Commodity Market in India Essay Example

Commodity Market in India Essay Example Commodity Market in India Essay Commodity Market in India Essay 1. Commodity and Commodities market 1. 1 INTRODUCTION India, a commodity based economy where two-third of the one billion population depends on agricultural commodities, surprisingly has an under developed commodity market. Unlike the physical market, futures markets trades in commodity are largely used as risk management (hedging) mechanism on either physical commodity itself or open positions in commodity stock. For instance, a jeweller can hedge his inventory against perceived short-term downturn in gold prices by going short in the future markets. The article aims at knowhow of the commodities market and how the commodities traded on the exchange. The idea is to understand the importance of commodity derivatives and learn about the market from Indian point of view. In fact it was one of the most vibrant markets till early 70s. Its development and growth was shunted due to numerous restrictions earlier. Now, with most of these restrictions being removed, there is tremendous potential for growth of this market in the country. 1. 2 COMMODITY A commodity may be defined as an article, a product or material that is bought and sold. It can be classified as every kind of movable property, except Actionable Claims, Money Securities. Commodities actually offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity markets, may find commodities an unfathomable market. But commodities are easy to understand as far as fundamentals of demand and supply are concerned. Retail investors should understand the risks and advantages of trading in commodities futures before taking a leap. Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option. In fact, the size of the commodities markets in India is also quite significant. Of the countrys GDP of Rs 13, 20,730 crore (Rs 13,207. 3 billion), commodities related (and dependent) industries constitute about 58 per cent. Currently, the various commodities across the country clock an annual turnover of Rs 1, 40,000 crore (Rs 1,400 billion). With the introduction of futures trading, the size of the commodities market grows many folds here on. . 3 COMMODITY MARKET Commodity market is an important constituent of the financial markets of any country. It is the market where a wide range of products, viz. , precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are traded. It is important to develop a vibrant, active and liquid commodity market. This would help investors hedge their comm odity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market. Table: 1 Turnover in Financial Markets and Commodity Market (Rs in Crores) S No. Market segments 2002-03 2003-04 2004-05 (E) 1Government Securities Market 1,544,376(63)2,518,322(91. 2)2,827,872(91) 2Forex Market 658,035(27)2,318,531(84)3,867,936(124. 4) 3Total Stock Market Turnover (I+ II) 1,374,405(56)3,745,507(136)4,160,702(133. 8) I National Stock Exchange (a+b) 1,057,854(43)3,230,002(117)3,641,672(117. 1) a)Cash 617,989 1,099,534 1,147,027 b)Derivatives 439,865 2,130,468 2,494,645 II Bombay Stock Exchange (a+b) 316,551(13)515,505(18. 7)519,030(16. 7) a)Cash314,073 503,053 499,503 b)Derivatives2,478 12,452 19,527 4Commodities Market NA 130,215(4. )500,000(16. 1) Note: Fig. in bracket represents percentage to GDP at market prices Source: Sebi bulletin 1. 4 Its EVOLUTION IN INDIA Bombay Cotton Trade Association Ltd. , set up in 1875, was the first organized futures market. Bombay Cotton Exchange Ltd. was established in 1893 following the widespread discontent amongst leading cotton mill owners and merchants over functioning of Bombay Cotton Trade Association. Th e Futures trading in oilseeds started in 1900 with the establishment of the Gujarati Vyapari Mandali, which carried on futures trading in groundnut, castor seed and cotton. Futures trading in wheat was existent at several places in Punjab and Uttar Pradesh. But the most notable futures exchange for wheat was chamber of commerce at Hapur set up in 1913. Futures trading in bullion began in Mumbai in 1920. Calcutta Hessian Exchange Ltd. was established in 1919 for futures trading in raw jute and jute goods. But organized futures trading in raw jute began only in 1927 with the establishment of East Indian Jute Association Ltd. These two associations amalgamated in 1945 to form the East India Jute Hessian Ltd. to conduct organized trading in both Raw Jute and Jute goods. Forward Contracts (Regulation) Act was enacted in 1952 and the Forwards Markets Commission (FMC) was established in 1953 under the Ministry of Consumer Affairs and Public Distribution. In due course, several other exchanges were created in the country to trade in diverse commodities. 1. 5 Structure of Commodity Market 1. 6 Different types of commodities traded World-over one will find that a market exits for almost all the commodities known to us. These commodities can be broadly classified into the following: Precious Metals: Gold, Silver, Platinum etc Other Metals: Nickel, Aluminum, Copper etc Agro-Based Commodities: Wheat, Corn, Cotton, Oils, Oilseeds. Soft Commodities: Coffee, Cocoa, Sugar etc Live-Stock: Live Cattle, Pork Bellies etc Energy: Crude Oil, Natural Gas, Gasoline etc 1. 7 Different segments in Commodities market The commodities market exits in two distinct forms namely the Over the Counter (OTC) market and the Exchange based market. Also, as in equities, there exists the spot and the derivatives segment. The spot markets are essentially over the counter markets and the participation is restricted to people who are involved with that commodity say the farmer, processor, wholesaler etc. Derivative trading takes place through exchange-based markets with standardized contracts, settlements etc. 1. 8 Leading commodity markets of world Some of the leading exchanges of the world are New York Mercantile Exchange (NYMEX), the London Metal Exchange (LME) and the Chicago Board of Trade (CBOT). 1. 9 Leading commodity markets of India The government has now allowed national commodity exchanges, similar to the BSE NSE, to come up and let them deal in commodity derivatives in an electronic trading environment. These exchanges are expected to offer a nation-wide anonymous, order driven, screen based trading system for trading. The Forward Markets Commission (FMC) will regulate these exchanges. Consequently four commodity exchanges have been approved to commence business in this regard. They are: Multi Commodity Exchange (MCX) located at Mumbai. National Commodity and Derivatives Exchange Ltd (NCDEX) located at Mumbai. National Board of Trade (NBOT) located at Indore. National Multi Commodity Exchange (NMCE) located at Ahmedabad. Turnover on Commodity Futures Markets (Rs. In Crores) Exchange2003-042004-05 FIRST Half NCDEX149054011 NBOT5301451038 MCX245630695 NMCE238427943 ALL EXCHANGES129364170720 1. 10 Volumes in Commodity Derivatives Worldwide 2. Commodity Futures Trading in India 2. 1 INTRODUCTION Derivatives as a tool for managing risk first originated in the Commodities markets. They were then found useful as a hedging tool in financial markets as well. The basic concept of a derivative contract remains the same whether the underlying happens to be a commodity or a financial asset. However there are some features, which are very peculiar to commodity derivative markets. In the case of financial derivatives, most of these contracts are cash settled. Even in the case of physical settlement, financial assets are not bulky and do not need special facility for storage. Due to the bulky nature of the underlying assets, physical settlement in commodity derivatives creates the need for warehousing. Similarly, the concept of varying quality of asset does not really exist as far as financial underlyings are concerned. However in the case of commodities, the quality of the asset underlying a contract can vary largely. This becomes an important issue to be managed. . 2 Benefits to Industry from Futures trading. * Hedging the price risk associated with futures contractual commitments. * Spaced out purchases possible rather than large cash purchases and its storage. * Efficient price discovery prevents seasonal price volatility. * Greater flexibility, certainty and transparency in procuring commodities would aid bank lending. * Facilitate informed lending. * Hedg ed positions of producers and processors would reduce the risk of default faced by banks. * Lending for agricultural sector would go up with greater transparency in pricing and storage. Commodity Exchanges to act as distribution network to retail agri-finance from Banks to rural households. * Provide trading limit finance to Traders in commodities Exchanges. 2. 3 Benefits to Exchange Member * Access to a huge potential market much greater than the securities and cash market in commodities. * Robust, scalable, state-of-art technology deployment. * Member can trade in multiple commodities from a single point, on real time basis. * Traders would be trained to be Rural Advisors and Commodity Specialists and through them multiple rural needs would be met, like bank credit, information dissemination, etc. . 4 Why Commodity Futures? One answer that is heard in the financial sector is we need commodity futures markets so that we will have volumes, brokerage fees, and something to trade. I t hink that is missing the point. We have to look at futures market in a bigger perspective what is the role for commodity futures in Indias economy? In India agriculture has traditionally been an area with heavy government intervention. Government intervenes by trying to maintain buffer stocks, they try to fix prices, and they have import-export restrictions and a host of other interventions. Many economists think that e could have major benefits from liberalization of the agricultural sector. In this case, the question arises about who will maintain the buffer stock, how will we smoothen the price fluctuations, how will farmers not be vulnerable that tomorrow the price will crash when the crop comes out, how will farmers get signals that in the future there will be a great need for wheat or rice. In all these aspects the futures market has a very big role to play. If you think there will be a shortage of wheat tomorrow, the futures prices will go up today, and it will carry signals back to the farmer making sowing decisions today. In this fashion, a system of futures markets will improve cropping patterns. Next, if I am growing wheat and am worried that by the time the harvest comes out prices will go down, then I can sell my wheat on the futures market. I can sell my wheat at a price, which is fixed today, which eliminates my risk from price fluctuations. These days, agriculture requires investments farmers spend money on fertilizers, high yielding varieties, etc. They are worried when making these investments that by the time the crop comes out prices might have dropped, resulting in losses. Thus a farmer would like to lock in his future price and not be exposed to fluctuations in prices. The third is the role about storage. Today we have the Food Corporation of India, which is doing a huge job of storage, and it is a system, which in my opinion does not work. Futures market will produce their own kind of smoothing between the present and the future. If the future price is high and the present price is low, an arbitrager will buy today and sell in the future. The converse is also true, thus if the future price is low the arbitrageur will buy in the futures market. These activities produce their own optimal buffer stocks, smooth prices. They also work very effectively when there is trade in agricultural commodities; arbitrageurs on the futures market will use imports and exports to smooth Indian prices using foreign spot markets. In totality , commodity futures markets are a part and parcel of a program for agricultural liberalization. Many agriculture economists understand the need of liberalization in the sector. Futures markets are an instrument for achieving that liberalization. ***************************************************************************************************************************************************** Sagging Agricultural Commodity Exchanges Growth Constraints and Revival Policy Options Commodity derivatives have a crucial role to play in managing price risk especially in agriculture dominated economies. However, as long as prices of many commodities are restrained to a certain extent by government intervention in p roduction, supply and distribution, forward and futures markets for hedging price risk in those commodities have only limited practical relevance. A review of the nature of institutional and policy level constraints facing this segment calls for more focused and pragmatic approach from the government, the regulator and the exchanges for making the agricultural futures market a vibrant segment for risk management. K G Sahadevan Instability of commodity prices has always been a major concern of the producers as well as the consumers in an agriculture dominated country like India. Farmers’ direct exposure to price fluctuations, for instance, makes it too risky for them to invest in otherwise profitable activities. There are various ways to cope with this problem. Apart from increasing stability of the market by direct government intervention thwarting the market mechanism, various actors in the farm sector can better manage their activities in an environment of unstable prices through derivative markets. These markets serve a risk-shifting function, and can be used to lock-in prices instead of relying on uncertain price developments. Derivatives like forwards, futures, options, swaps, etc, are extensively used in many developed and developing countries in the world. The Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, International Petroleum Exchange, London, London Metal Exchange, London Futures and Options Exchange, ‘Marche a Terme International de France’, Sidney Futures Exchange, Singapore