Why They Avert Learning?

The success of any organization depends on the attitude of organizational members toward the process of learning and how they operationally define it. Mostly top management of any organization argues that, they know how to learn but actually they don’t know at all. They believe that learning is the process of correction of errors but ignores the problem inwardly. They think learning is a one way process and spend their lives in this dilemma. According to the experts, learning occurs in two ways. One is single loop learning (e.g. Air conditioner tripped on specific room temperature) and the second is double loop learning (if air conditioner asked why I am fixed at specific temperature and explore about other options).

Professionals are good at single loop learning but not at double loop learning. Because they rarely face unfavorable situations in their lives and when they face undesired situations, they become defensive instead of being realistic. They start blaming on others as the reason of problem. Blaming on others blocks their own learning process. Companies should learn how to break the barriers among their members and make them double loop learners. They should make them able to do reasoning of their own behaviors. There was a famous consulting organization which provided services to different companies. According to the feedback from the clients, they were very much satisfied with the performance of consulting services but the CEO of that consulting organization was not satisfied with the performance of his own staff. He was worried about the performance of the employees and think that the employees are not meeting with standards. He decided to get help from the external consultant to uncover the problems facing by the employees.

During the initial meetings, members were not comfortable to share the problems but after the series of meetings with external consultant they opened up and raised some points. They said that the clients were non-serious and CEO was distant during the process. We were under pressure by our CEO to end the project on time which affected their performance. At time the members were asked to give the evidence of problems they have been discussed, their responses being changed. Instead of being realistic, they presented the problem in such way which stopped learning. Finally, they ended-up unclear conversation. According to the theory of actions; espoused theory will be different from the theory-in-use because people want to maximize the winning and avoid embarrassment.

I am agreeing with the idea of single loop and double loop learning. Most of the times people are committed to change and they want too but they locked-up their selves in defensive reasoning and even they are unaware of the defensive boundary they made around them. Companies can help employees to break their membrane of defensive reasoning by showing the gap between actual and espoused theory of actions and encourage open conversations among the members to make the place of continue improvement. It will help them to understand the deeper aspects of employee-client relationship and also they will learn the process of learning by real discussions. Acceptance should be encouraged instead of blaming each other for any problem. Proper training of the employees can transform organizations into a better place for work.

How to Find the Cheapest Scrap Platinum

The oldest record of platinum use is as an inlay in ancient Egypt. However, the Egyptians though it was a variation of electrum, (a natural blend of gold and silver.) Native Americans used it for centuries in small decorative objects. Platinum was unknown to Europeans until Spanish discovered it in Columbia. The Spanish called it platina, meaning little silver. It was not identified as a new metal until the 1700’s. The metal was introduced into Europe from South America in the middle of the eighteenth century. It is always found in association with other metals, chiefly Rhodium, Osmium, Iridium, Palladium.

Platinum is one of the rarest and purest precious metals in the world. The perfect jewelry material for these fortuitous times, Platinum is regarded by many as a “new” metal. Platinum has been held in high regard as a symbol of wealth and nobility, the true worth of Platinum was underappreciated until the eighteenth century, when the Europeans began to recognize Platinum’s beauty. As a matter of fact, France’s Louis XVI proclaimed it the only metal fit for royalty. Legendary jewelers such as Cartier, Faberge and Tiffany created their timeless designs in platinum. The world’s famous diamonds, including the Hope and Koh-l-Noor, are secured permanently in platinum.

Platinum reached its peak of popularity in the early 1900s, when it was the preferred metal for all fine jewelry in America. It dominated the world of jewelry design during the Edwardian era, the Art Deco period and well into the 1930s. At the onset of World War II, however, the U.S. government declared platinum a ‘strategic’ metal and its use in non-military applications, including jewelry, was banned.

Very few countries have platinum supplies, with South Africa (80%) and Russia (11%) accounting for approximately 90% of the world’s supply. The yearly production from these mines is only 150 tons, which is 1/25 of the yearly production of gold. Moreover, the amount of platinum that can be produced from raw ore is relatively small. To make a single small ring of approximately 3 grams requires approximately 1 ton of raw ore.

Today, platinum is much more valuable than gold. Although it is used in many industrial applications, including the automotive industry, platinum jewelry consistently commands higher prices than even pure gold because of its rarity.

Two of the best ways to find the cheapest scrap platinum is through catalytic converters and scrap platinum jewelry. Due to the prices of platinum being so high as of late, a lot of people are becoming victims of thieves who steal their catalytic converters. It used to be you had to worry about your rims, stereos and gps systems, well not anymore.

A catalytic converter is used to reduce the toxicity of emissions from an internal combustion engine. They were first introduced on cars in the US market for the 1975 model year to comply with tightening EPA regulations on auto exhaust. Each catalytic converter contains between three and seven grams of platinum. Not a bad catch if you can find one legally. Catalytic converters are also used on generator sets, forklifts, mining equipment, trucks, buses, trains, and other engine-equipped machines.

From the scrap yards, the converters make their way into the metal-recycling industry, where the platinum and other precious elements, including palladium and rhodium, are removed and used to build high-tech machinery, including more catalytic converters.

Although it is being brought to the forefront thanks to thieves stealing the catalytic converters, platinum still seams to be the big unknown in scrap metal. Some great places to find old catalytic converters for scarp are the local junk yards, online classifieds, such as Craiglist, US Freeads and Kiji. Another great place, as usual is Ebay. Some people even find them at flee markets and garage sales. The trick is once you get them, finding refiners that will pay decent scrap metal prices for the platinum. It will be less than what the price of platinum is due to the fact that they have to extract it, that price is passed on to you.

Now there is a second way to find the cheapest scrap platinum and that is through jewelry. Again the best places to find great deals on platinum jewelry is through the flee market and garage sales, followed by Craigslist, Us Freeads, Kiji and Ebay. Or if you are really resourceful you can invest in a metal detector and hope for the best.

What is so great about scrap platinum jewelry? Well, the number of knowledgeable buyers and sellers are low. Most people don’t understand that platinum jewelry is 90% platinum and that the other 10% is made up of a platinum group metal. If you call around to your local pawnshops, scrap metal dealers, junk yards, coins shops, and jewelers, you’ll find that most of them are paying about the same for platinum jewelry as 14k gold and some may pay close to what they pay for 18k gold. They are taking advantage of most of the sellers out there who just don’t understand what they have.

