Business Strategy and Human Resource in an Organization
Business Strategy and Human Resource in an Organization
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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?
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Business Strategy and Human Resource in an Organization
Integration of human resource and business strategy has become essential in the modern strategic human resource management. Human resource is one of the essential assets in an entity (Ray, Barney & Muhanna, 2004). Organizations must adopt appropriate strategies that will enable them remain competitive and achieve their desired performance. The author deliberates on the conditions organizations can use to determine their business strategy, as well as how entities can include HR issues in their business strategy.
Business strategy encompasses the tactics or ways that an entity adopts to achieve its desired goals. An entity may have various strategies but being able to select the most appropriate ones is critical to the success of the entity. One of the conditions that and organization therefore should consider in determining a strategy is the social, political, citizenship and regulatory measures in place (Ray, Barney & Muhanna, 2004). An organization operates in a community that has its own rules and laws that govern it. Therefore, the strategy should comply with the regulatory requirements and the government policies. It should be ethical and meet the societal expectations as well as standards of goof community citizenship. For example, the strategy should ensure that it does not contribute to environmental pollution as this affects the lives of the community.
Another condition is the overall industry attractiveness and competitive conditions. The strategy must be responsive to the mix and nature of the various competitive factors in play such as quality, of products, price, service performance features, and warranties among others (Zajac, Kraatz, & Bresser, 2000). It becomes important for an organization to respond to such factors to safeguard its position in the market
It is also important for an entity to consider the opportunities and external threats in determining the strategy. The strategy aim should be to take advantage of the opportunities to trigger development and profitability (Mithas, Tafti & Mitchell, 2013). Likewise, the strategy should counter external threats to the company such as competitors to safeguard the future performance and well-being of the entity. Others aspects include, availability of substitutes, the power of buyers and suppliers, and rivalry in the market (Porter, 2008)
The strength of the company resources, competitive capabilities as well as competencies shape the choice of a strategy. An organization should evaluate itself if it has enough resources and competencies to adopt a certain strategy or not. For instance, some of the business strategy may require heavy capital, which the organization may not be in a position to provide (Arthur & Strickland, 2009). The attitudes, personal ambitions, and ethical beliefs of managers as well determine the strategies the business takes. Ambitious managers will adopt aggressive strategies to ensure that they achieve their goals. Business philosophies, culture, structure and shared values as well determine the kind of business strategies selected (Arthur & Strickland, 2009).
For the strategies to be well implemented, human resource is critical and must be involved. Various human resource issues such as recruitment, motivation, disciplinary measures, training and development are essential to execute strategy and trigger success. Organizations can therefore work through communication. The strategies should be articulated well to those charged with responsibility of implementation to enable them understand them well (Arthur & Strickland, 2009). Therefore, HR practitioners must be involved in the process at all level to ensure that they create a conducive environment for the implementation and achievement of the objectives set.
In conclusion, organizations need to understand various conditions in the environment before selecting their strategies, thus, enhancing positive relationships with the human resources department critical in enhancing achievement of the objectives.
Reference list
Arthur, T, & Strickland, P , 2009, Strategic Management: Concepts and Cases, McGraw Hill.
Ray, G, Barney, J, & Muhanna, W 2004, ‘Capabilities, business processes, and competitive advantage: Choosing the dependent variable in empirical tests of the resource-based view,’ Strategic Management Journal, 25: 23-37.
Zajac, E, Kraatz, M., & Bresser, R 2000, ‘Modeling the dynamics of strategic fit: A normative approach to strategic change,’ Strategic Management Journal, vol. 21: 429-45.
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For an organization to be successfully innovative, it must be based upon the higher level principles of innovative organizing. Unfortunately, only a limited number of leaders of these high technology companies see the manufacturing process development as one of the main source of competitive advantage. This is why, over the last ten years, trends indicate that more companies are deciding to outsource the manufacturing process to other third party contractors. The reason for such an action is that these high tech companies are trying to avoid the expenses of the manufacturing process as well as having to lose focus on the process of product research and development. They view this research and development to be the major source of competitive advantage. Contrary to this, research conducted in the pharmaceutical industry between 1985 and 1995 suggests that such a view greatly costs organizations as it negatively impacts their competitive health. Different studies support the idea that such high tech companies that encourage the development of organizational capabilities so as to support an innovative, efficient, and effective process development, are better placed to introduce new products faster. This is alongside the higher yields and also the controlled processes that will present the company with a better cost advantage over competitors. With such a step, less capital investment and fewer development resources are usually required, compared to what the competitors will have to apply. Apple has managed to be chosen constantly as the most innovative company in the world. This is because its strategy for innovation is inclusive of amazing new products as well as innovative business models. It always pioneers into untapped business spaces thereby creating new market niches. This is why its innovation strategy is the best to use so as to enable Microsoft/Nokia mobile phones division to also be more innovative. The aim of this report is to properly analyze Apple’s innovation strategy and innovative organizational structure, particularly focusing on the iPhone and iPad products, so as to identify factors that can also be implemented by Microsoft/Nokia mobile phones division to make it more innovative.
Background of Apple Company
Apple Inc., an American multinational corporation, was co-founded by Steven Paul Jobs, Steve Wozniak and Ronald Wayne in 1976 (Finkle & Mallin 2010: 50).Among its best known hardware are the iPhone and iPad products. Research conducted in June 2014 showed that Apple has 425 retail stores in fourteen different countries (‘Event Brief of Q1 2014 Apple Inc. Earnings Conference Call – Final’ n.d.). With an approximate of $446 billion market capitalization, this company is the largest publicly traded corporation in the globe (Mallin & Finkle 2011: 65). In 2012, this company had 72,800 permanent employees who worked fulltime, 3,300 temporary employees working fulltime as well (Sahoo 2012:39). In 2014, its five year growth was registered at averagely 39% for the top line growth and 45% for the bottom line growth (‘Event Brief of Q1 2014 Apple Inc. Earnings Conference Call – Final’ n.d.).
The period between 2007 and 2010 acted as the time when Apple finally started achieving success with its mobile devices. The iPhone and iPpad products introduced innovations in mobile phones and personal computers respectively. With these devices, software applications could only be purchased in a store implemented by Apple, thus the company created a new business model. In mobile phones, touch screens had already been noted before, however, Apple introduced a user interface with specific preprogrammed touch movements that was unique and interesting to consumers (Mallin & Finkle 2011: 66). The cofounders made a great effort to push this company towards attaining an innovative structure. Together, they encouraged innovation as they also innovated, and hired innovative employees. They also had good marketing skills that enabled the public to be informed effectively about the benefits of any newly innovated products, thus sales were boosted within months of release.
The release of the iPhone and iPad products gained Apple great success. This is proof that innovation success goes hand in hand with commercial success. This company managed to increase its customer base by introducing products that would also be important for the newly introduced business model. Therefore, Apple does not rely on specific products, but on unique products, although they perform similar functions. Thus, customers with different needs will always find what they want from the products of this company. As a result of innovation, Apple frequently introduces new products, month after month.
Why iPhone and iPad products can be called Innovative Products
The iPhone and iPad can be referred to as innovative products judging from how the ideas involved in the new product development were noted to be promising. The new product development process will only be successful once there has been a creation and evaluation of the new product ideas. These two tasks can be influenced positively when there is more than one idea and idea creators, when decisions are made as a group and not as an individual, and when there are methods that combine idea creation with evaluation. These three factors can be combined with the aid of idea markets method. This method makes use of virtual idea stocks to act as a representation of new product ideas, enable participants to order and trade stock shares on the virtual marketplace, and thus uses the market efficiency and resulting stock prices as determinants of the likelihood that the new product ideas will be successful (Soukhoroukova, Spann & Skiera 2012: 105).
First, the iPhone and iPad products were generated as a result of many ideas and idea creators, as expected in the idea markets method. This company has employed thousands of employees to work in the different stores around the globe. Therefore, the company has a big number of idea creators, a factor that will also benefit the company as it presents many ideas since each creator will come up with a unique idea for new products. The new product idea quality is important for the commercial success of the final product. However, it is always difficult to choose which idea creator is the best, or what the new product idea should consist of. This is usually as a result of the stochastic nature of creativity, whereby even better ideas may arise unexpectedly where there is actually no demand, and the fact that diversity of skills from the many idea creators may improve the chances that an unconventional new product idea may be developed (Soukhoroukova, Spann & Skiera 2012: 107).
To increase the number of idea creators, Apple Inc. has made it clear that innovation is everyone’s task, and not the task of specific developers (‘DATAMONITOR: Apple Computer, Inc’ 2008:6). Therefore, to make the most of its idea creators, the company makes use of diverse sources including employees, suppliers, customers and researchers (Breen 2014:5). This is very important as all these groups offer important feedback for the organization to use to its advantage. Through feedback from consumers, the company will know what the current trend is all about. This will enable employees to focus on that direction when developing new product ideas. Suppliers and researchers also contribute since during their activity, they can identify a gap in the market. Since this point of having many ideas and idea creators for high quality new product ideas has been achieved, the iPhone and iPad products qualify as innovative products.
Second, Apple has always focused on group decisions rather than individual decisions when it comes to product development. When the different idea creators engage in an exchange of opinions, even better product ideas are developed. This is usually because some ideas may be improved when used alongside other ideas. When it comes to decision making, doing so in a group improves the quality of the outcome. This is because participants may learn from each other, and hence be better placed to understand why a certain idea may not be of quality, and why it should not be implemented. This also makes the decision making process to be accurate in that it will reduce bias. Apple’s iPhone and iPad products are an example of innovative products in that not one individual is involved in the decision making process of the product development, but instead a group of individuals are involved (Castelluccio 2013:59). Hence, these products were developed only after a group of experts decided that the ideas were reliable and promising. If only one person was involved, then the products would not qualify as innovative since the decision making process would have been biased. Eventually, they would not have been as successful in driving the company upwards in its industry. Hence, they are innovative products as they are the result of more than one great idea combined together.
Third, iPhone and iPad, according to the idea markets theory qualify as innovative products since Apple combines idea creation with evaluation (Cusumano 2011:26). Most techniques used in idea generation either support creation of ideas or the evaluation of these ideas. Although participants can be very imaginative when the two actions are separate, a threat is posed whereby creators cannot receive immediate feedback on the ideas they form. It is important to use these two factors side by side as it saves time, reduces costs of screening, and saves resources. Thus, with immediate evaluation and feedback, more time will be saved that can be used for working towards the more quality ideas. Thus, their screening will be more critical and there will be extra resources to be used in the in-depth analysis and implementation of the new ideas. This is what makes iPhone and iPad products to be considered innovative products.
Idea evaluation for the iPhone and iPad that make them innovative products can also be analyzed through the Analytical Hierarchy Process (AHP) approach. This method takes a hierarchical approach to the idea evaluation and decision making processes. A single idea is assessed on multiple criteria before it is structures according to its relative importance (Borade, Kannan & Bansod 2013: 969). The reason why the iPhone and iPad products are innovative products is that Apple ensured to only implement the best ideas brought forward. All ideas cannot be effective for a single product; however, more than one can be used together. Judging from the success of these two products, it is clear that the company took time to identify what the resulting product would consist of, its target market, and its benefits. Since the success was amazing, it is highly likely that only the best ideas were implemented. This is because the target market is highly satisfied with the products being released constantly by Apple Inc. For instance, the iPhone and iPad products were introduced alongside another business model, the app store, that was intended to provide these devices with various applications required (Simmons 2007: 35). Apple saw an opportunity and used different ideas side by side to promote sales while also fully satisfying customer needs.