International Monetary Exchange, Singapore Commodity Exchange, Kuala Lumpur Commodity Exchange, ‘Bolsa de Mercadorias Futuros’ (in Brazil); the Buenos Aires Grain Exchange, etc, are some of the leading commodity exchanges in the world engaged in trading of derivatives in commodities. Even in China during the last 10 years of liberalisation of internal market many exchanges were set up for exclusive trading in commodity futures and most of them like Shanghai Metals Exchange; China Commodity Futures Exchange; China Zhengzhou Commodity Exchange, Beijing Commodity Exchange, etc, have witnessed tremendous growth [UNCTAD 1998]. However, they have been utilised on a very limited scale in India. The objective of this paper is to bring to focus the problems and prospects of the futures market in agricultural commodities in India. On the basis of visit to some of the recognised commodity exchanges (see the list in Table 2) the study identifies bottlenecks in the organisational, trading and regulatory set-up of these exchanges and recommends certain broad policy alternatives for the revival of commodity exchanges in general. Historical Perspective Although India has a long history of trade in commodity derivatives, this segment remained underdeveloped due to government intervention in many commodity markets to control prices. The production, supply and distribution of many agricultural commodities are still governed by the state and forwards and futures trading are selectively introduced with stringent controls. While free trade in many commodity items is restricted under the Essential Commodities Act (ECA), 1955, forward and futures contracts are limited to certain commodity items under the Forward Contracts (Regulation) Act (FCRA), 1952. The first commodity exchange was set up in India by Bombay Cotton Trade Association and formal organised futures trading started in cotton in 1875. Subsequently, many exchanges came up in different parts of the country for futures trade in various commodities. The Gujarati Vyapari Mandali came into existence in 1900 which has undertaken futures trade in oilseeds first time in the country. The Calcutta Hessian Exchange and East India Jute Association were set up in 1919 and 1927 respectively for futures trade in raw jute. In 1921, futures in cotton were organised in Mumbai under the auspices of East India Cotton Association (EICA). Many exchanges were set up in major agricultural centres in north India before world war broke out and they were mostly engaged in wheat futures until it was prohibited. The existing exchanges in Hapur, Muzaffarnagar, Meerut, Bhatinda, etc, were established during this period. The futures trade in spices was first organised by India Pepper and Spices Trade Association (IPSTA) in Cochin in 1957. Futures in gold and silver began in Mumbai in 1920 and continued until it was prohibited by the government by mid-1950s. Though options are permitted now in stock market, they are not allowed in commodities. The commodity options were traded during the pre-independence period. Options on cotton were traded until they along with futures were banned in 1939 [Ministry of Food and Consumer Affairs 1999]. However, the government withdrew the ban on futures with passage of FCRA in 1952. The act has provided for the establishment and constitution of Forward Markets Commission (FMC) for the purpose of exercising the regulatory powers assigned to it by the act. Later, futures trade was altogether banned by the government in 1966 in order to have control on the movement of prices of many agricultural and essential commodities. After the ban of futures trade all the exchanges went out of business and many traders started resorting to unofficial and informal trade in futures. On recommendation of the Khusro Committee in 1980 government reintroduced futures on some selected commodities including cotton, jute, potatoes, etc. As part of economic liberalisation of 1990s an expert committee on forward markets under the chairmanship of K N Kabra was appointed by the government of India in 1993. Its report submitted in 1994 recommended the reintroduction of futures which were banned in 1966 and also to widen its coverage to many more agricultural commodities and silver. In order to give more thrust on agricultural sector, the National Agricultural Policy 2000 has envisaged external and domestic market reforms and dismantling of all controls and regulations in agricultural commodity markets. It has also proposed to enlarge the coverage of futures markets to minimise the wide fluctuations in commodity prices and for hedging the risk arising from price fluctuations. In line with the proposal many more agricultural commodities are being brought under futures trading. The Present Status Presently, 15 exchanges are in operation in India carrying out futures trading in as many as 30 commodity items (details are given in Table 1). Out of these, two exchanges, viz, IPSTA, Cochin and the Bombay Commodity Exchange (BCE) have been recently upgraded to international exchanges to deal in international contracts in pepper and castor oil respectively. Moreover, permission has been given to another two exchanges, viz. The First Commodities Exchange of India, Kochi (for copra/coconut, its oil and oilcake), and Keshav Commodity Exchange, Delhi (for potato), where futures trading is expected to start soon. Another eight new exchanges are proposed to set up and some of them are expected to start operation shortly. The government has also permitted four exchanges, viz, EICA, Mumbai; Central Gujarat Cotton Dealers Association, Vadodara; South India Cotton Association, Coimbatore; and Ahmedabad Cotton Merchants Association, Ahmedabad, for conducting NTSD contracts (explained below) in cotton. Lately, as part of further liberalisation of trade in agriculture and dismantling of ECA, 1955 futures trade in sugar has been permitted and three new exchanges, viz, e-Commodities, Mumbai; NCS Infotech, Hyderabad; and e-Sugar India. Com, Mumbai, have been given approval for conducting sugar futures [Ministry of Food and Consumer Affairs 1999]. Table 1:Profile of Commodity Futures Exchanges ExchangeActive MembersCommodity TradedVolume in Lakh Tonnes (Value in Rs Crore) 199920002001 1996-971997-981998-991999-002000-01 India Pepper and Spice Trade Association, Cochin554231Pepper0. 86 (765) 1. 56 (2834) 1. 73 (3411) 1. 24 (2862) 1. 29 (2580) -37Pepper(intl)007 (15) 0. 40 (106) 0. 02 (5. 6) The Bombay Cpmmodity Exchange, Mumbai865Castor seed2. 53 (279) 0. 25 (30) 0. 11 (17) 0. 9 (15) 0. 10 (14) 22Castor oil0. 04 (14)0. 01(5) -9-RBD Palmol-0. 04 (9) Kanpur Commodity Exchange, Kanpur-85Mustard seed, oil and cake-0. 108 (14) The EAst India Cotton Association, Mumbai15177Cotton0. 02 (9) 0. 35 (143) 0. 21 (139) The Chamber of Commerce, Hapur363621Potato0. 79 (29) 1. 76 (56) 0. 09 (5) 0. 22 (5) 0. 52 (14) 263426Gur29. 28 (1655) 30. 10 (2760) 23. 85 (2162) 23. 79 (2236) 28. 80 (2555) Coffee Futures Exchange, Bangalore554Cof fee-0. 50 (289) Ahmedabad Commodity Exchange383655Castor seed54. 84 (5981) 68. 76 (8006) 44. 91 (6854) 30. 68 (5220) 24. 73 (3469) The Rajkot Seeds Oil and Bullion Mercehants Association128- 19. 85 (2167) 21. 36 (2495) 16. 77 (2562) 16. 35 (2811) 18. 94 (2761) National Board of Trade, Indore-4851Soy seed, oil and cake1. 093 (261) 32. 56 (7874) -4-Mustard seed and mustard oil-0. 13 (31) Vijai Beopar Chamber, Muzaffarnagar403535Gur40. 71 (2281) 44. 06 (3429) 61. 34 (9518) 47. 48 (4510) 31. 28 (2877) Bhatinda Om Oil and Oilseeds Exchange, Bhatinda161615Gur29. 81 (1936) 23. 60 (1896) 20. 41 (1813) 21. 88 (2263) 21. 24 (2060) The Meerut Agro Commodities Exchanges Co, Meerut101111Gur2. 45 (144) 3. 25 (248) 3. 58 304) 4. 1 (389) 3. 7 (311) The Rajdhani Oils and Oilseeds Exchange,Delhi172124Gur8. 51 (548) 28. 60 (2231) 4. 51 (383) 8. 24 (787) 7. 78 (668) The East India Jute and Heesian Exchange, Calcutta574071Sacking25. 21 (5022) 5. 58 (1234) 7. 88 (1703) 111Hessian41. 38 (15604) 26. 60 (7342) 2. 43 (569) 0. 003 (0. 81) 0. 0008 (0. 22) The Spices and Oilseeds Exchange, Sangli-37Turmeric0. 83 (149) 0. 81 (152) 0. 01 (6) 0. 0002 (0. 03) 0. 0002 (0. 21) Source: Forward Markets Commission, Mumbai A brief profile of the exchanges which are currently in operation has been presented in Table 1. Many of the existing exchanges have become weak in spite of considerable membership strength and potential for large volume of trade. Some of the observations drawn on the basis of visit to six of these exchanges have been presented later in the paper. The number of members who are actively involved in trading in all these exchanges is abysmally low. It is important to know why traders who in spite of setting up the exchange are not keen to participate in trading actively. It has been observed from many exchanges that trading was unprofitable and could not be relied on it as a full-time business. Any attempt to revive the exchanges and rejuvenate the futures market in India needs to address this issue first. It is interesting to note that even in case of commodities in which very active domestic and international ready market exists with volatile prices, futures trade in those commodities are no attraction to the merchandisers. The IPSTA located in Cochin which is known for futures trade in spices for over five decades has not attracted many traders. It is the only exchange in the world engaged in trading of futures in pepper. Kerala being the producer of lion’s share (around 95 per cent) of pepper in India and Cochin being the port city where a majority of pepper exporters are operating the existing futures exchange should have a larger role to play [UNCTAD 1995]. However, in spite of having more than 150 members in the exchange, only around 10 members’ cubicles in the trading ring were occupied by the respective representatives during the trading hour. A further inquiry into the issue reveals that these members hail from families which are into pepper trade for generations and no new member from outside has come into the business. It is not clear as to why members of the exchange are keen to retain the status of the exchange as a specialised single-commodity exchange. The BCE arguably the richest exchange in India in terms of its infrastructure, is also facing the problem of empty trading ring. Though the exchange has a membership strength close to 600, less than five members are trading actively. Data in Table 1 shows that the volume in castor seed futures declined from 2. 53 lakh tonnes during 1996-97 to just 10,000 tonnes during 2000-01. The EICA which is one of the oldest exchanges in the country has a different story to tell. Cotton has a long tradition of futures trading in India. Cotton futures started in 1857 and continued until it was suspended in 1966. Cotton has large potential for futures trading due to its uncontrolled and uncertain supply and variability of prices. While prices within a crop season fluctuate between 7. 5 and 26. 2 per cent in the last decade, its output varied as much as 14 per cent from one year to the next. It has a strong domestic and international market. India is the third largest producer and the second largest consumer of cotton in the world. Moreover, cotton is placed under OGL list with zero import duty, and quota system for its exports is likely to be dismantled by 2005. Nevertheless, the present status of cotton exchange and the Indian cotton futures contract is no different from other exchanges. Although the exchange has a membership strength over 400, not more than 10 members actively trade in the exchange. It is often argued by the exchange authorities that the government’s indirect control on supply and prices by its procurement makes the futures market in cotton unattractive and worthless. Futures market in many other commodities indeed shows that there is scope for the rejuvenation of this sector in the country. The buoyant trading activities in the newly started National Board of Trade at Indore, the old exchanges like the Chamber of Commerce, Hapur; Viajai Beopar Chamber, Muzaffarnagar; Ahmedabad Commodity Exchange; Bhatinda oil exchange; East India Jute Exchange, Calcutta, etc, are the indications of prospects of futures trade in agricultural commodities. Commodity Futures Contract Futures contracts are an improved variant of forward contracts. They are agreements to purchase or sell a given quantity of a commodity at a predetermined price, with settlement expected to take place at a future date. The futures contracts as against forwards are standardised in terms of quality and quantity, and place and date of delivery of the commodity. The commodity futures contracts in India as defined by the FMC has the following features [Forward Markets Commission 2000]: (a) Trading in futures is necessarily organised under the auspices of a recognised association so that such trading is confined to or conducted through members of the association in accordance with the procedure laid down in the rules and bye-laws of the association. (b) It is invariably entered into for a standard variety known as the ‘basis variety’ with permission to deliver other identified varieties known as ‘tenderable varieties’. c) The units of price quotation and trading are fixed in these contracts, parties to the contracts not being capable of altering these units. (d) The delivery periods are specified. (e) The seller in a futures market has the choice to decide whether to deliver goods against outstanding sale contracts. In case he decides to deliver goods, he can do so not only at the location of the association through w hich trading is organised but also at a number of other pre-specified delivery centres. (f) In futures market actual delivery of goods takes place only in a very few cases. Transactions are mostly squared up before the due date of the contract and contracts are settled by payment of differences without any physical delivery of goods taking place. The terms and specifications of futures contracts, however, vary depending on the commodity and the exchange in which it is