The Information of Different Needs of Different User Groups

1 Introduction to accounting Introduction n this opening chapter we begin by considering the role of accounting. We shall see that it can be a valuable tool for decision-making. We shall identify the main users of accounting and financial information and discuss the ways in which this information can improve the quality of decisions that those users make. We shall then go on to consider the particular role of financial accounting and the differences between financial and management accounting.Since this book is concerned with accounting and financial decision making for private-sector businesses, we shall also examine the main forms of business enterprise and consider what are likely to be the key objectives of a business. I Learning outcomes When you have completed this chapter, you should be able to: ? explain the nature and roles of accounting; ? identify the main users of financial information and discuss their needs; ? distinguish between financial and management accounting; ? e xplain the purpose of a business and describe how businesses are organised and structured. 2 CHAPTER 1INTRODUCTION TO ACCOUNTING What is accounting? ? Accounting is concerned with collecting, analysing and communicating ? nancial information. The purpose is to help people who use this information to make more informed decisions. If the ? nancial information that is communicated is not capable of improving the quality of decisions made, there would be no point in producing it. Sometimes the impression is given that the purpose of accounting is simply to prepare ? nancial reports on a regular basis. While it is true that accountants undertake this kind of work, it does not represent an end in itself.The ultimate purpose of the accountant’s work is to give people better ? nancial information on which to base their decisions. This decision-making perspective of accounting ? ts in with the theme of this book and shapes the way in which we deal with each topic. Who are the users of accounting information? For accounting information to be useful, the accountant must be clear for whom the information is being prepared and for what purpose the information will be used. There are likely to be various groups of people (known as ‘user groups’) with an interest in a particular organisation, in the sense of needing to make decisions about it.For the typical private-sector business, the more important of these groups are shown in Figure 1. 1. Take a look at this ? gure and then try Activity 1. 1. Figure 1. 1 Main users of financial information relating to a business Several user groups have an interest in accounting information relating to a business. The majority of these are outside the business but, nevertheless, have a stake in it. This is not meant to be an exhaustive list of potential users; however, the groups identified are normally the most important. W HO ARE THE USERS OF ACCOUNTING INFORMATION?Activity 1. 1 Ptarmigan Insurance plc (PI) is a lar ge motor insurance business. Taking the user groups identified in Figure 1. 1, suggest, for each group, the sorts of decisions likely to be made about PI and the factors to be taken into account when making these decisions. Your answer may be along the following lines: User group Decision Customers Whether to take further motor policies with PI. This might involve an assessment of PI’s ability to continue in business and to meet their needs, particularly in respect of any insurance claims made. CompetitorsHow best to compete against PI or, perhaps, whether to leave the market on the grounds that it is not possible to compete profitably with PI. This might involve competitors using PI’s performance in various aspects as a ‘benchmark’ when evaluating their own performance. They might also try to assess PI’s financial strength and to identify significant changes that may signal PI’s future actions (for example, raising funds as a prelude to mark et expansion). Employees Whether to continue working for PI and, if so, whether to demand higher rewards for doing so.The future plans, profits and financial strength of the business are likely to be of particular interest when making these decisions. Government Whether PI should pay tax and, if so, how much, whether it complies with agreed pricing policies, whether financial support is needed and so on. In making these decisions an assessment of its profits, sales revenues and financial strength would be made. Community Whether to allow PI to expand its premises and/or whether to provide representatives economic support for the business.PI’s ability to continue to provide employment for the community, the extent to which it is likely to use community resources and its likely willingness to help fund environmental improvements are likely to be considered when arriving at such decisions. Investment Whether to advise clients to invest in PI. This would involve an analysts asses sment of the likely risks and future returns associated with PI. Suppliers Whether to continue to supply PI and, if so, whether to supply on credit. This would involve an assessment of PI’s ability to pay for any goods and services supplied.Lenders Whether to lend money to PI and/or whether to require repayment of any existing loans. PI’s ability to pay the interest and to repay the principal sum would be important factors in such decisions. Managers Whether the performance of the business needs to be improved. Performance to date would be compared with earlier plans or some other ‘benchmark’ to decide whether action needs to be taken. Managers may also wish to decide whether there should be a change in PI’s future direction. This would involve looking at PI’s ability to perform and at the opportunities available to it.Owners Whether to invest more in PI or to sell all, or part, of the investment currently held. This would involve an assessme nt of the likely risks and returns associated with PI. Owners may also be involved with decisions on rewarding senior managers. The financial performance of the business would normally be considered when making such a decision. Although this answer covers many of the key points, you may have identified other decisions and/or other factors to be taken into account by each group. 3 4 CHAPTER 1 INTRODUCTION TO ACCOUNTING The conflicting interests of usersWe have seen above that each user group looks at a business from a different perspective and has its own particular interests. This means that there is always the risk that the interests of one group will collide with those of another group. Con? ict between user groups is most likely to occur over the way in which the wealth of the business is generated and/or distributed. A good example is the con? ict that may arise between the managers and the owners of the business. Although managers are appointed to act in the best interests of t he owners, there is always a danger that they will not do so.Instead, managers may use the wealth of the business to award themselves large pay rises, to furnish large of? ces or to buy expensive cars for their own use. Accounting information has an important role to play in reporting the extent to which various groups have bene? ted from the business. Thus, owners may rely on accounting information to check whether the pay and bene? ts of managers are in line with agreed policy. A further example is the potential con? ict of interest between lenders and owners. There is a risk that the funds loaned to a business will not be used for purposes that have been agreed.Lenders may, therefore, rely on accounting information to check that the funds have been applied in an appropriate manner and that the terms of the loan agreement are not being broken. Activity 1. 2 Can you think of other examples where accounting information may be used to monitor potential conflicts of interest between t he various user groups identified? Two possible examples that spring to mind are: ? ? employees (or their representatives) wishing to check that they are receiving a ‘fair share’ of the wealth created by the business and that agreed profit-sharing schemes are being adhered to; overnment wishing to check that the profits made from a contract that it has given to a business are not excessive. You may have thought of other examples. How useful is accounting information? No one would seriously claim that accounting information fully meets all of the needs of each of the various user groups. Accounting is still a developing subject and we still have much to learn about user needs and the ways in which these needs should be met. Nevertheless, the information contained in accounting reports should help users make decisions relating to the business.The information should reduce uncertainty about the ? nancial position and performance of the business. It should help to answer qu estions concerning the availability of funds to pay owners a return, to repay loans, to reward employees and so on. Typically, there is no close substitute for the information provided by the ? nancial statements. Thus, if users cannot glean the required information from the ? nancial statements, it is often unavailable to them. Other sources of information concerning the ? nancial health of a business are normally uch less useful. HOW USEFUL IS ACCOUNTING INFORMATION? Activity 1. 3 What other sources of information might, say, an investment analayst use in an attempt to gain an impression of the financial position and performance of a business? What kind of information might be gleaned from these sources? Other sources of information available include: ? ? ? ? ? ? ? ? meetings with managers of the business; public announcements made by the business; newspaper and magazine articles; websites, including the website of the business; adio and TV reports; information-gathering agencies (for example, agencies that assess businesses’ creditworthiness or credit ratings); industry reports; economy-wide reports. These sources can provide information on various aspects of the business, such as new products or services being offered, management changes, new contracts offered or awarded, the competitive environment within which the business operates, the impact of new technology, changes in legislation, changes in interest rates and future levels of inflation.However, the various sources of information identified are not really substitutes for accounting reports. Rather, they are best used in conjunction with the reports in order to obtain a clearer picture of the financial health of a business. Evidence on the usefulness of accounting ? There are arguments and convincing evidence that accounting information is at least perceived as being useful to users. Numerous research surveys have asked users to rank the importance of accounting information, in relation to oth er sources of information, for decision-making purposes.Generally, these studies have found that users rank accounting information very highly. There is also considerable evidence that businesses choose to produce accounting information that exceeds the minimum requirements imposed by accounting regulations. (For example, businesses often produce a considerable amount of accounting information for managers, which is not required by any regulations. ) Presumably, the cost of producing this additional accounting information is justi? ed on the grounds that users ? nd it useful.Such arguments and evidence, however, leave unanswered the question of whether the information produced is actually used for decision-making purposes, that is: does it affect people’s behaviour? It is normally very dif? cult to assess the impact of accounting on decision making. One situation arises, however, where the impact of accounting information can be observed and measured. This is where the shares (portions of ownership of a business) are traded on a stock exchange. The evidence reveals that, when a business makes an announcement concerning its accounting pro? s, the prices at which shares are traded and the volume of shares traded often change signi? cantly. This suggests that investors are changing their views about the future prospects of the business as a result of this new information becoming available to them and that this, in turn, leads them to make a decision either to buy or to sell shares in the business. Although there is evidence that accounting reports are perceived as being useful and are used for decision-making purposes, it is impossible to measure just how useful 5 6 CHAPTER 1 INTRODUCTION TO ACCOUNTING ccounting reports are to users. As a result we cannot say with certainty whether the cost of producing those reports represents value for money. Accounting information will usually represent only one input to a particular decision and so the precise weight attached to the accounting information by the decision maker and the bene? ts which ? ow as a result cannot be accurately assessed. We shall now go on to see, however, that it is at least possible to identify the kinds of qualities which accounting information must possess in order to be useful.Where these qualities are lacking, the usefulness of the information will be diminished. Providing a service One way of viewing accounting is as a form of service. Accountants provide economic information to their ‘clients’, who are the various users identi? ed in Figure 1. 1. The quality of the service provided is determined by the extent to which the needs of the various user groups have been met. To meet these users’ needs, it can be argued that accounting information should possess certain key qualities, or characteristics: relevance, reliability, comparability and understandability. ? ? Relevance. Accounting information must have the ability to in? uence decisions. Un less this characteristic is present, there is really no point in producing the information. The information may be relevant to the prediction of future events (for example, in predicting how much pro? t is likely to be earned next year) or relevant in helping to con? rm past events (for example, in establishing how much pro? t was earned last year). The role of accounting in con? rming past events is important because users often wish to check the accuracy of earlier predictions that they have made.The accuracy (or inaccuracy) of earlier predictions may help users to judge the accuracy of current predictions. To in? uence a decision, the information must, of course, be available when the decision is being made. Thus, relevant information must be timely. ? Reliability. Accounting should be free from signi? cant error or bias. It should be capable of being relied upon by managers to represent what it is supposed to represent. Though both relevance and reliability are very important, t he problem that we often face in accounting is that information that is highly relevant may not be very reliable.Similarly, that which is reliable may not be very relevant. Activity 1. 