Fluctuation of Gold Price

read and give rewards to me ABSTRACT Gold is a brilliant yellow precious metal that is resistant to air and corrosion. Gold comes second after bank deposits when it comes to the preference for investment in India and considered a savings and investment vehicle. India is the world’s largest consumer of gold in jewelry as an investment.Gold is traded in the form of securities on stock exchange Even when the gold prices are high there is steel boom in the commodities market of gold hence the main purpose and the need of the study are to know the investment pattern in gold and to hedge the risk The data which is used in the study is secondary data. The analysis has been done by using the technical tools Relative Strength Index (RSI), MACD. From the analysis it can be concluded that gold as an investment avenue has increased. There wider market for gold and a person with small amount can trade in gold.RSI can be considered as the best tool to evaluate the price movement of gold. Th e investors have to keep a keen watch on the price of gold and since there is an upward momentum in the price of gold it is time for the investor to sell CONTENT | | | | |CHAPTER |PARTICULAR |PAGE NO | |NO. | | | |1. INTRODUCTION | | | |NEED FOR THE STUDY | | | |OBJECTIVE OF THE STUDY | | | |SCOPE OF THE STUDY | | | |RESEARCH METHODOLOGY | | |LIMITATIONS | | | | | | |2. REVIEW OF LITERATURE | | | |TABLES AND GRAPH | | | | | | |3. COMPANY PROFILE | | | | | | |4. |DATA ANALYSIS & INTERPRETAIONS | | | | | | |5. FINDING | | | |CONCLUSION | | | |RECOMMENDATIONS | | | | | | |6. BIBLIOGRAPHY | | CHAPTER NO — 1 INTRODUCTION INTRODUCTION ABOUT INDIAN COMMODITY MARKET Commodity future trading is an old concept and flourished in the late nineteenth century. There were several such exchanges that traded in specific commodities in certain geographies. In the 1960s the futures market ran into trouble as high inflation resulted from a series of wars and droughts in the countr y which lead to considerable speculation and hoarding of agricultural commodities.Ever since the down of civilization commodity trading has become an integral part in the life of mankind. The very reason for this lies in the fact that commodities represent the fundamental utility of human being. Commodity markets are market where raw or primary products are exchange. These raw commodities are traded regulated commodity exchange they are bought and sold in standardize contract that may any movable property other them actionable claims, money and securities. This commodity market is becoming day by day the best for the increasing economy.Gold is valued in India as saving and investment vehicle and is the second preferred investment after bank deposit. India is world’s largest consumer of gold jeweler and in investment. Gold is traded in the form of securities on stock exchange. In the cities gold is facing competition from the stock market and a wide range of consumer goods. Do mestic consumption is dictated by monsoon, harvest and marriage season. Indian jewellery off take is sensitive to price increases and even more so to the volatility.For years, portfolio managers have recommended a minimum of 10% to 20% of one’s total net worth in gold as a hedge against inflation or as a safety net in the event that our paper money system collapses. Hence the study is about the commodities market in gold. Every commodity has its own price, and varies across markets even at the point of first sale, i. e. the wholesale market. There is of course another very active financial market, which has a price that is widely traded, i. e. the stock market. Here shares of companies are traded by investors at prices which are determined by multitude of perceptions. NEED FOR THE STUDY:- ? Since there is a cut throat competition in the present world market There is a need to study about factors affecting gold prices ? Even when the gold prices are high there is still boom in the commodities market of gold hence the main purpose and the need of the study are to know the investment patterns in gold and to hedge the risk OBJECTIVE OF THE STUDY:- 1. To know how gold is traded 2. To know the fluctuation of gold prices 3. To know the factors affecting gold prices 4. To evaluate the trend analysis of gold . To study the impact of gold on investors METHODOLOGY: – The data which is used secondary in a nature. SECONDARY DATA:- ? From various test books, journals, magazines, news papers and booklets from company. ? Information collected from different websites likes Gold World, MCX etc. SCOPE OF THE STUDY:- ? The scope of the study is about the day to day changes in the price of gold and the reasons behind the change. ? It focuses more on the fluctuations and the interest of investors to invest in gold even though the price is getting higher. The study also focuses more on the fluctuation in the gold and its relation to oil markets oil and gold are the two main items in the economy now that tends to increase day by day. LIMITATIONS:- ? Difficulty in getting the lives prices of gold in absence of online research software. ? Use of limited technical tools. ? Commodity trading is limited to gold only. ? There may be factor other than those studied in this research which may impact on gold prices. ? The study is limited only for a certain period of time i. e. April to June 2012 CHAPTER-2 REVIEW OF LITERATURE TRADING OF GOLD IN COMMODITY MARKETS COMMODITY MARKETCommodity markets are markets where raw or primary product these raw commodities are traded on regulated commodities Exchange in which they are brought and sold in standardized contract it cover physical product markets but not ways that services including those of government, nor investment debt, can be seen as a commodity A commodity trading is sophisticated form of investing it is similar to stock trading but instead of buying