Tag: Merits

  • What is Communism: Meaning Definition Examples

    What is Communism: Meaning Definition Examples

    Communism is a socio-political ideology that advocates for the abolition of private property and the establishment of a classless society. In a communist society, the means of production own and controlled by the community as a whole, rather than standing privately owned. The ultimate goal of communism is to create a society where wealth and resources distribute equally among all individuals. This ideology stands often associated with the idea of a planned economy and the absence of a central government. However, it is important to note that there are various interpretations and implementations of communism throughout history.

    Understanding Communism: Meaning, Definition, Features and Characteristics, Pros and Cons with Examples

    What is the meaning of Communism? Communism is a socio-economic ideology and political movement that aims to establish a classless, stateless society where all property stands commonly owned and each person works and compensates according to their abilities and needs. At its core, communism seeks to create a society where the means of production, such as factories, land, and resources, collectively own and control by the community as a whole, rather than standing privately owned by individuals or a specific ruling class.

    The concept of communism was most notably developed by Karl Marx and Friedrich Engels in the 19th century, who outlined their ideas in “The Communist Manifesto” and “Das Kapital.” According to Marx, communism would emerge as the final stage of human society, following the transitional stage of socialism. In a communist society, social classes would abolish, as well as the division of labor and the existence of money.

    Communism aims to overcome the inequalities and exploitation that can occur in capitalist systems by prioritizing the common good over individual interests. It seeks to eliminate social hierarchies and establish a society based on cooperation, equality, and the equitable distribution of resources. However, different interpretations and implementations of communism have led to variations in its practice throughout history, with some societies claiming to be communist but falling short of the ideals outlined by Marx and Engels.

    It’s important to note that communism has been a subject of debate and has faced criticism for its historical implementations. Which have often resulted in authoritarian regimes, restricted individual freedoms, and human rights abuses. Nevertheless, understanding communism involves recognizing its theoretical principles while acknowledging the complexities and variations in its practical application.

    What is Communism Meaning Definition Examples Image
    What is Communism: Meaning, Definition, and Examples; Image by Bob Dmyt from Pixabay.

    Definition of Communism

    Communism is a socio-political ideology that aims to establish a classless society where the means of production own and controlled by the community as a whole, rather than standing privately owned. It advocates for the abolition of private property and the equitable distribution of wealth and resources among all individuals. In a communist system, there is typically an absence of a central government, and economic system decisions stand often made collectively through a planned economy. It is important to note that the implementation and interpretation of communism have varied throughout history.

    Features and Characteristics of Communism

    Communism is characterized by several key features:

    1. Abolition of Private Property: Communism seeks to eliminate the concept of private ownership of property. Instead, all resources and means of production collectively own and manage by the community as a whole.
    2. Classless Society: Communism aims to create a society without social classes, where everyone considers equal. This means there is no distinction between the working class and the ruling class, and all individuals have equal access to resources and opportunities.
    3. Distribution of Wealth and Resources: In a communist society, wealth and resources intend to distribute equally among all individuals. This ensures that everyone’s basic needs are met and prevents the accumulation of wealth and power by a few.
    4. Planned Economy: Communism often involves a planned economy. Where economic decisions are made collectively and resources are allocated based on the needs of the community. This contrasts with a market economy, where decisions are driven by supply and demand.
    5. Stateless Society: In some interpretations of communism, the goal is to establish a stateless society. This means that there is no central government with hierarchical power structures. Instead, decision-making and governance are based on collective decision-making processes.

    It’s important to note that the implementation and interpretation of these features have varied throughout history, and different communist societies have embraced them to varying degrees. Additionally, the practical application of communism has often faced challenges and criticisms, leading to different outcomes and experiences in different contexts.

    Pros and Cons of Communism

    The following Communism have pros and cons, advantages and disadvantages, benefits and drawback, as well as merits and demerits below are;

    Pros:

    1. Equality: Communism aims to eliminate social classes and create a society. Where all individuals have equal access to resources and opportunities. It strives to reduce inequalities and promote fairness.
    2. Collective Decision-Making: In a communist system, economic decisions stand often made collectively through a planned economy. This approach allows for the prioritization of the common good and can potentially lead to a more equitable distribution of resources.
    3. Social Welfare: Communism places an emphasis on the well-being of society as a whole. It aims to provide basic necessities such as healthcare, education, and housing for all individuals.
    4. Worker Empowerment: In a communist society, the means of production stand owned and controlled by the community as a whole. This can lead to increased worker empowerment and participation in decision-making.

    Cons:

    1. Lack of Individual Freedom: Communist regimes have often stood criticized for restricting individual freedoms. Such as freedom of speech, assembly, and expression. This can lead to a lack of political and personal liberties.
    2. Centralized Power: Communism typically involves the absence of a central government. However, in practice, this has often resulted in the concentration of power in the hands of a few individuals or a ruling party, leading to authoritarianism.
    3. Economic Challenges: The planned economy in communism can face challenges in efficiently allocating resources and adapting to changing demands. This can lead to shortages, inefficiencies, and a lack of innovation.
    4. Limited Incentives: In a communist system, where resources stand distributed based on needs rather than individual efforts. There may be limited incentives for individuals to work hard or innovate, which can hinder economic growth.

    It’s important to note that the pros and cons of communism stand highly debated and can vary depending on the specific implementation and context. Different societies have experienced different outcomes and faced unique challenges in their pursuit of communist ideals.

    Examples of Communism

    Communism has been implemented in various countries throughout history, each with its own unique characteristics and outcomes. Here are some examples of countries that have attempted to establish communist systems:

    1. Soviet Union: The Soviet Union, also known as the Union of Soviet Socialist Republics (USSR), stood established in 1922. Led by the Communist Party, the Soviet Union implemented a centrally planned economy and collectivized agriculture. However, the regime stood characterized by authoritarianism, censorship, political repression, and human rights abuses.
    2. People’s Republic of China: Following the Chinese Civil War, the Communist Party of China, led by Mao Zedong, established the People’s Republic of China in 1949. Under Mao’s leadership, China implemented various policies like land reforms, collectivization, and the Great Leap Forward. The Cultural Revolution in the 1960s further transformed Chinese society. China has since undergone considerable economic reform and shifted towards a more market-oriented economy while maintaining single-party communist rule.
    3. Cuba: In 1959, Fidel Castro led a successful revolution in Cuba, overthrowing the US-backed dictator Fulgencio Batista. Cuba then adopted communism as its governing ideology. The Cuban government implemented policies such as the nationalization of industries, collectivized agriculture, and the establishment of a centrally planned economy. Cuba has faced economic challenges and international isolation, but the government continues to maintain communist rule.
    4. North Korea: The Democratic People’s Republic of Korea (DPRK), commonly known as North Korea, was established in 1948 under the leadership of Kim Il-sung. The country has remained under communist rule and implemented a centrally planned economy. North Korea has faced significant challenges, including international sanctions and human rights concerns.

    Bottom line

    Communism is a socio-political ideology that aims to create a classless society. Where the means of production stand collectively owned and wealth stands distributed equally. It advocates for the abolition of private property and often involves a planned economy and the absence of a central government. The concept of communism stood developed by Karl Marx and Friedrich Engels. But the interpretation and implementation of communism have varied throughout history.

    While communism seeks to eliminate inequality and exploitation. It has also faced criticism for its historical implementations resulting in authoritarian regimes and human rights abuses. The pros and cons of communism stand highly debated, as different societies have experienced different outcomes. Examples of countries attempting to establish communist systems include the Soviet Union and China.

  • Mixed Economy Definition Characteristics Pros Cons Examples

    Mixed Economy Definition Characteristics Pros Cons Examples

    A mixed economy is an economic system that combines elements of both capitalism and socialism. There is a mix of private ownership and government control in the production and distribution of goods and services. This system allows for a level of economic freedom, as businesses and individuals can operate in the private sector, while also ensuring that the government plays a role in areas such as regulation, public services, and economic planning. The specific mix and degree of government involvement can vary between countries. Overall, the goal of a mixed economy is to promote both economic growth and social welfare.

    Definition, Characteristics, Pros, Cons, and Examples of Mixed Economy: How to be Know

    What is the meaning of Mixed economy? It refers to an economic system that combines elements of both capitalism and socialism. It is characterized by the coexistence of private enterprises and government involvement in economic activities. In a mixed economy, some industries and sectors are privately owned and driven by market forces, while others are controlled or regulated by the government.

    The government plays a role in areas such as infrastructure development, education, healthcare, and social welfare. It may also enact regulations and policies to protect consumer rights, promote fair competition, and prevent monopolies. Additionally, the government may implement fiscal and monetary policies to influence economic growth and stability.

    At the same time, private individuals and businesses have the freedom to engage in economic activities, establish their enterprises, and make decisions based on market forces such as supply and demand. This allows for competition, entrepreneurship, and profit-making potential.

    The specific balance between government intervention and private enterprise can vary across countries and can evolve. Some countries lean more towards a free-market capitalist system, while others have a higher degree of government control and social welfare programs. The term “mixed economy” is often used to describe the economic systems of many modern democratic countries, where a combination of private and public interests shapes the overall economic landscape.

    Mixed Economy Definition Characteristics Pros Cons Examples Image
    Mixed Economy Definition, Characteristics, Pros, Cons, and Examples; Image by Gerd Altmann from Pixabay.

    Definition of Mixed economy

    It is an economic system that combines elements of both capitalism and socialism. In a mixed economy, there is a balance between private enterprise and government intervention. Private individuals and businesses have the freedom to own and control resources and engage in economic activities, while the government also plays a role in regulating industries, providing public services, and redistributing wealth. The degree of government involvement can vary, but the goal is to promote economic growth, efficiency, and social welfare. This system allows for a combination of market forces and government intervention to address both individual and societal needs.

    Characteristics of a Mixed Economy

    A mixed economy is characterized by the following key features:

    Combination of Private and Public Ownership:

    There is a blend of private enterprises and government-owned or controlled sectors. Certain industries and businesses are owned and operated by private individuals or companies, while others are owned and managed by the government.

