Saturday, August 31, 2019

Business & Human resource

In today’s competitive world, where there is increased competition in the industry. Human resource management and recruitment has proven to be the most effective tool that provides with a competitive advantage, which cannot be matched or countered by any other competitor. Human resource of any company is the key to success and its sustainable development in the coming years. Therefore it is essential for all the corporations to take into account the immense power of their human resource and to make genuine efforts in order to retain them. For that the main area to be targeted is motivation.In that case it is necessary to evaluate the psyche of all the employees. Motivation is the driving force that makes a person achieves the desired goals in an affective manner. In the past years a lot of research work has been done on the topic of motivation. Because only if a person is willing to perform any task, he will be motivated to do it. As depicted by the saying that one can take hi s horse to the water but cannot force him to drink it unless he wants to. Such is the phenomenon of motivation. Motivation has a very prominent role in the field of business. As all humans are complex beings. All of them have different requirements.It is extremely important for the firm to set up such an environment that promotes the talent of the employees and utilize their potential in an efficient manner. In order to keep the employees intact and promote an organizational culture which is healthy. It is required that the leadership carefully works on job design. Job design is the process in which different elements are join together to form a job in which individual as well as organizational requirements are kept in mind . While designing a job description it is very important that they company is aware of and concentrates on the fact that what they want to achieve.If the employees are aware of their job description and are provided with the right resources and culture, the compa ny is able to achieve its goals. And also maintains the standards at the same time. In such a situation employees are motivated to put in their best and to take their work to further level of excellence. Motivation is one factor that is extremely difficult to attain. But on the other hand those firms that have been successful in motivating their employees have also earned value addition form their talented and skillful employees.Most of these researches of motivation in management have been derived from the discipline of psychology. Since psychology is the study of human mind and behavior. These theories have proved to be very effective in use in all the fields of management. A few of these theories related to motivation are described bellow. Abraham Maslow was a famous psychologist and was also known as the father of modern management. He in his article â€Å"A Theory of Human Motivation† formulated a framework of human motivation and drives on the basis of their needs†¦ The table below depicts the hierarchy of these human needs in order.1) Psychological needs: they are recognized as the primary needs of every individual that are essential to be fulfilled. They are required for survival. They comprise of necessities like food, shelter, sleep, water etc. 2) Safety Needs: as soon as the psychological needs are met, ones attention is diverted towards fulfilling the security needs. Every person has some insecurities may it be physical or emotional. According to Maslow until and unless these needs are addressed and resolved a person would feel threatened and would not climb up any further on the pyramid.3) Social Needs: this is the first level of higher level of needs. It involves the interaction and relationship with a society, family or social group. 4) Esteem Needs: esteem needs include self-respect, self worth, recognition and achievement. 5) Self-Actualization needs: realizing personal potential, self-fulfillment, seeking personal growth and peak experiences Maslow’s ideas regarding the hierarchy of needs provides information about workplace environment that encourages and enables employees to attain their potential that is self actualization.Managers can use these to encourage personal growth and development. Douglas McGregor’s Theory X and Y were a basis of development of positive management styles and techniques. And prove to be helpful in development of organizational development and culture within the organization. It clearly defines two different methods of management control. One is the classic and conventional authoritative management style and the other is the modern a participative style. Companies’ can chose either of them but theory Y or the participative style has been more effective in motivating the workforceBecause these theories help us understand the psyche of human mind which in turn can be helpful in developing the job description. And if the job design would be good enough than this would motivate employees to work harder and bring in innovation. In this world where nothing is stagnant and environment changes, such steps are all effective in helping a company cope with these changes and to conquer new market with fresh ideas. All these theories are a guiding force to manage employees and their talent. Motivation is essential at all levels.It is a complex combination of several factors. Motivation leads to efficiency, profits and loyalty. It can make the impossible possible. Employees need to feel respected and valued in the company. This gives them a sense of belonging. Adopting sensible job designs for the workforce can only bring about this change. It is the responsibility of the leadership to make such job descriptions that help utilize the potentials. Theory Y shows that management styles empower and have a significant impact on workforce motivation.Works Cited Abraham Maslow. (n. d. ). Maslow Hierarchy of Needs. November 14, 2008. Retrieved from: < http:// www. abraham-maslow. com/m_motivation/Hierarchy_of_Needs. asp> Businessballs. com. (n. d. ). Maslow’s hierarchy of needs. November 14, 2008. Retrieved from: < http://www. businessballs. com/maslow. htm> Job Access. (n. d. ). Job description and design. November 14, 2008. Retrieved from:

Friday, August 30, 2019

Operation management tma worksheet

Second, Hazelwood has made investments in plant; they build a manufacture in London with 1 million productions of sandwiches per week but when they invest more by building Manton Wood they produce more by 3 million sandwiches. Also with new powerful machines, they could reduce the human resources costs because fewer tasks need to be done . Also the stock levels will be reduced so that this will be successful for the company.Third reasons lead Hazelwood Sandwiches to make investments in the product that customers are looking for quality, different types of Sandwich to compare it when they are abroad, So Hazelwood try to provide a high quality, healthy and delicious sandwiches in order to meet the customer demand. In addition providing different types of sandwiches to satisfy all types of tastes and modify old items or create new ones. Over all, there are many other reasons that lead Hazelwood to made capital investment . ln fact they are trying to gain competitive advantage to maximiz e the wealth of owners.They use different techniques to evaluate the investment opportunities, and then choose the best project. Moreover, Hazelwood maintain a brand name because of its sandwiches, Actually every company should investment in people, product and plant. Question 2 Hazelwood's investment decision techniques Investment decisions are important for the growth of the business because an investment includes financial resources for purchasing assets such building or equipment's which will bring economic benefit for the company. Those decisions are difficult and expensive to refuse once it has been ventured.Actually Hazelwood's uses various capital investment appraisal techniques to measure which project is more profitable. First method is Payback period which is the length of time that the investment takes to pay back the net cash inflows form the project. Projects will be selected according to the period the business sets and the shorter ones are preferred. The advantages o f this method that it's easy and quick to calculate or understood by users, avoiding risks and its good for the startup business to calculate the time needed to prepay the original investment.The disadvantages are that it onsiders about the time not the value of money, the relevant information such as the cash flows beyond the payback period are ignored and it doesn't consider maximizing the wealth of owners because it looks for the short project periods while longer beneficial project might be ignored. The second is Net Present Value includes all the money of an investment; It calculates the benefits from the investment against all the costs of this investment with allowance for the timing of them. The rule is to choose the project with the higher value and the positive ones not the negative ones.For its advantages, it considers about the objects of the business, maximizing the profits, it takes all the relevant cash flows in account and the timing of cash flow. For the disadvantag es, there are some risks for example a machine doesn't works, or that interests may lost in investment, also the problems of inflation which consider the loss in the purchasing power of money. The third is the Accounting Rate of Return which calculates the average operating profits over the average investment to earn those profits in the form of percentage.It's about achieving the target with higher ARR projects. The advantages that it represents a percentage and it consider the performance before it has performed. The disadvantages about using the accounting profits to measure the performance over the life of product, also different sizes of investments competing and using of average investment cause problems. Over all, those are the three investment decision techniques that Hazelwood uses in evaluation the investment opportunities.Each method ranks projects according to some compared features. With those techniques the most profitable project will be chosen. Question 3 Invest in p eople Investing in workforces is the lifeblood for any business, actually it's important to make investments in human resources because they are the main role of the business and attects it pertormance. Also well trained and experienced employees give advantage for the company because they are the workforce that a control the process in which the business operates.So the company should ensure that their employees are well trained, motivated and loyalty to their Jobs. Additionally maintain the satisfaction of the employee will raise the employee performance and focus to achieve the business objectives. Also this will improves their skills in doing the tasks. On one hand, Hazelwood provides flexible working environment: include the induction program which introduced the new employee to the organization and to its role, also programs that make the new employees feel they are a part of the team.Second, Family-friendly HR practices to understand the employee's circumstances such as the w orking hours for the mothers to look for their families and offers a paid time off for pregnant women's. Third, providing training and development opportunities which will enhance the commitment and improve the skills in doing the asks as fast as possible, also opportunities to take National Vocational Qualifications relevant to the food industry. Hazelwood try to provide facilities in the Job environment by providing gyms, hair dressers, shops, restaurants and cleaning services.In addition, the employee's expectations about the nature of work should be met. On the other hand, Hazelwood plain and monitor the performance of its employees to give them reward packages for their high performance. With those methods Hazelwood achieved to be the employee's brand that it's the choice of the employees because they know how to take care of their employees offer them good ay packages. As a result, Hazelwood decreases the labour turnover and reduces the levels of absenteeism also the costs of recruitment.Beside of Hazelwood there are other companies that invest in people in such as the National Bank of Kuwait; they believe that investing in people will benefit them in future. Actually 1800 Kuwaitis has been trained in 2012 and it will always provide training and developments opportunities to encourage their employees. Also ZAIN Company provides programs of training such as ongoing coaching, sending employees outside to complete their high education and induction. Last but not least T;D Team provides training and developments for the employees in order to improved their skills, performance and knowledge.Question 4 Workforce greatest assets For all businesses workforces are the role assets; In fact they are the people who achieve the company objectives. They should be looking after them starting from the managers, suppliers, employers, employee and all of them. Actually investing in people adds value to the organization especially for innovation companies such as Google be cause they rely on the experience of their human resources rather than nything else. The importance of workforces has different points of view. First the HRM function perspective which considers about managing people and carrying out their activities.It's responsible for ensuring that the people are in their right places with right skills by recruiting, selecting, developing and monitoring. HR believes that people performance affects the business performance so they provide training and development opportunities to maximize their performance. Also monitor the performance to ensure that they are on the right track and provides them with feedback. Moreover they provide reward systems to encourage them to achieve their targets and make sure that they are satisfied, motivated, appreciated and loyal to their Jobs.Moreover, this will build the organization's reputation as a social, ethical and responsible organization in order to gain a competitive advantage. Second the accounting functio n which considers about the financial accepts of the business. To achieve the HR function activities, the business should be able to afford the costs associated with those activities. Here the workforces are important because they guarantee bringing money to the business. But before going a step the business should think of the investment returns and risks.As if sending an employee to take English courses, how much of benefits this will bring in the future benefits. Moreover developing the skills of employees will raise the production levels as they have experience, finish the tasks on time and do it perfectly . So they will be able to develop or create new products or advanced technology. Also maintaining a positive reputation that will help them to raise money in the market and the financial advisors will advise the investors to invest in the business. Additionally, the company will gain a brand name which will decrease the costs of recruitment and advertising.