If you find the cheap scrap platinum that you are looking for then your next step is to locate a platinum refiner preferably in your area and get their schedule or purchase prices. Your goal is to locate a refiner who will pay you for the “residual” values in your scrap alloy. The key is that you will need to guarantee that you’ll be providing a minimum of 10 to 12 Troy ounces in order to be paid for all your metal rather than just the 90% platinum.

4 Controls That an ETL Data Mapping Tool Must Have

With a view to getting a competitive advantage, many businesses are investing heavily in Big Data (BD) initiatives. However, distilling the initiatives and getting the true value out of it is a difficult challenge. The biggest difficulty in this process is extracting information from multiple sources, information transformation and information loading in a warehouse. This whole process is called as Extract, Transform and Load (ETL). Businesses can use ETL data mapping to solve this problem and make the most out of their mission critical initiatives. However, before referring any integration software, businesses must ensure that it packs controls to deal with different Big Data integration issues.

Big Data and the Associated ETL Issues

Huge amounts of Poly-structured information traversing through and around organizations, i.e., video, logs, and transactional records is organizational Big Data. There are immense benefits of using this pool. Experts believe that businesses using analytics position themselves better in the market. As nearly 80% of any BD project consists of data integration and the remaining job is data analysis.

The cost required to manage such large volumes of diverse data on enterprise applications and open source software is huge. Organizations with traditional warehouses (EDW) using poor ETL are many times incapable of retrieving information from multiple sources. A traditional process fails to solve the purpose as it involves humongous amount of coding, time and cost.

Combination of Controls Required in a Data Mapping Software

Distributed Software Platform: A distributed software platform helps developers in effectively storing and processing the data. Such a model should run on industry-standard servers with direct-attached storage. This model can help users in storing petabytes of data, and scaling the performance by including cost-effective cluster nodes. The distributed framework should help developers in troubleshooting data-parallel problems where the obtained data can be fragmented into small chunks and processed independently.

Distributed Data Ecosystem: This feature helps in scalability and fault tolerance by storing huge files after dividing them into blocks and replicating them on different servers. Such an ecosystem should also offer APIs to read and write data parallelly.

Components for Data Management: It is quintessential for integration software to pack components for aggregating, and transferring large amounts of data from multiple sources into a centralized place. Such an information virtualization feature can transform raw information into a valuable asset.

Data Transferring Components: The ETL data mapping tools should have components for transferring data between different databases. Such components should automate complex processing operations like importing data from MySQL, Oracle database or exporting it back to RDBMS, etc.

The Effects Of Balance Of Trade Surplus And Deficit On A Country’s Economy

INTRODUCTION

It is in no doubt that balance of trade which is sometimes symbolized as (NX) is described as the Difference between the monetary value of export and import of output in an economy over a certain period. It could also been seen as the relationship between the nation’s import and exports. When the balance has a positive indication, it is termed a trade surplus, i.e. if it consists of exporting more than is imported and a trade deficit or a trade gap if the reverse is the case. The Balance of trade is sometimes divided into a goods and a service balance. It encompasses the activity of exports and imports. It is expected that a country who does more of exports than imports stands a big chance of enjoying a balance of trade surplus in its economy more than its counterpart who does the opposite.

Economists and Government bureaus attempt to track trade deficits and surpluses by recording as many transactions with foreign entities as possible. Economists and Statisticians collect receipts from custom offices and routinely total imports, exports and financial transactions. The full accounting is called the ‘Balance of Payments’- this is used to calculate the balance of trade which almost always result in a trade surplus or deficit.

Pre-Contemporary understanding of the functioning of the balance of trade informed the economic policies of early modern Europe that are grouped under the heading ‘mercantilism’.

Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and military security of the state. In particular, it demands a positive balance of trade. Its main purpose was to increase a nation’s wealth by imposing government regulation concerning all of the nation’s commercial interest. It was believed that national strength could be maximized by limiting imports via tariffs and maximizing export. It encouraged more exports and discouraged imports so as to gain trade balance advantage that would eventually culminate into trade surplus for the nation. In fact, this has been the common practice of the western world in which they were able to gain trade superiority over their colonies and third world countries such as Australia, Nigeria, Ghana, South Africa, and other countries in Africa and some parts of the world. This is still the main reason why they still enjoy a lot of trade surplus benefit with these countries up till date. This has been made constantly predominant due to the lack of technical-know how and capacity to produce sufficient and durable up to standard goods by these countries, a situation where they solely rely on foreign goods to run their economy and most times, their moribund industries are seen relying on foreign import to survive.

What is Trade Surplus?

Trade Surplus can be defined as an Economic measure of a positive balance of trade where a country’s export exceeds its imports. A trade surplus represents a net inflow of domestic currency from foreign markets and is the opposite of a trade deficit, which would represent a net outflow.

Investopedia further explained the concept of trade surplus as when a nation has a trade surplus; it has control over the majority of its currency. This causes a reduction of risk for another nation selling this currency, which causes a drop in its value, when the currency loses value, it makes it more expensive to purchase imports, causing an even a greater imbalance.

A Trade surplus usually creates a situation where the surplus only grows (due to the rise in the value of the nation’s currency making imports cheaper). There are many arguments against Milton Freidman’s belief that trade imbalance will correct themselves naturally.

What is Trade Deficit?

Trade Deficit can be seen as an economic measure of negative balance of trade in which a country’s imports exceeds its export. It is simply the excess of imports over exports. As usual in Economics, there are several different views of trade deficit, depending on who you talk to. They could be perceived as either good or bad or both immaterial depending on the situation. However, few economists argue that trade deficits are always good.

Economists who consider trade deficit to be bad believes that a nation that consistently runs a current account deficit is borrowing from abroad or selling off capital assets -long term assets-to finance current purchases of goods and services. They believe that continual borrowing is not a viable long term strategy, and that selling long term assets to finance current consumption undermines future production.

Economists who consider trade deficit good associates them with positive economic development, specifically, higher levels of income, consumer confidence, and investment. They argue that trade deficit enables the United States to import capital to finance investment in productive capacity. Far from hurting employment as may be earlier perceived. They also hold the view that trade deficit financed by foreign investment in the United States help to boost U.S employment.

