Thursday, July 2, 2020
The White Man's Burden (Research Paper Sample) Content: The White Man's BurdenName:Institution:IntroductionWhite mans burden is a historical ideology exhibited by some Europeans of having hard tasks and duties of organizing themselves to care for other inferior races around the globe. It is also a view that existed in the imperialism era that civilized and more developed Europeans should bring modernity, civilization, wealth, and advancements to the rest of the world through their domination and leadership. The concept also extended to non-whites, although numerous white groups subjected to the notions were mostly Slavic ethnic groups in the eastern world such as Finns, Arabs, Boers, and Turks. The white mans burden also created moral justifications of imperialism on many long existing cultures and developed nations such as civilized economies including India and China. However, this paper discusses the ideological responsibilities by the white mans burden notion of bringing civilization and Christianity to the developing countries. The perceived responsibilities in some European cultures steered them to colonize the Third World people to over three centuries. This essay also describes the reasons behind the needs of Europeans to transform other civilizations and the results experienced during the process of fulfilling their desires. According to Pimentel (2003), imperialists in USA understood the ideology as a noble enterprise, which became the tool of racism and Western aspirations of dominating the developing world. The white mans burden resulted to a tool of white people to encourage and rule the cultural advancements of other peoples culture. The obligation of ruling other people was objected to stabilize their own economic and social dynamics, which resulted to the slavery of many people from the developing world. The idea was obligated to help or assist the developing world whether they needed it or not, although they did much ill than it was perceived (Easterly, 2006). Moreover, most of the w hites felt they have the power more power over the developing societies, especially in social and economical strength. In this case, they found it more essential to advance their leadership structure in other civilizations in order to have the capabilities of controlling and monitoring them. They achieved this notion by forceful introduction of their social, economical, and political culture in other civilized regions in the world. This included the establishment of industrial activities, in which they enslave the people from such civilizations to work for them (Wells, 2011). The whites also used barbaric force to ensure they control the resisting cultural groups, especially the developing parts of the world with rich minerals and resources.The burden, as perceived in the idea of the white mans burden was their hard, expensive, and challenging tasks in order to achieve their social and economical objectives. This is includes encountering and overcoming various challenges such as civ il resistances and huge costs of administering leadership frameworks in the civilized cultural diversities. The whites used Christianity to expand and advance their cultural, social, and economical intentions of benefiting from the third world countries. For example, Christian missionaries introduced the educational system that was aimed at changing and alienating the original cultures of the people in the third world countries. Christian education also aimed at changing the cultural beliefs and practices of individual societal groups, in order to follow the white mans teachings. The role of advocating and teaching was a difficult task to the whites, as they had to ensure that other people around the globe understood and believe on their theoretical teachings. In order to support their mission of controlling the world, economically and socially, the whites also settled in the third world countries where they introduced plantations, ranches, and mining industries. These economic acti vities aimed to support the whites operational activities in order to expand and advance their missions on the rest of the world.As a result, to the ideological scope of the white mans burden, many of the white population moved energetically to control the poor people in the third world, where many became missionaries, settlers, and colonizers. Their desires to transform other civilizations caused various civil wars with the resisting societies in an effort to control their own territories and culture. Moreover, many people lost their lives when trying to defend their cultural diversity. The movement o...
Sunday, May 31, 2020
Introduction Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit- holders. ORGANISATION OF MUTUAL FUND Mutual funds have a unique structure not shared with other entities such as companies of firms. It is important for employees agents to be aware of the special nature of this structure, because it determines the rights responsibilities of the funds constituents viz., sponsors, trustees, custodians, transfer agents of course, the fund the Asset Management Company(AMC) the legal structure also drives the inter-relationships between these constituents. The structure of the mutual fund India is governed by the SEBI (Mutual Funds) regulations, 1996. These regulations make it mandatory for mutual funds to have a structure of sponsor, trustee, AMC, custodian. The sponsor is the promoter of the mutual fund, appoints the trustees. The trustees are responsible to the investors in the mutual fund, appoint the AMC for managing the investment portfolio. The AMC is the business face of the mutual fund, as it manages all affairs of the mutual fund. The mutual fund the AMC have to be register ed with SEBI. Custodian, who is also registered with SEBI, holds the securities of various schemes of the fund in its custody. SEBI SEBI regulates mutual funds, depositories, custodians and registrars transfer agents in the country. The applicable guidelines for mutual funds are set out in SEBI (Mutual Funds) Regulations, 1996, as amended till date. An updated and comprehensive list of circulars issued by SEBI can be found in the Mutual Funds section of SEBIs website. Some segments of the financial markets have their own independent regulatory bodies. Wherever applicable, mutual funds need to comply with these other regulators also. For instance, RBI regulates the money market and foreign exchange market in the country. Therefore, mutual funds need to comply with RBIs regulations regarding investment in the money market, investments outside the country, investments from people other than Indians resident in India, remittances (inward and outward) of foreign currency etc. Stock Exchanges are regulated by SEBI. Every stock exchange has its own listing, trading and margining rules. Mutual Funds need to comply with the rules of the exchanges with which they choose to have a business relationship. Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the Securities Appellate Tribunal. Sponsor: The sponsor is the promoter of the mutual fund. The sponsor establishes the Mutual fund registers the same with SEBI. He appoints the trustees, Custodians the AMC with prior approval of SEBI, in accordance with SEBI regulations. He must have at least five year track record of business interest in the financial markets. Sponsor must have been profit making in at least three of the above five years. He must contribute at least 40% of the capital of the AMC. Trustees: The Mutual Fund may be managed by a Board of trustees of individuals, or a trust company a corporate body. Most of the funds in India are managed by board of trustees. While the board of trustees is governed by the provisions of the Indian trust act, where the trustee is the corporate body, it would also be required to comply with the provisions of the companies act, 1956. The board of trustee company, as an independent body, act as protector of the unit holders interest. The trustees dont directly manage the portfolio of securities. For this specialist function, they appoint an AMC. They ensure that the fund is managed by AMC as per the defined objectives in accordance with the trust deed SEBI regulations. The trust is created through a document called the trust deed i.e., executed by the fund sponsor in favor of the trustees. The trust deed is required to be stamped as registered under the provision of the Indian registration act registered with SEBI. The trustees begin the pri mary guardians of the unit holders funds assets; a trustee has to be a person of high repute integrity. Custodian: Often an independent organization, it takes custody all securities other assets of mutual fund. Its