [ 7 ]. Organised retail penetration expected to cross 10 per cent by 2016-17 [ 8 ]. In such cities, the number of market players is very large forming a monopolistic market, brand positioning thus becomes very important to create great brand recall value. [ 9 ]. Unique Selling Proposition [ 10 ]. Opened up multi brand retail in phases.

Company Background - Microsoft Corporation Essay

Company Background - Microsoft Corporation - Essay Example The essay "Company Background - Microsoft Corporation" discusses company background of Microsoft Corporation. In the 21st century the company has diversified into other business sectors such as the video game industry. The firm in 2001 released the X-Box and subsequently in 2005 created the X-Box 360 which has sold millions of units worldwide. Microsoft has grown a lot during the last 28 years. The firm has a global workforce of 94,000 employees and a market capitalization value of $266.2 billion. The firm’s common stocks are sold in the NASDAQ under the symbol MSFT. As of April 25, 2013 the price of Microsoft common stocks was $31.94. During fiscal year 2012 Microsoft generated total revenues of $73.72 billion. The net income of Microsoft during 2012 was $16.98 billion. I selected Microsoft because I have been a customer of the firm for over a decade. My preferred game console is the X-box 360 and I have Windows 8 installed in both my computers at home. This analysis will hel p me determine whether Microsoft would be a good investment option for my personal investment portfolio. The common stocks of Microsoft are considered blue chip stocks. A blue chip stock can be defined as a stock issued by a well-known company with an established record of making money and paying dividends. A ratio analysis of Microsoft is illustrated below Ratio Analysis. Accountants and business analysts can utilize ratio analysis to evaluate the financial performance of an enterprise. Ratio analysis uses the input from the common size. financial statements of a company in order to insert that data into financial formulas. The five major categories of ratio analysis are profitability, market value, liquidity, leverage, and efficiency. One of the benefits of using ratio analysis is that any person with basic math knowledge can use the formulas to calculate the ratios of a company. The financial statements that must be used to calculate ratios can be retrieved from the annual report of public firms. One of the limitations of ratio analysis is that its results are not forward looking since they focus on the historical performance of a company. This report will focus on three financial ratios: net margin, asset utilization, and return on assets (ROA). The results of Microsoft are going to be compared against one of its main competitors and against the industry. The competitor chosen for comparison purposes was Oracle. The liquidity position of the company will also be analyzed by calculating the free cash flow ratio and through analysis of the cash flow statement of the company. The net margin measures the profitability of a company. The formula to calculate net margin is net income divided by the total sales. Microsoft had a net income in 2012 of $16.98 billion and total sales of $73.72 billion. The net margin of Microsoft in 2012 was 23.03%. Microsoft’s net margin in 2011 was 33.10% which implies that the company’s profitability decreased by 10.0 7%. When compared to Oracle the net margin of Microsoft was 3.85% lower than Oracle’s 26.89% result. The industry standard net margin in the software industry is 4.50% (Dun & Bradstreet, 2012). The software industry is classified under SIC code 7372 (Prepackaged software). Microsoft’s profitability was superior to the industry by 18.53%. The asset utilization is a ratio that measures how effective the company has been at using its assets to generate sales. During 2012 Microsoft had an asset utilization of 1.65. The asset utilization of the company has declined by 0.09 since the previous fiscal year. Oracle had an

Company Law Essay Example | Topics and Well Written Essays - 1500 words - 5

Company Law - Essay Example A client and an auditor are usually in a contractual relationship thus meaning that the two parties are in agreement. The auditor thus have to perform their share of bargain carefully and appropriately as stipulated in the contract. If the auditor does not conform to the contract terms, the client can decide to sue based on the rounds of breach of contract. According Lacy, a client can sue the auditor first, due to the failure to accomplish specific performance, secondly, in the case where there is general monetary costs and damages for losses incurred due to the breach of that contract and lastly, any other consequential damages that as a result of negligence, have occurred (2002, p.78). Therefore, basing from these factors, Benard being the auditor of NASDAQ Composites Plc is highly liable. During auditing, before partaking any work for a client, the auditor or accountant should ensure that the particular duties to be executed, and in precise if there is need for any important matters to be excluded, have been discussed and harmoniously agreed with the client usually through written word or through a letter of engagement or otherwise (Delaney & Whittington 2010, p. 135). This therefore implies that before any of the undertakings is assumed, there is need for the auditor to ensure that there is special written evidence. In Re Thomas Gerrard & Son Ltd (1968) UK, the company’s auditors learned that there were various alteration to some of the invoice dates of the company. The company’s auditors then referred and consulted with the managing director of this corporation and accepted the director’s explanation although they did not scrutinize the statements of the related suppliers. As a result, there were loss of money to the company and it was thus ruled out that the auditors had breached their duty required by the company at the instance when they failed critically to examine the statements. The facts of the

