For this paper, it is critical that the writer clearly respond to the four main points listed in the questions. the paper must be detailed and concise, and the writer must pay attention to grammatical errors and APA formatting which will be to follow the 6th edition . Resources are also included at the end of the questions to assist the writer in getting the material needed to write this paper.
Corporate Governance
One of the most significant debates about corporate governance centers on whether the organization owes a greater responsibility to the shareholder who has invested in the company or to the stakeholders and those who can most be affected by its actions, namely the employees, suppliers, creditors, and customers.
After reviewing the resources for this week, respond to the following:
• Use the Internet to research alternative goals for shareholder wealth maximization.
• Identify countries with goals that differ from the U.S. or countries that are home to firms that have differing goals from those based in the U.S.
• Compare and contrast the difference between stakeholder focus goals versus shareholder focus goals.
• What are potential problems with both?
Resources to be use for this paper.
• Readings
Course Text
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2013). Corporate finance (10th ed.). New York: McGraw-Hill Irwin.
Chapter 1, “Introduction to Corporate Finance”
This chapter introduces some of the basic ideas in corporate finance; namely, capital budgeting, capital structure, and cash flows. In addition, there is a discussion on maximizing the value of stock, one of the most important concepts in finance.
Chapter 2, “Financial Statements and Cash Flow”
This chapter introduces and discusses basic corporate accounting procedures, as well as devices used to calculate a corporation’s cash flow from operations, changes in fixed assets, and changes in working capital.
Articles
• Adams, S. (2008, February). Fundamentals of business economics. Financial Management (UK), 46–48. Retrieved from Business Source Premier Database.
This article provides an analysis of the principal-agent problem and discusses some of the ways that many companies address the issue.
• Rappaport, A. (2006, September). Ten ways to create shareholder value. Harvard Business Review, 66–77. Retrieved from Business Source Premier Database.
In this article, the author states his belief that there are certain principles that when followed will result in increased shareholder value for a company. He provides a review of the 10 steps he has found to be most important and provides a brief description of each.
• Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783. Retrieved from Business Source Premier database.
The authors use a survey instrument to study how financial suppliers use corporate governance to assure that they receive a return on their investment.
• Almazan, A., Banerji, S., & DeMotta, A. (2008). Attracting attention: Cheap managerial talk and costly market monitoring. Journal of Finance, 63(3), 1399–1436. Retrieved from Business Source Premier database.
This article presents a new theory as to the best way to increase shareholder value by seeking market attention while the firm is undervalued.
SAMPLE ANSWER
There are a number of goals for shareholder wealth maximization. One of the reasons for shareholder wealth maximization is to increase their wealth and to attain a high market value of their shares (Adams, 2008). In addition, shareholders wealth maximization can be done with the aim of increasing shareholder expectations, leading to reduced conflicts between the management and the shareholders. These conflicts arising among the shareholders may be as a result of directors managing money with less care since it is not their own. Companies can address this issue by encouraging the directors and managers involved in the shareholder business to take note and interest on all matters arising from various interest groups to restore and maintain sanity (Shleifer &Vishny, 1997).
Rappaport (2006) argues that countries differ from one another in matters related to corporate social responsibility. In the United States,the shareholders are more protected by the means of an extensive system of rules that ensure that the rights of the shareholders and the stakeholders and protected accordingly. Germany and Japan had different goals as compared to those of the United States; whereby, they aimed at shaping their banks to be more powerful financial instruments with the capability of driving the economy. The issue of the type of the large investors in the country is also what contributes to making of profit by the financial suppliers with the aid of corporate governance. Large companies are incorporated to adopt the corporate laws that serve the interest of the shareholders and this contributes to the use of corporate governance inorder to gain profit.
Since shareholders and stakeholders forms different groups of people in a company, the views and aspirations concerning the company may slightly differ (Ross, Westerfield, & Jaffe, 2013). Unlike the stakeholders, shareholders are more concerned with the economic activity of their business thereby only seeing an organization in profitable terms and as instruments of its owners. On the other hand, the stakeholders of a business are more concerned with the social responsibility and demand that the business server the interest of all parties. The problem with shareholders focus is that it neglects the dreams of other interest groups of the business while the problem with stakeholders focus is that it may result into low profitability due to overindulgence in social affairs. When the firm is undervalued, there are three methods of seeking to increase shareholder value with the aid of market attention and they include the presence of managerial agency that the shareholders must addressto be able to achieve positive results (Adams, 2008). The ability of market speculators to produce additional information about the firm at a cost is another method for seeking to increase the shareholders of different companies.
Almazan, Benerji & Demotta (2008) argues that there are some ten principles when followed well will result into increased shareholder and one of them is when one does not manage earnings or provide earnings guidance. This is important because organizations only comprise value when they invest at rates below the cost of capital. A company should also make clear strategic decisions that will help in maximizing of the expected value, which is the weighted average value for a range of plausible scenarios even if it’s at the expense of lowering near-term earnings. Cash should be returned to the shareholders even when there are no credible value-creating opportunities to be able to invest in the business since this will help result to increased shareholders (Mallin, 2013). Senior executives and CEOs of companies ought to be rewarded so that they can continue delivering quality services that will help lead to increased shareholders. A company also has the responsibility of rewarding executives of the operating-unit for being able to add superior multiyear value and the middle managers for having delivered superior performance that influences the increase of shareholders directly. In order to bear the risk of ownership, a company requires senior executives to do so and by the provision of investors with value relevant information, there will be increased shareholder in the company
References
Adams, S. (2008). Fundamentals of Business Economics. Financial Management (UK), 46–48. Retrieved from Business Source Premier Database
Almazan, A., Banerji, S., & DeMotta, A. (2008). Attracting attention: Cheap managerial talk and costly market monitoring. Journal of Finance, 63(3), 1399–1436. Retrieved from Business Source Premier Database
Mallin, C. (2013). Corporate Governance. Oxford University Press; 4 edition
Rappaport, A. (2006). Ten ways to create shareholder value. Harvard Business Review, 66–77. Retrieved from Business Source Premier Database
Ross, S. A., Westerfield, R. W., & Jaffe, J. (2013). Corporate finance (10th Ed.). New York: McGraw-Hill Irwin.
Shleifer, A., &Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783. Retrieved from Business Source Premier Database
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Assessment : Coursework
Please read the following case study and answer the questions at the end. Each
question has equal value.
Case Study
Lego: Learning From Mistakes
The Lego brand is known around the world as a leader in the toy market. It promotes learning through playing with colourful bricks that can be connected and disconnected to form a wide variety of objects such as robots and cars. The company was founded in 1932 by a Danish carpenter and despite interest from global giants in the toy world such as Mattel, has remained in private ownership.
The company has seen its profits rise and fall over the years. Its first loss was in 1998 as it faced stiff competition from the growth in the computer and electronic games market and difficult trading times followed with a massive loss of US$240 million being posted in 2004.
They had entered into an alliance with Disney to produce Hogwarts Castle Lego sets and sold over one million in line with the success of the first two Harry Potter films making them profitable again. But the dangers of being too reliant on this arrangement were evident when no more Harry Potter films were released after 2002 and sales fell once more.
Further brand extension strategies were tried but failed owing to a poor understanding of what kids wanted from Lego. There was a move away from the core brand into diversified products such as clothes and video games when in reality what the market wanted was for Lego to stick to their unique original product range. An additional threat was the high levels of competition from similar lower cost products.
Resisting takeover moves, the family fought hard to keep the company as a privately owned business appointing an ex McKinsey consultant Jorgen Vig Knudstorp as their new CEO. He quickly implemented a series of measures designed to save the business. Around 50% of the workforce was dismissed, factories were closed in Europe and manufacturing relocated to Eastern Europe and Mexico.
Knudstorp was keen to foster a culture of openness and team building by focusing on open communication between management and staff who had been largely unaware of how the business was run. He also realised that their future depended on returning to their core brand values and winning back loyal customers. By 2006 the company
was gaining sales and had started to be profitable again.
Much of this success was the decision to limit diversification, but the company also needed to listen to customers about what they wanted from the Lego range .Based on their previous success with Disney related products they developed more Harry
Potter and Star Wars toys . The Lego Star Wars video game became a best seller.
Reflecting on the problems that Lego had faced it appeared that management at the time gave designers a completely free hand allowing creativity to rule over good business practice. The components became too complicated for many children and a
vast increase in the number of parts resulted in higher costs of production.
The solution was to listen to their target customer and design products that they wanted, restrict design activity and make all departments work together bringing a balance of ideas and controls.
Lego is not the cheapest product in the market but they have the advantage of being the one that is recognised for quality and creativity. This will allow them to retain a position of competitive advantage.
Questions
1 You are required to assess and critically evaluate the branding strategy that Lego pursued when trying to re-establish itself in the global market after the
problems it experienced.
2 Select a preferred strategic option for Lego and develop an international marketing strategy.
(Adapted from ‘ Lego playing with its strengths’ with kind permission from Cengage Learning)
References: The Economist, 28th October 2006. J. Greene.’ How Lego revived its brand’,
Bloomberg Businessweek,23rd July 2010
Assessment
Assessment Instructions
This coursework will be in REPORT format and is worth 40% of the overall mark. The Harvard referencing style must be used. This is an individual piece of work
• All material such as company information, websites, books, newspaper articles, journals, theory and models MUST be referenced within the report as well as a full reference section at the end of the report.
• Use Appendices where possible to keep to the required word count ( 2500 )
• Please note the marking criteria and weight this accordingly within your assignment.
• Late submissions will be capped at P1 unless extenuating circumstances have been approved.
