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Sunday, 27 March 2011

Time is right for growth of Islamic finance

Many sovereign wealth funds (SWFs) have exposure to Sharia-compliant, publicly listed screened companies.
The government pension fund of Norway reported in last year's third quarter that nine out of the top 10 investments were Sharia-compliant. HSBC Bank is the only exception.
According to Monitor-FEEM Research's five-point definition, there are 35 sovereign funds, just over half of which are from Muslim countries. The question to ask is twofold: has the time arrived for Islamic SWFs and what are the implications?
In today's financial markets, we talk about billions and trillions, yet in Islamic finance we do not have large banks (billion-dollar paid-up capital), and funds are small, with an average size of about US$40 million (Dh146.9m).
Takaful, or insurance, premiums are a relatively tiny amount at $8 billion, and so on. Put differently, Islamic finance is a rounding error or the size of a transaction in conventional finance.
There is no free-trade agreement among the 57 member countries of the Organisation of the Islamic Conference (OIC), and intra-OIC trade was about 17 per cent of the group's overall trade as of 2009. However, there are 1.6 billion Muslims, a number thrown around carelessly, to entice and show the potential growth in trade.
But how many Muslims know about Islamic finance and, more important, how many are participants, the bankable 2 to 3 per cent?
The halal food industry has greater brand recognition and penetration than Islamic finance among the 1.6 billion Muslims. The Islamic finance industry will continue to have conferences, issue press releases and produce white papers on the various needs of the hour: consolidation, co-ordination, standardisation, more scholars and qualified people.
The award dinners on the "best this or best that bank/fund/takaful" will continue in Islamic finance hubs. Beyond the cheer-leading, the industry needs to think outside the "mosque" for developments that generate foundational growth and have a cross-selling appeal to the non-Islamic community. An Islamic SWF would not only capture the imagination, but it might also be an anchor to move this niche industry to $2 trillion by 2015.
Assuming major challenges associated with establishing an Islamic SWF, such as sovereign ownership, mandate and funding are addressed, the focus then moves to three main areas; asset allocation and implications; corporate social responsibility; and public relations and marketing.
Typically, to smooth out returns, SWFs have exposure to a variety of asset classes including equity and bonds and alternative asset classes such as hedge funds, commodities, real estate investment trusts, property, forex trading and securities lending. External managers usually manage these assets on active and passive bases, and performance is benchmarked to a corresponding index or is assessed on an absolute basis.
Because of the prohibitions against interest, speculation, uncertainty and investing in the "sin" sector, asset class options for Islamic investing are more limited.
According to Lipper data for last year, 586 Islamic funds were in operation with $37bn of assets under management, with a bias towards equity funds (303), mixed asset (101), money markets (77), sukuk funds (77). The majority of these funds were actively managed by external fund managers.
The Islamic funds industry has been mandate-driven, meaning fund sponsors such as family offices or institutions put out requests for proposals (RFPs) for a mandate, such as global or healthcare funds, and asset management companies vie for the mandated money.
In the West, funds are internally seeded and incubated, then eventually brought out for sale if performing, but western asset managers do not replicate this process with Islamic funds.
Thus, an Islamic SWF can actually contribute to innovation in asset management by working with Islamic scholars and industry bodies such as the Accounting and Auditing Organisation for Islamic Financial Institutions, in establishing screening and structures for other asset classes, such as equity REITs and commodities, then circulating RFPs to asset managers for various "seeded" mandates.
The net effect is the building of the Islamic asset management industry, and, if done in Abu Dhabi, contributing to the emirate's 2030 vision of becoming an asset management hub. Today, Islamic finance focuses on negative screening for compliant companies, similar to the Stoxx Europe Christian Index or Catholic (Ave Maria) funds and earlier versions of social-ethical screening.

The enlightened investing world is moving towards impact investing and investing that emphasises environmentalism, sustainability and good governance, and Islamic finance likewise needs to build causeways towards the "positive".

As a region, the GCC has one of the largest carbon footprints globally, and, to date, not one Islamic bank is a signatory to the climate, carbon or equator principles.
This may be because of the embryonic nature of Islamic finance and the need to establish traction, but the justification for the status quo becomes less compelling as time passes.
The time has arrived for an Islamic SWF, as it will be the "needle threading" - the link among intra-OIC trade and investment, large Islamic banks, Islamic equity capital markets, and Islamic asset management to include positive screenings and build bridges.
*Rushdi Siddiqui is the global head of Islamic finance at Thomson Reuters (16 March 2011)

Experts see growth in Islamic banking

JEDDAH: The Kingdom will be a major hub for Islamic banking, which is growing rapidly, experts said Tuesday at the Jeddah Economic Forum 2011.

