Allocation Of An Enterprises Long Term Capital Resources Finance Essay - Free Essay Example

Sample details Pages: 8 Words: 2452 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? This assignment is about financial strategies and paying special attention to the allocation of an enterprises long-term capital resources. Financial and investment decisions play an important role in the development and future existence of the firm dynamics. Firstly, the goal of this project is to determine the initial aim of the firm by making capital investments. Don’t waste time! Our writers will create an original "Allocation Of An Enterprises Long Term Capital Resources Finance Essay" essay for you Create order Moreover, another section of assignment includes the capital budgeting process which is a significant researching procedure so as to defined capital opportunities. Then, these capital proposals are assessed from specialists in the evaluation procedure by utilizing and implementing Discounted Cash Flow techniques. Lastly, are presented the general conclusions of this survey which proves the importance of current trends and conditions. INTRODUCTION According to Lenos Trigeorgis (1995) the resource allocation procedure defines the leading levers for a firms strategic impulsion and additional determines its long-term competitive situation. Investments consist of exploitation of resources which will not be utilized completely in current time but determines firms attainment in future in the financial market. Generally, capital investment called as the commitment of financial resources in order to fixed capital expenses in the expectation of returns that compensate for the investme nts risk and the delay in the utilizing of these financial resources.(Richard Dobbins and Richard Pike,2007). Decisions which demand the use of resources are projects. These projects are made by firms so as to broaden strategic decisions, which concern invasion in emerging areas of business, emerging markets, and holding other firms. (Aswath Damodaram). For this reason, senior managers should be responsible and well-educated so as to take vital decisions concerned with the suitable capital investments. Thus, these significant decisions are defined from capital budgeting results. In utilizing this detailed technique, projects can give essential information if the imminent capital investment will have positive or negative effects in corporate performance. ( Cheng F. Lee and Joseph E. Finnerty ,1990). Strategic decisions are vital vehicles of corporate programming and advanced management discussions that provides a correct orientation to a firm. The procedure of capital budget ing by which companies allocate resources among long-term assets, gives essential information about companys future development or general failure.(Van Son Lai and Lenos Trigeorgis). What is more, these strategic decisions come from the evaluation of cash flow methods. Many surveys have pointed out that most prevalent and widespread tools of evaluation are the Discounted Cash Flow methods mainly in large and medium companies.(Brealey and Myers, 1991). As well as, according to Aswath Damodaram the main investment theory governed from the following principles: Utilize cash flow rather than profits. Utilize incremental cash flow concerning to the investment decisions. In this case cash flows that happen as an effect of the decision, rather than overall cash flows. Utilize time weighted returns, worth cash flows that happen earlier than cash flows that happen later. THE AIM OF THE FIRM The financial target of the company is the maximization of shareholders richness. For this reason, the essential aim of investigation is to determine in which of the financial attributes of a company must focus on in order to maximizing the shareholders property. On account of the fact that firms development and profitability affected from many factors, each firm should take vital decisions concerning in the implementation of suitable investment strategy that follow so as to achieve the optimal result.( Richard Dobbins and Richard Pike,2007). This statement also confirmed by Levy and Sarnat that support the following theory financial decision-making involves purposeful behavior, which implies the existence of a goal, or what is much more likely, some combination of goals. In order to opt for among various investment methods and products it is essential to pose firms target. Furthermore, nowadays not only the maximization of gain is the unique enterprises target but also many targets are of the firms interest. Thus, for each enterprise some of these goals are mainly the increase of sales and manage to own a significant market share. Apart from this latest financial rule it is evident that many surveys have pointed out that managers attempt to carry out long -term investigations in order to earn profitability and stability rather than to succeed high levels in market worth. Moreover, important enterprises target is the survival. For this reason, managers should not accept projects which not put in risk the profitability and stability of enterprise. (Levy and Sarnat, 1978). What is more, the monitoring and planning of investment determines the companys survival and prosperity in the future. Incorrect movements which referred to wrong evaluation of new investment chances can cause inefficiently impacts on a corporate performance. For this reason, it is evident that this estimation of opportunities determines from