Overcoming Defense Mechanisms free essay sample

Practical implications of each term are included for the benefit of organizations interested in applying theory in practice. Key words: organizational cohesion, action systems, compliance, culture of tradition, complete concrete systems, and symbolism Organizational Cohesion According to Etzioni (1961), cohesion can be defined as a positive expressive relationship among two or more actors that can reinforce negative and positive norms (p. ). He further differentiates cohesion bonds between persons of the same rank, peer cohesion, and cohesion bonds between persons of different ranks, hierarchical cohesion. The degree to which peer cohesion exists within an organization can determine how readily norms that are held by the majority of a given group or held by the most influential persons within a group will be accepted by the remaining group participants. In other words, peer cohesion dictates the degree to which actors within a given group are likely to mimic or adopt each other’s behavior and/or values. We will write a custom essay sample on Overcoming Defense Mechanisms or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It has also been suggested by Homans (1951), that there is a direct correlation between the frequency and endurance of interaction within a group and the level of a group’s cohesiveness. In other words, the more group participants interact, the more likely it is that they will adopt each other’s mannerisms, outlooks, or orientations toward the larger group of which they are a part (Etzioni, 1961, p. 290). Assuming that norms that are beneficial to a particular organization are being fostered via peer ohesion, such as intra-team cooperation, the net effect could be a highly productive work environment with low employee turnover. Etzioni’s research implies that organizations with high peer cohesion tend to have low employee turnover, which reduces costs involved with recruiting and socializing new employees, knowledge capture, and maintaining daily work routines. However, it is important to note that cohesion can reinforce both negative and positive norms, which is to say behaviors that alienate an employee from an organization as well as behaviors that reinforce one’s commitment to an organization (p. 80 ). Reagans and McEvily (2003) suggest that cohesion, specifically social cohesion, influences the willingness of individuals to devote time and effort to assisting others within a given group, in addition to serving as a motivator to transfer knowledge to a coworker or colleague (p. 245). Ultimately, cohesion within an organizational group, can encourage a â€Å"you scratch my back, I’ll scratch yours† effect that can encourage knowledge exchange across employees and reduce direct peer-to-peer or intra-departmental competition amongst employees (Reagan amp; McEvily, 2003, p. 245). In other words, â€Å"by limiting competition, social cohesion promotes knowledge transfer,† which is an essential component of a learning and innovative organization (Reagans amp; McEvily, 2003, p. 247). Although organizational cohesion can foster â€Å"exchange relationships that build commitment† (Tyndall, 2012, p. 3), it is essential that organizational leaders recognize tipping points wherein too much cohesion could increase group-think and inhibit innovation, performance, and potentially disrupt a work-group’s alignment with the overall organization’s values, should a given group’s norms contradict such values (p. ). Where possible, organizational leaders might assess the power that cohesiveness has within their organization, identify the source of cohesiveness, be it an agent of the organization or the organization itself, and take the necessary action to either encourage or discourage the cohesiveness, depending on whether it currently works in favor of the organization or to its detriment. Action Systems An action system embodies a collective effort to attain a single goal, as executed by interdependent work units’ processes, tasks, and functions. To attain its goal as a unit, a social action system adopts a structure and a process for organizing member activities† (De Ven, 1976, p. 25). An action system is a term used to describe a system that produces an output only if the necessary actions are completed by the appropriate parties throughout the entire production process-placing emphasis on the relationship that exists between actions and the larger task they accomplish. The existence of this term serves to illustrate a theoretical shift away from focusing on work units or groups and a shift toward focusing on the individual job holders’ roles within the larger group, analogous to speaking in of terms of cogs within a machine (Tyndall, 2012, p. 3). As Parsons (1951) has noted, â€Å"acts do not occur singly and discretely, they are organized in systems† (p. 7). Simply put, an action system is made up of two components: the actor and his situation (p. 7). By speaking in terms of action systems, the theorist or manager hopes to identify all factors that affect these two components in the name of achieving their end objective, be it decreasing production error and lags, and increasing production successes (non-defective output) or any combination thereof. The more an organization can identify all variables, resources, and actions required at each phase of production, the more it can regulate and manage them. â€Å"Resources and information flows are the basic elements of activity in organized forms of behavior† (De Ven, 1976, p. 25). If, for example, an actor works in reception at a doctor’s office, he/she might require a computer, medical forms, chairs for patients, clipboards, pens, etc. By tracking usage and resource requirements over an extended period of time, records might reveal that there are too many patients or too few chairs in the waiting area at any given time. Identifying this fail point will serve as a signal to the organization to either increase the number of chairs in the office, increase the number of business hours (to spread out patients), add a second partner, expand to a second location, or some other alternative. Total Quality Management, Lean Six Sigma, and Demings 14-Points of Quality are all examples of how organizations have provided structure to these very practices (Tyndall, 2012, p. 