In discussing the future of Islamic finance, the challenges and ways of developing the Islamic banking in Muslim countries, Abdullah Bin Sulaiman Al-Rajhi, CEO of Al-Rajhi Bank, pointed out that Saudi Arabia has the capacity to become a hub for Islamic banking industry in the world, but Islamic finance needs efficient financial institutions with unified rules.
“We have financial institutes in the Islamic World that brought more than 40 standards,” he said, citing an example in Malaysia that was established in 2001 to increase the awareness of Islamic concepts and improve Islamic finance.
Some institutes have different principles and weak procedures, which lead to confusion among the customers and different points of view about the institutions, but auditing standards can be adopted as a common framework, Al-Rajhi said. Introducing the standards to a large number of Islamic scholars so they can spread them is an efficient way for the standards to become more acceptable, he added.
Expanding the market with Islamic law will also improve Islamic finance, he added.
“The countries that are still in the beginning of improvement, like Indonesia, Turkey, and some in North Africa should expand their market while mature economies such as Saudi Arabia, Gulf countries, Sudan and Malaysia need institutions with strategies for corporate banking companies, investment companies, new products, asset management and short-term liquidity,” Al-Rajhi said. “The ability to provide competing services is making a difference here,” he added.
The Kingdom has a great role to play in the field of Islamic finance, according to Al-Rajhi. “The size of financing of Islamic banks is more than SR100 billion and lots of companies ask for Islamic products,” he said. Furthermore, the percentage of the loans provided by Islamic banks or Islamic operations increased by two percent in 2010 and reached 58 percent of the total funding, he added.
With the growth of Islamic finance, Abdulkarim Abu Al-Nasr, CEO National Commercial Bank, expects more demand for it, even from non-Muslims.
“The sector size of Islamic finance has reached a trillion dollars and in 2020 it will reach four trillion dollars,” Al-Nasr said.” More than 75 countries and 430 Islamic institutes provide Islamic products.”
Islamic finance is searching for solutions that meet with Islamic desires, not only those relating to economics, he said. “In Malaysia, non-Muslim clients deal with Islamic banks because Islamic finance focuses on moral standards, connects with development and avoids harmful activities for society,” Al-Nasr explained.
Some 20 years ago, there were more skeptics about Islamic finance, but now, after the financial crisis, most of them believe in it and it is expected to grow dramatically because there is significant evidence that Islamic finance was not affected by the crisis, he said.
“Saudi Arabia represents 25 percent of the Arab economic world, a huge number of clients ask for Islamic finance and 95 percent of the finance operations, especially the personal ones such as loans, is Islamic,” he said. “There is a big opportunity to finance the companies as well.”
Humayun Dar, managing director of BMB Islamic, said Islamic finance is an important development, but according to many surveys he has conducted, most non-Muslims are not sold on Islamic banking.
“Unlike Saudi Arabia where the majority of people prefer Islamic banks and 90 percent of the banks operate under Shariah law, 75 percent of the world’s population is not convinced,” he said. 
“Whenever Islamic bank regulations have been taken from Shariah, they have been more successful,” he said. “Social responsibility plays a significant role in Islamic finance and we can benefit from Zakat, which is not only for charity, but is for business as well.”
– Saudi Gazette / 27 March 2011

Enhancing the contribution of Islamic finance in Malaysia

ISLAMIC finance in Malaysia continued to register strong growth during the year. Total assets of the Islamic banking sector (including development financial institutions or DFIs) amounted to RM350.8bil as at end-2010, increasing by 15.7% from end-2009.
The Islamic banking sector now accounts for over 20% of the overall banking system in terms of assets, financing and deposits. In the Takaful sector, assets increased by 17.8% from 2009 to reach RM14.7bil as at end-2010.
Takaful assets now account for 8.7% of the total assets in the insurance and takaful industry.
Strategies to spur the development of Malaysia's Islamic finance industry continued to focus on developing the players. Infrastructure and expertise are required to meet the needs of the growing economy, and reinforcing Malaysia's position as a leading international centre for Islamic finance.
Bank Negara has granted four new family takaful licences to joint ventures between global and regional players and strong domestic entities. This was an increase from the earlier announced issuance of two new family takaful licences in 2009.
The decision to increase the number of licences took into account the overwhelming interest received in the new licences offered and the large untapped growth potential within the takaful sector.
Given Malaysia's demographic profile, the realisation of this potential is especially important to enhance the insurance and Takaful penetration rate.
All four new family takaful operators offer strong value propositions that are expected to significantly grow the family Takaful industry and further entrench Malaysia's position as the global hub for Islamic finance.
The formation of a high-level Law Harmonisation Committee last year to review, harmonise and further strengthen the legal infrastructure to facilitate the conduct of Islamic finance reinforces Malaysia's leadership role in building and maintaining a solid foundation for the development of Islamic finance.
The committee has a mandate to recommend legal reforms that will advance the development of Islamic finance and achieve greater certainty and enforceability of Islamic finance contracts domestically.
An important breakthrough in meeting the global liquidity management requirements of Islamic financial institutions was achieved with the establishment of the International Islamic Liquidity Management Corp.
This initiative marked the successful collaboration of 12 central banks and regulatory agencies, and two multilateral institutions to form a corporation that would be part of an international Islamic infrastructure to issue high quality instruments to support the liquidity needs of the global Islamic financial system.
Over the years, Bank Negara has pursued various initiatives to deepen the industry's syariah understanding as well as address issues in the application of syariah in Islamic finance. This includes the establishment of the Fund for Syariah Scholars in Islamic Finance amounting to RM200mil in June 2005.
In 2010, the fund supported talent enrichment, research and Islamic finance knowledge enhancement activities, which included the provision of scholarships for furthering Islamic finance studies.
(Bank Negara Malaysia Report 2010)

Anger Management: An Islamic perspective

How many times have you shouted at your parents? How many times have you felt so angry that you were just about to hit someone? Does this happen a lot? You're not the only one. Many people now are unable to control themselves and end up arguing with others, often the ones that they love - their parents, their brothers, their sisters, their husbands or wives. Here we're listing some reasons that stir people's anger and ways given from the Qur'an and Sunnah to overcome this anger and control yourself.

