Islamic Banking

[pic] ISLAMIC BANKING: IS IT REALLY â€Å"ISLAMIC†? By: Omar Mustafa Ansari & Faizan Ahmed Memon Is it really Islamic? †¦. In this era of development and growth in Islamic finance and banking, this is a question being raised at every forum by various quarters. All those who raise this question, are undoubtedly well-wishers of Islam, Islamic economic system and Muslim Ummah. Accordingly, while we celebrate the achievements of Islamic banking on one hand, we should not be ignoring the issues and objections being raised by such quarters in order to ensure that we lay the foundations of this industry on strong, straight and acceptable-to-all footings. Objectives Of Islamic Banking Before discussing various objections raised on the present day Islamic banking, we should first try to understand the objectives of Islamic banking, which are as follows: 1. To provide Shariah compliant and prudent banking opportunities; hence providing an opportunity to Muslims to do their banking transactions – a Halal way: In other words, this is just an effort to avoid Riba and other prohibited elements from commercial and banking transactions, in order to ensure that we do â€Å"Nothing-Haram†; and 2. Achieving the goals and objectives of an Islamic economic system. We all can agree that, given the circumstances, the Islamic banking industry is making all efforts to ensure the first objective, while the second objective, although no-less important, is not the prime objective of current-day Islamic banking. History Of Islamic Banking Modern banking system was introduced in Muslim countries at a time when they were politically and economically slave to the western world. The main banks of the western world established their branches and subsidiaries in the Muslim countries and territories to fulfill requirements of foreign business. The Muslim community generally avoided the foreign banks for religious reasons but with the passage of time, it became more and more difficult to engage in trade and other activities without making use of commercial banks. Even then, a large number of Muslims, confined their involvement to transaction activities such as current account or hundred percent cash margin letter of credits. Borrowings from commercial banks or placement the access funds and saving accounts were strictly avoided by practicing Muslims in order to keep away from dealing in interest which is prohibited by Islam. With the passage of time, however, due to increase in cross-border transactions and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. Local banks were established in Muslim countries (including the names like Muslim Commercial Bank) on the same lines as the interest-based foreign banks and they began to expand within the country bringing the banking system to more and more people. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals which gave emergence to the contemporary Islamic banking. By the midst of the last century, many Muslim countries started their efforts to adopt the Islamic economic and banking systems. Many scholars, economist and experienced bankers came with different solutions to initiate the Islamic banking. Those experiences paved the route for modern Islamic banking. Nowadays Islamic financial institutions (IFIs) are spread all over the world including European countries and the United States. In particular these have their significant presence in Pakistan, Saudi Arabia, Bahrain, United Arab Emirates, other GCC countries, Malaysia, Sudan and Iran. Who Raise The Questions? Islamic banking is a weak industry†¦. In respect of resources, in respect of knowledge-bases, in respect of trained-knowledgeable-sincere human resources, in respect of availability of commercial options, in respect of state support, as well as, society support, in respect of sincerity of stake-holders and WHAT NOT. With such adverse footings, unfortunately, it really has certain weaknesses which are not only targeted by the enemies, but, are more severally and forcefully attacked by the FRIENDS. As a consequence, the Islamic banking and finance is facing disagreements from various quarters including certain â€Å"revolutionary† Islamic movements, certain â€Å"rigid† and â€Å"hard-core† religious scholars, and â€Å"idealistic† and â€Å"utopian† Islamic economists (without any disrespect to them all). Can Banking Ever Be Really Islamic? The first question is raised mostly by those who either do not have any knowledge about banking, or those who have the courage to evaluate the banking systems from its evolution to its objectives. They feel that the banking per-se is against the very basic concepts of Islam. They feel that just like the fact that there can not be any â€Å"Halal pork† or â€Å"Islamic prostitution†, there can be no â€Å"Halal banking†. This viewpoint is supported by the fact that, particularly in Pakistan, we have already faced a complete disaster in the name of interest-free banking and so-called IFIs particularly including Modarabas. The argument, as to whether Islamic banking is really Islamic, has two different facets. The first one is that whatever is being performed in the name of Islamic banking is apparently quite similar to the operations of a conventional financial institution hence creates doubts in people’s mind, as to on what grounds we can call it Islamic? So they feel that it is merely a change in name and documents and in fact, it is nothing different from conventional banking. The second facet of this question is more important nd deals with the socio-economic factors associated with the overall Islamic financial system. Due to significance of these objections, we will discuss these two issues before looking for other arguments. Merely A Change In Name And Documents The most common and most discussed argument against contemporary Islamic banking is that there is â€Å"NO DIFFERENCE AT ALL† between