MT V.s Human translation Essay

Introduction Today, computers are used in all fields, and even almost every field has it’s own software packages. Using computers to translate a text from one language to another refered to machine translation [MT]. Machine translation is an interesting technology for human translators. It is a fact that MT software can translate texts very quickly. The question is that: Are these machine translations perfect? Are these translation tools like Google valid? MT are somehow acceptable in technical and informative texts but how about literaral or expressive texts? According to Chapman† Literature is the art that uses language†(qtd.in Voigt and Jurafsky 1). So, literary translation represents the strongest formulation of machine translation problems. As MT quality continiues to improve, the idea of using MT to assist human translators becomes increasingly attractive, and human translators can correct mistakes in these machine translations. Translation is not only a linguistic act, but also a cultural one. It involves more than just a word-by-word representation of a text; translators also have to take double meanings, cultural subtleties and slang into accountContext of culture affects the specific meaning of the language. So the analysis of cultural context is essential for Machine Translation (MT). If the cultural context analysis of the source language is omitted in MT, ambiguity or mistranslation will be produced. At least nowadays when we compare MT with human translation, we claim that human say the last word. A Brief History Of Machine Translation The history of machine translation is as old as that of computers. It has been started in the 1950s. Georgetown –IBM experiment consisted of the automatic translation of Russian sentences in to English in a very speciallized field(Organic chemistry), and it was widely recognized as a successful demonstration. Documents in Russian gathered by the U. S. military and intelligence agencies during the 50’s and 60’s. Throughout this period university and government research funding drove the development of MT. However, the real progress was much slower, and in 1966 they found out that the ten years long research had failed to fulfill the expectations, so the funding was dramatically reduced until the late 70’s, at which time advances in theoretically linguistics and the growth of computing and language technology converged, resulting in the first practical MT tools for main frame systems. In the late 1980’s, as computational power increased and became less expensive, more interest began to be shown in statistical models for machine translation. Today there is still no system that provides the holy-grail of â€Å"fully automatic high quality translation† (FAHQT). However, there are many programs now available that are capable of providing useful output with in strict constraints; several of them are available onlin such as Google Translate and SYSTRAN system which powers Alta’s BabelFish. (Wikipedia 1) The importance of Human Translation Translation is not only a linguistic act, but also a cultural one and a prime channel of communication across cultures irrespective of geographic discrepancies. Cultural implications may be higher in cross-cultural translation and may range from lexical level to pragmatic level. More the gap between the source and target culture, the more serious difficulties would take shape. Translation between English and Hindi; which belongs to two different cultures and backgrounds is one of the best examples of such problems. In such situation, cross-cultural communication should be appropriately done using proper translation techniques to avoid ambiguity and miscommunication. Context of culture affects the specific meaning of the language. So the analysis of cultural context is essential for Machine Translation (MT). If the cultural context analysis of the source language is omitted in MT, ambiguity or mistranslation will be produced. Any attempt to replace Human Translation totally by machine translation would certainly face failure for, due to a simple reason, there is no machine translation that is capable of interpretation. For instance, it is only the human translator who is able of interpreting certain cultural components that may exist in the source text and that cannot be translated in terms of equivalent terms, just like what automatic translation does, into the language of the target text. In addition, it is widely agreed upon that one of the most difficult tasks in the act of translation is how to keep the same effect left by the source text in the target text. The automatic translation, in this regard, has proved its weakness, most of the time, when compared with a human translation. The human translator is the only subject in a position to understand the different cultural, linguistic and semantic factors contributing to leaving the same effect, that is left in the source text, in the target text. It is an undeniable fact that automatic translation is regarded as a tool for producing quick and great number of translated texts; nevertheless, the quality of the translation is still much debatable MT evaluation One way for people inorder to assess machine translation’s quality is kind of Back translation. I mean to translate from a source language to a target language and to the source language with the same engine. Although this way sounds good, it is a poor method. When we consider two variables â€Å"inteligibility† and â€Å"fiedelity† in our judgment, in most cases it is easy to separate translation by human from translation by machine. â€Å"Inteligibility is a measure of how understandable the sentence is and fidelity is a measure of how much information the translated sentence retained compared to the original†(Wikipedia 1). Although machine translation currently produces relatively unacceptable output compared to human translation, I do believe it will be much better in the future. Is machine translation output necessarily of lower quality than human translation? Some scholars believe that † Translators who work in technical domain will be increasingly require to interact with MT â€Å"(Pym 1). The need for technical translation has increased dramatically and in the future MT systems will continue to reduce the cost of translation. Advantages & Disadvantages of MT In the past when we had to find the meaning of a word from another language we used a dictionary . This was very time consuming. Moreover, when a paragraph or note had to translated, this could be very difficult because one word has several meanings. When time is crucial factor, with MT you don’t have to spend hours looking up dictionaries to translate the words. Instead, the software can translate it quickly . It is not costly but one of it’s disadvantages is that translation is not accurate and it can’t solve ambigiuity. It can’t produce translations for literary texts with good quality because translating literature requires special literary skills, but it doesn’t mean that machine translation is useless. The quality of translation which can get from an MT system is very low but we know human translator normally doesn’t produce a perfect translation. MT threats the job of translators. MT is an important topic sociolly, politically, commercially, scientifically, intellectually & philosophically. MT and Translating culture-Bound elements One of the most challenging tasks for all translators is how to translate culture-bound elements into a foreign language. According to Newmak: â€Å"Translation is a craft consisting in the attempt to replace a written message and/or statement in one language by the same message and/or statement in another language†(qtd in Armellino 1). When words in the source text are strongly rooted in the source culture that they are specific to the culture that produced them, therefore, they have no equivalent in the target culture because they are unknown, or because they are not yet codified in the target language. When cultural differences exist between the two languages, it is extremely difficult to achieve a successful translation. How can MT cope with problems of not only lexical expressions, but also with problems of register, syntactic order, dialects? MT has to decide on the importance of certain cultural aspects and to what extent it is necessary to translate them into the target language. Nida confers equal importance to both linguistic and cultural differences between the SL and the TL and concludes that â€Å"Differences between cultures may cause more severe complications for the translators than do differencs in language structure(qtd. in Glodjovic 2). Idioms are difficult to translate. It is sometimes hard to find the right equivalent for a single word without finding an equivalence for a sequence of words that convey one specific meaning. We know idiomds are culturally specific, which means that they may express a scene that doesn’t occure in the TL. Baker says: Idioms and fixed expressions which contain cultural specific items are not necessarily untranslatable. It is not the specific items an expressin contains but rather the meaning it conveys and it’s association with culture specific context which can make it understanable or difficult to translate. (qtd. in Muller 13) So translating the idioms mostly depends on the context in which it has occurred. Is it possible for Machine translator like Google translation to deal with such problems? What would be the best translation strategies for dealing with Idioms and culturally bound expressons? Human-Assisted Machine Translation Machine translation has faced many problems which can be solved by computer-assisted machine translation at the pre-editing and post-editing stages. As a result the final translation will be more acceptable if MT translation is edited by human inorder to generate more appropiate translation for some words in a sentence and as a result our translation could be semantically and pragmatically more proper and we discard odd and unnatural structures. In human-assisted translation the computer produce the first draft then the proffessional revises it. The question is that : Is machine and post-editing of MT output faster than human translation? To answer this question measuring time will be the main purpose, furthermore who should be doing post-editing? Should it be performed by translators, revisors, non-linguists, or trained specialists? According to Loffer-Laurian†Post-editing of machine-translated text is a task different from traditional HT and revision. Loffer-Laurian maintains that post-editing is not revision, nor correction rewriting. It is a new way of considering a text, a new way of working on it for a new aim†(qtd. in Martinez 23). Poetry and Machine Translation According to Oxford English Dictionary Poetry is â€Å"The art or work of poet†(qtd. in Hovhamisyan 1). Translating of poetry is one of the most difficult and challenging tasks for every translator. According to Robert Frost’s definition â€Å"poetry is what gets lost in translation†(qtd. in Hovhamisyan 1). To sum up the theoretical approaches, it is clear that poetry is the most difficult type of the text and can be considered to be untranslatable. Grammatical differences between the languages causes a lot of problems in translating poetry. Should we , then refrain from translating poetry. Where proffessional translators assumes that the translation of poetry is extremly difficult, is it possible for a machine softwares to translate poems among differen languages? In the following paragraph first sunnet of Hafez it’s English translation by and it’s Google translation are avalible. ? ? ? ? ? ? ? ? O beautiful wine-bearer, bring forth the cup and put it to my lips Path of love seemed easy at first, what came was many hardships. With its perfume, the morning breeze unlocks those beautiful locks the curl of those dark ringlets, many hearts to shreds strips. In the house of my beloved, how can I enjoy the feast since the church bells call the call that for pilgrimage equips. With wine color your robe, one of the old Magi’s best tips Trust in this traveler’s tips, who knows of many paths and trips The dark midnight, fearful waves, and the tempestuous whirlpool How can he know of our state, while ports house his unladed ships. I followed my own path of love, and now I am in bad repute How can a secret remain veiled, if from every tongue it drips? If His presence you seek, Hafiz, then why yourself eclipse? Stick to the One you know, let go of imaginary trips. Google Translation High boots or stands Casa Ella field and Novell I would be easy to love but difficult The smell of oak tress Saba Nafhay Kakhr open What was the blood from the heart twist lock Mshkynsh Janan how secure mirth at my house because the door JRS will scream that should tell concerning vehicle The mat is a colorful old Garrett says Taha The traveler did not know the way home. Fear of the dark night of the wave and vortex Heil We know where the loose banks All I took from his failure to end stigma Who would he have hidden the secret circle center Guardian of the person, do not be absent from his Hmykhvahy We produce p my Dunya Matthew invitation and Ahmlha In above two translations that one of them is done by human, but the other is produced by Google it is cristal clear that for translating poem MT is not acceptable. It is full of grammatical and lexical mistaks Works Cited Armellino, Elisa. â€Å"Translating Culture-Bound Elements in Subtitling. † Translation directory. N. D. Web. 16 June 2013. â€Å"Evaluation of Machine Translation. † Wikipedia. 15May 2103. Web. 2July 2013. â€Å"Evaluation of Machine Translation. † Wikipedia. 15May 2103. Web. 2July 2013. Fiederer,Rebecca and Sharon O Brien. â€Å"Quality and Machine Translation. † Jostran. Org/issue. 11January 2009. Web. 19June 2013. Glodjovic, Anica. â€Å"Translation as Means of Cross-Cultural Communication. † facta. junis. ni. ac. rs. June 2010. Web. 7July 2013. â€Å"History of Machine Translation. † Wikipedia. Web. 2July 2013. Hovhannisyan, Mariam. â€Å"The Art of Poetry and its translation. † Translation Directory. May 2012. Web. 27 June 2013. Martinez, Lorena. G. â€Å"Human Translation V. S Machine Translation. â€Å",Sceuromix. August 2003. Web. 3July 2013. Muller, Theo. â€Å"Translation of Idioms. † 17 September 2009. Web. 5July 2013. â€Å"Human Translation V. S Machine Translation. † Netmask. it/Products. 2003. Web. 5 July 2013. Pym, Anthony. † Translation Skill-sets in a Machine-Translation. † usuaris. tinet. cat/apym/on-line/training/2012_competence_Pym. May 2012. Web. 1 July 2013. Voigt, Rob and Dan Jurafsky. â€Å"Toward literary Machine translation. † Stanford. edu/jurafsky, N. D. Web. 1July 2013.