Microteach #1 Lesson Plan Essay Example for Free

Microteach #1 Lesson Plan Essay Root Tip tip of a plant root that protects the growing tip and secretes mucilage to ease the movement of the root through soil Zone of Elongation absorbs food water, cell growth pushes root tip down, elongating the root Zone of Maturation Zone where root cells differentiate, or form different kinds of tissues that make up a mature root Xylem transports water up from roots through the plant Phloem transports the nutrients made from photosynthesis to all parts of the plant as needed Primary Root Develops into either â€Å"tap root† or â€Å"fibrous roots†; Other smaller roots branch off; Develops from hypocotyl; Roots provide water and minerals to the plant from the soil Adventitious Roots Additional roots that emerge from parts of the plant other than the root system; Burrow into the ground for nutrients Leaves Plumule Also known as â€Å"epicotyl†, emerges after primary root is established and becomes the â€Å"shoot† system above ground Stem Also known as â€Å"axis†; The main â€Å"stalk† of a branch or of the whole plant Apical Bud a. k.a. â€Å"terminal bud†; At the tip of a growing plant; Contains actively dividing cells called apical meristem; Growth here lengthens the plant; grows upward Node – point on the axis, or stem, where the leaf, petiole, another axis, or flower attaches Internode – distance between two nodes Petiole Stalk attaching the leaf blade to the stem Axillary Bud Bud located between the stem (axis) and the petiole; Can develop into a new branch, leaf or flower Leaf Blade Flattened, green site of photosynthesis  Sessile leaves attaches directly to the stem with no petiole Flowers Sepal Provide protection for flower bud; supports petals after flower blooms calyx – many sepals Petals Often brightly colored or unusually shaped to attract pollinators corolla – many petals Stamen – male flower part Anther: pollen-producing reproductive organ Filament: support structure for anther; Produces male gametes, or spores (plant version of sperm) Carpel Also called pistil; Female reproductive organ in flowers that produces seeds; Consists of ovary, ovule, stigma, and style Stigma Sticky, receptive tip of a carpel; The stigma receives pollen from bees Style pillar-like stalk through which pollen tubes grow to reach the ovary Ovary Pollen fertilizes eggs here and develop into seeds; develops into the pericarp Pericarp The outer layer In fleshy fruits; Often edible for human and animals; Develops from the ovary wall of the flower; Surrounds the seeds. (Vajravelu, 2009) Procedure: Anticipatory Set: â€Å"Now that everyones here, lets leave!† Invite students to travel outside and collect a plant sample that they would like to identify. State Objective Tell students that they are going to be learning about their samples, to identify their parts, and to learn their functions. Model: I will show a Microsoft PowerPoint slideshow with pictures or plant structures, their names, and descriptions of their functions. (ESOL Strategy for Edith: Use of visuals) Slideshow will contain brief and simple definitions for structures. (ESOL Strategy for Edgar: Describing items in simple terms; Bulleted lists rather than extended texts) I will point to the structures as I say their names out loud. (ESOL Strategy for Edith: Pointing/Gesturing) There will be an individual slide for each important structure with additional information, synonyms and pictures (ESOL Strategy for Edgar: Expand vocabulary through paraphrasing) I will try to repeat the names of the structures as many times as I can instead of saying â€Å"it† to aid in pronunciation and understanding. (ESOL Strategy for Edith: Repetition) Input I will ask students