Study On The Sources Of Islamic Jurisprudence Finance Essay - Free Essay Example

Sample details Pages: 12 Words: 3640 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Islamic Finance is dealing in financial matters based on the Islamic Jurisprudence (Shariah), therefore it is important to understand what Islamic Jurisprudence (Shariah) is. The main sources of Islamic Jurisprudence are as follows: For Muslims, the first and foremost ruling for any matter, social, economical, and religious, comes from the Holy Quran followed by the Hadith and the Sunnah of the Prophet Muhammad (p.b.u.h). If the matter is not clarified within the mentioned, Shariah allows the use of Ijma, Qiyas and Ijtihad. With regards to financial matters, the rulings are mentioned clearly in the Quran and the Sunnah. Principles of Islamic Finance As already mentioned, the Holy Quran does not only act as guidance for the religious issues but also for the working of an individuals daily life. A Muslim is obliged to follow the commandments that are laid down in the Holy Quran and also by the Prophet Muhammad (p.b.u.h). Financial issues are considered one of the more important issues that the Islamic Jurisprudence controls in order to maintain a more equitable society (Gait and Worthington, 2007). According to Gait and Worthington (2007), many scholars have studied the Islamic finance in great depth and have generally established that the fundamental principles of Islamic Finance (based on Shariah) are (a) the prohibition of Riba (excess amount on the principle lent) and the elimination of debt based financing, (b) the prohibition of Gharar (uncertainty, risk and hazard) therefore elimination of asymmetric information in contracts, (c) The prohibition of financing or investing in activities deemed sinful and socially irresponsible for example, gambling and alcohol, (d) the sharing of risk between the owners of the business and the sharing of profit and losses (this is considered to be an important part of Islamic Finance and hence will be looked at in detail later on in the essay), (e) there should be materiality and the transaction needs to be real and (f) justice should be maintained and it has to be made sure that exploitation does take place due to the transaction (Gait and Worthington, 2007). Prohibition of Riba (Interest) There are various different definitions that are given for the term Riba. According to Al Jarhi and Iqbal (2001) Riba is an Arabic word meaning any increase in the amount of loan that a debtor has to pay to a lender. Metwally (2006) on the other hand related Riba to usury. According to Usmani (2002: p.6) Riba means excess, increase or addition and as interpreted by the Shariah, it implies any excess compensation without due consideration. Nonetheless, Riba has been clearly prohibited in the Quran and the Sunnah. Following are some of the commandments worth mentioning: Those who devour usury will not stand except as stands one whom The Evil One by his touch hath driven to madness. That is because they say: Trade is like usury. But Allah hath permitted trade and forbidden usury (Q uran: 2:275). O Ye who believe! Fear Allah and give up what remains of your demand for usury, if Ye are indeed believers. If Ye do it not, take notice of war from Allah and His Apostle. But if Ye turn back, Ye shall have your capital sums: Deal not unjustly and Ye shall not be dealt with unjustly. (Quran: 2:278-279). That which you give in usury in order that it may increase in other peoples property has no increase with Allah; but that which you give in charity, seeking Allahs countenance, has increase manifold. Allah is He Who created you and then sustained you, then causes you to die, then gives life for you again. Is there any of your (so called) partners (of Allah) that does aught of that? Praised and exalted be He above what they associate with him. Corruption does appear on land and sea because of (the evil) which mens hands have done, that He may make them taste a part of that which they have done, in order that they may return. (Quran: 30: 38-41) With regards to Ha dith, Muslim narrated on the authority of Abu Said Al Khudriy; the Messenger of God (p.b.u.h) said: Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt; like for like, hand to hand, in equal amounts; and any increase is Riba. The above mentioned commandments clearly declare Riba as unlawful and hence prohibited. Although the reasons for the prohibition of riba are not clear, scholars have provided numerous reasons as to why riba is declared as unlawful by the Shariah. According to Sarker (1999), riba creates injustice between the borrower and the lender where the lender is clearly at an advantage. The lender