Thursday, August 29, 2019

Porsche Changes Tack

Porsche Changes Tack Yes, of course, we have heard of shareholder value. But that does not change the fact that we put customers first, then workers, then business partners, suppliers and dealers, and then shareholders. Dr. Wendelin Wiedeking, CEO, Porsche, Die Zeit, April 17, 2005. Porsche had always been different. Statements by Porsche leadership, like the one above, always made Veselina (Vesi) Dinova nervous about the company’s attitude about creating shareholder value. The company was a paradox.Porsche’s attitudes and activities were like that of a family-owned firm, but it had succeeded in creating substantial shareholder value for more than a decade. Porsche’s CEO, Dr. Wendelin Wiedeking, had been credited with clarity of purpose and sureness of execution. As one colleague described him: â€Å"He grew up PSD: poor, smart, and driven. † Porsche’s management of two minds had created confusion in the marketplace as to which value proposition Por sche presented. Was Porsche continuing to develop an organizational focus on shareholder value, or was it returning to its more traditional German roots of stakeholder capitalism?Simply put, was Porsche’s leadership building value for all shareholders, including the controlling families, or was it pursuing family objectives at the expense of the shareholder? Vesi had to make a recommendation to her investment committee tomorrow, and the evidence was confusing at best. Shareholder Wealth or Stakeholder Capitalism? Vesi’s dilemma was whether Porsche—Porsche’s leadership—was increasingly pursuing shareholder wealth maximization or the more traditional Continental European model of stakeholder capitalism.Shareholder Wealth Maximization. The Anglo-American markets—the United States and United Kingdom primarily—have followed the philosophy that a firm’s objective should be shareholder wealth maximization. More specifically, the firm should strive to maximize the return to shareholders, as measured by the sum of capital gains and dividends. This philosophy is based on the assumption that stock markets are efficient; that is, the share price is always correct, and quickly incorporates all new information about expectations of return and risk.Share prices, in turn, are deemed the best allocators of capital in the macro economy. Agency theory is the subject of how shareholders can motivate management to accept the prescriptions of shareholder wealth. For example, liberal use of stock options should encourage management to think like shareholders. If, however, management deviates too far from shareholder objectives, the company’s board of directors is responsible for replacing them. In cases where the board is too weak or ingrown to take this action, the discipline of the equity markets could do it through a takeover.This discipline is made possible by the one-share-one-vote rule that exists in most Anglo-Ame rican markets. Copyright  © 2007 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professor Michael H. Moffett for the purpose of classroom discussion only, and not to indicate either effective or ineffective management. Special thanks to Wesley Edens and Pilar Garcia-Heras, MBA ‘06, for case-writing assistance. Stakeholder Capitalism. In the non-Anglo-American markets, particularly continental Europe, controlling shareholders also strive to maximize long-term returns to equity.However, they are more constrained by powerful other stakeholders like creditors, labor unions, governments, and regional entities. In particular, labor unions are often much more powerful than in the Anglo-American markets. Governments often intervene more in the marketplace to protect important stakeholder interests in local communities, such as environmental protection and employment needs. Banks and other financial institutions often have cross-memberships on corporate boards, and as a result are frequently quite influential. This model has been labeled stakeholder capitalism.Stakeholder capitalism does not assume that equity markets are either efficient or inefficient. Efficiency is not really critical because the firm’s financial goals are not exclusively shareholder-oriented since they are constrained by the other stakeholders. In any case, stakeholder capitalism assumes that long-term â€Å"loyal† shareholders—typically, controlling shareholders—rather than the transient portfolio investor should influence corporate strategy. Although both philosophies have their strengths and weaknesses, two trends in recent years have led to an increasing focus on shareholder wealth.First, as more of the non-Anglo-American markets have increasingly privatized their industries, the shareholder wealth focus is seemingly needed to attract international capital from outside investors, many of whom are from other countries. Second, and still quite controversial, many analysts believe that shareholder-based multinationals are increasingly dominating their global industry segments. Porsche AG I know exactly what I want and what must happen. I am the real one. You can be sure. Dr. Wendelin Wiedeking Porsche AG was a publicly traded, closely held, German-based auto manufacturer.Porsche’s President and Chief Executive Officer, Dr. Wendelin Wiedeking, had returned the company to both status and profitability since taking over the company in 1993. Wiedeking’s background was in production, and many had questioned whether he was the right man for the job. Immediately after taking over Porsche, he had killed the 928 and 968 model platforms to reduce complexity and cost, although at the time this left the company with only one platform, the 911. Wiedeking had then brought in a group of Japanese manufacturing consultants, in the Toyota tradition, who led the complete overhaul of the company’s manufacturing processes. Wiedeking himself made news when he walked down the production line with a circular saw, cutting off the shelving which held parts. Porsche had closed the 2004/05 fiscal year (ending July 2005) with â‚ ¬6. 7 billion in sales and â‚ ¬721 million in profit after-tax. Wiedeking and his team were credited with the wholesale turnaround of the specialty manufacturer. Strategically, the leadership team had now expanded the company’s business line to reduce its dependence on the luxury sports car market, historically an extremely cyclical business line.Although Porsche was traded on the Frankfurt Stock Exchange (and associated German exchanges), control of the company remained firmly in the hands of the founding families, the Porsche and Piech families. Porsche had two classes of shares, ordinary and preference. The two families held all 8. 75 million ordinary shares—the shares which held all voting rights. The second class of share, preference s hares, participated only in profits. All 8. 75 million preference shares were publicly traded. Approximately 50% of all preference shares were held by large institutional investors in the United States, Germany, and the United Kingdom; 14% were eld by the Porsche and Piech families; and 36% were held by small private investors. As noted by the Chief Financial Officer, Holger Harter, â€Å"As long as the two families hold on to their stock portfolios, there won’t be any external influence on company-related decisions. I have no doubt that the families will hang on to their shares. † One of the consultants, focused on lean manufacturing techniques and Porsche’s overwhelming levels of subcomponent assemblies and various automotive parts and inventory, was quoted as saying, â€Å"Where is the car factory? This looks like a mover’s warehouse. 1 2 TB0067 Porsche was somewhat infamous for its independent thought and occasional stubbornness when it came to discl osure and compliance with reporting requirements—the prerequisites of being publicly traded. In 2002, the company had chosen not to list on the New York Stock Exchange after the passage of the Sarbanes-Oxley Act. The company pointed to the specific requirement of Sarbanes-Oxley that senior management sign off on the financial results of the company personally as inconsistent with German law (which it largely was) and illogical for management to accept.Management had also long been critical of the practice of quarterly reporting, and had in fact been removed from the Frankfurt exchange’s stock index in September 2002 because of its refusal to report quarterly financial results (Porsche still reports operating and financial results only semi-annually). Porsche’s management continued to argue that the company believed itself to be quite seasonal in its operations, and did not wish to report quarterly. It also believed that quarterly reporting only added to short-te rm investor perspectives, a fire which Porsche felt no need to fuel (see Appendix 4).Exhibit 1 7,000 Porsche’s Growth in Sales, Income and Margin Operating Margin 28% Millions of euros (â‚ ¬) Sales 6,000 20. 8% 5,000 18. 0% 18. 2% 17. 9% 20% 24% 4,000 13. 6% 3,000 11. 6% 12. 0% 16% Operating Margin (EBIT / Sales) 12% 2,000 7. 0% Operating Income (EBIT) 8% 4. 2% 1,000 2. 0% 0 1996 1997 1998 1999 2000 2001 2002 2003 4% 0% 2004 2005 Note: EBIT = earnings before interest and tax. But, after all was said and done, the company had just reported record profits for the tenth consecutive year (see Exhibit 1).Returns were so good and had grown so steadily that the company had paid out a special dividend of â‚ ¬14 per share in 2002, in addition to increasing the size of the regular dividend. The company’s critics had argued that this was simply another way in which the controlling families drained profits from the company. There was a continuing concern that management came first. In the words of one analyst, â€Å"†¦ we think there is the potential risk that management may not rate shareholders’ interests very highly. † The motivations of Porsche’s leadership team had long been the subject of debate.The compensation packages of Porsche’s senior management team were nearly exclusively focused on current year profitability (83% of executive board compensation was based on performance-related pay), with no management incentives or stock option awards related to the company’s share price. Porsche clearly focused on the company’s own operational and financial results, not the market’s valuation—or opinion—of the company. Leadership, however, had clearly built value for all stakeholders in recent years, TB0067 3 nd had shared many of the fruits of the business, in the form of bonuses, with both management and labor alike. â€Å"We are aware that our lofty ambitions for products, processes , and customer satisfaction can only be achieved with the support of a high-quality and well-motivated team. Here at Porsche, we have such a team—and we believe that they should share in the success of the company by means of special bonus payments. †2 Porsche’s Growing Portfolio Porsche’s product portfolio had undergone significant change as CEO Wiedeking pursued his promise to shareholders that he would grow the firm.The company had three major vehicle platforms: the premier luxury sports car, the 911; the competitively priced Boxster roadster; and the recently introduced off-road sport utility vehicle, the Cayenne. Porsche had also recently announced that it would be adding a fourth platform, the Panamera, which would be a high-end sedan to compete with Jaguar, Mercedes, and Bentley. 