When first God created humanity, He created many emotions and desires within each person, which we call human instincts. These include positive qualities such as recognizing truth and expressing it, love and compassion, pure physiological desires such as being thirsty, hungry and in need of sex.

Then there are some negative qualities such as hate and anger, with resultant violence and dejection.Allah says in the Qur'an:"And when your Lord said to the angles, "I am creating successors on the earth." They said, "Will You create on it those who will spread corruption and spill blood, although we celebrate Your praise and extol Your Holiness?" He said," I know what you do not know." (Qur'an 2:30).

Also Allah instilled some protective mechanisms for fighting these negative instincts.Allah says in the Holy Qur'an:"Man was created weak."During the moment of weakness, we succumb to the designs of our enemy, that is, the devil, who "will attack us from front, from behind, from the side," in order to divert us from God consciousness and return to our animistic nature. Thus anger by itself is not unnatural; it is the expression of anger which is done wrongfully, can lead to problems.

The difference between the wild beasts and wild humans is the difference of free will.When a lion or a wolf is angry, he does not think. When a man becomes angry as a result of provocation, he has a choice to control his anger or to respond to it as he has learned from the Qur'an and from Prophet Mohammad's teachings, or forget all that and become a wild animal. Thus anger takes place when we are not in control of ourselves, but the devil is controlling us.

Anger in itself is a natural feeling, Allah has put such feeling inside us to react against what's harming us, for instance to protect our lives, our properties, and our families. Yet we shouldn't over do that. Meaning it is ok to feel angry, but it is dangerous and forbidden by Allah to surrender to your anger and follow it to as far as it takes you (for it might drive you to killing somebody).

Anger is a de stabilizing thought. It is the most dividing emotion between friends; it takes away judgment, leads to depression, madness and wrong actions that we would repent later on when we are not angry. But why do we get angry to begin with? It is either an unexpected provocation or unexpected situation which leads to frustration and an angry response.

During anger, one can physically or verbally abuse a person that he or she loves, hurt another living being like an animal, or during the dejection phase of anger, one can even hurt him- or herself and even commit suicide. Prophet Mohammad (PBUH) gave us the medicine for that saying:"Shake hands and rancor will disappear. Give gifts to each other and love each other and enmity will disappear".

Also Prophet Mohammad (PBUH) said:"A strong person is not the person who throws his adversaries to the ground. A strong person is the one who contains himself when he is angry".The point is that the natural fulfillment of normal desires, whether in terms of food or sex, is a prerequisite for prevention of anger. There are many chemicals and hormones which affect our moods and behavior. It is well known that hypoglycemia and hyperthyroidism precipitate irritability when feeling angry. We must keep our hormones in balance in addition to facilitate our spiritual well-being.

We Muslims, are followers of Prophet Mohammad (PBUH), right? What better example of patience do we have than that of our own blessed Prophet himself? Prophet Mohammad (PBUH), who was sent to mankind to teach them good moral conduct, learned to control his anger toward the Unbelievers and teach them appropriate expressions. He used to speak against being angry. We think that we have it tough, when one of his days was probably tougher than the whole of our lifetimes! When we look at his life, our own difficulties seem so pathetic in comparison.

Imagine spending 13 years completely devoting his life spreading the word of Islam and suffering hardship. This was a man who had the burden of the whole of mankind's future on his shoulder. Yet he had the tolerance and self-discipline to be able to forgive those around him who were themselves so ignorant.The best example of this was when the Prophet (saw) went to a place called Ta'if. This was at the time when the followers of Islam were at their weakest and the Prophet himself had suffered the loss of both his wife Khadijah (May Allah be pleased with her) and his uncle Abu Talib. He went to this town in the hope that they would listen to what he had to say. Instead he was insulted and chased out of the town by the children who threw stones at him till (it was described) the blood flowed from his body to his feet making his sandals sticky with his own blood. The Prophet was so depressed that he prayed to Allah, who then sent down the Angel of the mountains who asked for the Prophet's permission to fold the mountains together and crush to death all those that lived there. But what was the prophet's reply? "Yes, kill them all as they did not listen to me"? No, off course not! His answer was "No, I hope Allah will bring from them people who will worship Allah alone, associating none with Him."

This was the example of the Prophet, even though he felt bitterness and was very angry with them, he had the discipline and control to not let his emotions control his actions and he forgave them realizing that they were merely misguided.

One companion asked him, Give me some advice by virtue of which I hope for good in the life hereafter, and he said, "Don't be angry." Another person asked, what will save me from the wrath of God, and he said, "Do not express your anger." A third person asked three times, 0 Messenger of Allah, give me an order to do a short good deed, and he said, "Don't be angry." Once he asked a question of his companion, "Who among you do you consider a strong man?" They said, the one who can defeat so-and-so wrestler in a fight, and he said, that is not so. The one who is strong is the one who can control himself at the time of anger.

He also said that anger is like fire, which destroys you from within, and it can also lead you to the fire of hell by your own expressions of anger unjustly.So being angry is similar to being drunk. In both cases, we do not know what we are doing, hurting ourselves or someone else, and afterwards when the intoxication is over, we repent.