4 To illustrate this last point, let us assume that a manager has to sell a custom-built machine owned by their business and has recently received a bid for it. This machine is very unusual and there is no ready market for it. What information would be relevant to the manager when deciding whether to accept the bid? How reliable would that information be? The manager would probably like to know the current market value of the machine before deciding whether or not to accept the bid.The current market value would be highly relevant to the final decision, but it might not be very reliable because the machine is unique and there is likely to be little information concerning market values. BUT †¦ IS IT MATERIAL? When seeking to strike the right balance between relevance and reliability, the needs of users should be the overriding consideration. ? ? ? Comparability. This quality will enable users to identify changes in the business over time (for example, the trend in sales revenue over the past ? ve years).It will also help them to evaluate the performance of the business in relation to similar businesses. Comparability is achieved by treating items that are basically the same in the same manner for accounting purposes. Comparability may also be enhanced by making clear the policies that have been adopted in measuring and presenting the information. ? Understandability. Accounting reports should be expressed as clearly as possible and should be understood by those at whom the information is aimed. Activity 1. 5 Do you think that accounting reports should be understandable to those who have not studied accounting?It would be very useful if accounting reports could be understood by everyone. This, however, is unrealistic as complex financial events and transactions cannot normall y be expressed in simple terms. It is probably best that we regard accounting reports in the same way that we regard a report written in a foreign language. To understand either of these, we need to have had some preparation. Generally speaking, accounting reports assume that the user not only has a reasonable knowledge of business and accounting but is also prepared to invest some time in studying the reports.Despite the answer to Activity 1. 5, the onus is clearly on accountants to provide information in a way that makes it as understandable as possible to non-accountants. But . . . is it material? ? The qualities, or characteristics, that have just been described will help us to decide whether accounting information is potentially useful. If a particular piece of information has these qualities then it may be useful. However, this does not automatically mean that it should be reported to users. We also have to consider whether the information is material, or signi? cant.This mean s that we should ask whether its omission or misrepresentation in the accounting reports would really alter the decisions that users make. Thus, in addition to possessing the characteristics mentioned above, accounting information must also cross the threshold of materiality. If the information is not regarded as material, it should not be included within the reports as it will merely clutter them up and, perhaps, interfere with the users’ ability to interpret the ? nancial results. The type of information and amounts involved will normally determine whether it is material. 8 CHAPTER 1 INTRODUCTION TO ACCOUNTING Weighing up the costs and benefits Having read the previous sections you may feel that, when considering a piece of accounting information, provided the four main qualities identi? ed are present and it is material it should be gathered and made available to users. Unfortunately, there is one more hurdle to jump. Something may still exclude a piece of accounting infor mation from the reports even when it is considered to be useful. Consider Activity 1. 6. Activity 1. 6 Suppose an item of information is capable of being provided. It is relevant o a particular decision; it is also reliable, comparable, can be understood by the decision maker concerned and is material. Can you think of a reason why, in practice, you might choose not to produce the information? The reason that you may decide not to produce, or discover, the information is that you judge the cost of doing so to be greater than the potential benefit of having the information. This cost–benefit issue will limit the extent to which accounting information is provided. In theory, a particular item of accounting information should only be produced if the costs of providing it are less than the bene? s, or value, to be derived from its use. Figure 1. 2 shows the relationship between the costs and value of providing additional accounting information. Figure 1. 2 Relationship between co sts and the value of providing additional accounting information The benefits of accounting information eventually decline. The cost of providing information, however, will rise with each additional piece of information. The optimal level of information provision is where the gap between the value of the information and the cost of providing it is at its greatest. WEIGHING UP THE COSTS AND BENEFITS The ? ure shows how the value of information received by the decision maker eventually begins to decline. This is, perhaps, because additional information becomes less relevant, or because of the problems that a decision maker may have in processing the sheer quantity of information provided. The costs of providing the information, however, will increase with each additional piece of information. The broken line indicates the point at which the gap between the value of information and the cost of providing that information is at its greatest. This represents the optimal amount of informat ion that can be provided.This theoretical model, however, poses a number of problems in practice. We shall now go on to discuss these. To illustrate the practical problems of establishing the value of information, let us assume that someone has collided with our car in a car park and dented and scraped the paint from one of the doors. We wish to have the dent taken out and the door resprayed at a local garage. We know that the nearest garage would charge ? 250 but believe that other local garages may offer to do the job for a lower price. The only way of ? nding out the prices at other garages is to visit them, so that they can see the extent of the damage.Visiting the garages will involve using some petrol and will take up some of our time. Is it worth the cost of ? nding out the price for the job at the various local garages? The answer, as we have seen, is that if the cost of discovering the price is less than the potential bene? t, it is worth having that information. To identif y the various prices for the job, there are several points to be considered, including: ? How many garages shall we visit? ? What is the cost of petrol to visit each garage? ? How long will it take to make all the garage visits? ? At what price do we value our time? The economic bene? of having the information on the price of the job is probably even harder to assess. The following points need to be considered: ? What is the cheapest price that we might be quoted for the job? ? How likely is it that we shall be quoted a price cheaper than ? 250? As we can imagine, the answers to these questions may be far from clear – remember that we have only contacted the local garage so far. When assessing the value of accounting information we are confronted with similar problems. The provision of accounting information can be very costly; however, the costs are often dif? cult to quantify.The direct, out-of-pocket, costs such as salaries of accounting staff are not really a problem to i dentify, but these are only part of the total costs involved. There are also less direct costs such as the cost of the user’s time spent on analysing and interpreting the information contained in reports. The economic bene? t of having accounting information is even harder to assess. It is possible to apply some ‘science’ to the problem of weighing the costs and bene? ts, but a lot of subjective judgement is likely to be involved. No one would seriously advocate that the typical business should produce no accounting information.At the same time, no one would advocate that every item of information that could be seen as possessing one or more of the key characteristics should be produced, irrespective of the cost of producing it. The characteristics that in? uence the usefulness of accounting information and which have been discussed in this section and the preceding section are set out in Figure 1. 3. 9 10 CHAPTER 1 INTRODUCTION TO ACCOUNTING Figure 1. 3 The char acteristics that influence the usefulness of accounting information There are four main qualitative characteristics that influence the usefulness of accounting information.In addition, however, accounting information should be material and the benefits of providing the information should outweigh the costs. Accounting as an information system ? We have already seen that accounting can be seen as the provision of a service to ‘clients’. Another way of viewing accounting is as a part of the business’s total information system. Users, both inside and outside the business, have to make decisions concerning the allocation of scarce economic resources. To ensure that these resources are ef? ciently allocated, users need economic information on which to base decisions.It is the role of the accounting system to provide that information and this will involve information gathering and communication. The accounting information system should have certain features that are co mmon to all valid information systems within a business. These are: ? identifying and capturing relevant information (in this case ? nancial information); ? recording the information collected in a systematic manner; ? analysing and interpreting the information collected; ? reporting the information in a manner that suits the needs of users. The relationship between these features is set out in Figure 1. . ACCOUNTING AS AN INFORMATION SYSTEM Figure 1. 4 The accounting information system There are four sequential stages of an accounting information system. The first two stages are concerned with preparation, whereas the last two stages are concerned with using the information collected. Given the decision-making emphasis of this book, we shall be concerned primarily with the ? nal two elements of the process: the analysis and reporting of accounting information. We shall consider the way in which information is used by, and is useful to, users rather than the way in which it is ident i? ed and recorded. Ef? ient accounting systems are an essential ingredient of an ef? cient business. When the accounting systems fail, the results can be disastrous. Real World 1. 1 provides an example of a systems failure when two businesses combined and then attempted to integrate their respective systems. Real World 1. 1 Blaming the system FT When Sir Ken Morrison bought Safeway for ? 3. 35bn in March 2004, he almost doubled the size of his supermarket chain overnight and went from being a regional operator to a national force. His plan was simple enough. He had to sell off some Safeway stores – Morrison has to date sold off 184 stores for an estimated ? . 3bn – and convert the remaining 230 Safeway stores into Morrison’s. Sir Ken has about another 50 to sell. But, nearly fifteen months on, and the integration process is proving harder in practice than it looked on paper. Morrison, once known for its robust performance, has issued four profit warnings in the past ten months. Each time the retailer has blamed Safeway. Last July, it was because of a faster-thanexpected sales decline in Safeway stores. In March – there were two warnings that month – it was the fault of Safeway’s accounting systems, which left Morrison with lower supplier incomes.This month’s warning was put down to higher-than-expected costs from running parallel store systems. At the time of the first warning last July, Simon Procter, of the stockbrokers Charles Stanley, noted that the news ‘has blown all profit forecasts out of the water and visibility is very poor from here on out’. But if it was difficult then to predict where Morrison’s profits were heading, it is impossible now. Morrison itself cannot give guidance. ‘No one envisaged this,’ says Mr Procter. ‘When I made that comment about visibility last July, I was thinking on a twelve-month time frame, not a two-year one. Morrison says the complexi ty of the Safeway deal has put a ‘significant strain’ on its ability to cope with managing internal accounts. ‘This is impacting the ability of the board to forecast likely trends in profitability and the directors are therefore not currently in a position to provide reliable guidance on the level of profitability as a whole,’ admits the retailer. Source: ‘Morrison in uphill battle to integrate Safeway’, Elizabeth Rigby, Financial Times, 26 May 2005. As a footnote to Real World 1. 1, though Morrison had its problems, these were quickly overcome and the Safeway takeover has proved to be a success. 1 12 CHAPTER 1 INTRODUCTION TO ACCOUNTING Management accounting and financial accounting Accounting is usually seen as having two distinct strands. These are: ? ? ? management accounting, which seeks to meet the accounting needs of managers; and ? financial accounting, which seeks to meet the accounting needs of all of the other users identi? ed earlie r in the chapter (see Figure 1. 1). The difference in their targeted user groups has led to each strand of accounting developing along different lines. The main areas of difference are as follows. ? Nature of the reports produced.Financial accounting reports tend to be general- ? ? ? ? ? purpose, that is, they contain ? nancial information that will be useful for a broad range of users and decisions rather than being speci? cally designed for the needs of a particular group or set of decisions. Management accounting reports, on the other hand, are often speci? c-purpose reports. They are designed with a particular decision in mind and/or for a particular manager. Level of detail. Financial accounting reports provide users with a broad overview of the performance and position of the business for a period.As a result, information is aggregated and detail is often lost. Management accounting reports, however, often provide managers with considerable detail to help them with a particula r operational decision. Regulations. Financial accounting reports, for many businesses, are subject to accounting regulations that try to ensure they are produced with standard content and in a standard format. The law and accounting rule makers impose these regulations. As management accounting reports are for internal use only, there are no regulations from external sources concerning the form and content of the reports.They can be designed to meet the needs of particular managers. Reporting interval. For most businesses, ? nancial accounting reports are produced on an annual basis, though some large businesses produce half-yearly reports and a few produce quarterly ones. Management accounting reports may be produced as frequently as required by managers. In many businesses, managers are provided with certain reports on a daily, weekly or monthly basis, which allows them to check progress frequently. In addition, special-purpose reports will be prepared when required (for example, to evaluate a proposal to purchase a piece of equipment).Time orientation. Financial accounting reports re? ect the performance and position of the business for the past period. In essence, they are backward looking. Management accounting reports, on the other hand, often provide information concerning future performance as well as past performance. It is an oversimpli? cation, however, to suggest that ? nancial accounting reports never incorporate expectations concerning the future. Occasionally, businesses will release projected information to other users in an attempt to raise capital or to ? ght off unwanted takeover bids. Even preparation of the routine ? ancial accounting reports typically requires making some judgements about the future, as we shall see in Chapter 3. Range and quality of information. Financial accounting reports concentrate on information that can be quanti? ed in monetary terms. Management accounting also produces such reports, but is also more likely to pr oduce reports that contain information of a non-? nancial nature, such as physical volume of inventories, number of sales orders received, number of new products launched, physical output per employee and so on. Financial accounting places greater emphasis on the use of objective, veri? ble evidence when preparing reports. Management accounting reports may use information that is less objective and veri? able, but nevertheless provide managers with the information they need. SCOPE OF THIS BOOK We can see from this that management accounting is less constrained than ? nancial accounting. It may draw from a variety of sources and use information that has varying degrees of reliability. The only real test to be applied when assessing the value of the information produced for managers is whether or not it improves the quality of the decisions made.The distinctions between management and ? nancial accounting suggest that there are differences between the information needs of managers and those of other users. While differences undoubtedly exist, there is also a good deal of overlap between these needs. Activity 1. 