Some Economists view the concept of trade deficit as a mere expression of consumer preferences and as immaterial. These economists typically equate economic well being with rising consumption. If consumers want imported food, clothing and cars, why shouldn’t they buy them? That ranging of Choices is seen as them as symptoms of a successful and dynamic economy.

Perhaps the best and most suitable view about Trade deficit is the balanced view. If a trade deficit represents borrowing to finance current consumption rather than long term investment, or results from inflationary pressure, or erodes U.S employment, then it’s bad. If a trade deficit fosters borrowing to finance long term investment or reflects rising incomes, confidence and investment-and doesn’t hurt employment-then it’s good. If trade deficit merely expresses consumer preference rather than these phenomena, then it should be treated as immaterial.

How does a Trade surplus and Deficit Arise?

A trade surplus arises when countries sell more goods than they import. Conversely, trade deficits arise when countries import more than they export. The value of goods and services imported more exported is recorded on the country’s version of a ledger known as the ‘current account’. A positive account balance means the nation carries a surplus. According to the Central Intelligence Agency Work fact book, China, Germany, Japan, Russia, And Iran are net Creditors Nations. Examples of countries with a deficit or ‘net debtor’ nations are United States, Spain, the United Kingdom and India.

Difference between Trade Surplus and Trade Deficit

A country is said to have trade surplus when it exports more than it imports. Conversely, a country has a trade deficit when it imports more than it exports. A country can have an overall trade deficit or surplus. Or simply have with a specific country. Either Situation presents problems at high levels over long periods of time, but a surplus is generally a positive development, while a deficit is seen as negative. Economists recognize that trade imbalances of either sort are common and necessary in international trade.

Competitive Advantage of Trade Surplus and Trade Deficit

From the 16th and 18th Century, Western European Countries believed that the only way to engage in trade were through the exporting of as many goods and services as possible. Using this method, Countries always carried a surplus and maintained large pile of gold. Under this system called the ‘Mercantilism’, the concise encyclopedia of Economics explains that nations had a competitive advantage by having enough money in the event a war broke out so as to be able to Self-sustain its citizenry. The interconnected Economies of the 21st century due to the rise of Globalization means Countries have new priorities and trade concerns than war. Both Surpluses and deficits have their advantages.

Trade Surplus Advantage

Nations with trade surplus have several competitive advantage s by having excess reserves in its Current Account; the nation has the money to buy the assets of other countries. For Instance, China and Japan use their Surpluses to buy U.S bonds. Purchasing the debt of other nations allows the buyer a degree of political influence. An October 2010 New York Times article explains how President Obama must consistently engage in discussions with China about its $28 Billion deficit with the country. Similarly, the United States hinges its ability to consume on China’s continuing purchase of U.S assets and cheap goods. Carrying a surplus also provides a cash flow with which to reinvest in its machinery, labour force and economy. In this regard, carrying a surplus is akin to a business making a profit-the excess reserves create opportunities and choices that nations with debts necessarily have by virtue of debts and obligations to repay considerations.

Trade Deficits Advantage

George Alessandria, Senior Economist for the Philadelphia Federal Reserve explains trade deficits also indicate an efficient allocation of Resources: Shifting the production of goods and services to China allows U.S businesses to allocate more money towards its core competences, such as research and development. Debt also allows countries to take on more ambitious undertakings and take greater risks. Though the U.S no longer produces and export as many goods and services, the nations remains one of the most innovative. For Example, Apple can pay its workers more money to develop the Best Selling, Cutting Edge Products because it outsources the production of goods to countries overseas.

LITERATURE REVIEW

In this chapter, efforts were made to explain some of the issues concerning balance of trade and trying to X-ray some of the arguments in favour of trade balances and imbalances with a view to finding answers to some salient questions and making for proper understanding of the concept of trade balances surplus and deficit which is fast becoming a major problem in the world’s economy today which scholars like John Maynard Keynes earlier predicted.

In a bid to finding a solution to this, we shall be discussing from the following sub-headings;

(a). Conditions where trade imbalances may be problematic.

(b). Conditions where trade imbalances may not be problematic.

2.1. Conditions where trade imbalances may be problematic

Those who ignore the effects of long run trade deficits may be confusing David Ricardo’s principle of comparative advantage with Adam Smith’s principle of absolute advantage, specifically ignoring the latter. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile. Global labor arbitrage, a phenomenon described by economist Stephen S. Roach, where one country exploits the cheap labor of another, would be a case of absolute advantage that is not mutually beneficial. Since the stagflation of the 1970s, the U.S. economy has been characterized by slower GDP growth. In 1985, the U.S. began its growing trade deficit with China. Over the long run, nations with trade surpluses tend also to have a savings surplus. The U.S. generally has lower savings rates than its trading partners, which tend to have trade surpluses. Germany, France, Japan, and Canada have maintained higher savings rates than the U.S. over the long run.

Few economists believe that GDP and employment can be dragged down by an over-large deficit over the long run. Others believe that trade deficits are good for the economy. The opportunity cost of a forgone tax base may outweigh perceived gains, especially where artificial currency pegs and manipulations are present to distort trade.

Wealth-producing primary sector jobs in the U.S. such as those in manufacturing and computer software have often been replaced by much lower paying wealth-consuming jobs such as those in retail and government in the service sector when the economy recovered from recessions. Some economists contend that the U.S. is borrowing to fund consumption of imports while accumulating unsustainable amounts of debt.

In 2006, the primary economic concerns focused on: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP), high trade deficits, and a rise in illegal immigration.

These issues have raised concerns among economists and unfunded liabilities were mentioned as a serious problem facing the United States in the President’s 2006 State of the Union address. On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the U.S. to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.

2.2. Conditions where trade imbalances may not be problematic

Small trade deficits are generally not considered to be harmful to either the importing or exporting economy. However, when a national trade imbalance expands beyond prudence (generally thought to be several [clarification needed] percent of GDP, for several years), adjustments tend to occur. While unsustainable imbalances may persist for long periods (cf, Singapore and New Zealand’s surpluses and deficits, respectively), the distortions likely to be caused by large flows of wealth out of one economy and into another tend to become intolerable.

In simple terms, trade deficits are paid for out of foreign exchange reserves, and may continue until such reserves are depleted. At such a point, the importer can no longer continue to purchase more than is sold abroad. This is likely to have exchange rate implications: a sharp loss of value in the deficit economy’s exchange rate with the surplus economy’s currency will change the relative price of tradable goods, and facilitate a return to balance or (more likely) an over-shooting into surplus the other direction.

