Net Present Value is the most realistic technique for evaluation

Net Present Value is the most realistic technique for evaluation Introduction Drury (2000) stated, The theory of capital budgeting reconciles the goals of survival and profitability by assuming that management takes as its goal the maximization of the market value of the shareholders wealth via the maximization of the market value of ordinary share. Capital budgeting decisions may be defined as the firms decision to invest its current funds most efficiently in the long term assets in anticipation of an expected flow benefits over a series of years. (Pandy, 2005) According to the above definitions of capital budgeting, following features can be identified, I. Exchange current funds for future benefits II. Funds are invested in long term assets and III. Benefit will occur to the firm over a series of years. Therefore main objective of the capital budgeting decisions are to maximize the wealth of the shareholders by, à ¢Ã¢â€š ¬Ã‚ ¢ Determining which specific investment projects to be undertaken à ¢Ã¢â€š ¬Ã‚ ¢ Determining the total amount of capital expenditure which the firm should be obtained à ¢Ã¢â€š ¬Ã‚ ¢ Determining how this portfolio of projects should be financed. In capital budgeting process different investment appraisal techniques are used to evaluate the investments. They are mainly traditional and Discounting Factor (DCF) methods. In traditional method consist of Payback and Accounting Rate of Return (ARR) which dont have the time value adjustment. But in DCF method Net Present Value (NPV) and Internal Rate of Return (IRR) are included and they are adjusting the time value of money to the cash flows. These techniques give different benefits and limitations in investment evaluation process, although as per the theoretical view DCF analysis may give more benefit to the organization. However successful completion of a project mainly depends on the selection criteria adopted while choosing the project in the initial phases itself and the choice of a project must be based on a sound financial assessment and not based on impression. DCF techniques are being widely used in both public and private sector. This is the method recommended for evaluating investment proposals. In this method, the incremental cost and benefits of proposals are discounted by a required rate of return in order to obtain the net present value of the proposal. Investment decisions are essential for a business as they define the future survival, and growth of the organization. The main objective of a business being the maximization of shareholders wealth. Therefore a firm needs to invest in every project that is worth more than the costs. The Net Present value is the difference between the projects value and its costs. Thus to make shareholders happy, a firm must invest in projects with positive NPVs. We shall start this essay with an explanation of investment appraisal, NPV, then compare this method with other investment appraisal methods and finally try to define, based on the works of Tony Davies, Brian Pain, and Brealey/Myers/Allen, which method works best in order to define a good investments. What is Investment Appraisal? A means of assessing whether an investment project is worthwhile or not Investment project could be the purchase of a new PC for a small firm, a new piece of equipment in a manufacturing plant, a whole new factory, etc Used in both public and private sector Types of investment appraisal: Payback Period Accounting Rate of Return (ARR) Internal Rate of Return (IRR) Profitability Index Net Present Value (discounted cash flow) Why do companies invest? Importance of remembering investment as the purchase of productive capacity NOT buying stocks and shares or investing in a bank! Buy equipment/machinery or build new plant to: Increase capacity (amount that can be produced) which means: Demand can be met and this generates sales revenue Increased efficiency and productivity Investment therefore assumes that the investment will yield future income streams Investment appraisal is all about assessing these income streams against the cost of the investment Capital budgeting versus current expenditures A capital investment project can be distinguished from current expenditures by two features: a) Such projects are relatively large b) a significant period of time (more than one year) elapses between the investment outlay and the receipt of the benefits. As a result, most medium-sized and large organizations have developed special procedures and methods for dealing with these decisions. A systematic approach to capital budgeting implies: a) The formulation of long-term goals b) The creative search for and identification of new investment opportunities c) Classification of projects and recognition of economically and/or statistically dependent proposals d) The estimation and forecasting of current and future cash flows e) A suitable administrative framework capable of transferring the required information to the decision level f) The controlling of expenditures and careful monitoring of crucial aspects of project execution g) A set of decision rules which can differentiate acceptable from unacceptable alternatives is required. The classification of investment projects a) By project size Small projects may be approved by departmental managers. More careful analysis and Board of Directors approval is needed for large projects of, say, half a million dollars or more. b) By type of benefit to the firm  · An increase in cash flow  · A decrease in risk  · an indirect benefit (showers for workers, etc). c) By degree of dependence  · Mutually exclusive projects (can execute project A or B, but not both)  · complementary projects: taking project A increases the cash flow of project B.  · substitute projects: taking project A decreases the cash flow of project B. d) By degree of statistical dependence  · Positive dependence  · Negative dependence  · Statistical independence. e) By type of cash flow  · Conventional cash flow: only one change in the cash flow sign e.g. -/++++ or +/-, etc  · Non-conventional cash flows: more than one change in the cash flow sign, e.g. +/-/+++ or -/+/-/++++, etc. Brief Introduction to Discounted Cash Flow and Methods This section would give a briefing on the mentioned topic and explain them thoroughly later on in this report. Discounted cash flow (DCF) DCF focuses on the time value of money, Rs.1 is worth more today than Rs.1 in the future. The reason being that it could be invested and make a return (yes, even in times of low interest, so long as interest rates are positive). So thats the discounting methodology, DCF has two methods. Net Present Value (NPV) The annual cash flows are discounted and totaled and then the initial capital cost of the project is deducted. The excess or deficit is the NPV of the project, it goes without saying that for the project to be worthwhile the NPV must be positive and the higher the NPV the more attractive is the investment in the project Internal Rate of Return (IRR) The IRR or yield of a project is the rate of return at which the present value of the net cash inflows equals the initial cost, which is the same as the discount rate which produces a NPV of zero. For an investment to be worthwhile the IRR must be greater than the cost of capital. Due to the following reasons, DCF method is identified as a best method for Investment appraisal processes, à ¢Ã¢â€š ¬Ã‚ ¢ They give due weight to timing and size of cash flow à ¢Ã¢â€š ¬Ã‚ ¢ Thy take the whole life of the project in to irregular cash flows do not invalidate the result obtained. à ¢Ã¢â€š ¬Ã‚ ¢ Estimate of risk and uncertainty can be incorporated à ¢Ã¢â€š ¬Ã‚ ¢ Use of discounting methods may lead to move accurate estimating and à ¢Ã¢â€š ¬Ã‚ ¢ They rank projects correctly in order of profitability and give better criteria for acceptance or rejection of projects than other method. Because of that in theoretically said that DCF analysis is best method to evaluate the investment over its rivals. A survey carried out by the Arnold Hatzopolous (2000) and Graham Harvey (2000) to identify the practical usage of investment appraisal techniques among the large manufacturing firms of UK had revealed that NPV and IRR are less behind its rivals in practically. Therefore they have commented that there is a gap between usages of appraisal techniques in practically and theoretically. The economic evaluation of investment proposals The analysis stipulates a decision rule for: I) accepting or II) rejecting Investment projects The time value of money Recall that the interaction of lenders with borrowers sets an equilibrium rate of interest. Borrowing is only worthwhile if the return on the loan exceeds the cost of the borrowed funds. Lending is only worthwhile if the return is at least equal to that which can be obtained from alternative opportunities in the same risk class. The interest rate received by the lender is made up of: The time value of money: the receipt of money is preferred sooner rather than later. Money can be used to earn more money. The earlier the money is received, the greater the potential for increasing wealth. Thus, to forego the use of money, you must get some compensation. The risk of the capital sum not being repaid. This uncertainty requires a premium as a hedge against the risk; hence the return must be commensurate with the risk being undertaken. Inflation: money may lose its purchasing power over time. The lender must be compensated for the declining spending/purchasing power of money. If the lender receives no compensation, he/she will be worse off when the loan is repaid than at the time of lending the money. Internal Rate of Return The internal rate of return (IRR) is another widely used method of investment appraisal. It calculates the rate of return, where the difference between the present values of cash inflows and outflows, the NPV, is zero. Thus when would a company undertake the project? Simply when the expected rate of return, the IRR, exceeds the target rate of return of the company. This is called the IRR rule. When the IRR is superior to the target rate of return, the NPV is positive. When IRR is equal to the target rate of return then NPV is equal to 0, and when the IRR is inferior to the target rate of return, then the NPV is negative. IRR can easily be determined through interpolation, which assumes a linear relationship between the NPVs of a capital investment project obtained using different discount rates. The exact rate is calculated algebraically using the theorem of Thales. we would have to compute a complex weighted average of these rates to be able to compare it to the IRR. This very much complicates the task, and gives us yet another reason to stick to the simple NPV method to better appraise investments. It has been shown that NPV proves to be much more reliable and simple of use than IRR. IRR is indeed subject to many pitfalls developed above. Nevertheless, a very important proportion of managers still use the IRR method to define attractive investments. Why could this be? It can be argued that managers do not trust the cash flow forecasts they receive. In the case of two projects A and B having the same NPV, IRR plays an important role. Project A requires an investment of 8,000 and project B necessitates an investment of 80,000. As said earlier both NPVs are the same. In such a situation where the NPVs are similar, managers would go for the project, whose initial investment is the lowest. If the project were to be dysfunctional, it is always easier to recover from a small initial loss than from a bigger one. By looking at the IRR the choice is quickly made. The project with the highest IRR is the one with the less risk. To summarize we have seen that although easy to use when used correctly, there are many drawbacks to the use of the IRR. IRR ignores the size of investment projects. That is two projects may have the same IRR but one project can return many times the cash flow returned by the other project. If the project cash flows are alternatively positive and negative, then we obtain two or more IRRs, or even no IRR, which can be disconcerting for interpretation. IRR should not be used to make a choice between mutually exclusive projects because it proves to be unreliable when it comes to ranking investment projects of different scale. So Forth, the IRR rule is difficult to apply when the discounting factors used over the years are different. Indeed, it is not easy to define what opportunity cost IRR should be compared to. Modified Internal Rate of Return (MIRR) Modified internal rate