Category: Business

Understanding Financial Decision Making

Understanding Financial Decision Making
Understanding Financial Decision Making

Understanding Financial Decision Making

Understanding Financial Decision Making: Tools for Evaluation

Order Instructions:

For this paper, it comes in 7 parts and the writer must label each parts and complete a minimum of one page summary as indicated for each part. The writer must follow critically the instructions and the requirements for each part. The writer must use in text citations for each part , as each part must have a minimum of two sources or two different in text citations. The paper must have a minimum of 10 pages in total excluding any diagrams of presentations that the writer may use. Also remember that you will also have to write an executive summary at the end to conclude the paper as mentioned in the instructions.

Understanding Financial Decision Making: Tools for Evaluation

In this paper, you will examine theoretical and empirical points of view and apply the knowledge you have gained from your study and research in order to understand how financial decisions are made within a large publicly traded company that you choose as an exemplar. You will utilize financial tools to evaluate current financial data and use your calculations to justify those decisions. Approach this exercise as though you were a financial consultant who has been asked to analyze the value of the company as a potential investment. This assignment will require access to in-depth financial information, so selecting a company for which this information is easily obtainable will be most beneficial.

You will conduct a detailed analysis of the financial dealings of your selected organization. Each week you will focus on a different aspect of the company’s financial information. You will explore the monitoring capabilities of the Board of Directors and use financial tools to compare ratios with one of the firm’s competitors. You will establish an estimated growth rate and predict future dividends. In addition, you will use annual reports as a tool in capital budgeting to determine potential real options, establish a market risk premium, calculate the weighted average cost of capital, and compare the mix of debt and equity that the firm uses to an industry average. Finally, you will prepare an executive summary of the company, complete with current stock prices and a recommendation on investing in the business you select. Your paper will contain topics unique to the company chosen, but will incorporate the themes covered in each section.

The Investment Analysis and Recommendation Paper will comprise a minimum of 10 pages in APA style format. Three to five diagrams and presentation slides may be included, but they will be additional to the required length of the paper
Part one
• This week, select a publicly traded company that you wish to analyze for this paper. Submit the name to your Instructor for approval. Obtain the company’s financial statements (annual report) and the most recent proxy statement.

Using the information on the proxy statement:
• Evaluate the monitoring potential of the firm’s Board of Directors.
• Identify the strengths and weaknesses of how the board is structured, as well as any ethical concerns.
Write a 1-page summary of your findings.

Part two
• Investment Analysis and Recommendation Paper
For this part, you will assess the company you selected for your Investment Analysis and Recommendation Paper relative to its competitors in terms of financial ratios. Financial ratio reports are available on numerous Web sites (examples: Reuters, Google, Finance, Hoovers). Remember, different Web sites may use slightly different definitions.

Using income statements and balance sheets for your company AND at least one of its main competitor’s, respond to the following:
•Calculate the DuPont identity for both companies for the past three years.
•Discuss any differences and/or trends that emerge.
Write up a 1-page summary of your findings, including any calculations you made, and how you gathered your information.

Part three
Investment Analysis and Recommendation
• This part of the Investment Analysis and Recommendation Paper requires you to establish an estimated growth rate in earnings and dividends for your company. Note, in the dividend growth model, “g” is the growth rate for earnings AND dividends. You might want to check historical growth rates for the company (in terms of earnings and dividends). Also, many people rely on analyst forecasts. Be sure to justify your growth rate selection and explain how you arrived at the number. Assume your company is a constant growth stock. Use your estimated growth rate to solve for the required rate of return using the dividend discount model. After completing your calculations, respond to the following:
• Does the number you arrived at seem logical or feasible?
• Did you face any problems or issues using the dividend growth model? Does your company pay a dividend?
• Is it reasonable to assume constant growth for your company?
Write up a 1-page summary of your findings, including any calculations you made, and how you gathered your information.

Part four
• For this part, you will read the text portion of your company’s annual report. As you do so, focus on the following:
• Identify potential real options that might arrive in this firm’s business.
• Are these options industry specific or company specific?
• How would these options affect their capital budgeting process?
• Justify your answers.
Write up a 1-page summary of your findings, including any calculations you might have made, and relate how you reached your conclusion.

Part five
• For this part of your Investment Analysis and Recommendation Paper, find an estimate of beta for your company. You might consider examining/using an industry average beta, especially if the reported beta you find seems unrealistic or inappropriate. Note: You should probably check your beta across a few different sources, because sometimes they vary. Find the current interest rate (yield) for 3-month Treasury bills. Determine an appropriate market risk premium. Be sure to consider the size of your firm when estimating an appropriate premium.

After making your calculations:
• Using all this information, what is the expected return for your company using CAPM?
• In Week 3, you estimated a required rate of return using the dividend discount model. How does your CAPM number compare?
Write up a 1-page summary of your findings, including any calculations you might have made.

Part six
• For this part, your assignment is to calculate the weights (proportions) of debt and equity for your company. For equity you can use the market value of stock (number of shares times the current stock price). For debt, you can use the book value of long-term debt (from the balance sheet). While market values of debt are “better,” they are rather difficult to obtain. Estimate the required rate of return on debt for your company. The following are three possible approaches: a) You can use the credit rating provided by Standard & Poor’s or Moody’s. Use the ratings to find current yields above risk-free rates. b) Go to FINRA Market Data. This will give the yield to maturity for EACH bond. You need one measure of the cost of debt, so you will have to figure out an appropriate way to handle multiple debt issues. c) If your company does not have publicly traded debt (and/or both the previous two approaches did not work), you will need to read the footnotes to the annual report. You may be able to get their estimated borrowing rate. After gathering the information:
• Estimate your company’s weighted average cost of capital. You can use the income statement information to estimate the tax rate.
• If your company uses this in the capital budgeting process (i.e., as the discount rate in NPV and IRR), what assumptions are they making?
• Does your company face any particular difficulties in using this rate? For example, does your company have different divisions or units that might have differing levels of risk?
Write up a 1-page summary of your findings, including any calculations you might have made, and describe which method you used to find the required rate of return on debt for your company.

Part seven
• For this part you will prepare the final section of your Investment Analysis and Recommendation Paper, consisting of the capital structure choices, as well as an executive summary of your research.

You will examine the mix of debt and equity that your firm uses. After finding this information:
• Compare this to an industry average or a main competitor. What are the differences?
• Based on what you know about your selected company, do these differences seem appropriate?
• Relate your company’s capital structure choices to the appropriate capital structure theory (ies).
Also, as a component of your executive summary, obtain the current stock price for your company and use it as an additional calculation. Based upon all of your research, would you recommend investing in this company? Justify your answer.

SAMPLE ANSWER

Ford Motor Group is a multinational public company that’s based in Michigan in the USA. Its shares are traded in NYSE under the initial F. It majors in automotive production and its current Executive chairman is William C. Ford, Jr. while the CEO is Mark Fields. The current brands or models are Ford Focus, Ford Escort, Ford Cortina, Ford Sierra and Ford Capri. There are several other brands that Ford manufactures besides an array of trucks and other automobiles. The Ford Family owns 2% of the company while the employees number about 181,000. It has a market capitalization of $54.65 Billion and its shares are currently trading at $14.09 dollars with a yield of 3.5%. Ford has 9 million outstanding shares while the market prices of its shares are currently costing 14.1 which amounts to a total of $126.9 million in outstanding stock valuation.

Part One

Board of Directors

The directors of Ford Motor Group have impeccable academic backgrounds and experience that warrant their positions. The executive management of the Ford board as at the end of July 2014 was chaired by William Clay Ford Jr., the executive chairman while the CEO was Mark Fields (CEO & President). For the other members of the board see appendix D.

Monitoring Potential of the Firm’s Board of Directors

Mark Fields, the current CEO and President, was initially appointed as the America’s President of operations in the year 2012. (Adams, 2008, p. 46) The board is mostly concentrated in running the operations of the company from the head office. Almost 50% of its annual turnover is achieved in North America while the rest are from South America, Europe, Asia, pacific and Africa. The duties of each director are not included in the reports together with the salaries of other senior staff. The academic background for the senior positions office holders is not available on the 2014 proxy annual report. The performance of Ford Motor Group has not been very impressive and it was expected that it would have more financial problems in the current financial period. However, Ford has endured hard times before and it’s expected that it will come out of financial woes on its own.

Strengths and Weaknesses of Board Structure

The major strengths of the Ford Motor Group board are the wide experience and skills the director’s posses. The executive chairman has been a director since 1988 and has also been the vice president at the commercial truck center before his recent promotion. He has also been the chair of the finance committee and the chairman of eBay Inc. The other board members are also equally skilled and experienced in automobile industry.

The board has also professional structures that vet all the qualifications of the directors before they are appointed. The nominating and governance committee scrutinizes all the background information on all the nominees before their names are forwarded to the board.

The major weaknesses of the board are the lack of clearly defined organization structures that spell out the role of each director and the hierarchy of the functions of their offices and their occupants. The structures are not clear and maybe they have their own system of operations but the structures have to be clearly drawn and the functions of each department clearly defined and addressed. (Corporate Ford Website)

Ethical Concerns

The other ethical issues that may arise is that some directors like Gerald L. Shaheen who may have served as the president of the Caterpillar Inc before he retired may be having the connections with the group hence his interests may also be linked to the company. H e should be allowed to serve the interests of one company only.

The other issue is that the company has some former politicians in the board like the former governor Jon M. Huntsman Jr. It reflects a little unprofessionalism to include some politicians in the board and who may have had different policies that may have been unpopular with some people hence it can influence the performance of the company negatively.

Part Two

Competitive Financial Ratio Comparison

Ratio analysis provides a diagnostic tool that identifies the areas prone to create problems for the company and evaluates the opportunities within the company and its competitors. The ratios of Ford Motor Group provide a relatively positive view of the company. Appendix C provides all the comparisons and ratio summaries for Ford and GM.

The net assets turnover for Ford Motor Group decreased by 2.5% in the year 2013 as compared to a 50% increase in the year 2012. GM registered a decrease of 13% in its net assets turnover in the year 2013 while in the year 2012 it experienced an increase of 6.5%. (Vance, 2003, p. 19)

DuPont Identity

The following is the Dopont model breakdown for Ford and GM. The profit margin for Ford amounted to 13% of sales for both 2013 and 2012. The return on Equity was 27% in 2013 while in2012 it was 36%. The profit margin on sales for GM amounted to 12% in 2013 while in 2012 it was 7%. The ROE for GM amounted to 13% and 17% respectively for the years 2013 and 2012 respectively. The return on assets amounted to 3 and 4% respectively. The earnings per share for Ford in 2013 and 2012 were 1.54 and 1.48 respectively while the dividends per share amounted to 0.4 and 0.2 respectively. Both companies are heavily leveraged and Ford is the one that has the highest concentration of debt compared to GM.

The interest expenses for Ford increased by 16.3% in 2013 while in 2012 it had decreased by 12.7%. The interest expense for Ford in the year 2013 and 2012 were 829 million and 713 million respectively. GM interest expenses decreased by 31.7% in 2013 while in 2012 the expenses decreased by 9.4%. The interest expenses for 2013 and 2012 were 334 Million and 489 Million respectively.

The net assets turnover for Ford’s decreased by 2.5% in the year 2013 as compared to the 50% increase in the year 2012. GM registered a decrease of 13% in its net assets turnover in the year 2013 while in the year 2012 it experienced an increase of 6.5%. The dividend per share for Ford in 2013 and 2012 was 0.4 and 0.2 respectively. (See appendix E) This represented a return of 22% to the shareholders in 2013 while in 2012 it was 23%. (Luenberger, 1997)

Financial Data of Ford Motor Group

The financial performance of Ford Motor Group seems to be better than General Motors for the years 2013, 2012 and 2011. (See table 1

Table 1

Ford  (Billions) Year 2013 Year 2012 Year 2011
Net income 7.15 5.67B 20.21
Revenue 146.92 195.06 135.61
Assets 202.03 189.41 178.35
Equity 26.38 15.95 15.03
 

GM     (Billions)

  

Year 2013

  

Year 2012

  

Year 2011
Net income 5.35 6.19 9.19
Revenue 155.43 152.26 150.28
Assets 166.34 149.42 144.60
Equity 42.61 36.24 38.12

Differences or Trends

The equity multipliers for Ford are higher than those of GM which means that Ford is more levered than GM. (See table 2) and Appendix C for GM.

Table 2

DuPont Analysis

 

ROE

 

  

Profit Margin

 

 Asset Turnover Equity Multiplier

 
Ford Year 2013 0.07 0.72 0.75 7.66

The ratios of Ford Motor Group for ROE and Profit margins are better than those of GM. (See Table 1 & 2 above) The equity multiplier for Ford Motor group is 7.66%.  However, the asset turnover for GM is higher than Ford. (See Appendix C) The net assets turnover for Ford’s decreased by 2.5% in the year 2013 as compared to a 50% increase in the year 2012. GM registered a decrease of 13% in its net assets turnover in the year 2013 while in the year 2012 it experienced an increase of 6.5%. The current ratios for Ford Motor group for 2013, 2012 and 2012 were 2.11, 2.32 and 2.26 respectively compared to Gm’s 1.31, 1.3 and 1.22 for the same period respectively. The quick ratios for Ford Motor group for the same period were 1.98, 2.18 and 2.15 compared to GM’s 1.08, 1.02 and 0.95 respectively. Ford Motor Group seems to have higher and better liquidity ratios than GM. The financial stability of Ford Motor Group is more promising that GM’s. The other competitive ratios are attached on the appendix.

