International Business Report Essay

Introduction It has always been a major concern of programmers and software developers throughout the world, to protect the intellectual property rights and software privacy. Governments in different countries fight computer software piracy; in which it provides support to national programs in order to educate and provide awareness to business communities. Governments especially in wealthy countries, has taken serious actions related to software piracy through laws that prohibits it, they force penalties to those who commit software piracy. Software piracy has reached a further approach, since it includes piracy of movies, music, computer software, and CD recording. Governments, institutions, companies, and organizations all stated a clear point of view about software piracy and protection of intellectual property which in fact stands up fiercely to minimize it and reduce its effect on the society, as well as protecting the creative ideas and innovative expertise that provides a competitive advantage to the society in general. On the other hand, communities with individualistic, collectivistic, democratic approaches, and other parties with other approaches; each stated its point of view clearly according to its own interests, concerns, and objectives; since, some of these parties fight software piracy and supports protecting intellectual property, and mainly those parties are the ones concerned with about the benefit of the society. On the other hand, there are some parties stated that they oppose protecting intellectual property, for the reason that their objectives and interests are their major concern instead of the whole society. Q.1: Collectivism and individualism, democracy and totalitarianism, rule of law and rule of man: what do these concepts say about the intellectual property rights of software and the legitimacy of its protection? To begin with, the terms collectivism and individualism arises from the major term which is political system. A political system; is a set of political organizations, interest groups, and institutions, that integrates different groups into a functioning, self sustaining, and self governing society. The purpose of the political system is to protect people’s interests and objectives. Political systems differ from one country to another. The term political can be discussed in terms of collectivism and individualism. At first, the term collectivism encourages dependence on the organization and a preference for thorough training, satisfactory work place conditions, and good benefits. Collectivism is motivated by satisfying social needs and security. Its primal concern is to benefit the society in general, rather than the benefit of each individual. Since its concern is protecting the society, it stands fiercely for supporting intellectual property right and fights software piracy to protect the society. On the other hand, individualism; refers to the primacy of the rights and role of individual; it emphasizes individual freedom, self expression, and personal independence – the principle that all men have â€Å"certain unalienable rights that among these are life, liberty, and the pursuit of happiness.† Countries that follow individualistic political system develop a form of government that protects every individual’s property and any intellectual property they create especially automated property due to the ease of piracy. As cultural attitudes influence the protection of intellectual property rights, individualist societies are more vigilant than collectivist societies. Whereas, democracy and totalitarianism. Democracy is a political system that grants voters the power to adjust laws and regulations of the government to make decisions. Moreover, provides them the right to participate in elections. In general, democracy is concerned with individual property rights, especially the freedom to express their opinions. As well as protecting people’s innovations from software piracy. According to what is claimed, that democratic countries with strong political and civil liberties usually have lower software piracy rates. As for totalitarianism, subordinates individuals to the interest of the group. Where a single agent takes control of the political power, and tries towards not supporting the ideology of the state as well as the activities that counters the goals of the state. Therefore, it controls people’s ideas, knowledge, and experiences and directs those to its own good and interest. Therefore, the intellectual property right is not its major concern as well as standing against software piracy. Since their objectives and concerns are related to the objectives and concerns of the agent with the political power. As for the rule of law, states that no individual is above laws which are clearly specified, commonly understood, and enforced fairly, which are improved and regulated by the parliament. Due to that countries that follow rule of law, especially ones that create intellectual innovations, automatically protect these properties from the moment of creation. Whereas, rule of man; states that the ultimate power exists in one person. Rule of man is opposed to the rule of law; less aggressively protect intellectual property rights. Since its major interests and concerns is limited to only what the man of power is concerned of. Individualist’s societies are more cautious towards the protection of intellectual property when compared with collectivist societies. Q.2 What is the relationship among governments, institutions, organizations, and companies in developing the legal means to fight software piracy? To begin with, a software piracy is the illegal copying of software. Software piracy is not a trend or a topic that appeared recently. Software piracy was the past and the present dilemma and will be the future’s too if it is not stopped. Types of piracy include: end-user piracy, pre-installed software, Internet piracy, counterfeiting, and online auction piracy. As the software piracy problem grows, more people are affected by piracy daily. Software companies, governments, organizations, retailers, and honest consumers all pay the price for software piracy. Parties such as, organizations and companies hopes that legal actions and political arrangements held by governments and institutions and other related parties would lead to a decrease in software piracy. Governments are taking an increasingly stronger stand against piracy. They get nations to sign agreements and to require them to force intellectual property rights. Since software piracy affects governments financially. It robs the economy of jobs and in turn diminishes income tax revenues. The market fails and loses its attractiveness among international businesses as it affects the private individuals and investors. Accordingly to the case study, governments fight piracy; they relied on technical and business actions as a counterattack. Such as, U.S.A enhanced efforts, threatening to sanction countries. Institutions supported governments to toughen their laws. Since these laws can minimize software piracy and decrease its effect on institutions. As for software companies, that are considered the biggest stakeholders in the piracy issue. They depend on software sales to fund their company operations and their future developments. Unfortunately, software piracy is now taking a large amount of the income these companies depend on away from them. As the number of Internet users continues to grow, software piracy will become an increasing problem and businesses will lose even larger amounts of revenue. As their profits decrease, software companies will no longer be motivated to fund development of new products; which will reduce innovation, Consequently, software companies want stronger penalties enforced on all people who illegally copy software; a new and emerging trend being offered on the market is leasing the software. Retailers have taken a stand against software piracy too. Piracy affects all software retailers by forcing them to compete against cheaper pirated software. This competition lowers their profit. As the cost of the software increases, people turn to less expensive illegal substitutes. As for organizations, they provided global services in public policy, business development, corporate education, and the protection of intellectual property right. Intellectual property; refers to the creative ideas, innovative expertise that give an individual, company, or country a competitive advantage. Whereas, intellectual property right is the right to control and derive the benefits from copyright, patents, trade secrets, and trademarks. It is the right to protect those creative ideas. Problems occur because intellectual property is hard to conceive but easy to copy. There are number of agencies that were created to protect intellectual property right such as: †¢ WIPO (World International Property Organization): it is one of the sixteen specialized agencies to encourage creative activity as well as to promote the protection of the intellectual property right. †¢ TRIPS (Trade Related International Property Rights): it is an international agreement managed by the WTO (World Trade Organization). It has minimum standards and requirements for many intellectual property forms. Generally wealthier countries provide stronger as well as stricter protection of intellectual property from piracy. Notably such countries consider these properties more widely than poorer ones. Conclusion Communities whether they are collectivist, individualist, democratic or totalitarian, applying rule of man or rule of law, governments, institutions, organizations, and companies. All of these parties stated clearly as discussed previously, that they are prohibiting software piracy since they are cooperating with each other in minimizing this dilemma or at least to minimizing its effects on organizations. Through forcing laws or through organizations that encourages innovative ideas yet protecting intellectual property rights by forbidding piracy. Such organizations include; WIPO (World International Property Organization), TRIPS (Trade Related International Property Rights), and other related organizations. Software’s intellectual property rights can be protected when following these steps: 1. Writing the name of the author, or the creator on all of the copies that are distributed to the public. 2. Determine the time in which the product was released and distributed to public. 3. Modify the product every now and then. 4. Protect the product against any crises that might put the author’s reputation at risk. 5. Have a specific location for software programs. 6. Save master copies of software. 7. Provide software to only licensed users, and only allow authorized users to install software. 8. Apply security procedures on software used by authorized users only, which can minimize software piracy. In conclusion, the standards of software piracy are explicit. Hence, parties have been hopeful that collective political arrangements and legal actions by companies, associations, governments, and institutions would lead to a decline in global software piracy. Government intervention and collaboration in offering legal protection for intellectual property, and the criminalization of software piracy are unsuccessful in diminishing the dilemma. Even efforts at the international level to get nations to sign treaties and to require them to protect and enforce intellectual property rights according to global, not local, standards have not yielded the desired results. Unfortunately, the ease with which software can be duplicated, sold, and distributed continues to baffle the industry.