More complexly, an economy may be unable to export enough goods to pay for its imports, but is able to find funds elsewhere. Service exports, for example, are more than sufficient to pay for Hong Kong’s domestic goods export shortfall. In poorer countries, foreign aid may fill the gap while in rapidly developing economies a capital account surplus often off-sets a current-account deficit. There are some economies where transfers from nationals working abroad contribute significantly to paying for imports. The Philippines, Bangladesh and Mexico are examples of transfer-rich economies. Finally, a country may partially rebalance by use of quantitative easing at home. This involves a central bank buying back long term government bonds from other domestic financial institutions without reference to the interest rate (which is typically low when QE is called for), seriously increasing the money supply. This debases the local currency but also reduces the debt owed to foreign creditors – effectively “exporting inflation”

FACTORS AFFECTING BALANCE OF TRADE

Factors that can affect the balance of trade include;

1. The cost of Production, (land, labour, capital, taxes, incentives, etc) in the exporting as well as the importing economy.

2. The cost and availability of raw materials, intermediate goods and inputs.

3. Exchange rate movement.

4. Multi lateral, bi-lateral, and unilateral taxes or restrictions on trade.

5. Non-Tariff barriers such as environmental, Health and safety standards.

6. The availability of adequate foreign exchange with which to pay for imports and prices of goods manufactured at home.

In addition, the trade balance is likely to differ across the business cycle in export led-growth (such as oil and early industrial goods). The balance of trade will improve during an economic expansion.

However, with domestic demand led growth (as in the United States and Australia), the trade balance will worsen at the same stage of the business cycle.

Since the Mid 1980s, the United States has had a growth deficit in tradable goods, especially with Asian nations such as China and Japan which now hold large sums of U.S debts. Interestingly, the U.S has a trade surplus with Australia due to a favourable trade advantage which it has over the latter.

ECONOMIC POLICY WHICH COULD HELP REALISE TRADE SURPLUSES.

(a) Savings

Economies such as Canada, Japan, and Germany which have savings Surplus Typically runs trade surpluses. China, a High Growth economy has tended to run trade surpluses. A higher savings rate generally corresponds to a trade surplus. Correspondingly, the United States with a lower Savings rate has tended to run high trade deficits, especially with Asian Nations.

(b) Reducing import and increasing Export.

Countries such as the U.S and England are the major proponent of this theory. It is also known as the mercantile theory. A Practice where the government regulates strictly the inflow and outflow from the economy in terms of import and export. One major advantage of this theory is that it makes a nation self sufficient and has a multiplier effect on the overall development of the nation’s entire sector.

CRITICISMS AGAINST THE ECONOMIC POLICY OF SAVING AS A MEANS OF REALISING TRADE SURPLUS

Saving as a means of realizing trade surplus is not advisable. For example, If a country who is not saving is trading and multiplying its monetary status, it will in a long run be more beneficial to them and a disadvantage to a country who is solely adopting and relying on the savings policy as the it can appear to be cosmetic in a short term and the effect would be exposed when the activities of the trading nation is yielding profit on investment. This could lead to an Economic Tsunami.

CRITICISMS AGAINST THE ECONOMIC POLICY OF REDUCING IMPORTS AND INCREASING EXPORTS

A situation where the export is having more value on the economy of the receiving country just as Frederic Bastiat posited in its example, the principle of reducing imports and increasing export would be an exercise in futility. He cited an example of where a Frenchman, exported French wine and imported British coal, turning a profit. He supposed he was in France, and sent a cask of wine which was worth 50 francs to England. The customhouse would record an export of 50 francs. If, in England, the wine sold for 70 francs (or the pound equivalent), which he then used to buy coal, which he imported into France, and was found to be worth 90 francs in France, he would have made a profit of 40 francs. But the customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of France.

A proper understanding of a topic as this can not be achieved if views from Notable Scholars who have dwelt on it in the past are not examined.

In the light of the foregoing, it will be proper to analyze the views of various scholars who have posited on this topic in a bid to draw a deductive conclusion from their argument to serve a template for drawing a conclusion. This would be explained sequentially as follow;

(a) Frédéric Bastiat on the fallacy of trade deficits.

(b) Adam Smith on trade deficits.

(c) John Maynard Keynes on balance of trade.

(d) Milton Freidman on trade deficit.

(e) Warren Buffet on trade deficit.

3.1. Frédéric Bastiat on the fallacy of trade deficits

The 19th century economist and philosopher Frédéric Bastiat expressed the idea that trade deficits actually were a manifestation of profit, rather than a loss. He proposed as an example to suppose that he, a Frenchman, exported French wine and imported British coal, turning a profit. He supposed he was in France, and sent a cask of wine which was worth 50 francs to England. The customhouse would record an export of 50 francs. If, in England, the wine sold for 70 francs (or the pound equivalent), which he then used to buy coal, which he imported into France, and was found to be worth 90 francs in France, he would have made a profit of 40 francs. But the customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of France. looking at his arguments properly, one would say that it is most adequate to have a trade deficit over a trade surplus. In this Vain, it is glaringly obvious that domestic trade or internal trade could turn a supposed trade surplus into a trade deficit if the cited example of Fredric Bastiat is applied. This was later, in the 20th century, affirmed by economist Milton Friedman.

Internal trade could render an Export value of a nation valueless if not properly handled. A situation where a goods that was initially imported from country 1 into a country 2 has more value in country 2 than its initial export value from country 1, could lead to a situation where the purchasing power would be used to buy more goods in quantity from country 2 who ordinarily would have had a trade surplus by virtue of exporting more in the value of the sum of the initially imported goods from country 1 thereby making the latter to suffer more in export by adding more value to the economy of country 1 that exported ab-initio. The customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of Country 1. But in the real sense of it, Country 1 has benefited trade-wise which is a profit to the economy. In the light of this, a fundamental question arises, ‘would the concept of Profit now be smeared or undermined on the Alter of the concept of Trade surplus or loss? This brings to Mind why Milton Friedman stated ‘that some of the concerns of trade deficit are unfair criticisms in an attempt to push macro- economic policies favourable to exporting industries’. i.e. to give an undue favour or Advantage to the exporting nations to make it seem that it is more viable than the less exporting country in the international Business books of accounts. This could be seen as a cosmetic disclosure as it does not actually state the proper position of things and this could be misleading in nature.

