Customer Loyalty in a Business To Business Context Essay Example for Free

Customer Loyalty in a Business To Business Context Essay Customer loyalty is considered to be a powerful tool for most organizations in ensuring that they gain a competitive advantage in their respective industries ( Lam, Shankar, Erramilli, Bvsan, 2004, p. 294). Customer loyalty is necessary for ensuring that organizations remain profitable while also achieving growth through reaching out to new market grounds. The importance of customer loyalty in the world of economics has developed gradually as an area of study especially business to business (B2B) environments. This is due to the need to study and identify factors that ensure customer loyalty is maintained and even increased, according to Haghkhah et al. , (2013, p. 156). Haghkhah, et al., (2013, p. 156) further noted that increased competition for customers in the market signifies that business ought to react even faster and more specific to the demands and wants of clients in order to win their loyalty. For this reason, marketers in most organizations tend to focus on customer retention techniques and also to lay an emphasis on increasing their loyalty levels. In order to achieve this, B2B has offered vast opportunities to ensure that most organizations achieve their objectives of customer retention and loyalty. Thus, the latter shows the importance of understanding customer retention and loyalty as an important area of the research study. Customer loyalty is viewed as a behavior of repetitive buying and further developed moving forward with factors such as antecedents, consequences, and factors. This has led the researcher to gain an interest in conducting further research on customer retention and loyalty, therefore, this research paper will be on the various ways and techniques that organizations can implement in order to increase customer loyalty in a B2B context Customer loyalty According to Haghkhah, et al., (2013, p. 157) a high rate of loyalty in a B2B environment is a competitive advantage to the seller due to the clients willingness to pay a higher price for goods and sensitive since they start becoming less price sensitive as a result of trust that has been gained. This means that the income generated is likely to increase and remain stable to move forward Customer loyalty is viewed as a strategy that aims at ensuring customers gain behaviour of repetitive purchasing from the same company. Customer loyalty in a B2B environment achieves a mutual reward that benefits both the customer and the organization. It is usually considered as ways of gaining competitive advantage by an organization over its competitors. Various companies have applied the strategy of maintaining customer loyalty since it is considered cheaper in regard trying to gain new customers in order to increase their revenue base. ÄÅ'ater.T ÄÅ'ater.B (2010, p. 1322) view customer loyalty based on activities such as contract renewal, making recommendations to clients and increasing patronage in a business to business environments. They further note that these factors will likely influence the level of loyalty to clients of an organization. In other research, customer loyalty in a B2B environment is based on the experiences of the client, the future expectations that a client may have about the organization and the frequency at which a customer buys goods and services from the organization( haghkhah, Abdul Hamid, Ebrahimpour, Roghanian, Gheysari, 2013, p. 158). Further, (ÄÅ'ater ÄÅ'ater, 2010) notes that in order to influence the loyalty of clients in a B2B context, and then the organization has to understand the behaviour of the client and the attitude of the client. Literature review 2.1 Limitations and Gap in Literature The field of customer loyalty is one that has much information, but very little attention has been given to business-to-business scenarios. Most previous research has mainly focused on the customer’s point of view (Mascareigne, 2009). This could be because most view customer retentions as a behavioral factor. (Ranaweera Prabhu, 2003) In any economy, businesses have to transact to perform their daily operations. Some businesses, such as audit firms, exist to serve other businesses. Extensive research on this area could aid other businesses to learn the dynamics of customer loyalty amongst themselves. A major limitation that was also experienced in the research was the over generalization of the research based on a B2B context. Since different businesses have different operations and strategies, some aspects may works for a certain sector that may not necessarily work for another. For example, concepts that may be used to increase customer loyalty in the banking sector, may not work in the manufacturing sector. According to Buttle (2008, p. 267) commitment is defined as the relationship that exist between the two firms and is likely to be terminated at a reasonable future date. In a B2B environment, the commitment shared by the two firms is usually on a mutual agreement. Doma (2013, p. 72) notes that commitment between two firms is usually bonded by trust among the two firms. The level of trust that is usually shared by the two or more firms that conduct business affects their commitment framework. The more a firm is committed to another increases the level of loyalty shared by the two firms. Moorman Rust (1999, p. 183) in their research notes that commitment is usually the level of effort that is put by firms in ensuring a valuable relationship enjoyed by the two firms is maintained in the long term. The relationship usually has economic benefits for the two firms in their bid to ensure they remain profitable in their operations. For this reason, there exists a belief among organizations that the relationship has economic benefits; thus efforts are put in maintaining it. However, according to Hennig-Thurau (2004, p. 463) states that many scholars tend to argue that there is no major difference between loyalty and commitment. That school of thought has been dismissed by Morgan Hunt (1999, p. 24) who argued there is a difference between loyalty and commitment. They, however, noted that the two are related, with a commitment being an antecedent of loyalty. This means that commitment is a factor in B2B environment that will increase the level of loyalty. This also meant th at the existence of commitment had a strong positive impact on the level of commitment. Shabbir et al. (2007, p. 280) in their research demonstrated that commitment is an antecedent of loyalty. They argued that commitment in the B2B environment, it played a central role in ensuring that loyalty is always maintained and even increased to higher levels. Sharma, et al. (2006, p. 77) in their study note that commitment is the situation whereby there is a desire to make a relationship stronger with another person or even group due to familiarity or even friendship has that has been developed over time due to the personal interaction that has occurred between the two over a period of time(Eakuru Mat, 2008, p. 125). Therefore, commitment should be as a result of identifying the values that are shared commonly between two organizations. It is crucial to note that the customer will retain a relationship with another party due to the positive effect they have with the supplier. At times, a client may be forced to continue staying in a relationship with another party due to lack of valuable options that may be available to them (Fullerton, 2005, p. 1388). However, most relationships are maintained with a commitment as a result of the benefits that both parties will benefit from (Brandi, 2001, p. 67). When commitment is the guiding principle of B2B environment, and one organization performs poorly in comparison to the incumbent organization, then due to the level of commitment shared the partners are unlikely to switch to other options (Stephan , 2002, p. 20). This makes a commitment an underlying factor that will help in influencing the level of loyalty in a B2B environment (Stephan , 2002, p. 33). Akin (2012) gives an example, in comparing the loyal between customers with low loyalty and customers with high loyalty and explains that customers with high loyalty will be not be swayed by discounted prices from other suppliers. Therfore, the higher the level of commitment that will be shared between organizations an increase in loyalty levels between the organizations will be experienced. If the level of commitment is increased through activities such as contract renewal and making of recommendations to the other organization, it will in turn increase the level of loyalty enjoyed by the two firms. Therefore, if organizations want to increase the rate of exit by their clients, then they have to build a relationship that will be founded on a commitment. Commitment will in turn increase the level of loyalty in a B2B environment. This will ensure that the future of the organization is maintained as it will continue making profit. In a study conducted by CITATION Gus05 l 1033 (Gustavsson Lundgren, 2005) they give an example whereby airline companies use their frequent flyer programs as a means to enhance repeated purchase through provision of economic incentives to ensure that they increase and also maintain loyal among their clients. 2.2 Theories and Methodologies A common principle that has emerged from the total quality management (TQM) movement is that the decisive path, to retaining customers, is to satisfy their needs (Colby, 2013). The theory holds that if by identifying what customers expect and by meeting these requirements and expectations, these customers are less likely to opt for the services given by a competitor. Past research conducted by Colby (2013) has shown a positive relationship between satisfaction and loyalty. In other words, if a client is satisfied with the services offered by a business, the client is bound to be loyal to the business. Other studies have also identified a positive relationship between service quality and customer loyalty (Van Es, 2012). However, a certain level of satisfaction does not always guarantee the desired loyalty. In a certain survey, Colby suggested four indicators of customer loyalty and this include; demographics, past behavior, perception of gain or loss of switching to a different brand and attitudes towards openness to new brands. Studying these four indicators can give a better understanding of customer loyalty. For instance, if a business expects to save on costs by transacting with another business, then they are most likely to be loyal to that particular partnership. The attitudinal approach takes a view of purchase behavior and tends to explain in terms of values, beliefs and attitudes. Deterministic theory entails the logical relationship between variables and researchers in this field are responsible for identifying which variables affect customer loyalty. It appears to be acceptable to most cognitive researchers that attitude comes before behavior in a scenario that involves repurchasing a product and is very important because attitude comes before a choice. The behavioral approach holds that internal processes cannot be measured and, therefore, have no place in research (Bennet Bove, 2002). Understanding customer loyalty in a B2B scenario is a long term relationship regardless of the importance of the transactions. Both methods may differ in views but can be both used to understand the concept. Although customer loyalty research has evolved over the years, most of this research uses a logical empiricist paradigm(Paavola, 2006). Information about customer loyalty has been derived mainly from cognitive psychology, with theories about attitude forming most of the work. Current theoretical framework could, therefore, bring a new perspective into the loyalty research. Paavola (2006) uses the social constructionism paradigm to examine the notion of customer loyalty critically. The study gives a detailed description of customer loyalty that is based on the social reality of customers. The results imply that different types of loyalty should be taken into considerations when making managerial implementations. Categorization can also be very beneficial when it comes to future loyalty research. Most theories, which are associated with loyalty studies, deal with issues such as loyalty programs, customer satisfaction, customer value, service quality and social bonds (Jacobsen, Olsson, Sjovall, 2004). A model constructed by Jacobsen, Olsson and Sjovall (2004) shows that social bonds have the most significant effect on customer loyalty with companies in the banking sector. The study shows that the most important factors, in maintaining customer loyalty in the banking sector, were social bonds and personnel. This is because, banking services are very similar and to survive in such as market, strong competitive personnel are required to make the right connections. The same study revealed that monetary benefits are not a significant factor in that area of business. According to Kuusik (2007), the factors, trustworthiness, satisfaction, importance of relationship and image are important factors that play a role in the different levels of customer loyalty. Traditionally, most research has focussed on either the influence of individual factors on loyalty or the nature of different levels of loyalty. It is important to not only view loyalty through behavioural criteria, but also attitudinal criteria as well. Behavioural clients could be divided into; forced to be loyal, functionally loyal and loyal due to inertia (Kuusik, 2007). For instance, in a B2B context, when a certain company is a monopoly, getting supplies from them is the only logical answer, and this forces a company to be loyal by force. Businesses can be loyal by inertia due to the importance of a certain process. If the process is of low importance, then there is practically no need to get another partner. This can happen in situations where the transaction is routine such as trash- pickup. Functionality loyalty is gained from when organizations have to partner with other organizations because they have an objective reason to be. Research has shown that inertia is a situation opposite to loyalty CITATION Aki12 l 4105 (Akin, 2012). For example, a business may select another business since they require minimal effort to reach them. Dahlgren (2005) used multivariate data analysis techniques to build a link between dimensions of brand loyalty and to capture the different levels of customer loyalty. The result showed several differences in the loyalty dimensions. In a similar study, Kuusik (2007) uses a LOGIT regression model to determine the significant factors that affect customer loyalty. The model comprises of various factors that affect customer loyalty. The study reveals that image, satisfaction, importance of relationship and trustworthiness are the most significant factors in loyalty research. According to East et al. (2005) the definition of loyalty is useful if they can be used to predict phenomena such as search, retention, and recommendation. The authors establish that combination measures of customer loyalty often act as poor indicators of consumer loyalty as compared to other singular indicators such as recommendations. Apart from viewing these combinations to be of limited value, the research also establishes that there is no form of loyalty that always predicts different loyalty outcomes and a general concept of loyalty should be abandoned (East, Gendall, Hammond, Lomax, 2005). For instance, instead of using indicators such as loyalty programs and money rewards, researchers should either look for retention of customers and any recommendation given by them. 2.3 Identifying relationships between ideas and practice to increase loyalty in a B2B context Various ideas have been drafted in order to increase customer loyalty in a B2B context. For example, from the above review, it is noted that identification of the companys prospects and acting on them will help in increasing the loyalty. However a company can deliver on all the needs of their clients, but the delivery of their services will influence the level of loyalty moving forward. If when delivering all the needs of their client, and they produce a poor delivery service, then this will likely lead to a decrease in loyalty level. For example