the conventional banking and Islamic banking and this is merely a change of name and doc uments. The second argument, which is in-fact a derivative of the first argument, is that even in Islamic banking, the most common products being used e. g. Murabaha, Musawwama, Salam, Istisna, diminishing Musharaka and Ijara Muntahia Bittamleek are on fixed return basis. Even the Musharaka and Modaraba based products are engineered in a way that the profits are â€Å"virtually-fixed†. One should realize the fact that unless we can distinguish an Islamic bank from a conventional bank, it would be difficult for any of us to rely on the same. Particularly, it is observed that they try to make sure that their product is similar to the conventional products in all respects, even if for that purpose they have to incorporate a few provisions in these products which are not considered to be good or a few of them are considered Makrooh. In addition, their endeavors are focused towards minimization of their risk through every possible option and accordingly, the essence of Islamic finance which is based on risk taking is killed. We can note that most IFIs market their products on the models very much similar to those used by the conventional banks. As an example, an Ijara Muntahia Bittamleek transaction introduced by an IFI might be very similar to a finance lease transaction offered by a conventional leasing company, except for a difference of Takaful / insurance cost which in Islamic mode is to be borne by the lessee and accordingly, the same is built-in the rentals. The basic reason behind this similarity is to ensure three objectives. The first one, which is more important one, is to provide an â€Å"even playing ground† to the IFIs in order to ensure their survival in the overall banking system. The second one, is that even by IFIs, it has to be ensured that their shareholders and depositors get some return and preferably a return equivalent to those of conventional banks. And the third reason is to avoid arbitrage amongst Islamic and conventional financial systems which may be exploited by a few big-guns to get the benefit of the pricing difference between the two parallel financial systems. For such reason, time value of money concept is used for performance measurement and pricing of financial products. Most importantly, it should be kept in mind that in some areas Haram and Halal have a very small difference. For an example, only saying the name of Allah Almighty on an animal at the time of slaughter makes it Halal and permissible while by not saying that name we make it Haram or by just a few words of acceptance in Nikah, in presence of a few persons, a man and woman become Halal for each other. Similarly, if a transaction can be engineered in a way that the same becomes Shariah compliant, then we should not conclude that the same is Haram only due to its resemblance with the interest based financing. It is also pertinent to note that since the Islamic financial services sector is in its infancy phase, as compared to the conventional banking, we unfortunately have to follow the conventional system in the pattern of financial products and are still not in a position to invent absolutely new financial services. During the last few centuries, the conventional banking system has well read the human needs and psychology and has invented a considerable number of financial products and accordingly, it is not simple to just invent a new financial tool just for the purpose of inventing one. For example, if they have running finance and overdraft as a financing tool, we have invented an alternate to the same in form of Istijrar with Murabaha or Musharaka based running finance model. Similarly, if they use finance leases as a financing tool, we have converted the same in a Shariah compliant form in form of Ijara Muntahia Bittamleek or in form of Diminishing Musharaka. These are only two examples, but the tally is practically very high and for each interest based financial product except for those explicitly Haram, more than one alternates have been engineered. The objective of this discussion was just to emphasize that merely an amortization schedule similar to the one offered by a conventional bank, is not a basis for declaring a Halal product to be Haram. If just a pricing model or just the similarity of a cash-flow model makes the transaction Haram, what you will say regarding a conventional loan offered at a price much higher or much lower than the market prevailing rates for which the pricing model and the cash-flow model are not similar to those generally applied in the industry. Does anybody think that such dissimilarity will make it Halal? Accordingly, from Shariah principles it is rightly concluded that it is the substance of a transaction what makes it Halal or Haram and not a pricing model used to price the transaction or the cash-flow model used for the payments and repayments in monetary terms. Socio-Economic Effects Of Islamic Banking And Finance Second most significant argument from such group, predominantly by certain Islamic economists and certain Islamic revolutionary movements, is about the socio-economic factors of Islamic banking. They feel that since Islamic banking is also based on profit motive and in present form, it generally works on â€Å"virtually-fixed† return basis; hence the same cannot attribute anything-positive towards the socio-economic changes that Islam desires. This is a crucial question and, we believe that, every conscious Muslim will concur with the concerns of those who raise the same, although the conclusions derived by different people might vary. Nobody can argue that virtually-fixed return based banking, although being Shariah compliant, is not what has been desired by Islam as a complete way of living. In addition, the current-day Islamic banking is emphasizing more on consumer finance as