does not only get a positive and fixed rate of return, but also no share in the risk which then completely becomes a burden for the borrower. Another reason why riba is forbidden is because Shariah does not allow making money from money as it is a medium of exchange (Gait and Worthington, 2007). Furthermore, riba not onl y creates hardships for the borrower who has to make additional payments as well as return the original principle amount borrowed, it is in a way unfair for the lender as well who is entitled to a fixed return even though the profits made by the borrower are far greater (Iqbal and Molyneux, 2005). It has to be noted however, that Islam is not the only religion that forbidden riba (interest). The Torah (Holy Book for Jews) and the Bible have forbidden dealings based on interest (Gait and Worthington, 2007). Following are a few verses translated from the Hebrew Bible prohibiting interest (Cohen and Meislin, 1964: p 250-251) Exodus XXII: 25-27 25. If thou lend money to any of My people, even to the poor with thee, thou shalt not be to him as a creditor; neither shall ye lay upon him interest. 26. If thou at all take thy neighbours garment to pledge, thou shalt restore it unto him by that the sun goeth down; 27. for that is his only covering, it is his garment for his skin; wherei n shall he sleep? and it shall come to pass, when he crieth unto Me, that I will hear; for I am gracious. Leviticus XXV: 35-37 35. And if thy brother be waxen poor, and his means fail with thee; then thou shalt uphold him: as a stranger and a settler shall he live with thee. 36. Take thou no interest of him or increase; but fear thy God; that thy brother may live with thee. 37. Thou shalt not give him thy money upon interest, nor give him thy victuals for increase. Deuteronomy XXIII: 19-20 19. Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of anything that is lent upon interest. 20. Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the Lord thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it. Gamoran (1971) based on the above verses argues that the law prohibiting interest was applicable to Israelites. The Prohibition of Gharar Gharar is generally translated as risk, hazard or uncertainty (Gait and Worthington, 2007). According to Professor Mustafa Al Zarqa (cited by Gamal, 2000), Gharar is a sale of probable items whose existence and characteristics are not certain, due to the risky nature which makes the trade similar to gambling (Gamal, 2000: p 7). Uncertainty can also be caused due to asymmetric information especially in case of a contract. Since Shariah believes in the fair dealing between the two parties and as uncertainty leads to injustice, if such uncertainty is not declared, it will be considered unlawful (Omar and Haq, 1996). Gamal (2000) also argues that sale of any item for which the existence and characteristics are risky or uncertain, will also be defined as Gharar, as this uncertain nature will make the trade similar to gambling. According to a Hadith narrated by Ahmad and Ibn Majah on the authority of Abu Said Al Khudriy: Muhammad has forbidden the purchas e of the unborn animal in its mothers womb, the sale of milk in the udder without measurement, the purchase of spoils of war prior to their distribution, the purchase of charities prior to their receipt and the purchase of the catch of a diver. Gamal (2000) states in this regard, that since the sale of fish that has not actually been caught, or an unborn calf (as mentioned in the Hadith) account for uncertainty and hence it is in the best interest of the contracting parties to be sure of the nature and characteristics of what is being traded. In conventional banking, two areas where Gharar is said to be applied is the insurance and financial derivatives. In insurance contracts, a premium needs to be paid regularly to secure against something that is uncertain. In this case, it is possible that the insurance company keeps receiving premium if nothing happens or the insurance company might end up paying a huge amount of money possibly after receiving the first premium (Gamal 2000). Prohibition of gambling and games of chance (Maysir) Maysir, also known as gambling and other games of chance by many jurists, is another form of transaction that is explicitly forbidden in the Holy Quran. Iqbal and Molyneux (2005:p 15) provide the following evidence from the Holy Quran regarding Maysir: O, you who believe! Intoxicants (all kinds of alcoholic drinks), and gambling, and Al Ansab (animals that are sacrificed in the name of idols on their altars) and Al Azlam (arrows thrown for seeking luck or decision) are an abomination of Satans handiwork. So avoid that (abomination) in order that