Part Three

The information was gathered from the Yahoo’s business finance websites

Dividend Growth Model

The dividend growth model is also known as the Gordon Model. The dividend growth model is a concept that determines the value of stock or a business firm. It utilizes the dividend yield as an investment strategy. Companies with reasonable payouts ratios and profitable dividend yields are considered safe investment. The following are the calculations for obtaining the Dividend Growth model;

Table 3

Growth Rate for Ford Motor Group

Analysis Formula % Year  2013
ROE Net income/ Equity 0.27 %
Retention ratio 1 – (cash dividends/ net income) 0.78 %
Growth rate in earnings (g) Retention ratio x ROE 0.21 %

For the formula used to calculate the ratios above see appendix E.

The Financial Information and Important Growth Trends for Ford Motor Group for 2013

Ford Motor Group 2013
ROE Net Income/Equity 0.27
Retention Ratio 1-(cash dividends/net income) 0.78
Growth rate in earnings Retention rate X ROE 0.21
Dividend Discount Model Return rate R = Dividend /price of stock + g 0.24
Price of Stock Dividend/Return Rate R – Growth Rate g 14.07

 Issues with Using the Growth Model

The growth model is only an indicator and it cannot guarantee the performance of the company in future.  However, it can be used to construct the investment portfolio of a business firm. The dividend earnings growth model for Ford has been calculated on average per year. There are financial periods where the dividend pay rate and amounts are similar hence the growth trend is not reliable as the average is very low. The general average however is 0.212%.

Reasonableness of Constant Growth

The growth rate number is logical as it reflects the general performance on the ground. The major problems with the calculation are the constant figures payable as dividends reflects a constant growth trend and the calculations reflect a zero growth trend. The company pays dividend as shown in the table above. It would be fair assume a constant growth trend for Ford Company.

Part Four

Annual Report

Potential Real Options

The potential real option analysis (ROV) refers to the valuation techniques that are applied in capital budgeting. To undertake some business initiatives or activities such as expansion or investment in capital projects or even abandon some projects is the objective of real call or even put option. Real options are different from the finance options as they are not traded on the securities and the option holders can also influence the real value of the options projects.

Stock Options for Employee compensation for the year 2013

Fair value per stock option 2013 2012 2011
5.03 5.88 8.48
Assumptions made
Annualized Dividend yield 3% 2% –
Expected volatility 52.20% 53.80% 53.20%
Risk free interest rate 1.50% 1.60% 3.20%
Expected stock option (yrs) 7.7 7.2 7.1
Company stock options as at December 31 2013 (millions)
Outstanding options Exercisable options
Shares weighted av life yrs weighted av Exc price Shares weighted av life yrs
Range Prices available in $
1.96 -2.84 15.5 5.2 2.16 15.5 2.16
5.11 – 8.58 23.2 3.1 7.29 23.2 7.29
10.11 – 12.98 29.1 5.3 12.58 19.1 12.56
13.07 – 16.64 11.3 2.8 13.86 9.8 13.71
Total stock options 79.1 67.6

Real options are also known as stock valuations. Several options in investment valuation and analysis depend on the objective of the project. The following is an example of employee stock valuation.

These options are company specific and they are payable on the range of prices available and the average years the employee has spent in the company. The share prices are weighted as shown on the table above. (Garrison, Noreen & Brewer, 2009, p. 65) The stock options would have to be provided for as their prices are usually provided for employees only and not for the general investors.

Capital Budgeting Process

The options would have to be provided for when budgeting for capital projects. All projects with average returns that are less than the weighted average cost of capital should be rejected as the cost of capital would be more the profits of the project.

Part Five

Beta

Beta is used in business finance a means of measuring the investment portfolio risk. A beta of 2 means that for every 1% change in the benchmarks value, the value of a given portfolio changes by 2%. The beta for Ford is 0.88%.

Expected Return – CAPM

The beta for Ford Motor Group according to yahoo business finance is 0.88%.  The current risk free market rate is 0.03%. The rate of risk premium is the amount that the expected asset’s rate of return is extra or exceeds the market risk free rate of interests.  The risk premium for trading companies is the company stocks or their expected rate of return less the risk free rate of return.

Capm = rf + β (rm -rf)
rf = risk free rate 3.00%
β = Beta 0.88
rm = return on the market 10.00%
Capm = 9.16%

The average historical equity premium is 6.9%, so 7% is an estimate for the risk premium (Ross, Westerfield & Jaffe, 2013).

The average Capm rate is equal to 6.52% as calculated in the excel formula which is attached. The expected return for Ford Motor Group is 7%. Using the model, the rate of return is 6.52%.

The cost of equity using the capital asset pricing model = Risk Free Rate + Beta * Market Risk Premium = 3+0.88*3= 11.64 (French, 2003, p. 65)

Ford has outstanding shares numbering 3.88 Billion while the market prices of its shares were costing 14.07 which amounts to a total of $54.59 Billion. (Black, Jensen and Scholes, 1972)

The Capital Asset Pricing theory suggests that the cost of capital depends largely on how the asset was initially. The cost of the debt capital, the cost of the equity capital and the weighted average of the two depending on the debt and equity financing represents the actual cost of capital.

Dividend Growth Model versus CAPM

The CAPM is 0.916% compared to the 0.21 %. The differences are not so high but the most logical one is CAPM which is about 1%. However the general trend for the Ford Motor Group has been retrogressive trend at around -0.3. (Appendix B)

Part Six

Debt and Equity

Equity

According to Modigliani and Miller (1958, p. 260) the cost of equity capital is mostly determined by the asset’s cost of capital and not the other way round.

Ford has outstanding shares numbering 3.88 Billion (see table 5) while the market prices of its shares were costing 14.07 which amounts to a total of $54.59 Billion. The Capital Asset Pricing theory suggests that the cost of capital depends largely on how the asset was initially financed (Bierman & Smiddt, 1966). The cost of the debt capital, the cost of the equity capital and the weighted average of the two depending on the debt and equity financing represents the actual cost of capital. (Black, Jensen and Scholes, 1972, p.80)

Table 5

Ford’s Market Value of Equity

Company name Year 2013
Shares outstanding 3.88B
Price as of 14.07 per share

Market value of equity

 54.59B

26.83B
CAPM                    6.52%

 The rate of Capital Asset Pricing model for Ford Motor Group is 6.52%.

Debt

Interest payments that are payable by lenders are all deductible from the ones or a company’s taxable income while the payments to shareholders as dividends are not. Most tax systems encourage the companies to use debt financing instead of equity. (Black, Jensen and Scholes, 1972, p.118) The higher the interest rates the higher the incentive.  The interest expenses for Ford increased by 16.3% in 2013 while in 2012 it had decreased by 12.7%. The interest expense for Ford in the year 2013 and 2012 were 829 million and 713 million respectively. GM interest expenses decreased by 31.7% in 2013 while in 2012 the expenses decreased by 9.4%. The interest expenses for 2013 and 2012 were 334 Million and 489 Million respectively. (Bodie, Kane, Marcus, 2008, p. 303)

The capital structure for Ford is mostly made up of borrowed money. In 2013, the long-term debts amounted to $114, 688 million while in 2012 and 2011 the debts amounted to 105, 058 and 99488 respectively. The total stockholder equity amounts to $26,383 Million and $15,947 million for the same period. Ford Company is highly levered and it needs to cut down on borrowing. General Motor’s long term debts amounted to $6573 Million and $3424 Million for the year 2013 and 2012 while the total stockholders equity amounted to $42,607, $36,244 and $38120 for the years 2013, 2012 and 2011. Gm is relatively levered. (Markowitz, 1959, p. 78)

The credit ratings for Ford currently are CCC+ from S & P performance of CC in 2012. Ford managed to pay its 9.9 Billion debts in the year 2014 and it helped to boost its credit rankings. Ford credit rankings place it in front of GM and Chrysler and they are currently fitting hard to avoid bankruptcy petition. (Luenberger, 1997, p. 48)

Table 6

Cost of Debt for Ford Motor Group for the year 2013

Company name 2013
Long term debt

Current Portion of Debt

Total Debt

 114.69B

–

114.69B
Cost of Debt % 7%
Tax Rate 40
The cost of debt for Ford Motor Group is 7%, a rate which is fairly affordable. Given the current ratio of 2.11 Ford can comfortably afford to pay its debts.

Table 7

Calculations for Weighted Average Cost of Capital for Ford Motor Group

Ford Value $ %
Equity (Rs)  26.38B  18.7
Debt (Rb) 114.69 81.3
Total Value 141.07 100Rs

The formula for calculating the weighted average cost of capital is:

Ford Value %
Equity(Rs) 26.38 0.87
Debt(Rb) 114.69 0.13
Total Value 141.07 1
Rwacc 3.98%

The WACC for Ford Motor Group is 3.98% which reflects a favorable position compared to its cost of debt which is 7%. (See Table 6 & 7 above)

Capital Budgeting Assumptions

The major assumptions are that the tax rate is 40%. Following the losses incurred by ford in its foreign branches no taxes were chargeable in 2013.

Competitive Review of Debt and Equity Mix

The average weighted cost of capital is higher for Ford than GM. In 2013, the WACC for Ford has a WACC of 3.98% while for GM it was 3.16%. Ford Motor Group seems to have slightly more debts compared to GM.

Competitive Review

GM Value %
Equity(Rs) 42.61 0.87
Debt(Rb) 6.57 0.13
Total Value 49.18 1
Rwacc 3.16%

 Part Seven

Capital Structure Theories

According to Modigliani and Miller (1958, p. 261) the cost of equity capital is mostly determined by the asset’s cost of capital and not the other way round.

Ford has outstanding shares numbering 3.88 Billion while the market prices of its shares were costing 14.07 which amounts to a total of $54.59 Billion. The Capital Asset Pricing theory suggests that the cost of capital depends largely on how the asset was initially financed (Bierman & Smidt, 1966, p. 300). The cost of the debt capital, the cost of the equity capital and the weighted average of the two depending on the debt and equity financing represents the actual cost of capital. (Black, Jensen and Scholes, 1972, p. 120)

Some theories of the Capital assets pricing model, have been applied in relation to heterogeneous beliefs and risk free lending rate elimination (Black, 1997, p. 444).

Summary

Ford Motor Group financial performance seems to be improving as in the year 2013  it had a Gross Profit 7.9%  as opposed to 2012 when it decreased by 5% from the previous year. The GP for General Motors on the other hand increased by 70% in the year 2013 while in the year 2012 it decreased by 43%. The net profit for Ford for the same period increased 26% in 2013 while in 2012 it decreased by 72%. GM registered a 13.7 % reduction in 2013 while in 2012 it registered a further reduction of 32.7%. The total shareholder’s equity for Ford increased by 65.5% in 2013 while in 2012 it increased by 6%. General Motor’s shareholders equity increased by 17.6% in 2013 while in 2012 it decreased by 4.9%. In 2012 Ford Motor Group reduced its total liabilities by almost 70% while GM increased its total liabilities by 15.6% in 2013. The sales revenue for Ford increased by 10% in 2013 while GM sales for the same period increased by 2.1%. Ford total sales revenues increased from $133,559 million in 2012 to $146,917 million in 2013. GM sales for the same period were 152256 million and 155427 million from the same period respectively. The interest expenses for Ford increased by 16.3% in 2013 while in 2012 it had decreased by 12.7%, GM interest expense decreased by 31.7% in 2013 while in 2012 it decreased by 9.4%. (Bodie, Kane, Marcus, 2008, p. 303)

The ratios for Ford also indicate that the liquidity ratios are above average for all the years for Ford Motor Group. The current ratios were 2.11, 2.32, 2.26 for the years 2013, 2012 and 2011. The quick ratios also indicated a positive trend. The Times interest earned for the year 2013 for Ford were 9.45, 11.83 and 11.63 for the years 2013, 2012 and 2013.  The interest cover for the same period indicated the same results like Times interest earned. (Drucker, 1999, p. 155)

The ford Family owns 2% of the company while the employees number about 181,000. It has a market capitalization of $54.65 Billion and its shares are currently trading at $14.09 dollars with a yield of 3.5%. (Ross, Westerfield & Jaffe, 2013, p. 175) The net asset turnover for Ford decreased by 2.5% in the year 2013 as compared to a 50% increase in the year 2012. GM registered a decrease of 13% in its net assets turnover in the year 2013 while in the year 2012 it experienced an increase of 6.5%. The dividend per share for Ford in 2013 and 2012 was 0.4 and 0.2 respectively. This represented a return of 22% to the shareholders in 2013 while in 2012 it was 23%.

