Deutsche Brauerei

QUESTION FOR REPORT/ DISCUSSION 2. What are the characteristics of Fund flow statement and its uses? What do the financial forecast and sources and uses of funds statement of company tell us? Discuss about breakeven analysis. What does the breakeven chart of the company tell us? [pic] Fund Flow Statement Financial statements mainly include profit and loss account and balance sheet. Profit and loss account lists out all the expenses made by the firm and revenue earned over a period of time. Balance sheet depicts the financial position of the firm at a particular point of time. While fund flow statement is complimentary to both balance sheet and profit and loss account, it brings a clear idea about the movement of funds in and out of the firm, during a particular period of time. Meaning of Fund Flow The financial statement of the business indicates assets, liabilities and capital on a  particular date and also the profit or loss during a period. But it is possible that there is enough profit in the business and the financial position is also good and still there may be deficiency of cash or of working capital in business. If the management wants to find out as to where the cash is being utilized, financial statement cannot help. Therefore, a statement is prepared of the sources and applications of funds from where Working Capital comes and it is utilized. This is called Fund Flow statement. Meaning of ‘Fund’ In a popular and generally accepted sense the term ‘fund’ is used to denote the excess of current assets over current liabilities : Working Capital  Ã‚  Ã‚  Ã‚   =  Ã‚  Ã‚   Current Assets – Current Liabilities Meaning of ‘Flow’ of Fund Flow of funds means transmigration (coming and going) of funds. In other words, Flow of funds means change in Working capital, as in funds flow statement the words ‘funds’ mean net working capital. Hence Coleman rightly states that, â€Å"The fund statement is statement summarizing the significant financial changes which have occurred between the beginning and the end of a company’s accounting period. † The flow of fund if is represented by changes in working capital, then it can happen, only if a transaction involves changes on both current item and noncurrent item. Every transaction has double entry. Various cases can be that transaction involves Change on current assets and on fixed assets (cash purchase of fixed assets) o Cash being current item and fixed assets are non current ? Change on current assets and on current assets (credit sale of inventory) o Debtors is a current item and inventory is also current in nature ? Change on current assets and change on current liabilities (payment made to creditors) o Cash is current asset and creditor, current liability ? Change on current liabilities and change on current liabilities (short term loan taken to clear overdraft) ? Change on fixed assets and on fixed liabilities (sale of investments to redeem debentures) So, amongst all these combinations, transactions which involve change, on one hand on current item and on other hand on non current item, they would only lead to fund flow. E. g. * Sell investments in cash. * Issue of shares * Raising long term loans, etc. Thus fund flow statement enumerates various sources from which funds come in organization and various applications which lead to usage of funds. It is an important tool to check the efficiency of management in the firm. It can make future projections about working capital requirements and thus firm can arrange for those requirements and can allocate funds in a more efficient manner. Preparation of fund flow statement involves preparation of adjusted profit and loss account which is prepared by excluding the non fund and non operating items from the initial figure of net profit. Different Names of Fund-flow Statement * A Funds Statement * A statement of sources and uses of fund * A statement of sources and application of fund * Where got and where gone statement * Inflow and outflow of fund statement Objectives of Fund Flow Statement The main purposes of Fund Flow Statement are: 1. To help to understand the changes in assets and asset sources which are not readily evident in the income statement or financial statement. 2. To inform as to how the cans to the business have been used. 3. To point out the financial strengths and weaknesses of the business How to Prepare a Fund Flow Statement Fund flow statements are prepared by taking the balance sheets for two dates representing the coverage period. The increases and decreases must then be calculated for each item. Finally, the changes are classified under four categories: (1) Long-term sources, (2) long-term uses, (3) short-term sources, (4) short-term uses. It is also important to zero out the non-fund based adjustments in order to capture only the changes that are accompanies by flow of funds. However, income accrued but received and expenses incurred but not received reckoned in the profit and loss statement should not be excluded from the profit figure for the fund flow statement. Fund flow statements can be used to identify a variety of problems in the way a company operates. For example, companies that are using short-term money to finance long-term investments may run into liquidity problems in the future. Meanwhile, a company that is using long-term money to finance short-term investments may not be efficiently utilizing its capital. Steps in Preparation of Fund Flow Statement: 1) Preparation of schedule changes in working capital (taking current items only). 2) Preparation of adjusted profit and loss account (to know fund from [or] fund lost in operations). 3) Preparation of accounts for non-current items (Ascertain the hidden information). 4) Preparation of the fund flow statement. Importance of funds flow statement: Funds flow statement is an important analytical tool for external as well as internal uses of financial statements. The users of funds flow statement can be listed as under: 1. Managements of various companies are able to review cash budgets with the aid of funds flow statements. They are extensively used by the management in the evaluation of alternative finance & investments. In the evaluation of alternative finance & investment plans, funds flow statement helps the management in the assessment of long-range forecasts of cash requirements & availability of liquid resources. The management can judge the quality of management decisions. 2. Investors are able to measure as how the company has utilized the funds supplied by them & its financial strength with the aid of funds statements. They gauge can the company capacity to generate funds from operations. On the basis of comparative study of the past with the present, investors can locate & identify possible drains on funds in the near future. 3. Funds statement serve as effective tools to the management for economic analysis as it supplies additional information, which cannot be provided by financial statements, based on historical data. . Fund statement explains the relationship between changes in working capital & net profits. Funds statement clearly shows the quantum of funds generated from operations. 5. Funds statement helps in the planning process of a company. They are useful in assessing the resources available and the manner of utilization of resources. 6. Funds statement explains the financial c onsequences of business activities. They provide explicit & clear awareness to questions regarding liquid & solvency positions of the company, distribution of dividend & whether the working capital has been effective or otherwise. 7. Management of companies can forecast in advance the requirements of additional capital & can plan its capital issue accordingly. 8. Fund statement provides clues to the creditors & financial institutions as to the ability of a company to use funds effectively in the best interest of the investors, creditors & the owners of the company. 9. Funds statement indicates the adequacy or inadequacy of working capital. 10. The information contained in fund flow statement is more reliable, dependable & consistent as it is prepared to include funds generated from operations & not net profit after depreciation. 11. Funds flow statement clearly indicate how profits have been invested, whether investments in fixed assets or inventories or ploughed back. Financial forecast: A financial forecast is normally an estimate of future financial outcomes for a company. Using historical internal accounting and sales data, in addition to external market and economic indicators, a financial forecast is an economist's best guess of what will happen to a company in financial terms over a given time period — which is usually one year. In this case, the company has forecasted its data for the years 2001 and 2002. Sources of funds 1. Net Income: Net income  is equal to the  income  that a firm has after subtracting costs and  expenses  from the total  revenue. Net  income can be distributed among holders of common stock as a  dividend  or held by the firm as  retained earnings. The items deducted will typically include  tax expense, financing expense (interest expense), and  minority interest. Net income is informally called the  bottom line  because it is typically found on the last line of a company's  income statement. [pic] The forecasted net income is increasing in the projected year. It has been projected that there would be an increase in the net income of 28% in 2001 and 17% in 2002. This can be credited to their expansion strategy in the coming years. There has been a dip in the net income in the year 1999 owning to the depreciation of Ukrainian currency by 125%. 2. Allowance for doubtful accounts: The allowance for doubtful accounts is a balance sheet account that reduces the reported amount of accounts receivable. Providing an allowance for doubtful accounts presents a more realistic picture of how much of the accounts receivable will be turning to cash. If a firm has made a sufficient provision in its allowance for doubtful accounts, reported earnings will not be penalized by bad debts when the bad debts occur. If uncollectible accounts are larger than expected, however, the firm will have to increase the size of the account and reduce reported income. [pic] There has been a sharp increase in allowance for doubtful accounts in the year 2001 which subsequently reduced. This can be linked to the increase in the credit they plan to give to the distributors owning to their expansion plans for the period and their recovery policy. The increase in doubtful accounts is a bad sign for the financial position for the company. 3. Depreciation: A  noncash expense  that reduces the  value  of an  asset as a  result  of  wear and tear, age, or  obsolescence. Most assets lose their value over time (in other  words, they depreciate), and must be replaced once the end of their useful life  is reached. Because it is a  non-cash expense, depreciation lowers the  company's  reported  earnings  while increasing  free cash flow. Calculated by two methods: 1. Straight Line Depreciation Method 2. Declining Balance Depreciation Method [pic] There has been gradual rise in the depreciation in the projected years. This can be related to increase in their number of assets (they are planning to buy more equipments and properties) which would lead to devaluation eventually. 4. Short-Term Debt: The account which comprises of any debt incurred by a company that is due within one year. The debt in this account is usually made up of short-term bank loans taken out by a company. The value of this account is very important when determining  a company's  financial health. If the account is larger than the company's  cash and cash equivalents, this suggests that the company  may be  in poor financial health and does not have  enough cash to pay off its short-term debts. Although  short-term debts are due within a year, there may be a portion of the long-term debt included in this account. This portion pertains to payments that must be made on  any long-term debt throughout the year. [pic] In initial years they heavily depended on short term debts. Over the years the financial health of the company improved which lead to the reduction in the debts. Owning to their credit policy and increase in investment in fixed assets, the company is not able to recover the money. This could have lead to increase in short term borrowings. 5. Accounts Payable: An accounting entry that represents an entity's obligation to pay  off a short-term debt to  its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are debts that must be paid off within a given period of time in order to avoid default. [pic] Increase in accounts payable shows that the company is making more purchases on credit. It could be due to taking more time to pay bills, buying more products on credit, paying higher prices for credit purchases. 