Activity Based Costing

Financial Management Concepts and Their Application – Focus on Activity Based Costing

The process or the technique of determining the cost of a service or a product is called cost accounting system. The costs are assigned to cost objects only after collected and classified by the cost accounting system. It is used to estimate the cost involved in developing, designing, purchasing, producing, servicing, distributing and selling different services or products. The heart of cost accounting system is cost allocation and Activity Based Costing (ABC) can be considered as a type of cost allocation. In this essay, different approaches to cost allocation and activity based costing are described. The methods used for cost allocation and activity based costing. Activity based costing received focus when attempts were made to improve the methods of cost allocation. The different ways of implementing cost allocation and ABC approaches in for- profit organizations (corporations) and in real world business enterprises (Akyol and Bayhan, 2005).

Like any other approach involved in business activities cost allocation and activity based costing also have their strengths and weaknesses and a detailed study of these factors ensures the successful implement of these account systems. The costs associated with these account practices are very crucial and they must be considered very carefully in terms of benefits earned by implementing cost allocation and ABC approaches. These systems could be viable only if they are implemented efficiently and they gain efficiency and profitability.

The study further discusses about the main objectives of cost allocation and ABC approaches and the relation between various factors like resources, costs, cost drivers and activities. It also signifies the methods of cost allocation like direct allocation, step- down allocation and reciprocal allocation. Activity Based Costing (ABC) has been discussed elaborately for allocating costs to services or products and the different steps involved in the process. The recommendations made in this paper could be used by the users as guideline for charging the fixed and variable costs of one department to other department of the organization (Peter B.B. 1997).

Cost Allocations and Activity Based Costing (ABC)

The process or the technique of determining the cost of a service or a product is called cost accounting system. The costs are assigned to cost objects only after collected and classified by the cost accounting system. Therefore, the process by which some costs or groups of costs are linked with one or more cost objectives, like divisions, departments and products, is basically called cost allocation. Generally, cost objectives which are responsible for causing costs are allocated costs. Costs are linked with cost objectives by selecting appropriate cost drivers. A cost driver is called cost allocation base when it is used for allocating cost. Major costs are allocated, such as cost of raw material for a manufacturing firm or cost of building material for a construction firm are allocated to departments, projects and jobs on an item basis by utilizing cost drivers like quintals of raw materials or tonnes of building materials consumed where as other costs, considering individually, may not be so significant that they need to be allocated individually (Peter B.B. 1997).

They are pooled and then they are allocated together. Hence, a cost pool may be defined as a set of single costs allocated to cost objectives utilizing an individual cost driver. For instance cost of everything which are measured in square meters and occupy space like rent of the building, cost of utilities and janitorial services can be pooled together for allocation. Or all the operating expenses of the registrar’s office of a university can be pooled together and it can be allocated to the respective colleges as per the quantity of students enrolled with each department.

In brief, the costs caused by the same factor should be given in the same pool. Those factors are called cost driver. In practice, many terms are used by the companies for describing cost allocation. Such terms can be attributing, trace, allocate, reallocate, distribute, assign, burden, load, reapportion, apportion, etc. For describing allocation of costs to cost objectives any of the above mentioned terms could be utilized interchangeably (Cooper and Kaplan, 1988).

The type of methodology used to measure the cost and the performance of different activities, cost objects and resources is known as the Activity Based Costing (ABC) and it is one of the most important aspects of the organizations engaged in specially manufacturing or service. For the traditional accounting systems based on costs it is regarded as the best alternative epitome of the accounting system. Presently, the organizations engaged in manufacturing and service sector are forced by the global competition for increasing productivity and reducing associated costs and for this they have to be greatly automated and more integrated and flexible.

They can only sustain in this competitive world if they adapt to a mechanism of calculating costs which is more than accurate. Activity based costing is regarded as the best alternative of the traditional methods of cost accounting and it is used now a days for assigning costs, using various cost drivers, to activities, further for allocating costs to products on the basis of use of these products for these activities. ABC is used to reduce the stake of distortion and gives information about costs accurately by utilizing various activities as cost drivers (Akyol , and Bayhan, 2005).

According to activity based costing, the total cost of a product or a service is calculated by adding the cost of all value added activities involved in the production with the cost of the raw material. It can be explained in different words as the activity based costing method is used to link the cost of activities performed for usages of the resources of the organization (inputs) to the final outputs like services, customers and above all products. Purchasing, engineering, technology, design, quality control and production are prime activities required for a product and each of these activities use resources of various types, for example the working hours of the supervisors or engineers. The activities performed by these resources are measured by cost drivers (Peter B.B. 1997).

The costs that can be associated directly to the product, as per traditional systems of cost accounting, are labor and direct materials. As per activity based accounting system, there are two types of activities – a. value added activities and b. non- value added activities and generally non- value added activities are reduced for improving the performance. ABC is quite useful in calculating costs accurately but it involves extra effort and expenditure for collecting the information required for cost analysis. These difficulties which come across in designing a cost model can be reduced by using a tool properly designed (Peter B.B. 1997).

Cost allocation and ABC approaches in for-profit firms (corporations)

Cost allocation and cost accounting systems are very crucial for any organization and in case of for- profit firms it become vital for the financial managers to be very careful about all the financial consequences within the organization or outside the organization. No any organization can make profit if their managers don’t consider the cost allocation factor seriously. The objective of cost allocation is to;

compute valuations of assets and income and
justify costs and attain reimbursement

For computing valuations of assets and income, cost allocation is done to projects and products for measuring costs of goods sold and inventory. The purpose of these allocations is to provide frequent service to financial accounting. Managers often use the resulting costs for performance appraisal, motivating employees and other managers and planning.

Most of the time prices depend on costs and an accepted bid is to be justified subsequently. This could be understood by citing the example of Boreal which is the largest company of Canada supplying scientific equipments and apparatuses to schools. It has a diverse line of products, hence the process of costing product is comparatively complex. Recently, a combination of several costing techniques for determining the cost of inventory and making allocations was used. The company has many departments for production and for each commodity the activities of production vary from each other. Three guidelines were kept in mind for making allocations:

Fair allocation
Verifiable and rational allocation
Its impact must be known on people using or working with it

.The current input costs and changes in operating costs were reflected by the revised Inventory Costing System. These information were used for making cost allocations(Akyol , and Bayhan, 2005).

