Contemporary Issue on Chit Funds -“The Invincible”

An contemporary issue report on CHIT FUNDS â€Å"THE INVICIBLE† 2013-2014 Made by : Fakhruddin Badshah PREFACE This document sketches the the meaning, introduction, overview,its working,online chit funds, I threw some light on latest news about this sector and also tried to cover the latest upsteram and downsteam aspects of this sector (chit fund companies). My aim of writing on this issue is who will going to stop the fraudulant activities being done by this companies. I chose this segemnt for my contemporay because this is going very common among the people in today’s time.So I thought lets give away the the detail of this segment to the people. With the help of this document people will come to know what exactly going on in this domain. This sector is expanding rapidly like anything. This developments has become a catalyst for the growth of vigourous chit fund companies in all over India. So what provisions should be made to curb the alleged false practices done by t hese companies or segment. Thus it is the to think and act on it to protect the interest of small investors and their hard earned incomes. Index Introduction| 5-7| Overview of chit fund| 8|How chit fund works| 9-11| 2012-2013 Highlighted News about chit-fund| 12-13| Who will stop chit funds? | 14-18| Report of MCA| 18-21| Benefits| 21-22| Drawbacks| 23| Safety from Chit funds| 24| CHIT FUNDS – â€Å"The Invincible† Introduction: A chit fund is a type of savings scheme practiced in India, besides other forms of savings scheme offered by various public and private sector banks, post offices, insurance corporations etc. Chit Funds are indigenous financial institutions in India that cater to the financial needs of the low-income households, which have been excluded from the formal financial system. Chit†, in the legal purview, means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead in the case of villages) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.In simple words, A chit fund is a savings-borrowing scheme, in which a group of people enter into an agreement to contribute fixed amounts periodically, for a specified period of time. The amount so collected (or the chit value) is distributed among each of the persons in turns, which is determined by way of lots or an auction. Chit funds provide an opportunity to save excess cash on a daily, weekly or monthly basis, and give an easy access to it in case of emergency. Chit funds are the Indian equivalent of the Rotating Savings and Credit Associations (ROSCA) that are famous thr oughout the world.ROSCAs are a means to â€Å"save and borrow† simultaneously. It is considered one of the best instruments to cater to the needs of the poor. It enables poor people to convert their small savings into lump sums. The concept of chit funds originated more than 1000 years ago. Initially it was in the form of an informal association of traders and households within communities, wherein the members contributed some money in return for an accumulated sum at the end of the tenure. Participation in Chit funds was mainly for the purpose of purchasing some property or, in other words, for â€Å"consumption† purposes.However, in recent times, there have been tremendous alterations in the constitution and functioning of Chit funds. While in most places ROSCAs are user-owned and organized informally, in India, chit funds have been formally institutionalized as well. Legally recognized firms provide a variety of chit schemes. A Chit Fund can either be legally regist ered or unregistered. Registered Chit Funds, as the name suggests are being regulated under the various Chit Fund acts. While unregistered Chit Funds are unorganized and mostly run by the close friends, relatives or family members of the investor.Unregistered Chit Funds which exceed 100 ($2) in value are illegal in India, although it is very well known that unregistered Chit Fund industry is very popular in India, mainly in the rural and semi-urban area, where people have very little access to the banking services and where financial illiteracy is more. The regulation of the Chit Fund industry was put in place by the Government of India to address the problem of misuse of informal Chit Funds by unscrupulous promoters and founders running away with the participant’s funds, leaving the members with little recourse to retrieve their money back.Chit funds in India are governed by various state or central laws. Organized chit fund schemes are required to register with the Registra r or Firms, Societies and Chits. Various Chit Fund Acts governing the industry in India are as under: * Union Government – Chit Funds Act 1982 (Except the State of Jammu and Kashmir) * Kerala – Kerala Chitties Act 1975 * Tamil Nadu – Tamil Nadu Chit Funds Act, 1961 * Karnataka: The Chit Funds (Karnataka) Rules, 1983 * Andhra Pradesh – The Andhra Pradesh Chit Funds Act, 1971 * New Delhi- The Chit Funds Act,1982 and Delhi Chit Funds Rules, 2007 * Maharashtra – Maharashtra Chit Fund Act 1975 Uttar Pradesh: Uttar Pradesh Chit Funds Act, 1975 * Goa, Daman & Diu: The Goa, Daman and Diu Chit Funds Act, 1973 * Pudducherry/Pondicherry: The Pondicherry Chit Funds Act, 1966. An overview of chit funds: The economic development of a country depends upon the availability of resources. The main activities that contribute to the growth are production and employment. Production depends upon the inputs of the factors such as finance, raw materials, labor etc. The mo st important here bring finance, which is the chief mobilized of all the factors of production.In a money economy, finance for development initially comes from private savings. These private savings give to the secondary deposits; this is where the financial institutions come into picture. Financial institutions occupy a central place in mobilizing savings from the people and make it available to the trade, commerce and industries either as a capital or loans. The non banking sector comprises of money lenders, indigenous bankers, pawn brokers, nidhis, â€Å"chit funds† etc.The origin of chit funds can be traced way back to the 17th century when the economic wizards of state of Malabar (now known as the state of Kerala) started this activity. Those were the people who actually founded this financial institution. It became so popular and numerous that people started adopting this activity as a profession by the 18th century all over. As the chit industry grew the number of peop le involved in this industry also grew. This gave rise to many misconceptions, frauds, mismanagement etc. , in this industry.To prevent this State Government of Travancore took the first initiative and introduced the first Chit Fund Regulation being the Chit Fund Act 1914. One important regulation introduced by this act was that of a commission payable to the foreman. The Act brought about a ceiling limit on the commission payable to the foreman that is 5% maximum which is still the same even to this date. How chit funds works: Chit funds which are popular from a very long time but still some people don’t know how exactly this chit fund works and invest their money illogically.This can be understood by the following procedure: Let’s say there are 20 people who come together and form a group. Each one will contribute Rs 1,000 per month and this will continue for next 20 months (equal to number of people in the group). In this group there will be one organizer, who will take the pain of fixing the meetings, collecting money from each other and then doing other procedures. So each month all these 20 people will meet on a particular day and deposit Rs 1,000 each. That will make a total of Rs 20,000 every month.Now there will be a bid on who will take this money. Naturally there will be few people who are in need of big amount because of some reason like some big expenses, liquidity crunch, business problem, Beti ki Shaadi etc etc Out of all the people who are in need of money, someone will bid the lowest amount, depending on how desperate he is for this money. The person who bids for the lowest amount wins the bid. Suppose out of total 3 people who bid for 18,000, 17,000 and Rs 16,000, the one who bids the lowest will win.In this case it’s the person who has bid Rs 16,000. There will also be â€Å"organizer charges† which are around 5% (standard) of the total amount, so in this case its 5% of Rs 20,000, which is Rs 1,000. So out of the total 16,000 which this winner was going to get, Rs 1,000 will be deducted and the winner will get only Rs 15,000, Rs 1,000 will be organizer charges and Rs 4,000 is the profit, which will be shared by each and every member (all 20 people), it comes out to be Rs 200 per person, and it will be given back to all 20 members.So here you can see that the main winner took a big loss because of his desperate need of getting the money and others benefitted by it. So each person actually paid just 800, not 1,000 in this case (they got 200 back). Note that when a person takes the money after bidding, he can’t bid from next time, only 19 people will be eligible for bidding. Now next month the same thing happens and suppose the best bid was Rs 18,000 , then winner will get 17,000 (after deducting the organizer fees) and the rest 2,000 will be divided back to people (Rs 100 each) . So each person is paying effectively Rs 900.This way each month all the people contribute the money, someone takes the money by bidding lowest, organizer gets his charges and the rest money is divided back to members. You will realize that the person who takes the money at the end will get all the money except organizer fee, as there is no one else to bid now. So the person will get around Rs 19,000 in the end, if you try to find out the returns which he got out of the whole deal, it will depend on two things, how much lower bids were each month and the fees paid to organizer, if bids and charges are very low, then a person will make more money at the cost of other situations.So this is pretty much how a chit fund works, there are various versions of chit funds and how they work , but the idea was to communicate the basic model and how it works. | Online Chit Funds is also running with pace of E-commerce With the advent of ecommerce in India, Chit funds have also started going online. Online chit funds conduct auctions online and subscribers can pay their monthly dues and receive prize am ount online through online transactions including electronic fund transfers. Each member will have an online account through which they can manage their chit funds. 2012-2013 Highlighted News about chit-fund: . Cunning strict approaches adopted by RBI to protect the investors from delusive acts of chit fund companies. 2. Last year in the month of December, The Reserve Bank of India (RBI) warned all the state governments about the mushrooming of chit funds and also written to them to take appropriate actions against them for duping depositors. 3. RBI Governor Duvvuri Subbarao said, â€Å"The responsibility for checking the chit funds and for prosecuting the violation of law is of the state government. We have written to all the state governments to be vigilant about this and to take appropriate action†. . D Subbarao also called for greater awareness among police and the general public for checking the proliferation of the chit funds in the country. 5. On 6th December 2012, Min ister of State for Corporate Affairs RPN Singh said that 87 companies have come under the scanner for alleged irregularities related to chit fund schemes and money circulation in the garb of multi-level marketing. The Registrar of Companies (RoC) and its Regional Directors have been asked to scrutinize the balance sheets and inspect the books of accounts and other records of these 87 companies. . India's market regulator, Securities and Exchange Board of India (Sebi) had banned companies such as Rose Valley and MPS Greenery Developers from accepting deposits from the public. 7. The former chief minister also pointed it out that small savings through post offices and co-operatives has suffered a lot as many people are depositing their money to these chit funds expecting huge return. 