Zimmerman - Surname Meaning and Family History

The Zimmermann / Zimmerman  surname originated as the German  occupational name Zimmermann  derived from the German word for carpenter. From the Middle High German zimber, meaning timber, wood and mann, man. This surname was sometimes Americanized as Carpenter. ZIMMERMANN is the 20th most common German surname.   Surname Origin:  German, Jewish Alternate Surname Spellings:  ZIMMERMAN, ZIMERMAN, ZYMERMANN, ZIMMERER, ZIMERMAN, CIMERMAN, CYMERMAN, CIMERMANN , TIMMERMAN, TIMMERMANN, SIMMERMAN, SIMMERMANN Famous People with the Surname ZIMMERMAN Rachel Zimmerman - inventor of the Blissymbol printerArthur Zimmermann -  State Secretary for Foreign Affairs of the German Empire during WWI; author of the infamous Zimmermann TelegramJordan Zimmermann -  American professional MLB baseball pitcher  Bob Dylan (born Robert Allen Zimmerman) - American singer-songwriter- American known for the shooting of Trayvon Martin in Florida in 2012 Where is the ZIMMERMANN  Surname Most Commonly Found? Surname distribution data on  Forebears ranks Zimmermann as the 20th most common surname in Germany, while the Zimmerman spelling is more common in the United States. Zimmermann is also very common in Switzerland, where it ranks 14th in the nation, and in Austria, where it comes in 66th. WorldNames PublicProfiler indicates that the Zimmermann surname is fairly common throughout Germany, with a slight edge in the regions of Sachsen, Rheinland-Pfalz, Baden-Wà ¼rttemberg, and Thà ¼ringen, as well as Alsace, France. According to surname distribution maps from Verwandt.de, there are over 119,000 individuals with the Zimmermann surname living in Germany. The greatest numbers are found around the cities of Berlin, Cologne, Hamburg, and Munich, as well as a cluster around Rhein-Neckar-Kreis and Karlsruhe. Genealogy Resources for the Surname ZIMMERMANN Common German Surnames Their MeaningsUncover the meaning of your German last name with this free guide to German surnames meanings and origins. Zimmerman  Family Crest - Its Not What You ThinkContrary to what you may hear, there is no such thing as a Zimmerman  family crest or coat of arms for the Zimmerman surname.  Coats of arms are granted to individuals, not families, and may rightfully be used only by the uninterrupted male line descendants of the person to whom the coat of arms was originally granted. Carpenter Cousins  Y-DNA ProjectThis project is focused on individuals with the Carpenter, Zimmerman and variant surnames interested in using  Y-DNA testing and traditional genealogical research to identify  genetically distinct Carpenter and Zimmerman lines, both English and German. Zimmerman Family Genealogy ForumSearch this popular genealogy forum for the Zimmerman surname to find others who might be researching your ancestors, or post your own Zimmerman query. There is also a separate forum for the Zimmermann spelling. FamilySearch - ZIMMERMAN  GenealogyExplore over 1.5  million  historical records which mention individuals with the Zimmerman surname, as well as online Zimmerman family trees on this free website hosted by the Church of Jesus Christ of Latter-day Saints. ZIMMERMAN  Surname Family Mailing ListsRootsWeb hosts a free mailing list for researchers of the Zimmerman  surname, as well as a separate list for the Zimmermann spelling. DistantCousin.com - ZIMMERMANN Genealogy Family HistoryExplore free databases and genealogy links for the last name Zimmermann. GeneaNet - Zimmermann  RecordsGeneaNet includes archival records, family trees, and other resources for individuals with the Zimmerman  surname, with a concentration on records and families from France, Germany and other European countries. The Zimmermann  Genealogy and Family Tree PageBrowse family trees and links to genealogical and historical records for individuals with the last name Zimmermann  from the website of Genealogy Today.----------------------- References: Surname Meanings Origins Cottle, Basil.  Penguin Dictionary of Surnames. Baltimore, MD: Penguin Books, 1967. Dorward, David.  Scottish Surnames. Collins Celtic (Pocket edition), 1998. Fucilla, Joseph.  Our Italian Surnames. Genealogical Publishing Company, 2003. Hanks, Patrick and Flavia Hodges.  A Dictionary of Surnames. Oxford University Press, 1989. Hanks, Patrick.  Dictionary of American Family Names. Oxford University Press, 2003. Reaney, P.H.  A Dictionary of English Surnames. Oxford University Press, 1997. Smith, Elsdon C.  American Surnames. Genealogical Publishing Company, 1997. Back to  Glossary of Surname Meanings Origins

George Orwell s Books On His Thoughts And Feelings Toward...