according to Akin (2012) factors that help increasing the loyalty of customers is high-level service quality delivered by firms that will lead to a high level of customer satisfaction. In another scenario, companies tend to try and find ways in which they can influence the frequency at which their clients access their websites for information. However, research indicates that half of the customers get information from their website. The lack of companies to invest and provide websites that are easy to access and provide the necessary information to their clients will lead to a decline in the level of loyalty. For this reason, there is a clear distinction between the ideas developed to increase loyalty and the practices a company will adopt. Conclusion From this literature review, it can be shown that various researches have tried to establish the existence of a positive relationship between loyalty and aspects such as service quality and customer satisfaction. Some studies have employed the use of correlation analysis to investigate this relationship. Correlation research allows a researcher to determine whether a relationship between variables exists, it allows one to define the extent of the relationship between the variables (Gall, Gall, Bord, 2005). Qualitative and quantitative research methods both have their benefits and drawbacks. For instance, when the correlation between two variables has been established, it still does not tell the researcher what should be done, but rather what can be done. Qualitative methods, as used by Paavola (2006), can also bring out knowledge that is not familiar with other researchers. The results can also be influenced by the researcher’s personal biases. However, some of these studies tend to cover wide areas that may take long periods of research. The benefits of customer retention have been recognized by many researchers (Feihua, 2011). In the business to business scenario, certain aspects of retaining a customer bring out themselves than conducting business with the ordinary customers. For instance, paying attention to the ordinary, like attending meetings on time is not a necessary, but a crucial habit to consider. In a B2B relationship, the parties are more defined, and this is based on the assumption that both parties are seeking common benefits in the relationship (Oy, 2010). In a normal business to customer relationship, the dissolution of the relationship ends up in the consumer leaving the services of the provider. In the B2B setup, the end of the relationship is thought in terms of a process while in switching is thought as just as a change in the relationship. In customer loyalty research, perhaps it would be of vital importance to consider the industry in which the research is being conducted on. In industries wher e the businesses provide similar services, social bonds could be the prevalent factor that promotes consumer loyalty between businesses. In other industries, where the services offered are different, probably loyalty programs and monetary rewards could be the way to win customer loyalty. References Akin, E. (2012). Literature Review and Discussion on Customer Loyalty and Consciousness. European Journal of Economics, Finance and Administrative Sciences, 158-170. Brandi, J. (2001). Building Customer Loyalty: The 21 Essential Elements in Action. Texas: The Walk The Talk Company. Buttle, F. (2008). Customer Relationship Management (2nd ed.). New York: Routledge. Doma, S. A. (2013). Relationship Quality as Predictor of B2B Customer Loyalty. SYSTEMICS, CYBERNETICS AND INFORMATICS, 111(1), 72-78. Gustavsson, S., Lundgren, E. (2005). Customer Loyalty. Lulea University of Technology. Haghkhah, A., Abdul Hamid, A. B., Ebrahimpour, A., Roghanian, P., Gheysari, H. (2013). Commitment and Customer Loyalty in Business-To-Business Context. European Journal of Business and Management, 15(19), 156-164. Lam, S. Y., Shankar, V., Erramilli, M. K., B. M. (2004). Customer Value, Satisfaction, Loyalty, and Switching Costs: An Illustration From a Business-to-Business Service Context. Journal of the Academy of Marketing Science, 32(293), 294-311. Bennet, R., Bove, L. (2002). Identifying the Key Issues for Measuring Loyalty. QUT Digital Repository, 1-29. ÄÅ'ater, T., ÄÅ'ater, B. (2010). Product and relationship quality influence on customer commitment and loyalty in B2B manufacturing relationships. Industrial marketing management, 39(8), 1321-1333.Colby, C. (2013, December 9). A New Paradigm for Understanding Customer Retention. Retrieved from Rockbridge: http://rockresearch.com/a-new-paradigm-for-understanding-customer-retention/ Eakuru, N., Mat, N. (2008). The application of structural equation modeling (SEM) in determining the antecedents of customer loyalty in banks in South Thailand. The Business Review, Cambridge, 10(2), 129-139. East, R., Gendall, P., Hammond, K., Lomax, W. (2005). Consumer Loyalty: Singular, Additive or Interactive? Australian arketing Joural, 10-17.Feihua, Q. (2011). Customer Retention in E-commerce business. Haaha-Helia University press, 1-56. Fullerton, G. (2005). How commitment both enables and undermines marketing relationships. European Journal of marketing, 39(11), 1372-1388.Gall, J., Gall, M., Bord, W. (2005). Applying educational research: A practical guide (1st ed.). Boston: Pearzon. Hennig-Thurau, T. (2004). Customer orientation of service employees: Its impact on customer satisfaction, commitment, and retention. International Journal of Service Industry Management, 15(5), 460-478. Jacobsen, D., Olsson, M., Sjovall, A. (2004). The Creation of Customer Loyalty. Kristianstad University, 1-71. Kuusik, A. (2007). AFFECTING CUSTOMER LOYALTY: DO DIFFERENT FACTORS HAVE VARIOUS INFLUENCES IN DIFFERENT LOYALTY LEVELS? Tartu University Press, 1-29. Mascareigne, J. (2009). Customer Retention. Lulea University Press, 1-88. Moorman, C., Rust, R. T. (1999). The role of marketing. The Journal of Marketing, 180-197, 63.Morgan, R. M., Hunt, S. D. (1999). The commitment-trust theory of relationship marketing. The Journal of marketing, 20-38.Oy, O. (2010). IMPROVING CUSTOMER LOYALTY THROUGH A REGULAR CUSTOMER PROGRAM. TAMPEREEN AMMATTIKORKEAKOULU University Publications, 1-45. Paalova, H. (2006). Categories of Loyalty. Toward Meaning-based Theory of Customer Loyalty. European Advances in Consumer Research, 420-428. Ranaweera, C., Prabhu, J. (2003). The influence of satisfaction, trust and switching barriers on customer retention in a continuous purchasing setting. international journal of service industry management, 374-395. Shabbir, H., Palihawadana, D., Thwaites, D. (2007). Determining the antecedents and consequences of donor †perceived relationship quality—A dimensional qualitative research approach. Psychology Marketing, 24(3), 271-293. Sharma, N., Young, L., Wilkinson, I. (2006). The commitment mix: Dimensions of commitment in international trading relationships in India. Journal of International Marketing, 64-91. Stephan, B. (2002). Customer Loyalty Programs and Clubs (2nd ed.). London: Gower Publishing, Ltd. Van Es, R. (2012). The Relationship between Service Quality and Customer Loyalty, and its Influence on Business Model Design. Universiteit Twente, 1-85. Source document

Communication Essay Example for Free

Communication Essay A career defines who I am and what am I all about. It is true that a majority of people will choose to work for what pays and offers them the most, especially living in today’s economy. However, I believe that my chosen career path should base on the source of my passion and interest in order to ensure a long term success in life. Therefore, when it comes to my interest and passion, the first thing that came into my mind would be dancing. Being a dancer since I was three years old, I always dreamt of having a company of my own which manages dancers from all around the world. To be specific, my chosen career would be the director of a dance company. The main reason for choosing this career, of course, is because of my passion in dancing. Therefore it would be great if I could spread my passion in this healthy sport to the society as well. In order to understand further on the requirements I need for my chosen career path and also the challenges I might face in the future, the company I decided to interview is the owner of a dance company named Redmouse Dance Academy. Person Interviewed (Ms. Pearl Wong Huei Woon, Director of Redmouse Dance Academy) In her mid-30’s, Ms. Pearl Wong Huei Woon has been working as the director of Redmouse Dance Academy, which is based in Dataran Mentari Bandar Sunway for the past 3 years. As a dancer herself, she has been to different countries and explored different dance companies from all around the world after graduated from high school, but focus mainly in Asian countries such as Korea and Japan. She has a vast amount of knowledge in the dance industry. She even brings over dance instructors all the way from Korea for her company in Malaysia knowing that Koreans are well known as great dancers. Besides that, knowing that the Korean pop songs are the current trend in Malaysia, Ms. Pearl Wong encourages her Korean staffs to teach Korean Pop Dances in order to meet the needs of the society. Throughout the interview, Ms. Pearl Wong Huei Woon shared many experiences of working in her career and how rewarding this career can be. Brief Background Information of Ms. Pearl Wong Job Scope i) Maintaining Company’s Image According to Ms. Pearl Wong, as the director of the company, it is very important for her to maintain the company’s image. In order to do so, she has to ensure from time to time that the Korean Instructors she hired did their job well in providing high quality dance instructions to her customers. She also accepts feedbacks and suggestions from her customers so that more improvements could be done to maintain the company’s reputation in the dance industry. ii) Planning and Organizing Ms. Pearl Wong has always been active in planning and organizing dance-related events occasionally to promote and gain attraction from the public towards her dance company. She offers opportunities for her students to perform in the events she organized and also events in collaboration with other dance companies so that the public could witness the quality of her dance company. iii) Managing  As the director of the company, Ms. Pearl Wong is responsible in coordinating and oversees the work of her staffs in the company. According to Ms. Pearl, it is important to allocate the right person to the right job. She analyzes the specialty of her employees in dancing and divides their job accordingly. She believes by managing her employees effectively, it helps to lead them to a path of efficient work and increases productivity. iv) Plotting of Future Expansion Possibilities of the Company Every decision the director make will bring a huge impact towards the company and the employees. (Sullivan, 2012) Even though it is risky to expand the company, however, Ms. Pearl Wong believed that a successful business expansion may lead the company to an exposure towards a wider audience which helps in increasing potential customers. Benefits of the Position To Ms. Pearl Wong, bringing up the young generation to let them show off their talents is already one of the benefits and happiness she could obtain in her career. Furthermore, having Korean instructors as her employees, it brings an international presence to her company and that helps her to learn more about the Korean culture and languages. In addition of that, it also gives her a new perspective and new ways to do things. Challenges The main challenge that Ms. Pearl Wong faces in her career is the changing customer preferences which is unpredictable. Customers’ preferences and expectations such as trends, economic conditions and the pace of their busy lives changes from time to time. (Miles, 2012) Ms. Pearl Wong has to keep herself up to date about the latest trend in dancing so that she could meet up the expectations of her target customers, which are the generation Y’s. She also adjusts prices for the dance classes so that it is affordable for her customers but in the same time, she needs to take into consideration of her profits and earnings. Therefore, these are the challenges she often face in her career. Job Requirements According to Ms. Pearl Wong, â€Å"Having a business of your own does not require a high level of education; instead, it requires passion, commitment and experiences.† Being just a graduate in SPM level, Ms. Pearl Wong explored and gain experiences from dance academies in different countries to learn their ways in doing the business. Years after years, she finally has her own dance company in Malaysia, which is also the first ever Korean Pop Dance Academy in Kuala Lumpur. Therefore, to her, it is all about the effort in learning and showing your passion in your career that counts. Personal SWOT Analysis i) Strengths My biggest strength is having good public relation skills especially in communication. I am able to communicate clearly no matter in writing or verbally. (Joseph, 2012) Besides that, I am always willing to learn new things in order to gain more knowledge and experiences. I also show full passion and commitment in my own interest and would spend time trying to improve myself. Last of all, I am able to think creatively and generate new ideas no matter in what I am doing. ii) Weaknesses  One of my weaknesses that often become the obstacle of my life is being lack of confidence. I often feel nervous and assume that I could not do well even before I try, this indirectly lower down my efficiency in work. Besides that, I have poor time management skills especially when it comes to completion of assignments and preparation for final exams. I always have this habit of completing my assignments at the very last minute which is one of my weaknesses that should be corrected. iii) Opportunities Being the Public Relation Manager and Event Coordinator in my club in University, I have the opportunity to organize events and meet people from different industries. Throughout the process of planning and organizing, I am able to gain a lot of new knowledge and experiences which would help me in my future career. Besides that, I am a part time trainee in Redmouse Dance Academy; therefore I am able to learn the ways to run a dance company. Of course, I am able to obtain extra knowledge in business through the current course I am studying in campus. iv) Threats The only threats I am currently facing are no specific training qualifications and no working experience which will definitely bring disadvantages to me in the future. Proposed Plan Short term plan For my short term plans, I would try my best to score my degree with flying colors. In the meantime, I would like to enhance personal development by being more active in participating activities and competitions in order to improve my self-confidence. Last of all, I must complete my degree program and graduate as an International Business and Marketing student so that I could equip myself with more knowledge and that will help increase the opportunities and chances others would offer to me in the future. Long Term plan For my long term plan, I would like to gain more working experiences at overseas for five years after completing my Degree Program as an International Business and Marketing graduate so that I could learn and explore more in other countries to get a wider view in business operations. After five years of working experience, I will continue pursuing my studies in Taylor’s Master in Management Program for 18 months to improve and upgrade myself so that I have enough knowledge to achieve my dream. After my completion in Master Program, I will continue working hard for at least three years and start my own business as an Entrepreneur of a dance company. Conclusion This interview has provided me a clearer view on my future career path and also increased my knowledge in the requirements of being an entrepreneur. Doing what I love to do and doing the best is always what I am trying to achieve in the future. I believe that my passion in dancing and managing will always be my motivation to study hard so that my dreams can be reached. Last but not least, I appreciate Ms. Pearl Wong’s help in spending her time to share her experiences with me throughout this interview.