capital budgeting process. It is a significant procedure which shows the suitable evaluation method. (Haim Levy and Marshal l Sarnat, 1994). THE CAPITAL BUDGETING PROCEDURE First of all, capital budgeting process is specified as the method of searching assets that are valued more than they cost. Many management executives attempt to commit limited financial recourses in order to succeed strategic important incentives and earn future advantages especially in the long-term of time. Furthermore, capital budgeting is a multidimensional corporate action which consists of seeking and determining new and effectively investment opportunities. Thus, in this process is made financial and economic analyses so as to define the most earning and least costly method to have an edge of an investment opportunity. This analysis is one section of capital budgeting procedure. (Richard Pike, 2007). Economic analysis defines investment as the interaction of the provision of capital and the torrent of investment chances. Additional it is observed that this theory point out that this incessant flow of investment chance s need evaluation so as to estimate all potential versions. In order to take advantage from these opportunities senior managers should react in time by doing targeted movements and thoroughly studied proposals. (Cheng F.Lee and Joseph E.Finnetry, 1990). Therefore, capitals budgeting except for determining investment opportunities categorize them according to some reasonable framework utilized in the firm, assembling required information and data such as calculation of cash flows and recognition of access risk. Additional, capital budgeting balancing each projects advantages and relationship to strategic incentives opposite its risk and limitations. Furthermore, this process estimating sensitiveness of different hypothesis and factors to various economic cases.(Van Son Lai and Lenos Trigeorgis, 1995). Generally, an essential capital budgeting project consists of the selection between leasing and purchasing. (Murdick et. al., 1980). Moreover, it is important to clarify that corp orate risk management is one of the crucial worries of managers when they implementing investment allocation decisions among various projects. For this reason, the most significant part of this analytical procedure is the financial evaluation which includes cash flow in projects and methods of risk estimation. (Xun Li and Zhenyu Wu, 2006). Taking everything into consideration, capital budgeting process plays the most important role in a companys long-term survival and viability. The capital budgeting procedure consists of: Recognition of possible projects. Forecast of potential outcomes. Selection of project. Financing and application of selected project and inspection project performance. It should also be added, that managers in order to select the suitable project except for the economic prevailing thoughts, the most vital factors which affect this selection are preference and individual opinions. (C.S Agnes Cheng , D.Kite, R. Radtke, 1993). Advanced methods such as Payback Period, Net Present Value and Internal Rate of Return provides useful information concerning the suitable decisions which could applied in order to achieve the optimum result. Additional, more techniques gives significant elements in risk-return such as portfolio theory and planning with mathematical approach. (Richard Pike). EVALUATION APPROACH IN INVESTMENT SUGGESTIONS PAYBACK PERIOD (PP) Concerning with, the payback period the investment chances with the least cost replacement are the most positive and most acceptable. Moreover, this method illustrate the period that initial expenditure must be recovered overall. But, by utilizing payback period technique is observed lags on account of the fact that PP not pay attention in the time value of money. Various fluctuations in economical environments and high interest rates also ignored by PP method, on account of the fact that are events which have impacts in final decisions. (Avi Rushinek, 2007). Additiona l, such extension of PP method does not make it a detailed factor which assists in the general goal of any firm, such as the defining of investment opportunities. (Avi Rushinek,2007). Also, another drawback of this method is that it not takes into account the cash flows which come up after the Payback Period. ( Cheng F. Lee and Joseph E. Finnerty,1990). Besides this, this method determined from the fact that in usage is simplier and can be understood more easily than other method. The worries concerning the recoverys costs are essential in a period when interest rates presenting increase and liquidity also presenting decline. (Avi Rushinek,2007). The PP is calculated by the following manner: Figure 1. Payback Period=Investment Required/ Net Annual Cash Inflows Suggestions which are acceptable are those in which the Payback Period is less than the overall period required, but it rejected the project where the PP is longer than the overall period required. (Cheng F. Lee and Joseph E. Finnerty, 1990). In decision making stage, the PP technique could be utilized as a secondary factor in order to lead in desirable effects. Thus, the PP is used mainly in economical periods where prevail conditions of high interest rates and low liquidity. (Avi Rushinek, 2007). But, according to George M. Zinkhan and F.Chiristian Zinkhan (1994) at this day and age the most prevalent methods which are applied in capital budgeting are these methods which