A Marketing Strategy

â€Å"Health is Wellness, Relieve Stress and Feel Better Today† is an adage that most people are adopting today to find relief from the stress and strains of a hard day in the workplace. More and more people are increasingly realizing the importance of exercise and mental well being in their daily lives. The growing number of people opting for memberships to health clubs and local gyms are an indicator of changing lifestyle and health awareness. Unwinding in the gym at the end of a stressful day is catching on. The fact that people are well informed about the ills of an unhealthy lifestyle and the repercussions that it may have on the body is one of the major factors contributing to the mushrooming of fitness and wellness services across the world. High stress levels at work and multi-tasking roles and responsibilities assumed by an individual are weaning away the energy levels and coping abilities. These are some of the other factors that have led people to join the fitness and wellness centers. Exercising can not only help maintain weight, avoid health problems that infect millions in the world today, relieve stress but also infuse a feel good and look good attitude. A positive outlook to life and high energy levels to do things better are some of the side effects of following a strict fitness routine. The term wellness indicates the willingness to manage stress, a good health score, and a positive attitude to life. Moreover the gym provides a platform for social interactions that bring up the motivational levels for daily exercising. The gyms and spas that were considered a luxury lifestyle yesterday have become a part of the lifestyle today. The extra cost is not an important factor to those who believe in the wellness of the inner self. The health and wellness industry is a billion dollar industry having a simple product that appeals to all – a healthy lifestyle. Executive Summary The high revenue earning potential of this industry has offset many enterprises to launch healthcare and wellness service centers across the globe. Small local gyms to luxurious health resorts have paved their success stories by enticing millions of clients with their personalized health and wellness programs. The changing dynamics of the industry has redefined the health and wellness concept. The industry now offers a total image change to its clients who want an overall improvement in their looks and physique. The Company Background Health to Wealth Associates is one such facility located in the heart of the Kansas City provides health solutions and fitness regimes for all age groups. The facility employs well-trained, certified staff with fitness equipment catering to the wide-ranging consumer needs.   The company has invested in attractive interiors and latest gym equipment in a wide spread out area where clients can feel the relaxing ambience of the place. The facility offers – Spa and massage services Personalized fitness programs with personal trainers Exercising in groups for higher motivational levels Diet and nutrition plans Gym equipment for cardio and weight training The company motto â€Å"Health is Wellness, Relieve Stress and Feel Better Today† relates easily to the consumers and has helped tremendously in gaining popularity and attracting more clients.   The company has witnessed an overall increase of 6% in revenue earnings in the past five years of operation. The company endeavors to open two more locations in the next five-year period as part of its expansion program. Great location, high quality service from well-trained staff and an aggressive market penetration strategy has given this company a competitive edge over the other players in the industry. Market SWOT Analysis A SWOT analysis of the Health to Wealth Associates reveals the market dynamics that govern the industry trends. Strengths: Well-trained staff providing excellent customer service. The state of the art equipment catering to wide variety of client exercising requirements with personal trainers and fitness programs A well-designed spa with wide range of massages services with diet and nutritional counseling. Weaknesses: The facility can cater to only 30 clients at a time. The premium pricing of the services and membership fees as opposed to local gyms. Non-existent baby-sitting facilities for women with children. Opportunities: Plans for expansion with more outlets opening in different geographical areas. A well-planned brand positioning and awareness marketing strategy using advertising and publicity campaigns. Tie up with other leading nutritional supplements shops to entice the customers. Introduction of family-oriented fitness training programs to attract more customers Addition of baby-sitting facility or children’s play area. Threats: Local gyms and massage parlors offering services at cheaper rates. Entry of leading brands and outlets in the vicinity. Enrolling enough members at the onset. Getting a steady supply of qualified and well-trained employees. This SWOT analysis highlights the issues and concerns that face the company along with the competitive and operational advantages that will steer the company in its aggressive marketing and promotional strategy. Market Analysis A health and wellness center that offers holistic and healthy lifestyle and one that encompasses the three facets of health – physical, emotional, and spiritual is required for a successful venture. The rising attraction of consumers towards gyms and spas has inculcated a healthy lifestyle that has become synonymous with healthy profits in the industry. It has been observed that people are not averse to paying more for quality and personalized services in this sector. This is one of the most attractive elements of the industry – a high market demand and high revenue prospects. But the industry is capital-intensive. The high profile equipment and gadgets are essential capital investment items and cannot be compromised in terms of quality. The business requires substantial funds for start up though the returns are high. The key ingredients to running a successful venture is – Well-trained and certified employees to ensure quality service. An aggressive and effective advertising campaign to create consumer awareness and entice more clients. As part of its market expansion strategy Health to Wealth Associates plan to adopt the following strategy to penetrate the market segment: Employ health experts to counsel the needs and requirements of the clients. Rolling out membership schemes that provide the members with discounted services and free consultations. Introduction of guest passes that will enable non-members to enjoy the services of the facility based on their income. Promotional campaigns for healthier lifestyle using the company slogan â€Å"Health is Wellness, Relieve Stress and Feel Better Today.† Health and wellness workshops for promoting the client base. A web site promoting the services of the facility. Tie up with nutritional supplement provider as a strategy for client retention. Financial Projections The company has reported a 6% annual increase in revenues. Based on the last few years’ performance and the implementation of the above-mentioned strategies the company projects an annual increase of 10% in the revenues earned in the next five years. The company envisages an increase of 8% in the net profit in the next two years’ of operation. Conclusion The company should endeavor to capitalize on the growing fitness and wellness concept in the industry. Adopting changes in the service delivery, offering wide range of choices to the customer, and an aggressive advertising campaign to push the company’s products will lure the consumer senses. The essence of success in this industry lies in identification of niche markets, use of updated technology and strategic partnerships with influential and well-known brands in the industry. References: 1.   Living the Good Life – http://www.goodlifefitness.com/newsletter.aspx – accessed on 18th December,2007 2.   The ISPA 2004 Spa Industry Study – Executive Summary – accessed on 18th December, 2007 3.   How to Start a Gym – http://ezinearticles.com/?How-to-Start-a-Gym&id=749346 – accessed on 18th December, 2007 4.   The menu of Spa Experiences   Ã¢â‚¬â€œ accessed on 18th December, 2007 5.   Gym Business Plan – http://www.briangreens.com/gym-business/gym-business-plan/ – accessed on 18th December, 2007   

A Look at the Different Opinions Concerning Abortion

A Look at the Different Opinions Concerning Abortion Being a subject that is never taken lightly in society, abortion is a wildly controversial issue. With a nation full of many diverse ethics and values, the issue of abortion has been divided into two opposite positions of pro-life or pro-choice. The pro-life stance is in opposition of legal abortion and against the termination of unborn fetuses. Overall, in the eyes of pro-life believers, life is a precious miracle and no matter how far along a fetus has developed, every aborted fetus has indeed been murdered. On the other hand, the stance of pro-choice supports the action of abortion and believes that women should have the legal right to terminate their pregnancy. No matter what position is taken on this crucial issue, abortion will always have lasting impact on people. For example, who can blame anyone who defends a pregnant mothers right to make a life and death decision by her own free will when assuming she completely understands all ramifications? By whatever way she arrives at her final heart- tearing decision to kill the fetus, should anyone have the right to force her to bear a child? Or, in contrast, who can fault someone who wishes to prevent the termination of a teen pregnancy in order to save the life of the innocent unborn child? Questions like these not only help conceive the importance and value of abortion but also raise much curiosity about this year’s election and the candidate’s beliefs. Although many of this years election policies are based on issues that encompass our devastating economy, the often neglected issue of abortion has become a ruthlessly exploited topic in this years presidential debates. The candidates, Governor Mitt Romney and President Barrack Obama, have very differentiating views of pro-life and pro-choice. Usually shown as an issue that favors pro-life candidates, this election has shown a historical change due to President Obama taking charge in a recent Gallup Poll (Dannefelser). Although there are some appealing arguments about the pro-life choice, I believe the policy of abortion should be terminated in our society, as it takes the lives of approximately 115,000 innocent and defenseless children daily. Of course, there is a population that doesn’t believe that the act of abortion is wrong and feels that women should have the right in whether they want to bear a child. Supporting this view, President Obama believes in the policy of pro-choice and holds the opinion that woman should bear the constitutional rights to their personal health and reproductive freedom. Within his campaign, Obama has shown his complete support of Planned Parenthood and given much funding to abortion and contraception advertising through his recent video known as â€Å"Yes We Can† (Yarrow). Through this tactic, Obama establishes the message that the women of America are capable of making their own choices. Disagreeing with parental notification, he states that he feels that abortion is an act that needs to have much thought and consideration and if â€Å"a young women becomes pregnant they should talk to their parents†. Moreover, he realizes that all girls do not have parental guidance a nd â€Å"in those instances, we should want these girls to seek the advice of a trusted source. Many feel this campaign tactic will be helpful in gathering support for abortion because â€Å"according to NARAL’s model and an extensive survey that shows there are over 5.1 million women pro-choice†(May). Claiming how Governor Romney â€Å"has gone to more extreme place†, by completely getting rid of funding for planned parenthood, President Obama claims that if he gets elected for a second term this crucial social issue will get resolved (May). Although President Obama makes some crucial arguments about this serious policy, there have been criticisms’ about his policy of abortion. President Obama constantly mentioned the topic of federal funding of planned parenthood numerous times and consistently made sure to bring up Romney’s vow to defund the nation’s largest abortion provider that also delivers an array of other productive services (Yarrow). Furthermore, Obama states in all three of his presidential debates that not only does his funding of planned parenthood help women in need, but it also can act like any other health care provider or OB/GYN by providing breast examinations and referring women to outside technicians (Viebeck). In reality though, Obama has recently been proven wrong, though, due to a recent fact check that verified that Planned Parenthood does not perform mammograms or even possess the necessary equipment to do so. The truth is actually revealed; â€Å"they do hundreds and thousa nds of abortions and not a single mammogram†(Dannenfeiser). According to the Washington Times â€Å"Planned Parenthood is even reportedly dropping what little prenatal care it offers† (Dannenfeiser). Moreover, the Congressional Research Service report stated that the federal government gives Planned Parenthood about $66 million to a unreliable service (Viebeck). In general, this shows the amount of money that is being taken out of the American’s pockets (Viebeck). Furthermore, pro-life candidate Mitt Romney claims that his opposing candidate, Barack Obama, needs to critically consider that abortion is a social issue and not an economical issue (Dannenfeiser). In general, Romney feels the most important thing should be fully trying to recover America from economic stress and this current devastating recession. Now completely behind the policy of pro-life, Romney’s policy of abortion has three exceptions of â€Å"cases of rape, incest, or pregnancy that endangers a women’s life† (Romney). His belief of pro-life advocates the legal protection of human embryos and fetuses and outlaws abortion. Throughout Romney’s debate he claims his first action he will take will be to defund Planned Parenthood in America. In addition, he he plans to overturn Roe vs. Wade, which states the legalization of abortion, due to over â€Å"fifty million abortions have been performed since 1973†. Through this plan, Romney claims that on ce overturned, abortion will be a matter of state decision and not a matter of federal decision. It will â€Å"finally allow the states to have authority† that they were initially intended to have (Blodget). In addition, Romney indicates that he will reverse the Mexico City position of the President and â€Å"reinstate the Mexico City policy which keeps us from using foreign aid for abortions overseas†(Weiner). Feeling that abortion is more of a social issue and not economic issue he plans to instead help the 17 million women that are currently living in poverty today (Weiner). Romney states I’m going to help women in America get good work by getting a stronger economy and by supporting women in the workforce.(Bennett). In general, much of this topic is subject to opinion and perspective and that is just the nature of this argument. Overall though, I find myself mostly behind Governor Romney and his choice of pro-life within America. Influenced by my morals and religious back ground, I believe that there are no exceptions for abortion. Living in a society that finds murder as a morally wrong act that deserves punishment, I believe the policy of abortion should be ended because I feel that there is no difference between murder and taking the life of an innocent and defenseless child. If a mother does not want a child or rape has occurred, adoption or other measures should be considered. Unfortunately, this is not a popular stance to many Americans due to the belief that woman should possess their constitutional rights. In reality, the act of abortion is legal before three months because the fetus is still in the embryo stage. In contrast, facts show that â€Å"More than 90% of the body structures found in a full-grown human are present after 9 weeks.† Overall I feel that today we live in a morally wrong and depraved society that is unwilling to accept their wrongs. We end up exonerating others for our mistakes. I understand that fear indeed is a powerful motivator, but as we accept these self-centered acts we underestimate both the intelligence and priorities of women. The women of America can use their brains, not solely rely on other parts of their body, to move ahead in society and achieve their goals.