Sheikh Hassan Al Basri said that one of the signs of the Believers is that his anger does not prevail over him.One should distinguish between natural response to wrongdoing and disbelief. A person who has no feelings about oppression, wrongdoing and disbelief is, in fact, an impotent person emotionally. It has been said, "Evil flourishes when a few good people do not do anything to oppose it." Thus response to injustice and operation in a civilized way is the appropriate expression of anger. Being neutral to injustice is equal to contributing to injustice.

Caliph Ali was once fighting in a war imposed on Muslims, and the chief of the Unbelievers confronted him. During the fight, the Ali was able to overcome him, who fell down on the ground and Ali was about to kill him. This person, knowing his fate now, had no choice so he spit on the face of Ali. Ali immediately got up and left him alone. The man came running to him and asked, "You had a chance to kill me since I am a Polytheist; how come you didn't use your sword?" Ali said, "I have no personal animosity toward you. I was fighting you because of your disbeliever, on behalf of God. If I had killed you after you spat on my face, then it would have become my personal revenge which I do not wish to take." That Unbeliever chief became a Muslim immediately and testified that 'There is no god but Allah, and that Prophet Mohammad (PBUH) is the Messenger of Allah'.When Prophet Mohammad (PBUH) became angry at someone else's wrong actions or disbeliefs, he never expressed it with his hand or tongue. His companions knew that he was angry by just looking at his face, which would turn red and with some sweat on his forehead, and he would keep quiet for a moment, trying to control himself.What happens to us physiologically when we are angry?Our heart beats rate and blood pressure go up; this is a direct effect of excessive adrenalin in our system. Our physical strength increases although spiritual strength decreases.

Our intellect or power to reason disappears, and things we would not justify in a normal state become acceptable.How can we defeat anger?To root out anger is impossible and unnatural, and may even be harmful. But what we should do is to control this feeling and do not let it lead us to what's wrong and forbidden in our religion (Islam).Firstly I advise you to avoid too much sensitivity that makes you "deaf, dumb and mute." For some people getting engaged in something else that diverts their attention away from what's angers them can be useful. For others, engaging in remembrance of God or meditation might work, but for common folk, they need some worldly tools.

Prophet Mohammad (PBUH) had advised us that when angry, one should try to change his body position. Meaning, if you're standing up, sit down, and if you're sitting down stand up. If this didn't work, then go and wash and get prepared for praying.When you're angry, think of Allah. Think of Allah's anger and punishment. Is Allah's wrath less than your wrath? And what happens when He expresses His wrath? We humans who seek forgiveness from Allah must forgive others first. When one forgives someone else, it establishes peace and tranquility in one's heart.

The first attribute of Allah that we Muslims are reminded (of) is Ar Rahman-Ar Rahim that is, Kind and Merciful. God Himself said, my mercy overtakes my wrath, and He told in one of the Hadith Qudusi, 'O son of Adam, when you get angry, remember Me." Thus, remembrance of God and meditation will put us on the right track. One of the meditation words is ya Halim (Patient), which is one of the attributes of God, being the Mild One. One can also pray to God to take control.

We must also think that our life that is so dear to us, is a temporary life, and we must not forget our death and destroy the life of eternity at the cost of this life. Washing one's face with cold water or taking a cold shower is also helpful.That is how the saying, "turn the other cheek" came about. One will become a calm person when he makes peace with himself, Allah and his surroundings. Anger is a costly weed; it costs one his health, life in this world, and the life in the Hereafter. This weed must be rooted out to allow the healthy plant of righteousness, piety and obeying Allah nurture and grow. Also anger is one of the weapons of Satan, we should be careful that we do not fall prey to his weapons, rather we should protect ourselves by being patient. -(IslamOnline)

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Kaizen : Defined and Applied

Kaizen Defined

Kaizen approaches productivity improvement. In Japanese, Kaizen means “small, incremental, continuous improvement,” and the English translation is “continuous or continual improvement.” It is a process that, when done correctly, humanizes the workplace, eliminates unnecessarily hard work (both mental and physical), teaches people how to do rapid experiments using the scientific method, and how to see and eliminate waste in business processes.
The objectives of Kaizen include eliminating waste, or activities that add cost but not value, just-in-time delivery, production load leveling of amount and types, standardized work, paced moving lines and right-sized equipment,. Basically, Kaizen takes processes, systems, products, and services apart then rebuilds them in a better way. Kaizen goes hand-in-hand with that of quality control circles, although it is not limited to quality assurance.

Kaizen Applied

Outside experts can help get Kaizen started. They work in your facility to identify problems that those close to the work may not see.  After instigation, employees can then continue implementing Kaizen works and experiencing its benefits.

Key Elements:

  • Structured approach – A formal schedule including kick-off and a final presentation to management in addition to Kaizen Team Leader updates
  • Aggressive objectives –Encouraging the team to stretch beyond its comfort zone to achieve goals
  • Short time-period – A Kaizen Event typically lasts two to five days, plus time to follow up
  • Full-time team membership – Team members are full-time for the duration of the Kaizen Event, but they are not expected to perform their normal duties during the process
Employee training and communication, combined with direct involvement by the management, is critical to Kaizen’s success. For example, a manager spending a week on the shop floor working with employees and encouraging them to develop suggestions will expedite the arrival of benefits as opposed to distant leadership. A manager should also ensure that employees see their suggestions addressed immediately instead of allowing their input to disappear into a management "black hole."
Kaizen does not view problems as negative but rather sees them as positive opportunities for improvement. To implement change, Kaizen finds, reports, and fixes problems. This program encourages rewarding employees who expose inefficiencies and other issues. Kaizen is about taking action to generate suggestions then implementing productive ideas as soon as possible.
Kaizen results in improved productivity and quality, better safety, faster delivery, lower costs and greater customer satisfaction. Furthermore, employees find work to be easier and more enjoyable—resulting in higher employee morale and lower turn-over.