you may be successful (Holy Quran 5:90). Although the rules of shariah are accepted by Muslims without any questions with regards to why something is forbidden, Iqbal and Molyneux (2005) provide some reasoning as to why games of chance and gambling are forbidden. They argue that such activities are associated with high risk in that a person can either gain a lot by sacrificing ve ry little as well as lose everything. This according to Iqbal and Molyneux leads to financial and societal problems and these activities do not generally add to the wealth of the society. Prohibition of investing in activities that are considered sinful Like gambling, the Shariah law does not allow an individual to invest in activities that are considered to be sinful or harmful to the society. Such activities can be investing in alcohol, pork or drugs which are considered to be forbidden for consumption by the Islamic Doctrine (Gait and Worthington, 2007). Accordingly Lewis and Algaoud (2001) argue that the aim of shariah is to promote ethical investments and therefore, any individual or an organisation is not allowed to trade in any commodity or activity that has been declared Haraam (forbidden). As we have seen that Islamic law (Shariah) has forbidden trading based on riba (interest), gharar (uncertainty and hazard), maysir (gambling and other games of chance) and invest ment in activites and commodities deemed unlawful, it is interesting to see what alternatives Islamic finance and Islamic banks have provided especially to replace riba (interest) which is a common variable that is used to attract investments and savings not only in the western economies but also in many eastern economies as well. A unique feature that is provided by the Islamic finance is the profit and loss sharing system. In theory, this is the main difference in the working of conventional banks and the Islamic banks. Although there are other modes of financing available through Islamic banks, the profit and loss sharing system is considered to be the heart of Islamic banking (Chong and Liu, 2009). ISLAMIC MODES OF FINACE As already mentioned, theoretically, Islamic banks differ from conventional banks in that they are not allowed to trade riba and are based on the profit and loss sharing system. There are two types of contracts that are based on this profit and loss shari ng system provided by the Islamic banks: Musharakah (joint venture or full equity partnership) and Mudarabah (profit sharing or partial equity partnership). Musharakah (joint venture or full equity partnership) It is narrated in Hadith Qudsi that God Almighty has declared that He will become a partner in a business between two Mushariks until they indulge in cheating or breach of trust (Usmani, 2002) Musharakah is a concept that is based on the profit and loss sharing system. According to Usmani (2002), the literal meaning of the word musharakah is sharing. Iqbal and Molyneux (2005: p 2) define musharakah as an arrangement where two or more parties establish a joint commercial enterprise and all contribute capital as well as labour and management as a general rule. It is quite clear for the definition that in musharakah arrangement, the partners have to provide the capital and the labour as well be involved in the decision making process. Hence in a way all the partners inv olved in a musharakah arrangement do not only share profits but also the risks associated with the venture. In the context of Islamic banking, musharakah is an agreement between the Islamic bank and the customer who then become partners or a joint venture agreement. The profits and loss that come about from a musharakah setting are shared equally among the parties or on a pre determined ratio (Gait and Worthington, 2007). The Islamic bank can however terminate the joint venture agreement after a certain time period or upon completion of certain conditions (Chong and Liu, 2009). According to Lewis and Algaoud (2001), musharakah contracts can be made in two ways, through permanent contract and a diminishing musharakah. A permanent contract in a musharakah setting that provides an equitable share of the annual profit and losses to its parties or on terms originally agreed. The second type, as Lewis and Algaoud (2001) state, is a musharakah setting that is a diminishing contract. This d iminishing musharakah is generally preferred by Islamic banks as it allows them to reduce their share of the project annually and obtain periodic profits as well, while the share of the joint partner (the banks customer) increases till the point of full ownership. In drawing a musharakah contract, the parties might usually require the help of legal experts in order to avoid riba