utilize a time value analysis of gain and called as the Net Present Value and Internal Rate of Return. Many studies have point out that the most financial managers have preference in the Internal Rate of Return method. (Stanley and Block, 1983). NET PRESENT VALUE (NPV) The theory about the time value of money point out that a dollar which accepted today is worth more than a dollar accepted in the future. This statement is supported because a dollar which could be reinvested in current time could offer positive results in the evolution of interest rates. Net Present value model belongs in the Discounted Cash Flow models which offer the meaning of take into account vital parameters such as uncertain risk and reinvestment profitability. This model estimates the change in the worth of a company as an effect of receiving an investment opportunity. (Avi Rushinek, 2007). During the calculation of Net Present Value is generated a receivable small percentage of rate of return. This rate of return which emerged from the calculation is a weighted average Cost of Capital which involves equity and dept parameters. (Wooller, 1981). After the procedure of calculating the Cost of Capital should be calculated the future project cash flows. Furthermore, in order to estimate the present valu e of future cash flows, in following these cash flows discounted back at the determined discount rate. In the final stage so as to achieve the Net Present Value first of all, the initial investment must be subtracted from preset values. As a result, acceptable projects should have positive NPV and projects with negative NPV are ignored and reject any investment opportunities. (Garrison, 1978). INTERNAL RATE OF RETURN (IRR) The Internal Rate of Return technique has many similarities with Net Present Value but a part of return on investment is defined as an opposite to an absolute dollar value. Moreover this method is implemented because have an edge to compare different investment opportunities by having the percentage of return over an absolute value. (Avi Rushinek, 2007). Utilizing the IRR in order to compare comprehensive investment projects in various currencies and extents, this method is assisted by the existence of percentages. Additional, it is significant to be said that estimating the IRR method demands the initial worth of the investment, however and the calculated future cash flows. (Avi Rushinek,2007). According to, Haim Levy and Marshall Sarnat (1994) IRR is determined as the discount rate which equates the predetermined value of the flow of net revenues with the initial expenditure. Thus, acceptable projects are those in which the IRR surpass the discount rate and in opposite site when the discount rate is bigger than the IRR these projects are rejected. To sum up, it is important to define that in Discount Cash Flow techniques is belonged the Net Present Value and Internal Rate of Return which are more complicated than Payback method. Besides this, these models are considered useful and profitable because including the time value of money and the Cost of Capital. For this reason, are the most prevalent models and prevail over PP method. Also, the PP model has vital usefulness in economic periods where dominated high interest rates and low liquidity. (Kim and Farragher, 1981). FACTORS WHICH AFFECT CAPITAL INVESTMENT PLANNING Another point worth mentioning is that in the appraisal procedure should take into consideration the full consequences of inflation. Cash flows estimation could be defined whether in money or real conditions. Whatever method is implemented it is significant that the determined rate of return is estimated in the same conditions. (Richard Dobbins and Richard Pike, 2007). What is more, Carsberg and Hope propose that the estimation of discount rates and cash flow should be represented in money terms. This statement arising from the appearance of various inflation rates on projects during the inflows and outflows, and the capital discounts are not indexed but defined in historical cost conditions. According to, (Johnson and Soenen, 1994) firms which operate and active in global basis should take into consideration the risk concern with currency fluctuations. Thus, when senior manag ers attempt to find the suitable capital budgeting method it is very essential to estimate the effect of a required investment on the economic exposure of a company. It is also be added that economic exposure idea is that in this case must take into consideration unpredictable changes on future cash flows in exchange rates. CONCLUSIONS In conclusion, in this assignment has become a descriptive analysis about the dominant methods that determine business decisions, whether a project must be accepted or not. This appraisal involves traditional techniques such as Payback Period in which does not take into account the time value of money, and Discounted Cash Flow techniques as Net Present Value and Internal Rate of Return. Discounted Cash Flow methods gradually decrease the value of cash flows accepted in the future. It is generally believed that Payback Period method is inferior to Discounted Cash Flow and Internal Rate of Return is inferior to Net Present Value. Thus, it is su pported the fact that the superior method is NPV, due to the fact that IRR have lags in the ability of multiple rates of return and a not real reinvestment suppose which emerges in its calculation.(Michael Pogue, 2004). However,

Is Truth Objective Or Subjective - 1504 Words