Outcomes include:

  • Reduction in waste in areas such as inventory, waiting times, transportation, worker motion, employee skills, over production, excess quality, and in-processes
  • Improvement in space utilization, product quality, use of capital, communications, production capacity, and employee retention
  • Immediate results. Instead of focusing on large, capital-intensive improvements, Kaizen focuses on creative investments that continually solve large numbers of small problems. The real power of Kaizen is in the on-going process of continually making small improvements that improve overall processes and reduce waste

What is Kaizen?

Kaizen is...
... a system of continuous improvement in quality, technology, processes, company culture, productivity, safety and leadership.

We'll look at Kaizen by answering three questions: What is Kaizen? What are the benefits of Kaizen? What do you need to do to get started using Kaizen principles?

What is Kaizen?

Kaizen was created in Japan following World War II. The word Kaizen means "continuous improvement". It comes from the Japanese words "Kai" meaning school and "Zen" meaning wisdom.

Kaizen is a system that involves every employee - from upper management to the cleaning crew. Everyone is encouraged to come up with small improvement suggestions on a regular basis. This is not a once a month or once a year activity. It is continuous. Japanese companies, such as Toyota and Canon, a total of 60 to 70 suggestions per employee per year are written down, shared and implemented.

In most cases these are not ideas for major changes. Kaizen is based on making little changes on a regular basis: always improving productivity, safety and effectiveness while reducing waste.

Suggestions are not limited to a specific area such as production or marketing. Kaizen is based on making changes anywhere that improvements can be made. Western philosophy may be summarized as, "if it ain't broke, don't fix it." The Kaizen philosophy is to "do it better, make it better, improve it even if it isn't broken, because if we don't, we can't compete with those who do."

Kaizen in Japan is a system of improvement that includes both home and business life. Kaizen even includes social activities. It is a concept that is applied in every aspect of a person's life.

In business Kaizen encompasses many of the components of Japanese businesses that have been seen as a part of their success. Quality circles, automation, suggestion systems, just-in-time delivery, Kanban and 5S are all included within the Kaizen system of running a business.

Kaizen involves setting standards and then continually improving those standards. To support the higher standards Kaizen also involves providing the training, materials and supervision that is needed for employees to achieve the higher standards and maintain their ability to meet those standards on an on-going basis.
(by Steve Hudgik)

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Modern Management Principles and The Holy Quran

The Holy Quran, The greatest blessing on humanity, the most comprehensive collection of guiding principles, teaches us, guides us and shows us light in every walk of life. Let it be personal to social matters or issues related with economics, business or politics.
A Muslim is required to believe in its directions, act on them and spread it to others. Ideally that's the only way of success, here and hereafter!!! (Surah Al-Asar), contrary to the fact, today Muslims are those who are found to be living in contradiction with its teachings, but more surprisingly the non-Muslims are now seen more close, of course to not all, but to some of the principles stated in this Great Book.

The principles mentioned in it are ordained to us by The One (SWT) who has designed the Nature, thus the compatibility of these principles with the natural laws is indeed irrefutable for the one who believe in Designer and creator of all. Anyone even a non Muslim, who follows these laws / principles, will probably get the results to the extent or comprehensiveness of his implementation. Like he will save and increase efficiency of his life if he reduced wastefulness, or people will trust in his credibility if he keeps promises and remains honest all the time, et cetera. However his fate in the hereafter cannot be guaranteed.

If we specifically talks about business world, unfortunately today we don't find any Muslim organization (purely) which is considered as a business icon all around the globe. The icons are non Muslim indeed. There exemplary stature inspires everyone seeking guidance in the business world. The leaders among them claim that their success is derived from believing and strictly adhering to certain principles and values (Check "Built to Last by Jim Collins); and surprisingly they are quite similar to what Quran has been trying to infiltrate our deaf ears.
Take Toyota as an example, elimination of wastage (Al-Quran Isra: 26~27, Araf:31) and respect for all (Imran:159, Hujrat:13) is the core of the entire business empire Toyota has developed around the globe. Furthermore when we drill down we see lots of principles which we being Muslims should be experts of. Like Kaizen which is about continuous improvement against inefficiencies or more like Jihad (Ma'idah:35). Or talk about JIT which is about keeping limited inventory or not keeping anything not needed, for a Muslim this should be a state of mind as instructed to him in Baqara:219, Yunus:58 or Tauba:34. Furthermore Toyota emphasis on authenticity of information to an extent that it expects every employee to verify each bit of information on a problem by visiting the site himself, if the employees would have been true Muslims, they would have require no training (Isra:36).