Discussion questions Essay Example | Topics and Well Written Essays - 750 words

Discussion questions - Essay Example 2007). The above data sources act as indicators of financial outcome of a project in hospital which is meant to improve the services of patients and in the long run increase their financial benefits to continue improving the hospital and even expand their services. These records in various sections of the hospital will serve as an indicator of the financial outcome essential for evaluation. The best evaluation design would be the pretest and posttest design with follow-up. This is because this evaluation design measures the project before it begins and at the end and this provides effective results that act as a baseline for comparison. The comparison is essential to indicate whether the project has achieved its set objectives or not and which objectives have not been achieved which is the basic essence of evaluation. The sampling strategy effective is the quota sampling. The hospital can be divided into quotas which depend on the services (like pharmacy, outpatient, and inpatient) and the evaluation can be carried out on each quota. This would also enable for comparison to be done on the (Melton et al. 2007). In order for an organization to compete successfully in the market, the quality of its goods and services must increase and this will require organizational structure of that organization to act. There may be more role allocation and role specificity in a bid to ensure that employees are producing their best in terms of goods or services production. In hospital for example, the nurses may be required to work in specific wards or handle specific cases to ensure increase in quality and standards of treatment and overall care for their patients (Borkowski 2005). Organizational structure of an organization is determined by the set goals and objectives of the organization. These same goals and objectives are centered on an increase in production of goods or services being offered in that organization. This therefore means that the two

Legalize Google Glasses while Driving Assignment

Legalize Google Glasses while Driving - Assignment Example They are efficient in enabling a driver to check on literally all features of a vehicle such as fuel levels, the GPS, weather and temperatures and such other features that normally require one to make eye contact from the road to the dashboard of the vehicle or on phone. There are thus profound advantages while using the glasses but critiques argue that the use is equally as dangerous as the concentration of a person definitely shifts from the road to the features on display on the glasses. Proponents of the legalization of the glasses argue that they are covered in the legislation on support to use of hands-free gadget while driving to minimize the likelihood of accidents. Fact: The head-mounted technology in use with the Google glasses are a great revolution in modern day but lawmakers are increasingly getting disturbed by the use of such computerized technology. In fact, the legislature in West Virginia is in the process of amending existing legal infrastructure to get the offense in use of Google glasses while driving. Cause: As many get disturbed with increased rates of accidents through use of cell phones while driving the support of such measures to ban completely the use of the phones while one drive would be instrumental in addressing the issue. Effect: It is likely to produce positive effects as required in reducing rates of road accidents by banning the use of the phones while on road. This would encourage the use of hands-free communication devices while driving. Summary: Melnick Meredith, â€Å"NTSB Calls for a National Ban on Cell Phones Behind the Wheel† 2011. Web. 26 March 2014. Melnick shows that risks of car crash increase greatly by the use of cell phones while driving.  

Strategic leadership in changing world Essay Example | Topics and Well Written Essays - 2000 words

Strategic leadership in changing world - Essay Example The paradox strategy is explained further by the porter’s assumptions about the significant of generic strategies and Raynor assumptions that these strategies have a higher risk of bankruptcy (Eldring 2009:17). Hamel assumes that strategy is a stretch that considers the essential paradox on the leadership that cannot be entirely planned and does not occur in the lack of a clearly spoken and widely shared aspiration. Organizations with hybrid strategies may not be successful in the industry, but they lower risk of running into financial crisis. This is the essence of the strategy paradox and complementation to Porter’s findings, who did not take the risk variable into account. Organizations with hybrid strategies are much less exposed to strategic uncertainty than the organizations with pure strategies. Porter argued that it is an unwillingness to make choice that organization choose for a hybrid strategy, but rather a diverse and risk averse approach can be risk in the organization (Porter, 2008:26). Meanwhile, market based view on the work of Michael porter will be discussed and it assumes that profitability is established mainly by the structure of the industry in which the company operates. The industry structure is evaluated based on the five-force framework. Consequently, the RBV strategy is associated with the works of Hamel that focuses on the competitive advantage in the organization, but use an inside out approach. Meanwhile, it is the starting point for organization’s internal environment and is viewed as the alternative perspective to Porters five forces framework that considered as the industry structure (Delfmann 2005: 226). PORTER (MBV) Porters argue that industry structures within organization are positioned against structure that determines how profitable individual firms should be. In the MBV framework, it is a critical task to analyze the industry structure to establish an ideal positioning and align value chain positionin g in the organization (Delfmann 2005: 226). Porter identified three generic strategies that include differentiation, cost leadership and concentration on selected areas to explain its positioning strategy. Thus, the significant critique of the MBV is based on its outside in perspective because it does not consider company internal aspect. Porters point out that the MBV has the significant impact on the strategic business unit level. He argues that this approach provides an efficient model of evaluating the nature of competition within an industry. Based on the MBV perspective, competitive advantage arises from an organizational dominance position within its industry. Thus, organizations can achieve a dominant position by employing a generic strategy (Weigl 2008: 90). The organizations with this dominant position produce monopoly rents since they thrived in restraining productive output. Porter argues that monopoly rents can be produced by intentionally restricting output in respect to competitive levels. Meanwhile, it can include the analysis of behavior and in respect to market position of competitors. The MBV helps the firm to position in its environment, create barriers for competitors, and protects its business. Therefore, the organization can exercise market power and earn monopoly rents. Meanwhile, Porter develops

Essay Example | Topics and Well Written Essays - 500 words - 32

Essay Example it as well; there are times when it helps man and other times when it becomes man’s enemy because it replaces the personal input he would have in his work otherwise. Man becomes divorced from his own work, while some even lose their livelihood to these machines as well. John Paul II further went onto state that it turns man into nothing but a slave. The late pope called for more harmony between workers in this section. It was the pope’s point of view that capitalism and labor were at odds with each other and this conflict was born from the industrial developments that took place in the western world. This conflict illustrated itself in the values found in liberalism and Marxism. He places more emphasis on the importance of labor than capital. He sees labor as essential to driving work, where as capital is only a mere tool. He also talks about property and the church’s stand on the principle of right. Here, the church disagrees not just with Marxist ideas that promote collectivism, but also the liberalistic ideas of capitalism. Human rights that come within the circumference of one’s work are the very basic rights that are allotted to a person. The Pope outlined unemployment as a great social problem, which didn’t just break down the social fabric through economics, but also perpetuated weak morality. He wrote against one-sided centralization by the authorities that left many out of jobs. He referred to agricultural work and how it had its own dignified way. Work has to be organized in a way that suits a person and their life. Demographics need to be taken into account such as a person’s age and gender etc. Women, according to John Paul II, should be allotted jobs that fit them without prejudice; but they must avail jobs without creating problems for their families. He also emphasized on the importance of perks and benefits, along with time off from work so that workers do not burn out. Unions are of the utmost importance because they can ensure that

Womens Right (Equal Right Amendment) Research Paper

Womens Right (Equal Right Amendment) - Research Paper Example This synchronized and yet sporadic movement by women activists, suffragists and liberationists precipitated for the advent of an epic legal victory that resulted benefits that scores of generations of women have enjoyed. In this paper, the author will outline, examine and interpret the women’s rights movement in America. Of particular importance here is the creation and the many hindrances that the Equal Rights Amendment of the United States Constitution has confronted throughout the years. The aim of this scholarly treatise is not only to provide pertinent information regarding the women rights advocacy but also to demonstrate insightful ideas and recommendations for the now and the future. Historical Background In 1848, the first-ever Women’s Rights Convention was held in Seneca Falls, New York. Abolitionists Elizabeth Cady Stanton and Lucretia Mott spearheaded the two-day meeting of over 300 people who rallied for justice and equality for women who were institutional ly restricted from the rights and privileges of a citizen. The said convention generated the Declaration of Sentiments among other eleven resolutions denouncing inequality and proposing suffrage. However, the nation was far from ready to seriously pay attention to the issue of women’s rights and thought that the call for justice was not only ridiculous but also a worthless endeavor (Becker 39). After the Civil War, while the constitutional reformation centered on giving freedom to the slaves, Susan B. Anthony and Sojourner Truth, as well as the already-veteran Stanton, fought for the legal ground of providing the same civil and political rights that men enjoy to the American woman. Citing the 14th and 15th Amendments of the Constitution that the right to vote shall not be deprived to citizens on basis of their race, color and previous states of servitude, these women freedom fighters underscored the obvious and utter neglect of women in the laws of the land (Whitney 57). In 1 872 during the presidential election, Anthony cast her ballot in one of the poll precincts in New York invoking her right as a citizen as provided in the 14th Amendment. Her somehow rebellious act prompted her arrest, conviction and a penalty of $100, which she refused to pay. On the other hand, the Supreme Court decision in Minor versus Happersett (1875), pronounced that while women may be citizens, not all citizens are necessarily allowed to vote. Stanton, Mott, Anthony, Truth and the rest of the women abolitionists and suffragettes during the time passed their lifetime without experiencing the joys of participating in the political activities of the nation. Yet certainly, their monumental efforts were never put to waste. The Movement’s Gaining Momentum The past century saw the exponential increase of the number of women who joined in the workforce. This strong power base for women incited them to take part in the movement for social progress and reform, and eventually for a revived call for the right of suffrage. Staunch lobbying, frequent street marches, deliberate political boycotts, massive picketing at the White House and widespread civil obedience showed how serious the women during this period to achieve their impassioned goal to participate in the political affairs of the country and to cast their ballots. Millions of women collaborated to send their message to the national government, and most of them even went out of their way to lobby their causes in Congress. It was Carrie Chapman and the National American Woman Suffrage Association who emerged as leaders during this period of the American feminist movement. Although these demonstration strikes (proof that democracy was working in the American

Reflecting on the main issues affecting the international tourism Essay

Reflecting on the main issues affecting the international tourism sector and how these have challenged conventional forms of tou - Essay Example Section 5: How These Factors Are Being Addressed – This section discusses how governments are trying to tackle these issues. Section 6: Conclusion – This section gives a summary of the issues affecting international tourism. Section 7: References – This section states the sources that were used to come up with the findings of this paper. International Tourism Introduction International tourism is to a situation where individuals travel globally outside of their home country and region (Beaver, 2012). This refers to a short movement of individuals from their residential place to another region for diverse reasons such as recreation, business, health or other reasons (Beaver, 2012). Tourism is significant to the world due to the volume of income it brings to nations, and it enhances international relations the world over. International tourism offers tourists great services in the nations they decide to tour while they boost their economy. It aids in providing jobs to the local residents of the nations being toured not just in the tourism, as well as the service industry, but also in the manufacturing industry because many individuals return home with local keepsakes in hand. Tourists are more inclined to have disposable income, which they use in the nations they are touring (Lennon & Foley, 2000). ... Even with all the natural disasters, which have overwhelmed the world of late, as well as the tragedy of 9/11 and the 2005 London Bombing among others, individuals are still traveling the entire world to see tourist attractions and see what other nations have to offer. Other major issues affecting this field can be divided into economical factors, technological factors, political factors, demographic factors and cultural factors (Ineson, 2005). This paper will reflect on the main issues affecting the international tourism sector and how they have challenged conventional forms of tourism activity. The paper will also discuss to what extent responsible tourism presents an opportunity for addressing some of these issues. Economic Factors Intentional tourism can cost local governments, as well as local taxpayers, loads of money (UNEP, n.d). Developers might require the government to develop the roads, airport, railways and other infrastructure such as enhancing their water transport syst em, and perhaps grant tax breaks and other financial benefits, which are expensive events for the government. Public resources used on support tax breaks or infrastructure might decrease government investment in other vital areas such as health and education (Lennon & Foley, 2000). This, therefore, makes a country oppose international tourism. Raising the demand for basic goods and services from tourists will normally lead to price hikes, which disapprovingly affect locals whose proceeds do not rise proportionately (UNEP, n.d). International tourism and its associated rise in real estate demand have radically increased land values and building costs. Not

Policy and practice in the education of bilingual children Essay - 1

Policy and practice in the education of bilingual children - Essay Example The processing of cognition has consequences that come about due to bilingualism or multilingualism. Therefore, all perennial questions concerning bilingualism revolve around the relationship and connection between two different languages in the same mind. Most tutors tend to wonder whether if multilingualism has two forms of separate systems responsible for language processing or it is a single combined system. Ideally, issues regarding whether one language aids or interferes with the other are not clear but this paper will consider addressing this issue with relevance to cognition. The complexity of the system consisting of two languages may have either losses or benefits on some areas rather than mind. This means that monolinguals and bilinguals may think differently. Evaluation of the competitive views Studies concerning psychology reveal that the term â€Å"cognitive† is becoming a confusing element when discussing this topic. With reference to linguists, linguistics is an arm of cognitive psychology. This is because, it concerns human mind. However, you should be able to note that the faculty of language is entirely different from the rest of the faculties that concern human mind. This reveals that, the faculty of language is distinct from cognition. Furthermore, linguistics differentiates the abstract of knowledge commonly referred to as â€Å"competence† and the process of â€Å"cognition† that facilitates the actual comprehension and production of a speech often termed as the â€Å"performance†. Often, psychologists explore the aspects concerning the relationship between the rest of the human mind (cognition) and language. Interestingly, some models related to language competence such as the parameter setting tend to treat language as a separate kna ck of human mind. Further, these models seek to develop a difference wherein language competence becomes a distinct aspect from language performance (Harris, 2005:385). Fact-findings tell us that the manner in which an individual defines the relationship between cognitive processing and bilingualism depends on the approach and the ideology of the person asking the question. The common general manner in which people ask this question uses the normal approach whereby it is standard for people to be â€Å"monolinguals† (Heaton, Taylor, and Manly, 2003:185). Supposedly, this approach lies on the norm that human beings should only know one language but deviating from a single language comes with a cost. Contrary to this approach is the multilingualism view, which views that human beings have knowledge of more than one language (Lorentz, 2008:77). In this arena, the monolingual approach has deficiencies since it lacks the natural human heritage whereby people know more than a singl e language. What is unclear is the overall level of loss that monolinguals have for having knowledge of only one language as well as in their remaining mental processes (Hammers and Blanc, 2003:101). Evaluation of the competing views of the relationship between bilingualism or multilingualism and cognition show that people who know more than one language, possess deficiencies in knowledge and understand in their second language (Panton, 2003:39). Research findings make it clear that, perhaps, it is blindingly obvious in such cases that, people who use their second language are less efficient in it (Harris, 2005:388). While compared to monolinguals, monolinguals are more critical and efficient in their native languages since their