8. In Bhubneshwar, The crime branch told that they are making a short documentary to sensitize people about illegal non-banking financial companies (NBFCs).The film will feature a host of financial manage ment companies like Seashore, Ashore and Saffex, whose irregularities were exposed recently. The Economic offences wing (EOW) of the Crime Branch has registered at least 30 cases against several fraud companies in the past six months for embezzling public deposits after giving them false promise of high return. Senior functionaries (Head) of the companies were arrested and their bank accounts being ceased. 9. EOW also making plan to start a toll free number to protect people from fraudulent activities done by chit fund companies. 10.Government making steps towards the projection of model; rules to check chit fund and MLM (Multi-level Marketing) frauds. The central government will soon make stringent provisions in place, like hefty financial penalty, jail terms, de-listing from the registrar of companies (RoC) roster, among others. Who will stop chit funds In October 2012, a women and her elder daughter were running a chit fund, committed suicide by consuming acid in Puthur in Trichy as they were unable to repay their investors. These women had started a Diwali chit fund in the year 2011 and attracted around 300 investors in the area.They had collected around `9lakh from the investors. As per norms, the chit fund company should have repaid the money with interest or given assured gifts to the investors before Diwali of the year 2012. When the investors pressurize the women, they decided to end their lives and consumed poison. Investors are helpless. This is not the only case there are numerous. Most chit fund investors are the rural poor and or small investors. Neither the victimized investors nor the police bring to book the persons responsible. Only the poor agents remain in place from whom the money cannot be recovered.According to Ministry of Corporate Affairs (MCA), there are 4256 listed or registered chit fund companies which are running their business in the country while India chit-fund association estimates that the country has in total 15000 (register ed and unregistered) companies which manage billions of rupees worth of funds. ShriRam Capital, one of the largest players, operates in four southern states and manages over USD 800 million. Some hope that recent hiccups in India’s once-booming microfinance sector, whose rise was led by microcredit, could bring even more business their way.One can imagine how big the business is all over India. Too many regulators could not stop irregularities in chit funds. Everybody agrees that irregularities need to be stopped because these are causing harm to a lot of small investors. But the question is; who will stop it? In 1978, when the RBI banned chit funds, it came under the ministry of corporate affairs as a collective investment scheme. Another way these companies work is through private placement of the non-convertible debentures or collective investment scheme. In this case, SEBI has the power to regulate it.Sahara and many other big names are in on it. Any debenture or private placement cannot be done by more than 50 people. In contrast, these kinds of companies collect money from thousands of investors. If the number of investors of share and debenture is more than 50, it needs to be registered in the market and the SEBI would control it. RBI wants the state government to take steps: In this context, RBI has a different take. Subbarao, Governor, RBI, has advised the state governments to make their law stronger to save common investors from the chit fund trap.It has written letters to the states to develop a definite action plan to take step against these multi levels marketing player. Subbarao explained that RBI has no power to regulate chit funds. So, it has asked state government to take the initiative to prevent the mushrooming of money market agencies. RBI can train police and other legal bodies about chit funds but cannot instruct the police to do so. It is a state subject to plan and executes the prevention process of chit funds. Corporate Affairs ministry looking into it:Union corporate Affairs Minister Sachin Pilot has said that the central government is looking into the issue of some chit funds and the Ponzi scheme that allegedly dupe small investors by using legal loopholes. It would also encourage state government to take necessary action against these firms. These firms are now misusing the loopholes, pilot added. Furthermore he added, â€Å"Our main objective is to protect small investors from these companies, who are taking their (investors) hard earned money. † As many as 87 companies have come under the scanner for alleged irregularities related to chit fund schemes and money circulations.Minister of State for corporate Affairs R. P. N. Singh has informed the Rajya Sabha that the directions have been issued on the basis of specific complaints received by the ministry against these companies, which are â€Å"alleged to be carrying on activities related to prize chit fund and money circulation in the garb of m ulti-level marketing. Legislative hodgepodge: Singh further said that SFIO (Serious Fraud Investigation Office) has recommended setting up of a specific central regulatory agency for the implementation of the prize chit and money circulation scheme (Banning) act, 1978.The act is administered by the Department of Financial services (DFS) which has constituted an Inter-Ministerial Group consisting of representatives from DFS, Ministry of Corporate Affairs (MCA), RBI, Security and Exchange Board of India (SEBI), Department of Consumer Affairs and Central. Report of Ministry of Corporate Affairs: List of Companies not registered but found doing Chit Business Beware of these Companies. Never join them. M/s. P. V. R. Chits (P) Ltd. , B-50, Flatted Factories, Okhla Phase-III, N. Delhi-20. | M/s. Narmal Chits (P) Ltd. , 1427, Gurudwara Road, Kotla Mubarakpur,N.Delhi-3. | M/s. Sahara Chits (P) Ltd. , WZ/A-49, Krishna Park Extension, N. Delhi-18. | M/s. Twenty Second Century Chit Fund (P) Ltd . , 4205-4206, Sant Nagar, Main Road, Rani Bagh, Delhi-34. | M/s. Skylla Chits (P) Ltd. , D-223/115, Laxmi Chambers, Laxmi Nagar, Delhi-92. | M/s. Hari Vimal Chits (P) Ltd. , Shop No. 8, M. R. Market, Rangpuri, N. Delhi-70. | M/s. Merchant Chits (P) Ltd. , CA-24/2, Tagore Garden, N. Delhi-27. | M/s. Mehar Chits (P) Ltd. , IIIrd Floor, 528, Krishna Gali, Katra Neel, Chandni Chowk, Delhi-6| M/s. Vinamar Chits (P) Ltd. , 170-E, Kamla Nagar, Delhi-7. | M/s.Vinamar Chits (P) Ltd. , 272, Hakikat Nagar, Mall Road, Delhi-9. | M/s. Well King Chits (P) Ltd. , C-47, Acharya Niketan, Mayur Vihar, Phase-I,Delhi-91. | M/s. Aegis Chit Fund (P) Ltd. , E-484, Greater Kailash-II, New Delhi-48. | List of Companies which have been debarred from doing any Chit Fund business in Delhi   NAME| ADDRESS| A. G. CHIT FUND PVT. LTD. |    | ARJIT CHITS PVT. LTD. | | BHAGMAL CHITS PVT. LTD. | | CHOJI PRITAM CHITS PVT. LTD. | | DISHTI CHIT FUND PVT. LTD. | DIRECTOR: Sh. Ajay Pandon| DISHTI CHIT FUND PVT. LTD. | DIRECTOR: Sh. Sudarshan Kapoor| EK-ONKAAR CHIT FUND PVT.LTD. | | EROS FIN. ; CHIT FUND PVT. LTD. | | GIRDHAR CHITS PVT. LTD. | | GOLDEN BENEFIT CHITS PVT. LTD. | | J. KRISHNA CHIT FUND PVT. LTD. | | J. V. CHITS PVT. LTD. | | KADS CHIT FUND PVT. LTD. | | KHAJANA CHITSPVT. LTD. | | LEAN CHITS PVT. LTD. | | MINCO CHITS PVT. LTD. | | NIKETAN CHIT FUND PVT. LTD. | | PARVATI CHIT FUND PVT. LTD. | | PARVEEN CHIT FUND PVT. LTD. | | POMA CHIT FUND PVT. LTD. | | PROSPER CHIT FUND PVT. LTD. | | RITESH CHIT FUND PVT. LTD. | | ROHTGI CHIT FUND PVT. LTD. | | ROYAL CHIT FUND PVT. LTD. | | RUHANI CHIT FUND PVT. LTD. | | S. T. S. CHIT FUND PVT.LTD. | | SAFAL CHIT FUND PVT. LTD. | | SATSANGI CHIT FUND PVT. LTD. | | SIMPLICITY CHIT FUND PVT. LTD. | | SUBHASH NAGAR CHIT FUND PVT. LTD. | | TRI NAGAR CHIT FUND PVT. LTD. | | VEDANTA CHIT FUND PVT. LTD. |    | YOG MAYA CHIT FUND PVT. LTD. |    | PARVARISH LEASING ; FIN. (P) LTD| Shop No. 6, Mafare Garden, New Delhi| M. V. A. CHIT FUND (P) LTD. | Shop No. 10, Krishna Mkt. ,Lajpat Nagar,N. Delhi. | HONOUR CHITS (P) LTD. | 2352, Sevak Bhawan,IIIrd Floor, Shop No. 9,Beadon Pura,Karol Bagh, N. Delhi. | * Source Ministry of corporate AffairsBenefits of Chit funds: Chit Fund is an attractive Investment Option which caters to people from all walks of life. It is specifically beneficial to the Salaried Class, Professionals, Businessmen and Self Employed. The uniqueness of Chit Fund as a method of Financial Planning stems from the fact that, it is both a tool for saving and borrowing. In other words, it serves the dual purpose of being an investment for your savings and in times of need the Subscriber can bid for the Prize Amount in order to meet any unexpected expenditure. The benefits of Investing in Chit Fund are numerous. You can choose how much you want to save per month. Chit funds companies offers chits of various denominations and monthly subscriptions amount ranges from Rs 2500/=(Chit value Rs 1 lakh) to monthly subscription of Rs 1,25,000. * The rate of return is very high compared to other Investment Options and it is also secure form of Investment. * Your Monthly payments will be the Chit Subscription Amount minus the Dividend. The details of the Dividend entitled for Deduction and the Balance Amount payable shall be informed every month, which is mandatory. It inculcates the habit of saving and setting apart a particular amount every month towards investment for a rainy day. * It is good for the Housewife to keep or save their small savings in Chit funds as they will get the money at the time of utmost financial need for household purposes. * It is generally used by housewives, employees of same company, peer groups, friends, and family members or some associations. * If it is used in proper or genuine way then it is makes a worth to invest in chit funds (Organized or unorganized). Drawbacks: Chit-funds do not offer any pre-determined or fixed returns. * Higher returns are earned when there are more nu mber of members in the group or if the duration of the scheme is longer. * One would earn more, when more members need emergency funds. Thus returns cannot be calculated and decided when one joins the scheme. * No security in unregistered chit fund companies. So there are more chances of getting hoax by these fraud companies. * Organizer gets benefited more from your savings. * No guarantee if fixed returns. * In chits interest earnings are lower than Fixed deposits (FD). High degree of risk is associated with chits, so relying on chit funds for saving could be more dangerous. * Chit does not make money; it is just a mechanism for liquidity and emergency funds. * Many chit fund owners are collecting huge volume of money from the common people by making false promises to them. Many poor people of our state are being allured by these chit fund owners and depositing their hard-earned money. But the people are not getting back returns for their investments How to be a Safe investor in C hit Funds:With the plethora of chit fund companies around, the safety of a chit fund lies in choosing the right one. In a registered chit fund company, under legal binding, the activities are regulated and institutionalized by the Chit Fund Act. And hence could be considered safe. However, other unregistered companies operating informally do exist. It has been also seen that depositors are being lured by chit funds companies or firms with higher returns than what banks offer them. These companies are also flourishing in the rural belts where banking penetration is low.One should carefully analyze the pros and cons before making investment in chit funds. Therefore one needs to exercise caution while choosing where he desires to invest. Chit funds definitely are an attractive option for regular saving. It inculcates a disciplined approach to financial planning. It has the added advantage of bringing a combination of savings as well as hassle free borrowing. This dual purpose investmen t tool could be a friend in need at times of unexpected financial emergencies. Thence BE SAFE AND BE SELECTIVE while going for any chit fund