Adoption of Islamic Banking Essay Example for Free

Adoption of Islamic Banking Essay The intention of the study is to identify the benefits which could be drawn in Adoption of Islamic banking by conventional banks and to determine the challenges they are going to face in the adoption. The 60 respondents from various conventional, non-Muslim banks have been chosen through simple random sampling. The result of the survey for the questions regarding the awareness of the local people was considered positive in Edgware Road, London. They were mostly familiar with Islamic banking since there is already established Islamic bank in the area. The first branch of The Islamic Bank of Britain was in this area. It was also found out that a good portion non-Muslims are aware about the features of Islamic banking. A number of these non-Muslim respondents were also found to be employees of Islamic banks. The fact that Islamic Bank of Britain employs the best person for the job regardless of color, creed, gender, and ethnicity, the system makes it more familiar to non-Muslims. It may be concluded that although Islamic banking is a good alternative to the conventional banking system, it should not replace the conventional system. The benefits drawn in the adoption of Islamic banking may be a very good alternative for investors who could use either or both systems to maximize the outcome of their investment plans. Chapter 1 Introduction 1. 1 Introduction What is Islamic Banking? Islamic Baking is quite a different system compared to a conventional banking system. The Islamic banking system prohibit usury and interest categorized as riba. It is governed by Shariah where Islam does not distinguish interest and usury (Haron 1995, p. 26). Currently, there are more than 150 interest-free institutions all over the world according to the International Association of Islamic Banks. Islamic banks nowadays were also serving non-Muslim countries such as Denmark, Switzerland and other Western countries. No interest is paid nor charged in an Islamic Bank. (Haron 1995, p. 26). The pioneer Mit Ghamr Local Savings Banks was established in 1963, somewhere in Nile Delta, Egypt, a provincial rural center. Although most of the banks operate in Muslim countries, it was also extended to the Western world. An example is the Islamic Banking System International Holding which was established in Luxembourg in 1978. It is considered as the first Islamic bank in the Western soil. The establishments of these banks were followed by other Islamic banks not only serving Muslim customers but also those who expanded their operations to service non-Muslims (Haron 1995, p. 27). After more than a decade since its establishment, it was estimated that over US$20 billion to US$40 billon of assets existed in the Islamic banking system worldwide. Currently, they have grown for more than US$60 billion. A study shows that the adoption of Islamic Banking in a financial system has not led to collapse as some feared to happen (Ghannadian Goswami 2004, p. 242). Islamic banking is also playing a very important role in resource allocation, mobilization and utilization. It means Islamic banks are also providing savings to depositors and credits to the needy. Normal deposits such as savings account, current account and investment deposits are very available to customers. Islamic banks provide financial assistance in a short or long term business and individuals. They are also involved in international trade activities (Haron 1995, p. 27). 1. 2 Research Background It is difficult to pinpoint when Islamic banking started, but consensus suggests that it took place in Egypt in the 1960’s. In the mid 1970’s, Islamic banking started to take root in other Muslim countries. The changes were explained into main factors. First, the 1970s have seen oil price shocks which led to a massive transfer of wealth for the oil-consuming to oil-producing countries. Second is the fact that the oil shock coincided with the Iranian revolution which brought about the Khomeini government and the first Islamic republic (Akacem Gilliam 2002, p. 126). By 2003, there were about 176 Islamic banks around the world, handling over US$ 147 billion and 32 banks are in an Arab state (Info Prod Research, 2003). This form of specialized banking may help to promote growth in the developing countries (Ghannadian Goswami 2004, p. 242). As recent as 2003, there have been news about the introduction of Islamic hedge funds which could tap into the capital of Islamic families that could be worth a trillion dollars in asset management. According to banking statistics, the growth rate of Islamic banking has outpaced the growth of traditional banking in the past decade. Transformation Oriented Developing Economies (TODEs) made the transformation of society into full pledged market based economies (MBEs) a centerpiece in overall strategies. Many structural changes are required in its financial institutions, especially that the role of a financial intermediary in supplying funds to a growing new industry is crucial. Moreover, there are times when improper resource allocation may potentially result destabilization due to either faulty risk assessments. Or because of the design of its contract could be significant in examining the implementation of an Islamic banking system and how Islamic banks can provide liquidity and aid in creating money. This is through offering transactions accounts with compensation for inflation to risk-avoiding depositors (Ghannadian Goswami 2004, p. 242). Evolution of Islamic The first modern experiment with Islamic banking was undertaken in Egypt. The pioneering effort of projecting Islamic image was led by Ahmad El Najjar who aimed to establish a savings bank based on profit-sharing in the town of Mit Ghamr in 1963. This experiment lasted until 1967, and by that time there were nine banks operating in the country. These banks neither charged nor paid interest and invested mostly in trade and industry directly or in forms of partnership and shared their profit with the depositors. This function is essentially a savings investment institution rather than a commercial bank. The Nasir Social Bank was established in 1971, IDB established in 1974 by the Organization of Islamic countries, and was the primarily inter-governmental bank aimed at providing funds for development projects in member countries (Sohrab 1996, p. 287). In considering the adoption of Islamic banking by conventional banks, what kind of benefits may be drawn from such adoption and the challenges they are going to face in undertaking such? Most benefits that may be drawn from the adoption of Islamic banking by conventional banks come from the features of its equity financing contract. With Mudaraba (trustee financing) and Musharaka (equity participation), entrepreneurs with little means and substantial collateral are able to gain access to capital (Sohrab 1996, p. 288). In addition, few businesses are able to operate strictly on cash basis without taking on debt or selling a portion of the business just to cover shortfalls or when there is a need for expansion (Bartlett Economy 2002, p. 184). Because of this, it will be more attractive to engage into Islamic bank equity financing than that of conventional banks offering debt financing thus, making Islamic banking more competitive with regards to innovative entrepreneurial customers.