911. The 911 series was still the focal point of the Porsche brand, but many believed that it was growing old and due for replacement. Sales had seemingly peaked in 2001/02 , and fallen back more than 15% in 2002/03.The 911 was a highly developed series with more than 14 current models carrying the 911 tag. The 911 had always enjoyed nearly exclusive ownership of its market segment. Prices continued to be high, and margins some of the very highest in the global auto industry for production models. Although its sales had been historically cyclical, 911 demand was not priceelastic. The 911 was the only Porsche model which was manufactured and assembled in-house. Boxster. The Boxster roadster had been introduced in 1996 as Porsche’s entry into the lower-price end of the sports car market, and had been by all measures a very big success.The Boxster was also considered an anticyclical move, because the traditional 911 was so high priced that its sales were heavily dependent on the disposable income of buyers in its major markets (Europe, the United States, and the United Kingdom). The Boxster’s lower price made it affordable and less sensitive to the business cycle. It did, however, compete in an increasingly competitive market segment. Although the Boxster had competed head-to-head with the BMW Z3 since its introduction in 1996, the introduction of the Z4 in 2003 had drastically cut into Boxster sales. Boxster sales volumes had peaked in 2000/01.Volume sales in 2003/04 were down to 12,988, less than half what they had been at peak. Cayenne. The third major platform innovation was Porsche’s entry into the sports utility vehicle (SUV) segment, the Cayenne. Clearly at the top end of the market (2002/03 Cayenne sales averaged more than $70,000 each), the Cayenne had been a very quick success, especially in the SUVcrazed American market. The Cayenne introduction was considered by many as one of the most successful new product launches in history, and had single-handedly floated Porsche sales numbers in recent years.The Cayenne’s success had been even more dramatic given much pre-launch criticism that the market would not support such a high-priced SUV, particularly one which shared a strong blood-line with the Volkswagen (VW) Touareg. The Porsche Cayenne and VW Touareg had been jointly developed by the two companies. The two vehicles shared a common chassis, and in fact were both manufactured at the same factory in Bratislava, Slovakia. To preserve its unique identity, however, Porsche shipped the Cayenne chassis 17 hours by rail to its facility in Leipzig, Germany, where the engine, drive â€Å"Porsche Stays on Course,† Dr.Wendelin Wiedeking, President and Chief Executive Officer, Porsche Annual Report 2003/04, p. 5. 2 4 TB0067 train, and interior were combined in final assembly. 3 A new six-cylinder version was introduced in 2004 to buoy Cayenne sales after the initial boom of the introduction year, by offering a significantly cheaper model choice. 4 As illustrated by Exhibit 2, Porsche’s platform innovations had successfully grown sales volumes over the past decade. Exhib it 2 Units 0,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note: Excludes sales of the discontinued 928 and 944/968 models in 1994-1996. These models totaled 1005 in 1995 and 104 in 1006. 911 sales in 2004 and 2005 include 222 and 660 Carrera GTs, respectively. Porsche’s Expanding Platforms and Growing Sales 911 Boxster Cayenne Panamera. On July 27, 2005, Porsche announced that it would proceed with the development and production of a fourth major model—the Panamera. The name was derived from the legendary Carrera Panamericana long-distance road race held for many years in Mexico.The Panamera would be a premium class, four-door, four-seat sports coupe, and would compete with the premium sedan models produced by Mercedes Benz and Bentley. Pricing was expected to begin at $125,000, rising to $175,000. Production was scheduled to begin in 2009 at a scale of 20,000 units per year. This new model would g ive Porsche a competitive element in every major premium-product market segment. The Most Profitable Automobile Company in the World Porsche’s financial performance and health, by auto manufacturer standards, European or elsewhere, was excellent.It was clearly the smallest of the major European-based manufacturers with total sales of â‚ ¬6. 4 billion in 2004. 5 This was in comparison to DaimlerChrysler’s â‚ ¬142 billion in sales, and Volkswagen’s The engine was, in fact, the only part of the Cayenne which was actually manufactured by Porsche itself. All other components of the vehicle were either outsourced or built in conjunction with other manufacturers. 4 The six-cylinder engine, however, was actually a Volkswagen engine which had been reconfigured. This had led to significant debate, as Porsche was criticized for degrading the Porsche brand. Comparing Porsche’s financial results with other major automakers is problematic. First, Porsche’s fiscal year ends July 31. Hence Porsche’s financial results for 2004 reported in Exhibit 3 are those for the August 1, 2003, through July 31, 2004, period. Secondly, Porsche announced that beginning with the 2004/05 period, which ended July 31, 2005, it would move to InternationalFinancial Reporting Standards (IFRS), rather than the German Commercial Code and special accounting requirements of the German Stock Corporation Law (German Generally Accepted Accounting Principles) which it has followed since it went public in 1984.These results will not be comparable to previous reporting years, and will require both Porsche and its analysts to reconstruct its financial history following IFRS. 3 TB0067 5 â‚ ¬89 billion. But, as illustrated in Exhibit 3, Porsche was outstanding by all metrics of profitability and return on invested capital. Porsche’s EBITDA, EBIT, and net income margins were the highest among all European automakers in 2004. 6 What also always stood out a bout Porsche was the average revenue per vehicle. At â‚ ¬83,671, only DaimlerChrysler was even close. Exhibit 3 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenPorshe’s Competitive Positioning, 2004 Earnings Measures Sales (millions) â‚ ¬ 44,335 â‚ ¬ 142,059 â‚ ¬ 46,703 â‚ ¬ 56,797 â‚ ¬ 6,359 â‚ ¬ 40,715 â‚ ¬ 88,963 Revenue per vehicle â‚ ¬ 39,622 â‚ ¬ 78,056 â‚ ¬ 28,844 â‚ ¬ 19,354 â‚ ¬ 83,671 â‚ ¬ 19,291 â‚ ¬ 18,369 EBITDA â‚ ¬ 5,780 â‚ ¬ 10,280 â‚ ¬ 2,190 â‚ ¬ 4,502 â‚ ¬ 1,665 â‚ ¬ 4,414 â‚ ¬ 7,140 EBIT â‚ ¬ 3,745 â‚ ¬ 4,612 â‚ ¬ 22 â‚ ¬ 1,916 â‚ ¬ 1,141 â‚ ¬ 2,148 â‚ ¬ 1,620 Net Income â‚ ¬ 2,222 â‚ ¬ 2,466 -â‚ ¬ 1,586 â‚ ¬ 1,357 â‚ ¬ 616 â‚ ¬ 3,551 â‚ ¬ 677 EBITDA Margin 13. 0% 7. 2% 4. 7% 7. 9% 26. 2% 10. 8% 8. 0% Margin Measures EBIT Net Income Margin Margin 8. 4% 5. 0% 3. 2% 1. 7% 0. 0% -3. 4% 3. 4% 2. 4% 17. 9% 9. 7% 5. 3% 8. 7% 1. % 0. 8% Source: â€Å"European Autos,† Deutsche Bank, July 20, 2005; â€Å"Porsche,† Deutsche Bank, September 26, 2005; Thomson Analytics; author estimates. Renault’s results included 343 million in extraordinary income in 2004, accounting for net income exceeding EBIT. Porsche’s financial results, however, had been the subject of substantial debate in recent years as upwards of 40% of operating earnings were thought to be derived from currency hedging. Porsche’s cost-base was purely European euro; it produced in only two countries, Germany and Finland, and both were euro area members.Porsche believed that the quality of its engineering and manufacturing were at the core of its brand, and it was not willing to move production beyond Europe (BMW, Mercedes, and VW had all been manufacturing in both the United States and Mexico for years). Porsche’s sales by currency in 2004 were roughly 45% European euro, 40% U. S. dollar, 10% British pound s terling, and 5% other (primarily the Japanese yen and Swiss franc). Porsche’s leadership had undertaken a very aggressive currency hedging strategy beginning in 2001 when the euro was at a record low against the U.S. dollar. In the following years, these financial hedges (currency derivatives) proved extremely profitable. For example, nearly 43% of operating earnings in 2003 were thought to have been derived from hedging activities. Although profitable, many analysts argued the company was increasingly an investment banking firm rather than an automaker, and was heavily exposed to the unpredictable fluctuations between the world’s two most powerful currencies, the dollar and the euro. Exhibit 4 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenReturn on Invested Capital (ROIC) for European Automakers, 2004 Operating Margin Sales (millions) â‚ ¬ 44,335 â‚ ¬ 142,059 â‚ ¬ 46,703 â‚ ¬ 56,797 â‚ ¬ 6,359 â‚ ¬ 40,715 â‚ ¬ 88,96 3 EBIT â‚ ¬ 3,745 â‚ ¬ 4,612 â‚ ¬ 22 â‚ ¬ 1,916 â‚ ¬ 1,141 â‚ ¬ 2,148 â‚ ¬ 1,620 Taxes â‚ ¬ 1,332 â‚ ¬ 1,177 -â‚ ¬ 29 â‚ ¬ 676 â‚ ¬ 470 â‚ ¬ 634 â‚ ¬ 383 EBIT After-tax â‚ ¬ 2,413 â‚ ¬ 3,435 â‚ ¬ 51 â‚ ¬ 1,240 â‚ ¬ 671 â‚ ¬ 1,514 â‚ ¬ 1,237 Interest Bearing debt â‚ ¬ 1,555 â‚ ¬ 9,455 â‚ ¬ 24,813 â‚ ¬ 6,445 â‚ ¬ 2,105 â‚ ¬ 7,220 â‚ ¬ 14,971 Invested Capital Stockholders' equity â‚ ¬ 17,517 â‚ ¬ 33,541 â‚ ¬ 5,946 â‚ ¬ 13,356 â‚ ¬ 2,323 â‚ ¬ 16,444 â‚ ¬ 23,957 Invested Capital â‚ ¬ 19,072 â‚ ¬ 42,996 â‚ ¬ 30,759 â‚ ¬ 19,801 â‚ ¬ 4,428 â‚ ¬ 23,664 â‚ ¬ 38,928 Capital Turnover 2. 2 3. 30 1. 52 2. 87 1. 44 1. 72 2. 29 ROIC 12. 65% 7. 99% 0. 17% 6. 26% 15. 15% 6. 40% 3. 18% Source: â€Å"European Autos,† Deutsche Bank, July 20, 2005; â€Å"Porsche,† Deutsche Bank, September 26, 2005; Thomson Analytics; author estimates. Invested Capital = total stockho lders’ equity + gross interest-bearing debt. Capital turnover = sales/invested capital. ROIC (return on invested capital) = EBIT – taxes/invested capital. ROIC. It was Porsche’s return on invested capital (ROIC), however, which had been truly exceptional over time.The company’s ROIC in 2004—following Deutsche Bank’s analysis presented in Exhibit 4—was 15. 15%. This was clearly superior to all other European automakers; BMW’s ROIC was second highest at 12. 65%. Other major European automakers struggled to reach 6% to 7%. EBITDA (earnings before interest, taxes, depreciation, and amortization) is frequently used as the income measure of pure business profitability. EBIT (earnings before interest and taxes) is similar but is reduced by depreciation and amortization charges associated with capital asset and goodwill write-offs. 6 6 TB0067This ROIC reflected Porsche’s two-pronged financial strategy: 1) superior margins on the narrow but selective product portfolio; and 2) leveraging the capital and capabilities of manufacturing partners in the development and production of two of its three products. The company had successfully exploited the two primary drivers of the ROIC formula: ROIC = EBIT after-tax Sales x Sales Invested Capital The first component, operating profits (EBIT, earnings before interest and taxes) after-tax as a percent of sales—operating margin—was exceptional at Porsche due to the premium value pricing derived from its global brand of quality and excellence.This allowed Porsche to charge premium prices and achieve some of the largest of margins in the auto industry. As illustrated in Exhibit 4, Porsche’s operating profits after-tax of â‚ ¬671 million produced an operating margin after-tax of 10. 55% (â‚ ¬671 divided by â‚ ¬6,359 in sales), the highest in the industry in 2004. The second component of ROIC, the capital turnover ratio (sales divided by inves ted capital)— velocity—reflected Porsche’s manufacturing and assembly strategy.By leveraging the Valmet and VW partnerships in the design, production, and assembly of both the Boxster (with Valmet of Finland) and the Cayenne (with Volkswagen of Germany), Porsche had achieved capital turnover ratios which dwarfed those achieved by any other European automaker. Porsche’s capital turnover ratio had surpassed all other European automakers consistently over the past decade. As illustrated by Exhibit 5, Porsche’s growing margins and relatively high velocity had sustained a very impressive ROIC for many years. In recent years, however, invested capital had risen faster than sales.But Porsche was not adding fixed assets to its invested capital basis, but cash. The rising cash balances were the result of retained profits (undistributed to shareholders) and new debt issuances (raising more than 600 million in 2004 alone). As a result, fiscal 2003/04 had prov en to be one of Porsche’s poorest years in ROIC. Exhibit 5 2. 