Ford Motor Group has a great potential to return to great profitability and also be able to pay off all its outstanding debts. The Current ratios and the quick acid test ratios indicate that Ford Motor Group has a stable liquidity and with the right leadership it would be able to make more profits like the earlier years. Given all these factors I would definitely invest my money in Ford Motor Group but I would be cautious besides I would also be requiring a plan on how the management of the company would be proposing to settle the huge loans that it owes several financiers. Ford may be earning some profits but it has a lot of debts that are four or five times its total equity. The classification of shares as common shares and also class B shares that have unequal voting rights is also some disquietedness among the shareholders.

Reference

Adams, S. (2008) Fundamentals of business economics. Financial Management (UK), 46–48.

Bierman, H. and Smidt. S. (1966).The Capital Budgeting Decision—Economic Analysis and Financing of Investment Projects. New York, NY: Macmillan Company. 300-55

Black, F. (1997) Capital Market Equilibrium with Restricted Borrowing, Journal of Business, July, 45:3, 444–55.

Black, F., Jensen, M.C. and Scholes, M. (1972) “The Capital Asset Pricing Model: Some Empirical Tests,” in Studies in the Theory of Capital Markets. Michael C. Jensen, ed. New York, NY: Praeger, 79–121.

Bodie, Z., Kane, A., Marcus, A. J. (2008). Investments (7th International Ed.) Boston: McGraw-Hill. 303.

Drucker, F. (1999) Management Challenges of the 21st Century. New York, NY: Harper Business. 150 – 55

Ford Motor Company Annual Report (2013) Delivering Profitable Growth for All, www. corporate ford.com

Fama, E. F, French, K. R (2004). “The Capital Asset Pricing Model: Theory and Evidence”. Journal of Economic Perspectives 18 (3): 25–46.

French, C. W. (2003). “The Treynor Capital Asset Pricing Model” Journal of Investment Management 1 (2): 60–72.

Garrison, R., Noreen, W. & Brewer, P. (2009) Managerial Accounting, New York, NY: McGraw-Hill Irwin. 65 -70

Gordon, M. J. (1962). The Investment, Financing, and Valuation of the Corporation. Homewood, IL: R. D. Irwin.

General Motors Company Annual Report (2013) www. corporate gm.com

Khan, M. (1993) Theory & Problems in Financial Management, New York, NY: McGraw Hill

Luenberger, D. (1997). Investment Science, Oxford University Press, Oxford: 48 – 75.

Markowitz, H. (1959) Portfolio Selection: Efficient Diversifications of Investments. Cowles Foundation Monograph No. 16. New York, NY: John Wiley & Sons, Inc. pp. 77 – 91.

Modigliani, F. and Miller, M. (1958) “The Cost of Capital, Corporation Finance, and the Theory of Investment,” American Economic Review, June, 48:3, 261–97.

Ross, S. A., Westerfield, R. W., & Jaffe, J. (2013) Corporate finance (10th Ed.) New York, NY: McGraw-Hill Irwin. 175.

Vance, D. (2003) financial analysis and decision making: tools and techniques to solve financial problems and make effective business decisions. New York, NY: McGraw-Hill.

Appendix A

The Historical Share Prices for Ford Motor Group

Date Shares
2013 Low High Average  % Trend
1-Sep 16.21 17.35 16.78
8-Sep 17.1 17.68 17.39 3.63528
15-Sep 17.3 17.7 17.5 0.632547
22-Sep 16.69 17.34 17.015 -2.77143
6-Oct 16.35 17.12 16.735 -1.64561
13-Oct 16.92 17.55 17.235 2.98775
20-Oct 17.39 18.02 17.705 2.727009
27-Oct 16.76 17.72 17.24 -2.62638
4-Nov 16.55 17.2 16.875 -2.11717
11-Nov 16.64 17.2 16.92 0.266667
18-Nov 16.82 17.18 17 0.472813
2-Dec 16.42 17.2 16.81 -1.11765
9-Dec 16.2 16.79 16.495 -1.87388
16-Dec 15.17 16.99 16.08 -2.51591
23-Dec 15.1 15.5 15.3 -4.85075
30-Dec 15.25 15.64 15.445 0.947712
2014
6-Jan 15.35 16.11 15.73 1.845257
13-Jan 16.08 16.78 16.43 4.450095
20-Jan 15.78 16.68 16.23 -1.21729
27-Jan 14.9 16.01 15.455 -4.77511
3-Feb 14.4 15.13 14.765 -4.46457
10-Feb 14.78 15.36 15.07 2.065696
24-Feb 15.07 15.46 15.265 1.293962
3-Mar 15.03 15.83 15.43 1.080904
16-Mar 15.16 15.74 15.45 0.129618
30-Mar 15.48 16.49 15.985 3.462783
6-Apr 15.59 16.17 15.88 -0.65687
20-Apr 15.71 16.44 16.075 1.22796
27-Apr 15.75 16.2 15.975 -0.62208
4-May 15.43 15.95 15.69 -1.78404
11-May 15.55 15.9 15.725 0.223072
25-May 16.05 16.56 16.305 3.688394
8-Jun 16.5 17.12 16.81 3.097209
15-Jun 16.38 16.87 16.625 -1.10054
22-Jun 16.68 17.29 16.985 2.165414
29-Jun 17.07 17.4 17.235 1.471887
6-Jul 17.05 17.49 17.27 0.203075
20-Jul 17.51 18.12 17.815 3.155761
27-Jul 16.72 17.85 17.285 -2.97502
3-Aug 16.74 17.14 16.94 -1.99595
10-Aug 17.11 17.49 17.3 2.125148
17-Aug 17.51 17.52 17.515 1.242775
24-Aug 17.19 17.49 17.34 -0.99914
31-Aug 16.94 17.87 17.405 0.374856
7-Sep 16.5 16.87 16.685 -4.13674
14-Sep 16.16 16.77 16.465 -1.31855
28-Aug 14.44 16.4 15.42 -6.3468
5-Oct 13.52 14.7 14.11 -8.49546
12-Oct 13.26 14.25 13.755 -2.51595
19-Oct 13.65 14.49 14.07 2.290076
-15.6592
Trend -0.31957

Source: www. Yahoo business Finance

Appendix B

The Financial Ratios of Ford Motor Group

Ford Motor Group 2013 2012 2011
Current Ratio Total Current Assets/Total current liabilities 2.11 2.32 2.26
Quick Ratio TT C/ Assets – inventories /TT/ C Liabilities 1.98 2.18 2.15
Receivable turnover Annual credit sales/average receivables
Inventory Turnover Cost of goods sold/Average inventory 17.00 17.51 19.87
Asset turnover Sales/Average total assets 0.75 0.73 0.76
Dividend yield Div per Share / Current Share price 0.03 0.01
Dividend cover EPS/ Dividend per Share 3.70 7.40
Net assets turnover Net assets / total sales 1.24 1.27 0.85
Times interest earned EBIT/Annual Interest Expense 9.45 11.83 11.63
Debt to total Asset Debt/Assets 0.57 1.03 0.56
Book value per share 9.17 9.17 9.17
Interest cover EBIT/Annual Interest Expense 9.45 11.83 11.63
Profit margin on sale GP/sales 0.13 0.13 0.14
R.R return on assets EAT/Total  Assets 0.04 0.03 0.11
R.R com stock equity Profit after taxes/Shareholders equity 0.27 0.36 1.35
Earnings per share Profit after taxes-pref div)/No. of comm O/S 1.54 1.48
Payout Ratio cash dividends/income 0.00 0.00 0.00
ROE Return On Equity (ROE) 0.27 0.36 1.35
ROA Return on average Assets 0.04 0.03 0.11

 Source: (Ford Motor Group Annual Report, 2013)

Appendix C

The Financial Ratios for General Motors

GM 2013 2012 2011
Current Ratio Total Current Assets/Total current liabilities 1.31 1.30 1.22
Quick Ratio TT C/ Assets – inventories /TT/ C Liabilities 1.08 1.02 0.95
Receivable turnover Annual credit sales/average receivables
Inventory Turnover Cost of goods sold/Average inventory 9.56 9.74 9.16
Asset turnover Sales/Average total assets 0.93 1.02 1.04
Dividend yield Div per Share / Current Share price
Dividend cover EPS/ Dividend per Share
Net assets turnover Net assets / total sales 0.27 0.24 0.25
Times interest earned EBIT/Annual Interest Expense 23.33 -57.68 17.99
Debt to total Asset Debt/Assets 0.04 0.02 0.02
Book value per share
Interest cover EBIT/Annual Interest Expense 23.33 -57.68 17.99
Profit margin on sale GP/sales 0.12 0.07 0.13
R.R return on assets EAT/Total  Assets 0.03 0.04 0.06
R.R com stock equity Profit after taxes/Shareholders equity 0.13 0.17 0.24
Earnings per share Profit after taxes-pref div)/No. of comm O/S 2.92
Payout Ratio cash dividends/income
ROE Return On Equity (ROE) 0.13 0.17 0.24
ROA Return on average Assets 0.03 0.04 0.06

Source: General Motors Annual Report.

The data was obtained from the annual reports but the calculations were done using excel while applying the formulas shown on the tables.

Appendix D

Members of the Ford Motor Group Executive Board

Richard A. Gephardt, Ellen Marram, Stephen Butler, Kimberly Casiano, Edsel Ford, Homer Neal, Antony F. Earley, James P. Hackett, John L. Thornton, Gerald L. Shaheeen, James H. Hance, Jr., William W. Helman John C. Lechieter, James H. Hance and Jon M. Huntsman.

(Ford Annual Report, 2013, p.7)

Appendix E

The formula for calculating the Return on Equity (ROE) for Ford Motor Group

The formula for calculating the Dividend Discount Model for Ford Motor Group

Dividend Discount Model (DDM) =

Financial Data for Ford Motor Group

Ford Motor Group (Billions) Year 2013
Net income $ 7.16
Equity $26.38
Total dividends paid $1.57
Outstanding shares 3.88
Earnings per share (EPS) $1.82 (dollars)
Dividends paid per share $0.4 (dollars)
Stock price as of 2/11/2014 $14.07

Source: Ford Group Annual Report for 2013

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Personal Worldview and Research Mindset in Business

Personal Worldview and Research Mindset in Business
Personal Worldview and Research Mindset in Business

Personal Worldview and Research Mindset in Business

Personal worldview and research mindset in business

Order Instructions:

Your Personal Worldview and Your Research Mindset

Have you ever heard the expression that someone is “right-brained” or “left-brained”? This notion implies that there are multiple ways of viewing the world or of perceiving reality. How you perceive the world may influence your thinking and perspective in ways that go beyond the obvious. For a researcher, it is critical to recognize one’s worldview and the perspectives that derive from it. One means of doing this is to conduct a personal inventory.

Refer to the handout “Your Personal Worldview Worksheet.” After you have completed the worksheet, post a statement by Day 3 explaining your worldview to your colleagues and Instructor. Follow the worksheet’s instructions for drafting your personal statement, and consider how your worldview aligns with the worldviews described in this week’s readings from the course text, Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Be sure to incorporate ideas and concepts from the readings about practitioner and professional doctorates as well. Your entire statement should be 2 to 3 paragraphs long, or range between 400–600 words.

Material A
Linking Theory to Your Business Problem Statement

DDBA 8427 Applied Research Methods – Qualitative and Quantitative
Linking Theory to Your Business Problem Statement

Review the Discussion and Application instructions for this week in the online classroom. This handout will guide you through the process of applying a quantitative, qualitative, and mixed methods approach to your Problem Statement.

If you do not already have one, begin by creating a template for an APA-formatted paper. Review the APA Publication Manual and note the sections pertaining to the required cover page, abstract, introduction, text of the paper, conclusion, and references. Also note the elements related to running heads and page headers. You may wish to save this template for future papers.

Each of the numbered sections below corresponds to a section within the main text of your paper; remember that an abstract and introduction will precede this section and that a conclusion will follow it. Follow the order presented, and organize your responses to the questions so that your writing has a logical flow. Incorporate references to the course text and any other sources that you deem appropriate. Keep in mind that direct quotations should be somewhat limited, as should instances of paraphrasing. The majority of your paper should reflect your own thoughts and only rely upon outside resources for structure, reinforcement, and validation.

I. Phenomenon for Research – State the phenomenon that you intend to research in broad terms. Examples: interactions between managers and staff; impact of mission statements on financial decisions; strategic aspects of an organizational unit; disparities between national and international planning in a given endeavor.

II. Your Problem Statement – Introduce your Problem Statement and illustrate its linkage to the phenomenon. If you need to revise your Problem Statement from DDBA 8160: Business Strategy and Innovation at this time, you may do so.

III. Your Problem Statement in a Worldview – Refer to Table 1.1 in your course text (Creswell, p. 6). Select three research tendencies, each from one of the four worldviews listed. Write a 1- to 3-sentence statement for each worldview that conceptualizes the phenomenon and your Problem Statement within that view. You may first need to do some brief research on concise definitions of the worldviews listed. Example:

The question of how closely financial decisions and organizational missions are aligned in small enterprises needs further investigation (phenomenon). It is theorized that financial decision makers in small manufacturing firms align their financial decisions with organizational missions less than 10% of the time, as measured by an investigation of the financial decisions of a sample population (problem statement). This is a Theory Vertification study under the category of a Postpositivist worldview.