Amazon.com, Essay Example for Free

Amazon.com, Essay The firm Amazon.com opened its proverbial doors for business in July 1995 with nothing more than a few people to pack books into shipping boxes out of a residential garage. Since that grandiose opening in Bellevue, Washington, Amazon.com has graduated from an extremely small business to one of the largest online retail stores in the entire world. As previously stated, Amazon initially only sold books and other reading materials and became a major competitor to firms such as Barnes and Nobles. Slowly at first Amazon began to expand the variety of merchandise available for purchase on their website. Today, because of the bold expansion of merchandise, Amazon.com sells everything from diapers in bulk to big screen televisions sets. It is obvious that people enjoy Amazon’s large online selection with over 150 million United States citizens purchasing from the website in 2009 (Webley, 2010). Along with a bold expansion strategy, Amazon’s rapid success is also attributed to the ethical and moral standards it holds itself to. Ethics play a major role in the Amazon Company. Their corporate governance page stresses the important of their â€Å"Code of Business Conduct and Ethics† (Corporate Governance, 2013). There is a link from their main site that explains what is expected of their employees and their finances. This is a readily available document for anyone to view, from the employees to customers just visiting the site. This clearly shows the importance of this topic and also their efforts toward living up to them. Procedures that the Amazon organization has put into place can be seen with this link off their main site. This is their corporate governance therefore everyone must follow it in the company. Sections in the document cover compliance with laws, rules and regulations; conflicts of interest; insider trading policy; price fixing; bribery; payments to government personnel; recordkeeping, reporting, and financial integrity. These are just a few that are relevant to the financial environment (Corporate Governance, 2013). One of the most relevant is the fact they point out recordkeeping, reporting, and financial integrity. This section of their corporate governance stresses  the points that are important to Amazon. They want to make sure that records are kept with the appropriate amount of detail. They do not want just minimal information. This section also explains how recordkeeping will comply with all laws and also with the company’s internal controls. Amazon has financial accounting and legal groups; the purpose of these groups is to create procedures to maintain control of the integrity of the financial reporting system. Amazon shows that they are really looking to maintain control of their finances and the integrity of their finances by creating these groups. Therefore, being responsible with financial reporting is a high priority. The employees are urged to report any discrepancies they see within the system and also violations they see from other employees to anyone in their management chain. This open door policy makes sure that anything that may happen that would go against their policies will be properly reported and fixed. The U.S. financial markets consist of many separate markets for diverse products offered on a range of trading platforms and exchanges. Among the many products traded are fixed-income securities, equities, foreign exchange, and derivatives. Fixed-income securities are financial instruments issued by various companies to raise money as a debt. Investors buy fixed-income securities to receive interest payments over time and for the return of the full investment principal if securities are held to maturity. Interest paid by security issuers as a form of income for investors remains fixed during the term of the securities, and investors may sell their holdings prior to maturity for a gain or loss on their investment principal. Equities are another form of instrument that signifies an ownership position in a corporation. It also represents a claim on its proportionate share in the corporation’s assets and profits. Foreign exchange and derivatives are instruments that lock in a future foreign exchange rate. These can be used by currency or forex traders and large multinational corporations. The Securities and Exchange Commission is in charge of protecting investors and to maintain a fair and efficient capital market. The SEC regulations oversee activities of individuals and organizations involves in the sale of securities, including brokers and brokerage firms. The SEC operates at a high level and does not recoup losses for individual investors. The SEC has enforcement activities that are conducted by its Division of Enforcement. This office conducts  investigations on individuals and corporations that are in a potential of violations of securities laws. Then they prosecute both civil suits and administrative proceedings. The SEC also runs an Office on Investor Education and Assistance. This office works to discourage investor fraud by educating investors. They also receive complaints from individual investors and will send an inquiry on behalf of an investor seeking information concerning a dispute There are three different types of ratios that were used to analyze Amazon.com in this paper. These types are Liquidity ratios, Solvency ratios, and Profitability Ratios. According to The book Financial Management, â€Å"Liquidity ratios are used to address a very basic question about the firm’s financial health: How liquid is the firm? A business is financially liquid if it is able to pay its bills on time.†(Titman, Keown, Martin, 2011, p. 80). The liquidity ratios used were the current ratio and the day’s receivable ratio. The current ratio is a very broad ratio that gives a general sense for how liquid the business is within a given time frame. The current ratio for Amazon.com shows that their current liquidity is shrinking a bit but not enough to cause concern. The day’s receivable ratio shows how long it takes for Amazon.com to collect on their receivables. The amount of days it takes Amazon.com to collect their receivable s has increased by about eight days. Although it is never a good thing to take a significant amount of time to collect, 92 days is still not a cause for concern. The next type of ratio used was a solvency ratio. The solvency ratio used is the Debt to Asset Ratio. This ratio measures the proportion of Amazon’s assets that were financed by borrowing or debt financing. According to the ratio, Amazon.com has seen about a 5.5% increase in the amount of assets financed. However, the amount is still less than the total amount of assets which is a good sign. The next type of ratios used is the profitability ratios. The profitability ratios used are the return on equity ratio and the operating profit margin ratio. The return on equity ratio measures Amazon’s profitability by showing how much profit they generate with the money invested by shareholders. This ratio is where we see a cause for concern. Amazon has dropped by 7.4% in this department down to -.4%. The operating profit margin ratio shows how much profit is generated from each dollar of sales. This is also dropping quite considerably. After viewing all of the ratios above, Amazon does not need to be concerned with  the overall health of the business but needs to work on becoming more profitable for investors. In conclusion Amazon.com is one of the foremost pioneers and trailblazers of the online retail market. As many pioneers of industries do Amazon.com began in a small two car garage and has graduated to operating one of the largest online retail companies worldwide. From selling books and other reading materials, to offering big screen televisions and diapers, Amazon.com is a household name. Although Amazon has experienced great success over the years, a deeper look into the firm’s liquidity, solvency, and profitability ratios has shown some signs of trouble. The firm’s liquidity ratios have been on a slight downward trend, although not significant, the ratios show some trouble. The Solvency ratios are also rising slightly, which shows that the firm is financing about 5.5% more of its assets than before. This rise in solvency ratio is little to no concern because of the firms total assets are larger than the amount financed. Profitability ratios for Amazon are a bit of a concern and headed downhill. Profitability of Amazon.com has dropped from 7.4% to -.4%. With such a dramatic fall in profitability, Amazon must immediately look to correct this issue in order to stay ahead of the online retail industry. References Corporate Governance. (2013). Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=97664p=irol-govConduct The Investors Advocate: Retrieved from http://www.sec.gov/about/whatwedo.shtml Titman, S., Keown, A. J., Martin, J. D. (2011). Financial Management. Principles and Applications (11th ed.). : Pearson Education Webley, K. (2010, July). Online Shopping. Time, (), . Retrieved from http://content.time.com/time/business/article/0,8599,2004089,00.html

Organisational Business Practices Essay Example for Free

Organisational Business Practices Essay Organization is a principle of life. We seek the help of organizations to meet our day to day requirements such as to feeding, clothing, educating entertaining, protecting etc. However, organizations are not contemporary creations. Modern society has more organizations which are fulfilling a larger category of societal and personal needs. Organizations are so encompassing in the modern life that it is sometimes easy to overlook that each may be regarded as an entity with a specific contribution and specific goals. Organization is a system of consciously coordinated activities of two or more persons in order to achieve a common goal. It is a system of four major internal interacting components such as: task, people, technology and structure. Organizations are said to be open systems. A number of metaphors can be used to think and explain about the nature of organization. There are eight archetypical metaphors of organization: Machines, Organisms, Brains, Cultures, Political Systems, Psychic Prisons, Flux and Transformation, Instruments of Domination. General Discussion Document: Director of Marketing is proposing to introduce a new process of sales at Superior Sales Corporation for which there will be changes as per the present set up. Staff are likely to resist the change hence some suggestions are placed to reduce the resistance. Organization Structure: Functional superiority can only be achieved if there is enough reliability and focus within each business unit. Elites are those specialized organizational units with closeness to power and having superior capability. Their functions signify a particular organization’s typical capability. It is, important that more than one such elite function exist. They need to be complementary so as to make sure that they serve as a check on another. Pluralist are those essential forces that play a important role in decision making. The tension that is created amongst these forces stimulates thoughts and lead to self-improvement and competitiveness, Elite functions bring main strengths to an organization, but must assist with the whole to attain shared results. The stronger and more competent the elites are, the more difficult it is to achieve cross-functional teamwork. The organization’s challenge is therefore to ensure that these functions are on a par with that of competition, but at the same time they need to ensure that they respond to market demands by cutting across these functional compartments. Organization Cultures: Organizations are mini-societies that have their own distinctive patterns of culture. Culture is a modern concept used in a social sense to refer broadly to civilization and social system. Its increasing use within the social sciences has led to definitions of varying generality, which develop in a host of ways. Culture is that complex whole which includes knowledge, belief, law, morals, custom, and any other capabilities and habits acquired by man as a member of society. There is a growing literature of relevance how organization can be understood as a cultural phenomenon. It is valuable to understand the relationship between culture and industrialization. The greatest strength of this metaphor is that it shows how organizations rests in shared systems of meaning, values, ideologies, beliefs and other social practices that ultimately shape and guide organized action. Reactive and Proactive Changes: Forces for change arise out of an organization’s interaction with elements in its external or internal environment. The action of competitors, suppliers, government units or public groups may have substantial impacts on change. Social and cultural factors such as life styles, values or beliefs also lead to important changes. Forces of change may also arise from within an organization depending upon different phases of growth or demands made by different interest groups. Reactive changes occur when these forces make it necessary for a change to be implemented. Proactive change takes place when some forces to change lead an organization to conclude that a particular change is desirable and goes about in initiating the change in a planned manner. The difference between reactive and proactive changes corresponds to that between reflexive behavior and purposive behavior. Reactive change, like reflexive behavior, involves a limited part of the system whereas proactive change and purposive behavior coordinate the parts of the system as a whole. Organizational change has noted that many participants respond with dogged resistance to altering the status quo. In the industrial phenomenon workers have at times sought, in extremely violent fashion, to block the introduction of new technology. Supervisors and lower level managers have balked at large scale projects in job redesign and job enrichment; even low level employees, the presumed beneficiaries of such projects, have fought such changes. Senior managers have fought pitched battles against realignment of corporate structure. Even the proposal by a course coordinator to adopt a different style of presenting the report is capable of touching off a frenzy of defensive tactics to resist change. Such behavior may be either overt or covert. Overt resistance may take the form of employees deliberately failing to do the things necessary for successful change or simply being unenthusiastic about the change. The absence of overt resistance does not mean that resistance is not present, as resistance may be hidden from direct observation. Covert resistance can be more detrimental to change than open resistance because it is harder to identify and eliminate. There are at least two sets of factors which explain the process of resistance. One set relates to the personality and the other relates to the social system. Decreasing the Resistance: Managers who have been responsible for implementation have developed personal perspective consisting of assumption and strong feelings about how change should be introduced. These philosophies fall into two camps, either tops-down or bottoms-up. The Tops-down Strategy: The advocates of this strategy believe that, in general, people resist changes and require direction and structure for their well being as well as to work efficiently and effectively. The basic psychological contract between employees and management, it is assumed, is one in which the employee provides work, effort and commitment and expects in return pay, benefits, and a clear definition of what is expected to be done. It follows that it is the management’s responsibility to design the changes it deems appropriate and to implement these thoroughly but quickly by directives from the top. The Bottoms-up Strategy The advocates of this approach profess what to them is a more enlightened view of human nature. They argue that people welcome change and the opportunity to contribute to their own productivity, especially if the change gives them more variety in their work and more autonomy. These managers assume people have a psychological contract which includes an expectation that they be involved in designing change as well as in implementing it. Commitment to change, they say, follows from involvement in the total change process and is essential to successful implementation.