6. Other Current Liabilities: A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. Companies will group together these other current liabilities into one account on the balance sheet for the sake of simplicity. [pic] Since this category is made up of accruals and similar items, it increases as the company gets larger. It increased in 1999 owning to higher investment in Ukraine. The increase in the other current liabilities has been more or less stable in the projected years. 7. Total sources of cash: It is the sum total of all the components of sources of funds. [pic] Uses of Funds 8. Dividend Payments Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. [pic] There is a sharp increase in the dividend payment as the company is projecting a higher increase in their profits. The dividends are paid from the net income from the same year. Increase in dividend payments implies strong commitment to maintain higher level of dividends in the future. 9. Increases in cash balance Amount of available cash that a management decides to maintain in cash planning, to avoid or cover up cash shortfalls resulting from mismatch between cash inflows and outflows during an accounting period. [pic] The company is having optimum cash balance hence maintaining sufficient working capital. 10. & 11. Increases in accounts receivable Accounts receivable (A/R) is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms. [pic] In Germany, the company has maintained a tight hold on the credit that they supply to the distributors; thus there isn’t a significant change in the accounts receivable as compared to Ukraine. pic] Increases in accounts receivable (Ukraine) that is disproportionate to any growth in revenue may indicate the company is having trouble collecting money from its customers. Depending on the company's cash situation, this could require the company to borrow money to plug the hole from the unpaid money it is owed by its customers. Eventual ly, the company might need to write-off some of these accounts receivable as bad debt, in recognition of the fact that some customers might never pay. In extreme cases, the company might run out of cash and have to shut down. 12. Increases in inventories Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. An organization's inventory can appear a mixed blessing, since it counts as an asset on the balance sheet, but it also ties up money that could serve for other purposes and requires additional expense for its protection. Inventory may also cause significant tax expenses, depending on particular countries' laws regarding depreciation of inventory. Inventory appears as a current asset on an organization's balance sheet because the organization can, in principle, turn it into cash by selling it. Some organizations hold larger inventories than their operations require in order inflating their apparent asset value and their perceived profitability. [pic] The fragile distribution system in Ukraine pre-2000 lead to increase in the inventories of the company as company is working on improving the distribution channel due to which the product flow has been projected to be smooth in coming years leading to decrease in inventory which is a healthy financial sign. 13. Increases in other assets Assets are economic resources owned by business or company. Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place. Examples of intangible assets are goodwill, copyrights, trademarks, patents and computer programs, and financial assets, including such items as accounts receivable, bonds and stocks. pic] There is a negative growth in the increase in the other assets because of the depreciation of other assets and they are not planning to acquire any new assets in near future. By 2002 they are planning to buy enough assets just to overcome the negative growth. 14. Reductions in long-term debt Long-term debts are loans and financial obligations that last for over one year. For example, debts obliga tions such as bonds and notes, which have maturities greater than one year, would be considered as long-term debts. pic] Reduction in long term debts from 1998 to 1999 could be due to overnight success of the company in Ukraine. The sound financial condition of the company has ensured the stable repayment of long term loans and would continue to do so in future. 15. Capital Expenditures Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset ith a useful life that extends beyond the taxable year. Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. [pic] The sharp increase in the CAPEX can be explained by the inflow of capital through long term debts and the operating profit the company is planning to achieve in the projected period. 16. Total uses of cas h: It is the sum total of all the use components in the fund flow statement. [pic] Break Even Analysis The break-even point for a product is the point where total revenue received equals the total costs associated with the sale of the product (TR=TC). A break-even point is typically calculated in order for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Break even analysis can also be used to analyse the potential profitability of an expenditure in a sales-based business. Breakeven analysis is a management accounting tool used for profit planning of a firm. Profit planning is a function of the selling price of a unit of product, the variable cost of making and selling the product, the volume of product unit sold and in case of multi-product companies, sales mix and finally, the total fixed costs. Breakeven point (for output) = fixed cost / contribution per unit. Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are â€Å"variable† (costs that change when the production output changes) and those that are â€Å"fixed† (costs not directly related to the volume of production). Total variable and fixed costs are compared with sales revenue in order to determine the  level of sales volume, sales value or production at which the business makes neither a profit nor a loss (the â€Å"break-even point†). Break even analysis depends on the following variables: 1. The fixed production costs for a product. 2. The variable production costs for a product. 3. The product's unit price. 4. The products expected unit sales. On the surface, break-even analysis is a tool to calculate at which sales volume the variable and fixed costs of producing your product will be recovered. Another way to look at it is that the break-even point is the point at which your product stops costing you money to produce and sell, and starts to generate a profit for your company. Break even analysis solves various managerial problems: †¢   Setting price levels: A price level is a hypothetical measure of overall prices for some set of goods and services, in a given region during a given interval, normalized relative to some base set. Hence with the help of BEP analysis a firm can determine the price level of product and particular sales volume which is necessary to produce an X amount of operating profit.   Targeting optimal variable/ fixed cost combinations †¢   Determining the financial attractiveness of different strategic options for your company. Break even Chart A breakeven chart is a strategic tool used to plot the financial revenue of a business unit against time or sales to determine the point when sales output is equal to revenue generated. This is reco gnised as the breakeven point. The information used to determine and analyse the breakeven point includes fixed, variable and total costs and the associated sales revenues. The analysis of a breakeven chart considers whether a venture runs at a profit or a loss. A sale above the breakeven point indicates continued and profitable growth. The principle of break-even theory is that during the early stages of a business venture, total costs, both fixed and variable, exceed sales. As output increases, sales begin to rise faster than costs and, eventually, they become equal (breakeven point). If sales continue to rise and exceed total costs, the business achieves profitability. The tool assumes that all the goods which are produced will be sold and that costs, namely the price, will remain constant. Likewise, it also relies on the capacity in terms of output to remain unchanged. Breakeven charts are universally applied to simply and graphically illustrate and forecast a company's projected revenue, and to calculate the time for profitability to be reached. It is used by financial and marketing strategists to predict the effect that changes in price will have on the percentage change in sales over time. It is also a useful tool to analyse the relationship between fixed and variable costs and to predict the effect on profitability of changes to those costs. Income Statements | | | | | | | |   |   |   |   |   |   |   | |Sales: Germany |62032 |62653 |64219 |66216 |68203 |70249 | |Sales: Ukraine |0 |4262 |17559 |25847 |37479 |48722 | |Total Net Sales |62032 |66915 |81778 |92063 |105682 |118971 | |Production Cost & Expenses |32258 |35366 |44271 49827 |61393 |71609 | |Excise duties |9143 |9108 |10486 |11557 |11625 |13087 | |Allowance for doubtful accounts |5 |7 |38 |24 |2 01 |60 | |Total Variable Cost |41406 |44481 |54795 |61408 |73219 |84756 | |   |   |   |   |   |   |   | |Administrative & Selling Expenses |12481 |13014 |16274 |18505 |18500 |18500 | |Depreciation |3609 |4314 |5844 |6068 |6766 |7448 | |Total Fixed Cost |16090 | | | | | | | | | | | | | | |(â‚ ¬ per hectoliters) | | | |Per unit Sales | |9206300/1173000 = | |78. 8508099 | | | |Per unit variable cost | | | | | |61408000/1173000 = | |52. 35123615 | | | |Contribution per unit | | | | | |Per unit Sales – Per unit variable cost = | |26. 3384484 | | | | | | |Breakeven Point = |Fixed cost/Contribution per unit | | | | | | | |24573000/26. 13384 = |940274. 633 | | | | | |Hence Number of units requires to be sold to reach breakeven point=940275 hectoliters | | | | | | | | | |Net Sale in year 2000 = 1173000 hectoliters | | |Revenue calculated from the sale of Breakeven volume sales = |breakeven point volume* per unit sale price |â‚ ¬ 73797559. 3 | | | | | |Total Variable cost at Breakeven Point = Breakeven volume * Per |940275 * 52. 32123615 = |â‚ ¬ 49224558. 57 | |unit variable cost | | | | | | | | Total Fixed Cost = â‚ ¬ 24573000 | | | | | | |Total cost of Production of Beer |Fixed cost + variable cost |â‚ ¬ 73797558. 57 | | | | | This analysis identifies the break-even volume, where revenues just equal total costs and Deutsche Brauerei recovers all its fixed cost at the break-even volume sale. Sales above Break-even Point will bring profits for the company. Margin of Safety (volume) = Total volume Sold – Breakeven volume 1173000 – 940275 = 232725 hectoliters Margin of Safety (Revenue) = per unit sale price * Margin of safety volume = 78. 48508099 * 232725 = â‚ ¬ 18265440. 47 Variable Cost for selling 232725 hectoliters = per unit variable cost * Margin of Safety (volume) = 52. 35123615 * 232725 = â‚ ¬ 12183441. 43 Deutsche Breuerei has already covered up fixed cost expense with break even volume sale hence they will make profit above the sale of break even volume. Net profit = Margin of Safety (Revenue) – Variable Cost for selling 232725 hectoliters = â‚ ¬ 18265440. 47 – â‚ ¬ 12183441. 43 = â‚ ¬ 6081999. 041 From the above analysis it is seen that as the volume increased above the break even volume, the profits rise disproportionately faster. The analysis of a breakeven chart shows that Deutsche Breuerei has to sell more than 940275 hectoliters of beer to start making the profit for the venture. A sale above the breakeven point indicates a continued and profitable growth, and venture makes a profit of â‚ ¬6081999. 041. Hence Deutsche Breuerei should stick to the current price level of beer and profit planning. Break even chart of Venture shows that if they can reduce the Production Cost in coming years through new facility and equipment they can increase the profits in long term. As the company is showing a healthy sales of good they can invest on production facility to reduce the per unit production cost and expenses to increases the overall profits. ———————– DEUTSCHE BRAUEREI Case Analysis- Question 2 MBA PHARM. TECH. (4th year) [pic] [pic] |ROLL NO. |NAME |ROLL NO. NAME | |38 |Devang Mehta |41 |Upasana Nagpal | |39 |Anand Menon |42 |Abhilash Nair | |40 |Manish Mishra |43 |Kadambari Narang | SCHOOL OF PHARMACY AND TECHNOLOGY MANGEMENT †0[pic]? 0[pic]? 0[pic]? 0[pic] 1[pic]†1[pic]x1[pic]|1[pic]? 1[pic]u1 [pic]2[pic]2[pic]2[pic]I2[pic]? 2[pic]N3[pic]l3[pic]A4[pic]A4[pic]? 