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Amazon.com – Financial Analysis Case Study
Amazon.com – Financial Analysis Case StudyIntroduction
The bookselling industry is one of the steady growing industries which have estimated the sales of $27 billion in the year 2006. The sales of the books highly depend on different seasons. The industry has diverse customers who buy different categories of books which includes the trade books, college books, professional books, mass market paper-back books. With stiff competition across the market, the companies are strongly focusing on adopting different ways and means so as to attract more and more consumers and achieving high market share in the industry.
Company overview
Amazon.com is considered to be the market player in the e-commerce industry (bookselling). Amazon.com was founded by Jeff Bezos, who focused on enhancing the book shopping experience of consumers, with innovation and new ways to sell books online. One of the major players of Amazon.com is Barnes and Noble.
Amazon.com started as an online bookstore that has turned into one of the largest online retailers selling items from music and movies to artwork and furniture. As the company website states “it is by design that technological innovation drives the growth of Amazon.com to offer customers more types of products, more conveniently, and at even lower prices.” In this paper you will learn the financial health of the company Amazon.com. The 9-step process written about by Professor Piper will be followed to assess how financially sound Amazon.com is now and the outlook for its future.
Step 1 – Goals, Strategy and Operating Characteristics
Amazon.com aims to be the “most customer-centric company for four primary customer sets: customers, seller, enterprises, and content creators” (Amazon.com, n.d.). Amazon.com is highly focuses on providing value to its consumers, the company has a strong focus on providing value to its consumers with a strong focus on increased selection, product diversity, discounted prices, informative products, high convenience and high level of customization for the consumers. The company opts for innovative means and ways to attract more and more consumers and make themselves consumer friendly so as to provide consumers value which is one of the strongest aspect which helps in creating competitive advantage. With a focus on these strategies the company is able to achieve competitive edge in the market of its operations. Amazon.com has a strong focus on Convenience, Selection, Service and Price which are considered as the core value of the Amazon.com. With a strong focus on the innovation and technology, Amazon.com is able to enhance the shopping experience to the target consumers.
One-click shopping – Amazon.com focused on providing convenience to its consumers, to save the time and provide enhanced value the company focused on providing a single click shopping experience, it helped in reducing the transactional burden on the customers. The company was able to pioneer on this by collecting the information of customers and creating a database of the same.
Product Review Information – All products on Amazon can be reviewed which helped the customers to review about the product they want to purchase
Purchase Circles – Amazon.com focuses on providing information about the books one is interested in.
E-Mail Alerts – Amazon allows consumers to keep tabs on their favorite author.
Recommendations – The company uses collaborative and other personalization techniques to recommend books to users.
Wish List – The Company focuses on enabling the creation of wish list of the products or items one wants to purchase in the near future.
Amazon.com focuses on 7 c’s framework which helped in creating value proposition, these are convenience, content, customization, community, connectivity, customer care, and communication.
So as to have a competitive edge in the market, Amazon.com focused on diversification by selling different products online. The company also focused on collaborating with different virtual companies to showcase and sell their product through Amazon.com. It also signed the contract with different brick and mortar stores so as to increase its products to be sold. Despite of the diversification, the company was able to have a strong focus on customer value and satisfaction.
Step 2 – Revenue Outlook
The primary source of revenue for Amazon.com is the sale of products and services to customers. The company offers everything from books, electronics, sportswear, tennis rackets, food, children toys, and gold- silver-and diamond jewelry. It was one of-the-first major companies to sell goods over the internet, which its main source of revenue. The revenue generated by the company in 2012 was $42000 as compared to $30792 in 2011 and $22273 in 2010. Thus, we can say that the product revenue of the company is growing by more than 37% yearly. The revenue for services is recorded at $6077 for the year 2012.
Step 3 – Investment in Assets
Considering the investment in assets, we can say that the company has purchased fixed assets which includes the internal use software as well as web development software in 2012 of $1811 million, the company has also invested in acquisition of other companies with which the company has been able to expand on its market base as well as technologies. The investment done in year 2012 on acquisitions has been recorded at $705 million.