By reduction and absurdum, Bastiat argued that the national trade deficit was an indicator of a successful economy, rather than a failing one. Bastiat predicted that a successful, growing economy would result in greater trade deficits, and an unsuccessful, shrinking economy would result in lower trade deficits. This was later, in the 20th century, affirmed by economist Milton Friedman.

3.2. Adam Smith on trade deficits

Adam Smith who was the sole propounder of the theory of absolute advantage was of the opinion that trade deficit was nothing to worry about and that nothing is more absurd than the Doctrine of ‘Balance of Trade’ and this has been demonstrated by several Economists today. It was argued that If for Example, Japan happens to become the 51st state of the U.S, we would not hear about any trade deficit or imbalance between America and Japan. They further argued that trade imbalance was necessitated by Geographical boundaries amongst nations which make them see themselves as competitors amongst each other in other to gain trade superiority among each other which was not necessary. They further posited that if the boundaries between Detroit, Michigan and Windsor, Ontario, made any difference to the residents of those cities except for those obstacles created by the Government. They posited that if it was necessary to worry about the trade deficit between the United States and Japan, then maybe it was necessary to worry about the deficits that exist among states. It further that stated that if the balance of trade doesn’t matter at the personal, Neighbourhood, or city level, then it does matter at the National level. Then Adams Smith was Right!.

They observed that it was as a result of the economic viability of the U.S that made their purchasing power higher than that its Asian counterpart who was Exporting more and importing less than the U.S and that it wouldn’t be better if the U.S got poorer and less ability to buy products from abroad, further stating that it was the economic problem in Asia that made people buy fewer imports.

“In the foregoing, even upon the principles of the commercial system, it was very unnecessary to lay extraordinary restraints upon the importation of goods from those countries with which the balance of trade is supposed to be disadvantageous. It obvious depicts a picture that nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded. When two places trade with one another, this [absurd] doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium.” (Smith, 1776, book IV, ch. iii, part ii).

3.3. John Maynard Keynes on balance of trade

John Maynard Keynes was the principal author of the ‘KEYNES PLAN’. His view, supported by many Economists and Commentators at the time was that Creditor Nations should be treated as responsible as debtor Nations for Disequilibrium in Exchanges and that both should be under an obligation to bring trade back into a state of balance. Failure for them to do so could have serious economic consequences. In the words of Geoffrey Crowther, ‘if the Economic relationship that exist between two nations are not harmonized fairly close to balance, then there is no set of financial arrangement that Can rescue the world from the impoverishing result of chaos. This view could be seen by some Economists and scholars as very unfair to Creditors as it does not have respect for their status as Creditors based on the fact that there is no clear cut difference between them and the debtors. This idea was perceived by many as an attempt to unclassify Creditors from debtors.

3.4. Milton Freidman on trade deficit

In the 1980s, Milton Friedman who was a Nobel Prize winning Economist, a Professor and the Father of Monetarism contended that some of the concerns of trade deficit are unfair criticisms in an attempt to push macro- economic policies favourable to exporting industries.

He further argued that trade deficit are not necessarily as important as high exports raise the value of currency, reducing aforementioned exports, and vice versa in imports, thus naturally removing trade deficits not due to investment.

This position is a more refined version of the theorem first discovered by David Hume, where he argued that England could not permanently gain from exports, because hoarding gold would make gold more plentiful in England; therefore the price of English goods will soar, making them less attractive exports and making foreign goods more attractive imports. In this way, countries trade balance would balance out.

Friedman believed that deficits would be corrected by free markets as floating currency rates rise or fall with time to discourage imports in favour of the exports. Revising again in the favour of imports as the currency gains strength.

But again there were short comings on the view of Friedman as many economists argued that his arguments were feasible in a short run and not in a long run. The theory says that the trade deficit, as good as debt, is not a problem at all as the debt has to be paid back. They further argued that In the long run as per this theory, the consistent accumulation of a major debt could pose a problem as it may be quite difficult to pay offset the debt easily.

Economists in support for Friedman suggested that when the money drawn out returns to the trade deficit country

3.5. Warren Buffet on trade deficit

The Successful American Business Mogul and Investor Warren Buffet was quoted in the Associated Press (January 20th 2006) as saying that ‘The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them’. He was further quoted as saying that ‘in effect, our economy has been behaving like an extraordinary rich family that possesses an immense farm. In order to consume 4% more than we produce-that is the trade deficit- we have day by day been both selling pieces of the farm and increasing the mortgage on what we still own.

Buffet proposed a tool called ‘IMPORT CERTIFICATES’ as a solution to the United States problem and ensure balanced trade. He was further quoted as saying; ‘The Rest of the world owns a staggering $2.5 trillion more of the U.S than we own of the other countries. Some of this $2.5 trillion is invested in claim checks- U.S bonds, both governmental and private- and some in such assets as property and equity securities.

Import Certificate is a proposed mechanism to implement ‘balanced Trade’, and eliminate a country’s trade deficit. The idea was to create a market for transferable import certificate (ICs) that would represent the right to import a certain dollar amount of goods into the United States. The plan was that the Transferable ICs would be issued to US exporters in an amount equal to the dollar amount of the goods they export and they could only be utilized once. They could be sold or traded to importers who must purchase them in order to legally import goods to the U.S. The price of ICs are set by free market forces, and therefore dependent on the balance between entrepreneurs’ willingness to pay the ICs market price for importing goods into the USA and the global volume of goods exported from the US (Supply and Demand).

Service Virtualization Facilitates DevOps Implementation

DevOps is the new paradigm in software development that is meant to bring about synergy amongst development, quality, operations, delivery and management teams. This helps to bring out better quality products in the shortest turnaround time, thus helping businesses to stay ahead in competition. Traditionally, various departments within an enterprise worked in silos with different work ethos and more often than not, at cross purposes with each other. DevOps adopts lean and agile methodologies to break barriers between various disciplines and work seamlessly to achieve optimization and automation.

DevOps is more to do with a change in the work culture of an organization, where synergy and collaboration are the buzzwords. As development and testing of software simultaneously by involving various disciplines of an organisation becomes the new norm, creation of a real test environment where different components of software can be tested assumes significance.