16-18) Just as an organization can identify, measure, and manage tangible resources along each stage of an action system, so too can an organization identify and measure intangible factors that influence workers orientation toward the organization and their assigned tasks. By understanding a worker’s motivation for being on the ob, an organization will be better equipped to frame that employee’s work and performance evaluation in such a way that will encourage the worker to achieve higher levels of performance. By structuring job functions in ways that directly attach task ownership to individual job holders, an organization can increase the accountability for that employee, and increase the likelihood of their experiencing satisfaction upon completely their assigned task –due to the ta sk’s proximity to its â€Å"owner† (Tyndall, 2012, p. 8). Forward-thinking and adaptable organizations will encourage transparency and two-way feedback between management and those who are managed. For this reason, it would be wise for organizations to seek input from employees when identifying areas of process improvement within action systems, share successes across the organization, and openly value collaboration between groups and collegiality within groups (Trist, 1981, p. 43, 57, amp; 49). Compliance Etzioni (1961) defines compliance as â€Å"a relationship consisting of the power employed by supervisors to control subordinates and the orientation of subordinates to this power† (p. xiii). Sciulli and Etzioni (1996) identify three sources of compliance: coercion, economic or pecuniary incentives, and normative values (p. 137). This interplay between the governors and the governed directly influences how an organization will function and be perceived by internal and external stakeholders. Further, the dynamic between these two parties sheds light on where power, and specifically the power to make change, resides within an organization. As was exemplified in The Challenger Disaster, the extent to which an organization’s members recognize when it is necessary to comply and when it is necessary to break from routine impinges on an organization’s ability to adapt and respond to catastrophic events: Argyris’s (1990) analysis of The Challenger Disaster brought to light the following: The problems were not only in the structure, rules, and independent monitoring devices. The problems also were that highly committed, well-intentioned, safety-oriented, can-do players reasoned and acted in ways that violated their own standards and made certain that this violation was covered up and that the cover-up was covered up. (p. 42). One could argue that NASA’s employees ignored their respective ethical instincts and instead complied with that of the organization, NASA: an unspoken practice of ignoring unsettling information in the name of making deadlines, satisfying stakeholders, or perhaps satisfying its own hubris. Regardless, this catastrophe serves to illustrate the negative implications of compliance, particularly as perpetuated through normative values. Organizational theorists, such as Ogbonna and Harris (1998) have set out to determine what behaviors within organizations evolve through genuine organic change and behaviors that evolve in response to deliberate actions taken by management via compliance. Their research indicates that efforts made by management to alter culture within an organization via compliance may prove successful, but not for a signal unified reason. In other words, an organization’s members may all buy-in to a behavioral modification or practice advocated by management, but for reasons that are unique to the individual members or groups of members within the organization. â€Å"Hence, a key implication of these findings is that managements attempting to alter culture should consider how multiple interpretations of the rationale for change influence the success of the change effort† (p. 284-285). Some changed in resigned compliance, some in authentic willingness, and some â€Å"cognitively accepted espoused values in order to further their careers† (p. 85-286). Management might benefit from this insight by carefully selecting which company practices or values they wish to indoctrinate employee with, particularly if such practices do not relate directly to tasks associated with production and instead relate to rules on how employees might govern themselves socially or culturally within an organization; if laun ching a new effort to encourage the valuing of X, perhaps it would be wise for management to seek employees’ input on why everyone should value X in order to determine whether a consensus on the promotion’s rationale exists. This will help ensure that all employees are not only helping to move the company in the same direction, but are doing so for the same or perhaps, intended, reasons. Culture of Tradition A culture of tradition within an organization consists of a subset of individual cultural traditions or â€Å"shared symbolic system[s] which function in interaction† (Parsons, 1961, p. 11). A culture of tradition is a culture that engender s its participants with values that center on traditional or historically patterns of interaction, patterns that have come to exist through repeated practice carried out by members of the organization. If an organization comes to value tradition, it could be inferred that such an organization will devalue or sanction behaviors that encourage or work in support of change, behaviors that we have come to know as organizational defenses or defensive routines. As Tyndall (2012) suggests, â€Å" defensive routines are rewarded by most organizational cultures because routines indicate a sense of caring and concern for people† (p. 13). Further, Tyndall suggests that routines are often protected by the same people who prefer that such routines not exist. Rather than expose detrimental cultural practices, organizations prefer to keep them hidden so as to prevent exposure and embarrassment (p. 13). For the purpose of this paper, let us assume that organizational identity and organizational culture are interconnected. Santos and Eisenhardt (2005) point out that â€Å"organizational identity helps members make sense of their situation by clarifying the defining attributes and purpose of the organization, thereby reducing ambiguity and providing