George Pippin Professor Hays HMXP 201 June 28, 2015 Is truth objective or subjective? Is there one truth for all of humankind or is truth subjective? Is there a subjective right and wrong to everything or is right and wrong dependent upon one’s religion, morals, and culture? This is a question that has been debated for years and a topic that many have devoted their careers and lives to. I believe truth is very much subjective. Almost everyone has beliefs or truths that they are unwilling to compromise. Why is this? Is it because everyone is searching for the one ultimate truth or is it because what is truth to one simply is not truth to another? During this essay, I will show how one’s religion, morals, and culture play a part of how someone discovers their own truth. Religion is something that has been around since the beginning of time and will be here until the end of time. People of faith use religion to answer questions like why are we here, how was the earth created, and what is the ultimate purpose for life. Neve rtheless, just as there are many truths, there are many different religions. If you were to ask a Christian how the earth was created, they would tell you that God created the earth. However, if you were to ask a Hindu how the earth was created, they would say the that there have been many earths before this one came into existence. Both the Hindu and Christian believe whole heartily that their truth is correct. However, who is to say either of them isShow MoreRelatedThe Argument Between Thrasymachus And Socrates1137 Words   |  5 PagesIn the following paper I am going to defend my personal position on whether or not justice is objective. I am going to explain the argument between Socrates and Thrasymachus and define the terms used. Next I will give supporting evidence to support my position. 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Coral Reefs, Our Disappearing Beauty Free Essays

Coral reefs are one of nature’s riches ecosystems with a diverse existence of life which is ultimately quite complex. They are a colorful ecosystem that plays an important role in the marine world and the human world as well. They are home to countless plants and animals, a source of food, medicines and one of the unique wonders of our world. We will write a custom essay sample on Coral Reefs, Our Disappearing Beauty or any similar topic only for you Order Now While they might bring the image of life near a tropical paradise, there is much more to the coral reef than its beauty. These beauties are home to a diverse population that benefits humans, each type in its own way. But will we be able to save these natural wonders? Corals belong to the same group of animals as jellyfish and sea anemones. While they seem to move in the current of the ocean, they actually do not move and stay in one place. Coral use their tentacles to feed and exist in colonies. They grow every slowly but they can live anywhere from a few decades to even centuries. They have a hard calcium carbonate skeleton which provides them with protection. The calcium carbonate is continually deposited which added to its size, however, their growth varies depending on the conditions within the environment. The growth of the coral reef is long and slow and it takes several years for it grow only a few inches. This growth can be even slower when you consider the destructive activities of animals, storms and humans. As the coral grows they form colonies which become the basic foundation of the reef. Coral reefs need particular conditions in order to survive. They generally grow near the shoreline which is a form of protection for the shore. Coral reefs only grow to depths approximately 45 meters because they need sunlight in order to survive. The amount of oxygen available is also important because coral have symbiotic relationship with some types of algae. The algae live in the coral and perform photosynthesis which makes food for the algae and the coral alike. The coral gives the algae protection and sunlight. For this reason coral reefs are built in shallow, clear water where lights can reach them. The amount of sedimentation mud be low because sediments can block the sunlight they need. There are three main kinds of coral reefs. Each of these is thought to be a stage in the development of the coral reef. (Birkeland, 1997). These include the fringing reefs, barrier reefs and atolls. Some scientists include a fourth type, the patch reef, as well. The most common type of ref is the fringing reef. Found very near to land they can often form a shallow area in the lagoon. When reefs are formed it is the fringing reef that is formed first. Another type of reef is the barrier reef. It can resemble the fringing reef but they do not form so close to shore and are usually much larger than the fringing reef. The fringing reef grows out and the distance from land becomes greater causing the fringing reef to become a barrier reef. The atoll is shaped like a horseshoe or can be a circle. It surround the lagoon although there is no land associated with the atoll. This is because when the land subsides, only the reef remains and it has the shape of the land it surrounded. Finally, there is the patch reef which usually are found within the lagoon and ore the outcrops of coral. An abundance of both plant and animal life are an integral part of coral reefs. Scientists continue to discover new species and learn a great deal from coral reefs. First, the coral itself is living