George Orwell wrote his books based on his thoughts and feelings toward the world. These thoughts would begin to arise early on in his life. Growing up in India where his father was stationed as a British official, his mother and siblings soon moved to England where he received his education. Unfortunately because of his family s financial conditions Orwell was unable to attend the university he would have liked to attend. Instead he headed to Burma where he joined the Indian Imperial Police Force where he would begin to see the detestable side to British Imperialism. Orwell knew he wanted to be a writer so after 5 years resigned from the force and went back to England in 1922. (George Orwell Biography) Soon he would publish his second big book Burmese Days in 1934 which â€Å"offered a dark look at British colonialism in Burma, then part of the country s Indian empire† (George Orwell Biography). By this time Orwell identified himself as a socialist. Two years later Orwell and his wife traveled to Spain where he participated in the Spanish Revolution fighting against the Nationalist Party. This nationalist party was for the rise fascism, which is a type of government â€Å"in which people are not allowed to disagree with the government† (Merriam-Webster). This faction was also receiving support from Joseph Stalin s communists who were combating the socialist dissenters. During this time Orwell was shot, and forced to flee the country with his wife. This stint would forever make himShow MoreRelatedAnalysis Of George Orwell s The Great Gatsby Essay1529 Words   |  7 PagesWatching You† (Orwell 1). One may ponder the thought of living in a world where the powers that be controlled, every step one takes and every move one made. Image the control being so drastic that it controlled one’s telepathic thought. There have been many who envisioned the thought of government surveillance. One of these visionaries is George Orwell. Orwell imp lemented his warnings to private citizens of his era, about these dangers through fictional writing. On June 8, 1949, George Orwell publishedRead MoreAnalysis Of Annabel s Annabel 1696 Words   |  7 PagesOctober 24, 2017, from http://www.nytimes.com/2011/01/09/books/review/DErasmo-t.html Kathleen Winter’s, Annabel, takes place in 1968 in Croydon Harbor, Labrador, Canada. The plot starts off with a baby being born as an intersex and centers around the baby’s identity. It is decided at the baby’s birth that his birth gender will be kept a secret from the child. The child is rendered male by the doctors and undergoes a surgery to correct his intersex gender to male. However, when a health concern arisesRead MoreComparing 1984 And The Giver By George Orwell979 Words   |  4 PagesThe world has observed multiple authoritarian governments rise throughout history. These regimes have carried a faà §ade in front of their subjects to remain powerful and glorified. However, the true circumstances of the society are not perfect, in fact, they convey the opposite. Such governments, impose their ideologies amongst their innocent citizens. Citizens are unable to speak out against their government or hold political freedoms. To remain in power, the reigning p arty must utilize tactics toRead MoreGeorge Orwell s The Novel Expressing The Idea Of A Government Changing The Past1655 Words   |  7 Pagesand death (37). This warning alarm of a totalitarian government intensifies throughout George Orwell’s novel expressing the idea of a government changing the past. In the novel 1984, the main character, Winston Smith lives in a world where the people of the society are restricted from free thinking. With no freedom or privacy, Winston tries to stand against the government’s ruthless control with the help of his lover, Julia. Winston’s struggle against the Party, explains Orwell’s indication of havingRead MoreAnalysis Of George Orwell s Dystopia 881 Words   |  4 Pagesand Warburg. Its name being â€Å"1984† by George Orwell. â€Å"Big brother is always watching,† the language the author utilizes drops subtle hints from time to time about what could possibly happen in the real world in near future . 1984 still remains one of the most intense and powerful warning signals about the peril of total government control. The time period 1984 was inspired in is crucial to its plot. It was inspired around World War 2. Because of the rise of totalitarianRead MoreFreedom vs Security - George Orwell, 19842554 Words   |  7 Pagesand, mostly, its applications in the field of communication, governments and business corporations from all around the world have now more power than ever to track and influence what we buy, what we listen to, what we read, what we watch and, ultimately, what we believe. 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Orwell gives the readers insight in a world where technology inhibitsRead MoreAnalysis Of George Orwell s 1984 And Animal Farm 1401 Words   |  6 PagesTitle/Author: 1984/ George Orwell Date of Publication/Genre: 1949/ Dystopian Fiction Biographical information about the author: George Orwell, who was originally Eric Arthur Blair was born in 1903 in British India. His two greatest novels include 1984 and Animal Farm. He is regarded as one of the greatest novelist of the 20th century. Historical information on the period of publication: During this period, the United Kingdom recognized the republic of Ireland. The United States claimed Israel asRead More The Warnings in George Orwells Animal Farm Essay1248 Words   |  5 PagesGeorge Orwells Animal Farm George Orwells goal in writing the novel Animal Farm was to portray the events surrounding the Russian revolution that took place in 1917. Orwells tale of Animal Farm is seemingly a story of how a group of farmyard animals plot to overthrow their owner and seize control of the land. The novel seems to be a simple story, however Orwell wrote this book as an allegory, a story that has a clear secondary meaning beneath is literal sense. Everything in Animal Farm isRead MoreAnalysis Of George Orwell s 1984 2157 Words   |  9 Pagescompositions, some historical (Holman). 1984 is a novel written by George Orwell set in London, Oceania, in 1984. George Orwell, born as Eric Arthur Blair, was born in Bengal, India, and spent a year there after his birth. Orwell has an older sister who lived in Henley-on-Thames with Orwell and his mother. Orwell did not spend much time with his father until he retired from the civil service, but they never formed a bond. Orwell attended college at Eton University in Windsor, United Kingdom. Five

The Uncontrollable Diseas Of Gambling Essay Research free essay sample