    Coexistence of Market Forces and Government Intervention:

    Market forces such as supply and demand play a significant role in determining prices, production, and distribution of goods and services. At the same time, the government intervenes to regulate and control specific areas of the economy to ensure fair competition, protect consumer rights, and address market failures.

    Government Regulation and Control:

    The government in a mixed economy has a regulatory role to protect public interests and ensure the smooth functioning of the economy. This may include implementing laws, regulations, and policies to oversee various sectors, enforce standards, monitor monopolies, and protect the environment.

    Provision of Public Goods and Services:

    The government in a mixed economy is responsible for providing essential public goods and services such as infrastructure development, education, healthcare, and social welfare programs. This ensures that basic needs are met and promotes equal opportunities for all members of society.

    Wealth Redistribution:

    A key characteristic of a mixed economy is the government’s role in redistributing wealth and addressing income inequalities. Through various mechanisms such as progressive taxation, social welfare programs, and wealth redistribution policies, the government aims to promote social equity and reduce disparities.

    Flexibility and Adaptability:

    The degree of government intervention and the specific mix of private and public sectors can vary in a mixed economy. This allows for flexibility and adaptability based on changing economic conditions and societal needs.

    Balancing Economic Growth and Social Welfare:

    The overarching goal of a mixed economy is to promote both economic growth and social welfare. By combining market forces with government intervention, it seeks to strike a balance between profit-making and addressing social concerns.

    Pros and Cons of Mixed Economy

    A mixed economy has both advantages and disadvantages, also Merits and Demerits, as well as Pros and Cons. Let’s explore some of the pros and cons of this economic system:

    Pros or advantages or merits:

    1. Economic Growth and Innovation: They allow private enterprises to drive economic growth through innovation, entrepreneurship, and competition. The profit motive encourages businesses to invest, expand, and create new products and services, which contributes to overall economic progress.
    2. Social Welfare: Government intervention in a mixed economy ensures the provision of essential public services such as education, healthcare, infrastructure, and social welfare programs. This helps to address societal needs and reduce inequality by providing support to those in need.
    3. Regulation and Consumer Protection: Government regulations and policies in a mixed economy protect consumers’ rights and ensure fair competition. This helps prevent monopolies and promotes market efficiency, consumer choice, and product safety.
    4. Stability and Crisis Management: The government’s role in economic planning and intervention allows for stability and crisis management. During turbulent times or economic crises, the government can implement fiscal and monetary policies to stimulate the economy and prevent severe downturns.

    Cons or disadvantages or demerits:

    1. Reduced Economic Freedom: It involves some degree of government control and intervention, which can limit economic freedom. Regulations, taxes, and redistribution policies may place restrictions on private businesses and individuals, potentially slowing down economic growth and innovation.
    2. Inefficiency: The presence of both public and private sectors can sometimes lead to inefficiencies in resource allocation. Bureaucracy and red tape in government institutions can hinder productivity and slow down decision-making processes.
    3. Potential for Corruption and Cronyism: When government intervention is extensive, there is a risk of corruption and favoritism. Private entities may try to influence government policies and regulations to their advantage, leading to unfair competition and unequal distribution of resources.
    4. Difficulty in Achieving Optimal Balance: Striking the right balance between government intervention and free-market dynamics can be challenging. Different countries may have different views on the appropriate mix, making it difficult to find the optimal balance that promotes both economic growth and social welfare.

    It’s important to note that the degree and effectiveness of these pros and cons may vary across countries and can depend on specific contextual factors.

    Examples of Mixed Economy

    A mixed economy can be found in various countries around the world. Here are a few examples:

    1. United States: The United States has a mixed economy where both private businesses and government agencies play significant roles. While private enterprise drives most sectors, the government provides regulations, public services, and social welfare programs.
    2. United Kingdom: The United Kingdom operates with a mixed economy, combining elements of capitalism and government intervention. Private businesses dominate most sectors, but the government provides public services, healthcare, and social welfare programs.
    3. Germany: Germany also has a mixed economy, often referred to as a social market economy. It combines a strong private sector with an extensive social welfare system and government regulation. The government plays a significant role in infrastructure development, education, and healthcare.
    4. Canada: Canada’s economy is considered a mixed market economy. It has a combination of private businesses and government intervention. The government regulates certain industries, provides healthcare, and administers social welfare programs.
    5. Sweden: Sweden follows a model of a mixed economy known as the Nordic model. It combines elements of capitalism with a high degree of government intervention, particularly in healthcare, education, and social welfare.

    These are just a few examples, and it’s important to note that each country’s mixed economy may have different degrees of government involvement and specific policies tailored to their unique contexts.

    Bottom line

    The content in the editor explains what a mixed economy is, its meaning, definition, characteristics, pros and cons, and examples. A mixed economy combines elements of both capitalism and socialism, with a balance between private enterprise and government intervention. It allows for economic freedom while ensuring government regulation in areas such as infrastructure, education, healthcare, and social welfare. The specific mix and degree of government involvement can vary between countries. The goal of a mixed economy is to promote both economic growth and social welfare.

  • What is the Executive Information System (EIS)?

    What is the Executive Information System (EIS)?

    Executive Information System (EIS) Meaning, Factors, Characteristics, Advantages, Pros, Benefits, Merits, Disadvantages, Cons, Limitation, and Demerits; An Executive Info System (EIS) is a kind of decision support system (DSS) used in associations to help managers in decision making. It does so by providing easy entrance to important data needed in an institution to achieve strategic objectives. An EIS usually has graphical presentations on a user-friendly interface. They can use for monitoring enterprise performance in many different types of organizations as well as for identifying opportunities and issues.

    Here is the article to explain, Executive Information System (EIS) with their Meaning, Factors, Characteristics, Advantages, Pros, Benefits, Merits, Disadvantages, Cons, Limitation, and Demerits!

    Early they were developed on mainframe computers as computer-based programs to provide the description, sales performance, and/or market research data for senior managers of an enterprise. Executives, however, were not all lettered or sure about the computers. Also, EIS data endorsed only executive-level decisions that did not necessarily support the entire organization or business. Current EIS data is available on local area networks (LANs) throughout the business or corporation, facilitated by personal computers and workstations.

    Workers can access business data to help make decisions in their workplaces, departments, divisions, etc. This enables workers to provide relevant information and ideas above and below the level of their business. Administrative support systems are intended to be used directly by senior managers to support unscheduled strategic management judgments. Often such data is external, unstructured, and even doubtful. Often, the exact scope and context of such details are not known in advancement.

    What is the meaning of Executive Information System (EIS)?

    An EIS is an Information System that can transform the business data into insights and help the top-level executives of a company in the domain of corporate business intelligence; which consists of the processes, applications, and also practices that support executive decision making. This system delivers the most recent operational data gathered from various internal and external databases.

    A Typical Executive Information System;

    Executive Information System focuses on the present, usually presenting the executive with information within the budgeting time-frame of the organization. Furthermore, it is exclusively a display technology, oriented to presenting static reports graphs, and textual information on demand. It offers no analysis capabilities to help the executive explain, diagnose, and also understand the information presented to them.

    Decision Support System:

    A Decision Support System (DSS) is a collection of integrated software applications and hardware that help the analyst, managers of an organization in the decision-making process. Organizations depend on decision support tools, techniques, and models to help them assess and resolve everyday business problems. And make decisions. The decision support system is data-driven, as the entire process feeds off of the collection and also the availability of data to analyze. Business Intelligence (BI) reporting tools, processes, and methodologies are key components to any decision support system and provide end-users with rich reporting, monitoring, and data analysis.

    Key Factors and Characteristics of Executive Information System (EIS);

    The below-mentioned formation describes key factors and characteristics of EIS,

    • Exact data – They provide absolute data from its current database.
    • Incorporate external and internal data – They integrate external and internal data. Also, The external data was collected from different sources.
    • Offering information – They describe available data in graphical form which helps to analyze it easily.
    • Trend research and analysis – They help executives of the institutions to data prediction based on trend data.
    • Easy to utilize – They very the simplest system to use.

    Advantages and Disadvantages of Executive Information System;

    The following Executive Information System (EIS) Advantages, Pros, Benefits, Merits, Disadvantages, Cons, Limitation, and Demerits below are;

    Pros, Benefits, Merits, and Advantages of EIS;
    • Trend Research and Analysis.
    • Revision and Improvement of corporate version in the marketplace.
    • Development of managerial and administrative leadership skills.
    • Improves conclusion or decision-making.
    • Easy to use by senior executives.
    • The more useful reporting method, and.
    • Also, Improved post efficiency.
    Cons, Limitation, Demerits, and Disadvantages of EIS;

    Sources for the information processed by an Executive Information System (EIS);

    The sources for the information processed by an EIS are as follows:

    Hardware Sources;

    The basic computer hardware needed for a typical EIS includes four components:

    • Input data-entry devices; These devices allow the executive to enter, verify, and update data immediately.
    • The central processing unit (CPU); CPU is the kernel because it controls the other computer system components.
    • Data storage files; The executive can use this part to save useful business information, and this part also help the executive to search historical business information easily
    • Output devices; Which provide a visual or permanent record for the executive to save or read. Also, This device refers to the visual output device or printer.
    Software Sources;

    The basic software needed for a typical EIS includes four components:

    • Text-based software; The most common form of text probably documents.
    • Database; Heterogeneous databases residing on a range of vendor-specific and open computer platforms help executives access both internal and external data.
    • Graphic base; Graphics can turn volumes of text and statistics into visual information for executives. Typical graphic types are time series charts, scatter diagrams, maps, motion graphics, sequence charts, and comparison-oriented graphs (i.e., bar charts).
    • Model base; The EIS models contain routine and also special statistical, financial, and other quantitative analyses.

    Levels of management need it;

    An Executive Information System (EIS) is a type of management information system intended to facilitate and support the information and decision-making needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization. Also, It exists commonly considered as a specialized form of a Decision Support System (DSS).