direction† (p. 500). If an organization’s current culture, a culture of tradition, is borne out of circumstances from fifty years ago, it can be inferred that there will a disconnect or lack of alignment between the direction the organization needs to be going in and the direction it actually is going in. Santos and Eisenhardt go on to suggest that: Organizational members actively perform collective sensemaking (Weick 1995) through which they gain awareness of new information, share interpretations of prior actions, and converge on the meaning of environmental changes and appropriate courses of action. p. 500). Assuming that employees are constantly being exposed to new information, but are inhibited on how to make use of or capitalize on such information because of the existence of cultural constraints, it will not only discourage innovation within the organization, but will also stymie employee’s desire to exercise creativity and engage with the organization. Ultimately, an organization s hould work to align its identity, culture, and activities it carries out (p. 00), maintain traditions that to not impinge on efficacy of essential processes, and foster an environment that embraces conflict and change (Trist, 1981, p. 47). Complete Concrete Systems Parson’s (1951) defines a complete concrete system of social action as consisting of a social system, the personality systems of the individual actors involved, and the cultural system which is built into such actors actions (p. 5-6). A cultural or social system is stagnant, unless the elements included therein are carried out through practice and action via an action system (p. 17). He further elaborates: A social system consists in plurality of individual actors interacting with each other in a situation which has at least a physical or environmental aspect, actors who are motivated in terms of a tendency to the ‘optimization of gratification’ and whose relation to their situations, including each other, is defined and mediated in terms of a system of culturally structured and shared symbols. p. 5-6). Parsons emphasizes the need to consider these three elements independently, as no one can be further reduced or ignored in the context of the general theory of action systems. In short, Parsons wishes to draw attention to the interplay that exists between personality, culture, and the society in which these elements exist; one cannot consider personality without also considering the context in which it exists or has been cultivated. As an organization develops its sense of self, it might also come to recognize the types of personalities that it supports and the types of personalities that it prefers not to engage. Once an organization is able to identify the types of personalities it attracts or tends to hire, it might then explore the question of why it is that these personalities â€Å"fit† the organization; it may be that the personalities hired within an organization are in fact not working in favor of the organization’s larger mission, but instead reflect historical cultural practices that actually work against the organization. The more that an organization is able to hone in on the types of personalities, behaviors, and the types of individuals that it is best suited to hire or from which it would benefit the most, the better able it will be to refine the organization’s culture and overall defining character. This is not to suggest that an organization should attempt to hire one type of personality, but it is to suggest that an organization should attempt to identify the types of personalities best uited for particular work units, roles within such work units, and conceive of ways to encourage hiring, training, and evaluation practices, that foster the development of such individuals rather than inhibit them. Agents within an organization should be mindful of the personalities with which they interact, particularly when presenting ideas to or interacting with decision-makers. Framing ideas in ways that appeal to decision-makers could prove advantageous and foster productive discourse. Symbolism Symbolism, or symbolic systems of meaning, come into existence as individual social actors engage with social objects (Parsons, 1951, p. 10). An actor comes to expect or associate certain actions with particular results through practice. The dynamic relationship between actions and the associations one comes to assign to particular actions exists through communication that is both implicit and explicit across an organization. Like culture, symbols come to exist by observing or partaking in patterns of behavior; if I do X, Y happens, or on a more simple level, if I sit on X, X is a chair. These expectations form â€Å"pattern consistency† (Parsons, 1951, p. 10), or logical consistency that enable people to transmit information to one another in ways that can be easily understood, whether this transmission is intentional or unintentional. These transmissions deliver messages to the receiver and it is these messages that come to form symbols. For these reason, symbols are highly subjective and based on the perception of the message’s recipient. Organizations must be mindful of the role that symbolism has in shaping the culture of an organization. Eisenberger, Huntington, Hutchinson, amp; Sowa (1986) define perceived organizational support (POS) as â€Å"global beliefs about the extent to which the organization cares about [employees] well-being and values their contributions† (Fuller, Barnett, Hester, Relyea, 2003, p. 789). Research consistently shows that perceived organizational support (POS) is positively correlated with organizational commitment. In other words, the more an organization’s employees perceive themselves to be supported by an organization, the more likely it is that they will commit themselves to the organization and its mission. Further, when people perceive that their organization values and appreciates them, they interpret it symbolically to mean that the organization has respect for them or sees them as having a high status within their organization. Perceiving one’s self as having high status, Gardner amp; Pierce (1998) suggest, will likely encourage commitment to an organization; this encourages a person to believe themselves to be worthy of being an organizational member (Fuller, et al. , p. 790).