Amazon has been expanding its business operations and product offering through various acquisitions. In 2009, the company acquired Zappos.com, an online apparel, footwear and accessories retailer. This acquisition enabled Amazon to tap the internet sales of apparel, the largest online shopping category and one in which Amazon has had limited success in the past. Later, in February 2010, the company acquired Touchco, a touch screen technology company. Amazon merged Touchco’s technology and staff members into its Kindle hardware division. This acquisition expanded Amazon’s platform to encompass more functionality and more content on Kindle. It also helps Amazon to address some of the form-factor issues with the Kindle.
Further in October 2010, the company acquired BuyVIP.com, a fashion and lifestyle online buying community. This acquisition strengthened Amazon’s position in the retail of fashion apparel. BuyVIP.com has more than six million members in countries such as Spain, Germany, and Italy. It offers members top fashion and lifestyle products at lower price points. In November 2010, Amazon acquired Quidsi, which operates Diapers.com and Soap.com. Diapers.com is an online baby care specialty site, and Soap.com is an online site for everyday essentials. The acquisition of Quidsi also brought the ownership of BeautyBar.com under Amazon. BeautyBar.com is a prestige beauty boutique. Later in January 2011, Amazon acquired the remaining shares in LOVEFiLM International, one of the leading European subscription entertainment service providers. It offers online DVD and games rental-by-post, and streams films and TV shows over the internet to personal computers, internet enabled TVs, and Playstation3. LOVEFiLM operates in the UK, Germany, Sweden, Norway and Denmark.
These acquisitions have added new customer base and complement Amazon’s existing product portfolio which has affected the prices of the company in a positive way.
The focus on Kindle has also improved on the share prices of the company tremendously. Amazon has dominated the fast-growing electronic book market for the past few years through its e-reader device, Kindle. In 2007, the company launched its e-reader, Kindle, in the US market. Kindle is Amazon’s portable reader that wirelessly downloads books, blogs, magazines and newspapers to a high-resolution electronic paper display that looks like real paper.
Thus we can say that the company is making investment on its assets with which the company is expanding its market base as well as improving its services.
Step 4 – Economic Performance
Considering the prices of the company i.e. Amazon.com we can say that the prices of the shares has increased tremendously over last 5 years, On 1st January’ 2010, the prices of the shares was $133.9 whereas in 2011 it increased to 184.22 and in 2012 it decreased to 179.03 whereas it is currently being sold at $256.41, which shows that the shares of the company has increased by about 67% in last 3 years.
Ratio Analysis:
Liquidity ratios: Considering the liquidity, we will be able to analyze the ability of the companies to meet their short term obligations, considering the current ratio of amazon.com we can say the current ratio of the company has decreased over last three years the current ratio of the company in 2010 was 1.35 and in 2011 it was 1.75, which states that the ability of the firm to meet short term obligations has decreased over the period.
Solvency ratio: Solvency and leverage ratio helps in analyzing the leverage of the company in respect to the proportion of the assets or resources of the company which are financed through debt and owner’s equity.
Considering the debt ratio of Amazon, we can say that the company has high proportion of short term obligations and debt as compared to the long term. The debt ratio of the company in 2011 has increased as compared to 2010. The debt equity ratio of Amazon in 2010 was 2.0 whereas in 2011 it increased to 2.25, the total debt ratio of the company is 63% and 69% consecutively, which depicts that the assets of the companies are highly financed by debt.
Profitability: Considering the profitability of the firms, we can say that the profitability of the company has decreased over the period, in 2009 the profit margin of the company is 3.68% which decreased to 3.39% in 2010 and further decreased to 1.33%
Operating efficiency: Return on equity and return on assets helps in analyzing the return which the investors are getting from the company, Amazon’s return on equity in 2011 was 8% as compared to 12% in 2010.
Overall, we can say that the financial performance of the company is good.
Step 5 – External Financing Need
With a focus on expansion, the company needs to have a strong focus on external financing need, as per the annual reports of the company we can see that the company has taken external financing through long term loan which is about $177 million, wherein the company has done the repayment of the capital lease obligation of $444 million. The total external financing of the company has amounted to $482 million in 2012 along with the common stock repurchase that has been done by the consumers.
Step 6 – Target Sources of Finance
The major sources of finance for the company is banks and other financial institutes with which the company will be able to take long term debts and loans. Thus the sources of financing of the company include the banks and the financial institutes, the company can also raise funds through equity or through debt financing.
Equity Financing:
This is one form of financing which people usually do when they think that they can contribute themselves or get it done from their family and friends. This is usually called equity financing in case of an individual. But, in case of a corporation the scenario is a bit different. Corporation issue shares in order to raise capital from the market and hence raise money by making shareholders the owners of the company.