ABC approach proved to be beneficial for the company for following reasons:

Recalculating selling price
Calculating selling prices of different offers including mixture of products or quantity of products
Deciding about whether to produce a product in- house or to purchase from market
Calculating taxes
Calculating profits

The importance of allocations is quite visible in the above example and furthermore it has many intended uses (Peter B.B. 1997).

Different ways of implementing Cost allocation and ABC approaches in real-world business enterprises

In real world business enterprise the ways of implementing cost allocation and ABC approaches are different and they depend on the need and requirement of the enterprise. There is no any defined way of implementing cost allocation and ABC approaches in the real world business enterprise which can be implemented universally. The following example of a transmission company (PJM) illustrates the understanding of the ways of cost allocation. It classifies various methods of transmission cost allocation used in the United States and the world. The following five categories don’t stand alone but give a general idea about cost allocation (Cooper and Kaplan, 1988).

The costs of transmission can be allocated:

Between generation and load
Amount of usage
Generation or peak consumption
Basis of flow
Basis of monetary impact

These allocations can be implemented by following methods:

Direct Method – As per the name suggests, by direct method, any other service departments are ignored when the cost is being allocated for the department directly to the operating (revenue – producing) department. It can be explained as, the services provided by facilities management to personnel may be ignored as it is a kind of support provided to personnel by facilities management. The cost allocated for facilities management depend on the square meters area used by the production department only. Similarly, the costs of personnel department are allocated to the production department only depending on the number of workers working with it (Akyol , and Bayhan, 2005).

Step- Down Method – It is recognized in the step – down method that the activities of different services are supported by activities of other service departments including production department also. In this method, the allocations are made in a sequence. It starts with the service department providing the greatest service in terms of costs to the largest number of other service departments. It ends with the service department providing the least service in terms of costs to the least number of other service departments. For example, in this method, the cost would be allocated to facilities management before it is allocated to personnel department because facilities management provides more support to the personnel as compared to the support provided by personnel to the facilities management. Once the costs are allocated to facilities management, no costs are allocated back to personnel even if some services are provided to the facilities management by the personnel. The costs of personnel allocated to the production department include the costs allocated by facilities management for personnel (Peter B.B. 1997).

Reciprocal Allocation Method – In the reciprocal allocation method the cost is allocated after recognizing that the services are provided to each other by different service department including production department. This method is considered as the most ideal and correct method due to its ability to cost the relationship between different departments completely for the cost allocation to the service departments.

For example, as shown in the above methods, in this method the costs of the facilities management are allocated to the personnel department and the costs of the personnel department are allocated to the facilities management department before they are allocated to the department of production. The costs of the services are allocated first which are provided between two service departments (Cooper and Kaplan, 1988).

It can be noted that the costs can be affected greatly by the method of allocation selected. For example, using a direct method of allocation can make an operation more expensive in comparison to other methods like step- down method or reciprocal allocation method. Similarly, finishing can be an expensive operation if non- direct method of cost allocation is used.

Analysis of ABC’s potential strengths and weaknesses within a company

A number of indirect overhead manufacturing costs can be turned into direct costs by using activity based costing systems. Direct costs mean the costs recognized specially with selected cost objectives. ABC enables managers to select appropriate cost drivers and activities to recognize numerous overhead manufacturing costs and cost objectives as simply as traditional accounting systems enable them to recognize direct material costs and direct labor costs.

ABC based systems classify most of the costs as direct cost which is not the case in traditional accounting systems. ABC system gives great confidence to managers as far as costs of services and products are concerned because they have more information (Özbayrak, Akgün and Türker, 2004).

On the other hand ABC systems are comparatively complex and expensive to traditional systems and it is not affordable by all companies. ABC systems are used by both manufacturing and service industries because of the following reasons:

Margins are shrinking due to increasing competition and companies ought to know their accurate margins for their services or products
Increasing complexity in the businesses has diversified products, services and even customers. The consumption of resources of the company also varies across customers and products
Introduction of new technologies are increasing the share of indirect costs and presently in manufacturing world indirect costs are more important. Automated machines are replacing direct labors.
Life cycles of products are shortened by changing technology and it has become difficult for companies to spare time for making price or cost adjustments once error are found

The costs of developing and operating systems are reduced substantially by the use of computers (Cooper and Kaplan, 1988).

Steps needed to ensure a successful implementation of ABC

An Activity based costing system requires four steps for its designing and successful implementation:

Determination of key activities, cost objectives and resources to be used is to be known and analyzed by the managers. They also need to identify the output measures (cost drivers) for each activity and resource.
A map is needed to be drawn by managers which should be based on process and be able to represent the activity – flow and resources supporting cost objects
The third step requires collection of operating data and cost

The last and final step requires calculation and interpretation of the new information based on ABC. A computer is required for the last step because of the complexity involved in activity based costing systems. The process of using ABC information for improvement of operations is known as Activity Based Management (Cooper and Kaplan, 1988).

The associated costs & benefits

The three main purposes of cost allocation are:

Motivation
Measurement of asset and income
Justification of cost or cost- plus contracts

By considering the above mentioned benefits of ABC system the cost involved in its implementation becomes regardless as the system enables to make calculations accurately which is very important for determining the profits. The cost involved in the implementation of ABC system is so high that it is beyond the reach of small enterprise but the benefits are so important that big enterprise cannot manage without it (Özbayrak, Akgün and Türker, 2004).

Efficiency gains

Activity concepts are utilized by Activity Based Costing systems which enables it to link successfully the costs of product to the knowledge of production. For example, what is the process of producing a product or service, what is the time required for the performance of an activity, and finally what is the amount of money required for performing the activity? These all questions are answered efficiently by ABC system of accounting (Cooper and Kaplan, 1988).

Profitability implications

ABC systems are used for inventory of products and determination of income. This is done by using the physical units or method of relative-sale-value. It is becoming popular gradually due to its ability of assigning costs to various activities within an organization, tracing costs to products or services depending on cost drivers measuring the reasons for the costs of the activity. It helps in improving profitability of the organization by quality improvement and waste elimination.