    The information presented to the executive may include financial information, work in process, sales figures, market trends, industry statistics, and the market price of the firm’s shares performance data and trend analysis. Also, Graphical interfaces (GUI) make it possible to request reports and queries without resorting to programming.

    Is there a relationship between global computing and executive information systems? Explain.

    They believe there is a strong relationship between global computing and Executive information systems. Senior executives of the organizations spread globally need constant and also timely access to global information for making decisions. This information originates in different places worldwide for a global organization and needs to organize before it can use for decision-making. The organization and management of global corporate data present unique challenges for developing global executive information systems (EIS) for senior executives of global companies.

    The objective of a global EIS should be to provide executives with a consistent, integrated, and summarized view of operational data from subsidiaries worldwide. Due to global computing, the EIS also provides access to external data that capture from different sources. Also, The system facilitates integrating the internal and external data for effective decision-making globally.

    What is the Executive Information System (EIS) Image
    What is the Executive Information System (EIS)?
  • What is Alternative Business Structure (ABS)?

    What is Alternative Business Structure (ABS)?

    What is Alternative Business Structure (ABS)? They what help to do; An alternative business structure could be a firm that has non-lawyers in its possession and management structure; this enables corporations to involve key those who bring further expertise and skills. The non-lawyer is often concerned through investment or as a partner or director.

    Here is the article to explain, What is Alternative Business Structure (ABS)?

    Before 2007, once the Legal Services Act stood passed, any thus solicitor doing business in a very legal capability for the general public had to try and do so in a very firm that solicitors in hand. Once the act stood passed, they came onto the scene and allowed each non-solicitors and solicitor to have legal service corporations. If you have obtained their license, you’ll offer legal services as a non-legal organization; this enables law corporations to manage by non-lawyers. ABS structures conjointly permit law corporations to supply over simply legal services. Law corporations created as ABS will have outside investors, which is one of the most important attracts of this feature.

    Introduction to Alternative Business Structures (ABS);

    Alternative Business Structures (ABS) has had and will continue to have, transformational implications in delivering legal services. ABSs entered the UK’s legal landscape through the Legal Services Act 2007 and officially began operating on 6 October 2011. In essence, ABSs have diluted ownership restrictions in favor of non-lawyers, allowing both non-lawyers and lawyers to manage the law firm business. This has similarly brought new entrants to the market and more external investment. This paper will critically assess the transformational impact ABSs have had in delivering legal services, examining both their positive and negative consequences. A case study will then undertake, with national law firm Irwin Mitchell’s decision to operate as an ABS discussed. What they are helping to do below are;

    An ABS performance will work where:

    • An established lawyer-owned firm needs to require a non-lawyer partner.
    • An established house needs its non-lawyer to follow the manager to become a co-owner.
    • A professional person needs to line up a house with a non-lawyer partner/owner, and.
    • A non-legal enterprise sees legal services as complementary and sets up a standalone business.

    Time for a change;

    As Nick Hood has noted:

    “When the Legal Services Act 2007 was enacted, it’s doubtful that its sponsors could have foreseen a Cyprus-based construction consulting firm embracing the concept to enhance its international credibility. Nor would they have anticipated it bringing together Bucks County Council & the Bucks Fire Authority as law services providers.”

    And indeed, it has been an era of considerable change. This transformation has seen businesses as diverse as trucking giant Stobarts entering the legal market, stands licensed to set up a firm of solicitors under ‘One Legal Ltd’. For the Stobart Group, which already owns a claims management company, an insurance broker, and Stobart Barristers; this means they can effectively operate as a ‘one-stop shop’. As the Legal Director of the Stobart Group noted:

    “[Stobart] can broker the insurance, then handle the claim, deal with the litigation, and provide an advocate”.

    Report;

    But of course, any evaluation of ABS’s must consider the underlying reason why they existed introduced. A 2001 Office of Fair Trading (OFT) report entitled ‘Competition in Professions’ provides the answer. This report formed the basis for a subsequent White Paper entitled ‘The Future of Legal Services’; itself leading to the Legal Services Act 2007 mentioned earlier. The 2001 OFT report provided that:

    “Markets generally work best for consumers when there is unrestricted competition between existing suppliers and unrestricted potential competition from new suppliers and new forms of supply.”

    As such, the chief reason ABSs existed introduced was to increase competition between existing ‘traditional’ law firm suppliers and encourage the introduction of new suppliers; both to benefit consumers in the forms of a greater degree of choice, potentially higher quality of service, and potentially a lower cost. Further, with new entrants to the market has come much external investment; “such as private equity or venture capital, to inject into legal businesses by outside investors”.

    Example;

    A well-publicized example of the colossal amounts of money existing injected into legal businesses by outside investors is that of private equity firm Duke Street Capital and national professional services firm Parabis Group. Duke Street Capital, which already invested £200 million into Parabis Group, invested a further £13 million in December 2014 to help fund the Group’s development of its ABS models. Parabis Group’s ABSs include Plexus Law, Cogent Law, Acumen, Casus Legal, and Greenwoods Solicitors.

    Speaking of the impact of the numerous ABS licenses existing issued and to the extremely wide range of recipient businesses, Stephen Mayson has provided that:

    “To pretend that these developments don’t matter, or won’t make any difference to the buying of legal services, is plain nonsense… This is not the time to resist, deny or challenge; it is time to reinvent the delivery of legal services. Not just changing a few of the moving parts, but fundamentally re-thinking what lawyers and law firms do”

    A word of warning;

    Evaluating Mayson’s comments; “undeniably, ABSs offer new ways of working for the lawyers who embrace them and new ways of accessing legal advice for the clients who choose them”. However, such developments and quest for reinvention mustn’t ride roughshod over professional ethics and principles. With non-lawyer owners and external investment comes the introduction of commercial norms, primarily the pursuit of profit above all else. Lord Neuberger has expressed concern over this issue, and speaking to the Association of Liberal Lawyers, stated that:

    “Such a professional ethos cannot assume to be in the forefront of the minds of hard-nosed businessmen who want to maximize a return on their investment… An external investor in a legal business may well want the firm only to carry out the most remunerative work.”

    Merits;

    There is merit in his Lordship’s concerns. Although it would be too naïve to suggest that commercial factors have not entered the law; they have existed tempered by practitioners’ professional obligations, towards both clients and the court. However, one can readily envisage legal practitioners operating in an ABS existing subjected to ethical challenges; which play off the obligations mentioned above with their obligations towards their external owners.

    As an indicative example, in the motor claims insurance sector, RBS roughly retains around a 30% market share. If RBS had 40% ownership of one particular ABS, a client, pursuing an insurance claim; may well find their solicitor is standing employed by the company who will have to ultimately pay out their claim.

    As Lord Neuberger rightly, and further notes:

    “The regulatory bodies will need to work hard to ensure that such pressures are minimized and neutralized. If they fail to do so and allow a culture of conflict to arise and one where that conflict is quietly resolved in the investors’ favor, we run the risk of losing a properly robust and independent legal profession.”

    However, opposing this view, one must also recognize the great benefits that ruthless commerciality can bring the legal profession.

    Research;

    Indeed, very recent research published by the Legal Services Board in July 2015 shows that solicitors practicing in newly created ABS firms:

    “Have higher levels of innovative activity of all types than other Solicitors. This is consistent with ABS Solicitors’ higher level of investment, staff engagement, and external involvement in innovation … ABS Solicitors are … more likely to introduce new legal services, with potential benefits for service users. They are also more likely to engage in strategic and organizational innovation.”

    The findings of the research are perhaps not that astonishing given “the mood music [that ABSs] have created, encouraging innovation and change”. Asides from an innate commerciality and access capital to invest, from a real, practical perspective; ABSs also have the added advantage over their ‘traditional’ law firm competitors in being able to establish; their own bespoke IT systems, often from scratch, rather than inheriting or having to make do with out-dated systems that are no longer fit for purpose.

    The advantages are obvious and numerous, including, for example, better communication between staff, improved service delivered to the customer, and more effective case management. Additionally, not existing confined to the “antediluvian working practices and petty partnership politics”; which have sadly characterized many ‘traditional’ law firms results in opportunities for ABSs to develop attractive, novel alternatives; working patterns, and remuneration packages developed in the commercial arena.

    But, unfortunately, as Hood notes:

    “One inescapable downside of bringing hard-headed commercial business attitudes and financial discipline to the cozy, coddled legal world is that investors will walk away from failing ventures without a trace of sentiment.”

    Case study – Irwin Mitchell;

    Irwin Mitchell was one of the first law firms to license by the SRA as an ABS. It has multiple licenses which cover a wide range of its business operations and indeed, most recently, has entered into a joint venture with insurer ensure and will form an ABS accordingly. Below, the reasons why Irwin Mitchell decided to apply for ABS status exist discussed; and the transformational impact it has had in delivering its legal services considered. This will ultimately explain why, as one of Irwin Mitchell’s practitioners has exclaimed, “becoming an ABS was right”.

    As Irwin Mitchell’s Chief Executive John Pickering has provided:

    “We decided that we wanted to become an alternative business structure because it would better suit our ability to grow our business and if need be and if we wanted to bring in external investment. It would also help fit with the development of our legal and related services,”

    Two chief factors can derive from Pickering’s comments, business growth, and external investment. Focusing on the first factor, business growth, how have Irwin Mitchell used the ABS model, to achieve business growth, and how has this transformed their delivery of legal services?

    According to Pickering, Irwin Mitchell sought “to restructure the business completely”. Achieving this, they eradicated strict delineations between practice areas; this being a defining feature of many ‘traditional’ law firms, and now operate through two practices, business legal services, and personal legal services. Each division stands headed by a separate chief executive. This move, Pickering notes, existed made “to be very client-focused and client-facing in terms of how we run the business”. This bold decision, it stands suggested, reflects commercial instinct; an instinct to streamline, drive down costs and simplify.