Marketing Research Report Essay

Irresponsible human behaviours are impacting the environment. Therefore, environmental concern groups and also the governments around the world are trying to do something hoping to change people’s attitude towards environmentally friendly issues. This report aims at predicting the factors that motivate consumers to engage in environmentally friendly purchase behaviours. Convenience sampling of non-probability techniques was used to collect data. The data collected was then analysed by regression analysis, t-test and ANOVA. It was found out that political and technological factors have a positive relationship with environmental concern while success or anthropocentric have a negative relationship with environmental concern. Furthermore, environmental concern has a positive relationship with direct and indirect environmentally friendly behaviour and willingness to pay for environmentally friendly purchase behaviour. However, the relationships were not strong. Therefore, it is re commended that a further, more in-depth research should be conducted to find out the substantial factors that affect consumers’ environmentally friendly purchase behaviour. 1. Introduction and Background 1.1 Importance of the research In recent years, there were one after another blockbusting environmental related movie, for instances, The Day After Tomorrow in 2004, An Inconvenient Truth in 2006 and 2012 in 2009. These popular movies have undoubtedly increase people’s awareness towards climate change issues. According to World Wide Fund for Nature (2010), the average temperatures on earth have warmed by about 0.76 degree Celsius over the past 2 centuries (WWF, 2010). The increases in temperature make huge changes for the world’s climate even thought the temperature rise seems insignificantly small. Researches after researches show that this environmental problem is primarily caused by irresponsible human activities like private consumption. As a result, it is necessary for us to educate and raise the awareness of the publics so that environmental problems will not be worsening. This  quantitative research is based on the collective findings of the qualitative exploratory research conducted earlier to investigate whether or not consumers engage in environmental consideration when making consumption decisions more thoroughly. 1.2 Scope The scope of the report is to find out the factors that may affect consumers’ environmentally friendly behaviour through the qualitative research, so that marketers may make meaningful decisions based on the data collected. This research will also provide recommendations to green organisations and the federal government on how to address the environmentally unfriendly purchase behaviour. 1.3 Research problem A research problem should feasible and clear. The research problem of this research is to predict motivations that may affect consumers’ environmentally friendly purchase behaviour. 1.4 Aims and Objectives The aim and objective of this research is to look for differences between samples and come up with a conclusion. This research also aims at testing two main groups of hypotheses. 1) Social beliefs, materialism will have a negative relationship with environmental concern * The social beliefs include technological belief, political belief, economy belief, anthropocentric belief and competition belief. * Materialism includes success, centrality and happiness. 2) Environmental concern has positive indirect behaviour, willingness to pay, direct behaviour 2. Methodology 2.1 Methodological considerations and assumptions This research, quantitative research, was based on the data gather from a qualitative exploratory research which was carried out previously. The purpose of qualitative exploratory research is to narrow and clarify the scope and nature of the research problem. Exploratory research helps researchers understand the research problem and then transform ambiguous problem into well-defined ones. From the quantitative research, two groups of variables, namely materialism and social values, were identified. This  quantitative research was conducted to find out which variables may have a stronger relationship with the dependent variables which are mentioned in section 1.4. 2.2 Sample considerations The target audiences of this research are any people live in Australia and are accountable for making purchase decisions. Respondents should understand English and be 18 years old or above. However, gender, marital status and educational level of respondents are not restricted in this research. 2.3 Data collection and framework, and analytical considerations Research was conducted through survey as a follow on from exploratory research conducted by face-to-face interview. This research was conducted by using a written questionnaire on a convenience sample. Convenience sampling, which is one of the non-probability techniques, â€Å"refers to sampling by obtaining the people or units that are most conveniently available† (Zikmund, Ward, Lowe & Winzar, 2007). Convenience sampling is inexpensive and quick. 1022 surveys were collected, 449 male and 573 female respondents. Since this research was trying to find out relationships between factors rather than analysing changes in a sam e sample, cross-sectional analysis was used. 3. Ethical Considerations In a research, ethic is one of the very important items that could not be missed. Ethics in researches are important because it supports the objective of a research, such as knowledge, truth and avoidance of error (Rensnik, 2010). Rensnik (2010) continues that ethics in a research is important also because it involves public privacy. As a result, ethical consideration has to treat carefully in a research so that the research is ethical and considerable. There are six ethical principles that have to be considered in a research according to American Marketing Association (2010), and they are responsibility, fairness, respect, transparency and citizenship. In other words, researchers have to be responsible for the consequences of their marketing decision; they also have to judge a fair balance between consumers and sellers. Furthermore, researchers have to respect human rights of all respondents involving in the research process. Researchers also have to make every effort to communicate clearly with all respondents so to strive for a high transparency of the research. Last but not least,  contributing to the community such as providing good recommendations is also considered as ethical in a research. To address all the ethical considerations above, each respondent would be asked to sign an interview consent form (see Appendix A) before the start of the survey, indicating that the interviewees do not only understands the purpose and risk of this research, but also know where to go when they have any concerns or complaints regarding the conduct of the research.