5 Porsche’s Velocity, Margin, and ROIC Margin ;amp; ROIC 20% Velocity = Sales/Invested Capital 2. 15 2. 0 2. 12 Velocity 1. 97 1. 99 1. 81 18% 1. 91 ROIC (Operating Margin X Velocity) 14. 2% 12. 5% 11. 7% 11. 6% 10. 5% 1. 19 10. 5% 1. 21 9. % 11. 6% 13. 8% 16% 12. 9% 1. 5 14% 12. 6% 11. 9% 12% 10% 1. 0 8. 0% 6. 1% Operating Margin 6. 4% 6. 0% 6. 4% 8% 0. 91 0. 84 6% 0. 5 3. 8% 2. 0% 3. 7% 4% 2% 0. 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0% Operating margin = ( EBIT – Taxes ) / Sales. Invested capital = cash + net working capital + net fixed assets. Porsche’s minimal levels of invested capital resulted from some rather unique characteristics. Invested capital is defined a number of ways, but Vesi used her employer’s standardized definition of cash plus net working capital plus net fixed assets. As illustrated in Exhibit 6, Porsche’s invested capital base TB0067 7 had be en growing rapidly in recent years, but not because of additional fixed asset investments. Porsche’s invested capital was growing primarily because of its accumulation of cash. 8 Vesi was concerned that using this measure of â€Å"invested capital† led to a distorted view of the company’s actual performance. Porsche’s minimal fixed-asset capital base resulted from the explicit strategy of the company as executed over the past decade.The development and manufacturing and assembly of the Cayenne was a clear example: †¢ Porsche had spent only $420 million in the development of the Cayenne. Auto analysts estimated that any other major automaker would have spent between $1. 2 and $1. 8 billion. †¢ Porsche had effectively avoided these costs and investments by co-producing the Cayenne with Volkswagen. The Cayenne shared some 65% of its parts and modules with the VW Touareg, with only 13% of the Cayenne’s actual wholesale value being derived fro m parts developed and manufactured by Porsche itself. The production agreement between Porsche and VW made VW responsible for all costs associated with quality problems arising at VW’s manufacturing facilities. Porsche paid VW a unit price for each Cayenne body produced in VW’s assembly facility in Bratislava, Slovakia. Porsche had successfully off-loaded both cost and risk. Exhibit 6 Asset Structure Cash Net working capital Net fixed assets Invested capital Liability Structure Short-term debt Long-term debt Total debt Equity Invested capital Porsche’s Managerial Balance Sheet (millions of euros) 996 â‚ ¬ 227 38 487 â‚ ¬ 753 1997 â‚ ¬ 281 116 578 â‚ ¬ 975 1998 â‚ ¬ 466 132 590 â‚ ¬ 1,188 1999 â‚ ¬ 730 225 649 â‚ ¬ 1,604 2000 â‚ ¬ 823 258 755 â‚ ¬ 1,835 2001 â‚ ¬ 1,121 369 960 â‚ ¬ 2,449 2002 â‚ ¬ 1,683 (355) 2,746 â‚ ¬ 4,073 2003 â‚ ¬ 1,766 (382) 3,215 â‚ ¬ 4,599 2004 â‚ ¬ 2,791 403 3,797 â‚ ¬ 6,992 2005 ↚ ¬ 4,325 (131) 3,641 â‚ ¬ 7,834 â‚ ¬8 19 â‚ ¬ 27 726 â‚ ¬ 753 â‚ ¬7 124 â‚ ¬ 131 844 â‚ ¬ 975 â‚ ¬ 10 114 â‚ ¬ 124 1,064 â‚ ¬ 1,188 â‚ ¬ 52 107 â‚ ¬ 159 1,445 â‚ ¬ 1,604 â‚ ¬ 20 82 â‚ ¬ 102 1,733 â‚ ¬ 1,835 â‚ ¬ 158 (49) â‚ ¬ 108 2,341 â‚ ¬ 2,449 â‚ ¬ 137 850 â‚ ¬ 987 3,086 â‚ ¬ 4,073 â‚ ¬ 70 859 â‚ ¬ 929 3,670 â‚ ¬ 4,599 â‚ ¬ 649 1,641 â‚ ¬ 2,290 4,702 â‚ ¬ 6,992 â‚ ¬ 1,107 2,026 â‚ ¬ 3,133 4,701 â‚ ¬ 7,834Net working capital = accounts receivable, inventories, and prepaid expenses, less accounts payable and accured expenses. This assumes ‘provisions for risk and charges' as equity. Porsche Changes Tack The summer and fall of 2005 saw a series of surprising moves by Porsche. First, Porsche announced that the â‚ ¬1 billion investment to design and manufacture the new Panamera would be largely funded by the company itself. Although the introduction of the Panamera had been anticipat ed for quite some time, the market was surprised that Porsche intended to design and build the car—and its manufacturing facility—nearly totally in-house.The new sports coupe was to be produced in Leipzig, Germany, at the existing Porsche facility, although a substantial expansion of the plant would be required. As opposed to the previous new product introductions, the Boxster and the Cayenne, there would be no major production partner involved. Porsche CEO Wendelin Wiedeking specifically noted this in his press release: â€Å"There are no plans for a joint venture with another car maker. But to ensure the profitability of this new model series, we will cooperate more closely than so far with selected system suppliers. 9 The German share of the value of the Panamera would be roughly 70%. Like the 911, Boxster, and Cayenne, the Panamera would bear the Made in Germany stamp. This methodology defines invested capital by assets, the left-hand side of the managerial balanc e sheet. Alternative definitions of invested capital focus on the right-hand side of the balance sheet; for example, as stockholder equity plus interest-bearing debt. Either version can also be netted for cash holdings under different methods. 8 Porsche’s cash and marketable securities grew from â‚ ¬2. billion in 2004 to over â‚ ¬4. 3 billion at the end of 2005 (July 31, 2005). Credit Suisse First Boston had in fact noted on September 21, 2005, just days before the VW announcement, that, â€Å"In our view, the only disappointment is that management indicated that the company would not look into returning cash to shareholders in the next 18 months. † 9 â€Å"Go Ahead for Porsche’s Fourth Model Series,† Porsche Press Release, July 27, 2005. 7 8 TB0067 The second surprise occurred on September 25, 2005, with the announcement to invest â‚ ¬3 billion in VW.Porsche AG, Stuttgart, seeks to acquire a share of approximately 20 percent in the stock capital of Volkswagen AG, Wolfsburg, entitled to vote. Porsche is taking this decision because Volkswagen is now not only an important development partner for Porsche, but also a significant supplier of approximately 30 percent of Porsche’s sales volume. In the words of Porsche’s President and CEO: â€Å"Making this investment, we seek to secure our business relations with Volkswagen and make a significant contribution to our own future plans on a lasting, long-term basis. Porsche is in a position to finance the acquisition of the planned share in Volkswagen through its own, existing liquidity. After careful examination of this business case, Porsche is confident that the investment will prove profitable for both parties. †¦ The planned acquisition is to ensure that†¦ there will not be a hostile takeover of Volkswagen by investors not committed to Volkswagen’s long-term interests. In the words of Porsche’s President and CEO: â€Å"Our planned investm ent is the strategic answer to this risk.We wish in this way to ensure the independence of the Volkswagen Group in our own interest. This ‘German solution’ we are seeking is an essential prerequisite for stable development of the Volkswagen Group and, accordingly, for continuing our cooperation in the interest of both Companies. † â€Å"Acquisition of Stock to Secure Porsche’s Business,† Porsche AG (press release), September 25, 2005. Porsche would spend approximately â‚ ¬3 billion to take a 20% ownership position in VW. This would make Porsche VW’s single largest investor, slightly larger than the government of Lower Saxony. 0 It clearly eliminated any possible hostile acquisitions which may have been on the horizon (DaimlerChrysler was rumored to have been interested in raiding VW. ) The announcement was met by near-universal opposition The family linkages between the two companies were well known. Ferdinand K. Piech, one of the most prom inent members of the Piech family which, along with the Porsche family, controlled Porsche, was the former CEO (he retired in 2002) and still Chairman of Volkswagen. He was the grandson of Ferdinand Porsche, the founder of Porsche.Accusations of conflict of interest were immediate, as were calls for his resignation, and the denial of Porsche’s request for a seat on VW’s board. Although VW officially welcomed the investment by Porsche, Christian Wulff, VW’s board member representing the state of Lower Saxony where VW was headquartered, publicly opposed the investment by Porsche. In the eyes of many, the move by Porsche was a return to German corporate cronyism. For years, â€Å"Deutschland AG† was emblematic of the cosy network of cross-shareholdings and shared non-executive directorships that insulated Germany from international capitalism.Wendelin Wiedeking, Porsche’s chief executive, himself invoked the national angle, saying this: â€Å"German solution was essential to secure VW, Europe’s largest carmaker, against a possible hostile takeover by short-term investors. † â€Å"Shield for Corporate Germany or a Family Affair? VW and Porsche Close Ranks,† Financial Times, Tuesday, September 27, 2005, p. 17. Germany, although long known for complex networks of cross-shareholdings, had effectively unwound most of these in the 1990s.The German government had successfully accelerated the unwinding by making most cross-shareholding liquidations tax-free in recent years, and both the financial and nonfinancial sectors had sold literally billions of euros in shares. This move by Porsche and VW was seen as more of a personal issue—Ferdinand Piech—rather than a national issue of German alliances. Many Porsche investors had agreed, arguing that if they had wanted to invest in VW, they would have done it themselves. The resulting ownership structure of Volkswagen in October 2005 was: 18. 3% Porsche; 18. 2% State of Lower Saxony; 13. 0% Volkswagen; 8. 58% Brandes Investment Partners; 3. 5% Capital Group; and 38. 19% widely distributed. Porsche still possessed the option to purchase another 3. 4%. 10 TB0067 9 There were also potential strategic conflicts between the two companies. Volkswagen’s premium segment company, Audi, was a distinct competitor to Porsche, particularly in light of the new Panamera project. VW itself had fallen on bad times (see Exhibit 3), and many VW watchers believed that the company needed activist shareholders.VW and its Audi unit were both suffering from high wage costs in German factories, and VW had been seeking wage concessions from many of its unions to regain competitiveness and profitability. Porsche had a reputation of being soft on German unions, and with the growing presence of both Porsche and Ferdinand Piech, critics feared VW would back away from its wage-reduction push. Porsche was not expected to be as cost-conscious or to push VW to ma ke drastic strategic changes.Instead, Porsche was expected to push VW to underwrite a number of the new models and platforms Porsche was in the process of introducing. There were, in fact, lingering allegations that a number of VW’s new product introductions had been delayed by the Cayenne’s production in 2003 and 2004. Shareholders in Porsche—the nonfamily-member shareholders—were both surprised and confused by this dramatic turn of events. Although the arguments for solidifying and securing the Porsche/ VW partnership were rational, the cost was not.At â‚ ¬3 billion, this was seemingly an enormous investment in a nonperforming asset. Analysts concluded that the potential returns to shareholders, even in the form of a special dividend, were now postponed indefinitely; shareholders would not â€Å"see the money† for years to come. The move was also seen by some as an acknowledgment by Porsche that it could no longer expand into new product categ ories without significantly larger capital and technical resources. Automotive electrical systems, for example, were increasingly complex and beyond capabilities possessed in-house by Porsche.The interest in VW, Europe’s second largest automaker to DaimlerChrysler, would surely provide the company with access to key resources. But why weren’t these resources accessible through partnerships and alliances, without the acquisition of one-fifth ownership in Europe’s largest moneyloser? The announcement of Porsche’s intention to take a 20% equity interest in Volkswagen in September 2005 was greeted with outright opposition on the part of many shareholders in both Volkswagen and Porsche. Major investment banks like Deutsche Bank immediately downgraded Porsche from a buy to a sell, arguing that the returns on the massive investment, ome â‚ ¬3 billion, would likely never accrue to shareholders. 