of return (MIRR) is a financial measure of an investments attractiveness. It is used in capital budgeting to rank alternative investments. As the name implies, MIRR is a modification of the internal rate of return (IRR) and as such aims to resolve some problems with the IRR. Problems with the IRR While there are several problems with the IRR, MIRR resolves two of them. First, IRR assumes that interim positive cash flows are reinvested at the same rate of return as that of the project that generated them. This is usually an unrealistic scenario and a more likely situation is that the funds will be reinvested at a rate closer to the firms cost of capital. The IRR therefore often gives an unduly optimistic picture of the projects under study. Generally for comparing projects more fairly, the weighted average cost of capital should be used for reinvesting the interim cash flows. Second, more than one IRR can be found for projects with alternating positive and negative cash flows, which leads to confusion and ambiguity. MIRR finds only one value. Calculation MIRR is calculated as follows: , Where n is the number of equal periods at the end of which the cash flows occur (not the number of cash flows), PV is present value (at the beginning of the first period), FV is future value (at the end of the last period). The formula adds up the negative cash flows after discounting them to time zero, adds up the positive cash flows after factoring in the proceeds of reinvestment at the final period, then works out what rate of return would equate the discounted negative cash flows at time zero to the future value of the positive cash flows at the final time period. Spreadsheet applications, such as Microsoft Excel, have inbuilt functions to calculate the MIRR. In Microsoft Excel this function is =MIRR. Example If an investment project is described by the sequence of cash flows: Year Cash flow 0 -1000 1 -4000 2 5000 3 2000 Then the IRR r is given by . In this case, the answer is 25.48% (the other solutions to this equation are -593.16% and -132.32%, but they will not be considered meaningful IRRs). To calculate the MIRR, we will assume a finance rate of 10% and a reinvestment rate of 12%. First, we calculate the present value of the negative cash flows (discounted at the finance rate): . Second, we calculate the future value of the positive cash flows (reinvested at the reinvestment rate): . Third, we find the MIRR: . The calculated MIRR (17.91%) is significantly different from the IRR (25.48%). Lefley and Morgan have developed a financial appraisal model, which has extended the traditional appraisal methodologies so as to provide more considered comparison for individual investment projects. The Lefley and Morgan model creates a profile, which combines the uses of NPV, Discounted payback period, and the discounted payback index, (DPBI). The discounted payback period is interesting to take into consideration as the entity proceeding with the investment might be lacking money and would prefer having a quick return of the funds invested. DPBI is used to assess the number of times the initial cost of the investment will be recovered over the projects life. It is calculated by dividing the accumulated present values by the initial capital cost. Combined these methods give a fairly accurate view of an investment. Net present value vs internal rate of return Independent vs dependent projects NPV and IRR methods are closely related because: Both are time-adjusted measures of profitability, and their mathematical formulas are almost identical. So, which method leads to an optimal decision: IRR or NPV? a) NPV vs. IRR: Independent projects Independent project: Selecting one project does not preclude the choosing of the other. With conventional cash flows (-|+|+) no conflict in decision arises; in this case both NPV and IRR lead to the same accept/reject decisions. NPV vs. IRR Independent projects If cash flows are discounted at k1, NPV is positive and IRR > k1: accept project. If cash flows are discounted at k2, NPV is negative and IRR Mathematical proof: for a project to be acceptable, the NPV must be positive, i.e. Similarly for the same project to be acceptable: Where R is the IRR. Since the numerators Ct are identical and positive in both instances:  · Implicitly/intuitively R must be greater than k (R > k);  · If NPV = 0 then R = k: the company is indifferent to such a project;  · Hence, IRR and NPV lead to the same decision in this case. b) NPV vs. IRR: Dependent projects NPV clashes with IRR where mutually exclusive projects exist. Example: Agritex is considering building either a one-storey (Project A) or five-storey (Project B) block of offices on a prime site. The following information is available: Initial Investment Outlay Net Inflow at the Year End Project A -9,500 11,500 Project B -15,000 18,000 Assume k = 10%, which project should Agritex undertake? = $954.55 = $1,363.64 Both projects are of one-year duration: IRRA: $11,500 = $9,500 (1 +RA) = 1.21-1 Therefore IRRA = 21% IRRB: $18,000 = $15,000(1 + RB) = 1.2-1 Therefore IRRB = 20% Decision: Assuming that k = 10%, both projects are acceptable because: NPVA and NPVB are both positive IRRA > k AND IRRB > k Which project is a better option for Agritex? If we use the NPV method: NPVB ($1,363.64) > NPVA ($954.55): Agritex should choose Project B. If we use the IRR method: IRRA (21%) > IRRB (20%): Agritex should choose Project A. See figure below. NPV vs. IRR: Dependent projects Up to a discount rate of ko: project B is superior to project A, therefore project B is preferred to project A. Beyond the point ko: project A is superior to project B, therefore project A is preferred to project B The two methods do not rank the projects the same. Differences in the scale of investment NPV and IRR may give conflicting decisions where projects differ in their scale of investment. Example: Years 0 1 2 3 Project A -2,500 1,500 1,500 1,500 Project B -14,000 7,000 7,000 7,000 Assume k= 10%. NPVA = $1,500 x PVFA at 10% for 3 years = $1,500 x 2.487 = $3,730.50 $2,500.00 = $1,230.50. NPVB == $7,000 x PVFA at 10% for 3 years = $7,000 x 2.487 = $17,409 $14,000 = $3,409.00. IRRA = = 1.67. Therefore IRRA = 36% (from the tables) IRRB = = 2.0 Therefore IRRB = 21% Decision: Conflicting, as:  · NPV prefers B to A  · IRR prefers A to B