Emerging Real Estate Market in Mumbai

Emerging Real Estate Market in Mumbai Introduction: India has firmed up its place in the world business space prompting global business houses to sit up and take a fresh view on India as a business and investment destination. In the last two years, Indian economy has grown well despite nature’s fury or other global adverse events. India is fast establishing itself as an alternative to China in a variety of sectors, particularly IT-ITES, manufacturing, and real estate. The most spectacular resurgence has been that of the real estate sector, which is back in business with a bang. New projects, superior quality product, new growth corridors, increased infrastructure spending, falling cost of finance and interest, and growing capacity of common man in the key reasons behind the steady growth in real estate market. With stock market being highly volatile, investment in real estate has begun to look attractive and competitive with typical yields of 10-12% per annum are achievable, even though specific return is always linked to property specific factors, dynamics of real estate market and the overall economic performance. Real estate is fast turning out to be a compulsive investment bet as compared to other investment vehicles such as capital and debt markets, bullion market etc. It attracts investors by offering a possibility of stable income yields, moderate capital appreciation, tax structuring benefits and higher security being tangible asset. With these prime factors there are several micro factors responsible for the returns on investment and those are location of the property in macro and micro context, the usage of property, the quality of tenant, the capital value and achievable rental, the prevailing structures of property tax and stamp duty. The study includes the macro economic factors that make India a favourable investment destination. The purpose of the study is to give a comprehensive overview of the emerging Real Estate market of Mumbai. Today’s market is at a stage of ambiguity so a detailed study is required in this respect. In the final report detailed analysis will be carried out by fragmenting the market into Residential, Commercial and Retail space. An overview of each of these markets is included in the current report. The study will also include what are the various financing options in the emerging markets currently. A detailed survey will be carried out for the final report based on a questionnaire and will be send out to the various players ( Private Equity funds, Domestic Financial institutions, Local Real Estate Developers and Property Consultants to assess the various options available for Fund raising. Currently an introduction is also included on the same. Characteristics of the Real Estate Market in India: With reference to the availability of infrastructure facilities, following cities are currently attracting MNCs/corporate/real estate developers: Tier I cities, Mumbai (Commercial hub), Delhi (Political hub) and Bangalore (Technological hub): Preferred option for many new market entrants Command the highest international profiles and significant proportion of FDI Offer qualified labour pool and the best infrastructure facilities Exhibit development of sub-urban commercial real estate Yield of 9.5 – 10% (Real Estate Sector – The India Story Submitted by Miss Sonia Sahni Asst Manager Corporate and Investment Banking, ABN AMRO Bank, Nariman Point, Mumbai) 2.0 Macro-Economic Factors India: Background of the Economy of India during 2008 and early 2009: Last year 2008 was quiet a setback for the real-estate sector in India after the boom of the previous three years where the property market registered a return of more than 30-40% every year. The sector had faced a down trend where the property prices corrected by over 30%. This was due to the sub-prime crisis in the United States and also the correcting Capital Markets and bankruptcy of the MNC’s and the Banks. This resulted in loss of liquidity and hence a fall in demand. In August 2008 the inflation reached as high as 13% which forced a knee jerk reaction from the RBI (Reserve Bank of India) to cut the cash reserve ratio, the repo and the reverse repo rate which warranted the Banks to lend less and as a result of the further shortage in liquidity the real-estate market took a plunge. However, the economy has recovered by leaps and bounce and which is reflected by the chart below: Sam Mahtani, emerging equities manager at FC, is confident on Indias economic prospects. Over the next 10 years, UBS estimates economic activity in India will increase by around 8.5% a year, a rate comparable with China and beyond the global average. We think that this growth rate could be achievable if Indian policymakers start to undertake structural reforms in the economy. Over the next five years, the government is committing an estimated US$500 billion to road, rail, port and other vitally needed upgrades. If the right legislation is put in place and managed effectively, this could represent the springboard for long-term economic growth rates in excess of Chinas†, he believes. GDP of India: The chart shows that the GDP growth rate of India and China are far ahead than any other country in the world. This shows that the standard of living in the country is high. GDP reflects the total income, the total output and the total expenditure of the country. The economy of the country is the twelfth largest in the world as per the recent market exchange rate and it is ranked number four as per purchasing power parity. It is the 2nd fastest growing economy in the world. The service sector of India contributes more than 50% to the GDP and real-Estate sector is the third largest among it. Mumbai is the sole largest contributor to the national GDP and the economics of Mumbai further supports the fact. The above figure shows the long term growth rate of GDP of India against the Developed counties of the World. Economy of India (mid 2009) and its impact on Real Estate: However the economic condition of the country has improved in the last year. This was a great precedent for the Real-estate sector in India and especially Mumbai. It has always been witnessed during recession that the financial cities of the world take the hardest hit but on the other hand recovery is quickly as well. The inflation rate in India is 0.30% on 1st December 2009. The CRR is 5% and repo rate is 4.75% and reverse repo rate 3.25% which is commendable and which has increased liquidity in the market and as a result of this the property prices have gone up in the country. The stock market has recovered exceedingly well and it had an almost 50% rise than the last year’s index. This has further increased the confidence amongst the analysts and the investors. In Mumbai the property rates have accelerated and it is not far behind the rates which were witnessed during the boom period. Mumbai has seen a constant price in the property prices since mid 2009 due to the strengthe ning of the economy. Source: CBRE report 2009 By 2030 India will need up to 10 million new housing units per year. Rapid population growth, rising incomes, decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. The financing of owner-occupied housing in particular holds out enormous market potential. (Deutsche Bank Report May 8, 2006). Population in India: India is the 2nd most populated country in the world at present after China. However, as per the numbers projected in a United Nations Report states that the Indian population would be more than the Chinese population by 2050. (Population of India is also set to take over China by 2050 as per the UN report.) 1.0 MUMBAI – OVERVIEW: Mumbai, the capital city of the state of Maharashtra, is the one of the largest metropolis in India. Known as the financial capital of the country, the city contributes almost 5% of India’s GDP. It is a multi-functional city with a vast array of economic opportunities, which has resulted in attracting a large migratory population from all over. The city sports a highly cosmopolitan environment with an intricate urban structure. Mumbai has long been home to several large multinational companies and is invariably the first choice for a new organization entering India. Demographic Pattern: Greater Mumbai accounts for 13% of Maharashtra’s population and 1.2% of India’s population[1]. The rate of growth of population has gone down but has been higher than the growth rate of Maharashtra. Source: Census of India Over 1901-71 period, the population in the island city was steadily increasing and was more than that of the suburbs. However, during the last 3 decades the population growth in the island city has been negligible whereas that in the suburbs is increasing at a rapid rate. Among the suburbs, the western suburbs (ward H, K, P and R) are more densely populated than the Eastern suburbs (ward L, M, N, S and T). The following graph indicates the projected population growth in Greater Mumbai. The above graph further illustrates that the population of Mumbai is set of increase manifoldly, as against the other Metros of the country. 2.0 MUMBAI REAL ESTATE MARKET OVERVIEW: The island city of Mumbai is the commercial capital and economic growth engine of India. Originally composed of seven small islands, land reclamation and infill carried out during the 18th and 19th century integrated these islands into a continuous peninsula (Deshpande and Arunachalam,1981). Beginning as a seaport on the west coast of the Indian peninsula, Mumbai has steadily diversified its economic base to include value-added manufacturing and financial services. The country’s central bank, the Reserve Bank of India and two of India’s largest stock exchanges, the Bombay Stock Exchange and the National Stock Exchange are all located here. Mumbai accounts for one-tenth of factory employment and value-added manufacturing, while the port handles more than one-third of the total value of foreign trade (Deshpande, 1996), making the Brihan Mumbai Municipal Corporation one of the richest, with a budget of more than USD 1.2 billion (Mohan, 2003), exceeding the budget of nine S tates and Union Territories of India. This economic growth is sustained by and in turn, drives the steady influx of migrants from rural and regional centres of the country. Consequently, the Mumbai Metropolitan Region (MMR) is one of the fastest growing regions of India. Its population increased from 7.7 million in 1971 to 18.3 million in 2001 (Census of India, 2001) and is projected to increase to 22.4 million by 2011(MMRDA, 1999). (Journal on HOUSING TENURE FOR THE URBAN POOR: A CASE STUDY OF MUMBAI CITY by Gaurang Desai and Madhura Yadav). Mumbai has gained immense prominence as one of the growing corporate and IT destinations in India. The Mumbai real estate scenario has been reflective of the burgeoning real estate sector of the country. The city has a mature and demand-led market driven by end users. Investors and HNIs have also been actively investing in various pre-leased properties with insurance, banking, IT/ITES, residential and retail sector occupants. Overall, there has been an increase in demand as well as supply and an appreciation in the real estate values across various micro markets in the city. Economy of Mumbai: The per capita income of the city is Rs 66,360 which is three times higher than the national income. It contributes 1/3 rd of the total income tax collection of the country. It contributes nearly 60 % of the total income generated from custom duty of the country. 40 % of India’s foreign trade. Corporate tax collection of the city is Rs 40 billion. 20 % of the total excise duty collection of the country. Mumbai Metropolitan region generates 5 % of the total GDP of the country. The island city of Mumbai is the economic growth engine and commercial capital of India. A combination of in-migration combined with a severe land shortage has resulted in Mumbai having one of the most expensive real estate in the world. As a result the city faces housing crisis with an estimated 60% of its total population living in slums, adopting multiple informal housing tenures. Property Index of Mumbai: Database:This index is based on minimum database size of 20,000 data points every month and the analysis has been drawn over a period starting Jan’09. The prices of properties are obtained across micro-markets through property listings on the website as well as based on nationwide sales force. Index Algorithm:The complex algorithm takes into account the property prices as base and then factors in the demand and supply of residential properties for each of the cities covered by it. Care has been taken to give weight age to cities in line with the size of underlying property market. (Makaan.com) The Real-Estate market of Mumbai can be divided into three types- Commercial Residential Retail Mall 4.1 Commercial Real Estate Market: Mumbai’s commercial market is divided into its traditional business districts and the recently developed business addresses. The Central Business District (CBD) of the city is located in South Mumbai and comprises of: Nariman Point – Often said to be the ‘Manhattan of India’, Nariman Point has traditionally been the most attractive location for international companies, in particular international investment banks, insurance companies and consulting firms. The areas concentrated within a radius of 1.5-2 km around the CBD are termed as the off-CBD locations, which include: Churchgate /Fort/ Fountain – This district has traditionally housed the city’s Business and Government establishments. It also houses numerous National and International Banks. Cuffe Parade – Primarily an up market residential area with a host of high-rise buildings. Some notable commercial buildings like the World Trade Centre and Maker Towers are located here. Ballard Estate – A prime commercial area where the buildings have European Renaissance architecture. The off-CBD business centres of the city have expanded to include a number of areas mostly oriented towards central Mumbai: Lower Parel: This industrial belt of Mumbai is transforming itself into a commercial hub of the city. This area is being developed on what used to be the textile mills. With mill land being freed for commercial, retail and residential development, the Lower Parel area will see massive supply of space. Currently, there are a number of retail, entertainment and advertising companies located in Lower Parel. High Street at Phoenix Mills is the most prominent retail development in this region. Worli-Prabhadevi: The Worli–Prabhadevi area has been a conventional stronghold of number of corporate offices. Besides, there is also the presence of two malls – Crossroads and Atria, in the stretch. The ongoing Bandra-Worli sea link is expected to give a further fillip to this area. The Suburban Business Districts (SBDs) of the city comprise of the following locations: (Image of the Bandra Kurla Complex) The Bandra-Kurla belt: The Bandra-Kurla Complex (BKC), which has been developed as an alternative business district to the CBD, has attracted a number of corporate. ICICI, National Stock Exchange, Wockhardt and ILFS are some of the important corporate located here. The Andheri-Kurla Belt: This area is also an upcoming location of choice for IT/ITES companies, banks, insurance companies, etc. Some of the sought after Grade ‘A’ buildings in this belt are ‘Technopolis’ and ‘Solitaire Corporate