Discriminated Criminals Essays - Abuse, Social Inequality

Discriminated Criminals Essays - Abuse, Social Inequality Discriminated Criminals The Criminal Justice system has always had discrimination in it. Discrimination can come from the police, courts, or even from lawyers. For example, in the Gideon vs. Wainwright case the court ruled that the state must provide a public defender but it did not rule that the public defender must be good or competent. (Too Poor N.Pag.). In most cases where a public defender is provided the defendant loses the case because the lawyer is new or incompetent. Thus the criminal justice system needs reform. The Criminal Justice System discriminates against the economically challenged and minorities because of police discrimination, unbalanced sentencing and incompetent public defenders. Police discrimination is a major factor in the criminal justice system. Police can discriminate towards different people and in different places at anytime the officers want. White police discriminate in jails and on the streets, which can be called racial profiling. In jail a white officer could give a black man a harder time then he would a white man. On the streets a white officer will stop a black man for no reason, ask where the black man is going, and often the officer will search the black mans car of belongings (Cole 7.). White police will go through poor neighborhoods to stop and search anyone the white police want (Cole 7.). A black man has a chance of getting picked up by the police for a DWB, which is Driving While Black which is impossible for most white people to even comprehend (Cole 7.). Another form of discrimination is from the black police. Sometimes the black police can discriminate just like the white police. Black police will discriminate against all ethnic groups like whites, blacks and other minorities. The black police discriminate against other blacks because the police believe that the black criminals are keeping the rest of the black community down. Black police also discriminate against the other minorities, not just the black criminals. Some black police feel the same way about Mexicans as some white police feel about blacks, that the Mexicans are what make this country bad. Another reason why there is talk about discrimination in the criminal justice system is because of unbalanced sentencing. Black men are more often sentenced for a first offense and usually get a longer sentence for something that the white men would only be getting a fine for (One-Third 25.). A California study showed that one out of six of six hundred twenty-five thousand black men were arrested, black men make up three percent of the population but account for forty percent of the prison population (Miller N. pag.). Black men usually pay twice as much bail as whites and usually get jailed before trial (One-Third 25.). Twelve percent of the American population is black and thirteen percent of blacks have used drugs but blacks account for thirty-five percent of arrests for drugs possession, fifty-five percent of convictions and forty-four percent of prison sentences (One-Third 25.). Most crack users in the United States are white but most prosecuted are black (Carter 290+.). Only fou r of the first thirty-seven death penalty prosecutions from the Anti-Drug Abuse Act have been white (Carter 290+.). Unbalanced sentencing, besides affecting black people wrongly, can also effect poor people wrongly. Poor people can get harsher sentencing just because a judge does not like the person for not being able to keep a job or for not paying taxes. Poor people could get a harsher sentence because the poor person does not have the money to pay a fine of a mere fifty-dollars. The judge knows that the poor person could not pay the fine. Even though misdemeanors and fines are small to most people, to a poor person it could mean imprisonment. Judges can also be swayed by the appearance of a person and a poor person cannot show up to court battered or in a suit. Incompetent public defenders are the biggest form of discrimination in the entire Criminal Justice System. The biggest problem is the funding for the public defenders. Even though it is less than two percent of the total spending on law enforcement and only ten percent of spending on all judicial and legal sources, people can still