and selling shares of companies, an investor buys an d sells commodities likes stocks, commodities are traded on exchange where buyers and sellers can work together to either get product they need or to make a profit from the fluctuation prices. There are few ways to trade commodities. Futures are contracting to buy or sell commodities at specific date. An option is the right to buy or sell a commodity at a specific price and date. COMMODITY TRADING: Trading futures is the purest way to invest in commodities. To trade commodities, an individual trading account can be opened either directly with a futures commission merchant or indirectly through as introducing broker.Another way to trade commodities is through a managed account, where you give someone written power of attorney to make and execute decisions about what and when to trade. He or she will have discretionary authority to buy or sell for your account or will contract you for approval to make trades, or you can hire a commodity trading advisor for a fee. And lastly, ever incr easingly popular methods of diversified investing in commodities include commodity pools (limited partnerships) or commodity related mutual funds. In all futures markets, trading decision are made in two ways – Fundamental or Technical, although many traders use a combination of both.Fundamental analysis includes all factors that influence supply and demand. For the physical commodities markets, fundamental factors include weather and geopolitical events in producing countries – outside forces that influence price action. For the financial futures markets, factors such as Federal Reserve actions and economic reports are among fundamental forces affecting prices. Technical analysis is based strictly on inside market forces. It involves tracking various price patterns that occurred in the markets in the past. Analysts focus on a variety of time frames, and trading decisions are based on past tendencies with the idea these price patterns tends to repeat themselves.Technic al analysis involves a wide range of techniques, and a variety of market indicators are studied including volume, open interest, and momentum. Each individual analyst has his favorite approach – technical analysis is just as much art as it is science. REGULATOR OF COMMODITY MARKET THE DIFFERENT PRODUCT IN COMMODITY MARKET ARE USE 1. Precious metal 6. Plantations 2. Base metal 7. Spice 3. Pulses 8. Sugar 4. Cereals 9. potato 5. Energies Introduction Gold Gold is a unique asset based on few basic characteristics. First, it is primarily a monetary asset, and partly a commodity.As much as two thirds of gold’s total accumulated holdings relate to â€Å"store of value† considerations. Holdings in this category include the central bank reserves, private investments, and high-cartage jewelry bought primarily in developing countries as a vehicle for savings. Thus, gold is primarily a monetary asset. Less than one third of gold’s total accumulated holdings can be c onsidered a commodity, the jewelry bought in Western markets for adornment, and gold used in industry. The distinction between gold and commodities is important. Gold has maintained its value in after-inflation terms over the long run, while commodities have declined. Some analysts like to think of gold as a â€Å"currency without a country’.It is an internationally recognized asset that is not dependent upon any government’s promise to pay. This is an important feature when comparing gold to conventional diversifiers like T-bills or bonds, which unlike gold, do have counter-party risk History of gold in India Prior to 1962, India was the world’s largest gold market and the main trading center was Bombay. In 1962, the government enacted the Gold Contract Act, which prohibited the citizens of India from holding pure gold bars and coins due to loss of reserves during the indo-china war. It was declared that the old holdings in pure gold bars to be compulsorily co nverted into jewelry. Pure gold bars and coins were to be dealt only by licensed dealers.A large unofficial market sprung up which dealt in cash only as a consequence of this legislation that adversely affected the official gold market. This also made way for smuggling and black marketing, which comprised of many jewelers and bullion traders. In 1990, India was on a verge of default of external liabilities as it had a major foreign exchange problem. It had to give up the concept of controlling and licensing as it led to nothing more than corruption and shortages. As a result, the India government pledged 40 tones from their gold reserves with the bank of England. India had to adopt the concept of liberalization. The government abolished the 1962 Gold control Act in 1992 and liberalized the import of gold in India for a duty payment of Rs. 250per 10 grams.The government made up for the foreign exchange problem by allowing free imports and earning the taxes. This step expanded the gol d market and it also waved off the unofficial trade i. e. smuggling and black marketing. This makes India the most price-sensitive market for gold in the world. Gold in Indian present scenario Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the world’s largest consumer of gold in jewelry (much of which is purchased as investment). The hoarding tendency is well ingrained in Indian society, not least because inheritance laws in the middle of the twentieth century lent a great desirability to anonymity.Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%. Gold’s circulates within the system and roughly 30% of gold jewelry fabrication is from recycled pieces. India is typically also the largest purchaser of coins and bars for investment (>80tpa), although last year it had to concede first place to Japan in the wake of the heavy buying in the first quarter due to fears for the stability of the Japanese banking system. In 1998-2001 inclusive, annual Indian demand for gold in jewelry exceeded 600 tons; in 2002, however, due to rising and volatile prices and a poor monsoon season, this dropped back to 490 tons, and coin and bar demand dropped to 67 tons.Indian jewelry off take is sensitive to price increases and even more so to volatility, although this decline in tonnage since 1998 is also due in part to increasing competition from white and brown Goods and alternative investment vehicles, but is also a reflection of the increase in price. The Indian bride’s â€Å"Streedhan†, the Wealth she takes with her when she marries and which remains hers, is still gold, however (thus giving gold an important role in the â€Å"empowerment† of women in India). The distinction between gold and commodities is important. Gold has maintained its value in after-inflation terms ove r the long run, while commodities have declined. Some analysts like to think of gold as a â€Å"currency without a country’.It is an internationally recognized asset that is not dependent upon any government’s promise to pay. This is an important feature when comparing gold to conventional diversifiers like T-bills or bonds, which unlike gold, do have counter-party risk. SIGNIFICANCE OF GOLD IN INDIAN CULTURE Gold is a precious metal with which man kind has had a long and very intimate relation. Gold is considered as a symbol of purity and good fortune. Most of the gold that the entire world holds lies in India. The main reasons why Indians consider gold as an investment are. ? Gold is considered as equivalent to liquid cash: gold is considered as a security or assets which can be converted in to cash when ever required. Gold is very good investment :due to consistently increasing value, gold is considered as safe and secure investment ? Gold is a goof gift item: it i s precious and worthy it is again as gift during wedding birthdays or any other special occasions. It is symbol of prestige and is considered auspicious ? Gold considered as status symbol: Gold is symbolizes wealth. in Indian the weddings, the bride wears jewellary as a symbol of the family status. ? Gold has religious significance : Gold is a symbol of Hindu goddess lakshmi. Gold is bought or gifted on occasions of festivals like Dhanteras Dussera and diwali . ? Gold has great ornamental value: women and gold jewellery are inseparable from each other.Gold ornaments area always in fashion and will never become out of fashion . even the wedding rings are made of gold to mark a long lasting relationship ? Gold : Ancentral property: Gold is passed down from generation to generation as an ancestral property. .Gold producing countries †¢ South Africa †¢ United states †¢ Australia †¢ China †¢ Canada †¢ Russia †¢ Indonesia †¢ Peru †¢ Uzbekistan †¢ Papua new guinea †¢ Ghana †¢ Brazil †¢ Chile †¢ Philippines †¢ Mali †¢ Mexico †¢ Argentina †¢ Kyrgyz tan †¢ Zimbabwe †¢ Colombia The largest producer of Gold is South Africa. It accounts for an estimated 16. 5 million ounces of Gold annually in the next 3 year: and produces almost 20 percent of the world’s bullion.Hopping to control its declining production trend due to the extended weakness in the price of Gold in recent years. The South African Gold industry is working in the direction to lower its production costs and boost productivity. The second largest producer of gold is united states. It accounts for an estimated 10. 4 million ounces of Gold annually by 2001 and produces about 12. 5% of the world’ Gold supply Due to the expansion US Mining operations. And because of the reduced profitability due to the low price of Gold. Reduction in mine production is expected by 9% by the US during the next 3 years th e third largest producer of gold is Australia with an estimated 9. 6 million ounces annual production by 2001.Nearly 45% of the world gold supply was produced by the top 3 producing nations Latin America (Mexico, Peru, Chile and Brazil) and the Far East producer are accepted to increases production in the next three years. Though these countries add up to a very a small shares in the world’s totally supply there production increase will counter act some of the production cuts made up by the top 3 big producers Current Scenario in Indian Commodity Market Need of commodity derivatives for India India is among top 5 producers of most of the commodities, in addition to being a major consumer of bullion and energy products. Agriculture contributes about 22% GDP of Indian economy. It employees around 57% of the labor force on total of 163 million hectors of land Agriculture sector is an important factor in achieving a GDP growth of 8-10%. All this indicates hat Indian can be promot ed as a major centre for trading of commodity derivatives. INDIAN COMMODITY MARKET TRADING AND EXHANGES ? MCX: MULTI COMMODITY EXHANGE ? NCDEX: NATIONAL COMMODITY AND DERIVATIES EXHANGE ? NSEL: NATIONAL SPOT EXHANGE LTD ? NMCE: NATIONAL METAL AND COMMISSION EXHANGE MULTI COMMODITY EXCHANGE – MCX Multi commodity exchange is a commodity exchange based in Mumbai, the financial capital of India. The MCX is a demutualized electronic multi commodity futures exchange, and enables future trading of various agricultural and non agricultural commodities such as Metals, Pulses, Oils, Fiber, Energy, Petrochemicals, Plantations, Cereals, Bullion and Spices etc.As on 31st of December 2007, the exchange was offering futures trading in 55 different commodities. Established in November 2003 by Financial Technologies, the MCX hold a permanent recognition issued by government of India. Pattern on multi commodity exchange (MCX) MCX is currently largest commodity exchange in the country in terms of trade volumes, further it has even become the third largest in bullion and second largest in silver future trading in the world. Coming to trade pattern, though there are about 100 commodities trade on