Apple’s Innovation Strategy Behind the iPad and iPhone
Strategy can be described as an integrated yet overarching approach of how a company intends to achieve its objectives. There are three types of innovation strategy; offensive innovation strategy, defensive innovation strategy and imitative innovation strategy. Apple’s strategy behind the iPad and iPhone is the imitative innovation strategy as the company works towards modifying the already existent products to provide an even more sophisticated and unique product (Davis, Muzyrya & Pai-Ling 2014: 39). Therefore, instead of focusing on creating entirely new products, this company works on identifying areas of improvement and thus works towards promoting these. Thus, the focus is on producing thinner, faster and lighter iPads instead of cheaper hybrid and new offerings. The new innovations made at the current time, will therefore, not lead to the development of new products, but instead will be used to further improve the already available products. For example, the innovations developed for the iPhone 5S are expected to soon be used to further improve the cheaper iPhone 5C (Connolly 2011: 18). The difference is in price and quality as this strategy is supposed to ensure that all customers willing to spend different amounts will be able to get what they need from Apple.
The iPad and iPhone have proven to be the best innovations to drive Apple to commercial success. This happened because Apple was able to implement new product ideas that could be used side by side to facilitate profits. Therefore, the new products were implemented alongside a new business model. Hence, the company was able to use new ways to create, deliver and capture value for consumers. For example, the iPhone is a product that has been matched with the App Store where consumers can go to when they need to purchase software and other applications to customize their iPhones (Maisto 2014: 8). Therefore, the innovation strategy used by Apple is not the development of new products frequently, but the improvement of already available products with the aid of quality ideas. If Apple only focused on new product developments, then chances are high that a similar level of success would not have been achieved. For an innovation to become successful, it must first be acceptable to the customers in the marketplace. Once this happens, the product will sell faster and effectively, thus leading to commercial success. Therefore, commercial success and innovation success may be driven by the New Product Ratio (NPR). The strategy of Apple can be looked at from two perspectives. First, it featured an introduction of new products that were not actually present in the market place. Thus, it attracted a majority of the population as it offered the satisfaction of a need which was not being met by other companies. This is why the innovation became highly successful and, hence commercial success was also achieved.
Another means through which innovation success can drive commercial success is by offering product improvements. This is the current strategy adapted by Apple after the iPhone and iPad were successfully introduced. Instead of working towards other new products, the company has decided to first make use of the available products by introducing new innovations that improve the products (Connolly 2011: 20). When a product is further developed, customers view it as an entirely new product as it may feature newer features and have various capabilities that were not present previously. Thus, the present strategy used by Apple for the iPhone and iPad products is still capable of driving commercial success as it can promote innovation success.
The strategy used by Apple may also be analyzed from how the company is adapting innovation across various industries. So far, these two products have a link in the hardware, software, entertainment, and also logistics (Maisto 2014: 8). So far, the company has managed to master most of the parts of all these industries so as to improve its competitive advantage. In the development of the iPhone and iPad, Apple had a choice of outsourcing some of the manufacturing activities such as software development. However, to improve its profitability, it decided to develop its own software that would be used for the products as operating systems. For instance, the iPhone uses the iPhone operating system (iOS). Most of the applications involved in this product were developed by Apple and not a third party contractor.
Innovations across industries, therefore has a commonality in that in all industries, customers are in search of a product or service that will meet their unsatisfied needs. Therefore, in any industry, a new and unique product that meets an unmet need will flourish. And by providing consumers with everything they need all in one place, the company will be boosting its customer base. Apple managed to grab this new opportunity by introducing the iPhone and iPad and also producing software, entertainment applications and many more that would make these products even more exciting to use. This factor has greatly improved the competitive advantage of the company in that it will appear at the top of all industries as it has more to offer than companies specializing in a specific industry.
Apple’s innovation and design process are usually influenced by commercial, social and political factors. Design is more of invention while innovation is aimed towards implementing this invention. The strategy used by Apple, therefore, is influenced by the above factors in that the company has to adhere to certain rules when developing any new innovation and design ideas. In developing its products, Apple has to consider the commercial, social and political situations first before moving ahead. For example, social influences may be positive in the process of innovation and design as it can provide information on what consumers are really in need of (Castelluccio 2013:60). Therefore, this information will influence innovation and design by providing ideas that can be used to develop new and exciting products. Social influences may also limit innovation towards a specific direction, a factor that is not entirely positive. This is because it may lead to the innovation of similar products with no new ideas, as most consumers will want to purchase a phone with features similar to what was noted in a friend’s mobile phone. Innovation and design may also be influenced by commercial factors such as the enforcement of various legislations and policies. As a result, Apple may realize that it is expensive to be innovative and to come up with a unique design. Lastly, political influences on innovation arise from the fact that innovation is usually considered to be a political aspect. If the research and development process is seen to be promising, the government may offer to fund the innovation and design process. Such an action will definitely be a positive influence on the process as it will not cost the company to indulge in deeper research. This will also promote the innovation policy within an organization.
The Components of Apple’s Organization that made it an Innovative Organization
Apple did not become a successfully innovative company until years after it was founded. There are certain factors that played a major role in making this company an innovative organization. At the beginning, Apple was merely a computer manufacturer. Today, it has developed into a company offering a wide range of products including different consumer electronic devices and a pioneering business model (Edwards 2005: 2). Therefore, there is more to the high performing iMac computer, amazing MacBook notebooks and the multifunctional operating system Mac OS X. All the consecutive new innovative products are what enhance Apple’s share price to increase drastically. In 2000, the increase was $ 12, and in 2010, the increase was more than $ 200 (Finkle & Mallin 2010: 50). Currently, the competitors have found a reason to worry over losing to Apple. This is as a result of its innovation that came about through many factors. First, the company managed to create and implement an innovative culture, compared to the previous situation. Before this implementation, employees worked individually and selfishly (Nussbaum, Berner & Brady 2005: 63). They were not united and hence always engaged in fighting amongst them. Therefore, despite the presence of highly skilled employees, the company could not be productive as a result of the culture which inhibited collaboration. This collaboration is an essential element for innovation.
This situation changed upon the return of Jobs, the co-founder of Apple, in 1997 after being ousted in 1985 (Stone 2011: 39). As the company’s leader once again, Jobs encouraged calculated and well thought increases in R&D spending, and frequent launching of new products and upgrades. It is important to note that Apple did not apply the exact principles of innovation as developed by scholars. Instead, the company developed its own principles, which turned out to be more effective in enabling it to achieve its objective (Stone 2011: 40). Steve Jobs managed to encourage the company employees to work together by clearly educating them on the importance of adapting a product oriented culture. With such a culture, employees understood that they all have a common goal, thus, must work together towards ensuring they get the best results possible. Aside from having an innovative organizational culture, the leadership of this organization has also encouraged the development of an innovative organization. Ever since Steve Jobs, the next leaders have not taken steps to interfere with what he started. Jobs understood that for the organization to become innovative, he had to stir them towards that direction (Hof, Burrows, Hamm, Brady & Rowley 2004: 198). Therefore, through transformation leadership style, Steve Jobs encouraged and supported various forms of innovations presented by employees (‘Apple Inc.: The Steve Jobs Effect’ 2012: 3). He encouraged employees to work on what they love. He made this rule having in mind the fact that innovation cannot happen without passion. Therefore, employees got the opportunity to work on their various ideas and present them for evaluation. This is what resulted to the many innovation products that followed shortly.
Another factor that contributed to Apple’s innovation is how it does not simply focus on customer needs, but focuses on providing for all these needs, alongside ensuring an improvement of the customer experience (Nussbaum, Berner & Brady 2005: 65). This is what happened with the iPhone and iPad products. Therefore, it also relies on creativity and not only customer feedback. This is a factor that has encouraged the company to use different ideas to create ways of promoting customer interactions. The customers experience is very important, as many people look for a product that will make things easier for them. Therefore, the company assumes that customers, at times, may not have a clear idea of what they want. However, by offering them a high quality product that improves their experience, they will definitely like it.
Apple also managed to become innovative through the business model it adapted after implementing iPhone and iPad products. This new App store business model enabled the company to create and deliver value to customers, thus increasing their level of satisfaction (Schlender & Chen 2000: 70). The App Store will not be beneficial to consumers without the iPhone. This is why Apple has designed a model that captures value beyond the product.
Conclusions and Recommendations
From this analysis conducted on Apple Inc., it is clear that innovation requires great effort. There are many factors that have promoted the innovativeness of Apple. First, the company was careful when choosing ideas to implement for new products. To improve the quality of the new product ideas, employees were encouraged to work together and appreciate one another’s inputs by creating an innovative organization culture ad structure. This was very important as it promoted various working conditions that enhance innovation. Second, the company has developed a strategy for two of its most prominent products; the iPhone and iPad. Instead of focusing its innovation on the development of new products for release, the company focuses on the innovation that will improve the already available products. This is in line with the time frame set by the company that within every 10 years a new product must be developed. Therefore, the company is still on schedule, despite the various claims that it is losing its innovativeness. These two products were implemented within the past 10 years, and the current innovations are supposed to improve their quality and hence the quality of user experience. Third, this company had a leader who knew exactly how to achieve innovation. Some of the tactics used by this leader have never been mentioned in any management model, however the result was amazing. Every leader, therefore, must learn to understand the ideas that will work for its organization, just as Steve Jobs did for Apple. For instance, he understood that innovation will need the employees to work together, a factor that was not present in the current culture. Therefore, he decided to show them that they were not competing against each other, but instead they needed one another. This was very important as the organization soon realized that they need to share ideas so as to come up with good and competitive new products.
The Microsoft/Nokia mobile phone, therefore can borrow a lot from Apple’s innovative strategy. First, the division needs to take extra caution when choosing the ideas of new products to implement. This is because not all ideas are of high quality. Therefore, it is important to incorporate this process with the evaluation process. This will enable the division to develop a habit of ranking ideas in terms of their importance and quality. Thus, only the best will be implemented. To improve the chances of ending up with top quality ideas, the division should also adapt a system of involving everyone in the organization, in the innovation process. Employees with different skills may be asked to work side by side so that they may have a better position of borrowing ideas from one another and coming with an eventual proposal that is of high quality.
Next, Microsoft/Nokia mobile phone division needs to adapt a reasonable product development strategy. This is important as it saves costs and time, and also maximizes revenue for the already available products. Thus, instead of always wanting to develop new types of mobile phones, the leaders need to encourage employees to think of ways and ideas that can b implemented for the already available mobile phones to make them more effective. Third, the company needs to ensure that this department has a leader who is effective in his job. The leaders should be encouraged to use a leadership style that will not limit employee innovation, but instead one that will support it.