4[pic]eOA »Ã‚ ­A »A »Ã¢â‚¬Å"| ­h ­Ã‚ »WI8A! h`fJh? *B*[pic]OJQJ^J[? ]ph333h? *B*[pic]CJOJQJph! hNu—h? *B*[pic]CJOJQJNet income =Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends Deutsche Brauerei QUESTION FOR REPORT/ DISCUSSION 2. What are the characteristics of Fund flow statement and its uses? What do the financial forecast and sources and uses of funds statement of company tell us? Discuss about breakeven analysis. What does the breakeven chart of the company tell us? [pic] Fund Flow Statement Financial statements mainly include profit and loss account and balance sheet. Profit and loss account lists out all the expenses made by the firm and revenue earned over a period of time. Balance sheet depicts the financial position of the firm at a particular point of time. While fund flow statement is complimentary to both balance sheet and profit and loss account, it brings a clear idea about the movement of funds in and out of the firm, during a particular period of time. Meaning of Fund Flow The financial statement of the business indicates assets, liabilities and capital on a  particular date and also the profit or loss during a period. But it is possible that there is enough profit in the business and the financial position is also good and still there may be deficiency of cash or of working capital in business. If the management wants to find out as to where the cash is being utilized, financial statement cannot help. Therefore, a statement is prepared of the sources and applications of funds from where Working Capital comes and it is utilized. This is called Fund Flow statement. Meaning of ‘Fund’ In a popular and generally accepted sense the term ‘fund’ is used to denote the excess of current assets over current liabilities : Working Capital  Ã‚  Ã‚  Ã‚   =  Ã‚  Ã‚   Current Assets – Current Liabilities Meaning of ‘Flow’ of Fund Flow of funds means transmigration (coming and going) of funds. In other words, Flow of funds means change in Working capital, as in funds flow statement the words ‘funds’ mean net working capital. Hence Coleman rightly states that, â€Å"The fund statement is statement summarizing the significant financial changes which have occurred between the beginning and the end of a company’s accounting period. † The flow of fund if is represented by changes in working capital, then it can happen, only if a transaction involves changes on both current item and noncurrent item. Every transaction has double entry. Various cases can be that transaction involves Change on current assets and on fixed assets (cash purchase of fixed assets) o Cash being current item and fixed assets are non current ? Change on current assets and on current assets (credit sale of inventory) o Debtors is a current item and inventory is also current in nature ? Change on current assets and change on current liabilities (payment made to creditors) o Cash is current asset and creditor, current liability ? Change on current liabilities and change on current liabilities (short term loan taken to clear overdraft) ? Change on fixed assets and on fixed liabilities (sale of investments to redeem debentures) So, amongst all these combinations, transactions which involve change, on one hand on current item and on other hand on non current item, they would only lead to fund flow. E. g. * Sell investments in cash. * Issue of shares * Raising long term loans, etc. Thus fund flow statement enumerates various sources from which funds come in organization and various applications which lead to usage of funds. It is an important tool to check the efficiency of management in the firm. It can make future projections about working capital requirements and thus firm can arrange for those requirements and can allocate funds in a more efficient manner. Preparation of fund flow statement involves preparation of adjusted profit and loss account which is prepared by excluding the non fund and non operating items from the initial figure of net profit. Different Names of Fund-flow Statement * A Funds Statement * A statement of sources and uses of fund * A statement of sources and application of fund * Where got and where gone statement * Inflow and outflow of fund statement Objectives of Fund Flow Statement The main purposes of Fund Flow Statement are: 1. To help to understand the changes in assets and asset sources which are not readily evident in the income statement or financial statement. 2. To inform as to how the cans to the business have been used. 3. To point out the financial strengths and weaknesses of the business How to Prepare a Fund Flow Statement Fund flow statements are prepared by taking the balance sheets for two dates representing the coverage period. The increases and decreases must then be calculated for each item. Finally, the changes are classified under four categories: (1) Long-term sources, (2) long-term uses, (3) short-term sources, (4) short-term uses. It is also important to zero out the non-fund based adjustments in order to capture only the changes that are accompanies by flow of funds. However, income accrued but received and expenses incurred but not received reckoned in the profit and loss statement should not be excluded from the profit figure for the fund flow statement. Fund flow statements can be used to identify a variety of problems in the way a company operates. For example, companies that are using short-term money to finance long-term investments may run into liquidity problems in the future. Meanwhile, a company that is using long-term money to finance short-term investments may not be efficiently utilizing its capital. Steps in Preparation of Fund Flow Statement: 1) Preparation of schedule changes in working capital (taking current items only). 2) Preparation of adjusted profit and loss account (to know fund from [or] fund lost in operations). 3) Preparation of accounts for non-current items (Ascertain the hidden information). 4) Preparation of the fund flow statement. Importance of funds flow statement: Funds flow statement is an important analytical tool for external as well as internal uses of financial statements. The users of funds flow statement can be listed as under: 1. Managements of various companies are able to review cash budgets with the aid of funds flow statements. They are extensively used by the management in the evaluation of alternative finance & investments. In the evaluation of alternative finance & investment plans, funds flow statement helps the management in the assessment of long-range forecasts of cash requirements & availability of liquid resources. The management can judge the quality of management decisions. 2. Investors are able to measure as how the company has utilized the funds supplied by them & its financial strength with the aid of funds statements. They gauge can the company capacity to generate funds from operations. On the basis of comparative study of the past with the present, investors can locate & identify possible drains on funds in the near future. 3. Funds statement serve as effective tools to the management for economic analysis as it supplies additional information, which cannot be provided by financial statements, based on historical data. . Fund statement explains the relationship between changes in working capital & net profits. Funds statement clearly shows the quantum of funds generated from operations. 5. Funds statement helps in the planning process of a company. They are useful in assessing the resources available and the manner of utilization of resources. 6. Funds statement explains the financial c onsequences of business activities. They provide explicit & clear awareness to questions regarding liquid & solvency positions of the company, distribution of dividend & whether the working capital has been effective or otherwise. 7. Management of companies can forecast in advance the requirements of additional capital & can plan its capital issue accordingly. 8. Fund statement provides clues to the creditors & financial institutions as to the ability of a company to use funds effectively in the best interest of the investors, creditors & the owners of the company. 9. Funds statement indicates the adequacy or inadequacy of working capital. 10. The information contained in fund flow statement is more reliable, dependable & consistent as it is prepared to include funds generated from operations & not net profit after depreciation. 11. Funds flow statement clearly indicate how profits have been invested, whether investments in fixed assets or inventories or ploughed back. Financial forecast: A financial forecast is normally an estimate of future financial outcomes for a company. Using historical internal accounting and sales data, in addition to external market and economic indicators, a financial forecast is an economist's best guess of what will happen to a company in financial terms over a given time period — which is usually one year. In this case, the company has forecasted its data for the years 2001 and 2002. Sources of funds 1. Net Income: Net income  is equal to the  income  that a firm has after subtracting costs and  expenses  from the total  revenue. Net  income can be distributed among holders of common stock as a  dividend  or held by the firm as  retained earnings. The items deducted will typically include  tax expense, financing expense (interest expense), and  minority interest. Net income is informally called the  bottom line  because it is typically found on the last line of a company's  income statement. [pic] The forecasted net income is increasing in the projected year. It has been projected that there would be an increase in the net income of 28% in 2001 and 17% in 2002. This can be credited to their expansion strategy in the coming years. There has been a dip in the net income in the year 1999 owning to the depreciation of Ukrainian currency by 125%. 2. Allowance for doubtful accounts: The allowance for doubtful accounts is a balance sheet account that reduces the reported amount of accounts receivable. Providing an allowance for doubtful accounts presents a more realistic picture of how much of the accounts receivable will be turning to cash. If a firm has made a sufficient provision in its allowance for doubtful accounts, reported earnings will not be penalized by bad debts when the bad debts occur. If uncollectible accounts are larger than expected, however, the firm will have to increase the size of the account and reduce reported income. [pic] There has been a sharp increase in allowance for doubtful accounts in the year 2001 which subsequently reduced. This can be linked to the increase in the credit they plan to give to the distributors owning to their expansion plans for the period and their recovery policy. The increase in doubtful accounts is a bad sign for the financial position for the company. 3. Depreciation: A  noncash expense  that reduces the  value  of an  asset as a  result  of  wear and tear, age, or  obsolescence. Most assets lose their value over time (in other  words, they depreciate), and must be replaced once the end of their useful life  is reached. Because it is a  non-cash expense, depreciation lowers the  company's  reported  earnings  while increasing  free cash flow. Calculated by two methods: 1. Straight Line Depreciation Method 2. Declining Balance Depreciation Method [pic] There has been gradual rise in the depreciation in the projected years. This can be related to increase in their number of assets (they are planning to buy more equipments and properties) which would lead to devaluation eventually. 4. Short-Term Debt: The account which comprises of any debt incurred by a company that is due within one year. The debt in this account is usually made up of short-term bank loans taken out by a company. The value of this account is very important when determining  a company's  financial health. If the account is larger than the company's  cash and cash equivalents, this suggests that the company  may be  in poor financial health and does not have  enough cash to pay off its short-term debts. Although  short-term debts are due within a year, there may be a portion of the long-term debt included in this account. This portion pertains to payments that must be made on  any long-term debt throughout the year. [pic] In initial years they heavily depended on short term debts. Over the years the financial health of the company improved which lead to the reduction in the debts. Owning to their credit policy and increase in investment in fixed assets, the company is not able to recover the money. This could have lead to increase in short term borrowings. 5. Accounts Payable: An accounting entry that represents an entity's obligation to pay  off a short-term debt to  its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are debts that must be paid off within a given period of time in order to avoid default. [pic] Increase in accounts payable shows that the company is making more purchases on credit. It could be due to taking more time to pay bills, buying more products on credit, paying higher prices for credit purchases. 