Procurement Strategy in the Pharmaceutical Industry

Procurement Strategy in the Pharmaceutical Industry Procurement is an important function to ensure meets its organizational goals. While Procurement is a support function for the organization, it is nevertheless a core function and critical to enhancing programme/project delivery. Procurement is a part of the process of achieving development project outcomes. Therefore all procurement activities are framed in the context of programmes and projects. So the Procurement is a managerial discipline in this function need to acquire and enhance certain managerial skills, tools, and including procurement risk management, procurement strategies development and procurement planning. Therefore the main benefits approach of procurement risk assessment, procurement strategies development and procurement planning serve as a bridge to cover the gap between programme and operations. They are also critical to programme delivery. Benefits of this approach include Best value for money, timely procurement; avoid unnecessary and unjustifiable emergencies, better allocation of existing resources, sufficient time to fully explore alternative procurement approaches, possibility to aggregate demand. So in Procurement successful criteria is that Joint Planning between programme and procurement in the early stages, Good flow of communication, understanding of the procurement requirements, understanding of the market and associated risks, live process with structured revisions and feedback mechanisms. In perception of researcher the procurement planning programme is very essential for fulfilment requirement of production demand and achieving goals for marketing and save the risk and shortage of availability of quality products production and marketing respectively. So the procurement development should be improving gradually with the strategies. Construct Definition Procurement: responsible for acquiring the goods and services necessary for the company. Sometimes organized as: Procurement is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source for the direct benefit or use of corporations, individuals, or even governments, generally via a contract, or it can be the same way selection for human resource. Simple procurement may involve nothing more than repeat purchasing. Complex procurement could involve finding long term partners or even co-destiny suppliers that might fundamentally commit one organization to another. Procurement can refer to buying, outsourcing, etc of any resources. (www.wikipedia.com) Procurement Strategy: determines the company needs and plans for acquiring the necessary raw materials and services for the company. Procurement strategy is a identification of need, defining of specification, defining contractual terms, sourcing the market, supplier appraisal, inviting quotes/tenders, analysing quotes/tenders, Negotiation where applicable, contract award/order placement, receive, evaluation of suppler, review of supplier performance, payment , vender rating two way feedback . (www.brentwood.com) Background Information In any organization, procurement strategies playing a vital role. Without procurement not only fulfils the requirement but also stop the production plan of any organization. So, the procurement structure is very important in any organization. So we study the pharmaceutical industry and its procedure of procurement. Different companies have different mode of procurement procedures. In this procurement procedure, the pharmaceutical companies receive the services or goods in raw shapes through supply chain system like import and local procurement system. Researcher is a Senior Procurement Officer in Star Laboratories (PVT) LTD. Lahore which is handling all Local Raw Materials, Packing Materials, Miscellaneous Items and any other special assignment of high management. Therefore we discuss the little introduction of Star Laboratories (PVT.) LTD. Star Laboratories was registered in Lahore in 1960 as a partnership concern being a very small unit. Star Laboratories (Pvt.) Ltd. having a very large unit with a covered area of 86061 stf having an authorized capital of Rs.30 million and paid up capital of Rs.20 million. Star Labs growth has been unprecedented. 1978 a Milestone when Star Labs was incorporated as a limited company emerged in the national streamline of growing pharmaceutical industry of the country and this achievement is still maintained in improving quality stability and reliability of veterinary and human products. Stars greatest asset is its human resource with present strength of more than 700 employees. Star believes that they have achieved this landmark with the loyalty honesty and hard work of their human resource. A new era started in 1970 when Star started and multiplying their veterinary products by a margin to multinational with the aim and target to provide our 80% population of rural area the veterinary products for livestock development at a low and reasonable price for the prosperity and ease of our poor country competing the multinational. Star is the market leader in Veterinary medicines producing almost complete range of veterinary products. A break through came in 1995 when Star was shifted to the new modem well equipped pharmaceutical plant at 23-Km, Multan road, Lahore with a refreshing aim of serving nationally and acting globally. Professionals from the field of pharmacy business administration carry out manufacturing at Star in accordance with the rule of Good Manufacturing Practices (CGMP) following international standards of quality management systems. From incoming raw and packing material, to in-process control till the finished goods, Quality Control Department intervenes at every stage to check the standard and the methodology of manufacturing. Stars reputation over a reasonable span of 44 years has opened new horizons for its veterinary products in global connection for exports to Saudi Arabia, Kuwait, Sri Lanka, Nigeria, Sudan, U.A.E, Ethiopia, Lebanon, Kenya, Yemen, Mauritius, Mauritania, Turkmenistan, Uzbekistan, Guyana and Somalia. Research Question or Problem Statement or Objectives Research Questions RQ1: How to decrease the issues, cost and save wastage of time of procurement structure? RQ2: How to improve in time delivery of quality Product and remove barriers structure and to develop standard by procurement strategies? RQ3: How to reduce the supply chain problems and enhancing the Source of suppliers for acquiring quality product with standard? Research Objectives To enhance the quality production of product, reduce the cost and improves the structure of procurement with strategic mode continuously. To mitigate shortage of quality goods or services and rejection. To compare past and present procedure and findings of other companies rule and development of procurement strategies. Scope and Limitations of Study Proposed study will be conducted in Star Laboratories (Pvt) Ltd with population of 700 employees a sample 120 employee for sales and marketing sector will be chooseed on the basis of convenient sampling. There could be following limitation of the study that can be observed during interviews and questionnaires sessions. Data will be collected only from procurement department and Production. Researcher role in Star Laboratories may subject to limitation. No body can receive the data form import department due to some limitations. Respondents are from procurement department because every body spend of their time in their work and may not give the information about work. In procurement department very difficult to manage rejected products cause wastage of time and delay in production. Researcher biasness is of most important nature for researcher the respondents State of mind equally important When researcher receives the data from many respondents may be not educated so that cause of difficulties If we receive the information from the procurement department the limitations imposed by account department so that information con not received. Chapter 2 Review of Related Literature Procurement is the process of acquiring goods, works and services covering both acquisitions from third parties and from in-house providers. The process spans the whole cycle from identification of needs, through to the end of a services contract or the end of the useful life of the asset. It involves options appraisal and the critical make or buy decision. This strategy provides the framework for the management of procurement activity within the Council to ensure it is taken forward in the most cost effective and efficient manner to deliver value for money. (www.harrogateboroughcouncil.com) Sustainable procurement is the process of integrating these environmental, social, and economic factors into purchasing decisions. This Strategy provides a blueprint to implement sustainable procurement at the City of Portland and Multnomah County. It will move local government beyond the current state of ad hoc, often contradictory, inconsistently applied policies. It will move local government toward purchasing decisions that promote the long-term interests of the community. (www.portlandonline.com) Procurement Strategies is the important in every organization because without purchasing goods respondents can not run the production. So, the Procurement procedure is playing an important role in the industry. In this function, managerial discipline is that need to acquire goods or services, enhance managerial skills, knowledge about procurement and tools. The process of procurement is that firstly requisition prepares on demand of the Stores, Productions and quality control department. After the requisition receiving the procurement department take quotation from the specific suppliers on demand but specific work caring on order making and inventory system. So the major function of procurement department making the planning, programming and developing the procedure by strategic manners. The aim of this theoretical study is to create a general framework for procurement strategy formulation and, in particular, present how to create and implement a procurement strategy. The framework suggested in this study will result from a study of various approaches discussed in the literature. The traditional perspective, as presented in the competitive strategy literature, finds the buyer-supplier relationship in terms of both parties competing with each other. The new approaches such as JIT, partnership sourcing and lean purchasing present quite a different perspective in terms of partnership. The central theme of this study is that, to be successful, the procurement