Marking Criteria
The following framework is a guide to the marks available for the assignment:
Report structure and presentation 15%
Critical evaluation of original branding strategy 35%
Recommended strategy with justified options 35%
References/bibliography 15%
Total 100%
SAMPLE ANSWER
Lego Case Study
#1
Each and every organization or business needs to establish its brand if it wishes to grow and acquire new consumers. There exist different types of branding strategies that firms can employ in attaining growth and acquiring new buyers. Some of these strategies have been noted to more effective than others in different market settings. Thus, firms are required to enter into their respective industries with well-established markets strategies for them to realize or witness success (Rubera, 2013). It is vital to note that the form of marketing strategy employed by a firm depends on the marketing needs of that firm. Prior to its establishment in the market, Lego focused on various branding strategies. However, the major branding strategy that this firm pursued to re-establish itself in the international market was the unique brand strategies. Unique branding strategy focuses on the establishment of a brand with unique characteristics around every service or product available. In some situations, this approach happens to be beneficial to organizations that provide various product lines or products. Furthermore, this strategy enables a product to maintain a positive reputation even when one of the brands performs poorly in the market.
Using the unique branding strategy as in the case of Lego is associated with several benefits. Taking into consideration the fact that this strategy focuses on the unique features of a brand around given product, the failure of one product cannot lead to the failure of the entire products offered by the company. When firms focus on specific products, the failure that arises from such products cannot be associated with other products (Robertson, 2013). This benefit stems from the fact that distinct advantages of every commodity can be attributed directly to specific brands. Focusing on the unique quality of a brand is significant in ensuring that companies invest adequate resources in the establishment of such brands. Focusing on the unique features of a product enables a company to improve in such features, which is vital in ensuring that organizations develop goods that have a competitive advantage over those that are produced by other firms as in the case of Lego. This company’s focus on the unique aspects of its brands helped it develop a product that meets the needs of the buyers. The focus on the unique brand strategy enabled the company to research on the needs of consumers followed by incorporating such needs in the products that it was developing. As a result, Lego managed to develop commodities that had a competitive advantage in terms of creativity and quality. This success was evident in the development of the Lego Star Wars, a video game that managed to become the best seller. It is evident that the use of other strategies such as diversification does not provide organizations with a suitable platform on which the interests of buyers can be taken into consideration. For instance, the company was unable to address the needs of consumers when it shifted to the production of diversified goods such as video games and clothes. On the contrary, the company’s move was wrong as customers were interested in the firm’s unique range of products.
Unique brand approach is significant in ensuring that the company provides value as in the case of Lego and its products. This strategy enables the business to establish and communicate a brand message, which has the potential to influence how buyers perceive the company. Knudstorp employed the unique brand approach in returning the company’s core values, which helped the company in winning back its loyal buyers. A firms core values are vital in the realization of its success in the market. Core values of company help in developing a positive reputation of the business among buyers (Robertson, 2013). Furthermore, maintaining the core values of an organization is significant in ensuring that the firm sends a brand message, which is clear to buyers. In many situations, customers often develop their assumptions about the organization based on how they perceive it. Therefore, the aspect of establishing maintaining positive values of the organization as was done by Knudstorp helps buyer develop a positive about the organization. Research has revealed that for businesses to grow in consistent and repeatable patterns, the companies’ buyers, employees and prospects must be in a position to associate these firms positively with things that offer positive values (Rubera, 2013).
Having a unique brand identity helps businesses grow in sustainable ways. As businesses expand, the presence of defined brands enables such organizations to build on their strengths alongside leveraging their unique values easily in the markets in which they operate. Managing the unique brand strategy is easier than managing other approaches such as the multi-branding strategy. This strategy has an added advantage in that it is not affected significantly by the choice of the business model. On the other side, the use of the unique brand strategy has certain disadvantages. When firm employ this strategy in marketing, each product often requires its marketing approach and budget with the absence of synergy between products (Rubera, 2013). As such, successes of products cannot be linked directly to the firm’s brand. Moreover, focusing on the unique features of the brand requires more resources than those required in other strategies such as the corporate brand approach. Establishing a unique brand requires companies to obtain information from other sources such as customers. Gathering information from buyers can be expensive as it involves methods such as survey that may consume time and resources. In addition, this process is complex as it involves working to comprehend the information gathered via objective analysis followed by an effective and consistent communication of the brand message to via channels of marketing and other touch points of consumers.
The economies of scale generated by the unique brand strategy are not more than those generated by multi-branding strategies. This approach focus on single brands, which makes the company earn more revenues from other products than others. However, using approaches such as the multi-branding strategy enables firms to earn revenues from all commodities that are sold under one brand. The unique brand approach does not address the needs of consumers who often have the tendency to shift to different brands (Rubera, 2013). In many markets, there exist consumers who always shift from one brand to another with the aim of exploring the benefits offered by other brands. Using the unique brand approach does not address the requirement of these buyers as it focuses on single brands. The level of internal competition generated by the unique brand approach is not as high as in other approaches such as the multi-branding strategy. As such, managers in companies that use this strategy are usually not subject to immense or stiff competition among themselves. In addition, this strategy does not provide firms with the opportunity of reaping the benefits of other brands. For instance, the success of one brand cannot be associated with another brand. As such, the company needs to invest adequate resources in developing the features of other brands.
#2
An alternative branding strategy that could have been employed by Lego is the blend brand strategy. The blend brand strategy focuses on the incorporation of elements from various branding strategies such as line extension strategy, corporate brand strategy and unique brand strategy. This brand strategy can benefit the company in several ways. Application of elements of the line strategy in this strategy ensures that companies can add new products to the existing ones (Holland, 2013). As such, this strategy could have helped the company manage the products that it had added on its production chain. On the other side, the incorporation of element so the corporate brand strategy within the blend brand strategies ensures that companies can manage to unify their services and products under single gigantic brand. The blend brand strategy is often significant in situations in which firms have well-established reputations. The reputation of a company often takes into consideration all the services and products that are offered by the company (Grebosz, 2013). Taking into consideration the fact that Lego has already established its brand reputations, this strategy can enable the company witness enormous gains in the global market. Therefore, the blend brand approach happens to be the significant alternative brand strategy approach that Lego can employ in witnessing success in the international market.
Marketing happens to be a great concept among organizations that focus on accomplishing success in the market. The aspect of leveraging marketing approach across various markets seems to be extremely beneficial to many firms (Evers et al, 2012). Such an undertaking helps in saving resources, and ensures that a high level of consistency exists between all activities of an organization and in-market branding. However, the question concerning the effectiveness of global marketing is a matter that always presents problems to many organizations or marketers. This topic has been noted to be a frequent conversation among marketers across the globe. As a result, the concept of internationally-led marketing resources can be exposed to skepticism. Marketing departments in big companies often tend to adopt similar mechanisms when developing their global marketing approaches. In some situations central teams are established to oversee territories. In some occasions, such teams are fragmented into local or regional components that focus on their target markets. Marketers should realize that global marketing is effective as it helps in driving economies of scale and synergies, while preserving cultural considerations and local needs. One of the main factors that has been noted to be effective in the establishment of successful global marketing strategies is the incorporation of the element of balance within such approaches. In relation to this, my international marketing strategy will take into consideration five components or elements.
First, this market strategy will focus on the clarification of the products or services that are driven internationally alongside the clarification of services and products that driven locally. An international marketing strategy does not imply the absence of market-specific initiative and plans that are local. In the real sense, such plans and initiatives should be complementary. International marketing serves to establish parameters and framework within which the operations of local marketing can be executed. In relation to this, my international marketing strategy will focus on global or central levels in areas of brand guideline, branding, budgeting and strategic marketing planning among others. In addition, this marketing approach will focus on areas such as social media strategy, social media guidelines, global PR (Public Relations) and large-scale marketing (Hultman, 2011). Other areas that will be managed locally include tactical campaigns, outreach initiatives, PR initiatives and social media channels, local events and partnerships. Markets should have control over the locally-based channels that help in driving their success. One method that will be employed in accomplishing this task is dividing the global market into tiers. In relation to this, a tiered market will help in the identification of territories, which can help in driving high potential gains. Besides, such an undertaking allows top-tier markets to have access to bigger budgets, thereby granting them autonomy. For instance, a company can employ this approach in researching into the behaviors of local users so that the aspect of product development can be addressed. It is vital to note that the local and global areas of ownership can be different from one organization to the other. As such, defining these areas is significant in ensuring that firms avoid inefficiencies and friction.
Second, this international marketing approach will focus on comprehending the needs of the local market and establish a collaborative approach. Studies have shown that global teams should focus on comprehending local markets and develop close associations with local marketing teams for a global framework to be successful (Schilke et al., 2009). In relation to this, the globally defined plans and initiatives employed in this global marketing approach will incorporate a degree of flexibility to address various cultural differences in the market (Kaufmann & Roesch, 2012). Some of the mechanisms that will be employed in accomplishing this goal will be social media competitions, community meet-up and treasure hunt-based campaigns. Moreover, celebrity campaigns will also be used in markets where certain people are considered celebrities.
This global marketing approach will then focus on thorough planning with the aim of managing campaigns. At this stage, several aspects will be taken into consideration. A campaign manager will be appointed to be in charge of coordination and communication around the campaign. The aspect of cross-misunderstanding will be avoided by ensuring that the campaign team members are aware of the accountabilities of the campaign manager (Morgan et al., 2012). Thorough planning will then follow in which the aspects of responsibilities, deadlines and deliverables will be made clear to all persons involved. Consequently, expectations, deliverables and plans will be communicated to all members involved across various channels
Careful tracking and adjustment will then be made. Campaign managers will be required to be disciplined about the tracking of results. One of the aspects that will be taken into consideration at this stage is definition of key goals and metrics at the beginning of campaign at market and global markets (Stachowski, 2012). Besides, buy-in will be obtained from in-market teams followed by the maintenance of a centralized share template for updating market metrics on a daily basis. Lastly, the metrics will be reviewed on a weekly basis by video calls or phone calls followed by the adoption of the necessary actions (Leonidou, 2013). In addition, this stage will provide a suitable platform on which the best practices across the market can be leveraged. During this stage, discussions will be made vibrant and active enabling all local teams to contribute their views, which will be significant in addressing the issue of under-performance.