    Other things;

    Additionally, Irwin Mitchell took advantage of the diluted ownership restrictions to place non-lawyers in senior positions of ownership. Glyn Barker, former Vice-Chairman of PWC, and Mel Eggleston, Senior Partner at KPMG, existed made a chairman-designate and a Non-Executive Director, respectively. Accordingly, Irwin Mitchell was able to acquire the commercial insight and invaluable management expertise of two extremely experienced individuals; who were operating at the upper echelons of the ‘Big Four’. Vitally, they were able to put them in positions of real control and influence.

    In Pickering’s own words, such hires reflect Irwin Mitchell’s “clear intention to take advantage of the opportunities we think will arise from becoming an ABS”. Moreover, it is interesting to note that accountancy firms, KPMG and PWC themselves being perfect examples, have gone through transformations from small, standalone accountancy practices to fully-fledged, diverse professional services organizations, offering many business services. The recruiting of Barker and Eggleston by Irwin Mitchell; therefore, arguably reflects “an envious nod to the success of accounting firms in becoming proper businesses”.

    Ultimately, as a result of the changes Irwin Mitchell have made since becoming an ABS, and of course not existing confined to the traditional legal model, has resulted in what Pickering has provided is:

    “A much more cohesive way of delivering our business. The management structure which underpins this, the divisional structure with all of its machinations behind that, enables us to run the business in a much more efficient and organized way.”

    Merits or Pros or Advantages of Alternative Business Structure (ABS);

    Merits or Pros or Advantages of ABS for Consumers;

    There are many benefits to Alternative Business Structure (ABS) for the consumer. Someone looking for legal assistance who heads to an ABS-type firm will probably face lower legal costs. If a client needs help with a wide variety of things; they might be able to find all of the assistance they’re looking for in one place.

    Beginning your business as an ABS could be the decision that gives you the edge over your competitors. Clients will likely appreciate the convenience of various services offered; and, you’ll have the ability to grow with more possibilities for investors.

    Merits or Pros or Advantages of ABS for Law Firms;

    Law firms can help from choosing to form an ABS for their practice in several ways. As previously said, the ability for ABS firms to offer various services is a huge draw. A firm can market itself as an all-encompassing assistance provider in a particular area when they’re able to protect more bases.

    When a law enterprise forms as a typical business structure, like a skilled limited liability company or a corporate law firm, it must own by only lawful professionals. Corporate law firms may only have attorneys as investors. However, this is not the issue with ABS. Employees of the business who are not attorneys can own interest in the enterprise. This could lead to better worker retention and maybe even a better environment throughout the business.

    Demerit or Cons or Disadvantages of Alternative Business Structure (ABS);

    Demerit or Cons or Disadvantages of ABS for Consumers;

    Some believe that the likely drawbacks of Alternative Business Structure (ABS) are too much to choose this structure. But many don’t find these drawbacks to be disadvantageous. Some worry that more ABS firms will drive out smaller enterprises and lead to fewer choices for consumers.

    If a law firm stands business structure as an ABS; they could run into difficulty trying to expand or provide assistance overseas. Individual foreign nations do not yet accept ABS. This could be an issue for a client who wants to stick with a certain enterprise as they move overseas or travel.

    Demerit or Cons or Disadvantages of ABS for Law Firms;

    There are a few possible drawbacks that a law firm might face if they choose to form as an ABS. Some worry that, if a firm is run by non-attorneys, it is likely to have legal work handled by non-lawyers. This already happens in certain areas of the law. For example, much of the work involved in conveyance and deed of assignment matters manage by non-legal professionals. However, ABS companies reserved certain legal activities for only the lawful professionals employed there.

    Conclusion;

    In conclusion, Alternative Business Structure (ABS) has had a transformational impact in delivering legal services. Their introduction through the Legal Services Act 2007 and operation commencing 2011 has created much furor over how legal services are to offer to consumers. This paper has examined the impact ABSs have had in this regard. The change they have occasioned in the legal profession has been discussed; with the example of the Stobart Group being put forward along with the vast amounts of external investment which have poured in.

    In this respect, the role private equity houses are having cannot be understated, financing, in large part, businesses wishing to offer legal provision under an Alternative Business Structure (ABS) license. The various positives and negatives of ABSs’ introduction were then examined. Whilst commercial practice must not curtail solicitors’ professional obligations and principles, devaluing the legal profession in the process; the benefits such a commercial mentality can bring were put forward, primarily increased innovation which can benefit the consumer.

    Last, a case study was undertaken on Irwin Mitchell, the first top-20 UK law firm to operate as an ABS. This posited the reasons why its decision to become an ABS has transformed the way; it delivers its legal services, most notably, the significant restructuring of its practices into two clear divisions. In all, whilst there are right “no cookie-cutter ABSs”, as the Legal Services Board has conclusively found, Alternative Business Structure (ABS) has higher levels of innovation than; their ‘traditional’ law firm counterparts and, in turn, have had a related transformational impact on how legal services are delivered in the UK.

    What is Alternative Business Structure (ABS) Image
    What is Alternative Business Structure (ABS)?
  • Departmental Organization: Meaning, Definition, Characteristics

    Departmental Organization: Meaning, Definition, Characteristics

    What does mean Departmental Organization? It is one of the conventional and most basic forms of public endeavors predominant in particular nations. These organizations completely organize, oversaw, and supported by the public authority. Under this form of organization, a public venture works as an undeniable service or the primary sub-division of an administration office. This article explains the Departmental Organization and their topics Meaning, Definition, and Characteristics or Features, Merits or Advantages, and Demerits or Disadvantages. All exercises and working of the endeavor heavily influence by a pastor who reports straightforwardly to the parliament.

    Here is the article of Departmental Organization: Meaning, Definition, and Characteristics or Features, Merits or Advantages, and Demerits or Disadvantages.

    The capable clergyman at that point assigns his authority descending at different degrees of the board for viable working and accomplishment of characterized objectives. The controlling service chooses each arrangement matter and other key choices of departmental organizations. Notwithstanding, the overall arrangements for these kinds of the endeavor outline by the parliament. Different people working in these sorts of endeavors are government representatives as they straightforwardly effect by the public authority. These endeavors additionally order into state government and local government. Indian Railways being overseen by the rail line service and Post and Telegraph administrations run by the service of correspondence are probably the best instances of departmental organization.

    Top 6 Characteristics of Departmental Organization:

    A departmental organization has the accompanying top 6 characteristics:

    1. The administration of such ventures is in the hands of the public authority. The venture oversees and constrains by the government workers of the division.
    2. The depository funds such as a venture and its receipts likewise pay into the public authority depository.
    3. It appreciates legitimate resistance and government endorsement is vital for suing the endeavors.
    4. Its records additionally review similarly to some other government division.
    5. Enlistments to these divisions make on similar standards and practices similarly just like the case with the public authority offices.
    6. Similar states of administration that apply to other government divisions apply to the staff working in this kind of big business.

    Features or highlights of Departmental Organization:

    Different highlights or features of the departmental organization territories examined in focuses underneath:

    • The simplicity of formation: It is a serious simpler assignment of building up organizations under departmental endeavors in contrast with private organizations. Departmental organizations don’t confront any severe enlistment formalities as they are set up and organized by the decision legislature of the country.
    • Under government control: Management of departmental endeavors straightforwardly oversees and control by the public authority by designating a priest to this undertaking. The pastor is straightforwardly answerable for the tasks of departmental endeavor and reports to parliament.
    • Not a different substance: Departmental endeavor isn’t set up as a free legitimate element unmistakable from Government. They detest any different legitimate powers yet works as a piece of Government.
    • Review and Accounting: These endeavors are liable to review and bookkeeping formalities similarly as material to different divisions of government. Departmental Accounting; All records appropriately keep up and conveniently examined for staying away from any error, extortion, and inconsistencies.
    Other Features:
    • Not subject to public borrow: Departmental organizations don’t have any choice of raising assets from people in general or any private body. Also, The spending allotment authorized by the Indian parliament is the solitary wellspring of money accessible to these endeavors for procuring any extra assets. The public authority somewhat or completely own all such kind of endeavors.
    • Government financing: It finances by the depository of the public authority. Each movement of a departmental organization finances through government reserves. Additionally, all incomes of these endeavors pay into the depository.
    • Extreme duty with Minister: A definitive obligation of dealing with the exercises of the departmental organization lies with the mindful priest. Also, This clergyman delegate by the public authority in front of the organization; and, is mindful of the state lawmaking body or Indian parliament for all the issues of the departmental endeavor. Pastor, thus, designates its authority downwards to particular degrees of the board for compelling working.

    Top 5 Merits of Departmental Organization:

    Following are the fundamental 5 merits of departmental endeavors:

    1. These endeavors are totally under government control and are related to one of the public authority offices. The public authority controls their work deliberately and appropriately to accomplish the goals.
    2. Departmental organizations can keep up the mystery in their work as it is fundamental for endeavors like a guard.
    3. The departmental organization guarantees the greatest level of parliamentary control of the venture.
    4. A departmental form of organization is vital for public utility administrations and vital enterprises. Key enterprises like protection and nuclear force oversee in a superior manner under government divisions.
    5. The danger of abuse of public cash limits in the departmental organization; because of a severe financial plan, bookkeeping, and review controls.