traded. The relevant terms and conditions of contracts traded in six sample exchanges in India are presented in Table 2. These terms are standardised and applicable across the trading community in the respective exchanges and are framed to promote trade in the respective commodity. For example, the contract size is important for better management of risk by the customer. It has implications for the amount of money that can be gained or lost relative to a given change in price levels. It also affects the margins required and the commission charged. Similarly, the margin to be deposited with the clearing house has implications for the cash position of customers because it blocks working capital for the period of the contract to which he is a party. Organisational Set-up In the Indian context, the scope of commodity exchanges has been limited to futures trading. They are associations of members which provide all organisational support for carrying out futures trading in a formal environment. These exchanges are managed by a board of directors which is composed primarily of the members of the association. There are also representatives of the government and public nominated by FMC. The majority of members of the board have been chosen from among the members of the association who have trading and business interest in the exchange. The board appoints a chief executive officer who with his team assists the board in day-to-day administration of the exchange. There are different classes of members who capitalise the exchange by way of participation in the form of equity, admission fee, security deposits, registration fee, etc. They are classified as ordinary members, trading members, trading-cum-clearing members, institutional clearing members, and designated clearing bank. The membership requirements for and the composition of members, however, vary from one exchange to the other. In some exchanges there are exclusive clearing members, broker members and registered non-members in addition to the above category of members. Clearinghouse is the organisational set up adjunct to the futures exchange which handles all back-office operations including matching up of each buy and sell transactions, execution, clearing and reporting of all transactions, settlement of all transactions on maturity by paying the price difference or by arranging physical delivery, etc, and assumes all counterparty risk on behalf of buyer and seller. There is no clearinghouse in a forward market due to which buyers and sellers face counterparty risk. In a futures exchange all transactions are routed through and guaranteed by the clearinghouse which automatically becomes a counterpart to each transaction. It assumes the position of counterpart to both sides of the transaction by selling contract to the buyer and buying the identical contract from the seller. Therefore, traders obtain a position vis-a-vis the clearinghouse. It ensures default risk-free transactions and provides financial guarantee on the strength of funds contributed by its members and through collection of margins, marking-to-market all outstanding contracts, position limits imposed on traders, fixing the daily price limits and settlement guarantee fund. The organisational structure and membership requirements of clearinghouses vary from one exchange to the other. The BCE and IPSTA have set up separate independent corporations (namely, Prime Commodities Clearing Corporation of India, and First Commodities Clearing Corporation of India, respectively) for handling clearing and guarantee of all futures transactions in the respective exchanges. While Coffee Futures Exchange India (COFEI), Bangalore has a clearinghouse as a separate division of the exchange, many other exchanges like the Chamber of Commerce, Hapur; Kanpur Commodity Exchange (KCE) and EICA, Mumbai run in-house clearinghouses s part of the respective exchanges. The clearing and guaranty are managed in these exchanges by a separate committee (normally called the clearinghouse committee). Membership of clearinghouse requires capital contribution in the form of equity, security deposit, admission fee, registration fee, guarantee fund contribution in addition to networth requirement depending on its organisational structure. For example, in the BCE the minimum capital requirement for membership in its clearinghouse as applicable to trading-cum-clearing members is Rs 50,000 each towards equity and security deposit, Rs 500 as annual subscription, and additionally, members are required to have networth of Rs 3 lakh. Similarly, COFEI prescribes Rs 5 lakh each towards equity and guarantee fund contribution and Rs 40,000 towards admission fee for a trading-cum-clearing member. However, in exchanges where clearing house is a part of the exchange the payment requirements are lower. For example, KCE prescribes payment of only Rs 25,000, Rs 1,000 and Rs 500 towards security deposit, registration fee and annual fee respectively for a clearing-cum-trading member. Margins (also called clearing margins) are good-faith deposits kept with a clearinghouse usually in the form of cash. There are two types of margins to be maintained by the trader with the clearinghouse: initial margin and maintenance or variation margins. They have important bearing on the success of futures. As they are non-interest bearing deposits payable to the clearinghouse up-front working capital of the trading parties gets blocked to that extent. While a higher margin requirement prevents traders from participating in trading, a lower margin makes the clearinghouse financially weak and hence more vulnerable to default. Internationally, many developed exchanges maintain a low margin on positions due to their better financial strength along with massive volume of trade resulting in large income accruing to them. However, this has not been the case with many exchanges in India. For example, the initial margin liability for transacting the minimum lot size in pepper is Rs 30,000 for domestic contracts and US$ 312. 0 for international contracts. Similarly, the volume of transactions these clearinghouses deal in many exchanges in India is abysmally low making their existence financially unviable. For ensuring financial integrity of the exchange and for counterparty risk-free trade position (exposure) limits have been imposed on clearing members apart from mandatory margins. These limits which are stringent in some exchanges and are liberal in others are normally linked to the members’ contribution towards equity capital or security deposit or a combination of both and settlement guarantee fund. In the BCE exposure limit of a clearing member is the sum of 50 times the face value of contribution to equity capital of the clearinghouse and 30 times the security deposit the member has maintained with the clearinghouse. While COFEI prescribes the limit of 80 times the sum of member’s equity investment and the contribution to the guarantee fund, EICA has stipulated a liberal exposure limit on open positions. It has a limit of 200 and 1,500 units (recall that one contract unit is equivalent to 93. quintals of cotton) respectively for composite and institutional members. The IPSTA has fixed a net exposure limit of 60 units (equivalent to 1,500 quintals) for domestic contracts and 90 units (equivalent to 2,250 quintals) for international contracts. Moreover, the settlement guarantee fund helps clearinghouse to honour all payments in case any trader defaults. The KCE maintains a trade guarantee fund with a corpus of Rs 100 lakh while COFEI in addition to a guarantee fund has su bstituted itself as party to clear all transactions. Yet another check on the possible default is through prescribing maximum price fluctuation on any trading day which helps limit the probable profit/loss from each unit of transaction. The relevant data on permitted price limit has been presented in Table 2. It is clear from the table that the maximum profit/loss potential from trade in each contract unit varies from as low as Rs 800 for potato futures in Chamber of Commerce, Hapur to as high as Rs 15,000 for pepper in IPSTA. Similarly, given the permissible open position of 200 units for a trading-cum-clearing member and maximum price fluctuation of Rs 150 per 100 kg for cotton futures in EICA, the maximum potential loss/profit in a trading day works out to be Rs 28. 05 lakh. Regulation of Commodity Futures Merchandising and stockholding of many commodities in India have always been regulated through various legislations like FCRA 1952; ECA 1955 and Prevention of Blackmarketing and Maintenance of Supplies of Commodities Act (PBMSCA) 1980. The ECA 1955 gives powers to control production, supply, distribution, etc, of essential commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices. Using the powers under the ECA, 1955 various ministries/departments of the central government have issued control orders for regulating production/distribution/quality aspects/movement, etc, pertaining to the commodities which are essential and administered by them. Currently, 29 commodity groups have been declared essential under the act. The PBMSCA 1980 targets the prevention of unethical trade practices like hoarding and blackmarketing, etc, in essential commodities. It is being implemented by state governments to detain persons who obstruct the supplies of essential commodities. The FCRA 1952 provided for three-tier regulatory system for commodity futures trading in India: (a) an association recognised by the government of India on the recommendation of FMC, (b) the FMC and (c) the central government (department of consumer affairs). Stock exchanges and futures markets being a part of the union list their regulation is the responsibility of the central government. All types of forward contracts in India are governed by the provisions of the FCRA, 1952. The act divides commodities into three categories with reference to extent of regulation, viz, (a) the commodities in which futures trading can be organised under the auspices of recognised association, (b) the commodities in which futures trading is prohibited and (c) the free commodities which are neither regulated nor prohibited. While options in goods are prohibited by the FCRA, 1952, the ready delivery contracts remain outside its purview. The ready delivery contract as defined by the act is the one which provides for the delivery of goods and payment of a price therefor, either immediately or within a period not exceeding 11 days after the date of the contract. All ready delivery contracts where the delivery of goods and/or payment for goods is not completed within 11 days from the date of the contract are forward contracts. The act classifies forward contracts into two: (a) specific delivery contracts and (b) other than specific delivery contracts or futures contracts. Specific delivery contract means a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified time period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned. The specific delivery contracts are of two types: transferable and non-transferable. The distinction between the transferable specific delivery (TSD) contracts and non-transferable specific delivery (NTSD) contracts is based on the transferability of the rights or obligations under the contract. Forward trading in TSD and NTSD contracts are regulated by FCRA 1952. As per the section 15 of the act every forward contract in notified goods (currently 36 commodity items) which is entered into except those between members of a recognised association or through or with any such member is treated as illegal or void. As per the section 17(1) of the act, 82 items are prohibited from entering into forward contract. The section 18(1) of the act exempts the NTSD contracts from the regulatory provisions. However, over the years the regulatory provisions of the act were applied to the NTSD contracts as well and 79 commodity items are currently prohibited from NTSD contracts under section 17 of the act. Moreover, another 15 commodity items are brought under the regulatory provisions of the section 15 of the act out of which trading in the NTSD contract has been suspended in 12 items. At present, the NTSD contracts in cotton, raw jute and jute goods are permitted only between, through or with the members of the associations specifically recognised for the purpose. Subsequent to the report of the Committee on Forward Markets (known as the Kabra Committee) submitted in 1994 the government has so far permitted futures trading in nearly 35 commodities under the auspices of 23 commodity exchanges located in different parts of the country. The commodities in which futures trading is permitted are: pepper, turmeric, gur, castorseed, hessian, jute sacking, cotton, potato, castor oil, soyabean and its oil and cake, coffee, mustardseed and its oil and oilcake, ground nut and its oil, sunflower oil, copra/coconut and its oil and oilcake, cottonseed and its oil and oilcake, kapas, RBD palmolein, rice bran and its oil and oilcake, sesame seed and its oil and oilcake, safflower seed and its oil and oilcake, and sugar. This list may get enlarged further with the repeal of ECA 1955 and with further liberalisation of farm sector as envisaged in the National Agricultural Policy 2000 and the Union Budget 2002-03. The exchanges are required to get prior approval of the FMC for opening of each contract in commodities which are notified under section 15 of the FCRA 1952. Regulation is essential especially in a private ownership and market-oriented system to ensure the necessary checks and balances in the system. However, stringent and continuous regulation for long period of time would do no good to the system. The initial stringent regulation should ensure that a foolproof and growth oriented control system in terms of set-up of the exchange and its sound management, a clearinghouse which can promote trade and its financial integrity, sound and facilitating contract terms and conditions, etc, is in place. The exchanges are already assumed to be self-regulatory