The Uncontrollable Diseas Of Gambling Essay, Research Paper The Uncontrollable Disease of Gambling In the US today, as gaming is going more popular so are chancing nuts. As the provinces institute legalized gaming, their income additions dramatically. Compulsive chancing demands to be recognized and medically treated before it is excessively late for the gambler. The lone manner to handle the disease of compulsive gaming is absence from chancing. Therefore, compulsive gaming must be considered and unmanageable disease. Harmonizing to the Merriam Webster Dictionary, compulsive means an resistless ( unmanageable ) urge ( Mish 166 ) . A disease is defined as being an unnatural bodily status that impairs working and can normally be recognized by marks and symptoms. Uncontrollable means incapable of being controlled ( Mish 222 ) . We will write a custom essay sample on The Uncontrollable Diseas Of Gambling Essay Research or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Pathologic gaming has been defined by the American Psychiatric Association # 8220 ; as a chronic progressive failure to defy urges to chance, and chancing behaviour that comprises, or amendss personal, household, or vocational chases # 8221 ; ( Glazer 2 ) . How can it be determined if an person is a compulsive gambler or non? Harmonizing to the American Psychiatric Association you are a pathological ( compulsive ) gambler if you exhibits theses traits: ( 1 ) you have # 8220 ; preoccupation with gaming ; ( 2 ) a demand to increase the exhilaration produced by chancing ; ( 3 ) restlessness or crossness when unable to chance ; ( 4 ) repeated unsuccessful attempts to command, cut back, or halt gaming ; ( 5 ) gaming in an attempt to acquire back money lost during chancing on a old twenty-four hours ; ( 6 ) gaming in an attempt to get away # 8221 ; an unpleasant # 8220 ; temper ; ( 7 ) prevarication to cover up chancing ; ( 8 ) endangering a important occupation, relationship, or educational chance by chancing ( 9 ) engaging in illegal activity to finance gaming ; and ( 10 ) traveling to person else to alleviate a despairing fiscal state of affairs produced by chancing. An person who fulfills five out of the 10 standards is diagnosed as a pathological gambler. Problem gamblers would fulfill merely two, three, or four of these standards # 8221 ; ( Lesieur 2 ) . If you answered five of the 10 inquiries yes, you need to look into yourself in to the nearest Gamblers Anonymous support group, because you have the unmanageable disease of compulsive gaming. Although grounds is soon sketchy on compulsive gaming, certain facts are get downing to emerge. In the past work forces were 95 % of all compulsive gamblers. Today adult females make up about a 3rd of compulsive gamblers ( Compulsive 1 ) . Therapists have begun to detect many similarities between intoxicant, drugs, and chancing dependence ( Lesieur 6 ) . # 8220 ; An dependence to chance must be considered a sever job, similar to that of intoxicant and drugs. # 8221 ; Gamblers frequently experience an gladdened high when gaming and backdown symptoms when they are non chancing ( Glazer 8 ) . Since pathological gamblers are determined to hold similarities to alcoholism and drug users, which is considered to be an unmanageable disease, pathological gaming must be labeled as an unmanageable disease, in order to decently name the job and work out it ( Lesieur 6 ) . # 8220 ; Compulsive gaming is perceived to be a disease that can non be cured, merely arrested # 8221 ; ( Lesieur 5 ) . In the past 20 old ages, gaming has dramatically increased, as has the rate of pathological gaming. By 1991, the entire money spent on gaming has risen over three hundred billion dollars ( Pathological 1 ) . Although provinces grosss from chancing have increased vastly, the aid for job and pathological gamblers lags far behind. It has been proven that the rate of compulsive gamblers is lifting at an dismaying rate. The most comm on attack for pathological gamblers is to fall in self-help groups such as the Gamblers Anonymous ( GA ) , a twelve-step plan base on Alcoholics Anonymous ( Lesieur 5 ) . Many more hours need to be put into researching diseased chancing. Research needs to be conducted on legion angles, including whether or non diseased gamblers should utilize abstention from chancing for the remainder of their life ( Glazer 9 ) . If we do non get down passing money on researching the unmanageable disease of compulsive chancing the job will merely go on to skyrocket into the following millenary. If an person is non able to command his or her head they are out of control, in other words they are unmanageable. A # 8220 ; compulsive gambler is unable to command the overmastering impulse to chance # 8221 ; ( Wedgeworth 4 ) . Therefore, the compulsive gambler is determined to suit the construct that the overmastering thrust to chance is an impulse and non within the gamblers witting control ( Wedgeworth 5 ) . Compulsive gaming is an unmanageable disease that thrives in the victim # 8217 ; s caput. Harmonizing to Aprile, a nurse practician, recent surveies indicate compulsive gamblers suffer from unequal degrees of encephalon chemicals. Therefore, the instability causes the gamblers to prosecute in risk-taking opportunities ( Aprile 6 ) . If you are out of control of your organic structure and your encephalon is non working decently, so you are non in control of yourself. Since the compulsive gambler # 8217 ; s head is non working decently, he or she is considered to be out of control and necessitate aid instantly. Otherwise, the unmanageable disease of chancing will go on to destroy their lives. Compulsive gaming is evidently an unmanageable disease. The gamblers frequently drift into a province of head that they have to chance. They believe it will work out all of their jobs, so the gambler has no pick, but to chance away every penny he or she was able to acquire clasp of. Compulsive gamblers make colored ratings of the result. Often clip, gamblers make irrational determinations that chancing will work out their fiscal jobs. Which is merely and semblance of control so the gambler can support his or her gaming wonts ( Lesieur 7 ) . Although Gamblers Anonymous is a deep plan aimed to bring around gamblers from their unmanageable impulse to chance by non chancing at all, the statement comes whether the lone remedy for the disease is abstinence. The easiest manner to work out an unmanageable disease is to neer acquire it. So don # 8217 ; t get down chancing if you don # 8217 ; Ts have to, otherwise, you will necessitate all the friends you have to assist you maintain you off form the unmanageable disease of gaming. Aprile, Dianne. # 8220 ; You wager your Life. # 8221 ; Courier-Journal and Louisville Times Co. 3 Dec. 1989: 1-10. 12 July 1999 Sirs. # 8220 ; Compulsive Gambling is an frequently Overlooked. # 8221 ; Consumers # 8217 ; Research. June 1999: par. 1. 12 July 1999. Ebsco. Ed. Mish, Frederick C. The Merriam-Webster Dictionary. Massachusetts: Springfield, 1997. Glazer, Amy. # 8220 ; Pathologic Gambling. # 8220 ; The Nurse Practitioner Sept. 1998: 12 par. 12 July 1999. Infotrac. Lesieur, Henry R. # 8220 ; Costss and Treatment of Pathological Gambling. # 8221 ; Annalss of the American Academy of Political and Social Science. March 1998: 4 pars. 12 July 1999. GW2. # 8220 ; Pathological Gambling. # 8221 ; Harvard Mental Health Letter. Jan. 1996: par. 1. 12 July 1999. Sirs. Wedgeworth, Raymond L. # 8220 ; The hypostatization of the # 8216 ; pathological # 8217 ; gambler: an analysis of chancing intervention and the application of the medical theoretical account to job gambling. # 8221 ; Positions in Psychiatric Care. 1-14. June 1998. Infotrac.

