corporate and business law Essay Example

corporate and business law Paper corporate and business law BY etu20110952 GASPARD vjrgile LAFITTE Pierre AC504E External auditing Take home case Pacific Sunwear of California Inc Executive summary † 3 The Sarbanes Oxley act: a compliance plan 4 Overview: 4 Summary of the Sarbanes-Oxley 4 The Sarbanes-Oxley act: † 404: Checklist: 5 Auditing standards n05: description of the procedures to comply with the section 5 International standards of auditing in reference with the 6 Processes to comply with the Section case How to comply with the 7 Procedures section 404? mplemented by Pacific Sunwear.. 8 Evaluation of the effectiveness of the process implemented by 9 Impact of the information disclosed on the stock PacSun † 10 Costs and benefits of Sarbanes- Oxley † 13 Recommendations for 15 References. 16 Appendix A : Deadline for the compliance with the different sections of internal the act.. † . 17 Appendix B: Certification required by the SEC about . 9 Appendix C: Certification required by 2 0 the SEC about disclosure controls Executive summary Pacific Sunwear of California entered in the stock market on Nasdaq in 1993. The Sarbanes Oxley act redacted in 2002, established new or enhanced standards for listing companies in the US markets and in particular the section 404 about the creation of an internal report each year, in response to a number of major corporate In this report, we will establish the impact of this United States federal law on PacSun by analyzing the process engendered, influence of the disclosures on the stock price, and the cost/benefits relation. The Sarbanes Oxley act: a compliance plan The Sarbanes-Oxley act enacted in 2002 is a United States federal law to respond to some major corporate and accounting scandals such as Enron, Tyco international or World com. These scandals cost billions of dollars to investors when stock prices collapsed and decreased the public confidence about nations securities markets and auditing standards. So, this standard established new or improved standards and regulations, for all US public company and all foreign companies listed in the US stock markets. This act contains 11 sections and required the Securities and Exchange Commission (US regulator which regulates the securities industry and the stocks and options markets) to implement the rules and comply with the new law. The deadlines to implement SOX are exposed in Appendix 1 . Summary of the Sarbanes-Oxley act: Then, we are going to describe quickly the different sections of the SOX act (except the section 4 explained below): 1 Public Company Accounting Oversight Board (PCAOB): the objective of this board is to register and regulate all public accounting firms to implement compliance standards 2 Auditor independence: creation of standards for external auditor ndependence to reduce conflicts of interest 3 Corporate responsibility: defines the relation between external auditors and corporate audit committees 5 Analyst conflicts of interest: evokes practice to create a new public confidence in the reporting 6 Commission resources and authority: highlights practice to create a new public confidence in the financial analysts 7 Studies and reports: SEC has to make various studies and explain their findings 8 Corporate and criminal fraud accountability: describes criminal penalties for fraud 9 White collar crime penalty enhancements 0 Corporate tax returns requir ed to be signed by the Chief Executive Officer 1 1 Corporate fraud accountability: identified corporate fraud and records classified as criminal offenses The Sarbanes-Oxley 404: Checklist: The section 4 is about enhanced financial disclosures and increases requirements for financial reporting like off-balance sheet transactions. It requires internal controls to offer the accuracy of financial reports and disclosures. An internal control system is failures, or weaknesses in the system that must occur. The section 404 is the cornerstone of the section 4 and demands that each annual eport contain an internal control report. We will write a custom essay sample on corporate and business law specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on corporate and business law specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on corporate and business law specifically for you FOR ONLY $16.38 $13.9/page Hire Writer This additional report assesses the responsibility of management for establishing and implementing adequate procedures for financial reporting. This report must include: assessment of effectiveness of internal control structure and procedures, any code of ethics and contents of that code. Consequently, this section is really decisive because it implies extra costs to comply with this requirement for registered public companies in the US stock markets. The Appendix 2 and 3 sum up the certifications required by the SEC. Auditing standards 05: description of the procedures to comply with the section 404 Issued the 24th may 2007, the Auditing standards n05 substitutes the Auditing standards n02. The Public Company Accounting Oversight Board releases the AS n05 to describe the procedures to comply with the section 404: o Highlights a top-down risk based approach (financial risk assessment) o Places greater reliance on entity-level controls o Focuses on understanding and testing controls related to risks for significant accounts and disclosures o Allows for greater ability to rely on work of others o Changes definition of material weakness and significant deficiency: Material weakness: a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis. Significant deficiency: A deficiency or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important to merit the attention by those responsible for ove rsight of the companys financial reporting. o Simplifies the auditors opinion by eliminating opinion on managements ssessment of internal control 5 International standards of auditing in reference with the case The section 404 referred to some ISA standards: ISA 230 about audit documentation ISA 300 about planning an audit of financial statements ISA 330 about the auditors procedures in response to assessed risks ISA 500 about audit evidence ISA 600 about using the Work of Another Auditor 6 Processes to comply with the Section 404 After evoking the requirements of the section 404, we will describe the processes implemented by Pacific Sunwear first and by the other listed companies in general. Complying with Sarbanes-Oxley is complex; compliance requires a multiple approach involving many departments and many people which will be detailed below. How to comply with the Section 404? Generally, according to Sanjay Anand an internal control in accordance with Sarbanes-Oxley is following an eight-step process: 1 Establish a compliance committee which is specialist of the compliance with Sarbanesoxley and can have a general overview of the company about the risk and the solutions. The objective of this committee is to commit the various departments, to provide training and to communication about the objectives. Assess risk in order to identify the magnitude and potential impact of each risk in order to create a risk portfolio. 3 Set reporting objectives by determining the probability of risks and errors to define decision rules and reporting objectives. For ensuring internal control compliance, these areas need to be created: personnel control, system and resource controls, strategic planning controls and business service controls. 4 Prepare a formal implementation plan, which is a transition plan to move from project step to a day-to-day operation for an internal control system. Communicate the ongoing procedures by presenting clearly and effectively with the focusing on understanding, acceptance and observance. 6 Provide training implemented by the compliance committee in internal policies, practices and procedures. 7 Document processes and risk management certified by the Chief Executing Officer and the Chief Financial Officer so as to demonstrate the efficiency of the internal control system. Perform continuous evaluation performed by the manager in order to establish and maintain controls and to ensure the appropriate compliance. 7 Procedures implemented by Pacific Sunwear The most expensive costs of compliance were those linke d with the section 404: costs about internal controls over financial reporting. The procedures of compliance are only described for the two first years in the case study: 2004 and 2005. Before the compliance, PacSun had not internal control system. They only created it in mid 2003 and they paid the services of a Big-4 auditing firms as required by the section 404. They expanded the internal control department at the end of 2004. About the procedures they implemented in 2004, PacSun followed a process in five steps: 1) Scope and plan the evaluation 2) Document the controls nd correct deficiencies 5) Reports on internal control They identified also 21 major business processes assigned to an owner with the objective to develop detailed process narratives. These major business processes were divided into sub processes with the detail of the business objectives and the risks. At the end of 2004, they had identified a total of 238 key controls and they managed to highlight a significant deficiency about the revaluation of deferred leases which can affect by definition the reliability of external auditing data. Then, all public officers had to certify in their area that the control was effective. The CEO and CFO certified then of the fairness and reliability of the financial statements. In 2005, the process became easier because all the information had already been created. They reduced the number of key controls to 222, only a 7% decrease, in comparison with larger companies (19% of decrease). They discovered a new significant deficiency because they didnt recognize liabilities about the companys loyalty program. 