11 Although Porsche and VW were currently co-producing the Porsche Cayenne and Volkswagen Touareg, this ownership interest would take the two companies far down a path of cooperation way beyond the manufacture of a sport utility vehicle. Although Porsche had explained its investment decision to be one which would assure the stability of its future cooperation with VW, many critics saw it as a choice of preserving the stakes of the Porsche and Piech families at the expense of nonfamily shareholders.The question remained as to whether this was indeed a good or bad investment by Porsche, and good or bad for whom? Vesi wondered if her position on Porsche might have to, in the end, distinguish between the company’s ability to generate results for stockholders versus its willingness to do so. Why should a small and highly profitable maker of sports cars suddenly hitch its fortunes to a lumbering and struggling mass-producer? That was the question that some alarmed shareholders asked this week when Porsche, the world’s most profitable carma ker, announced plans to buy 20% stake in Volkswagen (VW), Europe’s biggest carmaker.To some critics of the deal, Porsche’s move looked like a return to cosy, German corporatism at its worst. Since January 2002, when a change in the law encouraged German companies to sell their cross-shareholdings in each other, free of capital gains tax, new foreign shareholders have often shaken up fossilised German management. A deal with friendly compatriots from Porsche might rescue VW from this distasteful fate, particularly since foreign hedge funds and corporate raiders have been rumored to be circling VW. â€Å"Business: Keeping It in the Family,† The Economist, October 1, 2005. 1 â€Å"Porsche: We may never see the cash; downgrade to sell,† Deutsche Bank, September 26, 2005. TB0067 10 Appendix 1 (Millions of euros) Sales Cost of goods sold Gross profits Porsche’s Statement of Income, 1996-2005 (period ending July 31) 1996 â‚ ¬ 1,438 1,177 â‚ ¬ 261 24 3 15 64 â‚ ¬ 97 6. 8% 68 â‚ ¬ 29 2. 0% 3 â‚ ¬ 26 1 0 â‚ ¬ 25 1. 7% —-1997 â‚ ¬ 2,093 1,648 â‚ ¬ 446 339 21 67 â‚ ¬ 195 9. 3% 108 â‚ ¬ 87 4. 2% 7 â‚ ¬ 81 9 1 â‚ ¬ 70 3. 4% 45. 6% 40. 0% 1998 â‚ ¬ 2,519 1,853 â‚ ¬ 667 439 17 88 â‚ ¬ 334 13. 2% 157 â‚ ¬ 176 7. 0% 13 â‚ ¬ 164 22 â‚ ¬ 142 5. 6% 20. 4% 12. 4% 1999 â‚ ¬ 3,161 2,154 â‚ ¬ 1,007 571 29 84 â‚ ¬ 550 17. % 184 â‚ ¬ 366 11. 6% 12 â‚ ¬ 354 164 â‚ ¬ 191 6. 0% 25. 5% 16. 3% 2000 â‚ ¬ 3,648 2,527 â‚ ¬ 1,121 625 26 114 â‚ ¬ 636 17. 4% 197 â‚ ¬ 439 12. 0% 12 â‚ ¬ 427 220 â‚ ¬ 207 5. 7% 15. 4% 17. 3% 2001 â‚ ¬ 4,441 3,062 â‚ ¬ 1,380 793 61 87 â‚ ¬ 735 16. 5% 133 â‚ ¬ 602 13. 6% 14 â‚ ¬ 588 318 â‚ ¬ 270 6. 1% 21. 8% 21. 2% 2002 â‚ ¬ 4,857 2,981 â‚ ¬ 1,877 914 79 110 â‚ ¬ 1,152 23. 7% 279 â‚ ¬ 873 18. 0% 48 â‚ ¬ 825 363 (0) â‚ ¬ 462 9. 5% 9. 4% -2. 6% 2003 â‚ ¬ 5,582 3,250 â‚ ¬ 2,332 1,187 116 147 â‚ ¬ 1, 409 25. 2% 392 â‚ ¬ 1,017 18. 2% 88 â‚ ¬ 928 363 0 â‚ ¬ 565 10. 1% 14. 9% 9. 0% 2004 â‚ ¬ 6,359 3,787 â‚ ¬ 2,572 1,254 99 248 â‚ ¬ 1,665 26. % 525 â‚ ¬ 1,141 17. 9% 58 â‚ ¬ 1,082 470 (4) â‚ ¬ 616 9. 7% 13. 9% 16. 5% 2005 â‚ ¬ 6,574 3,501 â‚ ¬ 3,073 1,539 172 169 â‚ ¬ 1,875 28. 5% 510 â‚ ¬ 1,365 20. 8% 127 â‚ ¬ 1,238 459 (4) â‚ ¬ 783 11. 9% 3. 4% -7. 6% Selling, general & admin expenses Non-operating income Other income/expense, net EBITDA EBITDA/sales Depreciation & amortization Earnings before interest and tax EBIT/sales Interest expense on debt Earnings before taxes (EBT) Income taxes Minority interest Net income availabe to common Net income/sales (ROS) Sales growth Earnings growthSource: Thomson Analytics, June 2006, and author calculations. Appendix 2 (Millions of euros) Assets Cash ;amp; equivalents Receivables, net Inventories Prepaid expenses Total current assets Porsche’s Balance Sheet, 1996-2005 (period ending Jul y 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 â‚ ¬ 227 91 199 23 â‚ ¬ 540 â‚ ¬0 60 â‚ ¬ 1,324 917 â‚ ¬ 407 21 â‚ ¬ 1,027 â‚ ¬ 281 170 297 47 â‚ ¬ 795 â‚ ¬ 12 5 â‚ ¬ 1,536 994 â‚ ¬ 541 20 â‚ ¬ 1,374 â‚ ¬ 466 196 328 37 â‚ ¬ 1,027 â‚ ¬ 10 5 â‚ ¬ 1,623 1,062 â‚ ¬ 561 14 â‚ ¬ 1,617 730 202 357 42 â‚ ¬ 1,332 â‚ ¬ 30 9 â‚ ¬ 1,683 1,183 â‚ ¬ 501 110 â‚ ¬ 1,981 â‚ ¬ 823 321 396 45 â‚ ¬ 1,585 â‚ ¬ 177 14 â‚ ¬ 1,797 1,310 â‚ ¬ 487 76 â‚ ¬ 2,340 â‚ ¬ 1,121 439 468 29 â‚ ¬ 2,056 â‚ ¬ 253 38 â‚ ¬ 1,960 1,399 â‚ ¬ 561 108 â‚ ¬ 3,016 â‚ ¬ 1,683 638 487 50 â‚ ¬ 2,858 â‚ ¬ 539 39 â‚ ¬ 3,607 1,652 â‚ ¬ 1,955 214 â‚ ¬ 5,604 â‚ ¬ 1,766 823 539 42 â‚ ¬ 3,170 â‚ ¬ 552 42 â‚ ¬ 4,122 1,847 â‚ ¬ 2,276 346 â‚ ¬ 6,385 â‚ ¬ 2,791 939 726 23 â‚ ¬ 4,479 â‚ ¬ 733 21 â‚ ¬ 4,724 2,116 â‚ ¬ 2,607 436 â‚ ¬ 8,276 â‚ ¬ 4,325 971 572 17 â‚ ¬ 5,885 â‚ ¬ 1,211 27 â‚ ¬ 4,486 2,378 â‚ ¬ 2,108 295 â‚ ¬ 9,525Long term receivables Investments in unconsol subsidiaries Property, plant ;amp; equipment, gross Accumulated depreciation Property, plant ;amp; equipment, net Other assets Total Assets Liabilities Accounts payable ST debt ;amp; current portion due LT debt Income taxes payable Other current liabilities Current liabilities, total Long term debt Provision for risks ;amp; charges Deferred taxes Other liabilities Total liabilities Shareholders' Equity Non-equity reserves & minority interest Common Equity Shareholders' equity, total Total liabilities ;amp; shareholders' equity Common shares outstanding (millions) 117 8 3 156 â‚ ¬ 283 â‚ ¬ 17 481 1 1 â‚ ¬ 782 â‚ ¬ 148 7 10 241 â‚ ¬ 406 â‚ ¬ 116 541 4 4 â‚ ¬ 1,071 â‚ ¬ 159 10 8 262 â‚ ¬ 439 â‚ ¬ 114 648 n/a 0 â‚ ¬ 1,202 â‚ ¬ 193 52 10 174 â‚ ¬ 429 â‚ ¬ 102 856 n/a 5 â‚ ¬ 1,392 â‚ ¬ 240 20 17 248 â‚ ¬ 525 â‚ ¬ 102 95 1 (22) 2 â‚ ¬ 1,558 â‚ ¬ 236 158 28 303 â‚ ¬ 725 â‚ ¬0 1,312 (52) 2 â‚ ¬ 1,987 â‚ ¬ 305 137 200 1,027 â‚ ¬ 1,668 â‚ ¬ 317 1,619 97 437 â‚ ¬ 4,138 â‚ ¬ 337 70 71 1,378 â‚ ¬ 1,856 â‚ ¬ 337 1,916 173 350 â‚ ¬ 4,631 â‚ ¬ 368 649 61 855 â‚ ¬ 1,933 â‚ ¬ 1,457 2,378 182 2 â‚ ¬ 5,953 â‚ ¬ 440 1,107 187 1,064 â‚ ¬ 2,798 â‚ ¬ 1,985 1,281 36 5 â‚ ¬ 6,105 â‚ ¬ 10 235 â‚ ¬ 245 â‚ ¬ 1,027 17. â‚ ¬5 298 â‚ ¬ 303 â‚ ¬ 1,374 17. 5 â‚ ¬0 416 â‚ ¬ 416 â‚ ¬ 1,617 17. 5 â‚ ¬2 587 â‚ ¬ 589 â‚ ¬ 1,981 17. 5 â‚ ¬0 782 â‚ ¬ 782 â‚ ¬ 2,340 17. 5 â‚ ¬0 1,028 â‚ ¬ 1,028 â‚ ¬ 3,016 17. 5 â‚ ¬1 1,466 â‚ ¬ 1,467 â‚ ¬ 5,604 17. 5 (â‚ ¬ 0) 1,755 â‚ ¬ 1,755 â‚ ¬ 6,385 17. 5 â‚ ¬6 2,317 â‚ ¬ 2,323 â‚ ¬ 8,276 17. 5 â‚ ¬8 3,412 â‚ ¬ 3,420 â‚ ¬ 9,525 17. 5 Source: Thomson Analytics, June 2006, and author calculations. TB0067 11 Appendix 3 (Millions of euros) Porscheâ₠¬â„¢s Statement of Cash Flow, 1996-2005 (period ending July 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Operating Activities Income before extraordinary items Depreciation & amortization Other Cash Flow Funds From/For Other Operating Activities Net Cash Flow From Operating Activities Investing Activities Capital Expenditures Additions To Other Assets Increase In Investments Disposal of Fixed Assets Net Cash Flow From Investing Activities Financing Activities Net Proceeds From Sales/Issue of Com/Prf Stock Com/Prf Purchased,Retired,Converted,Redeemed Long Term Borrowings Inc(Dec) In ST Borrowings Reduction In Long Term Debt Cash Dividends Paid – Total Net Cash Flow From Financing Activities Exchange Rate Effect Cash & Cash Equivalents – Inc(Dec) â‚ ¬ 25 74 47 26 â‚ ¬ 171 â‚ ¬ 71 127 (0) 22 â‚ ¬ 220 â‚ ¬ 142 157 (7) 72 â‚ ¬ 363 â‚ ¬ 191 184 23 (5) â‚ ¬ 392 â‚ ¬ 210 197 11 (22) â‚ ¬ 396 â‚ ¬ 270 133 16 151 â‚ ¬ 570 â‚ ¬ 462 279 26 611 â‚ ¬ 1,377 â‚ ¬ 565 392 423 77 â‚ ¬ 1,456 â‚ ¬ 612 525 515 (349) â‚ ¬ 1,303 â‚ ¬ 779 510 42 (157) â‚ ¬ 1,175 (â‚ ¬ 184) (15) (14) (â‚ ¬ 214) (â‚ ¬ 230) n/a n/a (â‚ ¬ 230) (â‚ ¬ 174) (2) (0) 10 (â‚ ¬ 166) (â‚ ¬ 145) (12) (7) 27 (â‚ ¬ 136) (â‚ ¬ 257) n/a n/a 8 (â‚ ¬ 249) (â‚ ¬ 306) n/a (1) 23 (â‚ ¬ 285) (â‚ ¬ 1,833) 831 (â‚ ¬ 1,002) (â‚ ¬ 1,338) n/a 309 (â‚ ¬ 1,028) (â‚ ¬ 1,265) n/a 478 (â‚ ¬ 787) (â‚ ¬ 851) (63) (243) 226 (â‚ ¬ 932) â‚ ¬0 6 1 â‚ ¬8 (30) â‚ ¬0 102 (33) (5) â‚ ¬ 64 54 â‚ ¬0 (13) (â‚ ¬ 13) 185 â‚ ¬0 49 (21) (22) â‚ ¬6 1 263 â‚ ¬0 (36) (22) (â‚ ¬ 58) 4 93 â‚ ¬0 37 (26) â‚ ¬ 11 2 298 0 339 (102) (45) â‚ ¬ 192 (5) 562 â‚ ¬0 (39) (297) (â‚ ¬ 336) (8) 84 â‚ ¬0 639 n/a (0) (59) â‚ ¬ 580 5 1,025 â‚ ¬6 147 (69) â‚ ¬ 84 (32) 296 Source: Thomson Analytics, November 2005, and author calculations. Appendix 4 Porsche Dispenses wi th Listing in New York Stuttgart. The preferred stock of Dr. Ing. h. c. F. Porsche AG, Stuttgart, will continue to be listed exclusively on German stock exchanges. All considerations about gaining an additional listing in the U. S. A. have been laid aside by the Porsche Board of Management. The sports car manufacturer had been invited to join the New York Stock Exchange at the beginning of the year. The Chairman of the Board of Management at Porsche, Dr.Wendelin Wiedeking explained the decision: â€Å"The idea was certainly attractive for us. But we came to the conclusion that a listing in New York would hardly have brought any benefits for us and our shareholders and, on the other hand, would have led to considerable extra costs for the company. † The crucial factor in Porsche’s decision was ultimately the law passed by the U. S. government this summer (the â€Å"Sarbanes-Oxley Act†), whereby the CEO and the Director of Finance of a public limited company liste d on a stock exchange in the U. S. A. have to swear that every balance sheet is correct and, in the case of incorrect specifications, are personally liable for high financial penalties and even up to 20 years in prison.In Porsche’s view, this new American ruling does not match the legal position in Germany. In Germany, the annual financial statement is passed by the entire Board of Management and is then presented to the Supervisory Board, after being audited and certified by chartered accountants. The chartered accountants are commissioned by the general meeting of shareholders and they are obliged both to report and to submit the annual financial statement to the Supervisory Board. The annual financial statement is only passed after it is approved by the Supervisory Board. Therefore there is an overall responsibility covering several different committees and, as a rule, involving over 20 persons, including the chartered accountants.The Porsche Director of Finance, Holger P. Harter, made the following comments: â€Å"Nowadays in Germany, the deliberate falsification of balance sheets is already punished according to the relevant regulations in the Commercial Code (HGB) and the Company Act (Aktiengesetz). Any special treatment of the Chairman of the Board of Management of the Director of Finance would be illogical because of the intricate network within the decision-making process; it would also be irreconcilable with current German law. † Source: Porsche, News Release of October 16, 2002. 12 TB0067 Appendix 5 Porsche’s Share Price, 2004-2006 Source: www. porsche. com. TB0067 13