with the skeleton of calcium carbonate surrounding them for protection. The first animal that comes to mind when discussing coral reefs is the fish. Fish of every color swim in the reef, finding food, using it for protection, making it their home. Fish camouflage themselves within the reef to steer clear of larger fish and sharks. Sharks often scour the coral looking for a stray fish. Sea snakes also make the coral reef their home. There are also invertebrates like starfish who travel through the many species of seagrass and algae within the reef. There are many species of sea turtles that make coral reefs their home as well. These are only a few of the massive variety of creatures that live in the coral reefs. There are urchins, sponges, crabs, eels and literally thousands of others. It is the richest place of biodiversity. In fact, â€Å"Guam hosts over 3. 500 species of plants and animals, including 200 different types of corals. † (Teach Ocean Science, ret. June 14, 2013). In addition to theses kinds of plants and animals, there are also microorganisms that call the coral reef home. Coral reefs don’t only benefit animals and plants, but they also benefit humans. They are one of the oldest ecosystems on our planet and one of the most beautiful. One way they benefit humans is due to their beauty. Areas with coral reefs bring tourism. This tourism supports local communities, creating jobs for local inhabitants. Visitors come to dive, snorkel, fish and enjoy the coral. These jobs help support the infrastructure of the community and build a strong economy. The economic value of many of the reefs individually are in excess of hundreds of millions of dollars, some over $1 billion each year. More importantly, there are many plants and animals that help us in the creation of new medicines and perfecting ones we already have. Medicines that have been developed or are being developed from the coral reefs include treatments for heart disease, cancer, arthritis, viruses just to name a few. More obvious than the previously mentioned benefits, coral reefs provide an abundance of fish and other sea life that helps populate the oceans for fishing. This also benefits humans. Fisheries are important for recreation as well as a trade to provide food. Also, as the name implies, coral reefs are a natural buffer between the ocean and the land. This helps prevent property damage, soil erosion, and protects people from storms. Nearby communities depend on the coral reefs for their well-being. Even though humans depend on the coral reef in so many ways, we are unfortunately slowly losing them. These natural beauties are disappearing at a faster and faster rate. The biggest threat is humans themselves. Healthy coral reefs need clean water but people are polluting these waters causing significant harm to the reefs. Fertilizers, soil, pesticides and even sewage is put into the water. These things make the water unhealthy for corals, smother the reef and make it more likely the will get diseases. Pollution is a major threat. Humans also often have destructive fishing practices. They use explosives to fish or bang on the reef with large sticks as well as bottom-trawling. In addition to these destructive practices, humans have been overfishing which upsets the natural balance of the ecosystem of the reef. The food chain is then so out of balance that the effects are not only the direct fish population but the entire ocean and beyond. Humans are not the only threats to coral reefs. Natural disasters can also harm the reefs. Hurricanes and other storms can cause damage as well. Global warming is also a threat. Corals will only survive in a certain water temperature and global warming has caused damage by elevating the levels of coral bleaching. When the reef is already unhealthy it is difficult for it to improve such a disaster. One way our own government has started to help protect the coral reef is by developing the U. S. Coral Reef Task Force. â€Å"On June 11, 1998, President Clinton issued Executive Order 13089 on Coral Reef Protection. † (EPA, Ret. June 10, 2013). This task force was charge with the duties of mapping and monitoring the US coral reefs, conducting research to identify major causes and consequences of the decline of the reefs and with developing ways to restore the damaged reefs and prevent further damage. Governments have set up Preservation Zones to focus on the cost of human impact to the coral reefs and how to maintain the reefs. Each of us can help protect the coral reef. Be sure to clean up after yourself when you go to the beach. It sounds simple, and it is but many people don’t follow this advice. If you go to the area, be sure not to touch the coral. Take care of it. Leave shells and other creatures where they are. The food chain is a delicate balance and we should not do anything, no matter how small it might seem, to upset that balance. If you fish, catch only what you will eat. Throw small fish back to reproduce and the largest because they lay the most eggs. And if you don’t fish, eat only the species of fish that are on the sustainable seafood list. Even if you are not in the area, you can reduce the amount of freshwater you use, develop habits that reduce the amount of greenhouse gases we produce like using too much electricity or driving a lot. Recycle more, including reusing items. Basically reducing our carbon footprint helps our coral reefs. Coral reefs are a vital resource in our environment. They are home to an extremely diverse population that is necessary to all life on earth. Humans have come to depend on this ecosystem for numerous things yet we still see the coral reefs disappearing quickly. But this sensitive ecosystem is depending on us was well. We each can do our part by minimizing our own carbon footprint but so much damage has already been done that this alone is not enough. Humans must get involved and be proactive to save this valuable resource before it’s too late. Sources: Ruppert, EE and Barnes, RD, 1994, Invertebrate Zoology, 6th Edition, Saunders College Publishing, Philadelphia â€Å"What lives on a coral reef?