The sixth element of this global marketing strategy will involves consolidating and sharing of insights. Once the campaigns will be terminated, all the insights gained from them will be consolidated followed by the organization of debrief (Kumar et al., 2013). Here, the team members will be involved in the discussion of issues that worked and those that did not. Furthermore, the team members will be involved in the sharing and reviewing of results. This step will be vital in ensuring that adequate plans are developed for future campaigns.
The last aspect of this global marketing strategy will involve over-communication. Effective communication has been noted to be effective in all situations apart from campaigns. Being an international marketing role, implies that the marketer will be operating with colleagues around the world (Tan, 2013). Most of these individuals will be sitting several miles away. In such situations, marketers can develop a feeling of disconnection from their colleagues. Consequently, the disconnection between the marketer and other colleagues can lead to the disconnection of the plans, activities and strategies that are employed in campaigns. In relation to this, my global marketing strategy will involve the use of open communication channel in nurturing relationships among campaign team members and developing trust. Regular calls will be employed in updating team members on the events of the campaign, latest global plans and changes (Gabrielsson, 2012). Besides, the team members will be updated on the latest advancements in the international markets. Open communication channels will also be employed in the discussion of novel campaign ideas. Creation of a cohesive team in a campaign is vital in ensuring the success of the marketing process.
Reference List
Evers et al., (2012). “Stakeholders and Marketing Capabilities in International New Ventures: Evidence from Ireland, Sweden and Denmark.” Journal of International Marketing, 20(4), pp. 46-71.
Gabrielsson, P., (2012). “Marketing Strategies for Foreign Expansion of Companies Originating in Small and Open Economies: The Consequences of Strategic Fit and Performance,” Journal of International Marketing, 20(2), pp. 25-48.
Grebosz, M., (2013). “International Expansion of Brands by Realization of Co-Branding Strategy,” Journal of Economics and Management, 14(2), pp. 77-87.
Holland, J., (2013). “Aligning A Company’s People Strategy and Brand Strategy,” Journal of Brand Strategy, 3(2), pp. 245-258.
Hultman, M., (2011). “Export Promotion Strategy and Performance: The Role of International Experience,” Journal of International Marketing, 19(4), pp. 17-39.
Kaufmann, L & Roesch, J., (2012). “Constraints to Building and Deploying Market Capabilities By Emerging Market Firms in Advanced Markets,” Journal of International Marketing, 204), pp. 1-24.
Kumar, V et al., (2013). “Established Profitable Customer Loyalty for Multinational Companies in the Emerging Economies: A Conceptual Framework,” Journal of International Marketing, 21(1), pp. 57-80.
Leonidou, C., (2013). “Antecedents and Consequences of Eco-Friendly Export Marketing Strategy: The Moderating Role of Foreign Public Concern and Competitive Intensity,” Journal of International Marketing, 21(3), pp. 22-46.
Morgan, N et al., (2012). “Export Marketing Strategy Implementation, Export Marketing Capabilities and Export Venture Performance,” Journal of Academy Marketing Science, 40(2), pp. 271-289.
Naidoo, V & Wu, T., (2011. “Marketing Strategy Implementation in Higher Education: A Mixed Approach for Model Development and Testing,” Journal of Marketing Management, 27(11/12), pp. 1117-1141.
Robertson, A., (2013). “The Influence of Employer Branding on Productivity-Related Outcomes of An Organization,” Journal of Brand Management, 10(3), pp. 17-32.
Rubera, G., (2013). “Technology Versus Design Innovation’s Effects on Sales and Tobin’s Q: The Moderating Role of Branding Strategy,” Journal of Product Innovation Management, 30(3), pp. 448-464.
Schilke, O et al., (2009). “When Does International Marketing Standardization Matter to Firm Performance?” Journal of International Marketing, 17(4), pp. 24-46.
Stachowski, A., (2012). “The Niche Marketing Strategy in Internationally-Oriented Small and Medium Enterprises: A Literature Review and Lessons for New Zealand,” Small Enterprise Research, 19(2), pp. 96-112.
How mission,vision,values and culture of the organisational influence employee relations
Order Instructions:
• Describe how the mission, vision, values, and culture of the organization influence employee relations (the organization that I have used has been Houston Methodist – website https://www.houstonmethodist.org).
• Analyze human resources practices that promote positive employee relations and legal compliance.
• Describe how you will apply the human resources practices you selected.
• Describe how these practices will promote human resources as a strategic employee relations partner versus the enforcer.
• Include a reference page, and format your references using APA (6th edition) guidelines.
• The paper should be 6 pages long.
SAMPLE ANSWER
Employee Relations
The mission, vision, values and organizational culture of any organization have three critical roles. These roles are communicating the organization’s purpose to all the stakeholders, informing the developmental strategy for the organization, the development of measurable goals and objectives for ensuring the success of the organization’s strategy, and promoting positive interactions and conduct of the organization’s employees within and outside the organization (Tyson, 2012). These, therefore, influence the way employees and other stakeholders interact for the success of the organization.
Houston Methodist is a faith based Christian institution and, therefore, its mission; vision, values, and organization’s culture are based on Christian values. Therefore, employees interact with each other in a humane manner and treat each other with integrity, compassion, and respect as per the organization’s values. The employees perceive each other as equals and treat each other as having a sacred worth and value as they are all created by God.
Practices Promoting Positive Employee Relations and Legal Compliance
For any organization, Human Resource is among the most vital assets and a source for achieving competitive advantage. Management of human resources is challenging in comparison to the management of technology or capital. Therefore, effective management of any organization requires and effective Human Resource Management (HRM) system (Tiwari & Saxena, 2012). A good HRM system should have sound HRM practices. These are the organizational activities that are directed towards the management of the pool of human resources and ensuring such resources are employed to fulfill the goals of the organization (Tiwari & Saxena, 2012).
Researchers on HRM best practices have identified different practices using different names. These are for example, “best practice”, “high-performance”, “formal”, “sophisticated”, or “professional. However, per Pfeffer (1998), the most appropriate term to be used is “Best HRM Practices.” Best practices theories and theorists suggest that certain practices separately or in combination are universally associated with positive employee relationships, employees’ legal compliance, and improved organizational performance. Per Redman & Matthews (1998) these practices include careful recruitment and selection practices, team work and development of a job design that is flexible such as the encouraging cohesiveness, employee appraisal and training and learning including (Tiwari & Saxena, 2012).
Application of the Human Resources Practices
As indicated above, HRM is a planned approach used for managing people effectively to promote organizational performance. The aim is to establish a management style that is open, flexible and caring. This is with the aim of ensuring staff motivation, development and management in a manner that ensures they provide their support to the organization’s mission. Good HRM practices are essential in promoting the achievement of the organization’s objectives. However, they are also key in ensuring positive relationships between employees and legal compliance.
To promote these two aspects that are positive employee relationships and legal compliance I will ensure the recruitment and selection approaches used by the company are strict and places great emphasis on the people skills of the individual. Apart from the professional tests and activities, I will provide tests and activities during recruitment and selection to determine the social skills of the individuals and only those individuals that achieve a certain level of competency will be selected. On the other hand, to ensure legal compliance, I will review all the certificates and any testimonials provided by the client for their validity. In addition, I will ensure that the selection and recruitment process is in line with the legal requirements of the industry and the country.
Moreover, to promote employee relationships I will ensure teamwork and development of a job design that is flexible as a best practice in the following ways. First I will ensure that the lines of communication are open and clear among all the employees. I will also indicate that criticisms should be expected and appreciated and that in case of a conflict I will set up a conflict resolution team from within the employees to come up with an amicable solution. Second, I will ensure clarity by ensuring each employee understands his/her roles in the organization. Finally, I will develop job designs that are flexible and where different employees can a certain task to ensure development of trust in each other’s abilities and promote cohesiveness.
In regards to training and development, legal compliance will be attained by ensuring that the employees are provided with continuous training that will be statutory. This will be geared towards ensuring the organization complies with the regulations of the statutory body governing it and ensure employees are qualified according to the law. In addition, I will ensure all the employees undergo compliance training as per the organization’s policy requirements. This will ensure that the employees are conversant with all the company policies that will ensure that all the policies and laws are followed, and the organization meets its internal and external standards including those that arise from legislation. In addition, refresher training will also be provided in situations of need and especially for employees who have worked for the organization for a long period and also provide local level statutory or compliance training that are specific to a certain area of the organization. I will also provide diversity and inclusion training programs that will improve the organization’s culture and promote positive relationships. I will also develop and ensure the constant updating of an employee handbook which will contain all the organization’s legally mandated policies and the practices expected in the organization.
Finally, in regards to employee appraisal I will develop employee appraisal tools that will gauge provide feedback on the interpersonal skills of the individual. The tool will include items that will provide feedback on the people skills of different employees and identify the areas of weakness the employee then training will be provided to improve on the areas hence promote overall employee relations within the company.
Promoting HR as a Strategic Employee Relations Partner vs. the Enforcer
In the last 15 years, organizations have adopted the concept of Business Partner and have done experiments on various Business Partner roles with simultaneous strategies and structures to handle all the functions of the HR. The main goal has been to manage all the tactical areas of HR that include administrative such as legal defense and compliance, employee relations such as policies, and daily operational management tasks relation to employment, benefits, and payroll. The idea here is that the effective management of these roles provides enough time and resources for the Business Partner to handle issues regarding human capital (human resources) that strategically impact the business (Rothwell & Budscooter, 2012).