Ladders and stairways safety Essay Example | Topics and Well Written Essays - 1750 words

Ladders and stairways safety - Essay Example Stairway or ladder is considered as essential to provide to the employees when nineteen inches or more elevation has to be made without any ramp, embankment, runway or personal hoist. It should be kept in mind that it is mandatory for the employers to provide its employees a ladder or a stairway in every such point of transition. If the two levels are joined by only one point of transition employers should keep that point clear of any obstacles so that the employees are ensured of a free passage of movement. However even after taking adequate precaution if that transit point gets clumsy so that the movement of the employees gets severely restricted, the employer should prepare a second point of transition between the same two levels and provide its access to their employees. Furthermore if on from the very beginning or in the course of work a certain working place gets more than once access point between two levels the employers have to ensure that one of the transit point must be open for all the time and it should be cleared of any obstacle as well. A culmination of cautiousness, precaution and technology has to be used to ensure ladder safety at work place. To avoid slipping hazards ladder should be kept free of any slippery materials such as oil, grease and other form of oily element. Even to maintain a ladder use of all these products are strictly prohibited. Even after taking all the precautionary measures, if somehow the surface of the steps catches oil immediate wipe is strictly recommended. Each type of ladder is constructed with a certain objective and using them for their particularly purpose would not only ensure their longevity but it will also keep away several unwanted incidents. While putting a ladder into use the surface quality must be carefully watched. If the surface is uneven or slippery it may easily

Case Study -Ethics and Professional Practice Example | Topics and Well Written Essays - 1500 words

-Ethics and Professional Practice - Case Study Example The basic ethical principles are respect, empowerment, protection, responsibility and commitment. Every professional practice is shaped by its own ethics and codes of conduct that are expected of those who practice it. The police have a duty to protect themselves and other people considered vulnerable in society such as children and have the responsibility to carry the burden brought about by their conduct (Kleinig, 1997). In the case of Kelly Woods, there are various ethical issues that do arise, which challenge the practice of the policeman. Physical assault is ethically wrong of a father does that to intentionally inflict pain to a child. However, the problem comes when parenting roles conflict with family wrangles. The suspension of the young boy from school following his possession of porn and a pocket knife is an ethically right practice that is in line with rules and regulation of schooling. The child was to be punished but not assaulted. Ethics for parenting were thus broken by the father. The filing for a case five years after the assault case is questionable given that it is done with the assistance of the mother yet the two are separated. There could be possibilities of the young person evading future punishment due to his juvenile deliquesce and on the other hand, the mother might be silently pushing for child custody without putting her intentions clear. In the above case, there are possibilities that the police, in their faithful duty to serve the public, are being used unethically to settling personal scores. This is a case that calls for further investigation and avoid looking at things from one point of view. Cases such as these are normally complicated because the parents normally go to extreme options when seeking to take custody of kids. One ethical issue that normally stands out in such circumstances as has been seen in this case of Kelly Woods is the fact that children normally take advantage of

