Yazal & Rehan

Ayub Khan, Zulfikar Ali Bhutto and Zia Ul Haq

2010-08-17T22:24:00.000-07:00

To compare the era of Ayub Khan, Zulfikar Ali Bhutto and Zia Ul Haq it is essential that all the political and economic aspects are considered. After analyzing all the aspects can we then decide that which era benefited Pakistan the most. By benefit it means achieving high economic growth, human development and decreasing corruption.
Political Aspect:
Ayub Khan
A tremendous amount of goodwill accompanied Khan's assumption of political power and motivated him to institute deep structural changes in Pakistan’s society, economy, and political structure. Older Pakistanis still remember the beginning of his era as a time when trains ran on time, shops were clean, and corruption was punished. The imposition of martial law in 1958 targeted "antisocial" practices such as abducting women and children, black marketeering, smuggling, and hoarding. Many in the Civil Service of Pakistan and Police Service of Pakistan were investigated and punished for corruption, misconduct, inefficiency, or subversive activities. Ayub Khan's message was clear: he, not the civil servants, was in control.
Sterner measures were used against the politicians. The PRODA prescribed fifteen years' exclusion from public office for those found guilty of corruption. The Elective Bodies Disqualification Order (EBDO) authorized special tribunals to try former politicians for "misconduct," an infraction not clearly defined. Prosecution could be avoided if the accused agreed not to be a candidate for any elective body for a period of seven years. About 7,000 individuals were "EBDOed." Some people, including Suhrawardy, who was arrested, fought prosecution.
His initiatives like the system of Basic Democracies, the Constitution of 1962, the Land Reforms of 1959, and the Family Laws Ordinance of 1961 were all significant departures from the way political business had been conducted in Pakistan in the first post-independence decade.
In the realm of political participation, Khan introduced the system of "basic democracies" in 1960. It consisted of a network of local self-governing bodies that provided a link between the government and the people. Primary governing units were set up to conduct local affair and their members were elected by constituencies composed of 800 to 1,000 Pakistanis. However many suspected that the more than 80,000 "basic democrats" were simply a tool in the hands of the incumbent to deliver the votes he needed to win. Ayub Khan also introduced Land Reforms of 1959 in which the government imposed a ceiling of 200 hectares of irrigated land and 400 hectares of un irrigated land in the West Wing for a single holding. This reform created a new class of farmers having medium-sized holdings. the Family Laws Ordinance of 1961 focused on the Muslim families and dealt with issues such as who will receive the wealth of the deceased person, the divorce procedure etc. When the United States began to rearm India after China's invasion of northern India in 1962, Khan established close relations with and received substantial military aid from China. However he couldn’t resolve the Kashmir dispute with India which worsened, culminating in a two-week war in 1965. The failure to gain Kashmir and not being able to improve the human development, which included education, health poverty etc, led him to announce in late 1968 that he would not stand for reelection. Riots continued, and he resigned his office on March 26, 1969.

Muhammad Zia ul-Haq
Zia's political survival rested on his skill in wrong-footing opponents, and on the favorable external environment following the December 1979 Soviet occupation of Afghanistan. This transformed him overnight from an international pariah to America's front-line ally in the fight against Communism.
Zia embarked upon an Islamization program in the country that incorporated a number of initiatives aimed at making Pakistan a more Islamic country. Zia introduced special shariat courts, with Islamic rules of evidence and punishments for certain crimes. Further measures included the provision of Islamic banking facilities and the government collection of zakat (alms) and ushr (agricultural tax). Islamization which was stoutly opposed by women's groups and human rights activists stirred up sectarian tensions between Sunnis and Shias. Zia's introduction of Hudood laws failed despite their popularity because of the absence of mass education, deep corruption in Pakistan's judicial-legal system, and the absence of a desire in the prevailing system to understand the whole new system and to apply it with the level of piety and caution it was applied at the time of the Prophet Muhammad, peace and blessings be upon him. The corrupt police simply used the presence of three laws, leftover criminal laws that were a legacy of the British on the subcontinent, martial law, and Shariah law to extract a higher level of bribery. Thankfully, no innocent person was hurt and no punishment actually awarded. However, the Zia regime’s punishment of its PPP opposition with public flogging, in accordance with martial law, was used to give Hudood laws a bad name in the Pakistani public’s eyes. Zia's other Islamization institutions are still alive, such as the Sharia Court and the International Islamic University in the nation’s capital, Islamabad. The most admiring thing about this era was that in a world where even leading Western countries complain about taking in refugees, Pakistan's acceptance and support of three to four million Afghan refugees was an extra-ordinary act of humanity which has gone largely unrecognized. Karachi experienced mounting ethnic violence from 1986 onwards. Clashes between mohajirs and Pakhtuns, later extended to the Sindhi community. The growing lawlessness was encourage by the ready availability of weapons and drugs as a result of the Afghan War.

Zulfikar Ali Bhutto
Bhutto introduced a new constitution with a modified parliamentary and federal system. He attempted to control and reforms the civil service and took steps to revitalize a stagnant economy and ameliorate conditions for the poor under the banner of Islamic socialism. Bhutto's most visible success, however, was in the international arena, where he employed his diplomatic skills. He negotiated a satisfactory peace settlement with India in 1972, built new links between Pakistan and the oil-exporting Islamic countries to the west, and generally was effective in repairing Pakistan's image in the aftermath of the war.
In April 1972, Bhutto lifted martial law and convened the National Assembly, which consisted of members elected from the West Wing in December 1970 (plus two from the East Wing who decided their loyalties were with a united Pakistan). The standing controversies about the role of Islam, provincial autonomy, and the form of government--presidential or parliamentary--remained on the agenda. There was much jostling for position among the three major political groups: the PPP, most powerful in Punjab and Sindh; the National Awami Party (NAP) and the Jamiat-ul-Ulama-i-Islam (JUI), both based in the North- West Frontier Province and Baluchistan. The provincial assemblies were constituted from those elected in December 1970. There was much tension during the process of drafting a new constitution, especially from members from the North-West Frontier Province and Baluchistan. Bhutto reached some accommodation with opposition leaders from those two provinces on the matter of gubernatorial appointment and constitutional principle.
The 1973 Constitution set up a bicameral legislature at the Center consisting of two Houses, the National Assembly and the Senate. The National Assembly consisted of 200 seats elected directly for duration of five years. The President on the advice of the Prime Minister could dissolve the National Assembly. The Senate was to consist of 63 members; each province was to elect 14 members. In the Provincial Government, each province will have a Governor appointed by the President. The Provincial Assembly for each province consisted of 240 seats for the Punjab, 100 seats for Sindh, 80 seats for N. W. F. P., and 40 seats for Baluchistan.
The 1973 Constitution provided a free and independent Judiciary. The Constitution guaranteed a right to the citizens; to be protected by law, and imposed two duties on them, loyalty to the Republic and obedience to the law. Any person who was found to abrogate or attempt or conspire to abrogate or subvert the Constitution was to be treated guilty of high treason. The Constitution conferred several kinds of fundamental rights to the people such as the right to life, liberty, equality and freedom of speech, trade and association. The Constitution also declared the laws inconsistent with or in derogatory to fundamental rights as null and void.
In light of the previous experience, the Constitution of 1973 was more Islamic in character than the previous ones. Emphasis was made to establish a real Islamic system in all aspects of social life. Keeping this objective in mind, more Islamic provisions were laid down in the Constitution of 1973. The Constitution recognized Islam as the religion of the country and enjoined upon the State to serve the cause of Islam and to bring all existing laws in conformity with Islam. The Islamic Advisory Council was set up to recommend ways and means to bring existing laws of the country in conformity with the Islamic principles.
Economic Aspects:
Ayub Khan
The period of Khan's government is called the 'decade of development.' Since then, no such spurt of development has been witnessed in Pakistan. He introduced a plan known as Second Five Year plan The Second Five-Year Plan (1960-65) surpassed its major goals when all sectors showed substantial growth. The plan encouraged private entrepreneurs to participate in those activities in which a great deal of profit could be made, while the government acted in those sectors of the economy where private business was reluctant to operate. This mix of private enterprise and social responsibility was hailed as a model that other developing countries could follow. Pakistan's success, however, partially depended on generous infusions of foreign aid, particularly from the United States.
Ayub Khan also tried to improve the agriculture sector. For this purpose he introduced the green revolution which was the development of improved seeds in order to help the country achieve self-sufficiency in food grains in the process. As part of his green revolution, high yielding variety seeds like Mexi-Pak wheat, Irri-Pak rice, and Nayab 78 cotton were developed and popularized, along with the Pakistan's favorite citrus fruit: the Kinno. Three multipurpose dams, Warsak, Mangla, and Tarbela were built, the last being the largest is earth-filled dam in the world at the time of its establishment. Khan’s land reforms were practically sabotaged by the country’s feudal lords, who controlled the local revenue officers responsible for implementing them. Nonetheless, the agrarian reforms did deliver for the people of Pakistan. To improve the exports of Pakistan the Export Bonus Vouchers Scheme was introduced in 1959 and tax incentives stimulated new industrial entrepreneurs and exporters. Bonus vouchers facilitated access to foreign exchange for imports of industrial machinery and raw materials. Tax concessions were offered for investment in less-developed areas.
Ayub was skillful in maintaining cordial relations with the United States which helped to stimulate substantial economic and military aid to Pakistan. The signing in 1954 of a Mutual Defense agreement with the US, led to a total economic assistance of $500 million, or 2.8% of GDP. The facts and figure which shows the economic development of Pakistan are as follows:
□ GDP growth was slow during the 1950s but accelerated to 6.7 % during the 1960s.
□ Inflation rate during the period 1960-70 was 3.3% compared to 7.1%.
□ External resource inflows into West Pakistan were 6% of GDP in 1959-60 and rose to a record level of 10.5 %.
□ National savings rose to 10.5% in 1964-5.
□ Exports on Raw Cotton accounted for 28% of export earnings in 1969-70
□ By 1964-5, Balance of Payment deficit had risen to 6.8% of GDP.
Although President Ayub Khan's agrarian reforms did result in higher agrarian yield, and his industrialization efforts resulted in the growth of capital, he was criticized for making "the rich richer and the poor poorer or the trickle down effect. Khan has also been criticized for heavy dependence on foreign aid and the inability to create jobs.
Muhammad Zia ul-Haq
Zia ul-Haq introduced Islamization policy which not only affected the political aspect but the economic aspect also. Zakat used to be collected by the government in the early days of Islam and distributed among the poor. Zia called upon Pakistan’s economists and Islamic scholars to devise a program that would use Zakat as a vehicle to deal with poverty in the nation. After a year of discussion, the Zakat and Ushr Ordinance of 1979 was promulgated on June 20th 1980. Under this order, a five-tiered structure was formed to take care of Zakat, starting from the Central Zakat Council at the federal level to a local Zakat committee for each compact block of 3,000 to 5,000 persons. On all savings accounts, a 2.5 percent per annum Zakat was instituted. Despite some problems, Zakat was nevertheless collected and through the system of citizens’ committees, it was distributed among the poor and needy. According to a Gallup Pakistan survey, 80 percent of the Pakistanis surveyed felt that the system was relatively corruption-free. It was said it was the first time a modern government coded Zakat into law and implemented it.
On Zia's call, several leading economists and Islamic scholars worked together to develop an applicable set of models and laws for the implementation of Islamic Economics. Several international conferences were held and an Institute of Islamic Economics was established. Interest-free banking was partially introduced and an implementation program was developed to see how Pakistan's economy could be transformed. The resulting momentum regarding Islamic economics continues to reverberate across the globe today, as hundreds of Islamic banks have popped up worldwide. American icon Fannie Mae, along with some leading banks, has invested in Islamic models of financing. The Dow Jones has also come up with an Islamic Index. The facts and figure which shows the economic development of Pakistan are as follows:
□ GDP growth averaged to 6.6 % between 1971-1977.
□ Public spending on education did increase to 2.7 of GNP by 1987-1988
□ Domestic debt increased from 20.38% of GDP in mid 1981 to 42.9% of GDP in mid 1988.
□ Defense expenditure increased to 7% from 5 % of GDP over the period.
□ Terms of trade in 1987 -88 was 96.32.
Rapid growth, widespread prosperity, and relatively stable prices made the Zia period appear to be an era of exceptional political and economic stability in Pakistan’s history. Like Ayub, Zia relied heavily on the bureaucracy for economic management, and under the able guidance of Mr. Ghulam Ishaq Khan the bureaucrats did a fair job of short-term economic management partly under pressure from international financial institutions which provided critical balance of payments support in the early and mid-1980s. The flexible exchange rate policy strengthened export incentives and improved the climate for private investment. The initial reduction in budget deficits, through additional taxation and efforts after 1980, to reduce subsidies and to bring agricultural prices in line with international prices helped economic growth and moderated the inflationary pressures. That high economic growth was partly a matter of luck and reflected the influence of exogenous economic developments, notably the boom in worker remittances, does not detract from the steady and more or less consistent day to day management of economic policies during the 1980s. However, major structural weaknesses remained in the economy and indeed were intensified in some instances. Even though medium-term economic planning was revived in 1978, long-term policy issues were either not pursued with any seriousness or suffered due to poor implementation. A major criticism was the growth in public spending from 23.5 per cent of GDP in 1976-7 to 27 percent in 1987-8. Government expenditures adjusted for inflation increased nearly 150 per cent during 1977-88. Since revenue growth was slow, the budget deficits had risen to a unsustainable level of over 8 per cent of GDP in the final years of the Zia regime – essentially mortgaging future production and price stability.
Finally, the two major policy problems inherited from the 1960s and the 1970s — the inelasticity of the tax system and the strong anti-export bias of the trade