Strategic Planning Essay -- Business Planning Essays

Strategic Planning 1.  Ã‚  Ã‚  Ã‚  Ã‚  Appraise the formal planning efforts at the Copley Company for the period 1981 to 1984. INTRODUCTION Copley Manufacturing Company was primarily a manufacturer of a wide line of cutting tools and related parts and supplies. Late in 1980, Mr. Sagan, director of corporate development and Mr. Albert, executive vice president agreed that regular formal planning should become part of management’s way of life at Copley. EXECUTIVE SUMMARY In 1981, Copley Manufacturing Company had begun formal corporatewide planning. The formalized planning was ingrained into life at Copley through a series of visits by corporate groups, planning review meetings, as well as planning response meetings. However in 1982, the planning system was modified where the planning committee separated the formal planning cycle into three phases – Strategy Development phase, Quantitative phase and Action phase. In 1983, the planning process was largely influenced and administered by Mr. Tyler, the executive vice president. For recent development in 1984, the actual responsibility for planning has been placed directly on the executive vice president, group vice presidents and also division managers. DISCUSSION OF SITUATION IN 1981 In February 1981, Mr. Albert formed a corporate planning committee as the first step to move toward a regular formal planning process. In the discussion held, the planning committee decided on the process of ingraining the formalized planning into the life at Copley. On 21st March 1981, Mr. Albert requested the division general managers to sketch out a plan for regular formal planning and schedule for starting such an effort. The main objective of that effort is to issue guidelines for the preparation of divisional â€Å"provisional plans† (Brethauer 1999). On 6th June 1981, the corporate groups, which always included Mr. Albert and Mr. Sagan, had visited to the divisions constantly as an initial concept of formal planning activities. In the introductory meetings, Mr. Albert explained the importance of the planning effort, and Mr. Sagan explained the details. On 1st October 1981, the divisions, as well as the corporate staff groups, were asked to produce and submit the five-year plans. In November and December 1981, planning review meetings were held to review the divisional plans. On 28th December 1981, th... ...981 and modified in later years, leading Copley to attain success.M  Ã‚  Ã‚  Ã‚  Ã‚  The top management had been continuously putting effort in making planning a way of life for Copley. Weaknesses  Ã‚  Ã‚  Ã‚  Ã‚  M  Ã‚  Ã‚  Ã‚  Ã‚  The 1982 changes in top management were temporarily disruptive to the planning effort.M  Ã‚  Ã‚  Ã‚  Ã‚  Considerable effort was required to assimilate the acquired company and work out the split-up of Cutting Tool Division.M  Ã‚  Ã‚  Ã‚  Ã‚  Division managers had been planning largely to satisfy the requirements but had failed to commit to the plans. Opportunities  Ã‚  Ã‚  Ã‚  Ã‚  M  Ã‚  Ã‚  Ã‚  Ã‚  The 10-year look indicated that Copley’s profit was sensitive to cyclical swings, and large cash flow could be expected.M  Ã‚  Ã‚  Ã‚  Ã‚  Copley was mainly concerned in achieving future outgrowth through acquisition and merger.M  Ã‚  Ã‚  Ã‚  Ã‚  Copley is expected to reach a minimum annual profit growth of 10 percent and a return on equity of 12.5 percent. Threats  Ã‚  Ã‚  Ã‚  Ã‚  M  Ã‚  Ã‚  Ã‚  Ã‚  The depressed market conditions might result in Copley’s extensive loss.M  Ã‚  Ã‚  Ã‚  Ã‚  It was fearful that Copley would revert to a short-term orientation if it continued along the present path.M  Ã‚  Ã‚  Ã‚  Ã‚  There is a great tendency in American business to over manage, over plan, over staff, and over organize.