responsibilities include receipt delivery of securities collecting income-distributing dividends, safekeeping of the unit segregating assets settlements between schemes. Mutual fund is managed either trust company board of trustees. Board of trustees trust are governed by provisions of Indian trust act. If trustee is a company, it is also subject Indian Company Act. Trustees appoint AMC in consultation with the sponsors according to SEBI regulation. All mutual fund schemes floated by AMC have to be approved by trustees. Trustees review ensure that net worth of the company is according to stipulated norms, every quarter. Though the trust is the mutual fund, the AMC is its operational face. The AMC is the first functionary to be appointed, is involved in appointment of all other functionaries. The AMC structures the mutual fund products, markets them mobilizes fund, manages the funds services to the investors. Other Service Providers RTA The RTA maintains investor records. Their offices in various centres serve as Investor Service Centres (ISCs), which perform a useful role in handling the documentation of investors. The appointment of RTA is done by the AMC. It is not compulsory to appoint a RTA. The AMC can choose to handle this activity in house. All RTAs need to register with SEBI. Auditors Auditors are responsible for the audit of accounts. Accounts of the schemes need to be maintained independent of the accounts of the AMC. The auditor appointed to audit the scheme accounts needs to be different from the auditor of the AMC. While the scheme auditor is appointed by the Trustees, the AMC auditor is appointed by the AMC. Fund Accountants The fund accountant performs the role of calculating the NAV, by collecting information about the assets and liabilities of each scheme. The AMC can either handle this activity in-house, or engage a service provider. Collecting Bankers The investors moneys go into the bank account of the scheme they have invested in. These bank accounts are maintained with collection bankers who are appointed by the AMC. Leading collection bankers make it convenient to invest in the schemes by accepting applications of investors in most of their branches. Payment instruments against applications handed over to branches of the AMC or the RTA need to be banked with the collecting bankers, so that the moneys are available for investment by the scheme. Through this kind of a mix of constituents and specialized service providers, most mutual funds maintain high standards of service and safety for investors. Distributors Distributors have a key role in selling suitable types of units to their clients i.e. the investors in the schemes. Distributors need to pass the prescribed certification test, and register with AMFI. Asset Management Company (AMC) Day to day operations of asset management are handled by the AMC. It therefore arranges for the requisite offices and infrastructure, engages employees, provides for the requisite software, handles advertising and sales promotion, and interacts with regulators and various service providers. The AMC has to take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of the SEBI regulations and the trust deed. Further, it has to exercise due diligence and care in all its investment decisions. As per SEBI regulations: The directors of the asset management company need to be persons having adequate professional experience in finance and financial services related field. The directors as well as key personnel of the AMC should not have been found guilty of moral turpitude or convicted of any economic offence or violation of any securities laws. Key personnel of the AMC should not have worked for any asset management company or mutual fund or any intermediary during the period when its registration was suspended or cancelled at any time by SEBI. Prior approval of the trustees is required, before a person is appointed as director on the board of the AMC. Further, at least 50% of the directors should be independentdirectors i.e. not associate of or associated with the sponsor or anyof its subsidiaries or the trustees. The AMC needs to have a minimum net worth of Rs10 crores. An AMC cannot invest in its own schemes, unless the intention to invest is disclosed in the Offer Document. Further, the AMC cannot charge any fees for the investment. The appointment of an AMC can be terminated by a majority of the trustees, or by 75% of the Unit-holders. However, any change in the AMC is subject to prior approval of SEBI and the Unit-holders. Asset Management Companies In India INDIAN AMCs Axis Asset Management Company Ltd. Baroda Pioneer Asset Management Company Limited Birla Sun Life Asset Management Co. Ltd. Canara Robeco Asset Management Co. Ltd. DSP BlackRock Investment Managers Ltd. Edelweiss Asset Management Limited Escorts Asset Management Ltd. HDFC Asset Management Co. Ltd. ICICI Prudential Asset Management Co. Ltd. IDBI Asset Management Ltd. IDFC Asset Management Company Private Limited J.M. Financial Asset Management Private Ltd. LIC Nomura Asset Management Co. Ltd. LT Investment Management Limited Kotak Mahindra Asset Management Co. Ltd. Motilal Oswal Asset Management Co. Ltd. Peerless Funds Management Co. Ltd. Quantum Asset Management Co. Private Ltd. Reliance Capital Asset Management Ltd. Religare Asset Management Company Private Limited Sahara Asset Management Co. Private Ltd. SBI Funds Management Private Ltd. Sundaram Asset Management Company Limited Tata Asset Management Ltd. Taurus Asset Management Co. Ltd. UTI Asset Management Company Ltd. MNC AMCs AIG Global Asset Management Company (India) Private Ltd. Bharti AXA Investment Managers Private Limited BNP Paribas Asset Management India Private Limited Daiwa Asset Management (India) Private Limited Deutsche Asset Management (India) Private Ltd. FIL Fund Management Private Ltd. Fortis Investment Management (India) Pvt. Ltd. Franklin Templeton Asset Management (India) Private Ltd. Goldman Sachs Asset Management (India) Private Limited HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Private Ltd. JP Morgan Asset Management (India) Private Ltd. Mirae Asset Global Investments (India) Private Ltd. Morgan Stanley Investment Management Private Ltd. Principal PNB Asset Management Co. Private Ltd. Pramerica Asset Managers Private Limited Mutual Fund Industry in India The Evolution The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases: Phase 1. Establishment and Growth of Unit Trust of India 1964-87 Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971 and six more schemes during 1981-84, Childrens Gift Growth Fund and India Fund (Indias first offshore fund) in 1986, Mastershare (Indias first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTIs assets under management grew ten times to Rs 6700 crores. Phase II. Entry of Public Sector Funds 1987-1993 The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share. 1992-93 Amount Mobilised Assets Under Management Mobilisation as % of gross Domestic Savings UTI 11,057 38,247 5.2% Public Sector 1,964 8,757 0.9% Total 13,021 47,004 6.1% Phase III. Emergence of Private Sector Funds 1993-96 The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes. Phase IV. Growth and SEBI Regulation 1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Investors interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level. UTI was re-organised into two parts: The Specified Undertaking, The UTI Mutual Fund Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. Phase V. Growth and Consolidation 2004 Onwards The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun FC Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players. Key Developments over the Years The mutual fund industry in India has come a long way. Significant spurts in size were noticed in the late 80s, when public sector mutual funds were first permitted, and then in the mid-90s, when private sector mutual funds commenced operations. In the last few years, institutional distributors increased their focus on mutual funds. The emergence of stock exchange brokers as an additional channel of distribution, the continuing growth in convenience arising out of technological developments and higher financial literacy in the market should drive the growth of mutual funds in future.AUM of the industry, as of February 2010 has touched Rs 766,869 crores from 832 schemes offered by 38 mutual funds. In some advanced countries, mutual fund AUM is a multiple of bank deposits. In India, mutual fund AUM is hardly 10% of bank deposits. This is indicative of the immense potential for growth of the industry. The high proportion of AUM in debt, largely from institutional investors is not in line with the role of mutual funds, which is to channelize