7 Can you think of any areas of overlap between the information needs of managers and those of other users? We thought of two points: ? ? Managers will, at times, be interested in receiving a historical overview of business operations of the sort provided to other users.Other users would be interested in receiving information relating to the future, such as the planned level of profits and non-financial information such as the state of the sales order book and the extent of product innovations. The distinction between the two areas of accounting re? ects, to some extent, the differences in access to ? nancial information. Managers have much more control over the form and content of information they receive. Other users have to rely on what managers are prepared to provide or what the ? nancial reporting regulations require to be provided. Though the scope of ? ancial accounting reports has increased over time, fears concerning loss of competitive advantage and user ignorance concerning the reliability of forecast data have led businesses to resist providing other users with the same detailed and wide-ranging information available to managers. In the past, it has been argued that accounting systems are far too geared to meeting the regulatory requirements of ? nancial accounting to be able to provide the information most helpful to managers. This is to say that ? nancial accounting requirements have been the main priority and management accounting has suffered as a result.Recent survey evidence suggests, however, that this argument has lost its force. Modern management accounting systems tend to provide managers with information that is relevant to their needs rather than what is determined by external reporting requirements. Financial reporting cycles, however, retain some in? uence over management accounting and managers are aware of expectations of external users (see the reference at the end of the chapter). Scope of this book This book is concerned with ? nancial accounting rather than management accounting. In Chapter 2 we begin by introducing the three principal ? ancial statements: ? the statement of ? nancial position (sometimes known as the balance sheet); ? the income statement (also called the pro? t and loss account); and ? the statement of cash ? ows. 13 14 CHAPTER 1 ? INTRODUCTION TO ACCOUNTING These statements are brie? y reviewed before we go on to consider the statement of ? nancial position in more detail. We shall see that the statement of ? nancial position provides information concerning the wealth held by a business at a particular point in time and the claims against this wealth. Included in our consideration of the statement of ? ancial position will be an introduction to the conventions of accounting. Conventions are the generally accepted rules that accountants tend to follow when pre paring ? nancial statements. Chapter 3 introduces the second of the major ? nancial statements, the income statement. This provides information concerning the wealth created by a business during a period. In this chapter we shall be looking at such issues as how pro? t is measured, the point in time at which we recognise that a pro? t has been made and the accounting conventions that apply to this particular statement.In the UK and throughout much of the industrialised world, the limited company is the major form of business unit. In Chapter 4 we consider the accounting aspects of limited companies. Although there is nothing of essence that makes the accounting aspects of companies different from other types of private-sector business, there are some points of detail that we need to consider. In Chapter 5 we continue our examination of limited companies and, in particular, consider the framework of rules that must be adhered to when presenting accounting reports to owners and extern al users.Chapter 6 deals with the last of the three principal ? nancial statements, the statement of cash ? ows. This ? nancial statement is important in identifying the ? nancing and investing activities of the business over a period. It sets out how cash was generated and how cash was used during a period. Reading the three statements will provide information about the performance and position of a business. It is possible, however, to gain even more helpful insights about the business by analysing the statements using ? nancial ratios and other techniques. Combining two ? ures in the ? nancial statements in a ratio and comparing this with a similar ratio for, say, another business, can often tell us much more than just reading the ? gures themselves. Chapters 7 and 8 are concerned with techniques for analysing ? nancial statements. The typical large business in the UK is a group of companies rather than just a single company. A group of companies will exist where one company cont rols one or more other companies. In Chapter 9 we shall see why groups exist and consider the accounting issues raised by the combination of companies into groups.The scope of ? nancial reporting has tended to alter over the years. In Chapter 10 we shall consider where ? nancial reporting has come from and how it seems to be developing. Finally, in Chapter 11, we shall consider the way in which larger businesses are managed and how directors and other senior managers are accountable to the owners and to other groups with an interest in the business. Has accounting become too interesting? In recent years, accounting has become front-page news and has been a major talking point among those connected with the world of business.Unfortunately, the attention that accounting has attracted has been for all the wrong reasons. We have seen that investors rely on ? nancial reports to help to keep an eye both on their investment and on the performance of the managers. What, though, if the manag ers provide misleading ? nancial reports to investors? Recent revelations suggest that the managers of some large businesses have been doing just this. HAS ACCOUNTING BECOME TOO INTERESTING? Two of the most notorious cases have been those of: ? Enron, an energy-trading business based in Texas, which was accused of entering into complicated ? ancial arrangements in an attempt to obscure losses and to in? ate pro? ts; and ? WorldCom, a major long-distance telephone operator in the US, which was accused of reclassifying $3. 9 billion of expenses so as to falsely in? ate the pro? t ? gures that the business reported to its owners (shareholders) and to others. In the wake of these scandals, there was much closer scrutiny by investment analysts and investors of the ? nancial reports that businesses produce. This led to further businesses, in both the US and Europe, being accused of using dubious accounting practices to bolster reported pro? ts.Accounting scandals can have a profound effec t on all those connected with the business. The Enron scandal, for example, ultimately led to the collapse of the company, which, in turn, resulted in lost jobs and large ? nancial losses for lenders, suppliers and investors. Con? dence in the world of business can be badly shaken by such events and this can pose problems for society as a whole. Not surprisingly, therefore, the relevant authorities tend to be severe on those who perpetrate such scandals. In the US, Bernie Ebbers, the former chief executive of WorldCom, received 25 years in prison for his part in the fraud.Various reasons have been put forward to explain this spate of scandals. Some may have been caused by the pressures on managers to meet unrealistic expectations of investors for continually rising pro? ts, others by the greed of unscrupulous executives whose pay is linked to ? nancial performance. However, they may all re? ect a particular economic environment. Real World 1. 2 gives some comments suggesting that wh en all appears to be going well with a business, people can be quite gullible and over-trusting. Real World 1. 2 The thoughts of Warren BuffettWarren Buffett is one of the world’s shrewdest and most successful investors. He believes that the accounting scandals mentioned above were perpetrated during the ‘new economy boom’ of the late 1990s when confidence was high and exaggerated predictions were being made concerning the future. He states that during that period You had an erosion of accounting standards. You had an erosion, to some extent, of executive behaviour. But during a period when everybody ‘believes’, people who are inclined to take advantage of other people can get away with a lot.He believes that the worst is now over and that the ‘dirty laundry’ created during this heady period is being washed away and that the washing machine is now in the ‘rinse cycle’. Source: The Times, Business Section, 26 September 2002, p. 25. nisyndication. com. Whatever the causes, the result of these accounting scandals has been to undermine the credibility of ? nancial statements and to introduce much stricter regulations concerning the quality of ? nancial information. We shall return to this issue in later chapters when we consider the ? nancial statements. 15 16 CHAPTER 1INTRODUCTION TO ACCOUNTING The changing face of accounting Over the past 25 years, the environment within which businesses operate has become increasingly turbulent and competitive. Various reasons have been identi? ed to explain these changes, including: ? the increasing sophistication of customers; ? the development of a global economy where national frontiers become less important; ? rapid changes in technology; ? the deregulation of domestic markets (for example, electricity, water and gas); ? increasing pressure from owners (shareholders) for competitive economic returns; ? he increasing volatility of ? nancial markets. This new, more c omplex, environment has brought new challenges for managers and other users of accounting information. Their needs have changed and both ? nancial accounting and management accounting have had to respond. To meet the changing needs of users there has been a radical review of the kind of information to be reported. The changing business environment has given added impetus to the search for a clear framework and principles upon which to base ? nancial accounting reports. Various attempts have been made to clarify the purpose of ? ancial accounting reports and to provide a more solid foundation for the development of accounting rules. The frameworks and principles that have been developed try to address fundamental questions such as: ? Who are the users of ? nancial accounting information? ? What kinds of ? nancial accounting reports should be prepared and what should they contain? ? How should items (such as pro? t and asset values) be measured? In response to criticisms that the ? na ncial reports of some businesses are not clear enough to users, accounting rule makers have tried to improve reporting rules to ensure that the accounting policies of businesses are ore comparable and more transparent, and that they portray economic reality more faithfully. While this has had a generally bene? cial effect, the recent accounting scandals have highlighted the limitations of accounting rules in protecting investors and others. The internationalisation of businesses has created a need for accounting rules to have an international reach. It can no longer be assumed that users of accounting information relating to a particular business are based in the country in which the business operates or are familiar with the accounting rules of that country.Thus, there has been increasing harmonisation of accounting rules across national frontiers. A more detailed review of these developments is included in Chapter 5. Management accounting has also changed by becoming more outward looking in its focus. In the past, information provided to managers has been largely restricted to that collected within the business. However, the attitude and behaviour of customers and rival businesses have now become the object of much information gathering. Increasingly, successful businesses are those that are able to secure and maintain competitive advantage over their rivals.To obtain this advantage, businesses have become more ‘customer driven’ (that is, concerned with satisfying customer needs). This has led to management accounting information that provides details of customers and the market, such as customer evaluation of services provided and market share. In addition, information about the costs and pro? ts of rival businesses, which can be used as ‘benchmarks’ by which to gauge competitiveness, is gathered and reported. WHAT KINDS OF BUSINESS OWNERSHIP EXIST? To compete successfully, businesses must also ? d ways of managing costs. The cost base of modern businesses is under continual review and this, in turn, has led to the development of more sophisticated methods of measuring and controlling costs. What kinds of business ownership exist? The particular form of business ownership has important implications for accounting purposes and so it is useful to be clear about the main forms of ownership that can arise. There are basically three arrangements: ? sole proprietorship; ? partnership; and ? limited company. Each of these is considered below. Sole proprietorship ?Sole proprietorship, as the name suggests, is where an individual is the sole owner of a business. This type of business is often quite small in terms of size (as measured, for example, by sales revenue generated or number of staff employed); however, the number of such businesses is very large indeed. Examples of sole-proprietor businesses can be found in most industrial sectors but particularly within the service sector. Hence, services such as electrical repairs, picture framing, photography, driving instruction, retail shops and hotels have a large proportion of sole-proprietor businesses.The sole-proprietor business is easy to set up. No formal procedures are required and operations can often commence immediately (unless special permission is required because of the nature of the trade or service, such as running licensed premises). The owner can decide the way in which the business is to be conducted and has the ? exibility to restructure or dissolve the business whenever it suits. The law does not recognise the sole-proprietor business as being separate from the owner, so the business will cease on the death of the owner.Although the owner must produce accounting information to satisfy the taxation authorities, there is no legal requirement to produce accounting information relating to the business for other user groups. However, some user groups may demand accounting information about the business and may be in a position to h ave their demands met (for example, a bank requiring accounting information on a regular basis as a condition of a loan). The sole proprietor will have unlimited liability which means that no distinction will be made between the proprietor’s personal wealth and that of the business if there are business debts that must be paid.Partnership ? A partnership exists where at least two individuals carry on a business together with the intention of making a pro? t. Partnerships have much in common with sole-proprietor businesses. They are usually quite small in size (although some, such as partnerships of accountants and solicitors, can be large). Partnerships are also easy to set up as no formal procedures are required (and it is not even necessary to have a written agreement between the partners). The partners can agree whatever arrangements suit them concerning the ? nancial and management aspects of the business.Similarly, the partnership can be restructured or dissolved by agre ement between the partners. 