8 Evaluation of the effectiveness of the process implemented by PacSun Strengths: Enables to discover two significant deficiencies which misstate the financial statements Enable to create an efficient internal control system, which reduces the risks and increases the efficiency of the global system Implementation of a double control : internal control and Big-4 auditing firms control Better assessment of risks implied Significant reduction of the costs after the first year of implementation of about 40%, comparable to the other companies Commitment of all the employees which can increase the motivation and the corporate culture Better disclosure of financial information for financial analysts and investors Weaknesses: Compliance costs of $2 million in 2004 and $1. million in 2005 Additional costs associated with the training of the staff with the necessary creation of a SOX program training The compliance is very time-consuming with an increase of the formalization Competitive disadvantage in comparison with the other competitors not listed Overall, PacSun had efficiently implemented the compliance and the weaknesses will tend to reduce over the long term. However, PacSun management believed that the costs are greater than the benefits engendered. The costs implied and generally the time spent to respect the compliance rules, can Justify this opinion. Impact of the information disclosed on the stock prices In 2005, PacSun need to restate his prior two years financial statements, which resulted in no material change to net income. Auditors Judge restatement like deficiencies but they dont agree about the type of deficiency: two of the Big-4 firms judge this particular type of restatement as only a significant deficiency, i. e. a control deficiency, or combination of control deficiencies, that adversely affects the companys ability to be in accordance with GAAP. The others two Judge it to be a material weakness, i. e. significant deficiency, or combination of significant deficiencies, that result in more than remote likelihood that a material misstatement of financial statements will not be prevented or detected. by the PacSun loyalty program called Pac Bucks. In fact, the liabilities and expenses of this program were not recognizing in the proper quarter. This accounting problem was considered by external auditors like a significant deficiency, but not a material weakness. Thus, in FY 2005, PacSun received clean financial statement and 404 opinions. What is the impact of Information Disclosure provided by these deficiencies n PacSuns stock price? In this graph, we can see that the PacSuns stock price is very volatile between 2005 to 2007 (Beta higher than 1) when the NASDAQ is regularly up. This volatility can be explained by 10 the convergence of PacSun to SOX and the substantial increase of information provided on the firm. But it is very hard to have a real opinion of the impact of Information Disclosure on stock Market Returns with a unique firm. Thus we will answer with papers which study this impact on a large sample of US Company. The Sarbanes-Oxley Act of 2002 is one of the , if not the, most important pieces of egislation affecting corporations traded on the US stock exchanges, since the Securities Act of 1932 and Securities Exchange Act of A934 were enacted (Gordon et al. 2007). The SOX act introduced significant changes to financial practice and corporate governance regulation, including new rules designed to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. And the part of the Act having the most impact must be Section 404, which requires management to submit to the SEC with the companys annually filed financial statements, an internal control report, an assessment of the ffectiveness of the internal control structure and procedures for financial reporting, and finally an audit report which include a description of material weakness in such internal controls and of any material noncompliance. Furthermore, where significant deficiencies exist, they need to be identified as required under SOX like we saw in the PacSun case. Many studies demonstrate that the passage of mandatory government regulation like SOX may be altering the operation of capital market by affecting the stock performance of firms. In 2007, Balakrishnan et Al. , examine, by a dataset on stock arket abnormal returns and consists of 300 firms, how the stock market reaction varies for 8-K filling and how this reaction have changed since the passage of the SOX act. The result is that the SOX have the particularity to increase the information flow of a firm. Thus when a disclosure of a deficiency is promulgated, the information is quickly announced by media and have a direct negative impact on the stock market price. Inversely, when a firm received clean financial statement and 404 opinions, we can think that stock price is positively impacted because its an evidence of a very ood internal control of the firm. Another interesting dimension to consider would be the size of the firm. The effect of Sarbanes-Oxley on the firms information environment is expected to vary with the size of the firm (Ghose et al. 2006). In fact, international firm, but in the US sportswear market, this size is important. In a stock market where diversification is one of the solutions to leverage the risk, PacSun can be a blue chip. Thus, a special attention is paid to it by media. 1 Finally, we can say that disclosure of these deficiencies have had a negative effect on irms stock price but, on the contrary, clean financial statement certification and Good 404 opinion have a positive impact on stock price. In addition, a firm can decide to increase the speed with which information reaches investors by publicizing it in me dia articles. Its a good way to build a loyal firms brand image i. e. increase the investor recognition and limited the impact of bad news on the stock price. 12 Costs and benefits of Sarbanes-Oxley PacSun executives seem convinced that the costs of complying with SOX were greater than the benefits to the company. Though, according to a survey entitled Oversight Systems financials Executive Report conducted with 222 corporate finance leaders, 74 percent said their company benefited from SOX, 79 percent reported significantly stronger or somewhat stronger internal controls as a result of SOX, 46 percent said SOX compliance benefits the company by ensuring accountability and 75 percent said they would vote to keep Section 404 if they were members of Congress. In fact, the benefits of SOX Compliance are multiple: There is a positive influence on maintaining investor confidence (and long-term share price) through increased ransparency and fewer surprises. Financial reporting is more timely and reliable. Overall control culture and corporate governance process are improved. Outdated, redundant and inflective processes and controls are eliminated. Employee on- boarding process is easier Then, why did PacSun not benefit from the compliance process to the same extent as some other companies? Or were their compliance costs too high? The main issue of PacSun is this medium size ($1 billon in market capitalization). The high cost of SOX implementation is financially draining many firms. The SOX doesnt ake a distinction between large-cap billion-dollar companies and small-cap; $75- millon companies (the minimum cap to be obliged to apply SOX). Therefore, the Act requires all public companies to comply with the same regulations; it doesnt take into consideration that small companies arent as complex in organizational structure as large companies. Because large corporations have complex business models, more complicated accounting practices, they already have a lot of controls in place to ensure the efficiency of their operations that are required by SOX. In other hand, maller companies have simpler organizational structures and, thus, have slighter accounting practices, which generate simpler financial statements. These small firms require less internal controls. Therefore, since small companies have simpler subject to the same internal control and external auditing requirement of large companies. In the case of PacSun, this business model and accounting practice are closer from a small firm as shown this number of key controls (222 versus an average of 540 for the large companies). In addition, the SOX were created to fight against corporate scandals like Enron. But the majority of these scandals have occurred in large corporations with thousand of shareholders by the intermediary of retirement/pension fund. PacSun doesnt have the same type of shareholders and doesnt require the same level of protection for the shareholder interests. Therefore, although shareholder interests should be protected, SOX regulations arent needed for smaller firms that have simple business structures and a small number of shareholders that are unlikely to fraud themselves (entrepreneurs who start the company, their families, and public shareholders without any link between them). Implanting SOX is a long and costly process for companies. In the case of PacSun where his market is not occupied by large companies but especially by little firms (under the $75-million cap) which dont apply SOX, this implantation creates for PacSun a competitive disadvantage and stumps their growth by requiring them to spend excessive amounts of money and time to implement regulation. As example of costs, we have the cost of training, the implementation of a strong internal control, an increase of the size of finance/accounting departments, the fees of the audit firms ; he required amount of money is disproportionately larger in comparison with the largest firms. Thus in conclusion, we can say that SOX were designed in priority for large and complex companies. These costs are too high in relation with the engendered benefits for small caps. 4 Recommendations for PacSun Continue the work to reduce the number of key controls and try to improve a large part of them (better define it and really find an utility) Check the conformity between all marketing projects and internal control before a launching Optimize the balance between internal and external auditors to reduce the work of he external auditors Change your mind: SOX is an advantage to improve internal control Create a training and development program with an e learning module for example References Anand, S. (2006), Sarbanes-Oxley guide for finance and information technology professionals, John Wiley and Sons, 2nd edition Balakrishnan, K. , Ghose, A. and Ipeirotis, P. 2007), the Impact of Information Disclosure on Stock Market Returns: The Sarbanes- Oxley Act and the Role of Media as an Information Intermediary, University of Cambridge Bowling, D. Julien, R. and Rieger, L. (2003), Implementation of Sarbanes-Oxley S 404: Ensuring Compliance, Leveraging Opportunities Ghose, A. and RaJan. U. (2006) The Economic Impact of Regulatory Information Disclosure on Information Security Investments, Competition, and Social Welfare Proceedings of the Workshop on Economics of Information Security, University of Cambridge Gordon, L. , Loeb, M. , Lucyshyn, W. and Sohail, T. (2006), The Impact of the Sarbanesoxley Act on the Corporate Disclosures of Information Security Activities. Journal of Accounting and Public Policy, 25(5) pp. 503-530. Grinberg, E. 2007), The impact of Sarbanes Oxley Act 2002 on Small Firms, Pace University Ramos, M. (2004), How to comply with Sarbanes-Owley Section 404. Assessing the Effectiveness of Internal Control, John Wiley and Sons, Inc. Available on: http:// books. google. fr/books? id=GAMR23qTQUC=process+to+comply+with+section +404=frontcover=bl= LaTJJAf1 e 1 16 Appendix A : Deadline for the compliance with the different sections of the actl professionals, John Wiley and Sons, 2nd edition, page 63/64 17 18 Appendix B: Certification required by the SEC about internal controls2 professionals, John Wiley and Sons, 2nd edition, page 68