NPV IRR Project A $ 3,730.50 36% Project B $17,400.00 21% See figure below. Scale of investments To show why: The NPV prefers B, the larger project, for a discount rate below 20% The NPV is superior to the IRR a) Use the incremental cash flow approach, B minus A approach b) Choosing project B is tantamount to choosing a hypothetical project B minus A. 0 1 2 3 Project B 14,000 7,000 7,000 7,000 Project A 2,500 1,500 1,500 1,500 B minus A 11,500 5,500 5,500 5,500 IRRB Minus A = 2.09 = 20% c) Choosing B is equivalent to: A + (B A) = B d) Choosing the bigger project B means choosing the smaller project A plus an additional outlay of $11,500 of which $5,500 will be realized each year for the next 3 years. e) The IRRB minus A on the incremental cash flow is 20%. f) Given k of 10%, this is a profitable opportunity, therefore must be accepted. g) But, if k were greater than the IRR (20%) on the incremental CF, then reject project. h) At the point of intersection, NPVA = NPVB or NPVA NPVB = 0, i.e. indifferent to projects A and B. i) If k = 20% (IRR of B A) the company should accept project A.  · This justifies the use of NPV criterion. Advantage of NPV:  · It ensures that the firm reaches an optimal scale of investment. Disadvantage of IRR:  · It expresses the return in a percentage form rather than in terms of absolute dollar returns, e.g. the IRR will prefer 500% of $1 to 20% return on $100. However, most companies set their goals in absolute terms and not in % terms, e.g. target sales figure of $2.5 million. The profitability index PI This is a variant of the NPV method. Decision rule: PI > 1; accept the project PI If NPV = 0, we have: NPV = PV Io = 0 PV = Io Dividing both sides by Io we get: PI of 1.2 means that the projects profitability is 20%. Example: PV of CF Io PI Project A 100 50 2.0 Project B 1,500 1,000 1.5 Decision: Choose option B because it maximizes the firms profitability by $1,500. Disadvantage of PI: Like IRR it is a percentage and therefore ignores the scale of investment. The Payback Period (PP) The CIMA defines payback as the time it takes the cash inflows from a capital investment project to equal the cash outflows, usually expressed in years. When deciding between two or more competing projects, the usual decision is to accept the one with the shortest payback. Payback is often used as a first screening method. By this, we mean that when a capital investment project is being considered, the first question to ask is: How long will it take to pay back its cost? The company might have a target payback, and so it would reject a capital project unless its payback period was less than a certain number of years. Example 1: Years 0 1 2 3 4 5 Project A 1,000,000 250,000 250,000 250,000 250,000 250,000 For a project with equal annual receipts: = 4 years Example 2: Years 0 1 2 3 4 Project B 10,000 5,000 2,500 4,000 1,000 Payback period lies between year 2 and year 3. Sum of money recovered by the end of the second year = $7,500, i.e. ($5,000 + $2,500) Sum of money to be recovered by end of 3rd year = $10,000 $7,500 = $2,500 = 2.625 years Disadvantages of the payback method It ignores the timing of cash flows within the payback period, the cash flows after the end of payback period and therefore the total project return. It ignores the time value of money. This means that it does not take into account the fact that $1 today is worth more than $1 in one years time. An investor who has $1 today can consume it immediately or alternatively can invest it at the prevailing interest rate, say 30%, to get a return of $1.30 in a years time. It is unable to distinguish between projects with the same payback period. It may lead to excessive investment in short-term projects. Advantages of the payback method Payback can be important: long payback means capital tied up and high investment risk. The method also has the advantage that it involves a quick, simple calculation and an easily understood concept. Discounted Payback Method Some companies require that the initial outlay on any project should be recovered within a specific period. The discounted payback appraisal method requires a discount rate to be chosen to calculate the present values of cash inflows and then the payback is the number of years required to repay the initial investment. Yet payback can give misleading answers. Project Year 0 Year 1 Year 2 Year 3 A -4,000 2,500 500 5,500 B -4,000 2,500 1,800 0 C -4,000 3,180 500 0 The cost of capital is 10% per annum Project A Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 500 0.91 455 -1,545 2 500 0.83 415 -1,130 3 5,000 0.75 3,750 2,620 Project B Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 500 0.91 455 -1,545 2 1,800 0.83 1,494 -51 3 0 0.75 0 -51 Project C Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 1,800 0.91 1,638 -362 2 500 0.83 415 53 3 0 0.75 0 53 The payback rule does not take into consideration any cash inflow that occurs after the cut-off date. For example if the cut-off date is two years, project A, although clearly the most profitable on the long term will be rejected. Thus if a firm uses the same cut-off regardless of project life then it will tend to accept many poor short lived projects and reject many good long lived ones. The Accounting Rate of Return (ARR) The ARR method (also called the return on capital employed (ROCE) or the return on investment (ROI) method) of appraising a capital project is to estimate the accounting rate of return that the project should yield. If it exceeds a target rate of return, the project will be undertaken. Note that net annual profit excludes depreciation. Example: A project has an initial outlay of $1 million and generates net receipts of $250,000 for 10 years. Assuming straight-line depreciation of $100,000 per year: = 15% = 30% We here see that ARR is based on profits rather than cash flows and that it ignores the time value of money. It therefore just gives a brief overview of a new project, and should not be recommended as a primary investment appraisal method. As said earlier the impact of cash flows and the time value of money are essential in making an investment decision. Another disadvantage of the ARR is the fact it is dependent on the depreciation policy adopted by the business. Disadvantages It does not take account of the timing of the profits from an investment. It implicitly assumes stable cash receipts over time. It is based on accounting profits and not cash flows. Accounting profits are subject to a number of different accounting treatments. It is a relative measure rather than an absolute measure and hence takes no account of the size of the investment. It takes no account of the length of the project. It ignores the time value of money. The payback and ARR methods in practice Despite the limitations of the payback method, it is the method most widely used in practice. There are a number of reasons for this:  · It is a particularly useful approach for ranking projects where a firm faces liquidity constraints and requires fast repayment of investments.  · It is appropriate in situations where risky investments are made in uncertain markets that are subject to fast design and product changes or where future cash flows are particularly difficult to predict.  · The method is often used in conjunction with NPV or IRR method and acts as a first screening device to identify projects which are worthy of further investigation.  · It is easily understood by all levels of management.  · It provides an important summary method: how quickly will the initial investment be recouped? limitations of NPV when evaluating alternative investment proposals NPV is not that flexible and only uses information available at the time of the decision. It does not account for changes to the projects after the initial decision is made. NPV factors in risk by using a single discount rate, but in reality choices in the future concerning the project will likely change its payoffs and risk. Try real option analysis instead if you want to get around this problem. NPV only evaluates tangible and quantifiable projects. Some projects with negative NPVs are carried out anyway because they have some kind of strategic value, e.g. it shows the firm in a good light, builds goodwill or allows access to as yet unknown earnings in the future. Conclusion In conclusion it can thus be stated that only discounted cash flow methods should be used for appraising investments. This leaves us with the discounted payback method, the IRR, and the NPV. The Discounted payback method, ignoring cash flows that occur after the payback point, cannot be used on its own as it simply provides an overview. Concerning the IRR, although easy to understand it has many pitfalls that have been developed above. Thus the NPV rule proves to be the safest and most reliable. Yet the ideal

Coursework on multicultural management

Cross cultural training as one of the greatest managerial challenges of globalization is the heart of human resources management in the public sector. The author’s main advocacy is that of encouraging the public leaders to â€Å"assume the responsibility for creating new models of management systems† (Hill, Charles 2004). As an effective answer to the challenges of globalization, the author believes that the world is in need of training and educating globally competitive Human Resources professionals and that the government must do its part by financially supporting such immediate needs. It is the global competition that gave way to the increasing cultural diversity in companies and in the public sector. The focus of modern and globally competitive management strategy should then focus on its culturally diversified human resources.In this article, the author raised several vital questions in relation to human resources management in the global and multicultural environm ent. First the author asked how executives can develop a multicultural management group. Secondly the author wanted to explore the role of human resources in the management of negotiations and international collaboration. Lastly, the author dug on the ways of developing cross-cultural competencies.According to the author, a globally competitive agency must seriously consider the concept of trans-nationalism by creating and maintaining â€Å"multifaceted organizational cultures† (Bartlet and Ghoshal 1992 cited in Hill 2004). Global leaders are required to cope with cultural relativity and part of that step is to carry out cultural awareness training (Bochner, 1992 cited in Hill 2004). That awareness training must include an understanding of the country’s national culture and how its people think. A management specialist asserts that â€Å"Cultural differences significantly influence management approaches and the performance of employees within organizations† (Hof stede, 1989).A globally competitive leader must first learn the techniques of global negotiations which requires an awareness and understanding of the multicultural facets of the negotiation process. This skill however according to the author needs to be learned and practiced overtime. In the case of a globally competitive public manager, one has to develop the essential characteristics of a global leader. These characteristics according to Hill involve a global mindset, global leadership skills, and ability to lead cross-cultural teams, energy and talent to participate in global networking, and skills as a global change agent.In the context of public administration in education, the author recommends that a global leader must incorporate faculty development and exchange and team building for its members. A globally competitive public administration should also develop and maintain cultural exposure and a public-centered, multi-lingual work environment in addition to textbook and ca se study development.The concept of the globalization of human resources management is a vital aspect of any organization that must be placed immediate attention. Since globalization require the interaction of organizations in the international arena, it is important that its leaders and members should be able to develop cultural sensitivity. Global competition opens opportunity for people of different cultures to come together to negotiate, build business relationships and maintain a culturally diversified working environment. Human resources management therefore plays vital role in securing that each organization is recruiting and training globally competitive and culturally sensitive leaders.ARTICLE II. Multinational enterprises, employment relations and ethicsApart from cultural sensitivity, globalization also poses challenges to employment