Sustainability of Debt Finance Management

Chief Executive of ICAEW proposed the finding that a more sustainable pattern of British companies are to survive the financial management and learning  with less debt (Malcolm & Edwards, 1998). But whether this finding is convincing is unknown. Evaluation of the debt finance statement is needed to implement in this essay.It is apparent for this essay to focus on two aspects of the comment from ICAEW, one is whether the financial management of UK businesses is experiencing a more sustainable situation and the other is the actual debt development and the development situation of UK businesses. And this essay is going to argue this finding with the framework of literature review, assumptions and financial analysis. This essay is going to pick Tesco Plc for subject of analysis.1.1 Literature review Literature review is helpful to comment the findings from ICAEW about the impact of the sustainable model of financial management on debt conditions of UK businesses. The framework of the l iterature review consists of advantage (importance) and disadvantages (risks) of debt financing and impact factors affecting the debt finance management.The importance of the debt management for the corporations To many entrepreneurial organizations, debt is tempting and is glamorous genre of financing. It is widely accepted that external debt are close companions of external equity, and since the equity is necessary for the entities, debt are indispensable for the companies (Pratt & Morris, 1987). Besides, many advantages are generated from the debt financing of the company. Firstly, debt financing is an efficient leverage tool for shareholders of the companies to produce profits with the help of debt capitals (Ruud, 2012).Although the debt capitals are used at the price of financial interest or costs, namely that it is possible to reduce earnings before tax, shareholders still take this risk to use the debt leverage financial tool to add more value of their capital amount and keep sufficient internal funds available to take advantage of attractive investment opportunities. What is more, debt financing is helpful in reducing agency costs of free cash flows (Michael, 1986).Because agency cost is an eternal paradox in the corporate management, shareholders and managers are playing intra beneficial game with each other. Shareholders want to improve value with as small amount of own capitals as possible and mangers would like to  use safer capitals from shareholders and boost their bonus. Any failure from misuse or inefficient use of capital from shareholders by managers is agency cost and the positive debt finance is a way to balance this situation.Risks of debt financing for the entrepreneurs Even though debt financing is of great advantages and is very important for the entrepreneurs, risks still exist in the debt financing management. The main risk of the debt financing is the high rate of interests from the debt. It is clear that financial costs are mainly from the debt financing and the costs come after the operating interest (Robert, 1974), the number of the costs need to be controlled so that the earnings before tax are positive, namely that the profits are truly generated from proper use of debt.Furthermore, debt financing will place risk on the cash flow management of the companies (Davis, 1995), because the contradiction of the maturity of loan and fluctuation of the operating, investing or financing situation may lead to the breakage of the cash flows. Finally, the defaults from the debt financing the corporations manage may exacerbate the loss of reputation and integrity (Davis, 1995). This reputational loss will deter the chance for the corporations to borrow money.The impact factors of debt managementDebt financing management is influenced by different factors. It may be affected by the scale of the corporations. Generally speaking, it is more comment for small businesses to finance debt for operation (Acs, 1999). Because s mall businesses rather than large scale of businesses have less reputation and competitiveness to attract external equity or equity capital, small entrepreneurs have to turn to help of the financial intermediaries such as commercial banks and lender companies to borrow external capital to back up the operations of the organizations.On the other hand, large companies have privileges to finance capital by capital funding, shareholder investment and stakeholder investment. What is more, debt financing management is close related to the managerial style, or the governance, of the companies. For risk-averse managers, who are prudent in producing profits with safer and cheaper capital, they will prefer to manage finance  by receiving shareholders’ funding rather lenders’ (Amihud & Lev, 1981).1.2 Assumption and argument for this debt financing findings from ICAEW Based on the literature review, it cannot primarily reach the conclusion about the debt and the survival situati on of UK businesses. Before this essay expends the argument of whether the more sustainable model of financial management are currently using by UK business and they are survive with less debt, it is important to set the assumption for the argument. And the assumptions are as follow. The first assumption is that UK businesses discussed in this essay are those running on their track rather the new start-ups or newcomers who are eager in need for external debt or equity.The second assumption is that the capital structure of the UK businesses discussed is operating at least one kind of debt.The third assumption is that the debt change (accent or decent) are not caused by the managerial style or the scale of the corporations.1.3 Financial ratio analysis for the debt financing situation of the chosen listed company1.3.1 Debt financing performance According to the assumption preset above, this essay choose the listed company Tesco Plc in UK to testify the comment of ICAEW. Calculation and explanation of relevant ratios over a five-year period will be presented as follow. Referring to the long-term liabilities, the absolute number of long-term liabilities experiences a big rocket and a fluctuation from 2008 to 2012. Long-term liabilities in 2008 were  £5,972 million in 2008 and rose by more than one times to  £12,391 in 2009 than in 2008. Although the absolute number of long-term liabilities dropped a little in 2010, they increased to  £12,731 in 2012.When it comes to the short-term and long-term debt, they showed a consecutive up and down from 2008 to 2012 (See appendix two). One of the very important aspects of detecting debt financing situation of a certain company of UK is the average debt/asset ratio (Allen & Gregory, 2003). This ratio of can show the ability of debt to making  contribution to adding assets. From appendix one, although a slight rise of 2.36% occurred in 2009, a decent trend of average debt/asset ratio is irresistible from 52.82% in 2008 to 46.23% in 2012. The situation imply the decreasing trend of debt financing in the whole system though the absolute value of the debt is in a growth Another method for evaluating the debt financing is to assess the liquidity ratio of the target company.This is a method to assess the short-term debt of Tesco Plc (Gombola, 1983). From the liquidity ratios such as current ratio, acid test ratio and operating cash flows to maturing obligations, a lot of insight can be incorporated into the present cash solvency of the firm and the firm’s ability to remain solvent in the event of adversity. Firstly, the current ratio presents the degree of current assets covering the current liabilities. It was interesting to see from 2008 to 2012 the current ratios of Tesco Plc first increased by 29.57% and kept decreasing by 5.97%, 4.55% and 1.23% in the consecutive three years, but the current ratios were in a growth in the whole picture from 0.58 to 0.67. The situation implies that the syste matic risks of covering the short-term debt are decreasing.Acid test ratio illustrates the liquidity excluding inventory. The acid test ratio of Tesco Plc experienced a drop variation trend from 0.35 to 0.48 by an accent of 53.26%.But it cannot disprove the endeavor made by Tesco Plc to decrease acid test ratio consecutively from 2009 to 2012. The other financial ratio for testifying the long-term debt situation is the ratio of financial gearing. Financial Gearing is the ratio presenting the efficiency of using debt to generate profits. Financial Gearing includes debt equity ratio or leverage (D/E), and interest coverage ratio (Harrington, 2004). Debt equity ratio or leverage (D/E) demonstrates the same development details as the liquidity ratios do. Tesco Plc increased from 0.50 to 0.77 by 70.35% (first increased by 90.03% in 2009 then decreased from 2010 to 2012 in a row).The original soar in D/E may results from the overestimated optimism for the economic environment and over bor row long-term debt, and it takes time to lower the high percentage of debt. On the other hand, interest coverage ratio illustrates the coverage of earnings before interests and taxes to financial interests. From 2008 to 2012, the interest ratio of Tesco Plc dropped from 11.16 to 9.20 and it seems Tesco Plc has less competitive ability to cope with interest costs from debt financing. However, after the two-year decrease in this ratio,  interest coverage ratio rise by more than 20% in two consecutive years from 2011 to 2012.1.3.2 Operation performance But even the debt financial level is decreasing from the financial analysis above, it is important to evaluate whether Tesco Plc has better survive with less debt. So the assessments of the profitability of profitability, efficiency and shareholders situation of Tesco Plc are necessary (Cunningham, 1995). In the aspect of profitability, ROE of Tesco Plc was experiencing a fluctuation from 2008 to 2012. Tesco Plc decrease from 18.08% in 2008 to 15.85% in 2012 by 12.61%. During the 2010 to 2011 duration, Tesco Plc had risen by 0.93% in the ratio of ROE, however, this increase could not turn around the decent situation. Return on capital employed of Tesco Plc experienced a similar fluctuated decreasing rate (similar with ROE) from 15.69% in 2008 to 12.17% in 2012.From the perspective of efficiency ratios, they are ratios measurement of the effectiveness of assets performance of the Tesco Plc (Fraser, 2004). Efficiency ratios includes inventory turnover (days) and creditors' turnover (days). Inventory turnover present the efficiency of Tesco Plc to manage the inventory. As can be seen from Appendixes, the numbers of days for Tesco Plc increased from 20.31 days to 22.15 days by a rate of 9.41%, namely that Tesco Plc performed more slowly than before (circulating the same number of stocks with more time). When it comes to another efficiency ratio, debtors’ turnover (days), demonstrates the average number of days for which receivables are outstanding before retrieve.The debtors’ turnover for Tesco Plc increased from 10.12 days to 15.03 days by a rate of 42.63%. And it turned out that the debtors’ turnover of Sainsbury Plc was circulated from every 4.22 days in 2008 to 4.68 days in 2012. The situation of Shareholder can be assessed by the dividend per share, dividend payout ratio, earnings per share and operating cash flow per share. Dividend per share presents a different development trend for Tesco Plc. The dividend per share rose from 0.08 in 2008 to 0.10 in 2012 by 29.78%. Similarly, EP of Tesco Plc demonstrated an increase of 27.66% from 0.27 to 0.33 and dividend payout ratio of Tesco increased by 2.41% (0.28 to 0.29).1.3.3 Systematic debt financing performance Based on the financial analysis on both debt financing and operations, systematic debt financing is semi-match the opinion of ICAEW. Firstly, the ability of coping with short-term and long-term debt is more competit ive even though the total volume of debt is increasing. But this is not â€Å"less debt† as the saying goes in the opinion of ICAEW. Secondly, even though the â€Å"less debt† refers to more competitive ability to handle debt, the operations of profitability and assets ability are still failed to improve or say few evidence can prove the company with less debt can better survive. Thirdly, the improvement in shareholders situation is one symbol that implies better survival of Tesco Plc but the paradox between profitability and shareholders is need to further explained. In addition, as the forth point, policies are connective with the coping ability with debt. From 2010 to 2012, Tesco Plc procurement policy provides robust and consistent debt selection.Conclusion In conclusion, debt financing plays an important part in organizations but it also hide risks when corporations employ this tool. But doubts arise from the opinion that UK businesses can survive with less debt p ublished by ICAEW. After the analysis of financial ratios on debt and operations performance in Tesco Plc among UK businesses from the consecutive five years based on the assumptions, this essay cannot get the conclusive conclusion about the relations of survival and less debt. But if debt financing here refers to the improve ability to cope with debt rather volume of debt, it may be concluded that some of the UK companies at least Tesco had worse-off profitability and efficiency with less debt. And whether the sustainability model of debts financing in UK is sustainable is needed to be further explained.Question 2 Evaluate the role of finance director in an organization Introduction Financial director, as another name of CFO (Chief Financial Officer), is the main character in the organization to control the financial situation. Since the financial director wears the critical responsibility, it is meaningful to find out what kind of responsibilities or roles are for financial direct or. This essay focuses on exploring the roles of financial director from aspects of literature review and the scenario (Tesco Plc) comparison between different kinds of job roles, and what kind of sources, or information, or evidence in the financial report can prove the described roles above.2.1 Literature review of roles of finance director Financial director is an important role in the system of management in an organization and scholars in the academic or industry has many researches into the topic about financial director. And the framework this essay establishes is a reorganization of the theoretical and practical pinions on financial director.Compiling financial reports A competitive financial director is like a doctor who is engaged in safeguarding the healthiness of financial situation of the organizations (Michael, 1999). This safeguard role is quite different from other related financial occupations, since the largest financial burden is laid on the shoulder of finance di rector. Although financial director lead a team to perform the job about financial reports, he fulfills the solo responsibility of the accuracy of the financial reports (Roles of finance directors, 2013). During the financial work performance, finance director has to manage a financial team as well. And finance director act as the company's treasurer to keep the accuracy of the financial results, because one mistake is a mile in many aspects, such as capital structure, earnings per share or EBIT.Perform analysis on financial reports There is too much information in the financial reports and some of the information is hard to understand without translation. Financial director uses financial and non-financial ratios or conclusive and simple information, which other managers, shareholders and stake holders need, to present the key information of the financial situation of the organization (Keith &Falshaw, 1999).Besides the interpretation of the financial reports,  finance director de tects problems through the horizontal and vertical analysis on the financial reports in order to figure out approaches to achieve the perfect financial condition and try endeavors to maximize profitability. After the financial analysis on the financial report, financial director proposes an analysis report on historical data, positions the financial goals and objectives, and make the prospective strategy for the organization.Help operating the company and