Your Guide to Selling Trees in an Urban Yard

Your Guide to Selling Trees in an Urban Yard Although you may be able to market and sell your yard trees, you still have to attract a local timber buyer with trees that get a higher market value. Trees like grade oak, black walnut, paulownia, black cherry, or any other high-value tree in your area are mandatory for a buyer to be interested enough to make an offer. Remember this key requirement: in order for a timber buyer to be interested in purchasing a yard tree(s), the tree or trees must have value with sufficient volume to exceed the purchase cost. There has to be value to offset costs to the timber buyer to bring equipment (log truck, skidder, and loader) to the property, cut the log, haul the log(s) to a mill, pay the landowner for the tree(s) and still make a profit off the end product. Just that simple. Woods-Grown Trees Are More Valuable As a general rule, woods-grown trees are more valuable than trees grown in a yard in terms of hard dollar economics. They have the advantage of access without property damage, easier equipment operating conditions, and there are usually more trees. This will typically yield more volume and a better economic situation for the timber buyer. Remember that in many cases, a yard tree has important non-timber values through the life of the tree, which includes energy savings, air quality improvement, water runoff reduction, and increased property value, to name a few. Problems With a Yard Tree Sale Yard trees that are open grown tend to have grade-lowering short boles and large, limb-laden crowns. They are also subjected to negative human pressures. Yard trees can have nails affixed to their boles, mower and weed whip damage to the base of the tree, and wire fences and clotheslines attached. They are less resistant to natural elements, such as wind or lightning damage (which can cause defects). Often, a yard tree is difficult to get to. There may be structures, power lines, and other obstacles in the way that would hamper cutting and removal. Attracting a Yard Tree Buyer Even though selling a tree in your yard is not an easy thing to do, it is not impossible. Try some excellent tips from the Indiana Department of Forestry to improve your chances of selling a tree in your yard: Know the tree species. Consult a tree identification book to identify the tree or check with your county forester. You will have a better chance of selling if it is a valuable species in your area. It is also good to have more than one tree.Know the trees circumference. Bigger trees mean more volume and will have a better chance of attracting a buyer. Measure with a household tape and convert inches to Diameter at breast height (DBH). To do this, measure the circumference and divide by pi (3.1416). Measure the tree at 4.5 feet (DBH) above the ground.Know the height of the tree. With a yardstick, pace 50 feet on a parallel plane. Hold the stick 25 inches out and parallel to the tree. Every inch represents 2 feet of height.Know if the location of the tree is one that large, heavy tree harvesting equipment can get to. What structures and infrastructure are in the path of the trees removal? Is there a septic system, structures, other trees and plants, power lines, underground pipes? Woul d it be expensive (or even possible) to transport and run harvesting equipment onto your property? Finding a Yard Tree Buyer Some states only allow licensed timber buyers to buy trees. Other states have logging associations who can help you and every state has a forestry department or agency. These departments of forestry have lists of potential timber buyers who are often interested in purchasing excellent-quality yard trees. Whenever possible, use multiple bids with a winning contract. Sources Growing Walnut for Profit and Pleasure. Walnut Council, Inc., American Walnut Manufacturers Association, 1980, Zionsville, IN. Timber Buyers, Their Agents, and Timber Growers. Article 14, Appendix B, Indiana Department of Natural Resources, May 27, 1997.

Choose an important person that you have looked up to and who has Essay

Choose an important person that you have looked up to and who has helped you in your life - Essay Example He was an optimist who made things easy, even if it was so difficult. When I was small, I almost gave up on learning how to ride a bike. Paw made it look so easy to ride a bike that it made want to try and try again, no matter how many bruises or out balancing acts I made. Through this, he taught me how to persevere and work hard, no matter how difficult it would be. When I was having trouble in school, Paw was the one to defend me from some bullies. But at home, he taught me that fighting is not always the best solution to a problem. The act of goodwill and the power to always stay positive are only a few of the important virtues that make a person strong and must bear in mind when faced with adversities. And because of him, I managed to befriend the bullies who once made fun of me. Most of the time, Paw would tell jokes all day long. As I reminisce over his silly jokes, I never really got tired of hearing them, no matter how funny or how corny it would seem. To me, it was not the j oke that made me want his company, it was his eagerness to have a great time with me that always mattered. He always made sure that I was having a blast, from a silly board game or even to a melted ice cream we were eating. But, not all things turn out the way it should have been.

Cultural Awareness, Understanding, and Acceptance Research Paper - 3

Cultural Awareness, Understanding, and Acceptance - Research Paper Example Hinduism is the religion followed by Indian people, however, they are very well known for their tolerance and respect for other religions and hence, people from different religions like Sikhism, Muslim, Jainism, Christianity etc., are important part of Indian culture (Fenton, 1998, p.156). The open approach to other cultures has helped Indian people to assimilate easily with other cultures. When they migrate to other counties, they adopt their customs easily but at the same time, follow their own ethics and traditions in their private lives (Fenton, 1998, p.43). Indian values are shaped mostly by their religious beliefs and teachings and they value the oneness of God even if in their culture, God is manifested in different forms and deities (Shah, 2002, p.26). Values Even in today’s modern times, rituals related to God and scriptures are very much practiced and followed by Indian people (Muesse, 2011, p.144). The two great epics that are revered by Indian people are ‘Ram ayana’ and ‘Mahabharata’ (Muesse, 2011, p.144). ... The rituals and beliefs of Hindu religion are given in the sacred texts of ‘Vedas’, which are composed of hymns and songs (Winternitz, 1998, p.106). People follow the rituals given in the sacred texts religiously and with complete devotion (Muesse, 2011, p.102). Food The culture, identity and history of India is linked and represented strongly in their food and habits (Henderson, 2002, 99). Indian people value vegetarian system of food and most of the Indian people, who follow their religion sincerely, follow vegetarian diet (Henderson, 2002, 102). Cow is a symbol of sacredness and hence, killing cow for food purpose is considered a sin (Henderson, 2002, 102). At the same time, the fast food which is sold on street side and is full of different spices, is also enjoyed and loved by Indian people. Moreover, Indian culture, being an assimilation of different cultures, is full of variety of different cuisines and food customs. Hence, Indian culture is rich in tradition, spir ituality, customs and variety. Mexican Culture Religion People of Mexico follow a Roman Catholic faith and follow the Catholic Church as the religious authority (Huck, 2008, p.54). Important family events like â€Å"baptism, communion, confirmation, marriage, and novenas†, are carried out in religious traditional way by Mexican people (Kittler& Sucher, 2008, p.238). Hence, people from Mexico can be called religious as they still follow traditions sincerely. Values People from Mexican culture are family centered by nature and value family bonding (Kittler& Sucher, 2008, p.248). They value the ancient sayings, called ‘Dichos’, which give an insight into their traditional, religious and cultural beliefs (Samovar, Porter & McDaniel, 2009, p.260). From the sayings, it is evident

ECONOMIC INDICATORS SLP Essay Example | Topics and Well Written Essays - 1000 words