And think about the emphasis on quality of product, at Nike, Nokia, IBM, 3M or Boeing, can anyone really expects them to compromise on this aspect, now think about any Pakistani Brand. Whether it's a shoe, tooth paste, home appliance, etc it's only the pocket constraints that's push people closer to the local brands coming out of factories owned and operated by Muslims! (No doubt there are exceptions) Most local brands don't meet expectations, foreign brands do contrary to the fact that they are manufacturedbro by Non Muslims, most do it for profit of course, but the leaders in the market do it for ideals and withholding to their principles of delivering what is promised to the customers, despites its impact on profitability; as mentioned by Jim Collins in his Book "Built to Last" (Page#8). Surprised! Shouldn't that be expected from the believers of the Holy Book as it clearly states in Mutaffifin:1-3 "Woe to those that deal in fraud,- Those who, when they have to receive by measure from men, exact full measure, But when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account?" and also in Isra:35, Shaura:181-182, and Rahman:7-9.

The importance of commitments, promises and contracts requires no explanation. Dr. Stephan R. Covey states in his book 'The 8th Habit' (p#169) "Nothing destroys trust faster than making and breaking a promise. Conversely, nothing builds and strengthens trust more than keeping a promise you make". For a Muslim it should be a matter of faith and success in the hereafter (Isra:34, Nahl:91, Ma'idah:1 and Saff:2-3), but these traits are really in a short supply.
These are just a few examples, many more can be quoted. I don't mean to make Toyota, Jim Collins, or Dr. Stephan R. Covey our ideals, in fact I ask you, why look at them for guidance despite the fact we all have access to the most comprehensive set of principles called Quran and the sunnah of the most comprehensive Personality (PBUH)! … Then what stops us?
Omar Javaid, Sr. Editor, CRITIC MAG

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

5 Characteristics of Quality Leaders

As companies around the world struggle to stay afloat, many are turning to their managers when making the tough decisions. A good manager is used to having to deal with these kinds of problems, but probably not on the same scale. Quality leadership can be hard to come by, but there are some things managers can practice daily at work to ensure that they are better, more effective leaders. What follows is a brief list of some of the characteristics of a quality leader.

Earn the Respect of Others

Good leaders don’t demand respect from others, they earn it through their actions and being consistent with these actions. Only a poor leader would demand respect from his workers through fear and intimidation tactics. The situation we now find ourselves in economically is scary enough; there is no reason to add insult to injury. Part of earning the respect of others is intertwined with other characteristics listed within this article.

Knowledgeable and Capable

A quality leader is both knowledgeable and capable of doing the work he asks of others himself. No one will listen to a supposed leader who has no idea what he is talking about. Good leaders demonstrate their knowledge through action, not words. Those who stand behind good leaders know that he is capable of doing any task that he ask a member of his team to do, because they have seen him roll up his sleeves and do the work himself in the past.


Fairness is a quality that all good leaders possess. They are able to take the facts of a given situation and render a decision based on all necessary information. Good leaders take all sides into account and make a decision that will be most beneficial to all involved. If a punishment is necessary, it is fitting to the transgression.

Excellent Communication Skills

The best leaders can effectively communicate in all forms, whether it is written or verbal. A good says exactly what he means and leaves no wiggle room for interpretation or ambiguity. Directness with employees and team members is an absolute necessity in ensuring the success of a business, and good leaders make sure to be as precise as possible when it comes to communications.

High Expectations

Successful companies are headed up by successful leaders who have high expectations. This is not to say that their expectations are unreasonable by any means, but good leaders know what their people are capable of and expect them to maintain an optimal level of efficiency. This attribute benefits all parties involved and contributes to the success of all as well.

This post was contributed by Holly McCarthy

10 P's of Marketing Mix

10 P's of Marketing Mix

1. Product
2. Price
3. Place
4. Promotion
5. People
6. Process
7. Physical asset
8. Perception
9. Projection and prediction

McCarthy's (1960) traditional marketing mix consists of  Product, Price, Place and Promotion.
Magrath proposed another 3 more Ps to meet the needs for marketing in service-based industries - People, Physical evidence and Process.
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SWOT: Assess the strengths, weaknesses, opportunities and threats of your business with SWOT analysis