Teachers Note free essay sample

A brief summary chapter seems to help students consolidate their previous topic-by-topic learning, and they appreciate such a chapter for final exam study preparation. The summary of the many different adjectives placed before the word â€Å"cost† and the concepts behind these adjectives is useful. However, because there is no conceptually new material here, one need not spend much time on the text. Rather, instructors can jump right into a discussion of one of the chapter’s cases, which is intended to raise issues that cut across multiple chapters. Cases Puente Hills Toyota raises many financial responsibility center, performance measurement, and incentive systems issues in a car dealership setting. Axeon N. V. illustrates the real world application of many management accounting and control concepts, including incremental cost analysis, capital budgeting, sensitivity analysis, transfer pricing, organization design, and control system administration. Case 27-1: Puente Hills Toyota Note: This case is unchanged from the Twelfth Edition. We will write a custom essay sample on Teachers Note or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Purpose of Case This case can be used to motivate discussions of a number of topics, including financial responsibility centers, performance measurement, transfer pricing, and incentives. The setting is an automobile dealership, a business about which all students have some interest and understanding. And the setting is real, so students can benefit from secondary learning about the industry and business. Suggested Assignment Question Evaluate the performance measurement and incentive systems use at Puente Hills Toyota. What changes would you recommend, if any? Discussion The case illustrates clearly that financial responsibility centers exist in great variety. While textbooks describe the possible generic responsibility centers as cost centers, revenue centers, profit centers, and investment centers, this case shows some of the variance that can exist within these generic categories. The general sales manager is held accountable for net profit. Obviously, the dealership also keeps track of balance sheet items, but the dealership general manager’s incentives do not seem to consider them. So is the general manager an investment center manager? Regarding performance measurement: The departments are profit centers, but not all costs are allocated to them. They are more like â€Å"gross profit centers. † The salespeople are held accountable for gross profit on the deals they initiate, so each salesperson is also a little profit center. The service advisors are paid on commission, so each advisor is a revenue center. The service technicians, though, are paid for work accomplished. It is useful to discuss why some seemingly uncontrollable indirect costs are allocated to departments (see Exhibit 3). These allocations are mandated by Toyota, so that they can compare dealership departments on a common basis that treats each department more or less as a standalone business. Allocating the costs also gives the department managers information as to what services are being provided for them, and it gives them some power to complain if the size of the allocations becomes too high. This issue can lead into a discussion of the differences between authority and responsibility (accountability). Generally, managers are held accountable for results in areas where they have authority. But here, the general sales manager’s bonuses are based on performance measured in terms of profit after overhead allocations (line 59 in Exhibit 3). This is an example of a situation where this manager is held accountable for areas over which he has less than full authority. Conversely, the service manager’s bonuses are based on the department’s gross profit performance, which is before allocations. It is apparent in the case that some of the measures can be gamed. Puente Hills Toyota managers worry about the gaming in the service area, and they seem to have adequate controls over these behaviors. The Customer Satisfaction Index (CSI) measure is also gamed. But here the managers seem to encourage the gaming because it makes the dealership look better to Toyota. Does the dealership need an un-gamed CSI measure for its own management purposes? How will they get accurate information about problems if and when they exist? Transfer pricing of service jobs done for internal customers (particularly the used car department) is done at market prices. The alternative would be to give the internal customer a discount, or perhaps even to transfer at cost. What would happen under that alternative? It would shift profits from Service to Used Cars. It would also provide little incentive for Service to do internal work. Puente Hills Toyota transfers at market prices because they want to measure each department as a stand-alone business and they want to have the Used Car Department get as much priority in the Service area as any other customer. The measurement focus in this business is on profit measures. Do profit measures provide a good indication of value creation in the car retailing business? The answer here is probably yes. This is primarily a short-term business. Dealerships are not making many investments that involve large lags between time of investment and payoff (e. g. , RD), and they are not creating many intangible assets. The one exception is customer goodwill, so it is not surprising that Toyota mandates that considerable effort also be devoted to the measurement of CSI. Some useful class discussion can focus on the structure of the incentive plans. Depending on the focus of the class and the class time available, the instructor can have the students complete an incentive plan matrix. On a whiteboard, list any or all of the key incentive plan elements. With adequate time, I use the following: 1. Who is included in the plan? 2. Form of payment 3. Frequency of payment 4. Measure(s) and their importance weighting 5. Performance standards 6. Shape of reward/performance function 7. Size of reward (expected, maximum) 8. Funding (e. g. , is there a company bonus pool constraint? ) 9. Uniformity (are people in the same role treated the same? ) In an array of columns, list the roles for which the instructor wants to clarify the incentive system. These might include the general manager, general sales manager, service manager, salespeople, service advisors, service technicians. Among other things, this analysis will show that: – The payments are all in cash – The payments are timely (monthly) – The bonuses are paid by formula; there is no bonus pool constraint – There are no performance standards except in the service technician area where standards are set by Toyota. Internally set budgets are used to calibrate the payoff function, but goal-setting does not seem important in this business. – The service manager reward/performance function is kinked upward to encourage beating the budget. – The rewards are quite lucrative. The assignment question asks students for an evaluation of the system, which requires them to identify good and bad points about it. In addition to the points raised above, they might mention the following: (-) There are no deferred compensation elements that might provide retention and tax benefits. (-) This is an incentive system that would require the company to pay sizable bonuses even if the company is losing money. (-) There is no bonus for teamwork. How much teamwork is necessary? The case mentions one area that could be improved—service referrals to sales. (? ) Is the company paying too much? Answering this question would require knowledge of industry benchmarking. Some of these data are provided in the case Appendices. Puente Hills Toyota’s practices seem in line with other dealerships. (? ) The bonuses are all formula-based. Would it be useful to allow some subjectivity in case unforeseen events unfold? Generally, however, this measurement and incentive system probably must be considered as effective. Much of this system is dictated by Toyota, and this is an industry and company that has refined its systems over the years. And within the Toyota family, Puente Hills Toyota is a top performer. Case 27-2: Axeon N. V. Note: This case is unchanged from the Twelfth Edition. Purpose of Case The Axeon N. V. case was written to illustrate the effects of a management control system and the supporting management processes on one specific, major decision in a decentralized, multinational corporation. The situation, which is real, but disguised, illustrates the real world application of many management accounting concepts, including incremental cost analysis, capital budgeting, sensitivity analysis, and transfer pricing. But perhaps more importantly, the case is about managing the cost/benefit tradeoffs that are inherent in a decentralized firm. The case illustrates some common management process problems involving conflict between a parent and its foreign subsidiary. Visible in the case are common attributes of managerial behavior in a decentralized organization. The attributes are both positive (motivation, initiative) and negative (suboptimization, parochialism, indecisiveness). Dealing with these behaviors forces students to consider issues about organizational design and control system administration. Because of the breadth of issues raised, this is an excellent review case. Many students will become emotionally engaged in the situation and, hence, the case becomes a good vehicle for discussing the advantages and disadvantages of decentralization and the problems faced in administering a control system in a decentralized environment. Suggested Assignment Questions 1. Is construction of the new factory in the U. K. in the best interest of Axeon N. V.? 2. Ignoring your answer to question 1, if the plant were not built and AR-42 was shipped from the Netherlands to the U. K. , what transfer price would be appropriate? 