Friday, November 15, 2019

Impact of Financial Crisis on Islamic Banks

Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title Impact of Financial Crisis on Islamic Banks Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title

Tuesday, November 12, 2019

Samsung Case Study

Strategy Presentation on Countering Threat from Chinese Company BBackground ackground †¢ Samsung founded in 1938 by Byung-Chull Lee. †¢ 1950’s Economic Stabilization – Korean War – Samsung lost all assets – aimed to help rebuild Korean economy; entered the manufacturing industry (sugar, fabrics) – became a leader in modern business practices (recruiting from outside) †¢ 1960’s Expansion of Key Industries – entered electronics and chemical industries – 1969 established Samsung Electronics Co. as a division of the Samsung Group. In 1970s, Samsung's entry into the semiconductors business was pivotal for the company, to that end, creation of Samsung's semiconductors and telecommunication Co. in 1978. – – – laid the groundwork for electronics in Korea helped the domestic economy grow paved the way for exports †¢ 1980’s: Samsung was manufacturing, shipping, and selling a wide range of ap pliances and electronic products throughout the world. – – – A more comprehensive electronics company established Semiconductor and Communication corporation began memory chip business †¢ Early 90’s: Integration and Globalization – – Sales at Samsung Group grew more than 2. times between 1987 and 1992. Mid-Late 90’s: Implementing new management strategies Samsung Product Range Some of Samsung products Home Multimedia Mobile Multimedia Personal Multimedia Core Components Core-Competencies Samsung- Core Competencies High Quality Standards Superior Efficiency Innovation Drive Customer Responsiveness Reliable Products †¢ Reliable Products †¢ Work with design firms †¢ Located main R&D †¢ Learning new design †¢ Employee welfare facility and fabs at rules and application †¢ Active Recruitment a single site †¢ A common design of foreign Talent †¢ Performance platform with †¢ Global Strategy as ed promotion customization as per Group †¢ Reward but requirement †¢ Employees global no Firing business skills Policy Ability to customize product to †¢ Regional Specialist †¢ Debate based customer demands program agreements Increasing Competition Rank Company Market Share 1 Samsung 34% 2 Hynix 22% 3 Micron Technology 15% 4 Elpida Memory 14% 5 Qimoda 5% Industry Analysis: Porter’s Five Forces †¢ Fierce Rivalry due to increase in capacity & cyclical downturn Industry †¢ Entry of new Chinese companies Rivalry †¢ Suppliers are likely to becomes more concentrated and offer about 5% discount on bulk purchaseSupplier †¢ Buyers are largely OEM with no one controlling more than 20% of the market. Buyers †¢ Buyers are likely to negotiate hard for prices. Entry Barrier Substitute †¢ High entry barriers due to requirement of capital investment and complex †¢ Chinese firms going for joint ventures and access to foreign investment. à ¢â‚¬ ¢ Memory chips did not have any substitutes but old technology is likely to be replaced by more advanced technology. SWOT Analysis Strength Weakness Opportunity Threats †¢ Diversified product line to cover all customer needs †¢ High market share in Mobiles, Memory Chips and LCD High Brand value from multiple sponsorships †¢ High investment on research and development †¢ Customers place question on durability of products †¢ Lack of focus on niche market †¢ Low Average salary in the market †¢ Strong and growing customer demand for high-end products †¢ Young population gives a chance to develop customer base for future †¢ Intensifying competition †¢ Low cost Chinese products †¢ May lose advantage of DRAM technology to new Nana Tech Competitive Advantages of Chinese Firms †¢ Access to cheap labour and local engineering talent †¢ Government subsidies †¢ Easy access to local & international financial capital Lower cost structure †¢ Willing to endure years of losses to gain market share Competitive Advantages of Samsung †¢ Dedicated workforce of manual labourers and engineers †¢ Strong product portfolio †¢ SDRAM, DDR SDRAM, DDR2 SDRAM, RDRAM, other DRAMs †¢ Early mover advantage in increasing wafer-size †¢ Sustained levels of high operating margins †¢ Adoption of â€Å"stacking† method for fabrication Competitive Advantages of Samsung †¢ Strategic co-location of R&D and fabrication facilities †¢ Enabling an efficient cost-structure †¢ Favourable environmental conditions †¢ In-house competitions for new product developments Active involvement of junior staff and engineers in discussions regarding new products leading to innovation Competitive Advantages of Samsung †¢ Strong HR Policies †¢ †¢ †¢ †¢ Investment in employees’ higher education Active recruitment of foreign talent Goodwill towards employees 3 levels of Performance-based incentives †¢ Project-based incentive †¢ Productivity-based incentive †¢ Profit-based incentive Strong Financials Samsung Micron Infineon Hynix SMIC COGS/Sales 23% 44% 33% 44% 32% SG&A/Sales 12% 26% 9% 16% 8% R&D/Sales 11% 13% 14% 13% 18% Labor/Sales 11% 21% 16% 11% 8% Sales 5. 08 4. 48 4. 73 4. 58 4. 3 COGS 1. 19 1. 98 1. 57 2. 01 1. 84 SG&A 0. 59 1. 18 0. 44 0. 74 0. 34 R&D 0. 56 0. 56 0. 67 0. 61 0. 8 Labor 0. 54 0. 94 0. 75 0. 51 0. 34 Lower Raw material, Labour, Depreciation, R&D costs. Higher Selling Price! Resulting in better financial indicators: Lower COGS/Sales Lower SG&A/Sales Lower R&D/Sales (Exhibit 7d) The Big Question Can Samsung weather the Chinese Threat? Yes, Samsung continues to retain and gain market share. Samsung has a high brand value- Can leverage on Brand Equity. Wide Range of Product Offerings for sustenance. Deterring New Entrants Strategies to deter new entrants StrategyNiche Products Price Cut Cut down on pric e and Innovate on niche force a price war and products and drive competitors out explore new of the market markets Excess Capacity Acquisition Increase output and Acquire small force down prices to entrants with good make market entry potential to perform unprofitable Way Forward †¢ Keep Innovating and Invest heavily in R&D †¢ Focus on New Niche Products †¢ Maintain Reliability and Quality of Product †¢ Focus on More Foreign talent including talent from China as well †¢ Invest in lower end chip factories in china †¢ May look towards increasing the average salary Thank You