Human Resource Management understands and supports how employees do their work. Another equally important role is understanding the environment where such work is done and its contribution to the success of the business. These roles are inter-related and interdependent. The HR has four basic roles that are compliance and enforcement (enforcer), management advocacy, strategic partner, and employee advocacy (Singh & Kumar, 2011). Employee relations is the relationship between the employer and or the representative manager and the employees that is aimed at building and maintaining commitment, morale and trust in order to create a productive and secure environment for working (Singh & Kumar, 2011).
Critical to the functioning of the HR as a strategic partner is its role in the strategic process. Therefore, as a partner it must take its role in formulation and implementation of strategies that promote positive employee relationships. The HR has taken the strategic role of managing initiatives of change via communication and workshops that build organization culture and development of relationships is today considered as the means of culture development (Fulmer & Genson, 2006). Therefore, through recruitment and training the HR will select and recruit employees with the relevant values, abilities, and talents that will promote employee relations. Using the training programs the HR can instill the relevant values and develop the relevant abilities within the existing employees to grow and develop their interpersonal skills (Singh & Kumar, 2011). The performance appraisal will define the management expectations and standards that will enable employees to strategize and plan on how to achieve the employee’s expectations. Moreover, through teamwork and an open job design open communication channels will be opened and systems that ensure the information requirements of employees are met (Singh & Kumar, 2011).
As an enforcer, on the other hand, the Human Resource practitioners agree that the role as a compliance enforcer is well established and understood. It is tremendously difficult to keep track of all the local and federal laws and to translate these into policies and practices. However, this is required to ensure that all the regulators do not interfere with the business’s operations (Clardy, 2014). In addition, there is the need to ensure that complaints and conflicts that arise from employees such as harassment, discrimination, and wrongful discharge are mitigated. These are all roles left for the Human Resource. In addition, the enforcement and development of internal or corporate policies as part of risk management is the role of the HR. The organization is required to uniformly dispense policies, practices and procedures a role that falls within the Human Resource department (Clardy, 2014).
The laws and regulations create a legal context where the HRM can be held liable by employees and other public regulatory bodies. Therefore, employers that violate these laws and regulations can be deemed guilty of violating the protections of the employees. Hence it is vital that the HR becomes aware of such laws and regulations and ensure compliance (Clardy, 2014). Therefore, the HR through the recruitment and selection procedures can ensure selection of individuals that are qualified to perform the tasks and certified according to the governing laws and regulations. Education and training can be provided to the employees on the company policies and other laws governing the organization to ensure compliance. Finally, the appraisals can provide vital information on the areas of need and that require improvement in order to mitigate risk and ensure compliance.
References
Clardy, A. B. (2014). Managing Human Resources: Exercises, Experiments, and Applications. New York, NY, United States of America: Psychology Press.
Fulmer, R., & Genson, S. (2006). HR’s Strategic Partnership with Line Management. Graziadio Business Review, 9 (2).
Rothwell, & Budscooter (Eds.). (2012). The Encyclopedia of Human Resource Management, Volume III: Critical and Emerging Issues in Human Resource Management. San Francisco: United States of America: Pfieffer/Jossey-Bass.
Singh, P. N., & Kumar, N. (2011). Employee Relations Management. New Delhi, India: Pearson Education India.
Tiwari, P., & Saxena, K. (2012). Human Resource Managenment Practices: A Comprehensive Review. Pakistan Business Review, 699-705.
Tyson, S. (2012). Essentials of Human Resource Management. Burlington, MA: Routledge.
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Major risks to the organization when implementing and using IT
Major risks to the organization when implementing and using IT
Order Instructions:
It is important to pay close attention to grammatical errors and sentence structure as you compose this paper. you must also try to use research to support your examples. Use the resources below to help you in completing this paper. Also take note that they are a series of questions asked hear and you must clearly respond to each one of them in essay form and remember that a paragraph cannot be anything less than 5 sentences
IT Risk Mitigation
You have examined the role of IT within the organization, including its impact on the structure of the company and the ability to increase competitive advantage. But with the new opportunities that IT can create, there are risks and threats that must be addressed.
– What are the major risks to the organization when implementing and using IT?
– To what degree are IT security risks and business risks interrelated?
– What disadvantages might a business encounter from a “locked-down” IT environment, and how can these be balanced against the disadvantages of a security breach?
– Also include in your discussion the topic of ethics as it relates to handling consumer or patient data and intellectual property.
Be sure to include examples from your own experience or research you have done in your discussion.
Resources
Course Text
• Management Information Systems for the Information Age
Chapter 8, “Protecting People and Information: Threats and Safeguards,” pages 356–365
This chapter discusses privacy, intellectual property, copyright, fair use, and pirated software.
Articles
• Tran, E., & Atkinson, M. (2002). Security of personal data across national borders. Information Management & Computer Security, 10 (5). Retrieved from ABI/INFORM Global database.
This article discusses how national laws regarding personal data can impact transnational companies.
• Halliday, S., Badenhorst, K., & Solms, R. (1996). A business approach to effective information technology risk analysis and management. Information Management & Computer Security, 4(1). Retrieved from ABI/INFORM Global database.
This article connects business risk analysis with information technology risk analysis.
Farahmand, F., Navathe, S. B., Sharp, G. P., & Enslow, P. H. (2005). A management perspective on risk of security threats to information systems. Information Technology and Management, 6(2–3). Retrieved from ABI/INFORM Global database.
This article takes a management, rather than IT, point of view on security threats to information systems
SAMPLE ANSWER
What are the major risks to the organization when implementing and using IT?
Cyber criminality is increasingly becoming sophisticated every day. The ever growing cleverness in the hacking industry has literally become a critical challenge that organisations are faced with. A survey on cyber security demonstrates that more than 55% of survey correspondents indicated that cyber molestation and the general criminal activities have grown immensely. More than 30% of organisations witnessed negative monetary damage resulting from attacks like hacking and phishing in a period of one year. Organisations should now compete with a range of hi-tech attacks orchestrated by well structure monetarily driven criminals (Halliday, Badenhorst & Solms, 1996).
Data violations can culminate to embarrassing disclosures, the threat of clientele identity theft, and fines or legal dilemmas. In addition cryptographic keys can fall in wrong hands, granting unauthorized individuals or applications entry to sensitive or important information. Based on a particular nature of the information, the loss of cryptographic keys can culminate into critical mishaps that are likely to disorient business operations, the loss of clients and legal implications. Application-centered key control procedures present only limited security, leaving sensitive codes and information they safeguard, susceptible to assault. Propagation of fragmented key control systems can enhance the intricacies and security cost control, leading to business procedures that are complex to administer and scale. The complexity of reporting obligations can be enhanced with poorly documented key control.
To what degree are IT security risks and business risks interrelated?
As firms globally take advantage of ICT to curtail cost and enhance performance, digital data can be shared or accessed through interlinked information structures, the threat of information violation in increasingly concerned (Farahmand et al. 2005). Various major threats that concern ICT experts and business investors include system malfunctioning, disaster recovery, data reliability, which are equally concerns of the potential business threats. Security issues subsist from all assaults that include; connectivity such as; IP spoofing, spamming, and malicious programs. Such intrusions end up tampering with data, data modification, data disclosure and service interruption on power grids and even physical harms like was the case of Staxnet, which dealt a heavy blow on the Iranian nukes. In fact, malware technology has become so lethal that it can now create a physical destruction. With the enormity of such security threats in an IT setting, the business fraternity remain vulnerable especially in the absence of security analysis. Firms will still be vulnerable if they fail to implement a comprehensive security plan. As Tran and Atkinson (2002) state, business environments are fitted with some proficient security measures like data encryption, security socket layer (SSL) protocol to encode the transmission, and biometric validation that manages the physical entry.
What disadvantages might a business encounter from a “locked-down” IT environment, and how can these be balanced against the disadvantages of a security breach?
Firms that are run on heavy computerized networks would be disadvantaged with a locked down IT setting. Nonetheless, the limitation of such backdrops is the rigidity of application updates. IT experts should come in to decide a balance between practicality, fee, comfort, as well as safety measures as the “locked down” IT environment expects managerial leadership. Information and Technology experts require utmost support from the managerial that should comprehend the potential threats. By and large, implementing a locked down IT framework will be instrumental for the business. Most companies should take advantages of Microsoft Windows 2008 to ensure security is guaranteed. Apart from the Cisco firewall, online activities should be validated with SSL apart from static web server (Tran and Atkinson, 2002). Moreover, the issue of security can be enhanced by redirecting emails through virus interceptors and spam filters prior to hitting the front end substitution of all incoming emails. While personal emails should not be allowed within the corporate systems, the organization should implement programs that filter spamming and safeguard web traffic.
Ethics as it relates to handling consumer or patient data and intellectual property
The truth is that humans tend to abuse the technology per se by simply abusing the best practices. Human virus can alter how applications work, like tampering with payroll information to enhance the wage bill. This can be done by administrators on the back-end, to alter figures without any documentation. This is to say personnel represent the highest risks particularly when they abuse their rights and professional ethics (Farahmand et al. 2005). At that point, it becomes paramount to implement safety assessment in almost all structures and networks through an independent party to preclude the issue of unethical behaviors as well as practices.
References
Farahmand, F., Navathe, S. B., Sharp, G. P., & Enslow, P. H. (2005). A management perspective on risk of security threats to information systems. Information Technology and Management, 6 (2–3).
Halliday, S., Badenhorst, K., & Solms, R. (1996). A business approach to effective information technology risk analysis and management. Information Management & Computer Security, 4(1). Retrieved from ABI/INFORM Global database.
Management Information Systems for the Information Age Chapter 8, “Protecting People and Information: Threats and Safeguards,” pages 356–365
Tran, E., & Atkinson, M. (2002). Security of personal data across national borders. Information Management & Computer Security, 10 (5)
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The individual assignment is worth 30% of your final grade.