IV. Alignment of Research Methods – Match each of your statements to a method. You should have one quantitative approach, one qualitative, and one mixed method. For each statement, list the method and outline how you might conduct the study within the paradigm of that research approach. This is meant to be a preliminary and general sketch of a potential approach; you will likely expand on and expound upon it with greater precision and clarity by the end of the course. Example:

In order to conduct a mixed methods study of the alignment of financial decisions to organizational mission in small manufacturing firms, this study will collect internal and external financial statements from a random sample of 200 manufacturers with fewer than 200 employees. The financial data will be correlated to the organizational missions. Random chief financial officers will be selected for surveys and structured interviews. The financial data and compiled responses will be compared to paint a picture of the degree of alignment between financial decisions and organizational missions. It is posited that the statistical relationship between the dependent and independent variables will be reinforced by the surveys and structured interview findings.

A. Quantitative Approach
B. Qualitative Approach
C. Mixed Methods Approach

In your conclusion, summarize your proposed approaches, and discuss their similarities and differences. Be sure to include 3–5 questions for further consideration or areas for colleague and Instructor input and suggestions. Review your paper for APA formatting, and be sure that it contains all of the required elements. Then, return to the online classroom for posting and peer review (Discussion area), and for submission instructions (Application area).

References

Creswell, J. W. (2009). Research design: Qualitative, quantitative, and mixed methods approaches (3rd ed.). Thousand Oaks, CA: Sage.

Material# B
Your Personal Worldview Worksheet

DDBA 8427 Applied Research Methods – Qualitative and Quantitative
Your Personal Worldview Worksheet

Record your answers to the following questions. You will synthesize your answers into a complete statement at the end, so feel free to include limited personal information in the chart below. You should exclude anything personal or confidential that you wish to keep from the synthesized statement at the end, however. The chart below is for your own reference and is meant to be shared with colleagues or your Instructor.

Questions Responses
Think about your educational experiences. How do you learn best?
Think about your information-gathering and investigation skills. How do you search out answers to questions (e.g., about your health or as an informed consumer)?
Think about your interpersonal communication skills. How do you attempt to influence the behavior of others (e.g., through persuasion or interpersonal negotiation)?
Think about your problem-solving skills. How do you approach challenges (personal or professional)?
Think about your self-identity. Describe your personal background and experiences, including your cultural background and experiences.
Think about your professional persona. Describe your professional background and experiences (education, work, etc).
Think about your self-identity and its relationship to your professional practice. How do you think your personal, cultural, and professional experiences have influenced your personal beliefs, values, and worldview? How have they influenced your professional interests and the way in which you will approach and conduct research?
Think about how you would present yourself to others in an executive summary or “elevator pitch” (wherein you only have the time that it takes to ride an elevator to present an idea to the person riding with you). Based on the above information, summarize how you see the world in 3–5 sentences.

Based on this exercise, compose a statement reflecting your worldview for the benefit of your colleagues and Instructor. The first part of your statement will include the last segment from the table above, edited to remove any personal information you do not wish to share. The second part will explain how your worldview aligns with the worldviews described in the course text, Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Your entire statement should be comprised of 2 paragraphs and range between 400–600 words.

Please be advice of the message from my professor: Thanks My feedback to you and the class is to avoid the use of Creswell.

Creswell will not be seen cited in this class, I do not take off points the first week on this matter so, you are good for now. However, ensure you are using your APA manual as you make your reference, this is where most of the point deduction will take place as I take this piece very seriously.

SAMPLE ANSWER

Personal Worldview and Research Mindset in Business

Environment has influenced my way or perception of the world. Those who I interact with, my teachers and strangers, have had so much impact in my life.  My guiding factor is ethics, which always directs my decisions in all aspects of my life.

Material A
Linking Theory to your Business Problem Statement
I. Phenomenon for Research – State the phenomenon that you intend to research in broad terms. The effects of Human Resource Management Practices in an Organization
II. Your Problem Statement –

The typical Human Resource Management practices are staff recruitment and selection, training and development, and compensation and Performance appraisal. These practices have been found to be linked to the level of organizational performance. However, how these factors affect organizational performance varies from one organization to another. Indeed, the literature reviewed indicates that there is no uniformly acceptable standard on Human Resource Management Practices effect on organizational performance (Abeysekera, 2007).

III. Your Problem Statement in a Worldview –

When making  a decision on training organizational needs, one needs to first know what kind of training and mode will add value to the organization, thus, on job or off job training. Only off-the-job training improves performance. Effective training not only equips employees with most of the knowledge and skills required to accomplish jobs, but it also helps achieve overall organizational objectives by contributing to the satisfaction and productivity of the employees.

Employee compensation packages are a prerequisite for companies that want to attract and retain high –caliber, skilled staff. Proper management of compensation is a good source of employee motivation and a good source to measure organization performance. A well designed compensation plan gives an organization a competitive advantage, it helps to attract the best job candidates, motivates them to perform to their maximum potential, and retain them for long.

Performance appraisal also influences other HRMP such as recruitment and selection, training and development, compensation and employee relation, and retention. As performance appraisal leads to pay raise, promotion, and training, it is assumed that better performance appraisal can have impact on organizational performance. Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards (Jike, 2003).

  1. Alignment of Research Methods –

The study will utilize descriptive research design, which aims to establish how the independent variable relates with performance variables. This being a case study, the target population will be 215 permanent employees. Random sampling method will be used to select respondent of sample size representing 39% of the population. Primary data will be collected through self- administered questionnaire. Data will be analyzed using two levels of analysis: descriptive statistics describing frequency distribution, mean and standard deviation; regression analysis, which was used to establish the strength of the relationship between Human Resource Management practices and Performance. The result of the study was expected to show the effect of the independent variable studied on dependent variables (Bergh  & Ketchen, 2009).

Conclusion

Reliability is the degree of consistency with which an instrument measures the attributes for which it is designed. One type of questionnaire will be administered to the identified sample.  Ten employees will be identified representing the strata’s for pilot test of the questionnaire. This will give the researcher an opportunity to identify flaws in understanding whether questions and directions are clear to the subject. The main reason for testing the questionnaire is to ensure that it fits as an instrument in the primary data collection process. Data collection bias will be minimized by use of a trained research assistant who will administer the questionnaires, and standardized conditions such as exhibit of similar personal attributes to all respondents. The subjects will be requested not to write their names on the questionnaire to ensure confidentiality

The research questions are:

  1. What are the effects of staff recruitment practice on CRF performance?
  2. How does training and development affect CRF performance?
  3. How does compensation affect staff performance at CRF?
  4. What are the effects of staff performance appraisal practices to CRF performance?
  5. How does HRMP affect Employee outcome?
  6. Does the joint effect of HRMP and employee outcome affect CRF performance

References

Abeysekera, R. (2007) The impact of Human Resource Management Practices on marketing executive turnover of companies in Sri Lanka. Contemporary Management Research 3 (3).

Bergh, D. D., & Ketchen, D. J. (2009). Research methodology in strategy and management. Bingley: Emerald Group Publishing Limited.

Jike, V. (2003). Organizational behavior and negative attitudes in Nigeria’s Public  employment sector. The Empirical Nexus. Abuja Manage Review 1:4

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ERP systems Assignment Help Available

ERP systems
ERP systems

ERP systems

ERP systems Assignment

Order Instructions:

Read “Realizing Benefits ERP” article and discuss advantages and disadvantages of ERP systems
Write a summary of the ERP benefits.

SAMPLE ANSWER

ERP systems

ERP systems are associated with many pros and cons. Much of the benefits are realized when different firms with different strategic objectives realize these benefits from the adoption of ERP systems. One of the benefits of ERP systems is improved financial performance immediately after implementation of ERP models. ERP systems are known to bring about operational efficiency and productivity through automated transactions and better decision-making. Another benefit is that ERP system improve market performance through improved customer service (Bradford & North Carolina State University, 2010). This is affected by the use of operational support and inter-organizational systems and add-on software for decision support (that is, advanced planning and scheduling (APS) systems such as i2) and market information (that is, customer relationship management). The infrastructural capabilities of ERP improves a firm’s operational efficiency  ERP system reduce operational uncertainty by providing coordination, visibility and easy information sharing where there is interdependence among business units.

ERP systems can also reduce equivocality through business process standardization that aids to ensure information is presented in a consistent manner. Easy access to integrated, precise and valid business data leads to better operational planning and decision support. Integration of all these processes enables a company to have a competitive advantage over rival firms. This is because ERP system enable a company to have monopoly of the other firms in production of good and services (Bradford & North Carolina State University, 2010). More importantly, ERP systems are praised to bring about abnormal stock returns to firms. However, some critics to ERP systems have pointed out the system is harmful. They argue that the only experience in abnormal stock return is less significantly felt with manufacturing firms, but not with ERP adopters. Many adopters of ERP systems have no positive return on investment (ROI).

Reference

Bradford, M., & North Carolina State University. (2010). Modern ERP: Select, implement & use today’s advanced business systems. Raleigh, NC: North Carolina State University, College of Management.

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Starting a business enterprise Assignment

Starting a business enterprise
Starting a business enterprise

Starting a business enterprise

Order Instructions:

Word Limit: 2,000 words (with 10% plus or minus leeway)

Percentage of marks awarded for module: This assignment is worth 50% of the total marks for the module

Constructive critical analysis, introduction, conclusion •Relevant, accurate content, demonstrating research, as required by the assessment task.
•Coherent and clear discussion of the different forms of business
•Clear comparison between financial and management accounting
•Critical discussion of the different sources of finance 70%

Referencing Style •Full in-text referencing using the Harvard citation style.
•Structured reference list or bibliography using the Harvard referencing method 10%
Content, style, relevance, originality Clear demonstration of rigorous research from recognised authoritative sources. Audience focus; report format   10%

Introduction, conclusion and recommendation •Coherent and concise  introduction, conclusion and clear recommendations
10%

Assignment Task:
Mr and Mrs Swanson are thinking of starting a business enterprise. They have saved up some money from their 20 years in employment and have decided to produce and sell biscuits and chocolates. They expect this to be a lifelong investment with a plan for rapid growth and expansion.
They know that there are different forms of businesses, each with its own benefits and limitations, but are unsure of the best one to adopt. They also require the aid of an in-house accountant to help with their day-to-day management decisions, but also unsure if a management accountant would be preferable to a financial accountant.
Since this is a lifelong investment, with plans for expansion, they would also like to know the sources of finance available to them. They have come to your accounting practice for advice and guidance on these issues.
As an accountant, you are required to write a report to Mr and Mrs Swanson explaining the issues below:
• Explain the different forms of business units (sole proprietorship, partnership, limited company) available, highlighting the benefits and limitations of each (20 marks)

•Explain financial accounting and management accounting, highlighting the differences between the two strands of accounting (20 marks)

•Explain the sources of finance available to a business owner, making distinctions between internal and external sources, short-term and long-term sources, equity and debt (30 marks)

•Style, layout, format and relevance  (5 marks)

•Introduction, conclusion and Recommendation (15 marks)

•Referencing – Harvard Style (10 marks)

Total marks for assignment: 100

Please inform your writer to completely adhere to instructions on how the report should be. Also, every content of report must conform to UK including Referencing because I am not study in America University.

The following shows the Marking Scheme:
Introduction     5%
Sole Proprietorship    5%
Partnerships    5%
Private Limited Company  5%
Public Limited Company    5%
Financial Accountant      10%
Management Accountant     10%
Internal vs External source of finance   10%
Short Term vs Long Term Finance        10%
Debt vs Equity                          10%
conclusion and Recommendation            10%
Style, Layout,format relevance            5%
Referencing                               10%
Total                                    100%

Percentage of marks awarded for module: This assignment is worth 50% of the total marks for the module
Assessment criteria Explanatory comments on  the assessment criteria   Maximum marks for each section
Constructive critical analysis, introduction, conclusion • Relevant, accurate content, demonstrating research, as required by the assessment task.
• Coherent and clear discussion of the different forms of business
• Clear comparison between financial and management accounting
• Critical discussion of the different sources of finance 70%
Referencing Style • Full in-text referencing using the Harvard citation style.
• Structured reference list or bibliography using the Harvard referencing method 10%
Content, style, relevance, originality Clear demonstration of rigorous research from recognised authoritative sources. Audience focus; report format   10%

Introduction, conclusion and recommendation • Coherent and concise  introduction, conclusion and clear recommendations
10%

SAMPLE ANSWER

Starting a business enterprise

Table of Contents

Executive summary. 2

Introduction. 4

Starting a Business. 4

Main Branches of accounting. 7

Sources of Finance. 9

Conclusion and Recommendation. 11

References. 13

Executive summary

Mr. and Mrs. Swanson could incorporate a Sole Proprietorship, a Partnership, a Private Limited Liability Company or a Public Limited Liability Company as a business vehicle to implement their business idea of producing and selling biscuits and chocolates. Each of these types of business entities has their benefits and disadvantages.  For example a sole proprietorship will give the two entrepreneurs a lot of control over the affairs of their business and will enable them to make faster business decisions. On the flipside the liability of the enterprise extends to their personal property.  If the couple decides to incorporate either a Private Limited Liability Company or a Public Limited Liability Company they will be required to prepare at certain time periods financial statements in line with Company Act of the country. These include Income Statement, Balance Sheet, Cash flow statement, statements of changes in equity and notes to the financial statements in line with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Standards (GAAP). The documents are prepared in line with financial accounting requirements and are for external use. The couple could also prepare management accounts to aid them or their managers in planning, organizing, directing and controlling the operational activities of the company. Management accounts are however not mandatory documents by law unlike financial accounting documents. The couple has various sources from which they could get finances to implement their business idea. They could approach angel investors for equity financing, a bank for a loan, friends, relatives etc. for equity financing or loans. Each source has its benefits and disadvantages.