Nazis Who Helped Jews Survive

Nazis Who Helped Jews Survive Masquerading As Devils; Nazis Who Helped Jews Survive The Holocaust During WWII. During the holocaust, many people died, due to Machine Guns or due to starvations well as abuse. This is the way individuals disliked by Nazis were treated. The Jews along with other individuals were killed just on the basis that, Hitler and other people due to their faith. This happened to be the first time; such a holocaust happened based on such a reason. Under normal cases, there were holocausts when individuals were fighting for resources like land, or just an attempt of wining war. In this case, many individuals were killed based on the reason that, they believed in different religion. Around eleven million individuals were killed, and among them 6,000,000 of them were Jews and 5,000,000 were not Jews, (Resnick 34). As a result, this research looks at Nazis who helped Jews survive the Holocaust during WWII. AS a matter of fact, many researchers have dealt with reasons that led to World War II, there effects and the survivors. In addition, more has been done concerning the causes of this war, and how it came to an end, however, very little has been done on how the Jews got survival during the war, yet they were the main victims. Study objectives The main objective of this paper is to identify how the Jews survived during this war. In order to reach at this particular objective, I will use the following research questions. I look at who were the victims of Nazis Holocaust? I look at how was life in the concentration camp? I also look at how the survivors made it did and who were the rescuers? I look at why was it that, the Jews were the most target group? I look at the reasons that motivated rescuers? I look at who is Anne Frank and what made her famous? Definition of Terms Holocaust; in this concept, holocaust has been taken to mean, Large scale destruction and killing of millions of Jews and other people by Adolf Hitlers Nazi Germany during World War II (Library.thinkquest.org par 6). Concentration camps; this were the places that most Nazis victims were being killed Rescuers; are those who, at great personal risk, actively helped members of persecuted groups, primarily Jews, during the Holocaust in defiance of Third Reich policy (Rosenberg, par 4). Ghetto; these were tiny areas that were cordoned off by the use of barbed wire. Rationale This study is very important to me as a student as it is a partial fulfillment of my academic requirements as demanded the collage. Getting a better grade in this research will boost my overall academic grade in my cause. Nevertheless, after the completion of this research project, I will be equipped with lots of historical information concerning WWII, its causes, effects, participants as well as the victims. A part from all these, I will be acquainted with some more vocabularies that were used in history during first WWII. To the society this research will help them know that, those individuals who controlled the past will still control the future. In one way or the other, it will shape the way the society view the present, hence dictating the answers they will offer for the existing wars, problems and injustices. To the society in addition, this research paper will enable them to have the ability of looking back at World War II, and reflect on how the current leaders know the kinds of mistakes they ought not to make when dealing with conflicts. Without knowing how the Jews suffered due to their faith, where will the martyrs come from, they should such like a paper to strengthen their faith. Methodology This research paper addresses the question of Nazis Who Helped Jews Survive the Holocaust during WWII. The secondary source of data collection methods will be employed to ensure that the research carried out becomes successful. Materials from the library, internet and related research reports will be read and analyzed to provide the required data and information on the subject. Sampling strategies that will be used will include random sampling and stratified sampling strategies. In dealing with the ethical issues, the paper was approved by Ethical Approval board before data collection. This research anticipates the following limitations; time limitation, financial constrains, and the unreliability of secondary sources of data. Data Analysis At the time the WW1 started by the year 1914, Hitler was very ready to give out his life for the sake of German individuals. By that time, he was in the army for four years working as a messenger, and was fighting at the front line against Britain. At the end of it all, the Germans lost the war to their Allies. This made Hitler to be very angry for very long time after the defeat of German in the year 1919. It was too much unfortunate that, after the First World War, Germany was trying to come out of the effect in a desperate manner. Apart from this, there came Germany Great Depression. This rendered many individuals jobless and starving. In this terrible economic setting, Hitler made his way to power. In these desperate moments, the Germany people just needed any way out. As a result, Hitler ended up giving the German people lots of hope. Amongst his hopes, he ended up blaming partly the Allies who were the Britons, United States of America and France, for the poor condition that German was passing through as per that time. However, those were not the only parties that were blamed, there were others too. In his believe, German was beaten unfairly because the Jews betrayed them, which he described as being the evil partners of the Britons. He thought that, wealthy merchants and international bankers, which were majorly Jews, gave away all German secretes to Germans enemies. Due to this reason, Hitler hated and went a step higher to convince others to continue hating the Jews. In most cases, the victims of Nazis target included Jews, Gypsies, homosexuals, Jehovahs Witnesses, Communists, twins, and the disabled (Auschwitz.dk par 8). Amongst the, there were those who wanted to escape and hide from the Nazis, for instance the Ann Frank along with her family. There were those who were successful in escaping, but the majority was not. The victims as shown in appendix photo 1, that were captured were sterilized , underwent forced resettlement, family and friends separation, beaten, starved and or even death. The main victims were the Jews due the fact; they were hated most by Hitler and his Nazis. These Jews were not allowed to enjoy in theaters resorts or even swimming pools. They were given identity cards with which they had to work with them. The individuals were made to wear, the Davids star badge at any place they were going. There was a time further more, when Hitler set on fire the Jewish Synagogues, which were the place that the Jews went to practice their faith. In addition, Jews homes and businesses were all brought down to book. As an effect, there were no Jewish students who were going to schools, as they were stopped. In addition, there were curfews upon which the Jews were supposed to out, on top of these; they were not supposed to come in public places. At long last, some were forced back to there home land. The last resort for Hitler and his Nazis, were to bring sent to concentration camps. The victims were pushed out of their homes; especially the Jews were forcefully moved into smaller, overpopulated quarters in a very tiny section of the city. Such areas were cordoned off by the use of barbed wires, which were given the name Ghettos. In while in such places, every one was just waiting for a call that could be described as being dreaded, for resettlement. On their side, Jehovah Witness in German were also ban to undertake meetings when Nazis came to power, those who never bought the idea, were taken to concentration camps In the concentration camp, the Jews never lived happily waiting for their peaceful deaths. In this concentration camp as indicated in photo 2 in the Appendices, the treatments were too extremely cruel and very harsh. In such camp, they were no one feeling fine, this was based on the fact that, either some one was sick, starving, dying, and even a slavery laborer. Das result, thy ended up dying in many types of ways, for instance, sickness, starvation, being shoot by machinegun, or even overworking their bodies. There were instance where, others were being told to take shower; instead they ended up being killed. There was a time when they were tricked, and they all ended up in a gas chamber, as a result, they all died, but never did Nazis and other Germans did care (Concentration Camp par 20). Though the conditions were too tough to bear, there were those few who managed to survive. Amongst the survivors, sensed danger, or left to their homes forcefully, meaning that, they will never see their friends or families again. In addition, some survived because they were always a head of Nazis, and had lots of good luck. Life from hiding places was always a struggle, as most were just always in terror of being caught, as mostly were being constant found, hence the chances for escaping were too slim. On the other hand, another reason for terror in hiding places was that, the impact of being caught in hiding was just death, nothing else. It will be too bad to end the list of victims without mentioning Anne Frank. This was a girl from Jewish side, who survived till very end of WWII. After her family received a notice notifying them to hide, she ended up getting a diary. When they were in hiding, she went with her diary to the hiding place. Everyday, she kept on writing in it how she felt about the situation, and it felt to being in being in such a position. Just before the war ended, in 1944, Nazi found their hiding places, courtesy of some Germans who also disliked Jews. At the age of 16, in 1945, she died in a concentration camp. Latter, her diary was found, and currently, has become a book of all terrifying conditions that she underwent through. This book is now called The Diary of Anne Frank. There were those who survived due to many different techniques. There these who made it on the prospect of setting their eyes on their families, and they constantly held it in their minds. On the other hand, there were those who made it as a result of getting favors from upper Jews heading prisons such seniors could at least get extra food. Others used the technique of thievery. Such individuals stole food that was lying dead from their beds. Such thievery in a way can be called ethical stealing, which made some senses. If for sure they were going to die, way waste that particular bread. There were those who had their own luck, narrowly did they escaped all perilous barriers, and ended up being rescued by the Allies. The process of rescuing the Jews was undertaken by individuals who took a step ahead to act according to their own conscious and belief systems, while staying in an immoral community. Millions survived such holocaust incidence due to daring of such rescuers. However, their statistical number was too small. Rescuers were peasants and nannies, aristocrats and clergy, bakers and doctors, social workers and storekeepers, school children and police officers, diplomats and grandmothers. They were from many countries-the Netherlands, the Ukraine, Poland, Germany, France, Hungary, Denmark, Italy, Greece, Belgium and other nations (Fcit.usf.edu par 2). Such individuals never looked at Jews a long with other victims as being enemies, but just as other human beings. To be involved in a rescue process, one had to accept the consequential responsibility that might follow. For instance, their houses were even burned down, for instance in figure 3, after being realized that, they were assisting the Jews and other targeted groups. The rescuers had various reasons for doing so, for instance, the sense of morality motivated them, while others had some relation with particular individuals belonging to the targeted groups. There were those whose engine was politics, as they were the third Reich. There were those who were being involved as workers, for instance, nurses, diplomats, social workers among others, and extended their work beyond professional duties. Many children o the other hand followed the footsteps of their parents, hence becoming rescuers. Conclusion The reason as to why Jews were the main victims in the situation is because; it was believed that they betrayed the Germans during the First World War. Most of them were taken to concentration house where life was so miserable to an extent that, no one was left to die in peace, there were lots of troubles. The survivors in the concentration camp had lots of survival techniques; most of them were brave, determined and so cunning. They never cared on what they had to do to survive, as if thy miss out, they will end up losing. On the other hand, there were some victims who survived due to the mercy of rescuers. The rescuers were motivated by the spirit of humanity in the world of immorality. Work Cited Auschwitz.dk. Anne Frank: An Oasis of Innocence. 2002. 28 March 2011. . Concentration Camp. New Standard Encyclopedia, 1987. Resnick, Abraham. The Holocaust. San Diego: Lucent Books Inc., 1991. Library.thinkquest.org. The Holocaust: An Unbelievable Tragedy . 2002. 28 March 2011. . Rosenberg, Jennifer. The Holocaust. 1997. 28 March 2011. . Fcit.usf.edu . Rescuers. 2005. 28 March 2011. . Appendices Figure 1: Former prisoners of the little camp in Buchenwald. (Photo courtesy USHMM) from http://history1900s.about.com/od/holocaust/tp/holocaust.htm Figure 2, Firing squad wall at Auschwitz. From http://library.thinkquest.org/CR0215466/the_holocaust.htm Figure 3 from http://history1900s.about.com/od/holocaust/tp/holocaust.htm