Aristotle’s Ten Categories

The ten Categories of Aristotle are derived from Aristotle’s Organon (Evans) and are classifications of individual words (as opposed to propositions) They consist of substance, quantity, quality, relation, place, time, situation, condition, action, and passion (Robin, 2004). Of the ten categories, Substance (ouisa) is consistently considered to be the most important as it is the fundamental element of all living things. Each individual thing has its own substance that is unique to that thing and does not belong to any other individual thing. Substance exists in two forms; Primary Substance and Secondary Substance. Primary Substances are absolute, concrete individual things that can exist in isolation to other things. Aristotle specified elements such as air, water and earth as primary categories because they are entirely independent of other beings. Secondary Substances are essentially properties of the primary substances and therefore cannot exist in their own right (Smith, Robin, 2004). Aristotle specified that whilst primary substances were restricted to genus, secondary substances were restricted to the individual species to which they belonged, â€Å"'man' is predicated of the individual man; but ‘animal' is predicated of ‘man'; it will, therefore, be predicable of the individual man also: for the individual man is both ‘man' and ‘animal'. † (Edghill, 2000). The remaining nine categories are utilized to help define and determine the details of the substance and what it is similar to and much of Aristotle's discussion of these categories concerned the way the categories are used in language. The second of Aristotle’s categories is Quantity, which as per the conventional meaning of this word, refers to the physical size of something. Quantity can be measured by numbers, weight, volume, area etc and thus the category is intended as a means by which substance can be measured and interpreted relative to one another. Quality is related to the inherent nature of something, that is its attributes or characteristics. Quality aspects generally cannot be described mathematically. Descriptive words such as â€Å"white†, â€Å"fat†, â€Å"larger† etc. ould generally characterize the quality aspect of the categories. Relation concerns the way in which one thing is related to another. This relationship could be a cause and effect relationship, a physical relationship or an equivalent relationship. The next category is Place. This refers to the physical location of an object or thing in its environment. Following this is Time. This category is concerned with a thing’s position with regards to the passage of time in the conventional sense or in relation to other events. The seventh category, Position, addresses the relative position parts of an object in relation to each other or the position of one object in relation to other objects. State is similar to quality but is concerned with the ongoing nature of an object as opposed to the inherent nature. So, for example, â€Å"easy going† would be classified as a quality whilst â€Å"depressed† would be classified as a state. The ninth category, Action, refers to the way in which a change to one object could impact another object or thing. Conversely, the tenth category, Passion or Affection, is concerned with the reception of a change and relates to the alteration that something else has on the object. Aristotle’s theory states that every single part of a sentence will fall into one of these categories. An example of a sentence that uses them all is as follows: â€Å" The naughty (quality), lone (quantity) boy (substance) crouched (position) beside his sister (relation) in their playroom (place) one afternoon (time), happy (affection) and content (state) as he stole her toys (action). †