management should use both approach. (Veli-Matti Virolainen, July 1999) As companies attempt to shed old habits and begin to view procurement as a strategic resource from which a competitive advantage can be gained, there is a great deal of corporate baggage that must be shed. More importantly, there is a new mindset that must be instilled both in procurement and across the firm. Strategic supply symbolizes the importance of enterprise wide thinking where functional units inside the firm and key suppliers from the firms supply chain all work in concert to bring value to the marketplace. This paper presents data from the US and the UK that helps us better understand and address issues that are key to managing across independent supply chain partners. We also address some of the barriers to implementing such a supply strategy. These barriers exist inside the firm as well as between the firms at its key suppliers. Whilst we acknowledge that progress is being made, however the data suggest that the journey is far from over. (Paul D Cousinsa and Robert Spekma nb, January 2003) As more evidence indicates that a corporation is very much defined by its purchases and benefited by its close partnership with the suppliers, the sourcing decision becomes increasingly important in the firms growth and profit. This paper synthesizes the available sourcing alternatives into four categories, namely multiple sourcing, single sourcing, single/dual hybrid or network sourcing, and global sourcing, and provides a comprehensive review of these purchasing methods based on extensive literature. Besides the discussion of the pros and cons, the paper focuses on the underlying factors that determine the preference and suitability of each sourcing option. In addition, with the note that numerous companies are switching to do business on a global basis, we attempt to use China as an example to examine global sourcing from the standpoints of both buyer and supplier. (Amy Zhaohui Zeng, 2000) Global procurement is not a simple or easy solution to a companys sourcing needs. With new markets and changing competitors challenging established business, global sourcing is now offering an opportunity for organizations to meet these challenges on a global basis. Discusses the varied interpretations and significance of global sourcing as an ingredient of success, emphasizing the link between world-class production/quality, marketing and procurement. From these discussions and empirical evidence, provides a matrix of management choices to facilitate the selection of worldwide sourcing strategies most appropriate to corporate goals. (Shan Rajagopal, Kenneth N. Bernard, 1994) Industrial procurement is arguably that part of strategy which should have a customer focus. The recent attention to such strategies in a variety of commercial and government contexts, has grown much faster than detailed understanding of how sourcing decisions are made and their implications for organisations. This paper provides an overview of empirical research into sourcing decisions made in organisations. (Michael Quayle, May 2000) Chapter 3 Methods and Procedures Research Methodology Researcher receives previous data which contains on Quantitative research and Qualitative. In my opinion which receive current data Quantitative (Survey based), Qualitative (Interviews), to explore the procurement strategies in selected Star Laboratories (Pvt.) Ltd The researcher will conduct the proposed study using a questionnaire for collection of a primary data. The secondary data will be collected from research articles, different web sites etc. Current Quantitative Research Survey Instrument Copy of the survey instrument is attached (see appendix). Sampling Techniques A non probability convenience sampling technique will be used for selection of the sample from the target population of Star Laboratories (Pvt.) Ltd Sample Size Respondent of my study will be about 120 Respondents. This study of procurement strategies based on managers, officers, production pharmacists, store incharges, marketing sales officers who are working in the Star Laboratories (Pvt.) Ltd. Data Collection Procurement strategies data will be collected through interview survey, telephonic conversation and the questionnaire. This data will be distributed by the researcher himself. Data will be collected from different people who based on procurement strategies and the respondents will be contacted personally. The respondents will work at different departments and convenience sampling method will be used in this study of procurement strategies. Chapter 4 Data Analysis and Representation Data Analysis Data will be analysed by using Microsoft Excel to apply specific formulas and find mean, standard deviation, variance etc. Chapter 5 Findings, Conclusions and Recommendations Details of findings recommendations and conclusions will be explained in this chapter. References (Availableunderhttp://wbro.oxfordjournals.org/cgi/content/abstract/13/2/249), page accessed February 18, 2010 (www.harrogateboroughcouncil.com), Procurement Strategy, Delivery of fast glass public services, 2009 2012 March/April 2009. (www.portlandonline.com), Document Prepared by the Sustainable Procurement Steering Committee March 20, 2002 (www.saworks.com), Procurement definitions: www.saworks.sa.gov.au/LinkClick.aspx page accessed February 8, 2010 Amy Zhaohui Zeng, A synthetic study of sourcing strategies, Industrial Management Data Systems, MCB UP Ltd, Year: 2000 Volume: 100 Page: 219 226 Gadde, L.-E., Hakansson, H. (1994), The changing role of purchasing: reconsidering three strategic issues, European Journal of Purchasing and Supply Management, Vol. 1 No.1, pp.27-35 Leenders, M. (1998), The problem with purchasing savings, Proceedings of 2nd Worldwide Symposium, London, pp.343. Lian, P.C.S., Laing, A.W. (2004), Public sector purchasing of health services: a comparison with private sector purchasing, Journal of Purchasing and Supply Management, Vol. 10 No.6, pp.247-56. Michael Quayle, A School of Business, Management and Technology, Procurement; Sourcing; Decisions, University College Suffolk (Ipswich) Rope Walk Ipswich, IP4 1LT UK, May 2000 Moran, J., Avergun, A. (1997), Creating lasting change, The TQM Magazine, Vol. 9 No.2, pp.146-51. Murray, J. (1999), Local government demands more from purchasing, European Journal of Purchasing and Supply Management, Vol. 5 No.1, pp.33-42. Paul D Cousinsa, Robert Spekmanb, B Darden Graduate Business School, University of Virginia, Strategic supply; Relationship management; Value; Performance measurement, Volume 9, January 2003, Pages 19-29 Shan Rajagopal, Kenneth N. Bernard, Global Procurement: Motivations and Strategy ,Marketing Intelligence Planning, MCB UP Ltd, Year: 1994 Volume: 12 Page: 4 17 Veli-Matti Virolainen, Lappeenranta University of Technology, Purchasing; Procurement; Procurement strategies; Buyer-supplier relationship, Volumes 56-57, 20 July 1999, Pages 677-688 www.Wiipedia.com. Procurement definition: en.wikipedia.org/wiki/Procurement, page accessed February 8, 2010 www.wiktionary.com Procurement definition: en. wiktionary.org/wiki/Procurement, page accessed February 8, 2010

Investment Banking

Investment Banking in 2008 Group Report 1. Failure Analysis: Identify the major factors that contributed to Bear Stearns’s failure? Who stood to benefit from its implosion? How did Bear Stearns’s collapse differ from the ‘Long Term Capital Management’ failure a decade earlier? What could Bear Stearns have done differently to avoid this fate? In the early 2000’s? And during the summer of 2007? And during the week of March 10, 2008? (1) Identify the major factors that contributed to Bear Stearns’s failure? Bear’s somewhat cutthroat and renegade culture of maverick may have contributed a lot to their failure.This culture somehow made it killed by the credit crisis, while other investment banks survived. But the direct factors resulted in Bear’s implosion were the failure of Ralph Cioffi’s High-Grade Structured Credit Strategies Fund and Enhanced Leverage High-Grade Structured Credit Strategies Fund, which invested in sophisti cated credit derivatives backed by mortgage securities. And these failures cost Bear more than 1. 6 billion dollars to prop up two hedge funds. And the failures of two hedge funds led to a continuous questioning about Bear’s financial stability.At the same time, Bear concentrated its business on CDOs, which means it had high exposure to this item. Thus when credit crisis happened, it is significantly impacted. And in early 2008, Moody’s downgraded 163 tranches of mortgage backed bonds issued by Bear. Almost everyone realized that Bear will face liquidity problem. But meanwhile, Bear highly relied on repo to finance itself. When lender lost confidence in Bear, it failed in finding another effective way to find cash. In sum, the reasons above contributed to the failure of Bear in 2008 crisis. (2) Who stood to benefit from its implosion?JP Morgan is the beneficiary from Bear’s bankruptcy. It gained a company which had $172. 