if they can provide me with any examples of various structures from their experiences, diets, etc. For example, carrots are tap roots. (ESOL Strategy for Tasir: Linking content to students personal life) Guided Practice – I will provide some  of my own plant samples and place them under the dot cam. I will then dissect samples and state the names of various structures. (ESOL Strategy for Edgar: Correcting Phonological Errors) (ESOL Strategy for Edith: Repetition) Check for Understanding I will ask students to present their samples in groups on the dot cam and name their structures without my assistance. (ESOL Strategy for Tasir: Group Activities with Comprehension Checks) Independent Practice: Student will be asked to fill out a worksheet as homework. The students will be required to label unlabeled plant illustrations, and answers questions about the functions of each structure. Closure: Briefly review the material with students. This time without the visual aid, ask students if they can reiterate or paraphrase the purposes and functions of various structures. Ask students to relate reproductive structures to the embryonic structures they create, and then the embryonic structures to the adult structure they develop into. Assign homework. Give students something to look forward to for the next class, ex: interesting fact about photosynthesis. â€Å"I hope you have a wonderful afternoon! See you tomorrow!† Resources and References: Vajravelu, R. (2009). Ethnobotany: A Modern Perspective. (1st ed., pp. 20-35). Dubuque, IA: Kendall Hunt. Microsoft PowerPoint (OR) Linux LibreOffice Impress Samples from Landscaping and/or School Garden Dot Cam Evaluation: Upon being presented with an unlabeled plant sample or illustration, students should be able to identify the name each structure. Students should be able to recognize correlations between different structures for plants in different stages of the life cycle (Example: hypocotyl and primary root). Students should be able to understand what functions each structure has that contribute to the survival of the plant. ESOL Strategies: For Edith, who is at the beginning level of language development, used multiple visual aids for each structure. I will state the name of each structure while pointing to the structure, being sure to clearly enunciate, and will repeat the names of the structures as many times as possible. I have placed arrows and animations on the PowerPoint slides for things that I am not able to reach, point to, etc. A real life example that she has collected personally, and can touch and play with at her desk, will be useful as another visual aid. For Edgar, who is in the intermediate levels of language acquisition, I have provided very simplified definitions and brief bulleted lists of additional information. Animations in slides and gestures to structures coupled with me carefully enunciating while I speak the vocabulary words should help to clear up any phonological errors he may experience. Tasir, who is at the advanced levels of language acquisition, will benefit from note-taking in the classroom. Having the correctly spelled vocabulary words provided on the screen next visual examples will help her to spell them correctly in her notes, which will in turn build up her writing skills. Having me read aloud the words on the screen may help her with her reading skills. Peer review in group activities and guided practice will help correct any errors. Her spelling on her homework will help me to assess her level of success. I will link concepts to her personal life, such as tap roots and carrots, to help her understand that improvement in class will lead to skills she will use in life. Copy of PowerPoint is attached.