agencies. Their role must get strengthened further along with FMC minimising its role as a facilitator making the existing regulation an ‘appropriate regulation’. Constraints and Policy Options Commodity exchanges in India are in their nascent stage of development. There are numerous bottlenecks in the growth of this particular segment in India. These problems are not unknown to the government and the FMC. The FMC has already coordinated a number of studies carried out by experts with funding from World Bank during 1999-00. An integrated report [Youssef 2000] of these wide ranging studies has highlighted several issues for the consideration of government and FMC. These institutional and policy level issues have to be addressed by the government and the FMC for rejuvenating the paralysed agricultural futures markets. Some of the major problems that handicap the commodity exchanges are discussed below [Sahadevan 2002a]. Constitution of exchanges: All commodity exchanges in India are mutual organisations. They are promoted by traders who carryout trading as well as keep the management control of exchanges. The exchange staff including the chief executive officer/secretary is the staff of promoters. This structure poses a serious threat to the integrity of exchanges. The structure needs to be altered so as to ensure an arms length relationship between those who promote and manage the exchange on the one hand and those who have trading interest in exchanges on the other. Many leading exchanges in the world like Chicago Mercantile Exchange, International Petroleum Exchange, and New York Mercantile Exchange, etc, are demutualised organisations where arms-length relationship between management and trading is maintained. The pepper exchange in Cochin is seriously considering change in its set up from a non-profit making organisation to a profit-making equity-based organisation with public participation. Trading parameters: The terms and conditions of contracts play a crucial role in the growth and development of trading in any exchange. They should be market friendly in the sense that the terms are affordable to large traders as well as small traders and should be attractive to all prospective beneficiaries of futures trading including growers, processors, merchandisers, consumers, etc. However, the contract specifications (as given in Table 2) in many exchanges are prohibitive to many segments. For example, the lot size of cotton contract in EICA is 55 bales which is equivalent to nearly 10 tonnes of cotton. Similarly, the costlier commodity like pepper for which the lot size fixed by the pepper exchange, Cochin is 2. 5 tonnes with 15 tonnes as deliverable quantity. Many such finer aspects of contracts can be pointed out which apparently seem to go against the wider interests of prospective beneficiaries of futures trading. One needs to really go into the micro details of these specifications before making any judgments as to how market friendly these contracts are. Notes: IM and SM represent initial margin and special margin respectively. Price limit and margins vary from time to time. 1 Delivery month of the contract. 2 Bench Mark Price is the average of the opening, highest, lowest and the closing prices of the first three trading days of commencement month of any contract. 3 Bench Mark Price is arrived at by taking the average of the opening, highest, lowest and closing prices of the commencement day of trading of any contract. 4 The official closing price (OCP) is the weighted average price of the trades executed during the last 30 minutes of the trading session. Gross Exposure (GE) means the sum total of net outstanding position. 6 Delivery month relating to international castor oil contracts and all other specifications are common for all commodities traded in Bombay Commodity Exchange. 7 The Bench Mark Price (BMP) is determined by taking the weighted average of the transacted price of all the contracts traded on the first five days of the contract. Source: Bye-Laws of the respective exchanges. Infrastructure: L ack of efficient and modern infrastructural facilities are bottlenecks in the growth of futures markets in India. Though some of the exchanges notably BCE and EICA own huge office premises, they lack necessary institutional infrastructure including warehousing facilities, independent clearing house in addition to modern trading ring. The KCE for example, lacks basic facilities to disseminate the trading information. The exchange has only a couple of small office rooms and a poorly maintained trading ring which seem to have never been utilised. Trading system: Most of the exchanges till date have open outcry system. Of the sample of six exchanges visited, only COFEI has introduced electronic trading system. The FMC has been emphasising the need for automation and on-line trading system for ensuring better transparency and fairness in trading practices. It has been observed that less than 10 per cent of members are only actively trading in these exchanges. Volume of trade has been consistently declining. In some exchanges, e g, KCE, the market is non-existent. An active and vibrant market is necessary for introducing electronic trading system. Steps have to be initiated for creating market and making the exchange financially sound for investing in automation and on-line trading. It has been noticed that after introducing computerised trading in COFEI, trade volume dropped substantially leaving a large financial burden on the exchange. Moreover, majority of trading members in some of the exchanges are not educated enough to handle English language and to operate computer. For example, most of the members of the Chamber of Commerce, Hapur said to have no working knowledge of English without which computerised trading is difficult. Therefore, the priority of FMC and exchanges should be the creation of a better environment for active trading. Computerisation can be second step once a vibrant market is in place. Broking community: Although a large number of members exist in the records of exchanges, most of them shy away from trading due to the fact that the business is not very profitable. It is essential to attract large-scale broking firms who have diversified into stock broking and other related businesses. Regulation including setting standards for brokers, imposing capital adequacy norms, qualification criterion, etc, would become more meaningful when more and more active traders are attracted to the business. Existence of unofficial market: The grey/black market which existed outside the exchange premises during the ban on futures trading for over 30 years still continues to exist even inside the exchanges. It has been widely accepted and admitted by some of the CEOs/secretaries of exchanges that at least 25-30 per cent trade in the exchanges go unreported. The unofficial market operating outside the official exchange is much larger. These unofficial traders find the margin, stamp duty and income tax requirements least encouraging to come to the official contract channels. Multiplicity of exchanges: Currently 20 exchanges are operational of which three are specifically for conducting NTSD contracts and the remaining are in the trade of nearly 30 commodity items. Recently, five new exchanges have been approved and three of them are exclusively for futures contract in sugar. Many of these exchanges are set up as specialised ones for trading in one or a few commodities. The international experience however shows that exchanges are only to provide a platform for trade in many commodities and different forms of contracts. The Chicago Mercantile Exchange started as an agricultural exchange, and now largely relies on trade in financial futures; while the New York Mercantile Exchange, now the world’s largest energy exchange, once traded butter and potatoes. If an exchange provides a well organised trading system for certain commodities, with well-developed procedures, a good intermediary structure, and a sound clearing house, it can build on these strengths to introduce new products and to attract large number of traders which would eventually make the exchange more broad-based and financially sound. Controlled market: Price variability is an essential precondition for futures markets. Any distortion in the market mechanism where free play of supply and demand forces for commodities determines prices will dilute the process of natural variability of prices and potential risk. It is imperative that for a vibrant futures market commodity pricing must be left to market forces, without monopolistic or undue government control. However, in India many of the commodities in which futures trading is allowed have been still protected under ECA 1955. There are also commodity-based specialised government agencies like Cotton Corporation of India, NAFED, Jute Corporation of India, etc, which seek to control supplies of some farm products. Regulation: The government has two important roles to play – an oversight role by which the government disciplining those who try to manipulate the markets for their own benefit, and ensuring the sanctity of contracts; and secondly, an enabling role by which the government providing the necessary legal and regulatory framework for the smooth functioning of the system. The regulatory intervention should be most active at the time of the establishment of the exchange and of contracts. If the contracts are well formulated, and delivery modalities provide effective line of defence against attempts at manipulation, government has to only act as a watchdog intervening only when necessary. The goal of the regulatory agency is not only to regulate but also to inculcate the culture of self-regulation among the participants. This in turn, over a period of time, will give way for more self-regulation supported by the advisory role of state regulation. Promotion of the use of derivatives: With the increasing technological sophistication of trading methods, better transparency and guarantee of trade in futures, more institutional players like mutual funds, foreign institutional investors should be allowed to trade in recognised commodity exchanges. The exchanges under the guidance of the FMC must undertake publicity and mass awareness programmes for the promotion of this segment. For this purpose it would be beneficial for FMC to have a broad based functional alliance with its counterpart in stock markets. Modification of income tax provisions and rationalisation of stamp duty: In the past, speculative and non-speculative businesses were treated equally for taxation so far as right to set off or carry forward of loss was concerned. As a result, it was possible to set off speculative losses against speculative profits. Current tax rule however does not allow for setting off or carrying forward of speculative losses against regular business income. It does not treat losses on futures transaction as a normal business expense. The futures trading industry has been demanding amendments in the tax law for the promotion of futures trading activities. Similarly, the stamp duty provisions on futures trading make the transaction cost higher and moreover, the rates vary from one state to the other. While states like Gujarat, Madhya Pradesh, Kerala do not impose stamp duty on futures trading, some other states like Maharashtra imposes stamp duty on futures trading of certain commodity items. Conclusions Commodity derivatives have a crucial role to play in the price risk management process especially in agriculture dominated economy. Derivatives like forwards, futures, options, swaps, etc, are extensively used in many developed as well as developing countries in the world. However, they have been utilised in a very limited scale in India. The production, supply and distribution of many agricultural commodities are controlled by the government and only forwards and futures trading are permitted in certain commodity items. The present study is an investigation into the present status, growth constraints and developmental policy alternatives for derivative markets in agricultural commodities in India. The study has surveyed the recognised exchanges and their organisational, trading and the regulatory set up for futures trading. In the light of visit to six exchanges the study identified the problems and prospects of the futures markets and outlined various policy alternatives for revival of agricultural commodity futures in India. A review of the nature of institutional and policy level constraints facing this segment calls for more focused and pragmatic approach from government, the regulator and the exchanges for making the agricultural futures markets a vibrant segment for risk management. [This paper is drawn on the report entitled ‘Derivatives and Price Risk Management: A Study of Agricultural Commodity Futures in India’ which is a broader study carried out by the author with financial support from Indian Institute of Management, Lucknow. References Forward Markets Commission, Ministry of Food and Consumer Affairs, Government of India (2000): Forward Trading and Forward Markets Commission. Ministry of Food and Consumer Affairs, Government of India (1999): Futures Trading, Commodity Exchanges and Forward Markets Commission, New Delhi. Sahadevan, K G (2002a): ‘Risk Management in Agricultural Commodity Markets: A Study of Some Selected Commodity Futures’, Working Paper Series: 2002- 07, Indian Institute of Management, Lucknow. (2002b): ‘Derivatives and Risk Management: A Study of Agricultural Commodity Futures in India’, A Research Project Report, Indian Institute of Management, Lucknow. United Nations Conference on Trade and Development (1995): ‘Feasibility Study on a Worldwide Pepper Futures Contract’, (UNCTAD/COM/64). – (1998): ‘A survey of Commodity Risk Management Instruments’, (UNCTAD/COM/15/Rev2). Youssef, Frida (2000): ‘Integrated Report on Commodity Exchanges and Forward Markets Commission’, Report of the World Bank Project for the Improvement of the Commodities Futures Markets in India.