Each student will be expected to submit an individual assignment of 2,000 words in their Week 8 tutorials and via Turnitin. The required format for the assignment is an ESSAY. The topic is as follows:
Choose and collect two newspaper or periodical articles that have relevance for international firms from developed markets doing business in emerging/developing markets.
Your chosen articles must be published between 23rd June and 11th August 2014 in one of the following newspapers or periodicals: The Sydney Morning Herald, The Australian, The Australian Financial Review, The Wall Street Journal (US edition), Business Review Weekly, The Economist
Based on your articles you should address the following points within your essay:
What are the implications for international firms doing business within an emerging/developing market? Do you consider the legal, political, cultural and economic differences between home and host countries to be important considerations for international firms?
In your opinion, what is the most relevant macro-environment factor for an international business when choosing to internationalise into an emerging/developing market? Discuss any international business concepts or theories that could be used to help justify your answer.
Include copies of both articles (either the original ‘cut-outs’ or a print out of the article from the newspaper’s website) as appendices to your assignment.
Your essay should incorporate at least 12 different references. These can be sourced from the following:
Academic articles
Relevant textbooks
Periodicals
Newspapers
Relevant online sources
The 12 references should be evenly balanced between these five resource options. Examples of all of these reference options are detailed on pages 4-5 of this guide.
Students are expected to maintain an appropriate standard in presenting their essay Remember to acknowledge your sources throughout the paper using the Harvard referencing system. The report is to be typed and 1.5 spaced (a standard 12 point font should be used). It should be checked for spelling, consistency and clarity of expression.
No extensions will be granted. Late tasks will be accepted up to 72 hours after the submission deadline. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 20% penalty). This penalty does not apply for cases in which an application for unavoidable disruption is made and approved.
Your essay must be submitted to Turnitin.
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Business Plan for Urgent Care Center in Anaheim California USA
Business Plan for Urgent Care Center in Anaheim California USA
Order Instructions:
The purpose of this application is to provide the student an opportunity to develop an advanced practice nursing (APN) professional business plan.
BUSINESS PLAN for Urgent Care Center in Anaheim California USA
Introduction to the APN professional business plan:
Introduces the purpose of the paper and addresses all background information elements (who, what, where, when, and why) for the proposed APN professional business plan.
Description of proposed APN business profile:
Individually addresses each element of the proposed APN business profile with discussion of how each element could be achieved if implemented.
When describing the proposed APN business profile, be sure to include: (a) proposed vision statement; (b) proposed services; and (c) proposed process for obtaining all anticipated registrations (i.e., Central Contractor Registration [CCR#]; Clinical Laboratory Improvement Amendment [CLIA#]; Commercial And Government Entity [CAGE#]; Dun & Bradstreet Number [DUNS]; Employer Identification Number [EIN]; Marketing Partner Identification Number [MPIN]; National Provider Identifier [NPI#] and Taxonomy Registration; North American Industry Classification System [NAICS#]; Small Business Administration [SBA#]; Standard Industrial Classification [SIC#]; Trading Partner Identification Number [TPIN]), if implemented.
Presentation of proposed APN service delivery:
Individually addresses each element of the proposed APN service delivery with discussion of how each element could be achieved if implemented.
When presenting the proposed APN service delivery, be sure to include: (a) proposed staffing (emphasis on total number of practice years as a licensed healthcare professional); (b) marketing plan and economic feasibility analysis (address potential sources of funding); and (c) management plan with proposed organizational chart
Conclusion:
An effective conclusion identifies the main ideas and major conclusions from the body of your manuscript. Minor details should not be included. Summarize important aspects of the proposed APN professional business plan.
SAMPLE ANSWER
Business Plan for Urgent Care Center in Anaheim California USA
Introduction
Background
Emergency rooms in Anaheim California are characterized by long queues that translate to long waiting hours and for the young children having critical conditions, pediatric urgent care centers have become an alternative for providing child care especially in the after-hours. Taking care of the chronically ill requires a lot of patience and compassion and even more of these attributes are demanded when taking care of sick children especially in the afterhours. Sickness does not consider convenience and with a few urgent care centers and a population of approximately 345,000 people there is a definite need to introduce extra urgent care centers in Anaheim. There is an ever growing need and urgent requests that require filling due to the shortage of emergency pediatric urgent care centers. To help reduce this burden, the Urgent Pediatric Care Centre (UPCC) will be established on the State College Boulevard to cater for the emergency pediatric needs of the citizens in the area.
Business Profile
Mission Statement
It is the mission of the Urgent Pediatric Care Centre (UPCC) to provide high-quality child-centered care for all the children at an affordable price and in the shortest time possible in all of Anaheim.
Vision Statement
Our vision is to become the best pediatric urgent care centre in the country that provides the high-quality pediatric services through continuous education of our staff at affordable prices and the centre of choice for all children and parents nationally.
Services Offered
Children need special attention and care in times of illness. Therefore, UPCC will provide comprehensive care for the children and cater for the needs of the parent while at the centre. The multidisciplinary team comprising of General Practitioners, pediatric doctors, specialists, nurses, surgeons, and other support staff will provide a wide range high-quality services that are walk-in hours throughout the week and year. These include pharmacy, laboratory and x-ray services for quick diagnosis and monitoring, and a fracture program that is comprehensive and overseen by the pediatric specialist. treatment will be provided by for cuts and bruises, cold and flu-like symptoms, ear infections, burns, throat infections, sprains, and rushes just to mention a few. Apart from these, counseling services will be provided for the parent, guardian and or significant other in case of severe life conditions. Where emergency services are required, the support staff will immediately connect you to the nearest hospital or Emergency Room for specialized treatment. The center will be dedicated towards the provision of care and support to the child patient including their parents in every step in the recovery process. While providing such care parents are required to provide company to their child from the start to finish and be actively involved in the recovery and healing process to ensure acceptance and adherence to treatment and positive treatment outcome.
Process for Obtaining all Anticipated Registrations
To obtain all the relevant registrations, the following processes would be applied. First is the Clinical Laboratory Improvements Amendments (CLIA). Since the centre intends to provide laboratory services, certification and registration will allow provision of laboratory services through Medicare and Medicaid payments perks. Second, since the centre is going to provide care under different payment plans, the NPI standard will be sought for accountability purpose and for the sake of sharing with other institutions. Finally, for identification purposes, the Employer ID Numbers will be crucial as this is used by the IRS identify a business entity.
Service Delivery
Staffing
Pediatric care involves both the theoretical and evidence-based approach to practice and provision of care. The care here is not limited to the provision of differential diagnosis and treatment of conditions relating to medical interventions and therapeutics that occurs whether there is a disease or not. Interventions here are holistically provided and incorporate the human and family norms in treatment. Therefore, staffing will be done in a manner that supports the United States healthcare system and requirements and meets the needs of the patients. Staffing will involve supporting the United States healthcare system and the need to acquire highly qualified and well experienced and registered staff. Several options of clinical leads are available, and these leads will handle the emerging cases that “walk-in” to these centers and stabilize the patients before further treatment is provided, or referrals made. The leads will be required to have a minimum of eight years of practice as a licensed pediatric caregiver. The total number of staff required is forty to provide the best care possible.
Clinical Leads
Number
General Practitioner
1
Pediatric Doctor
1
APRN
1
Lab Specialist
1
Pharmacist
1
Radiologist
1
Medical Staff
Nurses
10
Pharmaceutical Technologist
2
Pharmacy Assistant
1
Lab technologist
2
Lab assistant
1
Physician Assistants
4
Counselor
2
Non-medicalstaff
CEO,
1
Human Resource Manager
1
Chief Financial Officer
1
Accountant
1
Other Staff
6
Marketing Plan and Economic Feasibility Analysis
The marketing strategy will be focused on the target population of children and their parents in Anaheim. Since there is a specific target group, the marketing strategy can be narrowed down only to address this group. Advertisement and media usage will be at the heart of the centre’s marketing strategy. Since television advertisements are often very effective, a short one-minute advert will be used with most of the media advert being done on local radio stations for a period of two weeks. The publicity and promotional approach that will be significantly used will be the print media. Billboards will be stylishly designed and placed in the region in strategic locations. Adverts will be published in the Newspaper on a daily basis for the first two weeks then on weekends only for the next four weeks. Pamphlets and brochures will also be prepared that will be handed out to individuals on the streets and to large organizations such as schools, hospital, and day care centers just to mention a few. Since gas filling stations often allow businesses to place their advertisements, posters will be prepared that will be placed on filling stations and the same applied to supermarkets, convenient stores, public toilet, or near children play areas. A promotional event will be organized and sponsorship of local events. The opening will be a community event aimed at introducing the staff and practice to the Anaheim populace. Free services such as blood screening will be done on a monthly basis in public institutions and facilities.
The cost structure will be semi-structured depending on the method of payment and source of payment. Medicare, Medicaid, and other insurance programs will have their price structures that will be dependent on the services provided.There will be three levels of pricing that will be based on a full comprehensive visit at $75, an intermediate problem that is new $65, follow-up visits at $35, and lab services $50. Counseling will be offered free of charge if the child is treated at the centre, however, for those who come from outside, a flat rate of $50 per every 45 minutes will be charged. Educational programs will be free at the hospital, but in case of outside invitations, the fee will be dependent on the location, depth of the program, and number of days the education shall be provided. The closest Urgent care centre here is the Anaheim Urgent Care. They charge higher prices and, therefore, UPCC is expected to attract more clients due to its lower prices and; in addition; they do not open for 24 hours. The centre will seek funds from the government; in addition, the CEO is expected to contribute towards the establishment of the funds. Through community activities, the centre will request for donations, grants, and gifts for establishing and running the institution. Finally, a bank loan will be sought to finance setting up of the centre, and this will be a quarter of the amount required as most financing will come from the government.