One of management's trustiest tools is the SWOT analysis. You take a calm, cool look at the organisation's Strengths, Weaknesses, Opportunities and Threats. Then you seek to capitalise on the Strengths, Eliminate the Weaknesses, seize the best Opportunities and counter the Threats. Could the magnificent success of Microsoft, with its 90% gross margin and $9 billion of cash, really be threatened? In a brilliant study in Worldlink magazine, Howard Anderson has shown that the answer is Yes - a dozen times over. Although the threats are specific to the software industry, they are also generic. Try them on your own firm:
1. Could newcomers (including breakaways from your own company) create damaging competition?
2. Is there an equally powerful force in the market which could muscle into your territory?
3. Is there a rival technology or other differentiator which could come out on top?
4. Are you weak compared to the competition in a key market segment?
5. Is the market developing in ways that favour competitors more than you?
6. Could your customers takes major sources of revenue away?
7. Is there a major area in the market where you lag rather than lead?
8. Does a competitor have a stronger hold on your biggest customers?
9. Is there a growing market where you are being left behind?
10. Are there environmental/regulatory threats?
11. Could unsuspected challenge arrive from outside the existing industry?
12. Is your market too broad for all threats to be safely covered?
The thirteenth question, of course, is whether, if any of the dozen apply to your business, you are doing anything effective to counter the Threat or, better still, to convert Threat into true Opportunity. It's an intimidating list, even for mighty Microsoft, especially when you see the names of its leading enemies: Sun Microsystems, the big banks, Cisco, Compaq, Netscape, Oracle, SAP and IBM. The latter giant provides Anderson with his starting point. Could what happened to IBM afflict Microsoft? His company, The Yankee Group, had been deeply impressed by the Strengths deployed by IBM in 1982 - and not surprisingly.
IBM led in every important market of the time: mainframes, communications, mainframe storage, mincomputers, and personal computers. It earned more profit than the next nine computer firms generated in total sales, spending more on R&D than they made in earnings. The Yankee Group concluded that IBM was therefore invulnerable - yet the giant was about to embark on a prolonged slide that, amazingly, leaves its market value lagging behind both Microsoft and Intel, and by no small margin, either. IBM's $86 billion of mid-1997 market capitalisation compares to $149 billion for Microsoft and $124 billion for Intel: IBM should plainly have held on to its old strategic investment in the latter. How could the Yankee Group's assessment be so spectacularly wrong?
In the first place, never concentrate just on your own or anybody else's Strengths. That's highly dangerous, partly because they can so easily turn into Weaknesses. Thus IBM's domination of mainframes, and dependence on them for the bulk of its profits, became an incubus as the market moved away to the PCs from which Intel and Microsoft drew their super-growth. The latter's similar domination and dependence in PC operating systems almost moved from Strength to Weakness as the Internet took off - and Gates was much nearer than his 'two years away from failure' when, with a mighty effort, he reversed engines and poured billions into Net, software probably just in time.
Second, market share and leadership by size are not strongpoints in themselves. In PCs, Compaq was able to exploit a world share of around 3% far more effectively than IBM, which had three times the market. The issue is how the market share, whether leading or not, has been achieved and sustained. Is the product or service perceived as superior? Is it cheaper? Is the distribution more effective? Is the cost level lower? Is speed-to-market faster? Are customer requirements met more accurately?
In the case of Compaq v IBM, curiously enough, the answers were all negative. Compaq had no significant advantage in product, distribution, costs, price, speed-to-market or customer satisfaction. But in the money-losing crisis into which Compaq suddenly plunged, it reacted radically on every point to create a stronger platform than its rival. The cost ratio, for instance, came down from 31% to 12.5% - an astonishing performance - as new products were launched at high speed, and the premium price policy was abandoned in favour of leading price levels downwards.
The key Strengths at Compaq were therefore intangibles, as were the Weaknesses at IBM. The smaller company was able to react and reform at speed; the larger could only react slowly and reluctantly. So the Yankee Group's second error was to concentrate on static Strengths, which are the results of past performance, rather than analysing the factors which will govern performance in the future. Even IBM's massively higher R&D spending was irrelevant in this context - the quantum of expenditure was less important than the uses to which its results were being put. The Yankee research consequently missed the low rate of conversion of R&D into saleable products - clearly shown, for example, by the strange RISC saga.
IBM's discovery of Reduced Instruction Set Computing, primarily the work of a technologist named John Cooke, was potentially a big winner, since it much enhances the performance of smaller computers. IBM, though, didn't use its own discovery in a work-station until 1990 - three years after Sun Microsystems and twice as long after RISC's availability. How could such absurdity be allowed? The explanation is that RISC was resisted by people who were dedicated to extending the 360-370 mainframe architecture. That's a perfect (or imperfect) example of how Strength turns into Weakness. Exactly the same mindset also allowed Compaq to seize the advantage, and a market share of nearly one third. in client-servers, powerful PCs which serve networks.
The resilience which IBM's rivals have shown, compared to their opponent's fateful conservatism, rests on people. In any industry today, the brighest and best employees are aware that their own SWOT analysis could lead to breakaway. They could stay with the company and develop their ideas within its embrace. But fragmented markets and booming stock prices, coupled with increasingly plentiful venture capital, offer a constant temptation.
Keeping people one by one, buying them off, so to speak, is no solution. The company has to create a culture that's so attractive, so hard to leave, that the retention rate will remain very high. In other words, Putting People First has to be the base strategy. An unhappy workforce is both a Weakness and a Threat - as British Airways has recently found. Its resurgence was founded on a programme actually called Putting People First - but, after a pilots' strike threat last year, in late June cabin crew and ground staff were equally alienated.
Look at what Fortune magazine calls the 'four-pronged approach' adopted by chief executive Bob Ayling, and the missing element is immediately obvious:
1. Develop a marketing plan with universal appeal
2. Help employees understand the company's global vision
3. Benchmark off mistakes that others have made in the past
4. Select the right partners for joint ventures overseas.