Introduction

            Mr. and Mrs. Swanson are intending to go into the business of producing and selling biscuits and chocolates. They could undertake the business by incorporating various forms of business entities namely; Sole Proprietorship, Partnership, Private Limited Liability Company or Public Limited Liability Company. Each business entity type has benefits and drawbacks. It is the duty of the couple to decide in light of these drawbacks highlighted in this document which would be the most ideal type of business entity to undertake the business venture(BULL, NELSON and FISHER 2009). If the couple decides to incorporate a Private Limited Liability Company or a Public Limited Liability Company they will be required to abide by IFRS or GAAP guidelines as the company law and thus prepare annual reports using financial accounting practices. There are various sources of finance that the couple can use to raise funds.  To implement the business idea, the couple could approach a lending institution for a loan or a line of credit. They could approach a venture capital fund, an angel investor, a friend, relative or resort to internal sources like selling private property to raise equity funds to implement the business idea (BULL, NELSON and FISHER 2009).

Starting a Business

In every sector of an economy of any country in the world, business entities are registered   either as sole proprietors, partnerships, private limited liability companies or public limited liability companies. Mr. and Mrs. Swanson will have to choose whether to register their business in any of these forms. The main differences between these three types of business configurations relates to ownership structure, legal requirements and financing structure decisions among others (BULL, NELSON and FISHER 2009). The term “sole proprietorship” is somewhat misleading as the word “sole” might be interpreted to imply that only one individual is involved in the business.  The reality is that a sole trader could have more than one person involved in it. In a sole proprietorship the main requirement is that only one individual is required to own a business entity.  The person who owns the entity would be the main source of finance and is expected to be actively involved in its management (MASLIANKOA and MAISTRENKOA 2012).  The main drawback is that sole proprietorship entities normally operate on an informal basis in that the private matters of the owner become part of the issues impacting on the business. For instance if the owner is sick the business stalls until he/she recovers.  If the business is folded up, the creditors could auction the owner’s property that is unrelated to the entity to recover their money.  There is no separation between the assets of the owner and those of the entity.  The main benefit of this type of business is that decision making is done much faster than in other types of entities. The owners will have total control over the affairs of the company. Accounting information in a sole proprietorship is relatively straightforward and there is no specific piece of legislation that governs accounting arrangements (KIRTZKHALIA 2012).

Mr. and Mrs. Swanson could also undertake the business as a partnership. The only difference between a partnership and a sole proprietorship is that there is more than one owner in a partnership.  It is important for partners in a partnership to agree among themselves the amount of financial resources each will contribute into the business venture before they start. It is also important for the partners to agree on the job responsibilities that each will bear and how many hours each will work (KIRTZKHALIA 2012). Partners must also agree on how they will share profits and losses at the end of each financial year. In many jurisdictions there are laws that govern partnerships. A partnership deed is normally signed to govern the agreements in some countries which are witnessed by an attorney (MASLIANKOA and MAISTRENKOA 2012).  The main advantages of a partnership are that the partners are able to raise more capital than in a sole proprietorship and they share ideas on how to effectively manage the business thus making better decisions. The main disadvantage of this type of partnership is that liability for the partnership’s debts is shouldered by the partners as individuals. In the event of dissolution, creditors can auction personal assets of each partner to recover their money.    The next business entity is a Private Limited Liability Company (BULL, NELSON and FISHER 2009).         The main advantage of these types of entities is that they have a separate legal personality from their owners.  These types protect owners from personal bankruptcy unlike in sole proprietorship or partnership discussed in the foregoing. The owners’ liability is only up to the agreed contribution paid at the start of the company and they are not obliged to add more funds in future if the company runs into financial problems. The main disadvantage is that the owners will be required to prepare financial statements in line with IFRS or GAAP depending on the standards used in the country. The entity will be subject to the company laws and will have to be governed in line with these laws. The level of control will be lower and decisions will not be made as fast as in previous types (MASLIANKOA and MAISTRENKOA 2012).

Lastly, the couple could incorporate a Public Limited Liability Company to implement their business ideas.  This type will have a separate existence from its owners. Companies are either limited by shares or by guarantees. The term “limited liability” means that owners are allowed to finance their company up to a certain agreed amount of money.  After the owners have contributed the agreed amount of money they cannot contribute any more funds even if the company lands into financial difficulties. To incorporate a Public Limited Liability Company the owners will have to register as a Private Limited Liability Company and then trade for a number of years before they can sell shares in the company to the public through the stock exchange. The benefits of incorporating a Public Limited Liability Company are many. First, the liability of the owners is up to the amount they have contributed and not more. In the event the company is to be liquidated, the creditors cannot sell the personal assets of the owners (BULL, NELSON and FISHER 2009).   The owners of the company can also approach financial institutions or sell shares to the public in an initial public share offer through the stock exchange to get additional equity and debt funding since limited liability companies are subject to more public scrutiny which improves their credit rating. The main disadvantage is that owners cede control to management who may not have the same passion for the business. The management usually pursues short term interest to the detriment of long term sustainability of the company which is to the detriment of the owners. This is what is called the agency problem. The owners will have less control over the affairs of the business and decisions will be made much slowly and will be subject to public scrutiny (MASLIANKOA and MAISTRENKOA 2012).

Main Branches of accounting

            The main branches of accounting that Mr. and Mrs. Swanson will have to understand and probably use depending on the type of business entity they choose to incorporate are financial accounting and management accounting. Management accounting is concerned with analyzing and providing information on cost to the management of a company to aid them in planning, organizing, directing, controlling and evaluating the operations of the company and making better decisions.  It is basically accounting information prepared for managers and employees within an organization (BIRNBERG 2011). It is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of accounting information that can be used by the management of a company to carry out their normal duties of planning, organizing, directing, controlling and evaluating of the business activities to ensure the organization achieves its strategic objectives (HASTE 2009).  Management accounting is concerned with providing information to managers for use in planning, controlling and making better decisions to achieve business objectives. Management accounting is basically designed to provide information to people inside an organization i.e. managers and employees (BROCCARDO 2014).

Financial accounting on the other hand is concerned with providing information to people outside an organization and includes stockholders, creditors, government, investors, bankers, suppliers, customers etc. The information that management accounting provides enables an organization to be managed effectively whereas the information provided by financial accounting enables stakeholders to judge the past performance of an organization and make better decisions on how to engage in future (LEAUBY and WENTZEL 2012).  Financial accounting provides information that is used by external parties such as bankers, creditors and other stakeholders whereas management accounting provides information that is used by managers and employees in an organization to better perform on their jobs. Financial accounting provides information that covers the entire organization whereas management accounting provides information on smaller business units or individual departments, in addition to information on the entire company. Financial accounting focuses on the history of a company whereas management accounting focuses on the future and present state of the company (JESSWEIN 2011).

Financial accounting is supposed to be in a given format that ensures comparability with similar organizations in the industry whereas management accounting has no specific format and is in line with the information requirements of the management of a company. Management accounting information assists the management to plan, record and control activities whereas financial accounting assists stakeholders, bankers, suppliers among others in making investment decisions and for credit analysis. The information provided by financial accounting is quantitative and monetary whereas the information provided by management accounting is both quantitative and qualitative that is both monetary and also non-monetary in nature (MASLIANKOA and MAISTRENKOA 2012).  Financial accounting reporting is done at predetermined times in a year like annually or semi-annually whereas management accounting reports could be produced daily, weekly or monthly depending on the needs and directives  of the management of a company.  Financial accounting reports are mandatory for limited liability companies as per the company laws in a country whereas there is no legal requirement for companies to produce management accounting information.  A company can decide not to prepare management accounting information and it will not be breaking any law in the country (HASTE 2009).  Financial accounting is done in line with stipulated accounting standards which could be International Financial Reporting Standards or Generally Accepted Accounting Procedures whereas management accounting information is prepared according to the directions of the management of a company. The main objective of financial accounting is to disclose the end results in a trading period and depict the financial condition of a company at a given date normally at the end of the financial year. Management accounting on the other hand has the objective of providing information to management that will help them make better decisions to achieve the objectives of the organization (HASTE 2009).

Sources of Finance

            To implement the business idea, Mr. and Mrs. Swanson will have to identify several sources of finance.  This is because new businesses need start-up capital to invest in long term assets and use as working capital to start operations.  There are many sources of finance to a business entity that it can utilize. These sources could be internal or external to the business entity.  Internal sources of finance basically refer to finance generated from inside a company whereas external sources of finance refers to finance generated from outside sources of a company. There are many internal sources of finance available for a company to utilize (MASLIANKOA and MAISTRENKOA 2012). The company can negotiate for a longer credit period with its suppliers. In this case the company will take longer to pay for goods supplied than before. For instance if it was paying its suppliers in 15 days from the date they supply goods and services it can negotiate to pay after 30 days. This will increase the amount of funds available to carry out business activities.

Alternatively a company can improve its debt collection methods to ensure it collects its debts sooner than before (BYRD, ROSS and GLACKIN 2013).   For instance, if it was collecting its debts in 30 days it can reduce the debt collection days to 15.  This method increases the amount of cash available for trading and enhances the bottom line which increases equity and is a long term source of finance.  A company can also sell some of its assets such as land to raise capital or lease it to rent payers (LUTTER 2013).  There are instances where a company has non-strategic assets such as underutilized land or land it does not use at all. This asset can be sold or leased out to generate cash for trading or to acquire strategic assets. Another internal source of finance is by ploughing back profits into the business instead of paying dividends to shareholders.   This can be done in full or partially and of course with the permission of the shareholders. This is a long term source of finance since the company could retain part of the profits as retained earnings at the end of each year. These earnings increase the equity component in the balance sheet (LUTTER 2013).

External sources of finance include approaching banks for debt finance in form of loans, overdrafts, trade finance, or lines of credit. Loans from banks are normally short term sources of finance but if the company can arrange for lines of credit instead of an overdraft then it can enjoy long term sources of finance to finance its operations.  This is debt financing and the company will be required to pay regular interest to the bank.  If a company is a limited liability company it could raise share capital from capital markets through an initial public share offer. This is equity funding and is a long term source of finance.  The company will be required to pay dividends at the end of a given year (CHANDRA and FEALEY 2009).  In subsequent years the company can offer rights issues which basically is a way of raising more equity finance from the existing shareholders by offering them more shares. Other external sources of finance include bank overdrafts, raising money from friends or family members. These methods on whether the funds are short term or long term, debt or equity mainly depend on the arrangement with providers of these funds. A company can also approach angel investors who tend to provide long term finance in form of an equity stake in the company. There are also venture capital funds that the company can approach to get equity financing mainly in exchange for a stake in the company (BYRD, ROSS and GLACKIN 2013).

Conclusion and Recommendation

From the foregoing, Mr. and Mrs. Swanson will have to incorporate a business entity to implement their business idea. The decision on the type of business entity that they will incorporate will be influenced by among other factors the amount of control they will want to have over the business affairs, the amount of liability they will need to shoulder, the level of scrutiny on the affairs of the business they will be willing to allow and the amount of capital they want to raise among other determinants (KIRTZKHALIA 2012). The couple will have to understand the main branches of accounting and its impact on their operations. Private Limited Liability entities and Public Limited Liability Companies must use financial accounting to prepare annual reports for eternal stakeholders. This is a requirement by the authorities. Failure to do that could lead to legal action being taken on the company with dire consequences. There are many sources of finance that the company could resort to raise funds.  Start-up finances are mainly in forms of either debt or equity. Each form has a bearing on the future cash flows of the company. It is the duty of the two to decide which form to resort to

References

BIRNBERG, J.G.,(2011). Robert N. Anthony: A Pioneering Thinker in Management

Accounting. Accounting Horizons, 25(3), pp. 593-602.

BROCCARDO, L.,( 2014). Management Accounting System in Italian Smes: Some Evidences

and Implications1. Advances in Management and Applied Economics, 4(4), pp. 1-16.

BULL, N., NELSON, S. and FISHER, R., (2009). CHARACTERISTICS OF BUSINESS

OWNERSHIP: OVERVIEW FOR PASS-THROUGH ENTITIES AND EVIDENCE ON S CORPORATE OWNERSHIP FROM LINKED DATA*. Washington: National Tax Association.