It also increases profitability by focusing on quality, reducing inventory, making production cycle short and by flexibly using human resources and operating assets. As these factors are non- value added activities and it results in reducing operating costs and increasing profitability (Özbayrak, Akgün and Türker, 2004).

Conclusion and recommendations

The traditional systems of accounting are gradually becoming irrelevant in the present competitive business world when things are changing very fast. Traditional costing system under costs the product because they are not able to consider the hidden costs involved in production. ABC systems enable to cost accurately and hence to calculate profitability accurately. Sometimes traditional methods over cost the product due to their incapability of calculating costs accurately and the price of the product become incompatible in the competitive market.

In nut shell it can be said that businesses have to adopt the Cost Allocation and ABC systems to sustain in the competitive business world. It is an expensive practice but keeping its utilities in mind the cost becomes negligible because it enables businesses to calculate profitability accurately without which business has no meaning.

References

Akyol D.E., Tuncel G. and Bayhan M. 2005. “World Academy of Science, Engineering and Technology”, Vol 3

Peter B.B. 1997. “Activity-Based Costing An Emerging Foundation for Performance Management”

Özbayrak M., Akgün M. and Türker A.K., 2004. “Activity-based cost estimation in a push/pull advanced manufacturing system,” International Journal of Production Economics, vol. 87, pp; 49–65

Cooper R., and Kaplan R.S. 1988. “How cost accounting distorts product costs,” Management Accounting, vol. 69, pp; 20–27

Kim G., Park C.S. and Kaiser M.J. 1997. “Pricing investment and production activities for an advanced manufacturing system,” Engineering Economist, vol. 42, no. 4, pp; 303-324

Gunasekaran A. and Sarhadi M. 1998. “Implementation of activity-based costing in manufacturing,” International Journal of Production Economics, vol.56-57, pp; 231-242

Ben-Arieh D. and Qian L.2003. “Activity-based cost management for design and development stage,” International Journal of Production Economics, vol.83, pp; 169-183

Lewis R.J. 1995. “Activity-based models for cost management systems,” Quorum Books, Westport, CT

Köker U. 2003. “Activity-based costing: Implementation in a sanitaryware company,” M.Sc. Thesis, Department of Industrial Engineering, University of Dokuz Eylül

Cokins G. 1997. “Activity-based cost management making it works,” McGraw-Hill. Inc.

Elliot, B. & Jamie E. 2004. “Financial accounting and reporting”, Prentice Hall, London, p. 3,

Goodyear and Earnest L.1993. “Principles of Accountancy”, Goodyear-Marshall Publishing Co., p.7

Singh W. and Ramnik. AICPA committee on Terminology. Accounting Terminology Bulletin No. 1 Review and Résumé.

Friedlob, Thomas G. & Plewa, Franklin J.1996. “Understanding balance sheets,” pp; 1

Carruthers, Bruce G., & Espeland, W. N.1991. “Accounting for Rationality: Double-Entry Bookkeeping and the Rhetoric of Economic Rationality”, American Journal of Sociology, Vol. 97, No. 1, pp: 40-41,44 46,

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Briefing Process Construction Projects

What Are The Contributions Made By Client Facing Project Managers To The Briefing Process Within The UK Construction Industry?

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For the past fifty years or so briefing has been highlighted as one of the problem areas within the UK construction industry. Various UK government reports have reflected these inefficiencies from the Banwell (1964) report to the Egan (1998) report. The government reports put emphasis on the importance of improving customer focus in the construction industry. The brief establishes the requirements of the client and hence the objectives of a project. As the client facing project manager is concerned with achieving the project’s objectives, this dissertation seeks to establish what contribution the client facing project manager has on the briefing process. In order for this investigation to progress the following research will include a literature review of the briefing process and qualitative research of the client facing project manager’s involvement in the briefing process. Primary data obtained from the qualitative research will be analysed and conclusion will be drawn. Analysis of results of the investigation showed both negative and positive issues for the client facing project manager on contributing to the briefing process.

Negative issues include lack of education of the briefing process; there is a lack of understanding with regard to good practice implemented and poor undertaking of strategic briefs. Positive issues include an appreciation of the briefing process and an appreciation of the impact of a project upon the client’s core business; traits of leadership implemented to the briefing process and a willingness to gain knowledge in order to develop a strategic brief. The conclusion of the investigation is that the client facing project manager needs to gain further competence in order to contribute effectively to the briefing process. The dissertation objectives are as follows;

To evaluate the involvement of the client facing project manager in preparing the brief for their client
To assess the client facing project manager’s perception of the briefing process
To examine what tools and protocol the client facing project manager uses to develop a brief
To gain an insight into any barriers that exist which would hinder the client facing project manager from implementing a strategic brief
To examine the client facing project manager’s understanding of the briefing process
To assess if the type of client influences the client facing project manager’s involvement in the briefing process
To carry out an objective investigation, in analysis and conclusion

Briefing is an iterative process in trying to interpret client requirements and involves consultation with project stakeholders during its development. A good brief should capture the client’s requirements in a clear and precise way. As briefing is an iterative process, communication and coordination is important as a large amount of information is being passed between parties involved in the briefing process. The process requires decisive decisions to be made that can have implications on cost in later stages of a project. Central to the briefing problem is that the client does not fully express the project objective and is oblivious of the alternatives open to it. On the brief taker’s side there is difficulty in trying to decipher the requirements of the client. With uncertain information moving between parties, misinterpretation is a high risk and may only be avoided by repeated iterations around the problem.

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Sustainability Dissertation

Has The Economic Crisis Impacted The Levels Of Commitment Towards Sustainability Within The Property Industry?

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The recent economic crises within the UK, Europe and the world continues to worsen and along with it growing concerns continue to increase over the fragile state of our environment with rising fears over climate change and global warming. Energy security along with the need to secure energy supply has been prioritised as a short to medium term objective by governmental authorities as climate change protocols appear to be set as a medium to long term priority. This hypothesis aims to assess the effects the recent economic crisis is having upon the property industries commitment to sustainability. It will provide an overview of the concept of sustainability, detailing the current constraints and the means by which it needs to be addressed in the future. This research paper will examine the legislations that have been produced to meet future targets within the property industry highlighting key initiatives for future sustainable development. Furthermore, it will deliberate the concept of green development identifying its key strengths, benefits and the provisions required to be incorporated in green leases and developments within the industry. It is essential that sustainability takes more precedence in the future to help curb global warming and in doing so establish the current global recession and its effects on sustainability with the realisation that the property industry must comply to promoting sustainability in order for greater environmental conditions. It seeks to identify the key roles and relationships faced by practitioners within the property industry and the need for mandatory procedures to adhere to regulation and establish greater levels of sustainable development in new and existing buildings.