6. Other Current Liabilities: A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. Companies will group together these other current liabilities into one account on the balance sheet for the sake of simplicity. [pic] Since this category is made up of accruals and similar items, it increases as the company gets larger. It increased in 1999 owning to higher investment in Ukraine. The increase in the other current liabilities has been more or less stable in the projected years. 7. Total sources of cash: It is the sum total of all the components of sources of funds. [pic] Uses of Funds 8. Dividend Payments Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. [pic] There is a sharp increase in the dividend payment as the company is projecting a higher increase in their profits. The dividends are paid from the net income from the same year. Increase in dividend payments implies strong commitment to maintain higher level of dividends in the future. 9. Increases in cash balance Amount of available cash that a management decides to maintain in cash planning, to avoid or cover up cash shortfalls resulting from mismatch between cash inflows and outflows during an accounting period. [pic] The company is having optimum cash balance hence maintaining sufficient working capital. 10. & 11. Increases in accounts receivable Accounts receivable (A/R) is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called credit or payment terms. [pic] In Germany, the company has maintained a tight hold on the credit that they supply to the distributors; thus there isn’t a significant change in the accounts receivable as compared to Ukraine. pic] Increases in accounts receivable (Ukraine) that is disproportionate to any growth in revenue may indicate the company is having trouble collecting money from its customers. Depending on the company's cash situation, this could require the company to borrow money to plug the hole from the unpaid money it is owed by its customers. Eventual ly, the company might need to write-off some of these accounts receivable as bad debt, in recognition of the fact that some customers might never pay. In extreme cases, the company might run out of cash and have to shut down. 12. Increases in inventories Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. An organization's inventory can appear a mixed blessing, since it counts as an asset on the balance sheet, but it also ties up money that could serve for other purposes and requires additional expense for its protection. Inventory may also cause significant tax expenses, depending on particular countries' laws regarding depreciation of inventory. Inventory appears as a current asset on an organization's balance sheet because the organization can, in principle, turn it into cash by selling it. Some organizations hold larger inventories than their operations require in order inflating their apparent asset value and their perceived profitability. [pic] The fragile distribution system in Ukraine pre-2000 lead to increase in the inventories of the company as company is working on improving the distribution channel due to which the product flow has been projected to be smooth in coming years leading to decrease in inventory which is a healthy financial sign. 13. Increases in other assets Assets are economic resources owned by business or company. Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place. Examples of intangible assets are goodwill, copyrights, trademarks, patents and computer programs, and financial assets, including such items as accounts receivable, bonds and stocks. pic] There is a negative growth in the increase in the other assets because of the depreciation of other assets and they are not planning to acquire any new assets in near future. By 2002 they are planning to buy enough assets just to overcome the negative growth. 14. Reductions in long-term debt Long-term debts are loans and financial obligations that last for over one year. For example, debts obliga tions such as bonds and notes, which have maturities greater than one year, would be considered as long-term debts. pic] Reduction in long term debts from 1998 to 1999 could be due to overnight success of the company in Ukraine. The sound financial condition of the company has ensured the stable repayment of long term loans and would continue to do so in future. 15. Capital Expenditures Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset ith a useful life that extends beyond the taxable year. Capex are used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings. [pic] The sharp increase in the CAPEX can be explained by the inflow of capital through long term debts and the operating profit the company is planning to achieve in the projected period. 16. Total uses of cas h: It is the sum total of all the use components in the fund flow statement. [pic] Break Even Analysis The break-even point for a product is the point where total revenue received equals the total costs associated with the sale of the product (TR=TC). A break-even point is typically calculated in order for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Break even analysis can also be used to analyse the potential profitability of an expenditure in a sales-based business. Breakeven analysis is a management accounting tool used for profit planning of a firm. Profit planning is a function of the selling price of a unit of product, the variable cost of making and selling the product, the volume of product unit sold and in case of multi-product companies, sales mix and finally, the total fixed costs. Breakeven point (for output) = fixed cost / contribution per unit. Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are â€Å"variable† (costs that change when the production output changes) and those that are â€Å"fixed† (costs not directly related to the volume of production). Total variable and fixed costs are compared with sales revenue in order to determine the  level of sales volume, sales value or production at which the business makes neither a profit nor a loss (the â€Å"break-even point†). Break even analysis depends on the following variables: 1. The fixed production costs for a product. 2. The variable production costs for a product. 3. The product's unit price. 4. The products expected unit sales. On the surface, break-even analysis is a tool to calculate at which sales volume the variable and fixed costs of producing your product will be recovered. Another way to look at it is that the break-even point is the point at which your product stops costing you money to produce and sell, and starts to generate a profit for your company. Break even analysis solves various managerial problems: †¢   Setting price levels: A price level is a hypothetical measure of overall prices for some set of goods and services, in a given region during a given interval, normalized relative to some base set. Hence with the help of BEP analysis a firm can determine the price level of product and particular sales volume which is necessary to produce an X amount of operating profit.   Targeting optimal variable/ fixed cost combinations †¢   Determining the financial attractiveness of different strategic options for your company. Break even Chart A breakeven chart is a strategic tool used to plot the financial revenue of a business unit against time or sales to determine the point when sales output is equal to revenue generated. This is reco gnised as the breakeven point. The information used to determine and analyse the breakeven point includes fixed, variable and total costs and the associated sales revenues. The analysis of a breakeven chart considers whether a venture runs at a profit or a loss. A sale above the breakeven point indicates continued and profitable growth. The principle of break-even theory is that during the early stages of a business venture, total costs, both fixed and variable, exceed sales. As output increases, sales begin to rise faster than costs and, eventually, they become equal (breakeven point). If sales continue to rise and exceed total costs, the business achieves profitability. The tool assumes that all the goods which are produced will be sold and that costs, namely the price, will remain constant. Likewise, it also relies on the capacity in terms of output to remain unchanged. Breakeven charts are universally applied to simply and graphically illustrate and forecast a company's projected revenue, and to calculate the time for profitability to be reached. It is used by financial and marketing strategists to predict the effect that changes in price will have on the percentage change in sales over time. It is also a useful tool to analyse the relationship between fixed and variable costs and to predict the effect on profitability of changes to those costs. Income Statements | | | | | | | |   |   |   |   |   |   |   | |Sales: Germany |62032 |62653 |64219 |66216 |68203 |70249 | |Sales: Ukraine |0 |4262 |17559 |25847 |37479 |48722 | |Total Net Sales |62032 |66915 |81778 |92063 |105682 |118971 | |Production Cost & Expenses |32258 |35366 |44271 49827 |61393 |71609 | |Excise duties |9143 |9108 |10486 |11557 |11625 |13087 | |Allowance for doubtful accounts |5 |7 |38 |24 |2 01 |60 | |Total Variable Cost |41406 |44481 |54795 |61408 |73219 |84756 | |   |   |   |   |   |   |   | |Administrative & Selling Expenses |12481 |13014 |16274 |18505 |18500 |18500 | |Depreciation |3609 |4314 |5844 |6068 |6766 |7448 | |Total Fixed Cost |16090 | | | | | | | | | | | | | | |(â‚ ¬ per hectoliters) | | | |Per unit Sales | |9206300/1173000 = | |78. 8508099 | | | |Per unit variable cost | | | | | |61408000/1173000 = | |52. 35123615 | | | |Contribution per unit | | | | | |Per unit Sales – Per unit variable cost = | |26. 3384484 | | | | | | |Breakeven Point = |Fixed cost/Contribution per unit | | | | | | | |24573000/26. 13384 = |940274. 633 | | | | | |Hence Number of units requires to be sold to reach breakeven point=940275 hectoliters | | | | | | | | | |Net Sale in year 2000 = 1173000 hectoliters | | |Revenue calculated from the sale of Breakeven volume sales = |breakeven point volume* per unit sale price |â‚ ¬ 73797559. 3 | | | | | |Total Variable cost at Breakeven Point = Breakeven volume * Per |940275 * 52. 32123615 = |â‚ ¬ 49224558. 57 | |unit variable cost | | | | | | | | Total Fixed Cost = â‚ ¬ 24573000 | | | | | | |Total cost of Production of Beer |Fixed cost + variable cost |â‚ ¬ 73797558. 57 | | | | | This analysis identifies the break-even volume, where revenues just equal total costs and Deutsche Brauerei recovers all its fixed cost at the break-even volume sale. Sales above Break-even Point will bring profits for the company. Margin of Safety (volume) = Total volume Sold – Breakeven volume 1173000 – 940275 = 232725 hectoliters Margin of Safety (Revenue) = per unit sale price * Margin of safety volume = 78. 48508099 * 232725 = â‚ ¬ 18265440. 47 Variable Cost for selling 232725 hectoliters = per unit variable cost * Margin of Safety (volume) = 52. 35123615 * 232725 = â‚ ¬ 12183441. 43 Deutsche Breuerei has already covered up fixed cost expense with break even volume sale hence they will make profit above the sale of break even volume. Net profit = Margin of Safety (Revenue) – Variable Cost for selling 232725 hectoliters = â‚ ¬ 18265440. 47 – â‚ ¬ 12183441. 43 = â‚ ¬ 6081999. 041 From the above analysis it is seen that as the volume increased above the break even volume, the profits rise disproportionately faster. The analysis of a breakeven chart shows that Deutsche Breuerei has to sell more than 940275 hectoliters of beer to start making the profit for the venture. A sale above the breakeven point indicates a continued and profitable growth, and venture makes a profit of â‚ ¬6081999. 041. Hence Deutsche Breuerei should stick to the current price level of beer and profit planning. Break even chart of Venture shows that if they can reduce the Production Cost in coming years through new facility and equipment they can increase the profits in long term. As the company is showing a healthy sales of good they can invest on production facility to reduce the per unit production cost and expenses to increases the overall profits. ———————– DEUTSCHE BRAUEREI Case Analysis- Question 2 MBA PHARM. TECH. (4th year) [pic] [pic] |ROLL NO. |NAME |ROLL NO. NAME | |38 |Devang Mehta |41 |Upasana Nagpal | |39 |Anand Menon |42 |Abhilash Nair | |40 |Manish Mishra |43 |Kadambari Narang | SCHOOL OF PHARMACY AND TECHNOLOGY MANGEMENT †0[pic]? 0[pic]? 0[pic]? 0[pic] 1[pic]†1[pic]x1[pic]|1[pic]? 1[pic]u1 [pic]2[pic]2[pic]2[pic]I2[pic]? 2[pic]N3[pic]l3[pic]A4[pic]A4[pic]? 4[pic]eOA »Ã‚ ­A »A »Ã¢â‚¬Å"| ­h ­Ã‚ »WI8A! h`fJh? *B*[pic]OJQJ^J[? ]ph333h? *B*[pic]CJOJQJph! hNu—h? *B*[pic]CJOJQJNet income =Revenue – Cost of goods sold – Sales discounts – Sales returns and allowances – Expenses – Minority interest – Preferred stock dividends