schemes. Contemporary Issue on Chit Funds -â€Å"The Invincible† An contemporary issue report on CHIT FUNDS â€Å"THE INVICIBLE† 2013-2014 Made by : Fakhruddin Badshah PREFACE This document sketches the the meaning, introduction, overview,its working,online chit funds, I threw some light on latest news about this sector and also tried to cover the latest upsteram and downsteam aspects of this sector (chit fund companies). My aim of writing on this issue is who will going to stop the fraudulant activities being done by this companies. I chose this segemnt for my contemporay because this is going very common among the people in today’s time.So I thought lets give away the the detail of this segment to the people. With the help of this document people will come to know what exactly going on in this domain. This sector is expanding rapidly like anything. This developments has become a catalyst for the growth of vigourous chit fund companies in all over India. So what provisions should be made to curb the alleged false practices done by t hese companies or segment. Thus it is the to think and act on it to protect the interest of small investors and their hard earned incomes. Index Introduction| 5-7| Overview of chit fund| 8|How chit fund works| 9-11| 2012-2013 Highlighted News about chit-fund| 12-13| Who will stop chit funds? | 14-18| Report of MCA| 18-21| Benefits| 21-22| Drawbacks| 23| Safety from Chit funds| 24| CHIT FUNDS – â€Å"The Invincible† Introduction: A chit fund is a type of savings scheme practiced in India, besides other forms of savings scheme offered by various public and private sector banks, post offices, insurance corporations etc. Chit Funds are indigenous financial institutions in India that cater to the financial needs of the low-income households, which have been excluded from the formal financial system. Chit†, in the legal purview, means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead in the case of villages) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.In simple words, A chit fund is a savings-borrowing scheme, in which a group of people enter into an agreement to contribute fixed amounts periodically, for a specified period of time. The amount so collected (or the chit value) is distributed among each of the persons in turns, which is determined by way of lots or an auction. Chit funds provide an opportunity to save excess cash on a daily, weekly or monthly basis, and give an easy access to it in case of emergency. Chit funds are the Indian equivalent of the Rotating Savings and Credit Associations (ROSCA) that are famous thr oughout the world.ROSCAs are a means to â€Å"save and borrow† simultaneously. It is considered one of the best instruments to cater to the needs of the poor. It enables poor people to convert their small savings into lump sums. The concept of chit funds originated more than 1000 years ago. Initially it was in the form of an informal association of traders and households within communities, wherein the members contributed some money in return for an accumulated sum at the end of the tenure. Participation in Chit funds was mainly for the purpose of purchasing some property or, in other words, for â€Å"consumption† purposes.However, in recent times, there have been tremendous alterations in the constitution and functioning of Chit funds. While in most places ROSCAs are user-owned and organized informally, in India, chit funds have been formally institutionalized as well. Legally recognized firms provide a variety of chit schemes. A Chit Fund can either be legally regist ered or unregistered. Registered Chit Funds, as the name suggests are being regulated under the various Chit Fund acts. While unregistered Chit Funds are unorganized and mostly run by the close friends, relatives or family members of the investor.Unregistered Chit Funds which exceed 100 ($2) in value are illegal in India, although it is very well known that unregistered Chit Fund industry is very popular in India, mainly in the rural and semi-urban area, where people have very little access to the banking services and where financial illiteracy is more. The regulation of the Chit Fund industry was put in place by the Government of India to address the problem of misuse of informal Chit Funds by unscrupulous promoters and founders running away with the participant’s funds, leaving the members with little recourse to retrieve their money back.Chit funds in India are governed by various state or central laws. Organized chit fund schemes are required to register with the Registra r or Firms, Societies and Chits. Various Chit Fund Acts governing the industry in India are as under: * Union Government – Chit Funds Act 1982 (Except the State of Jammu and Kashmir) * Kerala – Kerala Chitties Act 1975 * Tamil Nadu – Tamil Nadu Chit Funds Act, 1961 * Karnataka: The Chit Funds (Karnataka) Rules, 1983 * Andhra Pradesh – The Andhra Pradesh Chit Funds Act, 1971 * New Delhi- The Chit Funds Act,1982 and Delhi Chit Funds Rules, 2007 * Maharashtra – Maharashtra Chit Fund Act 1975 Uttar Pradesh: Uttar Pradesh Chit Funds Act, 1975 * Goa, Daman & Diu: The Goa, Daman and Diu Chit Funds Act, 1973 * Pudducherry/Pondicherry: The Pondicherry Chit Funds Act, 1966. An overview of chit funds: The economic development of a country depends upon the availability of resources. The main activities that contribute to the growth are production and employment. Production depends upon the inputs of the factors such as finance, raw materials, labor etc. The mo st important here bring finance, which is the chief mobilized of all the factors of production.In a money economy, finance for development initially comes from private savings. These private savings give to the secondary deposits; this is where the financial institutions come into picture. Financial institutions occupy a central place in mobilizing savings from the people and make it available to the trade, commerce and industries either as a capital or loans. The non banking sector comprises of money lenders, indigenous bankers, pawn brokers, nidhis, â€Å"chit funds† etc.The origin of chit funds can be traced way back to the 17th century when the economic wizards of state of Malabar (now known as the state of Kerala) started this activity. Those were the people who actually founded this financial institution. It became so popular and numerous that people started adopting this activity as a profession by the 18th century all over. As the chit industry grew the number of peop le involved in this industry also grew. This gave rise to many misconceptions, frauds, mismanagement etc. , in this industry.To prevent this State Government of Travancore took the first initiative and introduced the first Chit Fund Regulation being the Chit Fund Act 1914. One important regulation introduced by this act was that of a commission payable to the foreman. The Act brought about a ceiling limit on the commission payable to the foreman that is 5% maximum which is still the same even to this date. How chit funds works: Chit funds which are popular from a very long time but still some people don’t know how exactly this chit fund works and invest their money illogically.This can be understood by the following procedure: Let’s say there are 20 people who come together and form a group. Each one will contribute Rs 1,000 per month and this will continue for next 20 months (equal to number of people in the group). In this group there will be one organizer, who will take the pain of fixing the meetings, collecting money from each other and then doing other procedures. So each month all these 20 people will meet on a particular day and deposit Rs 1,000 each. That will make a total of Rs 20,000 every month.Now there will be a bid on who will take this money. Naturally there will be few people who are in need of big amount because of some reason like some big expenses, liquidity crunch, business problem, Beti ki Shaadi etc etc Out of all the people who are in need of money, someone will bid the lowest amount, depending on how desperate he is for this money. The person who bids for the lowest amount wins the bid. Suppose out of total 3 people who bid for 18,000, 17,000 and Rs 16,000, the one who bids the lowest will win.In this case it’s the person who has bid Rs 16,000. There will also be â€Å"organizer charges† which are around 5% (standard) of the total amount, so in this case its 5% of Rs 20,000, which is Rs 1,000. So out of the total 16,000 which this winner was going to get, Rs 1,000 will be deducted and the winner will get only Rs 15,000, Rs 1,000 will be organizer charges and Rs 4,000 is the profit, which will be shared by each and every member (all 20 people), it comes out to be Rs 200 per person, and it will be given back to all 20 members.So here you can see that the main winner took a big loss because of his desperate need of getting the money and others benefitted by it. So each person actually paid just 800, not 1,000 in this case (they got 200 back). Note that when a person takes the money after bidding, he can’t bid from next time, only 19 people will be eligible for bidding. Now next month the same thing happens and suppose the best bid was Rs 18,000 , then winner will get 17,000 (after deducting the organizer fees) and the rest 2,000 will be divided back to people (Rs 100 each) . So each person is paying effectively Rs 900.This way each month all the people contribute the money, someone takes the money by bidding lowest, organizer gets his charges and the rest money is divided back to members. You will realize that the person who takes the money at the end will get all the money except organizer fee, as there is no one else to bid now. So the person will get around Rs 19,000 in the end, if you try to find out the returns which he got out of the whole deal, it will depend on two things, how much lower bids were each month and the fees paid to organizer, if bids and charges are very low, then a person will make more money at the cost of other situations.So this is pretty much how a chit fund works, there are various versions of chit funds and how they work , but the idea was to communicate the basic model and how it works. | Online Chit Funds is also running with pace of E-commerce With the advent of ecommerce in India, Chit funds have also started going online. Online chit funds conduct auctions online and subscribers can pay their monthly dues and receive prize am ount online through online transactions including electronic fund transfers. Each member will have an online account through which they can manage their chit funds. 2012-2013 Highlighted News about chit-fund: . Cunning strict approaches adopted by RBI to protect the investors from delusive acts of chit fund companies. 2. Last year in the month of December, The Reserve Bank of India (RBI) warned all the state governments about the mushrooming of chit funds and also written to them to take appropriate actions against them for duping depositors. 3. RBI Governor Duvvuri Subbarao said, â€Å"The responsibility for checking the chit funds and for prosecuting the violation of law is of the state government. We have written to all the state governments to be vigilant about this and to take appropriate action†. . D Subbarao also called for greater awareness among police and the general public for checking the proliferation of the chit funds in the country. 5. On 6th December 2012, Min ister of State for Corporate Affairs RPN Singh said that 87 companies have come under the scanner for alleged irregularities related to chit fund schemes and money circulation in the garb of multi-level marketing. The Registrar of Companies (RoC) and its Regional Directors have been asked to scrutinize the balance sheets and inspect the books of accounts and other records of these 87 companies. . India's market regulator, Securities and Exchange Board of India (Sebi) had banned companies such as Rose Valley and MPS Greenery Developers from accepting deposits from the public. 7. The former chief minister also pointed it out that small savings through post offices and co-operatives has suffered a lot as many people are depositing their money to these chit funds expecting huge return. 