ECONOMIC INDICATORS SLP - Essay Example Frictional unemployment takes place when workers change or switch between different jobs. For example, change of job for better career prospects, change of interest in domain, transfer to different location of current job etc. Cyclical or seasonal unemployment means the workers remain employed only during specific seasons and unemployed for the rest of the year. It is inversely proportionate to the GDP rate. If the GDP rate decreases, then there will be an increase in the rate of unemployment. For instance, the outsourcing work during tax filing due dates alone shows cyclical unemployment. As per Bureau of Labor Statistics, the standard rate of unemployment is fixed as 6%. However, it increased to 7.7 % on Feb 2013, which is not a good sign for the US economy. In my perspective, frictional unemployment will affect my firm as it can happen unexpectedly on the interest of the experienced worker. This sudden change will affect the production and quality of work done by the newly hired u ntrained workers. 2. Think about other employment issues such as outsourcing. Do you think your firm would benefit from outsourcing? If you chose a firm in which outsourcing is not feasible, you can still discuss the advantages (or disadvantages) of outsourcing. The common employment issues such as low paying and short term jobs, unemployment due to outsourcing for cheap labor, high federal tax and less allowance etc are mostly related to GDP. Apart from the employment issues, outsourcing will definitely benefit the firm in its growth and cost effectiveness. The other advantages of outsourcing are concentration by managers only on principal activities of business, reduction in fixed and variable costs of firm, forming a new pool of required skilled personnel, a better control in work and staff, solving difficult tasks with less cost, temporary job allocation without statutory benefits, less scare about the labor turnover ratio in a firm, improvement in talents of internal staff etc. If the disadvantages of outsourcing overlook the advantages, then there is risk in outsourcing work. The disadvantages might include the risk in quality of work done by the back office, fear of privacy and confidentiality of business, poor control over back office due to indirect management, no par with the turnaround time etc which affect the society as a whole in monetary terms etc. According to Olga Kharif, the demerit of outsourcing is mainly in terms of pressure from â€Å"lower-cost competitors† (USC's Center for Management Communication, 2006). Kharif further expresses that â€Å"US companies like the instant gratification of savings on wages. But as the real costs of IT outsourcing become apparent over time, many companies may come to realize that it is no panacea† (USC's Center for Management Communication). 3. If a U.S. firm hires foreign workers abroad, would these wages count in the U.S. GDP? (i.e. an Indian citizen working in a call center for Microsoft i n India) Why or why not? The wages of foreign workers who are hired by a US firm are included in the US GDP. This is due to the fact that GDP is calculated by including earnings of foreign firms and residents in the United States as well as after excluding incomes earned abroad by US firms and residents. The international companies like Microsoft have no other option like hiring foreign workers wherever talents are required because the maximum GDP of US arise out of