Movements fighting for gay marriages Essay

The gay marriage debate has been persistent all over the world. It is a divisive political issue that brings out a lot of conflict. In USA for instance, movements fighting for gay marriages and their rights started as early as 1970’s. In the 1990’s it was a great political issue. The US federal government has not legalized gay marriages although some states like Massachusetts allow civil unions. Gay couples in US do not share same rights as straight couples since their marriages are not considered legitimate. Without marriage laws to protect their rights and benefits such couples face turmoil’s in their relationships. For instance automatic inheritance with death of a partner and making important decision for instance signing for emergency medical operations is not allowed. USA should follow Denmark, Netherlands and Canada and legalize gay marriages as a step forward to reducing hate crimes in society and thus promoting social order. Again, since most people who oppose it desires it do so on the basis of religious values the secular values and desires of the people are not considered. It should draw the line between the state and the church so that it accommodates all people in the society. Legalizing gay marriages will see the decline of HIV-AIDS transmission, as gay couples will increase their sense of responsibility for each other. Gay couples should not be denied significant rights like access to partners insurance or medical decision making, workers and compensation benefits. Benefits under annuity and retirement plans all which are important (http://marriageequity. com/facts/index. htm) By not legalizing gay marriage the law discriminates on the basis of sex since one’s ability to marriage depends on one’s sex. Cuba has recently started to involve and respect gay couples by redefining marriage to accommodate all people in society, as socialism should be all inclusive. (http://asp. usatoday. com/community/utils/idmap/13917955. story) Discrimination against gay couples will be abolished and their unions or marriages will be legalized It is ironic that US the world’s leading countries in democracy restricts gay marriages while it should be advocating and fighting for equality of all marriages. Gay marriages should be legalized and couples should be entitled to social security benefits and protection under federal pension laws. This would reduce instances where on death of a partner one cannot access the partner’s benefits. In case the family had children such benefits would be of great importance in maintaining the children’s welfare. Without legal protection gay couples face economic hardships that would have been eradicated had their marriage been legalized. South Africa and Belgium have also embraced it and marriages between same sex couples receive blessings. Today, most children are born out of wedlock to single parents; marriages end divorce and the family as a unit that provides the appropriate atmosphere for children to grow is loosing the grip. Children are still being brought up successfully outside the conceived perfect environment of the ‘family’. Gay marriages should be legalized so as allow partners make important decisions like medical based decisions. It will allow one make important decision that would save the partners life. Arguments in support of gay marriages The government’s purpose is to ensure that people’s rights are respected and that equality is maintained. It is therefore fair that gay marriages be legalized. If gay marriages are recognized gay couples would take the advantage of automatic inheritance in case of death of one partner. Without such gay couples inherit nothing of what they have worked hard for with their partner. Both straight and gay couples should have equal rights. (http://angelfire. com/home /leah/index. html) It is argued that gay relationships are not biologically natural as they cannot produce children of their own naturally. Culturally marriage is the institution that forms and upholds societal and social values and norms. Marriages ensure the continuity of society through procreation. It is therefore argued that society would suffer if gay marriages were to be legalized, as the continuam would be interrupted. Gay marriages should be legalized and efforts by the church t use religious values and imposing them on all people in society are uncalled for. There should be a clear distinction between the church and the state so that the state operates independently to accommodate all its citizens including the secular minded. (Snyder, 2006) Legalizing gay marriages will help create order and stability in society. When legalized the ‘main society’ will change their rigid perception that gay marriage is illegal and they will fit well with them. This will reduce gay-based hate crimes. The whole society will have social unity and discrimination against gay people will reduce. Unions to guide gay couple on how to raise their children can only be effective if gay marriages were legalized. This would counter the argument that gay couples are not good in bring up children. The unions can help create good parenthood through training. Arguments against gay marriages It is argued that legalizing gay marriages will be a step towards welcoming anti-social behaviour. Just as gay couple seek for attention and protection of their rights so would other absurd groups. Moral decadency is likely to occur in society. It would pave way for polygamy, incest and beastiality legalization all of which are not good for society. Traditionally marriage is between a man and a woman and not same sex parties. Gay marriages are therefore against the traditional perception of marriage and should be discouraged. Naturally marriage should be between two people of different sexes. Attraction between two people of same sex is considered unnatural gay marriages should therefore come to a halt. Marriage should be an institution between a man and a woman. And those gay marriages are immoral. God created a woman for the man and not a man for a man or woman for another. Gay couples choose to be gay and should not seek attention for the choices they have made in life. (Hohengarten, 1994) Parents pose as role models to their children. Gay parents are likely to bring up gay children and this will not be good for society. Supporters of this viewpoint argue that children need heterosexual parents to develop. This would be lacking in the gay families and consequently poor child development. The above reasons face much criticism. For instance linking procreation strongly with marriage undermines the other purposes of marriage. Procreation is not the only reason why people marry. Those who support gay marriages consider this point of view incompetent on the basis that there are sterile or barren couples or women at their post menopausal age who marry. The question posed is whether such marriages ought to be considered null since they won’t bear children. Again marriage could be for sexual satisfaction companionship and moral expression. (Strasser, 2002) Another problem with the argument that gay marriage is immoral is that who defines marriage and what is moral or immoral calls for another debate altogether. People have different perception about what is moral or immoral. Using religious values to support eradication of gay marriages by quoting the bible is inappropriate especially to a country that accommodates diverse religions. This is an insufficient approach as freedom of religion will be compromised. Why install your religious aspects to life on people who are for a secular approach to life? (http://atheism. about. com/6/9/007160. html) The argument that children need heterosexual parents to grow and develop is quite shallow. There are cases where their development is jeopardized despite them having heterosexual parents. Children need good nurturing, tender care and love from their parent’s to develop. Again gay parents are more likely to bring up straight children to spare them the pain of discrimination they have through. (Ross, 2002) Some gay people are not gay by choice but by birth. Argument that gay couples are naturally attracted to same sex partners outdoes the argument that gay marriages are unnatural. Nature should take its course and they should be allowed to marry those they are attracted to regardless of their sex. (Pierson et al, 2005) Arguments raised against legalizing gay marriages on the basis of their instability are uncalled for since the straight marriages have proved to be 7% more instable compared to gay marriages. In the USA only two states legalize gay marriages that are Massachusetts and Lowa though they call them civil unions. The federal government under the defense of Marriage Act of 1996 leaves the states to decide on which approach to handle its issues. Gay couples want their marriages to be legalized. This will eradicate the discrimination they face, as society is not comfortable with them and view them as ‘outcast’ with legalization gay couples can gain recognition. (Mello, 2004) The church is used by politicians for their own interests. Politicians are careful in discussing critical issues like whether to legalize or not legalize gay marriages. They are cautious not to offend the people who will determine their stay in government through voting. Conclusion. Gay couples have their rights to be happy. Happiness in marriage would be with the person one is attracted to and willing to be intimate with. Denying gay couples that happiness and trying to impose the person they should marry in terms of gender would be depriving them their rights. The government should ensure that the rights of all citizens are preserved. If gay marriages were legalized the HIV-AIDS prevalence would decline. This is because gay couples would increase their commitment towards their marriages. Forcing people to marry those they are not attracted to is a major reason for increased divorce rates. References: Austin Cline. 2007. Gay Marriage and church/state separation. Retrieved on 16th October 2007 from http://atheism. about. com/6/9/007160. html Leah Moore. 2001. Points in defense of gay marriages. Retrieved on 16th October 2007 from http://angelfire. com/home /leah/index. html USA Today. 2007. When it comes to gay rights, Is Cuba ahead of USA? Retrieved on 16th October 2007 from http://asp. usatoday. com/community/utils/idmap/13917955. story Mello, Michael. 2004. Legalizing gay marriages. University Press. Pierceson, Jason, Courts: 2005. Liberalism and Rights: Gay Law and Politics in the