Park’ where a number of corporate are relocating. The Malad-Goregaon Belt: The Malad Goregoan belt has become the preferred destination for IT/ITES companies due to the availability of large floor plates at competitive rentals. The superior quality of buildings offered at MindSpace is another motivating factor for technology companies looking for world-class amenities to come here. The Powai Belt: Another suburb, the Powai belt is scoring well on the IT/ITeS front. The pricing in rental terms is similar for Powai and Malad. There will be 600 new shopping centres by 2010. India’s burgeoning middle class will drive up nominal retail sales through 2010 by 10% p.a. At the same time, organised retail is becoming more important. At present organised retail accounts for a mere 3% of the total; by 2010 this share will already have reached 10%. (Deutsche Bank Research 6 may,2006) The Peripheral Business District (PBD) of the city consists of: Navi Mumbai: Navi Mumbai is being developed as a counter magnet to Mumbai, with the basic objective of curbing further congestion in the city. The potential target audience, apart from the existing residents, arises from the 40,000+ IT/ITES industry workforce travelling to Navi Mumbai daily. Consequently, the government has undertaken a number of initiatives to promote further development of IT ITES sector in Maharashtra state. These include formulation of a progressive sector-specific policy, development of IT parks and development of the â€Å"Knowledge Corridor† between Navi Mumbai and Pune. Sector 17 of Vashi and CBD Belapur were developed as the prime commercial areas for Navi Mumbai. A number of corporate have moved to Navi Mumbai, the largest amongst them being Reliance Industries. Millennium Business Park at Mahape and Airoli Knowledge Park at Airoli, developed by MIDC houses several IT/ITES companies like Aptech, CMS computers, Datamatics, Mastek, TCS, Patni etc 4.2 Residential Market Scenario: Residential real estate in Mumbai is today amongst the most expensive in the country. The key residential areas in the city are as follows: The south and central locations of the city like Colaba, Napean Sea Road, Worli, Breach Candy and Pedder Road are the most preferred locations for leased accommodation for the senior and expatriate staff. Amongst the key suburban locations, Bandra and Malad in the northwest and Powai in the northeast are equally preferred due to proximity from the emerging commercial/office locations. Other suburban residential micro-markets of Andheri, Goregaon and Mulund also fall in the preferred category. In fact, these areas are witnessing fresh construction activity with projects from prominent residential developers like K.Raheja, Oberoi Constructions, Royal Palms and the Runwal Group. Luxury housing projects, which have been traditionally concentrated in South and selective Central Mumbai locations, are now being planned in the suburban regions like Malad as well as peripheral districts. Currently, a number of IT/ITES companies have located there. The Central Mumbai belt consists of areas such as Mahalaxmi, Lower Parel, Worli, Parel,Byculla, Chinchpokli, Sewri, Wadala, Dadar, Matunga and Mahim. The micro markets of Worli are currently established markets and command a premium over other central Mumbai pockets. The current ongoing rates in Worli vary between Rs. 25,000-30,000 per sq. ft. Lower Parel is fast emerging as a residential and commercial destination, with additional supplies expected from the mill lands. 4.3 Mumbai Mill Lands: (Image of an old Mill in Mumbai) Bombay had first developed as an industrial city through the growth and expansion of the cotton textile industry from the late nineteenth century to the nineteen forties. Now known as the Mill Lands, the textile industry was located in the central districts of the Island City. After World War II and Independence, to the fifties, sixties and seventies, the industrial base of the urban economy diversified into petroleum and chemical production, and then into petrochemicals, pharmaceuticals, consumer goods and engineering industries. These new industries were mostly located on the eastern fringe of the Island City, in the Eastern suburbs, and in the seventies and eighties expanded to Thane and its surrounding district, as well as the Thane-Belapur belt flanking Navi Mumbai. Till the late seventies, the Cotton Textile Mills were booming with activity but in 1982 things changed. The unorganized Powerloom sector had taken over and it was becoming uneconomical to maintain large-scale industrial units within the city limits on account of high power and Octroi costs. Moreover, the 18-month long crippling strike by the mill workers proved to be the final nail in the coffin. All this led to huge losses and the running of the Cotton Textile Mills became unviable. Several mills were declared sick and a few even shut down their operations. Only a few managed to survive. The total area occupied by all the mills put together is approximately 605 acres (2,446,278.39 sq. mt.) There are three categories of ownership of the mills, namely, National Textile Mills (NTC), Maharashtra State Textile Corporation and Private Owners: 4.4 Mumbai Port Trust Land: The proposed release of Mumbai Port Trust (MbTP) land could change the face of the eastern waterfront in Mumbai. MbPT has about 40 acres of surplus land of which a substantial portion is on the environmentally sensitive eastern waterfront (areas such as Sewri, Wadala). Large tracts of MbPT land had been leased out to private companies, several of whom have shifted their facilities to other areas, but continue to maintain a token presence on the leased land. With the construction of Trans- Harbour Link and the Special Economic Zone at Dronagiri this land is expected to turn out into a virtual goldmine. The MbPT policy for commercial utilization of this land has been awaited for several months since the new board of trustees were not constituted. Now with 17 of the 21 trustees in place, the process of formulating the policy has been set in motion. The subcommittee is expected to unveil a plan of action when MbPT board meets on August 9. Besides the above, there are some Port Trust plot that are being released in the market. These include a 28.39 hectare (approx. 70 acres) plot at Titwala, vacant lands in isolated pockets totalling to 5.17 hectare (approx. 14.5 acres) and a slum-encroached plot measuring 6.77 hectare (approx. 17 acres) on the eastern waterfront. Floor Space Index (FSI): FSI stands for Floor Space Index. Municipalities and Government’s allow only a certain amount of FSI. Otherwise there are possibilities of sky scrapers been constructed in narrow spaces that would be leading to parking and various other problems like the one existing in downtown Manhattan. In Mumbai, FSI was first introduced in 1964 and the value than was 4.5 times. Over the years there were several changes made to the rule which depends broadly on the leading Municipal Corporation and the State Government. With an average of 2.9 m2 per person, the consumption of residential floor space in Mumbai is one of the lowest in the world. More than 50% of the city’s population lives in slums. This type of record would be expected from a city in a desperate economic situation. However, this is not the case. Mumbai is a prosperous city with an expanding economy. (Mumbai FSI conundrum: The perfect storm: the four factors restricting the construction of new floor space in Mumbai – By Alain Bertaud 2004). The very low consumption of floor space coupled with very high real estate prices would suggest that a number of supply bottlenecks might be responsible. By comparing Mumbai to other metropolis in Asia it appears that indeed 4 factors are exceptional and contribute to the very low supply of floor space: An exceptional topography that reduces the amount of developable land; A draconian and ill-conceived land use policy restricting the area of floor space which can be built on the little land available. Muddled property rights preventing households and firms to freely trade land and floor space as a commodity; A failure to develop major primary infrastructure networks, which prevents the city to overcome its topographical constraint. In turn, the weakness of the infrastructure network is used to justify the restrictive land use policy. (Alain Bertaud July 15th 2004). Comparing Mumbai to other similar sized Asian cities, (Bertaud 2004) found that within a radius of 25 km from the city centre, sea and water bodies occupy 66% of the total area for Mumbai while it was 22% in the case of Jakarta and 5% for Seoul. Cities with such extreme topography often compensate for the lack of land by allowing the height of buildings to be increased. In the case of Mumbai however, this is not the case. While the Floor Space Index (FSI) in most large cities varies from 5 to 15 in the Central Business District (CBD) to about 0.5 in the suburbs, in Mumbai the FSI remains uniformly fixed at 1.33 for the Island City and 1.00 in the suburbs (Alain Bertaud, 2004). (The above map shows the different FSI values in the city.) Transfer of Development Rights (TDR): A cartelisation of Mumbais real estate, one of the costliest in the world, in the matter of transferable development rights has put upward pressure on prices and has also caused concern in policy circles. In case of Mumbai, TDRs were used initially to compensate plot owners whose development right was restricted due to some public programmes like widening of roads etc. Later this was used for compensating owners of Heritage buildings who could not develop their lands. More recently they have been used in case of Slum Redevelopments where additional development rights could not be consumed on a plot due to over density reasons. There are also talks about using TDR for redevelopment of old buildings. Another detail about TDR is that it can be only used in the same or northern ward of the generating plot Hence you could see sudden additions to suburban buildings that have high property value.However, it also led to haphazard and unplanned development in the suburbs. There was an increased the pressure on suburban infrastructure. In a recent development, just six-odd builders and developers hold 70 per cent of the 2.5-3 million sq ft TDR available. The price of TDR has also surged to Rs 2,500-Rs 3,000 per sq ft from Rs 800-1,000 sq ft in the past six months. Realty sector experts in Mumbai cartel had meant a rise in TDR prices practically every month. The development is a sequel to a 2008 order of the High Court here, which stayed a state government decision to allow 33 per cent extra building rights (measured as more of Floor Space Index, or FSI, the ratio of what can be erected on a plot of land to its area) in return for more premium. Nainesh Shah, executive director of Everest Developers, argued that TDR rates can be brought down only by an increase in the stock of land and the government are the only entities that can make this happen. More land needs to be released, Ashutosh Limaye, associate director, strategic consulting, Jones Lang LaSalle Meghraj, saidâ€Å"TDR trading follows the open market principle. For areas that are popular and in demand for real estate development (Bandra, Chembur, Vile Parle, etc), land prices is high and it makes sense to buy TDR even at a higher rate†. However, A Vile Parle-based activist and former builder, Bhagwanji Raiyani, filed a Public Interest Litigation in the Bombay High Court asking for a total ban on TDR, following which the court in an interim order banned the use of TDR along the Eastern and Western Express Highways and the Eastern and Western suburban railway tracks. In the recent times, the government is considering a proposal to increase floor space index (FSI) in the suburbs to two without taking the transfer of development rights (TDR) route. Under this, for example, a builder involved a slum project in Trombay gets the nod to transfer development rights to the north of the rehabilitation site. Because of this policy, the suburbs are witnessing the construction of tall towers, which use TDR. There has been a 100% rise in property prices in Mumbai, Thane and other places, primarily because of the high cost of TDR. If a builder buys TDR at Rs 4,500 per sq ft, he will have to add another Rs 4,500 per sq ft towards the cost of land and construction. This forces him to sell flats at Rs 10,000 per sq ft even in a distant suburb like Mulund, which is an absurd rate. No wonder there is tremendous consumer resistance. Around 50% of the flats remain unsold because the prices are beyond an average buyer’s reach,’’ (Subhash Runwal, former office-bearer of the Maharashtra Chamber of Housing Industry, reported in Times Of India). The demand for FSI is 10 crore sq ft per annum in the suburbs. If the government sells this at even Rs 2,500 crore, it can generate a whopping Rs 25,000 crore annually. Half of this revenue can be used for improving infrastructure in the suburbs and the rest for development work in the rest of the state†. The Golden Question: How to design new FSI and TDR values for Mumbai? Design a spatial land use strategy based on current land values and future investments in transport (bridges, highways, metro, BRT). Identify high accessibility nodes. Divide the existing and future built-up areas into land use zones based on accessibility and on existing character of the area; Identify and map the historical areas and natural areas that need to be protected, those that should not be redeveloped, and where the new FSI will not be applied; Design regulations (FSI, % lot coverage, setbacks, etc) for each zone. Comprehensive plan ready and approved for the entire city No more TDRs are issued during preparation of plan, however, already issued but not yet used TDRs are honored. Progressive transition: New FSI plan prepared and approved for 2 or 3 main streets and high intensity areas around new metro stations and bridge access. New TDRs can be issued but they have to be used in the areas already mapped for FSI increase. Meanwhile the comprehensive strategy is prepared and approved. More areas for FSI increase are prepared every year and where TDRs can be used. After 2 or 3 years new TDRs are issued only for slum redevelopment and for historical area protection. The above is just a model example of how the increase in FSI would solve the Real Estate problems in Mumbai. If the Government adopt the path which has been used in downtown Manhattan than it would reduce Real Estate prices in the city, help to relocated millions of people, abolish the TDR practice and the additional space could be used to improve the lagging infrastructure of the city. 4.5 Mumbai Salt Pan Land http://infochangeindia.org/Agenda/Coastal-communities/Saltpan-city.html The proposal to use saltpan lands first emerged in 2002 when the Maharashtra Housing and Area Development Authority (MHADA) warned that it was running out of land and asked the state to release land belonging to various departments like defence, the Bombay Port Trust, and saltpan lands. In 2006, the then Union Minister for Commerce and Industries Kamal Nath and Ex Maharashtra Chief Minister Vilasrao Deshmukh worked out a formula of developing saltpan lands on a no-profit-no-loss basis. The scheme proposed allowing private developers extra FSI for commercial purposes after setting aside 225 sq ft houses to accommodate slum-dwellers. In 2007, a committee of