Gratitude for Brown vs. Board of Education :: Race Segregation

What is it to ME I was born in 1985 and I grew up with two younger brothers. Now when I look back on my life I realize that I have taken many things for granted. These things are the simple things that most people take for granted such as growing up in a good neighborhood, and not having to worry about gangs, violence, and drugs. Like most kids growing up in good areas I went to a good school that helped springboard my life. These blessing are what allowed me to get into this University. Every once in awhile I view or think of something that reminds me of how lucky I am. At this University I had one of these moments and it happened at an art museum. This museum had an exhibit on Brown v. The Board of Education. This exhibit is where I really came to appreciate what I was blessed with because of others before my time and what they have allowed me to do with it. The Brown v. Board of Education exhibit size was decent from my view but I have not been to an art exhibit for exceptionally long time. The thing that caught my eye the most was a video playing on a wall. This video had the screen split down the middle with two separate videos playing. On one side of the screen there was what seemed to be old video footage of a white family and then on the other side old video footage of a black family. These videos seemed to try to show that black and white life was the same during this time. The footage seemed to be taken in the sixties or seventies, based on the clothing worn in the footage, and this puzzled me due to the fact that black and white life was not equal at this time. It showed both families going to Disney World and their family get-togethers. The black family did seem to have more people over for the family together and much more food which just reminded me of my own family get-togethers, which I have to say are a blast. The whole film gave off an aura that the film had been contrived.