MCX, only 3 or 4 commodities contribute for more than 80 percent of total trade volume. As per recent data the largely trade commodities are Gold, Silver, Energy and base Metals.Incidentally the futures trends of these commodities are mainly driven by international futures prices rather than the changes in domestic demand-supply and hence, the price signals largely reflect international scenario. Among agriculture commodities major volume contributors include Gur, Urad, Mentha oil etc. whose market sizes are considerably small making then vulnerable to manipulations. NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LTD – NCDEX The second largest commodity exchange in the country after MCX. However the major volume contributors on NCDEX are agricultural commodity but most of them have common inherent problem of small market size, which is making them vulnerable to market manipulations and over speculation.About 60% trade on NCDEX comes from guar seed, chana and urad (narrow commodities as specified by FMC). National Commodity and Derivatives Exchange Ltd (NCDEX) is a technology driven commodity exchange. It is a public limited company registered under the Companies Act, 1956 with the Register of companies, Maharashtra in Mumbai on April 23, 2003. it has an independent Board of Directors and professionals not having any vested in commodity market. It has been launched to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency.In December 2003, the National Commodity and Derivatives Exchange Ltd (NCDEX) launched futures trading in nine major commodities. To begin with contracts in Gold, Silver, Cotton, Soya bean, Soya oil, Ra pe/ Mustard seed, Rapeseed oil, Crude palm, and RBD palmolein are being offered. National Multi Commodity Exchange (NMCE) NMCE is third national level futures exchange that has been largely trading in agricultural commodities. Trade on NMCE had considerable proportion of commodities with big market size as jute rubber etc. But, in subsequent period, the pattern has changed and slowly moved towards commodities with small market size or narrow commodities.Analysis of volume contributions on three major national commodity exchanges reveled the following pattern, major volume contributors. Majority of trade has been concentrated in few commodities that are ? Non Agricultural Commodities ( bullion, metals and energy) ? Agricultural commodities with small market size ( or narrow commodities) like guar, urad, menthe etc The commodity markets are being classified as following types of commodities. 1. Agricultural products. 2. Precious metals. 3. Other metals. 4. Energy. GENERAL CHARACTERIST ICS OF GOLD: ? Gold is primarily a monetary asset and partly a commodity. ? More than two-thirds of gold’s total accumulated holdings relate to â€Å"value for investment† with central bank reserves, private players and high-carat jewellery. Less than one-third of gold’s total accumulated holdings is a â€Å"commodity† for jewellery in western markets and usage in industry. CHARACTERISTICS OF GOLD MARKET: ? Gold market is highly liquid and gold held by central banks and other major institutions and retail jewellery keep coming back to the market. ? Due to large stocks of gold as against its demand, it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium. ? Effective Portfolio Diversifier: this phrase summarizes the usefulness of gold in terms of â€Å"Modern Portfolio Theory†, a strategy which is utilized by many investment managers today. Using this approach, gold can be used as portfolio diver sifier to improve investment performance. Effective Diversification During â€Å"Stress† Periods: Traditional methods of portfolio diversification often fail when they are most needed-that is, during periods of financial â€Å"stress†(instability). On these occasions, the correlations and volatilities of return for most asset classes(including traditional diversifiers such as bonds and alternative assets)increase, thus reducing the intended â€Å"cushioning† effect of diversified portfolio. INDIAN GOLD MARKET: ? Gold is valued in India as savings and investment vehicle and is the second preferred investment after bank deposits. ? India is the world’s largest consumer of gold in jewellery and in investment. In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. ? The gold hoarding tendency is well ingrained in Indian society. ? Domestic consumption is dictated by monsoon, harvest and marriage season . Indian jewellery off take is sensitive to price increases and even more so to the volatility. ? In the cities gold is facing competition from the stock market and a wide range of consumer goods. ? Facilities for refining, assaying, making them into standard bars in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively. GOLD MARKET MOVING FACTORS: ? Above ground supply from sales by central banks, reclaimed scrape and official gold loans. Producer/miner hedging interest. ? World macro economic factors-US Dollar, interest rate. ? Comparative returns on stock markets. ? Domestic demand based on monsoon and agricultural output. IMPORTANT WORLD GOLD MARKETS: ? London is the biggest as well as the oldest gold market in the world. ? Mumbai under India’s liberalized gold regime. ? New York as the home of futures trading. ? Zurich as a physical turntable. ? Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming reg ions. ? Tokyo was TOCOM sets the mood of Japan. Headquartered in Mumbai, Multi Commodity Exchange of India Ltd (MCX) is a state-of-the-art electronic commodity futures exchange.The demutualised Exchange set up by Financial Technologies (India) Ltd (FTIL) has permanent recognition from the Government of India to facilitate online trading, and clearing and settlement operations for commodity futures across the country. Having started operations in November 2003, today, MCX holds a market share of over 80% of the Indian commodity futures market, and has more than 2000 registered members operating through over 100,000 trader work stations, across India. The Exchange has also emerged as the sixth largest and amongst the fastest growing commodity futures exchange in the world, in terms of the number of contracts traded in of the number of contracts traded in 2009. MCX offers more than 40 commodities across various segments such as bullion, ferrous and non-ferrous metals, and a number of a gric-commodities on its platform.The Exchange is the world's largest exchange in Silver, the second largest in Gold, Copper and Natural Gas and the third largest in Crude Oil futures, with respect to the number of futures contracts traded. The Exchange strives to be at the forefront of developments in the commodities futures industry and has forged strategic alliances with various leading International Exchanges, including Euro next-LIFFE, London Metal Exchange (LME), New York Mercantile Exchange, Shanghai Futures Exchange (SHFE), Sydney Futures Exchange, The Agricultural Futures Exchange of Thailand (AFET), among others. For MCX, staying connected to the grassroots is imperative.Its domestic alliances aid in improving ethical standards and providing services and facilities for overall improvement of the commodity futures market. EXCHANGE-TRADED GOLD: GOLD-BACKED SECURITIES Gold is traded in the form of securities on stock exchange in Australia. France, Hong Kong, Japan, Mexico, Sin gapore, South Africa, Switzerland, Turkey, the United Kingdom and the United States. By design, these forms of securitized gold investment, all regulated financial products, are generally referred to as Exchange Traded Commodities or Exchange Traded Funds (ETFs), and are expected to track the gold price almost perfectly. Unlike derivative products, the securities are 100% backed by physical gold held mainly in allocation form.These securities have had a major impact on the gold market, representing an annual average of 32% of identifiable investment and 6. 5% of total physical demand over the 5 years to 2008. Financial advisors and other investment professionals can provide further details about these products. FUTURES AND OPTIONS GOLD FUTURES Gold futures contracts are firm commitments to make or take delivery of a specified quantity and purity of gold on a prescribed date at an agreed price. The initial margin – or cash deposit paid to the broker – is only a fraction of the price of the gold underlying the contract. That means investors can achieve notional ownership of a value of gold considerably greater than their initial cash outlay.While this leverage can be the key to significant trading profits, it can also give rise to equally significant losses in the event of an adverse movement in the gold price. Futures prices are determined by the market’s perception of what the carrying costs – including the interest cost of borrowing gold plus insurance and storage charges -ought to be at any one time. The futures price is usually higher than the spot price for gold. Futures contracts are traded on regulated commodity exchanges. The largest are the New York Mercantile Exchange Comex Division (recently rebranded CME Globex, after a merger between Chicago Mercantile Exchange and NYMEX), the Chicago Board of Trade (part of CME) and the Tokyo Commodity Exchange. Gold futures are also traded in India a Dubai.The Commodity Futures Trading commission provides extensive reports on derivatives trading in the United States. Tradable commodity indices are based on fully collateralized baskets of long-only commodity futures, all of which include a small allocation to gold. GOLD OPTIONS These give the holder the right, but not the obligation, to buy (‘call' option) or sell (‘put' option) a specified quantity of gold at a predetermined price by an agreed date. The cost of such an option depends on the current spot price of gold, the level of the pre-agreed price (the ‘strike price'), interest rates, the anticipated volatility of the gold price and the period remaining until the agreed date.The higher the strike price, the less expensive a call option and the more expensive a put option. Like futures contracts, buying gold options can give the holder substantial leverage. Where the strike price is not achieved, there is no point in exercising the option and the holder's loss is limited to the premium initia lly paid for the option. Like shares, both futures and options can be traded through brokers. Gold price Fluctuation: Responsible factors Gold has widely used throughout the world as a vehicle of monetary exchange, as an investment, use in jewelry, medicine, the food and drink also. Gold provided the independent of states, currencies, productivity and credit worthiness.Many experts advice to the private investors that they do 5 to 10 % their investment in the gold because regular purchase of gold and silver coins helps to protect the smaller investor against price and currency fluctuation. Gold has always been prized as precious and valuable. It does not deteriorate. Gold is also maintained the liquidity in our portfolio because gold is traded around the world. With gold we can possess the international currency which we can sold around the world at any time. This table shows the gold price fluctuation. [pic] Table shows the gold price fluctuation In the recent scenario there are va rious issues and factor responsible for the gold price fluctuation. Increasing deficit in the balance of trade in the united states. ? The declining production of some gold producing countries the major gold producing company Africa, Canada, Australia, china, Philippines. ? Central bank and international monetary fund also play the major role in gold fluctuation. It is generally accepted that interest are closely related to the gold price. As the interest rate rise the general tendency