61 worth less than 8 months ago with an i ncredible low price of $10 a share. (3) How did Bear Stearns’s collapse differ from the ‘Long Term Capital Management’ failure a decade earlier? The origin in LTCM’s failure was the high-leveraged structure. It obtained excessive debt for the investment of the bonds. Simultaneously, the market capacity was not sufficient to support LTCM’s large bloated size. As time had gone, market competition and capacity diminished its profitability.But with such a high leverage, LTCM had no other choice but to gain enough profit to move on. Therefore, they got a foot into some unfamiliar area. Meanwhile, as to the trading strategy, LTCM held a large quantity of asset with low liquidity. However, situation was different from what they had predicted. Big loss happened eventually, but LTCM could not sell asset for enough cash. It inevitably had to go bankruptcy. High leverage structure of Bear’s hedge fund also had great impact on its collapse. But the awful strategy of Bear’s management should blame most for its bankruptcy.If it was in a less turbulent environment, things might be different. Continual bad news about Bear from executives’ unmannered behavior to its first quarterly loss since foundation ruined the confidence of investors. And another difference in the failure of both was that Bear mainly died of market failure. When the whole market was fear of the loss of subprime asset, the large subprime assets holding companies such as Bear Stearns, could not avoid a fate of great loss and liquidity problem. (4) What could Bear Stearns have done differently to avoid this fate?In the early 2000’s? As an investment bank, Bear was just in pursuit of the return while underestimated the potential aftermath of being too risky. Most of its profit was composed of fixed income securities. Meanwhile, Bear should not let each hedge fund manager just specialize in a particular security to make volatility. It is obvious that Bear’s risk management had significant flaw. Furthermore, since the over-confident Bear was desperate for the incredible return, it was not attentive to such supernormal growth of the housing price.They should not just concentrate on CDOs without also devoting their asset in other business, as diversification is so important for a firm. But it may not happen, since Bear was not less greed than the surrounding. And during the summer of 2007? If Bear realized the market could not be defeated, they should have controlled Cioffi’s risky action of raising new hedge fund with a higher leverage. Conversely, they should liquidate the fund. If the liquidation was performed, they should not have lost such great amount in this worthless fund.And meanwhile it began to try to search for cash to finance itself. Except those worthless ‘toxic assets’, Bear still had some assets, which could provide it some cash flow. If Bear sold these assets earlier with determination, they might not sink in liquidity problem so deeply. And during the week of March 10, 2008? After Bear was downgraded by Moody, market had lost confidence in it. Almost everyone realized bear’s liquidity problem. When pointed out to have liquidity problems, Bear’s executives should realize the severity of the crisis rather than believing the worst was once again behind them.Even though they could not recover from the difficulty, prime actions could be taken, including exposing the reality to the market, reassuring the investors, making urgent strategies, applying for emergent aids from the Fed, and applying for temporary held in stock trading. 2. Liquidity Crisis and Business Model of Investment Banks: What is the role of Liquidity for banking and investing banking firms? Is perception of Liquidity more important for a banking/investment banking firm than manufacturing firms (such as Ford or Boeing)? Why?What could Bear Stearns have done to address its Liquidity concern s, which initiated the run on the bank? Looking back, what lessons can we infer from Bear Stearns’s failure regarding the business model of investment banks? Looking forward is the concept of ‘pure-play’ investment banks sustainable? (1) What’s the role of liquidity for banking and investing banking firms? Liquidity can reveal the untrue existence of cash (and cash equivalents), short-term investments, accounts receivable and accounts payable, etc. To which extent it lives up to the real condition.It measures whether the bank’s business is legal, reasonable and whether the financial status is promptly and properly reflected on the financial reports. Liquidity risk is also important. It values the repayment of debt and reminds the board of the corporation’s risk at any time. Managing liquidity is a daily process requiring bankers to monitor and project cash flows to ensure that adequate liquidity is maintained. The investment portfolio serves as the primary source of liquidity and represents a smaller portion of assets. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. 2) Is perception of Liquidity more important for a banking/investment banking firm than manufacturing firms (such as Ford or Boeing)? Why? Yes. The main sources of funding for commercial banks are deposit, interbank borrowings, commercial banks deposits, the international money market borrowings and the issuance of financial bonds, among which the short-term deposit accounts for the vast majority of the proportion. However, these funds are primarily used for commercial loans, discounting business, securities investment, etc. These higher profitability and long-term loans account for the absolute proportion in the composition of assets.This mismatch between assets and liabilities makes the liquidity of assets very important in banks’ operation. Since when sudden changes occurred in the market, a large n umber of customers will be forced to perform withdrawal, therefore the bank will be very difficult to realize its assets and to meet its liquidity needs. In some sense, it is similar for the investment banks. The difference is just that they do not raise money from retail depositors; most of the money is funded in the interbank market and is used to hold illiquid mortgage backed securities.Once banks were not able to provide funding for business, a banking contagion will occur and spread. A traditional manufacturing business is generally funded by equity or long-term debt and has steady cash flows from business operations. Even in the case of a collapse of such businesses, it would not have the same contagion effect as banks. (3) What could Bear Stearns have done to address its Liquidity concerns, which initiated the run on the bank? 1. The basis of the modern financial system is not physical assets, but people’s confidence in this system.Actually when the rumor of BSC runnin g out of cash was widely spread, BSC was forced to make a public announcement to ensure the public that their financial situation was solid and their liquidity was sufficient. Unfortunately, BSC did not take valid action or provide strong evidence such as strengthen its financial sheets or reducing leverage to convince investors. The board should pay more attention to the operation of the corporate rather than participate in a bridge tournament. 2. BSC could reduce leverage by selling their risky assets to generate cash during a period of financial stress.They should maintain enough reserves in the form of short-term instruments of the highest credit quality to meet the obligation. So an amount of funds should be invested only in instruments that have guaranteed liquidity, like treasury instruments. 3. Bear Stearns, three-quarters of whose revenue was still dependent on the market (see the source below), should adopt diversification strategy to find a real alternative to business an d improve its finance. The plans could be accelerate the development in other countries and diversified business, including equities, investment banking and asset management businesses.Source: http://finance. sina. com. cn/money/future/20080403/09024705325. shtml (4) What lessons can we infer from Bear Stearns’s failure regarding the business model of investment banks? Diversification of the investment is the foremost thing to consider for any matured investor. Investing heavily into one company, one industry, or having only one investment strategy is unadoptable. You are banking for speculation that one company or industry will always do well. But in fact, it is hardly possible to be in perfect condition at any time.You must make your investment portfolio diversified. Maybe an element of international stocks can be added into the portfolio. When the U. S. market is unprofitable, it still has the chance to get profits from Asia and Europe so as to keep the portfolio solid. So metimes high leverage can kill a firm. In March 2008, Bear owned tangible equity capital of about $11 billions versus total assets of $395 billions—a leverage ratio of 36. For several years, this reckless financing bring the company a profit margin of about one third and a return on equity of twenty percent.However, when the market endured a sharp downturn, Bear lose a lot of capital and willing creditors. During the ensuing months, the same story was to be played out at scores of other banks and non-banks. (5) Looking forward is the concept of ‘pure-play† investment banks sustainable? The performance of a pure-play investment bank can be highly influenced by the type of investing style which targets at it. For instance, if a pure-play bank's business is favored by growth investing, the company will do well during a bull market, where growth stocks tend to outperform the market.Conversely, a pure-play bank associated with growth investing will do poorly during bea r market, when a value investing strategy is historically more profitable. What’s more, the pure-play investment banks have relied heavily on short-term capital, especially repo transactions in which counterparties take collateral as security against the cash they lend. As public companies, pure-play banks faced pressure to deliver return on equity comparable to that of universal banks, even as those banks put competitive pressure on traditional advisory businesses such as M;A, underwriting, and sales and trading.In response, pure-play banks resorted to the two advantages they had over non-depository institutions: unlimited, unregulated leverage capacity, and increasing reliance on proprietary trading to deliver earnings. 3. Systemic Banking Crisis and Regulation: What is a â€Å"systemic banking crisis†? What is ‘banking contagion†? What was the rationale for the creation of ‘fire-wall’ of separation between investment banking and commercial b anking in USA that was institutionalized by the Banking Act of 1933? Why did the regulators weaken and phase out that ‘fire-wall of separation’ in 1990s?Identify the major Deregulatory Acts and its role in the meltdown of the investment banking industry? In your opinion, based on lessons from past global banking crisis, what steps should regulators institute now to address similar future problems? (1) What is a â€Å"systemic banking crisis†? Systemic banking crisis refers to the crisis detrimental to the whole financial system. It is the fatal chaos that several disastrous crises occur simultaneously, such as monetary crisis, banking system crisis, foreign-debt crisis, etc.The crisis expands from one financial market to another. For example, from the stock market to the real estate market or foreign-trade market, etc. (2) What is ‘banking contagion†? Banking contagion refers to a scenario where the banks, which initially affected by some crisis sprea d to the other banks even the other countries whose economy is previously healthy. In this scenario, the expansion could be very quick and disastrous. The international spread might cause the whole banking system to be paralyzed and need another several more years for recovery. 3) What was the rationale for the creation of ‘fire-wall’ of separation between investment banking and commercial banking in USA that was institutionalized by the Banking Act of 1933? There are 3 major factors. 