Dyson Case Study Essay

Dyson Case Study Essay Introduction In Inside Dyson: a distinctive company?, Shepherd et al. (2011) gives details of the secret of Dysons success the company specializing in innovative, design-heavy vacuum cleaners and other household appliances. The successes and failures of Dysons design efforts (from their successful vacuums to the 3-in-1 vacuums that did not test well with customers) are explored, as well as their unique perspective on business, which puts quality and innovation above anything else. 1. Using frameworks from the chapter, analyze the strategic capabilities of Dyson. The strategic capabilities of Dyson revolve primarily around a resource-based view of the strategy with a heavy focus on engineering design; they spend a tremendous amount of time developing and engineering prototypes for household products that seek to provide a twist to the typical device (e.g., vacuum cleaners that provide smooth turning around the corners, oscillating fans that multiply air, etc.) This creates a niche in what can be an overly-saturated market. Providing a unique spin of this sort on a product can offer tremendous advantages. Combine this with state-of-the-art, sleek design elements and bright, colorful exteriors, and Dyson creates a number of high-end, well-sought-after appliances. Dyson invests heavily in Chinese and Asian manufacturing in order to make their products cheaper, so that they can maintain profit margin benchmarks. This emphasis on design in their organizational planning means not as many products being manufactured. But what they do sell they sell to a target market at higher prices. Given the innovation that is present in Dysons business strategy, it is quite clear that their strategic capability is high, even though the risks can be high as well due to the experimental and out there nature of their products which may be too daunting for normal consumers. 2. To what extent do you think any of the capabilities can be imitated by competitors? The primary niche that Dyson follows is superior design. As a result, it can be quite difficult to replicate the specific strategic capabilities. Their focus on innovation revolves around them being the only ones around to actually try to change the way the vacuum or other appliance is designed. The level of specialization is what attracts customers to them. In order to provide legitimate competition to Dyson, superior engineering designers would have to be hired, and a much greater focus on innovation would have to be attempted. Otherwise, Dysons dominance in the high-end, experimental house-ware market remains unchecked by competitors. Competitors are already trying to imitate their products with the USA Wind Tunnel vacuums and Mjele swivel-head vacuums. Yet the patents Dyson has placed on their product prevents other companies from outright stealing of their ideas. 3. Which of Dysons distinctive capabilities may become threshold capabilities over time? The existence of high-value specialties will likely become a threshold capability for Dyson as the time goes on. Threshold capabilities are what is required to remain in the market. Currently, what is allowing Dyson to maintain its high prices is the high quality of the design and engineering present in their products. Compared to other consumer-level appliances of this kind, Dyson stands out as a distinctive product from a marketing standpoint. Emphasizing the new and innovative stuff allows the consumer to feel as though they are receiving a brand new, insightful product, leagues ahead of the competition. For Dyson to change its business model in any way towards increasing volumes of standard products would be to tarnish its image, nearly irreparably. What is maintaining Dysons primary conceit is the design innovation, which is a clear threshold capability. 4. Bearing in mind your answers to questions 1 and 2, how crucial is Sir James Dyson to the future of the company? What might be the effect of his resignation or the sale of the company? Given the importance of James Dyson, it would certainly be a blow if he were to leave or sell the company. James Dyson is a prominent public figure and the best spokesperson in commercials Dyson company could have.