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A Report Outlining Main Arguments for and Against the Use of Feasibility Studies to Determine Potential Business Success
Introduction
Feasibility study is the process of analyzing and evaluating the potential of a business or a project that has been proposed. This study entails extensive researches and investigations on the possibility of business success or failure, thus, the information collected becomes pertinent in decision making. The need for feasibility studies has been growing owing to the increase in the number of business failure especially during their first five years of operations. As a result, investors are more willing to spend and finance such studies as they evaluate the validity of a business idea. Specifically, feasibility studies answer the question raised by an entrepreneur regarding the need to either seize or cease a project idea. It has been established that the application of feasibilities studies is extensive such that the information collected from the evaluation can be used in myriads of ways apart from the primary role which is to approve a proposed venture (Lumpkin & Dess, 2006, p 142). The information is as important to banks, venture capitalists and other primary stakeholders as it is to the entrepreneur since it acts as a business plan and thus stating the weaknesses and strengths of a proposed business.
Essentially, competitive analyses and financial analysis could be helpful in determining if a given idea might be a waste of time and resources thus saving the stakeholders the resources that could have otherwise gone to waste. On the same note, it is appreciated that a venture that is economically viable and feasible has to promise that it will generate cash flows that will be profitable. For the entrepreneur to be assured of sustainability, risk assessments have to be conducted so as to identify the intensity of risks the business is likely to face both in the short run and long run. By so doing, the probability of its meeting the goals set by the founders of the business are met. Unlike some entrepreneurs have been made to believe that feasibility studies can only be performed on start-up business ventures, Young (2010, p 380) is of the thought that existing businesses can still conduct feasibility evaluations. This is likely when making arrangements for mergers and takeovers, transfer of businesses or even when an organization wants to launch a new product. Based on this introduction, this report seeks to assess the feasibility of the Community Crusaders business plan which is a sole proprietorship owned by Ian White. The mission of the company makes it vulnerable to financial risks. As a result, the need to outline the main arguments for and against the use of feasibility studies to determine potential business success is raised.
Literature Review
The area of feasibility study and its application in business has not elicited much research in the past. This implies that the topic, unlike other topics related to entrepreneurial business management has not attracted much attention among business researchers and theorists. According to Dana (2010, p 47), feasibility studies also known as feasibility analysis, can combatively be referred to as a cost-benefit analysis. The analysis seeks to evaluate the effectiveness of a new system or a new expansion before it is added onto the business. He further suggests that feasibility studies can be sub divided into two schools of thought; time based study and cost based study. Dana (2010, p 47) goes ahead to argue that the information derived in both studies provide a comprehensive assessment of the organization in terms of profit margins and levels of stability. For instance, the cost based study majors on analysing the probability of a business to be sustainable and successful by calculating operational and developmental costs. Operational costs denotes costs realized during production thus they are necessary in facilitating the functional aspects of the business while developmental costs form the bulk of acquiring the factors of production and setting up a business. Pinson, (2004, p 54) seconds that making calculations related to costs could be helpful in evaluating the chances that a business will either fail or succeed. For example, undertaking a cost analysis on the Community Crusader business venture will enable Mr White to get the near accurate operational and developmental costs for setting up the project. Cost based evaluations often include deep routed considerations that entail a full analysis of the macro environment and the microenvironment. Economic factors are ranked highly while other influential factors such as government regulations and policies or political factors come in handy when calculating costs to be incurred by Community Crusaders business.
Dana (2010, p 50) describes the second sub-division for feasibility studies as being time-based. This explanation is made in form of a hypothesis, which is grounded on the need to establish the time that it will take for the entrepreneur to start enjoying the profits. Such a study is focused on timing, thus, it analyzes the future of a business in terms of profitability. It takes into account commodity value as well as inventories held by the organization. Time based studies are therefore focused determining the ability of the firm to generate profits over an extended period. It is therefore advisable that Community Crusader has to undertake a time based evaluation or study of the proposed community growth start-ups after which Mr. White can decide on the projects that will have a higher chance of sustainability based on estimated calculations of Net Present Value (NPV) and Internal Rate Returns (IRR) (Georgakellos & Marcis, 2009, p 231). Mr. White will find these two studies to be of extreme importance to the business startup as the time based study will estimate the duration required to gain back the money invested in the various high risk ventures. Unlike Danev who classified feasibility studies based on time and cost, O’Brien and Marakas, (2011, p 488) identified five sub divisions of feasibility studies that can be applied to businesses. The different areas include; technical, economic, operational, legal and scheduling. Technological feasibility comes handy with system evaluations, which can be helpful to the Community Crusaders Company when analysing whether the technical expertise of the employees and their ability to contribute towards continued organizational success. In fact, the feasibility study makes provisions for a section where a brief description on the company’s prospects can be made. Secondly, the report gives an analysis of human and economic factors while making provisions for possible solutions to identified problems. In fact, the first stages of the analysis often entail and analysis of the business in terms of its technical requirements and legality.
In the event that the business activities to be undertaken by Community Crusaders are illegal according to the law, then the idea will not go through the other stages of the study. This section is contained in the legal feasibility study where all the components of the system are analysed for compliance. For instance, the tax system, the Information and Technology system, the inventory system and all the other systems will have to be tested for compliance (Ciavarella & Buckholtz, 2011, p 490). The third grouping is operational feasibility, which measures the ability for the management to handle emergencies, solve problems, resolve conflicts and embrace random opportunities. Assessments made at this stage also ascertain the possibility that the business will fit into the competitive pressures set by the industry in which it intends to operate. The nature of operations undertaken by Mr White as the manager for Community Crusaders has to ensure that it conforms to a design that promises efficiency, reliability, supportability, usability, maintainability, disposability, affordability and sustainability (Brinkman, 2010, p 19). In order to be effective, operation feasibility has to be undertaken during the early stages of business design so that the different organization processes can be synchronized in a way that will maximize on profitability. The process of meeting operational efficiency for Community crusaders has to be aided by the input of operation engineers as well as managerial experience. This is because, it is often believed that a system that incorporates operational and technical characteristics into its design increases the chances that it will serve the purpose it was intended for.
Nykiel, (2007, p 22) identifies that there are more advantages of carrying out feasibility studies on a business start-up since the section on economic feasibility helps determine the economic benefits likely to be gained from undertaking a given business venture. The process of assessing this feasibility includes identification and quantification of the expected benefits by use of a cost/benefit analysis. On the other hand, technical feasibility is focused on analysing the technical resources held by an organization and how these resources can be applied to the proposed system so as to increase on the chances of business success (Bentley & Whitten, 2007, p 32). Basically, this section entails a comprehensive evaluation of the software and hardware. Schedule feasibility is an equivalent of the time based analyses. In the event that Mr White delayed the completion of the Community Crusader Company, then there will be an increased chance that the business will fail. The section on scheduling seeks to estimate the time frame for undertaking business projects and the cost implications associated with delayed completion. In reality, increasing the payback period could reduce the chances of business success thus it becomes advantageous for the owner of Community Crusaders to consider undertaking a feasibility study. Other authors seeking a more classified analysis of a start-up business are likely to go an extra mile into considering other feasibility factors such as the market feasibility, resource feasibility, cultural feasibility and financial feasibility.
Example of a feasibility study and discussion
An example of a feasibility study in support of the literature theory stated in the previous section is shown in the XYZ Company, which intends to invest in the production of widget parts. The objective of the project is to determine the appropriateness or the feasibility of producing plastic widgets. The information provided by the company include part drawings of the projected design, description of the part requirements, production information and other information that was requested by the feasibility advisor. The executive summary for the feasibility study identified that the manufacturing process required various components, which included an injection mould made of a polypropylene material. The problem arose from the fact that there were several types of moulds and each would have a considerable impact on the sustainability and profitability of the business. The materials included the single cavity, centre sprue gate (SC, CSG), single cavity, hot runner edge gated (SC, HREG) 3 and multiple tab gates or fan and the two cavity, hot runner edge gated, multiple tab gates or fan (TC, HREG) (Benjamin & Fabrycky, 2010, p 90). A feasibility study for this project could only be possible after the identification of material estimates and the moulding process, tools to be used and the costs of the parts as shown
in the figure below.
Figure 1: Tooling and Purchased Cost Estimate
This table makes it subtle that the project of manufacturing widgets is complicated by the fact that the machinery used differ in quality and costs. Additionally, the total cost of a machine might be cheap but the spare parts are so costly. This implies that the XYZ Company will have to incur more costs when the machine breaks down than if it had purchased a machine that is expensive but has low cost spare parts. Apparently, an advantage of feasibility study is made evident in this case since it provides a comprehensive report on the estimated costs for the tool and that of the spare parts. This advantage is seconded by a chart which presents a graphical representation of the relationship between the part costs and the possible production volume. As a result, it enables XYZ to have a basis for decision making and this becomes the prerequisite for
determining potential business success.
Chart 1: Part cost versus production volume
The executive summary of the feasibility study for XYZ factory depicts a summary of the findings made after the feasibility study, recommendations made and the conclusion. In part, the study identifies that the two-cavity tool is likely to produce low cost widget parts with a cost range that is medium. All the estimates fall within the range of data given by the management at XYZ except for SC, HREG, which exceeds the annual cost of the produced parts. A decision is not determined at this time on the best production tool to select among the three and so the feasibility study is important helping guide the recommendation process. It is only after the study that it is made lurid on the best tool, operation design and additional costs that will be incurred in assembling the parts, decorating and packaging them. In so doing, it is established that XYZ has to consider making sure that the maximum cost for the produced products does not exceed $5.00. The recommendation made at the end of the study shows that the feasibility study guided the feasibility advisors into giving a conclusion that was unlike the request posed by the owner of the XYZ Company. Because of this, it is essential that the management alters their plan to suit the advice given by the advisors since they have a foresight of the hurdles the business is likely to face in selecting between the three given production machines.
The feasibility study used in the case of XYZ Company follows the theoretic outline presented by Dana, (2010, p 52). The framework used includes the classification of the study into two parts; cost based and time based. The cost based analysis helps in determining the costs of the machines to be acquired by XYZ and the estimations for the costs of the products as well as the spare parts. The analysis is made over an extended period of time which then assures the management that the statistical data presented in the report is well researched and that there is a higher probability that the venture will be profitable if a given machine is preferred instead of the other (Deakins & Freel, 2009, p 41). This is strategically done by calculating and distinguishing developmental costs from the operational costs. The cost based information is elaborated in the part cost and tooling estimations section which stages a coherent discussion weighing between the use of a PTC spreadsheet to estimate the costs or a local tool maker. The calculations on the part costs are made using spreadsheets from PTC. Ostensibly, PTC uses estimations derived from cycle times, material costs, machine costs and tool costs. Several inputs are needed when making the spreadsheets for feasibility studies. The resultant figures show the estimated amounts of money to be paid by XYZ Company when purchasing molded parts from a molder. The other production costs are varied according to volume of widgets produced and these costs include the cost of the tools (10% amortization) over an extended period of 5 years and a scrap rate of 5%. The probability that XYZ could manufacture these parts in-house is also considered in the analysis. On the other hand, the time based feasibility study comes in handy in seconding the findings made in the first research (Herrmann, 2009, p 90). It uses the time series charts to present evidence on the possibility that the business will be profitable over an extended period of time. The feasibility study relating to the case of XYZ analyses the possibility of breaking even with the sales and costs in the near future even as the machines might start to break down.