17 18 CHAPTER 1 INTRODUCTION TO ACCOUNTING Partnerships are not recognised in law as separate entities and so contracts with third parties must be entered into in the name of individual partners. The partners of a business usually have unlimited liability. Activity 1. 8 What are the main advantages and disadvantages that should be considered when deciding between a sole proprietorship and a partnership? The main advantages of a partnership over a sole-proprietor business are: ? ? ? sharing the burden of ownership; he opportunity to specialise rather than cover the whole range of services (for example, in a solicitors’ practice each partner may specialise in a different aspect of the law); the ability to raise capital where this is beyond the capacity of a single individual. The main disadvantages of a partnership compared with a sole proprietorship are: ? ? the risks of sharing ownership of a business with unsuitable individuals; the limits placed on individual decision making that a partnership will impose. Limited company ? Limited companies can range in size from quite small to very large.The number of individuals who subscribe capital and become the owners may be unlimited, which provides the opportunity to create a very large-scale business. The liability of owners, however, is limited (hence ‘limited’ company), which means that those individuals subscribing capital to the company are liable only for debts incurred by the company up to the amount that they have agreed to invest. This cap on the liability of the owners is designed to limit risk and to produce greater con? dence to invest. Without such limits on owner liability, it is dif? cult to see how a modern capitalist economy could operate.In many cases, the owners of a limited company are not involved in the day-to-day running of the business and will, therefore, invest in a business only if there is a clear limit set on the level of investment risk. T he bene? t of limited liability, however, imposes certain obligations on such companies. To start up a limited company, documents of incorporation must be prepared that set out, among other things, the objectives of the business. Furthermore, a framework of regulations exists that places obligations on limited companies concerning the way in which they conduct their affairs. Part of this regulatory framework requires annual ? ancial reports to be made available to owners and lenders and usually an annual general meeting of the owners has to be held to approve the reports. In addition, a copy of the annual ? nancial reports must be lodged with the Registrar of Companies for public inspection. In this way, the ? nancial affairs of a limited company enter the public domain. With the exception of small companies, there is also a requirement for the annual ? nancial reports to be subject to an audit. This involves an independent ? rm of accountants examining the annual reports and underl ying records to see whether the reports provide a true and fair view of the ? ancial health of the company and whether they comply with the relevant accounting rules established by law and by accounting rule makers. All of the large household-name UK businesses (Marks and Spencer, Tesco, Shell, BSkyB, BA, BT, easyJet and so on) are limited companies. Limited companies are considered in more detail in Chapters 4 and 5. HOW ARE BUSINESSES ORGANISED? Activity 1. 9 What are the main advantages and disadvantages that should be considered when deciding between a partnership business and a limited liability company?The main advantages of a partnership over a limited company are: ? ? ? ? the ease of setting up the business; the degree of flexibility concerning the way in which the business is conducted; the degree of flexibility concerning restructuring and dissolution of the business; freedom from administrative burdens imposed by law (for example, the annual general meeting and the need f or an independent audit). The main disadvantage of a partnership compared with a limited company is the fact that it is not possible to limit the liability of all of the partners.This book concentrates on the accounting aspects of limited liability companies because this type of business is by far the most important in economic terms. The early chapters will introduce accounting concepts through examples that do not draw a distinction between the different types of business. Once we have dealt with the basic accounting principles, which are the same for all three types of business, we can then go on to see how they are applied to limited companies. It must be emphasised that there are no differences in the way that these three forms of business keep their day-to-day accounting records.In preparing their periodic ? nancial statements, there are certain differences that need to be considered. These differences are not ones of principle, however, but of detail. How are businesses organ ised? As we have just seen, nearly all businesses that involve more than a few owners and/or employees are set up as limited companies. This means that the ? nance will come from the owners (shareholders) both in the form of a direct cash investment to buy shares (in the ownership of the business) and through the owners allowing past pro? s, which belong to them, to be reinvested in the business. Finance will also come from lenders (banks, for example), who earn interest on their loans and from suppliers of goods and services being prepared to supply on credit, with payment occurring a month or so after the date of supply, usually on an interest-free basis. In larger limited companies, the owners (shareholders) are not involved in the daily running of the business; instead they appoint a board of directors to manage the business on their behalf. The board is charged with three major tasks: ? etting the overall direction and strategy for the business; ? monitoring and controlling its activities; and ? communicating with owners and others connected with the business. Each board has a chairman, elected by the directors, who is responsible for running the board in an ef? cient manner. In addition, each board has a chief executive of? cer (CEO), or managing director, who is responsible for running the business on a dayto-day basis. Occasionally, the roles of chairman and CEO are combined, although it is usually considered to be a good idea to eparate them in order to prevent a single individual having excessive power. We shall come back to consider the relationship between directors and shareholders in more detail in Chapter 4. 19 20 CHAPTER 1 INTRODUCTION TO ACCOUNTING The board of directors represents the most senior level of management. Below this level, managers are employed, with each manager given responsibility for a particular part of the business’s operations. What is the financial objective of a business? A business is created to enhance the wealth of its owners.Throughout this book we shall assume that this is its main objective. This may come as a surprise, as there are other objectives that a business may pursue that are related to the needs of others associated with the business. For example, a business may seek to provide good working conditions for its employees, or it may seek to conserve the environment for the local community. While a business may pursue these objectives, it is normally set up with a view to increasing the wealth of its owners. In practice, the behaviour of businesses over time appears to be consistent with this objective.Real World 1. 3 reveals how one well-known business has changed its focus in order to improve pro? tability. Real World 1. 3 Profiting from change It speaks volumes for the work done by Kate Swann in turning around W H Smith that when she became chief executive five years ago, the company was being spoken of in similar tems to Woolworths. Comments such as ‘You wouldn’t invent it if you were starting out today’ and ‘What is it actually for these days? ’ were typical among analysts, as they were with Woolies.Indeed, many thought that W H Smith was beyond help and argued that the supermarkets were eating away at sales. Ms Swann has defied the sceptics, achieving an impressive turnaround. The company’s magazine and newspaper distribution division was hived off as a separate entity and new outlets were opened at airports and railway stations – so much so that sales by W H Smith’s travel unit now threaten to overtake those of its traditional high street stores. Lower-[profit-]margin lines, such as CDs and DVDs, have been cleared from the shelves to make way for higher-margin items, such as stationery.The last plank of the strategy was in evidence again in yesterday’s update, in which Ms Swann reported that sales in the nine weeks to January 17 were down by 7 per cent in the high street stores and by 2 per cent in the travel stores, partly because W H Smith is continuing to reduce its exposure to the entertainment category. That was the bad news. The good news was that, although sales overall were down, the reduced focus on entertainment was good for profits. W H Smith made an extra 2p of profit in every ? 1 of sales, compared with the same period a year earlier, a stunning achievement given the deflation hitting the high street.Source: ‘Business big shot’, Ian King, The Times, 27 January 2009, p. 39. nisyndication. com. Within a market economy there are strong competitive forces at work that ensure that failure to enhance owners’ wealth will not be tolerated for long. Competition for the funds provided by the owners and competition for managers’ jobs will normally mean that the owners’ interests will prevail. If the managers do not provide the expected increase in ownership wealth, the owners have the power to replace the existing management team wit h a new team that is more responsive to owners’ needs. WHAT IS THE FINANCIAL OBJECTIVE OF A BUSINESS?Does this mean that the needs of other groups associated with the business (employees, customers, suppliers, the community and so on) are not really important? The answer to this question is certainly no, if the business wishes to survive and prosper over the longer term. Satisfying the needs of other groups will normally be consistent with increasing the wealth of the owners over the longer term. The importance of customers to a business cannot be overstated. Dissatis? ed customers will take their business to another supplier and this will, in turn, lead to a loss of wealth for the owners of the business losing the customers.Real World 1. 4 provides an illustration of the way in which one business acknowledges the link between customer satisfaction and creating wealth for its owners. Real World 1. 4 Checking out Sainsbury’s objectives J Sainsbury plc is a leading food retailer that recognises the importance of customers to increasing the wealth of the owners (shareholders) as follows: Our objective is to serve customers well and thereby provide shareholders with good, sustainable financial returns. Source: Investor FAQs, www. j-sainsbury. co. uk, 8 January 2009, p. 1. A dissatis? d workforce may result in low productivity, strikes and so forth, which will in turn have an adverse effect on owners’ wealth. Similarly, a business that upsets the local community by unacceptable behaviour, such as polluting the environment, may attract bad publicity, resulting in a loss of customers and heavy ? nes. Real World 1. 5 provides an example of how two businesses responded to potentially damaging allegations. Real World 1. 5 The price of clothes FT US clothing and sportswear manufacturers Gap and Nike have many of their clothes produced in Asia where labour tends to be cheap.However, some of the contractors that produce clothes on behalf of the two com panies have been accused of unacceptable practices. Campaigners visited the factories and came up with damaging allegations. The factories were employing minors, they said, and managers were harassing female employees. Nike and Gap reacted by allowing independent inspectors into the factories. They promised to ensure their contractors obeyed minimum standards of employment. Earlier this year, Nike took the extraordinary step of publishing the names and addresses of all its contractors’ factories on the internet.The company said it could not be sure all the abuse had stopped. It said that if campaigners visited its contractors’ factories and found examples of continued malpractice, it would take action. Nike and Gap said the approach made business sense. They needed society’s approval if they were to prosper. Nike said it was concerned about the reaction of potential US recruits to the campaigners’ allegations. They would not want to work for a company tha t was constantly in the news because of the allegedly cruel treatment of those who made its products. Source: ‘Fair shares? , Michael Skapinker, Financial Times, 11 June 2005. 21 22 CHAPTER 1 INTRODUCTION TO ACCOUNTING It is important to recognise that generating wealth for the owners is not the same as seeking to maximise the current year’s pro? t. Wealth creation is a longer-term concept, which relates not only to this year’s pro? t but to that of future years as well. In the short term, corners can be cut and risks taken that improve current pro? t at the expense of future pro? t. Real World 1. 6 gives some examples of how emphasis on short-term pro? t can be damaging. Real World 1. 6 Short-term gains, long-term problemsFT Human beings are bad at learning and changing. It takes a good crisis to drive home what may have been staring us in the face. So what in particular are the lessons for all those concerned with saving, investment, borrowing and lending? For many years, under the guise of defending capitalism, we have been allowing ourselves to degrade it. We have been poisoning the well from which we have drawn wealth. We have misunderstood the importance of values to capitalism. We have surrendered to the idea that success is pursued by making as much money as the law allowed without regard to how it was made.Thirty years ago, retailers would b