Zulfikar Ali Bhutto
Bhutto claimed success for his economic policies. The gross national product and the rate of economic growth climbed. Inflation fell from 25 percent in fiscal year 1972 to 6 percent in FY 1976, although other economic measures he introduced did not perform as well.
Bhutto pointed out that his foreign policy had brought Pakistan prestige in the Islamic world, peace if not friendship with India, and self-respect in dealings with the great powers. He felt assured of victory in any election. Therefore, with commitment to a constitutional order at stake, in January 1977 he announced he would hold national and provincial assembly elections in March.
The Nationalization Order, 1972 provided for the nationalization of industry in Iron and steel sector, basic metals, heavy engineering, heavy electrical, assembly and manufacture of motor vehicles and tractors, heavy and basic chemicals, petrochemicals, cements, public utilities, power generation, transmission and distribution, gas and oil refineries.
31 industrial units were taken over under the nationalization order but it was alleged subsequently that nationalization was selective, to pick up some and to exclude others in the same fields. General Zia privatized the Ittefaq foundry nearly eight years later on the ground that Ittefaq foundry was nationalized while several others of same size were not. However the industries whose nationalization was omitted by Bhutto were not mentioned.
The nationalization order had excluded the private sector from operating in key economic fields and therefore, several industrial licenses were cancelled which included Adamjee deutez, Shahnawaz Industries, Fecto tractors, Arusa Industries for manufacturing tractors and Monnoo motors for progressive assembly of Toyota cars. The nationalization order was followed within a fortnight by another order banning the managing agency system under which companies were appointing persons to be sole purchasers for sale or distribution. The managing agency system was one of the medieval systems practiced only on subcontinent which provided the mechanism through which control over industrial sector was concentrated in a few hands. Under the managing agency system, the corporate sector was controlled by a handful of managing agents who perpetuated their control over the affairs of the companies, without being accountable to the shareholders.
The new labor policy provided for old age pensions, group insurance and other means of social security including free education for the children of the workers. Administrative reforms ensured a better, organized and service oriented bureaucracy. Education, literacy and healthcare were targeted as key focus areas. Heavy industry was brought in for the first time in the country, creating immense employment opportunities as well as transfer of technology from the developed nations. The establishment of the country’s first-ever Steel Mill could be cited as an example in this regard. Quaid-e-Awam also owes credit for establishment of the second seaport Port Qasim, near Karachi, thus laying the foundation of economic self-reliance. However, major structural weaknesses remained in the economy and indeed were intensified in some instances. Even though medium-term economic planning was revived in 1978, long-term policy issues were either not pursued with any seriousness or suffered due to poor implementation. A major criticism was the growth in public spending from 23.5 per cent of GDP in 1976-7 to 27 percent in 1987-8. Government expenditures adjusted for inflation increased nearly 150 per cent during 1977-88. Since revenue growth was slow, the budget deficits had risen to a unsustainable level of over 8 per cent of GDP in the final years of the Zia regime – essentially mortgaging future production and price stability.
Finally, the two major policy problems inherited from the 1960s and the 1970s — the inelasticity of the tax system and the strong anti-export bias of the trade.
The facts and figure which shows the economic development of Pakistan are as follows:
□ GDP growth rate fell to 3.8% between1971-77.
□ The total government spending on education increased from 1.6% to 2% of GNP over 1972-77.
□ The ratio of taxes to GNP improved to 12% in late 1970s.
□ Rural poverty incidence fell from 54% in 1969-70 to 41% in 1979.
□ Domestic savings averaged < 8 during this period.
□ Current account deficit averaged 6.5% of GDP.
□ Inflation fell from 25% in FY 1972 to 6% in FY 1976.
Conclusion:
Ayub Khan's legacy is mixed, he was opposed to democracy believing like any other dictator that parliamentary democracy was not suited for the people of his country. Like many subsequent military dictators he was contemptuous of politicians and political parties. However, during his early years in office, he sided with the Americans against the Soviets, and in return received billions of dollars in aid which resulted in enormous economic growth. Ayub began to lose both power and popularity. On one occasion, while visiting East Pakistan, there was a failed attempt to assassinate him, though this was not reported in the press of the day. In 1971 when war broke out, Ayub Khan was in West Pakistan and did not comment on the events of the war. He died in 1974.
After assuming power as Chief Martial Law Administrator, Zia-ul-Haq promised to hold National and Provincial Assembly elections in the next 90 days and to hand over power to the representatives of the Nation. However, in October 1977, he announced the postponement of the electoral plan and decided to start an accountability process of the politicians. In a statement, he said that he changed his decision due to the strong public demand for the scrutiny of political leaders who had indulged in malpractice in the past. With the retirement of Fazal Ilahi, Zia-ul-Haq also assumed the office of President of Pakistan on September 16, 1978. In the absence of a Parliament, Zia-ul-Haq decided to set up an alternative system. He introduced Majlis-i-Shoora in 1980. Most of the members of the Shoora were intellectuals, scholars, ulema, journalists, economists and professionals belonging to different fields of life. As time passed, the Parliamentarians wanted to have more freedom and power. By the beginning of 1988, rumors about the differences between the Prime Minister and Zia-ul-Haq were rife. The general feeling was that the President, who had enjoyed absolute power for eight long years, was not ready to share it with anybody else. Apart from many other reasons, Junejo's decision to sign the Geneva Accord against the wishes of Zia-ul-Haq proved to be one of the major factors responsible for his removal. Zia-ul-Haq died in an air crash near Bhawalpur on August 17, 1988.
Zulfikar Ali Bhutto (January 5, 1928–April 4, 1979) was a Pakistani politician who served as the fourth President of Pakistan from 1971 to 1973 and as the ninth Prime Minister of Pakistan from 1973 to 1977. He was the founder of the Pakistan People’s Party (PPP), the largest and most influential political party in Pakistan.
Quaid-e-Awam Shaheed Zulfikar Ali Bhutto founded Pakistan People’s Party in the winter of 1967 as an answer to the dictatorial and anti-people policies of the military-bureaucratic-feudal nexus of power that ruled the country since its inception in 1947. The Party came into being with four cardinal principles i.e. Islam is our faith, democracy is our polity, socialism is our economy and all power to the people. Its program envisaged provision of basic human needs, i.e. Roti, Kupra aur Makkan (food, clothe and shelter) to every citizen of Pakistan. It advocated a just and fairer distribution of national wealth amongst various strata of the society and stood for democratic traditions, liberal values and welfare-oriented policies. The party program coupled with dynamic leadership of Quaid-e-Awam captured the imagination of the people within no time and the Party emerged as the single largest party of the country.
Pakistan's third constitution was formally submitted on December 31, 1972, approved on April 10, 1973, and promulgated on Independence Day, August 14, 1973. Although Bhutto campaigned in 1970 for the restoration of a parliamentary system, by 1972 he preferred a presidential system with himself as president. Bhutto claimed success for his economic policies. The gross national product and the rate of economic growth climbed. Inflation fell from 25 percent in fiscal year 1972 to 6 percent in FY 1976, although other economic measures he introduced did not perform as well. The Nationalization Order, 1972 provided for the nationalization of industry in Iron and steel sector, basic metals, heavy engineering, heavy electrical, assembly and manufacture of motor vehicles and tractors, heavy and basic chemicals, petrochemicals, cements, public utilities, power generation, transmission and distribution, gas and oil refineries.
As president, Bhutto addressed the nation via radio and television, saying "My dear countrymen, my dear friends, my dear students, laborers, peasants… those who fought for Pakistan… We are facing the worst crisis in our country's life, a deadly crisis. We have to pick up the pieces, very small pieces, but we will make a new Pakistan, a prosperous and progressive Pakistan." He surely proved himself the best leader Pakistan had ever had.

References:
http://www.answers.com/topic/muhammad-zia-ul-haq
http://www.yespakistan.com/people/past-presidents.asp
http://en.wikipedia.org/wiki/Five-year_plans_of_Pakistan
http://pkproblems.com/index.php/zia-ul-haq-economic-policies-for-pakistan-an-assessment/

Cuban Missile Crisis

2010-08-17T22:20:00.000-07:00

Cuban Missile Crisis

After the WW2 USA and USSR were in a cold war because both want to establish their hegemony but both of them were capable of nuclear attack so there was no such war but an era of cold war started. At the beginning of September 1962, U-2 spy planes discovered that the Soviet Union was building surface-to-air missile (SAM) launch sites. There was also an increase in the number of Soviet ships arriving in Cuba which the United States government feared were carrying new supplies of weapons. President John F. Kennedy complained to the Soviet Union about these developments and warned them that the United States would not accept offensive weapons (SAMs were considered to be defensive) in Cuba.
As the Cubans now had SAM installations they were in a position to shoot down U-2 spy-planes. Kennedy was in a difficult situation. Elections were to take place for the United States Congress in two month's time. The public opinion polls showed that his own ratings had fallen to their lowest point since he became president.
On 27th September, a CIA agent in Cuba overheard Castro's personal pilot tell another man in a bar that Cuba now had nuclear weapons. U-2 spy-plane photographs also showed that unusual activity was taking place at San Cristobal. However, it was not until 15th October that photographs were taken that revealed that the Soviet Union was placing long range missiles in Cuba.
President Kennedy's first reaction to the information about the missiles in Cuba was to call a meeting to discuss what should be done. Robert S McNamara, Secretary of State for Defence, suggested the formation of the Executive Committee of the National Security Council. Fourteen men attended the meeting and included military leaders, experts on Latin America, representatives of the CIA, cabinet ministers and personal friends whose advice Kennedy valued. Over the next few days they were to meet several times. During their discussions they considered several different strategies for dealing with the crisis. They included the following
(1) Do nothing. The United States should ignore the missiles in Cuba. The United States had military bases in 127 different countries including Cuba. The United States also had nuclear missiles in several countries close to the Soviet Union. It was therefore only right that the Soviet Union should be allowed to place missiles in Cuba.
(2) Negotiate. The United States should offer the Soviet Union a deal. In return for the Soviet Union dismantling her missiles in Cuba, the United States would withdraw her nuclear missiles from Turkey and Italy.
(3) Invasion. Send United States troops to Cuba to overthrow Castro's government. The missiles could then be put out of action and the Soviet Union could no longer use Cuba as a military base.
(4) Blockade of Cuba. Use the United States Navy to stop military equipment reaching Cuba from the Soviet Union.
(5) Bomb Missile Bases. Carry out conventional air-strikes against missiles and other military targets in Cuba.
(6) Nuclear Weapons. Use nuclear weapons against Cuba and/or the Soviet Union.
So the 4th option was chosen which was to block Cuba hence a deal was signed between USA and USSR which has the far reaching effects as
CONSEQUENSES
(1) The two sides established a direct communications link that became known as the Hot Line. It was hoped that this would help prevent dangerous confrontations such as the Cuban Missile Crisis arising again.
(2) Three months after the Cuban Missile Crisis the United States secretly removed all its nuclear missiles from Turkey and Italy.
(3) A Test Ban Treaty was signed between the two countries in August 1963. The treaty prohibited the testing of nuclear weapons in the atmosphere.
(4) The 1,113 prisoners captured during the Bay of Pigs invasion were exchanged by Castro for $60 million in food, drugs, medicine and cash.
(5) The Soviet Union became determined to have a nuclear capability that was equal to the United States. This was achieved by 1972.
(6) China accused the Soviet Union of being a 'paper-tiger' and claimed to be the true leader of the Communist movement. The split between the Soviet Union and China became wider.
(7) The United States became convinced that the Soviet Union would not go to war over another communist country. It has been argued that this encouraged the United States to help attempts to overthrow socialist and communist governments in Vietnam, Nicaragua and Grenada.
References
http://www.spartacus.schoolnet.co.uk/COLDcubanmissile.htm
http://library.thinkquest.org/11046/days/index.html

Islamic Economy Vs Capitalistic Economy

2010-08-17T22:19:00.000-07:00

Islamic Economy Vs Capitalistic Economy
Capitalism and Islam are compared in respect of their basic economic concepts as under:
1. Right to ownership:

Capitalism
o The existence of right of private ownership of property is the hallmark of capitalism.
o It gives unrestricted and unencumbered full rights of ownership to the individual.
o The individual may acquire, own or alienate his property in whatever manner he likes. The system believes in the private ownership of the means of production, distribution and exchange which are managed and controlled by individuals or groups of individuals for private profit.
o The unrestricted right to own property and earn profits leads to concentration of wealth in few hands.
o This necessarily disturbs the balance of distribution of wealth and income in society.
o The economic disparities and the ever-increasing gulf between the rich and the poor sow the seeds of discord and destruction in the capitalist society.
Islam
o Islamic concept of ownership is unique one.
o Ownership, in reality, belongs to God while some rights only vest in man so that he may fulfill the purpose of God, that is the purpose of community by acting as a trustee for those in need. In other words, what Allah has created for benefit of and service to man belongs collectively to the whole humanity.
o Legal ownership by the individual is recognized in Islam but it is subject to the moral obligation that in all wealth all sections of society have the right to share.
o Thus private or individual ownership in Islam is not unlimited or unrestricted. All the means of production are not placed under private ownership as public ownership of certain things of common utility exists side by side with it in an Islamic state.
o Islamic state has also the right to nationalize certain things which are under private ownership for the benefit of the community.
o In this way the limited right of private ownership with law of inheritance which distributes the estate of the deceased among fairly large number of heirs averts concentration of wealth in few hands and thus prevents class-conflict.

2. Institutions of Interest:

Capitalism
o The Institution of banking and interest is the life-blood of capitalistic form of economy.
o For business, trade and industry especially for big projects and economic ventures, huge funds are required which no individual or firm can arrange.
o This leads to establishment of banks who borrow capital from depositors and investors on lower rate of interest and lend it to business enterprises on higher rate of interest.
o Thus the institution of interest has become part and parcel of capitalism.

Islam
o Islam considers interest as the most exploitive institution for humanity and has abolished it root and branch in its every form and manifestation.
o According to al-Qur’an taking of interest tantamount to war against God and His Apostle, while according to Prophet Muhammad (PBUH) interest is worse than adultery.
o Islam builds its economy on interest free basis and promotes profit and partnership as incentive for saving and investment.

3. Distribution of Wealth

Capitalism
o Capitalism does not believe in fair and just distribution of wealth.
o Since it believers in full economic freedom and private ownership of means of production, wide economic disparities exist in capitalistic economy.
o Concentration of wealth in few hands takes
o place while huge majority of the populace is deprived of the very basic necessities of life. The privileged few live in luxury while poverty, ignorance, disease and unemployment is the lot of the multitude.
o This disturbed balance of distribution of economic resources and unbridgeable gulf between the haves and have-nots ultimately leads to class struggle and ultimate overthrow of the very system.
Islam
o Islam on the one hand guarantees provision of basic human needs such as food, clothing and shelter to everyone and, on the other hand, ensures fair and equitable distribution of wealth and economic resources among all.
o It does not tolerate existence of wide disparities among the rich and the poor and tries to eliminate concentration of wealth in few hands.
o For bridging the gulf between the rich and the poor and for ensuring equitable distribution of wealth, Islam has taken many steps such as Zakat and Sadaqat, laws of inheritance and bequest, voluntary charities and compulsory contributions in the form of taxes and duties.
o To prevent concentration of wealth in few hands Islamic economic code has taken measures like abolition of interest, prohibition of earning of wealth through haram means, prohibition of

Tea

2010-07-20T01:40:00.000-07:00

Mobilink – Disney Phone

2010-07-20T01:23:00.000-07:00

The Product

Mobilink – Disney Phone
Mobilink, the country’s leading cellular phone service and Disney announced the launch of a parental-controlled mobile phone for children today. This is the first time a cellular company in Pakistan has launched a mobile phone that will meet the communication and security needs of parents. After conducting market research and realizing the growing needs of working parents to stay in touch with their children using mobile phones; Mobilink in collaboration with Disney is introducing this innovative solution to the Pakistani market. Moreover, changing social trends and feedback received by Mobilink through this research led the market leader to co-launch a safe and secure solution for parents. The features of the new Mobilink-Disney D100 allows complete parental control on all outgoing and incoming calls and text messages. With the help of this new feature, parents can control who the child can correspond with, thus enabling parents to keep a check on the list of people the child is communicating with.

Main Objective
As we grow and reach millions of people throughout the country, it was only a matter of time before we would develop a solution for parents and children. We had to tread this ground cautiously, keeping potential concerns of parents in mind. We have collaborated with Disney to introduce a phone, which gives complete parental control. We are confident that the new phone will not only provide the children of Pakistan with a phone to enjoy but also enable parents to monitor and manage the communication needs of their children.

Orientation behind the launch of Mobilink – Disney handset:
The launch of Mobilink – Disney handset for a completely new target market was basically a marketing oriented step taken by the Mobilink. As Mobilink, been the market leader wants to stay in the limelight for its consumers as it always takes initiatives and launches exclusive products in the market. With the launch of Mobilink – Disney handset, Mobilink once again showed up that they always have innovations on the move for the customers.

Target Market
The target market set by the Mobilink for the Disney phones was mainly based on the children with the age bracket between ( 10 to 15 yrs). Children within this age group were the main target market of Disney Phones. Group of people with SEC-A was targeted. And as far as the distribution is concerned, mainly urban cities such as Lahore, Karachi, Islamabad, Multan, Faisalabad etc were kept in mind.

Product Development:
Mobilink was not directly involved in the product development process as Mobilink is just the telecom service provider. The handsets were made by some third firm, and were imported by Mobilink with the co branding of Disney.

Image and Reputation
The image of the names associated with the product is of the market leaders in their respective industries. Mobilink Disney phone is a co branded product with the highest brand value and image with greater expectations from people.
When a brand like Mobilink and Disney introduces a new product in the market, it is expected to meet the standards it has maintained previously. If it does not, customers do not hesitate to turn towards another brand. This is where the concept of brand loyalty comes in, which is hard to obtain with growing competition. This is an issue that Mobilink faces in the case of Mobilink - Disney phones.
POSITION IN THE MIND OF CONSUMERS
With the increase in competition in the country and the increased awareness among people, their attitudes have changed in many ways. The major trend that Mobilink can bank on is the shift towards people becoming more mobile and image conscious. Therefore, by providing consumers with a product that enhances image and meets their changing needs along with providing them with sustained quality, Mobilink – Disney phone has potential advantage in the market.