make the prospective strategy for the companyFinancial director not just theoretically analyze or improve the financial situation using the historical data from consecutive financial reports (Grant, Roman & Sidney, 2014). He incorporates the financial information into financial operation in the company. Overseeing payroll activity for staff and participants in order to avoid fraud; monitoring the banking activities of the organization to ensure sufficient liquidity to meet daily needs; Investigating cost-effective production approa ches in the production line. Besides the internal financial events, he represents the company to meet government in order to control the rhythm of the tax payment or government funding. What is more, he also takes an informative and advice supportive part in marking, operation, financing and investment decision making.2.2 Roles of finance director of Tesco Plc and comparison of other job advents 2.2.1The evaluation of roles of financial director of Tesco Plc Laurie McIlwee has been taking the position of Chief Financial Officer (Finance director) of Tesco Plc since 27 January 2009. As a Fellow of Chartered Institute of Management Accountants and a member of The Hundred Group of Finance Directors, Laurie McIlwee has experienced years of finance director responsibility in Tesco UK and Pepsico. His horizontal international finance management is impressive. But it is important evaluate whether he meet the roles of the financial director while working in Tesco Plc.Ordinary Financial enga gement Besides composing the financial statements and financial reports for the board of directors and shareholders, Laurie McIlwee is responsible for utilizing financial and non-financial ratios to analyze the historical data from 2010 to 2012 (Financial Report, 2012) and select key ratios, present then as clear graph and report them in the financial report in order to keep the financial reports usable for the users.He also monitors any external financial issues, such as relationship with government and tax bureau. And He is responsible for establishing and maintaining a strong working relationship with outside consultants, bank representatives and insurance and bonding representatives. What is more, Laurie McIlwee affects the continued operation of the company by positioning the financial boosting strategy in the foreseeable future. His duties also include managing, maintain and forecasting the company's cash requirements and cash flow. He also reviews and signs all financial repo rts, tax returns and audit reports.Financial Team Management Laurie McIlwee is of course unlikely to cope with the actual receipt of income or the paying of bills in person, he wisely leads a team on all kinds of financial jobs (Financial Report, 2012). The chief finance officer Laurie McIlwee oversees all accounting personnel within the financial team.His mentor and develop the accounting team and manage their tasks and processes, training and performance evaluation He regulations to ensure compliance with current and future Management Accountants Society of practices and procedures to govern the financial director of an appropriate internal control safeguards and requirements Hundred Group Business Development and Strategy DutiesThe CFO Laurie McIlwee directs financial strategy, including borrowing and investment strategies (Financial Report, 2012). He also establishes and monitors budget planning and forecasts. He works with CMO, COO and the heads from other department. Finance i s expected to incorporate other strategic objectives. In order to meet their specific objectives closely with vice president of information technology, development tools, and the president and providing important financial and operational information systems to CEO.2.2.2 Other jobs advents for comparison CEO Philip Clarke is the CEO of Tesco Plc for more than 3years until today. He is mainly responsible for developing company goals (Financial Report, 2012). He formulated the objectives, designed the progress to achieve these goals. In determining the direction of the company in the process, he defined the specific market, observe competitors and determine how the company will come to the fore.In addition, Philip Clarke build a competitive team to assist him in the operation of Tesco Plc. Philip Clark uses the best part of the individual team and solve the senior team and the members of the corporate culture differences between a company's values through the establishment. Setting bu dget is an important role of the CEO, the CEO is only when the budget is set for a certain strategy, CFO or Finance Director may adjust the budget implementation plan. Finally, CEO Philip Clarke have functional public relations. Under many circumstances, it is CEO that pre builds the client relationship before CMO can keep the continuous relationship with the client.CMO Min Mason is the CMO of Tesco Plc. His job is different from finance director Laurie Mcllwee and CEO Philip Clarke. He launches research and development in order to determine the potential need for a product or service based on current market demand (Financial Report, 2012). Moreover, he cooperate with Lanrie Mcllwee to make an available financial R & D budget. Secondly, Mim Mason is responsible for making promotion strategies by managing the overall marketing and advertising campaign and analyzing effectiveness of a campaign and what types of modifications. For example, the promotion of â€Å"Everyday Big sale† in Tesco Plc designed specifically for women and let them feel satisfactory. Min Mason has to manage not only public relations, but also the three aspects mentionedCOO Kevin Grace is a COO in Tesco. He was the main contact with the other officers of the Board. Kevin Grace manages the daily functions of the company, reporting to the CEO and the board regarding the company needs or  performance, make a final decision in many daily problems (Financial Report, 2012). If a company could find a COO like Kevin Grace who is a reliable manager, COO can become into the role of CEO in situations where the board realizes that a current CEO will be retirement. In addition, the role of the COO has been changed. COO need to learn the CEO position. COO becomes an alternate, not a partner. The responsibilities of COO will begin to take on the role of the CEO over time. When Kevin Grace stepped down as South Korea, he was promoted to be the CEO of Poland and UK Property Director.2.3 Effective ev aluation of availability of sources of information All the role information is truly comes from the 2012 Tesco Plc annual report, and it is presented dispersively in the financial report. With the evidence of financial statements, notes of financial statements, clear graph, convincing declarations from the board of directors, the truth and effectiveness can be proven to support the role evaluation of the roles of different directors (Financial Report, 2012). ConclusionIn conclusion, this essay centers on the role evaluation of finance director by demonstrating literature reviewing, citing roles of finance director in Tesco Plc, comparing the roles of finance directors and CEO, CMO and COO in Tesco Plc, and evaluating the effectiveness of evident used to citing examples. Question 3Evaluation for the usefulness of budgeting and budgetary control in Tesco Plc Introduction A budgeting control is a mechanism assisting senior managers in setting the adequate spending limits. It is importa nt since risks of expenditure exceeding from the potential budget are what corporation cannot bear and the risks will have an unfavorable impact on corporate profits. So in order to count on the importance to focus on the budgetary control, this essay is going to throw literature control in the budgetary control to see what accomplishment that scholars achieve in this field, and introduce the empirical example of implementing budgetary control in a corporation by citing Tesco Plc.3.1 Literature review in budgetary control Scholars in academic field have been doing many researches in the field of budgetary control. They refer the budget control to almost all aspects in the business operation. But after reorganization, this essay reframes the outline of the literature review in budgetary control. Businesses of different kind of scales require different kinds of basic financial concerns and monetary limits in order to keep cost-effective efficiency. Budgetary control is indispensable i n the business operation. Cost controllingThe main objective of budget control is to control the cost. Capitals are limited in one organization (Ariratana, Treputtarat & Tang, 2013). Smart and appropriate cost of using is good for cost-effectiveness to save. Through the full use of the capital budget, managers take effective measures to save money. The definition of the budget is a list of intended or expected expenditures of money and proposed to satisfy these expenditures. By presenting the amount of money that will be used for different projects to satisfy different strategy, the managers can handle different assignment with an elastic budget boundary, because decision-makers can see exactly what they are spending their capital on.Perspective planning Budgetary control can lead a perspective planning in the business. It is indispensible in the management style of making strategy based on the limited capital or the style of organizing capitals for budget for the decisive planning (Dariya & Klaus, 2013). All businesses have the requirement to balance its short-term expenditures with savings and investments that they can use enough jetton to meet the long-term developmental expand or take advantage of special opportunities. Budgetary management is designed with the changeable need from business opportunities coverage and allows a business to monitor necessary spending along with the capital and earnings in order to generate positive profits. Financial statement compilingBudgetary control serves a significant practical role by assisting accountants and auditors to compile financial reports for report users. For the reports in internal use within the organization, budgetary controlling can provide information of costs controlling, strategy positioning and internal operation (David, 1998). For the reports use by publicity such as regulators, industry analysts, stockholders and investors, budget controlling presents the comparison of the original planning of the l imited capital and the ability for the business to implement actions to spend money and achieve the original goals. The budget controlling is also important in helping managers to handle the corporate profits and corporate cash flows.Business success evaluation Budgetary control gives comprehensive evaluation of the availability of and the success of specific efforts in the businesses (Yanwu & Fei-Yue, 2014). In other words, the link of budget control reflect the input and output in the changing business activities, such as staff training. However, if the future budget show that due to the employees’ mistake, training programs and its cost recovery issues more significant decline would be reasonable. Similarly, if the new forms of consumption can have a negative impression of the future budget, it will be eliminated, maybe it is good to use with similar goals.3.2 Budgetary control in Tesco Plc This paragraph is going to evaluate the usefulness of budgeting and budgetary contr ol in Tesco PlcUse budgetary controlling tools as policy document Firstly, Tesco Plc smartly uses the budgetary controlling as a policy document to protect important projects. The importance of a budget used as part of policy considerations is to generate enough capital for profitable but vulnerable projects. According to the announcement in early 2012, Tesco Plc plans to substantially increase investment in the shopping trip – particularly in the UK with a limited and special budget.On the one hand, Tesco Plc anticipate minimal Group trading profit growth for the year 2012, namely that Tesco has considered the possible opportunity costs in the budget when implementing the project. On the other hand, Tesco Plc reduces levels of old capital expenditure when it modifies its policy of expansion.  To further protect the project, Tesco Plc establishes another policy that no bonus will be paid to Executives unless performance is greater than budget, representing year-on-year grow th in profit.Financial awareness Budget Control provides financial awareness of business expenses and income. In the case of Tesco Plc, it needs to take into account tax expenses, thus setting the budget report. When a new tax resolution passed by Congress, which adjust their tax budget accordingly. The budget outline shows the number of business from sales and additional revenue in one month. It shows how much companies spend on operating costs even as revenue. Operational budget should also display a given assets and liabilities Tesco plc in the current time. This reveals whether a company's financial position is positive or negative. Tesco's financial situation reveals the budget showed that the business is profitable or create monthly debt.Business Opportunities One advantage of having a financial budget for Tesco Plc is to recognize opportunities that can help market and expand the business. The budget reveals the amount of profit the business can put aside each month. Tesco Pl c uses the profit to expand the business and market it in new ways by attending conferences and joining marketing campaigns with larger businesses. Informing the funding available can help the business owner plan ahead and market the business in new and creative ways.For example, Tesco Plc did researches in 2012 and found out the challenging year for consumers in many of Tesco Plc markets are suffering tight budget in household management by inflation, austerity and high fuel price. That would possibly reduce the enthusiasm of consuming in Tesco Plc. But considering the tight budget Tesco Plc also is facing, Tesco Plc transfers to the international businesses and performed this switch strongly. Thanks for the wise business opportunities, Tesco Plc delivers an 18% increase in profits, which helped to compensate for the reduction in trading profit in the UK.Communication Tool Through monthly, half-yearly financial budget statements or reports budgetary  control tools communicative a cts each year. When held for budgetary control will be discussed from time to time to collect the director, directors can share the latest ideas and mentality, improve the efficiency of the method and the target budget. With the discussing, budget is essentially a communication tool, because it shows how the enterprise works and how the smart money used.Budgets are discussed in Board, Executive Committee of Tesco Plc regularly and the risk management proposal will be shared in order to improving the efficiency of budgeting. In order to control the budget better, All business sectors in Tesco Plc has stretched the budget based on the Balanced Scorecard and KPI's steering system and performance indicators are monitored on an ongoing and regular basis to the BoardFinancial planning Tesco Plc implements regular review of strategy, risks and financial performance by Board and Executive Committee, with external advice as required and makes consistent operational plans and budgets develope d throughout the Group to ensure delivery. What is more, Broad of directors in Tesco Plc approves the budget and long-term plan for the Group. The budget controlling reveals the assets and liabilities in Tesco Plc so that it can have better evaluation of itself when making business decision. Budget controlling can help Tesco Plc create a financial plan as mentioned above so the liabilities can be addressed before the debt becomes uncontrollable.ConclusionIn conclusion, budgeting control is really important in the aspect of costs controlling, perspective planning, financial statement compiling, and business success evaluation according to the literature reviewing. After citing the example of Tesco Plc, further information about budget controlling containing Use budgetary controlling tools as policy document, financial awareness, business opportunities, communication tool and financial planning.