The Thoughtful Forecaster

Becoming a thoughtful forecaster is important to the development of any company today. Understanding the financial aspects of your company can be the deal-breaking point of whether your company is a successful one or not. In the case, â€Å"The Thoughtful Forecaster†, we learn that sometimes you are right and sometimes you are wrong, which is partially due to one’s bias. We also learn that being a thoughtful forecaster involves trial and era. It isn’t easy but throughout the processes you start to understand the financial relationships within your business.The financial statements provide information needed in order to make a proper analysis and provides you with the historical strengths and weaknesses of your business. The income statement, also known as the â€Å"profit-and-loss statement†, is utilized to measure the flow of cost, revenue, and profits over a period of time. The balance sheet gives an over view of business investments and the financing in a particular time. Together these two statements can give a thorough outlook of the business’s performance and a better understanding of the mechanics that make up the business operations.Interpreting and utilizing financial ratios is an important way to evolve into a successful financial forecaster. Examining a business’s performance includes: growth rates, margins, turnover, and return on investments. Growth rates capture the year-on-year change in percentage of a particular line item. It can be separated into two growth measures: unit growth and price growth. Unit growth is the growth of revenue due to an increase in units sold. Price growth is the growth revenue due to an increase in the price of each unit.Margin ratios are the percentages of revenue that has not been consumed by any business costs. Margins also measure the cost structure of the business which includes important definitions/ratios. These are: gross margin, operating margin, and net profit margin. Turnover ratios are used to measure productivity, or efficiency, of business assets. It is created by dividing a measure of volume from the income statement by a measure of investment from the balance sheet.There are several measures of turnover and they include: receivable turnover, inventory turnover, PPE turnover, asset turnover, total capital turnover, and payable turnover. An alternative form of measuring the asset productivity is in â€Å"days†, which takes the investment amount divided by the volume, which is then multiplied by 365 days. The resulting number is the average number of days in a year that an investment item is held by the business. Return on investments (ROI), is the profit generated per dollar of investment and the measure for calculating return on investments.This measure includes: pretax return on assets, return on capital (ROC), and return on equity (ROE). Financial ratios are useful in forecasting financial statements because they show the relationsh ips across financial-statement line items of the past. The financial models can be helpful in identifying the impact of assumptions on the forecast. Most financial models are composed in excel through a spreadsheet. By doing this it makes it easier to see the assumptions for the different forecast scenarios but it is also used to correct any of the assumptions that were inaccurately made.The forecasting process should go hand-in-hand with the constant economic changes and you should take into consideration the industry and economy wide pressures it endures. These pressures include: inflation, price-growth assumptions, and any economic recessions. Industry reality should also be taken into place and here you should consider business profitability and follow the guidelines that qualify a business to have higher or lower profitability. Having a high profitability does not always mean a high performance.It is important to recognize that the strategy of competitors do not stand still, an d your forecasting should be adjusted when needed according to aggressive competition. Two elements that become a problem in business forecasting are optimism bias and overconfidence bias. Optimism bias is stated as a systematic positive error in the expected value of an unknown quantity. Overconfidence bias is a systematic negative error in the expected variance of an unknown quantity. It is a difficult task but it is important to have an unbiased outlook for the forecast, which is done by having estimated high-side and a low-side scenarios.When forecasting the financial statements of the Maytag Corporation for the end of 2004, the company’s annual report provided me information from the income statement and the balance sheet from the previous two years. On there is calculations and a variety of ratios including the sales growth to return on assets. The ratio analysis gives us a sense of the trends in the business performance. Next it shows that a thoughtful forecaster would need to make assumptions into the future.Although these aren’t completely accurate, they can give us a clearer more centralized view of the analysis. With the qualitative/quantitative research and the historical data that was given we can assume the company will maintain its position in a declining industry. An increased entry of foreign competition will lead to zero sales growth for Maytag in 2004. Although all the events of 2004 cannot be predicted with the guidance and use of thoughtful analysis, we can conclude a reasonable and unbiased expectation of future performance has been represented.