Sales
Mobilink – Disney phone’s launch was quite successful but due to weak distribution channel and lack of after sales service, it was short-lived because of which the phenomenon of repeat purchase could not be established. However, given the right marketing mix, Mobilink – Disney phone has the potential for increased sales.

The Market
By analyzing the launch of Mobilink – Disney phones, it was expected to have certain features that kids want to have, what other phones within the same price range were offering. The Mobilink – Disney phone had lack of technology, colored display and no entertainment package (games etc.) in it. Whereas other handsets in the market were offering these things within the same price.

Competition
All the other handset makers were in direct competition with the Mobilink - Disney phone but this can be considered as exclusive in the target market they were focusing on and the technology of tracking and check and balance on the usage of the handsets.
Branding Policy:
It was a co branded product, which has two big names associated with it. Both of them are the market leaders of their markets. Disney and Mobilink. The packaging was designed to attract the children of a certain age group.
At that time Mobilink has used ATL ( above the line) promotional type and as well as BTL(below the line ) promotional type for their product. In the ATL Disney cell phones were marketed through TV , Media and Radio . And in below the line these cell phones were marketed by Flyers .bill boards, press realease and other outdoor campaigns . Personal selling was not applied in the case of Mobilink – Disney handsets. There was no public relations strategy used.

Economic Analysis (Pakistan)

2010-07-20T01:17:00.000-07:00

Economic Analysis (Pakistan)
Equity Market (KSE)
The Karachi Stock Exchange (KSE) is the largest and oldest stock exchange. It is a premier stock exchange in Pakistan which offers a range of high quality products and services, which has enabled it to become the leading center of capital formation in the country. It offers companies and investors an efficient and transparent securities market, for raising capital and achieving investment objectives. Companies listed on KSE are Pakistan’s most well known, largest and most established companies. The exchange is owned by 200 owners with 651 companies listed. KSE has 4 indices KSE 100, KSE 30, KSE all share index and KMI 30. It also facilitates electronic trading and its total market capitalization as of June 30th 2009 is $ 26.15 billion. KSE trades in equities, deliverable futures contracts, cash settled future contracts and stock index futures contracts.
The year 2008-09 was a difficult year for Pakistan as GDP growth slowed; inflation rates rose and discount rates also followed an upward trend. Also the rapidly rising oil prices and law and order instability made matters even worse. The international and domestic volatility led to a series of events at KSE during the year. The KSE 100 index declined 60% from 12,289 points on July 1, 2008 to 4,815 points on January 26, 2009. In order to prevent widespread risk to the entire financial system, restrictions were imposed. These restrictions along with low investor confidence, and a lack of liquidity in the market resulted in a low average daily turnover of 115.64 million shares in 2008-09 compared to 256.34 million shares during 2007-08, depicting 55% decline. The year 2008-09 was a challenging one for KSE as the revenues declined 47% from Rs.1716 million to Rs. 914 million. Poor domestic and international market conditions, drastic increase in discount rate, lack of liquidity and floor imposition on the prices of securities led to a significant reduction in trading volumes to 27,142 million from 63,316 million last year.
Now giving an overlook to year 2009-2010, at the end of March 2010 the paid up capital at KSE amounted to Rs. 894.2 billion. Aggregate market capitalization as at end of March stood at Rs. 2890 billion. Market capitalization to GDP is currently just under 20%, which is low by comparison with many countries in Pakistan’s peer reference group. The period of July 09 to March 10 saw a recovery phase in the country’s capital market. The benchmark KSE-100 index rose 33% in line with the recovery being faced by the global equity markets. From the recent trough faced in January 2009, due to the aftermath of floor imposition at the KSE in late 2008, the KSE 100 rose up to 107%. Also a great deal of foreign inflow from the period of July to March amounting to US$ 440 million has greatly powered the index. But the volumes traded remained a fraction of period prior 2008. A major reason for reduced liquidity in the market is the absence of leveraged products. Mainly on the basis of foreign buying, the KSE 100 has risen 74% since its trough in January 2009, it has gained 33% since the start of the fiscal year 2009 to 2010. The Foreign Portfolio Investment has also risen sharply for July to March (2009-10). Other positives during 2009-2010 have been the restoration of macroeconomic stability after the BOP crisis, the IMF program, the upgrading of Pakistan’s rating by Standard and Poor’s. The KSE 100 index crossed the 10,000 mark on 12th March 2010 after a period of 18 months.
Important measures taken at KSE in 2009 include the following:
• Introduction of corporate Bonds Automated Trading System.
• Data Vending and Launch of Mobile KSE Automated Trading System (mKats)
• Implementation of internationally accepted industry classification Benchmark a jointly developed.
• Classification system launched by FTSE Group and Dow Jones Index.
• Risk Management.
• Introduction of Client Level Margining Regime.
• Restructuring of Net Capital Balance requirement.
• Pre‐settlement mechanism in Ready & Deliverable Future Contract Market.
• Introduction of Exposure Dropout Facility during Trading Hours.
• Introduction of Client wise cash deposits allocation against exposure margin and losses.
• Change in Penalty requirement on Net Capital Balance Certificate.

Interest Rates and Inflation:
The interest rate has been considerably high during the recent time periods, it has been 12.5% from November 2009 to May 2010, and this high interest rate has contributed greatly to the economic downturn Pakistan has been facing. In around January 2010 it was expected that the State Bank of Pakistan will reduce the discount rate by 100 basis point or 1% in the upcoming monetary policy statement along with some level of contraction in macroeconomic imbalances and improvement in monetary aggregates. After the expected revision the new interest rate would have been 11.5% from 12.5%. A cut in the interest rate was expected due to stability in food and other commodity prices. Even though inflation remained in double digits, the stability in the exchanged rate also contributed to the expectation of a reduced interest rate.
But on the flip side the interest rates followed an upward trend rather than a downward trend, with the size of government borrowings from commercial rates to be of Rs. 305 billion or 1.8% of GDP for year 2011 against an estimated rate of 1%. These borrowings are expected to remain high until or unless the release of financial inflows and privatization receipts from external and domestic sources are not materialized in the upcoming fiscal year. In the expected fiscal scenario along with an increase in the inflation numbers to be remained in double digits, significantly above the government target of 9.5%, there is no possibility for the central bank to lower down the rates. Therefore the interest rates are not expected to reduce at least in the next two quarters of upcoming financial year, this was stated in a report issued by the Standard Chartered Bank.
Inflation is one of the menaces that have contributed immensely to the current economic condition of Pakistan. After declining for much of 2009, inflationary pressure has intensified lately due to number of adverse events. From a low of 8.9% in October 2009, the Consumer Price index (CPI) has now increased to 13.3% as of April 2010. Food inflation has also remained high in these past few months increasing from 7.5% in Oct 2009 to 14.5% now. When considering the Non-food items, here again an increase in inflation is seen from 10% in Oct 09 to 12.2% in April 2010. On a period average basis the overall inflation recorded for July to April is of 11.5%. When taking in account the inflationary pressures it is very important to consider all major indices. The Wholesale Price Index (WPI) has risen steeply from 0.3% in August 2009 to 22% in April 2010. Similarly the Sensitive Price Index (SPI) has recorded an increase to 16.7% in April from 6.7% in Oct 2009. However inflation for 2010-11 is targeted at 8% rather than the central bank’s forecast of between 11% to 12% for the current fiscal year.
A sharp spike in global commodity prices, mainly relating to food and energy, which persisted since the beginning of 2009, has exerted a strong upward pressure on the domestic price level. Also a 70% increase in international oil prices between April 2009 to 2010 and a 49% increase in IMF commodity price index have also contributed greatly. Other factors that contributed to an increase in inflation over the two years consist of weakening of the Rupee over the past two years and also increase in domestic prices of wheat

GDP and Economic indicators:
The economy during current fiscal year 2008-09 registered a growth of just 2% against the budgetary target of 5.5% and downward revised target of 2.5% and only agriculture sector showed a positive growth of 4.7% against the target of 3.7%. The country has been pushed back in to the times of low growth, unemployment, higher inflation and higher interest rate regime leaving all sectors of the economy to suffer. During this period almost all the indicators were found in the red zone due to world’s financial crisis.
A measure of macroeconomic stability achieved over the past two years has kindled a moderate recovery in the economy, despite one of the most serious economic crisis in country’s recent history. The economy grew by 4.1% in year 2009-10. For the outgoing year the Agriculture sector grew an estimated 2%, against a target of 3.8%. Industrial output expanded by 4.9%, with large scale manufacturing showing a growth of 4.4%. Also the services sector grew by 4.6% as compared to 1.6% in 2008-09. Commodity producing sectors expanded at a pace of 3.6%.There were several developments that caused this moderate economic growth, such as crop support prices policies with higher work remittances which sustained aggregate demand in the economy, improvement in business confidence, expansionary fiscal stance and a small recovery in global economy.
Now the reports and predictions made for the year 2010-11 mostly state that, Pakistan is set to grow at 4.5% in the beginning of July in the year 2010-11 against the 4.1% during the current fiscal year. Agriculture growth is targeted to be 3.8%, manufacturing growth is expected to be 5.6% and the services sector is targeted to expand to 4.7%. The government aims the fiscal deficit of between 4 to 4.2% of GDP in 2011 as compared to earlier forecast of 5.1%.

Economic Indicators (2009-2010) July-May
Exports
(Billion$) Imports
(Billion$) Trade Balance
(Billions$) FDI
(Million$) Foreign investment
(Million$) Work remittances
(Billion$) Forex reserves
(Billion$) Exchange rate
(Rs./US$) GDP Infla-tion
1.75 3.36 -1.60 2030.7 1896.9 8.064 16.013 85.4 2% 13.3%

Structural adjustment programmes

2010-07-18T23:43:00.002-07:00

Structural adjustment programmes

Introduction
In the 1950s and 60s, the model that was suggested and developed by academics and government officials in the USA focused entirely on growth. This model, where the general aim was to increase growth in the economics of the relatively advanced underdeveloped countries- Latin America and some Asian countries – rested on the premise that increased growth should be the fundamental focus of all policy, and eventually the fruits of growth would “trickle down” to the population at large.
From structural adjustment loans to structural adjustment
Programmes:
• In the 1970s, the IMF and World Bank used to play a smaller, though important, role in the economic development of many developing countries. They used to provide loans which were based on careful country analysis and had stringent conditions attached to them.
• The focus of the IMF was essentially on improving the balance of payments problem, while the World Bank was more focused on specific projects and sectors.
• This foreign money was lent on easy terms and had a negative real rate of interest. While interest rates were low and commercial banks were ready to lend, governments in developing countries and in the advanced countries were not very concerned about the accumulating debt.
• However when US interest rates rose to 18% to finance Ronald Reagan’s largest peace time military build up, third world countries were forced to increase their budgetary allocations to service the US $ denominated debt. While the cost of servicing outstanding debt increased, commercial credit to the third world became much tighter. In order to repay parts of their debts or, more importantly, huge interest, government spending priorities had to change. As a consequence internal investment and social expenditures began to fall.
• The results of such a policy were obvious at the outset: social expenditure fell in almost all those countries that had accumulated debts.
• There was a major change from the mid 1980s, when the programmes of the World Bank and IMF began to become more fused. Also, the distinction between stabilization and adjustment became narrower, and the structural adjustment programmes of the late 1980s onwards had elements of both. There were also differences in the time span of loans. Earlier structure adjustment loans were for 12 to 18 months, but as institutional and policy reform became an increasingly important concern, the period of the loans increased to between 3 and 5 years.
Structural adjustment programmes: composition.
A structural adjustment programmes seems to fairly general, in the sense that it’s basic principals are applied to countries irrespective of their differences- and this is one of the major criticisms of the approach. The focus of the structural adjustment programmes is on improving the balance of payments position, cutting the fiscal deficit, lowering inflation, and increasing growth. The different arenas around which these and other policies revolve are as follows:
1. Trade policy: countries are advised to adopt competitive real exchange rate, n the mechanism for doing this is devaluation.
2. Fiscal policy: the reduction and the elimination of fiscal deficits by curtailing public expenditure is a high priority, and an increase in prices in the public sector so as to meet costs increase revenues is also recommended.
3. Public enterprises: the preferential financial treatment to state economic enterprises is to be stopped and there is to be brought in line with the private sector.
4. Financial sector: institutions are to be restructured so as to facilitate resource mobilization and to reflect costs. Interest rate ceilings are to be relaxed. Time deposit rate and lending rates are to be liberalized.
5. Industrial policy: protection is to removed from the industrial sector so as to make it more competitive internationally, and price controls over goods are to be removed so as to improve resource allocation.
6. Agriculture: the bias against agriculture is to be eliminated by adjusting the exchange rate and by removing the protection offer to industry.
To summarize them the structural adjustment program is meant to improve the balance of payment positions with the help of devaluation, which is suppose to encourage exports, it should cut the fiscal deficit by increasing some prices and cutting subsidies and by decreasing government expenditure; and it should cut inflation and foster growth.
Structural adjustment programmes: implementations and effects
• It is often found that programs are associated with a rise in inflation and the fall in the growth rate.
• This stringent fiscal adjustment which is central to the structural adjustment programs has led to a sharp decline in the public investment which may be leading to serious infrastructure bottlenecks to development.
• If the adjustment effect on the growth is weak, adjustment lending creates a negative investment effect: “the influence of SAPs on aggregate investment is almost everywhere negative” and “this negative impact on investment runs counter towards one of the basic objectives of adjustment and thereby questions the assumptions on which policy lending was predicted”.
• Further more, the attempt to correct the balance of payments positions with help of devaluation and immediate and undifferentiated reduction in import tariffs has not given national industries adequate time to improve their competitiveness with foreign firms.
• Consequently, reindustrialization in many countries resulted from sudden trait liberalization and further eroded the industrial base of many fragile countries.
• Moreover, a study by Van Der Hoeven found that it was mostly the extreme poor effected by the program, since ‘ the economic environment in which they live is often more closely related to the external sector and the principal source of income –wages-has often decreased drastically as part of structural policies.
• Increasing income concentration and inequality was also found in the other success story.
• There was a sharp decline in the share of both agricultural incomes and wages and salaries.
• The worsening income distribution arose from the ‘removal of subsidies following price decontrol in the public sector, a neglect of a essential public services in health and education, as well as a sharp fall in real wages and agricultural terms of trade’.
• The effects SAP on he natural environment is also been seen to be harmful.
• The most palpable impact of SAP has been an increase in rural poverty.
• Countries under adjustments are often short of resources and of the capacity to implement the programmes.
Structural adjustment programmes in Pakistan
History
• Pakistan has had a long association with the IMF, and the first time that the government of Pakistan asked for a loan was in 1958.this was a standby arrangement worth SDR 25 million over a period of 10 months.
• Two more standby arrangements were made in 1965 and 1968 by the Ayub khan government.
• In the case of Pakistan, as in other UDCs, the nature and the extent of the IMF involvement change drastically in the 1980’s.
• As the IMFs funding amount in pattern changed over late 1970’s and 80’s Pakistan entered in to a long term EFF in November 1980, for a period of 3 years under general Zia.
• The second recourse to a long term agreement with the IMF, following which the various governments in Pakistan have very closely followed the program, was signed by the interim government after the death general Zia ul haq. Infact, it was literally the last day of the government when the agreement was signed, and the subsequently elected prime Minster, Benazir Bhutto, took office the following day.
• There was a gap of almost two years before another agreement was signed in September 1993.
• Pakistan’s political history since 1993 will help put he present SAP in proper context.
• The enhanced SAP was prepared by Moin Quraishi interim government, and by 30th august 1993 IMF and the World Bank staff, which represented both the IMF and the government of Pakistan, had agreed to a Policy Framework Paper, which laid the bases of the more comprehensive three years programs of 1994.
• There was so much overlapping of interest over the content of the program that it became difficult to see whether the government of Pakistan was initiating the programs based on its own particular needs and priorities, or whether the IMF and World Bank members, in their official and non official capacities, were imposing the programs.
• The Moin Quraishi government was given a standby loan of SDR 265.4 million in record time by the IMF on 16th September 1993.
• Benazir’s government endorse 1993 program, but also, within 4 months, signed the 3 years loan under the EFF and the ESAF.
• The only time the democratically elected government itself took a loan from the IMF, was Nawaz Sharifs second government of 1997-1999.
• There were 4 agreements, two ESAFs and two EFFs, but as in the past, all agreements were suspended o abrogated and were never fulfilled.
• Nawaz sharif’s second government which used a one trenches $ 495 million Contingency and Compensatory Financing Facility- completed its programs and fulfilled the agreements.
• The only exception is general Musharaf’s government, which agreed to a Poverty Reduction and Growth Fund arrangement worth US $ 1.3 billion (which is equivalent to 100% of the SDR quota of Pakistan) over the period December 2001 to 2004.
• It should be clear from the above account that there are major political connotations to SAP in the context of Pakistan, something that is also confirmed by events after 9/11.
Implementations of SAP in Pakistan: an examination of the 1988 program.
The key objectives of the 1988 SAP over the tree year period, with their annual targets were as follows:
• Reduce the overall budgetary deficit to 6.5% of the GDP
• Contain the rate of inflation and reduce it gradually
• Reduce the external current account deficit
• Reduce the civilian external debt service
• Increase gross official foreign exchange reserves
• Contain the growth of domestic credit and money supply in line wit the growth of nominal GDP.
• Consistent with the macro economic adjustments, sustain real GDP growth.
Fiscal policy
• With an attempt to decrease the fiscal deficit/ GDP ration in 3 years major emphasis was put on resource mobilization, with major tax measures that were intended to increase the tax revenue elasticity.
• Excessive government expenditure, particularly current expenditure, was also to be reduced.
• This was to be achieved by reducing the growth of current expenditures, as well as by lowering and eliminating subsidies on fertilizer and revising the procurement prices of wheat.
• There was also a major attempt to tighten the control over provincial expenditures, with a new federal/ provincial revenue sharing agreement been worked out so that provincial government would make grater efforts to raise revenues.
• The implementation of the SAP as evaluated by the IMF/World Bank was weakest in the area of fiscal policy. Most quantitative targets were not met.
Trade
• The emphasis of the SAP of 1988, in the4 trade sector, was on extensively reducing tariffs so that imports could be made cheaper.
• However, there was also an attempt to increase exports, particularly higher valued exports.
• In addition, with deregulation and privatization being promoted, the private sector was to be permitted greater involvement in the export of rice and cotton, both of which were previously solely under government control.
• In the latest agreement, the PRGF of 2001, these policies have continued, deepening the reforms further.
• With the help of these programmes the exports increased sharply and the trade balance also improved significantly.
Financial sector
• The SAP of 1988 highlighted measures to improve the efficiency and profitability of the banking system and to increase the autonomy and accountability of public sector financial institutions, particularly nationalized commercial banks.
• On the monetary policy side, policies were to be undertaken to abolish negative real interest rates on concessional credit programmes, and efforts were to be made to free interest rates in the market for medium- and long term credit, making the interest rate more responsive to market conditions rather than being under the control of the government.
• In addition to these steps, the SAP of 1988 proposed policies in the monetary sector, where the government was expected to pursue cautious domestic credit policies so that inflationary pressures were curtailed and perceived improvements in the balance of payments were not jeopardized.
• The overall effect of SAP for the financial sector was pretty good.
Conclusion
• World Bank/IMF was not totally satisfied with the outcomes, as many targets were missed.
• More importantly, independent research that has been done on the impact of the program shows, very clearly, that the repercussions have been severe for poverty, employment, wages and inequality.
• Moreover, some of the outcomes of a SAP, like higher growth and lower inflation, have not been manifested themselves in Pakistan, with growth being considerably lower and inflation higher than trend levels.
• Thus, we argue that one of the main reasons why there has been such a noticeable rise in poverty in Pakistan, has been due to the adherence of such SAPs.