Commercial Risk in International Business

Commercial Risk in International Business What is International business ? International business is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more nations. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons. A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country. An MNE is often called multinational corporation (MNC) or transnational company (TCN). Well known MNCs include fast food companies such as McDonalds and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets. Areas of study within this topic include differences in legal systems, political systems, economic policy, language, accounting standards, labor standards, living standards, environmental standards, local culture, corporate culture, foreign exchange market, tariffs, import and export regulations, trade agreements, climate, education and many more topics. Each of these factors requires significant changes in how individual business units operate from one country to the next. The conduct of international operations depends on companies objectives and the means with which they carry them out. The operations affect and are affected by the physical and societal factors and the competitive environment. Objectives of International Business: sales expansion, resource acquisition, risk minimization. What are Risk In International Business ? Companies doing business across international borders face many of the same risks as would normally be evident in strictly domestic transactions. For example, * Buyer insolvency (purchaser cannot pay); * Non-acceptance (buyer rejects goods as different from the agreed upon specifications); * Credit risk (allowing the buyer to take possession of goods prior to payment); * Regulatory risk (e.g., a change in rules that prevents the transaction); * Intervention (governmental action to prevent a transaction being completed); * Political risk (change in leadership interfering with transactions or prices); and * War and Acts of God. * The risks that exist in international trade can be divided into two major groups: Economic risks . Risk of insolvency of the buyer, . Risk of protracted default the failure of the buyer to pay the amount due within six months after the due date . Risk of non acceptance . Surrendering economic sovereignty * Political risks . Risk of cancellation or non renewal of export or import licences . War risks . Risk of expropriation or confiscation of the importers company . Risk of the imposition of an import ban after the shipment of the goods . Transfer risk imposition of exchange controls by the importers country or foreign currency shortages . Surrendering political sovereignty  · Exchange rates * Price for which the currency of a country can be exchanged for another countrys currency. Factors that influence exchange rate include (1) interest rates, (2) inflation rate, (3) trade balance, (4) political stability, (5) internal harmony, (6) high degree of transparency in the conduct of leaders and administrators, (7) general state of economy, and (8) quality of governance. Risks in international trade can be divided under several types, such as: Economic risks: * Risk of concession in economic control * Risk of insolvency of the buyer * Risk of non-acceptance * Risk of protracted default i.e. the failure of the buyer to pay off the due amount after six months of the due date * Risk of Exchange rate * Political risks: * Risk of non- renewal of import and exports licenses * Risks due to war * Risk of the imposition of an import ban after the delivery of the goods * Surrendering of political sovereignty Buyer Country risks * Changes in the policies of the government * Exchange control regulations * Lack of foreign currency * Trade embargoes Commercial risk: * A banks lack of ability to honor its responsibilities * A buyers failure pertaining to payment due to financial limitations * A sellers inability to provide the required quantity or quality of goods Others Risks : * Cultural differences e.g., some cultures consider the payment of an incentive to help trading is absolutely lawful * Lack of knowledge of overseas markets * Language barriers * Inclination to corrupt business associates * Legal protection for breach of contract or non-payment is low * Effects of unpredictable business environment and fluctuating exchange rates * Sovereign risk the ability of the government of a country to pay off its debts * Natural risk due to the various kinds natural catastrophes, which cannot be controlled There are many other risks which are the following. (1) Strategic Risk (2) Operational Risk (3) Political Risk (4) Country Risk (5) Technological Risk (6) Environmental Risk (7) Economic Risk (8) Financial Risk (9) Terrorism Risk Strategic Risk: The ability of a firm to make a strategic decision in order to respond to the forces that are a source of risk. These forces also impact the competiveness of a firm. Porter defines them as: threat of new entrants in the industry, threat of substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers. Operational Risk: This is caused by the assets and financial capital that aid in the day-to-day business operations. The breakdown of machineries, supply and demand of the resources and products, shortfall of the goods and services, lack of perfect logistic and inventory will lead to inefficiency of production. By controlling costs, unnecessary waste will be reduced, and the process improvement may enhance the lead-time, reduce variance and contribute to efficiency in globalization. Political Risk: The political actions and instability may make it difficult for companies to operate efficiently in these countries due to negative publicity and impact created by individuals in the top government. A firm cannot effectively operate to its full capacity in order to maximize profit in such an unstable countrys political turbulence. A new and hostile government may replace the friendly one, and hence expropriate foreign assets. Country Risk: The culture or the instability of a country may create risks that may make it difficult for multinational companies to operate safely, effectively, and efficiently. Some of the country risks come from the governments policies, economic conditions, security factors, and political conditions. Solving one of these problems without all of the problems (aggregate) together will not be enough in mitigating the country risk. Technological Risk: Lack of security in electronic transactions, the cost of developing new technology, and the fact that these new technology may fail, and when all of these are coupled with the outdated existing technology, the result may create a dangerous effect in doing business in the international arena. Environmental Risk: Air, water, and environmental pollution may affect the health of the citizens, and lead to public outcry of the citizens. These problems may also lead to damaging the reputation of the companies that do business in that area. Economic Risk: This comes from the inability of a country to meet its financial obligations. The changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of exchange-rate and interest rate make it difficult to conduct international business. Financial Risk: This area is affected by the currency exchange rate, government flexibility in allowing the firms to repatriate profits or funds outside the country. The devaluation and inflation will also impact the firms ability to operate at an efficient capacity and still be stable. Most countries make it difficult for foreign firms to repatriate funds thus forcing these firms to invest its funds at a less optimal level. Sometimes, firms assets are confiscated and that contributes to financial losses. Terrorism Risk: These are attacks that may stem from lack of hope; confidence; differences in culture and religious philosophy, and/or merely hate of companies by citizens of host countries. It leads to potential hostile attitudes, sabotage of foreign companies and/or kidnapping of the employers and employees. Such frustrating situations make it difficult to operate in these countries. CASES * October 2006 International Risk North Korea Future Implications International Risk has drawn up a report which explores the strategic thinking of the North Korean regime and their logic for conducting nuclear tests. The report outlines the likely future implications for Asia. * September 2005 International Risk Assessment: INDIA BUSINESS RISK OPPORTUNITIES India continues to establish itself as an emerging global force attracting increasing foreign direct investment. In response to the ever changing business climate, companies need to develop strategies to increase competitiveness and improve profitability. When expanding into new and developing markets, there are various elements that help make the endeavour successful as well as risks which can lead to severe disappointment. With India being touted as the new market and global player, it is critical that companies understand and appreciate both the opportunities and challenges faced by foreign investors. In short, provided companies take appropriate action to, India works. It represents a huge opportunity for the investor who has the appetite for detail, is patient and looks to the long term. International Risk, the premier international risk mitigation and investigation company, provides a strategic assessment on the risks and opportunities for foreign investors entering this exciting market. * May 2005 International Risk Macau Strategic Risk Assessment In the five years since its return to Chinese sovereignty, the former Portuguese colony of Macau has witnessed unprecedented economic growth, driven by huge investment inflows into its gaming and tourist industries and an explosion in visitor arrivals, particularly from the mainland. Whilst there are positive indications as to Macau continuing its growth as a regional gaming centre, much like its new role model Las Vegas, there are nevertheless uncertainties and risks arising from its chequered past as much as from its future under Beijings current benevolent oversight. Understanding these factors is crucial if foreign investors are to mitigate this risk. International Risk, the premier international risk mitigation and investigation company has developed a strategic review of the challenges facing Macau, the opportunities it presents investors, and the risks they could encounter. International Risk has considerable experience in discreetly assisting foreign investors who seek to enter this colorful, yet exciting environment. * April 2005 International Risk Report on China-Japan  § Political and strategic frictions between China and Japan have been growing over the past few years because of deep-seated historical distrust and an accelerating rivalry for regional power and influence between the two countries. But these tensions were previously contained and offset by close economic ties and the sharing of many issues of mutual interest, such as concerns over the rise of a nuclear North Korea.  § This calm in China-Japan relations has been damaged by a perfect storm of controversies that has unleashed pent-up passions among Chinese city-dwellers across the country. The history text-book issue over Japans war-time activity in China, Japans bid for a permanent UN Security Council seat and Tokyos decision to allocate drilling rights in disputed territorial waters are all highly charged emotional issues that strike at the very heart of Chinese popular nationalism.  § While these controversies have propelled Chinese onto the streets in their thousands, the Chinese leaderships decision to allow these anti-Japanese protests to take place is driven by deeper structural issues that suggest China-Japan ties are likely to remain volatile in the longer term. Managing the Risks of International Trade This guide provides information that will help you to put procedures in place to minimise the risks involved in international trade. You should read it if you are responsible for planning and delivering the export strategy in your company. You should make sure that the information in this briefing is read by your sales and marketing force, your finance management team, your credit manager and the sales ledger controller. What types of risks will I have to manage? Customer Risk You will need an assessment of the credit worthiness of your customer. This should include checking the following: à ¢Ã¢â€š ¬Ã‚ ¢ The identity of your customer. Do they exist as a legally established business in the country of import? Are you dealing with someone who has the authority to bind your customer; à ¢Ã¢â€š ¬Ã‚ ¢ The usual period of credit offered in your customers country; à ¢Ã¢â€š ¬Ã‚ ¢ The credit limit you are prepared to offer your customer; à ¢Ã¢â€š ¬Ã‚ ¢ The trading history of your customer. Are they a prompt payer? Have there been any changes to their normal payment patterns? à ¢Ã¢â€š ¬Ã‚ ¢ Are your exports compatible with your customers normal business profile? à ¢Ã¢â€š ¬Ã‚ ¢ Can your customer pay the bill? à ¢Ã¢â€š ¬Ã‚ ¢ Insolvency. Remember that a customers insolvency can involve you in a pre credit risk, where losses can occur if your customer becomes insolvent during the manufacturing process or at any time before or after the despatch of the export consignment. You can obtain the information needed to carry out these checks either yourself or through a reputable credit agency or credit insurer. Country Risk As well as your customer, their country can pose separate risks that you will need to manage. Country risks traditionally fall into five areas: à ¢Ã¢â€š ¬Ã‚ ¢ Sovereign: The willingness or ability of the government to pay its debts. This is affected by the political climate within the country, internal and external threats to the country; international trading performance including balance of payments record; the level of national debt and the amount of foreign exchange reserves. Other political decisions can also frustrate your export sales; these include the imposition of embargoes, tariff or other quotas, and import or export restrictions. à ¢Ã¢â€š ¬Ã‚ ¢ Private: The ability of the private sector to pay for its imports. This situation is affected by the 2 SITPRO Management Guide: Managing the Risks of International Trade state of the domestic economy, the commercial institutions in the country, and the competence of banking and financial services sector. à ¢Ã¢â€š ¬Ã‚ ¢ Natural: Some regions of the world suffer from regular climactic catastrophes (for example annual flooding, drought, earthquakes and other disasters). When these occur they can severely disrupt the operations of both the business sector and the government. à ¢Ã¢â€š ¬Ã‚ ¢ Fashion and Finance: International trading patterns often create a fashionable region or country as an export market. In these circumstances trade finance is often readily available, allowing you to offer good credit terms to your export customers. However, fashions change and countries can quickly go out of favour for both exports and trade finance. à ¢Ã¢â€š ¬Ã‚ ¢ Other: These include transfer risks such as the inconvertibility of the local currency; transaction risks such as late or non-payment, and