u Emerging Real Estate Market in Mumbai Emerging Real Estate Market in Mumbai Introduction: India has firmed up its place in the world business space prompting global business houses to sit up and take a fresh view on India as a business and investment destination. In the last two years, Indian economy has grown well despite nature’s fury or other global adverse events. India is fast establishing itself as an alternative to China in a variety of sectors, particularly IT-ITES, manufacturing, and real estate. The most spectacular resurgence has been that of the real estate sector, which is back in business with a bang. New projects, superior quality product, new growth corridors, increased infrastructure spending, falling cost of finance and interest, and growing capacity of common man in the key reasons behind the steady growth in real estate market. With stock market being highly volatile, investment in real estate has begun to look attractive and competitive with typical yields of 10-12% per annum are achievable, even though specific return is always linked to property specific factors, dynamics of real estate market and the overall economic performance. Real estate is fast turning out to be a compulsive investment bet as compared to other investment vehicles such as capital and debt markets, bullion market etc. It attracts investors by offering a possibility of stable income yields, moderate capital appreciation, tax structuring benefits and higher security being tangible asset. With these prime factors there are several micro factors responsible for the returns on investment and those are location of the property in macro and micro context, the usage of property, the quality of tenant, the capital value and achievable rental, the prevailing structures of property tax and stamp duty. The study includes the macro economic factors that make India a favourable investment destination. The purpose of the study is to give a comprehensive overview of the emerging Real Estate market of Mumbai. Today’s market is at a stage of ambiguity so a detailed study is required in this respect. In the final report detailed analysis will be carried out by fragmenting the market into Residential, Commercial and Retail space. An overview of each of these markets is included in the current report. The study will also include what are the various financing options in the emerging markets currently. A detailed survey will be carried out for the final report based on a questionnaire and will be send out to the various players ( Private Equity funds, Domestic Financial institutions, Local Real Estate Developers and Property Consultants to assess the various options available for Fund raising. Currently an introduction is also included on the same. Characteristics of the Real Estate Market in India: With reference to the availability of infrastructure facilities, following cities are currently attracting MNCs/corporate/real estate developers: Tier I cities, Mumbai (Commercial hub), Delhi (Political hub) and Bangalore (Technological hub): Preferred option for many new market entrants Command the highest international profiles and significant proportion of FDI Offer qualified labour pool and the best infrastructure facilities Exhibit development of sub-urban commercial real estate Yield of 9.5 – 10% (Real Estate Sector – The India Story Submitted by Miss Sonia Sahni Asst Manager Corporate and Investment Banking, ABN AMRO Bank, Nariman Point, Mumbai) 2.0 Macro-Economic Factors India: Background of the Economy of India during 2008 and early 2009: Last year 2008 was quiet a setback for the real-estate sector in India after the boom of the previous three years where the property market registered a return of more than 30-40% every year. The sector had faced a down trend where the property prices corrected by over 30%. This was due to the sub-prime crisis in the United States and also the correcting Capital Markets and bankruptcy of the MNC’s and the Banks. This resulted in loss of liquidity and hence a fall in demand. In August 2008 the inflation reached as high as 13% which forced a knee jerk reaction from the RBI (Reserve Bank of India) to cut the cash reserve ratio, the repo and the reverse repo rate which warranted the Banks to lend less and as a result of the further shortage in liquidity the real-estate market took a plunge. However, the economy has recovered by leaps and bounce and which is reflected by the chart below: Sam Mahtani, emerging equities manager at FC, is confident on Indias economic prospects. Over the next 10 years, UBS estimates economic activity in India will increase by around 8.5% a year, a rate comparable with China and beyond the global average. We think that this growth rate could be achievable if Indian policymakers start to undertake structural reforms in the economy. Over the next five years, the government is committing an estimated US$500 billion to road, rail, port and other vitally needed upgrades. If the right legislation is put in place and managed effectively, this could represent the springboard for long-term economic growth rates in excess of Chinas†, he believes. GDP of India: The chart shows that the GDP growth rate of India and China are far ahead than any other country in the world. This shows that the standard of living in the country is high. GDP reflects the total income, the total output and the total expenditure of the country. The economy of the country is the twelfth largest in the world as per the recent market exchange rate and it is ranked number four as per purchasing power parity. It is the 2nd fastest growing economy in the world. The service sector of India contributes more than 50% to the GDP and real-Estate sector is the third largest among it. Mumbai is the sole largest contributor to the national GDP and the economics of Mumbai further supports the fact. The above figure shows the long term growth rate of GDP of India against the Developed counties of the World. Economy of India (mid 2009) and its impact on Real Estate: However the economic condition of the country has improved in the last year. This was a great precedent for the Real-estate sector in India and especially Mumbai. It has always been witnessed during recession that the financial cities of the world take the hardest hit but on the other hand recovery is quickly as well. The inflation rate in India is 0.30% on 1st December 2009. The CRR is 5% and repo rate is 4.75% and reverse repo rate 3.25% which is commendable and which has increased liquidity in the market and as a result of this the property prices have gone up in the country. The stock market has recovered exceedingly well and it had an almost 50% rise than the last year’s index. This has further increased the confidence amongst the analysts and the investors. In Mumbai the property rates have accelerated and it is not far behind the rates which were witnessed during the boom period. Mumbai has seen a constant price in the property prices since mid 2009 due to the strengthe ning of the economy. Source: CBRE report 2009 By 2030 India will need up to 10 million new housing units per year. Rapid population growth, rising incomes, decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. The financing of owner-occupied housing in particular holds out enormous market potential. (Deutsche Bank Report May 8, 2006). Population in India: India is the 2nd most populated country in the world at present after China. However, as per the numbers projected in a United Nations Report states that the Indian population would be more than the Chinese population by 2050. (Population of India is also set to take over China by 2050 as per the UN report.) 1.0 MUMBAI – OVERVIEW: Mumbai, the capital city of the state of Maharashtra, is the one of the largest metropolis in India. Known as the financial capital of the country, the city contributes almost 5% of India’s GDP. It is a multi-functional city with a vast array of economic opportunities, which has resulted in attracting a large migratory population from all over. The city sports a highly cosmopolitan environment with an intricate urban structure. Mumbai has long been home to several large multinational companies and is invariably the first choice for a new organization entering India. Demographic Pattern: Greater Mumbai accounts for 13% of Maharashtra’s population and 1.2% of India’s population[1]. The rate of growth of population has gone down but has been higher than the growth rate of Maharashtra. Source: Census of India Over 1901-71 period, the population in the island city was steadily increasing and was more than that of the suburbs. However, during the last 3 decades the population growth in the island city has been negligible whereas that in the suburbs is increasing at a rapid rate. Among the suburbs, the western suburbs (ward H, K, P and R) are more densely populated than the Eastern suburbs (ward L, M, N, S and T). The following graph indicates the projected population growth in Greater Mumbai. The above graph further illustrates that the population of Mumbai is set of increase manifoldly, as against the other Metros of the country. 2.0 MUMBAI REAL ESTATE MARKET OVERVIEW: The island city of Mumbai is the commercial capital and economic growth engine of India. Originally composed of seven small islands, land reclamation and infill carried out during the 18th and 19th century integrated these islands into a continuous peninsula (Deshpande and Arunachalam,1981). Beginning as a seaport on the west coast of the Indian peninsula, Mumbai has steadily diversified its economic base to include value-added manufacturing and financial services. The country’s central bank, the Reserve Bank of India and two of India’s largest stock exchanges, the Bombay Stock Exchange and the National Stock Exchange are all located here. Mumbai accounts for one-tenth of factory employment and value-added manufacturing, while the port handles more than one-third of the total value of foreign trade (Deshpande, 1996), making the Brihan Mumbai Municipal Corporation one of the richest, with a budget of more than USD 1.2 billion (Mohan, 2003), exceeding the budget of nine S tates and Union Territories of India. This economic growth is sustained by and in turn, drives the steady influx of migrants from rural and regional centres of the country. Consequently, the Mumbai Metropolitan Region (MMR) is one of the fastest growing regions of India. Its population increased from 7.7 million in 1971 to 18.3 million in 2001 (Census of India, 2001) and is projected to increase to 22.4 million by 2011(MMRDA, 1999). (Journal on HOUSING TENURE FOR THE URBAN POOR: A CASE STUDY OF MUMBAI CITY by Gaurang Desai and Madhura Yadav). Mumbai has gained immense prominence as one of the growing corporate and IT destinations in India. The Mumbai real estate scenario has been reflective of the burgeoning real estate sector of the country. The city has a mature and demand-led market driven by end users. Investors and HNIs have also been actively investing in various pre-leased properties with insurance, banking, IT/ITES, residential and retail sector occupants. Overall, there has been an increase in demand as well as supply and an appreciation in the real estate values across various micro markets in the city. Economy of Mumbai: The per capita income of the city is Rs 66,360 which is three times higher than the national income. It contributes 1/3 rd of the total income tax collection of the country. It contributes nearly 60 % of the total income generated from custom duty of the country. 40 % of India’s foreign trade. Corporate tax collection of the city is Rs 40 billion. 20 % of the total excise duty collection of the country. Mumbai Metropolitan region generates 5 % of the total GDP of the country. The island city of Mumbai is the economic growth engine and commercial capital of India. A combination of in-migration combined with a severe land shortage has resulted in Mumbai having one of the most expensive real estate in the world. As a result the city faces housing crisis with an estimated 60% of its total population living in slums, adopting multiple informal housing tenures. Property Index of Mumbai: Database:This index is based on minimum database size of 20,000 data points every month and the analysis has been drawn over a period starting Jan’09. The prices of properties are obtained across micro-markets through property listings on the website as well as based on nationwide sales force. Index Algorithm:The complex algorithm takes into account the property prices as base and then factors in the demand and supply of residential properties for each of the cities covered by it. Care has been taken to give weight age to cities in line with the size of underlying property market. (Makaan.com) The Real-Estate market of Mumbai can be divided into three types- Commercial Residential Retail Mall 4.1 Commercial Real Estate Market: Mumbai’s commercial market is divided into its traditional business districts and the recently developed business addresses. The Central Business District (CBD) of the city is located in South Mumbai and comprises of: Nariman Point – Often said to be the ‘Manhattan of India’, Nariman Point has traditionally been the most attractive location for international companies, in particular international investment banks, insurance companies and consulting firms. The areas concentrated within a radius of 1.5-2 km around the CBD are termed as the off-CBD locations, which include: Churchgate /Fort/ Fountain – This district has traditionally housed the city’s Business and Government establishments. It also houses numerous National and International Banks. Cuffe Parade – Primarily an up market residential area with a host of high-rise buildings. Some notable commercial buildings like the World Trade Centre and Maker Towers are located here. Ballard Estate – A prime commercial area where the buildings have European Renaissance architecture. The off-CBD business centres of the city have expanded to include a number of areas mostly oriented towards central Mumbai: Lower Parel: This industrial belt of Mumbai is transforming itself into a commercial hub of the city. This area is being developed on what used to be the textile mills. With mill land being freed for commercial, retail and residential development, the Lower Parel area will see massive supply of space. Currently, there are a number of retail, entertainment and advertising companies located in Lower Parel. High Street at Phoenix Mills is the most prominent retail development in this region. Worli-Prabhadevi: The Worli–Prabhadevi area has been a conventional stronghold of number of corporate offices. Besides, there is also the presence of two malls – Crossroads and Atria, in the stretch. The ongoing Bandra-Worli sea link is expected to give a further fillip to this area. The Suburban Business Districts (SBDs) of the city comprise of the following locations: (Image of the Bandra Kurla Complex) The Bandra-Kurla belt: The Bandra-Kurla Complex (BKC), which has been developed as an alternative business district to the CBD, has attracted a number of corporate. ICICI, National Stock Exchange, Wockhardt and ILFS are some of the important corporate located here. The Andheri-Kurla Belt: This area is also an upcoming location of choice for IT/ITES companies, banks, insurance companies, etc. Some of the sought after Grade ‘A’ buildings in this belt are ‘Technopolis’ and ‘Solitaire Corporate