is for the gold price, which earn no interest to fall and rates dip for gold price to rise. ? At the end of 2008 financial crisis captured all the global market, a trend start to develop of regular investor allocating a certain amount of their portfolio into gold.The most popular reason to own gold is as hedge against the inflation. ? From late 2009 Fears of Sovereign debt crises developed among the investors as a result rising the private and government debt levels around the world together with the wave of downgrading of government debt in some European states. The crises have major impact on several European countries, most notably on Greece, Ireland, Italy, Portugal and Spain. Several other factors which are responsible to pushes the gold prices upward political unrest and war monetary expansion, economic misbalance because of these reasons people lose their faith in the value of their currency and they invest into the gold as permanent or a fixed assets. [pic]

Strategic Fit of It Service Management

IBM Academy of Technology Academy TechNotes ATN Volume 2, Number 9, 2011 Strategic fit of IT Service Management iven the crucial role that IT (Information Technology) plays in businesses today, IT departments have a significant responsibility to ensure that its value is optimized. IT optimization can be obtained through the adoption of the IT Service Management proposition by IT operations. G Pietro Della Peruta However, IT Service Management concepts and tools are complex changes to introduce to an organization. To achieve the right fit of such concepts and tools it is important that the introduction is congruent with the company’s operating mode. The Company Operating Mode concept was introduced in the seminal work of Nolan and McFarlan on the â€Å"IT Strategic Impact Grid† (Harvard Business Review, October 2005, Information Technology and the Board of DirecTurnaround mode is characStrategic Dependence: Current value of IT on tors). According to the IT terized by the business havbusiness Strategic Impact Grid, ing a low strategic dependHigh companies operate in Low ence on IT which has high four possible modes: strategic impact. Firms in Turnaround Strategic High support, turnaround, facturnaround mode expect a IT Governance Focus IT Governance tory, and strategic. These new system to change their on system s and Governance modes determine the on business business. New systems promapplications Strategic Im pact: services Scope of IT current value IT has for ise major process optimizaFuture value of IT on operations the business (i. e. strategic business tion and service transformaSupport Factory Managem ent dependency) and the tion as well as cost reducBusiness Applications Focus future value IT has for the tion. IT operations are charservice and system m anagem ent m anagem ent business (i. e. strategic acterized by a great attenLow impact). To optimize the tion to efficiency, and they Legenda IT Managem ent Mode value of IT, for each are mostly process driven. Business Focus System Focus Com pany Operating Mode Company Operating Mode, The IT operations focus is on Focus of IT a well-defined level of IT the systems with attention to operations service management (IT IT governance processes (i. e. service management mode) needs to be implemented ITIL). y the IT operation. The IT service management mode is Strategic mode is characterized by IT having high stratecharacterized by the focus of IT operation (i. e. system gic dependence and high strategic impact on the busifocus or business focus) and by the scope of IT operations ness. Firms in this mode require dependable systems and (i. e. management focus or governance focus). When a must exploit emerging technologies to hold their comcompanyâ €™s currently adopted IT management mode petitive position. IT operations are seeking effectiveness does not match the operating mode the company is in, and efficiency. IT operations focus is on managing busithe IT department must modify the way IT services are ness service from a business point of view (effectiveness) managed in order to optimize the value of IT. as well as using a process driven approach to manage Support Mode is characterized by IT having low strategic the IT (efficiency). This means IT governance and business impact on the business which has a low strategic deservice focus. endency on IT. Companies in support mode are least dependent on IT. In this mode systems operate mostly in About the Author: Pietro della Peruta is an Executive IT Archimaintenance mode. Service interruption might not protect, IBM Software Group, a member of the IBM Academy of duce serious consequences. For a company in support Technology, and has 20 years of experience in systems mode, systems and applications are monitored and some availability and p erformance management. est practices exist for recovery from performance and availability problems. IT operations are focused on systems and applications resources, and the scope of operations is management.  © Copyright IBM Corporation 2011 Factory mode is characterized by the business having high strategic dependence on IT which has low strategic impact. Companies in factory mode are more dependent on information technology. If systems fail for a minute or more, there is an immediate loss of business. Increased response time has erious consequences for both internal and external users. IT management in the factory mode is characterized by a high level of effectiveness via tailored control of business service quality. KPIs (key performance indicators) are defined at business level more than at IT level. IT operations have a business focus but still a management scope. In factory mode, the focus of IT operations is more on managing the business services than on the systems or the applications as single entities. For more information please visit the Academy web site.