Sunday, November 10, 2019

Alcoholism results in health problems

Alcoholism can be described as a psychiatric disorder and nearly fourteen percent of the people suffer from this disorder. Generally this disorder is accompanied by various other psychological disorders such as anxiety, unstable mental condition and a deviant personality.Alcoholism results in health problems that could result in death and it is usually not identified in the traditional clinics (American Psychiatric Association, 1994).At present, the availability of screening instruments is of great help in recognizing that problem of drinking, which is known as the pre – alcoholism condition.The mortality rate due to alcohol is estimated at a hundred thousand deaths per annum. Moreover, alcohol abuse accounts for morbidity and mortality. Some of the other disadvantages associated with alcohol abuse are social and legal problems, violence and accidents (American Psychiatric Association, 1994).Dependence on alcohol is on the increase and it leads to the abuse of alcohol. The pro blem of alcohol abuse is not restricted only to men but is also present in women. Therefore it can be concluded that the incidence of alcoholism is increasing in society irrespective of the sex of the person concerned. Alcoholism starts as a habit in adolescence and forty percent of alcoholics develop it between the ages of fifteen years and nineteen years (Helzer JE, 1991).Alcoholism has been recognized to be more prevalent in males since the number of male alcoholics is more than that of females. However, the research conducted by Oregon Health & Science University and Portland Veterans Affairs Medical Center reveals that female alcoholics are more susceptible to undergo damage of the cells in the brain due to alcohol abuse than male alcoholics (Alcohol Abuse More Likely To Cause Brain Damage In Females, 2007 ).Alcohol controls the central nervous system and acts as a depressant, consequently, the consumption of large amounts of alcohol would result in the inhibition of excitatory centers in the brain. Some of the indications of alcohol abuse are impairment of rational thinking, deprivation of motor coordination in the body, cirrhosis of the liver, presence of peptic ulcers, gastritis, pancreatitis and carcinoma. A few examples of the cardiovascular effects of the abuse of alcohol are hypertension and cardiomyopathy (Amy Cohagan, 2005 ).Alcohol inhibits neurological activities and results in peripheral neuropathy which could lead to ataxia, wernicke encephalopathy, Korsakoff psychosis and brain damage and dementia. Male alcoholics generally suffer from impotency caused by the deficit of the testosterone hormone, which is inhibited by alcohol.This hormonal deficiency results in testicular atrophy and gynecomastia. In females, fetal alcohol syndrome could occur, which damages the fetus and thus the new born would be at risk of suffering from mental retardation, facial deformity and other neurologic problems (Amy Cohagan, 2005 ).Society can prevent alcoholism t o a major extent by prohibiting advertisements pertaining to alcoholic beverages and by severely restricting their availability. In addition, physicians can appraise their patients about the pitfalls of consuming alcohol (Goodwin).The modern day world is beset with the scourge of alcohol abuse, especially in the developed world. The worst fallout of alcoholism is the increasing addiction in adolescents and young adults, because it engenders an increase in the loss of life. Moreover, traffic accidents increase exponentially due to drunken driving.Doctors, employers, society and a person’s family constitute a number of important social groups that can contribute to a major extent in preventing a person from becoming an alcoholic. This is due to the fact that family members have a greater influence and are therefore eminently suited to highlight the dangers inherent in becoming an alcoholic. Moreover, it is possible for employers to employ economic and compassionate strategies t o discourage this malaise.ReferencesAlcohol Abuse More Likely To Cause Brain Damage In Females. ( 2007 , July 30 ). Retrieved August 14, 2007, from http://www.medicalnewstoday.com/articles/77987.phpAmerican Psychiatric Association. (1994). Diagnostic and statistical manual of mental disorders. Washington, D.C.: American Psychiatric Association.Amy Cohagan, D. ( 2005 , March 16). Alcohol and Substance Abuse Evaluation. Retrieved August 14, 2007, from http://www.emedicine.com/EMERG/topic20.htmGoodwin, D. W. (n.d.). Attacking the problem. Retrieved August 14, 2007, from http://search.ebscohost.com/login.aspx?direct=true&db=hxh&AN=7553701&loginpage=Login.asp&site=ehost-liveHelzer JE, B. A. (1991). Alcohol abuse and dependence. Psychiatric disorders in America: the epidemiological catchment area study , New York: Maxwell Macmillan International,81-115.