Blade Runner :: Art

Blade Runner The plot of the movie â€Å"Blade Runner† becomes unrevealed till the end of the movie. Many assumptions about the plot and the final of the movie appear in the spectator’s mind, but not one of these assumptions lasts long. Numerous deceptions in the plot grip the interest of the audience and contribute for the continuing interest to the movie eighteen years after its creation. The main character in the movie is Deckard- the Blade Runner. He is called for a special mission after his retirement, to â€Å"air up† four replicants who have shown flaws and have killed people. There are many arguments and deceptions in the plot that reveal the possibility Deckard to be a replicant. Roy is the other leading character of the movie. He appears to be the leader of the replicants- the strongest and the smartest. Roy kills his creator Tyrell. The effect of his actions fulfils the expectation of the spectator for a ruthless machine. The main deception in the plot is also the main cause that holds the identity of the blade razor  ­Deckard, unrevealed through the continuance of the movie. The first assumption that comes to the mind is that Deckard is not a replicant because he is the one that Bryant calls to hunt replicants. But there also appears the question what makes him the most proper to oppose the consummate replicants. The possibility Deckard to be a replicant makes him the worthiest person for the assignment. Deckard recommends Holden who is also a replicant assuming the words of Bryant -â€Å"He can bread okay as long as no one unplugs him†. In most of the chapters Deckard acts as a human being. He has feelings for Rachael, and later in the movie he is the one that shows her how to behave in action for which she is not programmed for. Because Rachael saves his life Deckard doesn’t accept her like a replicant, which he has to hunt. On the other side if Deckard was a replicant older product ion than Zhora, he shouldn’t be smarter than Zhora and to recognize her because of sexual context. The effect of deception in the plot about Deckard’s identity awakes the imagination of the spectators and keeps interest in the plot. Another form of deception in the plot is Roy’s behavior at the final of the movie. Roy who killed Tyrell, Sebastian, and the man in the eye laboratory with unusual enjoyment, shows weakness and helps Deckard to survive.

Buying an Existing Website :: Sell Website

Buying an Existing Website Have you considered being your own boss, creating your own financial independence and making your own dreams a reality? You're not alone, owning your own business is the "American dream". But the reality is that buying a business is a serious financial and personal commitment that requires an understanding of what makes a business successful. All too often, new owners jump blindly into a business venture, overwhelmed by the tremendous workload of starting a business from the ground up. A government survey shows that 60% of new businesses fail within the first three years. An existing, established business that is purchased by a new owner shows a minimal failure rate. If you have considered the thought of owning your own business, buying an existing business has many advantages over building a business from scratch: You can review actual operating results, rather than projected results. You get immediate cash flow from the ongoing business activities. You will have trained employees in place. You will have established suppliers. You will have established customers and referral business. You will have existing licenses and permits. The seller will train you in operating the business. In most cases, the seller will provide the financing you need to buy the business. SUNBELT Business brokers know the reasons a good business succeeds. SUNBELT itself is a franchise that ranks number one in the business brokerage industry. SUNBELT has over twenty years of matching the right business opportunity with the right buyer. It's that simple. From understanding the reasons an on-going business can provide a positive cash flow, to the value of an established name, location and customer base to the inner workings of new owner financing and sealing the deal - SUNBELT can make your dreams reality. With the right negotiations, a business can actually pay for itself - let SUNBELT show you how. Confidentiality Unlike the sale of real estate or franchises, the sale of an on-going business is very confidential for both the seller and the prospective buyer. All inquiries are held in strict confidence. Meetings and information shared or observed are to be held in strict confidence. To ensure confidentiality for all parties, SUNBELT brokers require a confidentiality agreement to be signed. In return for granting you, the prospective buyer, access to investigate the operations of the seller's business and otherwise private information, the prospective buyer promises to use the information for the sole purpose of evaluating the benefits and risks of purchasing the seller's business in strict confidence.

Motivation other than Money in the Workplace Essay -- Business Managem

The Motivation of Money Many people believe that they are motivated by earning money, but this is not always completely true as there are many other factors such as the conditions of the workplace and the need to be appreciated. There are many arguments that are both for and against money being the key motivator in the workplace. Some argue that being paid a good salary is important in attracting employees to a job and helps to keep them in the job. Although this money can become less of a motivator once the employee has been working for a time and the pay has become routine and expected. Although money may not be the only motivator in the workplace, it is the basis for the attitudes and behaviours of employees. If an employee feels they are being well paid and rewarded financially for their hard work and any extra effort, then they will be more likely to work hard and strive to gain these financial rewards. However if an employee is unhappy with the money that they are receiving for their work then it will be very difficult for them to be motivated in their work. One other view that supports money being a key motivator is that people feel that they are highly valued if they are receiving a decent salary. The higher their salary the more valued they feel within the organisation and so the more likely they are to work hard in their job and be motivated in their work. Cash awards can be a very effective way of motivating employees to meet targets and excel in their work. McGregor's theory of the reasons why people work shows that using these sorts of 'carrot' methods of motivating employees are often successful with the Th... ...ir needs have been met at a lower level before moving upward. For example, a person will not be motivated by love until they have had both their physiological and security needs met. Maslow's Model So in conclusion it is not always money that motivates, as although for a lot of people it is money that drives them this is not always the case. Money does however provide people with the ability to make choices and improve their quality of life. In order to motivate people, you need to find out what their wants are. It may be money, but this may not always be the case. People are motivated by a variety of items. It is the responsibility of the manager to find people's individual wants. In order to have motivated workers it is important for a manager to try to meet and attempt to satisfy these needs in some way.

Islamic Economic System

INTRODUCTION Islam is a complete code of life which offers its own social, political and economic systems to guide human behavior in all spheres of life. History has recorded that the economic system of Islam, for the first time in the world had established social and economic justice during the period of al-Khilafah al-Rashidah. In any ideal Muslim society, socio-economic justice is considered as one of the most significant characteristics for the social, political, and economic as well as all realms of human interaction.Exploitation and any source of unjustified enrichment in Islam are prohibited. The Holy Qur’an has emphatically instructed Muslims not to acquire each other’s property wrongfully. Islam is not an ascetic religion. It takes a positive view of life as the natural outcome of the belief that human beings are the vicegerents of Allah (Swt). The conditions for interest/riba has been laid down as increase in principal amount and increase with respect to payme nt period, the more period causes more increase. Interest/riba has been categorized into two types.After describing interest/riba and its types, reasons have been sought for prohibition of interest/riba from Quran referring to Surah Al-Rum-39, Surah Al-Nisa-161, Surah Al-Imran 130-2 and Surah Al-Baqrah 275-281. Help from Hadith (Muslim, Ahmed, Tirmidhi and Ibn-e-Majah) has also been sought. Interest/riba generates various evils like moral evils, social evils and economic evils. The goals of socio-economic justice and equitable distribution of income and wealth are integral parts of the moral philosophy of Islam.However, one of the socio-economic reforms made by Islam was the prohibition of riba (interest). About the efficacy and usefulness of the prohibition of interest in Islam, Muslim economists have tried to provide the juridical clarity and support based on reason, as opposed to mere belief. The purpose of this paper is to spell out the meaning of riba or interest, its different kinds, and the social, moral, as well as economic rationale of its prohibition.The central feature of an Islamic financial system is the absolute prohibition of the payment and receipt of interest. Thus, countries that have chosen to bring their economic systems into closer accordance with the rules prescribed by Islamic law have had to restructure their banking Systems to conform to the restriction on interest based financial transactions. One of the main subjects in Islamic economy is study on ration of usury to currency devaluation compensation.In Iran which average inflation rate has been 20% during the last 30 years (that is prices have been averagely multiplied by 240 in the last 30 years) on the one hand and currency devaluation compensation is regarded usury on the basis of traditional definition of usury on the other hand, the fact that devaluation compensation is considered as usury causes the holders of interest free deposit to face continual and evident devaluation and then cause the holders of fixed salary and cash asset to have zero purchasing power over time and some will benefit (including government and then owners of estates) and some will lose.The incurred loss will be the same as the benefit of some beneficiaries leading to poverty of the poor and wealth of the rich and violation of rule of dominance in private ownership. On the basis of traditional jurisprudence, compensation for currency devaluation is regarded the same as inflation rate and non compensation will lead to undesirable consequences.In this article, this traditional attitude has been challenged and we can say that compensation for decrease of purchasing power which is the same as inflation rate is not only usury but also necessary with regard to economic changes in the current era and this is closer to justice recommended in religious law. With regard to the mentioned material, importance of currency devaluation compensation is made evident.In fact, this article seeks to ans wer this question whether currency devaluation compensation is one of the usury evidences or not and if it is necessary to compensate it in transaction (especially in term transaction)?. Substantive hypothesis of this research is that compensation for purchasing power decrease in transaction (especially in loan) is necessary. Much has been written on the interpretation of the term â€Å"interest/riba†, Interest on the wisdom underlying its prohibition, on its economic and social implications and on the practical aspects of the Islamic economy which is supposed to work without interest.It is explained that the people not conversant with principles of Islam and economic philosophy of Islam believe that elimination of interest/riba from banks and financial institutions makes them charitable, rather than commercial concerns which offer financial services without a return. This is their wrong assumption that interest free loan is meant for cooperative and charitable activities and not normally for commercial transactions. It is clear that elimination of interest from financial activities does not mean that lender cannot earn profit.If financing is made for commercial purpose, it can be based on the concept of Musharakah and Mudarabah. Islam animated novel systems which were beyond the reach and perception of human beings to think and develop. LITERATURE REVIEW Much has been written on Interest and its evils. Prohibition of interest in Islam is basically is an effort to prevent the society from the evils of interest. Interest free economy is an ideal economic system, model of which is presented by Islam through Qur’an and Hadith.Prophet Muhammad (S. A. W) laid down the basis of interest free economic system 1400 years ago and Khulfa-e-Rashidain carry that work and establish an economic model that is role model for today’s economists and for those who are contributing their efforts for establishing an Interest free economic system. Regarding subj ect matter in the present article which studies relationship between them, the related literature (except Qur’an & Hadith) relates to the recent 30 years.Islamic prohibited Interest as Qur’an Said: â€Å"Allah deprives riba of all blessing and develops charity† (Al-Baqara-276) â€Å"The interest that you give in order to increase the wealth of the people, does not increase in the sight of Allah† (Al-Rum-39) Basic concept of Interest/riba is explained by Qur’an, Hadith, Islamic and other scholars in an easy way. Fourth Revelation (Surah Al-Baqarah, verses 275-281) â€Å"Those who devour riba will not stand except as stands one whom the evil one by his touch hath driven to madness. That is because they say: â€Å"Trade is like riba†.But Allah hath permitted trade and forbidden riba. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge). But those who repeat (the offence ) are companions of the fire; they will abide therein (forever). †(275) Allah further said: â€Å"O you who believe, observe your duty to Allah and give up what remains (due) from interest, if you are believers. But if you do not do it, then be warned of war from Allah and His messenger; and if you repent, then you shall have your capital.Do not exploit and be not exploited. † (2:278-279). The Holy Prophet (S. A. W) has advised Muslims to avoid seven harmful things and the third among these is interest, He stated,' although interest brings increase, yet its end tends to scarcity’. From Jabir (RAA) The Prophet, (PBUH) may curse the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: â€Å"They are all alike [in guilt]† (Muslim, Tirmidhi and Musnad Ahmad).From Abdullah Ibn Hanzalah (RAA) the Prophet (PBUH), said: â€Å"A dirham of riba which a man receives knowingly is worse than committing adultery thirty six times† (Mishkat al-Masabih, Kitab al Buyu, Bab al riba, on the authority of Ahmad and Daraqutni). Bayhaqi has also reported the above Hadith in Shu’ab al-imam with addition that â€Å"Hell befits him whose flesh has been nourished by the unlawful. † From Abu Hurayrah (RAA): The prophet, (PBUH), said: â€Å"There will certainly come a time for mankind when everyone will take riba and if he does not do so, its dust will reach him. Abu Dawud, Kitab al Buyu†, Bab fi ijtinabi al-shubuhat; also in Ibn Majah) From Abu Hurayrah (RAA): The Prophet, (PBUH), said: â€Å"God would be justified in not allowing four persons to enter paradise or to taste its blessings: he who drinks habitually, he who takes riba, he who usurps an orphan’s property without right, and he who is undutiful to his parents† (Mustadrak al-Hakim, Kitab al-Buyu) Above illustrated Verses from Holy Qur’an and Hadith explain the meanings and its status in Islam.Prohib ition of Riba Act 1997 states that riba is an stipulated payment over and above the principal amount lent in consideration of the time given for repayment, either on simple or compound basis or any discount given on assignment of debt or any financial paper representing money. Chapra (1985) explains that â€Å"Riba literally means increase, addition, expansion or growth†. Even among secular literature, one finds criticism on interest. Aristotle (384-322 BC) in his book â€Å"Politics† criticized interest in following words â€Å"Of all modes of getting wealth, this is the most unnatural†.In value neutral economics too, we find criticism on interest. Keynes (1936, p. 377) in his monumental work â€Å"General Theory of Income, Employment, Interest and Money† reasoned in following words: â€Å"Interest to-day rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the own er of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce†.Tahir (1999) describes that riba is a discrepancy which results from the contractual obligations of a party in the context of a direct exchange of items of the same general kind (such as loan transaction) bet ween two parties. Encyclopedia American International Edition (1970) expresses the meaning of interest that it is a charge for the use of money. Interest has not always been considered legitimate or even moral payment. Until the end of middle ages, any charge for a loan was general considered to be usury.Teachings of Christian, Judaic and Islamic religion, all condemned in varying degrees, the taking of interest, in more recent times, however, usury has come to be regarded as only the charging of illegal rates of interest. â€Å"The interest that you give in order to increase the wealth of the people, does not increase in the sight of Allah; and the Zakat that you pay in order to win Allah’s approval, its payers do indeed increase their wealth† (Surah Al-Rome no. 39)(Shafi and Usmani, 1997, p. 67).It is beautiful and powerful statement from Quran which shows that interest is prohibited by God because it can only increase the wealth of individual not the society.  "Exclusion of interest from financial activities does not necessarily mean that the financier cannot earn a profit. If financing is meant for a commercial purpose, it can be based on concept of profit and loss sharing, for which Musharakah and Mudarabah have been designed since the very inception of Islamic commercial law† (Usmani, 2005, p. 10).It is wrong and confused concept in the society about the operation of the Islamic banking system but Islam provides an alternative system where everyone contributes their share of investment and earns profit. In case of losses all the parties of contract suffer according to their agreed terms and conditions. Islamic financial system is being only successful if all the financial activity will be performed according to Islamic financial law Islamic banking is a very strong sector of interest free economy; Islamic anking can be a true alternative of conventional banking. The Organization of Islamic Conference (OIC) defined an Islamic bank ing as â€Å"a financial institution whose statutes, rules and procedures expressly state its commitment to the Principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations† (Hassan, 1999, p. 60). According to this statement it is clear that interest is fully prohibited in Islamic law due to its bad effects on human being and more badly effects on overall society and economy.In an interest based economy a trend arises that rich people create the methods to increase their wealth through effecting the middle and lower classes. In interest based economy the middle class cannot contribute positively in economic system then gradually the economy travel toward financial crises such as credit crunch. An Islamic bank is an intermediary and trustee of other people’s money with the difference that it shares profit and loss with its depositors.In practice the most Islamic banks have an organizational set-up very matched and simi lar to their conventional counterpart banks (Dar and Presley, 2000). â€Å"Islamic banking is phenomenally profitable because, although its underlying funding mechanism is the same as conventional banking, its default experience is better, and its charges higher and less transparent† (Cook, 2006, p. 16). It is resulted from above statements that Islamic banking is not totally different from conventional banking.They are doing same practice such as saving deposits and consumer finances but there are some fundamental differences of its practice and objectives. Islamic banking is interest free and its main objectives are the equal distribution of wealth, decreasing the poverty and increasing the investment opportunities. It is very beneficiary for Muslim population who want to solve all their financial matter according to their religion. Because a number of Islamic and some high street commercial banks from all over the world offer products and services that are according to Sha riah compliant (www. tandardchartered. com). Islamic and traditional banking actually are not different. The both banking system has same objectives and practice the only difference of implementation of interest because interest is totally prohibited in Islam. Islamic banking falls into the realms of conventional banking; Islamic banking try to ensure that all their financial matters according to Islamic financial law as well as the rules and regulations of a articular state like the Financial Services Authority (FSA) in the United Kingdom (Shanmugam, Perumal and Ridzwa, 2004). Islamic banking almost provides same services as conventional banking such as current accounts, saving accounts, insurances, mortgages and investment opportunities in the society. Regarding usury or currency devaluation and its related issues, there are abundant economic literatures. Its reason is that this subject has not been raised as main and serious subject in the past.In Sunnite world, the above issue h as not been seriously raised. Perhaps, the main reason is that this issue becomes important in the country like Iran which usury free banking has been executed completely due to close relationship between currency devaluation compensation and usury free banking. In fact, by study on history of Islamic banking in world of Islam especially in literature of Sunnites, we notice that history of Islamic banking is divided into two periods: firstly, when it has been raised as an ideal form and secondly, when it has been realized.Principle of attention to usury free banking idea is found in book Anvar Eghbal Goreishi (1946) (Naem Sadighi 1948) and Mohammad Ahmad (1952) and consequently, professional elaboration of Mododi in 1950(1961) and writings of Mohammad Hamidollah in 1944, 1955, 1957 and 1967 are included in this group. In all of these works, bailment means participation on the basis of profit and loss was suggested as main mechanism for usury free banking idea (Abdul Ghafoor, 1955). In the next two decades, usury free banking attracted many attentions; efforts of researchers about this subject started in this period.The first works related to Mohammad Azir (1955) and afterward, Abdullah Arabi (1967), Nejatollah Sadighi (1961, 1969) and Alnajar (1971) and Sadr (1961, 1974) published works in this field in late 1960s and early 1970s (Sadighi 1997, P222). These governmental efforts and assistances led to application of theory in reality and the first usury free bank i. e. Islamic Development Bank was born out of this process in 1975. Afterward, different researches were published in the field of usury free banking.Works done by Mir Akhor (1989), Farokh Omar(1985), Khan (1986), Asif Ahmad (1997), Motahari(1403 AH), Mosaei(1998, 1999, 2001, 2003, 2004), Adib Soltani (1996, Bakhtiari (1996), Beheshti (1989), Taskhiri (1996), Tootonchian(2000) , Davoodi (1995), Marzban(1977), Mesbahi (1997), Hedayati (1996), Yousefi (1998), Arif Mohammad (1988) and Musai (1997, 2001) belong to this category. The first private usury free bank was Dubai Islamic bank which was established in 1975 by a group of Muslim merchants from many countries. Afterward, two other private banks called Feisal Islamic Bank was established in Egypt and Sudan.In the same year, Kuwait government established Kuwait Finance House. But before this date, usury free banking has been available in small and limit scale such as banking in Malaysia in the middle 1940s and another one in Pakistan in the late 1950s. With regard to these experiences, Naser Social Bank was established in 1972 which is available now and its goals are social rather than commercial. During the next 10 years, more than 50 usury free banks were formed out of establishment of the first private commercial bank in Dubai. Most of these banks are in Muslim countries.But many are available in West Europe in Denmark, Luxemburg, Switzerland and England. In 1983 and 1984, many banks were established but afterward, the number of these banks has decreased. METHODOLOGY Since this study was secondary data based, no primary data collection methods were followed. Data was collected from various scholarly articles related to studies. Books on Islamic economics were also consulted and considered for data collection. Data related to Zakat, usher, fidia, jizia and charity was collected from Qur’an and Hadith. And authenticity of data was confirmed by Ulma so that any misconception could be prevented.Scholarly articles and related studies were carefully studied and most related data was taken for report. After rigorous study of literature available, a comparative analysis of various sectors of economy was performed. Comparison of Zakat and tax, conventional and Islamic banking, monetary and fiscal policy and also a brief discussion of inflation is included. After comparative analysis and deep discussion of data collected an effort is made to develop an interest free economy model in Pakistan. COMPARATIVE AN ALYSIS Much has been written on the interpretation of the term â€Å"interest/riba.We have expand our discussion more and try to explain the meanings of interest, its implications in different sector of economy and also try to produce free model of economy, sector wise. INTEREST Interest is the money paid for the use of money lent, or for delaying the repayment of a debt. The economy today is based on the system of interest. It has its merits and demerits, but if we analyze it in accordance with the Islamic injunctions and teachings, then we come to realize that this system of interest is not viable for the Muslims, and it undermines the human and cultural values.Interest is the basis of modern capitalism. It is completely opposite to Zakat. Zakat channels wealth from the rich to the poor while interest takes away wealth from the poor and hands it over to