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Themes of War - Essay Example The theme of the author is able to display how war affects every level of society while holding the wrong intent that negatively impacts those directly and indirectly involved without good reason. This is displayed through the monologue and the way that the author describes the specific situation. The first way in which the author describes the problem is with the individuals that are fighting in Iraq and what this has caused to their personal lives. This occurs specifically with Cheo’s brother who is fighting in the war. The conditions which are described show how his brother is suffering not from the fighting but, instead, from the lack of care which is received while being in Iraq. â€Å"He sat in a tank in the middle of the Saudi Arabian desert. Wrote six, seven, eight hours a day. These brilliant letters of fear† (Rivera, 346). The fear is then described with the brother waiting to die while there is nothing to do but wait. This problem is one which continuously ar ises in the main theme, specifically in how it has affected his brother by creating fear and causing him to believe only in death. The conditions of the war and the treatment of the soldiers further show that the Iraqi war is one which is not worth fighting and is only leading to misery and loss of life. The individuals that are affected then move into the familial relationships that have connections to those that are in the war. Cheo, as the main character, is first shown with the effects that he has had toward the war because of him missing his brother and of the pain which he knows he is in. This is followed by his confusion over the rights and beliefs which he knows he should have and which cause a division of whether to believe in the war or not. The problem which arises is first seen with Cheo’s observations of his brother and how he changes from saying that he loves others to fighting them and no longer having this characteristic. The reflection continues with Cheo cha nging his belief in wanting blood and bombs and waiting every day for Iraq to be bombed so his brother can come home (347). The change in the character of Cheo shows how the relationships of the family and those that are waiting for the war to be over affect the situation even more, as well as the attitudes of those that are placed in the war. The problems noted with the family then turn to the dialogue becoming one of a national and societal problem. This creates a connection that moves from the family and into the political and social impact that is created. â€Å"And this billboard went up in my town showing Stalin, Hitler, and Hussein, saying we stopped him twice before we have to stop him again! This billboard was put up by a local newspaper!† (348). The attitude created in society is one which shows the same violence that is taking place in the war, despite the lack of knowledge or understanding of what is occurring in the war as well as why it is being fought. The them e of violence and how this takes over at every level is displayed through this dialogue and by showing that there is a sense of the war spreading because of attitudes, changing beliefs and the position of being involved in the war. The war, then, becomes one that is based on growing attitudes of violence over nothing that is occurring within society except for a desire to have money and oil. The theme continues with noting that the war is based not only on problems

Case study #1 Example | Topics and Well Written Essays - 750 words

#1 - Case Study Example Basing on the company’s experience and an interview with one of the workers at the customer service center of Nike Inc, the paper examines the process of customer service within the company. Creation of strong brand equity has over the past four decades become major strengths for the enterprise. The structure and emphasis within the business ensure that the customer get the concept of the idea behind the brand and want to have a connection with the name. After identifying the importance of customer experience, the company is making major steps towards the creation of a competitive advantage. It is believed that seventy percent of purchasing trends and purchasing experiences among customers are a result of clients feeling regarding their treatment. The availability of strong competing brands like Addidas and Puma has led to the realization of the importance of handling customer experience within the company. Since customers are aware of the availability of strong brands competing with Nike, they enjoy the luxury of demanding better services and better treatment while their complaints are being resolved. Because customer brand experience directly correlates with the exper ience enjoyed by the client, ensuring an existence of authentic customer engagements before and after completion of a sale is essential (Frisch, 2009). The approach needs requires a personal commitment with the client throughout the period to ensure any needs or requirements of the client are handled. As Nike company operations involves engaging in direct contact with customers, the company emphasizes on the importance of customer interaction through these processes throughout its retailers worldwide. The organization has consequently created loyalty programs among customers to ensure continuous interactions with customers that in return lead to the development of customer experience. The company’s

Case Studies Essay Example | Topics and Well Written Essays - 1500 words - 1

Case Studies - Essay Example It is understood that the recent wave of expansion that has hit the European travel market has been an application of strategic tools and techniques in order to achieve the organizational objectives of profit maximization, increased customer base and cost efficiency. According to the information presented by Page and Connell (2006: p129) the vast scope of the European travel market is such that 53% of the population residing in the continent were reportedly away on holiday with most holiday goers belonging to the western region of the continent which essentially represents the differences in incomes and savings of individuals residing in various parts of Europe. As per the guidelines set by strategic management, major tour operators in Europe have benefitted from various modes of integration in order to obtain a larger share of the overall market. Page and Connell (2006: p130) identify that due to the adoption of such practices of horizontal and vertical integration the landscape of the travel market in Europe is dominated by certain key players in the industry of which TUI AG and Thomas Cook AG are standout contenders on the list. As highlighted earlier, aspects of strategic management are pivotal to an organization’s success and this statement is also applicable within the context of major European tour operators. The tools, techniques and procedures that are involved in the assessment of a company’s internal analysis are used to define its value creating process and uncover its strategic capabilities. The implementation of these techniques consequently defines the optimal distribution of resources in an organization so that the achievement of economic advantages may guide the business towards prosperity and success (Bensoussan and Fleisher 2012). The purpose of this paper is to effectively utilize the tools of internal analysis which are, Value Chain Analysis and Balanced Scorecard with regards to the European tour operators TUI AG and Thomas C ook AG respectively. Accordingly, the concluding section of the paper examines the key aspects of the internal analysis to provide suitable suggestions and recommendations in the light of the discussion. 2. Value Chain Analysis According to Bensoussan and Fleisher (2012) the procedure which follows the implementation of a Value Chain Analysis can be described as a series of activities that are undertaken to guide products from the stage of inception till they are delivered to the final customers. Henceforth, the division of the Value Chain Analysis is based on the categories of primary activities and support activities which must be initiated for the achievement of various organizational objectives. This section of the paper focuses on the Value Chain Analysis for TUI AG on the basis of the aforementioned categories. The primary activities of the business can be examined on the basis of several categories that are classified as inbound logistics, operations, outbound logistics, mark eting and sales and service. The inbound logistics of TUI AG include: aircrafts, hotels, cruise ships and cruise liners. Accordingly, the operations of the business can be defined under the categories of tourism, travel and hospitality services. Outbound logistics of TUI AG are highly extensive which reflects the vast scope of its global operations, infrastructures comprising of the outbound facilities are travel agencies, airlines, retail stores, high street

Analysis of Story Of The Three LIttle Bears by Eleanor Mure Essay

Analysis of Story Of The Three LIttle Bears by Eleanor Mure - Essay Example After reading the short story, I could feel no gratification at all, especially since the ending is quite unusual. Unlike in most children’s stories that have a happy ending or a lesson, the significant lesson to be learned from the story is not quite clear to me, and I think this would be the case for children who would read this too. It implies punishment for people who do not respect other people’s property. For me, this would not be effective. Rewards would be more appealing in teaching children. Perhaps one of the lessons that the author tries to teach here is that of moderation. Goldilocks finds herself choosing the middle path. She likes the porridge that is not too warm nor too cold; she chooses the chair that is not too hard nor too soft; and she prefers the bed that does not have too much space above her head or below her feet. Yet, if this lesson is indeed the intention of this story, then it is not clear as no obvious rewards are given for her actions. On the contrary, punishment is implied for Goldilocks at the end of the story. It troubles me that the words â€Å"she broke her neck† were used at the end to imply punishment for her rude and disrespectful behavior. But then again, whether or not she was indeed punished is left for the reader to guess, as there was no trace of her and the bears never saw her again. I find this quite troubling, since it makes me wonder what the point of the story really is. There is no clear reward or punishment for the actions that Goldilocks did, and thus, whatever the lesson this story is supposed to teach children is not reinforced. During the course of the story, I felt a sense of hope that it would end up great. Since the bears were polite and good-natured, I was hoping that they would forgive Goldilocks for what she did. Yet when it reached the end, Goldilocks simply ran away. The story leaves the reader hanging, and not pleasantly at that. Digging deeper than just reading the short story on the book, I

Management Functions Assignment Example | Topics and Well Written Essays - 1000 words

Management Functions - Assignment Example It has refocused on offering low prices for their products, improved the mix of merchandise sold, and provided friendlier and quick customer service. The secret to this was the organization culture introduced by the company that encourages teamwork. Teams in the company get together to discuss performance and to help each other with the goals of improving performance (Barnaro, 2005). Staffing Staffing deals with managing the structure of the organization that ensures putting the right man on the right job. â€Å"Staffing involves managing the structures of the organization through doing proper selection, appraisals and personnel development to fill roles designed in the organization’s structure.† (George & Jerry, 1999, p.74). staffing includes manpower planning, recruitment and selection, training and development,compensation,performance appraisal and promotions and transfers.walmart ensures that it recruits employees who have the right qualifications for the positions that they hold.walmart also encourages diversity at the workplace by employing staff from different cultural backgrounds and minority groups. The company has Latinos, African-Americans, Asians and people with disability.walmart have over 1000 employees in their retail outlets in the U.S market. Controlling Controlling is the measurement of goals that have been accomplished against the set standards and correction of deviations that have occurred if any, to ensure organizational goals are achieved. Controlling is done to ensure that everything confirms to standards and having an effective system of control that can help in predicting deviations before they occur. controlling involves steps which include establishment of standard performance, measurement of actual performance,... This essay discusses the field of management, that is a process that involves several steps which starts with scanning the environment to analyze external threats facing the organization. This could be economic conditions, customers or competitors. Planning considers available and prospective physical and human resources in the organization in order to get effective contribution, coordination and perfect adjustment. in ensuring that they achieve their goal of developing cost structures that would enable the organization offer low prices,wal-mart strategies on replenishing their inventory using cross docking logistics technique. With this technique products are got from suppliers to wal-mart warehouses, they are then shipped to store in the shortest time period possible. The researcher mentions that Troy argues that Wal-Mart has concentrated on developing and advancing a highly structured supply chain management to enhance their competitive advantage in the market. These functions of planning,staffing,controlling,organizing and directing helps in achieving group goals, ensures optimum utilization of resources and reduces costs through minimum input by proper planning and using minimum input and getting maximum output. In conclusion, it could be stated that they help in establishing a sound organization, establishing equilibrium and they are essentials’ for prosperity of society, in that efficient management leads to better economic production which increases the welfare of the people.