Friday, November 8, 2019

Focault Analysis Essays - Military Education And Training

Focault Analysis Essays - Military Education And Training Focault Analysis The Manufacturing of an American Soldier: An Examination of the Indoctrination Process During the Gulf War at Fort Knox, Kentucky As a soldier, you have accepted a solemn obligation to defend the ideals of freedom, justice, truth, and equality as found in The Declaration of Independence and the United States Constitution. Whether you are serving a single term or making a career of the military, your actions should never be contrary to the ideals and principles upon which this nation was founded. - Department of the Army, Soldier's Handbook (62) In February of 1991, Bravo Troop of the 5/15 Cavalry stationed at Fort Knox, Kentucky Training Facility performed a ritualized, ceremonial examination of its new recruits. The recruits arose at four a.m. and marched till eight to arrive at a small, secluded building surrounded by forest. The recruits stood in a single-file line facing the entrance of the building, eyes forward, feet shoulder width apart, hands folded in the small of their back. Approximately one hundred and twenty recruits stood peering through the lenses of their protective masks, watching fifteen soldiers enter the building. Once inside the building, the fifteen recruits stood at attention, fingers curled, thumb locked on second knuckle of the index finger, hands placed at their sides, heels together, feet splayed at a forty-five degree angle, stomach in, chin-up, eyes forward, in three lines, five recruits deep, facing the Drill Instructor. The room was filled with thick, white smoke. The only light came from a sm all fire burning on the cement floor at the drill instructor's feet. Beside the fire was a metal, olive-green container labeled in black, block lettering the read, Solid CS Agent. The Drill instructed the recruits, still standing at attention, to remove their protective masks, which they did with little hesitation. Exposure to such high concentrations of CS gas produces a violent, bodily reaction that cannot be refused. Once the face is exposed, the valve connecting the lungs to the windpipe involuntarily closes. Those who were able coughed quietly to themselves for lack of air while others vomited silently. The eyes, once exposed to the irritant, attempted to flush the gas away with profuse tearing. Likewise, the nose made an effort to remove the irritant. Thick ropes of mucus hung from the recruits' noses, some of these ropes reaching as far down as the knees on shorter soldiers. The fifteen recruits tried to stand at attention, fingers curled, thumb placed on second knuckle of index finger, hands at their sides, heels together, feet splayed at a forty-five degree angle, stomach in, chin-up, eyes forward, in three straight lines, five recruits deep, facing the drill instructor with a mixture of mucus, tears, and vomit smeared across their bodies. The drill instructor, still wearing his protec tive mask, walked to the first recruit and demanded to know the maximum effective range of an M16-A2 rifle. The recruit barked back something unintelligible, his mouth making dumb O shapes. After the drill seemed satisfied, he dismissed the recruit, who then ran out the back door of the building. The drill made his way down the line, examining each recruit individually in order to make sure that the correct level of docility had been exercised, while simultaneously administering his power to set each recruit free. Apparently, I had a lot to learn. *** The point of this essay is to examine the American military's indoctrination of the new recruit. In many ways, this essay will echo and hopefully build upon the work of Michel Foucault, particularly Discipline and Punish. As Foucault admits in Discipline and Punish, There can be no question here of writing the history of different disciplinary institutions, with all their individual differences. I simply intend to map on a series of examples some of the essential techniques that most easily spread from one [institution] to another (139). Since Foucault never intended a specific application in Discipline and Punish, the purpose of this essay is to examine the ways in which Foucault's theories concerning discipline play out in actual practice at a specific place in time, namely that of the Fort Knox Training Facility during the height of the Gulf War. This particular historical event offers a snapshot of the American indoctrination