How are proffessional and managerial careers gendered and racialist Essay

How are proffessional and managerial careers gendered and racialist - Essay Example From this research it is clear that globalization and advancements in technology have led to the career advancement of women and fading of the cultural and feminist beliefs which have made women to increasingly participate in managerial and professional roles which were traditionally male dominated. Every individual despite his race is guaranteed by law a chance to develop in his career without any discrimination. This has however not always been the case since people from minority groups still face discrimination. Evidence from surveys conducted by Equality campaigner groups have shown that job applicants from minority races stood a higher of not being shortlisted for job interviews compared with white counterparts with similar qualifications. People from minority groups have been found to shy away from some professions due to perceived racial prejudice. Researchers have also shown that the racial background of an individual may determine their chances of getting into managerial job s. The government has however worked towards equality at job place by introducing stringent laws to guarantee equal opportunities for all. In professional careers, the role of gender is demonstrated by the perception of the society on the role of women in work activities. Some working environments such as construction and engineering work are considered to be hostile for women. According to Arditi and Balci, the perceptions and beliefs on gender and work continue to persist despite the fact that women have demonstrated the ability of performing duties which were considered to be meant for men.... Watts (2009, p. 23) illustrates that high profile organizations have been reported to show bias against women in the promotion into managerial positions. For example civil lawsuits have been staged by women against large organizations and companies such as Wal-Mart for allegation of gender bias in the appointment, promotion and compensation of female employees as compared to the male counterparts. Fisher, Gushue and Cerrone (2011, p. 447) assert that women in the UK’s construction industry who work as engineers face challenges in balancing the professional and domestic life because of the obligations they are expected to meet at home and the pressure at work. The cultural context and belief of the society on the participation of women in construction work show that men are considered to be most suited for the construction work. According to Watts (2009, p. 37), women face prejudice when working in a male dominated career because some roles and work activities are considered to be meant for men. The number of women within the construction industry is increasing despite the challenges and the prejudice associated with this career. The ability of women to survive in the male dominated career shows that they are qualified to be part of the team and it is contributing to the reduction of the discrimination in hiring female engineers. Therefore the professional identity of women in some managerial and professional careers is facing conflicts and challenges but they are decreasing with the growing civilization within world societies. It is notable that gender discrimination in managerial and professional careers is not always apparently

Girl, Interrupted Essay Example | Topics and Well Written Essays - 1000 words

Girl, Interrupted - Essay Example uding Polly who had self-inflicted burns on her body and face, Georgina her roommate who is struggling to maintain a relationship with her boyfriend Wade who is also a patient in the hospital. Wade is another person that she meets there and he entertains people with stories of his father’s indulging in exploits with CIA. She comes across many more patients who keep her bemused and at the same time the environment at the hospital makes her feels like a captive. Kaysen believes that the hospital is a place meant for her rehabilitation while at the same time she feels that it has taken her freedom away from her. The daily routine dictated by the hospital rules and the complete check on the patients by the nurses at every interval along with no privacy gave way to all sorts of emotions in Kaysen’s persona. James Watson’s visit to the hospital to meet Kaysen indicated how emotionally broken she was when she came to this place. Watson attempts to pull her out of the mental hospital’s environment but her rejection indicates that she is adamant to take the complete treatment. Her past attempt to commit suicide by an aspirin overdose at high-school had worried her the most. Since many creative people have been McLean’s residents, she is convinced that creative minds are liable to mental illness in particular the poets’. The over strictness in the environment has given way to the feeling of imprisonment for Kaysen as she observes the nurses following up on each of the patient’s whereabouts. They take all the things which might cause harm to the patient away from them including earrings. They correspond to the severity of any patient and eventually attend all the activities the patients are collectively involved with. This is the reason why even field trips are restricted and there is a complex system of taking nurses with the patients during these trips. Kaysen has a tendency of drawing conclusion to her own mental health. She categorizes her mind into

Management Essay Example | Topics and Well Written Essays - 750 words - 12

Management - Essay Example The project designers are assigned to work for eight hours per week (web based system) work to each designer (Smith and Mark). After some time one designer (Smith) has taken causal leave of 3 days. On this occasion the project manager assigned extra work to the second designer (Mark). So Mark was doing work for 12 hours on web based system and also carrying other projects as well. This situation made him too busy and tired. On the return of Smith the same operational hours were maintained for the Mark. He requested the project manger but manager took no action. The main reason behind this situation was the effective relationships of the Smith to the project manager. This produced some ill feeling in Mark for the Smith and project manager. The conflict among the Mark and Smith has taken more critical conditions. Now the project design is started to effect. This conflict caused delay in the completion of the design work of web based system. The developer team is waiting to develop the system, but no effective results till now have achieved. The main cause behind this situation is the conflicts between designers. This project requires extensive coordination but at the work both designers exchange some harsh words with each other. In this situation both sides know the main reason of the conflict. Smith knew that he was the person behind the over-burden on the Mark. Smith has not admitted that he is doing wrong. In this scenario Mark was under pressure from the management and project manager. He tried to perform well but with his fellow designer he could not be able to coordinate. In this way the over design duration was delayed. After that project manager called the designers to show the progress about the system design. At the moment the project manager has charged the Mark for the delay in the system design, and Smith was not asked regarding the development delay, because of the good terms with project manager. The situation went more

Financial Managment IP 1 Essay Example | Topics and Well Written Essays - 750 words

Financial Managment IP 1 - Essay Example The New York Stock Exchange houses many of the largest companies in the United States and trades around 1.5 billion shares each day across the United States and Europe. The companies listed on the stock exchange represent over seventy-five percent of the market share in the nation. Most of the trading is done on the floor of the exchange where specialists and floor traders provide related services. Specialists  are the workers who have the responsibility of matching interested buyers to sellers. Every specialist is responsible for certain shares. These specialists make sure that trading of the stocks and shares they are responsible for occurs in a fair, orderly, competitive, and efficient market. This ensures that all customers will have an equal and fair opportunity to buy shares while the seller receives the best possible price according to the market conditions present at that time. They also work to prevent any large and unjust fluctuations in the prices of the shares between c onsecutive sales. The floor traders are the people present on the floor of the stock exchange waving their hands and making gestures to make trades. These are the members of the NYSE who trade for their own account, however they can serve as floor brokers for buyers and sell their services. Lastly the NYSE uses a SuperDOT system through which the specialists handle orders from brokers that are not on the floor. The system enables brokers to send messages through a common message switch to the proper specialist’s trading-floor workplace. These specialists then handle the buying and selling of the selected shares and as they become available they send an acceptance using the same switch to the originating brokerage firms. The National Association of Securities Dealers Automated Quotations uses three separate processes for the buying and selling of shares. These include the interface, the matching engine and the quote services. The interface electronically connects the buyers an d sellers as they enter their trades with the brokers. These trades then come into the NASDAQ system through hundreds of computers. The quote services provides up-to-date minute price quotes through its computers. Brokers then use these quotes for the people they deal with. Lastly the matching engine connects the buyers and sellers when the prices they offer match. Once this is done information is sent to the brokers of the buyer and seller who then complete the transaction. This information can also be seen through the quote services facility by any person interested in the transaction. The process is not as simple as it seems because numerous transactions take place simultaneously, therefore thousands of computers and brokers are needed to complete every transaction. Both the New York Stock Exchange and the National Association of Securities Dealers Automated Quotations sell shares of the companies listed on their exchanges. These organizations use brokers which help in connecting buyers and sellers. There is increase in the use of machines as both organizations have a highly developed computer system which speeds up the trading process and aids the buyer and seller to negotiate. However as the name suggests NASDAQ is run mainly by machines where the interface connects the customers with each other and the matching engine finds suitable trades. On the other hand NYSE is still labour-oriented

Teacher Interview Essay Example | Topics and Well Written Essays - 750 words

Teacher Interview - Essay Example hool, he also participates in harmonizing the objectives of various schools in the district to come up with a common goal that is focused on accomplishing a shared vision. Through interaction with other teachers, he is able to understand the necessary resources for teaching and learning. He is also able to develop new learning opportunities for the teachers and students. Instructional leadership is one of the significant strategies in developing a focused student centered learning environment (Goleman, 2002). Instructional leadership has had significant benefits to the teacher’s role. It has led to a widened scope of learning beyond the classroom and with more people participating in the enhancement of learning. This has made it easy for the teacher to accomplish his duties as the head, contrary to the conventional authoritarian style where the administrator needed not to consult with others (Hargreaves & Fink, 2004). The teachers are presented with a favorable environment to carry out their duties especially through participating in goal setting, which makes empowers them especially by feeling as part of the institution and hence deliver knowledge to the students in a better way. The school is ranked among the best performers in the district, while the students are motivated to accomplish their educational goals through the collaboration that exists among the teachers. Professional leadership is among the leadership styles that are significant in developing focus and vision, which the head teacher uses to promote a sense of purpose for the institution. The teachers are assigned roles depending on their capabilities with the purpose of encouraging them to participate in decision making as regards the various areas that they supervise. Authority is distributed to the teachers and all participate in developing policies that affect learning in the school. The head teacher is always aware of the progress in all classes, including the information that is being

Early Modern European History Essay Example | Topics and Well Written Essays - 1750 words