Orangization Behavor- Phase 2 DB Essay Example | Topics and Well Written Essays - 1250 words

Orangization Behavor- Phase 2 DB - Essay Example The company is growing and to enable the company to cater to the different cultural markets, CSD will have to incorporate diversity and train the employees to be culturally sensitive about many issues. An organization can be viewed in many ways; it can be a machine, designed to be highly precise and organized, it can be an organism with a lifespan during which it grows, becomes weak and then dies, it can be an instrument of domination which is exploited by the wealthy and powerful. Thus organizations can be defined through metaphors, in itself it is complex and no single metaphor can define it completely. (Morgan, G, 1997). Within an organization there is a lot of communication taking place, information keeps flowing back and forth. Types of communication channels that are open to organization are formal and informal channels. Both of these channels have many techniques within them. In the formal channel there is upward and downward communication, and horizontal communication. In the informal channel, there is the grapevine and management by wandering around. Keeping in mind that the structure of the organization is a matrix structure, all types of formal communication should exist. Employees need to report to their supervisors with problems and feedback from the customers, while supervisors should share knowledge about the product to avoid problems such as selling the wrong widgets. Apart from this, since there has been a recent change in the structure, the department heads need to get together so that they can bring the organization together. The sales department is responsible for the sales and the customer services. They have only been concentrating on sales, it needs to be communicated to them that customer service is also a vital part of the company. Also to integrate diversity within the organization the department heads needs to cooperate so that all

Putting It All Together Essay Example for Free

Putting It All Together Essay A Childhood to Remember Memorial Splash Park has gone through the early planning stages. It is now time to take what the committee has composed on paper, and turn it into a reality. The planning stages has taken a total of three months to accurately address timing, sitting/sizing, cost, potential funding, and community research for the park. Once those issues were calculated and discussed, then the additional issues of which park elements will be used, security, and maintenance of the splash park was addressed. The proposal of Memorial Splash Park has been presented to the board, as well as all research in regards to cost, sitting, sizing, funding options, equipment/labor needed, security, maintenance, and community surveys. The proposal was voted 6 to 1 in favor of construction of Memorial Splash Park. I, and the committee, have to decide to break ground September 4th, 2012 and complete construction exactly four months from the date. A brief, but detailed, account will be given as to the steps taken over the four months to get the park up and running. Planned Cost of Construction  Before construction could begin, total cost had to be calculated for Memorial Splash Park. Once every aspect of the planning stage was researched and gathered, C. Faye (assigned committee member to calculating cost) used this equation to the overall cost of project = Cost of playground equipment + Cost of installation + Cost of surfacing + Cost of design fees, grading, landscaping, and other expenses = Total project cost or budget (Ruth, 2008). This basic equation will help the project stay within budget and the time frame set. Month 1: Underground Work  Before any park elements could be laid down, the old foundation of the area selected had to be broken up and the Earth dug up to view the current pipe and drainage system (see appendix diagram 1). It was the determined that minimal issues had to be addressed to make the pipe and drainage system adequate to serve the needs of the splash park. What saved a great deal on time was the fact 4 in. PVC pipes (not metal) were in place. Once the minor issues were addressed, the system was tested and inspected; it was passed by the citys lead structural engineer. This initial process took a total of two weeks to complete. Now that the proper pipe/drainage system is in place, foundation has been laid in the respective areas for the full basketball court and water area. These areas required a special concrete blend. The playground area foundation will be composed of a shock absorbing material that will help make that area safe. To reduce the risk of injury due to falls, playground equipment should be located above a shock-absorbing, or safety surface (Ruth, 2008). It is imperative that children safety be first and foremost. The laying of foundation on each specialized area took two weeks. So the total process correcting pipe/drainage system to laying the foundation was one month. Month 2: Playground Construction Once the foundation has properly dried and been tested, it was decided to start piecing together the playground area (see appendix diagram Playground Area). After much consideration, it was agreed upon going with pressure-treated wood with a hint of durable recycled plastic over galvanized steel and aluminum. It will give the area a modern yet familiar feel. We decided to go with the equipment manufacturers option of a community build. This helped save 25% of the cost of the playground. The community build allowed for the community to come together to erect and assemble the play structure. The manufacturer even provided assistance to help organize a successful â€Å"Build Week†, and also trained supervisors to oversee the work. This assembly of the playground area took a total of two and a half weeks, and the remainder of the month was left to rigorous testing of the structure. Month 3: Splash Area Construction, so far, has gone as planned, until a three straight days of rain occurred. This pushed back the start of the splash area (see appendix diagram Splash Area) by a week. This part of the process did not include the community involvement and was completed by the hired construction crew plus a structural engineer. The elements of the splash park include galvanized steel parts to make the different structures that water will shoot, spray, and pour down. Also, during the laying of the foundation process, holes were made in order to allow for water to shoot up from the ground, allow for the placement of made structures, and to drain the water out. The different colors chosen were to help bring about good vibes and fun times. Once every structure was composed, it was set and mounted in its respective place. The process took four week exactly and passed the structural engineers approval. Month 4: Basketball Court Area And Clean Up The construction of the splash area went over by a week due to rain. This left three weeks left until Memorial Splash Park was completed. The last thing was finishing the full court basketball area (see appendix diagram Basketball Court) and cleaning up before the grand opening. The court was left for last because it will take the least amount of time to complete. First thing that was done was to surface the court with lights. The surfacing process took no more than three days. Lastly the court was lined and painted and allowed to dry. The basketball court construction was completed in a week and a half. The final week and a half was left to an intense community cleanup, with proper disposal, and reevaluations of each area. Each area was again passed and what could be recycled was indeed. Additional Structures and Services As each area was built, there were also a specified amount of benches, three medium covered picnic areas, grills, and a mile walking circle enclosing the park added. These additional structures will assist in appealing to every one of all ages. The committee left no stone unturned when planning out Memorial Splash Park. Additional services must be provided to keep the park in pristine condition and safe for the patrons. Maintenance will be done quarterly by the Park and Recreation Department for the city. They will be accompanied by a structural engineer to ensure the structures have not been compromised by nature (severe thunder, hail, and rain storms) or defaced. Also the park will be opened from 8:00am to 10:00pm and will have two plain clothed armed security guards on duty during those times. The security guards are there to eliminate sexual predators, bullying, gang activity, and fighting. We want everybody to be able to come and have a great time without worrying about anything. Conclusion Memorial Splash Park opened to great reviews seven months after a small committee came together to make a change. A community barbeque/splash day was held and everybody was invited. The overall goal was to provide a safe and free place where children and families can enjoy themselves. The construction process was broken down over four months, with each month dedicated to the building of a specific area. Each structure brought about its own set of challenges, from making sure proper pipe/drainage system was in order to dealing with the elements. The project managed to stay on budget and within the time frame allotted. Memorial Splash Park would not have been the success it is with the involvement of the community. They helped with the building of the playground area as well as the cleanup. Memorial Splash Park was born out of the need to return fun to the children of the community as well as bring the community together. All it takes is few willing minds to do something bigger than them.

Save the Earth from Its Near Destruction Essay Example for Free

Save the Earth from Its Near Destruction Essay Human and environment are interconnected. What we do to the earth will return to us also humans. Because of taking things for granted, our environment is undergoing to destruction. This movie, The 11th Hour, serves us an eye-opener to its audience. The root of earth destruction began when trees in forest were cut down. Tree is our main supplier of oxygen and they lessen the carbon dioxide in the environment that makes the earth cool. We are experiencing global warming because we are not a good steward of this earth. Cutting down trees irresponsibly and overfishing are some of the evidence that we abuse the earth. As a result, landslides, strong typhoons and abnormal weather condition are happening to us today. One of the evidence also of earth is the pollutants in the air and water that makes people sick of hard to heal disease such as cancer. We could see this abuse on earth but ironically we are not doing something about it. Yet the worst, we are focusing on economic growth to the point that we disregard the nature. It’s not yet too late to act. Save the earth from its destruction. If not now, when? How will be the life of future generation if we didn’t take the first step to prevent the earth from its future destruction? There are many ways to save the earth like, plant trees and have a self discipline. It’s not yet too late. The clock is not yet striking 12, it’s only the 11th hour.