compared to financing to SME sector, agricultural sector, and more importantly, on the micro-finance; hence, it is not contributing enough towards the â€Å"just and equitable monetary system† that Islam needs. Having due regard for these arguments, may we remind you that that the Islamic economic system is not something that can work in isolation of the geo-political and legislative system, as well as, and more importantly the society’s behavior towards the injunctions of Islamic Shariah in personal and collective matters. Accordingly, one can easily imagine that in an economy whereby most of the businessmen are not honest in fairly presenting the financial statements of their businesses, how difficult it is to introduce a profit and loss sharing based financial solution. Similarly, in most of the cases payment of Zakat and Sadaqat depends on the individual and particularly, in view of the gigantic volume of the black economy in the country, what can be expected even if a good system for Zakat and Ushr is introduced? It needs to be emphasized that only the change in banking system is not a solution to the overall revolution of economic system unless other facets of Islamic economic system, as well as, Islamic social system are not implemented simultaneously. Accordingly, the complete transition of economy to an Islamic economic system can be performed, when and only when, the overall consensus of the society is developed towards practical application of Shariah in all the facets of human life, particularly including the governmental, political and legislative structures. Despite such an unsatisfactory and rather discouraging attitude of the society towards application of Islamic Shariah, it should be noted that such a situation do not relieve a Muslim from the applicability of Shariah principles, but rather increases his responsibilities in the way that it becomes his duty not only to try to abide by all applicable Shariah requirements in his personal capacity but also to put his endeavors towards improvement in such system. Consequently, in case the Islamic banking, in your opinion, is not contributing enough towards betterment of society, you cannot blame the same alone. The responsibilities of the Muslim Ummah as a whole (or of the State) can not be expected to be borne by a single sector only, which, at this point of time is in its infancy stages. Is It Heela Banking? This is a general discussion at various forums that contemporary Islamic banking is based on Heelas. From Shariah perspective, a Heela is an option utilized to disobey the divine guidance through engineering the circumstances and playing with the facts and intentions. Having an insight into the industry, one can not disagree with this argument to certain extent, as it has been observed in a number of cases that in-fact, certain transactions are practically applied on this basis. Having said that; this argument should, however, not be used to blame the entire industry. We should acknowledge that the foundations of the industry have been built using the pillars which are directly derived from the Holy Quran, Sunnah and Fiqh. It is worth-noting that mostly, a Heela is applied in the â€Å"execution of a transaction† rather than â€Å"designing of a transaction†. In other words, we can safely conclude that application of Heelas in Islamic banking is not a weakness in the theories of Islamic banking, but actually is a matter of misuse / misinterpretation of basic Shariah guidance in respect of various Shariah compliant financial transactions. Accordingly, it needs to be emphasized that in order to support the growth of Islamic banking and finance on right footings, we need to strengthen the Shariah compliance mechanism for the industry. In addition, in the longer run, we need to eliminate the Islamic financial products which have the potential of misuse. Use Of Interest-Rate As Benchmark; Is It Halal? Critics, including scholars, as well as, economists, strongly condemn that most of IFIs while providing financing by way of any of the â€Å"Halal† transactions, determine their profit rate on the basis of the current interest-rate benchmarks prevailing in the conventional money market. Scholars are of the view that by applying these benchmarks, the Islamic banking industry makes their transactions â€Å"similar† to interest-based transactions and as a consequence, these transactions become doubtful from Shariah point-of-view. Economists feel further issues and that and are of he view that this thing makes these financial institutions a part of the prevailing capitalistic economic systems, hence this sort of transactions are absolutely not desirable by Islam. Here it would be worthwhile to have a look on the arguments by the Islamic banking for better understanding of the pricing issue. They generally give examples like; s uppose you enter into a supermarket in UK and see that the pork, the beef and the Halal beef are all being sold for GBP 2 per kg. Do you think that this similarity of price or the fact that these products are being sold under the same roof renders the Halal beef as Haram? Or for example; in the same superstore you note that they are using the same balance for weighing these three types of meat. Do you think that using the same balance will render the Halal beef, as Haram? If not, then we should better understand the principle that it is the substance and legal form of the transaction that makes it Halal or Haram and not its pricing, rate or the cash-flow model or the institution, or even the environment that offers such transaction. This issue, however, needs to be addressed by the government, as well as, the market players. A strong Islamic inter-bank market will InshaAllah provide us opportunities to develop our own benchmarks for Islamic banking operations. Dealing of Islamic Banks with Conventional Banks Another strong argument against