transition risks for emerging markets where the threats are the effectiveness of the liberalisation programme, failure to complete economic structural reforms and any possible destabilising influences. You can obtain information about country risks by visiting the country and/or by speaking to other knowledgeable organisations such as UK Trade Investment, your local chamber of commerce or one of the major banks. Credit Risk Perhaps the first question you should ask is Can I afford to give my customers credit? To decide how much credit you are prepared to advance you must consider: à ¢Ã¢â€š ¬Ã‚ ¢ The amount of credit outstanding in your trading accounts, both overseas and domestic; à ¢Ã¢â€š ¬Ã‚ ¢ What do you know about your customer and what is the maximum amount of credit you should NOT exceed; à ¢Ã¢â€š ¬Ã‚ ¢ Can you carry any financial shortfall? What will be the impact on your business if your customer delays payment or does not pay at all? à ¢Ã¢â€š ¬Ã‚ ¢ How will you finance the credit period you offer? This means do you have sufficient money to allow you to offer credit terms in export sales contracts as part of your business cycle. Foreign Exchange Risk When you trade internationally you will most likely be dealing in more than one currency. This means you are exposed to fluctuations in the foreign exchange market. You can learn how to manage this risk by referring SITPROs guide on The Foreign Exchange Market. Other risks If you manufacture goods to order you must include in your export strategy a contingency that will help you manage the risk of a frustrated export this is when your customer refuses the goods. You should have a plan to either resell the product to another market or realise a salvage value for your goods. Managing the Risks of International Trade: You must also have procedures in place for the collection of your invoice amount. Under your contract you may have to collect your money in your customers country. This does have its risks as collection maybe more uncertain or expensive, so you will have to consider the legal system in their country. Your contract may, however, allow you to take legal steps to recover your debt in another country, including your own. How do I manage these risks? You can do the job yourself or employ the services of a comprehensive credit management and insurance provider. If you decide, for sound business reasons, to do the job in house then you must have the resources and knowledge to: à ¢Ã¢â€š ¬Ã‚ ¢ gather credit and other trade information about existing, and potential, customers; à ¢Ã¢â€š ¬Ã‚ ¢ research the country and associated risks; à ¢Ã¢â€š ¬Ã‚ ¢ examine the need for credit insurance, identify the most appropriate policy and investigate competitive products and services; à ¢Ã¢â€š ¬Ã‚ ¢ manage the credit insurance policy and maximise any benefits If you decide to go down this route, you will have to consider the financial and other impacts on your business. These include senior management ownership of the credit management strategy; The allocation of sufficient time, resource and money to do the job, and a review of your export catalogue prices. You must remember to include the costs of in house risk management and extending credit terms in your export quotes. Otherwise, a profit can soon turn into a loss as administrative costs eat into your bottom line. What types of risk management and insurance services are available? Classically, these are the approaches adopted by the business sector, based on the pattern of trade of the exporter. Type of business à ¢Ã¢â€š ¬Ã‚ ¢ Supplying goods to markets and customers on a regular basis; à ¢Ã¢â€š ¬Ã‚ ¢ A large one-off sales contract; à ¢Ã¢â€š ¬Ã‚ ¢ The supply of capital or semi-capital goods for major overseas projects; à ¢Ã¢â€š ¬Ã‚ ¢ The provision of services such as surveys or feasibility studies; à ¢Ã¢â€š ¬Ã‚ ¢ Smaller or new exporters. Products and services Depending on your type of business, the following products and services are available to you: à ¢Ã¢â€š ¬Ã‚ ¢ A partnership with a Credit Insurer to identify and assess your business prospects and cover the risks on your exports. The service can be tailored to meet your needs, by covering all Managing the Risks of International Trade. Your sales ledger, or just your accounts with larger customers, or by having a geographic limit, or by product line, or indeed in many other ways; à ¢Ã¢â€š ¬Ã‚ ¢ A specific insurance policy structured for a particular deal. Such a policy will take into account any factors unique to the sales contract which is being covered. Specific policies are ideal for contracts whose size or duration fall outside the normal pattern of your trade. Also they are suitable for the sale of capital or semi capital goods on extended credit. Insurance for individual contracts can be obtained from credit insurance companies but the main supplier of this service, particularly for capital goods contracts, is the Export Credits Guarantee Department (ECGD); à ¢Ã¢â€š ¬Ã‚ ¢ Smaller or new exporters can use a Managed Credit Insurance scheme as a way of contracting-out the credit control functions (obtaining country information, checking customer details and credit limits, chasing overdue payments and making claims). The cost of these services are often included in the premium for the scheme. Where do I obtain these services? You can approach specialist credit management and insurance providers, or your insurance adviser (broker, agent or intermediary). A list of credit insurance companies can be obtained from Association of British Insurers. Details of specialist advisers can be obtained from organisations such as the British Insurance Brokers Association. With their worldwide networks credit insurance companies have years of experience and expertise in analysing and covering the risks involved in international trade. In addition to covering commercial debts and indemnifying you if your customer fails to pay, they can provide you with guaranteed cover which could improve your cash-flow, provide confidence to maximize your export sales and may enhance your borrowing power. The use of credit insurance imposes on your company a disciplined and professional approach to trade risk management. Adopting this solution can help reduce your bad debts, improve your competitiveness in the global marketplace and increase your profitability. Are there any other options open to me? There are other financial solutions to you credit management risks: à ¢Ã¢â€š ¬Ã‚ ¢ do nothing, and carry the risk yourself. The extent of the risk you are prepared to take will determine if this option is appropriate; à ¢Ã¢â€š ¬Ã‚ ¢ Factoring or invoice discounting; à ¢Ã¢â€š ¬Ã‚ ¢ Forfaiting.; à ¢Ã¢â€š ¬Ã‚ ¢ Secured payment terms (for example, Letters of Credit); à ¢Ã¢â€š ¬Ã‚ ¢ Insurance-backed financial packages. Managing the Risks of International Trade How much will it cost me? Like all insurance cover (premises, employers liability, business interruption) you will have to pay for your risk management and insurance services. Policies based on a specific risk are available and premium is usually on a one-off basis. Premium is calculated according to the specific risk in question, credit period offered, your customers country and the duration of the risk from the insurers perspective. There are also credit insurance policies and managed schemes that will cover all of your export turnover. Premium is usually annual and assessed against your estimated insurable turnover (the sales on credit covered). With your credit insurer you will have to agree your target export turnover for any one year. Typically, you can expect to pay between 0.35% and 0.65% for this type of policy, dependent on your products, the number of customers and range of your export markets, your export trading experience, and your own credit management system. As with all insurance cover, you should spend time researching the market and getting quotes from a range of credit insurance providers. The costs quoted are based on typical policies available for small or new exporters wishing to cover sales with fairly short delivery and payment profiles. Costs will rise for specific policies where the horizon of risk for the insurer might be 2 or 3 years as in the case of ECGD cover for capital goods projects. Conclusion Credit insurance is an important risk management tool to help you protect the payment of your overseas accounts and unlock the full potential of your export business. You should carefully consider including it in your global trading strategy. What are the major risks for business? 1. Political risk 2. Economic risk 3. Financial risk What is the risk in the following Countries..? INDIA : In India or country risk tier (CRT) is categories in three types of risks. Political, economical financial risks. * Poverty reduction in India is heavily reliant upon high levels of economic growth, which is likely to return in 2010/11. Political Risk: High à ¢Ã¢â€š ¬Ã‚ ¢ Income disparity in India is significant, as approximately one third of the population lives in poverty. à ¢Ã¢â€š ¬Ã‚ ¢ National security has become a focus in India as some of the major cities have been the scene of terrorist bombings. à ¢Ã¢â€š ¬Ã‚ ¢ The bilateral relationship with Pakistan is strained, and receives worldwide attention. Efforts in recent years to make reparations have been interrupted repeatedly by acts of violence. Financial System Risk: Moderate à ¢Ã¢â€š ¬Ã‚ ¢ The insurance industry is regulated by the Insurance Regulatory and Development Authority (IRDA). à ¢Ã¢â€š ¬Ã‚ ¢ The Indian government is working to align its regulatory and accounting standards with international best practices. à ¢Ã¢â€š ¬Ã‚ ¢ The Indian financial system has fared relatively well during the global financial crisis. Economic Risk: Moderate à ¢Ã¢â€š ¬Ã‚ ¢ India, with a massive population exceeding one billion, is home to the worlds 12th largest economy as measured by gross domestic product (GDP). à ¢Ã¢â€š ¬Ã‚ ¢ Indias information technology sector and business services sector have been drivers of growth as the government has supported development with improvements in infrastructure and regulation. à ¢Ã¢â€š ¬Ã‚ ¢ A notable point of weakness for the Indian economy is the worsening government budget balance. The deficit will likely reach -7.0% of GDP in 2008/09. CANADA: Economic Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ Canadas economy is developed, with services and manufacturing accounting for the majority of the countrys output. à ¢Ã¢â€š ¬Ã‚ ¢ International trade is vital to the economy as exports represent about 40% of GDP with nearly 80% of those exports going to the United States. à ¢Ã¢â€š ¬Ã‚ ¢ Economic growth in Canada began to contract in the fourth quarter of 2008 and will continue to contract until 2010. Political Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ Canada is a high income country with significant natural resources and an established legal system. à ¢Ã¢â€š ¬Ã‚ ¢ Canadas economy is inexorably linked to that of the United States due to the latter countrys geographic proximity, cultural similarities and economic size. à ¢Ã¢â€š ¬Ã‚ ¢ Canadas budget has moved into deficit as the government uses fiscalpolicy to help stimulate the economy. Financial System Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ Insurance companies in Canada can be licensed at a national and/or provincial level. à ¢Ã¢â€š ¬Ã‚ ¢ Federal companies are registered under the Insurance Companies Act of Canada and are regulated by the Office of the Superintendent of Financial Institutions of Canada. USA: Economic Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ The United States economy is the largest and most advanced in the world with gross domestic product (GDP) of more than USD 14 trillion. à ¢Ã¢â€š ¬Ã‚ ¢ The United States has the dual advantage of being rich in natural resources, both agricultural and mineral, but also capable of producing high-end products such as computers and peripherals, medical equipment, pharmaceutical products and military equipment. à ¢Ã¢â€š ¬Ã‚ ¢ The U.S. economy is currently experiencing its worst economic contraction since at least the early 1980s with unemployment expected to reach double digits and GDP reaching negative 3% in 2009. Political Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ The United States has a stable democratic political system and a strong legal system. à ¢Ã¢â€š ¬Ã‚ ¢ The United States is currently involved in armed combat in Iraq and Afghanistan which has put strain on the relationships between the U.S. and much of the international community. à ¢Ã¢â€š ¬Ã‚ ¢ The U.S. is currently using expansionary fiscal policy to stimulate the economy and this has led to a substantial increase in the budget deficit. Financial System Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ Insurance regulation in the United States is decentralized and handled on a state by state basis. à ¢Ã¢â€š ¬Ã‚ ¢ The financial system in the U.S. is going through a tumultuous period with the government intervention with large corporations such as Bear Stearns, Citigroup and AIG. UK: Economic Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ The United Kingdom (UK) has the second largest economy in Europe behind Germany. Service industries represent three quarters of economic production, particularly financial services and real estate activities. London is a global financial center and businesses there account for nearly half of the countrys financial services industry. à ¢Ã¢â€š ¬Ã‚ ¢ The UK economy entered into a recession in the second half of 2008 as the country has been hit hard by the financial crisis and a declining housing market. The economy is not expected to recover until mid to late 2010 at the earliest. Political Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ The United Kingdom is a member of the European Union. However, the United Kingdom, along with Denmark, obtained special opt-outs from the Maastricht Treaty which allows them to not adopt the euro unless they wish. à ¢Ã¢â€š ¬Ã‚ ¢ The UK government has taken steps to counteract the effects of the current financial crisis. These steps include partial nationalization of the banking system and implementing several stimulus packages. Financial System Risk: Very Low à ¢Ã¢â€š ¬Ã‚ ¢ The Financial Services Authority (FSA) regulates the UK financial services industries, including insurance. à ¢Ã¢â€š ¬Ã‚ ¢ The UK is widely seen as a major center for international insurance and reinsurance and is home to the London Market, a wholesale market that writes risk around the world. Lloyds of London accounts for over half of the business on the London Market. JAPAN: Economic Risk: Low à ¢Ã¢â€š ¬Ã‚ ¢ Japan, an industrialized and advanced country, is home to the second largest economy in the world behind that of the United States. à ¢Ã¢â€š ¬Ã‚ ¢ Gross domestic product (GDP) growth, which had been weak over the past 20 years, will fall sharply in 2009 as domestic demand and exports contract. The government is responding to the crisis with aggressive expansionary fiscal policies that should result in a return to modest growth in 2010. à ¢Ã¢â€š ¬Ã‚ ¢ Inflation, however, is expected to remain negative until 2011.