3. What should Mr. van Leuven do? Case Analysis A. Product Sourcing Alternatives Despite the existence of many relevant data in the case, the answer to the first assignment question is not an easy one. There are two alternatives for producing AR-42: U. K. and Netherlands. The best place to start is with the discounted cash flow analysis, a summary of which is presented in Exhibit 2 of the case. Case Exhibits 3 to 5 provide back-up detail. The analysis is straightforward, and it presents no computational difficulties. The new-factory project shows a positive net present value using an 8% rate, which seems to be the marginal borrowing rate for Hollandsworth in the U. K. And the project shows a 15% IRR, which is above Axeon’s 12% hurdle rate. So, based on these analyses, the project looks worthwhile. Was there anything wrong with this initial analysis? The analysis looks sophisticated, and most students will instantly empathize with Mr. Wallingford. However, criticisms can be made of his analysis: 1. The end-of-project recovery value of equipment and working capital is a surrogate for the cash flows after the end of seven years. It is likely that this is biased downward. Why would all sales and profits stop after that date? Is there no learning that has come from this project? Does the project have no option value? 2. Wallingford might well have presented some sensitivity analyses, reflecting more pessimistic forecasts. These might have headed off some of the criticism that came later from Axeon’s director of sales. 3. Most importantly, although he appears to be taking a corporate perspective and, hence, comes across as an appealing character with whom most MBA students will identify, Wallingford is really parochial. He did not consider the investment opportunity using a corporate-focused perspective. Wallingford is indignant about Axeon managers’ rejection of his idea, but he is not as innocent as he portrays himself. The main defect in his analysis was his failure to consider the alternative of manufacturing in the Netherlands. The main missing information in his original proposal was this implicit benchmark. Wallingford might also have proposed a two-step approach to selling AR-42 in the U. K. He could have demonstrated the size of the U. K. market using imports from the Netherlands, and then later proposed to save the shipping and duty costs by manufacturing in the U. K. Instead, he chose the more self-centered approach of going it alone from day 1. Why didn’t Wallingford present this alternative? Probably because he wanted to run his own plant (build his own empire). So we see in the case that the Dutch managers argue that producing the AR-42 in the Netherlands is an even better alternative than that proposed by Mr. Wallingford. Some of their arguments question some of the numbers in the Hollandsworth analysis. The Axeon director of sales (Mr. De Rijcke) questioned the sales forecasts. But who understands the U. K. market better, the local general manager or the functional specialist in a foreign country? The Axeon director of manufacturing (Mr. Oosterling) questioned both the U. K. facility’s ability to handle the manufacturing and the cost assumptions. Students should think about his statements regarding costs. The fixed costs are already sunk, so they are not relevant to the analysis. The analysis of the variable costs (as shown in Exhibit 6 of the case) is misleading. As shown in Exhibit-TN 1, an average variable cost of ? 1860 on the full 1000 tons of production implies an incremental variable cost of ? 1800 on the additional 400 tons for U. K. sales. This incremental variable cost is the relevant cost when comparing the two investment proposals. So Mr. Oosterling has overstated his case. Next, the instructor can turn to the discounted cash flow comparisons. Exhibit-TN 2 shows an analysis of the Netherlands proposal. The revised analysis still favors the Netherlands proposal, mainly due to the much greater initial investments for the U. K. proposal. U. K. Proposal Netherlands Proposal Net Present Value @ 8%? 916,000? 1,288,790 Internal Rate of Return20%26% In addition, taking into account the higher risks involved in the U. K. startup relative to the Netherlands expansion, the U. K. hurdle rate should be higher, which makes the Netherlands alternative even more attractive. On the other hand, sensitivity analyses would show that the U. K. managers could face significant sales shortfalls and manufacturing problems and still have a project with a positive net present value. In terms of that criterion, or even the Axeon 12% hurdle rate criterion, perhaps the impact of the startup complications are not as significant as the Axeon functional managers believe them to be. Further, the irrelevance of the fixed costs in the Netherlands proposal makes sense only if the Netherlands has, and will always have, excess capacity for producing AR-42. In other words, the assumption of zero opportunity cost of the fixed plant is valid only if the Netherlands capacity is greatly overbuilt. If this is the case, it suggests problems with Netherlands capacity planning in the past. The longer the time horizon, the better the U. K. proposal looks. Other issues such as nationalism and perceived autonomy are also important. Axeon N. V. is increasingly embracing a philosophy of decentralization. Therefore, even if the U. K. proposal is not optimal, forcing manufacturing of AR-42 in the Netherlands will undercut the perceived decentralization in the company. Another consideration is the nationalistic sentiments of the English. This is suggested by the requirement of a majority of local directors for the Hollandsworth board and the threatened resignation of Mr. Nobel. An increase in duties on AR-42 is likely if the U. K. viewed Axeon as exploiting the U. K. market from the Netherlands. Finally, Mr. Wallingford is known to be enthusiastic and innovative. If he feels that he has less autonomy than before and all the benefits go to the Netherlands, his enthusiasm and innovative spirit are bound to suffer. He might be less committed to developing the AR-42 market in the U. K. And, based on his outstanding performance at Axeon, opportunities for Mr. Wallingford to leave Axeon for a competitor are probably abundant. Can Axeon afford to lose him? B. Why did Mr. van Leuven behave as he did? It is easy to be critical of Mr. van Leuven in this case. He caused much of the problem because he did not manage the process very well. He should learn that in some situations he should refrain from comment when he is exposed to early-stage proposals at board meetings. His early encouragement in this situation, which he subsequently reversed, caused much of the disappointment from the Hollandsworth personnel. Mr. van Leuven was also representing Axeon at the Hollandsworth board meeting. Ideally, he should have proposed the alternative of sourcing from the Netherlands early in the decision-making process. Much of Mr. van Leuven’s behavior in the case was designed to find a way out of a problem that he probably knew he had caused. C. The Transfer Pricing Issue If the AR-42 for the U. K. is sourced from the U. K. , then the analysis is complete. However, if AR-42 is supplied from the Netherlands to the U. K. , then a transfer price must be established. There are a number of transfer pricing possibilities: 1. Market price. This would award most of the â€Å"profit† to the producer, in this case, the Netherlands. 2. Cost, or cost plus a mark-up. Cost can be defined anywhere from incremental variable cost to full cost, and the mark-up can be variable (a fixed amount per unit) or a lump sum (to compensate the Netherlands for costs of the increased working capital and the use of its capacity). 3. A two-book system. This would involve crediting the Netherlands at market price but charging the U. K. only the variable cost. This would make both divisions happy, presumably, but it would lead to a double counting of profits and require a corporate elimination. In many decentralized companies, managers would allow the division managers to negotiate a fair transfer price. But in this case, because of the friction already generated between personnel in the U. K. and the Netherlands, negotiation may not be possible. So here Mr. van Leuven probably has to choose a transfer pricing method and a means of implementing his decision. The total contribution per ton of AR-42 is as follows (using figures from year two and following): Selling price ? 3,700 Variable costs (1,800) Shipping (100) Duty (100) Contribution per ton ? 