Definition and Examples of Synchronic Linguistics

Definition and Examples of Synchronic Linguistics Synchronic linguistics is the study of a language at one particular period (usually the present). It is also known as  descriptive linguistics or general linguistics. Key Takeaways: Synchronistic Linguistics Synchronistic linguistics is the study of a language at a particular time.In contrast, diachronic linguistics studies the development of a language over time.Synchronistic linguistics is often descriptive, analyzing how the parts of a language or grammar work together. For example: A  synchronic  study of language is a comparison of languages or  dialects- various spoken differences of the same language- used within some defined spatial region and during the same period of time, wrote Colleen Elaine Donnelly in Linguistics for Writers. Determining the regions of the United States in which people currently say pop rather than soda and idea rather than idear are examples of the types of inquiries pertinent to a synchronic study.State University of New York Press, 1994 Synchronistic views look at a language as if its static and not changing. Languages continually evolve, though its slow enough that people dont notice it much while its happening. The term was coined by Swiss linguist Ferdinand de Saussure. That for which he is now most known was just a portion of his contributions to academia; his specialty was the analysis of Indo-European languages, and his work generally studied languages over time, or diachronic (historical) linguistics. Synchronic vs. Diachronic Approaches Synchronic linguistics is one of the two main temporal dimensions of language study introduced by Saussure in his  Course in General Linguistics (1916). The other is diachronic linguistics, which is the study of language through periods of time in history. The first looks at a snapshot of a language, and the other studies its evolution (like a frame of film vs. a movie). For example, analyzing the word order in a sentence in Old English only would be a study in synchronistic linguistics. If you looked at how word order changed in a sentence from Old English to Middle English and now to modern English, that would be a diachronic study. Say you need to analyze how historical events affected a language. If you look at when the Normans conquered England in 1066 and brought with them a lot of new words to be injected into English, a diachronic look could analyze what new words were adopted, which ones fell out of use, and how long that process took for select words. A synchronic study might look at the language at different points before the Normans or after. Note how you need a longer time period for the diachronic study than the synchronic one. Consider this example: When people had more opportunities to change their social class in the 1600s, they started using the words thee and thou less often. If they didnt know the social class of the person they were addressing, theyd use the formal pronoun you to be safely polite, leading to the demise of thee and thou in English. This would be a diachronic look. A description of the words and how they were used at the time in comparison to the pronoun you would be a synchronic description. Before Saussure, it was considered that the only true scientific study of a language could be diachronic, but both approaches are useful. In the third edition of Synchronic English Linguistics: An Introduction, the authors explain the types of historical linguistics:   As it is necessary to know how a system works at any given time before one can hope to understand changes, the analysis of language at a single point in time, i.e. synchronic linguistics, now usually precedes the study in terms of diachronic linguistics. (Paul Georg Meyer et al.,  Gunter Nar Verlag, 2005) Synchronic studies look at what associates with what (how parts interact) at any given time. Diachronic studies look at what causes what and how things change over time. Examples of Synchronic Study Synchronic linguistics is descriptive linguistics, such as the study of how parts of a language (morphs or morphemes) combine to form words and phrases and how proper syntax gives a sentence meaning. In the 20th century the search for a universal grammar, that which is instinctive in humans and gives them the ability to pick up their native language as an infant, is a synchronic area of study. Studies of dead languages can be synchronic, as by definition they are no longer spoken (no native or fluent speakers) nor evolving and are frozen in time.