and Gharar (Gamal, 2000). Mudarabah (profit sharing or partial equity partnership) Mudarabah is a very old form of profit sharing that was used by the tradesmen even at the time when Muhammad (p.b.u.h) was not declared a Prophet. The best example of Mudarabah is the fact that the Prophet Muhammad (p.b.u.h) himself practiced it with Khadija (r.a) almost fifteen years before the establishment of Islam (Adbul Gafoor, 2006). According to Obaidullah (2005), Mudarabah is a setting through which an owner of capital provides finance to fund a specific venture or business that has been indicated by the borrower . Therefore, in an Islamic bank setting, the bank will provide the entire amount of capital that is needed for the venture, while the expertise, labour and decision making will be provided by the customer (Chong and Liu, 2009). Mudarabah can hence be seen as a silent partner agreement. In another way, an individual may wish to deposit capital in the bank which can then use it to invest in accordance to Mudarabah. Mudarabah differs from musharakah on the profit and loss sharing. Where in musharakah both the profit and the loss are shared by the parties, in a Mudarabah setting or contract, the profits are shared on a pre determined ratio while the loss is completely born by the owner providing the capital (Chong and Liu, 2009; Gait and Worthington, 2007). However it has to be noted that only loss that occurs in the normal working and not due to the negligence of the entrepreneur will be borne fully by the capital owner (Sarwer, 1999: p 4). In a banking setting, the Islamic bank as a p rovider of finance will face the entire loss. This in a way keeps the banks more disciplined as they have to distinguish between good and bad customers and not involve in deliberate risk taking (Chong and Liu, 2009). This characteristic of Mudarabah has also been recognised by Gamal (2000) who argues that Mudarabah can be a very risky method of financing as the entrepreneur does not invest anything in the business but merely gives his time and skills. Therefore, the Islamic banks have to carefully analyse the project before the decision regarding investment is made. The two mentioned modes of financing are based on the unique feature of the profit and loss sharing. In Islamic banking and finance, there are other modes of financing that are not particularly based on the same profit and loss sharing basis as musharakah and mudarabah. Murabaha Murabaha is not particularly a mode of finance as musharakah and mudarabah but is more like a sale. In a murabaha setting for the Islam ic banks, the customer can ask the bank to buy a good (for example car, machinery etc) on their behalf and agree to pay a profit margin when making the payments to the bank (Gamal, 2000). For this to take place, the customer usually provides the bank with the specification and the prices of the goods that it wants the bank to purchase. The bank on the other hand studies the prices that it has been given and forms conditions of payment. Only when the customer and the bank have agreed on the terms and conditions will the sale take place. The bank will then purchase the goods and then sell it to the customer (Gait and Worthington, 2007). In a murabaha contract, the profit that the bank obtains from the sale of the contract has already been agreed by the customer (Metwally, 2006). Although in the murabaha contract the profit margin may be considered to be a form of interest, the reason why it is not considered so is because the profit is made from the exchange of goods for money rather than money for money (Mills and Presley, 1999). Furthermore, to comply fully with Shariah, in a murabaha contract, goods must be specified clearly, the bank must have ownership of the goods before making the sale, the original cost price must be known by the customer and the customer must also agree on the profit margin which in turn has to be de linked to the repayment period (Gait and Worthington, 2007; Mills and Presley, 1999). However, Saleem (2005) argues that although murabaha is being widely used by the Islamic banks, it is not being done so in compliance with the Shariah rules and regulation. Usmani (2000a) on the other hand states that murabaha has only been allowed by scholars under very strict conditions. If these conditions are not fulfilled, murabaha will not be allowed. Bai Muajjall (deferred payments) Bai Muajjall is somewhat similar to the murabaha but is structured on the basis of deferred payment. Where the delivery of goods will be immediate, the payment for the goods will be made on a later agreed date either in instalments or lump sum. This price that needs to be paid will be agreed upon at the time