However, there are a few challenges to create a real test environment for DevOps testing:

• The software architecture has individual components that are either evolving or not tested properly.

• The individual components or dependencies are mostly developed and controlled by third parties or partners – at locations that are far off from the parent organisation.

• Ensuring dependencies and various teams handling them to work in tandem is difficult.

• The dependencies might be separated by distance, language and time zones, which are not always possible to be included in a real test environment.

• Dependencies need real datasets to validate their results, which are not always available.

• The task of aligning dependencies for testing purpose is cost prohibitive.

• Delays are inevitable if testing teams have to wait for dependencies to be ready.

The above mentioned challenges can be addressed by using Service Virtualization technique. In this process a virtualized test environment is created, wherein the behaviour of dependencies is simulated as if they form part of the embedded software architecture with connections to other parts of the system. Here, the entire system architecture is not simulated, but only the ones that are needed for testing purposes. Service Virtualization strategy does not require setting up of a real test infrastructure or data sets, but helps testing or development teams to record the behaviour of dependencies – if they perform as desired.

How Service Virtualization works to the advantage of DevOps

• Creates a functional test environment without real dependencies and datasets

• Leads to cost savings, as setting up of real test infrastructure is not required

• Shorter turnaround times as testing teams need not wait for dependencies to be ready or available

• Any number or type of datasets can be used to check the behaviour of dependencies, which can be helpful to study abnormal behaviour of components (if any)

• Glitches thus identified are addressed promptly leading to better quality software made available in the shortest time

• Better quality product leads to better user experience, thus better brand value

Conclusion

The integration of various disciplines in a business to work in tandem is the hallmark of DevOps testing and leveraging service virtualization to achieve the same is the proverbial icing on the cake with respect to savings on cost and time, and enhancement of an organization’s brand value.

How To Evaluate A Business Idea For Developing An Enterprise

Why Do You Need A Business Plan?

Planning is a process that never ends for all businesses. It is extremely important in the early stages of any venture when the entrepreneur will need to prepare a preliminary business plan.

There are different types of plans that may be part of any business operation. These include but not limited to Financial plans, Marketing plan, Human Resource plan, Production plans, Sales plans etc. Plans may be short term or long term or may be strategic or operational. Whatever the type of plan or the function, plans have one important purpose; to provide guidance and structure to management in a rapidly changing market environment.

A business plan on the other hand is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing and human resources. It also addresses both short term and long term decision making for the first three years of operation. Thus, the business plan, or road map, answers the strategic questions of where am I now? Where am I going? And how will I get there? Potential investors, suppliers and even customers will request or require a business plan.

How I Prepared My Preliminary Project Proposal

In my case, I followed the following break downs keeping each section as brief as possible.

1. Background: in this section, I established the context of the project by giving an account of the problem it is trying to address.

2. State of the art: I gave an overview of existing and emerging technology in the field, including an account of rival technologies and a comparison of the advantages and disadvantages of the various options.

3. Proposal: I wrote an overview of the proposed project and the approach, i.e. the activities which I will be undertaken to achieve the project objectives. Clearly establish the research element or novelty component in the proposal.

4. Consortium: an overview of the proposed manpower and establish the required ability to carry out the project successfully (e.g. skills, competencies, etc.)

5. Objectives and Deliverables: Identify (1) the objectives and (2) the deliverables of the proposed project.

6. Competitiveness: if applicable, establish the competitiveness or advantages of the proposed solution compared to other solutions, whether these already exist or are still being researched.

7. Cost: give an overview of the project cost (including start-up cost and working capital requirements).

8. Impact: this section should include:

i. Markets and Uses: identify possible uses and markets for the deliverables of the project.

ii. Benefits and Beneficiaries: identify the beneficiaries of the project’s results (e.g. the project participants, the general public, third parties) and the manner in which they will benefit.

iii. Roadmap: give an indication regarding what further steps, effort, costs and timeframes are necessary before tangible benefits can be realized from the deliverables or results of the project (unless these are realized within the lifetime of the project).

iv. Spillover Benefits: identify any secondary benefits of the project (e.g. facilitating participation in funding programmes, improving Malta’s ranking, strengthening Malta’s reputation in a particular area, etc.)

Preparing a Detailed Business Plan

Stages of writing a business plan are: After deciding to go into business, before starting the business and when updating is required.

Business plans can be written for retail business, wholesale business, service business, manufacturing and any other type of business.

A business plan is written by doing the following:

Identifying all the questions that could be asked about the business.

Determining what further information needs to be gathered to answer all the questions.

Obtaining all the necessary information.

Comparing various alternatives

Making a decision on each question.

A business plan should:

Have a good appearance

Provide an index

Provide a summary

Number each copy

Be signed to show who is submitting it.

Depend on the nature of the business.

A business plan should be organized to carry a cover page, table of contents, executive summary, business description, Marketing plan, organizational plan, operational plan, financial plan and appendices.

Outline of a typical business plan is as below;

1. Title: Feasibility study Report on______________________

Commissioned by_________________________

2. Project consultants

3. Table of contents:

Executive Summary

The Report

Project Background

Objective of study

Project description and

Loan advancement

Promoter

Location

Market and marketing plan

Potential customers

Competition

Pricing

Sales Tactics

Advertising and Promotion

Distribution.

Technical Feasibility and management plan:

Factory

Machinery

Overhead charges

Packaging materials

Raw materials Manpower and Labour costs.

Financial Projection/Feasibility:

Overview on capital requirement

Financial plan

Projected cash flow

Projected profit and loss account

Projected balance sheet

Break-even analysis

Source and application of funds

Organization Plan:

Form of ownership

Identification of partners/Principal shareholders

Authority of Principals.

Management team background

Roles and responsibilities of members of organization

Assessment of Risk:

Evaluate weakness of business

New technologies

Contingency plans.

Schedules:

12 months projected sales

12 months projected purchase

Fixed Assets and depreciation schedule

Profitability index.