Management Plan
UPCC will be incorporated to become a limited liability corporation. This is with the goal of enabling the centre to benefit from taxing regulations, separate liability, and hence similar to a sole proprietorships but with reduced risk associated with sole-proprietorship. This form of business allows a single owner; however, it allows the addition of partners. The main decision maker will be the CEO for the non-medical decisions while the APRN will be the leader decision maker for the non-medical staff; however, this will be on consultation with the management team. This team will comprise of the CEO, CFO, and the HRM.
Conclusion
From the mission statement, UPCC aims at becoming the best urgent care centre not only in Anaheim but the entire nation. The institution will employ three approaches to ensure efficient registration and compliance with the IRS that are CLIA, EIN, and NPI. This will also ensure it provides care to a large population with different insurance plans and payment methods. The institution will offer a broad range of services that include pharmacy, laboratory and x-ray services for quick diagnosis and monitoring, and a fracture program. These will be offered on top of the conventional treatments in pediatric urgent care centers that include treatment for cuts and bruises, cold and flu-like symptoms, ear infections, burns, throat infections, sprains, and rushes just to mention a few. The centre will employ a total of 40 staff members that are highly qualified and experienced. Although it will be located near a well established urgent care centre it will provide the services at a reduced cost and on a 24 hour basis that will give it a competitive advantage. The government will be the main source of funding, and the rest will be sought through the bank, CEO contributions, and grants and gifts from the community. The CEO will be the overall decision maker, but for the medical staff the APRN will be the head responsible for decision making.
When a customer feels pressured into making decisions or taking action that he or she feels is inconsistent with what is right, ethical conflict is said to have occurred. Sales people are constantly faced with various ethical dilemmas as they interact with the customers, competitors, and employers. They are frequently exposed to high levels of ethical pressures than employees holding other positions in a company. This is as a result of the freedom they have, since they tend to work in relatively unsupervised settings. They are also responsible for the generation of a firm’s revenue, which may also be stressful.
Question 1
I disapprove of Wright’s sales tactic because the method being used is not ethical. The whole technique is based on dishonesty and deceiving the customer (Ferrell, Johnston & Ferrell, 2007). It also puts pressure on the customer to seal the deal immediately. Wright, however, is trying to cover up for it by giving directions that only customers who seem to want the product can be persuaded. Direction is also given that the technique will only be influenced for someone who actually needs the land. From this perspective, this sales tactic may be dismissed as moral since the customer indeed needed the land, and the sales person knew that the land would satisfy the client’s needs fully (Ruiz-Palomino & Martínez-Cañas, 2014).
Question 2
If I knew that the prospect in the case study would eventually buy the property or that it would be in the prospect’s interest to buy it, my moral assessment of this closing technique would not be affected. This is because I still think that it is morally wrong for salespersons to play with their prospect’s psychology through deceit, just to seal deals. Dishonesty is a factor that has been discouraged for a very long time, especially for salespersons (McClaren, 2013). There are no way the sales person will be in a position to know if that prospect actually needs the land. Hesitation does not mean that the land is needed; but that the client is not sure which one will fully satisfy his or her needs. Therefore, when the sales person uses Wright’s tactic, the pressure of missing out on a product is exerted on the prospect.
If the law allows three days for the prospects to change their minds, there will be reasonable grounds for complaining about the closing technique used against them. First, the sales person was being dishonest in the attempt of getting the prospect to sign the deal. Once the prospect realizes that all the phone calls and reference to headquarters were all face, dishonesty may be claimed. It is always important to be truthful about information given to the customer. This is very important because the client needs to feel confident about the company in case of complaints. Second, after a day or two, the prospect may discover that the product is not what he or she hoped for. However, after being pressured using illegal means, he or she ended up signing the deal. Therefore, the prospects may argue that they were pressured into purchasing a product they were not sure satisfied their needs.
Question 3
There are many things which Jean needs to take into consideration before making any decisions. First, she needs to consider how her action will affect her future deals. No prospect would want to be associated with a dishonest salesperson. Lying about the presence of headquarters, and making fake phone calls to lure a client into signing the deal may easily backfire. If the client notices that all these were a lie, this may be the end of jean’s career. Second, as a sales person, Jean has the obligation to ensure that her actions are not interfering, in any way, with the rights of the customer. The customer has a right of making his or her own decision; the duty of the sales person is to help the customer decide on a product and finally make a purchase (Ross & Robertson, 2003). The duty of the sales person is not to pressure customers into purchasing the goods or services.
Question 4
Jean should give very little weight to self-interest in her deliberations since ethics suggest that a salesperson must always do what is best for his or her customers. It is not stated that she should also consider her own interests. If this code of ethics is considered, the sales person will be foregoing short-term profits but investing in long-term profits that may take longer to show (McClaren, 2013). The long-term benefits are always better because the sales person will eventually start gaining from referrals. Therefore, Jean should stick to her code of ethics and avoid doing what she thinks is wrong. She should always be honest to customers and refuse to pressure them into signing deals. Despite the fact that she is lagging behind, there is hope for more prospects in future because the few she has closed deals with will refer others to her because of her honesty and patience with customers.
Question 5
A rule utilitarian would encourage real estate agents in such a situation to follow a simple rule: “Happiness is not the rational end and purpose of human life and action; virtue is a better end or goal than happiness,” (Qtd. From Ferrell, Johnston & Ferrell 2007, p. 296). This rule implies that the sales person should not focus on his or her own benefits, but rather on virtue or goals. When this rule is followed, the real estate agents will always focus on taking the right actions and making good decisions for the sake of their customers, since the more loyalty there is, the better the performance of an organization.
The realtors’ professional code of ethics needs to reflect a lot on closing techniques. It should warn against using negative means of influence on prospects just to seal a deal. The rights of the customers must always be respected by ensuring that the closing techniques used are not going to disrespect these in any way.
Conclusion
The ethics of salespersons is a factor that will almost never be followed. This is because the job of salespersons has been closely associated with being dishonest, using pressure, and many more activities that ensure the customer signs a deal no matter what. This case study is basically an example of the decisions that salespersons have to make daily. At times, they are often pressured into using the wrong techniques to ensure they sign the deals. However, it is always advisable to use the proper means since the benefits associated with the latter outweigh its shortcomings.
References
Ferrell, O. C., Johnston, M. W., & Ferrell, L. (2007). A Framework For Personal Selling And Sales Management Ethical Decision Making. Journal Of Personal Selling & Sales Management, 27(4), 291-299.
McClaren, N. (2013). The Personal Selling and Sales Management Ethics Research: Managerial Implications and Research Directions from a Comprehensive Review of the Empirical Literature. Journal Of Business Ethics, 112(1), 101-125. http://www.doi:10.1007/s10551-012-1235-4
Ross, W. T., & Robertson, D. C. (2003). A Typology of Situational Factors: Impact on Salesperson Decision-Making about Ethical Issues. Journal Of Business Ethics, 46(3), 213-234.
Ruiz-Palomino, P., & Martínez-Cañas, R. (2014). Ethical Culture, Ethical Intent, and Organizational Citizenship Behavior: The Moderating and Mediating Role of Person-Organization Fit. Journal Of Business Ethics, 120(1), 95-108. http://www.doi:10.1007/s10551-013-1650-1.
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The 2011 National Business Ethics survey reported that 45% of respondents witnessed ethical misconduct at work, a record low for the survey; 63% of those respondents reported the misconduct, a record high. Of those whistleblowers, 22% reported retaliation (Ethics Resource Center, 2012).
These statistics seem to indicate increased attention to ethical business practice. However, they also point to an ongoing need to continue to strengthen commitment to ethical business practice. Business professionals and scholars need to know how to face ethical dilemmas and make sound ethical decisions. DBA students should have a basic understanding of various ethical frameworks and understand how these frameworks influence real-world business decisions. Northouse (2013) stated, “[e]thical theory provides a system of rules or principles that guide us in making decisions about what is right or wrong and good or bad in a particular situation. It provides a basis for understanding what it means to be a morally decent human being” (p. 424). Ethical values are used daily for decision making in business. Understanding and analyzing various ethical frameworks will enable you to better solve ethical dilemmas.
To prepare:
•Read the case study, “Hierarchical Motive Structures and Their Role in Moral Choices,” found in this Module’s Learning Resources, and complete the exercise on pp. 482–483.
By Day 3 of Week 6, post a solution to the ethical dilemma posed in the case study. Justify your proposed solution, and explain the reasoning you used to arrive at your solution. Incorporate the justifications you provided in response to the exercise on pp. 482–483. Identify which ethical frameworks outlined in the Learning Resources or in other scholarly literature align with your reasoning. Explain how your reasoning aligns with those frameworks.
•Use academic justification and two scholarly resources, in addition to those presented in the Learning Resources, to support your solution.
Moral choice scenario
Respondents were asked to read and put themselves
in the following situation:
You have just learned information that strongly
suggests that a person, who has been charged with
engaging in an unethical action, has been falsely
charged. He is going to be severely reprimanded
based upon an offense he didn’t commit. The
information you have suggests that the wrong person
was fingered for falsifying entries on official documents.
But one of your friends, a peer within your
command and someone you have known for years,
has asked you not to say anything. While you are
sure your friend didn’t commit the unethical act, he
may be implicated in some way if you step forward
with what you know. You don’t even like the guy
who is going to get the reprimand, but you’re sure
that he’s not the one responsible for the unethical act.
The issue is about to come to a close, and it is likely
that if you come forward, your friend and possibly
three or more other people may also be implicated.