Early Modern European History - Essay Example This in turn led to overcrowding in towns and the problems associated with it. The aim of this paper is to discuss the impact of the industrial revolution on different groups in society and how these groups responded to such changes. I will argue that industrial revolution despite its many advantages brought about serious problems to all groups in society; none was spared including infants. These ranged from physical to mental problems. The workers had no option but to work and the manufacturers were bent on ensuring value from their investments: machine and people no matter the working conditions. The industrial revolution affected many areas of society. These can be explained in terms of the working conditions in the factories, changes in living standards, attitudes and values of middle class and the effects it had on lifestyle. One prominent feature of industrial revolution was establishment of factories and also increased mining activities. There is no problem with the country pe ople living their local areas to go work in factories and mines as it was a means of livelihood. Furthermore, it offered more earnings than engaging in agriculture in remote areas. Those who went to town could send money to those back at home. They could also improve on their skills as they specialized in one activity unlike in feudal society where a serf did everything. Improved transport and communication was also essential for the society as now they could communicate and mix with people from all walks of life thus exchange cultures and ideas. Furthermore, women got to be engaged in work instead of being relegated to the domestic duties such as child rearing. If industrial revolution brought all these goodies, why was it so much resented to an extent of establishing commissions to investigate on its workings? Industrial revolution may have changed lives in a positive way but the way it was carried out left a lot to be desired. It led to deterioration of health of the society espe cially the infants even changed the way society is organized. Testimonies regarding working conditions in England and child labor in factories leading to the famous Factory Act of 1833 tell a lot about the sufferings endured by infants and adults alike in the factories and mines and also the reactions of manufacturers regarding workers plight. One of the testimonies was from the commission of medical examiners in North East England highlighting the physical condition of children working in factories. The report revealed some devastating effects on the children such as â€Å"deformity, stunted growth, relaxation of ligaments like knees and ankles and also relaxed muscles† (Sherman 142). The most worrying thing is that children as young as five years were engaged in employment and to make matters worse, they worked for thirteen hours a day. This is a disgrace to humanity that should be rejected at all cost. The 9, 10 and 11 year olds according to the commission worked for 14 an d 15 hours a day. In traditional society, children were supposed to stay at home and be cared for by their parents especially mothers. Even today, child labor is prohibited. Children are supposed to be in school studying but since those days schools were for the chosen few, children remained at home learning various skills from the society. When industrial revolution set in, parents colluded with masters to do disservice

The eradication of poverty Essay Example for Free

The eradication of poverty Essay Sentence Outline: 1. Government action and charity from the business sector and private individuals helps  in the eradication of poverty. 2. Education is a way of helping the poverty stricken to better themselves and increase  their standard of living. 3. The injection of money into the economy by the government, foreign investment or  foreign aid may help decrease poverty by creating jobs. 4. Family planning is a useful tool in the eradication of poverty. 5. Drug treatment centers will aid in the task of the eradicating poverty. Conclusion: Poverty may be caused by many factors for instance lack of jobs, lack of skills, one may be born into poverty or one may be forced into poverty by lifestyle choices. Irrespective of the cause of poverty the eradication of poverty should be a worldwide goal as it brings benefit to no one. This is why help should be forthcoming from all sectors of the population including the government, the business sector and private individuals to rid society of the problem of poverty. ESSAY: The eradication of poverty. There are many different reasons why poverty occurs and as such there are  many different avenues to pursue in the eradication of poverty. The term poverty may have vastly differing meaning to people from different countries or backgrounds. This occurs because poverty is not uniform everywhere and the methods of eradicating poverty need to be adapted to the different situations that exist. Nevertheless the need for support from governments, the business sector, non-profit organizations and the public is needed on a worldwide basis. Government action, charity from the business sector and private individuals helps in the eradication of poverty. For instance, the government may institute school feeding programmes so that underprivileged children will have at least one meal a day. Members of the business sector may contribute funds towards building a shelter for the homeless and private individuals may donate items such as clothing to the poor. Provision of shelter, meals and clothing to the poor and homeless is the first step towards increasing their standard of living as their basic needs are being met. Education is a way of helping the poverty stricken to better themselves and increase their standard of living. The government and non-profit organizations working alone or together can provide free training to the poor. The provision of training will allow these less fortunate individuals to learn a skill, which they can use to make themselves employable or earn a higher wage. This will enable them to enjoy a better standard of living as they can better provide for themselves and their families. The injection of money into the economy by the government, foreign investment or foreign aid may help decrease poverty by creating jobs. People who were previously unemployed may be able to find gainful employment. They would then be able to increase their standard of living as they now have a reliable source of income to provide for their needs. Family planning is another useful tool in the eradication of poverty. Many families still experience poverty even though both parents are employed. This occurs many of the times because there are too many children to support with the income being earned. Through education about family planning people  can learn to have manageable sized families where they can enjoy a reasonable standard of living even if their income is not very high. Lastly, drug treatment centers will aid in the task of eradicating poverty. Many people become destitute because of their addiction to drugs. Centers are needed where these people can go to for help to overcome their addiction. Overcoming drug addiction will be the first step to overcoming poverty for these people. Once a drug addict has been rehabilitated he can move on with his life and once more become a useful member of society and provide for himself. Poverty may be caused by many factors for instance lack of jobs, lack of skills, one may be born into poverty or one may be forced into poverty by lifestyle choices. Irrespective of the cause of poverty the eradication of poverty should be a worldwide goal as it brings benefit to no one. This is why help should be forthcoming from all sectors of the population including the government, the business sector and private individuals to rid society of the problem of poverty.