The Problem of Starbucks in Marketing Terms Research Paper

The Problem of Starbucks in Marketing Terms - Research Paper Example Starbucks suffers from being over-reliant on its US market in its generation of sales. The company has also launched new products which were not positively received by the market. It can also be recalled that the company has sometimes failed in its quest to conquer foreign markets. Industry analysts describe that the global arena is fast evolving into a hypercompetitive market. The speciality coffee industry, being still in the growth stage presents a lot of untapped opportunities including new product introduction and technological innovation to enhance customer value. The global market is also unsaturated giving lots of opportunities for expansion for Starbucks and other players. On the downside, there has been increasing competition in the industry due to the proliferation of other participants attracted by the prospects of high profit. Based on the analysis, it is recommended that Starbucks should look into offering new products and serving new markets. The company’s succe ss in venturing to new product areas has been heavily documented. However, Starbucks should also minimize the risk of launching products which are not warmly received by the market through the use of intensive and extensive marketing research to unveil the preferences of the customers. As the American market is also becoming saturated with some players, it is necessary that Starbuck s also look into the introduction of its products in other economies. China is a good target because of its size and rapid development.

Invisible Man 3 Essay Example | Topics and Well Written Essays - 250 words

Invisible Man 3 - Essay Example Although it seems that in the modern society equality among races has been achieved, there remains to be a huge number of people who are represented by the main character in Invisible Man. Not only the African-American society struggles to find their own identity and value in a diverse community such as the United States, but also those from other continents of the world. Students as well as professionals from different ethnicities and culture do everything in order to make themselves fit in the American society. Social groups in different forms have started to exist in the society offering a sanctuary to those who feel neglected by other members of the community. Just like the main character in the novel, he found refuge in social groups such as the Brotherhood where he eventually though he has found his worth. However, as people become too attached to these groups, they eventually find out that this does not necessarily make them heard of their voices. In fact, the identity that they thought they had found in being a one among the members is not theirs but what the leaders of the group wanted them to be. In this reading, Ellison made it clear that embracing one’s individuality is the key to achieving peace to oneself. The desire of being accepted in the society is not achieved by seeking acceptance from other people and various social groups. The world itself is already filled with people who have prejudices among each other. Finding peace in oneself is the only key to being accepted in the society that is in itself already a

Race and gender econ Essay Example | Topics and Well Written Essays - 1000 words

Race and gender econ - Essay Example e other hand, if they have altered – then men and women began to have more flexible understanding and perceptions about their roles and family duties. Communities and Africa were based on hunting and gathering. Traditionally, the role of men and women had different dimension in comparison with the rest of the world. Early theories had focused on the social and biological development in people and referred to men as hunters and meat providers, whereas the women were taking care of the children and gathered wild fruits. Woman gathered also roots, nuts, honey, grains and men were hunting to provide the meat and fur (Gender roles and sexuality, 2002). Women are assessed as caregivers and mothers and men are perceived as protectors and hunters. These roles correspond to the passive roles that women had and their social placement. Women were subordinated and men dominated. These culturally and socially stereotyped gender roles interpret males not only as hunters, but also as active invaders and guardians. Therefore the hunting-gathering societies were patriarchal focused and male-centered. Females as gatherers had decentralized role within the community. What is more because of their reproductive functions women were less mobile and their economic role less viable (Dahlberg, 1981). Horticulture is the first evidence of sedentary lifestyle and anthropologists have called such groups Horticulturists. Horticultural societies depended on cultivating fruits, plants and vegetables. During horticulture period men were the ones to plow, dig or hoe the land in order to cultivate it. In general men were responsible to cleaning the land, while women plant, crop, harvest and stored the production. Also during this period men continued to hunt, however, they were less productive in their hunting and societies started to domesticate animals. The role of men and women changed, because men had to trade the crops and because groups began to settle down. Kinship played an immense

American Express Case Study Example | Topics and Well Written Essays - 750 words

American Express - Case Study Example American Express is perceived as a premium brand product and the principles listed above are reflected in their credit card business. Though the service credit cards are directed at several different income and status levels, they have been able to maintain a mystique of exclusivity. The cards cover the range of the common inexpensive credit card to the 'cause marketed' Red Card which donates a share of the profits to fight AIDS. High income levels are targeted with the Black Centurian Card costing $2500 and made out of titanium. Their peripheral businesses, such as car rental and hotel reservations, have benefited from this brand recognition and customer loyalty. Teamwork has allowed American Express to become a truly global company. They entered the international market at the beginning of the 20th century with the introduction of internationally accepted Traveler's Checks. Their cards are now recognized around the world. While much of American Express's success has come from their innovation in financing, they have also been able to cultivate and manage relationships based on their reputation. When the company went through organizational restructuring in the middle of the 1980s to confront the growing competition from Visa and Mastercard and the loss of merchant services, they turned to their core business and its principles. "Rebuilding relationships with merchants became a top priority, as did significantly increasing American Express Card acceptance across a wide range of industries and geographical markets" ("Our History"). Years later, the company's chief executive would say, in retrospect, "If not for the strength of our brand name, American Express would have collapsed by the late 1980s" ("Our History"). For American Express, it was not the product but their brand reputation that saved the company. Today, many other products compliment the financial card segment. They have co-branded with Citi Bank and other financial institutions to offer bank issued credit cards. They offer a wide range of personal and business travel services that fit well with the financial card unit. They have become a one-stop-shop for the personal or business traveler. In addition they offer an array of business services from financing to taxes that once again are based on, and linked to, the business credit card unit. A business can arrange all their financing, financial planning, lines of credit, travel, lodging, and airlines, and have it all billed through the payment service unit. These services would not have been possible for American Express without the unique position and reputation of their financial card product. Works Cited "Our

Orgabizational analysis---TOYOTA Research Paper

Orgabizational analysis---TOYOTA - Research Paper Example The philosophy of lean aimed at preserving value with less work done. This philosophy has been driving the Toyota Company for decades. Lean manufacturing emphasizes on efficiency by optimizing the flow of work, ensuring that there is minimum waste and use of intuition to make decisions rather than accepting the idea that existed before (Jeffery, 2004). Historically, there were changes that took place in Japan which forced the Toyota Company to restructure its operation and management systems in order to meet the needs of its customers. Towards the end of 1949, a collapse in sales made Toyota to layoff part of its workforce. Toyota engineers came to a conclusion that Taylor’s scientific management theory of mass production was not effective and efficient. From this conclusion, they came up with Toyota production system that emphasized on quality control and aggressively sought to eliminate waste and other causes of production defects. Japan had just lost the world war two, so Toyota president aimed at competing at the same level with America in terms of production and quality within three years. The principle of just in time was applied so that there was continuous flow process; the right parts needed in assembling hall reach the destination at the right time and only in amount needed. The other principle is automation which meant that there was dramatic improvement in productivity in that whenever a defect product was detected, the machine stopped automatically to shield the operation from producing more defects. Also, in the Toyotas assembly, assembly lines pulled liens were introduced which allowed operators to detect a problem whenever it occurred thus making everyone in the assembly hall aware of the problem (Jeffery, 2004). The success of Toyota Company in the market has been attributed to lean production system. The basic concepts that

Principles of quality control relating to business management Research Paper

Principles of quality control relating to business management - Research Paper Example There are many employees who at times do not take adequate measures in order to maintain proper quality. Therefore, in this regard, it can be demonstrated that such an attitude may lead to loss of the customers. On the flip side, the competitors may take the advantage of the market needs. It has been viewed that most of flourishing companies have identified the role of the customers-defined quality on the business. As a consequence of this, most of the companies have focused their attention towards the quality standards. The two successful companies that have identified the customer satisfaction as their top most priorities are Honda Motor Company and Ford Motors. Quality Quality is one of the primary aspects that each and every organization aspires to maintain upon their products and offerings. Quality in their offerings can offer an organization with the added competitive advantage. The definition of the factor quality in business management context generally relies upon the positi on of the people defining it. There isn’t any single description of quality. ... It has gained importance as in due course of time organizations have realized that poor quality might result to high costs. The greatest loss to the company can result when the poor standards of quality transpires to discontented customers. This can ultimately result in loss of consumer as well as business. The term quality can be associated to a few other costs. One group of cost is referred to as the cost of quality control whereas the other group of cost can be referred as the prevention and appraisal cost (John Wiley & Sons, â€Å"Total Quality Management†). Quality Control The term quality control can be defined as sequence of the analytical measurements that can be taken for the purpose of judging the quality of the analytical data (SlideShare, â€Å"Quality Assurance vs. Quality Control†). The concepts of quality as well as productivity run side by side to each other. Thus, it is important to comprehend how the consumers measure the quality. It is generally done by recognizing how efficiently the product serves its own purpose. According to the views of the manufacturers, quality can be measured by the extent to which the product executes as per the predefined standards. The task of creation of the quality standards, the production of the goods that meet those standards and the measurement of the finished goods is the task of the quality control. In order to control the quality, the companies must be highly dedicated so as to manage and work in a manner that can assist in building excellence in every aspects of the operation of the organization (Gitman, L. J. & McDaniel, C., â€Å"The Future of Business: The Essentials†). Quality Control in Modern Business The modern business environment can be characterized as highly complex