The Role of Civil Society’s and NGOs in Pakistan

2010-07-18T23:43:00.001-07:00

Table of Contents
Introduction.................................................................................................... 2
Defining Civil Society…………………………………………………………… 3
Overview of Civil Society in Pakistan............................................................. 4
Typology………………………………………………………………………….. 5
1) Structure............................................................................................. 6
i) Mapping Civil Society
ii) Membership Base

2) Space................................................................................................... 8
i) The Right of Association
ii) Socio-religious Pressure
3) Values ................................................................................................. 10
i) Tradition of Charity
ii) Violence and Militancy: The Other Extreme
iii) Other Folk Sub-sectors
iv) Gender Equity
v) Accountability and Transparency
4) Impact................................................................................................... 13
i) Public Policy
ii) Effectiveness of CSOs: Poverty Reduction and Sustainable Development
iii) Comparative Advantage
iv) Creating Awareness
v) Successful lobbying
vi) Portrayal in Media
vii) Some Setbacks

Conclusion....................................................................................... 18
Limitations……………………………………………………………… 20

Introduction
The newest factor we are coming across in the development equation is ‘Civil society’ and in response civil society strengthening is the latest addition to the agenda of development. The traditional and the modern components of civil society are to be found around the globe whether it is in Pakistan or anywhere else. It is these organizations and institutions it is made up of and hence is known to be a stand between the individuals, the state as well as communities. Pakistan's civil society is not entirely constituted by NGOs and special interest groups. It consist both bazaar associations (baradaris) and NGO’s
The best way to gain knowledge and understand in depth along with appreciate civil society’s role from the development perspective it surely needs to be undressed of its ideological clothing. The overall purpose of this report is to critically assess the present enthusiasm of the role played by civil society as a counterweight to the state, and as the basis of a society-centered strategy of development.
We can say, that the civil society of Pakistan is basically characterized by hybrid forms, multiple inheritances and a lot of unresolved struggle among the between the practices and values of pre-capitalist society and new modes of social life. Its cultural manifestations appear as a collection of incoherent voices, conflicting worldviews and opposing interests.
Defining Civil Society
It is wise to understand the term ‘civil society’, before proceeding with the analysis of Pakistan's civil society. It is the distinction between civil and political societies, paralleling of the old fashioned segregation like prince versus people which laid the basis of the idea of civil society. According to Gramsci, it is to differentiate civil society from both economy and state, describing it as the realm of public opinion and culture [Mamdani (1996), pp. 14-15]. At the present according to Cohen and Arato, civil society is differentiated from the state and defined as "the sphere of associations (especially voluntary associations), social movements, and forms of public communications that mediate between economy, state and society" [Cohen and Arato (1992), p. ix].
In practice today, civil society has come to a broad meaning NGOs, local communities, clubs, interest groups and other associational arrangements which are outside the sphere of state. It is emphasized that all social institution of a society that express collective interests as well as the actions do not come under civil society. To build and sustain civic institution outside the government, both for meeting collective needs and for holding the state accountable is the main project of strengthening the civil society. According to Mccarney, this is how donor agencies and Western academics define civil society [McCarney et al. (1995

Overview of Civil Society in Pakistan
Sociologically speaking, it is Beradaris (clans) system, Panchayats (village councils) and Jirgas, comprised of religious leaders, rural landlords and town notables make up civil society in Pakistan and is observable in formal institutions, such as political parties, labour unions, media and press, chambers of commerce, citizen clubs and community organizations. We can deduce on this basis that these 'mediating' structures are the ones which regulate, balance and influence the state on high node, as well as in organizing collective action in public affairs. In a nutshell, we see that groups mentioned above act as the intermediaries who make the voice reach to the king from individuals.
It is estimated to be around 45,000 active nonprofit organizations currently working in Pakistan which include a large some of people amounting to almost 6 million members and consists of approximately a quarter million staff members. This sector have a diverse range of activities from religious education to sport activities, from performing religious rites to the lobbying for civic amenities, and also from running vocational centers to national human rights advocacy organizations. It includes all the sizes which range from small neighboring graveyard to the multibillion rupee hospitals. It has come up that almost half (46%) of the Pakistan’s nonprofit organizations cite education to be their main activity performed. Advocacy is the second largest component in this nonprofit sector totally approximately 18% whereas, the organizations providing social services and religious activities as their main activities represent 8% and 5% respectively of the total. A relatively small share work in the health sector 6%.
Typology

NGOs (Non-Governmental Organization): Citizen Sector, which in depth can be defined as private, not for profit citizen organizations, pressure groups and support centers.
Community Based Organizations (CBOs): Membership based, grassroots organizations known to be a subset of NGOs.
Trade Unions: These are organized associations of the workers in an industry or profession which work for the protection and furtherance of their rights and interests.
CSOs (Civil Society Organizations): CSO will be used as an “umbrella term” in the report to refer to NGOs, CBOs, think tanks, trade unions, cultural groups and informal citizen organizations

The project report presents an overview of the contemporary civil society along four dimensions based on the limited survey and range of secondary data which includes research papers, articles and databases:
1) Structure
2) Space
3) Values
4) Impact

1) Structure:
Civil society organizations, sectoral and regional distribution, resources, membership, networking etc. are the lime light of this part. Since there is no database been maintained on regular basis hence, it is difficult to draw an absolute picture of the civil society of Pakistan. From 1990’s several initiatives have been launched to collect data on various dimensions of the civil society, but so far no comprehensive analysis has been undertaken. The amount of data available is pretty much of a mere sketch or can be said as area specific, which also mostly focus on the NGO’s.
It has shortcomings in areas such as membership base, regional distribution, building alliances and coalitions, co-operation with the private sector. I have not been able to find a consolidated data available on the number, funding sources and resources of such traditional civil society actors as madrassas, jirgas and panchayats (council of elders), savings groups, burial societies, neighbourhood associations and shrines.
i) Mapping Civil Society:
After reviewing a number of databases and surveys, from my findings, I would estimate that there are around bulk of 59 percent in Punjab province followed by Sindh and NWFP NGO’s actively working currently in Pakistan. If non-registered organizations are added to those registered (active) under the six laws, the number, according to reliable government sources, could be anywhere around 50,000.
It is a complicated task due to multiplicity of registration laws to map the NGP sector in Pakistan. There are six different laws under which organizations can be registered:
i) The Societies Act (1860),
ii) Companies Ordinance (1984),
iii) The Trust Act (1882),
iv) The Charitable Endowments Act (1890),
v) The Co-operative Act (1925)
vi) The Voluntary Social Welfare Agencies (Registration and Control) Ordinance (1961).
It wide open fact that there is no such system whereby non-functional NGOs are struck off the registration records which result in many of the NGO’s, which have becomes defunct still continue to be listed and hence present a false picture of the sector.
ii) Membership Base
Only five to ten percent of the total has more than 450 members. There are basically no reliable figures as such available on the membership base of CBOs and faith-based organizations which can accumulate the exact numbers. It is only 22 percent of civil society knowledge bearers agrees that CSOs in Pakistan has an active membership base. Approximately, 35 percent disagrees while as many as 65 percent of respondents seems to hold a mix opinion. This clearly shows the lack of information of the membership base of CSOs in Pakistan.

2) Space:
This section of the report studies the legal, political and socio-cultural environment that civil society operates in. Borne the brunt of repeated military interventions in the country’s polity have been faced by the Civil society of Pakistan. The state has many times came under the repression in various forms including bans on CSOs, arrest of civil society leaders and political pressure. After a quasi-democratic interlude in 1980’s, the country again came under military rule of General Parvez Musharraf (Retd). After coming out of the military rule now certain socio-cultural norms and attitudes still lack the continuation of the impact on the strengthening of civil society.

i) The Right of Association
There have always been an ambiguity and mixed based attitudes between the state and the NGOs. Where the services are appreciated the NGOs provide, they are also perceived as a competitors for donor funded, political allegiance and influenced. The government’s concerns with the operation of NGOs essentially hinge around issues of sovereignty, funding, monitoring and supervision. The history of the relations between the state and civil society shows that while the former is relatively comfortable with the service delivery and charity role of NGOs; it is the advocacy work that it finds unsettling and provocative. It is seen that traditionally, the state has refrained from interfering with the activities of informal CSOs such as madrassas, shrines, seminaries and jirgas.
ii) Socio-religious Pressure
In the recent past certain sub-sectors of civil society faced increasingly hostility at societal level. Throughout 2000, it is seen that NGOs were been subjected to repeated verbal assaults by religious leaders. The attacks came despite the support extended by the government ministers to NGOs calling for their inclusion in advisory panels and in undertaking work at the grassroots level. Religious extremists continue to accuse development and advocacy-oriented NGOs of working against ‘national ideology’ by spreading liberal and secular values

3) Values:
This part of the project report looks into the values, norms and attitudes that civil society represents and propagates. It takes into account issues such as promotion of human rights, gender equity, tolerance, sustainable development, transparency and accountability, internal democracy etc. There is, however, a dichotomy between the values held by modern CSOs and traditional or folk sub-sectors in terms of vision and values. The Values dimension almost 50% reflects a civil society that is reasonably well- advanced in terms of norms and attitudes.
i) Tradition of Charity
Volunteerism has traditionally in our country been a deep-rooted impulse, which is encouraged primarily by the religious obligation of helping the poor and the needy. After partition in Pakistan the charity organizations which were setup drew on the historical tradition of providing relief to the needy. Dominance by the founding fathers of such organizations have shown and proved invaluable services to the poorest of poor whereas, they somehow lack internal democracy and accountability and are characterized by informal structures.

ii) Violence and Militancy: The Other Extreme
A sub-set of CSOs comprising religious seminaries, however, has invariably backed jingoistic and chauvinistic ideologies. Their worldview is clearly at cross-purposes with the goals of social development, gender equality and social justice adopted by other civil society organizations. It can be seen similarly with the jirgas in the North West Frontier Province and the Federally Administered Tribal Areas often condone violence, honor killings and gender discrimination in the name of familial honor and traditions.
The political parties are highly blamed for the infusion of violent culture in to universities which includes the campus life upset due to the educational hurdles be the first and foremost attribute to the student raging frustration enhancing it with the deeply unsatisfactory nature of education experience with regards to a most doubtful future employment prospects.
iii) Other Folk Sub-sectors
It is evident that mysticism in the subcontinent, as elsewhere in the world, gave birth to a whole range of poetry, allegory and music that was an combination of the unorthodox Islam and the indigenous culture. Nowadays, Sufi saints are looked upon as models of piety and spiritual excellence. Within these saints some gained more popularity after their deaths which resulted in the birth of shrines as being the center of their wishes to come true for people of all creed and sects. As the years pass by some of these shrines have lost their charm and became hotspot of drugs, prostitutions and quackery. There are still few which still aim to provide genuine alternatives space for faith, devotion and culture.
iv) Gender Equity
Today studies have clearly pointed out the need for trade unions to involve women workers and to address their concerns and problems. Additionally, it has been notified that women have limited opportunity to exercise leadership in trade unions. This is partly due to the tradition of segregation and social restrictions on women’s mobility that women workers will not have any incentive to join trade unions unless they have the confidence that doing so will improve their condition and strengthen their position in the workforce. Much like trade unions, professional associations, employers’ unions and student organizations continue to be male-dominated. The under-representation of women in these organizations speaks volumes about their dominated status in the Pakistani society.
v) Accountability and Transparency
A rise to greater responsibilities and public expectations there is seen an increasing role of CSOs in the social sector. NGOs are found wanting in terms of internal democracy and participatory decision-making. Civil society of Pakistan in this manner is caught up in conflicting trends. Only a quarter of the respondents agreed that CSOs make information about their general activities publicly available, while only a very small percentage believe that financial accounts are disclosed. Any individual who is relatively better off in qualification from the other and wield a certain amount of influence setup a community based organization. This gives rise to the total control of that organization and with very minimal or limited democratic participation. Larger NGOs in Pakistan have remained caught up increasingly in the world of foreign official aid, which pushed them towards certain forms of evaluation and accountability at the expense of others. When most of the funding is obtained exclusively from foreign funding agencies it is therefore, hard for the organizations to establish their credibility either to government or to society-at-large.