Respondents were asked to adhere to the following
procedures in order to provide the underlying motives for their decision to act or not:
Step 1: Please take a couple of minutes to gather
your thoughts and focus on your personal reasons
for why you answered: ‘‘yes’’ or ‘‘no’’ to
the above question (A). Do this slowly and
carefully, in order to thoroughly identify, in
your own mind, why you answered ‘‘yes’’ or
‘‘no.’’ Then list five (5) reasons in Column #1
of the table on the next page so as to reflect
your personal reasons for answering ‘‘yes’’ or
‘‘no’’ (see Response recording protocol). Please
make a point to express your own actual reasons
for answering ‘‘yes’’ or ‘‘no’’ above. Your reasons
can be single words, phrases, or a sentence
or two as necessary.
Step 2: After listing your five (5) reasons in
Column #1 of the table, please return to your
first reason in Box #1 and think about why
this reason is important to you personally. We
want you to explain or justify this reason and
to put your explanation for why Reason #1 is
personally important to you in Box #6 (the
first box in Column #2). Sometimes it may
be difficult to put your reasons into words. A
trick or aid to help you do this that has proven
useful is to think about how you would
feel if the reason you gave (Column #1–Box
#1) did not happen. Place your answer for why Reason #1 is important to you in Box #6.
Step 3: After explaining why Reason #1 is
important to you, please look at your response
in Box #6 carefully. Think about why this reason
is important to you personally. Again, take a
moment to explain or justify this reason (Column
#2–Box #6) and put your response in Box
#7, the first box in Column #3 of the table. If
you have difficulty putting your explanation
into words, think about how you would feel if
the reason you gave in Box #6 did not happen.
Place your answer for why Reason #6 is important
to you personally in Box #7.
Step 4: Repeat Steps 2 and 3 for each remaining
reason in Column #1. The numbers in the top
left corner of each box are reminders of the
sequence to follow.
Please do your best to provide an answer for each box.
Would you take action?
Yes No
1 2
482 Richard P. Bagozzi et al.
Response recording protocol
References
Agle, B. R., R. K. Mitchell and J. A. Sonnenfeld: 1999,
‘Who Matters to CEOs? An Investigation of Stakeholder Attributes and Salience, Corporate Performance,and CEO Values’, Academy of Management Journal 42(1), 507–525. Anscombe, G. E. M.: 1963, Intention (Cornell University Press, Ithaca, NY).
Antaki, C.: 1994, Explaining and Arguing: The Social
Organization of Accounts (Sage, London).
Bagozzi, R. P., M. Bergami and L. Leone: 2003, ‘Hierarchical Representation of Motives in Goal Setting’, Journal of Applied Psychology 88, 915–943.
Baier, A. C.: 1991, A Progress of Sentiments: Reflections on Hume’s Treatise (Harvard University Press, Cambridge, MA).
Bartone, P. T., S. A. Snook, G. B. Forsyth, P. Lewis and
R. C. Bullis: 2007, ‘Psychosocial Development and
Leader Performance of Military Officer Cadets’, The
Leadership Quarterly 18, 490–504.
SAMPLE ANSWER
Reason for your decision
Why is it important for you?
Why is it important for you?
To ensure that my colleague got justice
It would make me happier to know that I saved someone who was innocent.
Failure to save him would leave me with a feeling of guilt
To ensure that those who were planning evil against my colleague got justice for their action
Living with them would arouse fear in me
Getting them reprimanded for their mistakes would help me feel safer. I would stop fearing that they will do the same to others in the organization including myself
To free myself. I would feel pressurized to work with people for whom I would always be required to keep a secret.
Their being reprimanded would mean that I would stop being accountable to them.
There was a chance that they would be changed to better persons in the society
To help correct the guilty persons
Protecting the lives of wrong doers prevents them from changing for the better.
It would be sad to have a friend deteriorate in terms of discipline and manners because I cannot take action.
To participate in creation of a more just society
I feel there is always a need for every one of us to participate in the creation of a more just society. If any one of us failed, the society would have failed, the society would have failed and would be required to live with the consequences
The consequences of living in a society in which I am guilty of helping in the creation of is an unforgivable act.
The dilemma involves either choosing to hide the acts of an evil friend or protecting an innocent person. I believe that my decision to tell the truth would be mostly affected by my self-respect. The decision would be highly charged by the fact that I would not want to be associated with supporting the wrong doers at the expense of someone who was innocent. People who have a high self-esteem are more likely to be ethical (Bucaro 2013; Cohen, 2007; Bellamy, 2008). Such people put the risk involved in obtaining justice behind the justice itself. They feel that their decision is vital for the way a case goes and therefore opt to make the most positive contribution towards it. However, other factors would also play a part in my choosing to take action to save my colleague.
First, I would feel guilty for facilitating a wrong doing to take place. The very act of making it possible for evidence to be declared sufficiently incriminating as to warrant someone who is innocent to be declared guilty would be very hard to live with. Compared to allowing people who are guilty to be arrested would count far lesser compared to that even if they were very close friends.
In conclusion, the need to do the right thing, probably in the face of society can make me make an ethical decision. Some people would be more comfortable protecting their friendship or their own security. However, I would trust the justice system to protect, the society, my colleague and myself in such a dilemma situation. I think helping find justice for an innocent person would help me to obtain better friends than those I would be protecting by choosing to say no
References
Bellamy, A. J. (2008). Fighting terror: Ethical dilemmas. London: Zed Books.
1. HR Analysis
a) As Coke and Pepsi move forward from this point, are there any important human resource issues that should be considered as part of their corporate and business strategies?
SAMPLE ANSWERS
Cola Wars Continue: Coke and Pepsi 2010
Introduction
Pepsi and Coke have dominated the carbonated soft drinks (CSD) market since the founding of the companies in 1889 (Coke) and 1898 (Pepsi-Cola) with stiff competition between them as they tried to become market leaders in the beverages market. However, the competition between the two companies is taking a new direction as they realize that the future lies not only in selling more products, but more so in having the right people on their team. The two companies are looking for new ways to boost their HR so that they can secure their present and future prospects.
Future HR practices
Crucial HR issues
The future of HR will be greatly impacted by some current issues such as finding the right talent for the complex tasks related to international beverage marketing and production given the stiff competition within the industry. Once the companies have found and selected the people with the right skills and capabilities, the next step is to ensure that they stay committed to their roles within the global corporations, which can be best achieved through giving meaning to their contribution within the organization. Companies are also struggling to reshape their identities through their people and not just their products as it was in the past, which means that they are investing more resources in their people now than ever before (Accenture, 2014). It is also crucial that companies have the right leaders who understand and believe in the values of the company and are focused on doing the right things that move the company closer to achieving its mission. HR professionals are crucial in this process as they work with line managers in efforts to ensure that they deliver on their mandate through nurturing talent, promoting the right culture and through delivery of transformational leadership.
Dealing with generational diversity
The current marketplace is composed of about three to four generations of workers with baby-boomers being the oldest group and generation Y being the youngest of the working generations, which poses a difficult challenge for HR professionals as all these groups of workers have different needs (Boudreau, Gibson & Ziskin, 2014). This challenge will still be present even in the future as the millennials start joining the workforce and as such, HR should come up with proper strategies to accommodate both the younger workers and the older workers as well. What is becoming clearer is that the younger generations are more adventurous than the older generations and as such, they do not want to be restricted by the old workplace rules. This trend has forced HR professionals to rethink how best they can accommodate them, yet at the same time increase the efficiency of operation and not lose out on productivity. Technology is also an important aspect of the lives of the younger generation as they are constantly on social media where they network and chat with friends, which might be quite detrimental to their productivity at work. HR professionals in coordination with line managers should work hand in hand to ensure that workers do not spend time on social media while on company time.
The workforce of one
This trend is gaining popularity among HR practitioners as they grapple with the diverse needs of their employees having realized that each employee has unique needs and it is no longer viable to treat the workforce as a single homogenous unit, but focus should be on individuals and their needs. This means that each employee is treated as a workforce in himself and his needs are addressed individually, but in accordance with the organizations culture. This trend has emerged out of the need to retain their talent for as long as possible given the prohibitive costs incurred in training such talent, especially those in top positions or those highly skilled professionals. Companies are finding it harder to keep replacing their talented employees who are being poached by other companies whether they are competitors or even companies from different industries. In the global marketplace where both Pepsi and Coke operate, there is stiff competition between international corporations and the number of professionals who understand the global marketplace and how to achieve the best results for companies is limited, which is driving the move towards talent retention and training.
The extended workforce
As both Pepsi and Coke operate globally, the need to use an extended workforce is increasing and will keep rising as more franchises are created where it is more efficient to use contractors instead of full-time employees of the company. The use of contractors is usually a good move for the company as it narrows down on employee administration tasks as the company only has to deal with the contractor and not his entire workforce, which saves time for the company, but may be detrimental in the long run. Most of the contracted workers are usually manual laborers who are employed in the bottling plants and manufacturing facilities of the company, without close supervision of the contractors activities most contractors have been known to underpay their workers. Therefore, it is vital that both companies set HR standards for their outside contractors and have an oversight team, which monitors the activities of contractors and ensures that the working conditions of manual laborers and their wages are commensurate with those stipulated by the companies. The companies should not forget to monitor the skilled professional who they contract in order to ensure that their work meets the set standards.
Integrating talent management activities
For global corporations such as Coke and Pepsi there is nothing more important than managing the careers of talented professionals who contribute greatly to the key strategies that move the company forward in the highly competitive global food and beverage industry. One of the key talent management strategies is through training of employees on the key skills required to work in the corporation and also providing guidance on how these individuals could move up the ladder within the organization. This need for talent retention has seen both companies launch management trainee program that prepare young graduates for top management positions within the company through training them on all aspects of the companies’ operations so that they understand exactly how the company operates. This means that the trainees get to spend significant amounts of time within the various departments in the organization and they are in daily contact with line managers to get a deeper understanding of not only how the department operates, but also to understand the key managerial challenges in each department. These programs are working extremely well, but more needs to be done in refining the programs for future challenges.