Dissertation Objectives

To provide an overview of the concept of sustainability and its effects on the property industry
Research the government’s laws and regulations towards promoting green development and betterment towards sustainability
To identify the problems of the economic crisis and its effect upon promoting sustainability
To understand and anticipate practitioner’s commitment towards sustainable development and how the lapse in the commercial market and limited bank lending has affected their decisions

The fundamental issue of sustainability within the built environment is becoming an increasingly topical subject; and yet the term sustainability defies specific definition among many of those working within the property sector, with many unsure as to what it actually means. Sustainability is now reaching the top of many political agendas with growing concerns at the realisation of the rate of climate change and so the progress in encouraging sustainability is becoming an essentiality. The term sustainability in relation to property development can be loosely defined as the location, design and development of property which is economically viable, environmentally responsible and which has a positive, material effect on the quality of life. With the strain caused by the recent financial downturn in the economy this study examines how both this and the need for environmental sustainability will prevail and how those working within the property sector have taken to their commitment to sustainability with the rise of economic turmoil, said to be the worst recession since World War I. This literature review takes a closer look at the different concepts of sustainability, recent government measures to improve sustainability and how the recent economic downturn has impacted upon the sustainability agenda by the new government legislation in attempts to produce a Zero Carbon environment. With the lack of academic papers available it will acquire professional statements, government publications and reports to review any literature upon promoting sustainability, its definition and the global recession’s impact upon practitioners’ commitments to adhering to regulations for future betterment of the built environment.

Dissertation Structure

Chapter 1 – Introduction This chapter introduces the problematic issue surrounding global warming and how the concept of sustainability must be realised in order to reduce carbon emissions and the challenges it brings within the property industry. The current financial climate is addressed and the financial impact it has upon the property industry together with legislative regulations produced by the government to reduce carbon footprint of buildings and promote sustainability. The chapter outlines the aims and objectives of the research study, entailing the outline methodology and the research methodology that will be utilised to perform this study.

Chapter 2 – Review of Literature on sustainability Literature review assists in addressing the concept of sustainability, identifying its principles, the government’s actions to tackle this problematic issue within the built environment and the future strive for green development.

Chapter 3 – Review of literature on the economic crisis’ impact upon sustainability within the property industry Literature review on the current economic crisis and its effects upon both sustainability and the property industry and the relationship held between each of these three elements.

Chapter 4 – Research Methodology This chapter examines the research methodology to be applied to carrying out the research.

Chapter 5 – Research Findings and Analysis The results from the interviews will be used to provide an analysis to go along with the literature review in order to evaluate the hypothesis formulated in section 1.

Chapter 6 – Conclusion This chapter gives a conclusive result of the research conducted, and provides a summary and evaluation, identifying the constraints felt during the process of producing this report and an answer to the hypothesis.

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Smartphone Market Apple

Apple’s Position in the United States Smartphone Market

The smartphone market in the United States is comprised of all firms that manufacture and sell smartphone’s specifically to U.S. consumers. According to Cromar (2010. p 4.), a smartphone is a mobile phone which is run on an advanced operating system. The operating system makes a smartphone to have advanced computing capabilities such as installing of new applications and can connect to the internet.

There are five major players in the U.S. smartphone market. They include:

Apple Inc. (a U.S. corporation)
Research in Motion Limited (a Canadian corporation)
HTC Corporation (a Taiwanese corporation)
Motorola Inc. (a U.S. corporation)
Samsung Electronics (a subsidiary of a Korean corporation)

This article will mainly focus on Apple’s presence in the smartphone market.

Apple’s Market Share

According to new statistics released by comScore – an analytics firm – on February 2013, Apple and Samsung have continued their two-horse race for the U.S. smartphone subscription over the last quarter of 2012 (Campblell, 2013). For three months ending in December 2012, Apple’s iPhone had maintained its dominance in the U.S. smartphone market which raised its share of the market by 2% up from 36.3% in the previous quarter. However, Samsung, the biggest competitor to Apple had experienced the most positive change over the same period by controlling 21% of the market. These two smartphone giants were trailed by HTC and Motorola, which unfortunately were experiencing declining results with market shares of 10.2% and 9.1% respectively (Campbell, 2013). The following table shows a percentage share of smartphone subscribers for the period between September 2012 and December 2012

Smartphone Market 01 — Smartphone Market Apple

Source: comScore (2013)

This was a representation of 125.9 million people in the United States who were owning smartphones during the last quarter of 2012 (Jones 2013). As Apple was dominating in smartphone subscription, Google’s Android Platform operating system was leading with a 53.4 % of the market share in the fourth quarter of 2012 (Paul, 2013). This made Apple’s iPhone 5 and Samsung Galaxy SIII the bestseller in Q4 leaving HTC, LG and RIM struggling to get a share of the lucrative market. The following table according to Jones (2013) shows a tabulation of Apple’s position in the period between December 2011 and December 2012

	Dec-11	Mar-12	Jun-12	Sep-12	Dec-12	+/-
Android	47%	51%	52%	53%	53%	6%
Apple	30%	31%	32%	34%	36%	6%
RIMM	16%	12%	11%	8%	6%	-10%
Microsoft	5%	4%	4%	4%	3%	-2%
Symbian	1%	1%	1%	1%	1%	-0%
Other	1%	1%	1%	1%	0%	-1%
Total	100%	100%	100%	100%	100%

Source: comScore (2013)

Threat Analysis

Apple’s dominance in the smartphone market for many years can be attributed to the advantage that the company takes from vital synergies that are available in its electronic ecosystem of electronics, computers and software (Comar 2012 p 31). Before the company released the iPhone, Apple already had an existing broad base of users for its iPods, computers and software like iTunes. The iPhone is a smartphone that can be easily integrated with other Apple products such as the Apple TV. It is the success of Apple’s other products that were carried over and integrated into the iPhone making it an unmatched smartphone with highly differentiated and integrated user experience.