4) Impact:
In this final part of the report the contribution of civil society to various social, economic and political problems, its role in agenda-setting, policy-making, implementation and monitoring are discussed. The overall impact of the civil society initiatives can be gauged from the fact that CSOs in Pakistan are now accepted as partners in social and economic development. Once which was an indistinct voice at the edge, civil society today is a force to be recognized with in the national ground. Functioning under resource constraints and in an unfavorable environment as they do, CSOs’ contributions to the country are indeed impressive.

i) Public Policy
Civil society in Pakistan has evolved under the shadow of frequent military interventions and a debt-ridden and elitist state system. That the ideals of people-centered development, human rights, gender equality and social justice are slowly but steadily creeping into public policy frameworks has much to do with the efforts that civil society has made over the past five decades.
ii) Effectiveness of CSOs: Poverty Reduction and Sustainable Development
There have been a tremendous impact through micro-credit in the rural areas are the result of initiatives taken by such as the Aga Khan Rural Support Programme (AKRSP). It has formed more than 2 300 village organizations and over 1 450 women’s organizations contributing to almost Rs 1450 million disbursed in loans to more than 600 000 villagers. It is the AKRSP model which was replicated by each of the four provinces in addition to the National Rural Support Programme (NRSP) at the national level.
iii) Comparative Advantage
A huge number of respondents agree to the providing of services by the CSOs to be of maximum positivity to the state. It is the edge over the state that has remained distant from the realities on the ground and obsessed with extravagant projects which are pointed out by many observers regarding the flexibility, informality and emphasis on small scale projects performed by CSOs.
iv) Creating Awareness
It have been a vital role played by the NGOs in Pakistan in creating awareness on issues such as human and legal rights, women’s role in development, and over-population. For women and minorities that have borne the brunt of religious bigotry and social repression, civil society came as a silver lining in dark, gloomy clouds. Repealing discriminatory laws and reforming the electoral process have been consistently campaigned by the advocacy groups. It is the role of civil society which have been lobbying successfully have blocked an attempt made by the Muslim League government to introduce religious coding of the national identity cards.
v) Successful Lobbying
Child rights’ organizations have played a key role in reducing child labour in Pakistan’s football stitching industry. To eliminate the child labour from the football stitching industry was a consequence of a constant struggle of the Sialkot Chamber of Commerce and Industry in 1997. The project of UNICEF based on a multi-pronged approach of providing education to children which were displaced from the football stitching industry gave credit to their families was an immense success and went on to win the government’s support as well.

vi) Portrayal in Media
Media as known plays a very vital role in the portrayal of these CSOs. In view of maximum observers as the negative approach is taken towards these operational CSOs which raise allegations adherence to foreign agendas, corruption and promotion of western values with lacking of the accountability. The is that the coverage and analysis of CSO activities varies from one medium to another and also from one kind of CSO to another to which majority of the public opinion poll is that they are negatively portrayed in the media both in paper and television broadcast. It is advised that CSOs need to devise a strategy for effectively engaging media to have a stable and positive image to be presented.
vii) Some Setbacks
In spite of significant breakthroughs made by the civil society’s development initiatives have sometimes also met with failure. Due to the unexpected withdrawal of funding or at the culmination of the project period have led to the many of the CSOs come to a halt in their operations and permanently closed down only because of the dependency on the foreign donors to the sustainability of the projects. This dependence often translates into programmes that are task-oriented, bureaucratized and unsuited to local conditions. Rather than on long-term planning, institutional strengthening, human resource development and building a sound resource base CSOs are forced to concentrate more on immediate activities. Due to the lack of focus and clear organizational structure community based initiatives fall short of targets. They seem to be in need of clear vision, focused objectives, well-defined strategy, managerial and financial systems, planning and implementation skills and linkages with the surrounding systems. Only few organized and planned procedures are for regular contact with the government. Technical advice and training in situation analysis and devising strategies are weak points that must be developed. This would be an important step towards building their capacity to put forward alternative policies in their areas of concern. Finally, it must be added that many civil society initiatives are well-geared toward long-term human development although their results may not be visible in the short-term, whereas CBOs still need some clarity in their long-term plans. Changes in attitudes, levels of awareness and social consciousness are hard to quantify — thus much of civil society's impact invariably escapes public notice.

Conclusion
The research phase of the project report yielded a wealth of information and ideas about the roles played by civil societies in Pakistan. On the positive side, the results of the finding speak itself of a civil society that is healthy and advanced in terms of financial sustainability and commitment. The fact that civil society knowledge bearers consider it to be financially strong may encourage a focus on areas such as lack of human resources and weak management while trying to establish a link with low impact. A negative aspect of the most CSOs weak structure along with lack of vision for long term planning is to a very great extent subject to political and government pressures. The objectives envisioned by smaller CSOs are often vague and limited to short-term remedy of diverse issues. The role of CSOs in promoting and practicing human rights emerges as a strong value especially given the non-democratic societal context. CSOs as playing a successful role in promoting harmonious relations in society needs to be qualified by the fact that the sheer number of militant and ethnic organizations overshadows the positive role played by other CSOs. It is also highlighted that service delivery and mobilization of the marginalized as success areas. A number of indicators a substantial percentage of views of the knowledgeable individual land in the mid-range category (those who neither agreed nor completely disagreed).

The hypothesis that can be drawn in the introduction to this report to the best understanding is:
Civil Society in Pakistan is characterized by hybrid forms, unresolved conflicts and divergent legacies, where a civil society is caught up in the middle of the ripple of pain and birth cramp of a new one. There is also a need, “to assess the role of CSOs in the broader socio-political environment of the country,” to quote one author Jean-Jacques Rousseau in his one of famous book on Civil society.

Limitations
While I made every effort to make this project as broad-based, comprehensive and accurate as possible, I was constrained by a number of factors that must be mentioned at the outset.
• Government representation in various aspects was limited
• The accuracy was doubtful which lead to more investigations
• Time and resource constraints precluded collection of data
• The relatively small number of respondents
• The language of the small questionnaire i.e. English also posed a limitation as knowledge bearer
• Ongoing concerns in the country limited to the various locations to be approached for valuable data
• Driver took a leave to his sister’s wedding caused a lot of trouble for transportation
• Parents permission on visiting some locations for information made a few obstacles
• The temperature of Lahore being a major factor

Tariq Glass Industries

2010-07-18T23:39:00.000-07:00

Tariq Glass Industries
TABLE OF CONTENTS:

Executive Summary 3
Introduction 4
Cost Methods Used 6
Analysis of Income Summary 7
Analysis of Cost of Goods Sold Statement 9
Application of Activity Based Costing 11
Break – Even Analysis 12
Evaluating Annual Results to orient the outsider 13
Conclusion & Recommendations 14
References 15
Appendix 16

Executive Summary

Over the last twenty years, Tariq Glass Industries Ltd. has excelled in the art of glass manufacturing. The company has gained immense popularity under the brand names of Toyo Nasic, Omroc and Nova. Today it has become a reliable house hold name in Pakistan. This company enjoys a competitive superiority over its rivals primarily because the glassware produced in this firm is of matchless quality. Tariq Glass Industries also offers extensive variety in terms of its products, which attracts consumers from all regions of the country. Moreover the company runs operations in the international markets as well across Europe, Middle East, Africa, Asia and the Far East. Presently the Managing Director or the CEO of the company is Mr. Tariq Baig.
This report presents a brief, yet comprehensive analysis of the financial position of the company in terms of its financial statements and the cost methods used for valuing the inventory. The report covers tenure of three years starting from the year 2007 up till the present year 2009. A careful analysis reveals that the company earned reasonable profits in the year 2007 and the preceding years. But since 2008 due to various macro economic factors and some internal policies the company is facing tremendous losses. The major reason for these losses is attributed to external factors. These factors include the financial crunch that has devoured the financial systems of the world as well as political instability in our country. Certain other factors include rampant inflation. Due to rising prices the manufacturing process has turned out to be very expensive resulting in relatively lower profits. These factors have resulted in inefficient operations because of rising expenses and diminishing revenues.
Lastly the report concludes by summarizing the major causes of the present financial position of the company. Various financial ratios have been computed which outline the underlying factors for the unsuccessful operations of the company. The final analysis indicates that the financial position can be improved by efficiently managing the production process in accordance to the macroeconomic factors. This will result in lower per unit costs. Moreover the cost systems must be cautiously evaluated so that they represent true costs for the inventories. Certain employees can also be laid off to reduce expenses.

Introduction
Tariq Glass Industries Limited was formerly known as Nasir Saddique Corporation of Pakistan Limited and more popularly recognized as Toyo Nasic. The company was established in 1981 as a public limited company. The project was set up with the Technical assistance of Toyo Nasic Glass of Japan which is the leading manufacturer of Glass ware in Pakistan.
Over the last twenty years, Tariq Glass Industries Ltd. has excelled in the art of glass manufacturing. Under the popular brand names of Toyo Nasic, Omroc and Nova, Tariq Glass Industries Ltd. has become a reliable house hold name in Pakistan. By fulfilling the needs of quality glass tableware and nurturing the basic ingredients of Quality, Variety, Reliability and above all having a Competitive Edge, Tariq Glass Industries Ltd. is now the market leader in Pakistan. This success is now fast spreading to international markets across Europe, Middle East, Africa, Asia and the Far East. The backbone of Tariq Glass Industries Ltd. is a team of qualified, experienced and dedicated professionals with a proven expertise along with a staunch backing through technical collaboration with Toyo Glass of Japan.
Production Capacity
The plant boasts a production capacity of almost 200 metric tons of glass tableware per day, having a combination of single and double gob press machines as well as H-28 press and blow machines for light weight product ranges.
Decorating Facilities
For the creative and decorative needs of our clients, Tariq Glass Industries Ltd. has the facility of a fully automated, state-of-the-art printing machine, with the capability of printing six colors simultaneously, including quality gold and silver banding.
Warehousing
To ensure uninterrupted and consistent supply of goods to valued clientele, an all weather warehousing facility caters for raw materials, packing goods as well as finished products storage.
Quality
Tariq Glass Industries Ltd. stands committed as a team to manufacture quality glass tableware products through dedication, creativity, experience and technology. Their focus is striving not only to meet the expectations of their clientele, but also their imaginations. Their journey continues towards excellence.
Quality Assurance
At Tariq Glass Industries Ltd. assuring quality starts with a careful selection of indigenously available raw materials, which are processed through a most modern and fully automated plant. Quality Assurance at every step is constantly monitored by their experts through a fully equipped on site laboratory.

Cost Methods Used

As Tariq Glass industries mainly deals with the glass making including bottling and many more. Company basically uses two cost methods which are job order costing; it is the cost system which provides a method for tracking resource consumption directly to individual product. In this type of cost system cost of direct material, direct labour and overhead are accumulated separately for each job. Second one is the Activity Based Costing, it is an overhead allocation method that uses multiple overhead rates to track indirect cost by the activities that consume those cost. In activity based costing many different activity bases or cost drivers are used in applying overhead cost to products. Thus activity based costing recognizes the special overhead considerations of each product line. Other than this activity based costing provides management with information about the cost of performing various overhead activities.
As this company is engaged in diverse production activities so it uses both above prescribed cost accounting system, the overhead application rate using job order costing is determined by the given formula:

Overhead Application Rate = Est. Overhead Cost / Est. units in the activity base

Analysis of Income Summary

INCOME STATEMENT ANALYSIS

2007 2008 2009
Sales 1,108,446,723 1,174,459,701 1,409,803,158
Cost of goods sold 908,757,268 1,054,201,600 1,282,562,334
Gross profit 199,689,455 120,258,101 127,240,824

Operating Expense:
Administrative 29,340,674 31,917,516 32,040,086
Selling and Distribution 54,551,193 54,069,253 75,479,250
83,891,847 85,986,769 107,519,336
Operating Income 115,797,588 34,271,332 19,721,488
Financial charges 33,699,627 34,636,004 56,353,274
82,097,961 (364,672) (36,631,786)
Other Income 970,704 478,110 70,042
83,068,665 113,438 (36,561,744)
Other Expenses 5,700,790 5,209,669 -
Profit/loss before tax 77,367,875 (5,096,231) (36,561,744)

Tax amount 27,041,619 12,054,694 5,859,010
Profit/loss after tax 50,326,256 (6,958,463) (30,702,734)

An income statement is a summarization of a company's revenue and expense transactions for a particular period of time. The income statement reports on the financial performance of the company in terms of earning revenue and incurring expenses over a period of time and explains how the company's financial position changed between the beginning and end of that period. Therefore it is extremely important for the company's owners, creditors and other interested parties to adequately understand the income statement, because ultimately the relative success or failure of a company is based upon its ability to earn revenues in excess of its expenses. Once a company's assets are acquired and the business process is initiated, the revenues and expenses are important dimensions of a company's operations.
The table above illustrates the financial performance of Tariq Glass Industries, in terms of its income statements for three consecutive years. These income statements reveal the amount of profit and loss incurred by the company for the years 2007, 2008 and 2009. We have observed that in the year 2007 the company earned a net profit amounting to 50,326,256 which was slightly greater than the profit of the year 2006 which was 49,112,726, thereby revealing smooth operations. Now if we analyze the figures of the year 2008, it is observed that sales figures rose as compared to the sales figures for the previous year, but due to rising inflation rates and the dreaded financial crisis the cost of goods sold and other expenses also increased considerably, which resulted in a lesser operating income or a net loss of 6,958,463.
In the year 2009 the company again incurred a significant net loss amounting to 30,702,734, which is almost five times greater than the previous year's loss. This is primarily due to the political instability in the country, the financial crisis and soaring inflation rates. Although sales figures enhanced in the year 2009, but consequently the cost of goods sold also increased manifold. Even after the increase in cost of goods sold figures the gross profit was still greater than the preceding years' gross profit. But the selling and distribution expenses also increased significantly, which greatly offseted the gross profit. The cumulative effects of all these changes resulted in a lower operating income as compared to the preceding years and therefore a net loss was incurred.
All in all it can be stated that the income statements for the past three years reveal that Tariq Glass Company is in a weak financial position due to various internal and external factors. The owners of this company need to initiate drastic measures in order to control their losses and improve their financial position. These measures may include a cost efficient production process and significant reduction in expenses.
Analysis of Cost of Goods Sold Statement

COST OF GOODS SOLD ANALYSIS

2007 2008 2009
Direct Material
Raw material consumed 249,131,532 277,538,301 324,517,791
Packaging material consumed 121,307,354 117,462,993 175,336,958
Direct Labor
Salaries, wages and other benefit 140,182,082 177,168,480 222,976,693
Manufacturing Overhead
Stores and spares consumed 43,225,138 73,354,553 62,967,856
Fuel and power 289,128,308 323,853,591 387,568,006
Depreciation 51,381,351 57,968,756 88,537,394
Carriage and freight 3,832,906 5,957,782 4,665,431
Repair and maintenance 4,169,813 5,037,167 8,319,414
Travelling and conveyance 4,306,285 7,585,491 8,307,241
Insurance 2,242,276 2,647,275 3,286,869
Postage and telephone 687,974 850,956 1,009,267
Rent, rates and taxes 959,138 1,845,518 1,002,630
Printing and stationary 110,903 111,425 232,526
Entertainment 96,198 131,200 301,200
Others 2,340,084 3,253,502 4,679,865
Total Manufacturing Cost 913,101,342 1,054,766,990 1,293,709,141
Work in process
Opening 5,006,759 5,466,576 7,425,414
Closing 5,466,576 7,425,414 11,007,463
Cost of goods manufactured 912,641,525 1,052,808,152 1,290,127,092
Finished goods inventory
opening 19,874,464 23,758,721 22,365,273
Closing 23,758,721 22,365,273 29,930,031
COST OF GOODS SOLD 908,757,268 1,054,201,600 1,282,562,334

Above given table includes cost of goods sold during the three executive years which are 2007, 2008 and 2009. Cost of goods sold includes direct material, direct labour and finally manufacturing overhead. As cost of goods for year 2007 is 908575268 and a major portion includes manufacturing overhead. As we look at 2008 cost of goods sold it comes out to 1054201600 which is greater than 2007 cost, main increase in cost are because of salaries paid to labour and the rent paid or taxes paid, company work in process and finished goods inventory also increases compared to last year inventory. 2009 in which the cost of goods sold results to 1282562334 a higher value compared to last year, the major reasons behind this increased value is the increase in direct material cost because of increased inflation and the overhead component which is fuel and power and this is because of high load shedding and increase in petroleum prices. So company cost of good increase every year results in a short of profits every year.