8. In Bhubneshwar, The crime branch told that they are making a short documentary to sensitize people about illegal non-banking financial companies (NBFCs).The film will feature a host of financial manage ment companies like Seashore, Ashore and Saffex, whose irregularities were exposed recently. The Economic offences wing (EOW) of the Crime Branch has registered at least 30 cases against several fraud companies in the past six months for embezzling public deposits after giving them false promise of high return. Senior functionaries (Head) of the companies were arrested and their bank accounts being ceased. 9. EOW also making plan to start a toll free number to protect people from fraudulent activities done by chit fund companies. 10.Government making steps towards the projection of model; rules to check chit fund and MLM (Multi-level Marketing) frauds. The central government will soon make stringent provisions in place, like hefty financial penalty, jail terms, de-listing from the registrar of companies (RoC) roster, among others. Who will stop chit funds In October 2012, a women and her elder daughter were running a chit fund, committed suicide by consuming acid in Puthur in Trichy as they were unable to repay their investors. These women had started a Diwali chit fund in the year 2011 and attracted around 300 investors in the area.They had collected around `9lakh from the investors. As per norms, the chit fund company should have repaid the money with interest or given assured gifts to the investors before Diwali of the year 2012. When the investors pressurize the women, they decided to end their lives and consumed poison. Investors are helpless. This is not the only case there are numerous. Most chit fund investors are the rural poor and or small investors. Neither the victimized investors nor the police bring to book the persons responsible. Only the poor agents remain in place from whom the money cannot be recovered.According to Ministry of Corporate Affairs (MCA), there are 4256 listed or registered chit fund companies which are running their business in the country while India chit-fund association estimates that the country has in total 15000 (register ed and unregistered) companies which manage billions of rupees worth of funds. ShriRam Capital, one of the largest players, operates in four southern states and manages over USD 800 million. Some hope that recent hiccups in India’s once-booming microfinance sector, whose rise was led by microcredit, could bring even more business their way.One can imagine how big the business is all over India. Too many regulators could not stop irregularities in chit funds. Everybody agrees that irregularities need to be stopped because these are causing harm to a lot of small investors. But the question is; who will stop it? In 1978, when the RBI banned chit funds, it came under the ministry of corporate affairs as a collective investment scheme. Another way these companies work is through private placement of the non-convertible debentures or collective investment scheme. In this case, SEBI has the power to regulate it.Sahara and many other big names are in on it. Any debenture or private placement cannot be done by more than 50 people. In contrast, these kinds of companies collect money from thousands of investors. If the number of investors of share and debenture is more than 50, it needs to be registered in the market and the SEBI would control it. RBI wants the state government to take steps: In this context, RBI has a different take. Subbarao, Governor, RBI, has advised the state governments to make their law stronger to save common investors from the chit fund trap.It has written letters to the states to develop a definite action plan to take step against these multi levels marketing player. Subbarao explained that RBI has no power to regulate chit funds. So, it has asked state government to take the initiative to prevent the mushrooming of money market agencies. RBI can train police and other legal bodies about chit funds but cannot instruct the police to do so. It is a state subject to plan and executes the prevention process of chit funds. Corporate Affairs ministry looking into it:Union corporate Affairs Minister Sachin Pilot has said that the central government is looking into the issue of some chit funds and the Ponzi scheme that allegedly dupe small investors by using legal loopholes. It would also encourage state government to take necessary action against these firms. These firms are now misusing the loopholes, pilot added. Furthermore he added, â€Å"Our main objective is to protect small investors from these companies, who are taking their (investors) hard earned money. † As many as 87 companies have come under the scanner for alleged irregularities related to chit fund schemes and money circulations.Minister of State for corporate Affairs R. P. N. Singh has informed the Rajya Sabha that the directions have been issued on the basis of specific complaints received by the ministry against these companies, which are â€Å"alleged to be carrying on activities related to prize chit fund and money circulation in the garb of m ulti-level marketing. Legislative hodgepodge: Singh further said that SFIO (Serious Fraud Investigation Office) has recommended setting up of a specific central regulatory agency for the implementation of the prize chit and money circulation scheme (Banning) act, 1978.The act is administered by the Department of Financial services (DFS) which has constituted an Inter-Ministerial Group consisting of representatives from DFS, Ministry of Corporate Affairs (MCA), RBI, Security and Exchange Board of India (SEBI), Department of Consumer Affairs and Central. Report of Ministry of Corporate Affairs: List of Companies not registered but found doing Chit Business Beware of these Companies. Never join them. M/s. P. V. R. Chits (P) Ltd. , B-50, Flatted Factories, Okhla Phase-III, N. Delhi-20. | M/s. Narmal Chits (P) Ltd. , 1427, Gurudwara Road, Kotla Mubarakpur,N.Delhi-3. | M/s. Sahara Chits (P) Ltd. , WZ/A-49, Krishna Park Extension, N. Delhi-18. | M/s. Twenty Second Century Chit Fund (P) Ltd . , 4205-4206, Sant Nagar, Main Road, Rani Bagh, Delhi-34. | M/s. Skylla Chits (P) Ltd. , D-223/115, Laxmi Chambers, Laxmi Nagar, Delhi-92. | M/s. Hari Vimal Chits (P) Ltd. , Shop No. 8, M. R. Market, Rangpuri, N. Delhi-70. | M/s. Merchant Chits (P) Ltd. , CA-24/2, Tagore Garden, N. Delhi-27. | M/s. Mehar Chits (P) Ltd. , IIIrd Floor, 528, Krishna Gali, Katra Neel, Chandni Chowk, Delhi-6| M/s. Vinamar Chits (P) Ltd. , 170-E, Kamla Nagar, Delhi-7. | M/s.Vinamar Chits (P) Ltd. , 272, Hakikat Nagar, Mall Road, Delhi-9. | M/s. Well King Chits (P) Ltd. , C-47, Acharya Niketan, Mayur Vihar, Phase-I,Delhi-91. | M/s. Aegis Chit Fund (P) Ltd. , E-484, Greater Kailash-II, New Delhi-48. | List of Companies which have been debarred from doing any Chit Fund business in Delhi   NAME| ADDRESS| A. G. CHIT FUND PVT. LTD. |    | ARJIT CHITS PVT. LTD. | | BHAGMAL CHITS PVT. LTD. | | CHOJI PRITAM CHITS PVT. LTD. | | DISHTI CHIT FUND PVT. LTD. | DIRECTOR: Sh. Ajay Pandon| DISHTI CHIT FUND PVT. LTD. | DIRECTOR: Sh. Sudarshan Kapoor| EK-ONKAAR CHIT FUND PVT.LTD. | | EROS FIN. ; CHIT FUND PVT. LTD. | | GIRDHAR CHITS PVT. LTD. | | GOLDEN BENEFIT CHITS PVT. LTD. | | J. KRISHNA CHIT FUND PVT. LTD. | | J. V. CHITS PVT. LTD. | | KADS CHIT FUND PVT. LTD. | | KHAJANA CHITSPVT. LTD. | | LEAN CHITS PVT. LTD. | | MINCO CHITS PVT. LTD. | | NIKETAN CHIT FUND PVT. LTD. | | PARVATI CHIT FUND PVT. LTD. | | PARVEEN CHIT FUND PVT. LTD. | | POMA CHIT FUND PVT. LTD. | | PROSPER CHIT FUND PVT. LTD. | | RITESH CHIT FUND PVT. LTD. | | ROHTGI CHIT FUND PVT. LTD. | | ROYAL CHIT FUND PVT. LTD. | | RUHANI CHIT FUND PVT. LTD. | | S. T. S. CHIT FUND PVT.LTD. | | SAFAL CHIT FUND PVT. LTD. | | SATSANGI CHIT FUND PVT. LTD. | | SIMPLICITY CHIT FUND PVT. LTD. | | SUBHASH NAGAR CHIT FUND PVT. LTD. | | TRI NAGAR CHIT FUND PVT. LTD. | | VEDANTA CHIT FUND PVT. LTD. |    | YOG MAYA CHIT FUND PVT. LTD. |    | PARVARISH LEASING ; FIN. (P) LTD| Shop No. 6, Mafare Garden, New Delhi| M. V. A. CHIT FUND (P) LTD. | Shop No. 10, Krishna Mkt. ,Lajpat Nagar,N. Delhi. | HONOUR CHITS (P) LTD. | 2352, Sevak Bhawan,IIIrd Floor, Shop No. 9,Beadon Pura,Karol Bagh, N. Delhi. | * Source Ministry of corporate AffairsBenefits of Chit funds: Chit Fund is an attractive Investment Option which caters to people from all walks of life. It is specifically beneficial to the Salaried Class, Professionals, Businessmen and Self Employed. The uniqueness of Chit Fund as a method of Financial Planning stems from the fact that, it is both a tool for saving and borrowing. In other words, it serves the dual purpose of being an investment for your savings and in times of need the Subscriber can bid for the Prize Amount in order to meet any unexpected expenditure. The benefits of Investing in Chit Fund are numerous. You can choose how much you want to save per month. Chit funds companies offers chits of various denominations and monthly subscriptions amount ranges from Rs 2500/=(Chit value Rs 1 lakh) to monthly subscription of Rs 1,25,000. * The rate of return is very high compared to other Investment Options and it is also secure form of Investment. * Your Monthly payments will be the Chit Subscription Amount minus the Dividend. The details of the Dividend entitled for Deduction and the Balance Amount payable shall be informed every month, which is mandatory. It inculcates the habit of saving and setting apart a particular amount every month towards investment for a rainy day. * It is good for the Housewife to keep or save their small savings in Chit funds as they will get the money at the time of utmost financial need for household purposes. * It is generally used by housewives, employees of same company, peer groups, friends, and family members or some associations. * If it is used in proper or genuine way then it is makes a worth to invest in chit funds (Organized or unorganized). Drawbacks: Chit-funds do not offer any pre-determined or fixed returns. * Higher returns are earned when there are more nu mber of members in the group or if the duration of the scheme is longer. * One would earn more, when more members need emergency funds. Thus returns cannot be calculated and decided when one joins the scheme. * No security in unregistered chit fund companies. So there are more chances of getting hoax by these fraud companies. * Organizer gets benefited more from your savings. * No guarantee if fixed returns. * In chits interest earnings are lower than Fixed deposits (FD). High degree of risk is associated with chits, so relying on chit funds for saving could be more dangerous. * Chit does not make money; it is just a mechanism for liquidity and emergency funds. * Many chit fund owners are collecting huge volume of money from the common people by making false promises to them. Many poor people of our state are being allured by these chit fund owners and depositing their hard-earned money. But the people are not getting back returns for their investments How to be a Safe investor in C hit Funds:With the plethora of chit fund companies around, the safety of a chit fund lies in choosing the right one. In a registered chit fund company, under legal binding, the activities are regulated and institutionalized by the Chit Fund Act. And hence could be considered safe. However, other unregistered companies operating informally do exist. It has been also seen that depositors are being lured by chit funds companies or firms with higher returns than what banks offer them. These companies are also flourishing in the rural belts where banking penetration is low.One should carefully analyze the pros and cons before making investment in chit funds. Therefore one needs to exercise caution while choosing where he desires to invest. Chit funds definitely are an attractive option for regular saving. It inculcates a disciplined approach to financial planning. It has the added advantage of bringing a combination of savings as well as hassle free borrowing. This dual purpose investmen t tool could be a friend in need at times of unexpected financial emergencies. Thence BE SAFE AND BE SELECTIVE while going for any chit fund schemes.