Islamic banking is against dealing with conventional banks. These dealings are of two types i. e. sharing of services and commercial transactions. As far as services are concerned, where the Islamic Banks are facilitating the foreign businesses of their customer or helping out their customers to transfer the money from safe channels. For these services, the remuneration or expense of Islamic banks is service charges which are allowed by Shariah jurists, although they recommend that such interaction should be avoided wherever IFIs are available. The second argument which is much strong is regarding the commercial transactions with conventional financial institutions. These transactions generally relate to the treasury side of the Bank whereby either the IFIs place their excess liquidity with the conventional banks or obtain financings from them to meet their own liquidity requirements. For placement of funds with conventional banks most of Islamic banks in Pakistan are using the product of Commodity Murabaha or they invest in certain â€Å"Halal assets† of the conventional financial institutions. On the other hand, they normally obtain financings from the conventional banks on the basis of profit and loss sharing, although the profit rates are once again â€Å"virtually-fixed†. Although, most of the Shariah scholars have allowed these transactions duly considering the Shariah requirements, however, nobody can argue that it is a must to avoid all such transactions. For this purpose, however, we need to strengthen the Islamic inter-bank market and to provide further liquidity management options to the IFIs particularly, in form of strong Shariah-compliant government securities and a stable capital market with plenty of Halal investment options available. All dealings with conventional financial institutions should remain limited to the necessities which reach the extremes of compulsion. Cost Of Being A Muslim Those who have bad memories of dealing with Islamic banks are in front-line of critics with this remark. People feel that there are serious doubts on the honesty and integrity of IFIs. They feel that these Banks are using the name of Islam to earn a few bucks more as compared to the conventional banks or rather they are exploiting the faith of Muslims by charging them, the â€Å"cost of being a Muslim†. On the financing side, they charge higher than conventional banks. In other words, internal rate of return on Islamic financial products is higher than the conventional products. On the contrary, it is observed that on the deposit sides they pay less as compared to the conventional banks. In addition, it is generally observed that the expected rates, as well as, the actual rates of return offered by these financial institutions are fairly equivalent to (generally slightly less than) the rates being offered by conventional financial institutions. A justification against the first argument is that since IFIs are subject to the commodity risk, asset destruction and holding risks and the price risk, as well as their relevant costs e. g. Takaful expenses, in addition to the risks and costs that a bank faces, they are justified in their demand i. e. higher internal rate of return. Nevertheless, financial experts have generally felt that even if these factors are considered, the pricing by these Banks is on the higher side. On the other side, in a profit and loss based model, it is agreeable that they assign weightage to different types of deposits in a manner that the total return on investment and financing pools is allocated amongst various depositors and the Bank (working as a partner). Even then, it is generally noted that IFIs are paying less than the market. We can only hope that in near future, with increasing competition in the Islamic banking industry, this effect will minimize because of market-forces except to the extent of pricing against actual additional risk elements. Marketing Approach Of IFIs Another valid argument is about the marketing approach being used by these financial institutions, which adversely effects the public reliance on this mode. People raising objections on the marketing approach of IFIs have two grounds for the same. The first one is the general marketing approach being applied by the a few IFIs which include advertisement and other publicity materials including involvement of women and traditional marketing and advertisement styles for promotion of â€Å"Islamic† banking business. Second ground is the marketing strategy in which sometimes it is felt that false statements are made for promotional purposes. An example of the same is the claim by a leading Islamic bank that all its day to day activities are monitored by its Shariah Advisor. Just imagine, if it is humanly possible, that a part time Shariah Advisor can look after all day to day activities of a full fledged bank with a number of branches even located at other cities. Another example is the claim by an Islamic mutual fund that it is the first one of its kind in the country, whereas another fund was operating in the country for around one year earlier to subscription for such mutual fund. They Don’t Look Like Islamic Once you enter into a glittering branch or office of an IFI, generally you do not feel any difference with a conventional bank. This issue is raised particularly by the blend of people who feel that once they enter into such location, it should look like a sacred place instead of a commercial office. You generally feel that they have over-spent on the furniture, interior-decoration and publicity stuff, which apparently, is against the injunctions of Islam. This impression is further strengthened when you see the overall environment, the dealing style of personnel and most significantly, you feel (in most of the cases) that there are ladies working for the organization without Hijab or even â€Å"appropriate attire† (in