As of 2010, most of Apple’s competitors were facing significant challenges in market share control due to Apple’s availability of a highly integrated electronic ecosystem. However, Samsung has in the past two years revolutionized its smartphone presence in the United States making it Apple’s main competitor. This has led to patent counter suits between Apple and Samsung being experienced in especially the last one year. Samsung has fully utilized its wide range of consumer products such as the manufacture of computer chips, PCs, TVs and printer to influence its smartphone innovation in recent years, a technique that Apple largely relied on in the earlier days.

Apple’s Weaknesses

The biggest challenge that Apple as a smartphone manufacture is facing today is the growing competition in smartphone operating system application platform. Apple smartphones use iOS which is a mobile operating system created exclusively by Apple. Over the last couple of years, Apple has been experiencing a significant long term risk in gradual loss of smartphone market share specifically to the Android platform. This trend has reduced Apple, a one-time smartphone giant, to a mere niche player in the U.S. smartphone market. The following image show’s Apple’s iOS market share as compared to other mobile operating systems for the period between January 2009 and June 2012 (Blodget 2012)

The Android platform that is giving Apple’s iOS a run for its money is a software stack of mobile devices which includes an operating system that is designed mainly for touch screen devices such as smartphones. Android, which is owned by Google, has played a key role in challenging the success of Apple’s smartphone by handing companies like Samsung an easy to use mobile operating system.

The reason why Apple’s smartphone market share is under siege is essentially because the smartphone market is a ‘platform’ market. Apple’s weakness here is that in a platform market, third company markets like Google build products and services on top of other companies’ platforms (Blodget 2012). In this case, Google continues to build the Android application for use by companies such as Samsung on their smartphones. Currently, Android and Apple are continuing to dominate the smartphone market with Apple’s share declining in a rapid manner in the last two years.

Another area of Apple’s weakness is its spending on research. According to Chen (2013), smartphone manufacturer, Samsung, outspent Apple by 2012 on research and development with Samsung spending 5.7% of its revenues on research as compared to Apple which has spent only 2.2% of its revenues. Research is essential, especially in a mobile based platform, since a company will always be abreast with not only emerging trends, but also reading the current trends of consumers.

Samsung’s Competition on Apple

Even though Samsung came in second in the U.S. smartphone market share, Samsung was the only company that recorded significant growth especially in the last quarter of 2012. Paul (2013) points out that with increase in competition in innovativeness in smartphone design, Samsung’s growth rate was slightly more than Apple’s which consequently heightens the prediction of its market share results in the first quarter of 2013. Samsung has not only been experiencing growth as a mobile phone manufacturer in the United States alone. Globally, for the first time in 13 years, Samsung toppled Nokia in the global mobile phone business on an annual basis at the end of 2012. Samsung accounted a growth of 29% in mobile phone business in 2012 which was up from 24% in 2011 (Wayne 2012).

Chen (2013) also concurs that for many years Apple has not face a challenger like Samsung, who can make very popular and profitable smartphones and tablets. Whereas Apple is staking its success on creating new markets and then dominating them, Samsung is investing heavily on studying existing markets and coming up with new innovations inside them. Samsung’s strategy has seen the Samsung Galaxy SIII smartphone to be the first smartphone to engage on a neck-to-neck competition with Apple’s iPhone in sales (Chen 2013).

Samsung’s success over competitors like Apple and Nokia is being mainly forged by the company’s competitive edge in the smartphone sector. According to information and analytics provider HIS, on a global perspective, Apple and Samsung ended 2011 in an absolute two-horse race over smartphone market share, with only 1% separating the two (Wayne 2012) .

Business Analysis tools and techniques

There are many business analysis techniques and tools that can be used to analyze different business problems. This paper shall focus on four of the majorly used tools. They include:

SWOT Analysis
The PESTLE Technique
The 5 Whys Technique
CATWOE Analysis

SWOT Analysis

SWOT analysis is one of the most commonly used tools for analyzing and auditing the overall strategic position of a business and its environment. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. For purposes of understanding the business environment of a company through SWOT analysis, strengths and weaknesses mainly focus on the internal factors while opportunities and threats focuses on the external factors.

Whereas a business cannot change the external factors affecting it, it can change the internal factors affecting its business environment. SWOT analysis do help companies for instance to understand the external environment of a business and how they can strategize on sustainability and performance. SWOT also helps a company to identify a strategy that creates a concrete business model that best matches a company’s capabilities and resources to the environmental requirements. It is basically a foundation in which a business evaluates its internal potential and probable limitations in comparison to opportunities and threats posed by its external environment. Arguably, a consistent SWOT analysis of the environment that a business is operating enables a company to adequately predict changes in trend and also helps in factoring them in the decision making processes of the company.

Strengths

The strengths of a business are the unique qualities that enable a company, for instance, to accomplish its mission and vision. They form the basis on which the continued successes of a business are established and sustained. The strengths of a business are what the business is well specialized in or the expertise it has, the traits and the exceptional qualities that its employees poses and the distinctive features as compared to others in the industry that gives the business its consistency. They are simply the attributes within a company, which can either be tangible or intangible that give the business a competitive edge over others. Some of these beneficial aspects of a business may include: customer goodwill to the brand loyalty, human competencies, financial resources, products and services, etc.

Weaknesses

Weaknesses are the attributes and qualities that prevent a business from accomplishing its mission and consequently achieving its desired full potential. In SWOT analysis, these are factors that prevent a business from achieving successful results since they simply deteriorate a business’ growth. They are internal factors in a business that make the business not to meet the required standards that the business opts to be meeting. They may range from insufficient research and development capabilities as in the case of Apple Inc. when compared to Samsung Electronics, to narrow product range and depreciating machinery. Analyzing weakness assists the management in a business to know the areas in the business that need to be improved. Weaknesses precisely impact on the profitability of a business and if not well controlled, they may make a company to go out of the business.

Opportunities

Opportunities are essentially the possibilities that a business has in increasing their profit margins or improving on performance. They are presented by the environment within which a business is operating. Opportunities arise when a business takes an advantage of the conditions posed in its operating environment to plan and execute strategies that could drive it to more profit making. Businesses have to be very keen in identifying opportunities and grasping them immediately they rise. It could be something as simple as releasing a new product line to targeting a new customer niche. Conducting a SWOT analysis on opportunities involves examining external factors to a business such as technological advancements and the state of the overall economy.