The wording of the only reference to people is curious. So long as they 'understand' that BA wants to be seen as a global airline, not a national carrier, that's fine. But consider this quotation: 'At a recent employee gathering in New York, none of the 75 people in the audience could remember the company's... mission statement' - which was only a single sentence. To put it mildly, there's not much point in a mission that everybody has forgotten.
The massive facelift on which BA is engaged went down well with the same audience ('there were audible oohs and ahs when images of the new planes and tocket jackets flashed up on a big screen.') The author's conclusion was that; 'If you give somebody a product they can be proud of and tell them why it's changing, you stand a good chance of helping them sell it better.' That is far from the truth. There are some key questions that need to be answered:
1. Have the people helped to create the new product?
2. Did they contribute to the thought processes that led to change?
3. Are they constructively involved in deciding how to sell the product better?
The answers at BA appear to be negative. One report accuses Ayling of being someone who 'may not have grasped the finer points of dealing with real people, as opposed to numbers on a page.' The curious issue here, though, is that BA has confronted similar problems before. Some of its managers have learned the powerful lesson that change accomplished through people is far more effective than change forced upon them. In the last 1980s, the troubles with its engineering division became so acute that management was forced to take a strike, keeping the airline going with white-collar labour, until the unions capitulated.
Alastair Cumming, the manager in charge, concluded that 'very determined management' could only go so far. Unless the employees could be positively involved and their willing support obtained, further progress would be impossible. The results of changing the management culture - from order and obey to cooperation - were spectacular. Cumming sold off its engineering overhaul business to GE, cut staff numbers by 500, and took £38 million out of costs in the first year - without any dispute. Once improvement had become the shared objective, and the necessary tools had been provided, examples soon abounded of employees taking the initiative in raising quality and reducing cost.
The BA engineering exercise rubs in the point that the SWOT exercise needs to be in two parts: internal and external. The first category includes matters like R&D strengths, engineering know-how, the cash in the bank, and so on. But these are passive. The second category is what actively turns the physical assets into achievements in the external world. This was brought home to me forcefully by reading Ryuzaburo Kaku's account of how he devised the two plans - in 1972 and 1982 - which converted Canon into, first, a premier Japanese company and, second, the world technology leader that it is today.
The process, according to Kaku's article in the July-August Harvard Business Review, began with a meeting at which the young Kaku argued that Canon's obvious weakness of the time (a cash shortage so severe that it couldn't pay dividends) resulted from internal defects: 'poor decision-making and bureaucratic organisation'. Given his chance, Kaku 'radically decentralised decision-making, redesigned the organisation' and 'poured resources into R&D'. As the fruits poured forth, Kaku developed his ideas on 'kyosei' or 'a spirit of cooperation'.
He describes kyosei as a five-stage journey, starting with economic survival. That's where the vast majority of companies stop - making reliable profits from strong market positions: just like IBM or BA, in other words. But Kaku argues that this stage is not enough - the company must move on to cooperation between management and labour. Salaries, bonuses and training are all involved in this process: 'The two sides are in the same boat...sharing the same fate'. Plainly, this is the stage where BA has fallen short. Instead of emulating his own engineering side's later enlightenment, Ayling is adopting the strong-arm methods of its former, unhappier days.
Even cooperation is still not enough - 'this stage of kyosei can become so inwardly focused that it does little to solve problems outside the company'. Kaku goes on to call for cooperation with both suppliers and customers and with communities. Suppliers, for instance, are 'provided with technical support and in turn deliver high-quality materials on time'. But even that's not enough. In this third stage, 'companies often focus so much on local and national problems that they neglect global problems' - which leads on to Kaku's next two stages, globalism and partnership with governments.
Now, for most businesses these two stages seem infinitely remote - though globalism, thanks partly to the Internet, is a rising force in many markets today, and may well become decisive. But Kaku's five stages raise a crucial point: nothing is ever enough. No matter how great your Strengths, how limited your Weaknesses, how minimal the Threats and well-taken the Opportunities, there is always a next stage. The organisation must continually challenge itself and move onwards and upwards. An encouraging internal and external SWOT analysis is simply a foundation - an encouragement to do better still, and then more.
Nevertheless, the foundations laid by Kaku, together with the principles of employee cooperation which he used, make an instructive guide and form a penetrating two-part questionnaire:
1. Have you formed a large overall ambition? (Canon's was to join the top ranks of global companies and move from cameras to all-round high-technology manufacturer).
2. Have you set aggressive, long-term performance targets for every part of the organisation?
3. Have you got the right set-up? (Canon formed a matrix with three main product lines as vertical pillars, linked by three horizontal activities - manufacturing, marketing and R&D).
4. Are you investing heavily in all the horizontal activities?
Turn from Canon to BA, and the four questions would reveal similar foundation strengths, starting with the fact that it carries more passengers than any other airline. Its planned alliance with American Airlines should create a dominant force in an industry where BA already boasts the highest profitability. Its plans to cut costs and employment by radical reorganisation, including the outsourcing or disposal of services, will add to the Strengths and ward off any Threats. But the whole edifice (including those plans) rests on the next four questions based on the Canon experience:
5. Have you eliminated all distinctions between different types of employee?
6. Have you based excellent employee relations on investing in high salaries, extensive training programmes, generous vacations., etc?
7. Do you dislike and seek to avoid lay-offs, early retirements,etc.?
8. Do you make it a prime objective never to engage in confrontation with your employees?
Here BA's answers are far less satisfactory. Yet the two parts, the strategic exploitation of commercial assets and the creation of a one-company, cooperative culture go hand-in-hand. You can see the fruits of Canon's two-part octet in a decade of growth in net profits by 20% annually, with sales rising at 9%, and the return on both sales and equity more than doubling. In copiers and desktop printers, its main products, too, Canon is world leader. To take today's abundant Opportunities in like style, against multiplying Threats, never forget that Strengths can become Weaknesses - but, equally important, Weakness can be turned into Strength.
(by Robert Heller/Thinking Managers)

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