of sale and will not include any charge for deferred payments (Chong and Liu, 2009). This kind of sale can be seen as a sale on credit which, as accepted by Islamic scholars, is permissible and does account to riba. This is because the increase in the price is due to deferment of payment and is agreed by the buyer and seller at the point of the sale. However, it the amount of debt increases as a result of deferment, then it would not be allowed (Gamal, 2000). Bai Salam According to Iqbal and Molyneux (2005: p 25), Salam is a contract for sale or purchase of goods at a specified future date with the price of these goods paid in advance at the time of the contracting. Although as a general rule, the goods that are being purchased or sold must physically exist to avoid Gharar, Bai Salam is one such exception. Gamal (2000: p 17) provide s evidence on this from Hadith narrated on the authority of Ibn Abbas: The Messenger of Allah came to Madinah and found its inhabitants entering salam contracts (with the price paid in advance) in fruits for one, two and three years. He said: Whoever enters a salam contract, let him specify a known volume or weight and a known term of deferment. According to Usmani (2000a: p 185-187), the Prophet Muhammad (p.b.u.h) allowed salam contracts on very strict conditions. Therefore, for the salam contract to be permissible, the commodities must not be available at the time of the contract, the quality and the quantity of the goods must be known, the date and the place of delivery must be clearly defined and the full purchase price must be paid at the time of the contract (Gait and Wothington, 2007). Istisna (Manufacturing Contracts) Istisna contracts are a form of manufacturing contracts where one party agrees to produce or manufacture goods which are to be delivered at a futur e date at a predetermined price (Chong and Liu, 2009). Gamal (2000: p 17) translates Istisna as commission to manufacture. It is a relatively new concept in Islamic banking and allows a party to obtain industrial goods on either a full upfront payment or deferred payment for a deferred delivery (Gait and Worthington, 2007). The advantage of istisna is that since the cost price is either prepaid or deferred as instalments, it helps in the creation of the a product at a cheaper price than buying the complete product (Gamal, 2000; Gait and Worthington, 2007). Although the permissibility of Istisna has been adopted through the use of Qiyas (analogy) by the scholars with the permissibility of Bai Salam (Gamal, 2000), the two are different. Istisna involves a commodity that needs manufacturing, the payment can either be lump sum or deferred instalments but the time of delivery could be unknown (Iqbal and Molyneux 2005). Don’t waste time! Our writers will create an original "Study On The Sources Of Islamic Jurisprudence Finance Essay" essay for you Create order

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Democracy vs. Absolutisn free essay sample

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Split Brain Research Essays - Neuroscience, Cerebrum,

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effect of nutrient on bean essays

effect of nutrient on bean essays Effects of excessive macronutrients on growth and development of ( Phaseolus Vulgaris ) I predict that excessive Nitrogen(N) added to soil will result in the burning of the leaves and moderate color loss in the bean plant. Excessive Phosphorus(P) added to soil will result in death of the bean plant within a month. Excessive Potassium(K) added to the soil will result in yellowing of leaves and slowly lead to death of the bean plant. Excessive Iron(Fe) added to soil will result in death of bean plant within weeks. Introduction A experiment was conducted at CSULA greenhouse. To investigate the influence of 16 times the recommended macronutrient amount added to the bean plants in a one month period. The macronutrient Nitrogen, Phosphorus, Potassium are the most common components of plant fertilizers. These macronutrients are the chemical building blocks of plant structure. The addition of macronutrients will generally enhance plant growth. But excess amount will also cause plasmolysis of root cells and damage to or death of the plant (Gomez Material Pot experiments were carried out during January to March 2004 to investigate the effect of different levels of macronutrients on growth and development of kidney bean plant (Phaseolus vulgaris) at CSULA greenhouse. Each pot was filled with 1000g of mix soil (pH6.5). The seeds were bought in1997 from Burpee Company. The seeds were planted on Dec. 12, 2003 in a mixture of one part peatmoss, redwood compost (by Orchard Supply Hardware) a...