    Benefits or Advantages of Departmental Organization:

    Various advantages given by departmental organization can surely know from the focuses given beneath:

    • An instrument for social change: Departmental endeavors are key devices accessible to the public authority for advancing financial and monetary equity inside the country. These ventures utilize by the public authority as an instrument for bringing social change. For instance, an administration by setting up a mail center, telecom, and broadcasting software engineers in faraway provincial zones can do social, monetary, and scholarly improvement of individuals dwelling there.
    • Direct control of government: Such endeavors work under the immediate control of the public authority and connect to one of the branches of government. A priest delegate at the top who is capable to parliament or state governing body for all working of these kinds of endeavors. All approaches and choices are taken by the public authority; and, they can’t make any choice on their own which may hurt any gathering of people in general.
    • The mystery kept up: Another important advantage of the departmental endeavor is that they can keep up the mystery of important approach matters. Also, The public authority has full power over such organizations; and, can undoubtedly retain any delicate information like a safeguard for the public interest.
    Other Advantages:
    • Dodge abuse of government depository: Departmental endeavors are dependent upon exacting planning, bookkeeping, and reviewing like some other government organization. Also, They are under exacting control and all representatives working in these endeavors are responsible which dodges any abuse of public assets.
    • Expense on general society is lesser: This sort of embraced brings about less weight of assessment on the overall population as all incomes from these divisions straightforwardly go into the depository of government. Each action finances by the public authority and additionally, all income pays to the public authority.
    • Adds to government pay: Departmental endeavor makes a proficient commitment to the depository of government accordingly raising their general income. Any excess in these divisions moves to the public authority which builds their pay. Additionally, any lack likewise meets by the public authority.
    • Monitored by rule and guidelines of Ministry: These organizations work heavily influenced by a clergyman selected as ahead by the public authority. Each authoritative official working inside the departmental endeavor works according to the course of the delegated serve. Also, The priest reports straightforwardly to parliament and state assembly about the situation of departmental endeavors.

    Top 5 Demerits of Departmental Organization:

    A departmental endeavor experiences the accompanying demerits or limits:

    1. Public endeavors should have impressive self-sufficiency and activity. Under this framework, there is over the top pastoral control which murders agreement; and, the actual reason for making such organizations basically crush.
    2. This kind of organization is essentially run on government lines and as such acquires all the deformities of an administration organization including those of deferrals and running into the groove of red-tapism and officialdom.
    3. Under this framework, all strategies chose at the pastoral level and the forces incorporate at the more elevated level. It antagonistically influences the effectiveness of the worries.
    4. Departmental organizations can’t take long haul monetary choices since it relies on budgetary appointments of the public authority.
    5. The executives of such undertakings are in the hands of government workers. There is a shortage of skilled people who have business experience. Government employees are not appropriate for running business organizations.

    Disadvantages or limitations of Departmental organization:

    Departmental organization notwithstanding benefits additionally has a few disadvantages which are summed up underneath:

    • Impact of Bureaucracy: Departmental organization needs independence and activity as are dependent upon unreasonable administrative noise and organization. Endorsement of government needs for taking each choice which postpones the entire working cycle. Along these lines, the departmental endeavor needs adaptability in maintaining a business as on account of another kind of big business.
    • Unnecessary parliamentary control: It works under the inordinate control of parliament which makes challenges in its everyday working. Every single key arrangement and rules outline by parliament; and, actualized using a clergyman working at the top of these organizations.
    • Monetary reliance: Departmental endeavors are monetarily needy upon the spending designations of the public authority. Also, They can’t freely any long-range venture choices that may produce income for these organizations. All the incomes produced can’t use for financing business however should save into the public depository.
    Other Disadvantages:
    • The easygoing way to deal with work: The officials working in the departmental endeavors build up an easygoing way to deal with work as they are liable to visit moves. These organizations face a great deal of operational failure because of the easygoing work mentality of representatives.
    • Absence of polished methodology: Departmental endeavors faces a ton of non-polished methodology as government employees utilized here don’t have a significant expert administration range of abilities. These chiefs because of the dread of analysis from parliament or clergyman can’t afford to be an imaginative one.
    • Political impact: A departmental organization faces an overabundance of political impact in its working. Also, The force balance between the decision party and the resistance impacts its destiny of performing proficiently. Accordingly, it turns out to be more a political organization as opposed to a business or financial organization.
    Departmental Organization Meaning Definition Characteristics Features Merits Benefits Advantages Limitations Demerits Disadvantages Image
    Departmental Organization: Meaning, Definition, and Characteristics; Image from Pixabay.
  • Data Science: Meaning, Advantages, and Disadvantages

    Data Science: Meaning, Advantages, and Disadvantages

    Data Science has become a progressive innovation that everybody appears to discuss. Hailed as the “hottest occupation of the 21st century”, It is a popular expression with not many individuals thinking about the innovation in its actual sense. While numerous individuals wish to become Data Researchers, it is basic to gauge the upsides and downsides of data science and give out a genuine picture. In this article, we will examine these focuses in detail and furnish you with the important bits of knowledge about Data Science.

    Here is the article on Data Science Meaning, Advantages, Benefits, Merits, Demerits, Disadvantages, and Limitations.

    Data Science is the investigation of data. It ties in with removing, investigating, envisioning, overseeing, and putting away data to make experiences. These bits of knowledge assist the organizations with settling on ground-breaking data-driven choices. They require the use of both unstructured and organized data. It is a multidisciplinary field that has its foundations in insights, math, and software engineering. It is perhaps the most profoundly pursued positions because of the wealth of data science positions and a rewarding compensation scale. Thus, this was brief to data science, presently we should investigate the advantages and disadvantages of data science.

    Data science has become a fundamental piece of any industry today. It’s a strategy for changing business data into resources that assist associations with improving income, decrease costs, take advantage of business openings, improve client experience, and that’s just the beginning. Also, Data science is perhaps the most discussed point in businesses nowadays. Its ubiquity has become throughout the long term, and organizations have begun executing data science strategies to develop their business and increment consumer loyalty. It is the area of study that manages tremendous volumes of data utilizing present-day devices and methods to discover inconspicuous examples, determine significant data, and settle on business choices.

    Focal points or Benefits or Merits, Advantages of Data Science:

    In this day and age, data produces at a disturbing rate. Consistently, bunches of data create; be it from the clients of Facebook or some other long-range informal communication site, or from the calls that one makes, or the data which being produce from various associations. Also, due to this gigantic measure of data, the estimation of the field of Data Science has a few preferences. A portion of the preferences reference beneath:

    Data Science has significantly sought after. Planned occupation searchers have various chances. It is the quickest developing position on Linkedin and anticipates to make under 12 million positions by the 2026 examination. This makes Data Science an exceptionally employable occupation area.

    A plenitude of Positions:

    There are not many individuals who have the necessary range of abilities to turn into a total Data Researcher. This makes Data Science less immersed as contrasted and other IT areas. In this manner, It is an unfathomably bountiful field and has a lot of chances. The field of Data Science is high popular yet low in stock of Data Researchers.

    A Generously compensated Vocation:

    Data Science is perhaps the most generously compensated position. As per Glassdoor, Data researchers make a normal of $116,100 every year. This makes Data Science a profoundly worthwhile vocation choice.

    It is Flexible:

    There are various uses of Data Science. It generally utilizes in medical care, banking, consultancy administrations, and web-based business ventures. Also, Data Science is a flexible field. In this way, you will have the chance to work in different fields.

    They Improve Data:

    Organizations require talented Data Researchers to measure and examine their data. They break down the data as well as improve its quality. Subsequently, Data Science manages advancing data and improving it for their organization.

    Data Researchers are Profoundly Renowned:

    Data Researchers permit organizations to settle on more astute business choices. Also, Organizations depend on Data Researchers and utilize their skill to give better outcomes to their customers. This gives Data Researchers a significant situation in the organization.

    Not any more Exhausting Errands:

    Data Science has assisted different enterprises with computerizing excess assignments. As well as, Organizations are utilizing verifiable data to prepare machines to perform tedious errands. This has disentangled the laborious positions embraced by people previously.

    They Make Items More brilliant:

    Data Science includes the utilization of AI which has empowered businesses to make better items customized explicitly for client encounters. For instance, Proposal Frameworks utilized by internet business sites give customized experiences to clients dependent on their chronicled buys. This has empowered PCs to comprehend human conduct and settle on data-driven choices.

    They can Save Lives:

    The Medical services area has been significantly improved due to Data Science. With the coming of AI, it has been made simpler to identify beginning phase tumors. Likewise, numerous other medical services enterprises are utilizing Data Science to help their customers.

    Data Science Can Improve You An Individual:

    Data Science won’t just give you an incredible profession however will likewise help you in self-improvement. You will have the option to have a critical thinking mind. Since numerous Data Science jobs connect IT and executives, you will have the option to appreciate the best of the two universes.

    Advance and short advantages:

    A portion of the preferences are referenced underneath:

    • Numerous Work Alternatives: Being popular, it has offered to ascend to countless vocation openings in its different fields. Some of them are Data Researcher, Data Examiner, Exploration Expert, Business Investigator, Examination Director, Large Data Specialist, and so on
    • Business benefits: They help associations knowing how and when their items sell best and that is the reason the items are conveyed consistently to the ideal spot and correct time. Quicker and better choices are taken by the association to improve productivity and procure higher benefits.
    • Generously compensated positions and professional openings: As Data Researcher keeps on being the hottest work and the pay rates for this position are additionally terrific. As indicated by a Dice Compensation Review, the yearly normal compensation of a Data Researcher $160,000 every year.
    • Recruiting benefits: It has made it relatively simpler to sort data and search for the best contender for an association. Large Data and data mining have made the preparation and choice of CVs, fitness tests, and games simpler for the enlistment groups.

    Disadvantages or demerits or limitations of Data Science:

    While Data Science is an exceptionally rewarding vocation alternative, there are likewise different detriments to this field. To comprehend the full image of Data Science, we should likewise know the disadvantages, or limitations, or impediments of Data Science. Some of them are as per the following:

    Data Science is Hazy Term:

    Data Science is an extremely broad term and doesn’t have an unmistakable definition. While it has become a trendy expression, it is exceptionally difficult to record the specific significance of a Data Researcher. A Data Researcher’s particular job relies upon the field that the organization is work in. While a few people have portrayed Data Science to be the fourth worldview of Science, barely any pundits have considered it a simple rebranding of Insights.

    Dominating Data Science is close to incomprehensible:

    Being a combination of numerous fields, they come from Measurements, Software engineering, and Arithmetic. It is a long way from conceivable to dominate each field and be comparably master in every one of them. While numerous online courses have been attempting to fill the ability hole that the data science industry is confronting, it is as yet impractical to be capable of it thinking about the tremendousness of the field. An individual with a foundation in Measurements will be unable to dominate Software engineering without prior warning become a capable Data Researcher. Subsequently, it is a consistently changing, unique field that requires the individual to continue to gain proficiency with the different roads of Data Science.