The Age of Reagan Assignment Example | Topics and Well Written Essays - 250 words

The Age of Reagan - Assignment Example hilosophy, ones experiences, ones exposure to the raw edges of human existence, ones religious training, ones attitudes toward life and family and their values, and the moral standards one establishes and seeks to observe, are all likely to influence and to colour ones thinking and conclusions about abortion†. Reagan was a president who worked against the communist agendas. As per (Vlib)â€Å"Under the Reagan Doctrine, one by one, it was the Communist dominos that began to fall†. Reagan has been a lash on the violent history of communist activities and he had won cold war and even changed the face of American in many ways. By ending communism he proved to be a man who put a hold on the violent centuries of communism. As per (History Place, 1982) â€Å"The President eloquently explains the reasons behind his staunch opposition to Communism while encouraging the British to aid in the worldwide struggle for freedom, recalling the success of former Prime Minister Winston Churchill in the fight against Nazi tyranny†. Reagan has been successful in combating communism and this was a revolutionary phase in American politics. Ameircan Rhetoric, . (2001). Address to the Republican National Convention. In http://www.america nrhetoric.com. Retrieved May 18, 2014, from http://www.americanrhetoric.com/speeches/part

Quantitative Applications Essay Example | Topics and Well Written Essays - 2000 words

Quantitative Applications - Essay Example (c) A project plan was constructed and the network was designed for designing, writing and installing a bespoke computer database. The critical path and the shortest time to completion is identified as follows: = Contract negotiation User discussions Review current system Systems analysis (a) Systems analysis (b) Programming Preliminary testing Documentation preparation Implementation Debugging Manual. (d) This project can be controlled by monitoring and controlling the critical activities and reducing lead time on the other activities which do not contribute towards the critical path. The important activities that need monitoring and control may be the Systems analysis, programming, testing, documentation, implementation and debugging. (a) The main advantages of holding an inventory are that losses due to unexpected changes in demand and deliveries from suppliers can be avoided and it is a safety net against backorders. The main disadvantages of holding inventory are the increased holding costs incurred due to higher rental value of the space occupied, higher premiums, the danger of the inventory losing its value or becoming obsolete and the loss of money in opportunity costs. The assumptions made are that the demand rate is known and it is uniform (constant), the ordering cost is constant, quantity discounts do not exist, the production rate is infinite (with no shortages) and the order is received immediately after placing the order. The formula for a simple demand model for the EOQ (Economic Order Quantity) is now given below: Economic Order Quantity, Q = Where, C = fixed cost per order (not per unit, in addition to unit cost) D = annual demand quantity of the product H = annual holding cost per unit (also known as carrying cost) (c) Unit cost = 80 Annual holding cost per unit = 20% per year = 0.20 * 80 = 16 Holding cost per unit per month = 1.33 Fixed cost per order = 140 Demand = 700 /month Therefore, EOQ, Q = 384 units/order (d) If the supplier offers a 5% discount on the product cost if ordered in lots of 1200 units or more, then the advice to the manager is to place the orders once every four months. QUESTION 3 (a) A diagram of a simple and basic EBQ model is shown below (production and consumption model). The assumption here is that rather than the lot arriving instantaneously, the lot is assumed to arrive continuously at a production rate K. This situation arises when a production process feeds the inventory and the process operates at the rate K greater than the demand rate D. According to this model, the Economic Batch Quantity (EBQ), or the Economic Production Quantity (EPQ) is given by Where, K = Setup cost D = Demand rate F = holding cost P = production rate (b) Unit cost of a thermostat = 25 Demand per annum, D = 4000 Production Rate, P = 200 per week = 10400 per annum Setup costs, K = 240 /setup Inventory Holding costs, F = 17.5% of

Television as the Substitute Good Essay Example for Free

Television as the Substitute Good Essay Studying the conditions, it can be understood that the television set is a substitute good of the television repairmen. Meaning, if the cost of hiring repairmen goes up, the demand for television sets will rise (Piana 2005). Although this may seem counter-intuitive, it makes much more sense when the problem is closely observed. Firstly, we take only in consideration the two goods given: repairmen and television sets. It does not follow that television sets have an absolute need of repairmen for the industry to survive. When a television set breaks, hiring a repairman is not the only option. The second option is the second good itself. People have the option to simply buy a new television set. It is true that the market of repairmen is dependent on the demand for television sets but the scenario asks for the opposite. The market of television sets does not rely on the demand of repairmen. Overall, we can say that the increase of repairmen cost per hour will increase the quantity of new television sets sold. If the cost of television repairmen becomes too high, people will have the tendency to buy new sets instead of hiring repairmen. Of course, this scenario relies on the condition that other goods in the market are not considered. If we take into consideration goods that rival the television such as computers and what not, then the market for television sets may go down with the repairmen. However, the problem must be limited to the given and all other factors cannot be applied. Since television and repairmen are the only ones to be considered, then the prediction above is more or less acceptable.

Broken Lives Essay -- essays research papers

Broken Lives written by Estelle Blackburn is an expository text, which through research has presented that nineteen year old John Button was wrongfully convicted of killing his seventeen year old girlfriend Rosemary Anderson in a hit and run. I believe through my reading of Broken Lives that the key factor of expository texts is to explore awkward questions deeply and critically. In this case who was guilty of killing Rosemary Anderson in a hit and run, John Button or Eric Edgar Cooke, and the effect of Cooke’s crimes and murders had on people. John Button was a loving, caring, active and an innocent man. John’s relationship with girlfriend Rosemary Anderson was strong. They planed to get married and Rosemary’s family accepted John for who he was and was already thinking of him as a son in law. â€Å"She was all he could think of: he was in love and was still consumed by the beautiful night at the Skyline Drive-in†. John was caring and always thoughtful of other living things. â€Å"John was upset when he saw the first kangaroo die from Colin’s shot†¦ He was too soft hearted to shoot†. As a child and teenager John loved to keep active by attending ballroom dancing which he was in love with. Button was innocent of killing Rosemary, but fierce police questioning and the police failing to investigate the case thoroughly lead to his imprisonment. There was little physical evidence to prove John’s guilt. â€Å"†¦ looking for blood, flesh or human hair which was likely if the c ar had hit a human...

Female Foeticide in India Essay

Save the girl child, or Beti Bachao, Beti Bachao Andolan in Urdu, is a campaign in India to end the gender-selective abortion of female fetuses, which has skewed the population towards a significant under-representation of girls in some Indian states. The â€Å"Beti Bachao† campaign is supported by human rights groups, non-governmental organizations, and state and local government in India. Contents [hide] 1 Female foeticide 2 Beti Bachao awareness campaign 3 National support 4 Effectiveness 5 See also 6 References Female foeticide[edit] Further information: Female foeticide in India Sex-selective abortion, or female foeticide, has led to a sharp drop in the ratio of girls born in contrast to boy infants in some states in India. Ultrasound technology has made it possible for pregnant women and their families to learn the gender of a foetus early in a pregnancy. Discrimination against girl infants, for several reasons, has combined with the technology to result in a rise in abortions of fetuses identified as female during ultrasound testing. The trend was first noticed when results of the 1991 national census were released, and it was confirmed to be a worsening problem when results of the 2001 national census were released. The reduction in the female population of certain Indian states continues to worsen, as results of the 2011 national census have shown. It has been observed that the trend is most pronounced in relatively prosperous regions of India. [1] The dowry system in India is often blamed; the expectation that a large dowry must be provided for daughters in order for them to marry is frequently cited as a major cause for the problem. 2] Pressure for parents to provide large dowries for their daughters is most intense in prosperous states where high standards of living, and modern consumerism, are more prevalent in Indian society. Rates of female foeticide in Madhya Pradesh are increasing; the rate of live births was 932 girls per 1000 boys in 2001, which dropped to 912 by 2011. It is expected that if this trend continues, by 2021 the number of girls will drop below 900 per 1000 boys. 3] Beti Bachao awareness campaign[edit] Beti Bachao activities include large rallies, poster campaigns, wall paintings, billboards, and television commercials and short animations and video films. Celebrities such as video director Jagmeet Bal, and Bollywood actress Priyanka Chopra, have become involved in â€Å"Save the girl child† initiatives. National support[edit] The Beti Bachao campaign is supported by numerous medical organizations in India, including the Indian Medical Association. 4] Government support at the state level has provided funding for Beti Bachao publicity activities in particular. The expenditures related to the campaign have been a source of political controversy in Madhya Pradesh, which launched its official Beti Bachao Abhiyan campaign in 2012. [5] Effectiveness[edit] The campaign has reported some success in parts of India. In 2009, it was reported that in Gujarat, rates of female births increased from 802 to 882 for every 1000 male births. Beti Bachao activities were credited with this improvement. [6]