Threats

Threats to a business rise when external factors in a business environment compromise the profitability and reliability of the business. They create a vulnerability that is faced by a business when compounded to its weaknesses. They are peculiar external factors which cannot be controlled. For instance, the economic downturn of 2008 was factor that most businesses could not control. Political and social trends can also be possible threats to a business. A good example is the current social and political push for products that are more environment friendly as compared to those that are not. An essential part in analyzing the threats of a company has to involve a look at the strengths of its competitors.

SWOT analysis is advantageous in that it presents valuable information since a business can evaluate the four elements either independently or as in combination (Nordmeyer, 2010). It also involves the integration of qualitative and quantitative data which is an essential part in formulating a business strategy. SWOT analysis is preferred by many since one is not required either have technical skills or training to conduct the analysis. This in turn makes SWOT analysis one of the most affordable business analysis tools that also requires a fairly short time to conduct.

The PESTLE Technique

The PESTLE technique is a business analysis technique that is mainly concerned with the external aspects of a business such as the environment. PESTLE is an acronym that stands for Political, Economic, Social, Technological and Legal Environment (Financez 2012). This method is mostly used in analyzing a business environment and making market evaluations at the initial stages of the business. According to Marx (2010), the PESTLE technique primarily consists of four main phases. These phases are:

Formulating the external factors list
Identifying the implications of these external factors
Determining the relative importance of the impacts of the external factors
Formulating alternative scenarios

Political – When generating a political-factor list, one is expected to concentrate on the key political factors that will affect a business. The taxation policy, for instance, especially during elections is one of the main political factors that a business needs to internalize and factor in its strategy analysis. How foreign policy will affect exports and imports especially to a business in such a field can also be a cognizant factor.

Economic – In this analysis, one is considered to factor the overall economic situation, the strength of consumer spending in business’ main product and service segment, both current and future government expenditure and how it may affect the economy among many other factors.

Social – When considering the sociological aspects in business analysis, it is important to concentrate on the cultural aspects that are likely to impact on the business (Marx 2010). Cultural and social trends have great influences on a consumer of any product or service. Therefore, it is important to consider factors on demography, lifestyle patterns, fashion, and work attitudes as well as religious and ethnic differences when analyzing a business environment.

Technological – This is one area that has greatly changed the lives of many people today. For a business to easily sustain itself in today’s world, it has to adequately factor technological advancements available to improve its overall performance. Having a big eye on technology is a major factor that creates a competitive edge of a business over its rivals (Financez, 2012).

Legal – Legal and political factors are closely related but for good business analysis, they are distinguishable. Current and pending legislation ultimately do have implications on a business which makes them a compulsory business analysis consideration as this technique provides. Legislation may affect employment, taxation, health and safety requirement, as much as many other aspects of a business.

Environmental – These are factors in business analysis that may have a connection with the environment. Aspects on pollution capabilities and recycling possibilities in the product and services of a company are important factors in business analysis.

The 5 Whys Technique

The 5 Whys technique is a problem-solving technique that assists one in getting to the root cause of a problem quickly (Manktelo & Carlson 2011). This method simply helps in determining the cause-effect relationship in a problem or failure event (Sondalini 2008). This technique was made popular by Toyota especially in the 1970s when they were developing their manufacturing methodology. The 5 Why’s technique simply involves looking at a business problem and asking ‘why’ and ‘what caused the problem’. In using this strategy to solve a problem, one simply starts with the end results and works backward in asking ‘why’ in a repeated manner until the root cause of a problem is apparent.

Five is a rule of the thumb and that is why this technique is called the 5 Whys technique. It is not a must for one to ask 5 ‘whys’ since one may ask more or less before finding the root cause of the problem. When one, for instance, in business is facing a certain problem, you start with a statement of the situation and ask why it is occurring. Then turn the answer to this questions into a second ‘Why’ question. The answer to the second ‘Why’ questions becomes the third ‘Why’ questions and so forth. Repeatedly asking why peels away ‘layers’ in an issue which then leads one to the root cause of a problem. When one refuses to be satisfied with an answer, this increases the odds of coming up with the underlying root cause of the problem (Sondalini 2008). Some of the benefits attributed to this technique are:

Simple – it does not require the use of advanced mathematical tools.
Effective – it quickly helps to separate symptoms from causes
Flexible – It can be used alone or in combination with other techniques

CATWOE Analysis

CATWOE analysis is a business analysis technique where an analyst prepares a report, that is analytical, to solve a particular problem. CATWOE is an acronym that stands for Clients, Actors, and Transformation, Worldview, Owner and Environmental constraints. In business, it is a technique that is very useful in checking the features existing in a defined problem. The CATWOE technique is mostly preferred when identifying a business problem that requires prompting critical thinking on why it is really necessary to be solved.

Clients – The clients of a business have to be analyzed on so as to understand who are on the receiving end of the business’s products and services.

Actors – This comprises the employees who form part of implementing the business strategy or changes to achieve a desired mission.

Transformation – It comprises of an analysis of probable changes that have been introduced in a business. It also factors on the analysis of the processes involved in transforming inputs into outputs.

Worldview – In other words, this is the world view. This describes an analysis on the bigger picture that a certain situation or a problem in business fits.

Owner – Having a look on the stakeholders and identifying needs of the owners or shareholders of a business is crucial.

Environmental constraints – It includes an analysis on the external environmental factors in which a business is operating.

References

Blodget H. (2012). This Trend is very worrisome for Apple. Business Insider

Campbell M. (Wednesday, 6^th February 2013). Apple and Samsung pull further ahead in U.S. smartphone market, iOS gains on Android. Apple Insider

Chen B. (February 10^th, 2013). Samsung Emerges as a Potent Rival to Apple’s Cool. New York Times

Comar S. (November 29^th, 2010). Smartphone in the U.S. Market Analysis

ComScore (February 6^th 2013). ComScore Reports December 2012 U.S. Smartphone Subscriber Market Share

Financez (2012). What is Business Analysis: 2 – PESTLE Technique

Jones C. (February 2013). Apple’s and Android’s U.S. Smartphone Market Share Continues to Increase.