    Huge Measure of Area Information Required:

    Another hindrance of Data Science is its reliance on Space Information. An individual with a significant foundation in Insights and Software engineering will think that it’s hard to tackle a Data Science issue without its experience information. Similar holds for it the other way around. For instance, A medical care industry chipping away at an investigation of genomic groupings will require an appropriate worker with some information on hereditary qualities and sub-atomic science. This permits the Data Researchers to settle on determined choices to help the organization. Be that as it may, it gets hard for a Data Researcher from an alternate foundation to get explicit space information. This likewise makes it hard to relocate starting with one industry then onto the next.

    Discretionary Data May Yield Startling Outcomes:

    A Data Researcher dissects the data and settles on cautious forecasts to encourage the dynamic cycle. Commonly, the data gave is discretionary and doesn’t yield anticipated outcomes. This can likewise bomb because of feeble administration and helpless usage of assets.

    The issue of Data Protection:

    For some ventures, data is their fuel. Data Researchers help organizations settle on data-driven choices. Notwithstanding, the data used in the process may penetrate the security of clients. The individual data of customers are obvious to the parent organization and may now and again cause data spills because of a pass in security. The moral issues concerning the safeguarding of data protection and its utilization have been a worry for some enterprises.

    Data Science Meaning Advantages Benefits Disadvantages and Limitations Image
    Data Science: Meaning, Advantages, and Disadvantages; Image from Pixabay.
    Advance and short disadvantages:

    All that accompanies a few advantages additionally has a few outcomes. So how about we view a portion of the demerits or disadvantages or disservices of Data Science:

    • Data Security: Data is the center part that can expand the profitability and the income of the business by settling on game-changing business choices. However, the data or the experiences acquired from the data can be abused against any association or a gathering of individuals or any advisory group and so forth Removed data from the organized just as unstructured data for additional utilization can likewise be abused against a gathering of individuals of a nation or some advisory group.
    • Cost: The devices utilized for data science and examination can cost a great deal to an association as a portion of the instruments are perplexing and expect individuals to go through preparing to utilize them. Likewise, it is exceptionally hard to choose the correct devices as per the conditions because their determination depends on the legitimate information on the devices just as their exactness in breaking down the data and separating data.
  • Activity Based Costing: Meaning, Features, and Advantages

    Activity Based Costing: Meaning, Features, and Advantages

    What is ABC (activity based costing)? It is the collection of financial, operational, performance information tracing the significant activities of the firm to product costs in production management. In other words, the knowledge of find out estimates costs of production for product costs.

    What does mean ABC (activity based costing)? Meaning, Definition, Features or characteristics, advantages, and disadvantages.

    Activity-based costing (ABC) is a new term develop for finding out the cost. The basic feature of ABC is its focus on activities as the fundamental cost objects. It uses activities as the basis for calculating the costs of products and services. The Activity-Based Costing (ABC) is a costing system, which focuses on activities performed to produce products. ABC is the costing in which costs first trace to activities and then to products. This costing system assumes that activities are responsible for the incurrence of costs and create the demands for activities.

    For example, an online learning firm prepares tax returns; suppose Udemy teaches online students. Fees charge to products based on individual product’s use of each activity. In the traditional absorption costing system, fees first trace not to activities but an organizational unit, such as a department or plant and then to products. It means under both, ABC and traditional absorption costing system the second and final stage consists of tracing fees to the course.

    ABC activity based costing meaning definition features characteristics advantages limitations and disadvantages Image
    Activity Based Costing: Meaning, Features, and Advantages; Image from Pixabay.

    Definition of ABC (activity based costing):

    What is the ABC (activity based costing) definition? The following ABC definitions below;

    According to CIMA as;

    “Cost attribution to cost units on the basis of the benefit received from indirect activities e.g. ordering, setting up, assuring quality.”

    According to CAM-1 organization of Arlinton Texas as;

    “The collection of financial and operational performance information tracing the significant activities of the firm to product Costs.”

    It bases on the belief that in the production process various activities give rise to costs. Generally, Activity Based Costing (ABC) defines as an accounting technique that allows an organization to determine the actual cost associated with each product and service produced by the organization without regard to the organizational structure. Amongst various benefits associated with the ABC approach, one of the major ones is that it helps to define the activities of the organization in terms of value-adding activities.

    Features or Highlights or Characteristics of ABC (activity based costing):

    What are the ABC (activity based costing) features or highlights or characteristics? The following ABC features below;

    Features or Highlights or Characteristics of ABC (activity based costing) Image

    1. The simple traditional distinction made between fixed cost and variable cost is not enough to guide to provide quality information to design a cost system.
    2. It is a two-stage product costing method that first assigns costs to activities and then allocates them to products based on each product’s consumption of activities.
    3. They can use by any organization that wants a better understanding of the costs of the goods and services it provides, including manufacturing, service, and even non- profit organizations.
    4. The cost pools in the two-stage approach now accumulate activity-related costs.
    5. An activity is any discrete task that an organization undertakes to make or deliver a product or service.
    6. It bases on the concept that products consume activities and activities to consume resources.
    7. The more appropriate distinction between cost behavior patterns is scale related, scope related, decisions related, and time-related. In other words, cost behavior is all performance-related product costs.
    8. Cost drivers need to identify. A cost driver is a structural determinant of cost-related activity. The logic behind this is that cost drivers dictate the cost behavior pattern. In tracing overhead cost to the product, a cost behavior pattern must understand so that appropriate cost drivers could identify.

    ABC cost method is activity-based cost management:

    What is activity-based cost management? Cost management is an accounting method that calculates material costs, labor costs, management costs, financial costs, etc. according to certain standards by the current accounting system.

    This management approach sometimes fails to reflect the direct link between the activities undertaken and costs. Also, the ABC cost method is equivalent to a filter. It readjusts the original cost method so that people can see the direct connection between the cost consumption and the work they engage in so that people can analyze which cost inputs are effective. Which cost inputs are invalid.

    The ABC (activity based costing) cost method mainly focuses on the production and operation process, strengthens operation management, focuses on specific activities and corresponding costs, and strengthens activity-based cost management.

    Benefits or Merits or Advantages of ABC (activity based costing):

    What are the ABC (activity based costing) benefits or merits or advantages? The following ABC advantages below;

    Benefits or Merits or Advantages of ABC (activity based costing) Image

    Actual and accurate product costs:

    ABC brings actual, accuracy, and reliability in product costs determination by focusing on cause and effect relationships in the incurrence of the cost. It recognizes that it is activities which cause producing costs, not products and it is a product which consumes activities. In advanced manufacturing environment and technology where support functions over-heads constitute a large share of total or overall costs, ABC provides more realistic product costs. It produces reliable and correct product cost data in case of greater diversity among the products manufactured such as low-volume products, high-volume products.

    Knowledge and information regarding Cost Behavior:

    It identifies the real nature of cost behavior and helps in reducing costs and identifying activities that do not add value to the product, in other words producing costs. With ABC, managers can control many fixed overhead costs by exercising more control over the activities which have caused these fixed overhead costs. This is possible since the behavior of many fixed overhead costs about activities now becomes more visible and clear.

    Tracing of Activities for the Cost Object:

    ABC uses multiple cost drivers, many of which transaction-based rather than product volume. Further, ABC concern with all activities within and beyond the factory to trace more overheads to the products.

    Tracing of Overhead Costs:

    ABC traces costs to areas of managerial responsibility, processes, customers, departments besides the product costs. Costs tracing, accurate allocation of costs to various products lead to proper pricing policy. Also, Cost driver rates can use advantageously for the design of new products or existing products as they indicate overhead costs that are likely to apply in costing the product.

    Analysis and mentions of Non-manufacturing Costs:

    Some costs term as non-manufacturing costs; for example, product promotion or advertisement. Even though, advertising is a non-manufacturing cost which constitutes a major portion of the total cost of any product. These non-manufacturing costs can be easily allocated since the relationship between costs; and, their causes can properly understand by using ABC.

    Limitations or Demerits or Disadvantages of ABC (activity based costing):

    What are the ABC (activity based costing) limitations or demerits or disadvantages? The following ABC disadvantages below;

    Limitations or Demerits or Disadvantages of ABC (activity based costing) Image

    Service costs are High:

    Implementing an ABC system requires substantial resources, which is costly to maintain.

    Report or data collection problem:

    It is a complex system which needs a lot of record for calculations.

    Non-useable for small organizations:

    In small organizations, the CEO or owner or managers accustom to using traditional costing systems to run their operations and traditional costing systems often use in performance evaluations. Some companies are producing only one product or a few products; so, the ABC cannot apply in there.

    Activation or selection problem:

    Some difficulties emerge in the implementation of the ABC system; such as the selection of cost drivers, assignment of common costs, varying cost driver rates, etc.

    Different timeline of terms:

    Since there are a lot of steps and groundwork required to come out with a costing based on this system, it is quite a time to consume. For example, large companies for the best costing system they produce the large size of production and give many products to us, but small or single handle company produces and give a single product. So, the large or multinational company collects many records and ABC work easy for long-term periods, as well as small organizations for difficult in short-term periods.

  • Capitalist Economy: Meaning, Definition, Features, Merits, and Demerits

    Capitalist Economy: Meaning, Definition, Features, Merits, and Demerits

    What does mean Capitalist Economy? Meaning; It is one of the oldest economic systems and its origin is at the time of mid-eighteenth century in England in the wake of the Industrial Revolution. It is that system, where means of production are owned by private individuals, profit is the main motive and there is no interference by the government in the economic activities of the economy. They are free to use them with a view of making the profit. Everybody is free to take up one line of production he likes and is free to enter into any contract with others for his profit. Hence, it is known as the free market economy. So, what is the topic we are going to discuss; Capitalist Economy: Meaning, Definition, Features, Merits, and Demerits.