Wednesday, August 28, 2019

Article Review Example | Topics and Well Written Essays - 500 words - 9

Review - Article Example This paper will analyze the works of Piaget, Vygotsky and Erikson and what their theories which were aimed at explaining the growth of the human psychology. This theory was developed commencing from 1920 by Jean Piaget. The research was aimed at analyzing the behavior of children at different ages. Piaget realized that children acquired different traits and behavior when they are at new stages of developments. The theory was also aimed at understanding the psychological changes and developments through each stage of growth. The theory covered the life of a child from birth till adolescent. In the article by Crain (2011) the theory also determined the influence made on language, memory, moral development and scientific reasoning. The article by Van der Veer (2007) refers to the theory as the most conclusive article ever written on human psychology. The theory is by Lev Vygotsky and was aimed at explaining the psychological changes and development in children. The article explains the theories explanation on the psychology behavior in children. The theory relates the change in psychological behavior to the behavioral change children show as they grow. From the theory we are informed as the reason why maturity precedes learning. The theory by Vygotsky provides information to relate maturity to learning and understanding the concepts of life. The relation of language to maturity and psychological development is also analyzed (Van der Veer, 2007). The theory is an articulation by Erik Erikson. From the article by Slater (2003) the article is an explanation of the stages which humans go through from infancy to late adulthood. The article explains the growth sates in eight steps. From the eight stages humans go through constraints and master new challenges that present themselves throughout the stages. In these stages of development Erikson claims that the development of humans depends on their ability to pass through the forces

ZAPPOS.COM Assignment Example | Topics and Well Written Essays - 500 words

ZAPPOS.COM - Assignment Example Customers are treated as humans and taken utmost care. Customer service and Culture are the biggest lessons that organizations and other leading people should pick up from Zappos and its CEO. Almost two-third of the sales for Zappos is from repeated customers which underlines the customer service provided by them. With the growing market and the ever increasing competition in the market, Zappos grew from selling shoes to the selling clothes, bedding, toys, cookware, electronics, and more. Though this has been emulated from Amazon, Zappos policy of customer satisfaction with free shipment has only contributed to its success. The company’s core values define its diversity. To encourage the employees to be in sync with the company’s culture of being open-minded, humble and encouraging to learn all the time all point towards endorsing diversity. Such an environment gives all the employees to be themselves and be professional following the corporate culture all the time. Yes I agree with this assertion. Zappos is mainly focused on customer relationship. Zappos just does not focus on lowering the prices as a part of its customer service; it takes care of each customer. They have set the tone for other companies to follow. Most companies spend lots on advertising and attracting customers but fail to deliver what they promised. Zappos does not spend more on advertising but retains most of its clients with its excellent service to the customer. It increases business impressing clients with its service. The advertising comes in place through the clients who are impressed with the service that they recommend their friends to go with Zappos. Zappos policy of being Simple, committed to customer service and being oneself are the main aspects other organizations should emulate. Friendly and humble CEO who bothers more about chasing vision of satisfying the customers and not charts and graphs of

Tuesday, August 27, 2019

Quickbooks Essay Example | Topics and Well Written Essays - 500 words

Quickbooks - Essay Example The company would have also opted to obtain loans from other financial institutions, this would have helped in increasing the companies gearing ratio which is very low. The company current ratio is also negative this is as a result of its payables being more than its receivables; the company has incurred a lot of accrued debts which are to be settled in the next financial year. These incurred debts tend to lower the companies gearing ratio thus putting it in a bad financial position. The company has no retained earnings as per the end of the month of December. This is quite evident on its financial statements because the little amounts that it has it uses it in paying its declared dividends and some money in paying out its debtors whose debt periods are almost maturing. The company has also used most of its funds in the purchase of assets as evident in the financial statements. The company should reduce the amounts of expenditure on assets and put much of its funds in generating additional income that will help in increasing its financial position a bit higher (Brown, Beekes & Verhoeven 2011). The company should also adopt a much more cost saving strategy that will help in reducing its rate of depreciation. The management should adopt measures that are much better that the policies adopted on the month of

Monday, August 26, 2019

Factors in Choosing a Quality Lighting Luminary for a Building Assignment

Factors in Choosing a Quality Lighting Luminary for a Building - Assignment Example It is evidently clear from the discussion that a fluorescent lamp refers to a low-pressure mercury lamp powered by an electric current. In a construction of a fluorescent lamp, a glass tube is filled with a mixture of argon and mercury vapor at low pressure. The inner side of the tube is coated with the phosphoric coating. The basic structure is as in the diagram presented in the paper. When the light is switched on, current flows through the electrodes in the tube and as a result, it passes through the gas which is contained between the electrodes. The current flow results in the emission of Ultraviolet light from the mercury arc which is converted to visible light by the fluorescent coating found on the inner side of the tube. The circuit contains a starter switch (which is a bimetallic strip), an inductor, a small radio suppressor capacitor and a power correction capacitor that is connected to an AC or DC power supply. The power supply provides the necessary current required to op erate the lamp. This type of lamp contains an outer glass envelop that is filled with nitrogen gas. The nitrogen gas acts as a coolant in that it keeps the arc tube at correct temperatures. It also contains a quartz discharge tube which is filled with argon gas and some small amount of mercury which is in liquid form. Either end of the discharge tube contains two electrodes and a secondary electrode which begins the discharge. The secondary electrode is connected in series with a 10 – 30 â„ ¦ resistor. At first, there is no current flow when the lamp is powered on. Then the power supply voltage appears across the main electrode and between one of the mains electrodes and the secondary electrode through the series resistor. Consequently, there is a production of an arc between the secondary and the main electrode resulting in occurrence of ionization. The pressure and the heat build-up results in the formation of more high pressure and vaporized arc between the electrodes.