Wednesday, November 6, 2019

43 Data-Driven Headline Ideas From 1,000 Popular Posts

43 Data-Driven Headline Ideas From 1,000 Popular Posts So far,  the 16,312 people who rely on for their all-in-one marketing calendar have scheduled 4,302,684  blog posts. Thats a lot of blog headlines. And were data junkies. The result? We nerded out pretty hard core. It was time to analyze all of the blog posts  in our system  to understand what headline ideas perform the best on social media to not only help you write better headlines, but also help you get the most social shares for your hard work  when you schedule your  social media  right in . To top it off, it was high time you had access to this data right in your marketing calendar to help you write great headlines every time. So next time you log in to , check out your  all-new headline analyzer integration to help you choose the best headline for your blog posts to help you get the social attention and traffic your content deserves. Lets take a look at the 1,000 most popular headlines weve ever seen,  focusing on the structure of very shareable headline ideas. First, a tangent: There are many factors at play here that made these 1,000 blog posts successful. Were  they  long-form blog posts? Did influencers write them? How did the editors promote these posts? I could name off a bajillion questions about the quality of the content. So this  data analysis focuses  purely on the headlines themselves and not the context of the content behind them. That's why there are a few things to keep in mind: A significant majority of these blog posts received the bulk  of their social shares from Pinterest, meaning they had some awesome visual content embedded into their blog posts. Many of the blogs  are optimized to increase social shares using WordPress plugins and social media  buttons. Every blog's audience is different, and some audiences may be more likely to share than others. Also, some audiences prefer certain networks over others. This data is no indicator of pageviews or the ultimate goal of content marketing to convert any traffic into profitable customer action. But, it's worth mentioning that from this data sample, an average blog post received: 18,700 Facebook shares,  22,997 likes, and 7,810 comments 252 Tweets 621 LinkedIn shares 304,934 Pins So there  are definitely lessons to learn  since only two of  10 people who see your headlines actually click through to read your blog posts. 1. A significant majority of headlines are generic,  essentially only targeting a keyword. An overwhelming amount of headlines in this study were generic- meaning they didn't contain any value proposition or helpful information to connect with the readers' emotions. I've heard headlines like this called label headlines before, and they look something like this: Wedding Budgets While  generic headlines work, you could improve this headline even more to connect with an emotion that could generate even more social shares: How To Stretch Your Wedding Budget To Make It The Perfect Day It's not an exact science, but your audience gets a better feel for what they'll discover after clicking through to read your content while connecting to an emotional need to stretch a smaller budget. The data we used to build the headline analyzer suggests the latter example here should perform  better than the original for increasing social shares and clickthroughs. Make your #headlines appeal to emotion to get more clickthroughs.2. People share blog posts with numbers in blog headlines. About 11% of the blog posts in this study began with  numbers in the headlines. Some of these were list posts, some mentioned  completing tasks in a specific amount of time, and some included steps. There is something about data that draws people into these headlines- setting an expectation and promising a quick solution to a problem. Data from Conductor and cited through Backlinko suggests that headlines with numbers get 36% more clickthroughs than those without, and this new data seems to complement what Conductor found, suggesting that headlines with numbers get more shares than those without. But  Conductor data suggests that odd numbers tend to perform better.  