BYRD, K., ROSS, L.W. and GLACKIN, C.E.W., (2013). A Preliminary Causal Analysis of

Small Business Access to Credit during Economic Expansion and Contraction. Journal of Applied Finance and Banking, 3(5), pp. 77-84.

CHANDRA, A. and FEALEY, T., (2009). BUSINESS INCUBATION IN THE UNITED

STATES, CHINA AND BRAZIL: A COMPARISON OF ROLE OF GOVERNMENT, INCUBATOR FUNDING AND FINANCIAL SERVICES. International Journal of Entrepreneurship, 13, pp. 67-86.

HASTE, D., (2009). MANAGEMENT ACCOUNTING -FINANCIAL STRATEGY. Financial  Management, , pp. 54-55.

JESSWEIN, K.,( 2011). PENGUIN MANUFACTURING: UNSEEN LINKS BETWEEN MANAGERIAL ACCOUNTING, GAAP, AND CREDIT ANALYSIS. Arden: Jordan Whitney Enterprises, Inc.

LEAUBY, B.A. and WENTZEL, K., (2012). Linking Management Accounting and Finance: Assessing Student Perceptions. Management Accounting Quarterly, 13(2), pp. 14-20.

LUTTER, D.J., (2013). Understanding Funding Sources. Bank News, 113(7), pp. 12-14.

MASLIANKOA, P.P. and MAISTRENKOA, A.S., (2012). A system of entities for enterprise business models. Cybernetics and Systems Analysis, 48(1), pp. 99-107.

N.KIRTZKHALIA, (2012), May 08. Number of registered in Georgia business entities increases by 11.2 percent in April. McClatchy – Tribune Business News.

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Interpreting Cost-Benefit Analyses 

Interpreting Cost-Benefit Analyses 
Interpreting Cost-Benefit Analyses

Interpreting Cost-Benefit Analyses

Application: Interpreting Cost-Benefit Analyses

Order Instructions:

Application: Interpreting Cost-Benefit Analyses
Cost-benefit analyses are designed to do just what their name implies—weigh the costs and benefits of a program or policy. This is important because, in a world of finite resources, people want to make sure that funds are allocated to programs that are as financially efficient as possible, thereby maximizing the impact of each dollar. As mentioned in this week’s Discussion, cost-benefit analysis is a type of program evaluation. To use this type of analysis, researchers weigh costs and benefits in economic terms, in other words, analysts must determine what the costs and benefits of a program or policy are (i.e., the variables) and assign monetary values to these variables. It sounds easy enough but can sometimes be complicated when non-economic costs and benefits (e.g., enhanced neighborhood beauty, psychological damage caused by a crime, or job satisfaction) must be assigned a monetary value. It is important to note that cost-benefit analysis differs from cost-effectiveness analysis in that the latter compares program costs to program outcomes.

For this Application Assignment, you evaluate the cost-benefit analysis of the program presented in the article, “A Cost-Benefit Study of a Breaking the Cycle Program for Juveniles.” As you examine the study, locate the key variables and consider the findings. Then consider whether you would continue or discontinue the program, based on the evidence presented in the study. As you formulate your answer, think about the advantages and disadvantages of continuing or canceling the program and the potential consequences for the affected community.
The assignment (2–3 pages):
• Describe the key variables within the study and provide a summary of the analysis.
• Explain whether you would continue or discontinue the program, based on the evidence provided in the analysis, and why.
• Finally, explain potential consequences of your decision for the affected community.
Support your Application Assignment with specific references to all resources used in its preparation. You are to provide a reference list for all resources, including those in the Learning Resources for this course

Will attach other files.

SAMPLE ANSWER

Description of the key variables within the study and a summary of the analysis
The case study is on the cost benefit analysis of a Juvenile Breaking the Cycle (JBTC) program in Oregon, in the United States of America. The JBTC program was initiated to provide the juvenile justice monitoring system; monitoring and coordinated treatment to youth  who were adjudged to be at high risk of using banned substances such as marijuana  and who stood the highest risk of recidivism. The key variables within the study were the case management costs which included employee benefits and administrative overheads, court costs, treatment costs and detention costs. The study involved comparing the JBTC group with a comparison group (Cowell, Lattimore & Krebs, 2010).

The study found that the average group in JBTC program, between intake and 6 months, incurred approximately $230 more costs per youth than the costs per youth in the average group in the comparison group. Costs per youth in the JBTC group in the period of 6 to 12 months rose to approximately $1,000 as compared to the similar period of 6 to 12 months in the comparison group. This implied that tax payers will have to pay more to fund the JBTC program at face value (Cowell, Lattimore & Krebs, 2010). However a further examination of juvenile justice costs showed that after intake, additional public costs on the majority of the unadjusted mean costs would diminish as youth progressed in the second year of the JBTC program. The additional juvenile justice costs in the 6-to-12 month period were found to be more by $434 per youth for the final 6 month period of the JBTC program. This difference fell to $52 which implies that the cost difference across would have greatly reduced in the second year after intake if juvenile justice costs were to continue to drive total costs of the program(Cowell, Lattimore & Krebs, 2010).

A decision on whether to continue or discontinue the program based on the evidence provided

            Based on the analysis above, it would appear that the program should be discontinued due to the fact that the costs  incurred by taxpayers in running the JBTC program in the first year was much higher than what was incurred by the average group in the comparison group. The analysis found that in the period between intake and 6 months the costs were more by $230 per youth and rose to $1,000 per youth in the period between 6 months to 12 months as compared to what was incurred by the average group in the comparison group (Cowell, Lattimore & Krebs, 2010).  However after analyzing other factors it would be a prudent use of public funds if the program was allowed to continue.  The study found that the juvenile justice costs, on the additional public costs on the majority of the unadjusted mean costs, would diminish as youth progressed in the second year of the JBTC program. The study did not include some crucial costs that would have affected the outcome of the cost- benefits study objectively such as probation costs, tax payer supported costs, etc. These costs might have altered the findings of the study (Cowell, Lattimore & Krebs, 2010).

The selection of the JBTC youth was drawn from youth who were at high risk of getting involved in substance abuse and at  high risk of recidivism as opposed to the youth in the comparison group whose selection criteria is not disclosed. This explains why the costs of the JBTC program are higher since these youth would ordinarily have used substances and hence incurred higher costs even if they were in the comparison group (Cowell, Lattimore & Krebs, 2010). The two groups had dissimilar characteristics and should not have been compared at all. Data on costs incurred in the second year was also unavailable even though initial examination showed that these costs would be similar to what would be incurred by the comparison group.  The study should be done for about four years to objectively determine its cost- benefit analysis and make a decision whether to continue or discontinue the program.  With the rates of youth, drug and substance abuse, crime and arrests growing each year in the United States as shown in the study, it would be prudent to not only continue the program but expand it to include even more deserving youth (Yeh, 2010; Zedlewski,2009).

The potential consequences of the decision for the affected community

            The decision to continue the program would initially incur the community substantial amounts of money for each youth joining the program in the first year which would be a burden to tax payers at face value.  However, in the second year the costs would be much less and the benefits much more. The potential benefits of the program are however much greater in the long run.  The JBTC program would address the problem of substance abuse and recidivism without which the youth would carry this behavior into adulthood (Cowell, Lattimore & Krebs, 2010). These adults would thereafter create dysfunctional families leading to high incidences of divorce, child abuse, suicides and crime.  The costs at this stage in the lives of these youth would run into millions of dollars to manage. Youths who go through this program at this early stage in their lives would be remodeled to go back to school or put more attention to their studies and pursue a career which would eventually produce productive citizens for the benefit of the community. The program would contribute in a reduction in crime and substance abuse which is a menace to the community and keeps investors away from investing in the community (Braga, Kennedy, Waring & Piehl, 2001).

References

Braga, A. A., Kennedy, D. M., Waring, E. J., & Piehl, A. (2001). Problem-oriented policing,         deterrence, and youth violence: An evaluation of Boston’s Operation Ceasefire. Journal of Research in Crime and Delinquency, 38(3), 195–225.

Cowell, A. J., Lattimore, P. K., & Krebs, C. P. (2010). A cost-benefit study of a breaking the cycle program for juveniles. Journal of Research in Crime and Delinquency, 47(2),241–262.

Yeh, S. S. (2010). Cost-benefit analysis of reducing crime through electronic monitoring of parolees and probationers.  Journal of Criminal Justice, 38(5), 1090–1096.

Zedlewski, E. (2009). Conducting cost benefit analyses in criminal justice evaluations: Do we dare?   European Journal on Criminal Policy and Research, 15(4), 355–364.

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Employer Goals on Organizational Strategy

Employer Goals on Organizational Strategy Order Instructions: How does the lack of identification of employer goals impact organizational strategy?

Employer Goals on Organizational Strategy
Employer Goals on Organizational Strategy

How can line managers overcome these pitfalls?

Employer Goals on Organizational Strategy Sample Answer

 

Lack of Identification of Employer Goals on Organizational Strategy

In every organization, goals, and objectives have to be set either by the employer or jointly through a collaborative process involving the employer and the employees. Either way, organizational goals provide important blueprints that determine the course of action of employees and employers, and aids in designing and preparing for future changes (Ovidiu-Iliuta, 2014). Owing to the crucial nature of these goals and objectives, it becomes imperative that every employer has to ensure that SMART goals and objectives are instituted, to guide the operations of the organization, and bring order. However, what would happen if these goals were not set? It is on this backdrop that this paper develops a solid argument behind the impact of lack of identification of employer goals on organizational strategy.

As aforementioned, organizational goals provide a blueprint that defines the course of action of an organization. Basically, this course of action is what is referred to as strategy. An organizational strategy refers to a contingent of activities and plans outlined to pursue a given objective and to take care of the future. Drawing from this definition, it is clear that employer goals and organizational strategy go hand in hand, and must be used in tandem to ensure organizational success. According to Farndale, Pai, Sparrow, and Scullion (2014), organizational goals serve four major roles: they facilitate planning, provide direction and guidance, assist in employee motivation, and contribute in performance evaluation and control.

Lack of identification of goals would hamper adequate planning in an organization. Since the business world is a rapidly changing platform, it is imperative that organizations come up with plans for the future, for instance, how to compete fairly, how to keep up with the ever-changing consumer preferences, and how to cope up with technological advancements, among others (Ovidiu-Iliuta, 2014). Without the institution of proper plans, it would mean that the organization would be caught off-guard when such crucial changes occur.

Additionally, as earlier identified, goals are important motivators for employees. Working with a known target makes operations easier, achievable, and motivating. However, in a case where the targets are not well designated, employees would not work hard enough, since they are not driven by any pressure to achieve. In line with this, employers also usually tend to align organizational goals with their own and use these as their performance indicators (Ovidiu-Iliuta, 2014). It is important to appraise highly performing employees since this would impact heavily on their motivation to work and be retained within the organization. Performance appraisal is only possible if there are set goals that act as indicators of good work.

As line managers, overcoming pitfalls caused by lack of identification of goals calls for solid leadership abilities. Most importantly, line managers need to be collaborative and involve employees in goal-setting, so that they feel part of the organization. One contingent approach would be to set specific short-term goals for teams, and ensure that these goals are met at the end of the specified time (Effects of wellbeing strategies not measured, a report finds, 2013). While these might act as ephemeral solutions to the above pitfalls, it is important that the line managers come together to set long-term goals for the entire organization, based on its culture and objectives. This process should be collaborative and must involve all employees so that they embrace the goals, and become part of the organization. Still, fostering teamwork in such a scenario is a great way to get the goals to be met satisfactorily.

Employer Goals on Organizational Strategy References

Effects of wellbeing strategies not measured, the report finds. (2013). Occupational Health, 65(5), 7.

Farndale, E., Pai, A., Sparrow, P., & Scullion, H. (2014). Balancing individual and organizational goals in global talent management: A mutual-benefits perspective. Journal Of World Business, 49(Talent Management), 204-214.

Ovidiu-Iliuta, D. (2014). The link between organizational culture and performance management practices: A case of its companies from Romania. Annals Of The University Of Oradea, Economic Science Series,23(1), 1156-1163.

Consumer Behavior Research Assignment

Consumer Behavior
Consumer Behavior

Consumer Behavior

Order Instructions:

Think of a new product that is currently not in market and as a Marketing Manager you are to develop marketing plans to launch this new product.

As a Marketing Manager or Product Manager, what do you have to consider in terms of consumer behavior when developing this new product?

Think of the consumer behavior theoretical discussion which you have learnt from Week 2 till to date.

I will uploaded my lecture notes for that.