Sunday, August 25, 2019

Critique the study of the article Lab Report Example | Topics and Well Written Essays - 1000 words

Critique the study of the article - Lab Report Example The measurement tools were translated from Finnish versions. These instruments have already been validated and evaluated. Content of Individualized Care Scale (ICS) has been refined after multiple revisions. Factor analysis and structural equation model were utilized for the validation Selection of study respondents was in a consecutive way without following any recommended sampling strategy. Respondents were not selected randomly. How the issue of various surgical specialities was addressed How the severity of disease of the respondents was taken care of Informed consent was taken during the ward stay and those patients who agreed to complete the questionnaire were provided these questionnaires at the time of discharge. It means that there was a time lag between identification of respondents and actual completion of questionnaire. This has got important implications as far as bias is concerned. There are chances that these patients would have been provided excellent care in a way to address all the components present in all measurement scales. As informed consent was taken by a nurse and this study also tried to assess the patient satisfaction from nursing care. Those who were being assessed were part of the assessment and may have influenced the results and outcome. Patients usually have some complaints while they stay in the hospitals. As time passes and when patients start feeling improvement then their complaints also start vanishing, this is like; all is well when the end is well. This time may not be appropriate for getting correct information. Data management issues have not been discussed or even stated any where in the article. How data quality was ensured to be of high level What was the data editing and entry process Which software was used for data entry Were data entered doubly and how data were cleaned Analysis Mean age of the respondents is very high, suggesting that majority of the respondents surround this age. There should have been age description in more than three categories to get an idea of representation of various age groups. In old age, satisfactory level may be different from younger age group. On the other hand, although, education was understandable in binary variable but more than 85 percent of the respondents were with less than or up to lower secondary level education. Those who were with this level of education may have different level of satisfaction and have influenced the results of this study. Non-randomization has got its own deficiencies and this type of data could have resulted due to that issue. Mean hospital stay was 2.85 days based on which satisfaction level was assessed. This seems to be a shorter time for a

Saturday, August 24, 2019

Reporting the Survey on Green Organic Restaurant Research Paper

Reporting the Survey on Green Organic Restaurant - Research Paper Example There are significant challenges pertaining to convincing consumers that Green Organic cafe is introducing a new product, and it is healthy, or it promotes a healthy lifestyle. Therefore, the cafe has to direct, shape and focus on how customers will perceive its new product. How customers see an organization’s brand is not just what their eyes see but what they think and feel (Kotler, Pfoertsch and Michi 187). Green Organic cafe’s main objective is to promote healthy lifestyle by emphasizing on the quality of their product and the uniqueness of raw food. Presently, the raw food trends have less exposure, and are a well-known lifestyle in other parts of the world. There is lack of knowledge about raw food, in Kazakhstan, which might be a constraining force. A negative impression, which will be harder to change, can be created when clients lack information. Therefore, this survey has the main objective of carrying out a thorough market analysis. The study seeks to find ou t the restaurants and cafes in Almaty that are perceived to serve healthy food. Furthermore, the study seeks to establish the level of efficiency of online shopping service in the food industry in Almaty. The main hypothesis of this study is to establish whether there is a relationship between the perceptions of what healthy food is and accepting the new brand/ product, which is raw food. Another hypothesis is that of establishing whether there is a relationship between efficiency of online shopping service in the food industry and acceptance of new brands. Given that there are no traditional or new media channels that Green Organic cafe has used for promotion, the hypotheses will establish whether there is a relationship between online shopping service in the food industry and acceptance of new products and brands introduced by restaurants that are perceived to serve healthy foo

Friday, August 23, 2019

Time Traveling, Art Historian Book Chapters Essay

Time Traveling, Art Historian Book Chapters - Essay Example As I step into the machine, I think of the periods of time and the great works that will be there when I arrive. I took the greatest care in detail, the clothing prepared, my language skills perfectly honed to a time and place, as well as history can inform me, although I am sure things will not be fully as I expect them to be once I arrive. I sit into the contraption, its cold steel lying under its camouflage, an exterior that seems to be a wooden platform with a structure around it, resembling something of a small shack to be set down in out of the way alleys, calculated to exist, or within outlying avenues that support the nature of such a building. The shack would fool anyone who looked at it, its nature defined by its purpose. I step into the machine, the slight hum filling my ears and buzzing my senses as it begins to move through time. I have set the dials under the panel so that I will appear where I desire, and then stand in the center, closing my eyes because the feeling of moving through time disturbs my sight, a detail that most others do not feel when they are given the privilege of using the machine. I cannot wait to see this place, the time and moment that I have decided to enter Rome, her majesty impressive in the present, which will most likely impress me more in its past. My eyes shut, I let the hum move over me until it stills, and I assume that I have entered the right space and time, the slight strange clunk as I appear affirming the very human need for noise, something to announce to the rider that he or she has arrived. The sound, very much like the clicks on a computer as one touches the button, the noise created just to appease the user. Chapter One The Sistine Chapel I cautiously open the door, seeing that I have arrived in the alley as I expected, stepping out of the machine, I see that it looks very naturally, like a makeshift shack that was erected to temporarily house someone of no means from bits and scraps. I can see that it is n ot, but most people who would not know that it was there, would not think anything, or at least much, about its presence. As I take a breath, it feels like for a moment it is knocked from me as quickly as I breath in, the scent of the city foreign, both lacking something and feeling something added, my hand automatically coming up to cover my mouth as I try to adjust to the odor. The lack of automobiles assaults my senses as I draw in a breath, feeling it catch from its foreign taste as it hits the back of my throat. It takes a few minutes for me to be able to breath more easily, which then leads me to feel the discomfort of my clothing, heavy and cumbersome now that I am out of the air conditioned lab and in the air of the year 1511. As I step into the streets of Rome, I realize that more than just time changes from period to period. The air, the feel of the sun as it beats down to a still protected earth, the ozone layer still intact and providing filtration, all make a difference in the taste of life during that time period. Italy has that natural glow of amber, as if the olives have broken open and become airborne, and this is heavier and more beautiful than I have ever experienced in modern day Rome. I ache to see the countryside and experience its beauty, pure and whole before technology stripped it of its beauty, but I have a task that I must accomplish. I must see the Sistine Chapel before it was the Sistine Chapel and still the reconstructed Capella Magna, letting my eyes rest upon the newly painted