retail money into transforming mutual funds into a truly retail vehicle of capital mobilization for the larger benefit of the economy the capital market. Various regulatory measures to reduce the costs and increase the conveniences for investors are aimed at. ADVANTAGES OF MUTUAL FUND Professional Management Mutual funds offer investors the opportunity to earn an income or build their wealth through professional management of their investible funds. There are several aspects to such professional management viz. investing in line with the investment objective, investing based on adequate research, and ensuring that prudent investment processes are followed. Affordable Portfolio Diversification Units of a scheme give investors exposure to a range of securities held in the investment portfolio of the scheme. Thus, even a small investment of Rs 5,000 in a mutual fund scheme can give investors a diversified investment portfolio. With diversification, an investor ensures that all the eggs are not in the same basket. Consequently, the investor is less likely to lose money on all the investments at the same time. Thus, diversification helps reduce the risk in investment. In order to achieve the same diversification as a mutual fund scheme, investors will need to set apart several lakhs of rupees. Instead, they can achieve the diversification through an investment of a few thousand rupees in a mutual fund scheme. Economies of Scale The pooling of large sums of money from so many investors makes it possible for the mutual fund to engage professional managers to manage the investment. Individual investors with small amounts to invest cannot, by themselves, afford to engage such professional management. Large investment corpus leads to various other economies of scale. For instance, costs related to investment research and office space get spread across investors. Further, the higher transaction volume makes it possible to negotiate better terms with brokers, bankers and other service providers. Liquidity At times, investors in financial markets are stuck with a security for which they cant find a buyer worse; at times they cant find the company they invested in! Such investments, whose value the investor cannot easily realise in the market, are technically called illiquid investments and may result in losses for the investor. Investors in a mutual fund scheme can recover the value of the moneys invested, from the mutual fund itself. Depending on the structure of the mutual fund scheme, this would be possible, either at any time, or during specific intervals, or only on closure of the scheme. Schemes where the money can be recovered from the mutual fund only on closure of the scheme, are listed in a stock exchange. In such schemes, the investor can sell the units in the stock exchange to recover the prevailing value of the investment. Tax benefits Specific schemes of mutual funds (Equity Linked Savings Schemes) give investors the benefit of deduction of the amountinvested, from their income that is liable to tax. This reduces theirtaxable income, and therefore the tax liability. Further, the dividend that the investor receives from the scheme is tax-free in his hands. Investment Comfort Once an investment is made with a mutual fund, they make it convenient for the investor to make further purchases with very little documentation. This simplifies subsequent investment activity. Convenient Options The options offered under a scheme allow investors to structure their investments in line with their liquidity preference and tax position. Regulatory Comfort The regulator, Securities Exchange Board of India (SEBI) has mandated strict checks and balances in the structure of mutual funds and their activities. These are detailed in the subsequent units. Mutual fund investors benefit from such protection. LIMITATIONS OF MUTUAL FUND Lack of portfolio customization Some securities houses offer Portfolio Management Schemes to large investors. In a PMS, the investor has better control over what securities are bought and sold on his behalf. On the other hand, a unit-holder is just one of several thousand investors in a scheme. Once a unit-holder has bought into the scheme, investment management is left to the fund manager (within the broad parameters of the investment objective). Thus, the unit-holder cannot influence what securities or investments the scheme would buy. Large sections of investors lack the time or the knowledge to be able to make portfolio choices. Therefore, lack of portfolio customization is not a serious limitation in most cases. Choice overload Over 800 mutual fund schemes offered by 38 mutual funds and multiple options within those schemes make it difficult for investors to choose between them. Greater dissemination of industry information through various media and availability of professional advisors in the market should help investors handle this overload. No control over costs All the investors moneys are pooled together in a scheme. Costs incurred for managing the scheme are shared by all the Unit holders in proportion to their holding of Units in the scheme. Therefore, an individual investor has no control over the costs in a scheme. SEBI has however imposed certain limits on the expenses that can be charged to any scheme. These limits vary with the size of assets and the nature of the scheme. No guarantees No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Management risk When you invest in a mutual fund, you depend on the funds manager to make the right decisions regarding the funds portfolio. If the manager does not perform as well as we had hoped, we might not make as much money on our investment as we expected. However, if we invest in Index Funds, we forego management risk, because these funds do not employ fund managers. TYPES OF MUTUAL FUND Equity Funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds: Aggressive Growth Funds In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds. Growth Funds Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. Speciality Funds Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of speciality funds: i. Sector Funds: Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds.. There are following types of speciality funds: ii. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk. iii. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the companys share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky. iv. Option Income Funds: While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors. Diversified Equity Funds Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. Equity Index Funds Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like SP CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky. Value Funds Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or speciality funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced. Equity Income or Dividend Yield Funds The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds. Money Market / Liquid Funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). Hybrid Funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. Growth-and-Income Funds Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds. Asset Allocation Funds Mutual funds may invest in financial assets like equity, debt, money market or non-financial (physical) assets like real estate, commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets. In other words, fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends. Debt /Income Funds invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of Investment Grade. Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds: Diversified Debt Funds Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. Focused Debt Funds Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. High Yield Debt funds As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of investment grade. But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of below investment grade. The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors. Assured Return Funds Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfil its promises and faced large shortfalls in return s. Eventually, government had to intervene and took over UTIs payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible. Fixed Term Plan Series Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period. Gilt Funds also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction. Commodity Funds are those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. Precious Metals Fund and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds. Real Estate Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation. Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad. Fund of Funds are Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs. They maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes. Risk Hierarchy of Different Mutual Funds Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds: Risk Associated with the Investment in Mutual Funds Savings are invested in various investment opportunities for earning better returns. The returns of the investment depend upon the risk of such investment. All investments involve some risk. The objective of any investor is to minimize the risk and maximize returns. The value of financial assets depends on their return and risk patterns. Risk can be defined as the chance factor in trading in which expected or perspective advantage, gain, profit or return may not materialize The actual outcome of investment may be less than the expected outcome. The greater is the variability in the possible outcome, the greater is the risk. Generally, the variance and the standard deviation of return are used as the alternative statistical measures of the risk of the financial asset. Similarly, co-variance measured the risk of the assets, relative to other assets in a portfolio. Some risks can be controlled by the investors. Others cannot be controlled, and they are to be borne by the investor compulsorily. Risk is an inherent aspect of every form of investment. For mutual fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the schemes investment may be affected by factors affecting capital markets such as price and volume, volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other developments. Types of Risks: Market Risk The prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to market risk. Inflation Risk Sometimes it is referred to as loss of purchasing power. Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you will actually be able to buy less, not more. Credit Risk In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures? Interest Rate Risk Changing interest rates affect both equities and bonds in many ways. Bond prices are influenced by movements in the interest rates in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase. Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV. Investment Risk In the sectored fund schemes, investments will be predominantly in equities of selected companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities. Liquidity Risk Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian fixed income market. Changes in the Government Policy Changes in government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund. INVESTMENT STRATEGIES Lump-Sum Investment Plan: Many financial advisors recommend this approach above the others, because the market goes up more often than it goes down. Systematic Transfer Plan: Under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. Systematic Withdrawal Plan: If someone wishes to withdraw from a mutual fund, then he can withdraw a fixed amount each month. Systematic Investment Plan: There are many investors who like to park their money as a lump sum into an asset class and forget about it. They dont want to worry about whats happening to it on a daily basis as long as the investment earns them some returns in the long haul. But there is another way this lump sum can be used by investing a fixed sum at regular intervals. This method eliminates the need to time the market (making an entry or an exit) an area where most investors are prone to go wrong. This method is commonly known as the rupee cost averaging. Under this system, one need not worry about when and how much to invest. A fixed sum of money can be invested regularly and over time it averages out the costs. For instance, if one were to buy units of a mutual fund by following rupee cost averaging, the fixed amount of money will fetch more units when the net asset value of the units are down, and vice versa. What one must remember here is that what price you pay for a single unit does not matter but the average price at the end of purchase is what holds and the returns are based on this average cost. This automatically falls in line with the age-old principle of buy low and sell high. Rupee cost averaging, of course, does not inculcate the selling aspect. It only helps one average the cost of an asset purchase. How it pans out This helps in doing away with the volatility in the market since it smoothens out ups and downs. A look at the table shows how investing regularly can fetch you more shares of a stock through rupee cost averaging. In the above example, when investing in lump sum, the share price was Rs 20 meaning, you end up buying 500 shares. Instead, if one were to invest Rs 1,000 every month for 10 months, the total number of shares purchased adds up to 520, since these were bought at different price levels and the average cost of each share comes down to Rs 19.6. And 520 shares would definitely fetch a higher return than 500 at the end of ten months Time (mths) Fixed amount invested (Rs) Price per share (Rs) Shares purchased 1 1000 20 50 2 1000 21 48 3 1000 24 42 4 1000 19 53 5 1000 16 63 6 1000 17 59 7 1000 16 63 8 1000 23 43 9 1000 18 56 10 1000 22 45 Total 10,000 19.6 520 Company Profile Pramerica Asset Managers Private Limited (the AMC), a private limited company incorporated under the Companies Act, 1956, has been appointed as the investment manager of Pramerica Mutual Fund by the Trustee under an Investment Management Agreement between the Trustee and the AMC. Further, the AMC has been approved to act as investment manager for Pramerica Mutual Fund by SEBI, vide SEBIs letter no. OW / 5045 / 2010 dated May 13, 2010. The AMC is wholly owned by PFI, the Sponsor of Pramerica Mutual Fund, through one of PFIs wholly owned step-down subsidiaries, namely, PGLH of Delaware, Inc., a company incorporated and with its principal place of business in the U.S.A. The AMC has been established as a full service asset management company providing investment solutions to both domestic and international retail as well as institutional clients. Pramerica Mutual Fund India (Backed by strong parentage, ready to take big steps) 100 % owned venture by PFI , USA A full service Asset Management Company offering superior investment solutions rather than just products Constructing a basket of products ranging from equity to debt Research driven investment process Strong focus on innovative products solutions Distributor training key focus area Objective of the Project To understand the acceptance level of a MNC based Mutual Fund entity entering into the business. To meet various Individual ARN Holders in Bangalore, introduce and educate them about Pramerica Mutual Fund and complete the survey through questionnaire. Methodology This report is based on primary as well secondary data, however primary data collection will be given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem. It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones. I have conducted a survey on 150 Individual Financial Advisors in Bangalore. Questionnaire Format-The response format required by a question depends on the nature of the research. The format usually deals with issues relating to the degree of freedom that should be given to respondents while answering question. I have mostly used multiple choice response questionnaires -These questions cover all degrees of response. The respondent has to select an option that best describes their feelings. Limitations ofthe Study Restricting my survey to 150 ARN Holders in Bangalore whos Assets under Management is less than Rupees 5 crores. Data about the ARN Holders was given by Pramerica Mutual Fund with the help of their registrars it was old as 31st December, 2010. Possibility of error in data collection because many of the respondents in the sample collected may not have give actual answers to my questionnaire. Some respondents might be reluctant to divulge personal information which can affect the validity of all responses. Some of the ARN Holders may not be responsive. Acceptance of MNC Mutual Fund by IFAs QUESTIONNAIRE RESPONSE How long have you been into this business? Less than a year 1 3 years 3 5 years Above 5 years Which of the following products do you mostly recommend to your clients? Insurance policy Mutual Fund Real Estate Public Provident Fund Post Office Savings Schemes All of the Above What is the share of Mutual Funds among the above products of your business? Less than 20 % 20 30 % 31 40 % Above 40% What type of AMCs you prefer doing business with? Indian AMCs PSU AMCs MNC AMCs All of the Above Which attribute you consider the most while empanelling with an AMC? Brand Relationship Manager Past Performance of Existing Schemes Brokerages and Rewards Fund Managers Background What