line with the dress-code of a Muslim woman as defined by Shariah). Although a few â€Å"moderate-enlightened† Muslims will not like this objection at all, nevertheless, it should be kept in mind that a common Muslim cannot digest â€Å"Islamic† banking while he feels that other factors of business are not really Islamic. We can’t argue with these objections as these have due weightage in them and the management of IFIs should take these objections seriously. However, we should keep in mind that the prime objective of Islamic finance, is to ensure that â€Å"financial† matters are dealt with in line with Islamic Shariah. In other words, environment does not make anything Haram. Needless to mention, from Shariah perspective, you can always buy a Halal product from a store where everything else is Haram although the same needs to be avoided if other options are available. Islamic Bankers – Don’t Know Islamic Banking This argument, once again, has key significance from the perspective of the overall control environment of these banks with regard to the applicability of Shariah principles. Particularly, it is astonishing when you deal with an Islamic banker, who knows very little about Islamic banking, but unfortunately, this is not very uncommon. The prime cause behind this issue is the fact that most of the IFIs have hired the conventional bankers and generally no or very little consideration is awarded to ensure that they are well conversant with the Shariah requirements with regard to the modes of finance being used by these Banks. Similarly, the IFIs do not spend enough on their resource-building for Shariah compliance and training of their staff, in comparison to what they spend for marketing. Having experience of training â€Å"Islamic Bankers†, as well as, performing Shariah compliance reviews, we may safely conclude that, this objection is not without substance. This accordingly, is a strongest need that the IFIs should allocate more and more resources for staff training and Shariah compliance. Monopoly Of Shariah Advisors Another objection is regarding the appointment of Shariah Boards and Shariah Advisors. People have largely noted and discussed at various forums that the major contribution in this field in Pakistan is limited to a very small group of jurists most of whom relate to a single family and their pupils (a single religious university). Besides this, another question is also being raised that generally the honorariums, consultancy fee and other benefits being offered to such jurists by the IFIs in Pakistan, as well as, abroad are quite high and this may jeopardize their independence. In addition, it is felt that they are the only ones who are whole and sole responsible for Shariah compliance. They approve the products, they review the transactions and in the end; they perform Shariah audit themselves, which is, however, an indicative of a conflict of interest (without any doubt on their personal independence and integrity). Most of the people conversant with the business and operations of Islamic finance do not agree with this observation, because the contribution of these people to the industry as a whole is remarkable and they deserve even more than that based on their contribution and efforts in the promotion of this industry. The general concept that a â€Å"Moulvi† should be paid the minimum for his life, is not justifiable. If you are getting benefits from their efforts, their knowledge and skills, then they should be justifiably rewarded. Having said that, it is always agreeable that it is the right time that contributions from jurist from other schools of thought should also be sought and they should necessarily be provided opportunities to enter into the field. For this purpose, it is a good proposition from the State Bank that a jurist should not be allowed to hold more than one remunerative position as a Shariah Advisor or member of a Shariah Board. This will ensure that fresh blood gets an option to enter into the field which will eventually improve the overall Shariah compliance in the field, as well as, will help these institutions to innovate fresh products. IFIs Use Conventional Insurance A valid objection; can’t argue with that. It was a real issue that according to the legal requirements, as well as, derived from real â€Å"compulsion†, the banks were required to obtain insurance coverage from conventional insurance companies and this practice was allowed by the Shariah Advisors to the extent of compulsion only. This situation, Alhamdolillah has changed after introduction of Islamic mode of insurance (Takaful) in Pakistani market. Unfortunately, there are a still IFIs who have not yet switched to Takaful while to-date three Takaful companies and a family Takaful company have commenced operations in Pakistan and now this lame excuse of compulsion can not be exercised anymore. Now it’s high time that the State Bank and the Shariah Advisors should take strong steps to ensure that no business is iven by the IFIs to any conventional insurance company either in respect of owned assets, or against assets held under security. Should We Still Prefer Islamic Banking? As a conclusion to this debate, we may say that we are required by our religion to implement a complete Islamic way of living in our individual and collective lives and the society and the government as well. The Islamic banking and financial system is a part of such system and is not construed to be applicable in isolation while o ther laws and customs repugnant to the Shariah requirements are still in force. However, for the sake of our own benefits, in order to avoid interest by ourselves and providing interest-free opportunities to our brothers and sisters in Islam, we should promote and support the Islamic banking and finance in the country with all our possible efforts and endeavors. We should not try to pull legs of an infant who is just trying to take his first step towards a long journey to go. However, we should try to ensure that he commences his journey on the right way, with strong footings. Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in augmenting a truly Islamic financial system, and more appropriately said, will serve as an experiment for the time when we will really be in a position to the implement the complete Islamic way of living in our beloved country. May Allah Almighty bestow us his blessings and enable us to evolve a complete system of life in accordance with the principles of life provided by the Holy Quran and the Holy Prophet (SAAWS). May Allah accept our efforts and forgive us for our mistakes in this field in our individual capacities, as well as, as a society. About Omar & Faizan: Omar is a Chartered Accountant by profession, and is presently working as Partner – Islamic Financial Services Group with Ford Rhodes Sidat Hyder & Co. (A member firm of Ernst & Young Global Limited). Omar enjoys vast experience in audit, Shariah compliance and providing related services to Islamic finance industry in Pakistan. He is author of a Book on Islamic finance namely â€Å"Managing Finances – A Shariah Compliant Way†. Faizan holds experience in the field of Shariah audits and product development. In past, he has worked with a leading Islamic bank as Shariah Coordinator and Shariah Auditor. Presently, he is working with Ford Rhodes Sidat Hyder & Co. as Manager – Islamic Financial Services. [pic][pic]

Globalization Position Paper Essay

Globalization is the process making the worlds citizens increasingly interdependent economically, politically, and socially, as well as environmentally and technologically. Although, to what extent should we embrace it? By the given definition, you would expect globalization to allow cultures, ideas, and beliefs to spread across the globe, which would lead to the development of our countries. However, this is not the case as said here by William K. Tabb, Economist: â€Å"Globalization refers to the process of reducing barriers between countries and encouraging closer economic, political, and social interaction. Globalization could vastly increase the ability of people everywhere to improve their living standards by sharing knowledge and the fruits of human labor across those barriers. This, of course, does not happen.† Tabb is trying to tell us that while Globalization could be doing us of world of good, it has failed to do so in recent years. In fact, a process that is supposed to allow us all to grow, is transforming us into somewhat of a monoculture due to acculturation. Tabb believes that there is vast potential for our world to become closer through political, social, and economic interaction if we allow it to do so. Sometimes we just don’t know exactly how to go about it. The aspect of globalization that has been occurring lately is more like assimilation than accommodation. Some have said that what is happening to the world is â€Å"Americanization†, which means that the world is becoming less of a mix of numerous different countries and cultures and more like one giant America. The beliefs, values, views, history and language of a people should all be evident within their culture, and while we can allow globalization to help counties grow, it should not be in a way that takes away or lessens their culture and it’s importance. Under the best conditions, globalization reduces barriers allowing the worlds countries to interact closer with one another. Though it should not become an unreciprocated act where only one country is receiving positive ideas and technology without the other. It seems that the world’s more powerful countries easily share their culture but have no interest in receiving anything from the less powerful countries, or when they do,  receive much less. This is not due to the less dominant country but rather to the more powerful one being somewhat uninterested. â€Å" Globalization could vastly increase the ability of people everywhere to improve their living standards by sharing knowledge and the fruits of human labor across those barriers. This, of course, does not happen.† Despite what William K. Tabb said here, these very things have happened, just not as often as one would perhaps wish them to. Take Taiwan for example. Thirty years ago the country had widespread poverty and was extremely poor. Nowadays they are as rich as the Spanish, with poverty rates cut by more than 50% and real wages that are now 10 times higher. How did they manage to accomplish this? This vast amount of economic progress was achieved through land reform, a government push for industrialization (such as the emersion of sweatshops), innovative ideas (more people owning their own business), cultural changes, and democracy rather than dictatorship. As long as foreign countries around the world are able to improve their living standards through globalization, and can do so without becoming too westernized, we can still see globalization as a positive occurrence. Globalization can do us of world of good. In some ways it has accomplished this and in others it has failed. It has been proven that it has the capability to change the lives of many through an improvement in their living standards. Not to mention that it reduces barriers and allows more interaction between people from different corners of the globe. But while it has managed to do this, a process that is supposed to allow us all to grow, is transforming us into a monoculture at the same time. William K. Tabb’s perspective is not the only one, but should only be embraced to some extent. Globalization should reduce barriers preventing closer relations with other nations and improve living standards. However, it should do so without causing too much westernization in eastern countries, and without assimilating the less dominate nations.