Family diversity in today’s society Essay

Examine the extend,of and the reasons for family diversity in today’s society. Many sociologists argue that the nuclear family is a universal and dominate institution however there has been an increase in diverse family types for various reasons. Examples of these diverse families are lone parents, reconstitutions and cohabitation families. Although most people experience life in a nuclear family, it represents only a stage in their life cycle. Social and demographic changes have meant that an increasing part of many people’s lives are spent in households that are not based on conventional nuclear families. Firstly the increase of single parents (lone parents) has tripled since 1970s in the UK. About 25% of all families with dependent children are single-parent families. There are various reasons which contribute to the increase of single parenthood but one main one is the demographical changes in the UK, is divorce. Divorce was legalised in the early 1970s and as a con sequences it is cheaper and easier to get a divorce and this one of the explanations for the growth in lone-parent families since the early 1970’s. Whereas in the past it would take years to get a divorce and even then the outcome was not always fair. Feminist argue that diversity is valued and liberal as it gives women a choice. They also argue that this not only benefits women but en as well as they can have more time with the child and care for their children, then in the past that was only seen as the women job. However these traditional values are stilled established by ethnic groups not so much. Another reason for the increase in single parent families is due to greater acceptance in society. There is no longer as stigma that you have conceives a child with in marriage. This is interlinked with secularisation, which means the decline in religious practice and thinking. Therefore religion has very little influence over people lives hence they have a wider option in regards to the type of family they chose. The media also contributes the greater acceptance of single-parents as it depicts them in a positive light today, whereas in the past were it was seen as ‘sinful’. The increase is in single parent families is also due to help of the welfare state. The welfare state provides the single pare nt finical support hence taking the position or the role of the father. As a result women no longer need to rely on men or marriage for support. The increase in never married single mother now accounts for about 40% of all lone parents. Although Britain has become more diverse single  parenthood is still not accepted by everyone. The new right thinker Charles Murray (1984) argues that the increase in lone-parents is due to the over generosity of the welfare state as they have provide for both the parent and their children. Murray argue that this creates ‘perverse incentive’, that is rewarding irresponsible behaviour hence creating a ‘dependency culture’ in which people assume that the state will support them. One of the consequences of the lone parent family is step families (often called reconstituted families) which accounts to about 10% of families with the dependent children in the UK. A reconstituted family is made up of an adult couple, living with at least one child from a previous relationship of one of the partners. However although there is an increase in diverse family types the stepfamily are more at risk of poverty because the stepfather would have to provide for his current step children and his children form a previous relationship. In addition a difference in sexuality has contributed to the increase in family diversity. Gay and lesbian households have become more common and more acceptable in society than in the past. As Jeffrey Weeks, Donovan and Heaphey did their study in 1999 they argue, ‘During the past generation the possibilities of living an openly lesbian and gay have been transformed’. According to Weeks et al (1999) the same sex families look upon their household and friendship network as a chosen family. Same sex families have more option than the conventional heterosexual family and others see these families and an alternative and continuous devolving. Weeks et al argues that this part of a wider social change which can be based on culture and ethnic difference. Another sociologist called Roseneil (2005) develops the idea of chosen your own family. She uses the term hetronorm to refer to the intimate relationship between a heterosexual couple is seen as normal. Cheal (2002) notes that many gays and lesbians are legally allowed to adopt nevertheless many want to retain status of difference because they may feel that by adopting a child they are being shaped or moulded to portray a heterosexual family. Another main reason in why same- sex families increase is the decline in secularisation because some religions condemn homosexuality and now less people are religious in the UK they are more acceptant of homosexuals. Another type of family is singletons; this means that when someone lives by themselves. About 3 in 10 household contains one person. The reasons for  these changes are the increase in separation and divorce has created more 1 person households especially with men under 65 because children are more likely to live with their mother. Also the decline in marriage and the trend in marrying later because people are living longer hence there are more people that are single. Stein (1976) argues the growing number of people choosing to be single is a deliberate choice. However, while many of these choose to remain single some are alone because e there are few partners available in their age group. Furthermore, another type of household is living apart together. It is often assumed that those living alone do not have a partner. However the researcher by Duncan and Phillips (2208) found that 1 in 10 adults are ‘living apart together’ and has become increasingly common. Living apart together is a significant relationship, but not married or cohabiting. Duncan and Phillips found that some couple cannot live together for finical reason and the minority actively chose to live apart may be because they want to keep their home as a security because if the relationship does not work then at least they have a home to go to. Nonetheless although there are various other families it does demolish the existence of the nuclear family as they are still common but it has changed hence becoming more modern. Perspectives like the functionalist and new right as described to be ‘modernist’ because they see modern society. The nuclear family has shaped and changed to fit society which helps maintain it by performing some essential functions. According to Chester (1985), there was little evidence that people were choosing to live on a long-term basis in alternatives to the nuclear family. However, he did accept that some changes were taking place in family life. In particular, many families were no longer ‘conventional’ in the sense that the husband was the sole breadwinner. He accepted more women are out working to finical support their family. He called this new family form, in which wives have got jobs, the neo-conventional family. Although many people are not part of the nuclear family at one time in the life is largely due to the life-cycle. Many people who are currently living alone i.e. widows, singleton or those who are yet to get married, were either part o f a nuclear family in the past or will be in the future. Chester argues that the statistics is misleading and does not portray that most people will spend a major part of their life in a nuclear family. The extended family is another type of family which is three  generations living together. The extended family was strongest in working-class families. It is less important today because of geographical mobility, but research by Finch and Mason (1993) shows that kinship ties are still important for most. They also receive finical help from extended family and they also found that the women are more actively involved with extended family. Wilmot (1988) did his study on the dispersed extended family and the beanpole family. Wilmot (1988) argues that there are four main types of extended family; extended family of residence where the members live in the same household, the local extended family – where 2 or 3 nuclear families live separately but in close proximity and see each other often, the dispersed extended family – nuclear families who see each other frequently but live further apart and do not see each other as regularly and the attenuated extended family – similar to the dispersed extended family but the contact is even less frequent. Brannen (2003) argues that there is a strong intergenerational links between generations mainly because people are living longer. However the links between the intragenerational links between siblings, cousins etc. were somewhat weaker. Therefore Brannen characteristic contemporary family structure as being long and thin and she compares it to the beanpole. A beanpole family is a nuclear family with one or two children who maintain regular contact with grandparents. Furthermore another concept which has contributed to the increase in diverse families is culture diversity. There’s is an increase of people with different ethnic background hence this means there alternative family forms and living arrangements. Ghazala Bhatti carries out her study in 1999 on Asian families living in the southern England. She found that the conflict between generations has created a new family type as the children may not marry someone with the same background. However Bhatti stresses that these families were not the norm. Within black families there is high rate of female-headed houses, lone-parent black families has someti mes been seen as evidence of disorganisation which link back to slavery. This is because under slavery when people were taken the children would stay with their mothers. Also due to high rate of unemployment among black men has meant that they cannot provide for their family which as a consequence lead to high rates of desertion or marital breakdown. Also among Asian families their household do contain three generation but most are in fact nuclear  rather than extended families. Larger Asian households also to some extent reflect the value placed on the extended family in Asian cultures. These differences are likely to have resulted from the fact that many Asian immigrants have come from a traditional agricultural economy where family patterns are more like pre-industrial Britain. Thus, minority ethnic families have not just contributed to family diversity through each group having its own distinctive family pattern. They have also contributed to it through developing diverse family patterns within each ethnic group.