relations and ethical perspectives of globally competitive organizations. This article specifically addresses the issues concerning business ethics like child labor, work environment safety and work pay rates. Ethics, although seen in different perspectives and in some relations with values, is a concept that is still considered a relative term in the business arena. In this article ethics has been discussed in comparison and in contrast with the concept of law.The author questions how can business leader gauge if business rules, practices and values can considered ethical? The author also explored the concept of universal approval as a benchmark in drafting an organization’s statement of values and ethical standards. Because values are relative, the acceptability of practices depends on the existing cultural norms in a certain society. â€Å"Values are always matters of taste or whim, and cannot be proved to be true, or valid for all time in all places, their nature and consequences can be identified† (Donaldson, John 2001). On this ground, ethical standards are always debatable.Still human resources are the main concern of this article since all organizations are composed and run by people. Globally competitive enterprises must therefore focus on critical analysis of the values and ethical standards they attempt to implement especially with the presence of cultural diversity. The author in this regard assessed that judgment of business ethics cannot be based upon legal structures rather on the culturally acceptable standards of the country on which an enterprise operates.In the author’s view, ethical standards of each enterprise must look into some principles of employment conditions that would generally be considered acceptable for at the European community. First, an ethical work environment must give its members the freedom to move around the working community, provide equal opportunities for men and women, training and a high standard of health and safety protection at work. The author’s main point is that ethical standards of different work environments, especial ly that relates to cultural diversity, differ on situations and not on principles upon which such ethical standards are based upon. The bottom line of the author’s argument is that business codes of ethics do not suffice for an organization to become successful in its operation but still they are held important as they serve to inform its members of the values that the company is expected of them.At the least business ethics are vital elements of the organization’s operations in matters of decision-making and of forecasting and shaping its future. â€Å"The key to managerial ethics is the development of individuals so that, ideally, they will possess the moral attributes required for the apprehension, appreciation and handling of ethical issues and dilemmas† (Donaldson, 2001). Business ethics should not therefore serve as borderline for each member rather it must be drafted in a way that independent moral judgment of each member can still be practiced. The autho r’s question is that apart from the existing organizational ethical standards, what more should each globally-operating enterprise should need?Apart from addressing the issues of working environment safety, child labor and gender sensitivity, global organizations must balanced such principles with the value of strong self-belief. What the author therefore recommends is adapt economic and business pluralism. A personal opinion on this matter would lead to a conclusion that respect for each person’s identity and preferences should always be an important consideration. Although it has been established as some form of business rule that a company must operate according to the existing laws in the country where it operates, cultural diversity poses a great challenge for each organization to balance cultural norms, ethical standards and laws with human respect especially those who are operating with people of different colors.ARTICLE III. Diversity Management and Cultural Co mpetenceDreachslin is concerned about the importance of cultural diversity awareness and recognition of managers in a globally competitive organization. An awareness of one’s group identities according to the author â€Å"helps shape our world view and influence our cultural style, including what we value, how we behave, and what we believe† (Dreachslin, Janice 2007,p.79). It is one’s awareness of a cultural identity and preferences that help him define his way of interacting with such culture in reference to human respect. The author also finds the issue important because of the presence of human biases and preferences that create possible disagreements and thus conflicts in an organization which caters to the needs of people from different cultures and beliefs.Because globally operating organizations necessitates the employment of culturally diversified people, it is not surprising that disparities in the workforce arise evidently. This trend had been viewed b y two opposing advocates. On one side, some believe that cultural competence is as important as celebrating our differences. On the other hand, some believe that placing importance of such issue would only contribute to cultural conflicts. The question raised in the middle of the author’s discussion is on what is the better approach to diversity management- homogenization or customization?On the basis of healthcare industry, the two approaches were compared. In the author’s perspective, â€Å"homogenization is necessary to build common ground and unity of purpose in the context of diversity, without which strong performance is not possible† (ibid.). It is stressed in the article that identities, being an inevitable part of cultural diversity, maybe chosen individually and socially. In that sense, one’s actions towards his relationship or interaction with people of the same culture or that of the other culture are seriously affected because expectations or at least impressions are created from the start. Such impressions or expectations therefore define our ways of communicating with others. Homogenization tells us that a common ground can possibly be created on which both parties can meet or agree with.The other side of the coin, the concept of customization, necessitates the satisfaction of one’s need to