Thanks for reading

New Rules for Uploading Applications in the Google Play Store

Introduction

In response to the changing times, the search engine behemoth Google Inc. is tightening screws on the applications that are being uploaded to the Play Store. The company has put in place a special team to screen the new applications for bugs, sexually explicit material and malware. It has put in this mechanism to strengthen its age-related rating system so that its products are in tune with time. Like Apple, Google has its operating system running in different devices. To be more precise, Google has its proprietary Android software powering various devices. Every year, developers make a large number of applications whose functionalities range from calendars to video games. So, it is quite natural to see an updated system in place to check the new applications developed by developers across the world. In this article, we would be looking at the rules the search engine behemoth has introduced for the first time for the benefit of the readers who plan to develop new applications.

Updated Rules

The people who want quality applications look forward to the Google Play Store for downloading them. The applications that are up for grabs include digital games, entertainment software, gaming applications and social media applications. The Silicon Valley software company wants to bring certain rules to tighten the quality before uploading the applications to the Play Store. A content quality team would check whether the applications getting uploaded follow the stipulated standards in the software industry. However, it is not putting in place as stringent rules as what the Cupertino Company has incorporated in its applications store to set high benchmark of quality. Yet, it has made sure that the rules are in sync with the changing times so that only relevant applications get uploaded to its Google Play Store.

1. An expert team will screen each application submitted by developers to find any variation in the content as per the rules laid. Earlier, it used automated technology for screening the applications. The manual intervention is reintroduced to catch and solve the glitches the automated system has ignored.

2. Developers will have to answer certain questions listed in the questionnaires about their applications so that independent review organizations can rate them based on their intended use.

3. Applications submitted without the accompanying questionnaires are liable to get rejected by the expert team. Hence, it will not be published in the Google Play Store..

4. Existing applications that don’t have any rating from the independent agencies would summarily be blocked to bring a level playing ground across the world. This move is certain to help the developers from the developing world to get the required exposure in the global software development industry.

Work Design and Technology

To increase employees’ job satisfaction and productivity technology is used by organizations to redesign jobs and work schedules. Technology changes the organization’s work style and employees’ performance analysis process. Technology is not just an instrument which transfers input to output. This term is used as such a machinery and instrument which is sophisticated in natures and develop output through computers and other electronic instruments. This technology looms the industrial sectors and now cloth can be produced much quicker and faster than before.

Electronic instruments developed for money transfer and finance management, open dynamic progress in banking and finance sectors. Workplace style and work lives of employees are being affected by technology. Continuous improvement is demonstrated in any organization to enhance productivity and efficiency simultaneously. This continuous improvement requires modification in all organizational processes. The term re-engineering comes from developing a better electronic version. In any organization, re-engineering fundamentally demands altering the ways we do things.

Its primary rule is to commence from a plan sheet to rethink to alter current management system. This redesign means to spruce up the process by removing antiquated elements from any work design.

Management responsibility is to understand the key elements and core processes that insert worth to organizations’ distinctive competencies. Since early 1990s, process re-engineering has been popular and all major companies of European countries and of America have introduced some changes in support of work redesigning. The employees, who continue their jobs after redesign process in organization, found that they are not doing the same job. Work redesign process can include more employees’ services excellence, interaction with customers, coordination with suppliers and colleagues, more responsibilities, creativity, follow-up and incentives.

It is mostly tough on employees and takes 3 to 5 years to complete the whole process re-engineering. During this time period, workers get anxious while taking more responsibilities, challenges, new work style and because of risks involved. Implications for process re-engineering is designed and selected on individual and group basis. Employees’ motivation and reinforcement, cyber loafing and ethics related steps are taken on individual basis. Along with decision making, communication & coordination and organizational politics are taken on different look; for group level implications.

By introducing new technology in workplace, job rules and interpersonal relationships are also being changed. For analyzing work tasks its characteristics need to be understand first. These task attributes, collectively affect different jobs and determine employees’ performance, motivations and relationships. Tasks attributes mainly include expertise variety, task identity and its significance, independence provided and feedback. By keeping in mind these tasks characteristics employees’ development need strength can be evaluated for specific job; on the basis of core job dimensions, critical psychological state and personal and work outcomes.

Technology is also facilitated in establishing an ideal work design to enhance overall performance. Organizations are looking towards offering alternative work schedules options for employees. Employees need flexibility in a changing work place and work schedules options as in organizations they act as a strategic tool.

Pollution in Kolkata – Why a Whole City is Turning Into a Health Hazard!

Pollution levels across India are some of the highest anywhere in the world. And on top of this pile of polluted places sits Kolkata. A once beautiful city has been reduced to a huge garbage yard with tons of plastic waste strewn on every square inch of the city. Along with the number of aging buses and trucks spewing smoke – the various coal fires and dusty construction sites, have made the landscape a wasteland. But what has conspired to create this situation? Why has the West Bengal government turned a blind eye to the transport contractors?

Politics has always been a prominent part of the Kolkata culture. However the excessive politicizing of every issue has made it extremely difficult for legislation to be formed. The government in its quandary chooses to sleep over the various bills in the interest of protecting the environment – rather than irk the contractors who pay for the party funds. This has led to an unhealthy environment of government apathy and general callousness, especially in taking care of the living conditions. In its mandate to “provide rights to the poor” they have totally neglected the harm being caused to the environment by the millions of poor in the city.

The classic case of rampant pollution in the city of Kolkata are the buses and trucks plying the roads. In a recent move, a number of NGOs had petitioned that the pollution norms be strictly applied to the errant bus contractors. However the ministry decided to make the announcement with a rider that “people with genuine reasons can get a reprieve from the pollution control measures”!! This kind of obvious molly coddling of the transport contractors have further emboldened them, making it impossible for the police on the ground to fine the law breakers.

Plastic bags is another area where the West Bengal government has failed to check pollution. Elsewhere in all other major cities of India, plastic bags are banned as they cause widespread pollution which is difficult to remove. But not in Kolkata – where the “poor” have to carry their daily bread in plastic bags! The result is that the drainage system is choked in the city and the roads look like an unending garbage yard. Filth and disease accumulate in this waste causing diseases and generally making the whole city an unhealthy place to live in.

The present CPIM government is on its way out. They lost in all the by-polls. Here is hoping that the new government when it arrives, will be able to get rid pf the lethargy and inaction. If the laws are not implemented soon this city is going to become uninhabitable in the next few years! It is time the West Bengal government understood that “giving rights to the poor” does not mean that the environment can be abused!