Apple Value Chain Analysis

The process of transforming inputs into outputs compromises a number of primary and support activities† (Hill and Jones, 2001, p. 133). Each value is considered to be a source of competitive advantage. In the analysis, the company is being examined exclusively. SUPPORT ACTIVITIES Infrastructure Apple has an unprecedented cash position; in fact, the most cash held by any technological company (Schubarth C. , 2011). It has 97. 6 billion US dollar in cash (Schonfeld E. , 2012) and this allows the company to internally finance any development and expansion without cost of capital. Furthermore, Apple is working on reducing its greenhouse gas emissions that is used in production and transportation by redesigning its packaging relying on renewable energy (O’Reilly J. , 2009). Apple has a multi-functional structure that is flat to allow more flexibility (Apple Inc. 2012). As well as casual dress codes to allow effectiveness and to promote quick decision making and innovation. Human Resource Management Apple is following a lean management style and the philosophy of â€Å"having less is more†. Also Case Study will describe why Apple Inc. is a very successful company. That is Apply intentionally understaffing in order to be more productive and innovative (Sullivan, J. , 2011). Apple, also, has a selective hiring process to attract talented employees. Moreover, Apple offer a generous employee benefit program; as a result, pulling and retaining the industry leading those talented employees to promote the company (Masi B. 2009, p. 13). Technological Development Apple spend enormous amount of money on its Research and Development in order to push innovation further; thus stay ahead of competition. According to figures published in Apple’s 2012 annual report, RD expenditure hits 3. 4 billion US dollars which is nearly 40% increase than 2011 (Brodjanac D. , 2012). Apple as well protects its invention and innovation worldwide by filling patent. Procurement Since Apple is a member of the Electronic Industry Citizenship Coalition (EICC), it works to guarantee fair treatment for its workers. In addition, Apple developed an ecosystem of suppliers to benefits from its strong relationships by keeping them close (Masi B. , 2009, p. 13). By doing that, it enables Apple to obtain its products and services within limited timeframe (Apple Inc. , 2012). Apple, occasionally, evaluates its relationships and enhances its suppliers’ ecosystem if needed. Moreover, Apple introduced a Supplier Diversity Program which is mainly for supporting any potential suppliers. This facilitates the visibility of these suppliers and develops the future relationships (Apple Inc. , 2012) PRIMARY ACTIVITIES Inbound Logistics Apple has a partnership with OEM in order to reduce development time, production, material and manufacturing costs. However, Apple supervises the entire process to control its quality (Francisco T. , 2011). Operations Apple outsourced to various Chinese manufacturers in order to employ its economy of scale; as a result eliminate the burden of production management. Apple, also, cooperate with other companies including HP and Samsung (Sherman E. , 2012). Furthermore, Apple designs its products in-house to eliminate production cost (Masi B. 2009, p. 14). Outbound Logistics Apple’s products are being delivered directly to its retail stores around the world to minimize inventory cost. To trim down shipping costs, Apple’s designing team developed packagings that are slim and light yet productive (Apple, 2012). Marketing and Sales Television commercial, online ads and print advertisements campaigns have been successful in promoting the App le’s products and services. Apple has a branding strategy that is emotions’ focused, humorous and simplicity. The ads theme is about lifestyle; innovation, imagination and aspiration (Masi B. , 2009, p. 14). In addition, Apple has a secretive strategy concerning new products or services in order to create suspension and publicity. It, also, sells its products to schools and universities; thus creating an exposure for the product or the service (Inside CRM, 2009). Services Having a great customer experience is fundamental priority for any businesses. Apple is a great example of customer focused; it believes that customer loyalty is a great strength to the company. Apple Genius Bar is one of its main services where customers get the best face to face support (Apple, 2012). Moreover, customers are always welcome for free consultation concerning any issues. Apple, in addition, offer one year warranty and customers then have the choice to purchase an extension warranty (Masi B. , 2009, p. 13). ALL http://www. scribd. com/doc/24134877/Strategic-Analysis-of-Apple-Inc-Brian-Masi Procurement http://www. apple. com/procurement/ Technological http://www. decryptedtech. om/news/apple-increasing-their-investments-in-research-and-development. html HR http://www. ere. net/2011/09/12/talent-management-lessons-from-apple-a-case-study-of-the-worlds-most-valuable-firm-part-1-of-3/ Infra. http://www. bizjournals. com/sanjose/news/2011/07/21/apples-cash-pile-up-16-to-762b. html http://techcrunch. com/2012/01/24/apple-97-6-billion-cash/ http://www. inboundlogistics. com/cms/article/how-green-is-apple/ Marketing sales http://www. insidecrm. com/articles/crm-blog/1 1-effective-strategies-apple-uses-to-create-loyal-customers-53510/ Operation Apple Value Chain Analysis The process of transforming inputs into outputs compromises a number of primary and support activities† (Hill and Jones, 2001, p. 133). Each value is considered to be a source of competitive advantage. In the analysis, the company is being examined exclusively. SUPPORT ACTIVITIES Infrastructure Apple has an unprecedented cash position; in fact, the most cash held by any technological company (Schubarth C. , 2011). It has 97. 6 billion US dollar in cash (Schonfeld E. , 2012) and this allows the company to internally finance any development and expansion without cost of capital. Furthermore, Apple is working on reducing its greenhouse gas emissions that is used in production and transportation by redesigning its packaging relying on renewable energy (O’Reilly J. , 2009). Apple has a multi-functional structure that is flat to allow more flexibility (Apple Inc. 2012). As well as casual dress codes to allow effectiveness and to promote quick decision making and innovation. Human Resource Management Apple is following a lean management style and the philosophy of â€Å"having less is more†. Also Case Study will describe why Apple Inc. is a very successful company. That is Apply intentionally understaffing in order to be more productive and innovative (Sullivan, J. , 2011). Apple, also, has a selective hiring process to attract talented employees. Moreover, Apple offer a generous employee benefit program; as a result, pulling and retaining the industry leading those talented employees to promote the company (Masi B. 2009, p. 13). Technological Development Apple spend enormous amount of money on its Research and Development in order to push innovation further; thus stay ahead of competition. According to figures published in Apple’s 2012 annual report, RD expenditure hits 3. 4 billion US dollars which is nearly 40% increase than 2011 (Brodjanac D. , 2012). Apple as well protects its invention and innovation worldwide by filling patent. Procurement Since Apple is a member of the Electronic Industry Citizenship Coalition (EICC), it works to guarantee fair treatment for its workers. In addition, Apple developed an ecosystem of suppliers to benefits from its strong relationships by keeping them close (Masi B. , 2009, p. 13). By doing that, it enables Apple to obtain its products and services within limited timeframe (Apple Inc. , 2012). Apple, occasionally, evaluates its relationships and enhances its suppliers’ ecosystem if needed. Moreover, Apple introduced a Supplier Diversity Program which is mainly for supporting any potential suppliers. This facilitates the visibility of these suppliers and develops the future relationships (Apple Inc. , 2012) PRIMARY ACTIVITIES Inbound Logistics Apple has a partnership with OEM in order to reduce development time, production, material and manufacturing costs. However, Apple supervises the entire process to control its quality (Francisco T. , 2011). Operations Apple outsourced to various Chinese manufacturers in order to employ its economy of scale; as a result eliminate the burden of production management. Apple, also, cooperate with other companies including HP and Samsung (Sherman E. , 2012). Furthermore, Apple designs its products in-house to eliminate production cost (Masi B. 2009, p. 14). Outbound Logistics Apple’s products are being delivered directly to its retail stores around the world to minimize inventory cost. To trim down shipping costs, Apple’s designing team developed packagings that are slim and light yet productive (Apple, 2012). Marketing and Sales Television commercial, online ads and print advertisements campaigns have been successful in promoting the App le’s products and services. Apple has a branding strategy that is emotions’ focused, humorous and simplicity. The ads theme is about lifestyle; innovation, imagination and aspiration (Masi B. , 2009, p. 14). In addition, Apple has a secretive strategy concerning new products or services in order to create suspension and publicity. It, also, sells its products to schools and universities; thus creating an exposure for the product or the service (Inside CRM, 2009). Services Having a great customer experience is fundamental priority for any businesses. Apple is a great example of customer focused; it believes that customer loyalty is a great strength to the company. Apple Genius Bar is one of its main services where customers get the best face to face support (Apple, 2012). Moreover, customers are always welcome for free consultation concerning any issues. Apple, in addition, offer one year warranty and customers then have the choice to purchase an extension warranty (Masi B. , 2009, p. 13). ALL http://www. scribd. com/doc/24134877/Strategic-Analysis-of-Apple-Inc-Brian-Masi Procurement http://www. apple. com/procurement/ Technological http://www. decryptedtech. om/news/apple-increasing-their-investments-in-research-and-development. html HR http://www. ere. net/2011/09/12/talent-management-lessons-from-apple-a-case-study-of-the-worlds-most-valuable-firm-part-1-of-3/ Infra. http://www. bizjournals. com/sanjose/news/2011/07/21/apples-cash-pile-up-16-to-762b. html http://techcrunch. com/2012/01/24/apple-97-6-billion-cash/ http://www. inboundlogistics. com/cms/article/how-green-is-apple/ Marketing sales http://www. insidecrm. com/articles/crm-blog/1 1-effective-strategies-apple-uses-to-create-loyal-customers-53510/ Operation

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An Introduction to Genre Theory Essay Example for Free

An Introduction to Genre Theory Essay An Introduction to Genre Theory Daniel Chandler 1. The problem of definition A number of perennial doubts plague genre theory. Are genres really out there in the world, or are they merely the constructions of analysts? Is there a finite taxonomy of genres or are they in principle infinite? Are genres timeless Platonic essences or ephemeral, time-bound entities? Are genres culturebound or transcultural? Should genre analysis be descriptive or proscriptive? (Stam 2000, 14) The word genre comes from the French (and originally Latin) word for kind or class. The term is  widely used in rhetoric, literary theory, media theory, and more recently linguistics, to refer to a distinctive type of text*. Robert Allen notes that for most of its 2,000 years, genre study has been primarily nominological and typological in function. That is to say, it has taken as its principal task the division of the world of literature into types and the naming of those types much as the botanist divides the realm of flora into varieties of plants (Allen 1989, 44). As will be seen, however, the analogy with biological classification into genus and species misleadingly suggests a scientific process. Since classical times literary works have been classified as belonging to general types which were variously defined. In literature the broadest division is between poetry, prose and drama, within which there are further divisions, such as tragedy and comedy within the category of drama. Shakespeare referred satirically to classifications such as tragedy, comedy, history, pastoral, pastoral-comical, historical-pastoral, tragical-historical, tragical-comicalhistorical-pastoral (Hamlet II ii). In The Anatomy of Criticism the formalist literary theorist Northrop Frye (1957) presented certain universal genres and modes  as the key to organizing the entire literary corpus. Contemporary media genres tend to relate more to specific forms than to the universals of tragedy and comedy. Nowadays, films are routinely classified (e. g. in television listings magazines) as thrillers, westerns and so on genres with which every adult in modern society is familiar. So too with television genres such as game shows and sitcoms. Whilst we have names for countless genres in many media, some theorists have argued that there are also many genres (and sub-genres) for which we have no names (Fowler 1989, 216; Wales 1989, 206). Carolyn Miller  suggests that the number of genres in any society depends on the complexity and diversity of society (Miller 1984, in Freedman Medway 1994a, 36). The classification and hierarchical taxonomy of genres is not a neutral and objective procedure. There are no undisputed maps of the system of genres within any medium (though literature may perhaps lay some claim to a loose consensus). Furthermore, there is often considerable theoretical disagreement about the definition of specific genres. A genre is ultimately an abstract conception rather than something that exists empirically in the world,  notes Jane Feuer (1992, 144). One theorists genre may be anothers sub-genre or even super-genre (and indeed what is technique, style, mode, formula or thematic grouping to one may be treated as a genre by another). Themes, at least, seem inadequate as a basis for defining genres