kind of facilities you receive from the AMCs that you have currently empanelled with? Regular service Technical support Product differentiation Workshops What other facilities do you expect from the AMCs? Better rewards for achieving targets sales Priority in processing of applications, payments etc. Recognition by the AMCs for being a star performer All of the Above How many clients do you manage? Less than 100 101 200 201-300 Above 300 Most of your clients fall under the age of? Less than 30 31 40 41- 50 50 Above Most of your clients are: Corporate Salaried Employees Businessmen Retired Employees What is the level of awareness among your client in relation to Mutual Funds? Excellent Good Fair Poor How many of your clients have already invested in mutual funds on your advice? Less than 100 100 200 201-300 Above 300 How would you rate most of your client in the risk parameter mention below? Aggressive (12-14)% returns Moderate (10 -12) % returns Conservative (8-10) % returns How do clients respond when you introduce and advice them to invest their money in a mutual fund scheme of a new AMC? Very hesitant Agrees after lot of persuasion Asks for a lot of information Trusts you blindly How challenging is the task of convincing a client to invest his money on MNC Mutual Fund today? Very Difficult Difficult Easy Very Easy How many times in a year do you review your clients portfolio? Once in a month Once in 3 months Once in 6 month Depends How do you charge fees from the clients? According to AMFI guidelines Depending upon the corpus of investment Depending upon returns generated As per agreement with the clients With so many MNCs entering in the financial market with their products, has it become very difficult to judge which companys products you should sell? Not really Agree The more the better Disagree Are you aware of Pramerica Asset Managers Pvt. Ltd.? Yes No If yes, how did u get to know about them? Peer Group Brochures Media AMFI Website Findings Crisis in October 2008 The trigger was the real estate crisis and the consequent fall in demand for real estate paper. Corporate clients of FMPs feared that one big player, Unitech, might default. Overnight, portfolios with real estate assets were seen as risky, and a wave of redemptions began. This is where things begin to seem almost surreal. Corporate clients suffered a loss to get out of FMPs, and most of them put the redemption proceeds into the banks. These banks had issued certificates of deposit, which is what most FMPs held. Essentially, the corporate investor made a heavy loss only to invest in the same instrument all over again. Unfortunately, retail investors, who form a minuscule portion of MF investors, decided to follow the example set by their larger peers. Most of them decided to redeem when the panic was at its peak and everybody was scrambling to exit. How It Happened? For Instance, Considering a Mutual fund with Assets of Rs. 1,000 (100 units of Rs. 10 each) and Net Asset Value (NAV) of Rs 10. Assuming that, for whatever reasons, the quality of the assets deteriorates, and is now worth only Rs 880. If the instruments are liquid, the fund will mark its holdings down to market value and the NAV will drop to Rs 8.80. However, if the instruments are illiquid and not well-traded, the fund pretends that all is well and that theres no fall in the value of its assets. On paper, therefore, the NAV remains at Rs 10. The problem occurs when there is a redemption request for, say, 20 units. Because the NAV remains Rs 10 when the assets are worth Rs 8.80, the fund has to borrow to pay Rs 200, and it has only 80 units left to absorb the loss on assets. The true NAV falls to Rs 8.50. What this means is that the other investors who have stayed in the fund lose 30 paisa so that one investor can exit without a loss. Hurt by low fee regime, nearly half of Mutual Fund distributors have quit SEBIs decision to ban entry load on mutual funds has meant lower income for distributors. They will not approach smaller investors as the brokerage they receive from smaller investors will not be worth the effort. Nearly half of the mutual fund distributors opted out of the business, ignoring regulatory need to fulfil some conditions to continue selling schemes; About 40,000 registered mutual fund sellers accounting for about 50% of the fund distribution industry have not completed their Know-Your-Distributor formalities by the mandated March 31, 2011 According to AMFI sources, about 41,000 AMFI Registration Number Holders have completed the KYD process, which includes submission of personal records, distribution business details and bio-metric profiling of the distributor. According to some of these distributors, they are sticking with the business only because they have already built a large base with the big AMCs. The Mutual Fund distribution business is the largest in Mumbai but, out of the 12,000 registered distributors, only 3,000 are actively selling Mutual Fund products. In Delhi-NCR, only 800 of the registered 3,000 are active and in Bangalore, this number stands at 700. AMFI has asked Asset Management Companies to stop paying commissions to non-compliant distributors. The industry has set KYD rules to increase agents accountability. Distributors are now forming a self-regulatory organization that will help them voice their concerns. They want to be heard by AMFI and SEBI on issues like entry load, investor services and investor advisory processes. IFAs find it easier to sell Mutual Funds of Indian Companies compared to selling products of MNC based Mutual Fund entities as it takes a lot of persuasion to convince clients to invest in MNC Mutual Funds. The Relationship Manager is the most vital link that IFAs consider while empanelling with an AMC. The IFAs expect better rewards for achieving target sales. Most of the IFAs` clients are salaried employees they are well informed about Mutual Funds. The IFAs in order to convince a client to invest in MNC Mutual Fund has to first explain about the company then its schemes where as for an Indian AMC, he can directly explain about its schemes close a deal. The problem is that neither the IFA nor the client has time for discussing all these issues. So the investor goes by word-of-mouth or invests in a popular AMC`s Mutual Fund. Due to the crisis in October 2008, the IFAs recommend clients to invest in schemes of popular Asset Management Companies. Hurt by low fee regime, nearly half of Mutual Fund distributors have quit.
Tuesday, May 26, 2020
Essay Topics For the Odyssey - Deciding What Theme Will Is Best For Your EssayGood essay topics for the Odyssey is something that you should consider carefully before you begin writing. It can make a huge difference in the success of your work, and whether or not it turns out the way you want it to.The most important thing to remember when choosing a topic for the Odyssey is that you don't want to limit yourself to one specific theme. You also don't want to write an essay about nothing but the Odyssey. As the Odyssey is a long story that involves multiple characters and has plenty of plot twists, you may want to take a more 'What if...' approach to the topic of your essay.Don't force anything. You don't have to explain the Odyssey to a blank page. The only thing you really need to do is create a nice outline and then brainstorm your topics. As you continue to write the outline, keep working out the structure of your essay and decide which points are the most important, and the main t heme of your essay.As I said, remember that there are no rules about writing a major theme and separate essays about each character in the Odyssey. However, as you get further into the Odyssey, you'll find yourself having to focus more on specific events that are happening to a particular character. After all, you're trying to summarize a very long story! And a good theme doesn't interfere with this process.So, how do you go about structuring your essay? How do you figure out the main point of your essay and then make sure it comes across? Well, you start with a general outline, or at least one.And when you've finished writing your outline, start coming up with more general essays to fill in the gaps. As you go along, you'll find yourself writing more essays to fill in the blanks. After all, if you fill in all the gaps in your outline, then you'll end up with lots of essays!Then, once you have enough essays filled in with the main point of your outline, start working on them all at once. Don't worry too much about choosing what essay to write first, as that will depend on your individual preferences. As long as you don't stress yourself out over the decision, you'll find that it'll be much easier to write your essay.