1,700 Each transfer pricing method allocates this contribution between the U. K. and the Netherlands. What transfer pricing/profit sharing arrangement is best? There is no correct solution. Transfer prices provide one way of shaping managerial behavior. If centralized production is deemed to be the strategic focus, then a transfer price giving more of the profits to the Netherlands will best signal this emphasis. But if top management wants to reward local market sensitivity and initiative, then a transfer price that passes most of the profits on to the U. K. is best. A thoughtful analysis of the transfer pricing issue will lead to a discussion of broader strategic questions. D. â€Å"Fit† Between Strategy, Organization Structure, and Control Systems At this point in the class discussion, it is useful for the instructor to ask the following question: What is Axeon’s corporate strategy? Can you tell from the case what the key success factors are for Axeon? The case does not provide much information about Axeon’s critical success factors. What is most critical for Axeon—identifying new applications and markets or producing at low cost? The case does not provide a clear answer to this question. However, one thing that is clear is the trend in Axeon’s international expansion and in its organizational structure. Exhibit TN-3 illustrates this trend. Axeon used to have a centralized, functional organizational structure, but the firm is moving to greater decentralization to take advantage of geographical expertise in each of the areas in which it operates. Should the company’s critical success factor(s) affect decisions about organizational structure and management control systems? Clearly yes. This observation can lead naturally into a discussion of the pros and cons of decentralization vs. centralization. Generally speaking, the advantages of centralization include economies of scale and technically skilled employees. On the other hand, decentralization leads to better relationships with local governments, sensitivity to the local market, and local managers’ higher perceived autonomy. Exhibit TN-3 summarizes the trade-off between flexibility and efficiency as the level of decentralization increases. Two points are worth noting: 1) Market sensitivity is enhanced with increased decentralization. Also, a decentralized manufacturing firm with a larger number of smaller facilities enables greater production flexibility. 2) Economies of scale decrease with increased levels of decentralization. This is because a decentralized organization loses the cost savings from shared management overhead and larger, more efficient plants. In summary, Axeon is facing two sets of pressures: | |Centralization Strategy |Decentralization Strategy | |Key success factor |Low cost |New product applications | |Key function |Production |Marketing | |Responsibility Centers: | | | Production |Investment center |Cost center (captive) | | Marketing |Revenue center |Profit/Investment center | To some extent, Axeon’s control system is a compromise between full decentralization, which would use highly autonomous local investment centers, and full centralization, which would have the local organizations be only marketing outposts, revenue centers. We also see in the case that the current reward system includes a bonus based entirely on the local division results. This seems to reinforce the decentralization strategy. Alternatively, even under a decentralization strategy, a bonus might be based partly on company-wide profits to promote cooperation between divisional managers. A reward system can reinforce a chosen strategy as well as compensate for the weaknesses of the chosen strategy. So Axeon seems to be gradually embracing decentralization. Both the line and the staff organizations have significant power (decision rights). The friction we see in the case is typical of a matrix organization where country managers like Wallingford are often at odds with functional specialists at headquarters. Mr. van Leuven has to play an integrator role. He should smooth over the rough spots that will inevitably arise. E. What should Mr. van Leuven do? There is no correct solution here; there are only pros and cons. The options are to source in the U. K. , source in the Netherlands, or delay. Delay means possibly source in the U. K. after the viability of the market has been demonstrated. Asking students to vote as to their preference will reveal significant differences in opinion. This vote, if one is taken, should come very late in the class. While it appears that the economics of this decision favor the Netherlands, our own take is that the decision in this case should probably favor the U. K. If a decentralized organizational structure is appropriate for Axeon, as it appears to be, then decentralization must be allowed to work. Motivate the local managers to take initiative, and reward them for taking that initiative. The Hollandsworth proposal exceeds the established hurdles, so allow Hollandsworth managers to proceed with their plan. If students recommend the seemingly superior economic choice of sourcing the production, then they should just be made to understand the negative motivational effects that choice will have on the motivation of the U. K. managers, and possibly even their successors. Longer-term, Axeon might try to implement a more sophisticated analytical procedure so that the right alternatives are properly addressed in proposals such as that analyzed here. What happened? In the real world situation, the Hollandsworth project was rejected. The transfer price was set at ? 3700, so the full cost to Hollandsworth (including shipping and duty) was ? 3900. Initially Hollandsworth managers tried to sell AR-42 at a price of ? 4500 per ton, but the volume sold was miniscule. Eight months later they lowered the price to ? 4200. The annualized rate of sales went to 150 tons, and Hollandsworth managers thought that the potential was there for annual sales of 200 tons at that price. Four months later they lowered the price to ? 3700. The annualized rate of sales went to 270 tons. With this result, the Hollandsworth managers thought that they had clearly demonstrated the potential for annual sales of 400 tons at that price. Axeon began an increased push to sell AR-42 in other parts of the world. Quickly they filled the capacity of the plant in the Netherlands. Hollandsworth eventually got permission to build a plant in the U. K. Mr. Wallingford did not leave the Hollandsworth immediately. Instead, he focused on other issues and continued to be a highly successful manager. Some years later, Mr. van Leuven was promoted. Mr. Wallingford was offered Mr. van Leuven’s job, but he turned it down because he wanted his children to be educated in the U. K. Soon after having made that decision, he was offered a position of managing director of a larger U. K. company, and he accepted that offer. Student Takeaways Students can learn a lot from this case. They can practice their technical skills, such as those required to do net present value analyses, and they can apply their transfer pricing theories to a real world-like situation. But perhaps most importantly, by seeing that what appears to be a good investment is not made and understanding why not, students can see that the process of management is more intriguing and more complicated than it usually appears in textbooks. Pedagogy Many students see this case as difficult. Some amount of floundering with the numbers is useful, but if the floundering continues, instructors should be prepared to step in and help clarify the analysis. That understanding is essential before moving on to the more qualitative aspects of the case. Suggested timing in a 75-minute class is as follows: 40 min. The plant investment decision 15 min. Transfer pricing alternatives and behavioral effects 15 min. The fit between the existing control system and the company’s strategic priorities 5 min. What happened/summary

Revenue Recognition And Theories of Accounting free essay sample

The Joint Project Revenue recognition requirements in US generally accepted accounting principles (GAAP) differ from those in International Financial Reporting Standards (IFRSs); the former consists of broad concepts whereas IFRSs contain fewer standards, but applying the two main standards to complex transactions were difficult and needed improvement (Australian Accounting Standards Board, 2010). Accordingly, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) initiated a joint project to clarify the revenue recognising principles and to establish a common revenue standard that would: (a)remove inconsistencies in existing standards; (b)provide a sturdier framework for addressing revenue recognition issues; (c)improve comparability across entities, industries, and capital markets; and (d) require enhanced disclosures (IFRS Foundation, 2010). The proposed new standard would clarify recognition, measurement and disclosure of revenue. If adopted, revenue would be recognised when goods or services, or both, are transferred to the customer (IFRS Foundation, 2011). In contrast, current approach to earning revenue is based on the income statement. We will write a custom essay sample on Revenue Recognition And Theories of Accounting or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Impact of Revenue Recognition Revenue reporting directly  impacts an entitys results of operations and financial position, therefore any changes in the revenue recognition model can have a fundamental consequence on a company’s results. Accordingly, the proposed model could have a significant impact on several industries. For example, the recognition of revenue for the licence of intellectual property is dependant upon the customer obtaining control of the asset. The proposals may result in some entities recognising revenue over the term of the licence