†, Teach Ocean Science, http://www.teachoceanscience.net/teaching_resources/education_modules/coral_reefs_and_climate_change/what_lives_on_a_coral_reef/, retrieved June 14, 2013. Water: Habitat Protection, EPA, http://water.epa.gov/type/oceb/habitat/taskforce.cfm, Retrieved June 10, 2013. Birkeland, C. (1997). Introduction. In Life and Death of Coral Reefs. Birkeland, C. (ed.). Chapman and Hall, New York. Achituv, Y. ; Dubinsky, Z. (1990). Evolution and Zoogeography of Coral Reefs. In Ecosystems of the World: 25 Coral Reefs. Dubinsky, Z. (ed.). Elsevier, New York. How to cite Coral Reefs, Our Disappearing Beauty, Papers

Change Management in the Modern Organization Get Free Solution

Questions: What is change management? What are some of the major challenges when trying to manage change in organisations? What are some of the current theories on change management? How can current change management theories be applied to support organisations? Answers: Introduction The global business landscape is filled with several organizations belonging to several organizational structures, business models and industry types. Organizations have abundant presence and are essential ingredient of the economy. Globalization and opening up of the economies have resulted in several functional, cultural, regulatory and technical changes in the operational aspects of several companies. These mentioned changes have even affected the business functioning and objectives of the several organizations (Dawson, 1994). Management of these Organizations has minimal option left, but to change with the changing times. Change for survival and change for progress is what the modern organizations are turning to.The twenty first century has made it necessary for the modern organizations belonging to this technology age, to be prepared for and embrace the concept of change management. This concept of change management has indeed attracted much of relevance in the modern age. There have been several studies and theories on this concept, and most of the researchers have suggested that the future survival of the modern organizations would be significantly dependent on the ability of these organizations to successfully embrace change in their Organizational functioning that would be triggered by the changes in the internal and external environment of these modern organizations (Coetzee et al., 2012). Several of the researches have also directed that the rate, in which the organizations would have to adapt changes in its structure and operations, would be increasing significantly in the near future (Dunphy, 1996). The rising competition in the global market and saturation of the buyers market phenomena, are the key indices, triggering the increased rate of changes in the external markets of these organizations. The concept of Change management The concept of change is closely related to adoption of new state of things that are different from the old state of things. The changes desired in the modern organizations, covers much larger field including the probable changes desired in servicing the new age customers, adapting to newer technologies of production, updating logistics and supply chain operations, etc. The change management in the organizations can be described as the process of continuously reviving an organizations structure, direction, objectives or capabilities in response to the dynamic external environment, as well as in response to the demands of the internal customers (Robbins et al., 2014). Managing change in a successful manner is an ongoing and continuous process that involves the combination of science as well as art. This process of organizational change requires the adequate alignment of Organizational structures, processes and strategies to adapt the necessary and desired changes. Several organization s of modern age are opting for change management techniques to survive and prosper in the todays competitive business world. These organizations are streamlining their Business operations to become more responsive and nimble to the external demands of the stakeholders of the organization, mainly the consumers (Senior, 2002).Many of the scholars and researchers have researched on the topic of the organizational change management and have broadly come up with two clear classifications of the types of changes that the organizations undergo (Paton and McCalman, 2000):a. Evolutionary changes (Gradual Changes, changes of 1st degree or incremental changes)This is generally a continuous change in the small order. These changes generally use dominant type of management to obtain stable growth and remain grounded in the markets. E.g.- Pizza Restaurants introducing newer variety of Pizzas every quarter, to adapt to the changing tastes and preferences of the consumers. b. Revolutionary changes (Transformational changes, changes of 2nd degree, Frame changes or dramatic changes)These changes are generally strategic in nature, altering the structures, power, control and orders of an Organization. These changes are also referred to as extreme changes.E.g.