Data from this study suggests the opposite. Of these popular headlines that contained numbers, 49 contained odd numbers while 58 of them contained even numbers. The most popular numbers used in headlines were: 15 and 20 tied for the  most popular 30 came in second place 10 took third place 5 came in fourth place 3 and 25 tied for fifth place 7, 16, and 50 tied for sixth place Think odd numbers perform best in #headlines? Think again [new research].3. List posts are the most popular structured headline that people share. Those numbers you just read about? Most of them were part of list posts. Yep, they still work. 4. How to headlines still work. It was surprising to find only 4% of the headlines in this sample contained how to  in them. But even with just a small amount, these still performed super well among the larger group. 5. Include header images to  drive tons of shares through Pinterest. While you might have the greatest headline and content in the world, it won't drive shares on Pinterest unless you complement  your blog post with awesome visuals. The average blog post from this study received more than 300,000 Pins on Pinterest because they included visual content. Even if they contained a generic headline,  these blog posts had to have awesome visuals to drive those shares. 6. Focus on self-reliance, ease, and time-savings. DIY appeared in 5% of the headlines. That's even more than how to! A  similar  percent  contained the word minute, taking an idea and letting the reader know how easy using the information from the blog post would be: $5 + 30 Minute Wooden Growth Chart Some of the blog  headlines also focused on helping readers do something with the tools they already had, without the need to buy anything new.  Overall, it seems that in no matter what industry- or even business-to-business or business-to-consumer- there is a common need to save time and money. 7. Question headlines  are under-used. Only two headlines in this study used questions to inspire curiosity. That runs contrary to other data we've analyzed that shows that question headlines are one of the top-performing types of headlines. Essentially, this means there is some opportunity for you to use question headlines to stand out from your competition. Recommended Reading from Neil Patel: The 6 Types Of Social Media Content That Will Give You The Greatest Value When we started analyzing our Twitter data to help us improve every tweet we send, we found that open-ended questions tend to  get more clickthroughs than other headline ideas. Sometimes, that disparity hit as much as 32%! So appeal to the fear of missing out in your social messages by sharing headlines like... Does Your SEO Content Strategy Focus On Buying Intent? Get Customers, Not Just Traffic. ...to  encourage more clickthroughs to your content. What would happen if you used questions as your #headlines?8. New types of blog posts may have an opportunity to stand out. A few of the blog posts had unusual headlines that nearly focus on the absurd to inspire clickthroughs and social shares: 135 Easy Elf on the Shelf Ideas That is a ridiculously high number, meaning folks looking for that information probably only need a single source to answer all of their questions on the topic. Those examples made me think of the best types of blog posts that help you grow traffic. When Aman Thakur explored the topic, he found: Long list posts get more backlinks. There were several  posts in this study that hit large numbers like 99, 100, 101, 135, and even 173 that really stood out from the others. Research-backed, data-driven posts get more traffic. Only a small amount  of the headlines included percentages or growth numbers. Personal success stories can  turn traffic into profit. Another small number of blog posts told very personal stories- some of them almost satirical. New method posts can coin new terms and change the industry.  Only very few of the blog posts in this study coined new terms for their processes, but when done, they were done well. Infographic  posts  get more shares.  