since, as David Bordwell notes, any theme may appear in any genre (Bordwell 1989, 147). He asks: Are animation and documentary films genres or modes? Is the filmed play or comedy performance a genre? If tragedy and comedy are genres, perhaps then domestic tragedy or slapstick is a formula. In  passing, he offers a useful inventory of categories used in film criticism, many of which have been accorded the status of genres by various commentators: Grouping by period or country (American films of the 1930s), by director or star or producer or writer or studio, by technical process (Cinemascope films), by cycle (the fallen women films), by series (the 007 movies), by style (German Expressionism), by structure (narrative), by ideology (Reaganite cinema), by venue (drive-in movies), by purpose (home movies), by audience (teenpix), by subject or theme (family film, paranoid-politics movies). (Bordwell 1989, 148) Another film theorist, Robert Stam, also refers to common ways of categorizing films: While some genres are based on story content (the war film), other are borrowed from literature (comedy, melodrama) or from other media (the musical). Some are performer-based (the Astaire-Rogers films) or budget-based (blockbusters), while others are based on artistic status (the art film), racial identity (Black cinema), locat[ion] (the Western) or sexual orientation (Queer cinema). (Stam 2000, 14). Bordwell concludes that one could argue that no set of necessary and sufficient conditions can  mark off genres from other sorts of groupings in ways that all experts or ordinary film-goers would find An Introduction to Genre Theory acceptable (Bordwell 1989, 147). Practitioners and the general public make use of their own genre labels (de facto genres) quite apart from those of academic theorists. We might therefore ask ourselves Whose genre is it anyway? Still further problems with definitional approaches will become apparent in due course. Defining genres may not initially seem particularly problematic but it should already be apparent that it is a theoretical minefield. Robert Stam identifies four key problems with generic labels (in relation to film): extension (the breadth or narrowness of labels); normativism (having preconceived ideas of criteria for genre membership); monolithic definitions (as if an item belonged to only one genre); biologism (a kind of essentialism in which genres are seen as evolving through a standardized life cycle) (Stam 2000, 128129). Conventional definitions of genres tend to be based on the notion that they constitute particular conventions of content (such as themes or settings) and/or form (including structure and style) which  are shared by the texts which are regarded as belonging to them. Alternative characterizations will be discussed in due course. The attempt to define particular genres in terms of necessary and sufficient textual properties is sometimes seen as theoretically attractive but it poses many difficulties. For instance, in the case of films, some seem to be aligned with one genre in content and another genre in form. The film theorist Robert Stam argues that subject matter is the weakest criterion for generic grouping because it fails to take into account how the subject is treated (Stam 2000, 14). Outlining a fundamental problem of  genre identification in relation to films, Andrew Tudor notes the empiricist dilemma: To take a genre such as the western, analyze it, and list its principal characteristics, is to beg the question that we must first isolate the body of films which are westerns. But they can only be isolated on the basis of the principal characteristics which can only be discovered from the films themselves after they have been isolated. (Cited in Gledhill 1985, 59) It is seldom hard to find texts which are exceptions to any given definition of a particular genre. There are no rigid rules of inclusion and exclusion (Gledhill 1985, 60). Genres are not discrete systems, consisting of a fixed number of listable items (ibid. , 64). It is difficult to make clear-cut distinctions between one genre and another: genres overlap, and there are mixed genres (such as comedy-thrillers). 2 Specific genres tend to be easy to recognize intuitively but difficult (if not impossible) to define. Particular features which are characteristic of a genre are not normally unique to it; it is their relative prominence, combination and functions which are distinctive (Neale 1980, 22-3). It is easy to underplay the differences within a genre. Steve Neale declares  that genres are instances of repetition and difference (Neale 1980, 48). He adds that difference is absolutely essential to the economy of genre (ibid. , 50): mere repetition would not attract an audience. Tzvetan Todorov argued that any instance of a genre will be necessarily different (cited in Gledhill 1985, 60). John Hartley notes that the addition of just one film to the Western genre changes that genre as a whole even though the Western in question may display few of the recognized conventions, styles or subject matters traditionally associated with its genre (OSullivan et al. 1994). The issue of difference also  highlights the fact that some genres are looser more open-ended in their conventions or more permeable in their boundaries than others. Texts often exhibit the conventions of more than one genre. John Hartley notes that the same text can belong to different genres in different countries or times (OSullivan et al. 1994, 129). Hybrid genres abound (at least outside theoretical frameworks). Van Leeuwen suggests that the multiple purposes of journalism often lead to generically heterogeneous texts (cited in Fairclough 1995, 88). Norman Fairclough suggests that mixed-genre texts are far from uncommon in the mass media (Fairclough 1995, 89). Some media may encourage more generic diversity: Nicholas Abercrombie notes that since television comes at the audience as a flow of programmes, all with different generic conventions, means that it is more difficult to sustain the purity of the genre in the viewing experience (Abercrombie 1996, 45; his emphasis). Furthermore, in any medium the generic classification of certain texts may be uncertain or subject to dispute. Contemporary theorists tend to describe genres in terms of family resemblances among texts (a notion derived from the philosopher Wittgenstein) rather than definitionally (Swales 1990, 49). An individual text within a genre rarely if ever has all of the characteristic features of the genre (Fowler 1989, 215). The family resemblance approaches involves the theorist illustrating similarities between some of the texts within a genre. However, the family resemblance approach has been criticized on the basis that no choice of a text for illustrative purposes is innocent (David Lodge, cited in Swales 1990, 50), and that such theories can make any text seem to resemble any other one (Swales 1990, 51). In addition to the definitional and family resemblance approach, there is  An Introduction to Genre Theory another approach to describing genres which is based on the psycholinguistic concept of prototypicality. According to this approach, some texts would be widely regarded as being more typical members of a genre than others. According to this approach certain features would identify the extent to which an exemplar is prototypical of a particular genre (Swales 1990, 52). Genres can therefore be seen as fuzzy categories which cannot be defined by necessary and sufficient conditions. How we define a genre depends on our purposes;  the adequacy of our definition in terms of social science at least must surely be related to the light that the exploration sheds on the phenomenon. For instance (and this is a key concern of mine), if we are studying the way in which genre frames the readers interpretation of a text then we would do well to focus on how readers identify genres rather than on theoretical distinctions. Defining genres may be problematic, but even if theorists were to abandon the concept, in everyday life people would continue to categorize texts. John Swales does note that a discourse communitys nomenclature for genres is an  important source of insight (Swales 1990, 54), though like many academic theorists he later adds that such genre names typically need further validation (ibid. , 58). Some genre names would be likely to be more widely-used than others: it would be interesting to investigate the areas of popular consensus and dissensus in relation to the everyday labeling of mass media genres. For Robert Hodge and Gunther Kress, genres only exist in so far as a social group declares and enforces the rules that constitute them (Hodge Kress 1988, 7), though it is debatable to  what extent most of us would be able to formulate explicit rules for the textual genres we use routinely: much of our genre knowledge is likely to be tacit. In relation to film, Andrew Tudor argued that genre is what we collectively believe it to be (though this begs the question about who we are). Robert Allen comments wryly that Tudor even hints that in order to establish what audiences expect a western to be like we might have to ask them (Allen 1989, 47). Swales also alludes to people having repertoires of genres (Swales 1990, 58), which I would argue would also be likely to repay  investigation. However, as David Buckingham notes, there has hardly been any empirical research on the ways in which real audiences might understand genre, or use this understanding in making sense of specific texts (Buckingham 1993, 137). Steve Neale stresses that genres are not systems: they are processes of systematization (Neale 1980, 51; my emphasis; cf. Neale 1995, 463). Traditionally, genres (particularly literary genres) tended to be regarded 3 as fixed forms, but contemporary theory emphasizes that both their forms and functions are dynamic. David Buckingham argues that genre is not simply given by the culture: rather, it is in a constant process of negotiation and change (Buckingham 1993, 137). Nicholas Abercrombie suggests that the boundaries between genres are shifting and becoming more permeable (Abercrombie 1996, 45); Abercrombie is concerned with modern television, which he suggests seems to be engaged in a steady dismantling of genre (ibid. ) which can be attributed in part to economic pressures to pursue new audiences. One may acknowledge the dynamic fluidity of genres without positing the final demise of genre as an interpretive framework. As the generic corpus ceaselessly expands, genres (and the relationships between them) change over time; the conventions of each genre shift, new genres and sub-genres emerge and others are discontinued (though note that certain genres seem particularly long-lasting). Tzvetan Todorov argued that a new genre is always the transformation of one or several old genres (cited in Swales 1990, 36). Each new work within a genre has the potential to influence changes within the genre or perhaps the emergence of new sub-genres (which may later blossom into fully-fledged genres). However, such a perspective tends to highlight the role of authorial experimentation in changing genres and their conventions, whereas it is important to recognize not only the social nature of text production but especially the role of economic and technological factors as well as changing audience preferences. The interaction between genres and media can be seen as one of the forces which contributes to changing genres. Some genres are more powerful than others: they differ in the status which is attributed to them by those who produce texts within them and by their audiences. As Tony Thwaites et al. put it, in the interaction and conflicts among genres we can see the connections between textuality and power (Thwaites et al. 1994, 104). The key genres in institutions which are primary definers (such as news reports in the mass media) help to establish the frameworks within which issues are defined. But genre hierarchies also shift over time, with individual genres constantly gaining and losing different groups of users and relative status. Idealist theoretical approaches to genre which seek to categorize ideal types in terms of essential textual characteristics are ahistorical. As a result of  their dynamic nature as processes, Neale argues that definitions of genre are always historically relative, and therefore historically specific (Neale 1995, 464). Similarly, Boris Tomashevsky insists that no firm logical classification of genres is possible. Their de- An Introduction to Genre Theory marcation is always historical, that is to say, it is correct only for a specific moment of history (cited in Bordwell 1989, 147). Some genres are defined only retrospectively, being unrecognized as such by the original producers and audiences. Genres need to be studied as historical phenomena; a popular focus in  film studies, for instance, has been the evolution of conventions within a genre. Current genres go through phases or cycles of popularity (such as the cycle of disaster films in the 1970s), sometimes becoming dormant for a period rather than disappearing. On-going genres and their conventions themselves change over time. Reviewing evolutionary change in some popular film genres, Andrew Tudor concludes that it has three main characteristics: First, in that innovations are added to an existent corpus rather than replacing redundant elements, it is cumulative. Second, in that  these innovations must be basically consistent with what is already present, it is conservative. Third, in that these processes lead to the crystallization of specialist sub-genres, it involves differentiation. (Tudor 1974, 225-6) Tudor himself is cautious about adopting the biological analogy of evolution, with its implication that only those genres which are well-adapted to their functions survive. Christine Gledhill also notes the danger of essentialism in selecting definitive classic examples towards which earlier examples evolve and after which others decline (Gledhill 1985, 59). The cycles and transformations of genres can nevertheless be seen as a response to political, social and economic conditions. Referring to film, Andrew Tudor notes that a genre defines a