Assessment of feasibility study
As a feasibility advisor for the Community Crusaders start-up business owned by Mr. Ian White, it is necessary to conduct a feasibility study that will match up to the organization proposed mission of investing in the high growth start-up projects in the community. The importance of these assessments is raised with the realization that most of the proposed projects are have high financial risk. According to economics, high-risk ventures are often more profitable since most investors tend to shy away from such projects (Gelderen & Bosma, 2008). In the event that Mr. White becomes successful in the proposed high growth community start-ups, then there is a higher chance that he will be very successful. But prior to making such a decision, it is mandatory to consider the financial costs and time implications associated with undertaking these high risk projects. The realization that similar firms or firms operating in competing business environments have incorporated the use of feasibility studies should act as a trigger that will help in identifying the near proximal facts related to undertaking the proposed projects (Hmieleski & Corbett, 2006, p 45). Therefore, the following considerations have to be made by Mr. White when making a decision on whether or not to use feasibility studies. First, he has to answer the question: why undertake a feasibility study?
The answer to this question lies in the facts presented in the following argument where the pros and the cons of feasibility studies are highlighted while also a comparison is made between the use of feasibility study and a business plan. First of all, Mr. White must be aware that coming up with a new venture is a difficult process. It is not only involving but tiring and time consuming. In spite of this, most of these ideas do not materialize to become as big as the entrepreneurs ever imagined. In fact, some of the businesses that become operational fail in the first six months. Thus, before making any investment, it is very advisable to ascertain the economic viability of the project. The advantages to be realized from the project have to outweigh the disadvantages and the potential risk factors likely to be experienced. A feasibility study is the most preferred tool to achieving these objectives. Without it, then the number of start-up failures could be much higher. High growth community projects are often capital intensive and involving in terms of expenditure, planning and operations. The importance of feasibility studies is therefore seen in its ability to identify areas of focus while providing alternatives that could be undertaken by the entrepreneur so as to maximize on the expected returns or increase the chances of business success (Jeffrey, 2007, p 37). This scenario is supported by the case study on XYZ where the management is notified on the availability of three manufacturing machine. Each of the machines has its advantages and disadvantages thus the management has to make a decision based on the information.
The second major reason for using feasibility studies is to narrow the alternatives faced by an entrepreneur. There are instances under which an entrepreneur might have several business proposals. As much as each of these proposals might look lucrative when analyzed from an entrepreneurs’ viewpoint, a feasibility study might help identify finer details that will make one of the projects stand out from the rest thus, the project will be prioritized over the others. The third advantage is that the feasibility studies provide information that is substantial to guide decision making. Apart from the documentation of important quantitative information, it is an evidence that an entrepreneur took time to investigate on the subtle factors associated with investing in a certain project. These documents are vital when soliciting for external financing for the projects. On the flip side, using feasibility studies has been associated with certain limitations or demerits. The feasibility study cannot substitute a business plan. The plan comes after a feasibility study especially when the project is in its developmental stages. A business plan tends to respond to the issues raised in the feasibility study where most of the outcomes identified in the feasibility study will form a basis for writing a business plan. First of all, the feasibility study does not identify new concepts or ideas regarding the project. The ideas have to be identified by the entrepreneur before the study can be conducted. The feasibility study is therefore dependent on the assumptions developed by the entrepreneur thus an impartial or unrealistic proposal will lead to a misleading study thus its effectiveness will be significantly reduced. According to Michele (2008, p 111), the leaders of a business might be pressured into skipping a feasibility analysis because there is a high chance that an existing business has succeeded and so are the chances that the new venture will succeed. At times the reports presented by the feasibility advisors and consultants do not reflect the real time information that can guide an entrepreneur into making viable decisions. This means that the read advantages of a feasibility study can only be realized if the study is done accurately.
There are differences between a feasibility study and a business plan. Whereas a feasibility study investigates the possibility of success, a business plan provides an outline towards the realization of the proposal made in the feasibility study. A feasibility study is an affirmation that a business is likely to succeed thus it can help narrow down different project scenarios while a business plan will only deal with one project (James, 2014, p 9). A feasibility study is followed by a business plan, which means that in the event the feasibility study discontinues a certain project a business plan will not be made.
Recommendations for the Organization
Reflecting on the discussions derived from the case study of XYZ Company, assessments and critical thoughts revolving around the need to conduct feasibility studies, it is evident that a feasibility study plays a pivotal role in managing start-up ventures. As a feasibility advisor, I will encourage Mr. White to consider writing up the business proposals for the different high growth community projects then they can be studies by use of the two classifications identified in the literature review. The sub-groupings for the feasibility study to be conducted will include undertaking a cost based and time based feasibility study on these businesses (Matson, 2010, p 90). The cost based study will identify all the economic parameters concerning financing and financial risks while time based studies will identify the time frame for initiating the project and the possibility of breaking even. On a general scale, the feasibility study for Community Crusaders has to follow the following format which begins with an executive summary section. It is in this section that assumptions are documented which then leads to making of inferences on the important findings and recommendations. The introduction section describes the projects and makes a justification on why the community development project is viable. It also introduces the general settings of the project and the needs identified in the immediate environment/ market needs. Third section has to state the industry background where basic information on the industry, feasibility and implications and the economic conditions identified in the industry. The fourth section has to contain information on marketing where the market potential will be analysed, the attributes of the market will be noted in relation to the limitations or ease of entering and penetrating the market. Technical and operational characteristics will form the bulk of the fifth section which will handle concerns regarding labour supply, technical skills, location considerations and the operational capacity and the subsequent efficiency of the Community Crusaders project. Sixth section will consider financial projections such as; revenues, net income, costs, capital requirements, pro forma cash flow statements, accumulated equity and financial plan for the company. The seventh section will have a summary and recommendation for the project followed by an appendix section.
Conclusion
In conclusion, feasibility studies provide a window through which an investor can peep into the viability of a business idea and determine if it is worth risking both time and money. A standard feasibility study has to entail a summarized cost and time analysis which is sub-divided into groupings that will facilitate guiding the data collection process (Justis & Kreigsmann, 2009, p 39). The finance section and marketability section represent the most important sections thus they have to be meticulous. The finance section analyzes the financial risks and implication of the business on the industry as a whole. While assessing financial risks, it has to be noted that the high risk ventures are often more profitable since most investors tend to shy away from such projects. But prior to making such a decision, it is mandatory to consider the financial costs and time implications associated with undertaking these high risk projects. The realization that similar firms or firms operating in competing business environments have incorporated the use of feasibility studies should act as a trigger that will help in identifying the near proximal facts related to undertaking the proposed projects. Likewise, the marketing section incorporates a critical look at the market factors that would either undermine or promote the marketability of the products and services. The market analyses are important when investing in high growth community investments since it assesses the potential of selling the products and services to the community. A feasibility study, therefore, identifies the potential output of a project thus the management has a decision to make between continuing with the project or abandoning it in the event that the output falls below the desired input.
References
Benjamin, S. & Fabrycky, W. (2010). Systems engineering and analysis. Cheltenham: Edward Elgar Publishing Ltd.
Bentley, L. & Whitten, J. (2007). System Analysis & Design for the Global Enterprise. London: Kogan Page Limited.
Brinkman, E. (2010). Research about business success- and fail factors of starters (Master thesis). Englewood Cliffs, New Jersey.
Ciavarella, M. & Buckholtz, A. (2011). The big five and venture survival: Is there a linkage? Journal of Business Venturing, 1(9), 465-483
Dana, L. (2010). Nunavik, Arctic Quebec: Where Co-operatives Supplement Entrepreneurship. Global Business and Economics Review Journal, 12 (1), 42–71.
Deakins, D. & Freel, M. (2009). Entrepreneurial activity, the economy and the importance of small firms: Entrepreneurship and small firms. London: McGraw-Hill Education.
Gelderen, M. & Bosma, N. (2008). Success and risk factors in the pre startup phase. Small Business Economics Journal, 24 (4), 365-380
Georgakellos, D. & Marcis, A. (2009). Application of the semantic learning approach in the feasibility studies preparation training process. Information Systems Management, 26 (3), 231-240.
Herrmann, N. (2009). The whole brain business book. London: McGraw-Hill.
Hmieleski, K. & Corbett, A. (2006). Proclivity for improvisation as a predictor of entrepreneurial intentions. Journal of Small Business Management, 44 (1), 45-63.
James, W. (2014). Your Small Business Adventure: Finding Your Niche and Growing a Successful Business. New York: ALA/Huron Street Press.
Jeffrey, N. (2007). Psychology: concepts and applications. Illinois: Cengage Learning.
Justis, R. & Kreigsmann, B. (2009). The feasibility study as a tool for venture analysis. Business Journal of Small Business Management, 17 (1), 35-42.
Lumpkin, G. & Dess, G. (2006). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21, p. 135-172.
Matson, J. (2010). Cooperative feasibility study guide. New York: ABC Press.
using three of ethical principles of the global business standards codex, two arguments, one counter argument to write. Ethical principles of the global business standards codex :
1 – Fiduciary Principle:
Is concerned with money and finances
Each officer has a legal fiduciary duty to act in the best interests of the stakeholders and other employees within the firm.
An implied fiduciary duty for every employee to act in a way that generates positive benefits for the firm.
• Examples: conflicts of interest, good faith efforts for carrying out responsibilities. Prudence with the company’s resources, loyalty.
2 – Property Principle:
• Based on the belief that every employee should respect property as well as the rights of the owners of the property.
• Expected that the employee should be a good steward to the resource that he/she has access to.
• Examples: theft, misappropriation of funds, wasting resources, misappropriation of intellectual property
3 – Reliability Principle:
• Based on the belief that it is the employee’s responsibility to honor the commitments he or she has made to the firm.
• Examples: breaching a promise or contract, not fulfilling a promised action, ensuring that suppliers and other business partners are paid in a timely manner.
4 – Transparency Principle:
• Based on the belief that every employee should conduct business in a truthful and open manner.
• Assumes that employees will not make decisions based on a personal agenda.
• Examples: keep accurate and current records of business obligations, fraudulent and deceptive actions of the employee, financial information is presented in a truthful and accurate way
5 – Dignity Principle:
• Based on the belief that each employee needs to respect the dignity of all individuals.
• Encourages the enhancement of human development not only within the company and the marketplace, but also in the society at large.
• Examples: ensuring the human rights of health, safety and privacy.
6 – Fairness Principle:
• Based on the belief that stakeholders who have a vested interest in the firm should be treated fairly.
• Reciprocal fairness
• Fair exchange – getting paid a fair wage for an honest days work.
• Distributive fairness
• Equity – all groups (sex, gender etc.) get paid the same for the same work)
• Wages are distributed fairly amongst the various positions in the organisation
• Fair competition
• Avoiding price wars, bribery and collusion.
• Procedural fairness
Stakeholders are treated fairly and whistleblowers are protected
7 – Citizenship Principle:
• Based on the belief that every employee should act as a responsible citizen in the community.
• Expected that employees respect the laws of the community – criminal, competition, environmental, corporate social responsibility.
• Examples: Taking a universalist approach and doing the right thing even when no one is looking.
8 – Responsiveness Principle:
• Based on the belief that employees have a responsibility to respond to the requests for information about the operations from various stakeholders.