Again, tons of these blog posts performed really well on Pinterest, so this seems like very good advice. Expert advice posts help you steal their audience. Some of the  headlines  in this study mentioned influencers' names to either take their idea  and build on it, or as an actual interview with the influencer. Takeaway: These ideas are data-backed, proven to increase your traffic. Yet it looks like these are new wave types of blog posts  that not many have explored yet. That means there is ample opportunity for you to use these headline ideas to stand out. 9. Some words make for very shareable headlines. Nearly 5% of all the headlines in this sample contained the word easy, another 4% used you, and 2% contained best. It looks like it works to focus on providing the best possible information to use as easily as possible all while targeting your audience directly in second-person narrative. Don't be afraid to test lesser-used adjectives to inspire some interest in your  blog posts: Stop Searching For A Magical Exercise Routine Pulling information from previous research, check out this  huge list of 500+ emotional words that will help you write better headlines with some uniquely powerful words. 10. There is opportunity to improve headlines to be more emotional. The average score of these posts is a 32 with the  headline analyzer, getting a C- grade. Woops. That's why even when you're publishing  really great content, we decided to help you  write better headlines by integrating that headline analyzer directly into so  you can see your score, write a few more headlines to publish every blog post with a  more emotional headline, and even get inspiration for sharing alternative headlines on your social networks. You can get started with the free headline analyzer now, and when you want to plan awesome content, just know it's waiting for you in your marketing calendar right in . ;) The Key To 43 Data-Driven Headline Ideas One of the things that's most useful with this data  is checking out the structure of successful blog headlines to give you new headline ideas. Consider this a way to find new angles for your blog posts and get a bit of inspiration from headlines that have already performed extremely well. This is going to feel like a lesson of filling in the blanks. Here's what you need to know as you get started with your headline ideas: [Brackets]: Anything in brackets is where you'll enter your own words to take a successful headline idea and make it your own. #:  Enter a number. Adjective/superlative adjective: Write in a word that describes your noun. Noun:  In most cases, think of this as your keyword for the blog post. Verb: Think of your headline like a call to action- tell your readers exactly what they should do. Adverb: Coupled with your verb, make it sound super easy to do what you're telling them to do. Audience: Think about your target audience and words they'd relate to, and literally call them out in your headlines. Present/past participle: Think of a verb in motion. Alright, some of that  might sound scary to those of you  who didn't pay attention in grammar class (you know who you are). And that's just fine. Follow the headline idea examples and you'll do great! Make it sound so easy it's silly  not to read your blog post. 1: Easy [Adjective] [Noun] (Our Favorite [Noun]) Easy Pull Apart Pizza Bread (Our Favorite Recipe) 2: [#]-[Noun] Easy  [Noun] 5-Ingredient Easy White Chicken Chili 3: [#] [Adjective]  And [Adjective]  DIY  [Noun] 60 Cute and Easy DIY Gifts in a Jar | Christmas Gift Ideas Position your blog post as an ultimate guide. 4: [#] [Adjective] Ideas For Every [Noun] 50 Organizing Ideas For Every Room in Your House Instigate  interaction and engagement. 5: Find Your [Noun]  With Our [Noun] Quiz #15daystoDDG : Find your muse with our Style Stalker quiz (day 4) Appeal to your readers' emotion to save money. 6: [Verb] These [#] [Noun] For [Adjective] [Noun]! Contact These 173 Manufacturers for High Value Coupons! 7: [#] Free [Noun] 20 Free Handwriting Fonts Help your readers save time. 8: [#]-Minute [Adjective] [Noun] 8-Minute No Crunch Ab Burner 9: $[#] + [#]-Minute [Adjective] [Noun] $5 + 30 Minute Wooden Growth Chart Intrigue your readers with a mystery. 10: [#] Tips For [Audience] (Number [#] Is A Game Changer) 45 Tips For Men (Number 40 is a Game Changer) Call out your audience directly. 11: [Audience]: You'll Thank Me Later (And For The Rest Of My Life) Coffee And Tea Lovers: You'll Thank Me Later (And For The Rest Of My Life) Write a truly unique headline to capture  interest. 12: [Noun] (Inspired By [Noun]) Bare Necessities Fresh Fruit Pops (Inspired by Disney's The Jungle Book) 13: [#] Unspoken [Noun] Rules Every [Audience] Should Know 27 Unspoken Suit Rules Every Man Should Know 14: A [Noun] Of [Noun]- [#] [Noun] Ideas A Hodge Podge of Mod Podge- 10 Mod Podge Ideas Share your value proposition. 