What Might We Mean By Firm Performance

What Might We Mean By Firm Performance The firm performance is a complex term which may include different shadows of meaning as long as it relates to organizational performance, functioning of the firm and outcomes of its operations. Normally, the firm performance implies the organizational performance, including manufacturing of products and services, functioning of different units of the firm, performance of its employees and outcomes of their work in total. At the same time, the firm performance can be viewed in a broader context as a part of the business development of the firm. What is meant here is the fact that the business development mirrors the firms performance and allows to assess the extent to which the organizational performance is effective. At this point, it is important to place emphasis on the fact that the firms performance is basically measured in terms of efficiency of the firms operations. In fact, the more effective the firms operations are completed the more positive the organizational performance is and, on the contrary, the low efficiency of firms operations and employees performance means the poor firms performance. In this respect, employees performance comprises an integral part of the firms performance because, in the contemporary business environment human resources, comprise an important marketing asset of any organization. Therefore, the efficiency of employees performance affects consistently the firms performance. Furthermore, it is important to take into consideration that the firms performance is an important indicator for investors and stakeholders. What is meant here is the fact that the firms performance indicates whether the company is worth investing or not. For instance, investors are ready to invest money in firms with the positive marketing performance, whereas poor marketing performance indicates at problems firms have in their business development. As a result, investors avoid investing money in companies with poor performance because they are uncertain in the return on investments and because of high risks accompanying such investments. What is competitive advantage, in OPERATIONAL and CONCRETE terms? The competitive advantage of a company is one of the most important factors that define the competitive position of the company in the market. In fact, the competitive position of a company means the marketing position and performance of the company compared to its major rivals. In this regard, it is necessary to pay a particular attention to the return on investments rate of the company because the higher is the return on investments and lower risks associated with investments and business development of the company, the better is the marketing position of the company. In fact, the company with the high return on investment can count for the steady improvement of its marketing and competitive position because it can take advantage of its business development and growth which occur due to the high return on investments. In addition, the competitive advantage should be unique, relevant and sustainable. At the same time, it is important to distinguish competitive position in operational and concrete terms. In this regard, the competitive advantage in operational terms implies the advantage of the company in terms of its business development, introduction of innovations, use of management strategies, organization of production process and other operations conducted by the company. The competitive advantage of the company in operational terms is defined by its ability to take a better position compared to its rival due to a better organization of the production process and other operations conducted by the company compared to its rivals. As for the competitive advantage in concrete terms, it is important to place emphasis on the fact that the competitive advantage in concrete terms implies the advantage of the company in terms of the assets value of the company, costs of its facilities, fixed costs, and other fixed values of the company, along with the products and services provided by the company to its customers. In other words, the competitive advantage in concrete terms implies the advantage the company gains in quantity of products, revenues and other items which can be measured and assessed accurately. Finally, on analyzing the competitive advantage concept, it is worth mentioning the fact that companies have to maintain their competitive advantage. In other words competitive advantage should be sustainable to insure that the company keeps progressing. Otherwise, if the company fails to maintain its competitive advantage, it is doomed to failure because it cannot afford the competition for rivals will keep progressing and outpace the company that has stopped in its development. Question 3: Assess the merits of the VRIO framework when determining a firms competitive advantage? The VRIO framework allows to obtain the basic information on the competitive advantage of a firm. To put it more precisely, the VRIO framework focuses on four key items defining the competitive position of a firm, including value, rarity, imitability, and organization. The value of the company is very important for determining its competitive position. In terms of the VRIO framework, the value implies the ability of a firm to neutralize external threats and hold a better marketing and competitive position compared to its rivals. In such a way, increasing the value, a firm can improve its competitive position and take the lead in the industry. The rarity implies the control over resource in hands a few and the firm should attempt to limit the access of the rivals to the resources. Alternatively, the company may attempt to establish control over resources and, thus, get a consistent competitive advantage over its rivals, especially if they cannot get access to resources. Furthermore, imitability involves the protection of the uniqueness of products and services provided by the company to its customers and the ability of the company to protect its products and services from imitations from the part of its rivals. In this regard, the protection of intellectual property rights, the development of new, original and unique products is crucial because it provides the company with an excellent opportunity to take advantage and hold the dominant competitive position in the market. The uniqueness of products or services is crucial for the competitive position of the company. Finally, the organization is another important factor that determines the competitive position of the company and its competitive advantage. In this respect, it is worth mentioning the fact that the effective organization allows the company to optimize the production process and company-customer relationships. As a result, companies with a better organization has a competitive advantage of its rivals because its performance is better compared to its rivals due to the better organization of work and more efficient work of employees within the company.