express his uniqueness by expressing the values and characteristics we share with those of the same affiliations. Customization therefore advocates and encourages the display of individual cultural differences not for cultural identification but for the sake of human need and satisfaction. Both concepts have their own benefits and costs like all other concepts and ideas but management specialists like Donaldson recommend the employment of both but stressed that this be done in balance. Communication has been highly regarded as a vital tool in managing one’s own leadership style.In reducing cultural conflicts, leaders are required to utilize the communication tool efficiently and effectively. Donaldson suggests that leaders must ask themselves if their communication styles are required by their jobs or their styles were purely their personal preference. The answer would definitely go for the former proposition. Experts suggest that serious attention must be put on managing diversity in order to have a positive impact on employee performance. It is to be stressed that diversity in this context encompasses gender disparities or gender gaps. Kochan stressed that â€Å"diversity is both a labor-market imperative and social expectation/ value† (Kochan, et al. 2003, p.18).In the practice of managing diversity, it is important that leaders must not focus on pointing out cultural and gender differences. Globally competitive leaders are rather required to employ balanced management styles through efficient communication strategies. These can be his powerful tool in building an organizational cultur e and human resources practices that would generally be practical and applicable to its culturally diversified people. Despite the presence of obvious cultural and gender differences, global leaders must be able to develop the skills of training its employees to professionally practice respect by simply treating its people based on what is just and rightful and without prejudice to any party involved.REFERENCESC. A. Barlett, and S. Ghoshal (1992). What is a Global Manager? Harvard Business Review 70 (1992): 124-132.John Donaldson (2001). Multinational enterprises, employment relations and ethics. Employee Relations. Bradford: 2001. Vol. 23, Iss. 6; pg. 627, 16 pgsJanice L Dreachslin (2007). Diversity Management and Cultural Competence: Research, Practice, and the Business Case.Journal of Healthcare Management. Chicago: Mar/Apr 2007. Vol. 52, Iss. 2; pg. 79Geert Hofstede (1980). Cultures Consequences: International Differences in Work-related Values (Beverley Hills, CA: Sage, 1980, 1 984).Pan Suk Kim (1999). Globalization of human resource management: A cross-cultural perspective for the public sector. Public Personnel Management. Washington: Summer 1999. Vol. 28, Iss. 2; pg. 227Michael Porter (1990). The Competitive Advantage of Nations (London: Macmillan, 1990). 2 Oded Shenkar

What Are Latitude and Longitude Lines on Maps

A key geographical question throughout the human experience is, Where am I? In classical Greece and China many years ago, attempts were made to create logical grid systems of the world to answer this question. The ancient Greek geographer Ptolemy created a successful grid system and listed the coordinates using latitude and longitude for significant places throughout the known world in his book Geography. But it wasnt until the Middle Ages that the latitude and longitude system he developed was refined into what it is today. This system is now written in degrees, using the  ° symbol. Read about the imaginary lines that divide the earth known as latitude and longitude. Latitude Latitude lines run horizontally on a map. They are also known as parallels since they are parallel and equidistant from each other. Lines or degrees of latitude are approximately 69 miles or 111 km apart, with variation due to the fact that the earth is not a perfect sphere but an oblate ellipsoid (slightly egg-shaped). To remember latitude, imagine the lines as horizontal rungs of a ladder, ladder-tude, or by the rhyme latitude flat-itude. There is both a north and south set of latitude degrees that run from 0 ° to 90 °. The equator, the imaginary line that divides the planet into a northern and southern hemisphere, represents 0 °. The degrees increase in either direction from this marker. 90 ° north is the North Pole and 90 ° south is the South Pole. Longitude The vertical lines on a map are called longitude lines, also known as meridians. Unlike latitude lines, they taper (latitude lines are completely parallel, almost as if stacked on top of each other). They converge at the poles and are widest at the equator. At their widest points, these are about 69 miles or 111 km apart like latitude lines. Longitude degrees extend 180 ° east and 180 ° west from the prime meridian, an imaginary line dividing the earth into an eastern and western hemisphere, and meet to form the International Date Line in the Pacific Ocean at 180 ° longitude. 0 ° longitude falls in Greenwich, England, where a physical line showing the division between the Eastern and Western hemispheres was constructed. The Royal Greenwich Observatory was established as the site of the prime meridian by an international conference in 1884 for navigational purposes. Using Latitude and Longitude To precisely locate points on the earths surface, use latitude and longitude coordinates. Degrees are divided into 60 equal parts called minutes () and those are further divided into 60 equal parts called seconds (). Do not confuse these units of measurement with units of time. Seconds can be broken down into tenths, hundredths, or even thousandths for the most precise navigation. Degrees latitude are either north (N) or south (S) and degrees longitude are either east (E) or west (W). Coordinates can be written as DMS (degrees, minutes, and seconds) or decimals. Example Coordinates The U.S. Capitol is located at 38 ° 53 23 N, 77 ° 00 27 W.That is 38 degrees, 53 minutes, and 23 seconds north of the equator and 77 degrees, 0 minutes, and 27 seconds west of the meridian.The Eiffel Tower in Paris, France is located at 48.858093 N, 2.294694 E.In DMS, this is 48 ° 51 29.1348 N, 2 ° 17 40.8984 E or 48 degrees, 51 minutes, and 29.1348 seconds north of the equator and 2 degrees, 17 minutes, and 40.8984 seconds east of the meridian.