Areas of knowledge

Adolescence, faced as a teenager, is a period of mental instability, wandering, and especially high interests on the opposite sex. Some argue that teenage dating is merely an activity which will negatively affect academic effort and achievements, thus it is not beneficial. However, teenage dating is not something that can be discouraged. In other words, teenage dating has to be perceived as a natural step within the adolescence period; although we cannot force teenage dating, it should definitely not be discouraged.Numerous Korean parents oppose teenage dating, in concern of its possible assistance upon academic achievement. They simply believe it will somehow negatively affect academic scores, rather than acknowledging it as a natural process within adolescence, and growing as a social being. However there are no significant proof of the correlation between dating and academic scores; and growing Into a social being is more than accomplishing academic demands, entering a famous univ ersity, or getting employed by a major company.It requires socializing with others, especially with the opposite sex; teenage dating can help this progress. By spending great amounts of time of deep communication while dating, teenagers will e able to learn how to Interact and respect the opposite sex as well; and this ability to communicate and respect the opposite sex Is extremely Important In growing Into a social being. Thus teenage dating Is clearly not something to be discouraged or negatively viewed.Let us consider that teenage dating Is actually harmful to teenagers; then will discouraging stop this phenomenon? No. Teenage dating derived from Increased Interest towards the opposite sex during adolescence Is an extremely natural process that should be respected as a method of relieving stress. For example, In the case of Genealogy Academy of Foreign Languages(GAFF), dating Is prohibited, and penalty points and other severe punishments are given when caught.However, dating Is not only a natural phenomenon, but Is also a method of relieving stress from having to live In a restricted school area for 5 days a week. Not only this applies to students of GAFF, this applies to every teenager In the period of adolescence, because dating allows teenagers to satisfy their desire to Interact with the opposite sex; this stress- relieving activity should not be discouraged, but rather respected as a natural hometown. Teenage dating should not be discouraged unless there Is a significant harm towards teenagers, such as underage smoking or drugs.It should be accepted as a natural process of growing mature, and a phenomenon derived from Increased Interests In the opposite sex during the adolescence period; especially as an essential requirement of social growth for young adults. Areas of knowledge By homeruns Ms. Lee proof of the correlation between dating and academic scores; and growing into a be able to learn how to interact and respect the opposite sex as well; and this ability o communicate and respect the opposite sex is extremely important in growing into a social being.Thus teenage dating is clearly not something to be discouraged or Let us consider that teenage dating is actually harmful to teenagers; then will discouraging stop this phenomenon? No. Teenage dating derived from increased interest towards the opposite sex during adolescence is an extremely natural process that should be respected as a method of relieving stress. For example, in the case of Gonging Academy of Foreign Languages(GAFF), dating is prohibited, and penalty points and other severe punishments are given when caught.However, dating is not only a natural phenomenon, but is also a method of relieving stress from having to live in a restricted school area for 5 days a week. Not only this applies to students of GAFF, this applies to every teenager in the period of adolescence, because dating allows teenagers to satisfy their desire to interact with the opposite sex; this stress- Teenage dating should not be discouraged unless there is a significant harm natural process of growing mature, and a phenomenon derived from increased interests in the opposite sex during the adolescence period; especially as an

Behind Cisneross Mind and Experience Professor Ramos Blog

Behind Cisneross Mind and Experience Photo Credit: https://www.sandracisneros.com/events Sandra Cisneros is widely known in American literature for the poems, stories, and novels she writes. Those stories reflect on the themes of love, religion, feminism, family, hardships, and the livelihood of the characters she creates and introduces in her stories. Actually, the themes Sandra Cisneros implements in her literary works of art not just reflected upon just that. The specific themes that are reflected upon are her life growing up with a hollow family; the hardships she faced as the only daughter in her family and as a Latina in the outside world; her deep experience in searching for the passion and wisdom that inspired her to wrote; her experiences as a teacher; the many authors and artists that inspired her to write her novels and stories; and the many literary works, such as The House on Mango Street, that have received critical acclaims for her work. Sandra Cisneros is the embodiment of telenovelas in her literary works because of the hardships she had dealt with in h er family, at school, and throughout her livelihood. One of the factors that became an inspiration for Sandra Cisneros’s literary work was from the experience she had with her family. Cisneros tries to get along with the family especially with the hardships she had faced within the family regarding her relationship with her parents; Cisneros being the only daughter and living with six brothers; and moving back and forth from one place to another. One of the factors regarding family, was Cisneros’s relationship with her parents. On her mother’s side, it seemed like the connection between her and her mother was good. Everyday, Cisnero’s mother would tell her â€Å"good luck†, but in a form of a malapropism by saying â€Å"Good lucky!† (Gonzlez 3). Moreover, the relationship between Cisneros and her father was nothing but â€Å"a complicated relationship† (Gonzlez 3). But regardless of the roughness in the family bond between her and her father, Cisneros still loves him no matter what happ ens. Another contributing part to Cisneros’s literary theme of family was the fact that her family has not been open to her. In an interview with Cisneros, she stated, â€Å" Most times, family are the least reluctant to tell me anything, and that’s why I have to invent so much when it comes to family’s stories† (â€Å"Interview with Sandra Cisneros† 1). Evidently, her statement to what inspired the family theme in her stories is because of the fact that she stays close to family even if they don’t tell her much things about their lives. This is further stated in that same interview when she said, â€Å"But maybe it’s just my family that doesn’t talk about their inner life to me. Especially after I became a writer† (â€Å"Interview with Sandra Cisneros† 1). Regarding to Cisneros’s travels between Chicago and Mexico, it was a stretch for her since â€Å"she would move between Mexico City and Chicago† (Mathias 1). That being said, her sense of having a permanent home is lost when it came to her being the only daughter; â€Å"not having sisters or friends† (Mathias 1) because of her travels; and her family not being open enough to even engage in a conversation. Another theme that is implemented in Cisneros’s livelihood and in her stories is the sense of having a permanent home without any problems. The theme of home has been one of the central themes in her literary works â€Å"usually in the form of clever aphorisms† (Gonzlez 2). In one of her literary works, The Little House, she wrote that the house in that work of literature was â€Å"permanent and stable† (Mathias 1) house because â€Å"it was one house for one family† (Mathias 1). From that metaphor of a stable house, she considered as â€Å"her dream house† (Mathias 1) because of the integrity of her family relating to how stable her dream house is. That theme also applied to her â€Å"as a metaphor to other developments in her life† (Gonzlez 2). In other words, the events and other experiences the Cisneros had gone through were developing as the foundation for her idea of home. Simply put, she is the home. Looking at the idea of what her dr eam house should look like and the experiences she had gone through, it was as if the foundation of her house was firm, but a little bit critical. As mentioned earlier, the fact that she was the only daughter and that she did not have much friends due to her family travels got her into â€Å"reading and burying herself in books† (Mathias 1). From that point on, her interests in reading got her into writing poetry and later becoming a literary magazine editor in high school (Mathias 1). From being the poet and high school magazine editor she is, her passion for reading and writing later grew during her college years. After that, she became a teacher educating students that dropped out of high school in Chicago neighborhoods. From her experience as a teacher, two things had happened: she learned and understood â€Å"the problems of young Latinas† (Mathias 1) and that she didn’t want to be a teacher because she didn’t have enough confidence and that the teac hing job took up her writing time (Gonzlez 3). But from that teaching experiences, it brought Cisneros to a point where she understood herself and improved her skills in writing after growing out of the holes of where she had a â€Å"lack of knowledge† (Gonzlez 3) and â€Å"immaturity at the time of her writing† (Gonzlez 3). Furthermore, Cisneros better understood the concepts of the love, family, feminism, religion, and the many that she implemented in her stories. As mentioned earlier, Cisneros’s family does not tell her much which leads to the point where she comes up with characters for her stories. Those characters are actually people she â€Å"has encountered in her lifetime† (Mathias 1). The stories she writes focus on the topic she had a better understanding of which are the ones that she considers as important: feminism, love, oppression, and religion (Mathias 1). On the theme of feminism, she has that theme deeply rooted in her literary works because of the fact that she had been the only daughter living with six brothers. Moreover, she got a better sense of it when she heard about the many problems the Latinas had in her classes during her years of teaching. In an Interview with Cisneros, she made two important notes on how much hardships women go through. She pointed out that women face hardships â€Å"because the world is so patriarchal† (â€Å"Interview with Sandra Cisneros 1) and that women are â€Å"contro lled by the Church, State, and consumerism† (â€Å"Interview with Sandra Cisneros 2). Cisneros further stated in the same interview that women weren’t â€Å"allowed information about their own bodies, control of their fertility, church and state dictating choices that belong to women themselves† (â€Å"Interview with Sandra Cisneros† 2). From her words, Cisneros states that women are restrained by society to what they can only see, hear, and understand. Everything else is off their limits and cannot be absorbed for their knowledge. That being said, Cisneros later pointed out that these excessive limitations among women are what drove its constituents to two pathways: one where women â€Å"equate ‘Girls Gone Wild’† to liberation† (â€Å"Interview with Sandra Cisneros† 2) and another path where women â€Å"don’t but the Paris Hilton model† (â€Å"Interview with Sandra Cisneros† 2). Cisneros brings up tho se two sides because she came across women who don’t have the full idea of feminism and women who are intelligent and independent beings. Another notable theme that is also focused on Cisneros’s literature is the theme of love and hardships between a man and woman. A definitive example of this theme is â€Å"Woman Hollering Creek† talks about the story of a loving relationship that turned abusive between a man, Juan Pedro, and a woman, Cleà ³filas. As the relationship is strained between the two due to their responsibility for their child and the man’s acts of abuse on the woman, Cleà ³filas dealt with her husband’s abuse by seeing it as a joyful act that can be happily cried over. She thought of this abusiveness as a good thing because she thought that â€Å"to suffer for love is good† (Cisneros 45). In a sense, Cleà ³filas is like a sponge absorbing the pain coming from her husband’s wrongdoing. Another pointer in this relationship was when Cleà ³filas was slapped around by Juan Pedro many times. Her response to that physical abuse was that â€Å"she didn’t fight back, she didn’t break into tears, she didn’t run away as she imagined she might when she saw such things in the telenovelas† (Cisneros 47). From this story, Cisneros correlated â€Å"Woman Hollering Creek† to the hardships some women face in relationships and to the time she mentioned that women face times where they’re restricted by society and the patriarchy. Photo Credit: https://news.avclub.com/weekend-box-office-dont-cry-for-me-la-llorona-1834220769 From the hardships and many experiences Sandra Cisneros had dealt with throughout her life, she was able to come up with themes based on her experiences with her family, education, and knowledge, she is acclaimed as one of the top American literature figures and writers in this country. These stories varied from themes relating to family, feminism, love, and hardships. Out of the work she had done and praise Cisneros had received, it came to a point where her literary works are taught in schools and colleges across the United States. From Cisneros, she sees this as a form of showing her experiences to readers who take in what she had gone through by reading stories about characters that define the themes that Cisneros writes into her literary works of art. Annotated Bibliography Cisneros, Sandra. Woman Hollering Creek and Other Stories. Vintage Books, 2002. The literary works of Sandra Cisneros defines the themes of feminism, the patriarchy’s control over women, her culture, family, love, home, and much more through the stories she had written. She conveys stories, such as â€Å"Woman Hollering Creek†, as a way of inspiring her readers of her thoughts about feminism and how women are affected in relationships and in the outside world. â€Å"Woman Hollering Creek† is mentioned in this analysis to talk about the the topic of hardships that women face in abuse relationships. Sandra Cisneros is a renowned author for literary works like â€Å"The House on Mango Street†, â€Å"Woman Hollering Creek†, â€Å"Eleven†, and many other literary works. Gonzlez, Rigoberto. â€Å"Sandra Cisneros Opens up about Her Life in A House of My Own.† Los Angeles Times, Los Angeles Times, 1 Oct. 2015, www.latimes.com/books/la-ca-jc-1004- sandra-cisneros-20151004-story.html. The article talks about the experiences Sandra Cisneros had gone through which was the inspiration that led her to coming with literary works of art. She goes into detail by talking about her life with family; acting as a teacher for high school dropouts; becoming a writer with a clear understanding of what it means to have a stable life; and the hardships she and many women go through in society. This article will be used to discuss Cisneros’s family life, her years as a bookworm in school and a writer in college; and how she better understood herself. Rigoberto Gonzlez is a writer and critic for the Los Angeles Times. He is also an English professor at the State University of New Jersey. Mathias, Kelly. â€Å"Sandra Cisneros.† Sandra Cisneros, web.mit.edu/21f.714/ www/hispanos/ cisneros.html. This summary of Sandra Cisneros sums up her metaphor of an ideal of home relating to her livelihood; her life as a child dealing with her family’s constant travels; and the inspiration behind her literary works, such as â€Å"The House on Mango Street†. From this, Cisneros has received many praises and acclaims for her works because of how much her books share an inspiration to many readers. This summary is used to discuss Cisneros’s childhood and the hardships she had faced. Kelly Mathias was a student at the University of Minnesota. She wrote this paper as part of her coursework for one the English courses she took during her college years there. â€Å"Interview with Sandra Cisneros.† Chicago Public Library, www.chipublib.org/interview-with- sandra-cisneros/. With the release of â€Å"The House on Mango Street†, Cisneros answered some questions during an interview regarding her life as the only daughter in the family going through life and her understanding of what women go through as society tightens their grip on them. Cisneros also discusses how she better understands the themes involved in her literary works. This interview is used in this literary analysis to further the integrity of the notions of the themes Cisneros brought up in her literature. The Chicago Public Library contains excerpts and biographies regarding various authors of literary works which are also seen at the start or end of the same piece of literature.

