Accumulative Effect
Accumulative effect is an interesting concept. From the basic definition, it can be deduced that it is the gradual buildup of a particular process or system. Such a process, can be a “cause and effect” system and can have many different manifestations within any given situation. The effects may be noticeable or hidden at first, but can easily become more assertive as more and more units of the process are “compounded.”
One of the most common examples of an accumulative effect is the way that interest accumulates on a loan. Every month, the principal amount is charged with a certain amount of interest and this slowly accumulates over time, increasing the overall amount that must be repaid. In the same way, when a person invest a certain amount of money over time and the returns start to accrue and contribute to the overall amount of money the investor will have at the end of the specified period.
Accumulative effect can be seen in many other areas of life, as well. For example, in educational systems, a students achievements, experiences and technical knowledge build up over each term, leading to a greater proficiency in the field in which they are studying. Each new concept or skill provides the necessary foundation for the students progress. In this way, each level of learning can become complex and sophisticated as the student acquires each successive concept.
In the business world, accumulative effect can be seen in the way in which mergers and acquisitions occur. Often, several firms will join forces to form a larger entity, with each company bringing certain strengths and weaknesses to the table. This conglomeration can create a more powerful and effective business capable of competing more effectively in the global marketplace.
Accumulative effect does not have to be something physically manifested, either. On the contrary, it can take a subconscious form, such as the emotional effects of a traumatic event. Each time a person is faced with a similar situation, traces of the old event may linger in the subconscious mind, creating a certain emotional reaction which is tied to past experiences and can be triggered in a moments notice.
Accumulative effect is an interesting and vital concept that has many applications in many different areas. For example, when used correctly it can help an individual or company become more successful, while on the flip side it can create a variety of hidden issues that require careful handling. For this reason, it is important to consider the accumulative effect of each situation or decision before making a final choice. Doing so can help to ensure that the outcomes are more beneficial and favorable than they may have been had no consideration been given to accumulative effect at all.