Conclusion
The above HR issues and trends are crucial to both Pepsi and Coke as they strive to continue being market leaders in the food and beverages industry against a backdrop of stiff competition from new entrants and the rapidly changing technological environment. HR practitioners within these two companies have to implement all the strategies analyzed above in order to stay competitive and ensure that they retain the right talent within their organization, as this is the key to a profitable future for both companies. Finally, as the HR function transforms in the global environment, HR practitioners will also need to invest time in learning new skill that will increase their effectiveness in future.
1. By doing the optimisation using Excel Solver, you are required to construct a mean variance efficient portfolio frontier for any 10 randomly selected ordinary shares listed on a stock market. For all your calculations, you should use the 60 monthly returns, sample means, standard deviations, and covariance and correlation matrices. Plot the portfolio frontier and comment on the weights of the portfolios along the portfolio frontier including in your discussion the correlations among the 10 shares.
2. Identify a risk-less asset and provide the rationale for your choice of the risk less asset.
3. By combining the risk-less asset with the 10 shares, plot the straight line efficient portfolio frontier and select the tangent portfolio on the portfolio frontier.
4. Assume that the short selling is not allowed, how your efficient frontiers would differ from those with short selling allowed in questions 1 and 3 above.
5. Identify the appropriate benchmark index and justify your choice of the benchmark index.
6. Evaluate the performance of the tangent portfolio selected above using:
a) Sharpe’s Measure
b) Treynor’s Measure
c) M2 Measure
d) Jensen’s Performance Measure
e) The Appraisal Ratio.
8. Critically evaluate the gains in the performance of the identified portfolio along with the associated risks from investing in other asset classes, for instance, investment in gilts (including index linked), corporate bonds, convertible bonds, commodities, real estate, hedge funds and exchange traded funds.
NB
This is a portfolio optimization assignment.
It has to be done with excel after the report writing on word.
SAMPLE ANSWER
Introduction
Investing in the stock markets is highly dependent on the performance of the portfolio in which a certain investor has put his/her money. This principle of portfolio optimization was popularized by Markowitz who developed an appropriate method through which an investor could devise the most important stock portfolio for investment by avoiding risky stocks and prioritizing on investing in the stocks with the highest potential for maximum returns. Therefore, Markowitz portfolio indicates that it is necessary to increase assets and/or stocks in an investment portfolio the where the total risk of that portfolio is considered to be low or as measured by the standard deviation (or variance) of total return declines continuously, whereas the envisaged portfolio return is a weighted average of the expected returns of the individual assets. This implies that investing portfolios instead of individual assets and/or stocks, investors have a chance of significantly lowering the total risk of investing without necessarily sacrificing returns on their investments.
Therefore, the Markowitz’s mean-variance theory is usually implemented through the Excel Solver spreadsheet calculations meaning that it always optimize allocation of assets by finding the stock distribution through which there is minimization of the standard deviation or variance of the portfolio while at the same time sustaining the desired return on the stocks and/or assets. The origin of modern portfolio theory was in the 1950s with Harry Markowitz’s pioneering work in mean-variance portfolio optimization. However, prior to Markowitz’s innovation, heuristics were the ones who significantly influenced finance more than mathematical modeling. Mean-variance optimization is currently considered the core technique used by pension funds and hedge funds for portfolio diversification.
Most investors trade risk off against the envisaged return on their investments. Mean-variance optimization plays a crucial role in the identification of the investment portfolio responsible for the minimization of risk (i.e. standard deviation) for a given return. In most cases the line which is formed when the envisaged returns are plotted against the minimized standard deviation becomes the most efficient frontier for determining the most appropriate investment portfolio.
Background of Stock Portfolio Optimization
There is a certain return for every stock in the market and it is assumed that a normal distribution is portrayed by this return. This implies that the distribution for these returns for the stock can be completely described using the mean which represents the expected return as well as variance of the returns. Moreover, between any pair of stocks covariance of the returns can be computed whereby the stocks that show positive covariances, it means that they move together while the stocks that show negative covariances move in the opposite directions. Therefore, if the envisaged returns for a certain stock return or a group of stock’s returns are known, a portfolio of these stocks can be put together because of their desired variance (risk) in the stock market as a result of their envisaged return. Thus, solver, excel is mainly used for the purpose of picking the portfolio in possession of the least variance for an envisaged return meaning that the investor is likely to gain profits from his/her investment.
However, the expected return as well as the portfolio’s variance can be calculated using the method that was developed by Harry Markowitz which is crucial in the computation of portfolio return in terms of the sum of individual stock covariances and variances between stocks’ pairs in a certain portfolio. This is definitely the right thing to do from a mathematical standpoint, even though all covariances between any portfolios pair of stocks is considered meaning there would be so many calculations that would be required to accomplish this task. Alternatively, another method was devised by William Sharpe for the determination of the envisaged return and variance for a certain portfolio. This is a simpler method compared to the previous one because it assumes that any stock’s return has two parts such as the beta part which depends on the entire market performance, and the second one which is independent of the market. These two methods have been extensively used to determine the performance of specific groups of stock portfolios in the stock markets across the world for a considerable period of time.
Discussion
In our considered example, the optimal portfolio in stock market provides a risk-return trade off for superior to investing in all the shares within the UK stock exchange market. For instance, through the computations of the Excel Solver it has been determined. For instance, the portfolio optimization analysis began with the analysis of descriptive aspects of the considered 10 stock returns over a period of 60 months including means, standard deviations, and median. Moreover, the correlation and covariance matrix as well as correlation coefficient all seem to indicate that there is significant relationship between the 10 stocks considered over the 60 months.
Moreover, there are also other performance ratios such as the Treynor’s measure, Sharpe ratio, Jensen’s Performance Measure, and the appraisal ratio. For instance, Treynor’s measure of 0.4 which is relatively low considering that it is below the half mark, this implies that selected portfolio is not that better since the higher the Treynor’s measure. The Sharpe ratio is almost identical to the Treynor measure, with exception of the fact that the risk measure is the standard deviation of the portfolio rather than only considering the systematic risk, as represented by beta. Therefore, the Sharpe ratio of 1.6 is indicative of a portfolio that is not performing better. This may be attributable to the selected stock with lowly performing returns, except a few which show considerable performance.
Jensen’s Performance Measure analyses the performance of an investment by not only looking at the overall return of a portfolio, but also at the risk of that portfolio. For instance, when two mutual stocks, rationally an investor would go the one that is less risky meaning that the obtained value of 0.2 is and indicative of considerable performance of the stocks.
Finally, the Appraisal Ratio of 0.5 shows that it is necessary to attempt to beat the returns of a relevant benchmark or of the overall market. The appraisal ratio measures the portfolio performance by comparing the return of their stock picks to the specific risk of those selections, hence the higher the ratio, the better the performance of the portfolio in question.
This implies that two step must always be taken prior to determining where to invest in the stock market, where the first one regards the determination of the allocation of stocks/assets between the riskless portfolio and the risky assets and/or stocks. The second step is the determination of the allocation of resources between the risky and riskless portfolios.
However, considering that all the portfolios of riskless and risky assets have a similar Sharpe ratio, all investors do not have one optimal portfolio, but their allocation is often determined by specific factors that are individual like the objectives of the investor or risk aversion of the investor, taking into account factors like the investor’s horizon, wealth, etc. Furthermore, the extent to which the volatility of the portfolio can be decreased is highly dependent on the correlation whereby, the lower the average correlation of the stocks within a certain portfolio, then it implies that that is the lower an investor can decrease the volatility of the portfolio. This is a clear indication that this has provided the author of this assignment with succinct knowledge of determining the optimal allocations in stock markets.
Conclusion
Through this assignment it has been shown that, it is possible to use specialized spreadsheets for the calculation of important risk and return related portfolio statistics in the stock markets as well as minimizing the overall risk or maximizing the expected return of a multi-stock portfolio. However, it is essential to know that irrespective of these calculations being useful when creating investment portfolios, they rest on the assumption that historical relationships between asset classes and individual assets will hold in the future. This means that it is always crucial for investors to choose a period that they feel is representative of a “typical” market cycle, in order to avoid a capturing a repetitive cycle that is not relevant.
Moreover, the mean-variance portfolio optimization has its limitations, despite the fact that it is very helpful in choosing appropriate portfolios. For example, using standard deviation (or variance) as a proxy for risk can only be considered valid for normally distributed returns, and not any other returns which is not always the case in the stock markets. In addition, the premise of the Markowitz theory means that investors are not likely to make any alterations to their asset allocation after it has been optimized. Finally, fund managers or investors may not necessarily be interested in the minimization of risk (i.e. standard deviation or variance), but instead they may be interested in reducing the correlation of a fund to a benchmark. These are the limitations of the used method, even it is very crucial in determining portfolio optimization.
Reference List
Arnold, G. (2008), Corporate Financial Management, Third Edition, New York, NY: Pearson Education Limited.
Craig, W. H. (2008), Excel Modelling and Estimation in Investments, Third Edition, Indiana University, Prentice Hall, Inc.
FTSE Website http://www.ftse.com/products/indices/uk
Goldfarb, D. and Iyengar, G. (2003), “Robust Portfolio Selection Problems”. Mathematics of Operations Research, Vol.28 Issue 1, pp. 1-38.
Jackson, M. and Staunton, M. (2001), Advanced Modelling in Finance using Excel and VBA. Chichester, England: John Wiley & Sons.
Markowitz, H.M. (1959), Portfolio Selection: Efficient Diversification of Investments. New York, NY: John Wiley & Sons.
Markowitz, H.M. (1952). “Portfolio selection” The Journal of Finance, Vol. 7 Issue 1, pp. 77-91.
Sharpe, W.F., (1964), “Capital asset prices: A theory of market equilibrium under conditions of risk”. Journal of Finance, Vol. 19 Issue 3, pp. 425-442.
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