Manktelow J. & Carlson A. (2011). 5 Whys – Quickly getting to the root of a problem. Mind Tools

Marx C. (July 20^th, 2010). The PESTLE Strategic Marketing Analysis Technique: Compiling the list of External Factors. Yahoo! Voices

Nordmeyer B. (2010). Advantages and Disadvantages of SWOT Analysis. Houston Chronicle.

Paul C (2013). Apple top US smartphone market with Samsung second. TechBeat.

Sondalini M. (2008). Understanding how to use the 5 Whys for Root Cause Analysis. Lifetime Readability Solutions

Wayne (December 18^th, 2012). Samsung displaces Nokia as Top Cellphone Brand in 2012 and takes decisive Smartphone lead over Apple. HIS Supplier

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Feminist Movement

Introduction

In the beginning of the sixties, feminist movement emerged as a social movement which concentrates on dealing with issues related to women. It sought to tackle issues such as abortion, domestic violence, sexual assault, voting issues, violence against women, sexism, etc. it influenced all spheres of life and concentrated on removing sexism and male chauvinism from society. Similarly, it has influenced the field of arts, which was also dominated by males. According to researchers, dealers and curators mostly consisted of males and they preferred male artists. This trend had negatively influenced women artists and they were excluded from major art events and exhibitions. Consequently, they did not get the chance to get acknowledged for their work and skills. During the time of discrimination against women and in the such an environment, where women were not acknowledged for their work and skills along with male chauvinism, female artists expressed their views through art in order to deal with patriarchal society. According to scholars, feminist art is defined as the art which concentrates on tackling patriarchy and to define and pave way for social creation of feminism. Several feminist artists came into view to deal with male chauvinism. The aim and objective of this research article is to explore true feminism.

This article will concentrate on discussing feminism and feminism movement. It will provide an overview on what feminism is all about and how it influenced art. At the same time, it will concentrate on feminism art of the sixties. It will also explore feminism and feminism art in today’s time. The main aim of this research article is to explore the topic of true feminism art of the sixties and feminism art of the twenty first century in the lights of broad and diverse academic resources. This article will employ the use of various journals, books, encyclopedias, magazines and electronic resources to discuss the topic of feminism art of sixties and twentieth first centuries. It will concentrate on discussing the works of prominent feminist artists and the events, which gave rise to feminism movement.

Feminist Movement: Overview

The feminist movement is also called the Women’s liberation movement which sought to deal and tackle with issues such as abortion, maternity leave, harassment and violence against women, domestic violence, genital mutilation of females, honour killings, etc. Scholars and academic have divided feminist movements into three waves, which have dealt with several aspects of feminism but in a different way. The first wave feminist had initiated between the nineteen and twentieth centuries and it was mainly concerned with Suffrage movement. The second wave of feminism was the period between sixties and eighties in which feminists sought to deal with discrimination against women in society and law. It had the basic ideas of first wave feminism. The basic idea behind these movements was to struggle and to improve the conditions of women. According to researchers, feminism is defined as the continuous battle against the oppression and suppression of females. It was essential to initiate the feminist movement because women were subjugated at all levels in the Western society. The feminist movement aimed at removing this bias and concentrated on removing sexism from society so that women would also get a chance to develop their careers. It is one of the most influential and long lasting social movements which have influenced women in all spheres of life.

Feminism and Art

The feminist art is considered to be the hard work and achievements of feminists, who worked hard to use art as a medium to represent the lives and experiences of women so that they can bring change in society as well as in contemporary art. Feminism art main aim was to ensure that women become more visible in the history and practice of art. The feminist movement started somewhere in the sixties and continued to develop in the seventies. Consequently, it gave rise to the notion “second wave of feminism”, which is persistent in today’s time. It was in the California State University of Fresno, where the first feminism art education program was started. The number of students was not more than fifteen and their instructor was Judy Chicago. She helped in the influencing the early feminism art and employed the use of costumer, video, performance in order to express feminism. In Los Angeles, Judy Chicago founded the art program. Together with Miriam Schapiro, they created Woman House in the early seventies. With the popularity of feminism movement, women emerged as separate and distinct individuals of society and started working with men. Artists such as Judy Chicago and Miriam Schapiro, Suzanne Lacy, Faith Wilding, June Wayne, Mary Kelly, Dara Birnbaum, etc emerged in the world of art and brought piece of art to represent feminism. In the seventies and eighties, the Women’s Building was considered to be the essential hub for feminist artist to gather and exchange views. In the same arena, conferences, conventions, workshops and exhibitions were held to discuss and promote feminist art. At the same time, Women’s Video Festival was introduced in order to promote feminist art.

Feminism History

According to researchers, feminism is considered to be theory which concentrates on political, economic and social equality of genders. As a social movement, it is considered to be the organized movement, which strives to work for women rights and interests. The history of feminism has been divided and classified by academics and researchers in three waves, first wave, second wave and third wave. The third wave feminism starts from nineteenth century to early twenty first century. The second wave starts from late sixties and late eighties. The third wave starts from nineties till recent times. The first wave feminism had started in the United Kingdom and United States. It concentrated on removing the inequalities which were officially mandated. Feminists of this time included Mary Wollstonecraft, Lucy Stone, Helen Pitts, Olympia Brown, etc. According to researchers, the first wave ended when the U.S Constitution allowed the women to vote. It was considered to be big step for women. Other significant victories of this first wave included new reforms in education, healthcare and other professions. However, the second wave of feminism concentrates on the unofficial inequalities and it was important to tackle them. It created a link with issues, which had to be addressed in order to change the present situation of women. This wave allowed women to understand their lives personally and politically.

History of First Wave Feminism

In the 1800, women did not have any control in their life. During this time, an average married female was the mother of seven children. They could not get higher education. In wealthy families, women interfered in domestic issues but did not have any property rights. At the same time, religious restrictions also hindered with the growth and development of women. In the 1790, the Second Great Awakening had started which allowed women to show their leadership skills outside the domestic sphere. Several movements were started. Angelina and Sarah Grimke are considered to be famous and prominent abolitionists who had criticized and defied social customs. They publicly addressed the American Anti-Slavery Society and were severely criticized. In order to respond to criticism, Sarah Grimke wrote “Letters of Equality of the Sexes.”