Advantages of Equity Financing:
You can use the equity raised from the market without any burden of paying back the money. It is not mandatory to pay dividends every year. However, if there is a discontinuity in the process, then it sends a wrong signal to the market regarding the financial health of the company.
If the company liquidates, then it is not necessary for the company to pay back the share of the common stockholders.
One may go for venture capitalist or angel investors in case if the business is a new start-up and you need both intellectual support as well as financial support.
Disadvantages of Equity Financing:
How much control you give to the investors depends entirely on the company? If more than 50% is owned by one individual company then the company may have a total control over the company and take charge of each small and big decision. So, this has to be in a constant check so that no hostile takeover takes place.
There is another disadvantage of raising equity. The management of the company is bound to take permission towards any major change they wish to make like going in for a large project; buying another company. So, for all this you need a lot of paper work and shareholder’s approval. This takes heavy time and builds on the opportunity cost of capital for the company.
Debt Financing
Many a times it happens that the company is confident enough to raise money at a specified interest rate, put in that money into the project and generate positive returns out of it. This way is the best way out for any company in order to expand themselves in the market and gain significant market share. Here, you are not in obligation to take permission at each and every decision.
Advantages of Debt Financing
Debt financing only needs the interest and the principal to be repaid. Any company has full ownership of each and every penny of profit which they make through this debt-financing. The biggest advantage of raising debt is that you do not have any obligation to answer anybody about your action and decisions. You are independent to make the decision for the company.
If you finance the company with debt, then the interest which you pay on the debt is actually tax-deductible. This lowers your tax-liability every year. Moreover, the interest rate which you pay is based on the prime interest rate.
Disadvantages of Debt Financing
The biggest disadvantage of raising money through debt is that if you become unsuccessful in paying down the interest and principal in timely manner, then your reputation and credit rating as a borrower in the market is hurt really badly. This precisely keeps you away from raising further debt. Hence, ultimately you end up becoming bankrupt.
Also debt raising is not that easy as it sounds. One has to collateralize some security or pledge their assets for raising that much amount of money.
It depends on the situation of the company in order to make a decision of whether to finance through equity or through debt. A number of factors to consider like: capital needs, potential investors, credit rating, business plan, tax situation. The proportion will give you the cost of capital for the business.
Step 7 – Viability of 3-5 Year Plan
Considering the stock prices and the financial performance of the company, we can say that the financials and the profitability of the company is likely to increase in the coming years and the company will improve on its profitability as well as the market share.
Step 8 – Stress Test for Viability
Considering the debt ratio with which the stress test of the company can be evaluated, we can say that the company has high proportion of short term obligations and debt as compared to the long term. The debt ratio of the company in 2011 has increased as compared to 2010. The debt equity ratio of Amazon in 2010 was 2.0 whereas in 2011 it increased to 2.25, the total debt ratio of the company is 63% and 69% consecutively, which depicts that the assets of the companies are highly financed by debt.
Step 9 –Financing and Operating Plan for Current Year
Though the share prices of Amazon.com are quite high but the financial condition of the company has decreased tremendously in past few years for which the company needs to improve on its financial condition and position so as to have higher profitability and higher returns in the market.
In order to protect its brand, Amazon should continue to offer products at competitive pricing. This will ensure that people will continue to visit Amazon’s site to find deals on their favorite products. Further, Amazon should continue to do the good job in terms of product selection and variety. It should keep on adding new and unique product categories and expand range of offerings, so that a wider target market can be approached.
Conclusion
In order to protect its brand, Amazon should continue to offer products at competitive pricing. This will ensure that people will continue to visit Amazon’s site to find deals on their favorite products. Further, Amazon should continue to do the good job in terms of product selection and variety. It should keep on adding new and unique product categories and expand range of offerings, so that a wider target market can be approached.