Application of Activity Based Costing

Tariq glass industries also uses activity based costing in which the overhead cost is allocated to two different cost pools and these cost pools are then driven by different cost drivers. The overhead is distributed on the basis of number of employees working on a particular department. The two cost pools are ordering and inspecting cost pools and these pools are driven by the crushing and moulding drivers.
We assume that during the present year, 2009, overhead accounts to 746,214,657 which is to be spread in the above given cost pools. The ratio of splitting cost among both cost pools is based upon the number of employees working in each department. Total employees working at ordering are 40 and on inspection are 60 so the cost comes out to be:
Total Overhead 100% 100
Ordering 40% 40
Inspecting 60% 60

Total Overhead 100% 746,214,657
Ordering 40% 298,485,863
Inspecting 60% 447,728,794

Now assigning cost to the cost drivers of individual cost pool:

Ordering cost pool:
Ordering Overhead 100% 10,000
Purchase orders for crushing 20% 2,000
Purchase orders for moulding 80% 8,000

Ordering Overhead 100% 298,485,863
Purchase orders for crushing 20% 56,997,173
Purchase orders for moulding 80% 241,488,690

Inspection cost pool:
Inspection Overhead 100% 2,400
Inspection for crushing 75% 1,800
Inspection for moulding 25% 600

Inspection Overhead 100% 447,728,794
Inspection for crushing 75% 335,796,596
Inspection for moulding 25% 111,932,198

This is how the overhead cost is spitted to different cost pool and then to their respective cost driver by defining stated percentages according to which the total overhead cost is divided among each activity pool. The values for splitting cost using Activity Based Costing are based upon assumed percentages.
Break – Even Analysis

Break Even analysis helps to decipher exactly how much dollar sales or units are to be produced so that a company will be in a position of no profit no loss.
The total cost incurred by the company in 2009 is 1,293,709,141 in which fixed cost totalled 547,494,484 and variable cost was 746,214,657. Company produces 1 million units throughout the year 2009 so break even in dollars and units come out to be:
Contribution margin per unit = Sale price – variable cost
= 1293.71 – 746.21 = 547.5
Contribution margin ratio = Sale price – variable cost / sale price
= 1293.71 – 746.21 / 1293.71 = 0.4231
Break even in rupees = Fixed cost + Target Operating Income / Contribution margin ratio
= 547,494,484 + 0 / 0.4231 = 1,294,007,289
Break even in units = Fixed cost + Target Operating Income / Contribution margin per unit
= 547,494,484 + 0 / 547.5 = 999,990 units.
Assuming that company has not estimated any operating income so the contribution margin per unit comes out to be 547.5 Rs and break even in units are 999,990 units. These are the units that the company should sell in order to be at breakeven point. While calculating the amount of sales in rupees required for the company to breakeven, the value turns out to be approximately 1.2 billion rupees for the year 2009.
Evaluating Annual Results to orient the outsider

Observing the past year performance of Tariq glass industries, the company has borne heavy losses in the last two years due to political instability, global recession and rising inflation. By analyzing the income statement of the company one concludes that investors would be unwilling to invest in the stocks of this company, but other than the income statement some financial ratios are used in order to detect the liquidity position of the company. This data is for the years 2007 up till 2009 while setting benchmark year 2007.
Year 2007
Current Ratio = Current Asset/Current Liability 1.1
EPS = Net profit/No of shares 3.85
Debt Equity Ratio = Debt / Equity 50.83%

Year 2008
Current Ratio = Current Asset/Current Liability 1.04
EPS = Net profit/No of shares -0.83
Debt Equity Ratio = Debt / Equity 27.68%

Year 2009
Current Ratio = Current Asset/Current Liability 1.04
EPS = Net profit/No of shares -1.33
Debt Equity Ratio = Debt / Equity 38.59%

The current ratio has increased from the base year and has remained relatively same in 2008 and 2009 due to increase in stores and spares. If we take inventory into consideration then it is not a good thing as either it is stockpiled with the company or it is not utilized properly. The company doesn't have an ideal ratio that is 2:1 but it covers all the current liabilities.
The EPS ratio has gone negative in 2008 and 2009 because the company incurred heavy losses during these years. Debt Equity Ratio tells what percentage of equity is financed by debt. If the ratio of debt is high it is considered good as the company gets the hedge and tax shelter. The ratio should not exceed 50% as then it will be difficult to pay off the debts. Well as in 2008 and 2009 it hasn’t gone very high so it’s reasonable.
Conclusion & Recommendations

To conclude, the income statement clearly depicts heavy losses which the company has gone through in the last two years. It is indeed an alarming situation and certain measures should be taken. The losses are mainly due to rising Inflation rates which have shot up in the current times, the expenses and the costs have increased much. Moreover there is overall global recession which has made everything even worse. Another major reason is political instability in Pakistan.
After looking at the ratios which are deduced from company’s figures it is seen that the company is going through losses and they are to be rectified in some way. This can be done through effective cost management at internal level. They should increase their current ratio level. As this shows that the company has enough assets to cover its liabilities. It is actually a guide to the magnitude of the financial margin of safety.
Most of the losses which they are bearing are due to external effects so if government changes some policies and reduce the overall inflation rate. This would reduce the overall input costs. But internally what the company can do is that it can manage its costs in a better way, effective management of cost systems may reduce their overall expenses. The company can also lay off certain employees in order to reduce salary expenses. So by taking into consideration all or some of the above stated recommendations the company can improve its current situation.

References

www.tariqglass.com
http://www.researchandmarkets.com/reports/585535
http://www.pakboi.gov.pk/pak/xdetail.asp?ComID=26391
http://it.glassglobal.com/directory/glass/profile/default.asp?ID=34336
http://www.alacrastore.com/company-snapshot/Tariq_Glass_Industries_Limited-2515850
http://www.docstoc.com/docs/17455272/TOYO-NASIC-TARIQ-GLASS-INDUSTRIES-LIMITED
http://www.tariqglass.com/tgiadmin/financials/THIRD%20QUARTERLY%20ACCOUNTS%20MAR-2006.pdf

Appendix

The annual report is attached for further reference.

Laundry Industry Analysis

2010-07-18T23:36:00.000-07:00

Laundry Industry Analysis

The laundry care market has evolved over time. These changes have led to intensified competition among rival producers and gradual expansion in consumer choice. The market currently faces strategic challenges from changes in consumer needs and preferences as well as any future rise in outsourcing and use of multi-purpose launderettes and from emerging washing technologies.

Highlights

UK consumers use washing machines most frequently each week although Pakistani consumers wash their clothes more frequently overall with a combination of machine and hand washing. Consumers everywhere hate doing the ironing the most of all laundry tasks and all household chores. Universally, no less than 80% of respondents to Pakistani consumer survey reported this chore as the one they disliked the most. Food and cooking are the most common causes of clothes staining and odor tainting for most consumers. Cigarette smoke concerns consumers aged 25-34 the most, as this age group is most likely to encounter the problem when going out for the evening. Smoking bans may lessen the importance of this source of odors.

Explore regional and national differences through qualitative market data and compare growth and penetration data to plan for future developments. Gain insight into the consumer preferences and changing behaviors that will affect the strategic direction of the laundry care market. Explore in-depth analysis of new products launched globally and action points that highlight existing best practice and new innovations.

For many centuries, soap was primarily used for laundering. However, laundry detergents have essentially replaced soap because they perform over a broad range of water hardness levels.
Laundry Detergent and washing powders have become an important part of every consumer’s life. The market offers a variety of washing powders, each brand claiming to wash the cleanest at unbeatable prices to consumers. Laundry detergents, however, exert a hidden but taxing cost on the environment and consumer health due to their environment-damaging properties. Phosphates are one of the main ingredients in most present-day laundry detergents and are also the primary culprits in polluting water bodies.

Growth in industry

Laundry detergent is also widely used in the Pakistan market, the average per annum consumption of laundry detergent is approximately 33,000 tons - One tone detergent costs around 138,000 Rs. Since the last two years, the market trend (Pakistan) in the laundry detergents has taken a good pace, and many consumers are switching from the bar soaps to laundry detergents. In terms of percentage, the increase ratio is about to 20-25% per annum.

Need for a wider consumer base
Increased competition in some categories has led to an increase in the variety of products which constitute particular ranges. In others, it has led to the targeting of a larger consumer base through increasing awareness of certain products’ usefulness and conducting brand awareness campaigns. Overall, competitive pressure stemming from increased prices and the effects of the economic recession led to some companies taking proactive measures during 2009 in order to gain value share by expanding into unexploited categories of home care and seeking to differentiate their products among consumers.
International brands preferred by consumers
A handful of multinationals dominate value sales in most categories of home care. Household name brands in countries around the world hold a similar status in Pakistan. These brands represent quality and availability and maintain a strong image. Domestic brands usually offer lower quality and represent a cheaper alternative. Whereas multinationals use their resources to make a strong impression on consumer consciousness, for example through advertising, local brands tend to have more limited visibility. In view of the current high rate of inflation and the slowdown in the economy a considerable proportion of consumers might be inclined to rethink their choice of home care product and shift to cheaper alternatives.
Increased popularity of supermarkets and other large-scale retail formats
A number of multinational operators set up in Pakistan during the review period, with many new retail outlets opening. This new trend also seems to be popular among consumers who increasingly rely on these distribution channels for stocking up during periodic big shopping trips. This trend can be attributed to the greater need for buying products in bulk at discounted rates due to the prevailing adverse macroeconomic conditions. After meeting with success in Pakistan’s biggest cities Lahore and Karachi, the impact of the increasing presence of these channels is now being felt in smaller cities such as Rawalpindi, Islamabad and Faisalabad.
Growth in value sales, slump in volume sales
Although the global economy is expected to recover during the forecast period, there will still be considerable inflationary pressures affecting the economy of Pakistan. However, volume will continue to grow at a slow pace due to the nature of consumer demand for many of the products. Although volume growth will remain at a low level, the jump in unit price will lead to a considerable rise in value sales. However, any possible deterioration in economic conditions or delay in the expected economic recovery will end up causing negative volume growth and very minute unit price increases as more consumers shift to economy brands from their current choice of standard brands. Even if the economic recovery begins soon, high inflation will still ensure that the magnitude of the increase will be much smaller and less significant in real terms compared to nominal growth.

Major Competitors

Market share plays a prominent role in business research and standing in the
market. There are many competitors of detergent in Pakistan.Some of the leading brands are given

Surf Excel
Ariel
Express Powder
Brite
Bonus

Surf Excel

Surf Excel was the first in the Pakistan detergent powder market. Over the years, Surf Excel has anticipated the changing washing needs of the Pakistan homemaker and constantly upgraded itself.

4 P’s of Surf Excel

Product
Surf Excel is Pakistan's largest selling compact detergent powder, it promises to tackle the toughest stains without damaging the colour of the fabric. This is because only Surf Excel has smart sensors that can differentiate stains from colours. Now consumers don't have to worry about tackling the really tough stains, especially on coloured clothes anymore.
Surf excel with active oxygen is formulated to remove a range of stains such as chocolate, ink, egg yolk, blood, turmeric and coffee. It gives clothes a complete cleaning while caring for the fabric. It is recommended by Singer (Manufacturer of Electronic appliances) for use in top loading washing machines.

Price:

Size Price
1kg Rs 175
500gms Rs 89

Those SKU(s) allow Surf Excel to deeply penetrate in the market by covering all possible washing powder consumers, based on income group. It also enjoys the market share of around 38% among the total branded laundry detergents in Pakistan.
35 and 15 gms SKU(s) are also called hanging SKU(s), it targets in lower class of society areas . Company gives special focus on the availability and visibility of these particular two SKU(s) (35 & 15 gms) in all shops of those low-line areas.

The purpose of focussing on these SKU(s) is to cater the demand of the consumers as per their low purchasing power and capacity to buy the well known brand and to generate more and more trials among the consumers to make them brand loyal. That is why the company calls these small SKU(s) a trial generation SKU(s).

Place

Unilever has an Intensive dealership network of 450 distributors all over the Pakistan, Uni lever also prohibits distributors from carrying competitive brand of competitors. For distribution it supports intensive distribution policy which suggests targeting the product through each and every outlet.

In Karachi itself there are 7 distributors for all its products, those 7 distributors distribute the product all over the 17,500 shops twice a week, form those 17,500 shops there are 2,000 whole-sellers, who distribute the supply further to the other 7,000 shops.

Promotion and Advertisement

The brand advertisement plan is based on an annual basis, which is made on the basis of assumptions and competitors’ moves. These plans are discussed and reviewed every month and modifications / changes are made if required. If any change is required than it needs to be approved from the Directors.

They divide the advertisement budget into two parts, first part is focused on theme advertisement, and other focused on promotional activities. As a premium brand Surf Excel needs to have heavy advertisement on television. Other media also used keeping in view the target consumers.

The reason for heavy advertisement on Television is because TV is the major influencer media, so major share of the advertisement goes to TV.
For Promotion purposes, they give

Trade offers
For trade offers, they offer 36 Rs. Discount per carton etc.

Sales Force Promotion
For distribution sales force, they give 1,000 Rs. to the District sales representatives (if they achieve their targets).

Consumer Promotion
For consumers they offer promotions from time to time by providing offers such as 25% Extra quantity, 26 Rs. off, they also some times include sachet of the other products in order to generate the trials of differentU ni l ever brand SKU(s) through the strength of Surf Excel’ large consumer base.

Ariel

Procter and Gamble market nearly 300 brands - including Pampers, Tide,Ariel, Always, Whisper, Pantene, Bounty. In July 1997, they launched Ariel in Pakistan based on a sophisticated and advanced formula. Its breakthrough formula was warmly welcomed by the Pakistani consumers and in a short time span it steals a significant amount of market share from Surf Excel.
New Ariel delivers against one of the key Pakistani consumer needs: a detergent that can give spotless cleaning to both coloured and white clothes. This is because new Ariel contains a unique double action system, which gets fully dissolved unlike bar soap.