• Expected to react in a timely manner.
• Examples: disclosing who your suppliers are or how your goods are being produced.
using at least 3 out 5 materials i gave.
Louw et al.(2007)?
Codex was established by two United Nation’s Organization, FAO (Food and Agriculture Organization) and the World Health Organization (WHO) in the year 1963. Codex is the organization that establishes the international standards for food. Codex provides the guidelines that promote and implement the fair trade practices in the food trade. The principles of Global Business Standards Codex govern the entire fair trade practices in all business universally. This paper evaluates the fair-trade practices in the fresh food industry especially in the context of the value chains that enhance the supermarket business operations. Supermarkets provide useful and informative materials on fair and ethical trade practices that complement the basic concepts quality as applied in the convention theory. (Gereffi 1994)
Fairness Principle
Fairness principle stems from fair trade which refers to a trading partnership that’s based on transparency, dialogue, respect and equity in the international trade. The association of fair trade major objective is to facilitate fairness even to the small traders or producers in the international market by providing guarantees and fair trading terms and prices, access to credit, stable supply relationships and other fair conditions for their produce in the international market. (Smith & Barrientos 2005) Large multinational organizations have been known to frustrate the growth of smaller companies in the emerging markets in the hope of minimizing any threats to their business operations and profitability. (Vorley 2004)
Fairtrade is principally concerned with business terms and prices between the producers and buyers, the ethical trade main concern is the working environment of the workers. The conditions like favorable working environment, good ventilation and adequate sunlight or visibility. Ethical trade ensures that the employers provide safe and comfortable working environment for all the employees. (Lee & Billington 1992) For many years, workers in the supermarkets were overworked and their counterparts in the factories worked under very poor working conditions like in the agricultural, garment and foot-ware industries. (Dolan & Humphrey 2004)
The impersonal capitalist markets and the characteristics of the unfair trading practices that dominated the international market in the early 1960’s that marginalized most producers were greatly challenged by the introduction of the fair-trading practices. (Murray & Raynolds 2000)
Reliability Principle
Reliability principle is hard to address when the buyers exert pressure on the suppliers to deliver goods on time with such instruments as insecure supply contracts, shortening lead times, falling prices and irregular orders of goods. These suppliers offset their costs by passing on the loses to the poor workers who have to work through short term contracts, increased workloads, low wages and impromptu long periods of work with unpredictable rates of overtime compensation. These practices are in direct violation of the codes that buyers and suppliers are supposed to promote and which the buyers insist that the suppliers must adopt and implement positively. The labor laws that the suppliers are supposed to honor are difficult to implement because of the harsh trading terms that the buyers insists on the suppliers to adopt. (Halbenwang 2004)
For many years, the South African Grocery market favored large and well established suppliers whose reliability can’t be matched with the small suppliers hence the ineffectiveness in the application of the equity principle. (Louw, Vermeulen, Kirsten & Madevu 2007) To guarantee the small supplier’s consistency on food quality, safety and volumes is very difficult due to competition from the large producers hence the apparent discrimination. (D’Haese & Huylenbroeck 2005)
However, the brands that are popular and available are not necessarily the best in terms of quality as most consumers rely heavily on the information available from the media through advertisement and other sources of information. Smith & Barrientos (2005) contends that the information available to the public is mostly limited and the imbalance that exists between the consumers and the retailers is associated with the search costs that may be prohibitive and unaffordable hence the customers may not be in a position to discover and also compare the food prices and services at all levels of each individual value chain. The brand loyalty ones created can attract more customers by virtue of the market power that the brand name has on the consumers.
The vertical market power that exists in big chains and brand names makes the fair trade play second fiddle as they can use their economies of scale to influence the prices that are payable by final consumer and also they can minimize or influence the prizes negatively that are receivable by the raw material suppliers. The Australian market has positive attributes but double marginalization arises where two companies that are vertically adjacent can seek or scheme to maximize their profits. (Cotterill 2006)
These activities may raise the prices of the retail markets, lower the supply profit or limit the final output. These inadequacies can be addressed by applying the vertical integration where a particular chain cannot be allowed to buy all the suppliers or allow a supermarket to dominate and monopolized the sales of a supplier. The private label companies can be utilized to minimize double marginalization.
Dignity Principle
The principles of human rights have to be adhered to in an organization. The rights of the employees to have a safe and secure working environment that is well ventilated and well lit is mandatory. The dignity of the workers have to respected by offering competitive compensation and also treating all the employees fairly without any discrimination based on gender, color, race, disability or nationality. According to the fair trade practices, all the employees should be compensated adequately and their working environment and conditions must be acceptable and standardized. The workers are entitled to a safe working environment that is well lit and ventilated. (Young 2003) Fair trade ensures that the employers provide safe and comfortable working environment for all the employees. For many years, workers in the retail outlets and supermarkets were overworked, underpaid while others in the factories worked under very poor working conditions like in the shoe factories, agricultural sector and the shoe industries. All the employees have a right to a dignified treatment under the fair trade agreements.
For the consumers, the fair trade allows the consumers to have an opportunity to choose branded products from the international markets. The small scale producers and suppliers are given equal opportunities to participate in the market and trade openly with other big players in the market. The multi-actor approaches as illustrated by Louw et al (2007) confirms the importance of the fair trade practices that aim at reducing the bottlenecks that are in the supply chain and which promote the collective actions that facilitate equity and competitiveness.
References
Murray D, Raynolds L., 2000, Alternative trade in bananas: obstacles and opportunities for progressive social change in the global economy. Agriculture and Human Values 17: 65–74.
Gereffi G., 1994, Capitalism, development and global commodity chains. In Capitalism and Development, Sklair L (ed.).Routledge: London; 211–231.
Vorley, B., 2004, Food Inc. Corporate Concentration from Farm to Consumer. UK Food Group: London.
Young, G., 2003, Fair Trade’s Influential Past and the Challenges of its Future. King Baudouin Foundation: Belgium.
Dolan C, Humphrey J., 2004, Changing governance patterns in the trade in fresh vegetables between Africa and the United Kingdom. Environment and Planning 36(3): 491–509.
D’Haese, M & Van Huylenbroeck, G., 2005, The rise of supermarkets and changing expenditure patterns of poor rural households: a case study in the Transkei area, South Africa. Food Policy, 30: 97–113.
Louw, A., Vermeulen, H., Kirsten, J. and Madevu, H., 2007, Securing Small Farmer Participation in Supermarket Supply Chains in South Africa, Development of Southern Africa, 24:4, 539 – 551.
Smith, S., & Barrientos, S., 2005, Fair Trade and Ethical Trade: Are There Moves Towards Convergence, Sustainable Development, Sust, Dev. 13, 190 – 198. Wiley InterScience, online publication, www.interscience.wiley.com. Doi: 10.1002/sd.277
Halbenwang, B.B (Ed.) 2004, Urbanisation trends in South Africa. Social Environment, Vol. 9, April. Institute for Futures Research, University of Stellenbosch.
Lee, H.L. & Billington, C., 1992, Managing supply chain inventory: pitfalls and opportunities. MIT Sloan Management Review, 33(3): 65.
Cotterill, R.W. (2006). Antitrust analysis
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Create an outline of an executive summary that includes the type of problem, requirements, and proposed business problem solutions.
Order Instructions:
The assignment must build off this section….This is the project that I chose to write about.
Select a project for the purpose of completing the writing assignments of this course. Provide a rationale for your selection from an organizational strategy standpoint. Next, respond to at least two posts of your classmates, and comment on their project selection. Note: Ensure that you can develop enough information to thoroughly cover the project topic. Assume that your projects will have duration of 12 to 15 months with a functionally allocated project team. Adhere to confidentiality standards if you are discussing projects from your organization
Today, my organization uses a system called RightNow to respond to customer requests via email and fax. The company has been talking about switching to a new response system called Salesforce. The Salesforce system is supposed to be more user friendly and also coincides with the system our company uses to submit service orders; this will eliminate a lot of extra work for the agents that are completing these type of requests. It keeps them from moving back and forth from system to system. However, there a lot of things the company would need to take into consideration such as migration. All of the previous requests we’ve received in the RightNow system would need to be migrated to the new system. This is very important, being that there is no Third Party Verification being recorded for electronic requests it is our way of proving that customers are requesting the service should any legal issues come about. The end result of migrating to this new response system would make it easier on the agents completing the job.
Write a seven to eight (7-8) page paper in which you:
Recommend a project portfolio management method for your selected project. Provide a rationale for your recommendation. Note: Be sure to align your project with the strategic efforts of the organization.
Create an outline of an executive summary that includes the type of problem, requirements, and proposed business problem solutions.
State the vision and the goal of the project. Note: Be sure that the goals are Specific, Measurable, Attainable, Realistic, and Timely (S.M.A.R.T.).
Determine five (5) major deliverables of the project, and explain the importance of each major deliverable.
Provide the timeframe for delivering the solution to the project.
Create a table which contains the generic resources, including people, equipment, and materials needed to undertake the project. Note: These are only generic figures to give the Project Sponsor an idea of the level of resourcing required to finish the project.
Estimate the total budget for the project based on the cost of the resources specified in the table that you have created. Next, add contingency and any other additional costs (e.g., intangible costs, the cost of a change in culture or process within the business, etc.).Support your response.
Determine the key success criteria for your project. Provide a rationale to support your response.
Assume that your project is delivered on time, within scope, and budget. Justify your stakeholders’ satisfactory level with three (3) key success criteria, against which the project will be measured.
Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length
The specific course learning outcomes associated with this assignment are:
Analyze corporate strategy and the project life cycle phases to define the project and initiate a project plan.
Apply the concepts of project management to prioritize project portfolios and align the projects with corporate strategies, culture, and organization.
Use technology and information resources to research issues in project management.
Write clearly and concisely about project management using proper writing mechanics.
SAMPLE ANSWER
Proposed business problem solutions
Create an outline of an executive summary that includes the type of problem, requirements, and proposed business problem solutions.
Executive Summary
RightNow has done a great work in making sure customer requests via email and fax are responded to promptly. However, the only thing that is constant is change and when an organization does not embrace change, it is setting itself up for failure. To ensure this does not happen, my organization is seeking to adopt Salesforce. This is a new response system that will not only address customer queries and requests, but also capture the service orders from the sales agents. This would rope in the critical information and present it in real time to the critical decision makers allowing them to make the right decision given the right and latest information. The elimination of the service order requests and others requests of this type, the efficiencies to be achieved should be sufficient enough to supersede associated costs – migration, retraining and Third Party Verification.
Recommend a project portfolio management method for your selected project. Provide a rationale for your recommendation. Note: Be sure to align your project with the strategic efforts of the organization.
Project Portfolio Management Method
To achieve a successful switch-over from RightNow to Salesforce system, the project implementation will be anchored on the Portfolio, Programme and Project Management Maturity Model (P3M3) (Harold, 2011). The maturity model is suited for this challenge, since unlike other models where managers are more often than not in a reactive mode, the former expects and requires of its mangers to be in a proactive mode. An organization should not settle on producing excellent results occasionally, this should be the norm. Only then do its customers feel wanted – that the organization values them. The maturity model is especially useful in improving portfolio programme management processes. This will be achieved at fine levels – initial, repeatable, defined, managed and optimized processes (Ralph, Irwin & Ken, 2009).