1. Risk of losses (safety and soundness). Banks that engaged in underwriting and holding corporate securities and municipal revenue bonds presented significant risk of loss to depositors and the federal government that had to come to their rescue; they were also more subject to failure with a resulting loss of public confidence in the banking system and greater risk of financial system collapse. . Conflicts of interest and other abuses. Banks that offer investment banking services and mutu al funds were subject to conflicts of interest and other abuses, thereby resulting in the harm to their customers, including borrowers, depositors, and correspondent banks. 3. Improper banking activities. Even if there were no actual abuses, securities-related activities are contrary to the way banking ought to be conducted.The Act prohibited the combination of a depository institution, such as that, commercial banks (those that accept deposits) were prohibited from engaging in most investment banking activities, including underwriting and selling securities, and from affiliating with investment banks and other companies â€Å"engaged principally† in the trading of securities. Likewise, investment banks were barred from accepting deposits. (4) Why did the regulators weaken and phase out that ‘fire-wall of separation’ in 1990s? Inspired by a desire to make U. S. nvestment banks competitive with foreign deposit-taking investment banks such as UBS, Deutsche Bank, an d Credit Suisse First Boston, a Republican Congress and President Clinton passed the Gramm-Leach-Bliley Financial Services Modernization Act in 1999, permitting insurance companies, investment banks, and commercial banks to compete on equal footing across products and markets. (5) Identify the major Deregulatory Acts and its role in the meltdown of the investment banking industry? 1999–Glass-Steagall Act Fell The repeal of the Glass-Steagall Act in 1999 had larger ramifications than any other steps in deregulation.Repealing this act made it possible for investment banks to be savings and loan banks and to receive to the same government protections as savings and loan banks. An investment bank could make investments with people's savings, sometimes irresponsibly, and those investments now were guaranteed by the federal government. 1988–Securitization In 1988, securitization, or repackaging assets as a financial instrument to sell to investors, became legal. Banks were a llowed to sell their mortgages to SPVs. Mortgages were no longer being made to hold but to sell, and lending requirements became substantially more lenient.This created a combination of bad loans and banks without the funds to back them up. 2004–SEC In 2004, the SEC abolished the â€Å"net capital† rule, which restricted the amount of debt their brokerage units could take on-demonstrated this growing appetite for leverage. This led investment banks to leverage themselves at a financially irresponsible 30 to 1 percent, meaning that for every $1 they had on hand they had $30 in debt. When some of these investments collapsed, the banks did not have the ready capital to maintain their companies. Ultimately, increased leverage and proprietary trading ravaged the nvestment banking industry, leading to the collapse, merge, or restructure of all 5 major pure-play banks on Wall Street. This time, the SEC took the unprecedented step of temporarily banning short sales of financia l institution stocks. The ban caused massive losses in hedge fund portfolios and dissuaded them from making additional investments, denying would-be issuers access to needed capital. Moreover, the SEC placed a ban on so-called ‘naked’ shorting, which reduced the total amount of short interest that could accumulate in a stock. 6) In your opinion, based on lessons from past global banking crisis, what steps should regulators institute now to address similar future problems? 1. The regulations should be placed on the fundamental part of economy. For example, when there seems to have bubbles in one field, the Fed should not ignore. It should adjust the policy towards the industry to change the unbalanced situation. 2. To fortify the risk awareness continuously in traders’ mind, especially those who control the wealth of millions of people. Their behaviors might have huge influence to the market and the profitability of the firms. 3.The Fed should research for adjustm ent for investors from the market of different systems to ensure that obstacles will not exist in multinational trades. Meanwhile, policies of staying resistant to exterior crisis should be prepared in case of the explosion of crisis. 4. Federal Bailout and Public Policy: Why did the Federal Reserve bail-out Bear Stearns? Why was Lehman Brothers allowed to collapse while Bear Stearns was not? Is the Fed orchestrated sale of Merrill Lynch to Bank of America the optimal solution for addressing the crisis? Could Morgan Stanley and Goldman Sachs have survived with out becoming bank holding companies?In your view, what public policy role should the Federal Reserve play in maintaining sustainability in global banking and stability securities markets? Why was there such a public out-cry against the bailout of Wall Street investment banks? Based on this recent performance how would you rate the Federal Reserve’s response to the financial crisis? (1) Why did the Federal Reserve bail-o ut Bear Stearns? If Bear went bankruptcy, it would affect other firms in Wall Street as well, since Bear was a market leader in prime brokerage and clearing who provided trading and back-end services to many other Wall Street financial institutions.Most customer asset would get frozen in the event of bankruptcy, and many hedge funds had collateral in the firm. Because of Bear’s holding of 13 trillion credit default swaps, the collapse of Bear would influence many other companies, which means too big to fail at that time. However, the Fed didn’t forecast that this kind of matter will happen again. The Fed Reserve bailed out Bear Sterns just to avert crisis and dissuade further irresponsible risk-seeking. The bailout benefited Wall Street at the expense of Main Street and the low share price was to discourage banks from taking on similar risk. 2) Why was Lehman Brothers allowed to collapse while Bear Stearns was not? The decision to let Lehman Brothers fail was largely m ade by then-Treasury Secretary Henry Paulson and the British Financial Services Authority. The public outcry over the taxpayer assumption of $29 billion in potential Bear losses made repeating such a move politically untenable. Therefore, the Fed refused to back Lehman’s liabilities and backstop losses from Lehman’s toxic mortgage holdings. Moreover, Barclay’s quitted the acquisition, worrying that it could not be satisfied with the timely shareholder approval, which directly led to the collapse of Lehman.The Fed also wanted to set it as an example, to let other company to know that not every time the government will come out to bail out the company, so they will have deliberate consideration repeatedly before making all kinds of risky investments. (3) Is the Fed orchestrated sale of Merrill Lynch to Bank of America the optimal solution for addressing the crisis? No. This transaction doubled the investment banking size of Bank of America. Furthermore, it exposed Bank of America to mortgage-backed securities, which had negative impact on the long-term credit rating of the bank.This transaction could not prevent the occurrence of another such case like Merrill Lynch’s, and this behavior could not bring unforgettable lesson to other banks. (4) Could Morgan Stanley and Goldman Sachs have survived without becoming bank holding companies? No. According to the research, Goldman Sachs was a major beneficiary of the government’s bailout of the financial services industry, not only through AIG but also through its ability to fall under the regulatory umbrella as a bank holding company, which made it eligible for debt guarantees and other government backstops.Every financial services company on the earth wanted to become a bank and line up for the handouts coming from Washington such as American Express, GE Capital, and GMAC. Even Willem Buiter, a former central banker, wanted to become a bank. Goldman was in a more precarious position than bank holding companies because of the vulnerabilities of being a broker-dealer. Nouriel Roubini warned repeatedly before Lehman’s collapse that the large full services broker-dealer model was broken. (5) In your view, what public policy role should the Federal Reserve play in maintaining sustainability in global banking and stability securities markets?From the lesson of subprime housing crisis, we think the Federal Reserve should control the capital, but without influencing the supply and demand. Since this crisis was created by those bad loans, the government’s control would limit people to invest on housing market, and somehow be better for people who are really in need of a place to stay. Furthermore, we have several pieces of advice to the Fed, besides in housing matters: a) Regulate the gross domestic and international banking environment. b) Reinforce the supervision over the risk control of investment banks. ) Restrict the expansion of any potential crisis once any symbol occurs. d) Do best to avoid the asymmetric information in the market. e) Ensure a fair and open environment for trading. (6) Why was there such a public out-cry against the bailout of Wall Street investment banks? People’s being against to government’s bailout the Wall Street had 2 main reasons. First, people believed Wall Street got this mess by themselves and they should be the one to clean it up, rather than that the government used tax payer money to save the Wall Street.They thought this was not fair, because this kind of action would increase the US government’s debt, and tax payer would have to pay more tax in the future to cover this debt. This debt may take a long time to be recovered. Second, when the government did get involved in the Wall Street crisis, the free market would not exist anymore, and next time if any firm had problem, they would ask the government to save them, which would totally be against the American economic policy , and belief. 7) Based on this recent performance how would you rate the Federal Reserve’s response to the financial crisis? Based on the recent performance, we think they had done what they had to do, but we think they should let the economic fail, based on the free market of American. They should let the invisible hand control the market, and the market should flow freely by itself. It will come back up, however long it takes. Now the government is using the tax payer’s money to cover Wall Street crisis, which actually is not fair.