- Wal-Mart expanding its business in Asia-pacific Region, by tying up with the local players in the respective countries for expanding its consumer base. The Rising relevance of change management in modern organizations The concept of change management has become highly popular in the twenty first century, and several of the Organizations are following this bandwagon to remain competitive and successful in the markets. The change is thus an ever-present feature of the organizational life at both operational as well as strategic level. However, with the economies opening up and world markets coming closer, the intensity and frequency of these need for changes has highly increased. Several of the environmental factors, such as political factors, socio-economic factors, cultural influences as well as the technology changes across the world, are forcing these modern organizations to stay up to date. Therefore the relevance of the concept of change management has highly increased in the modern age (twenty first century). Modern Organizations are slowly shedding the age old organizational ideologies and practices, and have become more practical and result oriented. Most of these Organizations have started involving their staff members in the strategic and key decision making processes, making the decisions more viable and practical. Most of the Organizations have also started valuing performance over time and have started making concurrent changes in their respective organizational HR polices (Robbins et al., 2014).The HR landscape has also complicated with several individuals from diverse backgrounds working as a team in the organization. These are resulting in the several cross-cultural management challenges that have to be dealt with careful changes in the policies and procedures of the Human resources management function of the modern organizations. The Technology is another buzz word that is facilitating several changes in the way the organizations functions. The modern Organizations have to be alert and quick in adapting to the latest technologies in the respective segment competencies. These organizations have to react and quickly install latest technology in their products a nd offerings, before the competitor organizations react. Otherwise the Organization poses a huge risk of customer dissatisfaction (Thurlow, 2009).The modern Organizations also have to with stand the cyclical ups and downs of the economic conditions of the Business and have to make immediate corresponding changes in the budgets and cost centers of their departmental operations (Coetzee et al., 2012). Theories of Organizational Change Let us discuss some significant theory models in the context of managing the Organizational change:a. The Analytical model belonging to Harold Leavitt revolves around a specific theory. According to this researcher, every organization is comprised of a multi variant structure that has the following four important variables: Structure Players Technology GoalThese variables would represent for the desired changes in the organizational functioning. These variables are interdependent at the core of the model. Thus changes in any one of the variables would result in modification effect on the other variables in this theory model (Thurlow and Mills, 2009). b. The Analytical model of change management by Kurt Lewin stated that change occurred when the forces that supported the organizational systems stable behavior, are been modified. This researcher suggested altering the stability forces, one maintaining the status quo in the organizations. This would help in less resistance to change fro m the employees, rather than strengthening the pro-change forces (Paton and McCalman, 2000). According to this researcher, the process of change unfolds in three stages Unfreezing- Minimizing the force that maintains the systems behavior at the current level. Change proper- this step is about altering the organizational behavior through development of new behaviors, values and attitudes throughout the change of structures and processes. Refreezing- this refers to stabilizing the new stage the organization is in, that would reinforce newly introduced elements that may be accomplished by changes in Organizational cultures, policies, norms and structures. These three stages of process change model are highly broad and dispersed and tries to analyze the change theoretically.How change management benefits the OrganizationsMost of the organizational changes are intentional and planned that are introduced by the top management team of the modern organizations for varied number of reasons ranging from pressures to strategy changes to the overall organizational development (Atman and Iles, 1998).When change management is introduced in an Organization, it is implemented through one or more of the following areas:1. Processes 2. Systems3. Organization structure4. Job rolesThese are numerous methods and tools that facilitate change management in the organizations. All of them reacting to problems or opportunities an organization are facing according to the internal or external stimuli of these organizations. The change is indeed desired for survival, growth, and prosperity of the organizations (Dunphy, 1996). And there have been several instances