State the vision and the goal of the project. Note: Be sure that the goals are Specific, Measurable, Attainable, Realistic, and Timely (S.M.A.R.T.).
Goal of the Project
In Salesforce, the organization will be able to achieve its desired long term goal of operating an effective and efficient business. This will mean the vision of the organization of making sure the customer requests and queries are addressed rapidly is achieved and additionally, that growing the business by getting sales orders in and deliveries out fast is vital. When these two components are made central to the operations of any organization, then the growth the organization can start to be experienced. For the organization, the pain that will be guaranteed with the switch will be smoothed over by the expected growth in order delivery and customer experience optimization that should make them more satisfied thus increasing sales (Jean, 2012).
Determine five (5) major deliverables of the project, and explain the importance of each major deliverable.
Deliverables
For this project, the deliverables will be critical in determining achievement of the objectives. The Salesforce is marketed as a programme that will make the turnaround time between raising a sales order and delivering on a sales promise. By making order rising instantaneous, the decision makers in the office who are responsible for preparing order requests from the field will now have better information when making decisions. Then will be able to determine which product/s trends and consumption cycles. To achieve this desired outcome, some of the tools to be used will include Brainstorming, Fishbone or Ishakawa Diagrams, Gnatt Charts (GC) and Critical Path Analysis Flow Diagrams (CPAFD). Each tool has its strengths that make is best suited for specific functions and aspects in the process (Batrol, & Martin, 2012).
Brainstorm
Fishbone
CPAFD
G C
Project brainstorming and initial concepts, ideas, structures and aims
3
2
Gathering and identifying all elements, especially causal and hidden factors
1
3
2
Scheduling and timescales
2
3
Identifying and sequencing parallel and interdependent activities and stages
1
3
1
Financial – costing, budgets, revenues, profits and variances
1
1
2
3
Monitoring, forecasting, reporting
1
2
3
Troubleshooting, problem identification, diagnosis and solutions
2
3
2
1
‘Snapshot’ or ‘map’ overview – non-sequential , non-scheduled
2
3
Format for communication, presentations, updates, progress reports
1
1
3
3 – Main tool; 2 – Optional / Secondary tool; 3 – Sometimes useful
To successfully achieve the switch over from RightNow to Salesforce, the organization will need to designate a manager to be in-charge of this implementation – one who will be the Champion of Salesforce. This could be the IT manager since Salesforce is an IT based platform. In an effort to develop teamwork, the IT manager will be ably assisted by the Sales Manager and the Customer Experience and Relationship manager. This three-sided team has adequate input from the critical departments who are on the front line in having the Salesforce switchover.
Determine the key success criteria for your project. Provide a rationale to support your response.
Key Success Factors
In order for the switch-over to be successful, the methodology will follow the following guidelines. These guidelines are developed from intensive research and in as much as they are not the only ones; they offer a good guideline which if embraced, will make implementation seamless.
Define the project
This is vital in making sure that the risk of getting back-tracked, the management will have to communicate clearly beforehand to the employees, the defining management’s intent in undertaking the switch, outline the full extent of the switch-over project. This will entail pinpointing the department, functions and staff to be involved and their degree of involvement, a clear description of the end results of the switch-over project and its long-term effects if any on the organization and its components (Watson, 2013).
Establish a Project Organization
As pointed out earlier, the IT manager will take the lead in implementing this switch-over project. To capture the cross-cutting nature of this switch-over, the IT manager will have two principal assistants on this project – the Customer Experience and Relationship Manager and the Sales Manager. These two departments are the current main consumers of the project as presently configured. In addition to appointing experienced managers to run the projects full time, their terms of responsibilities will be clearly set out. This is further strengthened by the appointment of line managers of the main consumers of the project. In addition to the line managers, a dedicated staff of three people will permanently offer back office support for the project around the clock. This will ensure queries are addressed promptly and glitches in the system that could affect the end-consumers are troubleshot and addressed before they happen. Finally, a sensitive balance has to be established between the functional heads of department and the project manager (Kristoffer, Tor, Terry, 2007).
Install Project Controls
These special controls will focus of costs, quality and time. This is because; these components will not be captured as they would with routine reports. Time control; this is especially vital when undertaking the Critical Path Method-ideal for providing the best time control for the project. Cost Control; though this controls are not as formalized as time controls, they break the aggregate costs into work packages, develop obligation reports for technical decision makers and focusing human capital talent on major opportunities and problems. Quality Control; are envisioned to compromise of elements that define the performance criteria, use quality standards to express the objectives and monitor advancement towards these set standards (Robert & Randall, 2012).
Implementation Benchmarks
When implementing the switch-over, the main activities will include a Work Breakdown Structure (WBS). This allows for decomposition of the project in various levels of detailed tasks. It is this small parts that when managed optimally will ensure project success. A Dependency Analysis will organize the tasks recognized by WBS in a sequence that allows for order while allowing simultaneous implementation where applicable. After this, Network Development, which entails developing a network diagram that captures all tasks in an orderly fashion, will follow. When allocating or committing resources, the appropriate individuals with the requisite expertise and skill are identified and tasked adequately. The resources are allocated to ensure they are adequate and cover all phases – build up to the phase out. It is important to estimate the time it will take on each activity and the whole project. To achieve this, the organization will either employ the quantitative, constraint, forecast or unit of work methods. Irrespective of method chosen, the technique will consider the effort-energy exerted and calendar-duration elapsed. Budgeting is important and the next step. Budgeting allows for the allocation of related project development costs over the lifetime of the project. This ensures that costs do not pile up at the beginning of a project but appear as they are incurred – in the course of a project implementation timeline. Finally, the status report detailing the work-in-progress on the different components of the project – resource load, schedule and budgets is prepared. This assists to track the actual.
It is important to point out that studies have shown that there are no alternatives to project management methods. Should the organization choose not to implement and formalize project management; it will be choosing to work at random – no clear plan. By embracing project management, individual contributions – based on specific tasks developed as part of the whole, outcomes when joined together with others results and by individuals.
Having established the power of the project management as a technique, it should be noted that this power can be harnessed for both large and small projects. Given the multiplicity of benefits and uses of project management tools, some industries are especially suited for this. They include, manufacturing, servicing construction among others. By implementing the switchover project, the organization will benefit from reduction in the cost of doing business, a reduction in the time used to attend to customer queries and complains better resource allocation and increased quality of the final product or service. These are the factors that determine the competitiveness and profitability of the organization. By being able to break-down complex projects into small independent task, cost and time resources will be better managed and more gotten from them. Additionally, project management techniques accrue to the organization benefits including, failure reduction, reduction of inappropriate tasks, close examination of the sub-tasks, scheduling, integration and communication (Fuller, 2010).
When considering the cost of implementation, the switchover will be made up of two components: resource allocation and infrastructure needed, and implementation schedule. The switchover requires cross-organizational collaboration between the customer experience and relationship and sales departments. In the switchover project, it will be very important that the project costs management be inclusive of the vital processes central to the project completion within its approved budget. To achieve this, the resources to be considered include: resource planning – establishing the resources and precise quantities needed of each in performing project activities; cost estimation – determining an estimate of the costs needed to get the project to the desired conclusion; cost budgeting – apportioning the overall costs estimates to individual work items; and finally, cost control – controlling changes to project budget (Megginson, 2011).
Recourse Planning
Cost Estimating
Cost Budgeting
Cost Control
Information needed
· Work Breakdown Structure
· Historical information
· Scope statement
· Resource Pool Description
· organizational policies
· Work Breakdown Structure
· Recourse requirements
· Recourse rates
· Activity duration estimates
· Historical information
· Chart of accounts
· Cost estimates
· Work Breakdown Structure
· Project schedule
· Cost baseline
· Performance reports
· Change requests
· Cost management plan
Tools and Techniques needed
· Expert judgment
· Alternatives identification
· Analogous estimating
· Parametric modeling
· Bottom-up estimating
· Computerized tools
· Cost estimating tools and techniques
· Cost change control system
· Performance measurement
· Additional planning
· Computerized tools
Results – Profits
· Recourse requirements
· Cost estimates
· Supporting detail
· Cost management plan
· Cost baseline
· Revised cost estimates
· Budget updates
· Corrective action
· Estimate at completion
· Lessons learned
Irrespective of the project dynamics, each project requires time to implement it. Having a grip on the time will enable the organization maximize its resources as well as operate efficiently and effectively. When considering the timeframe for the switchover project, the organization will have to consider the activity definition – pinpointing the project deliverables and specific activities to be performed. Activity sequencing – pointing out and documenting dependencies between interactivities (Meredith & Mantel, 2010). Activity Duration Estimating – given the individual activities, there is need to estimate the number of work periods needed. Schedule Development – sequencing activities, duration of activities and requirements for recourse when creating the project schedule and schedule control – changes to the project schedule.
For the migration to be considered successful, it must increase sales by 25%. In as much as Salesforce can be used by other department in the organization, as the name suggests it is meant to make selling effective and efficient. Despite the cost that the migration will cost the organization, the overall cost of doing business should come down by 10%. Finally, the bottom line should increase by 5%.
Provide the timeframe for delivering the solution to the project.
Timeframe
Activity/Time
Months
1
2
3
4
5
6
Training of IT and back office staff on Salesforce
Training of sales staff on Salesforce
Training of Customer experience and relationship management staff
Training of Accounting staff
Migration to from RightNow to Salesforce
Activation of Salesforce and switch-off of RightNow
Create a table which contains the generic resources, including people, equipment, and materials needed to undertake the project.
Generic Resources
RESOURCE
COST
Project Champion (IT Manager)
–
Project Ambassadors (Sales and CE&R Managers)
–
Training
10,000
Data Entry Devices for the Sales team
7,500
Dedicated Server
2,500
Estimate the total budget for the project based on the cost of the resources specified in the table that you have created. Next, add contingency and any other additional costs (e.g., intangible costs, the cost of a change in culture or process within the business, etc.).Support your response.
Project Budget
ITEM
COST
Training
15,000
Data Entry Devices for the Sales team
10,000
Dedicated Server
5,000
Migration Costs
70,000
Total
100,000
The Migration costs will include intangible costs. These are costs that will only be incurred as a direct result of the migration – whether successful or not. This will include cost of a change in culture and processes within the organization among others. This figure may seem huge, however when invested wisely, it will mean the difference between the success or failure of the migration.
Assume that your project is delivered on time, within scope, and budget. Justify your stakeholders’ satisfactory level with three (3) key success criteria, against which the project will be measured
Stakeholder Satisfaction
There are many stakeholders who have a stake on the successful migration from RightNow to Salesforce. To the management, the successful migration will result in better decision making. They will be able to get the latest information thus allowing them make strategic decision. When demand trends change, management does not have to wait for a long time to respond. The can anticipate this and act as opposed to reacting. The shareholders should be satisfied with the migration since it will have resulted in better returns from their investment. Additionally, since Salesforce is a new technology, the shareholders will feel that the strategic direction the management is taking the organization is agreeable to them. Finally, the sales force will be motivated when they get to interact with satisfied customers. The satisfaction of the customers will be enhanced by experiencing responses to the queries in a timely and comprehensive manner.