Causes And Consequences Of Lung Cancer Essay - 2203 Words

Lung cancer has increased within the past decade; one of the biggest reasons is that more and more people smoke now than they have in the past. Smoking causes damage not only in the lungs, but also in the body, lips, or inside the mouth. Even though smoking does harm your body there are some good things that come from smoking. Such as it can lower the risk of obesity, and knee replacement surgery. There is different types of lung cancer one for smoking and the other, nonsmoking. Although people are smoking, not only are adults getting lung cancer, but kids and teens are getting it too. Lung cancer is the deadliest of all cancers and yet it is also the most preventable. One reason why lung cancer has rapidly increased is because of the use of cigarettes. Apart from those who smoke , there is a greater and or equal risk of people developing lung cancer who do not smoke. Forty-five to seventy-five years old is usually the age a person could get lung cancer. The countries with a history of tobacco smoking between eighty to ninety percent of all causes are caused by smoking. Ages eighteen to twenty-four attempted to quit smoking cigarette and succeeded in 2010. Not only those who smoke can get lung cancer or have some type of disease, people who don’t smoke have the same chance or higher getting lung cancer or a disease. This known as second hand smoke, it is when the smoke is coming from the smoker s mouth, or from the cigarette. This means that the whole world isShow MoreRelatedCauses And Consequences Of Lung Cancer1781 Words   |  8 PagesLung Cancer? Blood Cancer? Bronchitis? COPD? All these familiar and terrifying words have one root in common- Smoking. 9 out of 10 smokers’ first smoke is at the age of 18 and 99% try it by the age of 26(Centre for Disease Control and Prevention). Each day about 4000 youths tries cigarettes for the first time (Haugen,2004). 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Personal Letter Writing Definition

A personal letter is  a type of letter (or informal composition) that usually concerns personal matters (rather than professional concerns) and is sent from one individual to another. Its longer than a dashed-off note or invitation and is often handwritten and sent through the mail. A personal letter takes longer to write than the few abrupt sentences you bang out without proofreading before you click on send; it takes longer to read than the blink-and-delete blitz that helps you purge your inbox; and  it digs deeper than the brief handwritten note that you drop in the mail, write authors  Margaret Shepherd with Sharon Hogan, who are passionate about the diminishing art form in The Art of the Personal Letter: A Guide to Connecting Through the Written Word. They go on to explain:   A letter deals with issues that deserve more than a minute of attention. It aims to strengthen a relationship, not just react to a situation. A letter isnt limited to a specific  message  like Can you come over? or Thank you for the birthday check. Rather, it can take both the writer and the reader on an excursion that sets off from a home base of mutual trust: I know youll be interested in what I think or Id like to hear your ideas on this. Whether it comes into your life onscreen or through the mail slot, the well-thought-out personal letter is irresistible to read aloud, mull over, respond to, read again, and save.Good letter writing feels much like a good conversation, and it has the same power to nourish a relationship. History of Letter Writing Until just a few decades ago, personal letters (alongside diaries and autobiographies) had been the common form of written personal communication since the 18th century. It really took off then because of mass-produced paper becoming widely available, a large rise in literacy rates, the  advent of systematic message delivery, and the establishment  of the postal system. However, the earliest letters date back to 500 BCE and the ancient Persians. Letter Writing and Literature One of the first prose collections to be called a novel,  Samuel Richardsons Pamela,  from 1740, was actually in the format of personal letters, and that tome isnt the only fiction book thats taken that format in the centuries hence. The confluence of letters and books doesnt stop there, of course. In nonfiction, families compile old letters into books for future generations, and famous historical people have had their letters assembled into nonfiction works for posterity, either as a matter of record or for historical value. Take,  for example, collections of love letters between presidents and their wives, such as the 1,000 letters saved between Abigail and John Adams.  Ã‚   Some of the greatest writers have had their personal letters published as major works, often regarded as discussions of literature, notes author Donald M. Hassler in the book, Encyclopedia of the Essay. An early example would be the letters of John Keats, which were originally personal, but which now appear in collections of essays on literary theory. Thus the ancient form continues to have an intriguing ambiguity of purpose and a vigorous potentiality in relation to the  essay  form. Letter Writing Today But various electronic communication innovations over the past several decades, such as email and texting, have contributed to a decline in the practice of personal letter writing. Its more uncommon to see handwritten correspondence in the mailbox than common. Instead of having pen pals, people communicate with others around the country and world through social media outlets.   Even though blogging communicates in longer scripts than short-form tweets or quickie status updates, blog posts still are more impersonal than letters sent to a specific friend or relative; theres likely an expectation of more privacy, more for your eyes only when something comes concealed and wrapped up with just one persons name on it, more like a gift than a broadcast over the airwaves to the known world.   Today, personal letter writing is a declining art, writes Robert W. Bly in Websters New World Letter Writing Handbook. Warm letters have always had a powerful ability to build goodwill. And in an age of computers and e-mail, the old-fashioned personal letter stands out even more. Sources Bly, Robert W. Websters New World Letter Writing Handbook. Wiley, 2004. Chevalier, Tracy, editor. Letter by Donald M. Hassler. Encyclopedia of the Essay, Fitzroy Dearborn Publishers, 1997. Richardson, Samuel, Pamela or Virtue Rewarded. London: Messrs Rivington Osborn, 1740. Shepherd, Margaret with Sharon Hogan. The Art of the Personal Letter: A Guide to Connecting Through the Written Word. Broadway Books, 2008.

Le Havre An Important Port For Emigration - 1431 Words

Le Havre is an important port for emigration to America from France, Switzerland,and the southern principalities of the German Confederation. After landing in New Orleans, many of the European immigrants would make their way up the Mississippi River to St. Louis Missouri and Cincinnati, Ohio. Most of the sailing ships leaving Le Havre were American and it was necessary for immigrants to make arrangements for passage directly with the captains of the ships. Johannes discovered he already had a ticket on the American sailing ship â€Å"Globe† in the envelopes given him by the Dowager Duchess. As he entered the port of Le Havre and approached the ship, Johannes happened to run into Georg, a former Baden soldier and friend from his tours of duty†¦show more content†¦New Orleans at the time was the largest city in the South. The trade with the plantations along the river combined with the trade with Europe was making the citizens of the city very wealthy. The slave trade h ad been stopped but smugglers were still bringing in African slaves and the slave market was flourishing. Slaves trying to escape to the north were being captured by bounty hunters and returned to their owners where they were beaten and chained. Before the trio landed in New Orleans, Louisa and her soldier husband convinced Johannes to stay with them on her grandfather’s plantation when they arrived in New Orleans. When they arrived at the plantation after their long ocean voyage and carriage ride from the city, they discovered her grandfather had died suddenly of yellow fever before they even arrived and the plantation was in chaos. She and her husband, with the help of Johannes, went straight to work and ordered the Overseer to report on the status of the crops and to give an accounting of all of the assets of the plantation including the number of slaves. Her father had given her an estimate of what he knew of the wealth of the plantation before he died but he had encourag ed her to check these records with those of the Overseer when she arrived. The plantation had

The wealth for wealth sake- the ethical perspective of profit making. Free Essays