Great War Assignment

This letter collection tell us about their bittersweet personal love story. The collected letters from Murray are addressed to his fiance Margaret who he was engaged to be married to. The tone in his letters are affectionate and loving. In the letters, he refers to her as â€Å"dear girl†2 â€Å"Honey girl†3 or â€Å"Girlie†4, and often tells how much he † dream[s] of [the] days†5 that they had together. For Murray, the existence of his sweet fiance Margaret was probably an emotional support on the war front. Letters from her perhaps gave him sense of certainty about their delightful future that eased his loneliness.Wellington Murray Dennis and Margaret Munroe letter, June, 1917, WWW Collection, www. Contraindicates. Ca ! Elongation Murray Dennis and Margaret Munroe letter, 20 May, 1917, WWW Collection, ! Elongation ! Elongation ! Elongation Murray Dennis and Margaret Munroe letter, July, 1917, WWW Collection, Matura's 3 The contents of his letters ex tend from everyday life on the battlefield to discussion on their relationship. He did not tell Margaret about the detailed hardships or horrors he experienced on the battlefield; this is, probably, because he did not want to make her worried or scared of losing him.Instead of sounding so concerned, he tries to think of something pleasant; â€Å"Instead of coming home to you tonight dear (as we had figured) I come â€Å"home† to a tent and in place of having you pouring out my tea and passing me delicious cakes across a clean white table cloth I get a certain issue of tea in a mess tin and I eat bread and cheese seated on the grass. â€Å"6 In this note, Murray combines reality, nostalgia, and fantasy. Together, they work as an escapism for him. In his mind, the reality of the battlefield somehow exists in parallel to happy memories and a spotless dream image.As he sipped â€Å"tea in a mess in† and eats â€Å"bread and cheese on the grass† after his duty, he remembers of going to â€Å"picnic parties†7 with Margaret back in Canada. As for nostalgia, he flashes back to her gentle way when she would pour his tea and pass him the delicious cake she made. Then fantasy plays a role in the memory. The phrase â€Å"coming home to you† represents his dream future of being married to Margaret, and â€Å"a clean white table cloth† is one example of details in his idealistic image. His daydream alters bitter ! Elongation ! Wellington Matura's 4 reality; â€Å"a tent† into the dream home, â€Å"bread and cheese seated on the grass† to delicious cakes†, and a â€Å"mess tin† to † a clean white table cloth†, believe it or not. Writing a letter to his fiance provided Murray a comforting time that he can live apart from the reality for a little while. It perhaps was a escapism for him; however, he might not had been necessary wanted to escape from the reality he was placed. Regarding the discu ssion about their relationship, it seems like Murray was having a debate in his head whether if he should have gotten married before he left Canada.In the first letter in this collection, written on May 4th, 1917, he noted it was a good session not to be married; â€Å"Still we were wise that we did not marry, no matter what our hearts prompted. â€Å"8 Perhaps, Murray thought he was saving her from having to live a lonely life by choosing not to marry her. Thus, Margaret is not forced to wait for him to be back to Canada, in addition, she would have a better chance to be marrying to another man and not live a lonely life, when Murray does not survive the war.Despite the rational decision in the beginning, he started to have mixed feeling about it because he realizes how â€Å"my[his] love [towards Margaret] has matured. 9 On July 5th 1917, he admits that he â€Å"thought it would have been better to have married [with Margaret]†10 because she might find â€Å"someone els e to help you[her] ease the burden. † 1 1 Clearly, Murray was faced with a dilemma; he wanted to establish an unshakable ! Elongation Murray Dennis and Margaret Munroe letter, 4 May, 1917, WWW Collection, ! 9 ! Elongation ! Elongation Matura's 5 connection with Margaret but Just could not let her to live a lonely life if he could not manage to survive. Not a single letters from Murray suggests that he supported or liked the war although he rarely expressed his dissatisfaction towards the warfare he was involved in. On May 4th, 1917, he reassuringly wrote in the letter â€Å"I'm [ He is] not lonesome nor downhearted†12 but he also tells Margaret that he's thinking about â€Å"what[their happy marriage] might have been had[happened] [if] this war [did] not intervened†13 in the same letter.Murray said he is not downhearted to give her sense of safety about him at the war, however, at the same time, he did not hide frustration about the war holding them back from the happy marriage. About 2 months later, he expressed his personal reflection about the war n the letter: â€Å"We had thought to be living our lives together in piece F[f]ann. how fate plays tricks with human plans. â€Å"14 Murray was amazed how the war derailed his future plans they had in mind in such an unpredictable way.As suggested in the beginning, he was an implement dealer not a career soldier; and, he probably had never thought he'd be a soldier nor supported the war. Everything 112 ! Littleton ! Eliminating ! 