Thursday, August 22, 2019

Kevin Stevenson retires as AASB Chair Essay Example for Free

Kevin Stevenson retires as AASB Chair Essay This media article is about the accomplishments and achievements of Kevin Stevenson regarding his retirement from Chairman of the Australian Accounting Standards Board on 30th June 2014. (Media releases, 2014) While Kevin Stevenson was in his position, he ensured the long traditions of financial reporting was being supported both internationally and domestically and that counseling was provided for the issues raised about FRC. (Media releases, 2014) Mr. Stevenson was the first to research, develop and create Accounting Standards Advisory Forum which is dealt within International Accounting Standards Board. The AASB’s Research Centre was established while Stevenson worked as the Asian-Oceanian Standard Setters Group’s chair. His leadership focus was mainly on the interest of the public. This was stated by Lynn Wood, FRC’s chair and trustee of the IFRS Foundation. Ian Mackintosh, the former Chair of the PSASB of Australia and Deputy Chair of IASB was in agreement with this statement. (Media releases, 2014) According to Mackintosh, Mr. Stevenson has largely contributed to have Asian countries to join IFRS, like Nepal and Korea. From the beginning of the 1970s, Stevenson has put all his attention in setting principal based standards and developing a Conceptual Framework to be used in financial reporting. Mr. Stevenson supported accounting regulations as it was evidenced by his organisation and also by Australian Accounting Research Foundation. He has also been appointed as a director of AARF while watching AARF grew with it’s development of regulations. He was a leader and was in the most important position when setting the international pace to develop the common accounting standards for both the public and the private sectors. (Media releases, 2014) Stevenson has contributed in the formation of the Public Sector Accounting. He took a significant role in the establishment of International Financial Reporting Standards in 2005 and this Standard has widely been used in Australia and the entire Europe. (Media releases, 2014) Concepts, ideas and facts There are two important components that need to be satisfied to offer accounting services exhibiting high efficacy and quality. These are teamwork and leadership. Management models in accounting services need to employ strategic human resource techniques to teams in accounting teams and leadership positions in order to provide high-quality services in the shortest time possible. The operation of accounting services operates under a clear and concise manner and performs its measurement. Therefore, to provide the best accounting services and not get involved in fraud accounting, there needs to be an ultramodern investigation that uses scientific leadership when working as a team with major stakeholders (Topic 2, 2014). Stevenson was leading in the right direction by using new techniques in accounting. These techniques of accounting were important steps which need leaders with efficient skills to apply concepts like efficacy, cost benefit analysis, economies of scale and cost-effectiveness analysis that will progressively measure improvement. To resolve a core issue of the organization and get a competent solution, it is important to acquire efficient leadership. Strategic leadership in accounting provides quality and up to date accounting services to an organization. Leadership like that of Stevenson, brings together all of the incomplete system consisting of thousands of accountants working within a fragmented system of organizations. (Topic 7, 2014) Advanced fraud investigation is developed through effective teamwork and leadership in accounting. Leaders’ decisions are encouraged to be made by considering social and moral implications so it will have a positive effect on the shareholders and customers of the organization, such as the leadership of Stevenson’s. (Topic 7, 2014) Every employee bears an ethical responsibility to act in an ethical manner and make sure that their company does is tax compliant and allows reasonable deductions. Employees should ensure that the company appropriately allocates the importance of the business activities. The Accounting Issue The best way to improve the truthfulness in accounting and financial reporting is by ensuring that ethical standards are used through efficient manners of reporting, sufficient financial management and a strong system of governance. Maintaining a right to the truth is an ethical practice in financial reporting and accounting. Both the clients and stakeholders of an organization have the right to information that is true and accurate when making any investment discussions. It is the legal obligation of any accountant to provide services that are professional and competent and this should be done within their required skills. It is a common argument that a large number of accountants do not have the ability to recognize and solve ethical dilemmas in an ethical manner. This has made it necessary to incorporate ethics education as a key element in the accounting profession. Early initiation of the inclusion of professional values and ethics should be emphasized in the accounting profession. Major issue of the article Stevenson clearly shows that ethical management and taking responsibility to act in the best interest of the company that they are providing accounting services for, relates with providing accurate and truthful records. This beneficial not only to the organization, but also to the society in general (Media releases, 2014) Management should be ethical by being honest, accurate and complete when dealing with financial data and have ethics held in place. Every employee bears the responsibility to make decisions that are wise and up to date for the future well-being of the company. The accounting standards are useful in financial reporting and accounting as they are critically examined when processed. (Topic 2 , 2014) In order to uphold the highest code of ethics, organizations should emphasize on the major functions because shareholders and customers often make their decisions based on financial and accounting reports. Mr. Stevenson’s case is a clear demonstration of the importance of legal and ethical factors in accounting and financial reporting. It is through these two issues that Mr. Stevenson was able to establish effective departments of accounting and financial reporting and design specific rules that govern general functioning of any company. Relevant topics and theories Positive Accounting Theory plans for the future and gives information of what is currently not known. Financial reporting has its history with Positive Accounting Theory applied. It has focused its major interest on various aspects of accounting techniques which has provided an informative background with in depth details of the functionality of accounting in financial reporting (Topic 2, 2014) The application of financial reporting and accounting is concerned with all the future business of a company that relates to any economic unit. There are four main ethical elements involved in accounting and financial reporting. These elements are truthfulness, objectivity, autonomy and competence and they require employees in the accounting and financial reporting profession to act independently towards the clients to whom they offer their services. They should ensure that their desire to attain better living and to acquire more wealth should not be an obstacle to their financial responsibilities. Obligations of ethics greatly affect the decisions of accounting and financial reporting. Also helps solving unfair situations that may alter information symmetry. (Topic 2, 2014) The decision by Nepal and Korea to join the IFRS was based on the financial guidelines that govern accounting and financial reporting. Every employee in the accounting and financial reporting profession, whether in a private or public company bears an ethical responsibility to act in a manner that is loyal and impartial to his or her obligation when reviewing both the financial or individual reports of an organization. It is quite normal for accountants and financial reporters to encounter possible ethical violations when working. As a result, one should maintain carefulness and desist from manipulation of financial records as this is a violation of ethical guidelines. The important elements of normative accounting theory are the integrity and being open to public scrutiny. For some companies to maintain certain public image they may receive pressure from management. Most companies in the public sector are faced with the pressure to be seen as highly successful. Consequently, it becomes an ethical concern for the company to maintain ethical reports of the company assets because the pressure from management could fail them to resist the temptation (Topic 2, 2014). Management should not manipulate the company’s financial records and alter the figures in an effort to create an image that falsely portrays the company as successful. This is often temporary because it only portrays the prosperity of the company on a short term basis before the fraud is detected by the Securities and Exchange Commission (Topic 2 , 2014). Such manipulation, which is often based on poor decision making skills aims at putting up a false image of the financial status of the company and only has negative effects on the well-being of the company. Accounting professional should by all means disregard such practices. Despite the temptation associated with manipulating financial records, management should act as the last defense tool against accounting fraud. For these reasons, accounting theories assert that companies should maintain their ethical vigilance in order to avoid any potential breach of conduct (Callahan, 2014). Every individual engaging in any activity relating to financial reporting and accounting should uphold the highest standards of ethical behavior. It is through these standards that guidelines and rules are set to guide employees in performing their professional responsibilities. Question 2 In comment letter 1, the Financial Reporting Committee of the IMA wrote this letter to express its opinion on financial accounting standards, to simply the income statement presentation by eliminating the concept of extraordinary items. The FRC is in charge of several accounting books of different companies. This basically means that FRC has the responsibility of making timely responses to statements, pronouncements, research legislation, proposals and pending legislation. Their main concern in this comment letter is the complexion of financial statements within FASB. They support the simplified financial statements adopted by the board which is easier for common people to understand CITATION Sch l 1033 (Schroder, 2014). Their support is on the elimination of very unusual items as in most times this criterion is not satisfied. Their proposal to simplify the income statement gets rid of the tedious work in the preparation of financial documents. Their support is based on the fact that the allocation of time in preparing income tax reduces to a great extend by eliminating the occurrence of other income items. They thus advocate for a thorough examination of the details of this suggested proposal CITATION Sch l 1033 (Schroder, 2014). In comment letter number 2, Marcum Accountants and Advisors write to the FASB to simplify the income statement by eliminating the concept of extraordinary items regarding the proposed accounting standards. Their letter is generally a response to several questions regarding the process of simplification of the income statement. They support the concept of elimination of extra ordinary items from the General Accounting principles. Their argument is based on where the extra ordinary items make the application difficult in accounting practice CITATION Giu14 l 1033 (Giugliano, 2014). They thus support the application for extra ordinary items in previous accounting periods. A sudden change of the rules would otherwise lead to confusion in the accounting practice CITATION Top14 l 1033 (Topic 2 , 2014). The ease of application with the proposed update makes it easy to make these recommended changes to adopt. They thus suggest the immediate adoption of the proposed update. They agree with the decision made by the board which was to comply with the principle of separate disclosure of infrequent transactions. They also suggest the importance of offering guidance on deciding the unusual item. CITATION Giu14 l 1033 (Giugliano, 2014) Proper definitions should be provided of the unusually occurring items. In comment letter 3, Ford Motor Company also writes supporting the simplification of financial report assessed and initiated by FASB. Their agreement is based on the reasonable evaluation, identification and improvement of the generally accepted accounting principles CITATION Cal14 l 1033 (Callahan, 2014). This thus means that by reducing the complexity and simplifying the income statement, it will possibly reduce the cost of application. They are also in agreement with the board that such an update would not lead to data loss. The overall benefit would be to the end users of such financial statements. References Callahan, S. (2014). Comment Letter No. 6 (1st ed.). FORD MOTOR COMPANY. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Callahan, S. (2014). Comment Letter No. 6 (1st ed.). FORD MOTOR COMPANY. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Giugliano, G. (2014). Comment Letter No. 5 (1st ed.). MARCUM LLP. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Media releases,. (2014). Kevin Stevenson retires as AASB Chair. Proposed Accounting Standards Update. (2014) (1st ed.). Retrieved from http://www.fasb.org Schroeder, N. (2014). Comment Letter No.2 (1st ed.). IMA/FRC. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Topic 2 The role of ethics in accounting. (2014). Topic 6 International Accounting. (2014). Topic 7 Normative Accounting theories. (2014). Source document

Wednesday, August 21, 2019

Parenting Styles and Abilites Essay Example for Free

Parenting Styles and Abilites Essay Families come in many different forms. Back in the 1950’s/60’s most families compromised of a father, a mother and at least one child, this is known as a nuclear family structure. In the past few decades though divorce rates rose which has caused a rise in reconstituted families for example step families, parents now work longer hours which has seen more children being raised by extended family members eg: grandparents and new changes in law has seen same sex marriages become legal. Within my placements many of the young people using the service have ended up in their situation due to family breakdowns. Many of the families live off benefits or on the poverty line and are battling with addictions to alcohol or drugs or are suffering from depression. This has a knock on affect to the young people I feel as they are therefore expected to grow up quicker in order to look after themselves or any other children that may be in the house. Also from what I have seen most of the young people do not seem to have any ambition or hopes for a better life and many get involved in the same kind of lifestyle that they have been used to all of their lives. This would agree with Bandura’s Social Learning Theory where people copy behaviours from their peers. In regards to the above Labour and Liberal Democrats have been campaigning for same sex families to have the right to adopt. Years ago this would have been frowned upon, but because same sex couples are now more ‘accepted ‘ in society I believe if they have the best intentions for the child then why shouldn’t they be allowed to raise their own families. Functionalists would not agree with this the same as they do not agree with single parent families as they believe in the nuclear family for reproduction, primary socialisation and economic support. I feel the young people that I work with have come from uninvolved parenting backgrounds. Many of them have been in trouble with the law and have never really been told right from wrong. Another reason for some of the young peoples behaviour is survival methods as they have been brought up to fend for themselves. Other parenting styles are indulgent, authoritarian and authoritative. Indulgent also known as permissive parenting normally means the parent/s are very involved in the child’s life and interests but does not believe in discipline. This results in many of the kids growing up to believe that they can do as they please and know no boundaries. Communication style would be very passive. The parent can come across very apologetic, at a loss for words, weak, hurt and anxious. Authoritarian parenting is mainly ensuring the child has strict guidelines and rules to follow and very much believes in discipline. This way of parenting normally results in the child growing up to be unhappy and in some cases they rebel against the control that they have been brought by. The parents way of communicating with the child would be very aggressive and commanding, loaded words and questions, putting the blame on the child, sarcastic and loud with a cold front. Finally there is authoritative parenting which is probably made up by most of the population. This kind of parenting shows an interest in the child but also teaches the child right from wrong. Children brought up in this kind of environment grow up happy and enthusiastic to achieve. Communication methods for this kind of parenting would be assertive. Ensuring point gets across, statements of wants and needs, caring and confident. Within the care sector in the UK it is likely you will come across all of the family styles mentioned above. In many other countries parenting styles will not play such an important part in the childs life. Children from as young as five years of age are sent out to work by their families in order to make a living, and in some cases the children do not have a choice as they have lost their family members to different environmental disasters, diseases etc. These societal issues play more of a part in the way the children grow up as they know they have no choice but to go out to work in order to survive. Recent TV progammes have followed families that live in slums in India. The whole family goes out to work long hours everyday rummaging through rubbish to see what can be recycled, the children do not always get to attend school as it is too expensive. At the end of the day the whole family sit, make and eat dinner together. Family values play a huge part in their lives and the sense of community is great, I feel this is more important as the family all seem to appreciate each other more and don’t take things for granted. In the UK parents are now having to work longer and longer hours therefore spending more time away from home, but unfortunately as in India where this seems to bring the family and community loser together it seems to be having the reverse affect here causing families to seperate and communities to be divided. I personally come from a very big close family so family is very important to me. I believe that if the young people that I worked with had close relationships with their parents then their outlook on life could have been very different. I think within the social care sector I could find this very difficult to deal with seeing how some families treat their children and are very uninvolved in their upbringing. Obviously the most important thing is ensuring the safety of the family especially the children, this would mean having to learn to accept different families styles of parenting whether I agreed with them or not as long as there were no signs of danger and ensuring the children were not put at risk in anyway. I know this is something I could struggle with but that I could not let interfere with the way my work was carried out with the family and have to accept that all families are different and live by different values.