SAMPLE ANSWER

Consumer Behavior

Schwartz (2004) defines a consumer as any person or individual who requires a given product or service to meet personal needs and wants. Behavior, on the other hand, refers to a given pattern, perception, belief, or sequence that an individual possesses that guides them or dictates the products or services to purchase. Understanding consumer behavior requires an inquisitive research so as to identify the customers thinking, beliefs, and level of income, social norms, market trends, gender, and religion (Belch & Belch, 2007). Once the researcher have outlined and differentiated all this factors a given geographical location can be segmented and the prevalent consumer behaviors determined. These consumer behaviors are then used in product design and formulation. A good company carries out a SWOT analysis to be familiar with the opportunities, threats and weaknesses of penetrating a given market segment. Mostly ,in carrying  out a research in a market segment problems can be identified  and then the research panel can brainstorm the solutions which are used to come up with various products and services that meet the needs of customers in that segment.

Factors influencing consumer behavior can be divided into economic, social, political, ecological and technological factors. For example, ecological weather conditions like winter or summer dictate the consumer preferences of clothing. In winter season consumers purchase heavy clothing and protective equipment like gumboots (Engel, Blackwell & Miniard, 2007). The change in technology also influences consumer behavior as this changes fashion and market trends. For example, the advent of android operating system in the mobile phone industry have seen massive demand and sales for this smart phones in companies like Samsung, Nokia, LG, IPhone and Techno. These companies have also been forced to adapt to the changes in technology in order to meet their consumer needs and preferences.

After considering all the above, the product in mind is modern mobile incinerators. These incinerators are of small sizes and are very portable. The reasoning behind this is that most companies and organization nowadays are faced with a lot of paperwork and plastic wastes in the offices and manufacturing sections, however, most of these firms don’t have the appropriate facilities to dispose this waste. My product which goes by the brand name ‘Mobi Inc.’ comes restore and uphold environmental consciousness in this organizations. This product also covers a wide customer base as it can also be used in homes and has a very considerate pricing. This product also has differentiation advantage in that the consumer can order customized incinerators (Hirsh, Kang & Bodenhausen, 2012). Therefore the size differentiation is entirely according to the customer’s needs and preferences. However, at the inception stage the main target market for this product are big firms and governments that can order large quantities and hence enjoy the quantity discounts that come with the package.

After production of these incinerators, we plan to have various marketing strategies and plans. One of the strategies is low price penetration strategy. In this strategy will start to enter the market with the lowest prices until we get acceptance and a good customer base. These customers will have training on the use and benefits of the product and this serves to create awareness o0f the product. This awareness will be crucial to serve as a marketing tool as these customers will pass on the good news. Other marketing strategies will include sales and promotion whereby for every product bought the customer will enjoy gifts and discounts (Assael, 2012). Discounts however come with bulk purchases and this strategy will most work with big corporate organizations that have centralized purchasing. Households that purchase the Mobi Inc. product will enjoy after sale services e.g. warranties, training and installation. Marketing is also to be done through advertising on social media, magazines, journals and all accessible medium. Sales and promotion personnel will also be employed to carry out door to door marketing and sensitization

References

Assael, H. (2012). Consumer behavior and marketing action. Boston: Kent Publishing.

Belch, G. & Belch, M.A. (2007). Advertising and Promotion: An Integrated Marketing Communications Perspective. New York: McGrawHill

Engel, J., Blackwell, R. & Miniard, P. (2007). Consumer behavior. CBS Publishing Asia LTD.

Hirsh, J., Kang, S. & Bodenhausen, G. (2012). Personalized persuasion: Tailoring persuasive appeals to recipient personality traits. Psychological Science Journal, 23(1), 578-581.

Schwartz, B. (2004). The Paradox of Choice: Why More Is Less. New York: New Haven Publishers.

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Business assessment Paper two Assign

Business assessment
Business assessment

Business assessment Paper two

Order Instructions:

Diploma of Business
BSB50207

ASSESSMENT TWO

Instructions to students:

Each assessment question requires a written answer of at least 100 words.

Use your study materials and personal research to answer these questions.
Don’t copy, or cut and paste

Please remember to place your name at the top or bottom of your document and email to business@academique.com.au or print and hand in at Reception.

ASSESSMENT TWO

Part A

You will need to refer to your business plan to complete part A of this assessment.

Prepare a minimum (2 page) report to the Managing Director of Global Star. Your report should communicate the viability of making changes to current business operations.

Please include the following points (minimum 1 paragraph) per point in your report as follows:

  • Outline at least three new marketing ideas and opportunities as a result of your research
  • Link these new marketing ideas to the goals and future objectives of the organisation
  • Evaluate each opportunity and outline the impact to the current business
  • Include financials and feasibility information to include a probable return on investment
  • Suggest recommended operational changes to the current business model
  •  Estimate the resources and costs associated with these operational changes
  • Include all relevant forms of Legislative considerations when making operational changes (e.g. privacy laws, anti-discrimination, ethical principles etc.)

Your report should be written in a way which is culturally appropriate and relates to people from diverse backgrounds and abilities.

Part B

Research and interpret a current marketing plan (template).  www.business.gov.au or other website searches will assist you in the following task. Please ensure you outline and list all the key elements (content) required when creating a sustainable marking plan for a business.

Not only are you required to provide a list of content but also provide a brief description against each key point.

For example:  Marketing Objectives defines what you want to accomplish through your marketing activities.

GOOD LUCK!!!

SAMPLE ANSWER

Part A

Question 1:

The three new marketing ideas and opportunities that would create a great commercial opportunity to Global star are: first, what need to fill or what problem to solve that will create a value proposition to the company. Second is the idea of how to make money which provides an opportunity of the revenue model. Third is the idea of how the market will either grow or shrink. This is the market growth. It should create an opportunity for the increase in demand of the products or services of the business over time (Hyman & Sierra, 2010).

Question 2:

If Global Star should consider the value proposition, they will be able to achieve their goals on the manufacturing since they will be able to use the best-in-class door and window in manufacturing techniques that will maximize the quality of all their products. Identification of the revenue model will help to attract even more people and keep innovative customer-focused employees who will in return reward the company’s performance fairly and equitably. If the market growth factor is considered, the company will be able to achieve its operations goal in achieving the best in class warehousing, ordering and the distribution practices.

Question 3:

Value proposition applies to an entire organization. It is based on a review and the analysis of benefits, costs and value that the organization can deliver to its customers both new and prospective. Its impact to Global Star is that it positions value. That is, Value is said to be equal to benefits minus costs where costs include the economic risk like investing in common stock. The revenue model allows the entire business to be structured around the around it. It does not allow any decision to have more potential to break the business. Its impact to global Star is that it impacts the marketing and the sales efforts and it also affects the product and the service design on the company. The market growth can at times be slow more especially if the consumers do not adopt to a high demand if the consumers find their product or service important for the price level. It is however important to Global Star if it has to grow and prosper. Its success will generate increased incomes, which would encourage further economic growth.

Question 4:

To include a probable return on investments, Global star is required to know its goals, by which to measure the success of the finances, know a good and reliable range for demand, know the cash needs to start up a business and know the operating expenses. Just by looking at the business from its financial perspective, it is possible to predict with reasonable accuracy whether or not the business is feasible. It is necessary to assess the business goals, the skills, resources, experience, knowledge and barriers among others. On the financials, the startup capital needs are analyzed, the Pro Forma balance Sheet and the income statement, the operating revenue projections and expenses, the working capital and the future cash flow need.

Question 5:

The recommended operational changes are on the technological changes, which are often introduced as the components of larger strategic changes although they at times take place specifically on their own. This is an important aspect because it will help in the determination of who within the company will be threatened by the change. This should be incorporated within the company’s overall system and at the same time, a management structure is created to support it. Another operational change includes the people changes, which involve the change of workers considering their attitudes and behaviors so as to increase their effectiveness. This is the most difficult though the most important part of the change process.

Question 6:

There are four major costs for the change management in organizations (Cameron & Green, 2009). First, is the dedicated resource on a project team. The project manager takes on the responsibility for a small change to a change ready group. Second is the procurement of methodology and tools. These are the tools that are available to be used by the change management resources. Third is the purchase of the source materials necessary for change. These materials are used by managers and supervisors in their exercises in coaching during the change process. Last is the training time and costs necessary during training. This applies to everyone involved in the company. This involves the managers and the supervisors as the trainers for change, the senior leaders as sponsors, the change management resources and the project teams.

Question 7:

When making changes, the privacy laws provide better protection to individuals with regard to how the personally information may have been collected. The operational changes include the privacy principles and apply to small businesses with a turnover of $3 million or less and also to those with an annual turnover of $3million or more. On the other hand, the state laws require that organizations should form a workplace that is free from anti-discrimination. It is important for employers to understand their rights and responsibilities under the human rights and the antidiscrimination law. By putting all these in place in your business, then you are assured of an improved productivity and increased efficiency (Cameron & Green, 2009).

Part B: Marketing plan

One of the most important areas of the small business owners is the development of a marketing plan. Though being the most important, most businesses overlook it. An effective marketing plan acts as a reference document that helps in the execution of the marketing strategy. It also helps to develop a methodical approach for creating products and services that would satisfy the customer’s needs (Marketing plan template, 2013).

Market planning should be an ongoing business activity. As there exists change in the market conditions and the business, you will need to revisit many of the ideas and strategies that are outlined in the marketing plan. Referring to the plan ensures that the business keeps heading in the right direction.

Key Elements Required When Creating a Sustainable Marketing Plan for a Business

First, there should be a background analysis for the business. The business opportunities and the challenges should be detailed. This helps to define the business capabilities. Second is the future analysis of the business where the vision statement and the marketing objectives are stated. This defines exactly what you would want your marketing plan to accomplish in the future. Third is the analysis of the market where the business states its target market, marketing strategy and the marketing mix. The target market explains who the business will be selling its products to. The marketing strategy details how you will bring your products and services to the market in a customer satisfaction way. The marketing mix is the elements that make up the marketing strategy. Fourth is the financial analysis of the business where the action plans and budgets bring the strategies and the marketing goals to life.

References

Cameron, E., & Green, M. (2009). Making Sense of Change Management : A Complete Guide to the Models, Tools & Techniques of Organizational Change. London: Kogan Page.

Hyman, M. R., & Sierra, J. J. (2010). Marketing Research Kit for Dummies. Hoboken, N.J.: Wiley.

Marketing Plan Template: Exactly What to Include. (2013). Promotional Marketing, 3.

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Business assessment paper; Question and answer

Business assessment paper
Business assessment paper

Business assessment paper; Question and answer

Order Instructions:

ASSESSMENT ONE

Instructions to students:

Each assessment question requires a written answer of at least 100 words.

Use your study materials and personal research to answer these questions.
Do not copy, or cut and paste

Please remember to place your name at the top or bottom of your document and email to business@academique.com.au or print and hand in at Reception.

ASSESSMENT ONE

1. Write a definition and give one example for each of the following:

  • Profitability
  • Public sector marketing
  • Telemarketing
  • Knockout factors
  • Return on investment
  • Weighted criteria

2. Research and analyse the attached Business Plan on Global Star to determine their future marketing needs and opportunities.  Provide a brief outline of at least 3 marketing opportunities you can see as a result of your research.

3. Outline and rank in order of priority the 3 marketing opportunities in terms of their overall contribution to the businesses bottom line.

4. Using the same business plan determine 2 potential new market opportunities for the business and provide a brief outline of these prospects.

5. Consider some innovative and creative marketing ideas that you could develop into potential marketing opportunities.

6. Identify and research the goals and objectives of the organization as listed in the business plan. How do the marketing opportunities link to organizational goals and capabilities?

7. Evaluate 3 marketing opportunities and discuss how these impact the business and its customer base in general.

8. Outline the financial viability of each marketing opportunity.  (A SWOT analysis may assist you to identify the financial feasibility of each opportunity – this is not compulsory).

9. Provide a brief summary on the probable return on investment and potential competitors for each marketing opportunity.

10. List at least 3 operational changes you would need to make to ensure viability of these new marketing opportunities. How would you ensure quality of service to the existing customer base?

11. Provide a brief summary of the estimated resources required to support the operational changes.
SAMPLE ANSWER

Business assessment paper

Profitability:  This is the primary goal of any organization’s operations.  It is a measure that is used to determine how an organization is able to balance between its incomes and expenses.  When an organization sells products it generates an income.  For the sold product to be produced, the organization incurs costs.  The difference between the two shows the profitability.

Public sector marketing:  This is seeks to recommend and express solutions that address the relationships and exchanges that occur between government organizations, groups of individuals, organizations, communities and individuals, with respect to performance of and request for public-oriented  tasks and services.

Telemarketing:  This is a form of marketing where the proponents use the telephone to solicit for prospective buyers to purchase the products or services on offer.  It is the most interactive marketing medium of all available.  Its interactive nature allows the telemarketer to address concerns raised by prospects, answer their questions and overcome their objectives

Knockout factors: These are exceptional qualities that vigorously contribute to an achievement.  They could also be items of selection criteria use in performing comparative analysis and eliminate certain options and other considerations.

Return on investment: This could be defined as the benefit of an investment when viewed against the cost on investment.  It is determined when the net profit is divided by net worth.  The resultant figure shows the performance of the business.

Weighted criteria: This seeks to assign a weight – measure of importance, to a particular component or factor, which shows the value attached to it.  A weighted criterion allows for evaluation of alternatives and determination of the most appropriate given the specific need to be added.
2. Research and analyse the attached Business Plan on Global Star to determine their future marketing needs and opportunities.  Provide a brief outline of at least 3 marketing opportunities you can see as a result of your research.