Is the Internet Ruining English Essay Example | Topics and Well Written Essays - 1000 words

Is the Internet Ruining English - Essay Example Why should be English be afraid of the internet? If the changes and additions in the language have been accepted in the past, the only noticeable issue with internet and English is the speed of the former, meaning how it has accelerated the process. This cannot be attributed to the negative trait. One cannot expect the internet--savvy modern combustible younger generation to read William Shakespeare and Charles Dickens. If they creative computer games, it is their choice. The language perfectionists argue that text messaging has spoiled the beauty of communications through grammatically perfect language and through complete sentences. One who sends the message is certainly not writing a paper for the competitive examination. If texts are filled with abbreviation and the one who reads that text perfectly understands the message conveyed, the purpose is served. Such practice was also vogue in the good old days when people sent telegrams with short and crisp messages. When small childre n lisp and try to communicate, will not the elders enjoy that communication? The longevity and popularity of such communications relate to their unequivocal acceptance. Formulation of new words is like finding of a new star in the galaxy. Once it is found, it has to be admitted as part of the galaxy and it is the permanent member of the star formations. The argument that technospeak will rule at the cost of standards and creativity, is a wishful thinking.Even assuming that globalization will impose sameness if that is for the betterment of humankind, there is nothing wrong with it. Just like the members of a family speak one language, the â€Å"global family† when it adopts certain uniform computer terminologies, it will be for greater good.

Computerized provider order entry(CPOE) Assignment

Computerized provider order entry(CPOE) - Assignment Example These systems are used for various reasons in healthcare. It is worth noting that this system makes it possible for individuals in the health care industry to insert precise and detailed analytical information relating to results from medical investigations to identify presence of disease, prescription information, as well as nursing information and guidelines. This helps individuals to keep proper electronic records. CPOE is a computerized system that helps link medical practitioners with patients medical information, links a medical practitioner with his or her colleagues in the health sector, links all computerized systems in a health institution, and also links one medical unit with other units or departments. CPOE helps reduce errors in the medical field. Some of the information entered in the CPOE system include prescribed amounts of medicines, sensitivities, and patients medical history. Availability of all this information is important as it helps healthcare providers consider all the benefits and possible effects of medications and hence minimize inaccuracies. A methodical investigation conducted in Brigham and Womens Hospital focusing on the effectiveness of CPOE, there was a decline medical mistakes or inaccuracies by fifty five percent in a period of four and half years (Doolan and Bates, 2002) To understand the benefits of CPOE, it is imperative to compare it with paper-based systems. According to Doolan and Bates (2002), "The advantages of CPOE over paper-based methods include decreased transcriptions, increased accuracy and completeness, and the ability to enter orders in multiple locations" (A4). This systems also makes it possible for health care providers to make resolutions regarding the patients health status aptly and timely as all information is readily available and computerized. The implementation of CPOE improves competence and effectiveness in health delivery systems. This is