the rich. Modern economics are so inter-linked with interest that people may think it is impossible to go without it. The situat ion is really very complex. But, we must aim at getting rid of interest. Unless people fight against the tyrant rulers and establish an Islamic state -the problems will still be there. Further, until Islamic state established, it will make us feel impossible to solve this riba (interest) problem.Allah SWT has not imposed on us something impossible. An interest-free economy will be a boon for all peoples of the world. INTEREST and ISLAM Interest (riba) has been vehemently disapproved in Islam. Islam prohibits all transactions involving interest. This prohibition is for all interest-based transactions, whether giving or receiving, whether dealing with Muslims or non-Muslims. It is reported that the Prophet Muhammad (peace be upon him) cursed those who pay interest, those who receive it, those who write a contract based on it, and those who witness such a contract. Interest is neither a trade nor a profit.It is a means of exploitation and concentration of wealth. PROHIBITION OF INTERES T IN QURAN AND SUNNA’H â€Å"They say, trade is like interest and Allah has allowed trade and prohibited interest. † (2:275). â€Å"Whatever you pay as interest, so that it may increase in the property of (other) men, it does not increase with Allah. â€Å"(30:39). â€Å"O you, who believe, do not take interest, doubling and quadrupling, and keep your duty to Allah, so that you may prosper. † (3:130). â€Å"O you, who believe, observe your duty to Allah and give up what remains (due) from interest, if you are believers.But if you do not do it, then be warned of war from Allah and His messenger; and if you repent, then you shall have your capital. Do not exploit and be not exploited. † (2:278-279). â€Å"Those who devour usury will not stand†¦. Allah has permitted trade and forbidden usury†¦. Allah will deprive usury of all blessing, but will give increase for deeds of charity†¦. † (Qur'an 2:275-6) The Holy Prophet of Islam has advi sed Muslims to avoid seven harmful things and the third among these is interest, He stated,' although interest brings increase, yet its end tends to scarcity’.In several verses of the Holy Qur’an, Allah (Swt) has mentioned the consequences of riba. The Qur’an did not declare the prohibition of riba in the early stage of revelation; rather we find that the complete prohibition of interest came sequentially. In the Qur’an Allah (Swt) says: â€Å"That which ye lay out for increase through the property of (other) people, will have no increase with Allah: But that which ye lay out for charity, seeking the countenance of Allah (will increase): it is these who will get a recompense multiplied†. 30:39) â€Å"That they took riba (usury), through they were forbidden and that they devoured men’s substance wrongfully – We have prepared for those among men who reject faith a grievous punishment. † (4:161) â€Å"O ye who believe! Devour not usury doubled and multiplied; but fear Allah, that ye may (really) prosper. † (3:140) â€Å"Those who devour usury will not stand except as stands one whom the evil one by his touch hath driven to madness. That is because they say: ‘Trade is like usury. ’ But Allah hath permitted trade and forbidden usury.Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge). But those who repeat (the offence) are companions of the fire, they will abide therein (forever)† (2:275) â€Å"O you who have attained faith! Remain conscious of God, and give up all outstanding gains from Usury, if you are (truly) believers†. (2: 278) TYPES OF RIBA Although the Qur’an did not specify any particular kind of riba, it is generally held that the word al-riba in the Qur’an is that kind of dealing which had been in vogue during the pre-Islamic days.Muslim jurists have classified riba in two type s: 1. riba al-nasi’ah, and 2. riba al-fadal. Riba al- Nasi’ah The term nasi’ah means to postpone or to wait and it refers to the time period that is allowed for the borrower to repay the loan in return for the addition of the premium. Hence it refers to the interest on loans. The prohibition of riba al nasi’ah essentially implies that the fixing in advance of a positive return on a loan as a reward for waiting is not permitted by the Shari’ah. Hadith on Riba Al-Nasi’ah 1) From Usamah Ibn Zayd (RAA): The Prophet, (PBUH), said: â€Å"There is no riba except in Nasi’ah [waiting]. (Bukhari, Muslim and Musnad Ahmad) â€Å"There is no riba in hand to hand (spot) transactions: (Muslim, and Nasa’i). 2) From Ibn Masud (RAA): The Prophet, (PBUH), said: â€Å"Even when interest is much, it is bound to end up into paltriness. † (Ibn Majah and Musnad Ahmad) 3) From Anas Ibn Malik (RAA): The Prophet, (PBUH), said: â€Å"when one of you grants a loan and the borrower offers him a dish, he should not accept it; and if the borrower offers a ride on an animal, he should not ride, unless the two of them have been previously accustomed to exchanging such favors mutually. (Sunan al-Bayhaqi) 4) From Anas Ibn Malik (RAA): The Prophet, (PBUH), said: â€Å"if a man extends a loan to someone he should not accept a gift. † (Mishkat, on the authority of Bukhara’s Tarikh and Ibn Taymiyyah’s al Muntaqa) Riba al-Fadal Islam, however, wishes to eliminate not merely the exploitation that is intrinsic in the institution of interest, but also that which is inherent in all forms of unjust exchange in business transactions. Riba al-fadal is the excess over and above the loan paid in kind.It lies in the payment of an addition by the debtor to the creditor in exchange of commodities of the same kind. The following tradition of the Prophet Muhammad (saw) is cited as evidence. It is related that Abu Said al-Khurdi said: â€Å"the Prophet Muhammad (saw) has said that gold in return for gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt, can be traded if and only if they are in the same quantity and that is should be hand to hand. If someone gives more or takes, then he is engaged in riba and accordingly has committed a sin. Islam is a complete code of life which offers its own social, political and economic systems to guide human behavior in all spheres of life. History has recorded that the economic system of Islam, for the first time in the world had established social and economic justice during the period of al-Khilafah al-Rashidah. In any ideal Muslim society, socio-economic justice is considered as one of the most significant characteristics for the social, political, and economic as well as all realms of human interaction. Exploitation and any source of unjustified enrichment in Islam are prohibited.The Holy Qur’an has emphatically ins tructed Muslims not to acquire each other’s property wrongfully. Islam is not an ascetic religion. It takes a positive view of life as the natural outcome of the belief that human beings are the vicegerents of Allah (SWT). Hadith on Riba Al-Fadal 1) From Umar Ibn al-Khattab (RAA). The last verse to be revealed was on riba and the Prophet, (PBUH), was taken without explaining it to us; so give up not only riba but also raibah [whatever raises doubts in the mind about its rightfulness]. (Ibn Majah,) International Journal of Humanities and Social Science Vol. No. 6 [Special Issue – March 2012] 149 2) The Prophet, (PBUH) said, â€Å"Sell gold in exchange of equivalent gold, sell silver in exchange of equivalent silver, sell dates in exchange of equivalent dates, sell wheat in exchange of equivalent wheat, sell salt in exchange of equivalent salt, sell barely in exchange of equivalent barley, but if a person transacts in excess, it will be usury (riba). However, sell gold for silver anyway you please on the condition it is hand to hand (spot) and sell barley for date anyway you please on the condition it is hand to hand (spot)†. ) From Abu Sa’id al-Khudri (RAA): The Prophet, (PBUH) said, â€Å"Do not sell gold for gold except when it is like for like, and do not increase one over the other; do not sell silver for silver except when it is like for like, and do no increase one over the other; and do not sell what is away (from among these) for what is ready. † (Bukhari, Muslim, Tirmidhi, Nasa’i and Musnad Ahmad) 4) From „Ubada Ibn al-Samit (RAA): The Prophet, (PBUH), said: â€Å"Gold for gold, silver for silver, wheat for wheat, barely for barely, ates for dates, and salt for salt-like for like, equal for equal, and hand to hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand to hand. â€Å"(Muslim and Tirmidhi) Impacts of Interest on Economic System The present money syst em, based on the payment of interest, is unsustainable. Compound interest leads to exponential growth, which can be seen as a cancer on our social and economic system, a pathological growth pattern leading towards either economic or ecological collapse of unprecedented proportions.Inflation is generally seen as a given and interest as a natural antidote to counteract it, while in fact interest is the major cause of inflation. Economic growth is needed at any cost, by continually increasing public and private debts. The interest system leads to an uneven growth of different sectors of the economy, indicating a severe sickness in the economic system. While the Net Income in Wages and Salaries rose 18 times between 1950 and 1995 in Germany, for instance, the Monetary Assets increased 461 times and the Gross National Product 141 times.The global volume of speculative monetary transactions, arbitrating on the variability of currency values, amounts 97 % of all transactions, with a mere 3 % being in real goods and services. The daily volume of trading exceeds $ 2,000 billion; all the currency and gold reserves in the world would only amount to the volume of seven to eight hours of trading! The interest system has devastating effects on the culture, ecology and society. It sucks up resources from regions with lower returns and redistributes them to the regions with high returns. EVILS OF INTEREST (RIBA)The following evils are explained below which are happened due to interest in the economy. Moral Evils Interest generates such vices as miserliness, selfishness and petty-mindedness. Charity on the other hand develops such virtues as self-sacrifice, sympathy and magnanimity. The former are certainly a form of regression and the latter are signs of progress. Social Evils A society in which selfishness and self-interest are the prime values and people instead of dealing with one another on the basis of consideration are bent upon taking advantage of the pressing needs of each other will always remain victim of chaos and disunity.In contrast, if members of a society are considerate and wish each other well, the society will make rapid progress. Economic Evils From an economic point of view interest results in even more serious losses. Following are some of the highlighted areas: I) Interest and Investment According to Lord Keynes capital investment depends on the one hand on the rate of interest and on the other on MEC (Marginal Efficiency of Capital). The process of investment in a country will continue as long as MEC is higher than the interest rate or at least at par with it.As soon as MEC falls below the interest rate, the process of investment will come to a halt. This phenomenon may be illustrated by the following table: Investment| MEC| Interest Rate| 10 Million| 24%| 18%| 20 Million| 22%| 18%| 30 Million| 20%| 18%| 40 Million| 18%| 18%| Suppose the interest rate is 18% and an investment of Rs. 10 million is made on which the MEC is 24%. Sinc e MEC is higher than the interest rate, investment is profitable. So the process of investment will continue. Now an additional investment of Rs. 10. 00 million is made on which the MEC declines from 24% to 22%. Investment is still profitable.So the process of investment will continue until MEC is equal to interest rate. As the above table shows at an investment of Rs. 40 million the MEC is at par with the 18% interest rate. After that the process of investment will stop because MEC will fall below the 18% rate of interest. The investment will then be non profitable. At this point the only hurdle in the way of investment is the interest rate. Further investment will continue only if the interest rate is reduced. If the interest rate is decreased to zero, the process of investment will continue till the level of full employment is achieved.II) Interest and Price When interest (as compensation for capital) is used as a factor of production it becomes part of the cost of production. It s burden is consequently shifted to the consumer. Moreover, interest is not added to the price once only, but it continues to be added to the price at several stages. Take the case of manufacturing of cloth. In the first place, the farmer will add interest to the price of cotton. Interest will again be added to the cost of production of yarn. It will be added to the cost of weaving, then to the cost of dyeing and finally to the price of finished cloth.Thus at every stage of production, interest enhances the price of goods which is totally unjustified. Interest by increasing the real price manifold causes inflation. III) Interest and Distribution of Wealth The distribution of wealth in a society becomes inequitable due to interest. Interest is an overhead charge which does not form part of any factor of production. Interest is received by the capitalist who continues the use his wealth to earn more wealth. Hence instead of circulating in the society, wealth is concentrated in the han d of the capitalist class.This causes an unjust distribution of wealth in the society. In this way due mainly to interest the rich in the society get richer and the poor, poorer. In regard to the distribution of Wealth, Abdul Qadir Salim writes in the October 1997 issue of the Tarjuman-ul-Quran: â€Å"Now when there is no significant rival to the capitalist system, what is the situation in the world? In this age of free economy and privatization twenty per cent of total world population is still living below the poverty line and its share in the gross wealth of the world is only 1. 