References
Amazon.com. (n.d.). http://www.amazon.com/irGitman, L. J., & Zutter, C. J. (2012). Principles of Managerial Finance (13th ed.). [Adobe Digital Editions version]. Retrieved from http://gcumedic.com/digital-resources/pearson/2012/principles-of-managerial-finance_13e.phpPiper, T. (2010). Assessing a Company’s Future Financial Health. [Adobe Digital Editions version]. Retrieved from http://gcumedia.com/digital-resources/harvard-business-school-press/2010/harvard-business-school_-assessing-a-companys-future-financial-health_ebook_1e.php10-K report, (2012), Amazon.com from: http://phx.corporate ir.net/phoenix.zhtml?c=97664&p=irol-sec&control_selectgroup=Annual%20FilingsMarket analysis of Amazon.con from: http://www.barchart.com/profile.php?sym=AMZN&view=key_statistics
Discuss how Gender Power Relations are manifested in Different Family Set Up in Africa
Discuss how Gender Power Relations are manifested in Different Family Set Up in Africa
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Background
Understanding gender power relations within the African context remains an intricate affair since it is extremely complex to identify the multiple practices, views and perceptions regarding equality between African men and women in relationships. This is due to the diverse nature of different African family set ups with some still focusing on traditional roles, others attempting to create mutually supportive relationships while others are somewhere in-between (Nyengele, 2003). Nonetheless, a model African family is organized based on gender relationships which stems from patriarchy (Wamue-Ngare and Njoroge, 2011). The paper discusses how gender power relations are manifested in different family set ups in Africa. It provides insights into the dilemmas that African couples face as the individual family practices intersect with societal structures that maintain gendered power. To enhance coherence, it approaches gender relations in light of the patriarch, matriarch, feminine and masculine conceptions.
Basically, it is hypothesized that since males tend to control more resources, they tend to wield greater power and influence since power is directly correlated to access of resources. It is imperative to note that Gender norms expressed within the household are reinforced and reflected in larger institutions of society. Gender power relations are therefore, not only confined to the domestic arena although households constitute a significant institutional site on which gender power relations are made, remade and contested in a range of institutional arenas (Nyengele, 2003). The paper begins by reviewing the theoretical foundations of these gender relations.
Gender Power Relations: Theoretical Foundation
Power within the context of a family refers to the member of the family with the ability to influence others to get their own ways and who are able to block or influence others to go with their decisions (Wamue-Ngare and Njoroge, 2011). As cited by Wamue-Ngare and Njoroge (2011), Cromwell and Olson (1975) classify family power into three areas namely; power bases, power outcomes and power processes. On the same notes, there exists six bases of family power namely; informational, referential, coercive, expert, reward and legitimate power. Legitimate power is the authority that is generally accepted or sanction by a given family’s belief system while informational power is wielded by the person with more income. Referential power, on the other hand, is based on mutual attraction, friendship, likeability and affection within the family while coercive power involves using either physical or psychological force to impose one’s authority within the family. Reward power is that wielded by the family member who is able to influence others by providing psychological benefits to other family members while expert power is based on the education, experience and training on basic family issues at hand (Wamue-Ngare and Njoroge, 2011).
The resource theory presented by Blood and Wolfe (1960) argued that the distribution of power between husbands and wives is based on the resources that each contribute within the family. Key factors to be considered include; resources of income, educational attainment and occupational prestige (Wamue-Ngare and Njoroge, 2011). In the African context however, men tend to become the heads of households by divine right or natural biological processes (Nyengele, 2003). Nonetheless, as more women attain education, the distribution of power within the family is getting more balanced. Generally, gender relations tend to be founded on the basis of a relationship between power and resources (Wamue-Ngare and Njoroge (2011). Multiple variables are considered when defining power within the family context. Conceptually, power depends on the decision making process and associated conflict that serve to include the strategy. The ability to make decision, control conflict and influence strategy characterizes the dominant family member. The more powerful partner within the family is therefore, the one who is able to conceive ideas, make decisions and engage in conflict (Nyengele, 2003).
Gender power relations to within the African Family
Patriarchal Relationships
The acquisition of gender roles is often through the socialization process which ascribes and prescribes gender roles. The socialization process inculcates in individual society members, gender specific behavior patterns, roles and responsibilities expected of them. Wamue-Ngare and Njoroge (2011) contend that, the gender roles in African communities are based on patriarchal system with dominant male authority and power. In the African familial context, this type of relationship is based on male dominated teachings typically found in conservative religion based societies where the male is regarded as unquestionably dominant. Patriarchal relationships are based on and justified by their traditional view which regards women as weaker, less intelligent and therefore entitled to be controlled by the stronger male.