Analysis of BAELL II Recommendations

Analysis of BAELL II Recommendations CHAPTER 1: INTRODUCTION 1.1. Introduction Operational risk is defined as â€Å"the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.† Financial markets in the last two decades have been highlighted by large-scale financial failures due to incompetence and fraud, such as Barings, Daiwa, Allied Irish Banks, Orange County, Enron, along with man-made and natural disasters, such as â€Å"9/11,† Hurricanes Andrew and Katrina. As a consequence, operational risk has been acknowledged to overweigh the importance of credit and market risks. Since 2001, the Basel Committee for the Banking Supervision of the Bank of International Settlements has been requiring banks to set aside regulatory capital amount that would cover potential operational loss. The capital amount must be evaluated on a one-year aggregated basis at a sufficiently high confidence level. Statistical tools are required to accurately assess the frequency and severity distributions. The presence of so-called â€Å"low frequency/ high severity† events poses problems for the modeling of operational risk and calls for models capable of capturing excessive heavy-tailedness in the data. Operational risk is one of the important arms of the risk management triangle the other two being Credit Risk and Market (Treasury) Risk. Any organization, particularly in the banking sector, is squarely exposed to operational risks emanating within or outside the organization. Risk Management Triangle Credit Risk Market (Treasury) Risk. Operational risk Operational risk capital charge is a mandatory requirement in global banking sector. This puts in a lot of stress and strain on a banks management. Operational Risk is also known as Transaction Risk in some countries. In order to efficiently face this new challenge of operational risk in risk management, the prerequisites for efficiently facing the operational risk are enumerated as follows : Ø creation of risk culture ; Ø enterprise wide operational ; Ø risk awareness. Proactive steps at all the levels of operation should operate as a safety valve and in the process, may in turn facilitate lower risk capital charge. 1.2. Background Risk mapping is often mentioned both in describing various approaches to operational risk management and, in an audit context, in formulating the key steps to control self-assessment, as the cornerstone of the risk identification process. Yet there is little published guidance on how to perform it effectively and on how to ensure that the resulting map is indeed complete and consistent. In other words, although the term is widely used by bankers, auditors, regulators and consultants alike, and although all these professionals  may even agree on what constitutes an acceptable final product, they will most likely give widely different explanations on how to get such product, the resources needed and the costs involved. Risk mapping is difficult for a number of reasons, all of which can be summarized by reminding ourselves that ‘the map is not the territory. No matter how accurate and thorough our analysis is, what really goes on in the business is never exactly what is written in the manual. Here are just a few of the key dimensions: People: Processes are affected by people, and people, no matter how formalized the process is, adapt, interpret and improvise in response to circumstances. Specialization: Very few people really understand a specific business process and its interactions with other people and systems within the bank. When one of these people leaves or is just absent for a while, the potential for an operational failure appears. Processes: Processes change all the time and any mapping becomes obsolete almost overnight after being completed. In this research, I describe a methodology for the mapping of operational risk with the objective of identifying the risks inherent in the different steps of a business process, selecting the key risk indicators (KRIs) (Hoffman, 2002; Davis and Haubenstock, 2002) and designing the most appropriate control activities. In my approach, therefore, risk mapping is the basis for all the key components of operational risk management identification, assessment, monitoring/reporting and control/mitigation as defined by the Basel Committee on Banking Supervision (2003). There is more than one way to map risks. The most common technique is probably the mapping on a probability/severity chart (Figure 1) so as to identify the key priorities for management. The result in most cases helps to distinguish between high severity/low frequency and high frequency/ low severity losses, but which in general gives no indication as to what management actions to take in order to change the existing risk profile. Another way is to map the risks to the phases of a business activity where they can occur and identify the key risk factors and drivers in the process. This leads to a somewhat more complex result, rich in qualitative information rather than in quantitative assessment, but giving very clear indications as to which parts of the process should be changed in order to make a difference to the overall risk exposure. It also allows for the identification of the KRIs that are more relevant to each risk exposure. Pursuing the application of KRIs to operational risk assessment is suggested by the need to capture the various issues we find with purely statistical approaches as well as the impact that managerial decisions may have on the operational risk profile. In market and credit risk measurement, the key managerial decisions are taken in deciding portfolio composition, thereby affecting the resulting risk profile directly and in a manner that measurement models have no problem in capturing. In operational risk measurement, on the other hand, managerial decisions may affect the risk profile in a number of different ways (through changes in control procedures, systems, personnel, to name but a few), none of which any measurement model can capture in a simple and direct way. Statistical approaches in particular will be at a loss in taking into account such changes, as historical data will reflect a risk and control environment which by and large no longer exists. The requirement of the new Bas el Accord (Basel Committee on Banking Supervision, 2004) to base risk assessment on 5 years of historical data if taken too literally will have banks generating risk capital charges on the basis of information largely unrelated to the current and, even less, the future risk and control environment. 1.3. Research Question: This work to start with will take a step back and ask the fundamental question of why do banks fail? Further the work shall research the recommendations of BASEL II and will try to seek the answer for: Will the BASEL II requirements make the systematic goals of safety and stability more achievable for banks/FIs? If yes, how? If no, how? 1.4. Motivation: Appropriate â€Å"Organizational structure† is a precondition for orderly management of any activity/ group working within the purview of organizational capabilities. Operational risk management is all pervasive in terms of activities of an organization e.g. if ‘people factor in operational management is poorly managed in a bank, other activities of the bank e.g. credit/market risk management, are likely to suffer . Similarly, legal aspects of any transaction/ function, if loosely dealt with, increases the likelihood of loss to the organization. Organizational structure for operational risk management needs to be compact and broad-based. The structure must be compatible with :- an organizations size; complexity of operations and area of operations; in tune with its risk appetite. The area of operational risk management is a matter of discretion which comes under the purview of regulatory authorities/banks. Through my research I have tried out to make out a clear and concise understanding of BASEL II accord for Banks/FIs in operational risk perspective. The work shall also try to suggest the suitable customization of BASEL II recommendations and implications of the same for effectively managing operational risk. It may also lead to forecasting the emerging trends in operational risk and ways to mitigate the same. 1.5. Chapter Scheme The chapter scheme of my dissertation is as follows: Chapter 2: This chapter describes the literature review and the findings. Chapter 3: This chapter describes research methodology and some of the variables included in empirical analysis. Chapter 4: This chapter provides the basis of qualitative research. Chapter 5: This chapter gives details of case studies analyzed for research purpose. Chapter 6: This chapter discuses the analysis and the findings. Chapter 7: This chapter includes the conclusion. CHAPTER 2: LITERATURE REVIEW 2.1. Introduction Until very recently, it has been believed that banks are exposed to two main risks. In the order of importance they are credit risk (i.e., counterparty failure risk) and market risk (i.e., risk of loss due to changes in market indicators, such as equity prices, interest rates and exchange rates). Operational risk has been regarded as a mere part of â€Å"other† risks. Operational risk is not a new concept for banks: operational losses have been reflected in banks balance sheets for many decades. They occur in the banking industry every day. Operational risk affects the soundness and operating efficiency of all banking activities and all business units. We begin our discussion with an explanation of the notion of risk. 2.2. Risk and Risk Management In the financial context, risk is the fundamental element that affects financial behavior. There is no unique or uniform definition of risk: different financial institutions may define risk slightly differently, depending on the specifics of their banking structure, operations and investment strategies. The definition of risk also depends on the context. In the economics literature, generally risk is not necessarily a negative concept, and is understood as uncertainty about future or the dispersion of actual from expected results. In the context of business investment, risk is the volatility of expected future cash-flows (measured, for example, by the standard deviation), and in the context of the Capital Asset Pricing Model (CAPM) is the risk of asset price volatility due to market-related factors and is captured by ÃŽ ². Such definitions do not exclude the possibility of positive outcomes. Hence, for the operational risk we need a different definition.[1] For the purposes of operational risk modeling and analysis, the definitions from insurance are more appropriate, as the notion of risk in insurance has a negative meaning attached to it. Risk is perceived as the probability and impact of a negative deviation, the probability or potential of sustaining a loss, â€Å"a condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hoped for† [2], or â€Å"an expression of the danger that the effective future outcome will deviate from the expected or planned outcome in a negative way† [3]. As the next step, we need to distinguish operational risk from other categories of financial risk. A comprehensive framework of risk management is applicable equally to all types of bank (Iqbal and Mirakhor, 2007). The process of risk management is a two (2) step process. The first is to identify the source of the risk, i.e. to identify the leading variables causing the risk. The second is to devise methods to quantify the risk using mathematical models, in order to understand the risk profile of the instrument. Once a general framework of risk identification and management is developed, the techniques can be applied to different situations, products, instruments and institutions. It is crucial for all banks to have comprehensive risk management framework as there is growing realization among IBs that sustainable growth critically depends on the development of a comprehensive risk management framework (Greuning and Iqbal, 2007). A robust risk management framework can help banks to reduce their exposure to risks, and enhance their ability to compete in the market (Iqbal and Mirakhor, 2007). A reduction in each institutions exposure will reduce the systemic risk as well. Hence, it is necessary that banks have in place a comprehensive risk management and reporting process to identify, measure, monitor, manage, report and control different categories of risks. 2.2.1. Understanding Risk and Risk Management It is important for staff of banking institutions to understand the aspect of risk in the banking operations and the risks that are inherent and exposed in their business operations. Better understanding of risk management is also necessary especially in the financial intermediation activities where managing risk is one of the important activities. A study conducted by Boston Consulting Group (2001) found that the sole determining success factors is not the technical development but the ability to understand risk strategically and also the ability to handle and control risk organizationally. Secondly, in order to realize a risk based management philosophy, the attitude and mindset of the employees need to be changed whereby they must be brought to understand that managing risk is crucial for success. This implies that there must be intensive training, clearly defined structures and responsibilities, as well as commitment to change. In addition, it was identified that banks in North A merica and Australia concentrate on risk management primarily to enhance their competitive positions. Meanwhile in Europe, Asia and particularly in South America, risk management is considered primary from the perspective of regulatory requirements. Then, Al-Tamimi and Al-Mazrooei (2007) found that the UAE banks staff have good understanding of risk and risk management, which might give an indication about the ability of these banks to manage risks efficiently in the future. Moreover, understanding risk and risk management had positive effect on risk management practice although it is insignificant. 2.2.2. Requirement for Risk Management Risk management framework is important for banks. The risk management strategy must be integrated with its overall corporate strategies (e.g. Froot and Stein, 2004). In conjunction with the underlying frameworks, basic risk management process that is generally accepted is the practice of identifying, analysing, measuring, and defining the desired risk level through risk control and risk transfer. BCBS (2001) defines financial risk management as a sequence of four (4) processes: (1) the identification of events into one or more broad categories of market, credit, operational and other risks into specific sub-categories; (2) the assessment of risks using data and risk model; (3) the monitoring and reporting of the risk assessments on a timely basis; and (4) the control of these risks by senior management. BCBS (2006), on risk management processes, require supervisors to be satisfied that the banks and their banking groups have in place a comprehensive risk management process. This woul d include the Board and senior management to identify, evaluate, monitor and control or mitigate all material risks and to assess their overall capital adequacy in relation to their risk profile. In addition, as suggested by Al-Tamimi (2002), in managing risk, commercial banks can follow comprehensive risk management process which includes eight (8) steps: exposure identification; data gathering and risk quantification; management objectives; product and control guidelines; risk management evaluation; strategy development; implementation; and performance evaluation (e.g. Baldoni, 2008; and Harrington and Niehaus, 2009). 