14 ! Elongation Matura's 6 that seemed to be real and going smoothly sank out of his sight, then his life changed dramatically. The war relocated him in a grim battlefield in an unknown country. There is no doubt that Murray was excited about what the future holds for him and Margaret.Perhaps, he tried the very best he could to survive on the battlefield, so that he can be back to his â€Å"Honey Girl†1 aback in the country. The following shows how he ended t he letter written on the letter written on July 7th, 1918; â€Å"The way you showed yourself so all mine honey girl is one of the sacred memories I have taken to France †¦ L loved you with my whole heart†¦ N[n]owe kisses and all love and honor to the mother of our children. Your faithfully Murray'16. This quote shows Murray strong love towards Margaret and it also his want to settle down and raise a family.The ending of the letter â€Å"all love and honor to the mother of our children† shows his idealistic perspective about domestic pleasure as a father and husband. This specific written on July 7th, 1918 is interesting because Murray strong feeling as never before is enclosed into the writing. Perhaps, he was afraid if he can survive as the war went on for a long time, so he tried to convince himself to live by feeling hopeful about the future. Sadly, Murray could not raise a loving family with Margaret as he desired, more pathetic still, he was killed in action o n August 9th, 1918.On November 1 lath same year, only three months later his death, the WWW ended. II 51 Elongation ! Eliminating Murray Dennis and Margaret Munroe letter, 7 July, 1918, WWW Collection, Matura's 7 After his death in France, many letters from family and friends were delivered to Margaret but not from her fiancee anymore. It seems her family and friends were teary about Murray death, at the same time, also trying to cheer her up: Oh Margaret I hardly know what to write but I want you to feel you have my sympathy despite my own feelings as yet it seems impossible to realize the truth.I have had no further correspondence but seen his dear name in the list†¦ Yours affectionately Murray Mother†17 † You know How Sorry I am for you I cannot tell you You will Just know and I know how Brave you are going to be†¦ Heaps of Love Sorrowing P[? ]e† â€Å"Only today did I hear of your great sorrow,When any one I love is in sorrow it makes my heart ache O h Dear†¦ Lovingly Elsie†18 Many of her friends and family almost immediately wrote to Margaret when they eared the sad news. This shows how much Murray was loved by people around him and the strength of their bond between family and friends.The letters were filled with thoughtful expressions of sympathy. However, it also sounded like they got used to write letter of sympathy on the death on young soldiers as there were many killed and wounded soldiers; â€Å"This is a sad time for the Wellington Murray Dennis and Margaret Munroe letter, 4 September , 1918, WWW Collection, www. Contraindicates. Ca Wellington Murray Dennis and Margaret Munroe letter, 7 September , 1918, WWW Matura's 8 people of Canada such long lists of killed & wounded coming in every day' 19.Some of the letters praised his braveness fighting his last breath for the war effort: â€Å"l know you will be proud as we are for the one who is so grand for he is not dead but sleepers†¦ Your loving niece Ge orgia†20 â€Å"Mingled with your sorrow there must – be a feeling of pride that your friend gave his life for such a noble cause†¦ Yours sincerely Ethel Radcliff†21 It appears people who lived during WWW considered being sacrificed for the war is noble and honorable. This is a twisted convention because what Murray wanted on the battlefield is to being back home and live in piece with Margaret.Battles fought, invented efficient weapons, numbers of soldiers killed or treaty that ended everything after such turbulence; those are the â€Å"facts† I learned in history or social classes. Reading the letter collection of Murray expanded brought me a different perspective to wars. Wars are not only about those â€Å"facts† and their cause and effect; there are plethora of personal stories behind them. Murray was a soldiers but, at the same time, he was young. He had a bright future ahead of him, and it has just started to shape itself.There is no reas on for me to demur at this statement. But then, there are wars still going on around the world. I wonder why, after 14 years from the beginning on 21st century, violence is still used as a last resort. I wonder if there is such a thing as ending of the use of violence. I was grown in Japan where all children receive peace education, and always thought, as a child, starting a war had disappear from options. It is sad that there are parts in the world where people are forced to live under the tension and straining situations.

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