Females are expected to be subservient to males on most matters both within and outside the family. In this kind of relationship while the male experiences many opportunities for independence, there is very little opportunity for the female to experience life as an individual. In patriarchal relationships neither men nor women dare to question this assumption. The Inner patriarch rules so on the surface there appears to be little conflict. Underneath is great pain and suffering and above all a lack of grown-up trust and sharing of power and control as an equal partnership between men and women in a relationship (Wamue-Ngare & Njoroge, 2011).
Boys and girls, therefore, tend to be socialized in ways which makes them ‘conform to the prescribed gender status quo at both the family and community’ (Wamue-Ngare and Njoroge, 2011: P. 10). Based upon this foundation, men tend to take leading roles as the heads of households and the dominant family providers while women tend to be more docile within the public sphere. Wamue-Ngare and Njoroge (2011) therefore summarizes that, the patriarchal ideology, which is dominant in the African family set up bestows absolute power on men hence women are left at their mercy.
Matriarchal Power Relationship
This type of relationship, while theoretically acknowledging the male as the head of the partnership, in practice, places the female in the position where she exercises subtle but powerful forms of control. This results in her having the final say on many significant family issues. Matriarchal relationships tend to regard men as being at best, “little boys” who (when it comes to family matters) need to be guided by stronger women. It is commonly found in many traditional Mediterranean, Eastern European and Jewish societies. Neither male nor females feel much sense of independence or freedom to be themselves as individuals (Blood & Wolfe, 2006). Trust and power is not shared but allocated to different areas some handled by men independently of women’s needs and vice versa.
Within the African family set up, men tend to have a superior status hence they have power over women and control family resources. This is also supported by the society, cultural practices, and the existing laws and policies. Man’s dominant status is therefore, spelt out and legitimized based on the existing tradition, belief systems and morals, (Wamue-Ngare and Njoroge 2011). In majority of African families, the gender stratification system is based on an assertion that women are economically dependent on men. This makes them less powerful within the family since their contributions to family resources is minimal, besides, the power processes within the African family is based on multiple cultural and family related variables, (Wamue-Ngare and Njoroge, 2011).
Nonetheless, women in some societies have the final say on most domestic issues. Although men are considered producers in the family, women are ultimately charged with the responsibility of decision making. On the outlook, Nyengele (2003) indicates that such societies appreciate the dominant role of the male, but on the ground, women play the greatest role. In the upcoming ‘modern’ families, a significant percentage of women play the integral role of economic production. They are the bread winners of their respective families. Regardless of this, they are soft spoken and acknowledge the roles of their husbands as the heads of their families.
Masculinity Power Relations
Masculinity stands for a society in which social gender roles are clearly distinct: Men are supposed to be assertive, tough, and focused on material success; women are supposed to be more modest, tender, and concerned with the quality of life (Sikod, 2007). In African masculine societies, social norms tend to be ego oriented, place great emphasis on money and material things and work is considered fundamental for survival. Economically, men in these masculine societies are considered to be more endowed than their female counterparts. For this reason, the society accords them the best and topmost positions in the job environment as well as the highest returns (Mookodi, 2004).
Generally, majority of families in Africa have masculine system of social structure and practice in which men dominate, exploit and oppress women. The system was initiated by men in position and has been maintained across decades. In the indigenous African families, men dominated all aspects of life socially, economically and politically and tended to make all the decisions even those that affected women. Women therefore, tended to be mere spectators or recipient, besides; the cultural practices which favored men had been institutionalized with time and through socialization. The perception in majority of indigenous African families was that, the man was the absolute head of family, a perception which was critical in maintaining family harmony and peace in community. Males in African societies have authority and power and are generally favored compared to the women.
Exemplifying the case of the Agikuyu community in Kenya, Wamue-Ngare and Njoroge (2011) notes that men owned virtually everything be it land, livestock or other valuable resources Women owned only domestically used resources hence had no economic power. This is reflected over and over in multiple African countries in which women are identified as homemakers and keepers of the family who are responsible for the well-being of their husband and children. Women in the majority of African families therefore, often feel powerless despite their willingness to undertake considerable risk in order to provide for their children. Nyengele (2003) contend that African men had entrenched identities as decision-makers and bread winners even as these roles are undermined and eroded by changing social and economic environments. These socially defined roles of men and women tend to influence, even when unjustified, the distribution of power within the family setting.