    Here are explained; What is the Capitalist Economy? with Meaning, Definition, Features, Merits, and finally Demerits.

    What is the Capitalist Economic System of India? Capitalism is the most prominent in our current global economic system. Its main characteristic is that it most means of production and property are privately owned by individuals and companies. The government has a limited role in such an economy limited to management and control measures. So a capitalist economy is a liberal economy. This means only the free market will determine the supply, demand, and prices of the products.

    Definition of Capitalist Economy:

    According to Wright,

    “Capitalism is a system in which, on average, much of the greater portion of economic life and particularly of net new investment is carried on by private (i.e. non-government) units under conditions of active and substantially free competition and avowedly at the least, under the incentive of hope for profit.”

    In the words of Loucks,

    “Capitalism is a system of economic organization featured by private ownership and use for private profit of man-made and nature-made capital.”

    According to Ferguson,

    “Capitalism is a free-market form or capitalistic economy may be characterized as an automatic self-regulating system motivated by self-interest of individuals and regulated by competitions.”

    Features of Capitalist Economy:

    Capitalist economy has the following main features:

    • Private Property: In this economy, private property is allowed. All means of production like machines, implements, mines, and factories etc. come under private property.
    • Price Mechanism: The Capitalist economy is gained by the price mechanism. Here prices are determined by the interaction of demand and supply without the interference of any kind by the government or any other external forces.
    • Freedom of Enterprise: In this system, every individual is independent to his means of production in any occupation that one likes.
    • The sovereignty of that consumer: Under this system, the consumer plays the most vital role. The entire production pattern is based on the desires, wishes and the demand of the consumer.
    • Profit Motive: The maximization of profit is the main motive of the producer. Profit guides the production in this type of economy.
    • No Government Interference: Under a capitalistic system, the government does not interfere in day-to-day economic activities. This means producers and consumers are free to make decisions.
    • Democratic: The capitalistic system is more democratic in comparison to other economic systems as there are more changes to chancel according to new environments of the economy.
    • Self-Interest: The inspiring force in this system is self-interest. It leads to hard work and to earn maximum income by satisfying their consumers.

    Capitalist Economy Meaning Definition Features Merits and Demerits
    Capitalist Economy: Meaning, Definition, Features, Merits, and Demerits. Image credit from #Pixabay.

    Merits of the Capitalist System:

    The following advantages or merits below are:

    • Individual Motivation: The capitalist economic system motivates the businessmen to develop new items, produce in good quality and undertakes innovative activities because of the initiative of larger profits.
    • Flexible and Dynamic Economy: Motivated by profits, individual initiatives and competition among the traders and businessmen, there is dynamism in the capitalist economy continuously goes ahead with changes and innovative activities.
    • The benefit of Perfect Competition: There exist perfect competition between different traders and creditors who benefit from the capitalist economy. There is no change of monopolistic profits because of perfect competition. The existence of competition initiates more economic welfare. According to George Steiner, from the point of view of public welfare, competition serves as a regulator and reducer of prices as an incentive to improved production efficiency. Without competition, the capitalist economy would become stagnant, unproductive and exploitative.
    • Capital Formation: The capitalist economy encourages for the formation of capital, wealth and assets in the society. New industrial and commercial institutions are set up with the objectives of profits and also encourages the creation of additional employment, income, and savings. 
    • The economic growth of an economy is also faster and higher in a capitalist economy. This is because the investors will also invest in projects that are profitable for them. There is no pressure to produce any goods or services if they do not wish to do so for the sake of the public.
    • Consumers also benefit in a capitalist economy. Firstly they have the freedom to choose whichever products or services they wish to buy. Also, the competition is high and the producers are motivated to make their best products in large quantities at reasonable prices.
    • Capitalism also promotes fundamental rights of freedom and choice for both the consumer and the producers.

    Demerits of Capitalist System:

    The countries which have become independent after the 1950s adopted mostly the socialistic economic system because of the demerits of the capitalist economic system. Human welfare aspect has completely disappeared in the capitalist system and it has created disparity in income and wealth. H.D. Dickinson writes, “Capitalism. …is fundamentally blind, purposeless, and irrational and is incapable of satisfying many of the urgent human needs.

    Some of the important disadvantages or demerits of capitalism are:

    • Increase Inequalities: It increases inequalities in wealth, income and opportunities. Increase in economic inequalities creates economic and social problems.
    • Economic Instability: It is difficult to establish a balance between the demand and supply. There will be a trade boom or recession or the frequent fluctuations in prices. All the decisions relating to production are taken by the capitalist and due to wrong estimates of future requirements; imbalance in production is generally found. Due to fluctuations in prices industrial and other economic activities become unstable and this will have an adverse impact on economic development and expansion.
    • Inefficient Production: The capitalist always produces with the motive of profit only. He always produces goods for use by the higher income class of the community so that maximum profits can be obtained. There is no place in the mind of the capitalist to produce for consumption by common people. Goods and service are not produced by keeping in view the interest and wants of the common man, but with the motive of capitalist’s profits.
    • Class Conflicts: The capitalist economy divides the community into two parts; on the first side the top capitalists and on the other side labor class which depends on the capitalists to fill their stomach. Since the production resources are controlled by the capitalists they exploit the labor from their reasonable reward.
    • Unemployment: In a capitalist economy, full employment situation cannot be brought due to lack of central economic planning. With the result, optimum use of resources cannot be possible. This brings the situation of unemployment.
    • Monopoly and Exploitation: The establishment of large-scale business, improvement in technology, the motive of maximization of profits, formation of combinations and acute competition are the reasons for the creation of monopoly and exploitation of customers.
    • Neglect of National Interest: They are mainly oriented towards self-interest of maximization of profits for which they compete with each other. They neglect the social interests. They do not undertake their activities keeping in view the national interest.
  • Capitalism: Meaning, Definition, Characteristics, Features, Merits, and Demerits

    Capitalism: Meaning, Definition, Characteristics, Features, Merits, and Demerits

    What does mean Capitalism? Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Capitalism is an economic system where private entities own the factors of production. The four factors are entrepreneurship, capital goods, natural resources, and labor. So, what is the topic we are going to discuss; Capitalism: Meaning, Definition, Characteristics, Features, Merits, and Demerits…Read in Hindi.

    Here are explained What is Capitalism? First Meaning, Definition, Characteristics, Features, Merits, and finally their Demerits.

    The owners of capital goods, natural resources, and entrepreneurship exercise control through companies. Capitalism is ‘A system of economic enterprise based on market exchange’. The Concise Oxford Dictionary of Sociology (1994) defines it as ‘a system of wage-labor and commodity production for sale, exchange, and profit, rather than for the immediate need of the producers’.

    ‘Capital refers to wealth or money used to invest in a market with the hope of achieving a profit’. It is an economic system in which the means of production are largely in private hands and the main incentive for economic activity is the accumu­lation of profits. From the perspective developed by Karl Marx, capitalism organizes around the concept of CAPITOL implying the ownership and control of the means of production by those who employ workers to produce goods and services in exchange for wages.

    Max Weber, on the other hand, considered market exchange as the defining characteristic of capitalism. In practice, capitalist systems vary in the degree to which private ownership and economic activity are regulated by the government. It has assumed various forms in indus­trial societies. In common parlance, these days, capitalism knows as a market economy. The goods sold and the prices they are sold at determines by the people who buy them and the people who sell them.

    In such a system, all people are free to buy, sell and make a profit if they can. This is why capitalism often calls a free market system. It gives freedom to entrepreneurs (of the opening industry), to the worker (of selling labor), to the trader (of buying and selling goods), and to the individual (of buying and consuming).

    Meaning of Capitalism:

    Under capitalism, all farms, factories and other means of production are the property of private individuals and firms. They are free to use them to make a profit. The desire to earn a profit is the sole consideration with the property owners in the use of their property. Under capitalism, everybody is free to take up any line of production he wishes and is free to enter into any contract to earn the profit.

    Definition of Capitalism:

    In the words of Prof. LOUCKS,

    “Capitalism is a system of economic organization featured by the private ownership and the use for private profit of man-made and nature-made capital.”

    Ferguson and Kreps have written that,

    “In its own pure form, free enterprise capitalism is a system in which privately owned and economic decision are privately made”.

    Prof. R. T. Bye has defined capitalism as,

    “That system of economic organization in which free enterprise, competition and private ownership of property generally prevail.”

    Capitalism from Mc Connell view is,

    “A free market or capitalist economy may be characterized as an automatic self-regulating system motivated by the self-interest of individuals and regulated by competition.”

    A capitalist economy works through the Price System.

    Prices perform two functions:

    • A rationing function,
    • An incentive function.

    Prices ration out the available goods and services among buyers according to the amounts each buyer wants and can pay for others whose desire is less urgent or whose income is smaller will receive smaller qualities. Prices also provide an incentive for firms to produce more. Where demand is high prices will rise encouraging firms already in the industry to produce more and drawing new firms into the industry. Where demand is falling, prices will normally fall too. Firms will reduce their production, releasing resources for use in other industries where there is a demand for them. Firms are buyers as well as sellers.

    They buy materials and supplies from other firms behaving exactly as private individuals do in deciding what to buy and how much to buy. If a new machine promises to reduce production costs or if a certain material can substitute for another at saving, the firm will buy low-cost resources to compete with other firms. The economy is tied together by millions of those interactions linking producers with one another and with consumers, linking one product with other products and linking every market with other markets. The point is that all the economic units in an economy inter-relates.

    The Characteristics of Capitalism:

    Capitalism involves new attitudes and institutions—entrepreneurs engaged in the sustained, systematic pursuit of profit, the market acted as the key mechanism of productive life, and goods, services, and labor become commodities whose use was determined by rational calculation.