The Tunnel Rats Essay Example for Free

The Tunnel Rats Essay INTRODUCTION   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was in January 1966 when one of the biggest intelligence coups of the war that time took place. While the soldiers or the â€Å"diggers† were doing a sweep of the â€Å"Iron Triangle† that was an area near Saigon they discovered a vast complex of tunnels.[1] This location was heavily guarded with armed protection and was restricted by the Viet Cong (VC). What they were about to find out was 60 feet into the ground of that perimeter would be the Viet Cong headquarters. [2]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When they arrived in Vietnam as part of the 1st Battalion of the 28th Infantry, 3rd Brigade of the 1st Infantry Division in January 7, 1966, they were called the â€Å"Big Red One† and were sent to engage in operation â€Å"Crimp.†[3] The mission was to search and destroy sweep the Viet Cong stationed in the Northwest of Saigon. Even as they were just landing, they could see from the air how there were groups of their men in trouble with small fire fights that made them quickly exit their helicopters to engage in battle and destroy the VC that had been attacking the soldiers.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When they went inside the tree line that led to the locations were they saw some of the fights, they saw a large trench filled with nothing and no one. They did not know where the VCs went. Those they saw that were firing at the other soldiers just disappeared into thin air. They were gone, all of them.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The battalion moved forward to see large catches of rice and estimated the amount they saw were enough to feed a Regiment.   Even after a few days later, they saw foxholes, trenches and caves but there were no VC enemies to fight with. However, it was evident the United States casualties were still increasing because of sustained enemy sniper fire that basically came out of nowhere.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was already January 10th and they merely had a few glimpse of this enemy. Later that day, a radio report came out that elements from another brigade had made contact with the VC and found the same thing tunnels. VIETNAM WARFARE STATEGIES   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Later they would discover that the VC’s strategy was to strike unexpectedly and then slip away into the tunnels to avoid retaliation. Their strategy was concealment and was effective with their hit and run tactics.[4] Tunneling was the essential element in the VC strategy. It was the greatest element in the VC stationed in the area of Cu Chi, located north the South Vietnamese capital, Ho Chi Minh City (formerly known as Saigon).   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   They used the tunnels for many functions. They attack American installations that were conveniently built right above them.[5] They took refuge in the tunnels when they felt threatened with annihilation. They used the tunnels to escape from threatened villages. The also used them to store war materials and to operate facilities like an underground hospital. The Americans never really discovered the full extent of the Viet Cong tunnel systems, but they gradually tried their best to develop tactics to counter attack the VCs and to use the complexities of the tunnels to their advantage.[6]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnels are now made into something like a Disney amusement park wherein tourists can take an hour bus ride from Ho Chi Minh to experience going into them. These tunnels used to be well hidden from American soldiers and reporters of the war but now it has brought tourism to the country. But along with the sights and the interesting experience, the war tactics and weapons the Viet Cong used were placed on display that serves as a reminded of their polished warfare strategies.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Man traps made to kill were part of the display. When American soldiers would try to slip into the tunnels, Punjisticks or spears of bamboo with razor sharpness and covered with excrement or poison were the first things that greeted them.[7] The sticks pierced the legs and the torsos of the Americans. More brutal strategies were used as bear traps were also placed in the tunnel openings to amputate the feet of the soldiers as they go inside the tunnel. Like this was not enough protection, booby traps were also hung from the trees near the opening that would result to beheaded soldiers or amputated limbs.[8]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The VC did not even bury some of their casualties. The United States forces often buried their dead enemy to keep track of the extent of the casualties for the enemy. Tactical conditions from the Viet Congs would result to dead VCs lying around the tunnels for the tunnel rats to discover. In some cases, they would even pull the bodies of dead American soldiers in the tunnels for the soldiers to encounter. This was a strategy they used to unnerve and demoralize the U.S. troops that would come into the tunnels.[9] TUNNELS OF CU CHI   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Located just seventy-five kilometers northwest from the country’s capital Ho Chi Minh were the tunnels of Cu Chi. This district of Cu Chi was a major Viet Cong infiltration route that served as a trail towards the Ho Chi Minh.[10]   Situated above the ground of this perimeter was the station of the United States 25th Infantry Division.[11] Below them was the home of the 7th Viet Cong Regiment and other allied units. It was like sleeping with the enemy, only with them they were sleeping above the enemy, literally.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnels were reported to be 250 kilometers long and most of the tunnels were located in Cu Chi. There were three levels to the VC tunnels. [12] In the first level, the opening was three meters deep. As one goes deeper into the tunnel, it would widen and be about six meters deep. The third level of the tunnels was eight meters below the ground. An Underground Battle Station   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In the tunnels, it was like a whole word underground. There were kitchens, there was a hospital, and the officers’ quarters were there as well as a meeting room.[13] During that time the tunnels were almost inaccessible. It was hidden in a jungle-like area. During the war it was ravaged by a skin-burning chemical Agent Orange that was part of the American counterattack. Some tunnels were also too narrow for an overweight Westerner.[14]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnel system included different sizes of chambers, rest areas, weapons and ammunitions storage, kitchens, workshops, barracks room as well as rooms that housed the communication equipments.[15]   The kitchens was designed so well the smoke that could signal the Americans of their location were dispersed and dissipated into numerous pipes that would mislead anyone who would see it.[16]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnels of Cu Chi were the venue where the Viet Cong fighters and the American Tunnel Rats, as they call those brave enough to penetrate the tunnels, would go into hand-to-hand combat inside dark and dangerous subterranean and complex tunnels. These tunnels were where they fought to death using knives and pistols.[17] The Little IRT   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnels of Cu Chi were known as the Little IRT. They were similar to the railway system in America with an interconnecting tunnel system that was in the northern section of Hau Nghia Province and in the southwester section of Binh Duong Province. The tunnels complexity connected hamlets, villages and provinces in the area. Originally it was dug up to be used to support the Viet Minh guerilla war against the French.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The American soldiers dubbed the tunnels the â€Å"little IRT† because of how similar it was to the New York City Subway. The complex tunnel system allowed for different levels in different locations that were interconnected by a series of â€Å"trap doors, channels, shafts, wells and communication tunnels.†[18] There connections from the tunnels to bunkers that was almost bombproof as well as to ground level bunkers. Tunnel Explorer, Locator Communicator System   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The TELACS was an experimental communications device system that the tunnel rats or the American soldiers used when they explored the enemy tunnel systems. It was a system that was composed of an earphone and a throat microphone for communications with the troops in the surface.[19]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was a flawed system because there was much voice distortion and there needed to be a large amount of wire that had to be dragged behind the explorer. It was a slow and inaccurate system. When it was tested in the year 1969, it was withdrawn.[20]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnel system proved to a sophisticated military tactic from the Viet Cong that may have been underestimated by the American troops. The genius of their strategies overwhelmed U.S. Forces until it came to the point that they decided to clear the tunnels of the VC. TUNNEL CLEARING   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   After the time when Ben Suc, Vietnam was depopulated American troops went on to clear out the tunnels of Cu Chi, looking for Viet Cong fighters. The army made use of large tanks with bull dozer blades as well as medium built soldiers that were known to be â€Å"tunnel rats† that went to uncover the underground city.[21] In the clearing process they found stoves, furniture, clothes for men and women, and essentially thousands of pages of important war documents. This major headquarters that the American command found brought them to explore further into the tunnels.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   However, during that time, a senior officer that was in-charge of exploring the tunnel was killed by one of the bloody booby traps. The U.S. army saw the danger of the situation and retreated from exploring the tunnels. Instead, they pumped tear gas into the tunnels as well as set off explosives.[22] The Americans thought this was the top headquarters for the Viet Cong, they miss the headquarters of the NLF that was several miles north that place.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The U.S. used tons of artillery and bombs for every Viet Cong fighter. The Viet Cong manual even said that the U.S. had much superior weapons and strength compared to them on the battlefield. But they could not chase them as they always launched surprise attacks from their underground tunnels.[23]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The use of incendiary weapons that included the white phosphorous and the napalm was used vastly by the U.S. forces during this time. [24]This move has placed them in the center of condemnation.   Napalm was described to be a petroleum fuel that as very effective in the destruction of the enemies’ bunkers as well as the people inside them. White phosphorous was used to mark targets and to set fire to flammable ones. It has caused suffering that would tend to continue burning the skin long after the initial contact.[25] Used together with napalm would prove to be painfully lethal. The mortality rate from those who suffered from such weapons was high and there were deaths that arose from injuries where victims were too badly burnt to receive hospital treatment.[26] CS Gas was proficiently used in clearing the tunnel complexes that sifted the enemy soldiers as well as the large numbers of civilians who sought refuge in the tunnels.[27]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Some antiwar critics of the U.S. Forces in the Vietnam claimed that America conducted a war of genocide in Vietnam because of the civilian casualties. However this was denied because the U.S. military strategy did not amount to having an official policy of genocide nor was it the intention of the government and the armed forces to wipe out any significant part of the Vietnamese civilians. TUNNEL RATS   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   During the war trained special units were called tunnel rats. They were described to be â€Å"small, mean and crazy† as they actually went inside the tunnels and combated with Viet Congs they encountered while other units merely thrown explosives to clear the tunnels.[28] They were also known to be the â€Å"Tunnel Runners† by the 25th Infantry Division and â€Å"Ferrets† by the Australian Army. â€Å"Tunnel Rat† was their official accepted name.[29]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was during this time that the U.S. Army realized that it was short-sighted to destroy the tunnels by the bulldozers and the bombings. There would be a massive loss of vital intelligence if the plans and documents of the Viet Cong would be destroyed through their first strategy.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was in 1965 when the 1st and 25th Infantry division organized specialized teams that had missions to search and explore the tunnels in the III Corp area.[30] The tunnel rats were not assigned; they were all volunteers and were armed only with a pistol or shotgun, a knife and a flashlight.[31] They infiltrated the tunnels with such minimal weapons where hundreds of VC might be hiding with their massive supply of weapons stored in the tunnels as well. Anyone who went into the tunnels was then dubbed as â€Å"Tunnel Exploration Personnels.†   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   As the tunnel rats descended into the tunnels they experience walking into a pitch black and claustrophobic pathway wherein they were playing a deadly game of hide and seek with the enemy Viet Cong. The sensitive probing of the floor, sides and roofs of the tunnels soon became second nature to the tunnel rat as he inched his way deeper into the tunnel complexes.[32] They carefully watched out for wires and tree roots that was irregular and could pass for booby trap that could blow them up to pieces or cut their limbs into pieces.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The entrances of the tunnels alone are usually mined or protected by concealed guards ready to fire upon entry. Sometimes, the unsuspecting tunnel rat can met the garrote or someone would cut his throat as he came up and pass by connecting trapdoors[33].   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Aside from the VC booby traps were a whole breed of animals that resided in the dark confines of the tunnels.[34] There were bats that used the grounds during the daylight hours. Snakes were also encountered inside the tunnels. The Bamboo Viper and the Krait were the deadly snakes that can be found the VC tunnels. The Viet Cong would deliberately tether a snake in the tunnels to serve as a natural booby trap for the tunnel rats.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The stress the tunnel rats undergo every time they went into the tunnel was unthinkable that pushed their mental state to its limits. They would crawl into the narrow, pitch black tunnels looking for a heavily armed enemy for hours to combat with. The idea was to find the VC first before he jumped on them to kill them. Sometimes the strain on the men’s nerves was too much to bear to the point wherein he had to be dragged from the tunnel screaming and crying.[35] When this occurs, they are not allowed to go into the tunnel ever again. There were no dead tunnel rats that were to be left inside the tunnel. Dead or wounded they were dragged out with wires, rope or by a comrade only to be taken out of the VC territory.[36] Weapons and Warfare   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   There was extensive use of the tunnel by the VC. The tunnel rats had to search and flush out the VC. Tunnel warfare then occurred between the VC and the U.S. Tunnel Rats.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The soldiers became used to tunnel welfare that they reveled in the opportunity to pursue a VC through the narrow passageways. It was not a work for someone with a faint heart as the danger of death was ever present underground were grenades would just pop through trapdoors and other forms of booby trap awaited.[37]   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When a tunnel rat went in for tunnel warfare, the infantry basic load was kept to a minimal. His total lack of equipment to carry was a factor for the tunnel rat’s survival.[38] The pistols the tunnel rats carried where the .38 Smith and Wesson. Sometimes they would carry a 9mm German Luger.[39] Most of the tunnel rats agreed not to carry the Colt .45. It was too big of a weapon for the underground battle with a silencer. Without a silencer, it was too loud that the enemies from far away could know your location instantly while you are temporarily deafened by the shot. In tunnel warfare, the tunnel rats follow the golden rule that prohibits firing more than three shots underground without reloading.[40] If this does not happen, the VC could know that the tunnel rat is out of ammunition and could attack while they reload.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnel rats carried a standard Army issue flashlight and each member carried one. They practiced how they would carry the flashlight to prevent themselves from being lighted targets. They also practiced how to change batteries in pitch darkness by touch alone and how it can be done quickly.[41] CONCLUSION   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The tunnel rats were remembered to be one of the bravest in the American-Vietnam war. They did a job that not many wanted to do. In fact, not many dared to volunteer for this position. But they stepped up and made it a duty to their country.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It was not an easy job considering the highly sophisticated tunnel strategies that the Viet Cong implemented before the U.S. Army troops even discovered that they existed. They were in and out of a battle scene. They controlled the tempo of the battle because of their invisibility. Even when the tunnels were discovered, threats still turned on the American troops as it proved to be dangerous to explore the tunnels. Deadly booby traps such as land mines, sharp sticks and trapdoors overwhelmed the U.S. troops that may have underestimated the intelligence of the VC tactics. In the end much of the tunnels that were deeper into the complexes were remained uncovered and unexplored by the U.S. Army. This was a war rightfully won by the one who had the best strategies, the most ruthless approaches that surprised the nations of the world. BIBLIOGRAPHY Brown, Lousie. War and Aftermath in Vietnam. New York, Routledge, 1991. Clark, Gregory R. Words of the Vietnam War: The Slang, Jargon Abbreviations, Acronyms Nomenclature, Nicknames Pseudonyms, Slogans Specs, Euphemisms Double-Talk, Chants and Names and Places of the Era of United States Involvement in Vietnam. Jefferson, NC, McFarland, 1990. Mangolds, Tom. â€Å"Behind Enemy Lines a Nam Vet Returns; Tom Mangold Revisits the Terrifying Viet Cong Tunnels He Discovered as a Young War Reporter.And Finds Them Transformed into a Fascinating, Disney-Style Attraction†, The Mail on Sunday, 15 October 2006, 94. McGibbon, Ian. â€Å"The Tunnels of Cu Chi: A Remarkable Story of War in Vietnam†, New Zealand Internationa lReview, Vol. 31, No. 3 (2006): 29. Philbert, Robert E.   â€Å"Back to Nam†, Social Studies, Vol. 86, No. 1 (1995): 6. Schulzinger, Robert D. A Time for War: The United States and Vietnam, 1941-1975. New York Oxford University Press, 1997. â€Å"Tunnel Rats.† Digger History, (2002). Available from http://www.diggerhistory.info/pages-conflicts-periods/vietnam/tunnel-rats.htm, accessed on October 3, 2007.