Impact of Globalization on Ford Motor Company

Impact of Globalization on Ford Motor Company The motor vehicle industry offers a unique perspective on globalization because of its massive employment, huge corporations and iconic product, it seem to reflect the countries identity. GM and FORD for the united states, FIAT and Ferrari for the Italy, Toyota and Honda for Japan. Globalization has impacted almost all the companies. Some of who managed to survive the various incidences of history like the world war and the great depression have set industry standards for the companies to follow. I am going to demonstrate the effect of globalization by taking Three instances from the Ford motor company. The following essay will try to give an insight of how political, economical, social and technological factors affected Fords strategies under the changing business environment that helped it stand out from the other rival car manufacturers in the world. Ford created some of the finest works of automobile engineering and came out with various eco-friendly innovations making it the only motor company to secure its place in the list of 100 most ethical companies of the world. About the company: Henry Ford had experienced a grand success especially with the early models like the T Model . he went on explained his business overseas and by the early 1910s, with production facilities in France, Denmark and England ,Germany and Austria. After the First World War started, Ford produced half of the cars being sold in the US. During the war, Ford produced many of its cars to serve the army. 1938: The German consul at Cleveland awards Henry Ford the Grand Cross of the German Eagle, the highest medal Nazi Germany could bestow on a foreigner By 1941, Ford became the worlds largest assembly plant owner and Ford produced from standard military vehicles, to B-24 Liberator bombers and tanks during the World War II After the WWII, was the period when Ford company developed and evolved very fast. Ford came out with latest technologies and development for their cars. During the Cold War they were the most important carmakers in the world. It was during period that the Ford Motor Company looked for other possible investments and continued to expand overseas. In 1979 they acquired a one fourth Mazda, the Japanese carmaker in 1987. Ford added Aston Martin and in 1989 Ford acquired Jaguar under its umbrella brand. Ford Motor Company onits 100th birthday in 2003 and showcased a series of special edition of cars, such as the all new Ford Mustang. Ford faced financial crisis when it reported losses of over $12 billion for the 2006 fiscal year .It led to the selling of some of the brands from the Ford group: Aston Martin, Jaguar and Land Rover. After the third Restructuring process The Way Forward, Ford started to Divest its subsidiary business in order to focus on the core FORD brand. It sold its Jaguar and Land Rover brand to Tata Automobile of India in 2008. Major events that shaped FORD in the changing global environment: 1914: Ford introduced $5 workday minimum wage double the existing rate. Background: In 1914 ford innovated the 5 dollar workday. 5 dollar was just twice the wages being paid at that time. The interesting thing about this was it was far more than the balance between demand and supply. The number of worker willing to work exceeded the required. The ford company came to be associated with good wages in 1914. This policy of high wages and mass production gave rise to a new term Fordism . Factors affecting decision: (P)olitical: Henry Ford was a strict anti-union, and believed in authoritative way of government system. (E)conomical: In the 1913 the availability of labors must have increased as the national economy and Detroit hinterland suffered a significant downturn. This is evident from the following table 1 which shows the number of people receiving the special unemployment relief in the country including Detroit increased about two third between the period of July 1912 June 1913 Fords high wage policy is in by the efficient wage theory. There are various theories for these changes like the Dual labour market theory. Although the same efficient wage theory also says the in a competitive market some people must be stuck in bad, low paid jobs or unemployed (Gintis, 1998). The alternative to the Fords offer of 5 dollar wage was unemployment or very low paid job hence can be the reason why workers showed up. (S)ocial: In 1913 Fords worker turnover rate increased to 380 percentage. High turnover rate during the twentieth century was a common problem faced by many manufacturers. The reason for dissatisfaction of labours according to ford management repost Too long hours Low wages Bad housing conditions Undesirable shop conditions . Fords method of 5 dollar wage made workers motivated, punctual. This although should have been a costly affair turned out to be profitable step for the business. The higher the wage rate offered by firms, the more effort will be supplied by the employees, with other things being the same (T)echnological: Dramatic evolution in production technology by Fords assembly line technique. The high efficiently of this system raised the importance of High worker turn over, high worker effort, and high worker quality. By 1910 two third of the fords workforce were either workmen or mechanics who were over rated as highly skilled or skilled this was because ford was not a manufacturing company rather assembling company. This problem was suppressed by 1996: Ford certifies all plants in 26 countries to ISO 9000 quality and ISO 14001 environmental standards Background: World War II gave birth to the idea of quality assurance. The first formal quality control programs in the world was instituted by the United States Defense department , in order to deal problems related to manufacturing of defense equipment as quality was the main consideration. Industry standards then became popular and reached the other parts of the world. They formed the basis for a set of quality assurance standards which was adopted by the North Atlantic Treaty Organization (NATO) members . Those standards were called the Allied Quality Assurance Publication (AQAP) (http://www.referenceforbusiness.com/encyclopedia/Int-Jun/ISO-9000.html). Finally at the close of World War II, the International Organization for Standardization (ISO) was created in 1947, with headquarters in Geneva, Switzerland. ISO 9000 ISO 14001: In December 1996, Ford became the largest automotive organization in the world to receive ISO 9001 quality certification, for quality management and quality assurance. On Sept. 9, 1999, Ford Motor Co. became the first U.S. automotive company to require all of its production and nonproduction suppliers to become certified to ISO 14001 international standards for environmental considerations. Factors affecting decision: (P)olitical: Governments may have actively promoted ISO 14001 if their economies relied on exporting to countries with high levels of ISO 14001 adoption rates .United States formed the Registrar Accreditation Board (RAB) to standardize procedure for certification. The US Congress adopted the National Technology Transfer and Advancement Act requiring federal agencies to adopt International Standards where they exist, instead of creating their own. Intergovernmental networks played limited role in diffusion of ISO as it was nongovernmental regime. Adversarial legalism approach was practiced in the U.S . In this system, the parties to a controversy develop and present their arguments, gather and submit evidence, call and question witnesses, and, within the confines of certain rules, control the process. The fact finder, usually a judge or jury, remains neutral and passive throughout the proceeding. This was slow and cumbersome. Relations between environmental groups, government regulators and industry were characterized by varying levels of hostility and high levels of mistrust. (E)conomic: International standards were important trends in business practice. During the Early 20th century, quality was viewed as an additional cost of production for the business. But, the quest for quality became their major consideration, as companies realized that high quality leads to more efficient and less expensive production processes. Both ISO 9000 and ISO 14001 helped companies to increase their market share. Encouragement by World Trade Organization for creation of supranational standards helped cut down barriers on trade and investment. As a consequence of which Foreign Direct Investment from international Market started pouring in. Changes were also happening at domestic levels which led to Rise in intercompany (trade within value the value chains of the company) trade Because of presence of dual trade linkage there might be a Possibility of California effect which means that if country A absorbs a significant proportion of country Bs exports, then country B can be expected to mimic or respond to the policies of country A (S)ociological: Employee morale improved as they felt part of the process. Managers and employees accepted responsibility for quality. This created better co-operation and communication among workers to do a better job and increased companies efficiency. This in turn led to improved customer satisfaction and trust. It helped reduce the need for customer audits (This can result in major savings). However, many citizen and activist groups were wary of EMS standards and viewed them as private regimes that were outside public scrutiny and claimed that adopting ISO 14001 will become a de facto condition of doing business: firms that outsource their operations sometimes require that their suppliers adopt ISO 14001. (T)echnological: Development of pollution-prevention techniques and company-specific EMSs to reduce waste production as well as disposal costs .Presence of new form of Information and technology and greater interaction among people of different countries led to the diffusion. Ford was perceived as good corporate citizens producing higher quality products. Hence, they gained goodwill that helped retain old customers while attract new ones. (L)egal: There was NO legal implication were there on the companies to adopt such standard but since EMS had become a gold standard for CSR conscious firms therefore most of the MNCs adopted them. (E)nvironmental: In the 1980s, environmental regulations on hazardous waste disposal at both the local and national levels became more stringent. This forced companies to change their method for hazardous waste disposal from placement in landfills to treatment and recycling. 2008: Ford sells Jaguar and Land Rover to Tata Motors: Background: After facing a loss of North American market share to Asian rivals like Toyota, Ford CEO Bill Ford declared to cut 25,000 to 30,000 jobs and idle 14 facilities by 2012 thus declaring the resurgence of Ford Motor company.. Bill Ford had instituted a Revitalization Plan in 2002, after the automaker lost $5 billion a year earlier. But the plan failed to meet the goals set for 2005. Later in 2006 the new CEO Allan R. Mulally announced the Third restructuring plan known as The Way Forward. The targeted areas of improvement were marketing and sales, Technology development and Human resource. Factors affecting decision: (P)olitical: Allan R. Mulally succeeded Bill Ford as the new president CEO of Ford Motor Company on September 5, 2006. on September 5, 2006. One of Mulallys first decisions at Ford was to bring back the Taurus nameplate. (E)conomical: Ford reported a loss of 1.2 Billion Dollar with a decrease in the market share from 23.7% to 15.5% since the year 2000.It faced tough competition from Asian manufacturer such as Toyota which had manufacturing capacity of over 1.5 million vehicles in North America alone. High prices of oil posed a threat that global economy might slip into recession and would create high uncertainty for the business as customers were switching over from sport utility vehicles to smaller, more fuel efficient cars. Because of high increase in labour and material costs, United States parts manufacturing company like Delphi declared bankruptcy in 2005. Ford did not want to sell its jaguar and land rover brand to similar automaker company which had wide range of product in order to avoid competitive pressures on fords other auto lines. (S)ocial: Stringent relationship between united auto workers and American car maker as the domestic car manufacturers bore the burden of heavy pension and health care costs. This was the scenario for both for current and retired workers, as stipulated in contracts with the UAW. This was not the case with Japanese manufacturers. UAW member at fords allowed non union workers to perform certain tasks and did not pay them even for overtime some of which fell on weekends and furthermore 6000 salaried jobs were cut in September, 2006 and additional 30,000 jobs scheduled for 2012. Customer purchases are driven by perceived value derived from brand reputation and an individuals personality and living standards, lack of differentiation between Ford, Lincoln and mercury brands resulted in cannibalization of sales. (T)echnological: U.S governments new rule in august, 2005 brought a change in the existing fuel efficiency standards. Though ford lacked innovation in mid sized and small cars it projected that by 2015 one half of the vehicles on road would have a six speed automatic transmission, which would result in increased mileage. (E)nvironmental: Pressure from environmentalist on car and truck manufacturers to clean up emissions by adopting to fuels like bio diesel, electric motors, compressed natural gas and solar energy. How globalization  impacted FORD: We see from the examples globalization effected fords strategies from the time it was setup till date. They were able to maintain their competitive advantage over the other companies either by innovating new technologies likes the assembly lines, approaching to new International standards or by focusing on the core Ford brand. By adapting such processes, FORD motor company contributed toward Corporate social responsibility and created remote social value in the eyes of the customers. Although there is some probability of window dressing and a quest for better profits. These can be understood by strategic behavior theories like market imperfections (Stephen Hymer (market imperfections, 1960s) and role of oligopolies (Market Imperfections, 1960s). Which explain that MNCs expand abroad ,exploit specific advantages over their rivals and remove conflicts with their rivals. (IBE, Lecture 8, slide 33) The Ford company explored new horizons of business across cross border market either by value crating or value capturing activities (lecture 6 slide 31). Expanding overseas specially towards emerging economies may not only increase corporate profits and shareholders returns but also provide employment to host countries and develop these economies at the base of the pyramid all of which have noble CSR dimensions. Ford quickly merged and acquired some of the big brand under its umbrella and came out come with some best of the cars leaving a long lasting impression on the consumers. Despite of debate, Globalization has led to a greener and safer environment where MNCs are under continuous process of giving their consumer even better products and creating flagship cars.