Tuesday, May 19, 2020
Literature and the Workplace The relationship between literature and the workplace environment is primarily one of human emotion and interaction. How a person feels about their work, or the issues faced within the workplace are fodder for fiction, non-fiction, and poetry alike. The majority of the working masses actually have a relatively small number of experiences. Though the work itself may be different, and the specific situations unique, the overall anxiety, fears, and concerns are generally the same. This means the audience for this type of literature is wide. Some ofÃ¢â¬ ¦show more contentÃ¢â¬ ¦The workplace is in fact like any other society, albeit, a small, contained society. The daily interaction of humans is predictable, allowing writers to use psychology as a basis for improvement and survival in the workplace. Fictional literary works in general do not revolve around a work environment. However, the story or poem may involve workplace experiences that affect the characters. Perhaps someone who is out of work or a workaholic. Some exceptions of this are the works we are discussing here. These are writings revolving around the workplace and the impact of that work on the lives of the characters. The writing effectively conveys the feelings of the individuals and in the case of Picasso, a brief glimpse into the impact of his work on others. In the poem, Ã¢â¬Å"Old Men Working ConcreteÃ¢â¬ , pride and teamwork are the primary themes. Each man in this story has his task that he is responsible for; Ã¢â¬Å"One trowels out the last space, one works the edgerÃ¢â¬ . (LaRocco Coughlin, 1995, p 241) The writer conveys the experience of the workers, creating an impression that these are skilled and happy workers. The line, Ã¢â¬Å"where the circle of can has worn a hole in the clothÃ¢â¬ (LaRocco Coughlin, p 240), does not speak directly to the work, but it does lend a sense of time, that the cloth is worn through because the worker has performed this action over a long period. This sense of time implies that the workers haveShow MoreRelatedDiversity in the Workplace: a Literature Review Essay1363 Words Ã |Ã 6 PagesDiversity in the Workplace In todays society, cultural diversity is at the highest point it has ever been. As companies are becoming more diverse, it is becoming more important for them to understand and manage that diversity. People of different backgrounds, races, ages, sex, and/or religions create a diverse workforce. There is an importance of having a diverse workforce in order to provide better performance overall. 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Saturday, May 16, 2020
Sample details Pages: 9 Words: 2597 Downloads: 4 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? Introduction Modern day organisations are impacted by many factors which may include the external business environment, government regulations, and internal interpersonal interactions. However, none has the more significant cultural impact of the internal operations of the organization than organizational culture its self. Culture poses the greater challenge in organisation operations because it encompasses behavioral expectation which are more difficult to monitor. DonÃ¢â¬â¢t waste time! Our writers will create an original "The Impact of Organisational Example For Free" essay for you Create order Overall organisational culture is best viewed as a collection of values, organisational principles, products presented, markets served, strategies applied, global cultures, languages, public assumptions, leadership styles, behavioral norms, symbolisms, habits, and belief systems that bring groups together for a common cause. It also includes a range of emotional interactions which result as a consequence of connection to the organisation. Every organisation is a culture with subcultures unto itself. They have ways of operating that differ in their approaches that bring products or services to market. Their social and psychological environments contribute to the emotional well being of society and the national groups that interact within the confines of the organisation existence. This paper presents a discussion on organisation culture. The Impact of Organisation Culture on Teams Before one can consider the impact of organisation culture (OC) on teams, it is best to provide a definition to aid in its understanding. Organisation culture is a set of shared behavioral norms and values that influence interpersonal interactions, decision-making, and resource allocations (Kotter, 2012; Silber Kearny, 2012). Kotter (2012) suggests that few individuals understand the dynamics of OC, or how to put in motion a plan to change it. As a result, many fail at the attempt to initiate OC change (Kotter, 2012). Bolman and Deal (2008) discuss organisation culture as the adhesive substance that connects the organisation structure to the unification of people for the mutual accomplishment of goals. They assert that cultural values are linked to symbols, rituals, playful humor, and other specialised symbols that contribute to its existence. These researchers argue further that management practices are undeniably culture initiated. Additionally, emotional healing and conflict resolution is conducted within the confines of cultural norms. Bolman and Deal (2008) present examples of organisations such as ATT, Coca Cola, Delta Airlines, and others as demonstration of the cultural transactions which take place within them. They discuss the emotional consequences explained by one executive as one moment euphoric and at other times depressed. Coca Colas discussion is on the introduction of a new product concoction that impacted its revenues and how they were forced to revert to the original formulation. Delta experienced success as a privately held organisation only to experience failure as it was transformed into a public one. Bolman and Deal (2008) speak of the emotional experiences that remained after Enron collapsed. The impact was felt throughout the organisation and trickled over into the public area. Where Enron succeeded as an independent entity, it failed in its acquisition prospects because its significant growth impaired its abilities to susta in an ethical culture. Enron ignored the cultural values that drove its success. The aforementioned examples serve to present the impact that culture imposes upon organisations as a social group form. Differentiating Workgroups from Teams Workgroups. Katzenbach and Smith (2003) believe it was important to distinguish workgroups from teams because they differ in operation and outcomes. Work-groups exist to follow the task-driven instructions of a single leader. All within the group operate as individuals who fulfill the requirements of assigned tasks. The individuals within the workgroup perform according to skills relevant to the task assigned. For example, an administrative assistant (individual) works in a department (workgroup), but is assigned to limited tasks, such as, typing documents or serving coffee or greeting corporate guests (Katzenbach Smith, 2003). Teams. In contrast, teams work together towards a common goal (Katzenbach Smith, 2003). Teams do not operate from task relevant assignments. They use their skills and competencies to complete all tasks that complete the mission of their coming together. They can be dissolved after initiatives are completed and be reassigned to work on other projects rel evant to individual competencies and skills. For example, an application systems designer has computer programming skills and knowledge of designing business applications; work assignments are not limited to computer programming alone (Katzenbach Smith, 2003). Additional Notes on Workgroups. Katzenbach and Smith (2003) make it clear that workgroups are prevalent within the organisation and function independent of common goals. Workgroups function best in top-down organisation structures. Focus remains on individual performance. Members in workgroups compete with other members in pursuit of personal accomplishments. Leadership Affect on Organisation Culture Leadership Behavior. Scholl (2003) posits that leaders model the behaviors and attitudes duplicated throughout the organisation. According to Morill (2008), OC is a modern day concept with roots in social movement theory and the sociology of culture. Kitts and Trowbridge (2007) posit that research concerning the logistics of OC emergence and maintenance is lacking. They assert further that Human Resource transactions, such as, recruitment and turnover, make any attempt at OC maintenance, a significant challenge. Fear as Motivator. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) affirm from their research that fear becomes the norm when cultural behaviors are challenged. Open confrontation of unhealthy behaviors warrants retribution. One example in which challenges can and do arise is a hospital setting, which requires the washing of hands for sanitary reasons. Consider that a nurse aide is in a patient room when a surgeon enters the room and fails to follow the hand-w ashing norms. Given the surgeons esteemed status, the aide witnessing such becomes intimidated and fails to mention the hand-washing rules (Grenny, Patterson, Maxfield, McMillan, Switzler, 2013). OC Characteristics. According to Silber and Kearny (2010), OC comprises three characteristics which easily identify them, namely, artifacts, espoused values, and accepted norms. Artifacts are considered to be the more obvious culture differences, such as, nationality or dress codes. Espoused values are what management consider to be important, such as, a motto that says the customer is always right. Accepted norms are values and belief systems that are taken for granted, such as, the concept of innovation requiring creativity (Silber Kearny, 2010). Affect of Organisational Culture Impact of OC on Teams. According to Rosenblatt (2011), work values come from the globalized concept of desired behaviors and relevant group beliefs. Rosenblatt (2011) believes that the values of the organisation are derived from the broader interfaces and environmental characteristics within a social system, such as, individual cultural values and collectivism (codified behavioral patters). Rosenblatt (2011) discusses the concept of codified behavioral patterns as a function of belief systems that are transferred from group to group in a globalized manner. As a result, they become embedded with the organisation rules and regulations. Impact of Teams on OC. Lucas (2010) asserts that individual cognition influences team interactions. Every person processes information according to that which has been assimilated from the global environmental group. Additionally, individual learning styles influence how information is adopted. As a result, the belief patterns of individual members is transferred via the interpersonal relationships to the team as a group. According to Lucas (2010), cognition affects the recollection of information and transmits it to thought processes. This transmission in turn affects the perceptions of individual members. How the members view the processed information is the direct result of past interpersonal interactions. As a result, the individual members respond to one another based upon the levels of confidence the information has provided. Culture Alignment Issues Behaviors. Silber and Kearny (2010) discuss behaviors within the context of cultural alignment as it relates to task completion. These researchers assert that how behaviors are manifested within the OC group identifies where the challenges lay. They use an example of how answering of the phone impacts the customer service provided. Silber and Kearny (2010) suggest that vocal intonation and attitude impacts how the customer perceives the organisation. As a result, the organisation leadership must determine if the resulting outcomes align with the intended goals and objectives. Katzenbach and Smith (2003) assert that teams impact the organisational culture by engaging in the behaviors that drive performance to the next level. Teams can resist change by not adopting the same value or belief system that management embraces. The wrong attitudes affect performance which in turn affects the organisations goals and objectives (Katzenbach Smith, 2003). ODonnell and Boyle (2008) asser t that behaviors and attitudes are complex and not always clearly interpreted. Some issues associated with the difficult of aligning the culture for success include but are not limited to: presenting a compelling vision for change; understanding the leadership mission; influencing the beliefs and values of culturally diverse individuals; communication of conflicts and how to address them; incorporating a compensation and reward system; ensuring adequate training and development opportunities; technological tools for communication transmission; removal of non-compliant team players (ODonnell Boyle, 2008). Role Considerations Leadership Role. Bolman and Deal (2008) suggest that the role of a leader is to ignite the passion (intrinsic motivation) of the individual team members to participate in the organisation mission. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) posit that leadership calls for influencing team member behavioral changes to meet organisation goals and objectives. Mitchell and Boyle (2009) assert that leaders help connect the emotional attachment of team members to the vision, hence, inspiring the desire for aligning behaviors to the mission. Joshi, Lazarova and Liao (2009) draw upon the principles of social identity theory to explain the relationship between leaders and followers. These researchers assert that leaders are effective in direct proportion to their ability to influence and connect the perception of follower identity to their cause. Team Role. Lucas (2010) asserts that individuals bring to the team their cognitive processing abilities and past influences. Add itionally, team members are required to exert various levels of risk in direct proportion to the group obligations. Katzenbach and Smith (2003) declare that team members challenge and encourage each other. Team members share a common respect of the goals to be achieved as a group. Need and Appropriate Role of Teams Katzenbach and Smith (2003) declare that business opportunities and or threatening competition can create a need for teams at all levels of the organisation. External environmental changes, such as, government regulations, international and or local business competition, and or new technology contribute to organisation needs. Teams provide an element of social engagement that contributes to the commercial and managerial aspects of the work. Teams can engage in social functions that enhance and sustain organisation performance (Katzenbach Smith, 2003). Need and Appropriate Role of Leadership Teams Keller and Aiken (nd) found in their research that seventy percent of change management teams failed and remain so by modern day standards. Their research also shows that teams everywhere are still struggling to become high performance teams. Only a very small group of teams have been able to succeed. Schyve (2009) declares that executive level oversight groups could be formed to strengthen weak work ethics or to help teams acquire the necessary skills to move them forward. Culture Support of Teams Executive Level Teams. Carillo (2015) declares that executive level teams are responsible for driving the logic of the organisation vision. They empower, encourage risk, allocate resources, and ensure that stakeholder assets are protected, and used appropriately. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) insists that these teams have a crystal clear vision of what is to be accomplished. Additionally, they are well versed in emotional intelligence and competent enough to help others feel their cause. Change Management Oversight Teams. Naranjo-Gil (2015) posits that change management oversight teams execute and implement strategic organisation change initiatives. They mediate the negative and positive aspects of change on the psychological well being of the organisation. They measure the change results to those intended by the strategy. They politically navigate formal structures and informal to ensure that friction is minimized, hence, avoiding derailing of chang e initiatives (Naranjo-Gil, 2015; Katzebach Smith, 2003; Silber Kearny, 2008). Executive Working Groups. McGuire, Palus, Pasmore, and Rhodes (2009) and Hambrick (1997), insist that the culture must be matched to the organisational purpose. Development of new belief systems must be cultivated; leaders must change themselves in the process; beyond the technology, cognitive abilities must be well developed; collaborative effects must be fostered and perfected; joint decision-making must be a public event. Conclusion The goal of this paper was to discuss the impact of organisation culture on teams. Hence, the intended goal has been achieved via the presentation of various topics that impact organisation culture in teams. The following topics were discussed a) the impact of organisation culture on teams; b) differentiating workgroups from teams; c) leadership affect on organisation culture; d) affect of organisational culture; e) culture alignment issues; f) role considerations; need and appropriate role of teams; g) need and appropriate role of leadership teams; h) culture support of teams. Additionally, a few examples of organisations which experienced success and failure was presented as a way to demonstrate the emotional power and affect of culture on the results achieved. References Bolman, L. G. Deal, T. E. (2008). Reframing organisations: Artistry, choice, and leadership. Fourth Edition. Jossey-Bass. San Franscisco, CA. Carrillo, R. A. (2015). Empower, trust resource: The role of executive leaders in safety. Professional Safety, 60(5), 32-33. Grenny, J., Patterson, K., Maxfield, D., McMillan, R., Switzler, A. (2013). Influencer: The new science of change. Second Edition. McGraw Hill, New York, NY. Hambrick, D. C. (1997). Corporate coherence and the top management team. Strategy Leadership, 25: 24-29. Joshi, A., Lazarova, M. B., Liao, H. (2009). Getting everyone on board: The role of inspirational leadership in geographically dispersed teams. Organisation Science, 20(1), 240-252,275-276. Katzenbach, J. R. Smith, D. K. (2003). The wisdom of teams. Harper Collins Publishers, New York, NY. Keller, S. Aiken, C. (nd). The inconvenient truth about change management: Why it isnt working and what to do about it. Retrieved 6-Oct-15 from: https ://www.mckinsey.com/App_Media/Reports/Financial_Services/The_Inconvenient_Truth_About_Change_Management.pdf Kitts, J. A., Trowbridge, P. T. (2007). Shape up or ship out: Social networks, turnover, and organisational culture. Computational and Mathematical Organisation Theory, 13(4), 333-353. doi: https://dx.doi.org/10.1007/s10588-007-9015-x Kotter, J. (2012). Leadership: The key to changing organisational culture. Retrieved 5-Oct-15 from: https://www.forbes.com/sites/johnkotter/2012/09/27/the-key-to-changing-organisational-culture/ Lucas, L. M. (2010). The role of teams, culture, and capacity in the transfer of organisational practices. The Learning Organisation, 17(5), 419-436. doi:https://dx.doi.org/10.1108/09696471011059813 McGuire, J. B., Palus, C. J., Pasmore, W., Rhodes, G. B. (2009). Transforming Your Organisation. Center for Creative Leadership. Retrieved 6-Oct-15 from: https://www.ccl.org/leadership/pdf/solutions/TYO.pdf Mitchell, R. J., Boyle, B. (2009). A theoretical model of transformational leaderships role in diverse teams. Leadership Organisation Development Journal, 30(5), 455-474. doi:https://dx.doi.org/10.1108/01437730910968714 Morrill, C. (2008). Culture and organisation theory. Annals of the American Academy of Political and Social Science, 619, 15. Naranjo-Gil, D. (2015). The role of top management teams in hospitals facing strategic change: effects on performance. International Journal Of Healthcare Management, 8(1), 34-41. doi:10.1179/2047971914Y.0000000078 ODonnell, O. Boyle, R. (2008). Understanding and managing organisational culture. Retrieved 6-Oct-15 from: https://www.cpmr.gov.ie/Documents/Understanding%20and%20Managing%20Organisational%20Culture.pdf Rosenblatt, V. (2011). The impact of institutional processes, social networks, and culture on diffusion of global work values in multinational organisations. Cross Cultural Management, 18(1), 105-121. doi:https://dx.doi.org/10.1108/13527601111104322 R oth, W. (2014). Evaluation and reward systems: The key shapers of organisational culture. Performance Improvement, 53(8). doi: 10.1002/pfi.21432 Scholl, R. W. (2003). Organisational culture. Retrieved 5-Oct-15 from: https://www.uri.edu/research/lrc/scholl/webnotes/Culture.htm Schyve, P. M. (2009). Leadership in healthcare organisations: A guide to joint commission leadership standards. Retrieved 6-Oct-15 from: https://www.jointcommission.org/assets/1/18/WP_leadership_standards.pdf Silber, K. H. Kearny, L. (2010). Organisational intelligence: A guide to understanding the business of your organisation for HR, training, and performance consulting. Pfeiffer. San Franscisco, CA.
What justifies political legitimacy in a society? By comparing the two readings assigned one can discuss the differences in political theories expressed by both John Locke and Thomas Hobbes. In, Leviathan, by Thomas Hobbes, and in, The Second Treatise of Government, by John Locke different theories of political legitimacy and definitions of the state of nature are described. The following paragraphs analyze multiple different points that are imperative to understanding these political theories. In the reading, Leviathan, Thomas Hobbes discusses what human existence is in the state of nature and the state of war. As it is described, the state of nature refers to how men were made equal in the faculties of the body and mind. To quote, Ã¢â¬Å"As though there be found one man sometimes manifestly stronger in body or of quicker mind than another; yet when all is reckoned together the difference between man, and man, is not so considerable, as that one man can thereupon claim to himself, as well as he.Ã¢â¬ Here, Hobbes is explaining his opinion on the meaning of the Ã¢â¬Å"state of natureÃ¢â¬ explaining that even though one may have a strength compared to another, it all is balanced out in the end. Each of us have our individual flaws and strength that constitute our character. Hobbes also notes, how humans inherently have a state of greed and savagery. The state of war in human existence is also examined in this article. 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