Marketings Role in the Organization †Essay

Marketings Role in the Organization – Essay Free Online Research Papers Topic: If the premise is that marketing creates value, then explain marketing’s role in the organization. In the modern economic society, marketing has been very close to everyone’s life. There are also some organizations such as enterprises, schools, institutions and government which are adopting various marketing activities every day in order to create more benefits for themselves. Drucker (1974) has stated that the purpose of marketing is to make selling surplus. The aim of marketing is to fully realize and understand customers, in order to enable products or service to fit customers and sell itself. Thus, marketings role as a driver of an organizations value chain will be stressed as value chains are increasingly shaped by consumer expectations and demands. This essay will clarify how the marketing’s role in Sony to be a value creator in various ways. In order to illustrate how marketing create value to the firm, it is necessary to understand the definition of marketing. What is marketing on earth? Marketing is a managerial function and a set of courses for communicating, creating, managing customer relationships and delivering value to customers in ways that benefit the organization and its stakeholders (American Marketing Association),date?. Marketing, by means of exchanging, results in obtaining the required products and service. Exchanging, the proceeding steps of value creation, usually will benefit mutually and further the exchanging of mutual values. The essence of marketing is aimed at creating customers’ value and satisfaction. A precise definition to the studies of marketing as given by Kotler (2004) is that the profitably contented with the requirement. Moreover, marketing assigns all those activities which accelerate services or the movement of goods from the producer to the consumer. In other words, it means those activities connected with distribution, advertising, promotion, merchandising, product planning, publicity, research and development, transportation, sales and services or warehousing of goods (Indiainfoline, 2002). Sony is a company with a reputable name and a great trade of brand recognition worldwide. The company rapidly presented itself to the world as a technological inventor capable of creating many consumer-friendly first such as the Walkman, the transistor radio, and the camcorder, although it started a small Japanese telecommunications company in Tokyo. Based on Southgate (1994), a brand is not a name, graphic device or logo. It is a part of intangible values in the minds of consumers. A strong brand is therefo re alive, complex, rich and enormously powerful. However, Sony is facing profits and sales are down or are gradual down, RD and capital investment cost are arising, competitors are moving in with copycats, the struggle between VHS and Beta and the research for a smash hit product such as the Walk-in or the Trinitron. According the survey of Business Week (2005), Sony, No.28, which declines 16% in brand value in the 2005 ranking. Although the firm is pioneered the Walkman, left Apple to reform portable MP3 players, as well as digital downloading and organizing of music. Thus, the RD group becomes a key element of corporate strength, or weakness, with the company highly dependent on its ability to deliver significant new technology, when expected (Webster, 1990). Similarly, Urban and Hauser (1980) indicated that the firm need a strategy for development. It must learn and understand how consumers perceive products, what needs exist, what consumer preferences are relative to the needs, and how consumers choose among products. This essay focuses on deep product strategy as a value creator to Sony. Marketing acts a central role in translating marketing information into products and afterward positioning these products in the target market from new product development process (Song, Montoya-Weiss, Schmidt, 1997). Also, the effective development and management of products can be an important factor in determining whether a company will succeed in gaining business from the major account market (Turner, 1990). Sony implemented restructuring plan recently, pointed at putting the struggling consumer electronics giant back on its feet, but got a doubtful response when the company presents of its new Walkman type a portable music player. A news from Taipei Times (2005) described that Sonys content-to-product strategy and the new plan disappointed those looking for a more radical departure at a company that is struggling with the likes of Apple, which marries style and high-tech sophistication in its must-have iPod music player. The company’s plan lacks in details and similar to earlier plans which have not worked, Nomura Securities analyst Eiichi Katayama told. New products are a necessary response, if the firm is to retain its marketing effectiveness, to changing customer preferences and dynamic competition in the marketplace. A stagnant product line is good evidence that an industrial firm has failed to keep up with advancing technology and the state-of-the-art in its industry (Webste r, 1990). In addition, a source of new product stimulus is a customer request to produce a specific product that the customer has designed (Urban Hauser, 1980). Sony