Product:
In case of P&G detergent according to their brand manager the attributes consumers seeks for are as follows
1. Overall cleaning
2. Stain remover
3. Power of scrubbing (Build in additives)
4. Color care
5. Fragrance
6. Value for money
P&G have segmented their consumers in 3 different categories just like Colgate Palmolive have already done. These categories are
1. Quality conscious
2. Price conscious
3. Mix of the above two

Price:
Size Price
1Kg Rs 179
500gms Rs 90

Positioning of Ariel
The positioning of ARIEL a “Better cleaning in a simple way”. Retailers influence consumers to buy a particular brand but mostly on those brands in which they are getting high margins. In detergent category consumers are highly brand loyal and they love to use those brands in their routine life and become habitual of that particular product. Consumers’ only switches when one or more than one attributes do not keep their promise; do not fulfill the expectations of consumers. P&G also emphasize the importance of Distribution network that if product is not available at the shops on the right time and at the right place how can customer will access to a particular brand. Now a day people are much more educated due to media and they know the benefits of each brand.. The new concept of packaging was highly accepted and appreciated by the customers. Customer basically do not look for packaging color and quality of polythene bags what they want just a Quality product for them.
Express Powder

The concept behind the launch of “EXPRESS” was to provide a premium quality detergent at a medium price.
This concept came into existence after a survey which gave the results that people are buying expensive detergents because its their need , but they want a close substitute with a lower price so that it is not hard at their pockets.

POSITIONING STATEMENT:

REMOVES TOUGH STAINS ---------OTHERS LEAVE BEHIND.

4 P’s Of Express Powder

PRODUCT:

EXPRESS is a premium quality detergent which was launched at a 30% less price than other premium detergents , because the main purpose of its launch was to penetrate in the middle segment market as well as to break and capture the market of SURF by Lever brothers.

As a premium quality product at an economical price express gained huge success and just in a period of 3 years from its launch it became the market leader in 1989.

People from the middle level segment converted from soap users to express users , a big number of unbranded detergent users also converted into express users and those upper level people who purchased surf because it was their need but were not happy by its price, became express users.

All this brought a drastic change in the detergent market in Pakistan , and express was day by day becoming a threat to surf.

PRICE:

EXPRESS was of the same quality as of surf but was priced 30% less , this was done to enter the market and to create sales.

Express was the 1st ever Pakistani detergent to be marketed in polythene bags.
This strategy came into implementation because CP was giving top quality in express but priced it less , so she had to cover the cost somewhere. This was the main reason behind this startegy that they launched express in poly packs and not in carton packing.

This change in packing strategy was a success because people got something new in form of packaging and CP was getting its regular estimated profit by the decreased packaging costs because carton packing is far more expensive than the polythene bags.

The company thought about launching express in a low price , because they conducted a survey , in which they found out that there was a big number of potential detergent buyers who wanted an excellent quality detergent at less price.

So this survey result became the backbone of the launch of express in order to convert those potential buyers into actual buyers , and finally did managed to do so.

Size Price
1kg Rs 121
400gms Rs 57

PLACE:

EXPRESS is placed at stores in posh localities , as well in the middle level localities. The reason behind this placement strategy is that express was mainly launched for the middle income group. But it received good response by upper level as well. It is never placed at a shop visited by people from lower income level because it is not marketed in sachets , to cater their needs CP launched bonus which a a low quality and low price so as to fulfill the detergent needs of low level income and group and also to convert soap users into detergent users.

PROMOTION:

Promotion is an important factor and every company pays a lot of attention to it. In the case of detergents various kinds of promotion techniques can be applied.

At the time of launching of EXPRESS in 1986 ,

CP made washing machine manufacturers recommend express to their clients.

The marketing team went at peoples homes to do personal selling and to answer their questions.

Express was a co-sponsor of the world cup cricket 1987 held in Pakistan.

At the time of re-launch of EXPRESS in January 2000,

CP made the quality control manager of Al-karam textiles recommend express for the protection of fabric colors.

Bonus

Bonus is the product of Colgate Palmolive - backed by Lackson Group of Industries, are a few of the oldest laundry detergents in Pakistan and enjoy a reasonable amount of share in laundry detergents market. Because of the low price factor, they attract the lower segment of the market. But due to inferior quality and less fragrance, they are unable to attract huge market.

Price:

Size Price
1kg Rs 89
500gms Rs 43

Brite

Colgate Palmolive - backed by Lackson Group of Industries, entered into the laundry detergent market by launching a product with a nameBri te in 1980. Although it was unable to capture the significant market share of Surf Excel, but is one of its main competitors. Brite also changes its packing from poly bags to suit the needs of consumers.

Price:

Size Price
1kg Rs 171
500gms Rs 72

Market Share

Surf excel 38%
Ariel 28%
Bonus 18%
Brite 11%
Express 7%

The Surf Excel enjoys the largest market share of 38% due to its better Brand Image in the market and better promotional compaigns.

Point of parity between Surf Excel and Ariel

Point of Parity Among two Brands
Stain Removal
Both Ariel and Surf Excel are focusing on the stain removal
Emotional appeal
Both companies following emotional appeal
 Ariel
Focusing on mothers and cause marketing for charity by hiring celebrities
but not focusing on product and performance
Surf Excel
Focusing on kids and their learning process and to highlight the basic performance (stain removal) of their product.

Whiteness and shine
Both the detergent companies are focusing on the shine and whiteness of the
detergents.
Packaging & sizes
Both the detergents are available in same sizes and packaging.
Point of Differences Among two Brands
BleachContent
Ariel has a larger content of bleach in its formula that is better for cleaning
of white fabric ultimately giving it a more shiny and clean look. According
to Customer perception:

High bleach content in Ariel

 Harmful for fabric fibers
 Harmful for skin

• Surf Excel is milder but strong
Active ingredients
Surf Excel is formulated with high quality phosphate builders and multi-
active surfactant system to deliver superior cleaning in addition this formulation is further fortified with color safe bleach system and enzymes for superior stain removal in washing machines.
Whereas Ariel came up with their enzimax short for cleaning enzymes similar to that of surf excel but positioned differently thereby utilizing half the water as compared to other detergents as advertised in their ads.

Surf has become a generic name
Surf excel has a psychological advantage over any of its competitors as surf has achieved the level where surf has become a generic name for detergents category, thereby creating association in mind of its consumer.

Launching of New Detergent

“Splash washing Powder”

Why are we launching a new washing machine detergent?
After performing a complete survey, we came across to know that there is an opportunity as the people highlighted the problem that they are not satisfied with the performance of their washing machine in comparison to hand washing.
As a fact, a wrong detergent can quickly destroy any hopes of savings. There exists a tremendous amount of misconception about the detergent dosage in washing machines.
A washing machine needs a specialist detergent. Without a special detergent meant for your washing machine the washer will not clean properly. Using regular detergent may even cause mechanical problems to your machine.
Unfortunately, we have become so used to seeing lather in our old washing machines that we mistakenly relate the presence of this lather to proper functioning of a washing machine.
Hence it is essential to USE THE RIGHT DETERGENT FOR YOUR MACHINE.
Splash is specially designed to work in your washing machine's large quantities of water & remove tough stains in the washing machine.
Splash has a 'low foam' formula that is designed to remove stains without generating excess foam which is harmful for your washing machine.

Product
The concept behind the launch of “Splash” is to provide a premium quality detergent at a medium price.
This concept came into existence after a survey which gave the results that people are buying expensive detergents because its their need , but they want a close substitute with a lower price so that it is not hard at their pockets.

POSITIONING STATEMENT:

Slogan

“Machine mange SPLASH ka sath”

Logo

Brand Creation Process

Identification of brand positioning
Developing brand identification
Creating brand image

1. Identification of brand Positioning

There are different positioning strategies under as follow:
Category positioning
Image positioning
Preemptive positioning
Benefit positioning
Unique product feature positioning

Benefit positioning;

We are going to use benefit positioning because we are launching a detergent which is basically meant for washing machines as it has the abilty to produce “Low Form” which is a basic requirement for performance with machines. Other than this is also contains “Oxy Bleach” which helps in the retention of the dyes of the clothes in machine.

2. Developing Brand Identification;

Its true that without brand identification product can not survive.
Brand identification can be created by following methods;

Brand name : Splash Washing Detergent

3. Creating brand image

We are going to give companionship with happiness through our messages and advertisement such as:

“Machine mange SPLASH ka sath“

Marketing Process

In the marketing process there are some steps which are as under:

Market Analysis

Market segmentation

Market target

Market positioning

Developing suitable marketing

Comparative analysis

Managing and controlling marketing

Now we will discuss all these concept for Splash washing Detergent.

1. Market Analysis

In the market analysis we are going to analyze the consumer in such a way:

What consumer need and want?

Who is their consumer?

Why the consumers buy?

How often the consumers buy?

How the consumer use?

How much the consumer wants the product?

How much consumer is wiling to pay?

How the consumer wants to be informed?

With the help of all these questions we easily analyze the market for our consumers.

2. Market segmentation
Every market has different segments but not always segmenting a market is equally useful. The company is making segmentation based on consumer market. There may be a large market s o we divide the market into various parts. So there is na need of segmentation based on variables. We divide the market in such a way;

• Upper class

• Middle class

• lower class
Effective segmentation

 Accessible
 Sub stainable
 Actionable

Accessible:
Our product Splash is accessible to our customer it is easily available to for our customer. Through using print and electronic media we provide all awareness’ of our product our customer feel no difficulty in assigning the product during purchase.

Substainable:
The cost and profit relation is substainable for us. The customer which have been focused are potential & real customer of our product.

Actionable
We have well organized staff and also have strong add campaigns for attracting segment effectively and efficiently

3. Target market

TARGET MARKET:

Normally speaking detergent is a product which is purchased by the housewives but still there is a big target market.

DEMOGRAPHICS:

Age:
People of all ages like to wear clean clothes.

Gender:
Male and Female.

Family size:
No limit of members , clothes are to be washed.

Family life cycle:
Young or old , married or single.

Income:
Rs 35000 and above

Occupation:
Students , Working people and Housewives.

Social class:
Upper class , Middle class and working class.

PSYCHOGRAPHICS:

Lifestyle:

Achievers, Well settled and Ambitious people.

Personality:

Hygiene conscious , Strong and Authorative.

In the case of Splash or any other detergent the final consumer is a housewife because she is the one who purchases the detergent and has knowledge about quality and price of the product.

4. Market Positioning

In the market positioning, the company capture the consumer mind as they try to occupy the consumer’s mind for the product. It means they create the image of product in the consumer’s mind.

Splash is meant for excellent machine washing because of its “Low Form” producing characteristics as well as it has other qualities like retention of dyes, easy on hand, fabric softener, leaving the clothes bright and full of fragrance.
Splash is positioned the mind of the customer through the effective advertisement and its effective performance. Our slogan is designed to target the customer mind and its slogan captures the customer and left the ever lasting image on the customer mind.

Slogan: Machine mange SPLASH ka sath

Managing the Marketing effort

We take four aspects to promote and sell their product in the market as the four marketing management functions.

Marketing analysis
Marketing planning
Implementation
Control

1. Marketing analysis

The companies make complete analysis of firm’s situation. Through marketing analysis we are able to analyze the market and marketing environment to avoid environmental threats and to find environmental opportunities. we also analyze the strength and weakness of marketing environment.

2. Marketing Plan:

Every company makes their marketing plan to achieve certain things which are as following: To achieve their goals & for increasing their sales and also for the promotion of their product. So for achieving all these things we decided to design our marketing plan in such a way which help us to reach our goals effectively and efficiently. According to our marketing plan we want to satisfy our customer with help of long term plan.

 Easily available
 Quality product
 Provide them complete information of our product.

3. Marketing Implementation:

In this stage we turn our marketing strategies and plan into marketing action for accomplishment of our marketing objectives.

4.Marketing Control:

In the marketing control the organization take some steps.They set the specific marketing goals and then measure its performance in the marketing place. They evaluate the cause of differences in the actual and expected product performance. Finally management take corrective actions to close the gaps between its goal and its performance. For marketing control we decide that for check our performance we take following steps:

 Marketing Audit
 Take ideas to our customer
 Listen the complains

MICROENVIRONMENT:

THE FACTORS OF THIS ENVIRONMENT ARE EXPLAINED BELOW:

MARKETING INTERMEDIARIES:

Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies and financial intermediaries.
It is very difficult to deal with all the wholesalers and retailers individually so Splash washing detergent has a sole distribution system with a distributing company.

CUSTOMERS:

Consumer markets consist of individuals and households that buy goods and services for personal consumption. In the case of our chosen product “Splash” , a detergent , the main customers our house-wives because they are the ones who buy detergents.

COMPETITORS:

There are 3 main players in the detergent industry of Pakistan.
1) Colgate-Palmolive ( Brite , Express , Bonus )
2) Lever Brothers ( Surf , Wheel )
3) Proctor & Gamble ( Ariel )

PUBLICS:

The company’s marketing environment also includes various publics such as , Financial publics , Media publics , Government publics , Citizen action publics , Local publics , Internal publics and the general public. Amongst all the publics the most important is the general public , because they are the ones that but the product so the company needs to be concerned about their attitudes toward its products.

MACRO ENVIRONMENT:

THE FACTORS OF THIS ENVIRONMENT ARE EXPLAINED BELOW:

DEMOGRAPHICS:

In the case of “Splash Washing Powder” the demographics that we have found out are , that this detergent is mainly for those people who are more performance and quality oriented.

PSYCHOGRAPHICS:

People who are ,performance conscious about their washing are Splash buyers , because when it comes to personality values than no compromise.

TECHNOLOGY:

We are the one who launch the detergent in “Jars or Bottle Packing.” This change in packaging means that the jars packing don’t get torn off after getting wet like the carton boxes, so this change found a ready market.

ECONOMY
Splash is a premium quality detergent, having some extra features as compare to other washing detergents. Other than this launching it in jars/bottles makes easy for the people to handle.

Marketing mix

Marketing mix consist of every thing the firm can do to influence the demand for its product .There are four variables in the marketing mix as the “Four Ps”
Product
Price
Place
Promotion

Product

We are introducing Splash washing detergent . Splash is a premium quality detergent, having some extra features as compare to other washing detergents., because the main purpose of its launch was to penetrate in the upper and middle segment market as well as to break and capture the market of detergent.

People from the middle level segment converted from soap users to splash users ,a big number of unbranded detergent users also converted into Splash users and those upper level people who purchased surf because it was their need but were not happy by its price, became Splash users as well.

All this brought a drastic change in the detergent market in Pakistan , and Splash will day by day become a threat to surf.

Features of Splash
Machine detergent
Low Foam
Power full cleaning.
Good fragrance.
Keeps the colors of clothes bright
Stain remover
Retention of dyes
Price
Penetration pricing is the pricing technique of setting a relatively low initial entry price, a price that is often lower than the eventual market price. The expectation is that the initial low price will secure market acceptance by breaking down existing brand loyalties.It is also the main tool through which we can trap our customer who are price conscious. Our prices for different packaging are
Package Price
1 kg Rs 185
500g Rs 92
125g Rs 22

.

Place
We have placed splash in such a way in which it is convenient and is available to all the customer when they need .The place where we will launch our product is Lahore.

Splash is placed at stores in posh localities, as well in the middle level localities. The reason behind this placement strategy is that Splash is mainly launched for the upper and upper middle income group. But it received good response by middle level as well.

DISTRIBUTION STRATEGY:

The distribution of Splash washing Powder is done by a distributing agency

We divide the Pakistan into 2 parts:

1) Sindh
2) Punjab

Sindh is further divided into 4 zones:

1) Karachi
2) Hyderabad
3) Sukkur
4) Quetta

Punjab is further divided into 5 zones:

1) Lahore
2) Faisalabad
3) Islamabad
4) Multan

Each zone is fed by a warehouse, which feeds 60 towns around each zone.

Everyday sales persons of all particular zones visit shops of their related area , collect sales reports and next orders from the shopkeepers on order taking cards.
The order taking card has the following information:

Name of the shop
Name of the shopkeeper
Name and signature of the person ordering
Address of the shop
Quantity and sizes of the product

Promotion

Promotion is the element that is used now a day for sales The promotion is done by the following ways:

Advertisement
It further includes
Radio
Television
Billboard
Newspapers
Sales promotion

We will use billboard and TV advertisement for our promotion.