string(235) " concerns as to whether a board can function effectively with multiple objectives and which should take priority over others, not to mention the fact that the enhancement of shareholder wealth is given supremacy in the United Kingdom\." INTRODUCTION This report seeks to explore the topic ‘wealth for wealth sake- the ethical perspective of profit making’, stakeholder theory, agency theory, corporate social responsibility, ethics and if any relationship exist between these concepts and level of company’s returns using British Petroleum Plc as a case study. These issues have sprung up a lot of debates in the last decade, with some of the opinion that the sole aim of an organisation is the maximisation of wealth for its shareholders while others hold the view that organisations should be responsible not just to their shareholders but to stakeholders. In view of this, this report will discuss these issues by examining diverse views and research on these issues and whether the focus of companies should be based solely on maximising shareholder wealth or if companies should pursue other objectives beside wealth maximisation. We will write a custom essay sample on The wealth for wealth sake- the ethical perspective of profit making. or any similar topic only for you Order Now SHAREHOLDER WEALTH MAXIMISATION/ LEVELS OF RETURNS A business exists to maximise wealth for its shareholders and the manager has a duty to act solely in the interest of the shareholders (Friedman, 1971 in ACCA p1, 2011, p.147). Friedman was of the view that organisation cannot have responsibility and so not accountable to anybody but its shareholders. This view was reiterates by Grant, 2011 who said that organisations are entities that have the right to maximise profit. However, a business though an artificial person in law, has the same rights and responsibilities as human beings and thus accountable for its actions and this invariably bestows its some responsibilities to those groups who are affected by the organisations activities and decisions (ACCA P1, 2011, p.146). The question is then whether organisations should make wealth at the expense of other stakeholders, such as the customers, suppliers, employees, community and society These organisations in question are kept running by communities of people who all share common goal s and values and shareholder wealth maximisation is being made possible because of the effort and actions of these group of people despite the fact that the shareholders provides funds for the business. An organisation who fails to recognise its stakeholder is asking for trouble as employees can boycott work or customers can stop buying from them. The implication will be a fall in share price and since shareholder wealth is measured by the value of shares they own in the company, there will be a reduction in shareholder wealth. Studies have shown that businesses that are ethically sound are rewarded with additional customers while those that are unsound are boycotted and employees show more commitment to socially responsible companies (ACCA p1, 2011, p.147). Friedman fails to realise that organisations are first and foremost communities of people working together for a common purpose and the existence of community automatically give rise to mutual responsibilities (Grant, 2011 in ( Blank and McGurn, 2004; Gates, 2004; Gini, 2004). Moreover, the market is a network of relationships and it is the working of these various relationships that makes an organisation efficient or inefficient. Bp has a better understanding of the importance of developing relationships with the stakeholders when in April 20, 2010 the Gulf of Mexico oil spill in America Killed eleven workers and left 17 injured in a bid to maximise wealth (Mardell, 2011). The company was charged $20bn as compensation fund (Palmer, 2011). Bp continues to pay dearly for its actions long after the incident with the continuous fall in the share price as evident in the graph below: Bp Share Chart April 2010 to April 2011 SOURCE: ADVFN, 2011 Bp had the biggest fall in share price following the spill by more than 6% on opening and ended the day 4.7% down (Merrison, July, 2010). BP Share Price 1-Day Chart SOURCE: SKY NEWS, 2010 As at June 9, 2010, two months after the incident, Bp is below book value and trading less than half of its 52-week high, and its worth less than $100 billion. The company which has been paying out a steady 84 cents per share per quarter now has that payment in jeopardy as there is a $4.50 fall in the share price and a dividend of $3.36 is currently being paid on a stock worth $30 (Salmon, 2010). Analysts even went as far as proposing an exit for Bp via a takeover. STAKEHOLDER AND AGENCY THEORY Stakeholders are all those agents who are concerned about the growth and development of an organisation (Pesqueux et al, 2005, p.6 in Mercier 1999). They are those individuals, groups or organisations who are interested in and or are affected by the activities of an organisation. (Boddy, 2011, p.637) and (Mallin, 2010, p. 63-67). Mallin identified several stakeholders and the nature of their interests and expectations in the organisation which are: EMPLOYEES: whose interest is in job security, fairness in promotion and pay and working conditions, personal development among others. Others are environmental groups, communities, customers, suppliers among others (Mallin, 2007, p.51-53). The law of corporations says that the firm should be run primarily in the interest of shareholders; stakeholder theory does not give preference to any stakeholder. Organisation should seek a balance relationship among all its stakeholders as an imbalance will put the survival of the organisation at stake. Jensen (2001) supported this view when he said that a firm who seek to maximise wealth cannot ignore the interest of its stakeholders. Buttressing the point that stakeholders not just shareholders are paramount to the success and wealth of a stakeholders, Freeman maintained that effective stakeholder management is important to the survival and prosperity of an organisation as opposed to Friedman who argued that the only responsibility of business is to engage in activities design to maximise wealth for the shareholders and anything contrary to this is stealing. However, Friedman opined that in the pursuit of this goal, the business must conform to the basic rules of the society whic h are embodied in ethical customs, giving credence to the fact that ethics is key to business performance. Mallin 2007, p.7273 raises concerns as to whether a board can function effectively with multiple objectives and which should take priority over others, not to mention the fact that the enhancement of shareholder wealth is given supremacy in the United Kingdom. You read "The wealth for wealth sake- the ethical perspective of profit making." in category "Essay examples" AGENCY THEORY Managers of a firm own a duty to shareholders to make all effort to maximise shareholder wealth by working in their interest. Alternatively, managers are also concern in working for their own best interest giving that economic theory of rational choice maintains that human nature being selfish will engage in activities that benefit them rather than others (Bradburn, 2001, p.4). However, there have been a lot of cases of selfless service in history such as Mother Theresa of old. Agency theory arises thus as a result of the conflicts of interest between management and shareholder due to separation of ownership from control. Studies have shown that managers substituted their interest in place of those of shareholders just like the case of Enron Corporation (ACCA, paper p1, 2010). Agency problem therefore arises as a result of managers making decisions that are contrary to the maximisation of shareholder wealth and possible causes of this are Separation of ownership and control: shareholders the principal fund the company but appoint agents, management to control the affairs of the company on their behalf. Differing goals between shareholders and management: Shareholders want high return on investment and thus want managers to take higher risk. However, managers are risk averse and tend to minimise risk by investing in low risk projects as oppose to shareholders who want higher returns on their investment thereby reducing shareholder wealth. Asymmetry of information: Because management are involve in the day to day running of the company, they have access to all financial and management information which the shareholders have no access to except the annual report of the company that are often times subject to manipulation (Watson and Head, 2007, pp.11-12). This was the case of Enron whose managers engaged in fraudulent creative accounting techniques in a bid to build empires at the expense of shareholders which led to the eventual collapse of the company. According to Jensen and Meckling, agency problem occurs when managers own less than 100% of the firm. He argued that managers are driven by power and control rather than maximizing shareholders wealth and often times seek to build empires. Thus take decisions that maximise their interest rather than the shareholders such as increase in managerial pay, rewards and job security. As a result of this conflict of interest and in an attempt to ensure that management interests are in line with those of shareholders, agency costs are incurred such as legal cost, cost of managers’ incentives and monitoring among others (ACCA, paper p1, 2010, p.23). To resolve problems arising from goal congruence between shareholders and management, Measures have been put in place by shareholders to minimise these problems: Monitoring activities of managers: Here external auditors are put in place to ensure that the financial statements prepare by the directors show a true and fair view of the affairs of the company. However, in the process agency costs are incurred. Performance related pay: Executive share option schemes: In an effort to encourage executives to maximise shareholder wealth and reduce managers aversion to risk, share options are introduced which allow senior managers to own certain number of shares in the company at a fixed price. The downside of using share option to check and balance senior executives is the fact increase in share price due to boom in the economy and general market trends will result to executives being rewarded not base on the merits of their performance (SIGLER, 2009, pp. 762-764). CORPORATE SOCIAL RESPONSIBILITY AND ETHICS It has become increasing important that organisations become actively responsible and makes ethical business decisions as a result of the recent scandals that have gulfed the business world, from Enron to WorldCom among others. The business world and the community can no longer fold their hands and watch in horror in anticipation of when the next big scandal will rock the world economy. Thus, the need to revisit the role of ethics and corporate social responsibility in today’s business world. Although corporate social responsibility is closely linked to ethics because an outcome of ethical conduct is social responsibility (Dubrin, 1994, P.44), however, Blowfield, 2008, p. 12 13 in Davis 1973 explains that corporate social responsibility begins where the law ends. It is the positive impacts companies made on the lives of the community and beyond the society in which they operate outside of their legal obligations. Siegel and Vitaliano (2007) argued that CSR occurs when firms e ngage in activity that appears to