Employing Strategy in a Competitive Environment Essay

Employing Strategy in a Competitive Environment - Essay Example Strategic management is essential in necessitating business both short term and long-term development and expansion. However, business professionals have asserted that the formulation and implementation of a working business strategy is an extremely complex process that requires an all-inclusive mechanism. Moreover, consistent evaluation of the company’s strengths, weaknesses, threats and opportunities have as well proved to be very productive and instrumental in the entire process of formulating a workable strategic management plan. This essay will therefore create an environmental scan for the Panera bread company indicating the most significant environmental threats. Panera Bread is a chain of cafe and restaurants in Canada and United States of America. The company’s headquarters are situated in Sunset Hills, Missouri. The Panera Bread also has a bakery for producing fresh breads and other bakery products. Apart from selling breads and other bakery products, Panera B read sell other products including cold sandwiches, muffins, bagels, soups and salads. Moreover, restaurant businesses in modern markets have proved to be very complicated and competitive. Over the years, the industry has encountered a consistent flow of new entrants that result in increased struggle for any company to make profit. Therefore, the Panera Bread Company has received consistent competition at all levels including specialty foods as well as fast casual dining. The main competitors of Panera Bread are Subways, Starbucks and McDonald’s. Despite the three main competitors, Panera Bread also encounters lively competition from other competitors at local, regional and national level. Increased competition has a negative impact on the company’s market share and revenue. As a result, to sustain its profitability, Panera Bread ought to frequently revisit and amend its menu to attract and sustain new and regular customers, fulfil the ever-changing customer demands an d preferences, as well as reacting and responding to various seasons of the year. By consistently changing its menu, Panera Bread would have an advantage over their competitors such as subways and McDonald who do not always change their menu forcing customers to loss interests in their products and services. In addition, in restaurant industry, there is no perfect substitute for food and drinks. Therefore, there is a relatively limited threat on food preparation. However, due to the existence of different operational and cultural background, Panera Bread Company is sometimes compelled to change their coffee selection to meet customers’ needs and cultural demands. Consistent change of coffee selection has emerged to be a very expensive and complicated process for Panera Bread restaurant (Panera Bread Company, 2012). Moreover, the company has created an atmosphere that encourages consistent interaction and consultation among all players in the organisation including the company ’s customers. To advance the competence of its employees, the company’s management is as well known for holding consistent strategic meetings with their employees and loyal customers. However, to counter the emerging alternative such as working from home, the company should offer an accommodating atmosphere to its employees in order to facilitate effective and uninterrupted working environment. Moreover, the limited barriers to new entry in restaurant markets have significantly increased in the market. It is

Port Security Assignment Example | Topics and Well Written Essays - 1000 words

Port Security - Assignment Example Since great numbers of trucks move in and out of ports it is easier for the terrorist to carry harmful things to the port vicinity. Some ports also have fishing and recreational boats that terrorists could use as an aid in performing their terrorist activities. Terrorist can use the shipping system to import weapons of mass destruction and other hazardous materials. Even smuggling of personnel can be a thing of major threat. If terrorist attack the sea port with nuclear bomb a large area can be destroyed. Seaports attack can cause local and international destruction as it is globally connected. As there is lot of embarkation and disembarkation happening in the sea ports it is difficult to detect mal practices. Radical elements can import biological and chemical weapons to destroy the country which is a matter of great concern. The coast guards are the major unit active in the port area to maintain the security system. The security atmosphere at seaports remains uncertain because of port infrastructure remaining uncompleted and also due to lack of proper co ordination in conveying of information about threats. â€Å"There is a wide range of vulnerabilities at seaports, including critical infrastructure such as bridges and refineries, shipping containers with unknown contents, and the enormous volume of foreign and domestic shipping traffic† (Decker,2002). Ports operate in a complex mode transport system, and weak linkages between components may result higher vulnerability Large scale military deployment would require to transport equipment needed by military heavily by sea .If the ports are attacked there could be a severe civilian causality and they could lose time and also cargo. Since infrastructure is inefficient the full potentiality of deployment cannot be utilized. There is lack of central authority to monitor the activities of the personnel installed along the ports. Moreover during the course of deployment there can be non government

White Collar criminals Essay Example | Topics and Well Written Essays - 1750 words