2.2.3. Risk Identification There are few conceptual studies on risk identification of financial institutions (e.g. Kromschroder and Luck, 2008; Luck 2008;; Pausenberger and Nassauer, 2000; Tchankova, 2002; Barton et al. 2002 ) and few empirical studies that include risk identification of banks (e.g. Al-Tamimi, 2002; Al-Tamimi and Al-Mazrooei, 2007). Risk identification is the first stage of risk management (Tchankova, 2002) and a very important step in risk management (Al-Tamimi and Al-Mazrooei, 2007). The first task of the risk management is to classify the corporate risks according to their different types (Pausenberger and Nassauer, 2000). The first step in organizing the implementation of the risk management function is to establish the crucial observation areas inside and outside the corporation (Kromschroder and Luck, 2008). Then, the departments and the employees must be assigned with responsibilities to identify specific risks. For instance, interest rate risks or foreign exchange risks are the main do main of the financial department. It is important to ensure that the risk management function is established throughout the whole corporation; i.e. apart from parent company, the subsidiaries too have to identify risks, analyze risks and so on. Pausenberger and Nassauer (2000) also state that it is advisable for most corporations to implement early warning systems. An early warning system is a special information system enabling the management board to identify risks in time by observing the development of defined indicators (Luck, 2008). Other instruments that could be used to identify risks are checklists of possible disturbances or breakdowns, risk workshops, examination of corporate processes, internal inspections and interviews, loss balance, etc. It is advisable to make use of the knowledge and skill of external experts, for instance, forecasts of banks about the development of interest rates or foreign exchange rates. There are many other approaches for risk identification, for instance, scenario analysis or risk mapping. An organization can identify the frequency and severity of the risks through risk mapping which could assist the organization to stay away from high frequency and low severity risks and instead focu s more on the low frequency and high severity risk. Risk identification process includes risk-ranking components where these ranking are usually based on impact, severity or dollar effects (Barton et al. 2002). According to him, the analysis helps to sort risk according to their importance and assists the management to develop risk management strategy to allocate resources efficiently. 2.3. Operational Risk Operational Risk is one of the important arms of the risk management triangle -the other two being Credit Risk and Market (Treasury) Risk. Any organization, particularly in the banking sector, is squarely exposed to operational risks emanating within or outside the organization (Levine and Hoffman, 2004). There was no precise definition of operational risk until Basel Accord II came into being in June 2004. Furthermore, for the first time in the history of global banking, operational in capital charge has been made a mandatory requirement in banking. This certainly puts in a lot of stress and strain on a banks management. Operational Risk is also known as Transaction Risk in some countries in order to efficiently face this new challenge in risk management, the prerequisites are -creation of risk culture and enterprise wide operational risk awareness. Proactive steps at all the levels of operation will operate as a safety value and in the process, may facilitate lower risk capital charge (Bagchi, 2006). As it has been mentioned that until the release of Basel Accord II in June 2004, there was no universal definition of operational risk in banking (Anna et al., 2007) . It was generally believed that as ‘risk would mean loss in any event or transaction, any risk other than credit risk and market risk would have to be reckoned as an operational risk, without the need of creating any separate identity for such risk. However this way of looking at operational risks is dangerously vague. Prof Hans Geiger, an international authority on risk management, has viewed operational risk from a direct angle and an indirect angle as under: Indirect Angle: â€Å"Operational risks are all those risks which cannot e classified as credit risk or market risk.† Direct Angle: â€Å"Operational risk is an expression of the danger of unexpected direct or indirect losses resulting from inadequate or failed internal processes, people and systems and from external events.† Basel Accord II has laid down the following definition for adoption by the countries and hence this should be treated as a standard definition of operational risk: Operational risk is â€Å"the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk but excludes strategic and reputation risk.† (Bagchi, 2006) 2.3.1. Reasons for Increasing Focus on Operational Risk Management * On going spate ( sudden trend flow) of financial deregulation procedures due to globalization. * Influence of technology and automation in managing business with other side effects. * Complex organizational structures arising out of re organization of business enterprises (e.g. merger/ de -merger etc.). * Opportunities for business process outsourcing. * Growing complexity of products/services, as banks now provide total business services and employ CRM (Customer Relationship Management) in their business activities. * With liberalization and globalization, banks compete very hard with each other for business. * Capital allocation for operational risks is a prime requisite for todays business organizations. 2.3.3. Operational Risk Vs Operations Risk Operational Risk has a wider coverage wherein process, people, systems etc. of an organization are also considered. In general while operational risk is analogous to operations risk, in the context of risk management, they are not alike as will be evident from the following table: Table 1: Distinction between Operational Risk and Operations Risk According to the â€Å"Kenneth Swensen of Federal Reserve Bank of Chicago†, there is a clear demarcation between operational risk and operations risk, from the viewpoint of relative risk contents. Operational risk should deserve special attention for an organization so that its procedures become fully Basel Accord II compliant. He remark regarding Basel II is , â€Å"†¦Ã¢â‚¬ ¦ under Basel II, if you are not moving forward, you are losing ground†. The distinctions are clearly mentioned below : Operational Risk Operations Risk 1. Operational Risk encompasses enterprise wide risk of loss arising out of inadequate, failed internal processes, people system or from external events. 1. Operations Risk encompasses risk by loss arising out of back office reconciling processes and does not generally cover front office functions. 2. Integrated risk management is the watch dog of such risk management function in the organization 2. Internal audit Department usually manages such risks. It is the first line of defense. 3. Basel Accord II specifies capital charge computation based on three approaches evolved for the purpose. 3. There is no requirement for any specific capital charge. 4. The organization must prepare and periodically update on operational risk policy mentioning, and should frame a computation method of measurement of operational risk capital. 4. There is no need for any specific policy document since each organization is guided by its manual/ book of instruction. 5. Regulatory Authority under pillar II has the responsibilities to review enterprise wide operational risk management of the organization. 5. Regulatory Authorities do not have any Pillar II responsibility. They may review operation risk as an ingredient of operational risk. 6. Corporate Governance study must take into account operational risk management of an organization especially the effect of any human error/skill deficiency aspects. 6. Corporate Governance angle does no form part of operations risk. 2.3.4. Distinction between Operational Risk and Operational Crisis Operational risk is an all inclusive concept covering :- Ø intra -organizational ( internal ) risks such as those related to people, processes and systems; Ø external events such as natural calamities, terrorism etc. In case of extreme external events such as natural catastrophes, there is no real distinction between operational risk and operations risk since such an event requires crisis management initiative. But a routine operational risk management dose requires operational crisis management to avert serious consequences. The points of distinction are enumerated as under: Operational Risk Operational Crisis 1. Operational Risk includes elements of Expected and unexpected (expected loss such as loss in process errors of say 0.1% of gross income). 1. Operational Crises covers only unexpected loss. 2. The continuity of business is not affected if some operational risk events do not have serious implications on organizations position (say, internal fraud of 0.1% of annual net profit). 2. An organizations continuity may be seriously affected if the crisis event is catastrophic. 3. Operational risk management dose not generally imply disaster recovery. 3. Operational crisis management generally involves disaster recovery. 4. Operational risk factors do not generally trigger off reputational risk (a minor processing error in a customers savings account may not effect the banks reputation). 4. Crisis event may sometimes (e.g. product failure, contamination etc., Union Carbide Gas leak incident in MP) triggers off reputational risk leading to fall in market share, equity share price etc. 5. Operational risk management in generally concerned with two phases: i. incident ii. recovery 5. Operational crisis management generally involves three phase; i. incident ii. recovery iii. continuity 6. Operational risk may not always turn out to be a danger. 6. Operational crisis is generally of a ‘moment of danger. 2.3.5. Effective way of managing Operational Risk Poor operational risk management, especially in the banking sector, may generate serious financial losses caused by Ø external/internal fraud, Ø system failure, Ø and other related operational lapses. Damage to a banks reputation, even if it is a private bank, may also be severe. Ø Effective operational risk management provides boosts sale by taking care of the following: Ø It tends to minimize severity or frequency of operational risk loses. Ø It creates a mechanism to optimize operational effectiveness throughout the bank. Ø Various business portfolios are better managed if the processes, systems and procedures are sound, together with people strength. Ø Strategic decision making by senior management is supported by a robust risk management system. Ø It ensures business continuity, as there are high probabilities of unexpected operational events owing to changing trends and globalization. Ø Capital allocation can be optimally utilized to the advantage of the bank. 2.3.6. Traditional Vs Modern Approach of Operational Risk Management Traditional Operational Risk Management Banks were managing operational risks in a traditional manner, going by the belief that such risks are really ‘residual risks that remain after the dominant risks of credit risk and market risk have been taken care of .Hence meager attention was extended to managing operational risks. Under the traditional approach, routine operational controls in banking were mainly through Ø internal checks, Ø balancing of ledgers, Ø careful recruiting process etc. Ø Audit and compliance aspects. Ø Insurance against risks was resorted to where necessary. Modern Operational Risk Management Operational risk management in banking took the shape of modern approach with the release of Basel Accord II ( recommendations on banking laws and regulations ) in June04. Modern approach of operational risk management aims at creating and maintaining an effective operational risk management strategy. This approach involves the following elements: Ø Realistic measurement framework on operational risk factors as against sole reliance on internal checks, auditors etc. Ø Operational risk losses calculated and summarized on the basis of past loss data and estimate for the future forms the core of strategic decision making especially for developing a new product or for encouraging a new technology. Ø Quantification of various operational risk factors facilitates optimal capital allocation. Ø Staff skill development exercise on an regular basis enables better output with lesser probability of errors and losses. 2.3.7. Operational Risk: A Challenge to Financial Institutions and Regulators Operational Risk exhibits more severity than Credit Risk, Market Risk Liquidity Risk. Global Association of Risk Professionals (GARP) has also undertaken a number of new initiatives to educate the organizations about the Operational risk. Operational Risk is capable of eroding the complete organization and can cause huge loss on the reliability factor of the financial company. As per GARP, Operational risk shall be the single largest risk facing the financial industry the world over by the year 2010. The most difficult part in managing operational risk is the fact that the threats and challenges can originate and spread at the speed of thought in operations of a Bank. The financial industry is growing all over the world in spite of the poor economic indicators forcing stricter regulations, policies and thus prompts greater awareness of the various challenges faced by financial industry. Operational risk ( especially for financial industry )should be placed at the highest level of attention in order to ensure smooth functioning of the organization as it can hamper the organizations future growth. Regulators formulating the policies and regulations for effective management of operational risk are faced by the following challenges :- Ø Ever changing requirements of policies. Ø Policies are expensive to start and implement at the workplace. Ø They also hamper the normal functioning of financial organization and requires trainings across all verticals. Ø Employee and customer participation is difficult to managed. 2.3.8. Operational Risk and Financial Organizations Advent of newer and convenient technology for various processes and tasks has made :- Ø our financial system has become more susceptible to attacks by hackers and viruses. The system needs to quarantined ( detained) for all possible leak holes and if found must be plugged immediately because of the following reasons :- Ø The financial system is the backbone of economy for any country or region. Ø It is the system that makes the economy grow and maintain its track. Ø It is of prime importance that the operational risk at this industry must be managed with utmost care. With increasing level of pilferage at the financial system,