Famous Military Commander Of The Carthaginian Army

Hannibal– Famous Military Commander of the Carthaginian Army Hannibal Barca was the greatest military strategist and army general of his time. He was born in 247 B.C.E. into a military family in Carthage, which is today known as Tunis, in the country of Tunisia. He led the military forces of Carthage in battles against Rome during the Second Punic War. His most famous achievement was leading the Carthaginian army, along with forty elephants, across the Alps to attack Rome. Carthage is located long the Mediterranean Sea in northern Africa. The ancient Phoenician Empire established the city of Carthage in 800 BCE. The people of this ancient Phoenician City State were great sea navigators and traders. Carthage’s location provided a seaport that was protected from sea storms and access to sea trading routes. The people of Carthage built an amazing circular artificial harbor called the Cothon, which consisted of two connected areas for ships to dock. The rectangular porti on docked and protected many sea-trading ships while the circular part was used to dock as many as 220 warships. Carthage dominated trade in the Mediterranean Sea including the expensive and sought after purple dye made from the murex shells of Mediterranean sea snails. The area surrounding Carthage also had fertile land for growing agriculture. The style of clothes, at that time, is believed to resemble the Egyptians, which included long white and purple clothing wrapped over one shoulder and sandals. TheShow MoreRelatedHannibal : A Great Carthaginian War General And The Greatest Strategists Of All Time1525 Words   |  7 PagesHannibal Barca â€Å"Hannibal Barca† was a great Carthaginian War general and is renowned as being one of the greatest strategists of all time by many. Hannibal was born in 248 B.C in the ancient city of Carthage which is in modern times is known as Tunisia. Hannibal was born into a Carthaginian military family known as the Barcids. His father was the Carthaginian military general â€Å"Hamilcar Barca† who was taking part in the â€Å"First Punic war† with the city state of Rome at the time. Hannibal was born whenRead MoreThe Battle Of The Second Punic War2071 Words   |  9 Pagesconsidered the entire civilized world at the time. The battles of the second Punic War show Hannibal Barca to be not only the greatest military leader of his age, but perhaps one of the greatest generals of all time. By examining one of Hannibal’s most spectacular victories, the paradigm for a battle of annihilation, military professionals can learn how the Roman commanders might have defeated Carthage’s General. In conducting an analysis of the Battle of Cannae, I will postulate an alternate outcome byRead MoreThe Expansion Of Early Rome1154 Words   |  5 Pagesover Italy, which was known for containing great fertile agriculture, valuable in Rome. Soon after Rome had taken over Italy, Rome fought the Carthaginians in the first Punic Wars. Carthage was a prominent commercial empire that made its fortune through trade in the Mediterranean. They had a tough army, strong navy, and solid government. Though the Carthaginians fought extensively and brutally with the Romans, they were financially struck and had no other choice but to create a truce. After Rome earnedRead MoreRoman Republic And The Roman Empire1108 Words   |  5 PagesRoman Republic, one of the most famous republic in ancient time, established a form of government comprising three main parts: a few magistrates, a Senate, and several assemblies. Roman Republic was the period of ancient Roman civilizati on starting with the collapse of the Roman Kingdom in 509 BC, and ended in 27 BC with the founding of the Roman Empire. The government had representatives selected by citizen and ended because of the civil war between powerful generals including Antony and BrutusRead MoreRoman Concepts of Military Leadership Essay2368 Words   |  10 PagesRoman army, both the Republic and the Empire. From 508 BC to 1453 the Roman’s would be a considered a â€Å"superpower† in the world with â€Å"all roads† leading to Rome as the old proverb explains. A superpower is maintained with a strong military and Rome was no exception. During her reign, Rome saw a vast number of generals and leaders that would stand out over time. Three of these leaders would be Trajan, Marius and Scipio Africanus. These three generals would have great impact on the Roman army and itsRead MoreHannibal and the Second Punic War3216 Words   |  13 Pagesgiven the world many great military minds. In rece nt times the world has seen such men as Dwight D. Eisenhower, George Patton, Douglas MacArthur, and Erwin Rommel. From ancient times, schools teach about Alexander the Great, Napoleon Bonaparte, Scipio Africanus, and Germanicus. But few have accomplished the feats of Hannibal Barca in the Second Punic War. His major accomplishment, marching his army through the Pyrenees and the Alps and into what is now Italy, is a military accomplishment worth honoringRead MoreEssay on Evaluation of Hannibal as a General2869 Words   |  12 PagesWar. After Hasdrubal was assassinated Hannibal became general of the Carthaginian army in Spain. He had had an interesting upbringing as the son of a popular war hero, Hamilcar. Hamilcar led the boy [Hannibal] to the altar and made him solemnly swearà ¢Ã¢â€š ¬Ã‚ ¦that as soon as he was old enough he would become an enemy of Rome[4]. There was some debate as to whether Hannibal should become commander at this young age. However the troops received him [Hannibal] with ominous Read MoreThe Real General George Patton Essay2919 Words   |  12 PagesPatton was a dyslexic, who came from a wealthy background, and was his own worst enemy. The real Patton had a high pitched voice, unlike George C. Scotts deep and rough voice. At the beginning of the movie, Pattons delivering his famous speech to the Third Army delivered on June 4, 1944. In the movie, during the opening speech, Patton also makes the statement, No bastard ever won a war by dying for his country, you win it by making the other poor dumb bastard die for his country!. He Read MoreComparision of Alexander the Great and Augustus Ceasar2530 Words   |  10 PagesAlexander the Great and Augustus are two different individuals from two different time periods and they are both famous for their accomplishments. Alexander is one of the greatest military geniuses who by the age of 33 had conquered most of Asia. Alexander thought of himself as the son of Greek god Zeus. Augustus was the first emperor of Rome who brought peace and stability to the Roman Empire. He was the grandson of the sister of Julius Caesar. His original name was Caius Octavius, but when he wasRead MoreThe Major Factors That Led Rome and the Hellenistic Kingdom to Clash2308 Words   |  10 PagesSeleucids and the Ptolemies and several other minor powers in the area came to be after the death of Alexander. The essay will focus on the factors that the writer believes contributed to the clashes. These being, P hilips alliance with Hannibal and the Carthaginian empire, the results of ambassadors from Rhodes and Pergamum being received in Rome and telling of an appending alliance between Philip of Macedon and Antiochus of the Seleucids Kingdom, the third factor is that Rome was simply coming to the aid