White Collar criminals - Essay Example The problem is that cognitive biases existing in the community prevent people from realizing that white collar criminals are potential threats to the society. Popular perceptions about what constitutes crime can be illustrated if one examines two instances of offenses, one that falls in the stereotypical notion and the other in the white collar crime category, as under: Scenario-1: A mugger waylays a person on a dark, desolated street and demands he parts away with his possessions. The man hands over his wallet and the thug empties it of its contents of 50 dollars and throws the wallet back at the man. He mutters some threats to him, stuffs the bills into his pocket, and sneaks into a murky alley. Terrified but grateful that he is unhurt, the man summons the police, files a report and goes his way, wondering how widespread crimes have become. Scenario 2: An employee of a heating and air conditioning firm attends a complaint at a home which has been damaged in a recent storm. The HVAC unit outside has been battered and the inspection reveals that it requires some minor repairs. However, the employee reports to the homeowner’s insurance company that the entire system needs replacement as it is completely damaged. Thus, his company gains a hefty profit, by fraudulent means. When one considers both these events, it becomes apparent that in the first episode, a thug waylays a person, robs him of 50 dollars. The victim recognizes this act as a crime, and the police register a case against the perpetrator. In the second instance, though the company has gained an undue benefit of a larger sum, the incident has neither been acknowledged as a crime nor has anybody taken cognizance of it. Thus, it transpires that white collar crimes do occur in the society, which is of much greater magnitude than normal crimes, but people hardly recognize this fact. As can be evidenced from the above

Racial and Ethnic Diversity Essay Example | Topics and Well Written Essays - 4250 words

Racial and Ethnic Diversity - Essay Example is rise in diversity so much of a problem This is an imperative question, for by viewing growth in racial and cultural diversity as a problem, policy makers, educators, and journalists, have set the stage for how societies will respond to this change. This does not mean that a change in the ethnic and racial structure of a school or community does not throw up new challenges or necessitate a change in approach as regards the part of educators. New immigrants palpably speak languages other than English, and in several California school districts, it is not unusual for over 40 foreign languages to be there among the student population. The arrival of racial minorities time and again leads to racial clashes and the venting of several kinds of bias and intolerance. Those receiving the new arrivals feel endangered and apprehensive and counter with antagonism and resentment. Finally, and most significantly, diversity is deemed as problematic because American schools have traditionally seen cultural incorporation of immigrants and non-whites as essential to their mission. One of the biggest concerns of politicians and educators during the nineteenth century was how new immigrants would be integrated into the American mainstream. Public schools were often considered the most rational place where task of converting foreigners into Americans could be executed. Still, "Americanization" was not restricted to foreigners. In the southwest it was routine for Native American children to be separated form their families and sent to boarding schools. The point was to convert them into Christians. As far as African American and many Mexican American children were concerned, segregated schooling actually saved them from being subjected to... According to the report findings diversity is deemed as problematic because American schools have traditionally seen cultural incorporation of immigrants and non-whites as essential to their mission. One of the biggest concerns of politicians and educators during the nineteenth century was how new immigrants would be integrated into the American mainstream. Public schools were often considered the most rational place where task of converting foreigners into Americans could be executed. As the paper declares today de-segregation has changed that too. As a consequence, the spoken language of children – be it Ebonics or Spanish - has frequently been subject to eradication. In addition, the cultural variations of these children are associated with cultural inferiority far too often, and not unpredictably, children from these groups are likely to fare poorly in school, get into serious trouble, or for that matter even drop out. Given America’s history, and given the authentic challenges that escort an increase in diversity, several educators and communities would treat this as a problem. Small towns and rural areas are showing that diversity is the country’s future and there is a concerted effort being shown in fostering diversity in the years to come. There is another option. Instead of reacting to rising diversity with apprehension and insecurity, it is feasible to treat diversity as an asset and work out ways of responding to it which facilitate the society to reap benefits from this pluralism.

Against Death penalty Essay Example | Topics and Well Written Essays - 1000 words

Against Death penalty - Essay Example Capital punishment is a controversial topic all over the world because of the immense value associated with human life. No science or technology has so far succeeded in creating an artificial life form in a laboratory setup. We have already succeeded in gathering useful information about even the distant planets in and out of the solar system; but still our knowledge about the origin of life, architecture of the life, life before birth and life after death etc are very limited. Proponents of capital punishment argue that instead of giving capital punishment, keeping the hardcore criminals in prison for a lifelong period is highly expensive and meaningless. In my opinion, considering the value and mysteries surrounding human life, capital punishment is unethical or immoral. The essence of American criminal justice system is that â€Å"partisan advocacy of both sides on a case will promote the ultimate objective that the guilty be convicted and the innocent go free† (Ferdic et al, p.37). Criminal justice systems in most of the countries believe that even if thousands of criminals escaped, no innocent people should be punished under any circumstances. We have lot of examples in which innocent people forced to accept punishments because of the circumstantial evidences collected against them by the law enforcement agencies. We should remember the story of one of the greatest philosophers of all time, Socrates, who forced to accept capital punishment since he tried to teach the word, the truth. In other words, the existing criminal justice laws are not perfect and the loopholes may take the life of even innocent people. Life is the most precious thing in this world and once it is finished, no science or technology can regain it. In short, considering the possibility of human error in judgements, capital punishment should be avoided under all circumstances. Judiciary always declare a person as innocent or criminal