15: [#] Ways [Noun] Will Improve Your Life 9 Ways Apple Cider Vinegar Will Improve Your Life 16: [#] [Noun]  Hacks You Won't Want To Forget 25 Sewing Hacks You Won't Want to Forget Focus on a very specific use case. 17: [#] [Adjective] [Noun] To Try On Your Next [Noun] 18 Mouthwatering Breakfast Recipes to Try On Your Next Camping Trip 18: [#] Things To Do With [Noun] 27 Things to Do With Cake Mix Show your readers how to do something better than ever. 19: How To [Verb] A [Noun] With [Noun] How To Clean A Microwave With Vinegar And Steam! 20: How To [Verb] [Noun] With A [Noun] How To Clean Grout With A Homemade Grout Cleaner 21: How To Make A [Adjective] [Noun] The Easy Way How To Make a Large Monogram Cutout The Easy Way 22: How To [Verb] Your [Noun] (In [#] Mostly Easy Steps) How To Stage Manage Your Wedding (In Six Mostly Easy Steps) Stand out with large list posts. 23: My [#] Best [Noun] My 101 Best Disney World Tips 24: [#] Things You Might Be Thankful For About Your [Noun] 99 Things You Might be Thankful for about Your Husband 25: [#] Easy [Noun] Ideas 135 Easy Elf on the Shelf Ideas This is #TheBestEver. 26: The Best Ever [Adjective] [Noun] Solution For [Noun] The Best EVER Homemade Carpet Cleaning Solution for Machines Entertain your readers. 27: The [#] [Superlative Adjective] [Noun] Of All Time The 50 Funniest Tumblr Posts Of All Time 28: [#] Of The [Superlative Adjective] [Noun] We've Ever Seen 99 Of The Funniest Pinterest Pictures We've Ever Seen Be honest, and tell your own story. 29: [#] Things I Wish I Knew About [Noun] 20 Things I Wish I Knew About Photography Posing 30: How I [Verb] [Noun] For The Week how i prep food for the week 31: I Am Always Sure About [Noun] I Am Always Sure About What I Don't Want Shock your readers with something unexpected. 32: [#]  Reasons To [Verb] [Noun] Daily 16 Reasons to Have Sex Daily 33: What's That [Noun]? DIY [Noun] For The [Noun] What's that smell? - DIY Poo Fragrance Spray for the Bathroom Go against the grain. 34: Forget The [Noun], Try This [Noun] Forget The Chocolate Bunny, Try These Easter Sweets 35: Stop Searching For A [Adjective] [Noun] Stop Searching For A Magical Exercise Routine Share case studies of past success. 36: Welcome To [Noun]: [Noun] [Verb]  [Noun] With Next To Nothing Welcome To "Bestie Row": Lifelong Friends Build Row Of Tiny Houses In The Middle Of Nowhere. Be inspirational. 37: When You Feel [Past Participle] when you feel shaken. 38: [#] Ways To [Verb] [Adverb] 5 Ways to Fail Gracefully Why not rant a bit- or go to the extreme? 39: Dear [Audience]: You're Not [Present Participle] Dear Teachers: You're Not Fooling Me 40: The Subtle Art Of Not [Present Participle] The Subtle Art of Not Giving a F*** Note: The original headline spelled out that expletive, definitely catching an unsuspecting audience off guard. Expect a few (OK, a ton of) four-letter curse words if  you click through. Blog post series still work. 41: [#] Days To Great [Noun] [Series #]: [#] Ways To [Verb] With Your [Noun] 29 Days to Great Sex Day 10: 16 Ways to Flirt with Your Husband Build on your previous success. 42: [#]+ More [Adjective] [Noun] Ideas 16+ More Creative Garden Container Ideas 43: [#] Things I Wish I Knew About [Noun] 20 Things I Wish I Knew About Photographing in Manual Mode Note: This one is awfully similar to #29, isn't it? The same blogger saw the success from her first headline structure like this and repeated it. The result? The second post was also super successful at capturing  social shares. Find what works for your audience and repeat your success. Bonus! A Few Of 's Most Popular, Super Cool, Non-Lame Headline Ideas has a top posts feature built into it to help you review what's popular. Here's a glimpse of the most-shared headlines on the blog: Now It's Your Turn To Rock These Headline Ideas I recommend taking some advice from Upworthy as you get started with these headline ideas: Write 25 headlines for every blog post. Not only can you use all of the data and examples from this post for inspiration, that practice will help you write better headlines every time- and consistently. When I started writing at least 25 headlines for every post, our traffic started taking off slowly but surely. We were able to reuse some of the best headlines in our social messages and email A/B tests. I'm telling you that this works- and that's one of the reasons we built the headline analyzer right into to help you get the most out of every blog post you publish. Good luck, and tell me all about your headline journey! I'd love to hear more about your headline ideas.