Characteristics of the breakfast cereal industry Essay

Brand History Breakfast cereals are not a homogenous product. The ready-to-eat breakfast cereal industry may be characterized by relatively low economies of scale and relatively low levels of technology. In other words, the entry into this industry is easy. Between the 1950s and the 1970s there was no entry of new firms in the industry even though all the incumbent firms such as Kellogg, General Mills, General Foods and Quaker Oats, made significant profits. Later however, there was the entry of new low-end companies in the markets and the number of brands sold by these firms also increased substantially from 25 to more than 80, and this number is still on a rise (Cabral, 2000, p. 265-266). Pricing trends For decades the breakfast cereal market was one of the most profitable in the United States. The industry had a consolidated structure dominated by Kellogg, General Mills and Kraft Foods with its Post brand. Strong brand loyalty, coupled with control over the allocation of supermarket shelf space, helped to limit the potential for new entry. Meanwhile the steady demand growth of around 3% per annum kept the industry revenues expanding. Also Kellogg, which accounted for over 40 percent of the market share, acted as the price leader in the industry for years in the industry. Every year Kellogg increased cereal prices, its rivals followed and industry profits too remained high. However, this favorable structure started to change in the early 1990s when the growth in demand slowed and then stagnated as the lifestyle and hence food patterns changed and the market saw the rise of powerful discounters such as Wal-Mart that started promoting their own brand of cereal. As sales of cheaper store-brand cereals began to take-ff, supermarkets no longer were as dependent on brand names to bring in traffic and hence they started to demand lower prices from the branded cereal manufacturers. Initially, the branded cereal manufacturers tried to hold against these adverse trends. However, in 1996 Kraft which was then owned by Philip Morris aggressively cut prices by 20 % for its Post brand in am attempt to gain market share. Kellogg son followed with a 19 percent price cut on two-third of its brands and General Mills quickly did the same. However, this too did not change the consumption pattern the growth rates of which remained flat and revenues then started going down for all the branded cereals (Hill, Jones, 2009, p. 52). The trend continued in 2000s also and the situation worsened with the private-label sales continuing to make inroads, gaining over 10 percent of the market. To top it all off, the sales of breakfast cereals started to contract at 1 percent per annum and the period between 1998-2001 saw the market leader Kellogg sliding down to the 2nd position for the first time in its history since its inception in 1906, by General Mills that continued to launch expensive price and promotion campaigns. To cover the rising cost General Mills raised prices in 2001 and competitors soon followed the trend. However, both Kellogg and General Mills tried to move further away from price competition in the industry by diversifying and focusing on brand extensions such as Special K on the behalf of Kellogg and new varieties of Cheerios. Special K was instrumental and helping Kellogg recapturing its market leadership position from General Mills and this renewed focus on non-price competition halted years of damaging price warfare (Hill, Jones, 2009, p. 52). Target markets The breakfast cereal industry targets several diverse markets but focuses upon two large ones namely the baby boomers and their children. Since a high proportion of the baby boomers are highly educated, health appeals are paramount. Thus many brands have placed emphasis on various types of oat-bran cereal. The other sizeable market, targeted to children is also highly developed. Various brands have successfully used sports personality and trade characters such as Tony the Tiger to attract the children towards their products and retain brand loyalty. The breakfast cereal industry has been adept at target market segmentation and promoting favorable brand images. The strategy of the overall industry especially Kellogg, the market leader, has been to provide a comprehensive assortment for the retailers targeting specific market segments (Michman, Mazze, 1999, p. 109-111) Competition Breakfast cereal industry faces competition from hand-held breakfast products such as bagels, muffins, doughnuts etc. These have in fact led to a decrease in the growth of the breakfast cereal industry. The industry also faces competition from frozen waffles, pancakes, and French toast brands which have proved to be a concern both in the past and the present. Many analysts consider that the competition is due to the change in dietary habits, though some also say that this has been due to th increase in cereal prices for the branded segment (Michman, Mazze, 1999, p. 112-113). Advertisements and Promotional activities From the time of WH Kellogg, the breakfast cereal industry has been dependent on marketing strategies and expensive promotions. In fact in 1909 itself the advertisement budget of Kellogg had reached 1 million per annum. Needless to say this is a major problem in the industry which has become price sensitive in present times. This activity has led to a decrease in profits and considering that the market share has not increased since the 1990s, this has become even more of a problem. There were also many insufficiencies generated by coupons and in-store promotions. For instance, more than 95 percent of the cereal coupons were thrown away and not redeemed and approximately half of the promotional expenditures did not reach the consumers in the form of lower prices. Because of these inefficiencies, as well as congressional investigations and competitive treats, the breakfast cereal industry has moved to lower prices. As the returns earned by the cereal manufacturers exceed most other grocery products, there is fierce competition among manufacturers (Michman, Mazze, 1999, p. 113-114). Factors contributing to success and failure There are a combination of variables that contribute to the successes and failure of the breakfast cereal industry. These variables and strategies include innovation, target-market segmentation, image, physical environment resources, and human resources. Such factors must be combined in various degrees for success. The breakfast cereal industry has shown innovation in product and packaging strategies. In addition to this, breakfast snack bars are a new innovation. The image of the breakfast cereal industry has been positive enough to withstand the assault of private-label brand sot a large extent. Also cereal manufacturers with their successful track records and huge advertisement budgets do not have much difficulty in convincing retailers to give their new product introduction a chance. In 1970s, Kellogg designed shelf space allocation programs for supermarkets. Sophisticated computers and programs developed by members of the breakfast cereal industry now help to allocate shelf space according to turnover. The breakfast cereal industry has also been successful in designing packaging for shipping and for display purposes. To sell their product brands and retain the company brand value, the breakfast cereal manufacturers have developed the strategy that links the brand name to the company name instead to identifying brand products by their individual brand names. For instance, Kellogg’s Rice Krispies and Special K, as well as General Mills’ Total Raisin Bran and Total Corn Flakes use this strategy. To fend off private brand competition by offering product line depth and high brand identification (Michman, Mazze, 1999, p. 114-115).