in the past that have seen the change management initiatives benefit the organizations in immense scale. The following are the prominent benefits acquired by the organizations on successful implementation of the change management practices (Graetz and Smith, 2010): Improvisation of the overall organizational outcomes by increasi ng the work efficiency of the management and the staff, involved in the operational process of the organization. Building strong interdepartmental synergies Alignment of the broader organization goals with each of its business segments Improvisation of the product as well as service quality of the offerings of the organization Enhancing overall employee satisfaction due to effective changes in employee engagement practices. Achieving higher return on investments for the organization Improvement in the overall efficiency of the organization. The Challenges faced by Organizations in the process Planning and managing the entire change management process especially in context of cultural and technological changes in the organization, is quiet a challenging task for the new age managers, who are expected to instantly respond to the environmental changes in the business (Balogun and Hope, 2004). Getting in to the management shoes, this process begins with diagnosing the key reasons for changes, and proceeds with making a schedule and proposal for smooth structuring of this change management program. A well researched and well analyzed proposal is extremely essential for promoting a smooth transition (desired change) in the organizations (Dawson, 1994). Several of the functional dimensions that are interrelated to each other have also to be considered. The Extent of planning for devising step by step change solutions, the estimation of the degree of changes desired in identified areas of the organizational operations, the key targets of change, etc, are the dimensions that requi re keen attention of the management of these modern organizations. This is quite a challenging process for the modern aged institutions and is filled with several challenges. The following are the key challenges encountered by the organizations in the change management process (Fuda, 2013): Resistance from the employees and the staff members for implementation of the desired change management procedures Resignations of the valued personnel and key human resources of the organization, resulting in to a resource crunch Delay in the scheduling of the critical projects Low employee confidence on the job, reflected in low employee performance Confusion reflected on the stakeholders, for changes in the organization Decline in the overall organizational productivity The following are the few measures that the management of the organization can implement for handling the above challenges (Robbins et al., 2012): Enabling Active Involvement of employees and the staff members (even the grass root level employees) in the key decision making processes that are related to the organizational change management Reaching out effectively and maintaining clear communication with the stake holders through emails and periodic meetings for updating the progress of the organizations towards the desired change management area. Recruitment of ambitious new personnel that would support and accept the changed organizational procedures Maintain effective and timely delivery of work schedules, by keeping the employees motivated Conclusion The organizational changes are strategic imperative in the todays globalised business world. Most of the organizations are keen on implementing the latest and the most sought out ideas, in their business operations in a fast paced manner. The Organizations are developing at a fast pace and have to compete in a fierce competitive business market of the twenty-first century, to survive the competitive. Change is thus inevitable for these organizations. They have constantly upgraded their operations and business methods with the changing facets of the internal and external environmental variables. Managing change in a positive manner, involving all the stakeholders, and presenting a clear picture before them at every juncture of change, is very important for successful implementation of the change management process in the organizations. The organizations must present the entire change plan as win-win to its stakeholders (especially employees) to gain their utmost support thought out th e process. References Atman, Y. and Iles, P., 1998, Learning, leadership, teams: corporate learning and organizational change, Journal of Management Development, 17(1), pp 44-55. Balogun, J. and Hope Hailey, V., 2004, Exploring Strategic Change, 2nd edition, London: Prentice Hall. Christopher G., Worley and Yvonne, 2010, Leading and Managing Change, Graziadio Business Review, Retrieved on January 31, 2015, from https://gbr.pepperdine.edu/2010/08/leading-and-managing-change/ Coetzee Rein, Visagie Jan and Ukpere Wilfred, 2012, leading a successful change intervention in a modern organization: Key elements to consider, African Journal of Business Management Vol. 6(51), pp. 12068-12075. Dawson, P., 1994, Organizational Change: A Processual Approach, London: Paul Chapman. Dunphy, D.C. ,1996, Organizational change in corporate settings. Human Relations, 49(5), 541-542 Eldrod, P. D. and Tippett, D. D, 2002, The death valley of change, Journal of Organizational Change Management, 15(3), pp273-291. 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