The Capital Budgeting

A number of factors combine to make capital budgeting decisions perhaps the most important ones financial managers and their staff must make. There are a huge number of variables that must be considered although many can be defined as legible due to their probability of occurrence. However the cost of failure is great with companies facing bankruptcy if their market judgment is vastly incorrect. This report then focuses on evaluating the major risks that effect capital budgeting decisions and how that information can aid the techniques used to analyze fixed asset investments.

First, since the result of capital budgeting decisions have an impact for many years, the firm will lose some of its flexibility. For example, the purchase of an asset with an economic life of ten years locks the firm in for a ten year period. Further because asset expansion is fundamentally related to expect future sales a decision to buy an asset that is expected to last ten years requires a ten year sales forecast. If the firm invests too much in assets, it will incur unnecessarily high depreciation and other expenses. On the other hand, if it does not spend enough on fixed assets, two problems may arise. ‘First, its equipment may not be efficient enough for least-cost production and second, if it has inadequate capacity it may lose a portion of its market share to rival firms, and regaining lost customers will involve heavy selling expenses and price reductions, both of which are costly’. If a firm forecasts its needs for capital assets in advance, it will have an opportunity to purchase and install the assets before they are needed. Unfortunately, many firms do not order capital goods until existing assets are approaching full-capacity usage. If sales grow because of an increase in general market demand, all firms in the industry will tend to order capital goods at about the same time. This results in ‘backlogs, long waiting times for machinery, and an increase in their prices’. The firm which foresees its needs and purchases capital assets during slack periods can avoid these problems. Capital budgeting typically involves substantial expenditures, and before a firm can spend a large amount of money, it must have the funds available – large amounts of money are not available automatically. Therefore, a firm contemplating a major capital expenditure program should plan its financing far enough in advance to be sure funds are available.

A key area concerned with the capital budgeting decisions made by firm’s lies within the capital structure policy as this sets the tone for all future financial decisions.

Incorporating the tax deductibility of interest but not dividends and bankruptcy costs leads to the trade-off theory of capital structure. Some debt is desirable because of the tax shield arising from interest deductibility but the costs of bankruptcy and financial distress limit the amount that should be used. This is because when companies are highly levered the threat of default risks is great. Therefore an optimal range of debt finance needs to be incorporated into capital structure policy.

This is an extremely important concept for companies to consider when undertaking in capital budget decisions as their capital structure will have a large influence in determining which investment options to pursue. For example if the company decides to follow an investment proposal where the discounted payback period is great during the later stages of the project although the initial cash outlays are large. If the company is heavily financed through debt then the risk placed on that project will be high due to the probable default risk occurring if the short term future produces an uncertain event that throws the investment into doubt. A recent example of this case is described below:

The recent crisis in the football industry has demonstrated the importance of keeping a tight control of a company’s finances. As the industry became increasingly profitable throughout the 1990’s many clubs operated under the trade off theory principles. To incorporate increased spending in parallel with exponential transfer and wage increases clubs borrowed excessively to a point where the industry could not sustain itself any longer. This reached a head during May 2002 when the sudden collapse of ITV Digital resulted in the threat of bankruptcy for many smaller clubs. This situation was due to fact that smaller clubs had gambled their future on the excessive amounts of capital they were receiving from ITV Digital. Capital budget decisions had been based around spending for short term gains thus allowing football clubs to neglect their long term survival and as a result over six hundred footballers were made redundant during the summer in order to cut costs.

For example the highly profitable semi-conductor companies of the mid 1990’s like Samsung, did not shift their capital budgeting decisions policy towards higher levels of debt as the trade off theory suggests. This can be explained through the fact that in high-tech growth industries current assets are best described as risky and intangible. Therefore borrowing heavily would appear foolish as in times of crisis the company’s current assets would be rendered worthless resulting in nothing tangible to safeguard against spiraling default payments. This does appear slightly pessimistic considering during times of prosperity one would expect expansion and growth however there are many other risk factors that need to be taken into account when forming capital budgeting decisions.

Sales Stability: Companies with a stable source of income can feel more comfortable about supporting higher levels of debt because they are able to service the debt.

Asset Structure: When fixed assets are at a higher percentage relative to current assets, higher levels of debt can be supported due to the security factor. The lender is aware that if the interest can not be paid, fixed assets can be sold off.

Operating Leverage: The relationship between fixed and variable costs suggests that a high level of operating leverage will result in a high level of fixed costs. Therefore a company that is highly levered in operating leverage should have low levels of financial leverage to prevent the increase of costs.

Management Attitudes: These attitudes change regarding the current financial climate and whether personal styles tend to be more conservative or aggressive.

Lender and Rating Agency Attitudes: The credit rating of a firm has implications regarding the entire capital structure policy of a firm.

It is essential that top management is aware of the information gained from producing the capital budgeting decisions and it is not just limited to the financial management department. Often within companies there is a capping of the capital budget made by top management which can extinguish any investments projects no matter how profitable they might be. Therefore there needs to be a good two way communication process between senior management and financial management to prevent conflict occurring.

One way of achieving this is through SWOT analysis. Before developing strategies to accomplish the firm’s objectives, a manager needs to access the internal strengths and weaknesses of the firm. This evaluation should include the firm’s financial health, physical capital, human resources, production efficiency, and product demand. External threats and opportunities that impact the firm’s ability to accomplish its objectives also need to be considered. An external threat and opportunity analysis might include evaluating the behavior of close competitors or assessing the impacts of the business cycle on clientele incomes and the resulting product demand. The SWOT analysis helps the firm understand the current constraints placed on it by both internal and external forces and enables the firm to take corrective action, when possible to better position itself to accomplish its objectives.

Through implementing SWOT analysis correctly a greater amount of information is available to make informed capital budgeting decisions. The technique can then be implemented with in standard investment appraisal techniques such as NPV, discounted payback period and IRR. By providing SWOT analysis to aid capital budgeting decisions the threat of failure deceases. However reviewing or post-auditing is a final step to review the performance of investment projects after they have been implemented. While projected cash flows are uncertain and one should not expect actual values to agree with predicted values, the analysis should attempt to find systematic biases or errors by individuals, departments, or divisions and attempt to identify reasons for these errors. Another reason to audit project performance is to decide whether to abandon or continue projects that have done poorly. Therefore in order to eliminate poor performance the various risks associated with capital budgeting decisions need to be applied as strictly in the auditing process to aid in the decision making process for future capital budgeting decisions.