First wave feminism is considered to be the era in which the feminism activities were started during the nineteenth and twentieth centuries. It started in United States and United Kingdom and aimed at removing gender discrimination. It concentrated on women’s suffrage because women were not allowed to vote during those times. From Miriam Schneir perspective, the first wave of feminism was the time when woman had taken her pen to protect herself from male chauvinism and gender discrimination. According to historians, Mary Wollstonecraft was the first female who had published the very first feminist treatises. The name of her treatises was, A Vindication of the Rights of Woman. In it, she expressed her views of current situation of women and supported the fact that there should be gender equality. In her uncompleted work, by the name of Maria or Wrongs of Woman, she had extensively discussed and explored the topic of sexual desires of women. It was criticized severely because it sought to talk on female sexuality. British feminists consider Wollstonecraft as the founder of British feminism. It was because of her ideas; feminists in Britain strived and campaigned for the right to vote. After continuous efforts, some women were given the privilege to vote in the year 1918. During the same time, Maria Stopes emerged and wrote a sex manual by the name of Married Love. The basic aim of this manual was to concentrate on the issue of equality in marriage. It also talked about female sexuality and its importance.

In the United States, Margaret Fuller was considered to be the pioneer of feminist work. She had written Woman in the Nineteenth Century. In United States, several prominent and well known feminist activists emerged. Active feminist movement members included women such as Lucy Stone, Susan B. Anthony, Elizabeth Cady Stanton, etc. these women were also the same individuals who made continuous efforts to remove slavery from the American society. Other prominent activist includes Victoria Woodhull and Matilda Gage, who worked hard to ensure that women get the right to vote. Several of these women had to face charges because of the fact that they had raised their voices. Carrie Chapman, Alice Paul, Sarah Grimke, etc are the name of some of the woman who violated the laws so that their voices could be heard. The first wave feminism consisted of women who belong from orthodox Christian groups. According to researchers, first-wave feminists are considered to be sensible and moderate and were ready to work within the system of politics.

According to researchers, the first wave of feminism was very different from second wave of feminism because of several issues. Firstly, it did not deal with social issues such as abortion, etc. They did not talk about the reproductive rights, which women have. According to researchers, feminists of that time did give views on marriage and asserted that woman has the right to refuse sex. However, marital rape had no legal recourse. During that time, feminists also talked on unwanted pregnancies and birth control pills. In the year 1860, Married Women’s Property Act was passed. It allowed women the authority and power to voice their opinions in the wills of their children. It also gave them inheritance laws. It was in the year 1920, when women were given the permission to vote. This was a major event and a big victory for feminists because it influenced the lives of women and gave the place for second wave feminist movement.

History of Second Wave Feminism

The second wave feminism movement is considered to be the feminist movement which took place from early sixties and continued to develop in the seventies. The first wave feminist movement concentrated mainly on the legal equality. However, second wave feminism concentrated on several social issues such as abortion, domestic violence, work discrimination against women, violence against women, reproductive rights of women, marital rape, etc. This second wave of feminism emerged in the late forties in which patriarchal concepts emerged. Television shows such as Father knows Best, etc are the male chauvinist programs which concentrated on the fact that woman are best to be housewives and mothers.

The Second Sex has been written by Simone de Beauvoir. In her work, she explained that women were considered to be ‘other’ in the male dominated society. She came to the conclusion that male dominance has taken roots in the entire world and it is accepted as a norm. Women are viewed as objects and their work is to become pregnant, look after their children and menstruate and there is no valid justification to categorize them as the ‘second sex’.

According to Cynthia Fuchs Epstein, Betty Friedan had openly criticized and protested against the image of women, which was depicted in the media. Women were placed at homes, to do house-chores and take care of children. This image was publicized and hindered in the development and growth of women. It showed that women did not have talent. The concept of perfect family consisted of husband, who was the bread earner and the wife, as the home maker and caregiver of children. This concept did not show happiness but rather degraded women.

During this movement, President Kennedy had appointed Esther Peterson to occupy one a high post in his administration. He also founded the Presidential Commission on the Status of Women. Eleanor Roosevelt was the chairperson of the Commission. Betty Friedan released, Feminine Mystique in the year 1963. In the same year, President John F Kennedy administration released a report which demonstrated that women were subjected to severe and harsh discrimination in United States. With Friedan book and report, several housewives criticized and show discontent and dissatisfaction on the present condition of women. This led to the development and formation of several local and government feminist organizations, which concentrated on liberating women from male oppression and subjugation. This was the starting point of the movement.

The movement grew and prospered and won several legal cases. These achievements include Equal Pay Act of 1963, Amendments in the Civil Rights Act of 1964, etc. Friedan joined forces with several women and men to lay down the foundations for NOW: National Organization for Women. Other significant victories of the movement are as follows:

Formation of Executive Order
Women’s Educational Equity Act
Equal Credit Opportunity Act
Pregnancy Discrimination Act
Illegalization of marital rape
No-fault divorce legalization
Allowing women to enter the military

The above are some of the major achievements of the second wave feminism. The second wave of feminism assisted women to become aware of them and gave them the opportunity to look at their personal lives. According to researchers, the goal of the second wave feminism was to remove the negative images of the women and to create their positive images in order to respond to these negative images. At the same time, it concentrated on removing oppression.

Abortion Act of 1967

The Abortion Act of 1967 was introduced in the year 1967 by the Parliament of United Kingdom. It made abortion legal if practiced by registered and authorized practitioners. David Steel was responsible for introducing this Act. It was subjected to heavy criticism and became one of the most debatable and controversial subject of all times. However, it was passed on twenty seventh of October in the year 1967. David Steel supported this Act because there were several women who had died because of illegal abortion practices. At the same time, such unwanted children were sent to orphanages or were looked after by relatives. They were also sent abroad. The act ensured that abortion remained legal in the United Kingdom. It ensured that abortion was legal up to twenty eight weeks of pregnancy.

Sisters of 77

“Sisters of 77” is considered to be an important documentary which concentrated on giving insight on the history of women. It was shown on the first National Women’s Conference and sought to end the discrimination and oppression of women. It concentrated on removing gender inequality. This was the first conference which was funded by the federal government and it was brought by more than twenty thousand men and women.