instead of upon the granting of it, thereby delaying its recognition (PricewaterhouseCoopers, 2010). Importance of Revenue It is widely recognised that revenue is one of the most important items in financial statements and that revenue recognition is one of the toughest issues standard-setters and accountants face. Apart from its monetary importance, users of financial statements attach great value to revenue in making investment decisions on the basis of its trends and growth, evaluating the companys past performance and making predictions about its ability to generate cash flows in the future. Why has revenue been given such significance? Reflecting on this, the work of Hines (1988, 1991) can be considered. Hines stresses a perspective that ‘financial accounting practices are implicated in the construction and reproduction of the social world’, arguing that emphasising particular performance attributes such as profits, or elements like revenue which determine profits, gives legitimacy to organisations. Furthermore, Hines also adopted the view that accountants create the impression that things like revenue only exist once we decide to recognise them, thereby making them real-ised. Essentially it is we who have created revenue to be associated with transactions and events holding such significance and subsequently defining it as crucial in assessing performance. The Development of Models amp; Theories As for revenue recognition models, its development is supposedly grounded in the principles in the existing Conceptual Framework (CF) (Wustemann amp; Kierzek, 2005). The CF sets out major accounting objectives with concepts and general principles specified in the standards for particular types of transactions and events. The interaction of these and professional judgement can well be demonstrated in the area of revenue recognition, discussed later below. Although CFs are defined by the FASB as ‘a coherent system of interrelated objectives and fundamentals that can lead to consistent standards’, Hines (1989) suggested CFs are merely ‘a strategic manoeuvre for providing legitimacy to standard-setting boards and the accounting profession’. She believed the qualitative characteristics of comparability, completeness and consistency of accounting information could not be achieved due to the CF’s lack of theoretical foundation. The CF is an example of a normative theory of accounting because it prescribes guidance such as the qualitative characteristics financial information should possess, as contrasted with positive theories, which seek to explain and/or predict particular phenomena (Deegan, 2009). Both theories are developed on the basis of deductive reasoning, which relies upon the use of logic to develop arguments and related theory. Although typically all research and theories are value-laden, the prescriptive nature of normative theories means more value judgement and social biasness is involved in its development, which may be a reason for the apparent functional failure of CFs. Raymond Chambers (1957) was a distinguished contributor to normative theory; he developed the Continuously Contemporary Accounting theory that describes how financial accounting should be undertaken, suggesting that the most useful information about an organisation’s assets for the purposes of economic decision-making is information about their ‘current cash equivalents’. Alternatively, positive theories begin with some assumptions and, through logical deduction, enable explanations or predictions to be made, typically evaluated by considering how well these relate to actual observations. Watts and Zimmerman (1978) developed the Positive Accounting Theory, which seeks to predict and explain why managers prefer adopting particular accounting methods, but neither guides us nor tells us anything about current practice’s efficiency. Contrastingly, going backwards, early development of accounting theory relied on descriptive research based on the process of induction, which is the development of ideas or theories by codifying common accounting practices based on observation. Paton and Littleton (1940) were two notable theorists who supported this form of research. They introduced the revenue and expense view, which proposed recognising revenue when it is earned or realised and matching the related costs with those revenues, assuming profit accrues throughout the entire earnings process. As a result, accounting income does not have an intrinsic definition and is operationally defined as the result of applying those principles. However, standard-setters have since proposed changing from the revenue and expense view to the asset and liability view, which somewhat restricts the application of the realisation principle and the matching principle, in order to curb arbitrary judgements and to achieve a more consistent income determination (American Accounting Association). Shifts in Theory Evidently over several decades there have been shifts from one theory to another, such as from early positive theories to normative theories of accounting, and more specifically, from an income statement approach to that of a balance sheet-driven model for revenue recognition. In explaining the reason for this, consider Kuhn’s (1962) explanation of how knowledge development is revolutionary, whereby one theory is replaced by another as particular researchers denigrate an existing paradigm and advance an improved alternative. Principal to this conversion is the role of value judgements and the individual value systems they are founded on. Different researchers work from different paradigms that provide greatly distinct perspectives on the topic of research, based on their respective value judgements. Thus, any changes in their value judgements alter their paradigm, enabling them to gain insight into and possibly become proponents of newer concepts that they see as superior. The role of value judgements is pervasive in all choices and conclusions. In accounting for organisations, since many transactions and events are incomprehensively addressed in the standards, managers and accountants must often use judgement when applying accounting standards. The reliance on principles over rules results in an inconsistent application because it allows management to exert judgement differently in identical cases through the choice of dissimilar accounting methods (Wustemann, 2010). Another reason for the shift from different accounting models could be to improve accounting standards and the credibility of accounting itself (Heffes amp; Orenstein, 2005). Accounting standards and measurement principles, and hence financial statements, are full of management estimates that are the result of differing value judgements or attempts to structure transactions to attain a specific accounting result rather than properly reflecting its economic substance. This has led to accounting losing its integrity and true purpose of communicating relevant and reliable information. In the case of sub-prime mortgage loans and the sale of their cash flows through collateralised debt obligations (CDOs), the assumption that real estate prices would continue to rise was shown to be a false assumption, estimates of default rates were too low, and the adequacy of credit enhancements was overestimated (Walters, 2008). Financial statement information, based on these flawed estimates and assumptions, was only proven to be wrong when real estate prices began falling, leading to the collapse of the sub-prime mortgage market. Thus, the development of newer accounting models and standards aim for the specification of particular accounting treatment resulting in financial information that more accurately reflects a company’s position and performance. It aspires to increase the efficacy of the accounting function and prevent the occurrence of similar crises. Conclusion This essay explored the reasons for the emergence of the IASB-FASB joint project on revenue recognition as an attempt to improve financial reporting by clarifying the principles for recognising revenue and creating a single joint revenue recognition standard that companies can apply consistently. The proposed revenue recognition model could have a significant accounting impact for several industries because of revenue being one of the most important indicators of a successful business, which directly affects financial results. The reason for revenue being pivotal may be merely due to the emphasis given to it as a key performance attribute that signals justification of support for particular organisations, as suggested by Hines. Concerning revenue recognition models, their development is apparently based on the essential elements of the CF, which are thoroughly discussed by standard-setting constituents, broadly understood and generally agreed upon before issuance of related standards. However, the CF has been viewed as failing technically and functionally, its purpose seemingly ‘to assist in socially constructing the appearance of a coherent differentiated knowledge base for accounting standard’ (Hines). Revenue recognition models have thus gone through several changes due to ongoing discussions surrounding the appropriate accounting treatment of revenue and the value judgements underlying those dialogues. Such modifications endeavour to promote accounting standards’ and principles’ credibility, to assist the accounting profession recover from scandals that have led to its reputation being questioned.