Conclusion
In conclusion, the success of the switchover project will depend on addressing some conditions of implementation. After initially adopting and embracing the project management philosophy, there is need to appreciate and acknowledge the remarkable benefits and profits that can be gained. Focus will, thus, be in ensuring the organization has sufficient cash flow; adequate existing and new infrastructure; the project manager and assistants are appointed, and that the requisite staff are hired and the resultant team satisfactorily developed.
References
Batrol K. M and Martin D. C (2012) Management, McGraw-Hill, New York, NY.
Fuller, J (2010) Managing Performance Improvement Projects: Preparing, Planning and Implementing, McGraw-Hill, New York, NY.
Harold K (2011) Project Management: A System Approach to Planning, Scheduling and Controlling, 6th Ed, McGraw-Hill, New York, NY.
Jean H (2012) Sharpen Your Team’s Skills in Project Management, Hoboken, New York, NY.
Kristoffer V. G, Tor H, Terry G (Editor),(2007) Goal Directed Project Management, 4th Ed, McGraw-Hill, New York, NY
Meredith J.R. and Mantel S.J.Jr. (2010). Project Management, J. Wiley & Sons, Hoboken, NJ.
Ralph L. K, Irwin S. L, Ken L. R (2009) Project Management Methodology: A Practical Guide, J. Wiley & Sons, Hoboken, NJ
Robert J. G, Randall L. E (2012) Creating an Environment for Successful Projects: The Quest to Manage Project Management, The Jossey-Bass Business and Management, SF
Expanding General Motors by acquiring Ford Motor Company Order Instructions: Use the Internet to research two (2) publically traded U.S. companies, and download their financial statements.
Expanding General Motors by acquiring Ford Motor
Assume you are the CEO of a major corporation. You are Responsible for expanding the corporation through the acquisition of another company. Assume that the acquisition involved $15 million in goodwill.
Expanding General Motors by acquiring Ford Motor Company Essay Instructions and Guidelines
Write a three to four (3-4) page paper in which you: 1. Provide an explanation for the business combination method you selected in expanding the corporation by acquiring another firm, your reason for selecting that business combination method, and how the purchase will grow the business.
Identify at least five (5) possible synergies that could occur as a result of the proposed acquisition.
2. Analyze the accounting requirements for the business combination method you selected. Prepare consolidated financial statements for the date of acquisition.
3. Assume that, in year two (2) of operations, goodwill has been impaired. Explain to management how you determined goodwill was impaired and the financial impact of
such impaired goodwill. Prepare the necessary accounting entries to recognize goodwill impairment.
4. Use at least three (3) quality academic resources in this assignment.
Expanding General Motors by acquiring Ford Motor Company Assignment Requirements
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one
inch margins on all
sides; citations and references must follow APA.
The cover page and the reference page are not included in the required assignment page length.
SAMPLE ANSWER
An explanation for the chosen business combination method selected in expanding General Motors Company by acquiring Ford Motor Company
Business combinations are events or occurrences in which a corporation obtains control of another firm or firms through binding contracts in transactions referred to as “true mergers” or “merger of equals”. A business can be defined as an integrated set of assets and activities that are capable of being managed for the sole aim of making a return to shareholders (Baker, Biondi & Zhang, 2012). In business combinations, the acquirer is the most important party that needs to be identified first. Business combinations occur when one or more firms through an agreed joint ownership strategy join together to form a new business entity with or without a new name. Through a business combination a corporation can expand externally through acquisition of assets or a merger with another company to form a new entity that could enable it to generate more revenues and record more profits at the end of the financial year (Weiss, 2014; Baker, Biondi & Zhang, 2012).
Business Combination Method Selected and Expanding General Motors by acquiring Ford Motor Company
There are basically two types of mergers namely: acquisition of another company’s assets or acquisition of a company’s controlling share capital stake by another company normally referred to as an acquirer. In this assignment I have assumed the role of General Motors Company’s Chief Executive Officer. General Motors Company is a public company that has entered into an agreement to acquire Ford Motor Company which is also a public company. The business combination method that has been agreed on is the acquisition method (Weiss, 2014). In this method, General Motors Company will acquire the assets and assume the liabilities of Ford Motor Company. Acquisition method procedures require that the acquirer’s CEO identifies the acquisition date and identifies the acquirer who in this case is General Motor Company. The General Motor Company’s CEO is also supposed to identify and determine the fair value of the identifiable assets of Ford Motor Company and the fair value of the liabilities that will be assumed. This also includes measuring any non-controlling interest in Ford Motor Company (Weiss, 2014).
Reasons for selecting acquisition method in the Business Combination and Expanding General Motors by acquiring Ford Motor Company
The main reason for choosing this business combination method is that it is systematic and well planned as opposed to other methods. This method benefits both the acquirer and the company to be acquired in a large way. It involves recognizing and measuring goodwill or a gain from bargain purchase which will ensure each party in the transaction gets the best deal out of its assets (Baker, Biondi & Zhang, 2012). This method will ensure General Motors Company buys the identifiable assets of Ford Motor Company at the fair value price to be determined on the acquisition date by qualified professionals. General Motors company will only purchase Ford Motor Company’s assets at their fair value which is determined by getting their going prices in the open market. The company will also measure the non-controlling interest at the fair value of the shares held or at the percentage of ownership in the net assets of Ford Motor Company. This method ensures that all potential dissenting shareholders are pacified by offering them the fair value of their stake in the company. The method ensures goodwill is measured separately from net assets and this enables the company to reflect the correct value goodwill (Dorata, &Badawi, 2008).
How the purchase will grow the new General Motors Company when Expanding General Motors by acquiring Ford Motor Company
The acquisition will make General Motors Company one of the largest automobiles manufacturer and dealer in the globe. General Motors Company will gain from the advantages of economies of scale and scope which will enable it to grow revenues and minimize costs even further. The automaker will make use of the large and well-developed combined distribution channels to sell more automobiles than before (Weiss, 2014). The combined asset base will create a large collateral base that will enable the company to obtain credit facilities from financiers at favorable terms to expand further in future. The acquirer will draw from a large pool of professional managers who have built their skills in the industry while working for the two entities that were previously competitors. The acquirer will also gain from combined Research and Development capacity and innovation which will enable it to gain cutting edge technology which will enable it to produce new and better automobiles that will enable the company to gain sustainable competitive advantage (Dorata, &Badawi, 2008).
Analysis of the accounting requirements in the method chosen for Expanding General Motors by acquiring Ford Motor Company
The acquirer will need to be identified as a prerequisite to entering into the business combination and in this case it is General Motors Company. The next step is that the acquisition date should be identified (Weiss, 2014). The method also requires that the parties in the transaction identify and measure the fair value of the identifiable assets to be acquired and the liabilities to be assumed and any non-controlling interest in Ford Motor Company. Good will should also be recognized and measured during the purchase. Intangible assets will only be recognized and measured if they can be separately identified by the two companies entering into the business combination
Extracts from the consolidated financial statements of the two corporations as at December 2013 and after the business combination is as shown below;
Business Combination
As at 31st December 2013
(In $ Millions)
GM
FORD
NEW GM (after acquisition)
Total Assets
166344
202026
368370
Total Liabilities
123170
175279
298449
Total Equity
42607
26416
69023
Non-Controlling Interest
567
364
931
Good will
15
The above analysis assumed that all the assets acquired and liabilities assumed are recorded at fair value price as at the acquisition date of 2013, 31st December. Good will is given as $15 Million and the fair value of the assets at the acquisition date is assumed to be equal to the value of assets and liabilities quoted in the audited accounts as at 31st December, 2013. Goodwill is calculated as the difference between the fair values of the total assets less total liabilities plus the non-controlling interest of Ford Motor Company as determined at acquisition date (Dorata, &Badawi, 2008). According to the table above General Motors Company will acquire Ford Motor Company at a price of $377669 Million plus $15 Million which is the sum total of the total assets plus total liabilities plus the non-controlling interest (http://corporate.ford.com/our-company/investors/reports-financial-information/annual-reports?releaseId=1244753689627).
Determination of goodwill impairment and financial impact on the new General Motors Company and Expanding General Motors by acquiring Ford Motor Company
In many business combinations involving an acquisition, the price paid to the company to be acquired often exceeds the total fair value of the acquired firm’s net identifiable assets less total liabilities assumed. The amount that is in excess is what is referred to in accounting terms as goodwill. Goodwill is subjected to periodical impairment test to make sure that it is not overstated in the acquirer’s balance sheet. The method that was used to determine that goodwill was impaired after year two is called an impairment test. An impairment test requires that the accountant concerned determines the fair value of the assets, liabilities and the non-controlling interest component in the open market and then compare the value obtained with the carrying value in the balance sheet of General Motors Company (Jahmani, Dowling & Torres, 2010). The difference is the impaired value. After the impairment taste was conducted it was found out that Goodwill was overstated and necessary adjustments needed to be done to ensure the balance sheet reflected the true value of Goodwill. The financial impact of the impaired goodwill is that the value of General Motors Company assets in the market has depreciated with a value equivalent to the impaired value of goodwill. Impairment of Goodwill points to underlying internal weaknesses and /or external forces that negatively affected the company’s business in the financial year. General Motors Company should carry out SWOT and PESTEL analysis to determine the cause and design strategies to guard against further depreciation of its value. The impaired goodwill amount is expensed in the profit and loss account which reduces the net profit for the year (Jahmani, Dowling & Torres, 2010).
The accounting adjustment in reflected in the following journal entry;
DR
CR
Impairment Expense
XX
Good will
XX
In the above journal entry, goodwill is debited by XX amount and credited by XX amount. This journal entry will see XX amount entered in the income statement as an expense which will reduce the company’s net profit and then the recorded be impairment value amortized in the Goodwill value in the asset schedule. This will see the value of goodwill in the balance sheet reduced by XX amount. This will result in a reduction in the net worth of the company (Devalle &Rizzato, 2012)
Expanding General Motors by acquiring Ford Motor Company References
Baker, C. R., Biondi, Y., & Zhang, Q. (2012).Should merger accounting be reconsidered?: A discussion based on the chinese approach to accounting for business combinations. Rochester: Social Science Research Network. doi:http://dx.doi.org/10.2139/ssrn.1303636
Devalle, A., PhD.,&Rizzato, F., PhD. (2012). The impairment test of goodwill and the quality of
mandatory disclosure required by IAS 36.: An empirical analysis of european listed companies. GSTF Business Review (GBR), 2(1), 1-6. Retrieved from http://search.proquest.com/docview/1039135033?accountid=45049
Dorata, N. T., &Badawi, I. M. (2008). International convergence: The case of accounting for business combinations. The CPA Journal, 78(4), 36-38. Retrieved from http://search.proquest.com/docview/212232774?accountid=45049
Jahmani, Y., Dowling, W. A., & Torres, P. D. (2010). Goodwill impairment: A new window for
earnings management? Journal of Business & Economics Research, 8(2), 19-23. Retrieved from http://search.proquest.com/docview/194882508?accountid=45049
and other (ASC 350): Accounting for goodwill (a consensus of the private company council). Miller GAAP Update Service, 14(5), 1-6. Retrieved from http://search.proquest.com/docview/1507828107?accountid=45049
Discuss critically this statement
Why most observers and virtually all politicians think that creating more new businesses is a ?good idea?, their views are often conditioned by the idea that
all new businesses grow and create employment and other forms of economic and social benefit. In reality, it is a small minority of businesses that grow
significantly and create the majority of economic and other benefits.