ADVERTISING:

An advertising budget is always high when the product is new , and when the product is more or less like other products kept in the shelves at stores. The same is the case with detergents , and Splash initially had to advertise a lot in order to make the consumer aware of its differentiated strategy of a machine detergent
In the beginning stage Splash is advertised on television , radio , posters and billboards were printed and were placed at the prime sites of the country and the walls of shops were covered by the posters of splash.

The company does it through all sorts of media. The major portions of advertisements come on T.V. and are usually shown between popular prime time programs to catch the consumer’s attention.

Print media is also done time to time, and a minor percentage is also concentrated on radio. As well as posters and hoardings are an important source of advertisement and have a huge affect on peoples minds.

SWOT Analysis

Strenghts:

• Strong Brand Portfolio
• Innovative Aspects
• Solid Base of Company
• Competitive Advantage

Weakness:

• Strong Competitors
• High Price
• Substitute products available in market
• Lack of control in market

Opportunities:

• Changing lifestyles of people
• Niche target market
• Technological development and innovation

Threats:

• Environment Effects
• Introduction of local products
• Increase in production and labor cost.

Point of Parity and Difference:

Point of Parity :

• Stain removal
Like other big brands, our detergent also provides maximum
stain removal guarantee.
• Fragrance
Our detergents leave the clothes full of fragrance like other detergents
• Powerful cleaning
It also has the ability to clean clothes in less time like other good detergents

Point of Difference:

• Low Foam
Our 'low foam' formula that is specially designed to remove stains without generating excess foam which is harmful for your washing machine.
• Oxy Bleach
This addition feature is added for retention of dyes, while leaving the colors bright after various washes in machine.

BCG Matrix

Our product lies in the question mark because it is not sure either it become successful or not.

Conclusion

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Pakistan is still a developing country, despite 63 years of is inception. Today, most of the highly advanced and cutting edge technology is available for use. But the organizations and the upper level executives are yet to accept these changes. Despite the progress in science and technology, our people still have the same old mindset of doing everything by hand. NESPAK, too, is a one such example of this attitude still prevalent in our country. But with the new generation streaming into the company, this mindset is slowly but surely decreasing, opening up a new era of technology and broadening the horizons of NESPAK, and thus our country

E-Commerce

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NESPAK has its own website for public view. But this site only performs the function of providing information about the company’s past and current projects and achievements. It is not used for carrying out business transactions. However it provides the service of online job applications. Therefore we can say that the company does not do E-commerce.

Enterprise Application

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• Customer Relationship Management
NESPAK has a lot of important and influential clients in many parts of Asia and Africa but the most regular ones are WAPDA and KESC in Pakistan. NESPAK has catered to its loyal customers for so long that it knows exactly what the requirements are of each customer. Because of this, they don’t have to go through of hassle of identifying their customers which is the case of most organizations. They complete their orders on time and also provide discounts to their regular and old clients. The company also takes the help of the HR department during large projects for better efficiency and quality. Because of all these reasons NESPAK has a strong and loyal clientele.

• Employee Relationship Management
NESPAK enjoys a very healthy and friendly relationship with its employees. When it comes to hiring new workers, they always give preference to their employees’ children. Just recently the company also helped their employees obtain laptops of the latest technology, by financing 50% of its cost. This has helped the company come at par with the latest technology and achieve higher efficiency and professionalism. The company also has a software system that continually observes the performance and efficiency of the employees and then allocates them bonuses accordingly.

Security Framework

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The major security used by NESPAK is the use of firewalls in there is system. A firewall is is a part of a computer system or network that is designed to block unauthorized access while permitting authorized communications. It is a device or set of devices which is configured to permit or deny computer applications based upon a set of rules and other criteria. All messages entering or leaving the intranet pass through the firewall, which examines each message and blocks those that do not meet the specified security criteria. There are several types of firewall techniques. The one used by NESPAK is the Proxy server which intercepts all messages entering and leaving the network. The proxy server effectively hides the true network addresses.

Vulnerabilities to the IS system

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As there is no extranet service available through which external bodies can view the data, there is no external threat in this regard. As far as the internal threat is concerned, each employee is given a password to access the information. However the information can only be viewed and not edited. Changes can only be made by the administration. So this makes the system quite secure and reliable. Therefore there are no major risks or vulnerabilities faced by NESPAK’s IS system.

Data Warehouses and Data Mining

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A data warehouse is a repository of an organization's electronically stored data, designed to facilitate reporting and analysis. The means to retrieve and analyze data, to extract, transform and load data, and to manage the data dictionary are also considered essential components of a data warehousing system. As we have mentioned earlier, the data of the company is neither integrated nor centralized so they don’t have a data warehouse. However every department operates independently of one another and stores information relevant to them on their own. This way the data cannot be assessed by other parts of the organization and thus results in inefficiency and data redundancy. And furthermore Data mining is the process of extracting patterns from data, but as the data is not centralized in the company, data mining is not possible.

Backup Plans

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Backups are useful primarily for two purposes. The first is to restore a state following a disaster (called disaster recovery). The second is to restore small numbers of files after they have been accidentally deleted or corrupted. Data loss is also very common. 66% of internet users have suffered from serious data loss. Therefore the company’s Database is present in both the computers and files. Basically there is parallel use of manually recorded files as well as MIS. Backup is done on a weekly basis, but for very critical information it is also done on a daily basis. The IT sector does not handle the future planning of the company; therefore the company has too many backup files. The company still has hard copies for personal backup even when all the information is present in the computers as well. That is because there is a resistance to change and the use of MIS at every hierarchical level. This makes the process all the more inefficient, time consuming and difficult to handle. In a recent event one of the offices of the company got burnt to the ground and so were all their manual files. But despite that, the company did not face any loss of information. The reason being, that they had backup information on the computers as well. So this only shows that there is no need to keep so many files when the information is already stored in computers.
Such attitude is quite common in countries like Pakistan where government - owned companies have a tradition of keeping manual files and not adapting to changes in technology. When we talked to Mr. Rashid Mahmud he told us that he had developed a software system for an automated information system but it not got implemented due to the higher administration’s problem of adapting such changes in the process of working.

Communication Networks

2010-07-18T23:31:00.001-07:00

NESPAK is working nationally and internationally in 36 countries and they design and supervise buildings for them. Unfortunately the company has not adopted vast means of communication because of the hesitation to depend on IT, thus they have been communicating by the means of telephone network or on the basis of face-to-face meetings therefore there in no extranet in the company. However new employees with advanced studies are trying to mix in the IT system along with the manual work. Moreover on national level Internet service is provided through LAN in the company the company has made a website for the common people to attain information about NESPAK and so that the world could know that what exactly the company is up to. It is also used to publish adds on their website for job vacancies. It is also used to scan project proposals to send them to the general manager of the required branch. Intranet is present but is not in use as the basic problem in the company is to adopt IT. The only way of contact between offices within a branch as well as other branches is through telephonic communication.

Hardware and Software Technologies

2010-07-18T23:30:00.001-07:00

Till 2005 the company’s data was collected and stored either manually or on Microsoft Word. They were using Pentium One only for the record of having a computer; therefore MIS was not in use at that time. They did have Oracle 8 but it was not being utilized.
Now with the help of Rashid Mahmud, a software developer in NESPAK, the company is using ORACLE DEVELOPER 11G TB that is used for database management system; basically it’s a J2EE-based application development suite from Oracle that is used to write Java, XML and Web services applications. It includes the JDeveloper development environment as well as Forms Developer for forms design, Designer for modeling and application generation, Discoverer for query and reporting and a variety of other tools.
Each user is equipped with Pentium 4 for system development.
Microsoft office 2010 is used in the company to add on the efficiency level of the work. Especially Access is used as a tracking system. There is no centralized or integrated MIS in NESPAK, different modules handle different things.
The process to hire engineers is done through advertisements on their website. The candidate applying is allotted points according to his experience, education and the interview. There is a fully automated system in the selection criteria of employees and HRM department only has to take the final decision.

Hierarchical Levels of NESPAK

2010-07-18T23:29:00.001-07:00

Organizations are divided into different levels of specialties. Their structures reveal a clear cut division of labor. Authority in a business is organized as a hierarchy of rising power and responsibility.
NESPAK has assigned grades to employees, ranging from 1 to 12. The first three grades i.e. 1 to 3 are for clerks performing duties as security guards and peons. The ones who fall in the 4-7 grades include unionized staff, performing semi-technical tasks such as data entry, also known Para-professionals. They help the upper level of employees with day to day work so that efficiency increases as they give them all the information they need to give a high-quality results. The 8-12 grade employees include the senior management such as the Chairman, GMs, vice president etc who decide the project, plan it and then make it happen. Therefore they are known as Professionals.
The strength of the Company’s staff now stands at 2651 as on October 31, 2009. This includes 1161 professionals and 1025 Para- professionals, the remaining being support staff. NESPAK is proud to have retained a solid core of experts in various fields despite ups and downs in the consultancy market. This asset has proved to be the company’s backbone and the company owes a lot to the skills and dedication of its employees at all levels.

Organizational Structure

2010-07-18T23:26:00.000-07:00

An organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim.
Organizations are a variant of clustered entities and can be structured in many different ways and styles, depending on their objectives and ambience the structure of an organization will determine the modes in which it operates and performs.
Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, or under permanent employment contracts or program orders.
Regarding NESPAK, this company is a government owned company which has a hierarchical oriented structure which are well developed but mainly function on their own because of lack of IT inserted to communicate between different levels. This problem occurs because the company is controlled by old educated people who are more comfortable with working on paper than to use IT system instead. This has made the whole company to work slowly and be inefficient in the working process. However new employees have been successful to include IT in each and every process they could.

NESPAK

2010-07-18T23:24:00.000-07:00

NESPAK is a product of the national renaissance of the early 1970’s in Pakistan. The idea was to attain self-reliance in engineering consultancy at national level and to reduce dependence on foreign consulting firms by developing an indigenous talent pool which culminated in the creation of a private limited company in 1973 named “National Engineering Services Pakistan (Pvt) Limited”. A small group of experts in various engineering disciplines were handpicked from the existing Government and private organizations to run NESPAK.
The company undertook projects of such large magnitude as the Left Bank Irrigation Tunnel at Tarbela Dam, Port Qasim and Karachi Steel Mills right at the outset was no men challenge for an organization in its infancy. It was due to the commitment and dedication of the founding members that such projects were successfully commissioned on schedule, contributing significantly to the burgeoning national economy. With this magnificent head start, the company soon expanded rapidly to accommodate the substantial business, which has kept pouring in since then, and by now, NESPAK has rendered services for 3,005 projects with a cumulative cost of Rs. 6,650 billon (US $ 164 billion), yielding a revenue of Rs. 26,110 million (US $ 641 million) NESPAK up to June 30, 2009.
Within a year of inception, NESPAK had entered the international arena by wining projects in Africa. After that there was no looking back; by now the company has provided, or is providing, consultancy services for 429 projects in 36 countries including Afghanistan, Azerbaijan, Bahrain, Bangladesh, Benin, Cameroon, Chad, Dominica, Ethiopia, Gambia, Ghana, Guinea, Iran, Iraq, Kazakhstan, Kyrgyzstan, Libya, Nepal, Nigeria, Oman, Pakistan, Qatar, Republic of Yemen, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Syria, Tajikistan, Tanzania, Thailand, Turkey, Turkmenistan, United Arab Emirates and Uzbekistan. Today foreign business accounts or nearly 30% of NESPAK’s total earning.
The greatest advantage NESPAK has over many other national and international consulting firms is that it can provide services in almost every field of engineering and economic development including water resources, agriculture, energy, transportation, communications, SCADA, environment, water supply and sanitation, architecture, urban planning, industry oil and gas, IT and GIS under one roof. The nature of services ranges from conceiving a project, carrying out master planning, pre-feasibility, feasibility and planning studies, preparing designs, tender documentation, management, preparing operation and maintenance annuals and specialized services for periodic inspection of engineering works. This is a great advantage to provide single window to the clients for all aspects of their projects.
The great success NESPAK has achieved is the development and promotion of consultancy in Pakistan by emphasizing the importance of the profession on every forum. Besides doing its own business, the company has supported and helped other smaller consulting firms of Pakistan in improving their experience and credentials by making joint ventures/associations with them. At present there are a large number of thriving Pakistani consulting firms, providing services both at the national and international level.

Islamic Modes of Financing

2010-07-18T23:21:00.000-07:00

Business firms require large financial resources to carry out production and related business operations. Such large scale monetary resources are sometimes beyond their own capacity.
To obtain them it is inevitable to solicit the cooperation of other individuals or organizations.

Islamic Economics provides several modes to secure such financial resources of which the following are particularly noteworthy

Sharakat (Partnership)
Modarbah
Bai Salam
Bai Marabaha
Bai Muajjal
Ijara

The Arabic Word Bai means purchase or sale.

Salam-Its noun is Islam, which means payment of the price before delivery of goods.
So Bai Salam denotes that mode of transaction or contract of sale in which price is paid before the delivery of goods.
The word salf is also used as a synonym for salam. However, salf conveys two meanings: One, to give a Qard Hasan. The second meaning is the same as that of Salam.
Bai Salam is a lawful transaction
Since it is an important need in everyday dealings, Shariat has sanctioned it
The testimony to its legitimacy is provided by the Holy Book and the sunnah, precedent of the illustrious companions and consensus of the jurists of the Ummah.

Allah Almighty says in the Holy Quran:

“O Believers! When you contract a debt for a fixed term, you should put it in writing.” (2:282)

Ibn-e-Abbas interprets this contract as contract of Salam(in which the payment of price is prompt but the delivery of goods is deferred).
In sunnah, it is reported from the Apostle of Allah (SAW):

“Tradition reports that the Apostle of Allah (SAW) has forbidden the sale of everything which is not in the possession of the vendor, but he made an exception in the case of Salam.”

According to a tradition recorded in Tirmidhi, the Holy Prophet (SAW) said:

“When a man makes prompt payment for goods to be delivered later, the parties should settle the weight and measure and the date of delivery of the goods.”
Artcile in this context implies an attribute

According to Hanafi School:Bai salam should contain 2 articles 1. Offer 2. Acceptance

According to other jurists:
1. Offer
2.Acceptance
3. Vendor
4. Buyer
5. Goods
6. Price
Since Salam is a form of sale, its articles are same as an ordinary transaction of sale.

GLOBALIZATION

2010-07-18T23:08:00.000-07:00

Definition: Globalization can be explained as a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade.
Salient features of Globalization:
 Globalization is the reduction and removal of barriers between nations in order to facilitate the flow of goods, capital, services and labour.
 Globalization phenomena started in the late nineteenth century.
 Negative integration is the breaking down of trade barriers or protective barriers such as tariffs and quotas.
 The removal of barriers can be beneficial for a country if it allows for products that are important or essential to the economy.
 Globalization has been facilitated by improvement in technology reduced costs of trade, and trade negotiation rounds, Under GATT.
 GATT has led to a series of agreements to remove restrictions on free trade.

Initiatives to promote free trade by GATT and WTO:
 Elimination of tariffs.
 Creation of free trade zones.
 Reduction, elimination, or harmonization of subsidiaries for local businesses.

Positive effects of Globalization:
 New markets for Trading.
 Technological Progress.
 Multinationals providing competition to domestic companies.
 Greater Mobility of Human Resources across Countries.
 Greater Outsourcing of Business Processes to Other Countries.
 Boom in the financial (banking) sector of Pakistan.
 Globalization resulted in the emergence of worldwide financial markets and better access to external financing.

Negative effects of Globalization:
 An opportunity in richer countries drives talent away from poorer countries.
 Globalization has badly affected the environment of the whole world.
 It is becoming increasingly difficult to maintain food security.
 The world recession also affected Pakistan’s economy because of having trading agreements with other countries.
 Poverty and globalization moves in an opposite direction and it has negative correlation.
 Technology & globalization has a right relationship, interaction between different countries leads to advancements in technology.

Beautiful

2010-07-18T23:02:00.000-07:00