Park’ where a number of corporate are relocating. The Malad-Goregaon Belt: The Malad Goregoan belt has become the preferred destination for IT/ITES companies due to the availability of large floor plates at competitive rentals. The superior quality of buildings offered at MindSpace is another motivating factor for technology companies looking for world-class amenities to come here. The Powai Belt: Another suburb, the Powai belt is scoring well on the IT/ITeS front. The pricing in rental terms is similar for Powai and Malad. There will be 600 new shopping centres by 2010. India’s burgeoning middle class will drive up nominal retail sales through 2010 by 10% p.a. At the same time, organised retail is becoming more important. At present organised retail accounts for a mere 3% of the total; by 2010 this share will already have reached 10%. (Deutsche Bank Research 6 may,2006) The Peripheral Business District (PBD) of the city consists of: Navi Mumbai: Navi Mumbai is being developed as a counter magnet to Mumbai, with the basic objective of curbing further congestion in the city. The potential target audience, apart from the existing residents, arises from the 40,000+ IT/ITES industry workforce travelling to Navi Mumbai daily. Consequently, the government has undertaken a number of initiatives to promote further development of IT ITES sector in Maharashtra state. These include formulation of a progressive sector-specific policy, development of IT parks and development of the â€Å"Knowledge Corridor† between Navi Mumbai and Pune. Sector 17 of Vashi and CBD Belapur were developed as the prime commercial areas for Navi Mumbai. A number of corporate have moved to Navi Mumbai, the largest amongst them being Reliance Industries. Millennium Business Park at Mahape and Airoli Knowledge Park at Airoli, developed by MIDC houses several IT/ITES companies like Aptech, CMS computers, Datamatics, Mastek, TCS, Patni etc 4.2 Residential Market Scenario: Residential real estate in Mumbai is today amongst the most expensive in the country. The key residential areas in the city are as follows: The south and central locations of the city like Colaba, Napean Sea Road, Worli, Breach Candy and Pedder Road are the most preferred locations for leased accommodation for the senior and expatriate staff. Amongst the key suburban locations, Bandra and Malad in the northwest and Powai in the northeast are equally preferred due to proximity from the emerging commercial/office locations. Other suburban residential micro-markets of Andheri, Goregaon and Mulund also fall in the preferred category. In fact, these areas are witnessing fresh construction activity with projects from prominent residential developers like K.Raheja, Oberoi Constructions, Royal Palms and the Runwal Group. Luxury housing projects, which have been traditionally concentrated in South and selective Central Mumbai locations, are now being planned in the suburban regions like Malad as well as peripheral districts. Currently, a number of IT/ITES companies have located there. The Central Mumbai belt consists of areas such as Mahalaxmi, Lower Parel, Worli, Parel,Byculla, Chinchpokli, Sewri, Wadala, Dadar, Matunga and Mahim. The micro markets of Worli are currently established markets and command a premium over other central Mumbai pockets. The current ongoing rates in Worli vary between Rs. 25,000-30,000 per sq. ft. Lower Parel is fast emerging as a residential and commercial destination, with additional supplies expected from the mill lands. 4.3 Mumbai Mill Lands: (Image of an old Mill in Mumbai) Bombay had first developed as an industrial city through the growth and expansion of the cotton textile industry from the late nineteenth century to the nineteen forties. Now known as the Mill Lands, the textile industry was located in the central districts of the Island City. After World War II and Independence, to the fifties, sixties and seventies, the industrial base of the urban economy diversified into petroleum and chemical production, and then into petrochemicals, pharmaceuticals, consumer goods and engineering industries. These new industries were mostly located on the eastern fringe of the Island City, in the Eastern suburbs, and in the seventies and eighties expanded to Thane and its surrounding district, as well as the Thane-Belapur belt flanking Navi Mumbai. Till the late seventies, the Cotton Textile Mills were booming with activity but in 1982 things changed. The unorganized Powerloom sector had taken over and it was becoming uneconomical to maintain large-scale industrial units within the city limits on account of high power and Octroi costs. Moreover, the 18-month long crippling strike by the mill workers proved to be the final nail in the coffin. All this led to huge losses and the running of the Cotton Textile Mills became unviable. Several mills were declared sick and a few even shut down their operations. Only a few managed to survive. The total area occupied by all the mills put together is approximately 605 acres (2,446,278.39 sq. mt.) There are three categories of ownership of the mills, namely, National Textile Mills (NTC), Maharashtra State Textile Corporation and Private Owners: 4.4 Mumbai Port Trust Land: The proposed release of Mumbai Port Trust (MbTP) land could change the face of the eastern waterfront in Mumbai. MbPT has about 40 acres of surplus land of which a substantial portion is on the environmentally sensitive eastern waterfront (areas such as Sewri, Wadala). Large tracts of MbPT land had been leased out to private companies, several of whom have shifted their facilities to other areas, but continue to maintain a token presence on the leased land. With the construction of Trans- Harbour Link and the Special Economic Zone at Dronagiri this land is expected to turn out into a virtual goldmine. The MbPT policy for commercial utilization of this land has been awaited for several months since the new board of trustees were not constituted. Now with 17 of the 21 trustees in place, the process of formulating the policy has been set in motion. The subcommittee is expected to unveil a plan of action when MbPT board meets on August 9. Besides the above, there are some Port Trust plot that are being released in the market. These include a 28.39 hectare (approx. 70 acres) plot at Titwala, vacant lands in isolated pockets totalling to 5.17 hectare (approx. 14.5 acres) and a slum-encroached plot measuring 6.77 hectare (approx. 17 acres) on the eastern waterfront. Floor Space Index (FSI): FSI stands for Floor Space Index. Municipalities and Government’s allow only a certain amount of FSI. Otherwise there are possibilities of sky scrapers been constructed in narrow spaces that would be leading to parking and various other problems like the one existing in downtown Manhattan. In Mumbai, FSI was first introduced in 1964 and the value than was 4.5 times. Over the years there were several changes made to the rule which depends broadly on the leading Municipal Corporation and the State Government. With an average of 2.9 m2 per person, the consumption of residential floor space in Mumbai is one of the lowest in the world. More than 50% of the city’s population lives in slums. This type of record would be expected from a city in a desperate economic situation. However, this is not the case. Mumbai is a prosperous city with an expanding economy. (Mumbai FSI conundrum: The perfect storm: the four factors restricting the construction of new floor space in Mumbai – By Alain Bertaud 2004). The very low consumption of floor space coupled with very high real estate prices would suggest that a number of supply bottlenecks might be responsible. By comparing Mumbai to other metropolis in Asia it appears that indeed 4 factors are exceptional and contribute to the very low supply of floor space: An exceptional topography that reduces the amount of developable land; A draconian and ill-conceived land use policy restricting the area of floor space which can be built on the little land available. Muddled property rights preventing households and firms to freely trade land and floor space as a commodity; A failure to develop major primary infrastructure networks, which prevents the city to overcome its topographical constraint. In turn, the weakness of the infrastructure network is used to justify the restrictive land use policy. (Alain Bertaud July 15th 2004). Comparing Mumbai to other similar sized Asian cities, (Bertaud 2004) found that within a radius of 25 km from the city centre, sea and water bodies occupy 66% of the total area for Mumbai while it was 22% in the case of Jakarta and 5% for Seoul. Cities with such extreme topography often compensate for the lack of land by allowing the height of buildings to be increased. In the case of Mumbai however, this is not the case. While the Floor Space Index (FSI) in most large cities varies from 5 to 15 in the Central Business District (CBD) to about 0.5 in the suburbs, in Mumbai the FSI remains uniformly fixed at 1.33 for the Island City and 1.00 in the suburbs (Alain Bertaud, 2004). (The above map shows the different FSI values in the city.) Transfer of Development Rights (TDR): A cartelisation of Mumbais real estate, one of the costliest in the world, in the matter of transferable development rights has put upward pressure on prices and has also caused concern in policy circles. In case of Mumbai, TDRs were used initially to compensate plot owners whose development right was restricted due to some public programmes like widening of roads etc. Later this was used for compensating owners of Heritage buildings who could not develop their lands. More recently they have been used in case of Slum Redevelopments where additional development rights could not be consumed on a plot due to over density reasons. There are also talks about using TDR for redevelopment of old buildings. Another detail about TDR is that it can be only used in the same or northern ward of the generating plot Hence you could see sudden additions to suburban buildings that have high property value.However, it also led to haphazard and unplanned development in the suburbs. There was an increased the pressure on suburban infrastructure. In a recent development, just six-odd builders and developers hold 70 per cent of the 2.5-3 million sq ft TDR available. The price of TDR has also surged to Rs 2,500-Rs 3,000 per sq ft from Rs 800-1,000 sq ft in the past six months. Realty sector experts in Mumbai cartel had meant a rise in TDR prices practically every month. The development is a sequel to a 2008 order of the High Court here, which stayed a state government decision to allow 33 per cent extra building rights (measured as more of Floor Space Index, or FSI, the ratio of what can be erected on a plot of land to its area) in return for more premium. Nainesh Shah, executive director of Everest Developers, argued that TDR rates can be brought down only by an increase in the stock of land and the government are the only entities that can make this happen. More land needs to be released, Ashutosh Limaye, associate director, strategic consulting, Jones Lang LaSalle Meghraj, saidâ€Å"TDR trading follows the open market principle. For areas that are popular and in demand for real estate development (Bandra, Chembur, Vile Parle, etc), land prices is high and it makes sense to buy TDR even at a higher rate†. However, A Vile Parle-based activist and former builder, Bhagwanji Raiyani, filed a Public Interest Litigation in the Bombay High Court asking for a total ban on TDR, following which the court in an interim order banned the use of TDR along the Eastern and Western Express Highways and the Eastern and Western suburban railway tracks. In the recent times, the government is considering a proposal to increase floor space index (FSI) in the suburbs to two without taking the transfer of development rights (TDR) route. Under this, for example, a builder involved a slum project in Trombay gets the nod to transfer development rights to the north of the rehabilitation site. Because of this policy, the suburbs are witnessing the construction of tall towers, which use TDR. There has been a 100% rise in property prices in Mumbai, Thane and other places, primarily because of the high cost of TDR. If a builder buys TDR at Rs 4,500 per sq ft, he will have to add another Rs 4,500 per sq ft towards the cost of land and construction. This forces him to sell flats at Rs 10,000 per sq ft even in a distant suburb like Mulund, which is an absurd rate. No wonder there is tremendous consumer resistance. Around 50% of the flats remain unsold because the prices are beyond an average buyer’s reach,’’ (Subhash Runwal, former office-bearer of the Maharashtra Chamber of Housing Industry, reported in Times Of India). The demand for FSI is 10 crore sq ft per annum in the suburbs. If the government sells this at even Rs 2,500 crore, it can generate a whopping Rs 25,000 crore annually. Half of this revenue can be used for improving infrastructure in the suburbs and the rest for development work in the rest of the state†. The Golden Question: How to design new FSI and TDR values for Mumbai? Design a spatial land use strategy based on current land values and future investments in transport (bridges, highways, metro, BRT). Identify high accessibility nodes. Divide the existing and future built-up areas into land use zones based on accessibility and on existing character of the area; Identify and map the historical areas and natural areas that need to be protected, those that should not be redeveloped, and where the new FSI will not be applied; Design regulations (FSI, % lot coverage, setbacks, etc) for each zone. Comprehensive plan ready and approved for the entire city No more TDRs are issued during preparation of plan, however, already issued but not yet used TDRs are honored. Progressive transition: New FSI plan prepared and approved for 2 or 3 main streets and high intensity areas around new metro stations and bridge access. New TDRs can be issued but they have to be used in the areas already mapped for FSI increase. Meanwhile the comprehensive strategy is prepared and approved. More areas for FSI increase are prepared every year and where TDRs can be used. After 2 or 3 years new TDRs are issued only for slum redevelopment and for historical area protection. The above is just a model example of how the increase in FSI would solve the Real Estate problems in Mumbai. If the Government adopt the path which has been used in downtown Manhattan than it would reduce Real Estate prices in the city, help to relocated millions of people, abolish the TDR practice and the additional space could be used to improve the lagging infrastructure of the city. 4.5 Mumbai Salt Pan Land http://infochangeindia.org/Agenda/Coastal-communities/Saltpan-city.html The proposal to use saltpan lands first emerged in 2002 when the Maharashtra Housing and Area Development Authority (MHADA) warned that it was running out of land and asked the state to release land belonging to various departments like defence, the Bombay Port Trust, and saltpan lands. In 2006, the then Union Minister for Commerce and Industries Kamal Nath and Ex Maharashtra Chief Minister Vilasrao Deshmukh worked out a formula of developing saltpan lands on a no-profit-no-loss basis. The scheme proposed allowing private developers extra FSI for commercial purposes after setting aside 225 sq ft houses to accommodate slum-dwellers. In 2007, a committee of u