In families where men are unemployed or underemployed hence are unable to sufficiently provide, women enter low-income, low-status jobs in order to feed their families, yet men still tend to wield power within the family. In such families, since men are unable to contribute adequately to the family income, men may start feel burdensome; be disoriented, angry and frustrated. Women in families where they are the sole providers tend to have better self respect; confidence and social status hence are able to make decisions within the families. In most African countries, when authority is challenged, men tend to experience stress and exert their right to control women through violence and threats of violence. Besides, in most African societies, violence is acceptable based on the existing social norms and structure. According to Sikod (2007), men in Botswana use brutality and fear to express their power and authority within the Family.
A survey of four African Countries, Swaziland, Uganda, Cameroon and Niger indicated that women were perceived to be inferior to men hence wielded no power within the household and the society as a whole. This created power inequity which is even reflected in both the traditional and modern laws and institutional practices. In nearly all African countries, women’s claim to the right of inheritance is either non-existent or limited besides, since men tend to have a right to throw women out of their marital homes with or without divorce, the threat of divorce has constituted a potent deterrent to women’s’ self-assertion in most African countries. In a correlated study in Kenya, women reported being chased away from their homes without any of their belongings.
Feminine Power Relations
Femininity stands for a society in which social gender roles overlap: Both men and women are supposed to be modest, tender, and concerned with the quality of life (Cromwell & Olson, 1975). In the African family context, this is defined by a flexible family structure in which both boys and girls and considered ‘children’. There is no fighting and failing is considered a minor accident for both male and female. This is apparent in some African countries, particularly those embracing modernism and western values in such as Egypt and South Africa. In these families, all children are taken to good schools and have a chance to share in family inheritance. In the home environment, both men and women perform household chores. Unlike in patriarchy, men in such settings assist their wives to perform important roles that are not solely economic. With respect to family income, both men and women contribute equally to this. According to Nyengele (2003), such families are seemingly few but trends indicate that a significant percentage of urban elites are embracing this.
Summary
The introduction of formal education, formal employment and the monetary system is progressively changing the gender power relations within multiple African families. There has been a shift in the perception that men wield all the power within the family although the increased dominance is dependent on the economic positions of women. Besides in most African societies, men’s roles which is directly linked to income earning potential is changing. Nonetheless, the unequal gender power relations have impacted on the state of affairs in various aspects such as women’s education, control of sexuality, health and cultural expression across many societies in Africa.
Conclusively, there exists a state of unbalanced power relationships in African families since male members of the family tend to assume positions of privilege in societies. The manifestation of gendered power impacts variant African families differently. The unbalanced relation makes it difficult for women to obtain authority and resources needed to be more dominant. It is evident that in the African context the woman has historically accommodated a man’s greater power in the family because of her perception that he was the head of the family. Although changing, the ultimate decision making power in most African families still remains with the male. According to Sikod (2007), majority of African male have struggled to maintain male domination in the family and society.
References
Blood, R. O., and Wolfe, D. M. (1960). Husbands and Wives: The Dynamics of Married
Living. Glencoe, IL: Free Press.
Cromwell, R., and Olson, D., eds. (1975). Power in Families. Newbury Park, CA: Sage.
Mookodi, G. (2004). Male Violence against Women in Botswana: A Discussion of Gendered
Uncertainties in a Rapidly Changing Environment. African Sociological Review, 8(1): 118-138,
Nyengele, M. F. (2003). African Women’s Theology, Gender Relations, and Family Systems
Theory: Pastoral Theological Considerations and Guidelines for Care and Counseling. New York: Peter Lang.
Sikod, F. (2007). Gender Division of Labor and Women’s Decision-Making Power in Rural
Households in Cameroon. African Development, 32(3): 58-71.
Wamue-Ngare, G. and Njoroge, W. N. (2011). Gender Paradigm Shift within the Family
Structure in Kiambu Kenya. African Journal of Social Sciences, 1(3): 10-20.
hapiness and ethics
Happiness and Ethics
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More than any other philosophers, Aristotle enshrines happiness as a key purpose of human goal and life in itself. Because of this, he devotes more time and space to the issue of happiness than any other philosopher does before the modern era. He concludes that happiness depends on virtue cultivation. Essentially, this philosopher argues that virtue can be attained by maintaining the mean, which he defines as the balance that exists between two excesses (Ross, 1995). This paper, therefore, will discuss the thoughts of Aristotle about happiness.