The Importance Of Depreciation Expenses

Depreciation as a concept and in practice plays a very important role in a companys cash flow hence in funding. The reasons are basically two, firstly because depreciation is a way of self finance for an organization and secondly because is a way of decreasing taxes that the government claims as the company doesnt have to pay taxes on depreciation which consequently enlarges the cash flow of the company. As a term depreciation in accounting is the process of allocating the cost of a capital asset over the period of its useful life. Depreciation takes into account the decrease in the service potential of capital assets invested in a business venture, resulting from such causes as physical wear and tear in ordinary use, deterioration by natural elements or obsolescence caused by technological changes. Basically depreciation is a loss in value or a diminishment in market price of a good always taking the time factor into account. Depreciation is a rate of change in value in an asset fixed or current compared to the present value of that asset. For example if a company purchases machinery for the production of a certain product the management must take under consideration the equipments life cycle, meaning that this machinery has a certain period of time in which it can contribute to the production before it becomes useless. Useless in a sense of a newer machine will be invented in some years which will be probably faster or more capable to produce better quality. The time factor of course always varies depending on the asset. For example the usefulness of a computer may be three years before it needs replacing, as for a building may be fifty years. A Mercedes van for instance in year 2000 could be purchased at the value of 13 million drachmas and its productive life span before it needs to be replaced will probably be 8 years. After the 8 years the van purchased would cease from being of any productive use to the company and if it needs to be resoled its market value would have depreciated drastically due to the time fade from the initial purchase. Its devaluation is its year zero value less an annual percentage of the devaluation process updated annually. But depreciation doesnt apply only to current assets but also is applicable to fixed assets as well. Buildings are losing their value too taking the time scale factor under consideration again. If a new building in year 1980 was valued 100 million drachmas as a newly built structure its value by the year 2030 will be definitely decreased by the depreciation rate estimated. The most widely used method to calculate depreciation is the so called straight line method, in which the rate of depreciation is constant for the entire working life of the capital assets. Thus, if a machine cost 1 million 100 thousand drachmas and is assumed to have a 10 year useful life and a scrap value of 100 thousand drachmas at the end of 10 years, the amount of annual depreciation would be 100 thousand drachmas and the annual depreciation rate 10 per cent. Which is the annual depreciation divided by cost minus scrap value. Because depreciation is subtracted from the assets of a financial statement it is not a subject to taxation therefore the company has automatically achieved a higher cash flow status by depreciating its assets, the worth of its capital value. This can be visible from the following cash flow calculation.

Microeconomics †Product & Resource Markets

It was at Menlo Park Laboratory Complex that Thomas Edison first unveiled the incandescent light bulb in December 1879 (Bellis 2006). More than a century has passed and, in that time, his famed invention has spread all over the world, marking great cities visible to passing planes. It has diminished from an astonishing wonder to an everyday, commonplace thing. In a large portion of the globe, light bulbs have become a basic necessity, placing it among products with inelastic demand. Without the artificial lighting, all manner of work at night would have to be severely limited. Artificial lighting also satisfies the demand for abstract concepts like the feeling of security and comfort. Demand for this product is inelastic because there are no substitutes for light bulbs; no other invention can efficiently produce artificial lighting. Incandescent light bulbs can be sold for less than a dollar a piece and requires a very small proportion of income. Changes in the price of artificial lighting is likely to cause only relatively small shifts in demand. If more than a century after Edison invented incandescent lighting, a new invention was placed in the market- a paint product that provided light when supplied with a weak electrical current. This new product presents itself as a substitute, which in turn, steals dollar votes for light bulbs. The quantity of light bulbs is sure to go down as some consumers favor the new product, forcing light bulb manufacturers to either exit the industry, increase prices, lower manufacturing costs, or innovate. A lot of women around the world, even those who don’t know fashion TV and the like, want a Prada bag. They can fetch a price of some hundreds to thousands of dollars. The supply for these bags, however, is inelastic. Even if the tiniest bag were to suddenly jack up in price, the quantity of Prada bags in the market would remain the same, or even go down as Prada will realize that their market has shrunk considerably. A Prada bag is unique, requiring very specific materials and highly skilled labor, including that of the designer, put together in a controlled manner. Because there is only one fashion house for Miuccia Prada, she, as a resource, has no substitution possibility contributing to the inelasticity of supply. Reference List: Bellis, M. (2006). The inventions of Thomas Edison. Retrieved November 2, 2006, from: http://inventors.about.com/library/inventors/bledison.htm