The US National Debt

â€Å"Spending financed not by current tax receipts, but by borrowing or drawing upon past tax reserves. † Is it a good idea? Why does the U. S. run a deficit? Since 1980 the deficit has grown enormously. Some say it is a bad thing, and predict impending doom, others say it is a safe and stable necessity to maintain a healthy economy. For nearly 150 years the U. S. government managed to keep a balanced budget. The only time a budget deficit existed during these years was in times of war or other catastrophic events. For instance, the government created deficits during the War of 1812, the recession of 1837, the Civil War, the depression of the 1890s, and World War I. However, once each incident ended the deficit would be eliminated. The economy was much stronger than the accumulated debt and would therefore quickly absorb it. The last time the budget ran a surplus was in 1969 during Nixon’s presidency. Budget deficits have grown larger and more frequent in the last half-century. In the 1980s they soared to record levels. The government cut income tax rates, greatly increased defense spending, and didn’t cut domestic spending enough to make up the difference. The deep recession of the early 1980s reduced revenues, raising the deficit and forcing the Government to spend much more on paying interest for the national debt at a time when interest rates were high. As a result, the national debt grew exponentially in size after 1980. It grew from $709 billion to $3. 3 trillion in 1990, only one decade later. (See Table 1) Federal spending has grown over the years. If you compare actual dollars and their proportion to the economy (Gross Domestic Product, or GDP), much of it began in the 1930s. Beginning with the â€Å"New Deal†, the Federal Government came to play a much larger role in American life. President Franklin D. Roosevelt sought to use the full powers of his office to end the Great Depression. He and Congress greatly expanded Federal programs. Federal spending, which totaled less than $4 billion in 1931, went up to nearly $7 billion in 1934 and then over $8 billion in 1936. U. S. entry into World War II sent annual Federal spending soaring to over $91 billion by 1944. Thus began the ever-increasing debt of the United States. Is our debt increasing as fast as we think it is? The dollar amount of the debt may increase but often times so does the amount of money or GDP to pay for the debt. Some believe a deficit allows more people to work, increasing productivity. A deficit does this because it is invested into the economy by government. For example, if the government spends deficit money on new highways, trucking will benefit and more jobs will be produced. When an economic system is in recession all of its resources are not being used. For instance, if the government did not build highways we could not ship goods and thereby decrease demand for them. Because we cannot ship the items, the supply remains low even though we have the ability to produce more. This non-productivity comes at a cost to the whole economic system. If deficit spending eliminates non-productivity then its direct monetary cost will be offset, if not surpassed, by increased productivity. In the 1980’s when the huge deficits were adding up, the actual additions to the public capital or increased productivity were often as big or bigger than the deficit. This means that as long as the government spends the money it gains from a deficit on assets that increase its wealth and productivity, the debt actually benefits the economy. But what if the government spends money on programs that do not increase its assets or productivity? Consider small businesses for instance. A company invests money to hire a new salesman. He will probably increase sales and the company will regain what it spent hiring him. If the company spends money on paper clips when they already have staplers they will just lose money. This frivolous spending is what makes a deficit dangerous. The government’s net worth decreases which risks putting it into serious debt. Debt should not be a problem because we can just borrow more, right? This statement would be correct if our ability to borrow was unlimited, but it is not. At first the government borrowed internally from private sectors. The government did this by selling bonds to the private sectors, essentially reallocating its own countries funds to spend on its country. This works fine in a recession, but when the country is at or near its full capability for production it cannot increase supply through investment of deficit dollars. Deficit dollars then translate into demand for goods that aren’t being produced. Referring back to the small business example, if a company is selling all the products it can produce they can still hire another salesman. However, since there are no more goods to be sold, the salesman only increases the number of consumers demanding the product. The problems of deficit spending out of a recession even out through two negative possibilities, inflation and crowding out. Inflation means there is more demand or money than there are goods this causes an increase in prices and drives down the worth of the dollar. This depreciation of the dollar counters the cost of the deficit but destroys the purchasing power of the dollar. A five-dollar debt is still a five-dollar debt even if the five dollars are only worth what used to be a five-cent piece of bubble gum. Despite its danger, inflation is used to some extent to curb the debt. Crowding out is when the government is looking for the same capital that the business sector wants to invest. This causes fierce competition for funds to invest. The fierce competition causes an increase in interest rates and often business will decide against further investment and growth. The government may have the money to build new highways but the truckers cannot afford trucks to use on them. The governments needs will â€Å"crowd out† business needs. This turns potential assets into waste. However, there is a third option that would allow the government to run a deficit and avoid the negative aspects of inflation and crowding out. Borrowing from foreign sources is a tangible and recently very common practice. Attracted by high interest rates and stability, foreigners now buy huge amounts of U. S. national debt. Of course this cannot be the perfect solution otherwise no one would be concerned about the debt. The problem with borrowing from external sources is the lack of control the government has over foreign currency and debts. Internal debts can be paid with increased taxes, inflation, and other monetary controls the government has. External debts can extremely damaging to a country if it cannot buy enough of the foreign currency to pay the interest. Running a deficit is apparently good for an economy that is operating inside its production possibilities curve but it can be damaging to an economy otherwise. A deficit managed properly has the effect of increasing demands. An economy inside its curve can increase supplies in reaction. An economy on the curve can increase demand but its supplies cannot increase causing prices to rise, or inflation. If there is no deficit and the curve shifts to the right then supplies will not increase and the country will no longer be operating on the curve. A deficit must be maintained to insure that the economy grows with its resources. Is the US’s current debt bad or good? The trick is finding out how large the deficit should be in order to allow for growth without waste. The US’s deficit is bad at this point because the U. S. is close to its maximum production capabilities, and deficit money is being wasted. For example two of the largest portions of the budget: defense and social security. Defense spending produces little or nothing except in times of war. The way social security is managed creates a huge waste. As managed, social security is money spent to immobilize a large and fairly capable part of the work force. It encourages elderly people not to work by spending deficit money on them. Reducing productivity and increasing the debt at the same time. In its current state, the U. S. should attempt to reduce its deficit. However, eliminating it is not necessary and could do more damage than good.