5%. The poor are getting poorer.Growing poverty is not the problem of the third world alone. The advanced countries face this problem too. Sixty per cent of world’s resources are controlled and consumed by the twenty per cent rich. The prestigious journal â€Å"The Economist dated 5th Nov. 1996† complains: Never during the last fifty years has there been such as large gap in incomes in Brit ain as there is today. In other industrialized countries also the gulf between the rich and poor has widened. International Journal of Humanities and Social Science Vol. 2 No. 6 [Special Issue – March 2012] 151 IV) Trade Cycle and InterestInterest creates trade cycles also. It plays a special role in bringing about a slump in the market. According to Hawtray’s Monetary Theory, the Banks issue loans with a free hand when the trade is brisk but as soon as signs of a slump appear they start of trade cycles recovery of the loans. In this way capital shrinks and the slump starts declining to its lowest level. V) Interest and Allocation of Resources Chapra (2000) expresses in Tarjuman-ul-Quran: Financial institutions operating on the basis of interest evaluate the resources of the applicants for a loan.They demand proper security to ensure that the borrower will not only return their capital but also an additional charge. How will the financial resources be utilized? This qu estion is not the basic and decisive factor in extending a loan. In this way financial resources flow either to the rich who can provide the requisite securities or to the Government which is considered to be immune to insolvency. Bank deposits are largely provided by various sections of the society. (It is estimated that eighty percent bank deposits in Pakistan are received from middle class and low income groups of the society).However, its advantages are largely monopolized by the rich class. The MEC varies according to the sector of investment. So, projects vital to national interest in which MEC is lower than interest rate will not attract investment. A society run on interest will shy away from investing money in those projects in which MEC is low. If interest is abolished investment will be available for every sector and project without discrimination. VI) Interest and Business The capitalist fixes his share (interest rate) at the time of investment in business.Since his prof it is guaranteed under all circumstances, he has no active interest in the business. He does not care if the business earns profit or incurs a loss. The running of business is entirely the responsibility of the management. A class of financiers thus comes into existence who supplies money and then sits idle. If interests are abolished, the financier class will take an active part in the economic struggle and the pace of economic development in the country will be accelerated. VII) Interest and Efficiency Interest has ill-effects on the efficiency of the people in general.The people who take loans to fulfill private needs are especially burdened with constant anxiety and mental depression. This condition has an adverse effect on their efficiency. Their interest in work is half-hearted because they are constantly nagged by the thought that a major portion of their earnings will got to pay the interest. Worry and depression weaken their physical health and their efficiency progressivel y deteriorates. VIII) Interest and Economic Instability Chapra (2000) states in Tarjuman-ul-Quran that interest destabilize the economy.The well-known American Economist Milton Friedman relates economic ups and downs to rise and fall in interest rate. A high rate of interest creates conditions of extreme uncertainty in investment market. It causes constant ups and downs in the gross profit (interest + profit) on total investment and makes it very difficult to take reliable decisions about long term investment. IX) Interest and International Loans The capitalist economy is virtually based on loans. So we can call it debt based economy. Individual or home consumption, private or public sector, economic activities in all spheres revolve round interest-based credit.The Special Issue on Behavioral and Social Science  © Centre for Promoting Ideas, USA www. ijhssnet. com 152 During the past two hundred years policies for economic development have used loans not only for physical developm ent but also as instruments for financial expansion. So through credit creation financial expansion has not only been made the most dynamic factor for the economy but has been accorded the greatest importance for achieving economic stability. The developing countries suffer heavy loss due to the dominance of interest-based economic order in the world.As debtors the developing countries have to tolerate the interference of the advanced countries in their internal affairs. Economically also the developing countries undergo a great loss because a large portion of their meager resources is utilized in returning loans with interest. ALTERNATIVES TO INTEREST Islam not only prohibits interest but also provides alternatives to it for doing business and transactions. These include the Mudarabah and Musharakah as explained ahead. MUDARABAH â€Å"Mudarabah† is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise.The investmen t comes from the first partner who is called â€Å"rabb-ul-mal†, while the management and work is an exclusive responsibility of the other, who is called â€Å"mudarib†. Business of Mudarabah The rabb-ul-mal may specify a particular business for the mudarib, in which case he shall invest the money in that particular business only. This is called al-Mudarabah-al-muqayyadah (restricted Mudarabah). But if he has left it open for the mudarib to undertake whatever business he wishes, the mudarib shall be authorized to invest the money in any business he deems fit.This type of Mudarabah is called ‘al-Mudarabah-al-mutlaqah’ (unrestricted Mudarabah) A rabb-ul-mal can contract Mudarabah with more than one person through a single transaction. It means that he can offer his money to A and B both, so that each one of them can act for him as mudarib and the capital of the Mudarabah shall be utilized by both of them jointly, and the share of the mudarib shall be distrib uted between them according to the agreed proportion . In this case both the mudaribs shall run the business as if they were partners inter se.The mudarib or mudaribs, as the case may be, are authorized to do anything which is normally done in a course of business. However, if they want to do an extraordinary work, which is beyond the normal routine of the traders, they cannot do so without express permission from the rabb-ul-mal. Distribution of the Profit It is necessary for the validity of Mudarabah that the parties agree, right at the beginning, on a definite proportion of the actual profit to which each of them is entitled. No particular proportion has been prescribed by the Shari’ah; rather, it has been left to their mutual consent.They can share the profit in equal proportions, and they can also allocate different proportions for the rub-ul-mal and the mudarib. However, they cannot allocate a lump sum amount of profit for any party, nor can they determine the share of any party at a specific rate tied up with the capital. For example, if the capital is Rs. 100000/- they cannot agree on a condition that Rs. 10000/- out of the profit shall be the share of the mudarib, nor can they say that 20% of the capital shall be given to rabb-ul-mal. However, they can agree on that 40% of the actual profit shall go to the mudarib and 60% to the rabb-ul-maal or vice versa.It is also allowed that different proportions are agreed in different situations. For example the rabb-ul-mal may say to the mudarib, â€Å"If you trade in wheat, you will get 50% of the profit and if you trade in flour, you will have 33% of the profit†. Similarly, he can say â€Å"If you do the business in your town, you will be entitled to 30% of the profit, and if you do it in another town, your share will be 50% of the profit. † Apart from the agreed proportion of the profit, as determined in the above manner, the mudarib cannot claim any periodical salary or a fee or remuner ation for the work done for him by the Mudarabah.All the schools of the Islamic Fiqh are unanimous on this point. However, Imam Ahmad has allowed for the mudarib drawing his daily expenses of food only from the Mudarabah account. The Hanafi jurists restrict this right of the mudarib only to a situation where he is on a business trip outside his own city. In this case he can claim his personal expenses, accommodation, food etc. , but he is not entitled to get anything as daily allowances when he is in his own city.If the business has incurred loss in some transactions and has gained profit in some others, the profit shall be used to offset the loss at the first instance, and then the remainder, if any, shall be distributed between the parties according to the agreed ratio. Termination of Mudarabah The contract of the Mudarabah can be terminated at any time by either of the two parties. The only condition is to give a notice to the other party. If all assets of the Mudarabah are in ca sh form at the time of termination, and some profit has been earned on the principle amount, it shall be distributed between the parties according to the agreed ratio.However, if the assets of the Mudarabah are not in the cash form, the mudarib shall be given an opportunity to sell or liquidate them, so that the actual profit may be determined. There is a difference of opinion among the Muslim jurists about the question whether the contract of Mudarabah can be affected for a specified period after which it terminates automatically. The Hanafi and Hanbali schools are of view that the Mudarabah can be restricted to a particular term, like one year, six months, etc, after which it will come to an end without a notice.On the contrary, Shafi’i and Maliki schools are of the opinion that the Mudarabah cannot be restricted to a particular time. However, this difference of opinion relates only to the maximum time limit of the Mudarabah. Can a minimum time limit also be fixed by the pa rties before which Mudarabah cannot be terminated? No express answer to this question is found in the books of the Islamic Fiqh, but it appears from the general principles numerated therein that no such limit can be fixed, and each party is at liberty to terminate the contract whenever he wishes.This unlimited power of the parties to terminate the Mudarabah at their pleasure may create some difficulties in the context of the present circumstances, because most of the commercial enterprises today need time to bring fruits. They also demand constant and complex efforts. Therefore, it may be disastrous to the project, if the rabb-ul-mal terminates the Mudarabah right in the beginning of the enterprise. Specially, it may bring a severe setback to a mudarib who will earn nothing despite all his efforts.Therefore, if the parties agree, when entering into the Mudarabah, that no party shall terminate it during a specified period, except in specified circumstances it does not seem to violate any principle of Shari’ah, particularly in the light of the famous Hadith, already quoted which says: â€Å"All the conditions agreed upon by the Muslims are upheld, except a condition which allows what is prohibited or prohibits what is lawful. † COMBINATION OF MUSHARKAH AND MUDARABAH A contract of Mudarabah normally presumes that the mudarib has not invested anything to the Mudarabah.He is responsible for the management only, while all the investment comes from rabb-ul-mal. But there may be situations where the mudarib also wants to invest some of his money into the business of Mudarabah. In such cases Musharakah and Mudarabah are combined together. For example, A gave to B Rs. 100000/- in a contract of Mudarabah. B added Rs. 50000/- from his own pocket with the permission of A. This type of partnership will be treated as a combination of Musharakah and Mudarabah.Here the mudarib may allocate for himself a certain percentage of profit on account of his investment as a sharik, and at the same time he may allocate another percentage for his management and work as a mudarib. The normal basis for allocation of the profit in the above example would be that B shall secure one third of the actual profit on account of his investment, and the remaining two thirds of the profit shall be distributed between them equally. However, the parties may agree on any other proportion.The only condition is that the sleeping partner should not get more percentage than the proportion of the investment. Now let’s see economy sector vise and analyze both interest based and interest free models. ISLAMIC TAXATION SYSTEM Zakat and Tax Zakat and tax are two systems that are used for the monetary benefits of the people. In this topic we will compare the two systems. Zakat Zakat is one of the five pillars of Islam. The word Zakat means both ‘purification' and ‘growth'. Zakat occupies a central position in the economic system of Islam.One of the most impor tant principles of