advance a social agenda beyond that which is required by law. There is no doubt that corporate social responsibility is of paramount importance to the performance of a business as evidence have shown that organisations who put social responsibility as top most priority in their agenda will have a strong financial performance (Schermerhorn, 2002, p.159). In a poll in 2005, eighty-one percent of executives said that corporate social responsibility is important to their business. Majority of the executives were of the opinion that the purpose of a business is to be a steward in the society as it has duties to its stakeholders such as the customers, shareholders, employees, community and the environment (Blowfield, 2008, p. 10). In addition, there is little or no reason to believe that organisations cannot maximise wealth for their shareholders while performing other public responsibilities. Svensson et al, 2011,p.29 in Lea 1999 agrees with this when he said that ‘it is the various stakeholders that determine the economic performance of a business and that profit will arise naturally from the performance of their business practices such as being socially responsible’. Similarly, Freeman et al 1988, p.47 stressed further this by saying that financial performance and ethics are the same thing. For an organisation to maximize wealth, it needs to maintain relationships with several stakeholders that affect or are affected by its decisions (Presqueux, 2005, p.8). Business should not only look at the immediate returns, but at the communities who will become their consumers. This indicates that companies need to re-examine the nature of their interactions and the effects on their stakeholders (Gibson, 2007, p.xiv). Martin 2003, p.87 in an article in Harvard business review maintained that organisations exhibit socially responsible behaviour because it create goodwill among customers and enhances shareholder value. Little wonder more companies have come to the significance of being socially responsible and have become actively involved in building key relationships with their various stakeholders. Some have gone from being socially responsible to becoming sustainable due to increasing awareness to conserve and protect earth’s limited and depleting resources (May et al. 2007, p.237) such as the G8 summit. British petroleum, BP in 1997 took a stand on climate change by reducing greenhouse emissions. This socially responsible act Bp claims has cost them nothing but increased net income by $600 million. However, the same Bp in 2010 was involved in an oil spill that led to 11 employees’ death and pollution due to negligence and an attempt to cut cost and increase shareholder wealth (Mar dell, 2011). Bp as a result suspended dividend payments to shareholders with $25 billion dollars set aside to cover compensation claims (Boddy, 2011, p.161). Apple and Microsoft are massively involved in CSR while still creating value for their shareholders. (Heal, 2005, p.14). Alternatively, there have also been those who argued that acting socially responsible has no impact on the wealth of an organisation. Friedman in an article published in 1970 argued that an organisation has no responsibility other than maximising shareholder wealth through legal and accepted means. Friedman was one of the capitalists who emphasised strict completion, wealth maximisation and reduction in expenditure which serve as barriers to acceptance of ethical practise in business. Monsanto was destroyed while acting socially responsible. The company invested money to make crops more productive without the use of chemicals. This backfired as it was faced with oppositions from environmental activists and consumers, thus making farmers to abandon them, causing financial threats to the company and the subsequent takeover. The quest to maximise shareholder wealth should not put other stakeholders’ lives in jeopardy. Take for instance Ford Motors whom in the sixties in an attemp t to improve market position, fight competition from companies like Volkswagen and subsequently increase wealth for shareholders made the affordable Ford Pinto that was produced very cheaply with the petrol tanks placed in a position that endangers lives. Analyst believed Ford knowingly choosing profit over safety. The car poses risks and do not meet up with the legislation, yet the car was put up on sale. What followed were series of car accidents that caused many lives. Ford motors continued to sell the car as the cost of removing the product from the market far outweighs the law suit that would arise. The company was sued, though it won the lawsuit, but its reputation was badly damaged which affected the market share and subsequently the shareholder wealth they were aiming for (Boddy, 2011, p.135-136). The company in an attempt to maximise wealth for their shareholders put profit first before the safety of its customers and the community and operated outside the legal and accepte d standard advocated by Friedman. ETHICS Ethics are the norms and standards for judging good versus bad, right versus wrong. It thus defines whether actions taking by an organisation are under moral grounds (May et al, 2007, p. 157). However moral behaviour is dependent on some circumstances of time and places or on each individual decision-maker. It provides a support for maximising shareholder value in the long term and an understanding of business ethics will enhance business targets and improve performance (Sternberg, 1994, p. 15). In a survey of CFOs carried out by ACCA, it was discovered that companies that build a culture of ethics are more likely to succeed financially. Also, good ethics they say means good business (Chriysside and Kaler, 1996, p.8). Studies have shown that employees are more inclined to work for companies that are ethically and socially responsible (Weiss J, W, 2003, p.11). The pursuit of shareholder wealth should be within the confines of ethical behaviour as an organisation that solely pursues we alth maximisation will act unethically (Gibson, 2007, p.7). More so, managers believes that shareholders interest is in wealth maximisation, however, shareholders differ on this view depending on the nature of their investment with time. Some shareholders wants returns on the short term through dividends and often times, such shareholders are not inclined to acting ethically as opposed to those who wants their returns reinvested to achieve capital gains in the longer term. Boddy states that evidence have shown that investors are willing to invest in business that encourages ethical decision making. Therefore, companies need to integrate values such as trust, honesty, integrity and fairness into its policies, practice and decision making (Blowfield, 2008, p. 18). In recent times, series of companies with strong ethical policies have been found in breach of the law. This was the case of Boeing in 1998 when despite its ethical guidelines on procurement, corruption and marketing used co nfidential materials stolen from its competitor Lockheed Martin to win defence procurement contracts with the United State government. This led to it suspension from bidding for defence contracts. Ethics is a necessity in the achievement of profits, growth and shareholder value (Blowfield, 2008, p.190). Conversely, an organisation that acts unethically will have its reputation damaged and boycotted by its stakeholders just like the Ford Pinto, Enron and WorldCom. Enron despites having a Code of ethics had its senior management concealed debts worth $35 billion. The exposure of this fraudulent act led to a drop in share price from $90 to 61 cent (Gini, 2009, pp.104-115). Royal Dutch shell adopted the slogan people, planet, profits in an attempt to regain lost trust in the Niger Delta region of Nigeria and criticism for its proposed scrap of Brent Spar oil storage platform in the deep Atlantic (Blowfield, 2008, 61). It is therefore not acceptable for business to say that anything it d oes within the confines of law is ethically acceptable. In the 80’s, the Beech-Nut Nutrition Corporation had its executives sentenced by a jury for purported selling baby apple juice which in reality contain little or no apple juice. The company’s shares of $750 million dropped from a high of 20% as a result to 17% (Gini, 2009, pp.29-31). Pressure is being mounted on businesses to go beyond the law by according respect and dignity to stakeholders, thus the need for organisations to consider responsibilities to those whom their decisions will affect. Managers have to balance the demands to maximise wealth for shareholders with those of acting ethically in the pursuit of wealth and being responsible to its stakeholders whom are affected by its decisions as doing contrary to this could be detrimental or poses to the business and shareholder wealth just as Dearlove 1998 suggests that ethical behaviour should be imbibed as a core value of business. Corporate social responsibility and ethics in a lot of ways increases wealth for shareholders as illustrated in series of examples above. However, organisations will need to weigh the benefits and advantages accrued from it and come to a balance. This is not to say that companies should pursue wealth at the expense of other stakeholders’ lives. CONCLUSION The aim of this report was to discuss the objective of the company as to whether the maximisation of shareholder wealth should be the sole objective of the company. Evidences reviewed in the report pointed to the fact that wealth maximisation should not be the sole aim of the company, other stakeholders who are affected by the company’s decision should be considered and the involvement of these various stakeholders evidence shown create company goodwill and increase shareholder wealth. It is therefore imperative that companies pursue other objectives beside wealth maximisation. REFLECTIVE JOURNAL WHAT I LEARNT FROM TAKING PART IN THE COURSE WORK: This report gave me a better insight into shareholder wealth maximisation and levels of returns, stakeholder theory, agency theory, corporate social responsibility and ethics. I learnt to work with limited time and meet up with strict deadline and to effectively manage my time. MY RESAERCH TECHNIQUES: My research techniques was based on reading journals, text books, Harvard Business review, television station archives such as BBC News, Ft.com,Rueters.com and internet sources. MY MOTIVATION: My motivation stemmed from my drive to produce a quality course work. So my motivation was strong as I worked really hard to meet up with the deadline for the assignment. WHAT I WILL DO DIFFERENTLY NEXT TIME: I would ensure that I have done a thorough research regarding the subject matter before commencing my work as this will make it easier and save me time. THE FOLLOWING ARE THE LEARNING OUTCOMES WHICH I FIND EASIEST Corporate social responsibility which bothers on the ground that organisation in their pursuit of shareholder wealth needs to consider the positive impacts they made on the lives of the community and beyond the society in which they operate beyond that which constitute their legal obligations. I got to know that corporate social responsibility enhances shareholder wealth maximisation despite some argument which stress sole objective of wealth maximisation. CHALLENGES AND THE LEANING OUTCOME I FIND MOST DIFFICULT Stakeholder theory was particularly difficult for me as I have challenges getting relevant materials for it. Another was ethics which in a way is like a twin to corporate social responsibility. I realised while writing ethics that most of what I had to talk about were already discussed in corporate social responsibility making it difficult for me to have a balance word count between the two concepts. Thus ethics was also touched on in corporate social responsibility and vice versa. I believe I have done this work to the best of my ability and it will be useful to me in my future career prospects. REFERENCE ACCA. 2010. Ethics linked to better business performance. [WWW]. http://www.accaglobal.com/allnews/national/zimbabwe/ethics (9/4/2011). ACCA. 2010. Paper p1: Governance, Risk and Ethics. Complete Text-June and December, 2011 Exam Sittings. UK: Kaplan Publishing Limited. ADVFN. 2011. [WWW]. Bp Share Price. http://www.advfn.com/lse/SharePrice.asp?shareprice=BP. (7/4/2011). BLOWFIELD, M, AND MURRAY, A. 2008. Corporate Social Responsibility: A critical Introduction. Newyork. Oxford University Press. BODDY, D and PATON, S, 2011. Management: An Introduction. 5st. Edn. England: Pearson Education Limited. BRADBURN, R. 2001. Understanding Business Ethics. London: Continuum. CHRYSSIDES, G AND KALER, J. 1996. Essentials of Business Ethics. London: McGraw-Hill. COLLINS, D. 2006. Enron: the good, the bad and the really ugly. In: GINI, A and MARCOUK, A.M. Case studies in business ethics. 6th.Edn. London: Pearson prentice Hall, pp. 104-115. DEARLOVE, D. (1998). Key Management Decisions. London: Pitman Publishing. DUBRIN, A.J. (1994). Essentials of Management. 3rd.Edn.Ohia: South-Western Publishing Co. FRIEDMAN, M. 1970. The social responsibility of business is to Increase Its Profits. In: BURCHELL, J. The corporate social Responsibility reader. Oxon: Routledge, pp.84-89. GRANT, P. 2011. Aristotelian approach to a sustainable business. Corporate governance [Online journal], 11(1), pp. 4-12. Available from Emerald at http://www.emeraldinsight.com/search.htm?st1=patricia+grantct=allec=1bf=1. (16/3/2011). GIBSON, K. 2007. Ethics and Business. Uk: Cambridge University Press. HEAL, G. 2005. [WWW] Corporate Social responsibility: an economic and financial framework. The Geneva papers on risk and Insurance-issues and practice. https://europealumni.kellogg.northwestern.edu/research/fordcenter/conferences/ethics06/heal2.pdf (4/4/2011). JENSEN, M, C. and MECKLING, W, H. 1976, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics. [Online Journal] http://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf. (17/3/2011). MALLIN, M, A. 2010. Corporate Governance. 3rd .Edn. New York: Oxford University Press. MARDELL, M. 2011. Failure of an industry. [WWW] http://www.bbc.co.uk/blogs/thereporters/markmardell/2011/01/the_failure_of_an_industry.html (5, 4, 2011). MARTIN, L, R. 2003. The Virtue Matrix: Calculating the return on corporate responsibility. In: HARVARD BUSINESS REVIEW. Harvard Business Review on Corporate Social Responsibility.USA: Harvard Business School Publishing Corporation. Pp. 83-103. MAY, S, CHENEY, G AND ROPER, J. 2007. The debate over Corporate Social Responsibility. New York: Oxford University Press. MERRISON ED. 2010. Seep Fears Fuel Drop in BP Share Price [WWW] http://news.sky.com/skynews/Home/Business/Seep-Fears-Fuel-Drop-In-BP-Share-Price-US-Coastguard-Demands-Action-Plan-From-Oil-Giant/Article/201007315667088?f=rss (4/4/2011). PALMER, J. 2011. Gulf spill’s effects ‘may not be seen for a decade. [WWW] http://www.bbc.co.uk/news/science-environment-12520630 (30/3/2011). SALMON, F. 2010. 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Canterbury tales

Canterbury tales-a personal pe Essay Canterbury Tales-A personal perspective on the Medieval Christian Church In researching Geoffrey Chaucer’s collection of stories named The Canterbury Tales, an interesting illustration of the Medieval Church becomes evident. A crooked society exists within the corrupt, medieval church community. Not all of the clergy’s intentions were corrupt, but as Chaucer, through his character the Pardoner,so well put it,â€Å"Radix malorum est cupiditas†, ( Love of money is the root of all evil). Many corrupted evils, such as greed, drove the clergy to deviate from the spirituality that religion was originated from. At that time, in all levels of society, belief in God or gods was not a matter of choice, it was a matter of fact. Atheism was an alien concept and this is why the church was so powerful. Sometimes, people of the church would take advantage of that power. Leading a life pleasing God was one of the most significant concerns of the medieval man. The existence of God was never questioned and the one thing that man wanted most was to be with the divine. In order to do this, he had to achieve salvation. The simplest way to achieve salvation was to buy it. The character of the Pardoner is truly one of the books most evil-hearted and despicable, for he is the person who can â€Å"sell† salvation. He takes total advantage of his position intimidating people into buying his pardons, indulgences, and holy relics. The Pardoner has no real concern for the sinners, he only wants his money, as shown on page 243, where he says â€Å"Out come the pence, and specially for myself, for my exclusive purpose is to win and not at all to castigate their sin. Once dead what matter how their souls may fare? They can go blackberrying for all I care.† The pardoner is the biggest hypocrite in the book because he preaches to follow the path of God, yet he admits that he likes money, rich food, and fine living. After his tale, he also tries to sell his relics and pardons to the other pilgrims for a price, as seen on page 257, â€Å" One thing I should have mentioned in my tale, dear people. I’ve some relics in my bale and pardons too, as full and fine, I hope, as any in England, given me by the Pope.† This is evident proof that the clergy of the Medieval Christian Church in that era were quite corrupt in their search for financial support other than from the church. Another corrupt clergy character that Chaucer offered to his readers was the Friar. Chaucer described the Friar as â€Å"the finest beggar of his batch†. This Friar used every immoral and vicious method to extract money from the parishioners, so when Chaucer says(pg. 9 in the prologue)â€Å"Natural gifts like his were hard to match† he is being ironical. Chaucer writes, â€Å"Sweetly he heard his penitents at shrift, with pleasant absol ution, for a gift. He was an easy man in penance-giving where he could hope to make a decent living; It’s a sure sign whenever gifts are given, to a poor Order that a man’s well shriven†¦Ã¢â‚¬  Chaucer himself writes that the church especially helps out those who have the money for it. The Friar also spends most of his time in bars and the taverns instead of at the places that need it. â€Å"He knew the taverns well in every town, and every innkeeper and barmaid too, better than lepers, beggars and that crew.† Here Chaucer clearly states that the English clergy are dedicated to their work only when their greed is satisfied. .udffe89a1c022c9671ce01c62e61b44f4 , .udffe89a1c022c9671ce01c62e61b44f4 .postImageUrl , .udffe89a1c022c9671ce01c62e61b44f4 .centered-text-area { min-height: 80px; position: relative; } .udffe89a1c022c9671ce01c62e61b44f4 , .udffe89a1c022c9671ce01c62e61b44f4:hover , .udffe89a1c022c9671ce01c62e61b44f4:visited , .udffe89a1c022c9671ce01c62e61b44f4:active { border:0!important; } .udffe89a1c022c9671ce01c62e61b44f4 .clearfix:after { content: ""; display: table; clear: both; } .udffe89a1c022c9671ce01c62e61b44f4 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .udffe89a1c022c9671ce01c62e61b44f4:active , .udffe89a1c022c9671ce01c62e61b44f4:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .udffe89a1c022c9671ce01c62e61b44f4 .centered-text-area { width: 100%; position: relative ; } .udffe89a1c022c9671ce01c62e61b44f4 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .udffe89a1c022c9671ce01c62e61b44f4 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .udffe89a1c022c9671ce01c62e61b44f4 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .udffe89a1c022c9671ce01c62e61b44f4:hover .ctaButton { background-color: #34495E!important; } .udffe89a1c022c9671ce01c62e61b44f4 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .udffe89a1c022c9671ce01c62e61b44f4 .udffe89a1c022c9671ce01c62e61b44f4-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .udffe89a1c022c9671ce01c62e61b44f4:after { content: ""; display: block; clear: both; } READ: Business ethics Essay In his book, Geoffrey Chaucer equally divides the amount of corruption with the amount of good-faith and sincerity that lies within the church at that time. The significant point being that since the church did have such an influence on society, it was quite difficult to freely express one’s view on the church if it happened to be in a negative light. That’s why Chaucer is considered a pioneer. He was a realist that wrote about the truth of corruption that occurred in the religious world.