needs to approach an effective managerial strategy of new product development that is likely to achieve success, but at the same time minimize risk. According to Magrath and Higgins (1992), innovation need satisfy consumer needs. These needs may relate to new product designs with appeal, new product uses, or the innovative developing of new groups of product users. Moreover, a more sophisticated strategy to react to competition is the â€Å"second but better† strategy. The firm waits until the competitor’s product is revealed and then not only copies it, but improves on it. The objective here is to be flexible and efficient so as to produce a product that will be superior to the competition without incurring the heavy market developmental expense for the product. Another approach to development is through the notion that someone must buy a product. The marketing strategy is based on finding consumer needs and then building a product to fill them (Urban Hauser, 198 0). Similarly, a firm’s new product strategy is increasingly recognized as a critical part of the total business plan. The key product strategies are developing highly innovative products, introducing products that meet customer needs more effectively, and introducing products with unique features for customers (Cooper, 1983). Sony flaunted its PSX, the enhanced PlayStation 2 video-game machine. It also works as analog TV, a DVD recorder, music player and digital photo album. The design of a single machine that has a little bit of everything seems logical and attractive to customers. Some analysts argue that audiovisual equipment and the game machine dont necessarily go together since the life cycles of AV machinery are much shorter, requiring constant upgrades. Moreover, the product doesn’t match the market, Kazumasa Kubota says, analyst with Okasan Securities Co. in Tokyo. The PSX may sell in amounts when it first goes on sale, but it will be hard to keep the sales going (Kageyama, 2003). Many as 90% of new products may fail in the market because many companies are scrambling to develop innovative high technology products. Then a definite need for the product exists in the market which must be determined. In addition, competitive products must be analyzed to assess by the market and segmented to i dentify target markets that will obtain greatest profits from the product and offer competitive advantages (Lucas Bush, 1984). Sony made itself into poor positioning and misunderstands of consumer needs. Urban and Hauser (1980) stated that positioning is the identification of a set of psychological need attributes and the description of the level of each attribute for a new product. The companies should pay much attention to the positioning issue as their discuss new product design. One of the major efforts in successful new product design is to define a good psychological positioning and a set of physical features to back it up. In order to avoid products failure, Moon (2005) analyzed companies can change customers mentally classify their products by positioning these products in unexpected ways. The firms through reverse, breakaway and stealth positioning are to shift consumers’ thinking in order to create a profitable place to ply their merchandises. In addition, different customers are likely to have different needs requiring some adjustment of the product. This means that the selection of custome rs, market segmentation strategy, is the key, long-term strategic choice for the industrial firm (Webster, 1990). Indeed, product position is strategically important because it can take years to create, it is difficult to change, and it affects business success and competitive strategy. A product or service position involves the set of associations with the product. It is created over time, often from a large assortment of sources such as the product design, the advertising, the store in which it is bought, and who uses it (Aaker, 1988). A product does not have novelty to benefit from original new positioning, nor does it have to be past its prime. The old rule of the product life cycle is by simply challenging consumers notions. Thus, from time to time, it makes sense for a company to review its product portfolio. Such a review can usefully be conducted once or twice per year. Grouping products according to approximate stage in the product life cycle may be a useful first step: new products; growth products; mature products; and declining products. Effective marketing may be successful in retarding the inevitable progress of the product life cycle and may bring the market back to an earlier stage, such as moving from maturity back to growth (Webster, 1990). Because of global competition and rapid technological advances, high technology products such as digital cameras and notebook computers have short life cycles. The company may upgrade its characteristics over time for renewing the competitiveness of a product. Wh ile products contain a set of features with some alternatives for each, design involves complex decisions: which features to upgrade, when to upgrade, and what alternatives should be chosen. The decisions will help managers in deciding the content and timing of promotions to maximize life cycle profit. And it merges traditionally made by various operations in the enterprise (product design, process design engineering, marketing, production