Islam is that all things belong to God, and that wealth is therefore held by human beings in trust. Our possessions are purified by setting aside a proportion for those in need, and, like the pruning of plants, this cutting back balances and encourages new growth. Zakat does not only purify the property of the contributor but also purifies his heart from selfishness and greed. It also purifies the heart of the recipient from envy and jealousy, from hatred and uneasiness and it fosters instead good-will and warm wishes for the contributors.As Muslims pay the Zakat they have the genuine feeling that it is an investment and not a debit helping to establish economic balance and social justice in the society. Compulsory payment of Zakat is one of the main principles of an Islamic economy. Every Muslim who owns wealth more than his needs must pay the fixed rate of Zakat to the Islamic state. Zakat is a means of narrowing the gap between the rich and the poor. It helps t he fair distribution of wealth. It is a form of social security.The Islamic state is responsible for providing the basic necessities of food, clothing, housing, medicine and education to every citizen. No-one should have any fear of insecurity or poverty (9:69, 103, 98:5). Primarily the root denotes an increase or augmentation (particularly of a positive, favorable or auspicious thing or virtue). Some also say that it means â€Å"to purify†. However, in the Quran AZKA has been used along with ATHAR in 2:232. The root, T-H-R (ta-ha-ra) from which the word ATHAR is derived, has the meanings â€Å"to purify† but the meanings â€Å"to increase, grow, thrive, augment etc. are the primary significations of the root Z-K-W. TAHARA is a negative virtue which signifies being free from dirt, filth or derogatory things. ZAKA is a positive virtue which signifies positive growth and development. The following phrases further clarify the signification of the root Z-K-W. * Zakat-il-a rdh means the land throve or yielded increase * Zakat-al-ghulam means the boy grew or throve * Al-ilmo yazkoo Alal infaaq means the knowledge increases by spending * Zukkoo means he enjoyed or led a plentiful and a pleasant or an easy, and a soft or delicate life.OR he was in a state of abundance of the goods, conveniences or comforts of life OR he enjoyed a life of increase or plenty. * Zaka means increase or augmentation or growth or development. The term aatozakaat appears in the following verses: 2:43; 2:83; 2:110; 2:277; 4:77; 9:5; 9:11; 22:41; 22:78; 24:56; 58:13; 73:20; The root of the word Aatoo is A-T-Y (alif-ta-ya), which has the following meanings (depending upon what word or preposition follows this word): †¢ To come (to or over someone) †¢ To arrive (at) To bring, bring forward, produce, accomplish or achieve (something) †¢ To bring, give or offer or provide (someone, something) †¢ To do or perform (a deed) †¢ To carry out or execute (e. g. a mo vement) †¢ To commit or perpetrate (e. g. a sin or crime) The term aatozakaat is usually taken to mean â€Å"give the poor rate† where â€Å"poor rate† means† the local tax for the relief of the poor†. This definition of the term aatozakaat is not correct and does not bring forth the true and complete concept of the term ZAKA.The term aatozakaat does not mean JUST to give some fixed sum from the money to the poor,(although it may be a means of accomplishing ZAKA). It is much more than that. Please see the verse 2:177 in which giving some of the wealth to the near of kin and the orphans and the needy and the wayfarer and the beggars and for (the emancipation of) the captives has been differentiated from the term aatozakaat. Zakat is more than just giving from one's wealth to the poor.See the following: (2:177) It is not righteousness that you turn your faces towards the East and the West, but righteousness is this that one should believe in Allah and th e last day and the angels and the Book and the prophets, and give away wealth out of love for Him to the near of kin and the orphans and the needy and the wayfarer and the beggars and for (the emancipation of) the captives, and establish SALAT and provide UZAKAU; and the performers of their promise when they make a promise, and the patient in distress and affliction and in time of conflicts– these are they who are true (to themselves) and these are they who guard (against the inevitable consequences of violating Allah's Commands). Even from the language point of view the term aatozakaat cannot be translated as â€Å"give the poor rate†. Although Aatoo has one of the meanings â€Å"give† but Zakat does not mean â€Å"poor rate†.Zakat means increase or augmentation or growth or development. The term aatozakaat is very comprehensive. It signifies â€Å"(to) Do whatever it takes to provide the means for the development and growth of all†, i. e. â€Å" (to) Do whatever is necessary to accomplish the physical and personal growth and development of all†. [See the meanings, â€Å"do†, â€Å"accomplish†, provide and â€Å"achieve† for the word Aatoo given above]. The purpose of Aatozakaat is to provide the means of development for all. It includes physical development and nourishment as well as development of the human personality i. e. mental/intellectual/personal development or development of the â€Å"self†.Development of human hardware as well as human software It involves development, increase and augmentation in the produce and resources to provide abundance of goods, conveniences and comforts to people as well as their self-actualization or development of their personalities. It is a complete economic system that ensures the provision of all the requisite resources for the physical and personal development of people. In order to establish such a system you have to have authority, power, dominio n and government. If you already have such an authority and you are an Islamic Government, your primary task is to establish such a system. Please see 22:41. 22:41 (Believers are} those who, if We establish them in the land, establish SALAT and provide ZAKA and enjoin good and forbid evil: †¦Notice in the above verse, the establishment in the land has been described as a prerequisite for the system of ZAKA. As has been mentioned above that growth and development is of two types: Physical (i. e. of the human hardware or body) and Personal (i. e. of the human software or the self or the personality). For physical development you have to have something added to your body as nourishment but for the development of the self or self-actualization, you need to give something out of your wealth or resources for others. See the following verses (which state that TAZKIYA or personal development is achieved by giving from your wealth to others: 9:103 accept their contribution for the commu nity.Purify their thoughts with proper education and training so that their â€Å"Self† may grow. Appreciate and Help them! Your appreciation and support is a great source of peace in their hearts. Allah is Hearer, Knower 92:18 Who gives his wealth (for the benefits of others) so that he may attain self-development (and grow in goodness). FUNDAMENTALS AND CONCEPT OF ZAKAT Zakat â€Å"alms for the poor† is the Islamic principle of giving a percentage of one's income to charity. It is often compared to the system of tithing and alms, but it serves principally as the welfare contribution to poor and deprived people in the Muslim lands, although others may have a rightful share.Zakat's similar-sounding, Arabic language analog is the Hebrew word Tzedakah, the charitable obligation in ancient Israel through to present day Judaism. It is the duty of the Islamic state not just to collect Zakat, but to distribute it fairly as well. Zakat is one of the Five Pillars of Islam. Bel ievers in Islam are aware that by giving a fixed percentage of their surplus wealth, they are fulfilling this religious obligation. Muslims see this process also as a way of purifying themselves from their greed and selfishness. In addition Zakat purifies the person who receives it because it saves him from the humiliation of begging and prevents him from envying the rich.Causes & Beneficiaries The Qur'an states that God revealed the beneficiaries of Zakat:†Alms are only for the poor and the needy, and the officials (appointed) over them, and those whose hearts are made to incline (to truth) and the (ransoming of) captives and those in debts and in the way of Allah and the wayfarer; an ordinance from Allah; and Allah is knowing, Wise. † [Qur'an 9:60] The people whose hearts are to be reconciled include (normally new Muslims or those close to becoming Muslim. Non Muslims cannot be included): †¢ Freed slaves †¢ Those heavily burdened with paying their debts †¢ Travelers who find themselves in difficult circumstancesThere have been cases where you can't pay to the Zakat for †¢ Traditional Zakat laws generally do not cover trade. †¢ It is not permissible to pay Zakat to some members of the family (i. e. grandparents, parents, spouses, children), for if they were needy or poor, they are under the custody of the eligible man, while Zakat is intended for public welfare. †¢Zakat doesn't become obligatory on a Muslim if he doesn't have a minimum amount in his possession that has remained unchanged for a whole lunar year; any increase in that money during the year waits for the following year and any decrease as long as the total amount is still above the minimum amount is exempted.In all the four recognized madhhabs the Fiqh of Zakat is very much the same with the key elements that make Zakat compulsory for an individual being: Islam, Freedom, the Nisab, Ownership and a Year's Possession. Zakat is a form of payment, which has t he spiritual development of the believer. Therefore, it should not be looked at as being only an economic duty. On Whom Zakat Is Compulsory Zakat is the amount of money that every adult, mentally stable, free, and financially able Muslim, male and female, has to pay to support specific categories people. This category of people has been defined above. MINIMUMS AND AMOUNTS 1. Passage of One Lunar YearZakat is obligatory after a time span of one lunar year passes with the money in the control of its owner. Then the owner needs to pay 2. 5% (or 1/40) of the money as Zakat. (A lunar year is approximately 355 days). 2. Deduction of Debts The owner should deduct any amount of money he or she borrowed from others; then check if the rest reaches the necessary Nisab, then pays Zakat for it. Nisab for Zakat If the owner had enough money to satisfy the Nisab at the beginning of the year, then the money increased (in profits, salaries, inheritance, grants†¦ etc. ), the owner needs to add t he increase to the Nisab amount owned at the beginning of the year; then pay Zakat, 2. %, of the total at the end of the lunar year (there are small differences in the Fiqh schools here). Zakat is not mandatory on harvest if the total did not reach the minimum limit of about 653 kilograms, nor on gold amounts if the owner has less than 85 grams of gold or less than 595 grams of silver. Calculation of Zakat Each Muslim calculates his or her own Zakat individually. For most purposes this involves the payment each year of two and a half percent of one's capital. Zakat in the Qur’an and Sunnah A. The root of the word Zaka(t) is Z-K-W (za-kaf-waw), which leads to the following meanings: †¢ To increase †¢ To grow †¢ To thrive †¢ To augment †¢ To increase in the purity of heart; to increase in integrity †¢ To befitThe following points will explain calculation methods of Zakat in different situations: B. There are different opinions about this. However, the general opinion is that jewelry, whether it is normally in use, or stored for occasional use, must all be included in calculating Zakat. The value of the gold or silver content in the jewelry should be included in the category of â€Å"Personal wealth†. Precious stones (diamonds, ruby, pearls, etc) are not to be included neither the labor cost of making the jewelry is to be included. Zakat on precious stones, however, is due if they are items of trade and should be included in Item 6, business inventory. C.Though owning a share of stock of any business is like having a share in the ownership of the business; we have categorized it as â€Å"Personal wealth†. Therefore, the lower of the value of stock at the beginning and the end of the year should be added in the category of â€Å"Personal wealth†. This is categorized as â€Å"Personal wealth† because of two reasons. 1. For the most people who own stock it is held as a saving with expectations that it will grow in value over time. In fact it is readily traded for money. Considering it as a readily redeemable asset, we have treated it as another form of saving. Therefore, we suggest using its fair market value in calculating Zakat. 2. Calculating Zakat on stock treating it as a share in ownership is normally not very convenient.There are literally millions of shares owned by general public. A stockholder will need to know his/her share of cash on hand, profit, and inventory, in order to use those values in the calculation of Zakat. This information is ordinarily very difficult to obtain, unless it is a partnership of a few people. Therefore, we did not treat stocks as a business partnership. D. If this amount is available to the individual at any time without any restrictions, then Zakat should be calculated for this amount through the category of â€Å"Personal wealth† because its nature will be that of savings. If the plan is restrictive and involves penalty and/or taxes, opinions differ on the payment of Zakat. 1.One opinion is that an