Essay --

Hank Aaron was a famous baseball player who was respectful to his teammates and his fans. His nickname was â€Å"Hammerin’ Hank†. At one time he led the league in the most home runs. He was born in a poor family and then grew up to be a great professional baseball player. He became one of the most admired baseball players in Major League history. He was born in Mobile, Alabama called â€Å"Down the Bay† on February 5, 1934. His real name was Henry Louis Aaron. He was the third of eight children. His mother’s name was Estella and his father’s name was Herbert. His dad was a tavern owner and a dry dock boilermaker’s assistant. His mother did not have a job until Hank was older. He lived in a town where there was segregation. Hank lived where it was rural and it was a lowly populated town. The town was fueled by a migration of farm workers looking for city work. Hank took an early interest in sports. Although the family had little money, and Hank took several jobs to try to help out, he spent a lot of time playing baseball at a neighborhood park. He had jobs such as mowing lawns, picking potatoes, and delivering ice. He started to love the game when his father’s local team formed out of the tavern he opened next to the family house called The Black Cat Inn. He played baseball with the loc al kids in the wide open fields. Until too many children to take care of at home, his mother worked in one of Mobile’s white households, where work was available for blacks as maids and cooks. Hank and his family moved to Toulminville, right outside of Mobile, at the age of eight. During his freshman and sophomore years, he attended Central High School, a segregated high school in Mobile where he stood out at both football and baseball. Fearin... ...rst all time in total accumulated bases with 6,856. He was second all time in at bats with 12,364. He was third all time in hits with 3,771. He was third all time in runs scored with 2,174. He was also third all time in games played with 3,298. He was elected into the Hall Of Fame in 1982. His autobiography, I had a Hammer, was published in 1990. In 1999, to celebrate the 25th anniversary of breaking Babe Ruth’s record, Major League announced the Hank Aaron Award, given to the best overall hitter in each league. I picked Hank Aaron because I want to be a baseball player just like him. I think he should be the President of baseball because, all of his special achievements. He was a very nice and skillful person and he will be remembered through all of baseball and will be remembered as one of the greatest baseball players ever in the history of baseball.

Overview Of Information Systems Essay

Information Systems Types Description / Benefits Example of Each (Including Vendor Name / Vendor Website) How have you seen them used in your organization or an organization that you are familiar with? 1. Databases A database is a computer mechanism for storing and retrieving data. It gives one true command of their data, enabling one to retrieve it, sort it, analyze it, summarize it, and report results in changes. Example: Google Cloud Website: cloud.google.com/ I have seen them used by businesses, and individual users who want to utilize their data across different IT systems. 2. Networks A network is a group of two or more computer systems linked together. The benefits of networking include more convenient file sharing and Internet connection sharing. Example: Examples include local-area networks (LANs) and wide-area networks (WANs). University of Phoenix www.phoenix.edu/ I am currently using a wide area network to download and post my assignments to the university of phoenix website. 3. eBusiness Electronic Business, is the administration of conducting business via the Internet. This would include the buying and selling of goods and services, along with providing technical or customer support through the Internet. The benefit is ebusiness allows people to carry out businesses without the barriers of time or distance. Example: Amazon www.amazon.com I have owned my own business and ecommerce was a great way to provide  services without actually physically being there. 4. Wireless Wireless is communications sent without wires or cables. the benefits to wireless are productivity, convenience, and cost advantages over wired networks. Example: wireless phones www.att.com The use of wireless technology in business and everday life is prevelant in today’s society as a whole. I have a wireless phone use, use Bluetooth and wireless internet on my laptop, as well as being able to transmit ans share internet, in my home and business. 5. Social Media Social Media is the websites and applications that enable users to create and share content or to participate in social networking. One main benefit is the ability to seek out potential clients and networking opportunities. Example: LinkedIn www.linkedin.com I am am member of the site and it is a great tool in networking and finding clients and potential employees. 6. Customer Relationship Management (CRM) Customer relationship management is the strategy that a company uses to handle customer interactions. It is beneficial by creating various platforms to meet customers needs and receive feedback. Example: rewards card program Best Buy www.bestbuy.com/site/†¦rewards/pcmcat102500050032.c?id Best Buy uses their rewards cards to track purchases ans other consumer information that helps in the promotion of certain products and services that they offer. 7. Supply Chain Management (SCM) Supply chain management is the the oversight of materials, information, and finances as they move in a process from start to finish. This is very beneficial as it shows a log off all happenings with a specific good or service. Example: The U.S. Department of Agriculture www.usda.gov/ The U.S. Department of Agriculture developed a Web-based solution for farmers and ranchers seeking to communicate with distributors and wholesalers. 8. Business Intelligence Business intelligence is a term that refers to a variety of software applications used to analyze an organization’s raw data. It is beneficial by helping companies be more efficient, spot areas for cost savings and identify new business opportunities. Example: the board is an all encompassing BI tool that has helped many companies. http://www.board.com/us/ I have seen a list of and have gotten goods and services from some of the companies that have employed the board’s BI tools.

buy custom Acquired Immunodeficiency Syndrome essay

buy custom Acquired Immunodeficiency Syndrome essay Acquired Immunodeficiency Syndrome (AIDS) is a disease that attacks the human immune system and renders it ineffective. It makes people more vulnerable to contracting various infections of the body like; diseases, opportunistic infections, tumors, and many other infections that do not easily affect people with a normally working immune system. Briefly, AIDS is a multiple-edge killer disease that kills at every opportunity it gets. Since its discovery in the 1980s, specialists have tried to end the misery of AIDS patients by trying to find a cure for the disease, but this has been unsuccessful. Instead, they have managed to come up with drugs that control the disease by preventing chances opportunistic infections. However, these drugs are either very expensive or completely inaccessible to a larger portion of the infected population. That is why researchers have speculated that come 2030, AIDS will be the third largest killer disease in the globe. Nonetheless, with this dreaded disease everyone is trying to be careful. People are looking at what may put them into the risk of contracting this infection and finding the best way to protect themselves rather than ending up in the hopeless point of lifelong treatment of the disease, which is also very expensive. With regards to that, it is important to note that AIDS is transmitted through many ways such as; vaginal, oral, or anal sex; blood transfusion, hypodermic needles; and exchange from the mother to child during pregnancy, birth, and breastfeeding. Although AIDS does not discriminate based on age group, culture, gender, and race, young people, especially between twenty and thirty years of age, and say in America would be at risk of contracting the infection because of certain circumstances that are mostly related to this group. These are; unprotected vaginal or anal sex with an infected person, sharing piercing equipment like needles, oral sex, blood transfusion, and any form of contact with the mucous membrane or bloodstream with a bodily fluid that has the virus. In conclusion, having learnt the risks of contracting the infection and knowing that I am not exempted from it, I know that I am also at risk. In effect, there are protective measures that an individual would take to avoid the risk of being infected with AIDS. First, and a sure way of avoiding the infection through sexual intercourse is abstinence from sexual activity. However, if someone has to engage in an activity of sexual nature then it is important that they use protective measures like condoms to prevent any exchange of infected bodily fluids. Alternatively, sexual partners must do a test to determine their HIV status before engaging in any sexual encounter. Nonetheless, while using piercing equipment, it is important for an individual to ensure that the tools are not shared with anyone, or that they are thoroughly sanitized. Apart from that, during blood transfusion, the recipient patient should make sure that the blood is thoroughly screened for HIV and other infections befo re it is injected into their bloodstream. These are some of the few preventive measures against HIV. Buy custom Acquired Immunodeficiency Syndrome essay