Global Star Enterprise (GSE) needs to expand its operations  beyond the Australian borders, expand the product portfolio, value add on present products and offer services that add value to their products – installation of doors sold by GSE.  GSE could expand into South East Asia, develop products that complement the current product line, offer services that complement current product portfolio and increase market share by more outlets in Australia (Heng, 2008).
3. Outline and rank in order of priority the 3 marketing opportunities in terms of their overall contribution to the businesses bottom line. 

The most important marketing opportunity lies across the border in South East Asia.  The market for GSE products and services is huge and growing.  Despite the additional costs of actualizing this strategy, it should contribute positively and significantly to the bottom line once the market is established.  There also exists marketing opportunities within the already existing markets by offering services not previously on offer – installation.  Finally, GSE could expand internally by opening more outlets and showrooms across the country.
4. Using the same business plan determine 2 potential new market opportunities for the business and provide a brief outline of these prospects.

South East Asia offers the best prospect of success among the potential market opportunities that exist.  The South East Asia should not be a hard market to penetrate and serve given the proximity to Australia.  Another potential market opportunity lies in new territories within Australia boundaries.  GSE has not been able to cover the whole country.  Opening new showrooms and outlets will allow GSE bring the products closest to the consumers (Covello, & Hazelgren, 2006).

  1. Consider some innovative and creative marketing ideas that you could develop into potential marketing opportunities. 

GSE could consider offering installation services with every purchase of its products, as a way of introducing its installation services to consumers.  GSE could also consider following up on all customers who have come through its doors and ask for a recommendation.  GSE could also map out all the construction sites and visit them aggressively seeking new business for its new and existing product line.
6. Identify and research the goals and objectives of the organization as listed in the business plan. How do the marketing opportunities link to organizational goals and capabilities?

It is GSE’s goal to expand its market.  It has the capacity to meet the additional product requirement in the new markets.  It also offers the marketing team new territories where to seek new markets.  It is also the goal of GSE to diversify its product portfolio.  To this end, GSE is looking to start producing Awnings in addition to offering additional services – installations services.  This helps GSE diversify its income streams – cushioning the business from traditional business shocks and ensure the business is able to maintain its growth trajectory (Zaharuddin, 2008).
7. Evaluate 3 marketing opportunities and discuss how these impact the business and its customer base in general.

Expansion to South East Asia offers a whole new market for GSE products.  The successful entry into the South East Asian market will double if not triple the customer base.  Secondly, expansion within Australia via opening of new showrooms and outlets will see GSE expand its footprint to more regions in Australia.  This should considerably increase the customer base.

Thirdly, the introduction of new products will bring into GSE customer base a new demographic group previously not part of its base.  This new group will also include previous customers who did seek complementary services from other vendors given GSE was not offering (Zaharuddin, 2008).
8. Outline the financial viability of each marketing opportunity.  (A SWOT analysis may assist you to identify the financial feasibility of each opportunity – this is not compulsory).  

The south East Asia will offer GSE a dynamic and rapidly expanding market that should profitable to service.  Though the servicing the South East Asia market will require developing logistics capabilities, it offers GSE opportunity to enter a new market and offer new product lines.  However, the threat of cheap knock-offs competing unfairly in this market.

The development of the Awnings will allow GSE to exploit the excess capacity already existing to maximize returns.  Though this is a new product – not previously produced by GSE, it has the potential of opening new markets segments.  This however could result in GSE stretching itself such that the quality associated with its current product portfolio getting compromised.

Finally, offering value addition services – installation, GSE will rely on its developed reputation for developing quality product and established sales channels to push the new service.  This is at the risk of consumers deciding that they like the separation of services as things were.   Despite this weakness, the service will allow GSE to be a player in market segments that were previously not addressed while making a strong case against the external and independent contractors GSE used to do the installation (Covello, & Hazelgren, 2006).
9. Provide a brief summary on the probable return on investment and potential competitors for each marketing opportunity.

The expansion into South East Asia could result in significantly raise GSE product output while opening new feedback channels.  GSE must however be aware of potential completion from cheap knock-offs from Asia and already existing companies.

The introduction and addition of Awnings into GSE product portfolio opening up a new income stream for the company.  Despite the potential of competition from organizations already producing the products, given GSE does not invest in new infrastructure to product the product means the cost will be low, allowing it a competing chance (Heng, 2008).

  1. List at least 3 operational changes you would need to make to ensure viability of these new marketing opportunities. How would you ensure quality of service to the existing customer base?

To meet the requirement of the South East Asian market, the production shifts could increase – especially when the market has been conquered.  With the production of the Awnings, GSE will have to train employees to produce them.  The introduction of the installation services, GSE will need employee who can perform the installation.

  1. Provide a brief summary of the estimated resources required to support the operational changes.  

GSE will need to invest in training of personnel to undertake the new services, and to inform about the existing product and service lines.  There will be a need for sales people to be hired in South East Asia to drive the sales in the new market.  GSE will also need to train its existing staff on production of Awnings and offer installation service

References

Covello, J. A & Hazelgren, B. J (2006)  Complete Book of Business Plans: Simple Steps to Writing Powerful Business Plans, Sourcebooks, Inc, Naperville, IL.

Heng, G. M (2008)  Conducting Your Impact Analysis for Business Continuity Planning, 2nd Ed, Tampines Central, Singapore.

Zaharuddin, H (2008)  Business Plan Analysis for Steel Fabricators, Dian Anugerah Prakasa, West Java, Indonesia.

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Necessary conditions for determining a business strategy

Necessary conditions for determining a business strategy
Necessary conditions for determining a business strategy

Necessary conditions for determining a business strategy in an organisation

Order Instructions:

Dear Sir,

I need an essay in the following subject:

What are the necessary conditions for determining a business strategy in an organisation? How can organisations work to include HR issues within a business strategy?

The following conditions must meet in the paper

1) I want a typical and a quality answer which should have about 1400 words.

2) The answer must raise appropriate critical questions.

3) The answer must include examples from experience or the web with references from relevant examples from real companies.

4) Do include all your references, as per the Harvard Referencing System,

Appreciate each single moment you spend in writing my paper

Best regards

SAMPLE ANSWER

According to Cascio & Boudreau (2012), there are various ways of determining strategies in a business which include: linkage, monitoring and control, annual business plan, human resource, organization structure together with action planning. In order for an organization to set up a business plan, it ought to come up with a standard and more detailed action plans that add the required details in their strategies that later will be implemented for the business to be profitable. Each of these actions, steps are assigned to one individual whose responsibility is to ensure that they are implemented to accomplish the conditions of determining a business strategy. In order to ensure these actions are accomplished, some money has to be set aside that will be used to implement the actions and a specific date is set when the actions will have to be ready.

Juul-Andersen (2013) states that, annual business plan is also a condition that has to be met when choosing a right business strategy in any organization. When running any given business the organizers are aware of some plans that they have to meet annually for their business to be successful, therefore, there is a need to set funds aside that will be used to run these plans. Due to this financial issue, these organizers meet and reason together on how and where to get the required finances necessary to run their business plans efficiently. However, the organizers tend to even ballpark these financial requirements so that they can have enough time to deal well with their financial matters clearly (Director, 2014). These organizers have to be committed to the plans on the table for the sake of the business success with an aim of gaining more money from it. This method of planning early for financial matters helps the business partners not to be shocked by financial matters when it comes to budget time and it also helps link strategic plans to their business plans.

In order to secure a successful organizational structure, the people in charge of its implementation have to ensure that the intended strategy fits the current structure. They even go an extra mile to inquire if the intended structure fits the current structure for the sake of avoiding mistakes and revising the structure, which is a waste of time and resources. In any given organization, when trying to develop new products, plans concerning the product need to be well organized by ensuring that there is necessary commitment and developments in the business so as to produce a good strategy of doing so. The new product mostly needs a humming factory and a high manufacturing support, which is well structured to be able to process the product as required, and this makes it a well preferred condition for a business strategy (Eigenhuis &Dijk, 2008).

According to Christensen (2005), monitoring of business plans helps to ensure that in case a strategy is derailed back it is therefore kept on track even if it calls for the change of schedule, change of strategy employed, change of action steps or even change of the business objectives. The well-known organizations that have been successful in matters of strategy implementation consider the use of human resource. Human resource is a highly valued condition by investors in a business whereby, it comes out as a good business strategy in their organization. Cooke &Saini (2010) states that, human resource does not involve a lot, but only entails that the business management team should consider the communication needs of the business. The actions of any business need to be articulated and the people who are in charge of doing that are fully aware of the strategy that is about to be implemented and what can be done to make it appropriate for that business at the given time. When a strategy is now implemented, managers are always aware of each effect on human resource needs that come as a result of its implementation; hence it is better to be more informed on the change that is needed for the sake of the strategy and how fast it can be provided. There is a need to also to know the implication of the human resource on the strategies to avoid choosing a wrong strategy that may be more costly. This calls for more training on the side of employees for them to be able to know how to handle and even understand the changes imposed through the strategy implementation. Some employees who have worked in organizations where the same strategies were applied also tend to be employed in the new businesses who have just introduced the strategies since they are experienced (Christensen &Higgs, 2008).

Cascio & Boudreau (2012) argue that another condition for all strategies in the organization to be effective calls for direct linkage of all of them for the sake of an organization’s success. An organization can best work to include human resource issues within a business strategy by ensuring that they have good superordinate goals, they have a good staff, employ the best skills in their business and have a good organizational structure. An organization also needs to implement all the strategies required for a successful business and good style of management with regard to best business systems (Director, 2014). The importance of human resources is most effective when the business has become has achieved a lot of knowledge from experienced workers and even when its technology has highly advanced. Human resource strategies are best applicable where a business employs cost leadership strategies, since leaders can best manage the business and keep it at ease. In order for cost leadership to be effective there is a need to focus on its efficiency with a close range to earning more dollars and producing more dollars with respect to the volume of the products produced. To some extend business human resources tend to be more complex in a case where that business is competing on different platforms or industries. Therefore, it becomes easy to structure incentive systems that align the interests of the business with an aim of making it more successful and most prominent. The integration between business strategies and human resource management can be grouped into three theories which are: resource-based theories, interactive theories and behavioral theories. Behavioral theory is just a list of assumptions which demands that for a business to be successful, certain behaviors should be evident among the employees. In a case like this, human resource management is an elicit method that is used to ensure that all employees have the right attitude and good behavior in job since their behavior is the key bridge to the business strategy and the firm performance. According to Cooke (2010), the employees’ behavior in a given business is the best method to help in achieving the best results in an organization; hence, human resources tend to vary following the firm’s required codes and ethics. Environmental characteristics are linked to the human resource management and are less connected to the product-market strategy; hence this makes it not to interfere with market products having no similar characteristics.

A good case example of a company that has integrated HR in their strategy system is the Tata Consultancy Services, which is a large software company in India. Their program involves in training engineers from divergent fields to improve their efficiency concerning their duties in the organization. Aditya Birla group of companies is also another example of firms that have made initiatives by ensuring that the business strategy is integrated with the HR strategy. Implementation over strategy formulation is one of the characteristic implemented by the human resource management to generate selected strategy formulation. It has been proven that people are more adaptable and reliable as compared to strategies, since they can reason on their own and make informed choices. The management choice and dominance are as a result of many models relying too much on product life cycle and a catalyst. Resource based view of the firm is best realized in a firm when it is immobile to save on time and cost (Robinson & Robinson, 2005). For human resource to take the top most rank it ought to be subsisted with other resources by ensuring that it competes with other firms, and also poses unique characteristics for it to be able to compete with their competitors and have a positive value to the firm.

Bibliography

Cascio, W. & Boudreau, W. 2012. Short Introduction to Strategic Human Resource Management (Cambridge Short Introductions to Management). Cambridge University Press

Christensen, R. 2005. Roadmap to Strategic HR: Turning a Great Idea into a Business Reality. AMACOM

Christiansen, L., & Higgs, M. 2008. How the alignment of business strategy and HR strategy can impact performance: A practical insight for managers. Journal of General Management. Vol. 33 Issue 4, p13-33

Cooke, F., & Saini, D. 2010. (How) Does the HR strategy support an innovation oriented business strategy? An investigation of institutional context and organizational practices in Indian firms. Human Resource Management. Vol. 49 Issue 3, p377-400

Director, S. 2014. Pearson Financial Analysis for HR Managers: Tools for Linking HR Strategy to Business Strategy (paperback). FT Press; 1 edition

Eigenhuis, A. & Dijk, R. 2008. HR Strategy for the High Performing Business: Inspiring Success through Effective Human Resource Management. Kogan Page

Juul-Andersen, T. & Minbaeva, D. 2013. The Role of Human Resource Management in Strategy Making. Human Resource Management. Vol. 52 Issue 5, p809-827

Robinson, D. &Robinson, J. 2005. Strategic Business Partner: Aligning People Strategies with Business Goals. Berrett-Koehler Publishers

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