There are two understandings of happiness or eudaimonia, one which is comprehensive, and another that is an intellectualist understanding. For instance, eudaimonia is appreciated in the activity of the most divine part of humanity, working in accordance with its appropriateness. According to the philosopher, this is the action of hypothetical consideration. According to the inclusive account, eudaimonia essentially involves the theoretical intellect activity, and the full range of human action and life, in line with the broader practical wisdom and moral virtual excellences. This understanding associates eudaimonia with the human nature concept as composite; that is as including the interaction of emotion, reason, action, perception (Nagel, 1972).
There have been numerous arguments that indicate that Aristotle was tempted by the intellectualist argument of eudaimonia. One of the best influential works on Aristotle is seen to be the Nicomachean Ethics, where he comes up with a theory of happiness that is even relevant today. In this case, one of the most essential questions that the philosopher looks to answer is what the ultimate purpose of existence of humanity is. Additionally, what is the ultimate end or goal should humankind direct their existence. In life, we have witnessed individuals looking for pleasure, excellent reputation and wealth, but while these have some form of value, none of these can take the place of the central good for which humankind should strive to obtain (Aristotle, 2004). To be an ultimate end or goal, an act should be final and self- sufficient; that which is at all times desirable in itself and never because of anything else, and it must be achievable by man. Aristotle argues that almost everyone would identify with the claim that happiness is the end, which addresses all of man’s needs (Nagel, 1972).
This definition of happiness utilizes and integrates into its definition, the aspect of good and spirituality, and supreme beings. This is unlike our usual understanding of what happiness is. It is the belief that happiness is reaching at a point or state whereby individuals are content with their lives to the fullest. With most individuals, today, it is easy enough to realize that we want pleasure, money, and honor because individuals believe that these aspects will bring us happiness. The main problem is that happiness in most of societies is conceived as a state of mind that is subjective. This is so because one might say that he is happy simply because he gets to enjoy a cold beer as a way of relaxing. It is quite different from the understanding of happiness because, in most cases, we do not see happiness as an end to itself; for Aristotle, however, happiness is a final goal or end that involves the totality of the life of an individual. It can, therefore, never be lost or gained in a short period, like sensations that are pleasurable. Aristotle sees it as the ultimate value of an individual’s life until it ends (Nagel, 1972).
Aristotle argues that if individuals are to stop with the truism, which the highest human virtue is eudaimonia, then they must enquire into a man’s ergon, since if an individual possesses ergon, then they are good and their good acts as a function of its ergon. The ergon of an individual or a thing is what he or it does that makes him or it what it is. Not everything or everyone has an ergon, but when they happen to possess it, then their good is spelled out by it. The appropriate human ergon, by which excellence in humanity is measured, is that which makes someone a man rather than something else. For instance, men do many excellent things, but since other living organisms can do the same things equally well, these things do not have anything to do with what makes individuals human (Hughes, 2001).
According to Aristotle, happiness involves attaining, through one’s life course all goods including wealth, health, friends and knowledge that result to perfection of the nature of humans and to the enrichment of one’s life. This requires individuals to make choices, some of which are usually difficult. In most cases, the lesser good promises an individual, immediate pleasure, which is usually more tempting. The greater good, in the other hand, is difficult and requires sacrifice. This philosopher’s doctrine of virtue is regarded as the golden man between the extremes of deficiency and excesses. To him, therefore, happiness is determined by the acquisition of a moral character, in which an individual displays a number of virtues such as the virtual of courage, justice, generosity, citizenship and friendship in their lives. These virtues require individuals to establish a balance or mean between deficiency and excess. A non- virtuous person can, therefore, never be happy (Aristotle, 1980).
On matters of happiness, I agree with Aristotle more than Plato because Aristotle argues his points more logically in and in a manner that most individuals can identify with; for example, in the case of attaining such goods and virtues as courage, health, knowledge and pleasure as ways of attaining happiness.
References
Aristotle. (1980). The Ethics of Virtue. Oxford University Press.
Aristotle. (2004). Nicomachean Ethics, ed. Hugh Treddenick. London: Penguin.
Hughes, G.J. (2001). Routledge Philosophy Guidebook to Aristotle on Ethics. London: Routledge.
Nagel, T. (1972). Aristotle on Eudaimonia. Phronesis, 17(3): 252-259.
Ross, Sir D. (1995). Aristotle (6th Ed.). London: Routledge.