moral and social world (Tudor 1974, 180). Indeed, a genre in any medium can be seen as embodying certain values and ideological assumptions. Again in the context of the cinema Susan Hayward argues that genre conventions change according to the ideological climate of the time, contrasting John Wayne westerns with Clint Eastwood as the problematic hero or anti-hero (Hayward 1996, 50). Leo Baudry (cited in Hayward 1996, 162) sees film genres as a barometer of the social and cultural concerns of cinema audiences; Robert Lichter et al. (1991) illustrate how televisual genres reflect the values of the programme-makers. Some commentators see mass media genres from a particular era as reflecting values which were dominant at the time. Ira Konigsberg, for instance, suggests that texts within genres embody the moral values of a culture (Konigsberg 1987, 144-5). And John Fiske asserts that generic conventions embody the crucial ideological concerns of the time in which they are popular 4 (Fiske 1987, 110). However, Steve Neale stresses that genres may also help to shape such values (Neale 1980, 16). Thwaites et al. see the relationship as reciprocal: a genre develops according to social conditions; transformations in genre and texts can influence and reinforce social conditions (Thwaites et al. 1994, 100). Some Marxist commentators see genre as an instrument of social control which reproduces the dominant ideology. Within this perspective, the genre positions the audience in order to naturalize the ideologies which are embedded in the text (Feuer 1992, 145). Bernadette Casey comments that recently, structuralists and feminist theorists, among others, have focused on the way in which generically defined structures may operate to construct particular ideologies and values, and to encourage reassuring and conservative interpretations of a given text (Casey 193, 312). However, reader-oriented commentators have stressed that people are capable of reading against the grain. Thomas and Vivian Sobchack note that in the past popular film-makers, intent on telling a story, were not always aware of the covert psychological and social  subtext of their own films, but add that modern film-makers and their audiences are now more keenly aware of the myth-making accomplished by film genres (Sobchack Sobchack 1980, 245). Genre can reflect a function which in relation to television Horace Newcombe and Paul Hirsch referred to as a cultural forum, in which industry and audience negotiate shared beliefs and values, helping to maintain the social order and assisting it in adapting to change (Feuer 1992, 145). Certainly, genres are far from being ideologically neutral. Sonia Livingstone argues, indeed, that different genres are concerned to establish different world views (Livingstone 1990, 155). Related to the ideological dimension of genres is one modern redefinition in terms of purposes. In relation to writing, Carolyn Miller argues that a rhetorically sound definition of genre must be centered not on the substance or form of discourse but on the action it is used to accomplish (Carolyn Miller 1984, in Freedman Medway 1994a, 24). Following this lead, John Swales declares that the principal criterial feature that turns a collection of communicative  events into a genre is some shared set of communicative purposes (Swales 1990, 46). In relation to the mass media it can be fruitful to consider in relation to genre the purposes not only of the producers of texts but also of those who interpret them (which need not be assumed always to match). A consensus about the primary purposes of some genres (such as news bulletins) and of their readers is probably easier to establish than in relation to others (such as westerns), where the very term purpose sounds too in- An Introduction to Genre Theory strumental. However, uses and gratifications researchers have already conducted investigations into the various functions that the mass media seem to serve for people, and ethnographic studies have offered fruitful insights into this dimension. Miller argues that both in writing and reading within genres we learn purposes appropriate to the genre; in relation to the mass media it could be argued that particular genres develop, frame and legitimate particular concerns, questions and pleasures. Related redefinitions of genre focus more broadly on the relationship between the makers and audiences  of texts (a rhetorical dimension). To varying extents, the formal features of genres establish the relationship between producers and interpreters. Indeed, in relation to mass media texts Andrew Tolson redefines genre as a category which mediates between industry and audience (Tolson 1996, 92). Note that such approaches undermine the definition of genres as purely textual types, which excludes any reference even to intended audiences. A basic model underlying contemporary media theory is a triangular relationship between the text, its producers and its interpreters. From the perspective of many recent commentators, genres first and foremost provide frameworks within which texts are produced and interpreted. Semiotically, a genre can be seen as a shared code between the producers and interpreters of texts included within it. Alastair Fowler goes so far as to suggest that communication is impossible without the agreed codes of genre (Fowler 1989, 216). Within genres, texts embody authorial attempts to position readers using particular modes of address. Gunther Kress observes that: Every genre positions those who participate in  a text of that kind: as interviewer or interviewee, as listener or storyteller, as a reader or a writer, as a person interested in political matters, as someone to be instructed or as someone who instructs; each of these positionings implies different possibilities for response and for action. Each written text provides a reading position for readers, a position constructed by the writer for the ideal reader of the text. (Kress 1988, 107) Thus, embedded within texts are assumptions about the ideal reader, including their attitudes towards the subject matter and often their class, age, gender and ethnicity. Gunther Kress defines a genre as a kind of text that derives its form from the structure of a (frequently repeated) social occasion, with its characteristic participants and their purposes (Kress 1988, 183). An interpretative emphasis on genre as opposed 5 to individual texts can help to remind us of the social nature of the production and interpretation of texts. In relation to film, many modern commentators refer to the commercial and industrial significance of genres. Denis McQuail argues that: The genre may be considered as a practical  device for helping any mass medium to produce consistently and efficiently and to relate its production to the expectations of its customers. Since it is also a practical device for enabling individual media users to plan their choices, it can be considered as a mechanism for ordering the relations between the two main parties to mass communication. (McQuail 1987, 200) Steve Neale observes that genres exist within the context of a set of economic relations and practices, though he adds that genres are not the product of economic factors as such. The conditions provided by the capitalist economy account neither for the existence of the particular genres that have hitherto been produced, nor for the existence of the conventions that constitute them (Neale 1980, 51-2). Economic factors may account for the perpetuation of a profitable genre. Nicholas Abercrombie notes that television producers set out to exploit genre conventions It makes sound economic sense. Sets, properties and costumes can be used over and over again. Teams of stars, writers, directors and technicians can be built up, giving economies of scale (Abercrombie 1996, 43). He adds that genres permit the creation and maintenance of a loyal audience which becomes used to seeing programmes within a genre (ibid. ). Genres can be seen as a means of controlling demand (Neale 1980, 55). The relative stability of genres enables producers to predict audience expectations. Christine Gledhill notes that differences between genres meant different audiences could be identified and catered to This made it easier to standardize and stabilise production (Gledhill 1985, 58). In relation to the mass media, genre is part of the process of targeting different market sectors. Traditionally, literary and film critics in particular have regarded generic texts (by which they mean formulaic texts) as inferior to those which they contend are produced outside a generic framework. Indeed, film theorists frequently refer to popular films as genre films in contrast to non-formula films. Elitist critics reject the generic fiction of the mass media because they are commercial products of popular culture rather than high art. Many harbor the Romantic ideology of the primacy of authorial originality and vision, emphasizing individual style  and artistic self-expression. In this tradition the An Introduction to Genre Theory artist (in any medium) is seen as breaking the mould of convention. For the Italian aesthetician Benedetto Croce (1866-1952), an artistic work was always unique and there could be no artistic genres. More recently, some literary and film theorists have accorded more importance to genre, counteracting the ideology of authorial primacy (or auteurism, as it is known in relation to the emphasis on the director in film). Contemporary theorists tend to emphasize the importance of the semiotic notion of intertextuality: of seeing individual texts in relation to others. Katie Wales notes that genre is an intertextual concept (Wales 1989, 259). John Hartley suggests that we need to understand genre as a property of the relations between texts (OSullivan et al. 1994, 128). And as Tony Thwaites et al. put it, each text is influenced by the generic rules in the way it is put together; the generic rules are reinforced by each text (Thwaites et al. 1994, 100). Roland Barthes (1975) argued that it is in relation to other texts within a genre rather than in relation to lived experience that we make sense of certain  events within a text. There are analogies here with schema theory in psychology, which proposes that we have mental scripts which help us to interpret 6 familiar events in everyday life. John Fiske offers this striking example: A representation of a car chase only makes sense in relation to all the others we have seen after all, we are unlikely to have experienced one in reality, and if we did, we would, according to this model, make sense of it by turning it into another text, which we would also understand intertextually, in terms of what we have seen so often on our screens. There is then a cultural knowledge of the concept car chase that any one text is a prospectus for, and that it used by the viewer to decode it, and by the producer to encode it. (Fiske 1987, 115) In contrast to those of a traditionalist literary bent who tend to present artistic texts as nongeneric, it could be argued that it is impossible to produce texts which bear no relationship whatsoever to established genres. Indeed, Jacques Derrida proposed that a text cannot belong to no genre, it cannot be without a genre. Every text participates in one or several genres, there is no genre-less text  (Derrida 1981, 61). Note *In these notes, words such as text, reader and writer are sometimes used as general terms relating to texts (and so on) in whatever medium is being discussed: no privileging of the written word (graphocentrism) is intended. Whilst it is hard to find an alternative for the word texts, terms such as makers and interpreters are sometimes used here as terms non-specific to particular media instead of the terms writers and readers. 2. Working within genres John Hartley argues that genres are agents of ideological closure they limit the meaning-potential  of a given text (OSullivan et al. 1994, 128). Robert Hodge and Gunther Kress define genres as typical forms of texts which link kinds of producer, consumer, topic, medium, manner and occasion, adding that they control the behavior of producers of such texts, and the expectations of potential consumers (Hodge Kress 1988, 7). Genres can be seen as constituting a kind of tacit contract between authors and readers. From the traditional Romantic perspective, genres are seen as constraining and inhibiting authorial creativity. However, contemporary theorists, even  within literary studies, typically reject this view (e. g. Fowler 1982: 31). Gledhill notes that one perspective on this issue is that some of those who write within a genre work in creative tension with the conventions, attempting a personal inflection of them (Gledhill 1985: 63). From the point of view of the producers of texts within a genre, an advantage of genres is that they can rely on readers already having knowledge and expectations about works within a genre. Fowler comments that the system of generic expectations amounts to a code, by the use of which  (or by departure from which) composition becomes more economical (Fowler 1989: 215). Genres can thus be seen as a kind of shorthand serving to increase the efficiency of communication. They may even function as a means of preventing a text from dissolving into individualism and incomprehensibility (Gledhill 1985: 63). And whilst writing within a genre involves making use of certain given conventions, every work within a genre also involves the invention of some new elements. An Introduction to Genre Theory As for reading within genres, some argue that knowledge of genre conventions leads to passive  consumption of generic texts; others argue that making sense of texts within genres is an active process of constructing meaning (Knight 1994). Genre provides an important frame of reference which helps readers to identify, select and interpret texts. Indeed, in relation to advertisements, Varda Langholz Leymore argues that the sense which viewers make of any single text depends on how it relates to the genre as a whole (Langholz Leymore 1975, ix). Key psychological functions of genre are likely to include those shared by categorization generally such as reducing complexity.