Concept of the Theory of Behaviorism in Psychology

Concept of the Theory of Behaviorism in Psychology The theory of behaviorism tries to explain how human behaviors are molded and the effects that the inborn and social environments have on once behavior; behavior can be defined as a systematic and observable manner of doing things without much of internal mental state consideration, a person’s behavior becomes his habit (Staddon Cerutti, 2003). According to the theory; there are two main conditioning of human life depending with the situation the person is under, they are:Advertising We will write a custom essay sample on Concept of the Theory of Behaviorism in Psychology specifically for you for only $16.05 $11/page Learn More Classical conditioning Under this condition it involves molding of human behavior through naturally occurring stimulus that Is pared to a certain response: with time the neutral stimulus is able to command some response. For example a person who has lived in a place that has war, may have experienced some attacks made by war planes; after the war is over, by hearing the sound of a passing plane, the persons mind has been conditioned to attach the sound with some attacks, he then becomes frightened. Operant conditioning Operant conditioning is a term used to refer to behavior modification that is attained trough a response-reward system. The major assumption (which happens to be true) is that human beings behavior can be conditioned through a reward system. The reward may be positive, which reinforces a positive behavior, may be negative which discourages a certain negative behavior. The underlying philosophy of the theory is that animals, human beings included, respond to stimuli. Thus if they can associate a specific stimulate with a certain behavior, and then they are likely to avoid or repeat the behavior in future. Rationale of why the topic was selected In social and political theory the trends and systems of human behavior is an important element that cannot be ignored, the way human being beha ve and what motivates them behave the way they do are important areas of intervention for social scientists. The topic of behaviorism becomes important as the policy makers seek to learn societal dynamics as well as how people behave and how the behavior can be molded for the benefit of the parties involved. In social movements, people’s behavior can be conditioned to give a certain impression or express their views in a particular manner; other than on public level, the topic is important to understand the behavior of others as well as behavior changes (Olson Hergenhahn, 2009). Why this topic is important in the study of psychology of criminal behavior Some psychologists have argued that criminology is a behavior learnt, reinforced and developed like any other behavior; with the study of behaviorism, policy makers and criminologists are able to understand why there exists a certain trend in the community, it is an important topic to understand crime and how it is developed as a behavior in people’s life.Advertising Looking for essay on psychology? Let's see if we can help you! Get your first paper with 15% OFF Learn More The idea of behaviorism is the approach taken by crime fighters and punishers of offenders; it assists them know the right intervention and the best punishments that can be given to offenders to deter them from committing crime. The thought of the suffering that is likely to come give result to a certain behavior that is mostly keeping away from crime. Using the theory of behaviorism, psychologists are able to learn different method through which they can understand the world and different segments of society; they can have answers why crime is more predominant to a certain area, thus they are able to offer sound recommendations on the best crime prevention methods to the authority’s concerned (Feud Strachey, 1976). References Feud, S., Strachey, J. (1976).The complete psychological work of Sigm und freud. New York: W.W. Norton Company. Olson, M. , Hergenhahn, B.R. (2009). An Introduction to Theories of Learning, Eighth Edition. New Jersey: Prentice Hall. Staddon, J., Cerutti, D. (2003). OPERANT CONDITIONING. Annual Review of Psychology, 54(1), 115. Retrieved from Business Source Complete

The impact of scraping of the retirement age on the management of HR Essay - 1

The impact of scraping of the retirement age on the management of HR in Organisations - Essay Example (Age UK, 2010). The decision on this ground shows growing need of service from the Britons to carry on working, only if they are fit and healthy and continue their work. This move of the government was welcomed by personnel groups but the business leaders notified in a form of warning that this measure might leave the employers blank with regards to their planning for future. This is because they would not know about the exact timing of retirement of their employees so that they can prepare the succession plan (Beckford & Peacock, 2010). The following literature review has been prepared to provide empirical evidence of the impact of such policy of the government to scrap the age of retirement. The evidence of this literature review has been collected from different articles and journals basically through secondary sources. According to Cadler (2010), scrapping or removal of the DRA will be one among the biggest alterations to employment law when it would come into being in the year of 2011. The author says that this reform will leave a number of unresolved problems for the employers. This is because the rules regarding this policy will be very unclear to all the employees along with the employers. At the same time, it will be unclear to all the stakeholders of the organisation (Cadler, 2010). Skirbekk (2004) stated that recognizing the profiles of age-productivity, is a significant factor of the economic world at present. The government recognised this factor and thus the issue gained importance. Government focuses on the demographic and economic factors of the country that are changing. Life expectancy is an important demographic indicator of the affect on economic growth of a country. This indicator influences the age structure of an economy. The government took the decision to scrap the retirement age because it is believed that individual productivity rises to its peak level at later stages of working life.

Business Ethics Learning Logs (1,2,3,4) Essay Example | Topics and Well Written Essays - 3000 words

Business Ethics Learning Logs (1,2,3,4) - Essay Example I came to the realization that ethics was important because I was aware that the recent financial crisis that rocked the world that made lives difficult for everybody was rooted in greed and lack of ethical practice in business. This explains why I was appreciative when I took the subject because I will have the opportunity to learn in details what really constitutes an ethical behaviour and to be able to discern the ethical behaviour from the unethical or undesirable one. I believed that this was important to learn especially when we are still in the academe and still in the process of equipping ourselves the necessary skills and knowledge so that it will be ingrained within us to become better professionals in the future. The lessons that we will learn would guide us when we make our choices in any ethical dilemma that we would confront, be it in business or in our daily activities. II. Second Entry – Evaluate The Theories Given the recent scandals that rocked the business a nd financial world, it now becomes an imperative that each individual entering into the corporate and financial industry must have a sound ethical foundation to avoid similar occurrences in the future. It should begin right in the academe where future professionals, employees or entrepreneurs are being trained and prepared. It is now important because the neglect and disregard for ethical practice in business has contributed to the recent financial and mortgage breakdown that stemmed from greed and lack of ethical practice that made life difficult for everybody. The high incidence of unethical practices in modern business has prompted a stream of organizational research about morality in business (Crane 1999). In fact, industry experts such as Ernst & Young has pointed out that unethical business practice is the main culprit that precipitated the recent economic crisis which caused a lot of jobs and homes to be lost that made life difficult for everybody which is why it is now an im perative not only to integrate but also to stress ethics beginning in the academe when future business professionals are being trained and prepared (Business Roudtable-Institute for Corporate Ethics 2009). The obvious disregard about business propriety is not surprising as Crane and Matten hypothesized that business in itself has been argued to be amoral that to put ethics in business is an oxymoron because they contradict each other (2010). Business in pursuit of its profit motive will invariably set aside ethics as it endeavour to make profit. Actions which may be considered unethical such as lying and deception may even become permissible in the business’ pursuit for profit (Carr 1998 qtd in Crane and Matten 2010). This is consistent with the consequential normative ethic theory that â€Å"holds that the moral rightness of acts, which holds that whether an act is morally right, depends only on the consequences of that act or of something related to that act, such as the m otive behind the act or a general rule requiring acts of the same kind† (Stanford Encyclopaedia of Philosophy a 2011). In plain language, a business person may be prompted to choose a certain course of action or inaction based on the benefit or the avoidance of harm that may be derived from such action or inaction. In the case of business, it can chose to shun any propriety in conducting business with the idea that it is more expedient to make profit by disregarding