planning and supply chain management) (Damodaran Wilhelm, 2005). Today, marketing’s role in the organization has become more and more important. Proper market strategy, intelligent product definition and execution of without mistakes will separate winners from losers in a market economy with very little opportunities for error. Sony is trying to pursue innovation by diversifying its core technologies. But the firm neglects a customer-need orientation as an organizing principle for new product development. For example, the new portable walkman is not satisfying consumer demands. Understanding the needs of the customer is an axiom found in all product development literature. As the result, companies should evaluate and refine to produce a product with consumer psychological attributes which indicate a high probability of success in the market. In addition, the new product marketing program requires careful definition of market segments. Positioning is a central strategic issue in the marketing of new products, although positioning is often th ought to apply only in a consumer market context. Sony’s product positioning such as PlayStation 2 doesn’t match the markets. In order to avoid new products failure, the firms can change consumer’s thinking through reverse, breakaway and stealth positioning. Without developing and marketing new products, a firm must struggle to keep profitable growth. Also, a strategic view of the product portfolio can help to stimulate the development of new products. Research Papers on Marketing's Role in the Organization - EssayMarketing of Lifeboy Soap A Unilever ProductDefinition of Export QuotasThe Project Managment Office SystemResearch Process Part OneHip-Hop is ArtAnalysis of Ebay Expanding into AsiaInfluences of Socio-Economic Status of Married MalesIncorporating Risk and Uncertainty Factor in CapitalBionic Assembly System: A New Concept of SelfRelationship between Media Coverage and Social and

Recommendation report in comparing two water provision methods for an Essay

Recommendation report in comparing two water provision methods for an arid region - Essay Example As such, the burgeoning human population, loss of natural environments, and desertification that is taking place around the globe all have a profound impact upon the availability and quality of the water resources that can be leveraged. 1 Aim This particular analysis will be concentric upon comparing to water provision methods in an otherwise arid continent; Australia. It is the hope of this author that be detailing the strengths and weaknesses of two approaches to water provision, the most appropriate, efficient, reasonable, and cost efficient means can be integrated as a means of providing the population with access to the most basic and fundamental resources required for life; liquid water. 2 Information specific to region ( water situation )- evidence. With regards to the lack of water that the continent of Australia currently must integrate with, the reader should understand the following points: Australia exhibits the lowest overall level of rainfall of any of the 7 continents Australians exhibit some of the highest per capita water usage rates in the entire world Global climate change threatens to cut future rainfall even furtherin Australia More specifically, with regards to the total per capita water usage that the average Austrlian exhibits, studies indicate that this is in excess of 120 liters per day. As compared with over 66% of the rest of the world that uses 60 liters or less in any given day, this is a two fold increase per capita; thereby representing something of an insatiable demand for a scarce resource that is only growing scarcer. Moreover, when one looks at the current water storage facilities that exist within the major metropolitan cities of Australia, these storage facilities are only operating at around 30-40% capacity; denoting the fact that the ability to store and retain water is negated by the incessant demands of the populace. This of course denotes the need for conservation as well as finding, utilizing, and exploiting further h ydro resources within the continent. 2 Background 1 Water problem around the word although it may seem convenient to approach the water resource shortage in Australia from purely a regional perspective, the fact of the matter is that water shortages, as well as overall purity of these water resources, is an issue that globally effects 780 million people. As has briefly been discussed within the introduction and regional information overview, two factors that continue to have a profound and noticeable effect on the existence of water shortage issues is the growth of the world’s population in tandem with the changes to precipitation that global climate change have affected. Due to the fact that many previously populated regions of the world have experienced a great degree of desertification, the extent to which the natural environment can continue to provide the ever increasing demands of the native population comes into question. Environmentalists and researchers are in agreem ent that unless fundamental changes are made with regards to the way the world’s water resources are utilized, within the next few decades the access to water will become a far greater issue than it is currently. 3 Presentation of options As a means of ameliorating the