Using System Dynamics to analyse the Economic Impact of Tourism Multip

Using System Dynamics to analyse the Economic Impact of Tourism Multip Using System Dynamics to analyse the Economic Impact of Tourism Multipliers Abstract The importance of tourism for economic development is widely recognised . This is reflected in the great interest shown by governments by promoting foreign direct investment and freeing both public and private sector projects. Most tourism studies concentrate on analysing the economic and social effects of tourism. The impact of the multiplier has been studied widely using traditional econometric techniques. This paper focuses on analysing the economic impact of tourism revenue on the Egyptian economy. The economic theory and the mathematical modelling involved in such scenarios is discussed but the main thrust of the paper is the encapsulation of this situation by Causal Loop Models . A dynamic model, run in Powersim, is then described where important non-linear dynamical movements and the significance of systems thinking in this framework are considered . This model considers the dynamics of tourism in Egypt and its impact on GNP. 1. Introduction The importance of tourism for an economy is independent of whether it is developed or developing. . Inskeep showed that in 1989 tourism revenues world-wide were nearly 209 billion dollars growing at 9% yearly. This revenue then represented nearly 7% of total international trade and 30% of total international income. Tourism played a major role in modernising the Spanish economy. In the USA, tourism generated 5 million jobs and was 6.7% of GNP in the USA in 1989 (Inskeep, 1991). It is not only income effects that make tourism sectors important. These sectors include foreign investment, subsidies and taxation. Infrastructure and resources are considered the most important feature for any country in a competitive world fighting to attract market share. In developing and advanced countries, tourism is viewed as an important means to boost levels of income and employment. There has been much research on tourism and relationships with economic development. Thus Kraph argues that tourism has a crucial role in developing countries. It helps to lower deficits in the Balance of Payments, increase levels of economic growth and raise job opportunities (Pearce, 1992). Kasse concentrated on the benefits and costs of tourism. He showed that through a certain investment in the tourism sector, income could be produced that may be used in developing different sectors of the economy. Van Doorn concludes that development theories should take into consideration the direct and the indirect effect of tourism (Pearce, 1992). Egypt is considered to have a reasonable infrastructure and adequate resources for tourism.. It has the advantage of a unique history and climate that has preserved some of the most ancient artefacts in the world. It has a good geographical location situated between three continents with a long coasts on the Mediterranean and Red Sea.. Egypt also has a stable political and social system. This paper focuses on analysing the economic impact of tourism sector revenues on the Egyptian economy. It begins by reviewing some of the most important previous studies that discuss models of tourism multipliers . It then examines a simple Keynesian model and relates this to Egyptian data. The paper presents the results of a regression analysis that considers relative effects on GNP, consumption, investment and import expenditures. Causal and System Dynamic models are then introduced and compared with econometric results. The policy implications are then discussed. 2 The Tourism Multiplier Most studies on Tourism have concentrated on analysing the economic and social effects of tourism specially by what is termed the multiplier effect. This term is a derivative of the multiplier effect first introduced by Samuelson (Samuelson, 1960). It determines the benefit to the economy for every unit of currency that is spent. It is noted that most of the conversations about the effect of tourism on economic development concentrated on the multiplied effect of tourism on the National economy. 2.1 Traditional Approaches: Archer reflects on interrelationships between three kinds of expenditure: 1) Direct expenditure. 2) Indirect expenditure. 3) Stimulated expenditure. Indirect expenditure and stimulated expenditure are called the secondary effects of the multiplier and the sum of these are called the total effect of the multiplier (Archer, 1982). Lundberg used the following formula to calculate multiplier effects (Lundberg, 1995). MPS MPI TPI TIM + = 1 (1.1) where: TIM = The tourism multiplier TPI = The marginal propensity to import for tourists MPS = The marginal propensity to save MPI = The marginal propensity to import for local residence Using published data for the Bahamas Islands, Lundberg (Lundberg, ibid) estimated the value of tourism multiplier as: 0.894 0.737 0.659 0.281 0.456 1 0.231 = = + TIM = Ryan (Ryan, 1991) devised an alternative formula for tourism multipliers as follows: BC TIM

Advanced Investment Theory and Practice Assignment

Advanced Investment Theory and Practice - Assignment Example The question to ask is, â€Å"what are the several implications of a market that is efficient for portfolio management?† As far as security analysis is in question, the efficient market hypothesis plainly put forward that neither fundamental analysis nor technical analysis is meaningful, unless, as Lorie and Hamilton explain, the scale of investable funds is sufficient in the process of analysis (Lorie & Hamilton 1973). The process of portfolio management is simple to explain. The whole process is adequately basic to allow the writing of a computer program to replicate nearly precisely the portfolio, which a manager chose. For example, Black presents an intense but convincing case for a passive portfolio management strategy. He explains that in case an investor does this, that investor will not try to outguess changes in the market. He continues saying the investor will not try to pick stocks that are thought not to do better than other stocks. The investor will usually sell o nly to establish losses in tax, or when the investor requires money. The investor may borrow against portfolio when money is required, rather than selling, in order to avoid realizing gains in capital.   Furthermore, the investor will try to minimize investment expenses, taxes, and costs. As correctly pointed out above by Black, a portfolio strategy that is passive does not mean randomly purchasing securities, but choosing a portfolio that is well diversified in harmony with the utility of investor towards risk.