Using library resources to explore the existing literature, discuss the above statement in a rigorous fashion. Explore where there is consensus or conflict
among academic researchers. Finally, come to your own considered view (supported by appropriate evidence/readings) as to the validity or invalidity of the statement.
We are interested that you research appropriate literature in exploring this question. Thus, we would suggest that a review of academic literature would be
of some value. Key findings should appear in your essay. You can still read the summaries of technical literature in order to get an idea of the findings
even if the methods appear too complex for you to understand fully.
High quality academic journals that you might wish to look at would include (but should
not be restricted to):
Locating a business to enhance the customer experience
Locating a business to enhance the customer experience
This is a case study these four questions should be answered separately. The answer for the questions could be from the case study or from other source.
Case Study Questions
1. Explain why Enterprise Rent-A-Car tries to locate branches close to its customers.
2. Analyse the various factors that influence Enterprise’s decisions about where to locate a new branch.
3. Analyse whether ‘closeness to customers’ is the most important location factor for firms.
4. Assess how organisations might evaluate any investment that they may make.
We can write this or a similar paper for you! Simply fill the order form!
For this assignment, please read the introduction as well as chapters 1 and 2 of When Teams Collide: Managing the International Team Successfully as well as the article, “The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstede’s Cultural Dimensions” which is attached.
TEXT= Bauer, T., & Erdogan, B. (2012), Organizational behavior (1.1 ed.). Nyack, NY: Flat World Knowledge.
This week, I would like you to choose a multinational corporation and discuss their organizational structure. You may compare/contrast your chosen company to the information that you have read in both your text as well as the sources above. Does the organizational structure of this corporation work? Are there things that could be improved? As in past weeks, you are welcome to use the company that you work for if the information is available to you.
This paper should include 3 pages of content with an additional cover and reference page. This is a total of 5 pages.
Your paper should be written in proper APA format. This link will take you to the section of the APUS library that can assist you with your formatting apus.campusguides.com/content.php.
Known as how activities such as coordination, supervision, and allocation are done towards the goals of an organization, organizational structure is an imperative facet for multinational cooperates. While small businesses have a flat organizational structure where the manager can report directly to the president of the organization, multinational cooperates have echelons of management, which requires a complex organizational structure. The need for good organizational structure is mandatory for the growth of any company since it is particularly very crucial for information. According to Lewis (2012) the information is very important for the progress of an organization. It is from communication that the top authorities get information about the issues that affects the company. The organizational structure enables the distribution of authority and evaluation of the employees’ performance and behaviors. Organizational structure goes with culture of the organization that evaluates interaction of each individual in a business set up. This paper critically analyzes the organizational structure of Whole Food Market Inc. that has led to their rapid growth over the last two decades.
Whole Foods Market is a company that was started in Texas, in 1980. At the time, there were only five natural food supermarkets in USA. By the year 2006 John Mackey, the CEO and the cofounder of Whole Foods Market, had over 43,000 employees and 260 stores in and outside the United States (Kowitt, 2014). Whole Foods is a passionate and dynamic company that always strives to meet the demand for natural food in its most natural state. Currently, it is the largest natural and organic foods grocer in the United States.
One of the organizational structures that the company has employed is “we”. Whole Food Market has always been known for its subscription of “we” organizational structure. As most company put some serious hierarchal order within the organization, whole food market has allowed the freedom of expression that has been brought by team work. The managers of the company indulge with the lowest level of staff through team construction. To support the philosophy of “we”, most of the decision making and planning rarely happens at the corporate level, rather, at the departmental level or at the individual store (Kowitt, 2014). The formal structure of whole food market, thus, is not built on centralized decision making and hierarchy. At Whole Foods market, the general structure is lean, flat, and buoyed by widely decentralized decision making which is based on the efforts of many people as long one has an idea. All employees are accountable, and the management accepts their increased enthusiasm to ask any question, express their points of view, and share necessary information. In the end, peer pressure is the substitute for bureaucracy in the company, and it has molded loyalty in a way that bureaucracy cannot.
John Mackey, the CEO, says that the strategy of “we” was aimed at encouraging collectivism and low power distance. As noted by Bauer and Erdogan (2012) collectivism allows individuals to work in groups supporting each other in every aspect of their duty. Hence, when the company makes profits or become successful, it is not the success of the company but the success of all individuals. Power distance is a vital factor that can either slows down or speeds up the performance of an organization. Leaders of high power distance organizations believe in giving juniors detailed instructions with little or no room for proper interpretation. The juniors are supposed to respect their instruction without any further clarifications. The characteristics of high power distance cultures, such as inequality in the society, lack of freedom of expression stifle employee new ideas and creativity. Low power distance in whole food market that allows any employee to pass information with less centralization and lack of hierarchal authorities promote interaction of employee and lateral communication (Lewis, 2012).
The strategy of “we” has worked for the Whole Food Market. It can be evidenced from the rapid growth of the company. Beresford (2014) says that in most cases, the low level employees have the raw information about the organization and what is currently happening behind the authorities. Thus, by engaging such workers in a free talk much of information is received that can that can be used to solve certain problems. It is for the reason of engaging with every staff member that the company works strictly under team leadership. Working together and low distance power has supported several innovations as every individual feels free to express his/ her idea.
However, Dartey-Baah (2013), has criticized the adoption of too much collectivity. He argues that in a collective society, individuals tend to belong to a certain group and looks after one another in exchange for loyalty. He says that collective cultures do not usually encourage the independence and freedom necessary for creativity of organizational members. As a result, they may fail to foster an environment that cultivates an innovative spirit. Therefore, Whole Food Market Company should balance between individualism and collectivism since both of them may be dangerous for the growth of the company as said by Dartey-Baah (2013).
References
Bauer, T., & Erdogan, B. (2012), Organizational behavior (1.1 ed.). Nyack, NY: Flat World Knowledge.
Beresford, P. (2014). The rich list 2014: from farmers to suppliers, wholesalers to distributors, supermarket bosses to restaurant chain owners, The Grocer’s first-ever Rich List represents the whole gamut of food and drink wealth creation. Some are household names. Others are intensely private. All are immensely rich. Grocer, (8163). 28
Dartey-Baah, K. (2013). The cultural approach to the management of the international human resource: an analysis of Hofstede’s cultural dimensions. International Journal Of Business Administration, (2), 39.
Kowitt, B. (2014). Whole foods takes over america. (cover story). Fortune, 169(6), 70-77
Lewis, R. D. (2012). When teams collide : managing the international team successfully
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Crisis in a business organisation; Brookside Dairy Company
Crisis in a business organisation; Brookside Dairy Company
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Organizational leaders often see crisis as a uniformly negative event that should be avoided at all costs. They often focus crisis management efforts on trying to predict every negative situation that could possibly occur and developing a plan to avoid them. Such an approach is impractical according to researchers Antonacopoulou and Sheafer (2011) because unexpected crises are an inevitable part of business. Moreover, they propose “a dynamic view of learning and crisis as central to management and organization practices” (p. 4). Crises, they say, not only happen during large-scale disasters but also occur on a smaller scale each time someone is pressured to make a decision for which prior solutions are inadequate. These situations force people to “make new connections” among existing knowledge to arrive at novel solutions. Research such as this suggests that crises can be learning opportunities.
To prepare, identify a crisis the organization that you chose for your SSP (Brookside Dairy Company ) has faced in the past, a crisis that it is currently facing (Brookside Dairy Company ), or a crisis that a competitor in that industry has faced that your selected organization may face in the future (Brookside Dairy Company ).
By Day 3 of Week 7, post a two page explanation of the crisis that you selected and a crisis management response recommendation.(Brookside Dairy Company ) Include an analysis of the ethical implications of that recommendation. Reference at least one scholarly peer-reviewed resource in your recommendation.
*******please take note all these questions and requirement has to be answered on Brookside Dairy Company . That is the company I chose to do my SSP on. Please follow instructions carefully !!!
SAMPLE ANSWER
Business
Crises are inevitable in organizations, even though many managers see them as uniformly negative events. Focus should not be on management of these crises, but should be used to develop a suitable plan to avoid them. The author uses Brookside Dairy Company as a case study in deliberating on aspects concerning crisis, recommends a crisis management response, and includes an analysis of ethical implications of the recommendation.
Brookside Dairy Company is one of the major dairy producing companies in East Africa with operations in Kenya, Uganda, and Tanzania. It deals in fresh milk as well as dairy products; some exported to other countries such as Rwanda, Egypt, Middle East, Burundi and Indian Ocean islands (Brookside Dairy Limited, 2014). The company’s competitors have faced a number of crises that Brookside Dairy Company should develop plans to avoid experiencing the same in future. One of the crises is employee go-slows because of low salaries that jeopardizes the operations of the company.
Employees have a right to better working environment and to engage in go-slows and strikes if their rights are beached. The management, on the other hand, has the responsibility of ensuring that their employees work in a conducive environment as this enhances job satisfaction translating into higher productivity. Therefore, many entities in Milk production have faced such crisis that has had negative impacts on their operations and profitability. Advance planning on how to manage such crises helps to avoid the consequences that negatively impacts on an entity. A lot of time is normally wasted during such periods that could have otherwise put into valuable use.
Understanding appropriate crisis management strategies contributes to successful management of a crisis. The appropriate crisis management recommendation to handle such a crisis is to engage in effective communication (Gupta, 2011). A communication plan is required to allow the management of the company and the leadership of employees to come to a consensus. Through communication, the two parties will create an understanding and will forge an appropriate way of solving their issues. The company is required to appreciate the contribution of their workers and ensure that it honors its promises on salary increments and on working conditions of workers. Similarly, the leadership of employees should also allow negotiation and provide appropriate direction to their fellow workers. These steps will help to avoid go-slows and, therefore, the operations of the company with continue normally without having to jeopardize the company profitability.
A crisis management option should also consider its ethical implications to the various stakeholders. The recommend response has ethical implications as it promotes or exemplifies care. By engaging all the stakeholders in the communication process to secure, a tangible solution is an indication of fairness and justice to all the parties (Tase, 2012). Employees have a right to ask for better pay and working terms. Likewise, the organization’s leadership has a right to be listened to and respected by employers. Therefore, through this relationship and open communications, both parties will be satisfied and will remain committed to the achievement of the entities goals and objectives (Veil, 2011). Workers through this agreement will not consider going on a go-slow hence, the company will not have to incur huge losses. The workers plights and complaints will also be considered in a better way helping reach an amicable solution.
Therefore, it is apparent that crisis is inevitable. This crisis may develop over duration of time or may arise instantly affecting the operations of an entity. Managers should, therefore, learn from crises that face their counterparts to be in a potion to develop appropriate strategies to counter such crisis when they happen in their entities. Crisis therefore, should be an opportunity to learn and to gain more experience on better preventive measures. Any decisions taken should consider ethical consequences to ensure that conflicts of interest do not happen.