    The main characteristics of the capitalistic organization in its ‘pure’ form may briefly describe as under:

    • Private ownership and control of the economic instruments of production, i.e., CAPITOL.
    • The gearing of economic activity to making profits—maximization of profits.
    • Free market economy—a market framework that regulates this activity.
    • The appropriation of profits by the owners of capital. It is the income derived by the capitalist from selling in the market.
    • The provision of wage labor, which creates by converting labor-power into a commodity. It is this process that produces the working class and inherently hostile relationships in capitalist society workers (proletariat) versus capitalist, employee versus the employer.
    • Business firms privately own and compete with each other to sell their goods to consumers.
    • Commercialization of agricultural and industrial production.
    • Development of new economic groups and expanding across the globe.
    • Capital accumulation by the capitalists as an obligatory activity, for unless there is capital to invest, the system will fail. Profits produce capital when they are re-invested.
    • Investment and growth are accomplished by using accumulated capital to expand an enterprise or create a new one. Capitalism, thus, is an economic system that requires constant investment and constant economic growth.

    What has impressed students of modernity is the huge and largely unreg­ulated dominance of capitalist enterprise across political and religious control with it’s related monetary and market networks.

    The Features of Capitalism:

    What a capitalistic economy is a can knows through its main features. These derive from the way certain functions perform and the main decisions of the economy execute.

    These may be stated as under:

    Private Property and Freedom of ownership:

    A capitalist economy is always having the institution of private property. An individual can accumulate property and use it according to his will. The government protects the right to property. After the death of every person, his property goes to his successors.

    The right of Private Property:

    The most important feature of capitalism is the existence of private property and the system of inheritance. Everybody has a right to acquire private property to keep it and after his death, to pass it on to his heirs.

    Price Mechanism:

    This type of economy has a freely working price mechanism to guide consumers. Price mechanism means the free working of the supply and demand forces without any intervention. Producers are also helped by the price mechanism in deciding what to produce, how much to produce, when to produce and where to produce.

    This mechanism brings about the adjustment of supply to demand. All economic processes of consumption, production, exchange, distribution, saving and investment work according to its directions. Therefore, Adam Smith has called the price mechanism as the “Invisible Hand” which operates the capitalist.

    Profit Motive:

    In this economy, the desire to earn a profit is the most important inducement for economic activity. All entrepreneurs try to start those industries or occupations in which they hope to earn the highest profit. Such industries expect to go under a loss abandoned. Profit is such an inducement that the entrepreneur prepares to undertake high risk. Therefore, it can say that the Profit Motive is the SOUL of the capitalist economy.

    Competition and Co-operation Goes Side by Side:

    A capitalist economy characterizes by free competition because entrepreneurs compete for getting the highest profit. On the other side buyers also compete for purchasing goods and services. Workers compete among themselves as well as with machines for taking up a particular work. To produce goods of the required type and quality workers and machines are made to co-operate so that the production line runs according to schedule. In this way, competition and co-operation go side by side.

    Role of the Entrepreneur:

    The entrepreneurial class is the foundation of the capitalist economy. The whole of the economic structure of the capitalist economy base on this class. Entrepreneurs play the role of leaders in different fields of production. The presence of good entrepreneurs is a must for healthy competition. Entrepreneurs are the main sources of the dynamism of the capitalist economy.

    Main Role of Joint Stock Companies:

    In a joint-stock company, business carries on by a board of directors which democratically elects by the shareholders of the company at its general body meeting. Because of this, it has said that Joint-stock Companies “Democratic Capitalism”. However, the real functioning of the corporate sector is not democratic because there is a one-share-one vote election. Since big business houses own a majority of the shares of a company, they manage to get re-elected and the company is run as if it were their family business.

    Freedom of Enterprise, Occupation, and Control:

    Every person is free to start any enterprise of his choice. People can follow the occupations of their ability and taste. Moreover, there is the freedom of entering into the contract. Employers may contract with trade unions, suppliers with a firm and one firm with another.

    Consumer’s Sovereignty:

    In a capitalist economy, a consumer compares to a sovereign king. The whole production frameworks according to his directions. Consumer’s tastes govern the whole production line because entrepreneurs have to sell their products. If a particular type of production is to the liking of consumers, the producer gets high profits.

    It arises Class Conflict:

    From this class-conflict arises. The society is normally divided into two classes the “haves” and the “have-not’s”, which are constantly at war with each other. The conflict between labor and capital is found in almost all capitalistic countries and there seems to be no neat solution to this problem. It seems that this class-conflict is inherent in capitalism.

    Historical Development of Capitalism:

    Historically, modem capitalism has mainly developed and expanded in Great Britain and the United States. Early industrial capitalism in Great Britain and the United States in the 19th century is regarded as the classical model that approximates the pure form most closely. Modern (industrial) capitalism differs fundamentally from pre-existing production systems because it involves the constant expansion of production and ever-increasing accumu­lation of wealth.

    In traditional production systems, levels of production were fairly static since they were geared to habitual, customary needs. Capitalism promotes the constant revision of the technology of production. The impact of science and technology stretches beyond the economic sphere. Scientific and technological development, such as radio, television, computers and other electronic media, have also come to shape how we live, how we think and feel about the world. In the face of these developments, traditional debates between the advocates of free-market capitalism, and state socialism have become more or less outdated or are becoming outdated.

    As we have moved into a ‘postmodern’ world (information society) from the 18th and 19th-century modern society, some philosophers like Francis Fukuyama predicated about the ‘end of history’—meaning that there are no future alternatives to capitalism and liberal democracy. Capitalism has won in its long struggle with socialism, contrary to Marx’s prediction and liberal democracy now stands unchallenged.

    Capitalism Meaning Definition Characteristics Features Merits and Demerits
    Capitalism: Meaning, Definition, Characteristics, Features, Merits, and Demerits.

    The advantages or Merits of Capitalism:

    The main merits and advantages of capitalism are as follows:

    Production According to the Needs and Wishes of Consumers: 

    In a free-market economy, consumer needs and wishes are the uppermost in the minds of the producers. They try to produce goods according to the tastes and liking of the consumers. This leads to the maximum satisfaction of the consumers as obtained from his expenditure on the needed goods.

    Higher Rate of Capital Formation and More Economic Growth: 

    People under capitalism have the right to hold property and pass it on an inheritance to their heirs and successors. Owing to this right, people save a part of their income so that it can invest to earn more income and leave the larger property for their heirs. The rate of Capital formation increases when savings invest. This accelerates economic growth.

    Efficient Production of Goods and Services: 

    Due to the competition, every entrepreneur tries to produce goods at the lowest cost and of a durable nature. Entrepreneurs also try to find out superior techniques of producing the goods consumers get the highest quality goods at the least possible cost because the producers are always busy in making their production methods more and more efficient.

    Varieties of Consumer Goods: 

    Competition is not only in price but also in the shape design, colors, and packing of products. Consumers, therefore, get a good deal of variety of the same product. They need not give limited choices. It says that variety is the spice of life. The free market economy offers a variety of consumer goods.

    In Capitalism there is no Need for Inducement or Punishment for Good and Bad Production:

    A capitalist economy encourages efficient producers. The able an entrepreneur is, the higher is the profit he obtains. There is no need to provide any kind of inducement. The price mechanism punishes the inefficient and rewards the efficient on its own.

    It Encourages Entrepreneurs to Take Risks and Adopt Bold Policies: 

    Because taking the risk they can make higher profits. Higher the risk, the greater the profit. They also make innovations to cut their costs and maximize their profits. Hence capitalism brings about great technological progress in the country.

    The disadvantages or Demerits of Capitalism:

    The capitalist economy has been showing signs of stress and strain at different times. Some have called for a radical reform of the free-market economy. Others like Marx have considered the capitalist economy to be contradictory in itself. They have predicted the ultimate doom of the capitalist economy after a series of deepening crisis.

    The main demerits or disadvantages of the capitalist economy are as follows:

    Inequality of Distribution of Wealth and Income: 

    The system of private property acts as a means of increasing inequalities of income among different classes. Money begets money. Those who have wealth can obtain resources and start big enterprises. The propertyless classes have only their labor to offer. Profits and rents fewer classes have only their labor to offer. Profits and rents are high.

    Wages are much lower. Thus the property holders obtain a major share of national income. The common masses have their wages to depend upon. Although their number is overwhelming their share of income is relatively much lower.

    Class Struggle as Inevitable in Capitalist Economy: 

    Some critics of capitalism consider class struggle as inevitable in a capitalist economy. Marxists point out that there are two main classes into which the capitalist society divide. The ‘haves’ in which the rich property class owns the means of production. The “have not’s” which constitute the wage-earning people have no property.

    The ‘haves’ are few. The ‘have not’s are in the majority. There is a tendency on the part of the capitalist class to exploit the wage-earners. As a result, there is a conflict between the employers and the employees which leads to labor unrest. Strikes, lockouts and other points of tension. All these have a very bad effect on production and employment.

    Social Costs are Very High:

    A capitalist economy industrializes and develops but the social costs of the same are very heavy. Factory owners running after private profit do not care for the people affected by their production. The environment pollutes because factory wastes not properly dispose of. Housing for factory labor very rarely provides the result that slums grow around big cities.

    Instability of the Capital Economy: 

    A capitalist economy is inherently unstable. There is a recurring business cycle. Sometimes there is a slump in economic activity. Prices fall, factories close down, workers render un-employe. At other times the business is brisk, prices rise, fast, there is a good deal of speculative activity. These alternating periods of recession and boom lead to a good deal of wastage of resources.

    Unemployment and Under-employment: 

    A capitalist economy has always some unemployment because the market mechanism is slow to adjust to the changing conditions. Business fluctuations also result in a large part of the labor force going unemployed during depressions. Not only this, workers are not able to get full-time employment except under boom conditions.

    Working Class does not have Adequate Social Security: 

    In a capitalist economy, the working class does not have adequate social security, commodity, the factory owners do not provide for any pension, accident benefits or relief to the families of those who die in employment. As a result, widows, and children have to undergo a good deal of suffering. Governments are not in a position to provide for adequate social security in overpopulated less developed countries.