Sunday, November 3, 2019

Management Assignment Example | Topics and Well Written Essays - 2000 words - 1

Management - Assignment Example He defines leadership as follows: â€Å"Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. Leaders carry out this process by applying their leadership attributes, such as beliefs, values, ethics, character, knowledge, and skills† (Clark, 2008, para.3). Leithwood & Riehl (2003) posit that a good leader has a clear vision of where he is going and sets directions to others towards that vision. He collaborates with other people on ways and means to reach their goals and not focus the authority on himself. In doing so, he empowers them to be confident in their abilities and motivates them to welcome challenges and opportunities. Because of his positive influence, he gains the respect of everyone to follow his lead while pursuing a common mission for the growth and development of the organization. For me, such a leader is leading a noble course in his life, one who makes a difference in other people’s lives and one who leaves a valuable legacy behind. The course on leadership included a large chunk on motivation. A leader needs to be able to motivate his team members. Handy (1999) reports that the initial goals of motivation research was to encourage individuals to provide better service to their employers by exerting more effort and maximizing their talents at work. Having a well-motivated workforce may be equivalent to better work productivity and success in the achievement of goals for the organization. Additional advantages are lower level of absenteeism and staff turnovers because the employees are satisfied with their work. This also means that training and recruitment costs are lowered because work positions are always reliably staffed (Dawson, 2009). To me that makes a lot of sense because what is the point of maintaining teams and training them to be effective if they are