Teaching Students With Multiple Disabilities or Handicaps

Teaching Students With Multiple Disabilities or Handicaps Children with multiple disabilities will have a combination of various disabilities that may include issues with: speech, physical mobility, learning, mental retardation, sight, hearing, brain injury, and possibly others. Along with multiple disabilities, they can also exhibit sensory losses as well as behavior and/or social problems. Children with multiple disabilities,  Ã‚  also referred to as multiple exceptionalities, will vary in severity and characteristics. These students may exhibit weakness in auditory processing and have speech limitations. Physical mobility will often be an area of need. These students may have difficulty attaining and remembering skills and/or transferring these skills from one situation to another. Support is usually needed beyond the confines of the classroom. There are often medical implications with some of the more severe multiple disabilities which could include students with cerebral palsy, severe autism, and brain injuries. There are many educational implications for these students. Strategies and Modifications for Multiple Disabilities Early intervention is necessary as soon as the child begins school.Involvement of the appropriate professionals, i.e. occupational therapists, speech/language therapists, physiotherapists, etc.A team approach at the school level involving external agency/community liaison who meet on a regular basis is essentialThe physical arrangement of the classroom will need to best accommodate this child. Consideration of special equipment and assistive technology is essential.Integration among their peers is important to assist these students with social development. Its important to integrate multiple disabled children as much as is possible. Research does indicate that when these students attend their community school and participate in the same activities as their peers, social skills develop and are enhanced. (Sometimes these students are placed full-time in a regular classroom with support, however in the majority of cases these students are placed in a developmental skills type of classro om with some integration. Ensuring that all students demonstrate respect for the multiply disabled student becomes a teachers responsibility and needs to be taken seriously with ongoing activities that develop respect from the other students in the class.An Individual Education Plan will need to be carefully planned out and adjusted on a regular basis and will need to be aligned to the needs of the individual child.Remember, these children are often completely dependent on others for most/all of their daily needs.Assistive technologies may aid this child and the support team will need to decide which assistive technologies will be most appropriate.A safety plan will need to be developed and is often included in the IEP.Care needs to be given in your expectations of this student to ensure the child doesnt become frustrated. Most importantly, these identified children are to be given the same rights as non-identified school age children including screening, evaluation, and an appropriate program/services.​

According to the question answer the question Essay

According to the question answer the question - Essay Example ducation makes it inappropriate to some people while Foster is of the belief that the current system of education has been able to enable to get students to have a good interpretation of their experiences. The walking journeys of Cheryl strayed in wild and Andrew Forstaffle in the â€Å"this American life† radio episode† hit the road† have some things in common. For instance, in both cases there are people who are compelled by the experiences that they are going through in life to go far places from wherever they were at first. Andrew Forsthoefel decides to go on a journey of over four thousand miles on foot after losing his job. He takes people he meets on the way with him. On the other hand, Cheryl strayed move to many cities in the process of trying to find a new life after the divorce with her former husband. The difference between the two cases is that Cheryl strayed was in search for a new life while Andrew Forsthoefel’s did not seek a new life. The views that Cheryl Strayed and Robert Bly give about the term being wild can be a little bit morally misleading. This is because they all advocate for some behaviours that are simply inappropriate morally. For instance, when someone looks at the kind of lifestyle that Cheryl Strayed leads in the name of being wild such as sleeping with strangers someone can clearly see the immoral part of it. Robert Bly, basically advocates for masculinity where female people are treated with less regard or respects. The two views can basically be said to be misleading in their description of being wild. Looking at the poem by Edward Hirsch someone can easily notice the importance that he gives to the emotional parts of human existence (Addonizio and Laux 242). This can be seen in the line where he asserts on the importance of people believing in their hearts. This can be seen in the first line. The poets urge people to believe in having better lives, even at times when they are going through the hardest parts of their

International marketing Essay Example | Topics and Well Written Essays - 1000 words - 3

International marketing - Essay Example The primary objectives of the organization, as per the website of the organization are to provide support and advice, notify interested businesses of overseas investment opportunities and to provide assistance in exporting goods. These objectives are moved further by the activities of the organization which include trade exhibitions of Australian goods around the world, locating and screening on business partners internationally and by the provision of research data on the viability of other markets. These support services are established through the governmental planning of exports and through the export network which Austrade has in place (Austrade, 2007). The primary purposed of Austrade is to provide information and one of the easiest methods available to a small business while seeking information is to use the internet (Levy and Powell, 1998). Austrade certainly does not disappoint in this case since even a brief overview of their website presents a wealth of information for anyone who seeks to conduct business outside Australia. For example, the website provides detailed information about countries where Austrade operates and it is easy to see that the data about these countries can be very helpful for an exporter looking to sell Australian products abroad. For any exporter who is just coming into the export business, a service such as TradeStart becomes invaluable. This is a network of offices which are spread across the country and assist local businesses with free services under the New Exporter Development Program. Primarily, these services consist of advice and information about the product requirements from different countries and how the product can be sold to another nation. The network also provides on the ground assistance in foreign lands where Australian businesses may not have a level of familiarity or local expertise (Austrade, 2007). As reported by Bartlett &